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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
[X] Definitive Proxy Statement Commission only
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11c or Rule 14a-12
MATTHEWS INTERNATIONAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(4) 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:
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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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MATTHEWS INTERNATIONAL CORPORATION
2004
NOTICE
OF
ANNUAL
MEETING
AND
PROXY
STATEMENT
3
Matthews International Corporation
Corporate Office
Two NorthShore Center
Pittsburgh, Pennsylvania 15212-5851
412.442.8200 Fax 412.442.8290
Notice of
ANNUAL MEETING OF SHAREHOLDERS
To be held February 19, 2004
To Our Shareholders:
The Annual Meeting of the Shareholders of Matthews International Corporation
will be held at 6:00 PM on Thursday, February 19, 2004 at Sheraton Station
Square, Pittsburgh, Pennsylvania, for the purpose of considering and acting
upon the following:
1. To elect three Directors of the Company for a term of three years and one
Director of the Company for a term of two years.
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors to audit the records of the Company for the fiscal year ending
September 30, 2004.
3. To transact such other business as may properly come before the meeting.
Shareholders of record as of December 31, 2003 will be entitled to vote at the
Annual Meeting or any adjournments thereof.
Please indicate on the enclosed proxy card whether you will or will not be
able to attend this meeting. Return the card in the enclosed envelope as soon
as possible. If you receive more than one proxy card (for example, because
you own common stock in more than one account), please be sure to complete and
return all of them.
We hope you can be with us for this important occasion.
Sincerely,
Steven F. Nicola
Steven F. Nicola
Corporate Secretary
January 15, 2004
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Matthews International Corporation
Two NorthShore Center
Pittsburgh, PA 15212 - 5851
412 / 442-8200
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of the Company
whose principal executive offices are located at Two NorthShore Center,
Pittsburgh, Pennsylvania 15212. This Proxy Statement and the accompanying
proxy were first released to shareholders on or about January 15, 2004.
Execution of the proxy will not affect a shareholder's right to attend the
meeting and vote in person. Any shareholder giving a proxy has the right to
revoke it at any time before it is voted by giving notice to the Corporate
Secretary or by attending the meeting and voting in person.
Matters to be considered at the Annual Meeting are those set forth in the
accompanying notice. Shares represented by proxy will be voted in accordance
with instructions. In the absence of instructions to the contrary, the proxy
solicited will be voted for the proposals set forth.
Management does not intend to bring before the meeting any business other than
that set forth in the Notice of Annual Meeting of Shareholders. If any other
business should properly come before the meeting, it is the intention of
management that the persons named in the proxy will vote in accordance with
their best judgment.
OUTSTANDING STOCK AND VOTING RIGHTS
The Company has one class of stock outstanding: Class A Common Stock, par
value $1.00 per share, referred to as the "Common Stock."
Each outstanding share of Common Stock of the Company entitles the holder to
one vote upon any business properly presented at the shareholders' meeting.
Cumulative voting is not applicable to the election of Directors.
The Board of Directors of the Company has established December 31, 2003 as the
record date for shareholders entitled to vote at the Annual Meeting. The
transfer books of the Company will not be closed. A total of 32,113,969 shares
of Common Stock are outstanding and entitled to vote at the meeting.
Abstentions and broker non-votes have no effect on any proposal to be voted
upon. Broker non-votes as to any matter are shares held by brokers and other
nominees which are voted at the meeting on matters as to which the nominee has
discretionary authority, but which are not voted on the matter in question
because the nominee does not have discretionary voting authority as to
such matter.
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GENERAL INFORMATION REGARDING CORPORATE GOVERNANCE
Board of Directors
The Board of Directors is the ultimate governing body of the Company. As such,
it functions within a framework of duties and requirements established by
statute, government regulations and court decisions. Generally, the Board of
Directors reviews and confirms the basic objectives and broad policies of the
Company, approves various important transactions, appoints the officers of the
Company and monitors Company performance in key results areas.
Board Composition
The Restated Articles of Incorporation of the Company provide that the Board
of Directors has the power to set the number of Directors constituting the
full Board, provided that such number shall not be less than five nor more
than fifteen. Until further action, the Board of Directors has fixed the
number of Directors constituting the full Board at seven, divided into three
classes. The terms of office of the three classes of Directors end in
successive years. The Board of Directors has determined that all of its
Directors are independent, other than Company employees David M. Kelly and
David J. DeCarlo.
During fiscal year 2003, there were five regularly scheduled meetings and one
special meeting of the Board of Directors.
Board Committees
There are three standing committees appointed by the Board of Directors -- the
Executive, Audit and Compensation Committees.
Management has the same responsibility to each Committee as it does to the
Board of Directors with respect to providing adequate staff services and
information. Furthermore, each Committee has the same power as the Board of
Directors to employ the services of outside consultants and to have
discussions and interviews with personnel of the Company and others.
The principal functions of the three standing committees are summarized as
follows:
Executive Committee
The Executive Committee is appointed by the Board of Directors to have and
exercise during periods between Board meetings all of the powers of the Board
of Directors, except that the Executive Committee may not elect Directors,
change the membership of or fill vacancies in the Executive Committee, change
the By-laws of the Company or exercise any authority specifically reserved by
the Board of Directors. Among the functions customarily performed by the
Executive Committee during periods between Board meetings are the approval,
within limitations previously established by the Board of Directors, of the
principal terms involved in sales of securities of the Company, and such
reviews as may be necessary of significant developments in major events and
litigation involving the Company. In addition, the Executive Committee is
called upon periodically to provide advice and counsel in the formulation of
corporate policy changes and, where it deems advisable, make recommendations
to the Board of Directors.
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The Executive Committee holds meetings at such times as are required. During
fiscal year 2003, the Executive Committee met two times. The members of the
Executive Committee are David M. Kelly (Chairman), David J. DeCarlo and John
D. Turner.
Audit Committee
The principal function of the Audit Committee is to provide oversight of (1)
the integrity of the Company's financial statements, reports on internal
controls and other financial information provided by the Company, (2) the
Company's compliance with legal and regulatory requirements, (3) the
qualifications and independence of the Company's independent auditors and (4)
the performance of the Company's internal audit function (including disclosure
controls and procedures for internal controls over financial reporting) and
independent auditors. The Committee will serve as a vehicle to provide an open
avenue of communication between the Company's Board of Directors and financial
management, the internal audit department, and independent auditors. The Audit
Committee is responsible for appointing the Company's independent auditors.
The Committee members are John P. O'Leary, Jr. (Chairman), William J.
Stallkamp and Robert J. Kavanaugh, all of whom the Board of Directors has
determined in its business judgment are "independent" from the Company and its
management as defined by the relevant provisions of the Sarbanes-Oxley Act of
2002 (the "Sarbanes-Oxley Act"). All members of the Audit Committee are
considered to meet the requirements of an Audit Committee financial expert as
defined by Securities and Exchange Commission ("SEC") regulations under the
Sarbanes-Oxley Act, and Mr. Kavanaugh has been designated as the Audit
Committee financial expert. During fiscal year 2003, the Audit Committee met
four times.
Compensation Committee
The principal functions of the Compensation Committee, the members of which
are William J. Stallkamp (Chairman), Robert J. Kavanaugh and John D. Turner,
are to review periodically the suitability of the remuneration arrangements
(including benefits), other than stock remuneration, for the principal
executives of the Company, and to prepare an annual report on executive
compensation for inclusion in the Company's proxy statement. A subcommittee
of the Compensation Committee, the Stock Compensation Committee, the members
of which are Messrs. Stallkamp (Chairman), Kavanaugh and Turner, consider and
grant stock remuneration and administer the Company's 1992 Stock Incentive
Plan. The Compensation Committee met three times during fiscal year 2003.
Meeting Attendance
Under the applicable rules of the SEC, the Company's Proxy Statement is
required to name those Directors who during the preceding year attended fewer
than 75% of the total number of meetings held by the Board and by the
Committees of which they are members. During fiscal year 2003, all Directors
attended more than 75% of such meetings for which they were eligible.
The Company does not have a formal policy with regard to Board members
attending the Annual Meeting of Shareholders, but it is customary for the
Board members to do so, and in general all or most of the Board members have
attended annual meetings in the recent past. All Board members attended the
2003 Annual Meeting of Shareholders.
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Compensation of Directors
Pursuant to the Director Fee Plan, Directors who are not also officers of the
Company each receive as an annual retainer fee shares of the Company's Class A
Common Stock equivalent to approximately $18,000. In addition, each such
Director is paid $1,250 for every meeting of the Board of Directors attended
and (other than a Chairman) $750 for every committee meeting attended. The
Chairman of a Committee of the Board of Directors is paid $1,000 for every
committee meeting attended. Directors may also elect to receive the common
stock equivalent of meeting fees. Each Director may elect to be paid these
shares on a current basis or have such shares credited to a deferred stock
account as phantom stock. No other remuneration is otherwise paid by the
Company to any Director for services as a Director.
Access to Directors
The shareholders of the Company may communicate in writing to the Board of
Directors by sending such communication to the Board or a particular Director
in care of Steven F. Nicola, Corporate Secretary, at the Company. At present,
such communications will be directly forwarded to the Board or such particular
Director, as applicable.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominations for election to the Board of Directors may be made by the Board of
Directors or by the shareholders. Glenn R. Mahone has been nominated by the
Board to serve for a two-year term that will end in 2006. David J. DeCarlo,
Robert J. Kavanaugh and John P. O'Leary, Jr., whose terms of office are
expiring, have been nominated by the Board to serve for a three-year term that
will end in 2007. Nominations made by the shareholders must be made in
writing in accordance with Section 6.1 of the Restated Articles of
Incorporation. No such nominations have been received.
The Company does not have a nominating committee. The Company believes that
obtaining input from all Directors in connection with Board nominations
enhances the nomination process. The Company does not currently have a charter
or written policy with regard to the nomination process (other than for
shareholder nominations). The Company intends to review and if necessary
modify its nomination process to comply with applicable law and SEC and NASDAQ
National Market System ("NASDAQ") regulations. The nominations of the
Directors standing for election or re-election at the 2004 Annual Meeting were
unanimously approved by the Board of Directors, including unanimous approval
by the independent Directors of the Board. These independent Directors meet
the requirements of independence set forth in the listing standards for
NASDAQ.
In connection with the nomination of new Director Glenn R. Mahone, the Company
hired a third party search firm to identify candidates. Several recommended
candidates were interviewed by the search firm and Mr. Mahone was selected to
be interviewed by the Board of Directors. Mr. Mahone was approved by the
Board, including a unanimous approval by the independent Directors of the
Board. The Company at present does not have any formal rules or policies
regarding minimum qualifications for candidates, but expects that its
candidates be of the highest ethical character, share the values of the
Company, have reputations, both personal and professional, consistent with the
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image and reputation of the Company, be highly accomplished in their
respective field, with superior credentials and recognition, and provide the
relevant expertise and experience necessary to assist the Board and the
Company to increase shareholder value.
The Board of Directors has no reason to believe that any of the nominees will
become unavailable for election. If any nominee should become unavailable
prior to the meeting, the accompanying proxy will be voted for the election in
the nominee's place of such other person as the Board of Directors may
recommend.
The Board of Directors recommends that you vote FOR the election of Directors.
The following information is furnished with respect to the persons nominated
by the Board of Directors for election as Directors and with respect to the
continuing Directors.
Nominees
David J. DeCarlo, age 58, is President, Bronze Division and has been a
Director of the Company since 1987. He was elected President, Bronze Division
in November 1993. Mr. DeCarlo received a Bachelor of Science Degree in
Industrial Management from West Virginia University in 1967, a Master of Arts
Degree in Economics and Statistics from the University of Pennsylvania in
1970, and an M.B.A. in Finance from the University of Pennsylvania Wharton
School of Finance in 1971 where he also completed all the required courses for
a Ph.D. in Applied Economics and Finance. Prior to joining Matthews, Mr.
DeCarlo held various management positions with Reynolds Aluminum Company,
Westinghouse Electric Corporation, and Joy Manufacturing Company where his
last position was Vice President of Field Operations.
Robert J. Kavanaugh, age 66, has been a Director of the Company since 1998.
Mr. Kavanaugh is a retired partner of the Pittsburgh office of Arthur Andersen
LLP, an accounting firm. Mr. Kavanaugh has more than 38 years of experience
assisting clients in numerous industries and has extensive experience
in public reporting, SEC related matters, and mergers and acquisitions.
Mr. Kavanaugh served as the advisory partner to a number of major clients,
both public and private. Mr. Kavanaugh retired from Arthur Andersen LLP in
August 1996.
Glenn R. Mahone, age 58, was elected to the Board of Directors of the Company
in April 2003 to fill a vacant position. Since 1991 Mr. Mahone has been a
partner in the Business and Finance Department and a member of the Executive
Committee of Reed Smith LLP, a national law firm that provides legal services
to the Company. Prior thereto, he spent ten years in the radio broadcast
industry as a chief executive, entrepreneur and owner, and served on the board
of directors of the two major trade associations which provide leadership to
the radio broadcast industry. Mr. Mahone holds Master of Laws, Juris Doctor
and Bachelor of Science degrees from Yale University, Duquesne University and
the Pennsylvania State University, respectively. He is currently the Chairman
of the Board of the Allegheny County Airport Authority and the Manchester
Bidwell Corporation, and is a member of the Board of Trustees of Westminster
College.
John P. O'Leary, Jr., age 57, has been a Director of the Company since 1992.
Mr. O'Leary was appointed Senior Vice President, SCA North America, a
packaging supplier, in May 2002. Prior thereto, he was President and Chief
Executive Officer of Tuscarora Incorporated ("Tuscarora"), a wholly-owned
subsidiary of SCA Packaging International B.V. and a division of SCA North
America. Tuscarora is a leading producer and manufacturer of custom design
9
protective packaging. Preceding SCA's acquisition of Tuscarora, Mr. O'Leary
served as Chairman of Tuscarora's Board of Directors. Mr. O'Leary holds a
Masters in Business Administration from the University of Pennsylvania Wharton
School of Business and received a Bachelor's Degree in Economics from
Gettysburg College. He currently serves on the Board of Directors of the
Beaver County Educational Trust and is a Trustee of Gettysburg College.
Continuing Directors
David M. Kelly, age 61, was elected Chairman of the Board on March 15, 1996.
He joined the Company on April 3, 1995 as President and Chief Operating
Officer and was appointed Chief Executive Officer on October 1, 1995. Prior
to his employment with the Company, Mr. Kelly was employed by Carrier
Corporation for 23 years. During that time, his positions included Marketing
Vice President for Asia Pacific; President of Japanese Operations; Vice
President, Manufacturing; President of North American Operations; and Senior
Vice President for Carrier's residential and light commercial businesses. Mr.
Kelly received a Bachelor of Science in Physics from Boston College in 1964, a
Master of Science Degree in Molecular Biophysics from Yale University in 1966,
and a Master of Business Administration from Harvard Business School in 1968.
He is Chairman of the Executive Committee and the Jas. H. Matthews & Co.
Educational and Charitable Trust, a member of the Company's Pension Board, and
serves on the boards of various subsidiaries of Matthews International
Corporation. Mr. Kelly is a member of the Board of Directors of DQE, Inc.,
Mestek, Inc., Elliott Company, and the United Way of Allegheny County.
William J. Stallkamp, age 64, has been a Director of the Company since 1981.
Mr. Stallkamp was a Vice Chairman of Mellon Financial Corporation, a financial
services company, in Pittsburgh, PA and Chairman and Chief Executive Officer
of Mellon PSFS in Philadelphia, PA until his retirement on January 1, 2000.
Until January 2002, he was a fund advisor and Chairman of the Operations Group
at Safeguard Scientifics, Inc., a technology company. Currently, he is
Managing Partner of Penn Hudson Financial Group, a private investment bank in
Philadelphia. He received a Bachelor of Science Degree in Business
Administration from Miami University of Oxford, Ohio. He serves as a Director
of W.J. Cowee, Inc., United Concordia Companies, Inc., Highmark Blue
Cross/Blue Shield, The Smithers-Oasis Company and Medmark, Inc. He also
serves as the Chairman of the Board of Directors of Akcelerant Holdings, Inc.
He is a member of the Board of Directors for YMCA of Philadelphia and
Vicinity, the Southeastern Pennsylvania Chapter of the American Red Cross and
the Franklin Institute and Gwynedd - Mercy College.
John D. Turner, age 57, has been a Director of the Company since April 1999.
Mr. Turner retired as Chairman and Chief Executive Officer of Copperweld
Corporation, a manufacturer of tubular and bimetallic wire products, on March
31, 2003, where he had served as Chief Executive Officer since 1988. He
joined Copperweld in 1984 as Group Vice President - Marketing & Sales and
later held the positions of Group Vice President - Specialty Bar & Tubing and
Executive Vice President. Mr. Turner received a Bachelor's Degree in Biology
from Colgate University. He currently serves on the Board of Directors of
DQE, Inc., the Coalition of Christian Outreach, the Greater Pittsburgh
Council, Boy Scouts of America and the American Red Cross, Chautauqua County
Chapter. Mr. Turner is also a member of the Advisory Board of the Fellowship
of Christian Athletes and serves on the Board of Trustees of Geneva College.
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The term for each nominee and Director is listed below:
Term to expire at Annual
Nominees: Meeting of Shareholders in:
-------- --------------------------
Glenn R. Mahone 2006
David J. DeCarlo 2007
Robert J. Kavanaugh 2007
John P. O'Leary, Jr. 2007
Continuing Directors:
--------------------
David M. Kelly 2005
John D. Turner 2005
William J. Stallkamp 2006
PROPOSAL 2
SELECTION OF AUDITORS
The Audit Committee of the Company's Board of Directors has appointed
PricewaterhouseCoopers LLP as independent auditors to audit the records of the
Company for the year ending September 30, 2004.
The Board of Directors has determined that it would be desirable to request an
expression of opinion from the shareholders on the appointment. Ratification
of the appointment of PricewaterhouseCoopers LLP requires the affirmative vote
of a majority of all the votes cast by shareholders of Common Stock entitled
to vote at the meeting. If the shareholders do not ratify the selection of
PricewaterhouseCoopers LLP, the selection of alternative independent auditors
will be considered by the Audit Committee.
It is not expected that any representative of PricewaterhouseCoopers LLP will
be present at the Annual Meeting of Shareholders.
The Board of Directors recommends that you vote FOR Proposal 2.
STOCK OWNERSHIP
The Company's Restated Articles of Incorporation divide its voting stock into
three classes: Preferred Stock, and Class A and Class B Common Stock. At the
present time, none of the Preferred Stock or Class B Common Stock is issued or
outstanding. The following information is furnished with respect to persons
who the Company believes, based on its records, beneficially own more than
five percent of the outstanding shares of Class A Common Stock of the Company,
and with respect to Directors, officers and executive management. Those
individuals with more than five percent of such shares could be deemed to be
"control persons" of the Company.
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This information is as of November 30, 2003.
Number of
Class A Shares
Name of Beneficially Percent
Beneficial Owner (1) Owned (2) of Class
---------------- -------------- --------
Directors, Officers and Executive Management:
--------------------------------------------
D.M. Kelly 395,641 (3) 1.2%
J.C. Bartolacci 43,470 (3) 0.1
E.J. Boyle 118,334 (3) 0.4
D.J. DeCarlo 84,817 (3) 0.3
R.J. Kavanaugh 2,000 *
G.R. Mahone - *
J.H. Maurer 3,337 *
J.P. O'Leary, Jr. 23,824 0.1
W.J. Stallkamp 8,500 *
J.D. Turner 4,000 *
All Directors, officers and executive
management as a group (14 persons) 879,886 (3) 2.7
Others:
------
Ariel Capital Management, Inc.
200 East Randolph Drive, Suite 2900
Chicago, IL 60601 3,889,197 12.1
Neuberger Berman, LLC
605 Third Avenue
New York, NY 10158 2,935,670 9.2
Select Equity Group, Inc.
380 Lafayette Street, 6th Floor
New York, NY 10003 2,927,123 9.1
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202 2,750,700 8.6
* Less than 0.1%
(1) Unless otherwise noted, the mailing address of each beneficial owner is
the same as that of the Registrant.
(2) The nature of the beneficial ownership for all shares is sole voting and
investment power, except as follows:
Ariel Capital Management, Inc. has no beneficial (economic) interest in
any of the 3,889,197 shares. Ariel Capital Management, Inc. holds
the voting power and/or investment discretion solely in a fiduciary
capacity as investment adviser for its clients. No client
individually owns 5% or more of Matthews International Corporation
common stock. Ariel Capital Management, Inc., in its capacity as
investment adviser, has sole voting power for 3,174,047 shares and
sole investment discretion for 3,889,197 shares.
Neuberger Berman, LLC ("NB"), is a registered investment advisor. In
its capacity as investment advisor, NB may have discretionary
authority to dispose of or to vote shares that are under its
management. As a result, NB may be deemed to have beneficial
ownership of such shares. NB does not, however, have any economic
interest in the shares. The clients are the actual owners of the
shares and have the sole right to receive and the power to direct the
receipt of dividends from or proceeds from the sale of such shares.
As of November 30, 2003, of the shares set forth above, NB had shared
dispositive power with respect to 2,935,670 shares, sole voting power
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with respect to 51,700 shares and shared voting power on 2,060,700.
With regard to the shared voting power, Neuberger Berman Management,
Inc. and Neuberger Berman Funds are deemed to be beneficial owners
for purposes of Rule 13(d) since they have shared power to make
decisions whether to retain or dispose of the securities. NB is the
sub-advisor to the above referenced Funds. It should be further
noted that the above mentioned shares are also included with the
shared power to dispose calculation.
Select Equity Group, Inc. has sole voting and dispositive power
relating to 2,487,207 shares, and shares voting and dispositive power
relating to 439,916 shares with another investment advisor under
common control. Select Equity Group, Inc. may be deemed to be the
beneficial owner of all 2,927,123 shares. All of these shares are
held solely for the benefit of investment advisory clients, and
Select Equity Group, Inc. disclaims beneficial ownership of the
shares.
Shares held by T. Rowe Price Associates, Inc. ("Price Associates") are
owned by various individual and institutional investors for which
Price Associates serves as investment advisor with power to direct
investments and/or power to vote the shares. For purposes of the
reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such shares;
however, Price Associates expressly disclaims that it is, in fact,
the beneficial owner of such shares. Price Associates has sole
dispositive power for 2,750,700 shares and sole voting power for
805,600 shares.
(3) Includes options exercisable within 60 days of November 30, 2003 as
follows: Mr. Kelly, 241,467 shares; Mr. Bartolacci, 20,667 shares;
Mr. Boyle, 45,334 shares; Mr. DeCarlo, 24,667 shares; and all Directors
and officers as a group, 433,135 shares.
COMPENSATION OF EXECUTIVE MANAGEMENT AND RETIREMENT BENEFITS
The following table sets forth the individual compensation information for the
fiscal years ended September 30, 2003, 2002 and 2001 for the Company's Chief
Executive Officer and the four most highly compensated executives.
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SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
----------------- -----------------------
Awards Payouts
------ ------- All
Securities Other
Name of Individual Underlying LTIP Compen-
and Principal Position Year Salary Bonus Options Payouts sation
---------------------- ---- ------- ------- ---------- --------- -------
(1) (Shares) (2) (3)
David M. Kelly 2003 $433,253 $437,289 120,000 $455,682 $ 236
Chairman of the Board and 2002 412,002 422,642 140,000 437,878 204
Chief Executive Officer 2001 376,506 385,365 112,000 262,878 1,195
David J. DeCarlo 2003 260,865 193,906 100,000 137,987 2,083
Director and President, 2002 250,245 177,282 38,000 217,841 1,892
Bronze Division 2001 238,380 174,685 28,000 372,415 1,564
Edward J. Boyle 2003 214,767 131,368 80,000 140,664 1,621
Chief Financial Officer, 2002 200,250 124,200 35,000 124,909 1,472
Secretary and Treasurer 2001 174,300 109,876 26,000 114,639 990
Jonathan H. Maurer (4) 2003 200,850 124,513 20,000 - 1,200
President, York Casket 2002 93,750 35,663 20,000 - 2,400
Division
Joseph C. Bartolacci 2003 175,745 94,691 40,000 98,388 37,255
Executive Vice President 2002 166,050 85,000 18,000 88,741 39,330
(1) Includes the current portion of management incentive plan and supplemental management
incentive payments. The Company has adopted a management incentive plan for officers and
key management personnel. Participants in such plan are not eligible for the Company's
profit distribution plan. The incentive plan is based on improvement in divisional and
Company economic value added and the attainment of established personal goals. A portion
of amounts earned are deferred by the Company and are payable with interest at a market
rate over a two-year period contingent upon economic value added performance and continued
employment during such period. See Long-Term Incentive Plans - Awards in Last Fiscal Year
table.
(2) Represents payments of deferred amounts under the management incentive plan.
(3) Includes premiums for term life insurance and educational assistance for dependent children.
Each officer of the Company is provided term life insurance coverage in an amount equivalent
to approximately three times their respective salary. Educational assistance for dependent
children is provided to any officer or employee of the Company whose child meets the
scholastic eligibility criteria and is attending an eligible college or university. Amounts
reported in this column include only life insurance benefit costs, except for Mr. Maurer and
Mr. Bartolacci. In fiscal years 2003 and 2002, Mr. Maurer received $1,200 and $2,400,
respectively, under the educational assistance program. The amounts reported in this column
in fiscal years 2003 and 2002 for Mr. Bartolacci include supplemental compensation of
$36,742 and $38,886, respectively, to cover expenses while on an international assignment.
(4) Mr. Maurer joined the Company as an officer on April 8, 2002.
The Summary Compensation Table does not include expenses of the Company for
incidental benefits of a limited nature to executives, including the use of
Company vehicles, club memberships, dues, or tax planning services. The
Company believes such incidental benefits are in the conduct of the Company's
business; but, to the extent such benefits and use would be considered
personal benefits, the value thereof is not reasonably ascertainable and does
not exceed, with respect to any individual named in the Summary Compensation
Table, the lesser of $50,000 or 10% of the annual compensation reported in
such table.
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Long-Term Incentive Plans - Awards in Last Fiscal Year
Performance Estimated Future
or Other Payouts Under
Number Period Non-Stock Price-
of Shares Until Based Plans
or Other Maturation ----------------
Name Rights or Payout Maximum
------------- ---------- ----------- ----------------
D.M. Kelly - 2 Years $485,612
D.J. DeCarlo - 2 Years 388,376
E.J. Boyle - 2 Years 144,920
J.H. Maurer - 2 Years 252,045
J.C. Bartolacci - 2 Years 98,711
The Company has a management incentive plan based on improvement in divisional and
Company economic value added and the attainment of established personal goals. A
portion of amounts earned are deferred by the Company and are payable with interest at
a market rate over a two-year period contingent upon economic value added performance
and continued employment during such period. Payment of these amounts may be subject
to further deferral by the Company under the deferred compensation provisions of the
management incentive plan.
Option/SAR Grants in Last Fiscal Year
Potential Realized
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants (1) Option Term
----------------------------------------------------------------- ----------------------
Percent
of Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base
Options in Fiscal Price Expiration
Name Granted Year per Share Date 5% 10%
-------------- ---------- ---------- --------- ---------- ---------- --------
D.M. Kelly 120,000 19.8% $21.81 12/19/12 $1,645,943 $4,171,143
D.J. DeCarlo 100,000 16.5 21.81 12/19/12 1,371,619 3,475,952
E.J. Boyle 80,000 13.2 21.81 12/19/12 1,097,295 2,780,762
J.H. Maurer 20,000 3.3 21.81 12/19/12 274,324 695,190
J.C. Bartolacci 40,000 6.6 21.81 12/19/12 548,648 1,390,381
(1) All options were granted at market value as of the date of grant. Options are
exercisable in various share amounts based on the attainment of certain market value
levels of Class A Common Stock, but, in the absence of such events, are exercisable in
full for a one-week period beginning five years from the date of grant. In addition,
except for the options granted to Mr. Boyle, options vest in one-third increments after
three, four and five years, respectively, from the grant date (but, in any event, not
until the attainment of the certain market value levels described above). The options
are not exercisable within six months from the date of grant and expire on the earlier of
ten years from the date of grant, upon employment termination, or within specified time
limits following voluntary employment termination (with consent of the Company),
retirement or death.
15
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
Number of Value of Unexercised
Shares Securities Underlying In-the-Money Options
Acquired Unexercised Options at Fiscal Year End
On Value -------------------------- --------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
--------------- -------- -------- ----------- ------------- ----------- -------------
D.M. Kelly 459,200 $6,810,646 265,666 555,334 $3,397,005 $4,565,489
D.J. DeCarlo 398,667 5,188,255 - 265,333 - 2,149,742
E.J. Boyle 128,000 1,283,230 26,667 166,333 125,601 1,304,415
J.H. Maurer - - - 40,000 - 94,200
J.C. Bartolacci 60,233 708,965 3,334 86,666 45,597 594,893
Report of the Compensation Committee
The Company's executive compensation policies are administered by the
Compensation Committee of the Board of Directors. The Committee consists of
three independent, non-employee Directors: Messrs. Stallkamp (Chairman),
Kavanaugh and Turner. Executive compensation for the Company's Chief
Executive Officer and the four other most highly compensated executives is
presented in the Summary Compensation Table.
Objectives and Policies
-----------------------
The Compensation Committee seeks to:
.. Ensure that there is a strong linkage between executive compensation and
the creation of shareowner value;
.. Align the interests of the Company's executives with those of its
shareholders through potential stock ownership;
.. Ensure that compensation and incentives are at levels that enable the
Company to attract and retain high-quality executives.
Compensation Philosophy
-----------------------
The Company maintains a compensation philosophy that targets fixed
compensation (i.e., base salaries) below the median of comparable companies,
with greater emphasis placed on variable components of pay. We define the
competitive market for executive pay to include companies of similar size and
scope to Matthews.
Components of Compensation
--------------------------
The Company's executive compensation program presently is comprised of three
elements: base salary, annual incentives (bonuses) and stock options. An
independent executive compensation consulting firm is periodically engaged to
provide comparative market compensation data.
Base Salary
-----------
The objective of the base salary policy is to target compensation at a level
slightly below the median level in comparison to the market and to reflect
individual performance when determining actual pay. An outside consulting
firm specializing in such services is retained periodically to compare
executives' salaries with other executives at corporations whose annual
revenues are similar in size to Matthews. Accordingly, base salaries of
executives for calendar 2003 were increased over calendar 2002 to reflect
competitive market pay practices.
16
Annual Incentive Compensation (Bonuses)
---------------------------------------
Annual incentive payments paid to executives in 2003 were based upon the
improvement in economic value added over the prior two years' base. Economic
value added is defined for this purpose as operating profit less the
associated capital cost of operating assets. The incentive pools are
determined based upon a percentage of absolute economic value added plus a
percentage of the incremental economic value added over a two-year base. The
incentive pools are distributed to individuals based upon each participant's
target incentive and performance relative to achievement of personal goals.
Earned incentive awards that exceed target levels are deferred and paid in the
subsequent two fiscal years. Payment of deferred amounts may be subject to
further deferral by the Company under the deferred compensation provisions of
the management incentive plan. In 2003, certain executives received a payout
of fifty percent of incentive award amounts earned and deferred from fiscal
years 2002 and 2001. The remaining fifty percent earned in fiscal 2002 is
payable in 2004 contingent upon economic value added performance and continued
employment (except in the event of death or retirement) during fiscal 2004. In
fiscal 2003, certain executives earned incentive awards in excess of target
levels. Amounts in excess of target have been deferred and are payable
contingent upon economic value added performance and continued employment
(except in the event of death or retirement) during fiscal years 2004 and
2005.
Stock Options
-------------
Stock options, which are an integral part of incentive compensation for the
executives of the Company, serve to encourage share ownership by Company
executives and thus align the interests of executive management and
shareholders. The Stock Compensation Committee (Messrs. Stallkamp, Kavanaugh
and Turner) approves periodic grants of stock options to executives and other
key employees of the Company to foster a commitment to increasing long-term
shareholder value. An outside consulting firm specializing in such services
was retained in fiscal 2003 to provide guidance on executives' stock options
compared with other executives at corporations whose annual revenues are
similar in size to Matthews. During fiscal 2003, certain executives and other
personnel were granted non-statutory stock options to purchase a combined
total of 607,525 shares of the Company's stock at fair market value at the
time of the grants.
Report on 2003 CEO Compensation
-------------------------------
The Chief Executive Officer's compensation is established based on the
philosophy and policies enunciated above for all executive management. This
includes cash compensation (base salary and annual cash incentive payouts) and
long-term incentives (stock option awards). In calendar 2003, Mr. Kelly's
base salary was increased 3.6 percent. Mr. Kelly's annual incentive paid in
2003 was based upon the annual incentive plan described above. Mr. Kelly was
granted 120,000 non-statutory stock options in fiscal 2003 under the 1992
Stock Incentive Plan to further align his long-term interests with those of
the Company's shareholders.
Tax Policy
----------
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")
disallows federal income tax deductions for compensation paid to the Chief
Executive Officer and any of the other four highest compensated executives in
excess of $1 million in any taxable year, subject to certain exceptions. One
17
exception involves compensation paid pursuant to shareholder-approved
compensation plans that are performance-based. Certain of the provisions in
the Company's 1992 Stock Incentive Plan, as amended, are intended to cause
grants of stock options under such plan to be eligible for this performance-
based exception (so that compensation upon exercise of such options should be
deductible under the Code). Payments of cash compensation to executives (and
certain other benefits which could be awarded under the plan, such as
restricted stock) are not at present eligible for this performance-based
exception. The Committee has taken and intends to continue to take whatever
actions are necessary to minimize, if not eliminate, the Company's
non-deductible compensation expense, while maintaining, to the extent
possible, the flexibility which the Committee believes to be an important
element of the Company's executive compensation program. Compensation paid to
the Chief Executive Officer and any of the other four highest compensated
executives has not exceeded $1 million in any taxable year.
Compensation Committee:
W.J. Stallkamp, Chairman
R.J. Kavanaugh
J.D. Turner
December 15, 2003
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN *
AMONG MATTHEWS INTERNATIONAL CORPORATION,
S&P 500 INDEX AND S&P SMALLCAP 600 INDEX **
S&P 500 S&P SmallCap
Year Matthews Index 600 Index
---- -------- ------- ------------
1998 100 100 100
1999 121 128 118
2000 119 145 147
2001 180 106 133
2002 191 85 132
2003 217 105 168
* Total return assumes dividend reinvestment
** Fiscal year ended September 30
Note:
Performance graph assumes $100 invested on October 1, 1998 in Matthews
International Corporation Common Stock, Standard & Poor's (S&P) 500 Index and
S&P SmallCap 600 Index. The results are not necessarily indicative of future
performance.
Retirement Plans
The Company's domestic retirement plan is noncontributory and provides
benefits based upon length of service and final average earnings. Generally,
employees age 21 with one year of continuous service are eligible to
participate in the retirement plan. The benefit formula is 3/4 of 1% of the
first $550 of final average monthly earnings plus 1-1/4% of the excess times
years of credited service (maximum 35 years). The plan is an insured, defined
benefit plan and covered compensation is limited generally to base salary or
18
wages. Benefits are not subject to any deduction or offset for Social
Security.
In addition to benefits provided by the Company's retirement plan, the Company
has a Supplemental Retirement Plan, which provides for supplemental pension
benefits to executive officers of the Company designated by the Board of
Directors. Upon normal retirement under this plan, such individuals who meet
stipulated age and service requirements are entitled to receive monthly
supplemental retirement payments which, when added to their pension under the
Company's retirement plan and their maximum anticipated Social Security
primary insurance amount, equal, in total, 1.85% of final average monthly
earnings (including incentive compensation) times the individual's years of
continuous service (subject to a maximum of 35 years). Upon early retirement
under this plan, reduced benefits will be provided, depending upon age and
years of service. Benefits under this plan do not vest until age 55 and the
attainment of 15 years of continuous service. However, in order to recruit
Mr. Kelly, the Company waived such minimum service requirement with respect to
Mr. Kelly. No benefits will be payable under such supplemental plan following
the voluntary employment termination or death of any such individual. The
Supplemental Retirement Plan is unfunded; however, a provision has been made
on the Company's books for the actuarially computed obligation.
The following table shows the total estimated annual retirement benefits
payable at normal retirement under the above plans for the individuals named
in the Summary Compensation Table at the specified executive remuneration and
years of continuous service:
Years of Continuous Service
Covered ----------------------------------------------------
Remuneration 15 20 25 30 35
------------------ -------- -------- -------- -------- --------
$ 150,000 $ 41,625 $ 55,500 $ 69,375 $ 83,250 $ 97,125
200,000 55,500 74,000 92,500 111,000 129,500
250,000 69,375 92,500 115,625 138,750 161,875
300,000 83,250 111,000 138,750 166,500 194,250
400,000 111,000 148,000 185,000 222,000 259,000
500,000 138,750 185,000 231,250 277,500 323,750
600,000 166,500 222,000 277,500 333,000 388,500
700,000 194,250 259,000 323,750 388,500 453,250
800,000 222,000 296,000 370,000 444,000 518,000
900,000 249,750 333,000 416,250 499,500 582,750
1,000,000 277,500 370,000 462,500 555,000 647,500
The table shows benefits at the normal retirement age of 65, before applicable
reductions for social security benefits. The Employee Retirement Income
Security Act of 1974 places limitations, which may vary from time to time, on
pensions which may be paid under federal income tax qualified plans, and some
of the amounts shown on the foregoing table may exceed the applicable
limitation. Such limitations are not currently applicable to the Company's
Supplemental Retirement Plan.
Estimated years of continuous service for each of the individuals named in the
Summary Compensation Table, as of October 1, 2003 and rounded to the next
higher year, are: Mr. Kelly, 9 years; Mr. DeCarlo, 19 years; Mr. Boyle, 17
years; Mr. Maurer, 2 years; and Mr. Bartolacci, 7 years.
19
AUDIT COMMITTEE MATTERS
Report of the Audit Committee
The Audit Committee of Matthews International Corporation is composed of three
independent Directors. The Committee operates under a written charter adopted
by the Company's Board of Directors (filed herewith under Appendix A).
Management of the Company has the primary responsibility for the financial
statements and the reporting process, including the system of internal
controls. The Audit Committee is responsible for reviewing the Company's
financial reporting process on behalf of the Board of Directors.
In this context, the Audit Committee has met and held discussions with
management and the independent auditors. Management represented to the
Committee that the Company's consolidated financial statements were prepared
in accordance with generally accepted accounting principles, and the Committee
has discussed the consolidated financial statements with management and the
independent auditors. The Committee discussed with the independent auditors
matters required to be discussed by Statement on Auditing Standards ("SAS")
No. 61, "Communication With Audit Committees" and SAS No. 90, "Audit Committee
Communications."
The Company's independent auditors also provided to the Committee the written
disclosures required by Independence Standards Board Standard No. 1,
"Independence Discussions With Audit Committees," and the Committee discussed
with the independent auditors that firm's independence.
The Committee discussed with the Company's internal and independent auditors
the overall scope and plan for their respective audits. The Committee meets
with the internal and independent auditors to discuss the results of their
examinations, their evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting.
Based on the Committee's discussions referred to above and the Committee's
review of the report of the independent auditors on the consolidated financial
statements of the Company for the year ended September 30, 2003, the Committee
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the
year ended September 30, 2003 for filing with the Securities and Exchange
Commission.
Audit Committee:
J.P. O'Leary, Jr., Chairman
R.J. Kavanaugh
W.J. Stallkamp
December 15, 2003
20
Relationship with Independent Auditors
PricewaterhouseCoopers LLP ("PwC") has been the independent auditors
performing the audits of the consolidated financial statements of the Company
since 1983. PwC periodically changes the personnel assigned to the annual
audit engagements. In addition to performing the audit of the Company's
consolidated financial statements, PwC provided various other services during
fiscal 2003 and 2002. The aggregate fees (including out-of-pocket expenses)
billed for fiscal 2003 and 2002 for each of the following categories of
services are set forth below:
2003 2002
Audit fees (includes audits and reviews of the
Company's fiscal 2003 and 2002 financial statements) $288,484 $368,910
Audit-related fees (primarily audits of the
Company's various employee benefit plans) 62,386 89,168
Tax fees 48,495 255,702
All other fees - -
The Audit Committee reviews summaries of services provided by PwC and the
related fees and has considered whether the provision for non-audit services
is compatible with maintaining the independence of PwC.
SHAREHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
Shareholders may make proposals for inclusion in the proxy statement and proxy
form for the 2005 Annual Meeting of Shareholders. To be considered for
inclusion, any such proposal should be written and mailed to the Secretary of
the Company at the corporate office for receipt by September 20, 2004.
Section 2.09 of the By-laws of the Company requires that any shareholder
intending to present a proposal for action at an Annual Meeting must give
written notice of the proposal, containing the information specified in such
Section 2.09, so that it is received by the Company not later than the notice
deadline determined under such Section 2.09. This notice deadline will
generally be 75 days prior to the anniversary of the Company's Annual Meeting
for the previous year, or December 6, 2004 for the Company's Annual Meeting
in 2005. Any shareholder proposal received by the Secretary of the Company
after December 6, 2004 will be considered untimely under Rule 14a-4(c)(1)
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
OTHER MATTERS
The cost of soliciting proxies in the accompanying form will be paid by
the Company. Shareholder votes at the Annual Meeting will be tabulated by
the Company's transfer agent, Computershare Investor Services LLC. A copy of
the Company's Annual Report for 2003 has previously been mailed to each
shareholder of record, or will be mailed with this Proxy Statement.
By Order of The Board of Directors
Steven F. Nicola
Steven F. Nicola
Corporate Secretary
21
APPENDIX A
Matthews International Corporation
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
A. Background
Matthews' Board of Directors first appointed an Audit Committee in 1980.
The Committee has been composed of three independent Directors since 1988.
B. Purpose
The Audit Committee was appointed by the Board of Directors to provide
oversight of (1) the integrity of the Company's financial statements,
reports on internal controls and other financial information provided by
the Company, (2) the Company's compliance with legal and regulatory
requirements, (3) the qualifications and independence of the Company's
independent auditors and (4) the performance of the Company's internal
audit function (including disclosure controls and procedures for internal
controls over financial reporting) and independent auditors. The Committee
will serve as a vehicle to provide an open avenue of communication between
the Company's Board of Directors and financial management, the internal
audit department, and independent auditors.
The Audit Committee will report quarterly to the Company's Board of
Directors. In addition, the Committee will prepare a report to be
included in the Company's annual proxy statement as prescribed by the
Securities and Exchange Commission.
C. Structure
The Audit Committee members shall consist of a minimum of three
independent Directors (as such term is hereafter defined by securities law
and rules and regulations of the Securities and Exchange Commission
("SEC") and the NASDAQ National Market System ("NASDAQ")) appointed by the
Board of Directors, with one member appointed Chairman of the Committee.
All members must be financially literate and, accordingly, be able to read
and understand financial statements. One member of the Committee will be
designated by the Board of Directors as the "Financial Expert" as defined
by the Sarbanes-Oxley Act of 2002.
D. Meetings
The Audit Committee shall meet a minimum of six times per year. One
meeting should occur prior to each of the Company's three quarterly
earnings releases and its annual fiscal year earnings release. Each
meeting which includes discussions of Company financial results should be
attended by representatives of the Company's independent auditors and the
Company's senior financial management. The meetings will follow a formal
agenda and will allow for open discussion among all parties. The
following items will also be discussed during at least one of the two
other meetings held by the Committee: status of the internal audit
program; the Company's Code of Ethics Applicable to Executive Management;
the Company's Ethics Statement; EPA/OSHA programs, policies, and issues,
22
if any; Employee Assistance Program; employee Hot Line; the Company's
insurance programs and employment practices.
E. Duties of the Audit Committee Related to Financial and Audit Matters
1. Review the Company's annual financial statements. Determine, based
on review and discussion of the audited financial statements with
management and the independent auditors, whether the Committee
should recommend to the Board that the audited financial statements
and any internal control report be included in the Company's Annual
Report on Form 10-K.
2. Discuss with financial management and the independent auditors each
Form 10-Q prior to its filing.
3. Discuss with management and the independent auditors the intended
disclosures under "Management's Discussion and Analysis" in the
annual and quarterly reports.
4. Appoint the Company's independent auditors (considering independence
and effectiveness), review the adequacy of the Company's independent
auditors and make any change of the independent auditors when
circumstances warrant. Approve the fees and other compensation to
be paid to the independent auditors.
5. On an annual basis, review and discuss with the independent auditors
all significant relationships the auditors have with the Company to
determine the auditors' independence and obtain a written disclosure
of all relationships between the auditors and the Company consistent
with Independence Standards Board Standard No. 1. The Committee
shall also ensure that the independent auditors meet all
requirements for audit partner rotation under applicable securities
laws and SEC and NASDAQ rules and regulations, and shall monitor any
hiring by the Company of persons who were employed by the Company's
independent auditors to ensure that such hiring does not adversely
affect the auditors' independence. The Committee shall also ensure
that the Company's independent auditors are a "registered public
accounting firm" registered with the Public Company Accounting
Oversight Board. Discuss composition of the audit team, scope of
coverage to be provided by the independent auditors with respect to
wholly-owned subsidiaries and/or partially owned companies and the
services to be provided by the independent auditors.
6. Discuss with the independent auditors at least annually the
auditors' internal quality control procedures and any material
issues raised by the most recent peer review.
7. Review earnings releases, as well as financial information and
earnings guidance provided to the public prior to such release.
8. Pre-approve all auditing and permitted non-audit services to be
provided by the independent auditors (including determining whether
any proposed non-audit services fall within the categories of
non-audit services prohibited under the Sarbanes-Oxley Act of 2002)
with the exception of de minimus non-audit services (as such term is
defined in the Sarbanes-Oxley Act of 2002) which are approved by the
Committee prior to completion of the audit. The Committee may
delegate pre-approval authority to one or more of its members, under
the condition that any decision taken by the delegated members must
be presented to the Committee at its regular meetings. The
Committee may also adopt policies and procedures with respect to
23
pre-approval of permitted non-audit services, provided that such
policies and procedures conform to the requirements set forth in
applicable laws, rules and regulations (including publication of the
pre-approval policy).
9. Periodically consult with independent auditors out of the presence
of management about internal controls and the fullness and accuracy
of the Company's financial statements. In addition, meet separately
with management and with internal auditors to discuss such issues in
a confidential manner.
10. In consultation with the independent auditors and the internal audit
department, review the integrity of the Company's financial
reporting processes and controls, both internal and external.
11. Review all internal audit reports and management's response.
12. Review reports by the independent auditors concerning critical
accounting policies and practices used, alternative treatments of
financial information and their ramifications that have been
discussed with management, and other written communications between
the independent auditors and management, and resolve any disputes
between the independent auditors and management regarding financial
reporting matters.
13. Review the independent auditors' annual Management Letter to the
Company and any other issues raised by the independent auditor, as
well as management's response and actions regarding such comments
and issues.
14. Review the Company's proposed internal audit schedule for the
ensuing fiscal year.
15. Consider and recommend to the Board, if appropriate, major changes
to the Company's auditing and accounting principles and practices as
suggested by the independent auditors, management, or the internal
audit department.
F. Other Responsibilities of the Committee
1. Review annually and update, as appropriate, the Committee's written
Charter.
2. Review the Company's Code of Ethics Applicable to Executive
Management and the Company's Ethics Statement (including without
limitation provisions applicable to senior financial officers and
the Company's CEO, CFO, principal accounting officer, controller and
persons performing similar functions) and ensure that management has
established a system to enforce the Code and Ethics Statement and
report any changes in, or waivers of, the Code and Ethics Statement,
all in accordance with applicable securities laws and SEC and NASDAQ
rules and regulations.
3. Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls and auditing matters.
4. Establish procedures for confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing
matters.
24
5. Require Company management to report employee Hot Line activity to
the Committee.
6. Discuss with management policies with respect to risk assessment and
risk management.
7. Meet with the Company's OSHA and EPA coordinator from time to time
to discuss Company policy and practices with respect to employee
health and safety programs and to determine the adequacy of the
Company's compliance with governmental environment, safety, and
health regulations.
8. Require management to report annually to the Board of Directors the
scope of the Company's property and casualty and executive risk
insurance programs.
9. Require management to report all known instances of employee fraud,
theft, embezzlement, etc.
10. Require management and/or the Company's independent auditors to
discuss from time to time the status of the Company's retirement
programs, such as the defined benefit and 401(K) Plans.
11. Review with management and, where appropriate, independent legal
counsel, legal compliance matters including corporate securities
trading, reporting and disclosure policies.
12. Review with management and, where appropriate, independent legal
counsel, any legal matter that could have a significant impact on
the Company's financial statements.
13. Engage independent counsel or other advisers as deemed advisable by
the Committee and determine the fees to be paid to such counsel or
advisers.
14. Review and approve any material "related party transaction" between
the Company and any of its Directors, executive officers and other
insiders (as defined in applicable securities laws, rules and
regulations). Further, any member of the Audit Committee should not
accept any consulting, advisory or other compensatory fee from the
Company, other than in such member's capacity as a member of the
Board of Directors and any Board committee.
15. Perform any other activities consistent with this Charter, the
Company's By-laws and applicable law, rules and regulations, as the
Committee or the Board deems necessary or appropriate.
25
APPENDIX B
PROXY
MATTHEWS INTERNATIONAL CORPORATION
Notice of
ANNUAL MEETING OF SHAREHOLDERS
To be held February 19, 2004
Sheraton Station Square
Pittsburgh, PA
To Our Shareholders:
The Annual Meeting of the Shareholders of Matthews International Corporation
will be held at 6:00 PM, Thursday, February 19, 2004 at Sheraton Station
Square, Pittsburgh, Pennsylvania, for the purpose of considering and acting
upon the proposals set forth above.
Shareholders of record at the close of business on December 31, 2003 will be
entitled to vote at the Annual Meeting or any adjournments thereof.
I hereby appoint David M. Kelly and Steven F. Nicola and each of them, with
full power of substitution and revocation, proxies to vote all shares of
Common Stock of Matthews International Corporation which I am entitled to vote
at the Annual Meeting of Shareholders or any adjournment thereof, with the
authority to vote as designated on the reverse side.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED PREPAID ENVELOPE
------------------------------------------------------------------------------
26
ANNUAL MEETING PROXY CARD
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE LISTED PROPOSALS.
1. Election of Directors
FOR WITHHOLD
01 - Glenn R. Mahone (2 year term) [ ] [ ]
02 - David J. DeCarlo (3 year term) [ ] [ ]
03 - Robert J. Kavanaugh (3 year term) [ ] [ ]
04 - John P. O'Leary, Jr. (3 year term) [ ] [ ]
FOR AGAINST ABSTAIN
2. To ratify the appointment of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as
independent auditors to audit the
records of the Company for the
fiscal year ending September 30, 2004.
3. To transact such other business as may properly come before the meeting.
I plan to attend the meeting. [ ]
Authorized Signatures - Sign Here - This section must be completed for your
instructions to be executed.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as an attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Signature 1 - Please Keep Signature within the box
----------------------------------------------------
Signature 2 - Please Keep Signature within the box
----------------------------------------------------
Date (mm/dd/yyyy)
--/--/----