SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Under Section 240.14a-11c or Section 240.14a-12
NACCO INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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 number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[LOGO] NACCO INDUSTRIES, INC.
5875 LANDERBROOK DRIVE
MAYFIELD HEIGHTS, OHIO 44124-4017
NOTICE OF ANNUAL MEETING
The Annual Meeting of stockholders of NACCO Industries, Inc. (the
"Company") will be held on Wednesday, May 8, 2002, at 9:00 A.M., at 5875
Landerbrook Drive, Mayfield Heights, Ohio, for the following purposes:
(1) To elect eleven directors for the ensuing year.
(2) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 15, 2002 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting or any adjournment thereof.
CHARLES A. BITTENBENDER
Secretary
March 28, 2002
THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2001 IS BEING
MAILED TO STOCKHOLDERS CONCURRENTLY HEREWITH. THE ANNUAL REPORT CONTAINS
FINANCIAL AND OTHER INFORMATION ABOUT THE COMPANY, BUT IS NOT INCORPORATED INTO
THE PROXY STATEMENT AND IS NOT DEEMED TO BE A PART OF THE PROXY SOLICITING
MATERIAL.
------------------------
PLEASE PROMPTLY FILL OUT, SIGN, DATE AND MAIL THE ENCLOSED FORM(S) OF PROXY
IF YOU DO NOT EXPECT TO BE PRESENT AT THE ANNUAL MEETING. IF YOU HOLD SHARES OF
BOTH CLASS A COMMON STOCK AND CLASS B COMMON STOCK, TWO FORMS OF PROXY ARE
ENCLOSED AND BOTH SHOULD BE FILLED OUT AND RETURNED. A SELF-ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
[LOGO] NACCO INDUSTRIES, INC.
5875 LANDERBROOK DRIVE
MAYFIELD HEIGHTS, OHIO 44124-4017
PROXY STATEMENT -- MARCH 28, 2002
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of NACCO Industries, Inc., a Delaware corporation (the
"Company"), of proxies to be used at the annual meeting of stockholders of the
Company to be held on May 8, 2002 (the "Annual Meeting"). This Proxy Statement
and the related form(s) of proxy are being mailed to stockholders commencing on
or about March 28, 2002.
If the enclosed form(s) of proxy are executed and returned, the shares
represented by them will be voted as directed on all matters properly coming
before the Annual Meeting for a vote. Proxies that are properly signed without
any indication of voting instructions will be voted for the election of each
director nominee and as recommended by the Board of Directors with regard to any
other matters or, if no recommendation is given, in their own discretion. The
proxies may be revoked at any time prior to their exercise by giving notice to
the Company in writing or by a later executed proxy. Attendance at the Annual
Meeting will not automatically revoke a proxy, but a stockholder attending the
Annual Meeting may request a ballot and vote in person, thereby revoking a
previously granted proxy.
Stockholders of record at the close of business on March 15, 2002 will be
entitled to notice of, and to vote at, the Annual Meeting. On that date, the
Company had outstanding and entitled to vote 6,560,427 shares of Class A Common
Stock, par value $1.00 per share ("Class A Common"), and 1,635,218 shares of
Class B Common Stock, par value $1.00 per share ("Class B Common"). Each share
of Class A Common is entitled to one vote for a nominee for each of the eleven
directorships to be filled and one vote on each other matter properly brought
before the Annual Meeting. Each share of Class B Common is entitled to ten votes
for each such nominee and ten votes on each other matter properly brought before
the Annual Meeting.
At the Annual Meeting, in accordance with Delaware law and the Company's
By-Laws, the inspectors of election appointed by the Board of Directors for the
Annual Meeting shall determine the presence of a quorum and shall tabulate the
results of stockholder voting. As provided by Delaware law and the Company's
By-Laws, the holders of a majority of the Company's stock, issued and
outstanding, and entitled to vote at the Annual Meeting and present in person or
by proxy at the Annual Meeting, shall constitute a quorum for such meeting. The
inspectors of election intend to treat properly executed proxies marked
"abstain" as "present" for purposes of determining whether a quorum has been
achieved at the Annual Meeting. Such inspectors shall also treat proxies held in
"street name" by brokers that are voted on at least one, but not voted on all,
of the proposals to come before the Annual Meeting ("broker non-votes") as
"present" for purposes of determining whether a quorum has been achieved at the
Annual Meeting.
Class A Common and Class B Common will vote as a single class on all
matters anticipated to be brought before the Annual Meeting. In accordance with
Delaware law, the eleven director nominees receiving the greatest number of
votes will be elected directors. In accordance with Delaware law and the
Company's By-Laws, the holders of a majority of the voting power of the
Company's stock which is present in person or by proxy, and which is actually
voted, shall decide any other proposal which is brought before the Annual
Meeting. As a result, abstentions in respect of any proposal and broker
non-votes will not be counted for purposes of determining whether such proposal
has received the requisite approval by the Company's stockholders.
In accordance with Delaware law and the Company's By-Laws, the Company may,
by a vote of the stockholders, in person or by proxy, adjourn the Annual Meeting
to a later date or dates, without changing the record date. If the Company were
to determine that an adjournment were desirable, the appointed proxies would use
the discretionary authority granted pursuant to the proxy cards to vote in favor
of such an adjournment.
2
BUSINESS TO BE TRANSACTED
ELECTION OF DIRECTORS
It is intended that shares represented by proxies in the enclosed form(s)
will be voted for the election of the nominees named in the following table to
serve as directors for a term of one year and until their successors are
elected, unless contrary instructions are received. All of the nominees listed
below presently serve as directors of the Company and were elected at the
Company's 2001 annual meeting of stockholders. If an unexpected occurrence
should make it necessary, in the judgment of the proxy holders, to substitute
some other person for any of the nominees, such shares will be voted for such
other person as the proxy holders may select.
PRINCIPAL OCCUPATION AND BUSINESS
EXPERIENCE DURING LAST FIVE YEARS AND DIRECTOR
NAME AGE OTHER DIRECTORSHIPS IN PUBLIC COMPANIES SINCE
---- --- --------------------------------------- --------
Owsley Brown II 59 Chairman and Chief Executive Officer of Brown-Forman 1993
Corporation (a diversified producer and marketer of
consumer products). Also director of Brown-Forman
Corporation.
Robert M. Gates 58 Educator, author and lecturer. From 1999 to 2001, 1993
Dean, George Bush School of Government and Public
Service, Texas A&M University. Former Director of
Central Intelligence for the United States. Former
Assistant to the President of the United States and
Deputy for National Security Affairs, National
Security Council. Also director of TRW Inc. and Parker
Drilling Company and trustee of Fidelity Funds.
Leon J. Hendrix, Jr. 60 Chairman of Remington Arms Company, Inc. (a 1995
manufacturer and marketer of sporting arms and
ammunition). Since prior to 1997 to 2000, Principal,
Clayton, Dubilier & Rice, Inc. (private investment
firm). Also director of Cambrex Corp., Keithley
Instruments, Inc., Remington Arms Company, Inc. and
Riverwood International Corp.
David H. Hoag 62 Retired Chairman and Chief Executive Officer of The 1999
LTV Corporation (an integrated steel producer). From
1998 to 1999, Chairman, and, during 1998, Chief
Executive Officer of The LTV Corporation, which filed
for Chapter 11 bankruptcy protection in December 2000.
From prior to 1997 to 1998, Chairman, President and
Chief Executive Officer of The LTV Corporation. Also
Chairman of the Federal Reserve Bank of Cleveland and
director of The Lubrizol Corporation, The Chubb
Corporation, PolyOne Corporation and Brush Engineered
Materials Inc.
Dennis W. LaBarre 59 Partner in the law firm of Jones, Day, Reavis & Pogue. 1982
Richard de J. Osborne 68 Retired Chairman and Chief Executive Officer of ASARCO 1998
Incorporated (a leading producer of non-ferrous
metals). From prior to 1997 to 1999, Chairman and
Chief Executive Officer of ASARCO Incorporated. From
prior to 1997 to 1998, President of ASARCO
Incorporated. Also Chairman (Non-executive) and a
director of Datawatch Corp. and a director of Goodrich
Corporation, Birmingham Steel Corporation and
Schering-Plough Corporation.
Alfred M. Rankin, Jr. 60 Chairman, President and Chief Executive Officer of the 1972
Company. Also director of Goodrich Corporation and The
Vanguard Group.
3
PRINCIPAL OCCUPATION AND BUSINESS
EXPERIENCE DURING LAST FIVE YEARS AND DIRECTOR
NAME AGE OTHER DIRECTORSHIPS IN PUBLIC COMPANIES SINCE
---- --- --------------------------------------- --------
Ian M. Ross 74 President Emeritus of AT&T Bell Laboratories (the 1995
research and development subsidiary of AT&T).
Britton T. Taplin 45 Principal, Western Skies Group, Inc. (a developer of 1992
medical office and healthcare-related facilities).
David F. Taplin 52 Self-employed (tree farming). 1997
John F. Turben 66 Chairman and Managing Partner of Kirtland Capital 1997
Corporation (private investment partnership). Also
director of PVC Container Corporation, Unifrax
Corporation and Instron Corporation.
BENEFICIAL OWNERSHIP OF CLASS A COMMON AND CLASS B COMMON
Set forth in the following table is the indicated information as of
December 31, 2001 (except as otherwise indicated) with respect to (1) each
person who is known to the Company to be the beneficial owner of more than five
percent of the Class A Common, (2) each person who is known to the Company to be
the beneficial owner of more than five percent of the Class B Common and (3) the
beneficial ownership of Class A Common and Class B Common by the directors, the
Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company and its subsidiaries during 2001 (the "Named
Executive Officers") and all executive officers and directors as a group.
Beneficial ownership of Class A Common and Class B Common has been determined
for this purpose in accordance with Rules 13d-3 and 13d-5 of the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (the
"Exchange Act"), which provide, among other things, that (a) a person is deemed
to be the beneficial owner of Class A Common or Class B Common if such person,
directly or indirectly, has or shares voting power or investment power with
respect to such stock or has the right to acquire such ownership within 60 days,
and (b) when two or more persons agree to act together for the purpose of
holding, voting or disposing of Class A Common or Class B Common, as the case
may be, the group formed thereby is deemed to be a person which has acquired
beneficial ownership of all Class A Common or Class B Common, as the case may
be, beneficially owned by each member of the group. Accordingly, the amounts
shown in the table do not purport to represent beneficial ownership for any
purpose other than compliance with SEC reporting requirements. Further,
beneficial ownership as determined in this manner does not necessarily bear on
the economic incidence of ownership of Class A Common or Class B Common.
4
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
SOLE SHARED
VOTING AND VOTING OR PERCENT
TITLE OF INVESTMENT INVESTMENT AGGREGATE OF CLASS
NAME CLASS POWER POWER AMOUNT (1)(2)
---- -------- ---------- ---------- --------- --------
Clara Taplin Rankin, et al. (3) Class B (3) (3) 1,542,757(3) 94.32%
c/o National City Bank
Corporate Trust Operations
P.O. Box 92301, Dept. 5352
Cleveland, OH 44193-0900
Clara Taplin Rankin Class A -- 752,295(4)(5) 752,295(4)(5) 11.47%
3151 Chagrin River Road Class B -- 479,371(3)(5)(6) 479,371(3)(5)(6) 29.31%
Chagrin Falls, OH 44022
Rankin Associates I, L.P., et al. (4) Class B (3)(6) (3)(6) 472,371(3)(6) 28.88%
Suite 300
5875 Landerbrook Drive
Mayfield Hts., OH 44124-4017
Rankin Associates II, L.P., et al. (5) Class A (4) (4) 738,295(4) 11.25%
Suite 300
5875 Landerbrook Drive
Mayfield Hts., OH 44124-4017
Thomas E. Taplin Class A 475,000 14,000(5) 489,000(5) 7.45%
950 South Cherry St. #506 Class B 310,000(3) 7,000(3)(5) 317,000(3)(5) 19.38%
Denver, CO 80246
Dimensional Fund Advisors Inc. (7) Class A 376,700(7) -- 376,700(7) 5.74%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Pzena Investment Management, LLC (8) Class A 344,875(8) -- 344,875(8) 5.26%
830 Third Avenue, 14th Floor
New York, NY 10022
Frank E. Taplin, Jr. Class A 314,550 14,000(5) 328,550(5) 5.01%
55 Armour Road Class B 284,728(3) 7,000(3)(5) 291,728(3)(5) 17.83%
Princeton, NJ 08540
FMR Corp. (9) Class A 600,844(9) -- 600,844(9) 9.16%
82 Devonshire Street
Boston, Massachusetts 02109
Owsley Brown II Class A 2,936 1,000(10) 4,025(10)(11) --
Class B -- -- -- --
Robert M. Gates Class A 2,056 -- 2,145(11) --
Class B -- -- -- --
Leon J. Hendrix, Jr. Class A 5,033 -- 5,317(11) --
Class B -- -- -- --
David H. Hoag Class A 956 -- 1,044(11) --
Class B -- -- -- --
Dennis W. LaBarre Class A 2,869 -- 2,958(11) --
Class B 100 -- 100 --
Richard de J. Osborne Class A 839 200 1,128(11) --
Class B -- -- -- --
Alfred M. Rankin, Jr. Class A 177,107 912,671(4)(10) 1,089,778(4)(10) 16.61%
Class B -- 478,427(3)(6)(10) 478,427(3)(6)(10) 29.25%
Ian M. Ross Class A 1,995 -- 2,084(11) --
Class B -- -- -- --
Britton T. Taplin Class A 8,824 -- 8,913(11) 0.14%
Class B 27,495(3) -- 27,495(3) 1.68%
David F. Taplin Class A 20,455 14,270 34,814(11) 0.53%
Class B 13,550(3) -- 13,550(3) 0.83%
John F. Turben Class A 5,717 -- 5,828(11) --
Class B -- -- -- --
Reginald R. Eklund Class A -- 1,000 1,000 --
Class B -- -- -- --
Michael J. Morecroft Class A -- -- -- --
Class B -- -- -- --
Clifford R. Miercort Class A -- -- -- --
Class B -- 1,000 1,000 --
Frank G. Muller Class A 178 -- 178 --
Class B -- -- -- --
All executive officers and directors Class A 253,960 934,779(4)(10) 1,189,845(4)(10)(11) 18.14%
as a group (41 persons) Class B 43,020(3)(6) 479,427(3)(6)(10) 522,447(3)(6)(10) 31.94%
5
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(1) The shares included in note (11) were deemed to be outstanding as of
December 31, 2001 for purposes of calculating the percentage owned at such
date by such person or group designated by note (11) pursuant to Rule 13d-3
under the Exchange Act.
(2) Less than 0.1%, except as otherwise indicated.
(3) A Schedule 13D filed with the SEC with respect to Class B Common on March
29, 1990, as amended and amended and restated from time to time, most
recently on February 14, 2002 by Amendment No. 9 to the amended and
restated Schedule 13D, reported that the following individuals and
entities, together in certain cases with related revocable trusts and
custodianships: Clara Taplin Rankin, Alfred M. Rankin, Jr., Victoire G.
Rankin, Helen R. Butler, Clara R. Williams, Thomas T. Rankin, Matthew M.
Rankin, Claiborne R. Rankin, Chloe O. Rankin, Roger F. Rankin, Bruce T.
Rankin, Frank E. Taplin, Jr., Margaret E. Taplin, Martha S. Kelly, Susan
Sichel, Jennifer T. Jerome, Caroline T. Ruschell, David F. Taplin, Thomas
E. Taplin, Beatrice B. Taplin, Thomas E. Taplin, Jr., Theodore D. Taplin,
Britton T. Taplin, Frank F. Taplin, Alison A. Rankin, Corbin K. Rankin,
J.C. Butler, Jr., Chloe R. Seelbach, James T. Rankin, Claiborne R. Rankin,
Jr., David B. Williams, Scott W. Seelbach, Rankin Associates I, L.P. (the
"Partnership"), Rankin Associates II, L.P. ("Associates"), Rankin
Management, Inc. ("RMI") and National City Bank, as trustee of certain
trusts for the benefit of certain individuals named above, their family
members and others (collectively, together with such individuals, revocable
trusts and custodianships, the "Signatories"), are parties with the Company
and National City Bank, (Cleveland, Ohio)(successor to First Chicago Trust
Company of New York, engaged in a joint venture known as Equiserve LP), as
depository, to a Stockholders' Agreement, dated as of March 15, 1990, as
amended, covering the shares of Class B Common beneficially owned by each
of the Signatories (the "Stockholders' Agreement"). The Stockholders'
Agreement requires that each Signatory, prior to any conversion of such
Signatory's shares of Class B Common into Class A Common or prior to any
sale or transfer of Class B Common to any permitted transferee (under the
terms of the Class B Common) who has not become a Signatory, offer such
shares to all of the other Signatories on a pro-rata basis. A Signatory may
sell or transfer all shares not purchased under the right of first refusal
as long as they first are converted into Class A Common prior to their sale
or transfer. Accordingly, the Signatories may be deemed to have acquired
beneficial ownership of all of the Class B Common subject to the
Stockholders' Agreement, an aggregate of 1,542,757 shares, as a "group" as
defined under the Exchange Act. The shares subject to the Stockholders'
Agreement constitute 94.32% of the Class B Common outstanding on December
31, 2001, or 67.32% of the combined voting power of all Class A Common and
Class B Common outstanding on such date. Certain Signatories own Class A
Common, which is not subject to the Stockholders' Agreement. Under the
Stockholders' Agreement, the Company may, but is not obligated to, buy any
of the shares of Class B Common not purchased by the Signatories following
the trigger of the right of first refusal. The Stockholders' Agreement does
not restrict in any respect how a Signatory may vote such Signatory's
shares of Class B Common. The Class B Common shown in the foregoing table
as beneficially owned by named persons who are Signatories is subject to
the Stockholders' Agreement.
(4) A Schedule 13D filed with the SEC with respect to Class A Common on
February 18, 1998, and amended from time to time, most recently on January
10, 2002 by Amendment No. 7, reported that the following individuals and
entities: Clara Taplin Rankin, Alfred M. Rankin, Jr., Thomas T. Rankin,
Claiborne R. Rankin, Roger F. Rankin, Bruce T. Rankin, Matthew M. Rankin,
James T. Rankin, Alison A. Rankin, J.C. Butler, Jr., Victoire G. Rankin,
Corbin K. Rankin, Chloe O. Rankin, David B. Williams, Clara Rankin
Williams, Scott W. Seelbach, RMI and Associates (collectively, the "Class A
Parties" and all the Class A Parties except Associates, the "Class A
Partners"), may be deemed as a group to have acquired and to beneficially
own 738,295 shares of Class A Common, representing 11.25% of the
outstanding Class A Common as of December 31, 2001. Although Associates
holds the 738,295 shares of Class A Common, which were contributed by the
Class A Partners, it does not have any power to vote or to dispose of such
shares of Class A Common. RMI has the sole power to vote such shares and
shares the power to dispose of such shares with the other Class A Partners.
RMI exercises such powers by action of its board of directors, which acts
by majority vote and consists of Alfred M. Rankin,
6
Jr., Thomas T. Rankin, Claiborne R. Rankin and Roger F. Rankin, the
shareholders of RMI. Under the terms of the Limited Partnership Agreement
of Associates (the "Class A Partnership Agreement"), Associates may not
dispose of Class A Common without the consent of RMI and the approval of
the holders of more than 75% of all partnership interests in Associates.
The Shareholders' Agreement among the shareholders of RMI, the Articles of
Incorporation of RMI and the Class A Partnership Agreement restrict the
transfer of RMI shares and partnership interests in Associates by RMI's
shareholders and the Class A Partners and provide such persons with a right
of first refusal to acquire RMI shares or partnership interests in
Associates which an RMI shareholder or a Class A Partner desires to sell
and a call right to compel the sale of RMI shares or partnership interests
in Associates held by RMI shareholders or the Class A Partners who are not
members of a "Family Group," consisting of one of Clara Taplin Rankin's
sons, their spouses and their descendants. The Class A Common shown in the
foregoing table as beneficially owned by each of the Class A Partners
includes the shares of Class A Common that are subject to the Class A
Partnership Agreement.
(5) Clara Taplin Rankin, Frank E. Taplin, Jr. and Thomas E. Taplin are
co-settlors of a trust holding an aggregate of 42,000 shares of Class A
Common and 21,000 shares of Class B Common, in which each retains a
reversionary interest with respect to 14,000 of such shares of Class A
Common and 7,000 of such shares of Class B Common. The Class B Common held
by the foregoing trust is subject to the Stockholders' Agreement described
in note (3).
(6) A Schedule 13D filed with the SEC with respect to Class B Common on
November 25, 1996, and amended from time to time, most recently on March
27, 2002 by Amendment No. 4, reported that the following individuals and
entities: Clara Taplin Rankin, Alfred M. Rankin, Jr., Thomas T. Rankin,
Claiborne R. Rankin, Roger F. Rankin, Bruce T. Rankin and the Partnership
(collectively, the "Class B Parties" and all the Class B Parties, except
the Partnership, the "Class B Partners"), may be deemed as a group to have
acquired and to beneficially own 472,371 shares of Class B Common,
representing 28.88% of the outstanding Class B Common as of December 31,
2001. Although the Partnership holds the 472,371 shares of Class B Common,
which were contributed by the Class B Partners, it does not have any power
to vote or to dispose of such shares of Class B Common. Alfred M. Rankin,
Jr., Thomas T. Rankin, Claiborne R. Rankin and Roger F. Rankin, as trustees
and primary beneficiaries of trusts acting as general partners of the
Partnership, share the power to vote such shares of Class B Common. Voting
actions are determined by the general partners owning at least a majority
of the general partnership interests. Each of the Class B Partners, as
trustees and/or primary beneficiaries of trusts acting as general and
limited partners of the Partnership, share the power to dispose of such
shares with the other Class B Partners. Under the terms of the Second
Amended and Restated Limited Partnership Agreement of the Partnership (the
"Class B Partnership Agreement"), the Partnership may not dispose of Class
B Common or convert Class B Common into Class A Common without the consent
of general partners owning more than 75% of the general partnership
interests and the consent of the holders of more than 75% of all
Partnership interests. The Class B Partnership Agreement restricts the
transfer of Partnership interests by its partners and provides the
Partnership and its partners with a right of first refusal to acquire
Partnership interests which a Class B Partner desires to sell and a
repurchase obligation to compel the sale of Partnership interests by Class
B Partners. The Class B Common beneficially owned by each of the Class B
Partners and the Partnership is also subject to the Stockholders' Agreement
described in note (3).
(7) A Schedule 13G/A filed with the SEC with respect to Class A Common on
February 12, 2002 reported that Dimensional Fund Advisors Inc.
("Dimensional") beneficially owns the shares of Class A Common reported
herein as a result of being an investment advisor that furnishes investment
advice to four investment companies and an investment manager to certain
other commingled group trusts and separate accounts (collectively, the
"Funds") which own the shares of Class A Common. As a result of its role as
investment advisor or manager, Dimensional possesses voting and/or
investment power over the shares of Class A Common owned by the Funds.
Dimensional disclaims beneficial ownership of all such shares.
(8) A Schedule 13G filed with the SEC with respect to Class A Common on
February 13, 2002 reported that Pzena Investment Management, LLC
beneficially owns the shares of Class A Common reported
7
herein as a result of being an investment advisor registered under Section
203 of the Investment Advisers Act. Clients of the filing investment
manager have the right to receive and the ultimate power to direct the
receipt of dividends from, or the proceeds of sale of, the securities
reported. No interest of any one of such clients relates to more than 5% of
the Class A Common.
(9) A Schedule 13G filed with the SEC with respect to the Class A Common on
February 14, 2002 by FMR Corp., a parent holding company, reported that
various of its affiliates have the right to receive or the power to direct
the receipt of dividends from, or the proceeds from the sale of, the Class
A Common. The interest of one person, Fidelity Management Trust Company, a
bank as defined in Section 3(a)(6) of the Exchange Act, in the Class A
Common, amounted to 352,840 shares, which constitutes 5.38% of the Class A
Common outstanding on December 31, 2001.
(10) Includes the following number of shares as to which certain directors and
executive officers disclaim beneficial ownership: (a) 908,620 shares of
Class A Common and 370,501 shares of Class B Common held by (i) members of
Mr. Rankin's family, (ii) charitable trusts, (iii) trusts for the benefit
of members of Mr. Rankin's family and (iv) to the extent in excess of Mr.
Rankin's pecuniary interest in such entities, the Partnership and
Associates; (b) 1,000 shares of Class A Common held by Mr. Brown's spouse;
and (c) with respect to all executive officers and directors as a group,
909,620 shares of Class A Common and 370,501 shares of Class B Common held
by family members and as described in (a) above.
(11) Includes the following shares which the directors have, or had, within 60
days after December 31, 2001, the right to acquire pursuant to the
Company's Non-Employee Directors' Equity Compensation Plan (the
"Non-Employee Directors' Plan") for payment of directors' fees for services
rendered between October 1, 2001 and December 31, 2001: Mr. Brown, 89
shares of Class A Common; Mr. Gates, 89 shares of Class A Common; Mr.
Hendrix, 284 shares of Class A Common; Mr. Hoag, 88 shares of Class A
Common; Mr. LaBarre, 89 shares of Class A Common; Mr. Osborne, 89 shares of
Class A Common; Dr. Ross, 89 shares of Class A Common; Mr. Britton T.
Taplin, 89 shares of Class A Common; Mr. David F. Taplin, 89 shares of
Class A Common; and Mr. Turben, 111 shares of Class A Common; and all
executive officers and directors as a group, 1,106 shares of Class A
Common.
Frank E. Taplin, Jr. and Thomas E. Taplin are brothers, and Clara Taplin
Rankin is their sister. Britton T. Taplin is the son of Thomas E. Taplin, and
David F. Taplin is the son of Frank E. Taplin, Jr. Clara Taplin Rankin is the
mother of Alfred M. Rankin, Jr., and J.C. Butler, Jr., an executive officer of
the Company, is the son-in-law of Alfred M. Rankin, Jr. The combined beneficial
ownership of such persons shown in the foregoing table (including shares as to
which such persons had the right to acquire beneficial ownership within 60 days
after December 31, 2001 pursuant to the Non-Employee Directors' Plan) equals
1,973,530 shares or 30.08% of Class A Common and 1,135,200 shares or 69.40% of
Class B Common outstanding on December 31, 2001 (including shares deemed to be
outstanding for purposes of calculating the percentage owned pursuant to Rule
13d-3 under the Exchange Act). The combined beneficial ownership of all
directors of the Company (including shares as to which the directors had the
right to acquire beneficial ownership within 60 days after December 31, 2001),
together with Clara Taplin Rankin, Frank E. Taplin, Jr., Thomas E. Taplin and
all of the executive officers of the Company whose beneficial ownership of Class
A Common and Class B Common must be disclosed in the foregoing table in
accordance with Rule 13d-3 under the Exchange Act, equals 2,021,395 shares or
30.81% of Class A Common and 1,138,175 shares or 69.58% of Class B Common
outstanding on December 31, 2001 (including shares deemed to be outstanding for
purposes of calculating the percentage owned pursuant to Rule 13d-3 under the
Exchange Act). Such shares of Class A Common and Class B Common together
represent 58.48% of the combined voting power of all Class A Common and Class B
Common outstanding on such date (including shares deemed to be outstanding for
purposes of calculating the percentage owned pursuant to Rule 13d-3 under the
Exchange Act).
There exists no arrangement or understanding between any director and any
other person pursuant to which such director was elected. Each director and
executive officer serves until his successor is elected and qualified.
8
DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors has an Audit Review Committee and a Nominating,
Organization and Compensation Committee (the "Nominating and Compensation
Committee"). During 2001, the members of the Audit Review Committee were Robert
M. Gates (Chairman), Leon J. Hendrix, Jr., David H. Hoag, Richard de J. Osborne
and Britton T. Taplin, and the members of the Nominating and Compensation
Committee were Robert M. Gates, David H. Hoag, Richard de J. Osborne, Ian M.
Ross (Chairman) and John F. Turben. The other standing committees of the Board
of Directors are the Executive Committee, which during 2001 was comprised of
Robert M. Gates, Dennis W. LaBarre, Alfred M. Rankin, Jr. (Chairman), Ian M.
Ross and John F. Turben, and the Finance Committee, which during 2001 was
comprised of Leon J. Hendrix, Jr., Dennis W. LaBarre, Alfred M. Rankin, Jr.,
Britton T. Taplin, David F. Taplin and John F. Turben (Chairman).
The Audit Review Committee held five meetings in 2001. The Audit Review
Committee recommends to the Board of Directors the selection of the Company's
independent certified public accountants. The Audit Review Committee discusses
with the internal auditors and the independent certified public accountants the
overall scope and specific plans for their respective audits. The Audit Review
Committee reviews audit and non-audit fees. The Audit Review Committee also
considers issues relating to auditor independence. The Audit Review Committee
meets regularly with the Company's internal auditors and independent certified
public accountants to discuss the results of their respective examinations,
their evaluations of the Company's internal controls, and the Company's
financial reporting.
The Nominating and Compensation Committee held three meetings in 2001. The
Nominating and Compensation Committee reviews executive compensation, fixes
compensation of the executive officers and incentive compensation, recommends
the adoption of and administers or monitors the administration of all benefit
plans, and has the authority to grant stock options. The Nominating and
Compensation Committee also reviews and recommends to the Board of Directors
criteria for membership to the Board of Directors, reviews and recommends to the
Board of Directors the optimum number and qualifications of directors believed
to be desirable, has established and monitors a system to receive suggestions
for nominees to directorships of the Company, and identifies and recommends to
the Board of Directors specific candidates for membership to the Board of
Directors. See "Submission of Stockholder Proposals."
The Finance Committee held three meetings in 2001. The Finance Committee
reviews the financing and risk management strategies of the Company and its
principal subsidiaries and makes recommendations to the Board of Directors on
all matters concerning finance.
The Executive Committee held no meetings in 2001. The Executive Committee
may exercise all of the powers of the Board of Directors in the management and
control of the business of the Company during the intervals between meetings of
the Board of Directors.
The Board of Directors held seven meetings in 2001. In 2001, all of the
incumbent directors attended at least 75 percent of the total meetings held by
the Board of Directors and by the committees on which they served during their
tenure.
REPORT OF THE AUDIT REVIEW COMMITTEE
The Board of Directors of the Company adopted a written Audit Review
Committee Charter in 2000. All members of the Audit Review Committee are
independent as defined in Section 303.01(B)(2)(a) and (3) of the New York Stock
Exchange's listing standards.
The Audit Review Committee has reviewed and discussed with the Company's
management and Arthur Andersen LLP, the Company's independent auditors for 2001,
the audited financial statements of the Company contained in the Company's
Annual Report to Stockholders for the year ended December 31, 2001. The Audit
Review Committee has also discussed with the Company's independent auditors the
matters required to be discussed pursuant to SAS No. 61 (Codification of
Statements on Auditing Standards, Communication with Audit Committees).
9
The Audit Review Committee has received and reviewed the written
disclosures and the letter from Arthur Andersen LLP required by Independence
Standards Board Standard No. 1 (titled, "Independence Discussions with Audit
Committees"), and has discussed with Arthur Andersen LLP its independence.
Based on the review and discussions referred to above, the Audit Review
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, filed with the U.S. Securities and Exchange
Commission.
ROBERT M. GATES, CHAIRMAN RICHARD DE J. OSBORNE
LEON J. HENDRIX, JR. BRITTON T. TAPLIN
DAVID H. HOAG
COMPENSATION OF DIRECTORS
During 2001, each director who was not an officer of the Company or its
subsidiaries received a retainer of $40,000 for the calendar year for service on
the Board of Directors and on subsidiary boards of directors. In addition, each
such director received $1,000 for attending each meeting of the Board of
Directors and each meeting of a committee thereof, as well as for each meeting
of a subsidiary board of directors or committee thereof on which such director
served. Such fees for attendance at board meetings could not exceed $2,000 per
day. In addition, the chairman of each committee of the Board of Directors and
the subsidiary boards of directors received $4,000 for the year for service as
committee chairman. Under the Non-Employee Directors' Plan, each director who
was not an officer of the Company or its subsidiaries received 50% of his annual
retainer ($20,000) in shares of Class A Common. These shares cannot be assigned,
pledged, hypothecated or otherwise transferred by the director, voluntarily or
involuntarily, other than (a) by will or the laws of descent and distribution,
(b) pursuant to a qualifying domestic relations order, or (c) to a trust for the
benefit of the director, or his spouse, children or grandchildren. The foregoing
restrictions on transfer lapse upon the earliest to occur of (i) the date which
is ten years after the last day of the calendar quarter for which such shares
were earned, (ii) the date of the death or permanent disability of the director,
(iii) five years (or earlier with the approval of the Board of Directors) from
the date of the retirement of the director from the Board of Directors of the
Company, and (iv) the date that a director is both retired from the Board of
Directors of the Company and has reached 70 years of age. In addition, each
director has the right under the Non-Employee Directors' Plan to receive shares
of Class A Common in lieu of cash for up to 100% of the balance of his annual
retainer, meeting attendance fees and any committee chairman's fee. These
voluntary shares are not subject to the foregoing restrictions.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the annual, long-term and all other
compensation for services in all capacities to the Company and its subsidiaries
of the Named Executive Officers of the Company and its principal subsidiaries,
NACCO Materials Handling Group, Inc. ("NMHG"), Hamilton Beach/Proctor-Silex,
Inc. ("Hamilton Beach/Proctor-Silex") and The North American Coal Corporation
("North American Coal").
10
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
PAYOUTS
ANNUAL COMPENSATION ------------
------------------------ LTIP ALL OTHER
FISCAL SALARY BONUS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)
--------------------------- ------ -------- -------- ------------ ------------
Alfred M. Rankin, Jr. 2001 $889,200(1) $176,778(2) -- $294,229(4)(5)
Chairman, President and 2000 $843,100(1) $503,566(2) $1,157,366(3) $527,771(4)(5)
Chief Executive Officer 1999 $838,400(1) $261,727(2) $ 828,008(3) $328,861(4)(5)
of the Company
Reginald R. Eklund 2001 $512,692(1) $ 57,733(6) -- $114,143(8)
President and Chief 2000 $494,305(1) $296,373(6) $1,947,811(7) $153,493(8)
Executive Officer of NMHG 1999 $470,016(1) $152,553(6) $ 759,850(7) $137,314(8)
Michael J. Morecroft 2001 $313,632(1)(9) $ 40,400(10) -- $ 40,156(11)
President and Chief 2000 $211,148(1)(9) $ 15,000(10) -- $ 30,772(11)
Executive Officer of 1999 $202,300(1)(9) $ 56,200(10) -- $ 46,460(11)
Hamilton Beach/Proctor-Silex
Clifford R. Miercort 2001 $405,138(1) $167,152(12) -- $ 27,599(14)
President and Chief 2000 $396,278(1) $177,600(12) -- $ 50,822(14)
Executive Officer of 1999 $378,865(1) $172,800(12) $1,210,540(13) $ 35,881(14)
North American Coal
Frank G. Muller 2001 $334,731(1) $ 29,100(15) -- $ 63,774(17)
Vice President of NMHG, 2000 $320,377(1) $152,350(15) $ 998,513(16) $ 84,297(17)
President of NMHG Americas 1999 $302,991(1) $ 94,681(15) $ 177,150(16) $ 77,952(17)
---------------
(1) Under current disclosure requirements of the SEC certain of the amounts
listed are being reported as "Salary," although the Company considers them
as payments of cash in lieu of perquisites, which are at competitive levels
as determined by the Company's Nominating and Compensation Committee. For
Mr. Rankin, the amounts listed for 2001, 2000 and 1999 include payments of
cash in lieu of perquisites of $84,200, $83,100 and $78,400, respectively.
For Mr. Eklund, the amounts listed for 2001, 2000 and 1999 include payments
of cash in lieu of perquisites of $53,292, $52,560 and $51,300,
respectively. For Dr. Morecroft, the amounts listed for 2001, 2000 and 1999
include payments of cash in lieu of perquisites of $27,614, $15,848 and
$15,400, respectively. For Mr. Miercort, the amounts listed for 2001, 2000
and 1999 include payments of cash in lieu of perquisites of $30,670,
$32,020 and $31,010, respectively. For Mr. Muller, the amounts listed for
2001, 2000 and 1999 include payments of cash in lieu of perquisites of
$29,100, $29,300 and $28,390, respectively.
(2) For Mr. Rankin, these amounts were paid in cash pursuant to the NACCO
Industries, Inc. Annual Incentive Compensation Plan (the "Short-Term Plan")
and the NACCO Industries, Inc. Supplemental Annual Incentive Compensation
Plan (the "Supplemental Short-Term Plan").
(3) For Mr. Rankin, there was no payout for 2001 under the NACCO Industries,
Inc. Executive Long-Term Incentive Compensation Plan (the "NACCO Long-Term
Plan"). The amounts listed for 2000 and 1999 were distributed in the form
of 15,617 and 7,451 shares of Class A Common and cash payments in the
amount of $539,979 and $289,874, respectively. The foregoing cash payments
are intended to be the approximate amounts required to be withheld by the
Company and paid to applicable federal, state and local income taxing
authorities based upon statutorily determined withholding rates.
(4) For Mr. Rankin, the amounts listed for 2001, 2000 and 1999 include $4,250,
$4,250 and $4,000, respectively, consisting of matching contributions by
the Company under the NACCO Materials Handling Group, Inc. Profit Sharing
Plan (the "NMHG Profit Sharing Plan"); and $30,569, $117,237 and $54,287,
respectively, consisting of amounts credited and interest under the NACCO
Industries, Inc. Unfunded Benefit Plan.
(5) For Mr. Rankin, the amounts listed for 2001, 2000 and 1999 include
$259,410, $406,284 and $270,574, respectively, consisting of amounts
credited and interest under The Retirement Benefit Plan for Alfred M.
Rankin, Jr.
11
(6) For Mr. Eklund, the amounts were paid in cash pursuant to the NACCO
Materials Handling Group, Inc. Annual Incentive Compensation Plan (the
"NMHG Short-Term Plan").
(7) For Mr. Eklund, the amount listed for 2000 represents the appreciation and
interest on the book value units awarded to Mr. Eklund in 1998, 1996, 1994
and 1993 under the NACCO Materials Handling Group, Inc. Long-Term Incentive
Compensation Plan (the "NMHG Long-Term Plan"), which was terminated in
2000. A portion of such amount was paid in cash and the remainder was
deferred into the NACCO Materials Handling Group, Inc. Unfunded Benefit
Plan (the "NMHG Unfunded Benefit Plan"). The amount listed for 1999
represents the appreciation on the book value appreciation units awarded to
Mr. Eklund in 1990 under the NMHG Long-Term Plan. A portion of such amount
was paid in cash and the remainder was deferred into the NMHG Unfunded
Benefit Plan.
(8) For Mr. Eklund, the amounts listed for 2001, 2000 and 1999 include $19,500,
$19,500 and $20,000, respectively, consisting of contributions by NMHG
under the NMHG Profit Sharing Plan; and $94,643, $133,993 and $117,314,
respectively, consisting of amounts credited and interest under the NMHG
Unfunded Benefit Plan.
(9) Prior to January 2001, Dr. Morecroft was Senior Vice President-Product
Development and Engineering of Hamilton Beach/Proctor-Silex. Effective
January 29, 2001, Dr. Morecroft became President and Chief Executive
Officer of Hamilton Beach/Proctor-Silex.
(10) For Dr. Morecroft, these amounts were paid in cash pursuant to the Hamilton
Beach/Proctor-Silex, Inc. Annual Incentive Compensation Plan.
(11) For Dr. Morecroft, the amounts listed for 2001, 2000 and 1999 include
$18,937, $19,161 and $23,125, respectively, consisting of contributions by
Hamilton Beach/Proctor-Silex under the Hamilton Beach/ Proctor-Silex
Employees' Retirement Savings Plan; and $21,219, $11,611 and $23,335,
respectively, consisting of amounts credited and interest under the
Hamilton Beach/Proctor-Silex, Inc. Unfunded Benefit Plan.
(12) For Mr. Miercort, these amounts were paid in cash pursuant to The North
American Coal Corporation Annual Incentive Compensation Plan.
(13) For Mr. Miercort, the amount listed for 1999 represents the amount in Mr.
Miercort's account under The North American Coal Corporation Value
Appreciation Plan (the "North American Coal Long-Term Plan"). A portion of
such amount was paid in cash and the remainder was deferred into The North
American Coal Deferred Compensation Plan for Management Employees (the
"North American Coal Deferred Compensation Plan").
(14) For Mr. Miercort, the amounts listed for 2001, 2000 and 1999 include
$8,500, $8,500 and $8,000, respectively, consisting of matching
contributions by North American Coal under The North American Coal
Retirement Savings Plan; and $19,099, $42,322 and $27,881, respectively,
consisting of amounts credited and interest under the North American Coal
Deferred Compensation Plan.
(15) For Mr. Muller, these amounts were paid in cash pursuant to the NMHG
Short-Term Plan.
(16) For Mr. Muller, the amount listed for 2000 represents the appreciation and
interest on the book value units awarded to Mr. Muller in 1998, 1994 and
1993 under the NMHG Long-Term Plan, which was terminated in 2000. A portion
of such amount was paid in cash and the remainder was deferred into the
NMHG Unfunded Benefit Plan. The amount listed for 1999 represents the
appreciation on the book value appreciation units awarded to Mr. Muller in
1990 under the NMHG Long-Term Plan and was deferred into the NMHG Unfunded
Benefit Plan.
(17) For Mr. Muller, the amounts listed for 2001, 2000 and 1999 include $19,500,
$19,500 and $20,000, respectively, consisting of contributions by NMHG
under the NMHG Profit Sharing Plan; and $44,274, $64,797 and $57,952,
respectively, consisting of amounts credited and interest under the NMHG
Unfunded Benefit Plan.
12
STOCK OPTION GRANTS
The Company did not grant any stock options under the Company's 1975 Stock
Option Plan or 1981 Stock Option Plan during the fiscal year ended December 31,
2001 to any person, including the Named Executive Officers. The Company has not
granted stock options since 1989 in the belief that the likely value realized is
unclear both in amount and in its relationship to performance. At December 31,
2001, there were no outstanding options to purchase shares of the Company's
Class A Common or Class B Common.
LONG-TERM INCENTIVE PLANS
The following table sets forth information concerning awards to the Named
Executive Officers during fiscal year 2001, and estimated payouts in the future,
under long-term incentive plans of the Company and its principal subsidiaries.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
NUMBER OF PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
SHARES, OR OTHER NON-STOCK PRICE-BASED PLANS
UNITS OR PERIOD UNTIL -----------------------------------
OTHER RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME ($ OR #) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- ------------ ------------ --------- ---------- ----------
Alfred M. Rankin, Jr.(1) $1,122,400 2 years $0 $1,122,400 $1,742,526
$1,122,400 5 years $0 $ 0 $ 643,977
Reginald R. Eklund(2) $ 466,300 7 years $0 $ 821,854 (2)
Michael J. Morecroft(3) 150,200 Units 10 years $0 $5,229,194 (3)
Clifford R. Miercort(4) $ 199,355 9 years $0 $ 199,355 (4)
Frank G. Muller (2) $ 189,150 7 years $0 $ 333,377 (2)
---------------
(1) Under the NACCO Long-Term Plan, participants, including Mr. Rankin, are
eligible for awards paid partly in shares of Class A Common and partly in
cash for performance against a target which is based upon the Company's
consolidated adjusted return on equity over multiple-year periods.
Effective January 1, 2001, participants were granted dollar-denominated
target awards. Final awards, if any, will be received in 2003 ("base period
awards") based upon the Company's consolidated adjusted return on equity
performance for the period from January 1, 2001 through December 31, 2002
against a pre-established target. Participants are also eligible to receive
a supplemental payout on such awards in 2006 ("consistent performance
awards") based upon the Company's consolidated adjusted return on equity
performance for the 5-year period from January 1, 2001 through December 31,
2005 against the same pre-established target. No consistent performance
award is payable if the Company's consolidated adjusted return on equity
performance for the relevant period is at or below target. The total amount
of the base period award and the consistent performance award paid to a
participant in any calendar year cannot exceed 200% of the base period
target award. 65% of all payouts are distributed in shares of Class A
Common, with the number of shares based upon the average closing price of
Class A Common on the New York Stock Exchange at the end of each week
during 2002 (in the case of base period awards) and 2005 (in the case of
consistent performance awards).
The shares of Class A Common issued as a portion of these awards under the
NACCO Long-Term Plan are fully vested but may not be transferred until the
earlier of (a) December 31, 2012, (b) the participant's death or
disability, or (c) five years after the participant's retirement. At any
time after three years after the end of the performance period, a
participant may also request that the Nominating and Compensation Committee
authorize the lapse of restrictions on up to 20% of shares issued under the
NACCO Long-Term Plan for the purchase of a principal residence or payments
of certain medical or educational expenses. Because the total value of a
final award is currently taxable as income to the participant, the balance
of the final award is paid in cash in an amount which is intended to be the
13
approximate amount required to be withheld by the Company and paid to
applicable federal, state and local income taxing authorities based upon
statutorily determined withholding rates.
(2) Effective as of January 1, 2000, Messrs. Eklund and Muller became
participants in the NMHG Senior Executive Long-Term Incentive Compensation
Plan (the "NMHG Executive Long-Term Plan"). Under the NMHG Executive
Long-Term Plan, participants, including Messrs. Eklund and Muller, are
eligible for awards for performance against a target which is based upon
NMHG's adjusted return on equity over two-year periods. Effective January
1, 2001, participants were granted dollar-denominated target awards.
Awards, if any, for the two-year performance period will be made in 2003
based upon NMHG's adjusted return on equity for the period from January 1,
2001 through December 31, 2002 against a pre-established target. The total
award for any period cannot exceed 150% of the target award. Under the NMHG
Executive Long-Term Plan, awards to participants are made in the form of
"book value units" which are subject to a payment restriction of five years
from the date of award. Such payment restriction shall automatically lapse
upon the participant's death, permanent disability or retirement, or in the
event of any other termination of employment with the approval of the NMHG
Nominating, Organization and Compensation Committee. Upon the lapse of the
payment restriction, the participant is entitled to receive a payment in
cash equal to (a) the book value of the units as of the end of the calendar
quarter coincident with or immediately preceding the date the payment
restriction lapses or (b) for participants who terminated employment for
reasons other than death, disability or retirement, the book value of the
units as of the end of the calendar quarter coincident with or immediately
preceding termination. At any time up to one year prior to the fifth
anniversary of the grant date of an award, a participant may elect to defer
the payout of the award under the plan for a period not to exceed ten years
from the grant date of the award and if the award is deferred for the
entire ten years the participant may thereafter elect to further defer
receipt of the award, in which case the deferred amount will be paid under
the NMHG Unfunded Benefit Plan. There is no minimum or maximum value for
final award payouts under the plan.
(3) Dr. Morecroft is a participant in the Hamilton Beach/Proctor-Silex, Inc.
Long-Term Incentive Compensation Plan (the "HB/PS Long-Term Plan"). Under
the HB/PS Long-Term Plan, participants are awarded "book value appreciation
units" which vest ten years from the date of award, or earlier in the event
of the participant's death, permanent disability or retirement, or in the
event of any other termination of employment with the approval of the
Hamilton Beach/Proctor-Silex Nominating, Organization and Compensation
Committee. At any time following the fifth anniversary of the date of an
award, a participant may also annually request that such Committee permit
the vesting of up to 20% of the number of book value appreciation units in
the event of a financial hardship or unforeseen financial emergency,
provided that such request may only apply to an aggregate of 40% of the
number of book value appreciation units originally granted in an award.
Upon vesting, the participant is entitled to receive a payment in cash
equal to the appreciation in the book value per unit from the base period
price per unit to the value of the book value unit at the end of the
calendar quarter immediately preceding the date of vesting, and vested book
value units as to which payment is made are canceled. There are no
threshold or maximum values for an award. Assuming a target adjusted return
on equity over ten years, Dr. Morecroft's 150,200 book value appreciation
units awarded effective January 29, 2001 would entitle him to a cash
payment on January 28, 2011 of $5,229,194. The actual payment to Dr.
Morecroft may be greater or less, depending upon whether Hamilton
Beach/Proctor-Silex's actual book value has increased or decreased as
compared to the target for book value growth over the period. Dr. Morecroft
was previously awarded 32,544 book value appreciation units effective on
December 31, 1992, which units will vest on December 30, 2002, 5,724 book
value appreciation units effective on December 31, 1993, which units will
vest on December 30, 2003, and 7,748 book value appreciation units
effective on January 1, 1994, which units will vest on December 31, 2003.
(4) Effective as of January 1, 2000, Mr. Miercort was awarded the right to
participate in The North American Coal Value Appreciation Plan for Years
2000 to 2009 (the "2000 to 2009 North American Coal Long-Term Plan"), which
replaced the North American Coal Long-Term Plan, at a rate equal to a
specified percentage of his salary range midpoint, as determined by the
North American Coal Nominating, Organization and Compensation Committee.
When the 2000 to 2009 North American Coal
14
Long-Term Plan was adopted, the North American Coal Nominating,
Organization and Compensation Committee set net income appreciation goals
that are based upon achieving underlying year-by-year targets for each year
during the ten-year term of the Plan. These goals are adjusted each year
for inflation and to take into account any "new projects" initiated in the
interim. Once a plan year is completed, the actual net income during that
plan year is measured against the adjusted net income goal for that plan
year to determine the annual net income appreciation of current and new
projects (the "Annual Factor"). Similarly, actual cumulative net income for
the term of the Plan to date is measured against the cumulative adjusted
net income goals to date to determine the cumulative net income
appreciation of current and new projects (the "Cumulative Factor") against
the ten-year target.
When the 2000 to 2009 North American Coal Long-Term Plan was adopted, the
North American Coal Nominating, Organization and Compensation Committee
also set a goal for the cumulative net income appreciation due to new
projects over the term of the Plan. At the end of each plan year, the
present value of expected cumulative net income appreciation of all new
projects initiated during that year is measured against the cumulative new
project goal to determine the net income appreciation due to the
acquisition of new projects (the "New Project Factor"). In addition, if it
is determined in any plan year (an "Adjustment Year") that a new project
has provided significantly less net income appreciation than originally
expected, then the amount of any prior award previously attributed to that
project as the result of a prior year's New Project Factor will reduce the
New Project Factor in the Adjustment Year (the "New Project Adjustment").
If the New Project Adjustment is large enough, it is possible for
participants to receive negative awards in a given year.
At the start of each year during the ten-year term of the 2000 to 2009
North American Coal Long-Term Plan, a target award is set for each
participant as a percentage of salary midpoint. The amount shown for Mr.
Miercort represents the target award which is based upon his salary range
midpoint for 2001. Following the end of the year, this target amount is
adjusted by the Annual Factor, the Cumulative Factor and the New Project
Factor. In addition, the New Project Adjustment is made, if applicable.
Target amounts as so adjusted are credited or debited to an account for the
benefit of the participant, which earns interest based upon the average
monthly rate of ten-year U.S. Treasury Bonds. There are no threshold or
maximum values for an award. All amounts in these accounts vest at the rate
of 20% each year, and become fully vested on December 31, 2004. Vested
amounts are payable in cash on the earlier of December 31, 2009, or the
participant's death, disability, retirement or other reasons within the
discretion of the North American Coal Nominating, Organization and
Compensation Committee. The participant may elect to defer receipt of all
or part of such amounts, in which case the deferred amount will be paid
under the North American Coal Deferred Compensation Plan. Earlier payments
of vested amounts may be permitted within the discretion of the North
American Coal Nominating, Organization and Compensation Committee in the
event of a financial hardship or unforeseen financial emergency.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Nominating and Compensation Committee of the Company's Board of
Directors and the Nominating, Organization and Compensation Committees of the
Company's subsidiary boards of directors (collectively, the "Compensation
Committee") have furnished the following report on executive compensation. The
members of the Nominating and Compensation Committee for 2001 were Robert M.
Gates, David H. Hoag, Richard de J. Osborne, Ian M. Ross (Chairman), and John F.
Turben. The members of the Nominating, Organization and Compensation Committees
of the Company's principal subsidiaries, NMHG, Hamilton Beach/Proctor-Silex and
North American Coal, consist of these individuals, as well as Dennis W. LaBarre
and Alfred M. Rankin, Jr. Messrs. LaBarre and Rankin are not members of the
Nominating and Compensation Committee of the Company, and their participation in
this report is limited to the portions of the report relating to the Company's
subsidiaries.
COMPENSATION POLICY
The guiding principle of the executive compensation program of the Company
and its subsidiaries in recent years has been the maintenance of a strong link
between an executive officer's compensation and
15
individual performance and the performance of the Company or the subsidiary for
which the executive officer has responsibility. Comprehensively defined target
total compensation is established for each executive officer position following
rigorous evaluation standards to ensure internal equity. Such total compensation
is targeted explicitly in dollar terms as the sum of base salary plus
perquisites, short-term incentives and long-term incentives. While the Company
offers opportunities for its executive officers to earn truly superior
compensation for outstanding results, this link includes significantly reduced
compensation for weak results.
In accordance with the foregoing philosophy, the Compensation Committee
approves a mix of base salaries and incentive plans for each executive officer
such that base salary levels are at levels appropriate to allow incentive plans
to serve as significant motivating factors. Base salary and incentive
compensation levels for each officer are determined by the Compensation
Committee, which considers recommendations made by the Company's independent
outside compensation consultant. The consultant bases its recommendations upon
an analysis of similar positions at a broad range of domestic industries, as
well as an understanding of the Company's philosophy, as summarized above.
Incentive-based compensation plans are designed to provide significant rewards
for achieving or surpassing annual operating and financial performance
objectives, as well as to align the compensation interests of executive officers
with the long-term interests of stockholders by basing a substantial portion of
the incentive compensation package upon adjusted return on equity performance
and book value appreciation rather than on cyclical movements in stock price.
Finally, in addition to providing certain other perquisites, target levels of
perquisites for executive officers are converted into fixed dollar amounts and
paid in cash, an approach which recognizes that perquisites are largely just
another form of compensation, albeit separate and distinct from salary and
incentive compensation.
In sum, the executive compensation program at the Company and its
subsidiaries is designed to reward executive officers with competitive total
compensation for achievement of specific corporate and individual goals, while
at the same time making them long-term stakeholders in the Company. In years
when the Company has lower financial results, payouts under the incentive
components of the Company's compensation plans will be lower. In years when the
Company has better financial results, payouts under the incentive components of
the Company's compensation plans will be greater. The Company believes that over
time the program will encourage executive officers to earn incentive pay
significantly greater than 100% of target by delivering outstanding managerial
performance.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended, a
public company is generally denied deductions for compensation paid to the chief
executive officer and the other four most highly compensated executive officers
to the extent that the compensation for any of such individuals exceeds one
million dollars for the taxable year. An exception to this general rule exists
for payments that are made for attainment of one or more performance goals
meeting certain criteria. In response to this law and the regulations
promulgated thereunder, the stockholders of the Company have approved the
Supplemental Short-Term Plan and the NACCO Long-Term Plan. Both plans were
designed so that, together with steps taken by the Compensation Committee in the
administration of the plans, payouts on awards made under the plans should not
count towards the one million dollar cap, which the law imposes for purposes of
federal income tax deductibility. While the Compensation Committee intends to
preserve the deductibility of compensation payable to the Company's executive
officers, deductibility will be only one among a number of factors considered in
determining appropriate levels or modes of compensation. The Company intends to
maintain the flexibility to compensate executive officers based upon an overall
determination of what it believes is in the best interests of the Company and
its stockholders.
EXECUTIVE COMPENSATION AND COMPANY PERFORMANCE
The three main elements of the Company's executive compensation
program -- base salary, short-term incentive compensation and long-term
incentive compensation -- are carefully reviewed by the Compensation Committee
in relation to the performance of the Company and its subsidiaries.
Base Salary. To assist the Compensation Committee in fixing base salary
levels which are at adequately competitive levels, an independent outside
consultant analyzes a survey of a broad group of domestic industrial
organizations from all segments of industry ranging in size from under $150
million to over $5 billion in annual
16
revenues. Organizations participate in the survey based upon their voluntary
submission of data to the independent consultant, as well as their ability to
pass the consultant's quality assurance controls. For 2001, participants
included 393 parent organizations and 566 independent operating units. Comparing
positions of similar scope and complexity, the consultant derives a median
salary level for each executive officer position at the Company and its
principal subsidiaries and provides that information to the Compensation
Committee. All information provided to the Compensation Committee is on an
industry-wide basis as opposed to a comparison with individual companies that
may compete with the Company and its principal subsidiaries. The Compensation
Committee uses the median, or salary midpoint ("Salary Midpoint"), for purposes
of determining the salary range for each executive officer. The Compensation
Committee then sets the base salary for each executive officer, which is within
the salary range and is dependent upon additional factors such as the executive
officer's performance.
Because the Compensation Committee uses Salary Midpoints based on studies
of domestic industrial organizations from all segments of industry, the Company
does not believe that there is a meaningful relationship between executive
salary levels of each subsidiary determined by the Compensation Committee and
the executive salary levels of the companies that make up the Russell 2000
Producer Durables Index. That index, which is used by the Company as the
published industry index for comparison to the Company's stock price
performance, was chosen because NMHG, which manufactures forklifts, is the
Company's largest subsidiary in terms of asset value and revenues.
Short-Term Incentive Compensation. At the beginning of 2001, the
Compensation Committee adopted target performance levels for return on total
capital employed for the Company (upon which awards under the Company's
Supplemental Short-Term Plan are based) and its subsidiaries, and various
performance criteria for the Company's subsidiaries such as net income, economic
value income, market share, sales development and support costs (depending on
the business unit) (upon which awards under the Company's Annual Incentive
Compensation Plan (the "Short-Term Plan") and the annual incentive compensation
plans of the Company's subsidiaries are based) for that year. The short-term
incentive plans for the Company and its subsidiaries essentially follow the same
basic pattern for award determination. Performance targets are established
within the Compensation Committee's discretion, and are generally based upon
management's recommendations as to the performance objectives of the particular
business for the year. Target awards for executive officers are established at
specified percentages of each individual's Salary Midpoint.
Final awards for each individual under the short-term incentive plans of
the Company and its subsidiaries are based on the individual's target award,
adjusted for performance by the business unit against the established targets,
and for all such plans except the Supplemental Short-Term Plan, for performance
by the individual against individual goals. The Compensation Committee, in its
discretion, may also increase or decrease awards under all such plans (except
for the Supplemental Short-Term Plan pursuant to which awards may be decreased,
but not increased), and may approve the payment of awards where business unit
performance would otherwise not meet the minimum criteria set for payment of
awards. In no event will short-term incentive payments exceed 150% of the target
amount.
The short-term annual incentive plans of the Company and its subsidiaries
provide target compensation of 5% to 75% of Salary Midpoint, depending on the
executive officer's position. Although it varies by business unit, target awards
generally are tied to the annual operating and financial targets for the
particular business unit, and in most cases, to longer-term objectives such as
long-term return on total capital employed performance targets for the business
unit.
Long-Term Incentive Compensation. For 2001, the long-term incentive
compensation plans for the Company and its subsidiaries, established at target
performance levels by the Compensation Committee, were designed to provide the
equivalent of 10% to 145% of Salary Midpoint (unless the amount is currently
taxable, in which case the targets are adjusted accordingly).
The long-term incentive compensation plan for the parent holding company
used the Company's consolidated adjusted return on equity as a measure of
incentive compensation. The consolidated adjusted return on equity target is
established by the Nominating and Compensation Committee, and is set at a level
believed to provide an appropriate measure of stockholder protection. In
general, each year participants are
17
granted dollar-denominated target base period awards based on performance
periods of two years and target consistent performance awards based on
performance periods of five years. Target awards are set based on a percentage
of each executive officer's Salary Midpoint, and are adjusted as of the end of
the base period based upon the Company's consolidated adjusted return on equity.
Consistent performance awards are intended to supplement the base period awards
granted to participants. No consistent performance award is payable if the
Company's consolidated adjusted return on equity performance for the relevant
period is at or below target.
Approximately 65% of all of the foregoing awards are distributed in shares
of Class A Common, the transfer of which is restricted for ten years, with the
number of shares awarded being based on the average closing price of Class A
Common on the New York Stock Exchange at the end of each week during the last
year of the appropriate performance period. An average price mechanism, rather
than year-end price or price on the date of payment, is used in determining the
number of shares to be awarded because the Nominating and Compensation Committee
believes that valuation at a single point in time in a year is likely to lead to
inappropriate results. The balance of the award is paid in cash and is intended
to be the approximate amount required to be withheld by the Company and paid to
applicable federal, state and local income taxing authorities based upon
statutorily determined withholding rates. The Nominating and Compensation
Committee has the power to adjust the percentage of awards that are paid in
stock.
The Nominating and Compensation Committee believes that these incentive
compensation plan awards promote a long-term focus on the profitability of the
Company because, although a recipient may receive a payout after the end of the
base period and each consistent performance period, the recipient is effectively
required to invest the noncash portion of the payout in the Company for up to
ten years. This is because the shares distributed may not be transferred for ten
years following the last day of the base period. During the restriction period,
the ultimate value of a payout is subject to change based upon the value of the
Class A Common. The value is enhanced as the value of the Class A Common
appreciates (or is decreased as the value of the Class A Common depreciates),
and thus such awards provide the recipient with an incentive over the ten-year
period to increase the value of the Company, to be reflected in the increased
value of the Class A Common.
The subsidiaries' long-term incentive compensation plans are linked to
future performance of the particular business unit. Similar to the parent
holding company's long-term incentive plan, each subsidiary plan establishes
target awards based on an executive officer's Salary Midpoint. NMHG's long-term
plans use NMHG's adjusted return on equity as a measure of incentive
compensation. The adjusted return on equity targets are established by the NMHG
Nominating, Organization and Compensation Committee and the target awards are
adjusted as of the end of the base period based upon NMHG's adjusted return on
equity performance. Participants are then awarded "book value units" which have
a five-year payment restriction from the date of the award. The actual amount
paid after the payment restriction lapses depends on the increase in the book
value of NMHG over the time period. Participants in the plan may elect to have
such amount deferred under the plan for up to ten years from the date of the
award, and if the award has been deferred through the full ten-year period, the
participant may further elect to have the award deferred and paid under the NMHG
Unfunded Benefit Plan. Under the Hamilton Beach/Proctor-Silex long-term
incentive compensation plan, the target award is set with the grant of "book
value appreciation units." The actual amount paid ten years after the date of
original grant depends upon the increase in the book value of Hamilton
Beach/Proctor-Silex over the time period. The North American Coal long-term
incentive compensation plan provides for awards of the right to participate in
the plan at a rate equal to a specified percentage of the individual's Salary
Midpoint. The target amount allocated to a participant is adjusted at the end of
each year for the actual net income during that plan year to determine the
annual net income appreciation of current and new mining projects against
previously set annual targets. Similarly, the target amount is adjusted at the
end of each year for the actual cumulative net income for the term of the plan
to date to determine the cumulative net income appreciation of current and new
projects against previously set targets. At the end of each plan year, the
target amount is also adjusted for the present value of expected cumulative net
income appreciation of all new projects initiated during that year to determine
the net income appreciation due to the acquisition of new projects against
previously set targets. Finally, if it is determined in any plan year that a new
project has provided significantly less net income appreciation than originally
expected, then the amount of any prior
18
award previously attributed to that project will reduce the new project
adjustment in that year. If the new project adjustment is large enough, it is
possible for participants to receive negative awards in a given year. Amounts
credited under the 2000 to 2009 North American Coal Long-Term Plan, which became
effective on January 1, 2000, vest at the rate of 20% for each year following
the effective date of the initial award, are fully vested on December 31, 2004,
and are paid in cash during the first calendar quarter of 2010 (or if so elected
by the participant, deferred and paid under the North American Coal Deferred
Compensation Plan).
The long-term incentive plans at the Company and its subsidiaries generally
require long-term commitment on the part of the Company's executive officers,
and cash withdrawals or stock sales are generally not permitted for a number of
years. Rather, the awarded amount is effectively invested in the enterprise for
an extended period to strengthen the tie between stockholders' and executive
officers' long-term interests. The ultimate compensation purpose of such
long-term incentive plans is to enable executive officers to accumulate capital
through future managerial performance, which contributes to the future success
of the Company's businesses.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation awarded to the Company's chief executive officer reflects
the basic philosophy generally discussed above that compensation for all
employees should be based on Company and individual performance.
The Nominating and Compensation Committee considered that, despite strong
results at its North American Coal and Kitchen Collection operating units in
2001, weak results at its NACCO Materials Handling Group and Hamilton
Beach/Proctor-Silex units resulted in disappointing consolidated financial
results in 2001. On a consolidated basis, the Company reported reduced sales and
operating profit in 2001, and an overall net loss for the year. The Committee
also considered, however, that a substantial portion of the Company's loss was
related to restructuring and downsizing activities at the Hamilton
Beach/Proctor-Silex and NACCO Materials Handling Group businesses, which
activities were largely completed in 2001. The Committee considered that these
programs were designed to put these businesses in the best possible position to
compete in the depressed market conditions expected at the beginning of 2002,
but also to prepare these businesses to respond promptly in the event that
market conditions improve. In addition, the Company continued its progress
towards completion of its strategic objectives including the maintenance of its
market share positions at NACCO Materials Handling Group and Hamilton
Beach/Proctor-Silex in 2001 despite unsatisfactory market conditions, and the
completion of the sale by NACCO Materials Handling Group of company-owned
forklift truck retail dealerships in Germany. Overall, the Committee believes
that Mr. Rankin continues to provide strong leadership as chief executive
officer of the Company.
After careful consideration of the overall results of the Company and its
subsidiaries, the implementation of various restructuring plans and continued
progress towards strategic goals in 2001, the Nominating and Compensation
Committee increased Mr. Rankin's base salary by three and one-tenth percent for
2002, although the Committee directed that the effective date of such increase
be postponed to July 1, 2002. With respect to incentive compensation, Mr.
Rankin's awards for 2001 under the Company's short-term and long-term incentive
compensation plans were determined in the same manner as for all other
participants in those plans. The Nominating and Compensation Committee
established Mr. Rankin's short-term incentive compensation participation for
2001 at 75% of his Salary Midpoint. The actual performance of the Company in
2001 in terms of return on total capital employed was below the minimum
threshold level of performance and the actual performance of certain
subsidiaries in terms of net income, economic value income, market share and
other strategic operating factors was predominately below targeted levels of
performance. The overall performance against target, and accordingly the annual
incentive awards to all plan participants, including Mr. Rankin, was 56.0% under
the Company's Short-Term Plan and 0.0% under the Company's Supplemental
Short-Term Plan, for an aggregate annual incentive compensation performance
against target of 33.6%.
The Company's 2001 financial results also have affected long-term incentive
compensation payouts for 2001. The long-term award targeted for Mr. Rankin in
2001 by the Nominating and Compensation
19
Committee was 160.0% of his Salary Midpoint (adjusted from 145.0% to take into
consideration the fact that the award is currently taxable to Mr. Rankin). The
consolidated adjusted return on equity under the NACCO Long-Term Plan for the
two-year period from January 1, 2000 through December 31, 2001 was below the
minimum threshold level of performance, and therefore there were no awards under
the Long-Term Plan for any of the plan participants, including Mr. Rankin. The
NACCO Long-Term Plan also provides for payment of "consistent performance
awards" when the Company's consolidated adjusted return on equity over five-year
periods exceeds a pre-established target. The consolidated adjusted return on
equity calculated pursuant to the 1997 NACCO Long-Term Plan for the five-year
period ending December 31, 2001 also was below the target established in 1997.
Accordingly, no plan participants, including Mr. Rankin, received consistent
performance awards.
ROBERT M. GATES JOHN F. TURBEN
DAVID H. HOAG DENNIS W. LABARRE*
RICHARD DE J. OSBORNE ALFRED M. RANKIN, JR.*
IAN M. ROSS, CHAIRMAN
* Messrs. LaBarre and Rankin are members of the compensation committees of the
Company's principal subsidiaries only.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Dennis W. LaBarre, a director of the Company and its principal subsidiaries
and a member of the compensation committees of the principal subsidiaries of the
Company (but not of the Company), is a partner in the law firm of Jones, Day,
Reavis & Pogue. Such firm provided legal services on behalf of the Company and
its principal subsidiaries during 2001 on a variety of matters, and it is
anticipated that such firm will provide such services in 2002.
Alfred M. Rankin, Jr., a director of the Company and its principal
subsidiaries and a member of the compensation committees of the principal
subsidiaries of the Company (but not of the Company), is chairman, president and
chief executive officer of the Company.
20
STOCK PRICE PERFORMANCE PRESENTATION
The following graphs compare the Company's total annual stock price
performance on Class A Common against the total stock price performance of the
Russell 2000 Index and, in the case of Graph 1, the Russell 2000 Producer
Durables Index for the periods indicated. The graphs present the year-end value
of a $100 investment, at the base point, for each index assuming the
reinvestment of dividends.
In accordance with the regulations promulgated by the SEC, Graph 1 compares
the stock price performance based upon the difference between the stock price at
the beginning of each fiscal year and the stock price at the end of the fiscal
year for the five-year period commencing January 1, 1997 (base point December
31, 1996) and ending December 31, 2001.
1997-2001 Stock Price Performance
Graph 1
[Performance Graph]
RUSSELL 2000 PRODUCER
NACCO RUSSELL 2000 DURABLES
----- ------------ ---------------------
1996 100 100 100
1997 202.67 122.23 128.83
1998 175.23 119.49 114.67
1999 107.16 145.01 157.44
2000 86.04 140.79 160.8
2001 113.46 144.49 169.77
Assumes $100 invested at December 31, 1996 with dividends reinvested
21
The Company believes that the measurement set forth in Graph 1, which is
based upon the stock price at a single point in time in each year, does not
adequately reflect the Company's stock price performance over the period because
of the numerous periodic fluctuations throughout the year in both the price of
the Company's stock and the level of the Russell 2000 Index. The Company,
therefore, has provided Graph 2, which compares the returns for the Company and
the Russell 2000 Index based upon the average of the daily closing stock price
(portrayed by the data presented in bold type) compared with the corresponding
information from Graph 1, which is based upon the change in the stock price for
each fiscal year for the same period as in Graph 1.
1997-2001 Stock Price Performance
Graph 2
[Performance Graph]
NACCO (12 MO. RUSSELL 2000 (12 MO.
NACCO MOVING AVERAGE) RUSSELL 2000 MOVING AVERAGE)
----- --------------- ------------ --------------------
1996 100 100 100 100
1997 202.67 138.01 122.23 110.35
1998 175.23 223.58 119.49 119.3
1999 107.16 139.16 145.01 123.3
2000 86.04 82.83 140.79 147.36
2001 113.46 125.65 144.49 137.69
Assumes $100 invested at December 31, 1996 with dividends reinvested
12-month moving average data is based upon the daily closing price
22
The Company believes that although sustained operating and financial
performance will ultimately be reflected in stock price, the five-year period
portrayed in the foregoing graphs is too brief a period over which to measure
the results of significant strategic activities, and that corporate financial
and strategic performance will be reflected in stock price only when measured
over the long term. Accordingly, the long-term incentive compensation plans of
the Company and its subsidiaries are linked to values reflecting long-term
operating and financial achievement, not short-term stock price fluctuations, as
further described in the "Report of the Compensation Committee on Executive
Compensation -- Executive Compensation and Company Performance -- Long-Term
Incentive Compensation" on pages 17 through 19. The Company, therefore, has
included Graph 3, which compares the 10-year returns for the Company and the
Russell 2000 Index based on the average stock price for the year computed using
the same method as in Graph 2 for the 10-year period commencing January 1, 1992
(base point December 31, 1991) and ending December 31, 2001.
1992-2001 Stock Price Performance
[PERFORMANCE GRAPH] Graph 3
RUSSELL 2000 (12 MO. MOVING
NACCO (12 MO. MOVING AVERAGE) AVERAGE)
----------------------------- ---------------------------
1991 100 100
1992 101.09 105.72
1993 105.21 127.78
1994 120.58 137.71
1995 124.73 156.72
1996 118.54 189.56
1997 165.88 227.05
1998 268.73 245.46
1999 167.26 253.69
2000 99.55 303.2
2001 151.01 283.29
Assumes $100 invested at December 31, 1991 with dividends reinvested
12-month moving average data is based upon the daily closing price
23
The following table contains the annual returns expressed in percentages
for the indices set forth in the preceding graphs.
ANNUAL RETURNS OF INDICES INCLUDED ON STOCK PRICE PERFORMANCE GRAPHS
YEAR-END CLOSING PRICE AVERAGE OF DAILY
-------------------------------- CLOSING PRICE
RUSSELL 2000 -------------------------------------
RUSSELL PRODUCER RUSSELL RUSSELL
YEAR NACCO 2000 DURABLES NACCO 2000 NACCO 2000
---- ------- ------- ------------ ------- ------- ------- -------
1991 0.00% 0.00%
1992 1.09% 5.72%
1993 4.08% 20.87%
1994 14.61% 7.77%
1995 3.44% 13.80%
1996 0.00% 0.00% 0.00% 0.00% 0.00% -4.96% 20.96%
1997 102.67% 22.23% 28.83% 38.01% 10.35% 39.93% 19.78%
1998 -13.54% -2.24% -10.99% 62.00% 8.11% 62.00% 8.11%
1999 -38.84% 21.36% 37.30% -37.76% 3.35% -37.76% 3.35%
2000 -19.70% -2.91% 2.13% -40.48% 19.52% -40.48% 19.52%
2001 31.87% 2.63% 5.58% 51.70% -6.57% 51.70% -6.57%
PENSION PLANS
NORTH AMERICAN COAL PENSION PLANS
The following table sets forth the estimated maximum annual benefits under
the North American Coal defined benefit pension plans (both qualified and
non-qualified) which would be payable on a straight life annuity basis, in
various compensation classifications upon retirement at age 65, after selected
periods of service:
FINAL
AVERAGE YEARS OF SERVICE AT RETIREMENT (AGE 65)
ANNUAL PAY ----------------------------------------------------
AGE 65 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
---------- -------- -------- -------- -------- --------
$125,000 $ 27,209 $ 36,279 $ 45,349 $ 54,418 $ 57,543
150,000 33,209 44,279 55,349 66,418 70,168
175,000 39,209 52,279 65,349 78,418 82,793
200,000 45,209 60,279 75,349 90,418 95,418
225,000 51,209 68,279 85,349 102,418 108,043
250,000 57,209 76,279 95,349 114,418 120,668
300,000 69,209 92,279 115,349 138,418 145,918
350,000 81,209 108,279 135,349 162,418 171,168
400,000 93,209 124,279 155,349 186,418 196,418
450,000 105,209 140,279 175,349 210,418 221,668
500,000 117,209 156,279 195,349 234,418 246,918
550,000 129,209 172,279 215,349 258,418 272,168
600,000 141,209 188,279 235,349 282,418 297,418
650,000 153,209 204,279 255,349 306,418 322,668
700,000 165,209 220,279 275,349 330,418 347,918
750,000 177,209 236,279 295,349 354,418 373,168
800,000 189,209 252,279 315,349 378,418 398,418
24
For computing pension benefits under the North American Coal plans, "Final
Average Annual Pay" is based on the average annual earnings for the highest five
consecutive years during the last ten years prior to retirement. Earnings
include those amounts shown in the "Salary" and "Bonus" columns of the Summary
Compensation Table on page 11, which are paid to the executive officers, other
than amounts which represent severance payments, relocation allowances and other
similar fringe benefits. The 2001 earnings of Mr. Miercort that would be taken
into account under the plans is $538,239.
As of December 31, 2001, the number of years of service under the North
American Coal plans for Mr. Miercort is 26 years. The benefits under the North
American Coal plans for Mr. Miercort are not subject to a Social Security
offset.
HAMILTON BEACH/PROCTOR-SILEX PENSION PLANS
For 1996, Dr. Morecroft was covered by the defined benefit cash balance
plans (both qualified and non-qualified) of Hamilton Beach/Proctor-Silex.
Hamilton Beach/Proctor-Silex credited an amount to a notional account for each
covered employee under the plans based on a formula which took into account the
employee's age, compensation and Hamilton Beach/Proctor-Silex's profits.
Effective as of December 31, 1996, the defined benefit cash balance plans (both
qualified and non-qualified) of Hamilton Beach/Proctor-Silex were permanently
frozen for all participants.
The frozen notional account balances are credited with interest equal to 1%
above the one-year Treasury Bill rate (with a minimum of 5% and a maximum of
12%) until benefit commencement. The notional account balances are paid in the
form of a lump sum or are converted to an annuity to provide monthly benefit
payments. The estimated annual pension benefit for Dr. Morecroft under the cash
balance plans, based on compensation, service and interest credits through
December 31, 2001, which would be payable on a straight life annuity basis at
age 65, is $12,400.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership of such securities with the SEC and the New York Stock Exchange.
Officers, directors and greater than ten percent beneficial owners are required
by applicable regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based upon its review of the copies of Section 16(a) forms received by it,
and upon written representations from reporting persons concerning the necessity
of filing a Form 5 Annual Statement of Changes in Beneficial Ownership, the
Company believes that, during 2001, all filing requirements applicable for
reporting persons were met, except as follows:
Susan Sichel filed a report on Form 5 which identified two late
transactions that should have been reported earlier on a Form 4; Martha S. Kelly
filed a report on Form 4 which identified one late transaction that should have
been reported earlier on a Form 4; Scott W. Seelbach filed a late Form 3; Robert
L. Benson filed a late form 3; Keith B. Burns filed a late Form 3; and Richard
H. Close filed a late Form 3.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
For fiscal year 2001, Arthur Andersen LLP was engaged as the independent
certified public accountants of the Company and its subsidiaries to audit the
books and accounts for the Company and its subsidiaries. It is expected that
representatives of Arthur Andersen LLP will attend the Annual Meeting, with the
opportunity to make a statement if they so desire, and, if a representative is
in attendance, the representative will be available to answer appropriate
questions.
In light of recent developments regarding Arthur Andersen LLP, the Company
is continuing to consider its options regarding the engagement of an independent
certified public accountant for 2002. As a result, the Company has not yet
selected its independent certified public accountant for 2002, and no
recommendation is
25
being made to stockholders for confirmation of an independent certified public
accountant for the Company and its subsidiaries for 2002. The Company, however,
has engaged Arthur Andersen LLP to perform reviews of its first quarter and
second quarter 2002 financial statements, subject to the right of the Company to
terminate that engagement at any time.
AUDIT FEES
Arthur Andersen LLP has billed the Company $1.4 million, in the aggregate,
for professional services rendered by Arthur Andersen LLP for the audit of the
Company's annual financial statements for the fiscal year ended December 31,
2001 and the reviews of the interim financial statements included in the
Company's Forms 10-Q filed during the fiscal year ended December 31, 2001.
AUDIT-RELATED FEES
Arthur Andersen LLP has billed the Company $0.5 million, in the aggregate,
for audit-related services rendered by Arthur Andersen LLP, consisting of fees
for audits of foreign subsidiaries required pursuant to the jurisdiction of
incorporation of such subsidiaries, employee benefit and welfare plan audits and
related services and due diligence activities related to acquisitions.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Arthur Andersen LLP has billed the Company $2.3 million, in the aggregate,
for professional services described in Paragraph (c)(4)(ii)(B) of Rule 2-01 of
Regulation S-X rendered by Arthur Andersen LLP during the fiscal year ended
December 31, 2001. Such fees were incurred in the implementation of financial
information systems. In 1999, the Company chose SAP AG as the principal
consultant on this engagement. Arthur Andersen LLP was engaged to assist SAP in
providing a portion of the implementation services. These services were
completed in 2001.
ALL OTHER FEES
Arthur Andersen LLP has billed the Company $1.4 million, in the aggregate,
for services rendered by Arthur Andersen LLP for all other services (other than
those disclosed above under "Audit Fees," "Audit-Related Fees" and "Financial
Information Systems Design and Implementation Fees") during the fiscal year
ended December 31, 2001. All other services includes (1) $1.1 million of fees
for tax services, (2) $0.1 million of fees for other services and (3) $0.2
million for permitted assistance to the Company's Internal Audit Department by
Arthur Andersen LLP personnel.
The Audit Review Committee has considered whether the provision of
information technology services and other non-audit services to the Company by
Arthur Andersen LLP is compatible with maintaining their independence. In
addition, as a result of the recommendation of the Audit Review Committee, the
Company recently adopted policies that it will begin to implement in 2002 with
respect to limiting the services provided by the Company's independent certified
public accountant to services that are audit and audit-related activities.
SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be eligible for inclusion in the
Company's proxy statement and form of proxy relating to the Company's next
annual meeting must be received at the Company's executive offices on or before
November 28, 2002. Such proposals must be addressed to the Company, 5875
Landerbrook Drive, Mayfield Heights, Ohio 44124-4017, Attention: Secretary. The
Company's Nominating and Compensation Committee will consider stockholder
suggestions for nominees for election to the Company's Board of Directors if
such suggestions are in writing, set forth the nominee's name, address and
ownership of Class A Common and Class B Common, and are accompanied by a resume
of the nominee's education and business experience (including directorships,
employments and civic activities) and a written consent by the nominee that such
nominee is desirous of being considered as a nominee and, if nominated and
elected, such nominee
26
will serve as a director. Such suggestions should be submitted in the manner and
to the address set forth above and must be received at the Company's executive
offices on or before December 31, 2002. Any stockholder intending to propose any
matter at the next annual meeting but not intending for the Company to include
the matter in its proxy statement and proxy related to the next annual meeting
must notify the Company by February 11, 2003 of such intention. If the Company
does not receive such notice by that date, the notice will be considered
untimely. The Company's proxy for the next annual meeting will grant authority
to the persons named therein to exercise their voting discretion with respect to
any such matter of which the Company does not receive notice by February 11,
2003. Notices should be submitted in the manner and to the address set forth
above.
SOLICITATION OF PROXIES
The Company will bear the costs of soliciting proxies from its
stockholders. In addition to the use of the mails, proxies may be solicited by
the directors, officers and employees of the Company by personal interview,
telephone or telegram. Such directors, officers and employees will not be
additionally compensated for such solicitation, but may be reimbursed for
out-of-pocket expenses incurred in connection therewith. Arrangements will also
be made with brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of solicitation material to the beneficial owners of Class A
Common and Class B Common held of record by such persons, and the Company will
reimburse such brokerage houses, custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred in connection therewith.
OTHER MATTERS
The directors know of no other matters which are likely to be brought
before the meeting. The Company did not receive notice by February 13, 2002 of
any other matter intended to be raised by a stockholder at the Annual Meeting.
Therefore, the enclosed proxy card grants to the persons named in the proxy card
the authority to vote in their best judgment regarding all other matters
properly raised at the Annual Meeting.
CHARLES A. BITTENBENDER
Secretary
Mayfield Heights, Ohio
March 28, 2002
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO
NOT EXPECT TO ATTEND THE MEETING ARE URGED TO FILL OUT, DATE AND MAIL THE
ENCLOSED FORM(S) OF PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. STOCKHOLDERS WHO HOLD BOTH CLASS A COMMON AND CLASS
B COMMON SHOULD FILL OUT, SIGN, DATE AND RETURN BOTH FORMS OF PROXY.
27
[LOGO] NACCO Industries, Inc.
5875 LANDERBROOK DRIVE
MAYFIELD HEIGHTS, OHIO 44124-4017
ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 2002
IMPORTANT: PLEASE VOTE, DATE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
DETACH CARD
--------------------------------------------------------------------------------
NACCO INDUSTRIES, INC.
CLASS A COMMON STOCK
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL
MEETING, MAY 8, 2002
P The undersigned hereby appoints Robert M. Gates, Alfred M.
Rankin, Jr. and Ian M. Ross, and each of them, as proxies, with
full power of substitution, to vote and act for and in the name
of the undersigned as fully as the undersigned could vote and
R act if personally present at the annual meeting of stockholders
of NACCO Industries, Inc. to be held on May 8, 2002, and at any
adjournment or adjournments thereof, as follows and in
accordance with their judgment upon any other matter properly
O presented.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
X VOTED FOR THE ELECTION OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
DIRECTORS.
Y
The election of the nominees listed below as directors:
[ ]FOR all nominees listed below [ ]WITHHOLD AUTHORITY
(except as marked to the contrary below). to vote for all nominees listed below.
Instruction: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name listed below.
Owsley Brown II Robert M. Gates Leon J. Hendrix, Jr.
David H. Hoag
Dennis W. LaBarre Richard de J. Osborne Alfred M. Rankin, Jr.
Ian M. Ross
Britton T. Taplin David F. Taplin John F. Turben
(Sign on reverse side)
DETACH CARD
--------------------------------------------------------------------------------
(Continued from other side)
DATE:___________________, 2002
------------------------------
------------------------------
Signature(s) of
stockholder(s)
NOTE: PLEASE SIGN EXACTLY AS
NAME APPEARS HEREON. JOINT
OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH.
PLEASE DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE -- NO POSTAGE
NECESSARY
[LOGO] NACCO Industries, Inc.
5875 LANDERBROOK DRIVE
MAYFIELD HEIGHTS, OHIO 44124-4017
ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 2002
IMPORTANT: PLEASE VOTE, DATE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
DETACH CARD
--------------------------------------------------------------------------------
NACCO INDUSTRIES, INC.
CLASS B COMMON STOCK
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL
MEETING, MAY 8, 2002
The undersigned hereby appoints Robert M. Gates, Alfred M.
Rankin, Jr. and Ian M. Ross, and each of them, as proxies, with
P full power of substitution, to vote and act for and in the name
of the undersigned as fully as the undersigned could vote and
act if personally present at the annual meeting of stockholders
of NACCO Industries, Inc. to be held on May 8, 2002, and at any
R adjournment or adjournments thereof, as follows and in
accordance with their judgment upon any other matter properly
presented.
O
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF DIRECTORS.
X
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
DIRECTORS.
Y
The election of the nominees listed below as directors:
[ ]FOR all nominees listed below [ ]WITHHOLD AUTHORITY
(except as marked to the contrary below). to vote for all nominees listed below.
Instruction: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name listed below.
Owsley Brown II Robert M. Gates Leon J. Hendrix, Jr.
David H. Hoag
Dennis W. LaBarre Richard de J. Osborne Alfred M. Rankin, Jr.
Ian M. Ross
Britton T. Taplin David F. Taplin John F. Turben
(Sign on reverse side)
DETACH CARD
--------------------------------------------------------------------------------
(Continued from other side)
DATE: ________________ , 2002
-----------------------------
-----------------------------
Signature(s) of
stockholder(s)
NOTE: PLEASE SIGN EXACTLY AS
NAME APPEARS HEREON. JOINT
OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH.
PLEASE DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE -- NO POSTAGE
NECESSARY