SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No.)
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Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
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[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
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GENCOR INDUSTRIES, INC.
5201 NORTH ORANGE BLOSSOM TRAIL, ORLANDO, FLORIDA 32810
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 11, 1997
TO THE SHAREHOLDERS OF GENCOR INDUSTRIES, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of Gencor Industries, Inc., a Delaware corporation (the "Company"), will be held at the Gencor Corporate Offices, 5201 North Orange Blossom Trail, Orlando, Florida, on April 11, 1997 at 10:00 A.M., local time, for the following purposes, all of which are more completely set forth in the accompanying Proxy Statement:
1. To elect five Directors of the Company Common Stock shareholders will elect one Director, and Class B Stock Shareholders will elect four Directors.
2. To approve the Company's 1997 Stock Option Plan.
3. To approve an amendment to the Company's Certificate of Incorporation to increase the number of authorized Common Stock from 5,000,000 to 15,000,000 and the number of authorized Class B Stock from 3,000,000 to 6,000,000.
4. To ratify the selection of Deloitte & Touche LLP, independent certified public accountants, as auditors for the Company for the year ending September 30, 1997.
5. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on February 14, 1997, are entitled to notice of and to vote at the Annual Meeting or any adjournments thereof. Shareholders should review the information provided herein in conjunction with the Company's 1996 Annual Report which accompanies this Proxy Statement.
The Company's Proxy Statement and proxy accompany this notice.
By order of the Board of Directors,
/s/ Jeanne M. Lyons
-----------------------------------
Jeanne M. Lyons, Secretary
Orlando, Florida
Date: March 3, 1997
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Enclosures
****YOUR VOTE IS IMPORTANT****
YOU ARE URGED TO DATE, SIGN, AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL AID THE COMPANY IN REDUCING THE EXPENSE OF ADDITIONAL PROXY SOLICITATION. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 11, 1997
This Proxy Statement is furnished in connection with the Annual Meeting of Shareholders of Gencor Industries, Inc. (the "Company") to be held April 11, 1997, at 10:00 a.m. local time, or any adjournments thereof at the Gencor Corporate Offices, 5201 North Orange Blossom Trail, Orlando, Florida. This Proxy Statement and accompanying proxy are first being mailed to shareholders on or about March 3, 1997.
SOLICITATION AND REVOCATION OF PROXY
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of the Company to be used at the Annual Meeting of the holders of the Company's Common Stock, par value $.10 per share, and Class B Stock, par value $.10 per share (hereinafter referred to as "Common Stock" and "Class B Stock," respectively) to be held April 11, 1997. The enclosed proxy may be revoked at any time before it is exercised by attending and voting in person at the meeting, by giving written notice of revocation to the Secretary of the Company prior to the taking of the vote for which such proxy has been given, or by delivery to the Secretary of the Company of a duly executed proxy bearing a later date. Notice and delivery shall occur upon actual receipt by the Secretary of the Company at its principal place of business. The cost of soliciting proxies will be borne by the Company. In addition to the use of the mails, proxies may be solicited personally, by telephone, or by telegraph by the Directors, Officers, and employees of the Company, or by the Company's transfer agent. Also, the Company will make arrangements with banks, brokerage houses, and other nominees, fiduciaries, and custodians holding shares in their names or in those of their nominees to forward proxy materials to the beneficial owners of shares, and the Company will upon request, reimburse such entities for their reasonable expenses in sending the proxy materials. All properly executed unrevoked proxies received in time for the meeting will be voted as specified. If no other indication is made, the proxies will be voted for the election of Directors shown as nominees and as recommended by the Board of Directors with regard to all other matters.
VOTING SECURITIES
At the close of business on February 26, 1997, there were 1,902,870 shares of Common Stock and 441,532 shares of Class B Stock outstanding and entitled to vote at the Annual Meeting.
The holders of such shares are entitled to one vote for each share of stock held by them on any matter to be presented at the Annual Meeting, including the election of Directors. The holders of Common Stock and Class B Stock will vote separately as a class on the election of Directors. Only shareholders of record at the close of business on February 26, 1997, are entitled to vote at the Annual Meeting and any adjournment thereof. Although the Company has not polled its Directors and Executive Officers, management expects that the Directors and Executive Officers will vote for the nominees and proposals as shown herein.
The presence at the Annual Meeting, in person or by proxy, of a majority of the outstanding shares of each class of Common Stock and Class B Stock will constitute a quorum.
PROPOSALS TO SHAREHOLDERS
1. ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides that 75% (calculated to the nearest whole number, rounding a fractional number of five-tenths (.5) to the next highest whole number) of the members of the Board shall be elected by Class B shareholders. voting separately as a class. The Company anticipates that the Class B Directors will be elected.
Pursuant to the Company's Bylaws, the Board of Directors has fixed the number of Directors at five. The Board of Directors has selected the following persons as nominees for election as Directors at the 1997 Annual Meeting of Shareholders:
To be elected by the Class B shareholders:
E.J. Elliott
Constantine L. Corpas
John E. Elliott
Peter Kourmolis
The affirmative vote of shareholders holding a majority of the Company's issued and outstanding Class B Stock in attendance at the meeting, either in person or by proxy, is required to approve this proposal. Abstentions and broker non-votes will have no effect.
To be elected by Common Stock shareholders:
Larry H. Pitsch
The affirmative vote of shareholders holding a majority of the Company's issued and outstanding Common Stock in attendance at the meeting, either in person or by proxy, is required to approve this proposal. Abstentions and broker non-votes will have no effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE NOMINEES.
Each of the nominees for the Board of Directors is presently serving as a Director of the Company. Each Director elected at the Annual Meeting shall hold office until his respective successor has been elected and qualified, or until such individual's earlier resignation or removal.
It is the intention of the persons named in the accompanying form of proxy to nominate and, unless otherwise directed, vote such proxies for the election of the nominees named above as Directors. The Board of Directors knows of no reason why any nominee for Director would be unable to serve as a Director. If any nominee should for any reason become unable to serve, the shares represented by all valid proxies will be voted for the election of such other person as the Board of Directors may designate, or the Board of Directors may reduce the number of Directors to eliminate the vacancy.
DIRECTORS AND EXECUTIVE OFFICERS
The following table lists each Director and Executive Officer of the Company and each nominee by class of stock for election as Director. The table also includes the age, principal occupation and business experience for the past five years, positions and offices held with the Company, and period of service as a Director or Executive Officer.
PRINCIPAL OCCUPATION EXECUTIVE DIRECTOR
NAME AND POSITIONS HELD AND BUSINESS EXPERIENCE OFFICER OF OF COMPANY
WITH THE COMPANY DURING PAST FIVE YEARS COMPANY SINCE SINCE
DIRECTORS TO BE ELECTED BY CLASS B STOCK SHAREHOLDERS:
E.J. Elliott Chairman of the Board 1968 1968
Chairman of the Board and President; and President of the Company
Director(1)(4)
Constantine L. Corpas Attorney, Corpas & Pahys -- 1968
Director(1)(2)(3)
John E. Elliott Executive Vice President of the Company 1985 1985
Executive Vice President, Secretary since 1989
Director(2)(4) 1985
Peter Kourmolis Investor -- 1968
Director(3)
DIRECTORS TO BE ELECTED BY COMMON STOCK SHAREHOLDERS:
Larry H. Pitsch President, California Pellet Mill Company -- 12/1996
Director since December 1996
Group President of Ingersoll-Rand
Company, 1985 - 1996
EXECUTIVE OFFICERS OTHER THAN DIRECTORS(5):
Alan Dawes Managing Director, General Combustion, 1985 --
Ltd. since 1992; Technical Director of
General Combustion, Ltd. 1985 - 1992
David F. Brashears Senior Vice President, Technology, since 1978 --
1993; Vice President of Engineering,
1978 - 1993
D. William Garrett Vice President, Sales since 1991. 1991 --
Between 1985 and 1991, he served in
several sales and marketing positions
with Company and its subsidiaries
Marc G. Elliott(4) Vice President, Marketing since 1993. 1993 --
He previously served in various
marketing positions since he joined the
Company in 1988.
Russell R. Lee, III Treasurer of the Company since 1995. 1995 --
Corporate Controller, 1990 - 1995
Jeanne M. Lyons Secretary of the Company since August 1996, 8/1996 --
Administrative Assistant since June 1995.
For the past ten years, Ms. Lyons has
worked as an Administrative Assistant.
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(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) E.J. Elliott is the father of John E. Elliott and Marc G. Elliott.
(5) Each executive officer holds office until his successor has been elected
and qualified, or until his earlier resignation or removal.
MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES OF THE BOARD
During the twelve months ended September 30, 1996, the Board of Directors of the Company held four meetings. All directors attended more than 75% of the meetings. The Board of Directors of the Company has a standing Audit Committee which met once during fiscal 1996. The Compensation Committee met once during fiscal 1996, to discuss executive performance. During fiscal 1996, stock options were granted to several Executive Officers/Directors as described in this proxy statement and one Executive Officer received a salary increase during fiscal 1996.
The Compensation Committee endeavors to ensure that the compensation program for executive officers of the Company is effective in attracting and retaining key executives responsible for the success of the Company and in promoting its long-term interests and those of its stockholders. The committee, without applying any specific quantitative formulas, considers such factors as net income, earnings per share, duties and scope of responsibility, industry standards and comparable salaries for the geographic area, corporate growth, profits goals and market share increases. The functions of the Compensation Committee include establishment of compensation plans for Gencor's executive officers and administration of certain of Gencor's employee benefit and compensation programs.
The members of these committees are indicated by footnotes to the table under "Directors and Executive Officers of the Company" above. The Company does not have a Nominating Committee.
The Audit Committee's responsibilities include selecting the Company's auditors and reviewing the Company's audit plan, financial statements and internal accounting and audit procedures.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors, officers and certain stockholders to file with the Commission an initial statement of beneficial ownership and certain statements of changes in beneficial ownership of equity securities of the Company. Based solely on its review of such forms received by it, the Company is unaware of any instances of noncompliance, or late compliance, with such filings during the fiscal year ended September 30, 1996, by its officers, directors or stockholders.
DIRECTORS FEES
Directors fees are paid by the Company to non employee directors, at the rate of $1,000 per quarter and $750 per meeting attended. During the twelve months ended September 30, 1996, the Company paid Directors' fees in the aggregate amount of $15,750.
EXECUTIVE COMPENSATION
The following table presents certain summary information concerning
compensation paid or accrued by the Company for services rendered in all
capacities during the fiscal years ended September 30, 1994, 1995 and 1996 for
(i) the President of the Company and (ii) each of the other most highly
compensated executive officers of the
Company (determined as of the end of the last fiscal year) whose total annual salary and bonus exceeded $100.000 (collectively, the "Named Executive Officers").
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION: AWARDS:
Underlying All other
Name and Principal Position Year Salary(1) Bonus Options Compensation(2)
- --------------------------- ---- ----------- ------ ------------------- ---------------
E.J. Elliott 1996 $300,000 -- 100,000 shares/(3)/ $3,029
President and Chairman of the Board 1995 300,000 -- 95,000 shares 2,596
1994 232,521 -- -- 2,192
John E. Elliott 1996 $125,000 -- 54,500 shares/(4)/ $ 0
Executive Vice President 1995 120,000 -- 50,000 shares 0
1994 60,000 -- -- 0
D. William Garrett 1996 $110,000 $7,087 10,000 shares /(5)/ $1,851
Vice President, Sales 1995 110,000 -- -- 1,586
1994 110,000 -- -- 2,010
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(1) Does not include an amount for incidental personal use of business
automobiles furnished by the Company to certain of its Named Executive
Officers. The Company has determined that the aggregate incremental cost of
such benefits to the Named Executive Officers does not exceed, as to any
named individual, the lesser of $50,000 or 10% of the cash compensation
reported for such person.
(2) The Compensation reported under All Other Compensation represents
contributions to the Company's 401(K) Plan on behalf of the Named Executive
Officers to match 1994-1996 pretax executive contributions (included under
salary) made by each executive officer to such plan.
(3) Includes 50,000 options granted pursuant to the Company's 1997 Stock Option
Plan (the "1997 Plan"), subject to shareholder approval at the Company's
1997 Annual Meeting.
(4) Includes 35,000 options granted pursuant to the Company's 1997 Plan, subject
to shareholder approval at the Company's 1997 Annual Meeting.
(5) Includes 10,000 options granted pursuant to the Company's 1997 Plan, subject to shareholder approval at the Company's 1997 Annual Meeting.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options to the Named Executive Officers of the Company in 1996. The options were granted as individual grants and/or under a stock option plan. Pursuant to Securities and Exchange Commission (the "SEC ") rules, the table also shows the value of the options granted at the end of the option terms (ten years) if the stock price were to appreciate annually by 5% and 10%, respectively. There is no assurance that the stock price will appreciate at the rates shown in the table. The table also indicates that if the stock price does not appreciate, there will be no increase in the potential realizable value of the options granted.
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
Number of Percent
Securities of Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted Fiscal Year ($/SH) Date 0% 5% 10%
- -------------------- ----------- ---------------- ----------- ---------- - ------- -------
E.J. Elliott 50,000 41.7% $7.75 07/24/01 0 107,000 236,500
50,000/(1)/ 33.9%/(1)/ $7.75/(1/ 07/24/01 107,000 236,500
John E. Elliott 19,500 16.3% $ 7.75 07/24/01 0 41,730 92,235
35,000/(1)/ 18.5%/(1)/ $7.75/(1)/ 07/24/01 0 74,900 165,550
D. William Garrett 0 0 ----- 07/24/01 0 0 0
10,000/(1)/ 3.3%/(1)/ $7.75/(1)/ 07/24/01 0 21,400 47,300
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(1) Represents options granted pursuant to the 1997 Plan, subject to shareholder approval at the Company's Annual Meeting.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
The following table provides information as to options exercised by each of
the Named Executive Officers of Gencor during 1996 and the value of options held
by such officers at year end measured in terms of the closing price of Gencor
Common Stock on September 30, 1996.
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-The-Money Options
Acquired on Value Options at FY-End At FY-End ($)
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------- ------------ ------------- ------------ ------------- --------------- -------------
E.J. Elliott 0 0 145,000 0 812,500 0
195,000/(1)/ 0/(1)/ 1,150,000/(1)/ 0/(1)/
John E. Elliott 7,500 0/(2)/ 69,500 0 381,625 0
104,500/(1)/ 0/(1)/ 617,875/(1)/ 0/(1)/
William Garrett 15,000 196,875/(3)/ 0 0 0 0
10,000/(1)/ 0/(1)/ 67,500/(1)/ 0/(1)/
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(1) Includes options granted under the Company's 1997 Plan, subject to
shareholder approval.
(2) Value realized upon exercise is based upon the difference between the last
sales price of the Common Stock on November 15, 1995 the date on which the
options were exercised ($7.50) and the option exercise price ($7.50) times
the number of options exercised (7,500).
(3) Value realized upon exercise is based upon the difference between the last
sales price of the Common Stock on September 12, 1996, the date on which the
options were exercised ($15.875) and the option exercise price ($2.75) times
the number of options exercised (15,000).
STOCK OPTION PLANS
1992 STOCK OPTION PLAN
In May of 1992, the Company's Board of Directors adopted the Gencor Industries, Inc. 1992 Stock Option Plan (the "1992 Plan") which authorizes the granting of options to Directors, officers and key employees of the Company or any of its present or future subsidiaries. Up to 100,000 shares of the Company's Common Stock, 100,000 shares of the Company's Class B Stock and fifteen percent (15%) of the authorized Common Stock of any Company subsidiary are subject to the 1992 Plan. Shares are no longer available for grant under the 1992 Plan since all options authorized under the Plan have been granted.
1997 STOCK OPTION PLAN
In July 1996, to Company's Board of Directors, subject to the approval of its shareholders, adopted the Gencor Industries, Inc. 1997 Stock Option Plan (the "1997 Plan") which provides for the issuance of incentive stock options with the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and non-qualified stock options, to purchase an aggregate of up to 300,000 shares of the Company's Common Stock, 300,000 shares of the Company's Class B Stock and up to fifteen percent (15%) of the authorized Common Stock of any subsidiary. The 1997 Plan permits the grant of option to officers, directors and key employees of the Company. See Proposal No. 2 - Approval of Gencor Industries, Inc. 1997 Stock Option Plan for additional information concerning the 1997 Plan.
STOCK OPTION AWARDS
Contemporaneously with the adoption of the 1992 Plan, the Board of Directors authorized a stock option bonus for E.J. Elliott which would grant Mr. Elliott fifteen percent (15%) of the outstanding shares of stock of Thermotech Systems Corporation, a subsidiary of the Company. The terms and conditions for the issuance of such shares have not been finalized, and no shares or options with regard to Thermotech Systems Corporation have been issued to Mr. Elliott.
In July 1996, the Company awarded a total of 89,000 options to management, at an exercise price of $7.75 per share and an expiration date of July 24, 2001.
REPORT OF THE COMPENSATION COMMITTEE
GENERAL
The Compensation Committee (the "Committee") of the Board of Directors consists of Constantine L. Corpas and Peter Kourmolis, each of whom is a non employee director of the Company. The Compensation Committee administers the Company's executive compensation program, monitors corporate performance and its relationship to compensation for executive officers, and makes appropriate recommendations concerning matters of executive compensation.
COMPENSATION PHILOSOPHY
The Committee has developed and implemented a compensation program that is designed to attract, motivate, reward and retain the broad based management talent required to achieve the Company's business objectives and increase stockholder value. There are two major components of the Company's compensation program: base salary, and incentives, each of which is intended to serve the overall compensation philosophy.
BASE SALARY
The Company's salary levels are intended to be consistent with competitive pay practices and level of responsibility, with salary increases reflecting competitive trends, the overall financial performance and resources of the
Company, general economic conditions as well as a number of factors relating to the particular individual, including the performance of the individual executive, and level of experience, ability and knowledge of the job.
INCENTIVES
Incentives consist of stock options and, to a lesser extent, cash awards. The Committee strongly believes that the pay program should provide employees with an opportunity to increase their ownership and potentially gain financially from Company stock price increases. By this approach, the best interests of shareholders, executives and employees will be closely aligned. Therefore, executives and other employees are eligible to receive stock options, giving them the right to purchase shares of the Company at a specified price of the future. The grant of options is based primarily on a key employee's potential contribution to the Company's growth and profitability, based on the market value of the Company's Common Stock and will only have value if the Company's stock price increases. The granting of cash awards is discretionary and is not dependent on any one factor.
1996 EXECUTIVE COMPENSATION
Base salaries were increased for certain executive officers to maintain an externally competitive rate of pay. With respect to Mr. E.J. Elliott, the Committee determined that a base salary increase should be foregone in favor of increased long term incentive opportunities. Mr. Elliott's base salary of $300,000 has remained the same for the past two years.
To ensure long term retention and to continue to focus the executives on the importance of stockholder returns, the Committee granted stock options to many of its executive officers. All stock options have an exercise price that is equal to the fair market value of the stock on the date of grant. In making these grants, the Committee considered competitive norms, individual contributions and responsibilities and the Company's performance. Mr. Elliott was granted options to purchase 50,000 shares of the Company's Class B Stock at an exercise price of $7.75 per share.
Constantine L. Corpas Peter Kourmolis
FIVE YEAR TOTAL RETURN COMPARISON
The following graph compares the cumulative total return of the Company's stock with the Wilshire Small Capitalization Index and the Dow Jones Heavy Machinery Index for the period 12/31/91 through 9/30/96. The Company's fiscal year ended 9/30/96. These calculations assume the value of investment in Company stock, the Wilshire Index, and the Heavy Machinery Index was $100 on 12/31/91. These calculations assume reinvestment of dividends in the Wilshire Index and the Heavy Machinery Index. A ten percent (10%) stock dividend was declared on November 16, 1994, payable December 30, 1994, to shareholders of record, on November 16,1994. A five cent ($0.05) per share cash dividend was declared on December 1, 1995, payable January 5, 1996, to shareholders of record on December 18, 1995. A five cent ($0.05) per share cash dividend was declared on November 21, 1996, payable January 4, 1997 to shareholders of record on December 18, 1996.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG GENCOR, WILSHIRE SMALL CAP INDEX, AND DOW JONES HEAVY MACHINERY INDEX
Wilshire Small Dow Jones Heavy
Gencor Cap Index Machinery
------ -------------- ---------------
12/31/91 100 100 100
12/31/92 183 115 108
9/30/93 142 131 165
9/30/94 204 130 174
9/30/95 171 149 207
9/30/96 258 169 276
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CERTAIN TRANSACTIONS WITH MANAGEMENT
The Company leases vehicles from Marcar Leasing Corporation ("Marcar"), a corporation engaged in general leasing to the public of machinery, as well as vehicles, owned by members of E.J. Elliott's immediate family, including John E. Elliott and Marc G. Elliott. The terms of the leases are established based on the rates charged by independent leasing organizations and are believed by the Board of Directors to be more favorable than those generally available from independent third parties. Leases between the Company and Marcar generally provide for equal monthly payments over either thirty-six months or forty-eight months. During fiscal 1996, the Company made lease payments to Marcar in the aggregate amount of $185,906.
On September 9, 1995, the Callie A. Elliott Trust Fund ("Trust Fund") made a $325,000 loan to the Company. The loan was evidenced by a demand note which was callable at any time by the Company. The interest on the notes is 9.5% per annum. On September 13, 1996, the Trust Fund made an additional loan to the Company in the amount of $1,000,000. This loan was also evidenced by a demand note and the interest rate was 9.5% per annum. The loans were repaid on December 10, 1996.
OWNERSHIP OF SECURITIES BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of January 1, 1997, with respect to (i) each person known to management to be the beneficial owner of more than 5% of the Company's Common Stock or Class B Stock, (ii) each Director of the Company, and (iii) the current Directors and Executive Officers of the Company as a group. Except as otherwise noted, each named beneficial owner has sole voting and investment power over the shares shown.
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP[1] PERCENT OF CLASS[1]
---------------------------- ---------------------
NAME AND ADDRESS OF COMMON CLASS B COMMON CLASS B
BENEFICIAL OWNER STOCK STOCK STOCK STOCK
E.J. ELLIOTT 254,000 [2] 544,324 [3] 15.6% 85.5%
5201 N. Orange Blossom Trail
Orlando, Florida 32810
CONSTANTINE L. CORPAS 32,500 [4] 27,500 2.0% 6.2%
5201 N. Orange Blossom Trail
Orlando, Florida 32810
JOHN E. ELLIOTT 117,024 [5] 123,880 [6] 7.2% 22.7%
5201 N. Orange Blossom Trail
Orlando, Florida 32810
PETER KOURMOLIS 26,703 [7] -- 1.6% --
5201 N. Orange Blossom Trail
Orlando, Florida 32810
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AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP[1] PERCENT OF CLASS[1]
---------------------------- ---------------------
NAME AND ADDRESS OF COMMON CLASS B COMMON CLASS B
BENEFICIAL OWNER STOCK STOCK STOCK STOCK
DAVID A. AIR 2,600 [8] -- * --
5201 N. Orange Blossom Trail
Orlando, Florida 32810
HARVEY HOUTKIN 306,893 [9] -- 18.9% --
78 Lafayette Avenue, Suite 207
Suffern, NY 10901
KENNEDY CAPITAL 128,918 [10] -- 7.9% --
MANAGEMENT, INC.
425 New Ballas Road, Suite 181
St. Louis, MO 63141
All Directors & Executive 473,452 [11] 812,084 [12] 28.6% 96%
Officers as a Group [11 Persons]
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* Percentage ownership is less than 1%
[1] In accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as
amended, shares that are not outstanding, but that are subject to option,
warrants, rights or conversion privileges exercisable within 60 days have
been deemed to be outstanding for the purpose of computing the percentage
of outstanding shares owned by the individual having such right but have
not been deemed outstanding for the purpose of computing the percentage for
any other person.
[2] Includes 30,000 shares owned jointly with John Elliott and 30,000 shares
owned jointly with Marc Elliott.
[3] Includes options to purchase 195,000 shares of Class B Stock (50,000
options were granted under the 1997 Plan and are subject to shareholder
approval).
[4] Includes options to purchase 15,000 shares of Common Stock.
[5] Includes 30,000 shares owned jointly with E. J. Elliott.
[6] Includes options to purchase 104,500 shares of Class B Stock. (35,000
options were granted under the 1997 Plan and are subject to shareholder
approval.)
[7] Includes options to purchase 14,500 shares of Common Stock.
[8] Includes options to purchase 1,500 shares of Common Stock.
[9] Based on a Schedule 13D dated August 14, 1996 filed by Harvey Houtkin with
the Securities and Exchange Commission. Includes 126,098 shares
individually owned by Mr. Houtkin and subject to sole voting and
dispositive power. Also includes the following shares with Mr. Houtkin as
control person subject to shared voting and dispositive power: 27,833
shares owned by All-Tech Investment Group Inc., a 100% owned subsidiary of
Rushmore Financial Services, Inc. ("Rushmore") and 34,617 shares owned by
Rushmore. Rushmore is owned 50% by Mr. Houtkin and Mark Shefts, who is Mr.
Houtkin's brother-in-law.
[10] Based on a letter dated December 27, 1995, for Kennedy Capital Management,
Inc.
[11] Includes options to purchase 61,000 shares of Common Stock (30,000 options
are subject to shareholder approval).
[12] Includes options to purchase 404,000 shares of Class B Common Stock
(120,000 options are subject to shareholder approval).
2. PROPOSED ADOPTION OF THE COMPANY'S 1997 STOCK OPTION PLAN
On July 24, 1996, the Board of Directors of the Company adopted, subject to shareholder approval at the 1997 Annual Meeting of Shareholders, the Company's 1997 Stock Option Plan ("Plan").
The Company's Board of Directors believes the Plan will enhance the Company's ability to attract, motivate and retain key personnel and will thereby serve the best interests of the Company and its shareholders.
The following summary describes the principal features of the Plan and is qualified in its entirety by reference to such Plan, a copy of which is attached hereto as Exhibit A.
The purpose of this Plan is to provide an incentive for persons who are granted options to exert maximum efforts for the Company's success, and to reward such efforts by enabling such persons to participate in such success through growth in the value of the stock subject to the option granted.
ADMINISTRATION
The 1997 Plan may be administered by (i) the Board of Directors of the Company or (ii) any duly constituted committee of the Board of Directors consisting of at least two members of the Board of Directors, all of whom shall be Non-Employee Directors as defined in Rule 16(b)-3 under the Exchange Act. The administering party is referred to herein as the "Committee."
The Committee selects the participants to whom options are to be granted and, with respect to each option, determines the number of shares covered thereby and the exercise price of the option. The Committee also resolves all questions of application or interpretation of the 1997 Plan.
GRANTS
Grants under the Plan may consist of: (i) options intended to qualify as
incentive stock options ("ISOs") within the meaning of the Code, (ii) so-called
"non-qualified stock options" that are not intended to so qualify ("NQSOs"), or
(iii) a combination thereof.
SHARES SUBJECT TO THE PLAN
The maximum number of shares which may be issued pursuant to options granted under the Plan shall be as follows: (i) 300,000 shares of the Company's Common Stock, (ii) 300,000 shares of the Company's Class B Stock; and (iii) fifteen percent (15%) of the authorized common stock of any subsidiary of the Company (collectively, the "Shares").
ELIGIBILITY
Options may be granted only to persons who are either directors, officers or key employees of the Company or any of its present or future subsidiaries.
OPTIONS
The Plan permits the Committee to grant plan options either as ISOs or as
NQSOs, and allows the Committee to establish, as to any participant, the number
of options, exercise price, exercise term (subject to a maximum of ten years),
and other terms and conditions. Subject to the foregoing, the option exercise
price for each Share covered by an option may not be less than 100% of the fair
market value of a Share on the date of grant of such option; however, in the
case of an ISO, the price shall be no less than 100% of the fair market value of
a Share at the time such option is granted; and in the case of an ISO granted to
a ten percent shareholder, the exercise price will be no less than 110% of the
fair market value of the Share on the date of grant. The optionee may pay the
exercise price by (i) cash (or its equivalent), (ii) loans from the Company,
(iii) payroll deductions, (iv) surrender of previously-owned shares having an
aggregate fair market value equal to the total purchase price, (v) the
withholding of shares granted pursuant to the option exercise having an
aggregate fair market value equal to the total purchase price or (vi) any other
medium approved by the Committee.
AMENDMENT AND TERMINATION OF THE PLAN
The Committee may amend or terminate the Plan at any time; provided, however, that the Board may not, without the approval of shareholders, amend the Plan in any manner that requires such shareholder approval pursuant to the
Internal Revenue Code of 1986, as amended or pursuant to the Exchange Act or Rule 16b-3 thereunder, and the terms and conditions of any awards to directors shall not be amended more than once every six months, other than to comply with changes in the Code or the Employee Retirement Income Security Act of 1974, as amended. According to its terms, the Plan will terminate 10 years from the effective date.
ADJUSTMENT PROVISIONS
In the event of a stock split, stock dividend, recapitalization or similar transaction, an appropriate adjustment shall be made to the number of Shares which are subject to options (and the exercise price per Share). In the event of a reorganization, reclassification, merger, consolidation, exchange or similar event, the Committee shall set forth in the option agreement the effect on the class of Shares issuable pursuant to options not yet exercised.
TAX IMPLICATIONS
The following discussion is intended only as a brief summary of the federal income tax rules relevant to options or shares issued under the 1997 Plan, as based on the Code currently in effect. This summary is not meant to be exhaustive and, among other things, does not describe state, local or foreign and other tax consequences. An optionee will not realize taxable income upon the grant of an option. In general, the holder of an NQSO (within the meaning of Section 422 of the Code) will realize ordinary income when the option is exercised equal to the excess of the value of the stock over the exercise price (i.e., the option spread), and the Company receives a corresponding deduction, subject to the executive compensation deduction limitations of Section 162(m) of the Code. (If the optionee is subject to the six-month restrictions on sale of Common Stock under Section 16(b) of the Exchange Act, the optionee generally will recognize ordinary income on the date the restrictions lapse, unless an early income recognition election is made.) Upon a later sale of the stock, the optionee will realize capital gain or loss equal to the difference between the selling price and the value of the stock at the time the option was exercised.
The holder of an ISO will not realize taxable income upon the exercise of
the option (although the option spread is an item of tax preference income
potentially subject to the alternative minimum tax). If the stock acquired upon
exercise of the ISO is sold or otherwise disposed of within two years from the
option grant date or within one year from the exercise date, then, in general,
gain realized on the sale is treated as ordinary income to the extent of the
option spread at the exercise date, and the Company receives a corresponding
deduction, subject to the executive compensation deduction limitations of
Section 162(m) of the Code. Any remaining gain is treated as capital gain. If
the stock is held for at least two years from the grant date and one year from
the exercise date, then gain or loss realized upon the sale will be capital gain
or loss and the Company will not be entitled to a deduction. A special basis
adjustment is applied to reduce the gain for alternative minimum tax purposes.
Special rules may apply in the case of an optionee who is subject to
Section 16 of the Exchange Act.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE COMPANY'S
1997 STOCK OPTION PLAN.
3. PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK AND CLASS B STOCK
The Company's Restated Certificate of Incorporation, as amended, (the "Certificate of Incorporation") provides that the total number of shares of all classes of stock which the Company shall have the authority to issue is 8,300,000 shares, consisting of 300,000 shares of Serial Preference Stock, par value $0.10 per share; 5,000,000 shares of Common Stock, par value $0.10 per share; and 3,000,000 shares of Class B Stock, par value $0.10 per share. The Company's Board of Directors has adopted a resolution recommending that the shareholders adopt an amendment to Article FOURTH of the Company's Certificate of Incorporation in order to increase the authorized number of shares of the Company's common stock from 5 million to 15 million and the authorized number of shares of the Company's Class B Stock from 3 million to 6 million (the "Amendment").
If the Amendment is approved, Article FOUR of the Certificate of Incorporation, which sets forth the Company's presently authorized capital stock, will be amended by deleting Article FOUR, Section A in its entirety and substituting the following therefor:
"FOURTH: Capital Stock.
A. Classes and Number of Shares. The total number of shares of all classes of stock which the corporation shall have authority to issue is Twenty-One Million Three Hundred Thousand (21,300,000) shares. The classes and the aggregate number of shares of capital stock of each Class which the corporation shall have authority to issue are as follows:
1. Three Hundred Thousand (300,000) shares of which shall be preferred shares designated as Serial Preference Stock, par value $0.10 per share (hereinafter called "Preferred Stock");
2. Fifteen Million (15,000,000) shares of which shall be designated as Common Stock, par value $0. 1 0 per share (hereinafter called "Common Stock"); and
3. Six Million (6,000,000) shares of which shall be designated as Class B Stock, par value $0.10 per share (hereinafter called "Class B Stock")."
The Board of Directors believes that the authorized number of shares of stock should be increased to provide sufficient shares for such corporate purposes as may be determined by the Board of Directors including, without limitation; acquiring other businesses in exchange for shares of the Company's stock; facilitating broader ownership of the Company's stock by effecting stock splits or issuing a stock dividend; flexibility for possible future financings; and attracting and retaining valuable employees and directors by the issuance of additional stock options or awards. The Company at present has no commitments, agreements or undertakings to issue any such additional shares. The Board of Directors considers the authorization of additional shares of stock advisable to ensure prompt availability of shares for issuance should the occasion arise. If required by law or regulation, the Company will seek shareholder approval prior to any issuance of shares
The Company intends to apply to the American Stock Exchange, on which the shares of the Company's stock are currently listed, for the listing thereon of additional shares to be issued and reserved for future issuance as a result of the Amendment. Shares of the Company's stock, including the additional shares proposed for authorization, do not have preemptive or similar rights. The issuance of additional shares of stock could have the effect of diluting existing shareholder earnings per share, book value per share and voting. Adoption of this proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote at the Annual Meeting and the affirmative vote of the holders of a majority of the outstanding shares of Class B Stock entitled to vote at the Annual Meeting. Shares not voted (whether by abstention, broker non-votes or otherwise) have the effect of a vote against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO INCREASE
AUTHORIZED STOCK.
4. SELECTION OF AUDITORS
The Board of Directors has approved the Company's engagement of the firm of Deloitte & Touche LLP as the Company's independent auditors. Deloitte & Touche LLP has served as the Company's independent auditors for the last three fiscal years, and is familiar with the Company's business and management. The Board of Directors believes that Deloitte & Touche LLP has the personnel, professional qualifications and independence necessary to act as the Company's independent auditors.
Representatives of Deloitte & Touche LLP are expected to appear at the Annual Meeting to make a statement, if they wish to do so, and to be available to answer appropriate questions from shareholders at the time.
While ratification by shareholders of this appointment is not required by law or the Company's Certificate of Incorporation or Bylaws, management of the Company believes that such ratification is desirable. In the event this appointment is not ratified by an aFfirmative vote of shareholders holding a majority of the Company's issued and outstanding Class B Stock and Common Stock, together, in attendance at the meeting, either in person or by proxy, the Board of Directors of the Company will consider that fact when it appoints independent public accountants for the next fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION AND APPROVAL
OF ITS SELECTION OF DELOITTE & TOUCHE LLP AT THE 1997 ANNUAL MEETING.
OTHER MATTERS
The Board of Directors knows of no business which will be presented for action at the Annual Meeting other than as set forth in this Proxy Statement, but if any other matters properly come before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.
SHAREHOLDER PROPOSALS
Any proposal of a shareholder intended to be presented at the Company's 1998 Annual Meeting of Shareholders must be received by the President of the Company for possible inclusion in the Company's Proxy Statement, and notice of meeting relating to that meeting by December 15, 1997. Shareholder proposals must be made in compliance with applicable legal requirements promulgated by the Securities and Exchange Commission and be furnished to the President by certified mail, return receipt requested.
YOU ARE URGED TO SIGN AND RETURN YOUR PROXY PROMPTLY TO MAKE CERTAIN YOUR SHARES WILL BE VOTED AT THE 1997 ANNUAL MEETING. FOR YOUR CONVENIENCE, A RETURN ENVELOPE IS ENCLOSED.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Jeanne M. Lyons
-----------------------------------
Jeanne M. Lyons, Secretary
Orlando, Florida
March 3, 1997
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EXHIBIT A
GENCOR INDUSTRIES, INC.
1997 STOCK OPTION PLAN
Subject to the provisions of the Plan, the Committee shall: (i) have
complete discretion with respect to the options granted; (ii) construe the
provisions of the Plan and the option agreements; (iii) prescribe, amend and
rescind rules and regulations relating to the Plan and the option agreements;
(iv) determine the terms and provisions (which need to be identical) of option
agreements; and (v) make all other determinations necessary or advisable with
respect thereto. The committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan, or in any option agreement in the
manner and to the extent it shall deem expedient. The Committee shall be the
sole and final judge of such expediency and its determinations shall be
conclusive. No member of the Committee shall be liable for any act or omission
in connection with the administration of this Plan, except for the member's
willful misconduct.
(1) states the election to exercise the option and the number of Shares to be purchased;
(2) complies with such other requirements as may be set forth by the Committee in the option agreement;
(3) is signed by the person or persons entitled to exercise the option and, if the option is being exercised by any person or persons other than the optionee, is accompanied by proof, satisfactory to counsel for the Company, of the right of such person or persons to exercise the option.
and from an optionee prior to delivery of Shares pursuant to exercise of the option, as the Committee may deem appropriate. The Committee may impose any additional conditions precedent to the consummation of the exercise of an option that it may deem appropriate, including, without limitation, the effectuation of any listing, registration or qualification and the obtaining of any consent or approval that the Committee may deem desirable.
months before or after this Plan is adopted by the Company's Board of Directors. Any designation of an option as an Incentive Stock Option and any related option agreement shall be subject to and contain such terms and conditions as shall be necessary to comply with all provisions of the Code (including any regulations thereunder or interpretations thereof) which apply to Incentive Stock Options, including, without limitation, the following terms and conditions:
(1) The optionee shall not dispose of any Share purchased pursuant to an option within two (2) years from the date of the granting of the option nor within one (1) year after the issuance of such Share to the optionee;
(2) At all times during the period beginning on the date of the granting of the option and ending on the day three (3) months before the date of such exercise, the optionee must have been an employee of the Company or a subsidiary of the Company; and
(3) If the optionee, at the time the option is granted, owns more than ten percent of the total combined voting power of the stock of the Company, then (i) the purchase price of the Shares under the Incentive Stock Option shall be at least 110 percent of the Fair Market Value of the Shares on the date of grant; and (ii) the Incentive Stock Option by its terms shall not be exercisable after the expiration of five (5) years from the date of grant.
In addition, the Committee may, with respect to any option (and any related option agreement) granted hereunder which is designated as an Incentive Stock Option, correct any defect, supply any omission, reconcile any inconsistency therein or adopt any amendment thereto which it may deem necessary or advisable to comply with the provisions of the Code. To the extent that the aggregate Fair Market Value of Shares with respect to which Incentive Stock Options are exercisable for the 1/st/ time by any optionee during any calendar year (under all plans of the optionee's employer corporation and its parent and subsidiary corporations) exceeds $100,000, such options shall be treated as options which are not Incentive Stock Options, as set forth in the Code.
COMMON SHAREHOLDER PROXY
GENCOR INDUSTRIES, INC.
THIS COMMON SHAREHOLDER PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS PROXY FOR ANNUAL MEETING OF SHAREHOLDERS APRIL 11, 1997
The undersigned hereby appoints E.J. Elliott, Russell R. Lee III, or any of them, as proxies, each with the power to appoint his or her substitute, to represent, and vote all shares of Common Stock of and on behalf of the undersigned as designated on the reverse side at the Annual Meeting of Shareholders of Gencor Industries, Inc., to be held April 11, 1997, and any adjournments thereof, with all powers the undersigned would possess if personally present and voting at such meeting. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" Please mark
PROPOSALS 1,2,3, AND 4. your votes as [X]
indicated in
this example
1. ELECTION OF DIRECTORS Larry H. Pitsch
FOR nominee WITHHOLD (INSTRUCTION: To withhold authority
listed at right AUTHORITY to vote for any individual nominee,
(except as marked to vote for write that nominee's name in the
to the contrary at right) space provided below).
[ ] [ ]
------------------------------------
2. PROPOSAL TO ADOPT THE 1997 STOCK This Proxy, when properly
OPTION PLAN executed, will be voted in the manner
directed herein by the Undersigned
FOR AGAINST ABSTAIN shareholder. If no direction is
indicated, the Proxy will be vote FOR
[ ] [ ] [ ] Proposals 1, 2, 3 and 4.
PLEASE MARK ON THIS SIDE; THEN
3. PROPOSAL TO INCREASE AUTHORIZED SIGN, DATE AND RETURN THIS PROXY CARD
STOCK PROMPTLY IN THE ENCLOSED ENVELOPE.
FOR AGAINST ABSTAIN PLEASE SIGN EXACTLY AS NAME(S)
APPEAR(S) HEREON. If shares are held
[ ] [ ] [ ] in the name of two or more persons,
all must sign. When signing as
Attorney, Executor, Administrator,
Personal Representative, Trustee, or
4. PROPOSAL TO RATIFY THE SELECTION Guardian, give full title as such.
OF DELOITTE & TOUCHE LLP AS AUDITORS If signer is a corporation, sign full
corporate name by duly authorized
FOR AGAINST ABSTAIN officer.
[ ] [ ] [ ] THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
Date: , 1997
-------------------
-------------------------------------
Signature
-------------------------------------
Signature if held jointly
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CLASS B SHAREHOLDER PROXY
GENCOR INDUSTRIES, INC.
THIS CLASS B COMMON SHAREHOLDER PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS APRIL 11, 1997
The undersigned hereby appoints E.J. Elliott, Russell R. Lee III, or any of them, as proxies, each with the power to appoint his or her substitute, to represent, and vote all shares of Class B Common Stock of and on behalf of the undersigned as designated on the reverse side at the Annual Meeting of Shareholders of Gencor Industries, Inc., to be held April 11, 1997, and any adjournments thereof, with all powers the undersigned would possess if personally present and voting at such meeting. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" Please mark
PROPOSALS 1,2,3, AND 4. your votes as [X]
indicated in
this example
1. ELECTION OF DIRECTORS E.J. Elliott, John E. Elliott, Constantine L.
Corpas, Peter Kourmolis
FOR nominee WITHHOLD (INSTRUCTION: To withhold authority
listed at right AUTHORITY to vote for any individual nominee,
(except as marked to vote for write that nominee's name in the
to the contrary at right) space provided below).
[ ] [ ]
------------------------------------
2. PROPOSAL TO ADOPT THE 1997 STOCK This Proxy, when properly
OPTION PLAN executed, will be voted in the manner
directed herein by the Undersigned
FOR AGAINST ABSTAIN shareholder. If no direction is
indicated, the Proxy will be vote FOR
[ ] [ ] [ ] Proposals 1, 2, 3 and 4.
PLEASE MARK ON THIS SIDE; THEN
3. PROPOSAL TO INCREASE AUTHORIZED SIGN, DATE AND RETURN THIS PROXY CARD
STOCK PROMPTLY IN THE ENCLOSED ENVELOPE.
FOR AGAINST ABSTAIN PLEASE SIGN EXACTLY AS NAME(S)
APPEAR(S) HEREON. If shares are held
[ ] [ ] [ ] in the name of two or more persons,
all must sign. When signing as
Attorney, Executor, Administrator,
Personal Representative, Trustee, or
4. PROPOSAL TO RATIFY THE SELECTION Guardian, give full title as such.
OF DELOITTE & TOUCHE LLP AS AUDITORS If signer is a corporation, sign full
corporate name by duly authorized
FOR AGAINST ABSTAIN officer.
[ ] [ ] [ ] THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
Date: , 1997
-------------------
-------------------------------------
Signature
-------------------------------------
Signature if held jointly
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