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 Section 240.14a-11(c) or Section 240.14a-12 LAWSON PRODUCTS, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ 2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ 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): ------------------------------------------------------------------------ 4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ 5) Total fee paid: ------------------------------------------------------------------------ / / 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 number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: ------------------------------------------------------------------------ 2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ 3) Filing Party: ------------------------------------------------------------------------ 4) Date Filed: ------------------------------------------------------------------------ [LOGO] LAWSON PRODUCTS, INC. 1666 EAST TOUHY AVENUE DES PLAINES, ILLINOIS 60018 - - -------------------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS May 9, 1995 - - ------------------------ TO THE STOCKHOLDERS: You are cordially invited to attend the annual meeting of stockholders of Lawson Products, Inc., which will be held at the offices of the Company, 1666 East Touhy Avenue, Des Plaines, Illinois, on Tuesday, May 9, 1995, at 10:00 A.M. (Local Time) for the following purposes: (1) To elect two directors to serve three years. (2) To transact such other business as may properly come before the meeting or any adjournment thereof. The Board of Directors has fixed the close of business on March 28, 1995, as the record date for the determination of stockholders entitled to notice of and to vote at the meeting. Accompanying this notice is a form of proxy, a Proxy Statement and a copy of the Company's 1994 Annual Report. EVEN IF YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED SO THAT YOUR SHARES MAY BE VOTED AT THE MEETING. IF YOU EXECUTE A PROXY, YOU STILL MAY ATTEND THE MEETING AND VOTE IN PERSON. By Order of the Board of Directors Robert J. Washlow SECRETARY Des Plaines, Illinois April 7, 1995 [LOGO] LAWSON PRODUCTS, INC. 1666 EAST TOUHY AVENUE DES PLAINES, ILLINOIS 60018 - - -------------------------- PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS May 9, 1995 - - ------------------------ This Proxy Statement is being sent to stockholders on or about April 7, 1995, in connection with the solicitation of the accompanying proxy by the Board of Directors of the Company. Only stockholders of record at the close of business on March 28, 1995, are entitled to notice of and to vote at the meeting. The Company has retained Morrow & Co., Inc., a firm specializing in the solicitation of proxies, to assist in the solicitation at a fee estimated to be $3,500 plus expenses. Officers of the Company may make additional solicitations in person or by telephone. Expenses incurred in the solicitation of proxies will be borne by the Company. If the accompanying form of proxy is executed and returned in time, the shares represented thereby will be voted, but the proxy may be revoked at any time prior to its exercise by execution of a later dated proxy or by voting in person at the annual meeting. As of March 28, 1995, the Company had outstanding 12,351,314 shares of Common Stock and such shares are the only shares entitled to vote at the annual meeting. Each holder of Common Stock is entitled to one vote per share on all matters to come before the meeting. ELECTION OF DIRECTORS The By-Laws of the Company provide that the Board of Directors shall consist of such number of members, between five and nine, as the Board of Directors determines from time to time. The size of the Board is currently set at nine members. However, Thomas W. Smith has advised the Company that he is retiring as a director effective May 9, 1995. As a result of Mr. Smith's retirement, the Board of Directors amended the Company's By-Laws, effective as of May 9, 1995, by reducing the number of directors from nine to eight. The Board is divided into three classes, with one class being elected each year for a three-year term. At the meeting, two directors are to be elected to serve until 1998. Stockholders are entitled to cumulative voting in the election of directors. Under cumulative voting, each stockholder is entitled to that number of votes equal to the number of directors to be elected, multiplied by the number of shares he owns, and he may cast his votes for one nominee or distribute them in any manner he chooses among any number of nominees. Unless otherwise indicated on the proxy card, votes may, in the discretion of the proxies, be equally or unequally allocated among the nominees named below. Directors will be elected by a plurality of the votes cast at the meeting by the holders of shares represented in person or by proxy. Thus, assuming a quorum is present, the two persons receiving the greatest number of votes will be elected as directors and votes that are withheld will have no effect. For purposes of the meeting, a quorum means a majority of the outstanding shares. In determining whether a quorum exists, all shares represented in person or by proxy will be counted. It is intended that the named proxies will vote in favor of the election as directors of the nominees listed below, except as otherwise indicated on the proxy form. If any nominee should become unavailable for election as a director (which is not contemplated), the proxies will have discretionary authority to vote for a substitute. In the absence of a specific direction from the shareholders, proxies will be voted for the election of all named director nominees. The following information has been furnished by the respective nominees and continuing directors: - - --------- - - - The Executive Committee, the members of which are Sidney L. Port, Bernard Kalish and Peter G. Smith, has all of the authority of the Board of Directors between Board meetings, except to declare a dividend, authorize the issuance of stock, amend the By-Laws or take action relating to certain fundamental corporate changes. - - - The Audit Committee, the members of which are James T. Brophy, Robert G. Rettig, Ronald B. Port, M.D. and Thomas W. Smith, reviews the scope and results of the audit by the Company's independent auditors and reviews the Company's procedures for monitoring internal accounting controls. - - - The Compensation Committee, the members of which are James T. Brophy, Robert G. Rettig and Thomas W. Smith, makes all determinations with respect to the compensation of the Chairman of the Board and establishes general compensation policies with respect to all other executive officers of the Company. - - - The Nominating Committee, the members of which are James T. Brophy, Robert G. Rettig and Thomas W. Smith, reviews and recommends potential directors to the Board of Directors. - - - Because of his substantial stockholdings, Sidney L. Port may be deemed to be a control person of the Company. See "Securities Beneficially Owned by Principal Stockholders and Management." - - - Ronald B. Port, M.D. is the son of Sidney L. Port. - - - Each nominee and continuing director has held the indicated position, or an executive position with the same employer, for at least the past five years. 2
YEAR FIRST ELECTED NAME AGE PRINCIPAL OCCUPATION DIRECTOR - - --------------------------------- --- ------------------------------------------------------------- ---------- NOMINEES TO BE ELECTED TO SERVE UNTIL 1998 Bernard Kalish................... 57 Chairman of the Board and Chief Executive Officer of the 1983 Company Sidney L. Port................... 84 Chairman of the Executive Committee of the Company 1953 DIRECTORS WHOSE TERMS EXPIRE IN 1997 James T. Brophy.................. 67 Private Investor 1971 Louis L. Carrol.................. 72 Retired Senior Executive Vice President -- Corporate Sales 1986 and Development of the Company Jerome Shaffer................... 67 Vice President and Treasurer of the Company 1989 DIRECTORS WHOSE TERMS EXPIRE IN 1996 Ronald B. Port, M.D.............. 54 Physician 1984 Robert G. Rettig................. 65 Consultant 1989 Peter G. Smith................... 56 President and Chief Operating Officer of the Company 1985 In 1994, the Board of Directors held four meetings, the Compensation Committee held two meetings, the Audit Committee held one meeting and the Nominating Committee did not meet. During 1994, each director attended at least 75% of the aggregate of the number of meetings of the Board and the respective committees on which he served. The Executive Committee did not meet, as matters typically dealt with by this Committee were considered by the full Board of Directors. Directors who are not employees of the Company receive directors' fees of $12,000 annually. SECURITIES BENEFICIALLY OWNED BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT Set forth below, as of March 1, 1995 (unless otherwise indicated), are the beneficial holdings of: each person known by the Company to own beneficially more than 5% of the outstanding shares of Common Stock of the Company, each director, the executive officers listed on the Summary Compensation Table below, and all executive officers and directors as a group. 3
SOLE SHARED PERCENT VOTING OR VOTING OR OF CLASS AT DISPOSITIVE DISPOSITIVE MARCH 1, NAME POWER(1)(2) POWER 1995 - - -------------------------------------------------------------------- ----------- ----------- --------------- Sidney L. Port...................................................... 3,604,532 -- 29.0% 1040 Lake Shore Drive Chicago, Illinois Bettie (Mrs. Sidney L.) Port........................................ 1,421,802 -- 11.4% 1040 Lake Shore Drive Chicago, Illinois Hugh Allen.......................................................... 4,750 -- * James T. Brophy..................................................... 1,150 -- * Louis L. Carrol..................................................... 6,000 -- * Bernard Kalish...................................................... 11,600 -- * Ronald B. Port, M.D................................................. 15,915 -- * Robert G. Rettig.................................................... 500 -- * Jerome Shaffer...................................................... 18,333 2,530 * Peter G. Smith...................................................... 8,550 10,511 * Thomas W. Smith..................................................... -- 30,000 * All executive officers and directors as a group (13 persons)...................................................... 3,686,123 45,907 30.0% - - --------- * Less than 1%. (1) Does not include certain shares held by wives and/or minor children (or trusts for their benefit) in the case of Mr. Brophy (725 shares), Mr. Carrol (1,400 shares), Mr. Kalish (11,030 shares), Dr. Port (67,215 shares), Mr. Shaffer (725 shares) and all executive officers and directors as a group (81,195 shares). (2) Stockholdings shown include shares issuable upon the exercise of stock options exercisable within 60 days by Mr. Allen (2,500 shares), Mr. Carrol (5,000 shares), Mr. Kalish (10,000 shares), Mr. Shaffer (5,000 shares) Mr. Peter Smith (7,750 shares) and all executive officers and directors as a group (38,000 shares). REMUNERATION OF EXECUTIVE OFFICERS SUMMARY COMPENSATION TABLE The table below sets forth certain information concerning the annual and long-term compensation for services in all capacities to the Company for the fiscal years ended December 31, 1994, 1993 and 1992, of those persons who were, at December 31, 1994 (i) the chief executive officer, and (ii) the other four most highly compensated executive officers of the Company (the "Named Officers"). 4
LONG-TERM COMPENSATION ANNUAL ------------ COMPENSATION SECURITIES --------------- UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(1) COMPENSATION(2) - - ----------------------------------------------------------------------------------------------------- Bernard Kalish 1994 $309,141 -- -- $ 14,250 CHAIRMAN OF THE BOARD AND 1993 290,399 -- -- 20,636 CHIEF EXECUTIVE OFFICER 1992 266,070 -- -- 16,592 - - ----------------------------------------------------------------------------------------------------- 1994 273,215 -- -- 14,250 Sidney L. Port 1993 252,825 -- -- 20,636 CHAIRMAN OF THE EXECUTIVE COMMITTEE 1992 250,000 -- -- 16,592 - - ----------------------------------------------------------------------------------------------------- 1994 259,864 -- -- 14,250 Peter G. Smith 1993 238,838 -- -- 20,422 PRESIDENT AND CHIEF OPERATING OFFICER 1992 229,362 -- -- 16,496 - - ----------------------------------------------------------------------------------------------------- Hugh Allen 1994 192,321 -- -- 14,250 EXECUTIVE VICE-PRESIDENT -- 1993 186,543 -- -- 12,992 SALES AND MARKETING 1992 177,537 -- -- 9,940 - - ----------------------------------------------------------------------------------------------------- Jerome Shaffer 1994 186,956 -- -- 14,250 VICE PRESIDENT AND 1993 177,312 -- -- 14,372 TREASURER 1992 162,070 -- -- 10,817 - - ----------------------------------------------------------------------------------------------------- (1) The Company has not issued stock appreciation rights or restricted stock awards to the Named Officers and does not have any "long-term incentive plans" as that term is defined in the applicable rules. (2) These amounts represent the Company's contribution as accrued to the Company's Profit Sharing Plan. No options were granted by the Company to the Named Officers in the fiscal year ended December 31, 1994. The following table summarizes option exercises during such fiscal year by the Named Officers and the value of the options held by such persons at the end of such fiscal year. AGGREGATE OF OPTIONS EXERCISED IN 1994 AND OPTION VALUES AT DECEMBER 31, 1994 EMPLOYMENT CONTRACTS Mr. Kalish is employed under a contract, expiring in 1996, pursuant to which he will receive a minimum salary of $309,954 for 1995. The contract provides for annual increases of not less than 5% and for salary continuation during incapacity and for two years after death. Under the terms of a salary continuation agreement, in the event of Mr. Port's death while employed by the Company, the Company will continue his salary for two years thereafter. Mr. Peter Smith is employed under a contract pursuant to which he will receive a minimum salary of $262,836 for 1995. Upon the expiration of two years prior written notice, the contract is cancellable by either party. The contract provides for salary increases from time to time and salary continuation during incapacity and for one year after death. Mr. Allen is employed under a contract pursuant to which he will receive a minimum salary of $191,000 for 1995. Upon the expiration of two years prior written notice, the contract is cancellable by either party. The contract provides for salary increases from time to time and salary continuation during incapacity and for one year after death. Mr. Shaffer is employed under a contract pursuant to which he will receive a minimum salary of $192,938 for 1995. Upon the expiration of two years prior written notice, the contract is cancellable by either party. The contract provides for salary increases from time to time and salary continuation during incapacity and for one year after death. 5
VALUE OF UNEXERCISED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT DECEMBER OPTIONS AT 31, 1994 DECEMBER 31, 1994(1) --------------------- -------------------- SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/ NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE - - --------------------------------- --------------- -------------- --------------------- -------------------- Bernard Kalish................... 775 $ 10,416 10,000/0 $ 0/0 Peter G. Smith................... -- -- 7,750/0 0/0 Hugh Allen....................... -- -- 2,500/0 0/0 Jerome Shaffer................... 2,800 35,532 5,000/0 0/0 - - --------- (1) Based on the closing price of the Company's Common Stock as reported on the NASDAQ National Market System on December 31, 1994. REPORT OF THE COMPENSATION COMMITTEE AS TO COMPENSATION MATTERS OVERVIEW The objectives of the Compensation Committee in establishing executive compensation are to provide compensation that will both attract and retain superior talent and align the interests of the Company's executive officers with the financial success of the Company. The criteria used to determine the compensation of the Chief Executive Officer are also used in determining compensation for the other executive officers. EXECUTIVE OFFICER COMPENSATION PROGRAM The Company's executive officer compensation program is comprised of base salary, long-term incentive compensation (in the form of stock options) and various benefits, including medical and profit sharing plans, generally available to employees of the Company. BASE SALARY. Base salary for the executive officers was set pursuant to employment agreements described elsewhere in this proxy statement. In setting these compensation levels, the Board of Directors considered a variety of factors, including competitive market levels, levels of responsibility as well as the unique abilities and individual experience and performance of each officer. In addition, certain of the employment agreements provide for discretionary increases in base salary. Generally, these salary increases are determined annually and correspond to increases in the consumer price index. STOCK OPTION PROGRAM. The Company's long-term incentive based compensation program is achieved principally through the Lawson Products, Inc. Incentive Stock Plan under which stock options (both nonqualified and incentive), stock appreciation rights, stock purchase agreements and stock awards may be issued to officers and key employees. The objectives of the Plan are to align executive and stockholder long-term interests by creating a link between executive compensation and stockholder return and to enable executives and other key employees to develop and maintain a long-term stock ownership position in the Company. Under the Company's plan, the Compensation Committee determines the identity of recipients and the amount of benefits to be received by each recipient. Generally, options are granted at an exercise price equal to the fair market value of the Company's common stock on the date of grant and have ten year terms. OTHER BENEFITS. The Company maintains a Profit Sharing Plan and Executive Deferral Plan and also provides a variety of other benefits that are generally available to Company employees. James T. Brophy Robert G. Rettig Thomas W. Smith 6 STOCK PRICE PERFORMANCE CHART Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on the Company's Common Stock against the cumulative total return of the Dow Jones Equity Market Index and the Dow Jones Industrial Diversified Index for the five prior fiscal years. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Assumes that the value of the investment in Lawson's Common Stock and each index was $100 on December 31, 1989 and that all dividends were reinvested. INDEPENDENT AUDITORS The Board of Directors has reappointed Ernst & Young LLP as independent auditors to audit the financial statements of the Company for 1995. Representatives of Ernst & Young LLP are expected to be present at the annual meeting and will be given the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. PROPOSALS OF SECURITY HOLDERS A stockholder proposal to be presented at the 1996 annual meeting must be received at the Company's executive offices, 1666 East Touhy Avenue, Des Plaines, Illinois 60018, by no later than December 7, 1995, for evaluation as to inclusion in the Proxy Statement in connection with such meeting. 7
LAWSON PRODUCTS DOW JONES EQUITY MARKET DOW JONES INDUSTRIAL 1989 100.00 100.00 100.00 1990 130.69 96.07 92.95 1991 119.93 127.24 115.09 1992 117.15 138.19 133.93 1993 136.74 151.93 163.65 1994 124.93 153.10 150.10 OTHER MATTERS The Board of Directors knows of no other matters which may be presented for action at the meeting. However, if any other matter properly comes before the meeting, the persons named in the proxy form enclosed will vote in accordance with their judgment upon such matter. Stockholders are urged to execute and return promptly the enclosed form of proxy in the envelope provided. By Order of the Board of Directors Robert J. Washlow SECRETARY April 7, 1995 8 LAWSON PRODUCTS, INC. PROXY/VOTING INSTRUCTION CARD DES PLAINES, ILLINOIS - - ------------------------------------------------------------------------------- THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING ON MAY 9, 1995. The undersigned hereby makes, constitutes and appoints Sidney L. Port and Bernard Kalish, and each of them, proxies for the undersigned, with full power of substitution, to vote on behalf of the undersigned at the Annual Meeting of Stockholders of Lawson Products, Inc., to be held at the offices of the Company, 1666 East Touhy Avenue, Des Plaines, Illinois, on May 9, 1995, at 10:00 A.M. (Local Time), or any adjournment thereof. INSTRUCTION: Unless otherwise specified in the space provided below this proxy shall authorize the proxies named herein to cumulate all votes which the undersigned is entitled to cast at the annual meeting, and to allocate such votes, in their discretion, among one or more of the nominees listed on the opposite side of this proxy as such proxies shall determine. To specify a different method of cumulative voting, write "Culmulate For" and the number of Shares and the name(s) of the nominee(s) in the space provided below. - - -------------------------------------------------------------------------------- YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES (SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. (Continued and to be signed on other side) 5302 /X/ Please mark your vote(s) as in this example. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF NOMINEES LISTED. - - ------------------------------------------------------------------------------ The Board of Directors recommends a vote FOR Proposal 1. - - ------------------------------------------------------------------------------ For 1. Election of Directors / / Nominees: Bernard Kalish and Sidney L. Port Withheld as to all Nominees / / (Instruction:To withhold authority to vote for any individual nominee, mark the "FOR" box and write the name of each such nominee in the space provided below.) - - ----------------------------------------------------- 2. In their discretion on any other matter that may properly come before the meeting or any adjournment thereof. The undersigned hereby revokes any proxy heretofore given and confirms all that said proxies, or any of them, or any substitute or substitutes, may lawfully do or cause to be done by virtue hereof. (Owner's Signature-Sign exactly as name appears hereon.) __________________________________________________,DATE________________ , 1995 Note: Please date and sign as name appears hereon. If shares are held jointly or by two or more persons, each stockholder named should sign. Attorneys, executors, administrators, trustees, guardians and others signing in a representatve capacity should indicate the capacity in which they sign. If the signer is a corporation, please sign full corporate name by duly authorized officer. If a partnership, please sign in partnership name by authorized person.