SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
MUELLER INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
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[LOGO]
MUELLER INDUSTRIES, INC.
8285 TOURNAMENT DRIVE, SUITE 150
MEMPHIS, TENNESSEE 38125
TELEPHONE: (901) 753-3200
------------------------
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD
MAY 12, 2000
------------------------
To the Stockholders of
Mueller Industries, Inc.
The Annual Meeting of Stockholders of Mueller Industries, Inc. (the
"Company"), will be held at the Company's headquarters at 8285 Tournament Drive,
Suite 150, Memphis, Tennessee 38125 on Friday, May 12, 2000, at 10:00 A.M. local
time, for the following purposes:
1. To elect five directors, each to serve until the next annual meeting of
stockholders (tentatively scheduled for May 10, 2001) or until his
successor is elected and qualified;
2. To consider and act upon a proposal to approve the appointment of
Ernst & Young LLP, independent public accountants, as auditors of the
Company for the fiscal year ending December 30, 2000; and
3. To consider and transact such other business as may properly be brought
before the Annual Meeting and any adjournment(s) thereof.
Only stockholders of record at the close of business on March 13, 2000, will
be entitled to notice of and vote at the Annual Meeting or any adjournment(s)
thereof. A complete list of the stockholders entitled to vote at the Annual
Meeting will be prepared and maintained at the Company's corporate headquarters
at 8285 Tournament Drive, Suite 150, Memphis, Tennessee 38125. This list will be
available for inspection by stockholders of record during normal business hours
for a period of at least 10 days prior to the Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING
REGARDLESS OF THE SIZE OF YOUR HOLDINGS. WHETHER OR NOT YOU INTEND TO BE PRESENT
AT THE MEETING IN PERSON, WE URGE YOU TO MARK, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED SELF-ADDRESSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
William H. Hensley
CORPORATE SECRETARY
March 17, 2000
PROXY STATEMENT
MUELLER INDUSTRIES, INC.
8285 TOURNAMENT DRIVE, SUITE 150
MEMPHIS, TENNESSEE 38125
TELEPHONE: (901) 753-3200
------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 2000
------------------------
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Mueller
Industries, Inc., a Delaware corporation (the "Company"), for use at the annual
meeting of stockholders (the "Annual Meeting") to be held at the Company's
headquarters at 8285 Tournament Drive, Suite 150, Memphis, Tennessee 38125, on
Friday, May 12, 2000, at 10:00 A.M. local time, or at any adjournment(s)
thereof.
This Proxy Statement, together with the Company's Annual Report for the
fiscal year ended December 25, 1999, is first being mailed on or about
March 17, 2000.
When a proxy card is returned properly signed, the shares represented
thereby will be voted in accordance with the stockholder's directions appearing
on the card. If the proxy card is signed and returned without directions, the
shares will be voted in favor of the proposals set forth thereon and for the
nominees named herein. The discretion granted in the accompanying proxy card
includes the authority to vote on all additional matters properly brought before
the Annual Meeting as the persons named in the proxy deem appropriate. A
stockholder giving a proxy may revoke it at any time before it is voted at the
Annual Meeting by giving written notice to the secretary of the Annual Meeting,
or by casting a ballot at the Annual Meeting. Votes cast by proxy or in person
at the Annual Meeting will be tabulated by election inspectors appointed for the
Annual Meeting. The election inspectors will also determine whether a quorum is
present. The holders of a majority of the shares of common stock, $.01 par value
per share ("Common Stock"), outstanding and entitled to vote who are present
either in person or represented by proxy constitute a quorum for the Annual
Meeting. The election inspectors will treat abstentions as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum, but as unvoted for purposes of determining the approval of any matter
submitted. If a broker indicates on a proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
not be considered as present and entitled to vote with respect to that matter.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, directors, officers and employees of the Company may
solicit proxies by telephone or otherwise. The Company will reimburse brokers or
other persons holding stock in their names or in the names of their nominees for
their charges and expenses in forwarding proxies and proxy material to the
beneficial owners of such stock.
VOTING SECURITIES
The Company had 34,469,796 shares of Common Stock outstanding at the close
of business on March 13, 2000, which are the only securities of the Company
entitled to be voted at the Annual Meeting. The record holder of each share of
Common Stock is entitled to one vote on each matter that may
properly be brought before the Annual Meeting. Only stockholders of record at
the close of business on March 13, 2000, will be entitled to notice of, and to
vote at, the Annual Meeting. The Company's Certificate of Incorporation and
Bylaws do not provide for cumulative voting for the election of Directors.
PRINCIPAL STOCKHOLDERS
As of March 9, 2000, the following person was known by the Company to be the
"beneficial owner" of more than five percent of the Common Stock:
NAME AND ADDRESS OF SHARES BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
---------------- ----- -----
Harvey L. Karp 3,634,000(1) 9.55%(1)
c/o Mueller Industries, Inc.
8285 Tournament Drive, Suite 150
Memphis, Tennessee 38125
- ------------------------
(1) Includes 3,600,000 shares of Common Stock which are subject to currently
exercisable stock options.
ELECTION OF DIRECTORS
The Board of Directors proposes to elect the following five persons at the
annual meeting of stockholders to serve (subject to the Company's Bylaws) as
directors of the Company until the next Annual Meeting (tentatively scheduled
for May 10, 2001), or until the election and qualification of their successors:
Robert B. Hodes, Harvey L. Karp, G.E. Manolovici, William D. O'Hagan and Robert
J. Pasquarelli. If any such person should be unwilling or unable to serve as a
director of the Company, which is not anticipated, the persons named in the
proxy will vote the proxy for substitute nominees selected by them unless the
number of directors has been reduced to the number of nominees willing and able
to serve.
Directors are elected by a plurality of the votes cast. "Plurality" means
that the individuals who receive the largest number of votes cast "For" are
elected as directors up to the maximum number of directors to be chosen at the
Annual Meeting. Consequently, any shares not voted "For" a particular director
(whether as result of a direction to withhold or a broker non-vote) will not be
counted in such director's favor.
OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE
OFFICERS AND INFORMATION ABOUT DIRECTOR NOMINEES
The following table sets forth, as of March 9, 2000, information about the
4,631,164 shares of Common Stock (calculated based on 34,469,796 shares
outstanding) beneficially owned by each of the Company's current directors,
nominees for director, executive officers and Named Officers (as defined under
"Executive Compensation"). Unless otherwise indicated, all directors and
nominees for director, executive officers and Named Officers have sole voting
and investment power with respect to the shares of Common Stock reported. The
table and the accompanying footnotes set forth the foregoing persons'
2
current positions with the Company, principal occupations and employment over
the preceding five years, age and directorships held in certain other
publicly-owned companies.
COMMON STOCK
BENEFICIALLY
OWNED AS OF PERCENT
PRINCIPAL OCCUPATION, EMPLOYMENT, ETC. MARCH 9, 2000 OF CLASS
-------------------------------------- ------------- --------
Robert B. Hodes............................................. 42,000 *
Director of the Company since February 10, 1995;
Director of W.R. Berkley Corporation, Globalstar
Telecommunications Limited, Loral Space & Communications
Ltd., K & F Industries, Inc., R.V.I. Guaranty, Ltd., LCH
Investments N.V. and Restructured Capital Holdings,
Ltd.; age 74 (1)
Harvey L. Karp.............................................. 3,634,000 9.55%
Chairman of the Board of Directors since October 8,
1991; Director since August 1991; age 72 (2)
G.E. Manolovici............................................. 12,000 *
Director of the Company since November 30, 1998;
age 63 (3)
William D. O'Hagan.......................................... 555,848 1.60%
Chief Executive Officer of the Company since January 1,
1994; Chief Operating Officer of the Company since June
22,1992; President of the Company since December 1,
1992; Director of the Company since January 1993;
age 58 (4)
Robert J. Pasquarelli....................................... 23,200 *
Director of the Company since July 1991; age 54 (5)
William H. Hensley.......................................... 168,040 *
Vice President and General Counsel of the Company since
December 16, 1991; Secretary of the Company since
January 30, 1992; age 49 (6)
Kent A. McKee............................................... 79,704 *
Chief Financial Officer of the Company since April 1,
1999; Vice President of the Company since February 11,
1999; age 39 (7)
Lee R. Nyman................................................ 116,372 *
Senior Vice President Manufacturing/Engineering of the
Company
since February 11, 1999; age 47 (8)
Executive Officers, Named Officers and Directors as a
Group....................................................... 4,631,164 12.05%**
- ------------------------
* Less than 1%
** Includes 3,980,800 shares of Common Stock which are subject to currently
exercisable stock options held by officers and directors of the Company.
(1) Mr. Hodes is Counsel to the New York law firm of Willkie Farr & Gallagher.
The number of shares of Common Stock beneficially owned by Mr. Hodes
includes (i) 2,200 shares of Common Stock owned by Mr. Hodes' children, and
(ii) 8,000 shares of Common Stock which are subject to currently exercisable
stock options.
(2) The number of shares of Common Stock beneficially owned by Mr. Karp includes
3,600,000 shares of Common Stock which are subject to currently exercisable
stock options.
3
(3) Mr. Manolovici is currently self-employed in managing his private investment
portfolio. Prior to June 1994, Mr. Manolovici served as a Managing Director
of Soros Fund Management, advisor to Quantum Fund. The number of shares of
Common Stock beneficially owned by Mr. Manolovici includes 2,000 shares of
Common Stock which are subject to currently exercisable stock options.
(4) The number of shares of Common Stock beneficially owned by Mr. O'Hagan
includes (i) 288,000 shares of Common Stock which are subject to currently
exercisable stock options, (ii) 20,000 shares of Common Stock owned by
Mr. O'Hagan's spouse, and (iii) 28,550 shares of Common Stock owned by a
family partnership of which Mr. O'Hagan is a general partner and in which
Mr. O'Hagan or his spouse hold a 99% interest. Mr. O'Hagan disclaims
beneficial ownership of the 20,000 shares of Common Stock owned by his
spouse.
(5) Mr. Pasquarelli has served (i) as General Manager of AK Steel Corporation's
Mansfield, Ohio, stainless steel manufacturing operations from July 1, 1997,
(ii) as a metals industry consultant from January 16, 1996 to June 30, 1997,
and (iii) for more than five years prior to January 17, 1996, as Director,
President and Chief Executive Officer of New Jersey Steel Corporation, a New
Jersey based steel maker. The number of shares of Common Stock beneficially
owned by Mr. Pasquarelli includes 10,000 shares of Common Stock which are
subject to currently exercisable stock options.
(6) The number of shares of Common Stock beneficially owned by Mr. Hensley
includes (i) 9,500 shares of Common Stock which are subject to currently
exercisable stock options, and (ii) 6,910 shares of Common Stock owned by
Mr. Hensley's children.
(7) Mr. McKee has served (i) as Vice President--Business Development/Investor
Relations of the Company from December 14, 1995 to February 11, 1999,
(ii) as Treasurer of the Company from November 8, 1991 to December 14, 1995,
and (iii) as Assistant Secretary of the Company from August 28, 1991 to
December 14, 1995. The number of shares of Common Stock beneficially owned
by Mr. McKee includes 22,300 shares of Common Stock which are subject to
currently exercisable stock options.
(8) Mr. Nyman has served as Vice President--Manufacturing/Management Engineering
of the Company from July 7, 1993 to February 11, 1999. The number of shares
of Common Stock beneficially owned by Mr. Nyman includes 41,000 shares of
Common Stock which are subject to currently exercisable stock options.
During 1999, the Board of Directors held five meetings and took action three
times by unanimous written consent. The Board of Directors established a
standing Audit Committee and a Compensation Committee at its organizational
meeting on February 13, 1991. On May 13, 1991, the Board of Directors created
two committees (the "Plan Committees") to be responsible for administering the
Company's 1991 Employee Stock Purchase Plan and the 1991 Incentive Stock Option
Plan. On November 16, 1993, the Board of Directors established a standing
Nominating Committee. On May 12, 1994, the Board of Directors created two
committees to be responsible for administering the Company's 1994 Stock Option
Plan and the Company's 1994 Non-Employee Director Stock Option Plan and on
February 12, 1998 created a committee to be responsible for administering the
Company's 1998 Stock Option Plan (collectively, the "Option Plan Committees").
During 1999, each of the directors attended 75% or more of the meetings of the
Board and the meetings of the committees on which they served.
The Audit Committee is composed of three directors who are not officers or
employees of the Company: Robert Hodes, G.E. Manolovici and Robert Pasquarelli.
During 1999, the Audit Committee met twice. The Audit Committee (i) makes
recommendations to the Board of Directors regarding the appointment of the
Company's independent accountants, (ii) reviews and approves any major change in
4
the Company's accounting policy, (iii) reviews the scope and results of the
independent audit, (iv) reviews and approves the scope of the non-audit services
performed by the Company's independent accountants and considers the possible
effect on the independence of the accountants, (v) reviews the effectiveness of
the Company's internal audit procedures and personnel, (vi) reviews the
Company's policies and procedures for compliance with disclosure requirements
concerning conflicts of interest and the prevention of unethical, questionable
or illegal payments, and (vii) makes such reports and recommendations to the
Board of Directors as it may deem appropriate.
The Compensation Committee is composed of two directors who are not officers
or employees of the Company: G.E. Manolovici and Robert Pasquarelli. These same
directors also serve as members of the Plan Committees and the Option Plan
Committees. The Compensation Committee (i) reviews management compensation
standards and practices and (ii) makes such recommendations to the Board of
Directors as it deems appropriate. During 1999, the Compensation Committee and
the Option Plan Committees held two meetings.
The Nominating Committee is composed of two directors who are not officers
or employees of the Company: Robert Hodes and G.E. Manolovici. The Nominating
Committee makes recommendations to the Board of Directors regarding director
candidates and criteria for Board membership. During 1999, the Nominating
Committee held one meeting. The Nominating Committee does not consider
individuals nominated by stockholders for election to the Board of Directors.
However, under the Company's By-laws, nominations for the election of directors
may be made by a qualifying stockholder, but only if written notice of such
stockholder's intent to make such nomination has been received by the Secretary
of the Company at the Company's principal place of business (8285 Tournament
Drive, Suite 150, Memphis, Tennessee 38125) not later than (i) with respect to
an election to be held at an annual meeting of stockholders, 90 days prior to
the anniversary date of the immediately preceding annual meeting (unless the
annual meeting date is advanced by more than thirty days or delayed by more than
sixty days, in which case different deadlines apply), and (ii) with respect to
an election to be held at a special meeting of stockholders for the election of
directors, not earlier than 90 days prior to the special meeting and not later
than the later of (a) 60 days prior to such special meeting or (b) the tenth day
following the day on which public announcement is first made of the date of the
special meeting, PROVIDED that in the event that the number of directors to be
elected to the Board is increased and there is no public announcement naming all
of the nominees for director or specifying the size of the increased Board of
Directors made by the Company at least 70 days prior to the first anniversary of
the preceding year's annual meeting, a stockholder's notice shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it is delivered to the Secretary of the Company not
later than the tenth day following the day on which such public announcement is
first made by the Company. To be a qualifying stockholder, the stockholder must
be a stockholder of record at the time the notice was delivered to the Secretary
of the Company. Each such notice shall set forth: (a) as to each person whom the
stockholder proposes to nominate for election or reelection as a director, all
information relating to such person that is required to be disclosed in
solicitation of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A (or successor provisions) under the
Securities Exchange Act of 1934, including such person's written consent to be
named in the proxy statement as a nominee and serving as a director if elected;
(b) as to any other business that the stockholder desired to be brought before
the meeting, a brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting, and any
material interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made; and (c) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal
5
is made (i) the name and address of such stockholder, as they appear on the
Company's books, and of such beneficial owner and (ii) the class and number of
shares of Common Stock which are owned beneficially and of record by such
stockholder and such beneficial owner. The presiding officer of the meeting may
refuse to acknowledge the nomination of any person not made in compliance with
the foregoing procedure.
DIRECTOR COMPENSATION
During 1999, Directors of the Company who were not employed by the Company
received an annual fee for serving on the Company's Board of Directors of
$25,000, plus a fee of $1,000 per Board and $750 per Audit, Compensation or
Nominating Committee meeting attended by such Director, plus reimbursement for
such Director's expenses incurred in connection with any such Board or Committee
meeting, except no Committee meeting fees were paid for meetings held in
conjunction with a Board of Directors meeting. In addition, the Chairman of the
Audit, Compensation and Nominating Committees receive an annual fee of $2,500.
Under the Company's 1994 Non-Employee Director Stock Option Plan, each
member of the Company's Board of Directors who is neither an employee nor an
officer of the Company is automatically granted each year on the date of the
Company's annual meeting of stockholders, without further action by the Board of
Directors, an option to purchase 2,000 shares of Common Stock at the fair market
value on the date the option is granted. As of March 9, 2000, options to
purchase 20,000 shares of Common Stock were outstanding under the Company's 1994
Non-Employee Director Stock Option Plan.
BOARD OF DIRECTORS' AFFILIATIONS
Mr. Hodes is Counsel to the law firm of Willkie Farr & Gallagher, which
provided services to the Company during 1999.
6
EXECUTIVE COMPENSATION
The following table summarizes the annual and long-term compensation for
services in all capacities for the Company for the fiscal years 1999, 1998 and
1997, of those persons who were, at December 25, 1999, (i) the chief executive
officer, and (ii) the other four most highly compensated executive officers of
the Company (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- ------------
OTHER SECURITIES
NAME AND PRINCIPAL ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION(2) OPTIONS(#) COMPENSATION(3)
------------------ -------- --------- ----------- --------------- ------------ ---------------
Harvey L. Karp 1999 $693,680 $1,144,572
Chairman of the Board 1998 $630,630 $ 630,630
1997 $606,372 $ 576,053
William D. O'Hagan 1999 $472,966 $ 756,746 $16,611
President and Chief 1998 $429,962 $ 408,464 200,000 $11,081
Executive Officer 1997 $413,616 $ 372,254 180,000 $ 7,201
William H. Hensley 1999 $183,195 $ 164,875 7,500 $ 6,962
Vice President, General 1998 $170,000 $ 129,475 7,500 $ 5,807
Counsel and Secretary 1997 $170,100 $ 127,575 8,000 $ 5,107
Kent A. McKee 1999 $149,949 $ 149,954 7,500 $ 7,146
Vice President and 1998 $120,000 $ 88,500 7,500 $ 6,102
Chief Financial Officer 1997 $113,263 $ 67,958 6,000 $ 5,500
Lee R. Nyman 1999 $178,020 $ 207,262 15,000 $ 9,589
Senior Vice President-- 1998 $172,000 $ 131,100 23,000 $ 6,857
Manufacturing/Engineering 1997 $165,375 $ 134,031 8,000 $ 5,458
- ------------------------
(1) Includes all amounts earned for the respective years, even if deferred under
the Company's Executive Deferred Compensation Plan.
(2) Perquisites and other personal benefits received by each Named Officer in
1999 aggregated below the required disclosure threshold.
(3) Consists of the following amounts for 1999: (a) $5,000 contributed on behalf
of Messrs. O'Hagan, Hensley, McKee and Nyman, respectively, as matching
contributions under the Company's Executive Deferred Compensation Plan; and
(b) $11,611, $1,962, $2,146 and $4,589 for Messrs. O'Hagan, Hensley, McKee
and Nyman, respectively, representing the portion of interest credits on
deferred compensation accounts under the Company's Executive Deferred
Compensation Plan that are deemed by rules of the Securities and Exchange
Commission to be at above-market rates.
7
OPTION GRANTS
Shown below is further information on options granted during the fiscal year
ended December 25, 1999, to the Named Officers.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ------------------------------------------------------------------------------------------------------ ---------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS MARKET
UNDERLYING GRANTED TO EXERCISE PRICE ON
OPTIONS EMPLOYEES OR BASE DATE OF
GRANTED IN FISCAL PRICE ($/ GRANT EXPIRATION
NAME (#) YEAR SH) ($/SH) DATE 5% ($) 10% ($)
- ---- ---------- ---------- ---------- -------- ---------- --------- ---------
Harvey L. Karp.......................... -- -- -- -- -- -- --
William D. O'Hagan...................... -- -- -- -- -- -- --
William H. Hensley...................... 7,500 4.9% $34.375(1) $34.375 12/13/09 162,138 410,876
Kent A. McKee........................... 7,500 4.9% $34.375(1) $34.375 12/13/09 162,138 410,876
Lee R. Nyman............................ 15,000 9.9% $34.375(1) $34.375 12/13/09 324,276 821,752
- ------------------------
(1) These options were granted under the Company's 1998 Stock Option Plan at
100% of the fair market value of the Common Stock on the date of grant,
which, in accordance with the terms of the 1998 Stock Option Plan, is the
mean between the highest and lowest sale price of the Common Stock on the
trading date last preceding the date of grant. For purposes of determining
the potential realizable value of these options, the mean between the
highest and lowest sale price of the Common Stock on the trading date
immediately preceding the date of grant was used as the date of grant market
price. These options vest ratably over a five-year term, with the first 20%
vesting on December 13, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUES AT DECEMBER 25, 1999
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS AT
AT DEC. 25, 1999(#) DEC. 25, 1999($)(*)
------------------- -----------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ------------------- -----------------------
Harvey L. Karp................ 3,600,000/0 110,925,000/0
William D. O'Hagan............ 488,000/312,000 10,156,185/4,988,250
William H. Hensley............ 8,000 193,500 30,300/24,700 614,410/216,650
Kent A. McKee................. 6,000 124,125 21,100/21,900 413,705/178,950
Lee R. Nyman.................. 7,680 190,560 37,500/48,500 717,266/341,575
- ------------------------
* Represents the difference between the closing price of the Common Stock on
the last trading day prior to December 25, 1999 and the exercise price of
the options.
8
The Company did not award stock appreciation rights to any executive officer
during 1999, nor was any award made under any long-term incentive plan. The
Company does not have a defined benefit or actuarial plan covering the Chief
Executive Officer or any of the Named Officers.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Effective as of September 17, 1997, the Company amended and restated
Harvey L. Karp's then existing employment agreement (as amended and restated,
the "Karp Employment Agreement"). The Karp Employment Agreement has a three-year
rolling term which is automatically extended so that the unexpired term on any
date is always three years, unless either party gives written notice of its
intention not to extend the term. The Karp Employment Agreement provides for
Mr. Karp to serve as Chairman of the Board of Directors of the Company. Under
the terms of the Karp Employment Agreement, Mr. Karp is to receive (i) an annual
base salary of $606,372 (to be adjusted upward annually at a rate commensurate
with increases granted to other key executives), and (ii) a discretionary cash
incentive bonus consistent with the executive bonus program which the Company
establishes for other key executives. In addition, Mr. Karp is to receive
reimbursement for reasonable business and travel expenses incurred in the
performance of his duties and will participate in all bonus, incentive, stock
option, pension, disability and health plans and programs and all fringe benefit
plans maintained by the Company in which senior executives participate.
Under the terms of the Karp Employment Agreement, Mr. Karp's employment may
be terminated by the Company without Cause (as defined in the Karp Employment
Agreement) or by Mr. Karp for Good Reason (as defined in the Karp Employment
Agreement) upon appropriate written notice. In either such event, Mr. Karp will
continue to receive his then-current base salary as if his employment had
continued for the remainder of the then current three-year term and an annual
bonus for the remainder of the then current three-year term equal to the average
bonus for the three calendar years immediately preceding the written notice of
termination. In addition, all outstanding unvested Company stock options then
held by Mr. Karp will immediately vest and become exercisable and Mr. Karp will
continue to participate in the Company's health plans and programs at the
Company's expense for the remainder of such three-year term.
Mr. Karp may resign voluntarily without Good Reason upon appropriate written
notice to the Company. In such event, Mr. Karp will be entitled to receive any
accrued but unpaid base salary and, at the Company's discretion, a bonus for the
calendar year in which his resignation without Good Reason occurs. The Company
may terminate Mr. Karp's employment for Cause (as defined in the Karp Employment
Agreement) upon appropriate written notice. In such event, Mr. Karp will forfeit
all existing Company stock options, but such options shall remain exercisable
for the 30-day period following Mr. Karp's receipt of the written notice.
Mr. Karp may terminate his employment for any reason within six months following
a Change in Control (as defined in the Karp Employment Agreement). In such
event, the Company will pay to Mr. Karp a lump sum amount equal to (i) three
times his then current base salary, and (ii) three times his average annual
bonus for the three calendar years immediately preceding the date of
termination. In addition, all outstanding unvested options then held by Mr. Karp
shall become immediately exercisable. In the event that any Payment (as defined
in the Karp Employment Agreement) would be subject to the excise tax imposed by
the "Golden Parachute" regulations, Mr. Karp would be entitled to a gross-up
payment from the Company to cover such taxes.
Effective as of September 17, 1997, the Company amended and restated William
D. O'Hagan's then existing employment agreement (as amended and restated, the
"O'Hagan Employment Agreement"). The O'Hagan Employment Agreement provides for
Mr. O'Hagan to serve as President and Chief Executive
9
Officer of the Company for a term beginning on the effective date of the O'Hagan
Employment Agreement and ending on December 31, 2002 (the "Employment Period").
Under the terms of the O'Hagan Employment Agreement, Mr. O'Hagan is to receive
(i) an annual base salary of $413,430 (to be adjusted upward annually at a rate
commensurate with increases granted to other key executives), and (ii) a
discretionary cash incentive bonus consistent with the executive bonus program
which the Company establishes for other key executives. In addition,
Mr. O'Hagan is to receive reimbursement for reasonable business and travel
expenses incurred in the performance of his duties and will participate in all
bonus, incentive, stock option, pension, disability and health plans and
programs and all fringe benefit plans maintained by the Company in which senior
executives participate.
Under the terms of the O'Hagan Employment Agreement, Mr. O'Hagan's
employment may be terminated by the Company without Cause (as defined in the
O'Hagan Employment Agreement) or by Mr. O'Hagan for Good Reason (as defined in
the O'Hagan Employment Agreement) upon appropriate written notice. In either
such event, Mr. O'Hagan will continue to receive his then-current base salary as
if his employment had continued for the remainder of the Employment Period and
an annual bonus for the remainder of the Employment Period equal to the average
bonus for the three calendar years immediately preceding the written notice. In
addition, all outstanding unvested Company stock options then held by Mr.
O'Hagan will immediately vest and become exercisable and Mr. O'Hagan will
continue to participate in the Company's health plans and programs at the
Company's expense until he reaches age 65.
Mr. O'Hagan may resign voluntarily without Good Reason upon appropriate
written notice to the Company. In such event, Mr. O'Hagan will be entitled to
receive any accrued but unpaid base salary and, at the Company's discretion, a
bonus for the calendar year in which his resignation without Good Reason occurs.
The Company may terminate Mr. O'Hagan's employment for Cause (as defined in the
O'Hagan Employment Agreement) upon appropriate written notice. Mr. O'Hagan may
terminate his employment for any reason within six months following a Change in
Control (as defined in the O'Hagan Employment Agreement). In such event, the
Company will pay to Mr. O'Hagan a lump sum amount equal to (i) his then current
base salary multiplied by the number of years (including partial years) then
remaining in the Employment Period, and (ii) his average annual bonus for the
three calendar years immediately preceding the date of termination multiplied by
the number of years (including partial years) then remaining in the Employment
Period. In addition, all remaining unvested options previously granted to
Mr. O'Hagan shall become immediately exercisable.
If Mr. O'Hagan's employment is terminated by reason of the expiration of the
Employment Period, and the Company and Mr. O'Hagan have not entered into a new
employment agreement, Mr. O'Hagan shall be entitled to receive his usual
discretionary annual bonus for calendar year 2002. In addition, beginning on
January 1, 2003, Mr. O'Hagan shall be placed on a temporary leave of absence for
six months. During that time period, Mr. O'Hagan shall (i) have the status of an
employee of the Company, and (ii) continue to receive base salary payments, but
the Company shall have the right to replace Mr. O'Hagan as Chief Executive
Officer and President. At the end of such six-month temporary leave of absence,
if the Company and Mr. O'Hagan have not entered into a new employment
arrangement, Mr. O'Hagan's employment will be automatically terminated. In such
event, Mr. O'Hagan will not be entitled to any severance payments. In the event
that any Payment (as defined in the O'Hagan Employment Agreement) would be
subject to the excise tax imposed by the "Golden Parachute" regulations, Mr.
O'Hagan would be entitled to a gross-up payment from the Company to cover such
taxes.
10
Under the terms of the O'Hagan Employment Agreement, the Company agreed, at
Mr. O'Hagan's option, to loan Mr. O'Hagan up to $5,000,000 on a full recourse
basis, which loan would be evidenced by a promissory note in favor of the
Company. Any such loan would be secured by either (a) Common Stock of the
Company having, at the time the promissory note is executed, a fair market value
of at least 125% of the face amount of the promissory note, or (b) other
marketable property acceptable to the Company having, at the time the promissory
note is executed, a fair market value of at least 150% of the face amount of the
promissory note. See "Certain Relationships and Transactions with Management."
The Company does not have any other employment agreements with Named
Officers. Except as set forth above, the Company has no compensatory plan or
arrangement with respect to any Named Officer which would result in severance or
change-in-control payments in excess of $100,000.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Base compensation payable to Mr. Karp, the Company's Chairman, and to Mr.
O'Hagan, its Chief Executive Officer, is principally governed by the terms of
their employment agreements. These agreements provide for minimum base
compensation of $606,372 for Mr. Karp and $413,430 for Mr. O'Hagan effective as
of September 17, 1997. Effective at the beginning of the 1999 fiscal year, the
base compensation payable to each of Messrs. Karp and O'Hagan was increased by
ten percent, which reflected the Company's growth over the past three years in
sales and pre-tax profits and the fact that, during that time period, the base
salary of Messrs. Karp and O'Hagan had increased only modestly.
The employment agreements for Messrs. Karp and O'Hagan also provide for
payment of an annual discretionary cash bonus consistent with the executive
bonus program which the Company establishes for other key executives. For 1999,
Messrs. Karp and O'Hagan were awarded discretionary bonuses in the amount of
165% and 160%, respectively, of their gross wages (excluding bonuses for 1998
which were paid in 1999, and certain other miscellaneous items). The bonuses
paid to Messrs. Karp and O'Hagan were recommended by the Compensation Committee
and approved by the Board of Directors, based on the favorable assessment of
their contributions to the Company's growth and profitability in 1999.
The Compensation Committee increased base compensation payable to other
executive officers at the beginning of 1999 by an average of approximately 3.5%,
based on recommendations from Messrs. Karp and O'Hagan, as well as the Company's
positive operating results. In addition, effective April 1, 1999, the
compensation of one executive officer was increased to reflect additional
responsibilities he assumed on that date. Bonuses paid to officers other than
Messrs. Karp and O'Hagan for 1999 did not exceed 116% of gross wages (excluding
bonuses for 1998 which were paid in 1999, and certain other miscellaneous
items). These bonuses were paid pursuant to (i) the Company's 1999 bonus
program, which provided for bonuses to be paid based on the Company's attainment
of income targets for fiscal 1999, and (ii) discretionary bonuses in the amount
of $15,000 or less paid to certain Company officers.
The Compensation Committee periodically grants stock options to executive
officers and other key employees as part of the Company's overall executive
compensation program. The Compensation Committee granted options to acquire an
aggregate of 30,000 shares of Common Stock to executive officers other than
Messrs. Karp and O'Hagan, based in part on recommendations from Messrs. Karp and
O'Hagan. When granting options to executive officers, the Compensation Committee
considers the total number of shares available under the Company's option plans,
the number of options previously granted to such officers, Company and
individual performance, and each officer's level of responsibility within the
11
Company. However, no specific corporate or individual performance factors are
used. The Compensation Committee believes that stock options are an integral
part of the Company's executive compensation program, which motivate executives
to practice long-term strategic management, and align their financial interests
with those of the Company's stockholders.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
deductibility of compensation paid to each of the Chief Executive Officer and
the Named Officers to $1,000,000 per year, subject to certain exceptions. The
Compensation Committee is comprised of "outside" directors and the Company's
1998 Stock Option Plan has been structured so that compensation attributable to
options will qualify as "performance based" compensation, which is excluded from
the determination of the annual maximum deductible amount. If, because of
competitive factors, individual performance or changes in tax provisions, the
Compensation Committee determines that it is appropriate to pay one or more
executive officer compensation in excess of the annual maximum deductible
amount, the Compensation Committee would expect to authorize such compensation.
During 1999, Mr. Karp's annual cash compensation exceeded the maximum deductible
amount.
ROBERT J. PASQUARELLI G.E. MANOLOVICI
12
CORPORATE PERFORMANCE GRAPH
The following table compares total stockholder return since December 31,
1994 to the Dow Jones Equity Market Index ("Equity Market Index") and the Dow
Jones Building Material Index ("Building Material Index"). Total return values
for the Equity Market Index, the Building Material Index and the Company were
calculated based on cumulative total return values assuming reinvestment of
dividends. The Common Stock is traded on the New York Stock Exchange under the
symbol MLI.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG MUELLER INDUSTRIES, INC., DOW JONES EQUITY MARKET
INDEX AND DOW JONES BUILDING MATERIAL INDEX
FISCAL YEAR ENDING LAST SATURDAY IN DECEMBER
12/31/94 12/31/95 12/28/96 12/27/97 12/26/98 12/25/99
-------- -------- -------- -------- -------- --------
Mueller Industries, Inc. .................. 100 196 242 356 269 440
Dow Jones Equity Market Index.............. 100 138 173 219 290 349
Dow Jones Building Material Index.......... 100 137 162 194 226 181
CERTAIN RELATIONSHIPS AND
TRANSACTIONS WITH MANAGEMENT
On June 15, 1998, pursuant to the O'Hagan Employment Agreement, Mr. O'Hagan,
the Company's President and Chief Executive Officer, borrowed $4,484,887.50 from
the Company. On October 26, 1999, Mr. O'Hagan repaid the loan in full. The loan,
which was on a full recourse basis, was secured by Common Stock of the Company
and carried interest at the rate of 6.65%.
On April 1, 1999, the Company purchased 60,000 shares of Common Stock from
Mr. O'Hagan for $22.31 per share. On October 26, 1999, the Company purchased
188,838 shares of Common Stock from
13
Mr. O'Hagan for $31.00 per share, and on October 29, 1999, the Company purchased
111,162 shares of Common Stock from a family partnership of which Mr. O'Hagan is
a general partner and in which Mr. O'Hagan or his spouse hold a 99% interest for
$31.00 per share. In each case, the purchase price was at or slightly below the
closing price on the New York Stock Exchange on those respective dates.
APPOINTMENT OF AUDITORS
Ernst & Young LLP ("E & Y") has, upon the recommendation of the Company's
Audit Committee, been selected and appointed by the Board of Directors to audit
and certify the Company's financial statements for the fiscal year ending
December 30, 2000, subject to ratification by the Company's stockholders. If the
appointment of E & Y is not ratified by the stockholders at the Annual Meeting,
the Board of Directors will reconsider its action and will appoint auditors for
the 2000 fiscal year without further stockholder action. Further, even if the
appointment is ratified by stockholder action, the Board of Directors may at any
time in the future in its discretion reconsider the appointment of E & Y without
submitting the matter to a vote of stockholders. It is expected that
representatives of E & Y will be in attendance at the Annual Meeting and will be
available to answer questions and to make a statement if they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE THEIR SHARES FOR
THE PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS OF THE
COMPANY.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 2001 ANNUAL MEETING
It is presently anticipated that the 2001 annual meeting of stockholders
will be held on or about May 10, 2001. In order for a stockholder proposal to be
included in the Company's proxy materials for the 2001 annual meeting of
stockholders, it must be received by the Secretary of the Company no later than
November 20, 2000. It is urged that any such proposal be sent by certified mail,
return receipt requested. If the date of the 2001 annual meeting of stockholders
is changed to a date more than 30 days earlier or later than May 10, 2001, the
Company will inform the stockholders in a timely fashion of such change and the
date by which proposals of stockholders must be received for inclusion in the
proxy materials.
OTHER MATTERS TO COME BEFORE
THE MEETING
If any matter not described herein should properly come before the Annual
Meeting, the persons named in the proxy will vote the shares represented by them
as they deem appropriate. At the date of this Proxy Statement, the Company knew
of no other matters which might be presented for stockholder action at the
Annual Meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE REPORTING
Based solely upon its review of Forms 3 and 4 received by it and written
representations from certain reporting persons that no Forms 5 were required for
those persons, the Company believes that during 1999 all filing requirements
applicable to its officers, directors and ten percent stockholders were complied
with.
14
OTHER INFORMATION
Consolidated financial statements for the Company are included in the Annual
Report for the fiscal year ended December 25, 1999 that accompanies this Proxy
Statement. These financial statements are also on file with the Securities and
Exchange Commission, 450 Fifth Avenue, N.W., Washington, D.C. 20549 and with the
New York Stock Exchange.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED FOR THE FISCAL
YEAR ENDED DECEMBER 25, 1999 (EXCLUDING EXHIBITS) WILL BE FURNISHED, WITHOUT
CHARGE, BY WRITING TO WILLIAM H. HENSLEY, SECRETARY, MUELLER INDUSTRIES, INC.,
AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS (8285 TOURNAMENT DRIVE, SUITE 150,
MEMPHIS, TENNESSEE 38125).
By order of the Board of Directors
William H. Hensley
Corporate Secretary
March 17, 2000
15
MUELLER INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 12, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
/ / I plan to attend the meeting.
1. Election of Directors. / / FOR all nominees / / WITHHOLD AUTHORITY
(except as indicated to the contrary) to vote for all nominees.
Nominees: Robert B. Hodes, Harvey L. Karp, G.E. Manolovici, William D. O'Hagan and Robert J.
Pasquarelli.
(Instruction: To withhold authority to vote for any individual nominee, write that nominee's name
in the space provided below.)
--------------------------------------------------------------------------------------------------
2. Approve the appointment of Ernst & Young LLP as auditors
of the Company. / / FOR / / AGAINST / / ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE SIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR
ALL NOMINEES" IN ITEM 1 AND "FOR" IN ITEM 2.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(CONTINUED ON REVERSE SIDE)
MUELLER INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 12, 2000
The undersigned hereby appoints William H. Hensley and Kent A. McKee, and
each of them, Proxies, with full power of substitution in each, to represent and
to vote, as designated, all shares of Common Stock of Mueller Industries, Inc.,
that the undersigned is entitled to vote at the Annual Meeting of Stockholders
to be held on May 12, 2000, and at all adjournments thereof, upon and in respect
of the matters set forth on the reverse side hereof, and in their discretion
upon any other matter that may properly come before said meeting.
Dated: _____________________, 2000
----------------------------------
Signature
----------------------------------
Signature if held jointly
Please sign exactly as your name
appears to the left. When shares
are held jointly, each shareholder
named should sign. When signing as
attorney, executor, administrator,
trustee or guardian, you should so
indicate when signing. If a
corporation, please sign in full
corporate name by duly authorized
officer. If a partnership, please
sign in partnership name by
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