Edgar Filing: NACCO INDUSTRIES INC

SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Section 240.14a-11c or Section 240.14a-12

NACCO INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(4) Date Filed:

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[LOGO] NACCO INDUSTRIES, INC.
5875 LANDERBROOK DRIVE
MAYFIELD HEIGHTS, OHIO 44124-4017

NOTICE OF ANNUAL MEETING

The Annual Meeting of stockholders of NACCO Industries, Inc. (the
"Company") will be held on Wednesday, May 14, 2003, at 9:00 A.M., at 5875
Landerbrook Drive, Mayfield Heights, Ohio, for the following purposes:

(1) To elect twelve directors for the ensuing year.

(2) To confirm the appointment of the independent auditors of the Company
for the current fiscal year.

(3) To transact such other business as may properly come before the
meeting.

The Board of Directors has fixed the close of business on March 17, 2003 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting or any adjournment thereof.

CHARLES A. BITTENBENDER
Secretary

March 27, 2003

THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2002 IS BEING
MAILED TO STOCKHOLDERS CONCURRENTLY HEREWITH. THE ANNUAL REPORT CONTAINS
FINANCIAL AND OTHER INFORMATION ABOUT THE COMPANY, BUT IS NOT INCORPORATED INTO
THE PROXY STATEMENT AND IS NOT DEEMED TO BE A PART OF THE PROXY SOLICITING
MATERIAL.
------------------------

PLEASE PROMPTLY FILL OUT, SIGN, DATE AND MAIL THE ENCLOSED FORM(S) OF PROXY
IF YOU DO NOT EXPECT TO BE PRESENT AT THE ANNUAL MEETING. IF YOU HOLD SHARES OF
BOTH CLASS A COMMON STOCK AND CLASS B COMMON STOCK, TWO FORMS OF PROXY ARE
ENCLOSED AND BOTH SHOULD BE FILLED OUT AND RETURNED. A SELF-ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.

[LOGO] NACCO INDUSTRIES, INC.
5875 LANDERBROOK DRIVE
MAYFIELD HEIGHTS, OHIO 44124-4017

PROXY STATEMENT - MARCH 27, 2003

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of NACCO Industries, Inc., a Delaware corporation (the
"Company"), of proxies to be used at the annual meeting of stockholders of the
Company to be held on May 14, 2003 (the "Annual Meeting"). This Proxy Statement
and the related form(s) of proxy are being mailed to stockholders commencing on
or about March 27, 2003.

If the enclosed form(s) of proxy are executed and returned, the shares
represented by them will be voted as directed on all matters properly coming
before the Annual Meeting for a vote. Proxies that are properly signed without
any indication of voting instructions will be voted for the election of each
director nominee, for the confirmation of the appointment of the independent
auditors, and as recommended by the Board of Directors with regard to any other
matters or, if no recommendation is given, in their own discretion. The proxies
may be revoked at any time prior to their exercise by giving notice to the
Company in writing or by executing and delivering a later dated proxy.
Attendance at the Annual Meeting will not automatically revoke a proxy, but a
stockholder attending the Annual Meeting may request a ballot and vote in
person, thereby revoking a previously granted proxy.

Stockholders of record at the close of business on March 17, 2003 will be
entitled to notice of, and to vote at, the Annual Meeting. On that date, the
Company had outstanding and entitled to vote 6,578,328 shares of Class A Common
Stock, par value $1.00 per share ("Class A Common"), and 1,623,410 shares of
Class B Common Stock, par value $1.00 per share ("Class B Common"). Each share
of Class A Common is entitled to one vote for a nominee for each of the twelve
directorships to be filled and one vote on each other matter properly brought
before the Annual Meeting. Each share of Class B Common is entitled to ten votes
for each such nominee and ten votes on each other matter properly brought before
the Annual Meeting.

At the Annual Meeting, in accordance with Delaware law and the Company's
By-Laws, the inspectors of election appointed by the Board of Directors for the
Annual Meeting will determine the presence of a quorum and will tabulate the
results of stockholder voting. As provided by Delaware law and the Company's
By-Laws, the holders of a majority of the Company's stock, issued and
outstanding, and entitled to vote at the Annual Meeting and present in person or
by proxy at the Annual Meeting, will constitute a quorum for the meeting. The
inspectors of election intend to treat properly executed proxies marked
"abstain" as "present" for purposes of determining whether a quorum has been
achieved at the Annual Meeting. The inspectors will also treat proxies held in
"street name" by brokers that are voted on at least one, but not voted on all,
of the proposals to come before the Annual Meeting ("broker non-votes") as
"present" for purposes of determining whether a quorum has been achieved at the
Annual Meeting.

Class A Common and Class B Common will vote as a single class on all
matters anticipated to be brought before the Annual Meeting. In accordance with
Delaware law, the twelve director nominees receiving the greatest number of
votes will be elected directors. In accordance with Delaware law and the
Company's By-Laws, the holders of a majority of the voting power of the
Company's stock which is present in person or by proxy, and which is actually
voted, will decide any other proposal which is brought before the Annual
Meeting. As a result, abstentions in respect of any proposal and broker
non-votes will not be counted for purposes of determining whether a proposal has
received the requisite approval by the Company's stockholders.

In accordance with Delaware law and the Company's By-Laws, the Company may,
by a vote of the stockholders, in person or by proxy, adjourn the Annual Meeting
to a later date or dates, without changing the record date. If the Company were
to determine that an adjournment were desirable, the appointed proxies would use
the discretionary authority granted pursuant to the proxy cards to vote in favor
of such an adjournment.

BUSINESS TO BE TRANSACTED

1. ELECTION OF DIRECTORS

It is intended that shares represented by proxies in the enclosed form(s)
will be voted for the election of the nominees named in the following table to
serve as directors for a term of one year and until their successors are
elected, unless contrary instructions are received. All of the nominees listed
below presently serve as directors of the Company and, except for Michael E.
Shannon, were elected at the Company's 2002 annual meeting of stockholders. If
an unexpected occurrence should make it necessary, in the judgment of the proxy
holders, to substitute some other person for any of the nominees, shares
represented by proxies will be voted for such other person as the proxy holders
may select.

PRINCIPAL OCCUPATION AND BUSINESS
EXPERIENCE DURING LAST FIVE YEARS AND DIRECTOR
NAME AGE OTHER DIRECTORSHIPS IN PUBLIC COMPANIES SINCE
---- --- ------------------------------------------------------- --------

Owsley Brown II 60 Chairman and Chief Executive Officer of Brown-Forman 1993
Corporation (a diversified producer and marketer of
consumer products). Also director of Brown-Forman
Corporation.
Robert M. Gates 59 President, Texas A&M University. Since prior to 1998, 1993
consultant, author and lecturer. From 1999 to 2001,
Dean, George Bush School of Government and Public
Service, Texas A&M University. Former Director of
Central Intelligence for the United States. Former
Assistant to the President of the United States and
Deputy for National Security Affairs, National Security
Council. Also director of Parker Drilling Company and
trustee of Fidelity Funds.
Leon J. Hendrix, Jr. 61 Chairman of Remington Arms Company, Inc. (a 1995
manufacturer and marketer of sporting arms and
ammunition). From prior to 1998 to 2000, Principal,
Clayton, Dubilier & Rice, Inc. (private investment
firm). Also director of Cambrex Corp., Keithley
Instruments, Inc., Remington Arms Company, Inc. and
Riverwood International Corp.
David H. Hoag 63 Retired Chairman and Chief Executive Officer of The LTV 1999
Corporation (an integrated steel producer). From 1998
to 1999, Chairman, and, during 1998, Chief Executive
Officer of The LTV Corporation, which filed for Chapter
11 bankruptcy protection in December 2000. From prior
to 1998 to 1998, Chairman, President and Chief
Executive Officer of The LTV Corporation. Also director
of The Lubrizol Corporation, The Chubb Corporation,
PolyOne Corporation and Brush Engineered Materials Inc.
Dennis W. LaBarre 60 Partner in the law firm of Jones Day. 1982
Richard de J. Osborne 69 Chairman of Schering-Plough Corporation (a 1998
research-based pharmaceuticals company) since 2002.
Retired Chairman and Chief Executive Officer of ASARCO
Incorporated (a leading producer of non-ferrous
metals). From prior to 1998 to 1999, Chairman and Chief
Executive Officer of ASARCO Incorporated. From prior to
1998 to 1998, President of ASARCO Incorporated. Also
Chairman (Non-executive) and director of Datawatch
Corp. and director of Goodrich Corporation and
Schering-Plough Corporation.
Alfred M. Rankin, 61 Chairman, President and Chief Executive Officer of the 1972
Jr. Company. Also director of Goodrich Corporation and The
Vanguard Group.
Ian M. Ross 75 President Emeritus of AT&T Bell Laboratories (the 1995
research and development subsidiary of AT&T).

Michael E. Shannon 66 President, MEShannon & Associates, Inc. (a private firm 2002
specializing in corporate finance and investments)
since 2000. From prior to 1998 to 2000, Chairman, Chief
Financial and Administrative Officer, Ecolab, Inc. (a
Fortune 500 specialty chemicals company). Also director
of The Clorox Company, Apogee Enterprises, Inc. and
CenterPoint Energy, Inc.
Britton T. Taplin 46 Principal, Western Skies Group, Inc. (a developer of 1992
medical office and healthcare-related facilities).
David F. Taplin 53 Self-employed (tree farming). 1997
John F. Turben 67 Chairman and Managing Partner of Kirtland Capital 1997
Corporation (private investment partnership). Also
director of PVC Container Corporation, Unifrax
Corporation and Instron Corporation.

BENEFICIAL OWNERSHIP OF CLASS A COMMON AND CLASS B COMMON

Set forth in the following table is the indicated information as of
December 31, 2002 (except as otherwise indicated) with respect to (1) each
person who is known to the Company to be the beneficial owner of more than five
percent of the Class A Common, (2) each person who is known to the Company to be
the beneficial owner of more than five percent of the Class B Common and (3) the
beneficial ownership of Class A Common and Class B Common by the directors, the
Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company and its subsidiaries during 2002 (the "Named
Executive Officers") and all executive officers and directors as a group.
Beneficial ownership of Class A Common and Class B Common has been determined
for this purpose in accordance with Rules 13d-3 and 13d-5 of the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (the
"Exchange Act"), which provide, among other things, that (a) a person is deemed
to be the beneficial owner of Class A Common or Class B Common if such person,
directly or indirectly, has or shares voting power or investment power with
respect to such stock or has the right to acquire such ownership within 60 days,
and (b) when two or more persons agree to act together for the purpose of
holding, voting or disposing of Class A Common or Class B Common, as the case
may be, the group formed thereby is deemed to be a person which has acquired
beneficial ownership of all Class A Common or Class B Common, as the case may
be, beneficially owned by each member of the group. Accordingly, the amounts
shown in the table do not purport to represent beneficial ownership for any
purpose other than compliance with SEC reporting requirements. Further,
beneficial ownership as determined in this manner does not necessarily bear on
the economic incidence of ownership of Class A Common or Class B Common.

AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP

SOLE SHARED
VOTING AND VOTING OR PERCENT
TITLE OF INVESTMENT INVESTMENT AGGREGATE OF CLASS
NAME CLASS POWER POWER AMOUNT (1)(2)
---- -------- ---------- ---------- --------- --------

Clara Taplin Rankin, et al. (3) Class B (3) (3) 1,542,757(3) 95.02%
c/o National City Bank
Corporate Trust Operations
P.O. Box 92301, Dept. 5352
Cleveland, OH 44193-0900
Clara Taplin Rankin Class A -- 752,295(4)(5) 752,295(4)(5) 11.44%
3151 Chagrin River Road Class B -- 479,371(3)(5)(6) 479,371(3)(5)(6) 29.52%
Chagrin Falls, OH 44022
Rankin Associates I, L.P., et al. (4) Class B (3)(6) (3)(6) 472,371(3)(6) 29.09%
Suite 300
5875 Landerbrook Drive
Mayfield Hts., OH 44124-4017
Rankin Associates II, L.P., et al. (5) Class A (4) (4) 738,295(4) 11.23%
Suite 300
5875 Landerbrook Drive
Mayfield Hts., OH 44124-4017
Thomas E. Taplin Class A 452,000 14,000(5) 466,000(5) 7.09%
950 South Cherry St. #506 Class B 310,000(3) 7,000(3)(5) 317,000(3)(5) 19.52%
Denver, CO 80246
Dimensional Fund Advisors Inc. (7) Class A 368,000(7) -- 368,000(7) 5.60%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Pzena Investment Management, LLC (8) Class A 544,650(8) -- 544,650(8) 8.28%
830 Third Avenue, 14th Floor
New York, NY 10022
Frank E. Taplin, Jr. Class A 309,150 14,000(5) 323,150(5) 4.91%
55 Armour Road Class B 284,728(3) 7,000(3)(5) 291,728(3)(5) 17.97%
Princeton, NJ 08540
FMR Corp. (9) Class A 526,520(9) -- 526,520(9) 8.01%
82 Devonshire Street
Boston, Massachusetts 02109
Owsley Brown II Class A 3,291 1,000(10) 4,406(10)(11) --
Class B -- -- -- --
Robert M. Gates Class A 2,411 -- 2,525(11) --
Class B -- -- -- --
Leon J. Hendrix, Jr. Class A 6,241 -- 6,629(11) 0.10%
Class B -- -- -- --
David H. Hoag Class A 1,311 -- 1,426(11) --
Class B -- -- -- --
Dennis W. LaBarre Class A 3,225 -- 3,339(11) --
Class B 100 -- 100 --
Richard de J. Osborne Class A 1,194 200 1,508(11) --
Class B -- -- -- --
Alfred M. Rankin, Jr. Class A 133,855 922,855(4)(10) 1,056,710(4)(10) 16.07%
Class B 36,624 472,371(3)(6)(10) 508,995(3)(6)(10) 31.35%
Ian M. Ross Class A 2,350 -- 2,464(11) --
Class B -- -- -- --
Michael E. Shannon Class A 400 -- 514(11) --
Class B -- -- -- --
Britton T. Taplin Class A 28,099 -- 28,213(11) 0.43%
Class B 7,495(3) -- 7,495(3) 0.46%
David F. Taplin Class A 16,347 11,770 28,231(11) 0.43%
Class B 13,550(3) -- 13,550(3) 0.83%
John F. Turben Class A 6,161 -- 6,303(11) 0.10%
Class B -- -- -- --
Reginald R. Eklund Class A -- 1,000 1,000 --
Class B -- -- -- --
Michael J. Morecroft Class A -- -- -- --
Class B -- -- -- --
Clifford R. Miercort Class A -- -- -- --
Class B -- 1,000 1,000 --
Frank G. Muller Class A 178 -- 178 --
Class B -- -- -- --
All executive officers and directors Class A 232,574 924,055(4)(10) 1,158,187(4)(10)(11) 17.61%
as a group (45 persons) Class B 59,644(3)(6) 473,371(3)(6)(10) 533,015(3)(6)(10) 32.83%

---------------

(1) The shares included in note (11) were deemed to be outstanding as of
December 31, 2002 for purposes of calculating the percentage owned at such
date by such person or group designated by note (11) pursuant to Rule 13d-3
under the Exchange Act.

(2) Less than 0.1%, except as otherwise indicated.

(3) A Schedule 13D filed with the SEC with respect to Class B Common on March
29, 1990, as amended and amended and restated from time to time, most
recently on February 14, 2003 by Amendment No. 10 to the amended and
restated Schedule 13D, reported that the following individuals and
entities, together in certain cases with related revocable trusts and
custodianships: Clara Taplin Rankin, Alfred M. Rankin, Jr., Victoire G.
Rankin, Helen R. Butler, Clara R. Williams, Thomas T. Rankin, Matthew M.
Rankin, Claiborne R. Rankin, Chloe O. Rankin, Roger F. Rankin, Bruce T.
Rankin, Frank E. Taplin, Jr., Margaret E. Taplin, Martha S. Kelly, Susan
Sichel, Jennifer T. Jerome, Caroline T. Ruschell, David F. Taplin, Thomas
E. Taplin, Beatrice B. Taplin, Thomas E. Taplin, Jr., Theodore D. Taplin,
Britton T. Taplin, Frank F. Taplin, Alison A. Rankin, Corbin K. Rankin,
J.C. Butler, Jr., Chloe R. Seelbach, James T. Rankin, Claiborne R. Rankin,
Jr., David B. Williams, Scott W. Seelbach, Alfred M. Rankin, Jr., as
trustee of Clara T. Rankin's Qualified Annuity Interest Trust 2004A, Alfred
M. Rankin, Jr., as trustee of Clara T. Rankin's Qualified Annuity Interest
Trust 2004B, Elizabeth B. Rankin, Rankin Associates I, L.P. (the
"Partnership"), Rankin Associates II, L.P. ("Associates"), Rankin
Management, Inc. ("RMI"), and National City Bank, as trustee of certain
trusts for the benefit of certain individuals named above, their family
members and others (collectively, together with such individuals, revocable
trusts and custodianships, the "Signatories"), are parties with the Company
and National City Bank, (Cleveland, Ohio)(successor to First Chicago Trust
Company of New York, engaged in a joint venture known as Equiserve LP), as
depository, to a Stockholders' Agreement, dated as of March 15, 1990, as
amended, covering the shares of Class B Common beneficially owned by each
of the Signatories (the "Stockholders' Agreement"). The Stockholders'
Agreement requires that each Signatory, prior to any conversion of such
Signatory's shares of Class B Common into Class A Common or prior to any
sale or transfer of Class B Common to any permitted transferee (under the
terms of the Class B Common) who has not become a Signatory, offer such
shares to all of the other Signatories on a pro-rata basis. A Signatory may
sell or transfer all shares not purchased under the right of first refusal
as long as they first are converted into Class A Common prior to their sale
or transfer. Accordingly, the Signatories may be deemed to have acquired
beneficial ownership of all of the Class B Common subject to the
Stockholders' Agreement, an aggregate of 1,542,757 shares, as a "group" as
defined under the Exchange Act. The shares subject to the Stockholders'
Agreement constitute 95.02% of the Class B Common outstanding on December
31, 2002, or 67.62% of the combined voting power of all Class A Common and
Class B Common outstanding on such date. Certain Signatories own Class A
Common, which is not subject to the Stockholders' Agreement. Under the
Stockholders' Agreement, the Company may, but is not obligated to, buy any
of the shares of Class B Common not purchased by the Signatories following
the trigger of the right of first refusal. The Stockholders' Agreement does
not restrict in any respect how a Signatory may vote such Signatory's
shares of Class B Common. The Class B Common shown in the foregoing table
as beneficially owned by named persons who are Signatories is subject to
the Stockholders' Agreement.

(4) A Schedule 13D filed with the SEC with respect to Class A Common on
February 18, 1998, and amended from time to time, most recently on January
9, 2003 by Amendment No. 9, reported that the following individuals and
entities: Clara Taplin Rankin, Alfred M. Rankin, Jr., Thomas T. Rankin,
Claiborne R. Rankin, Roger F. Rankin, Bruce T. Rankin, Matthew M. Rankin,
James T. Rankin, Alison A. Rankin, J.C. Butler, Jr., Victoire G. Rankin,
Corbin K. Rankin, Chloe O. Rankin, David B. Williams, Clara R. Williams,
Scott W. Seelbach, Alfred M. Rankin, Jr., as trustee of Clara T. Rankin's
Qualified Annuity Interest Trust 2004A, Elizabeth B. Rankin, RMI and
Associates (collectively, the "Class A Parties" and all the Class A Parties
except Associates, the "Class A Partners"), may be deemed as a group to
have acquired and to beneficially own 738,295 shares of Class A Common,
representing 11.23% of the outstanding Class A Common as of December 31,
2002. Although Associates holds the 738,295 shares of Class A Common, which
were contributed by the Class A

Partners, it does not have any power to vote or to dispose of such shares
of Class A Common. RMI has the sole power to vote such shares and shares
the power to dispose of such shares with the other Class A Partners. RMI
exercises such powers by action of its board of directors, which acts by
majority vote and consists of Alfred M. Rankin, Jr., Thomas T. Rankin,
Claiborne R. Rankin and Roger F. Rankin, the shareholders of RMI. Under the
terms of the Limited Partnership Agreement of Associates (the "Class A
Partnership Agreement"), Associates may not dispose of Class A Common
without the consent of RMI and the approval of the holders of more than 75%
of all partnership interests in Associates. The Shareholders' Agreement
among the shareholders of RMI, the Articles of Incorporation of RMI and the
Class A Partnership Agreement restrict the transfer of RMI shares and
partnership interests in Associates by RMI's shareholders and the Class A
Partners and provide such persons with a right of first refusal to acquire
RMI shares or partnership interests in Associates which an RMI shareholder
or a Class A Partner desires to sell and a call right to compel the sale of
RMI shares or partnership interests in Associates held by RMI shareholders
or the Class A Partners who are not members of a "Family Group," consisting
of one of Clara Taplin Rankin's sons, their spouses and their descendants.
The Class A Common shown in the foregoing table as beneficially owned by
each of the Class A Partners includes the shares of Class A Common that are
subject to the Class A Partnership Agreement.

(5) Clara Taplin Rankin, Frank E. Taplin, Jr. and Thomas E. Taplin are
co-settlors of a trust holding an aggregate of 42,000 shares of Class A
Common and 21,000 shares of Class B Common, in which each retains a
reversionary interest with respect to 14,000 of such shares of Class A
Common and 7,000 of such shares of Class B Common. The Class B Common held
by the foregoing trust is subject to the Stockholders' Agreement described
in note (3).

(6) A Schedule 13D filed with the SEC with respect to Class B Common on
November 25, 1996, which was amended and restated on March 27, 2002 and
subsequently amended on October 31, 2002 by Amendment No. 1, reported that
the following individuals and entities: Clara Taplin Rankin, Alfred M.
Rankin, Jr., Thomas T. Rankin, Claiborne R. Rankin, Roger F. Rankin, Bruce
T. Rankin, Alfred M. Rankin, Jr., as trustee of Clara T. Rankin's Qualified
Annuity Interest Trust 2004B and the Partnership (collectively, the "Class
B Parties" and all the Class B Parties, except the Partnership, the "Class
B Partners"), may be deemed as a group to have acquired and to beneficially
own 472,371 shares of Class B Common, representing 29.09% of the
outstanding Class B Common as of December 31, 2002. Although the
Partnership holds the 472,371 shares of Class B Common, which were
contributed by the Class B Partners, it does not have any power to vote or
to dispose of such shares of Class B Common. Alfred M. Rankin, Jr., Thomas
T. Rankin, Claiborne R. Rankin and Roger F. Rankin, as trustees and primary
beneficiaries of trusts acting as general partners of the Partnership,
share the power to vote such shares of Class B Common. Voting actions are
determined by the general partners owning at least a majority of the
general partnership interests. Each of the Class B Partners, as trustees
and/or primary beneficiaries of trusts acting as general and limited
partners of the Partnership, share the power to dispose of such shares with
the other Class B Partners. Under the terms of the Second Amended and
Restated Limited Partnership Agreement of the Partnership (the "Class B
Partnership Agreement"), the Partnership may not dispose of Class B Common
or convert Class B Common into Class A Common without the consent of
general partners owning more than 75% of the general partnership interests
and the consent of the holders of more than 75% of all Partnership
interests. The Class B Partnership Agreement restricts the transfer of
Partnership interests by its partners and provides the Partnership and its
partners with a right of first refusal to acquire Partnership interests
which a Class B Partner desires to sell and a repurchase obligation to
compel, under certain circumstances, the sale of Partnership interests by
Class B Partners. The Class B Common beneficially owned by each of the
Class B Partners and the Partnership is also subject to the Stockholders'
Agreement described in note (3).

(7) A Schedule 13G/A filed with the SEC with respect to Class A Common on
February 10, 2003 reported that Dimensional Fund Advisors Inc.
("Dimensional") beneficially owns the shares of Class A Common reported
herein as a result of being an investment advisor registered under Section
203 of the Investment Advisers Act that furnishes investment advice to four
investment companies registered

under the Investment Company Act and serving as an investment manager to certain
other commingled group trusts and separate accounts (collectively, the "Funds")
which own the shares of Class A Common. In its role as investment advisor or
manager, Dimensional possesses voting and/or investment power over the
shares of Class A Common owned by the Funds. However, all shares of Class A
Common reported herein are owned by the Funds. Dimensional disclaims
beneficial ownership of all such shares.

(8) A Schedule 13G/A filed with the SEC with respect to Class A Common on
February 5, 2003 reported that Pzena Investment Management, LLC
beneficially owns the shares of Class A Common reported herein as a result
of being an investment advisor registered under Section 203 of the
Investment Advisers Act. Clients of the filing investment manager have the
right to receive and the ultimate power to direct the receipt of dividends
from, or the proceeds of sale of, the securities reported. No interest of
any one of such clients relates to more than five percent of the Class A
Common.

(9) A Schedule 13G/A filed with the SEC with respect to the Class A Common on
February 14, 2003 by FMR Corp., a parent holding company, reported that
various of its affiliates have the right to receive or the power to direct
the receipt of dividends from, or the proceeds from the sale of, the Class
A Common. No one person's interest in the Class A Common is more than five
percent of the total Class A Common outstanding on December 31, 2002.

(10) Includes the following number of shares as to which certain directors and
executive officers disclaim beneficial ownership: (a) 918,419 shares of
Class A Common and 364,445 shares of Class B Common held by (i) members of
Mr. Rankin's family, (ii) charitable trusts, (iii) trusts for the benefit
of members of Mr. Rankin's family and (iv) to the extent in excess of Mr.
Rankin's pecuniary interest in such entities, the Partnership and
Associates; (b) 1,000 shares of Class A Common held by Mr. Brown's spouse;
and (c) with respect to all executive officers and directors as a group,
921,254 shares of Class A Common and 364,445 shares of Class B Common held
by family members and as described in (a) above.

(11) Includes the following shares which the directors have, or had, within 60
days after December 31, 2002, the right to acquire pursuant to the
Company's Non-Employee Directors' Equity Compensation Plan (the
"Non-Employee Directors' Plan") for payment of directors' fees for services
rendered between October 1, 2002 and December 31, 2002: Mr. Brown, 115
shares of Class A Common; Mr. Gates, 114 shares of Class A Common; Mr.
Hendrix, 388 shares of Class A Common; Mr. Hoag, 115 shares of Class A
Common; Mr. LaBarre, 114 shares of Class A Common; Mr. Osborne, 114 shares
of Class A Common; Dr. Ross, 114 shares of Class A Common; Mr. Shannon, 114
shares of Class A Common; Mr. Britton T. Taplin, 114 shares of Class A
Common; Mr. David F. Taplin, 114 shares of Class A Common; and Mr. Turben,
142 shares of Class A Common; and all executive officers and directors as a
group, 1,558 shares of Class A Common.

Frank E. Taplin, Jr. and Thomas E. Taplin are brothers, and Clara Taplin
Rankin is their sister. Britton T. Taplin is the son of Thomas E. Taplin, and
David F. Taplin is the son of Frank E. Taplin, Jr. Clara Taplin Rankin is the
mother of Alfred M. Rankin, Jr. J.C. Butler, Jr., an executive officer of the
Company, is the son-in-law of Alfred M. Rankin, Jr. The combined beneficial
ownership of such persons shown in the foregoing table (including shares as to
which such persons had the right to acquire beneficial ownership within 60 days
after December 31, 2002, pursuant to the Non-Employee Directors' Plan) equals
1,926,279 shares, or 29.28%, of the Class A Common and 1,145,768 shares, or
70.57%, of the Class B Common outstanding on December 31, 2002 (including shares
deemed to be outstanding for purposes of calculating the percentage owned
pursuant to Rule 13d-3 under the Exchange Act). The combined beneficial
ownership of all directors of the Company (including shares as to which the
directors had the right to acquire beneficial ownership within 60 days after
December 31, 2002), together with Clara Taplin Rankin, Frank E. Taplin, Jr.,
Thomas E. Taplin and all of the executive officers of the Company whose
beneficial ownership of Class A Common and Class B Common must be disclosed in
the foregoing table in accordance with Rule 13d-3 under the Exchange Act, equals
1,974,712 shares, or 30.02%, of the Class A Common and 1,148,743 shares, or
70.75%, of the Class B Common outstanding on December 31, 2002 (including shares
deemed to be outstanding for purposes of calculating the percentage owned
pursuant to Rule 13d-3 under the Exchange Act). Such shares of Class A

Common and Class B Common together represent 59.01% of the combined voting power
of all Class A Common and Class B Common outstanding on such date (including
shares deemed to be outstanding for purposes of calculating the percentage owned
pursuant to Rule 13d-3 under the Exchange Act).

There exists no arrangement or understanding between any director and any
other person pursuant to which such director was elected. Each director and
executive officer serves until his successor is elected and qualified.

DIRECTORS' MEETINGS AND COMMITTEES

The Board of Directors has an Audit Review Committee and a Nominating,
Organization and Compensation Committee (the "Nominating and Compensation
Committee"). During 2002, the members of the Audit Review Committee were Robert
M. Gates (Chairman), Leon J. Hendrix, Jr., David H. Hoag, Richard de J. Osborne,
Michael E. Shannon (effective November 12, 2002) and Britton T. Taplin, and the
members of the Nominating and Compensation Committee were Robert M. Gates, David
H. Hoag, Richard de J. Osborne, Ian M. Ross (Chairman) and John F. Turben. The
other standing committees of the Board of Directors are the Executive Committee,
which during 2002 was comprised of Robert M. Gates, Dennis W. LaBarre, Alfred M.
Rankin, Jr. (Chairman), Ian M. Ross and John F. Turben, and the Finance
Committee, which during 2002 was comprised of Leon J. Hendrix, Jr., Dennis W.
LaBarre, Alfred M. Rankin, Jr., Michael E. Shannon (effective November 12,
2002), Britton T. Taplin, David F. Taplin and John F. Turben (Chairman).

The Audit Review Committee held nine meetings in 2002. The Audit Review
Committee recommends to the Board of Directors the selection of the Company's
independent auditors. The Audit Review Committee discusses with the internal
auditors and the independent auditors the overall scope and specific plans for
their respective audits. The Audit Review Committee reviews audit and non-audit
fees. The Audit Review Committee also considers issues relating to auditor
independence. The Audit Review Committee meets regularly with the Company's
internal auditors and independent auditors to discuss the results of their
respective examinations, their evaluations of the Company's internal controls
and the Company's financial reporting.

The Nominating and Compensation Committee held three meetings in 2002. The
Nominating and Compensation Committee reviews executive compensation, fixes
compensation of the executive officers and incentive compensation, recommends
the adoption of and administers or monitors the administration of all benefit
plans, and has the authority to grant stock options. The Nominating and
Compensation Committee also reviews and recommends to the Board of Directors
criteria for membership to the Board of Directors, reviews and recommends to the
Board of Directors the optimum number and qualifications of directors believed
to be desirable, has established and monitors a system to receive suggestions
for nominees to directorships of the Company, and identifies and recommends to
the Board of Directors specific candidates for membership to the Board of
Directors. See "Submission of Stockholder Proposals."

The Finance Committee held four meetings in 2002. The Finance Committee
reviews the financing and risk management strategies of the Company and its
principal subsidiaries and makes recommendations to the Board of Directors on
all matters concerning finance.

The Executive Committee held no meetings in 2002. The Executive Committee
may exercise all of the powers of the Board of Directors in the management and
control of the business of the Company during the intervals between meetings of
the Board of Directors.

The Board of Directors held five meetings in 2002. In 2002, all of the
incumbent directors attended at least 75 percent of the total meetings held by
the Board of Directors and by the committees on which they served during their
tenure.

REPORT OF THE AUDIT REVIEW COMMITTEE

The Board of Directors of the Company adopted a written Audit Review
Committee Charter in 2000. All members of the Audit Review Committee are
independent as defined in Section 303.01(B)(2)(a) and (3) of the New York Stock
Exchange's listing standards as currently in effect.

The Audit Review Committee has reviewed and discussed with the Company's
management and Ernst & Young LLP, the Company's independent auditors for 2002,
the audited financial statements of the Company contained in the Company's
Annual Report to Stockholders for the year ended December 31, 2002. The Audit
Review Committee has also discussed with the Company's independent auditors the
matters required to be discussed pursuant to SAS No. 61 (Codification of
Statements on Auditing Standards, Communication with Audit Committees).

The Audit Review Committee has received and reviewed the written
disclosures and the letter from Ernst & Young LLP required by Independence
Standards Board Standard No. 1 (titled, "Independence Discussions with Audit
Committees"), and has discussed with Ernst & Young LLP its independence.

Based on the review and discussions referred to above, the Audit Review
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2002, filed with the U.S. Securities and Exchange
Commission.

ROBERT M. GATES, CHAIRMAN RICHARD DE J. OSBORNE
LEON J. HENDRIX, JR. MICHAEL E. SHANNON
DAVID H. HOAG BRITTON T. TAPLIN

COMPENSATION OF DIRECTORS

During 2002, each director who was not an officer of the Company or its
subsidiaries received a retainer of $40,000 for the calendar year for service on
the Board of Directors and on subsidiary boards of directors. In addition, each
such director received $1,000 for attending each meeting of the Board of
Directors and each meeting of a committee thereof, as well as for each meeting
of a subsidiary board of directors or committee thereof on which such director
served. Such fees for attendance at board meetings could not exceed $2,000 per
day. In addition, the chairman of each committee of the Board of Directors and
the subsidiary boards of directors received $4,000 for the year for service as
committee chairman.

Under the Non-Employee Directors' Plan, each director who was not an
officer of the Company or its subsidiaries received 50% of his annual retainer
($20,000) in shares of Class A Common. These shares cannot be assigned, pledged,
hypothecated or otherwise transferred by the director, voluntarily or
involuntarily, other than (a) by will or the laws of descent and distribution,
(b) pursuant to a qualifying domestic relations order or (c) to a trust for the
benefit of the director, or his spouse, children or grandchildren. The foregoing
restrictions on transfer lapse upon the earliest to occur of (i) the date which
is ten years after the last day of the calendar quarter for which such shares
were earned, (ii) the date of the death or permanent disability of the director,
(iii) five years (or earlier with the approval of the Board of Directors) from
the date of the retirement of the director from the Board of Directors of the
Company and (iv) the date that a director is both retired from the Board of
Directors of the Company and has reached 70 years of age. In addition, each
director has the right under the Non-Employee Directors' Plan to receive shares
of Class A Common in lieu of cash for up to 100% of the balance of his annual
retainer, meeting attendance fees and any committee chairman's fee. These
voluntary shares are not subject to the foregoing restrictions.

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth the annual, long-term and all other
compensation for services in all capacities to the Company and its subsidiaries
of the Named Executive Officers of the Company and its principal subsidiaries,
NACCO Materials Handling Group, Inc. ("NMHG"), Hamilton Beach/Proctor-Silex,
Inc. ("Hamilton Beach/Proctor-Silex") and The North American Coal Corporation
("North American Coal").

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
PAYOUTS
ANNUAL COMPENSATION ------------
---------------------- LTIP ALL OTHER
FISCAL SALARY BONUS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)
--------------------------- ------ -------- -------- ------------ ------------

Alfred M. Rankin, Jr. 2002 $904,900(1) $785,172(2) --(3) $394,687(4)(5)
Chairman, President and 2001 $889,200(1) $176,778(2) --(3) $305,042(4)(5)
Chief Executive Officer 2000 $843,100(1) $503,566(2) $1,157,366(3) $534,545(4)(5)
of the Company
Reginald R. Eklund 2002 $523,084(1) $364,023(6) --(7) $ 85,297(8)
President and Chief 2001 $512,692(1) $ 57,733(6) --(7) $115,897(8)
Executive Officer of NMHG 2000 $494,305(1) $296,373(6) $1,947,811(7) $155,026(8)
Michael J. Morecroft(9) 2002 $379,574(1) $195,100(10) $ 440,296(11) $ 70,827(12)
President and Chief 2001 $313,632(1) $ 40,400(10) -- $ 41,379(12)
Executive Officer of 2000 $211,148(1) $ 15,000(10) -- $ 31,525(12)
Hamilton Beach/Proctor-Silex
Clifford R. Miercort 2002 $416,620(1) $188,200(13) -- $ 36,288(14)
President and Chief 2001 $405,138(1) $167,152(13) -- $ 36,153(14)
Executive Officer of 2000 $396,278(1) $177,600(13) -- $ 58,330(14)
North American Coal
Frank G. Muller(15) 2002 $360,851(1) $197,553(16) --(17) $ 49,287(18)
Executive Vice President and 2001 $334,731(1) $ 29,100(16) --(17) $ 64,869(18)
Chief Operating Officer of NMHG 2000 $320,377(1) $152,350(16) $ 998,513(17) $ 85,240(18)

---------------

(1) Under current disclosure requirements of the SEC certain of the amounts
listed are being reported as "Salary," although the Company considers them
as payments of cash in lieu of perquisites, which are at competitive levels
as determined by the Company's Nominating and Compensation Committee. For
Mr. Rankin, the amounts listed for 2002, 2001 and 2000 include payments of
cash in lieu of perquisites of $87,400, $84,200 and $83,100, respectively.
For Mr. Eklund, the amounts listed for 2002, 2001 and 2000 include payments
of cash in lieu of perquisites of $56,784, $53,292 and $52,560,
respectively. For Dr. Morecroft, the amounts listed for 2002, 2001 and 2000
include payments of cash in lieu of perquisites of $42,170, $27,614 and
$15,848, respectively. For Mr. Miercort, the amounts listed for 2002, 2001
and 2000 include payments of cash in lieu of perquisites of $32,900,
$30,670 and $32,020, respectively. For Mr. Muller, the amounts listed for
2002, 2001 and 2000 include payments of cash in lieu of perquisites of
$33,215, $29,100 and $29,300, respectively.

(2) For Mr. Rankin, these amounts were paid in cash pursuant to the NACCO
Industries, Inc. Annual Incentive Compensation Plan (the "Short-Term Plan")
and the NACCO Industries, Inc. Supplemental Annual Incentive Compensation
Plan (the "Supplemental Short-Term Plan"). For 2002, the amount also
includes a special cash bonus of $150,000. See "Report of the Compensation
Committee on Executive Compensation - Compensation of the Chief Executive
Officer."

(3) For Mr. Rankin, there was no payout for 2002 or 2001 under the NACCO
Industries, Inc. Executive Long-Term Incentive Compensation Plan (the
"NACCO Long-Term Plan"). The amount listed for 2000 was distributed in the
form of 15,617 shares of Class A Common and a cash payment in the amount of
$539,979. The foregoing cash payment is intended to be the approximate
amount required to

be withheld by the Company and paid to applicable federal, state and local
income taxing authorities based upon statutorily determined withholding
rates.

(4) For Mr. Rankin, the amounts listed for 2002, 2001 and 2000 include $5,000,
$4,250 and $4,250, respectively, consisting of matching contributions by
the Company under the NACCO Materials Handling Group, Inc. Profit Sharing
Plan (the "NMHG Profit Sharing Plan"); $67,131, $30,569 and $117,237,
respectively, consisting of amounts credited and interest under the NACCO
Industries, Inc. Unfunded Benefit Plan; and $10,997, $10,813 and $6,774,
respectively, consisting of life insurance premiums paid by the Company for
the benefit of Mr. Rankin. The Company has no defined benefit retirement
plan for Mr. Rankin.

(5) For Mr. Rankin, the amounts listed for 2002, 2001 and 2000 include
$311,559, $259,410 and $406,284, respectively, consisting of amounts
credited and interest under The Retirement Benefit Plan for Alfred M.
Rankin, Jr.

(6) For Mr. Eklund, the amounts were paid in cash pursuant to the NACCO
Materials Handling Group, Inc. Annual Incentive Compensation Plan (the
"NMHG Short-Term Plan").

(7) For Mr. Eklund, there was no payout for 2002 or 2001 under the NACCO
Materials Handling Group, Inc. Senior Executive Long-Term Incentive
Compensation Plan (the "NMHG Executive Long-Term Plan"). The amount listed
for 2000 represents the appreciation and interest on the book value units
awarded to Mr. Eklund in 1998, 1996, 1994 and 1993 under the NACCO
Materials Handling Group, Inc. Long-Term Incentive Compensation Plan (the
"NMHG Long-Term Plan"), which was terminated in 2000. A portion of such
amount was paid in cash and the remainder was deferred into the NACCO
Materials Handling Group, Inc. Unfunded Benefit Plan (the "NMHG Unfunded
Benefit Plan").

(8) For Mr. Eklund, the amounts listed for 2002, 2001 and 2000 include $14,180,
$16,432 and $19,500, respectively, consisting of contributions by NMHG
under the NMHG Profit Sharing Plan; $69,334, $97,711 and $133,993,
respectively, consisting of amounts credited and interest under the NMHG
Unfunded Benefit Plan; and $1,783, $1,754 and $1,533, respectively,
consisting of life insurance premiums paid by NMHG for the benefit of Mr.
Eklund.

(9) Prior to January 2001, Dr. Morecroft was Senior Vice President-Product
Development and Engineering of Hamilton Beach/Proctor-Silex. Effective
January 29, 2001, Dr. Morecroft became President and Chief Executive
Officer of Hamilton Beach/Proctor-Silex.

(10) For Dr. Morecroft, these amounts were paid in cash pursuant to the Hamilton
Beach/Proctor-Silex, Inc. Annual Incentive Compensation Plan.

(11) For Dr. Morecroft, the amount listed for 2002 represents the appreciation
and interest on the book value units awarded to Dr. Morecroft in 2001,
1994, 1993 and 1992 under the Hamilton Beach/Proctor-Silex, Inc. Long-Term
Incentive Compensation Plan, which was terminated in 2002. Such amount was
paid in cash.

(12) For Dr. Morecroft, the amounts listed for 2002, 2001 and 2000 include
$26,791, $18,937 and $19,161, respectively, consisting of contributions by
Hamilton Beach/Proctor-Silex under the Hamilton Beach/ Proctor-Silex
Employees' Retirement Savings Plan; $41,755, $21,219 and $11,611,
respectively, consisting of amounts credited and interest under the
Hamilton Beach/Proctor-Silex, Inc. Unfunded Benefit Plan (the "HB/PS
Unfunded Plan"); and $2,281, $1,223 and $753, respectively, consisting of
life insurance premiums paid by Hamilton Beach/Proctor-Silex for the
benefit of Dr. Morecroft.

(13) For Mr. Miercort, these amounts were paid in cash pursuant to The North
American Coal Corporation Annual Incentive Compensation Plan.

(14) For Mr. Miercort, the amounts listed for 2002, 2001 and 2000 include
$10,000, $8,500 and $8,500, respectively, consisting of matching
contributions by North American Coal under The North American Coal
Retirement Savings Plan; $17,544, $19,099 and $42,322, respectively,
consisting of amounts credited and interest under the North American Coal
Deferred Compensation Plan; and $8,744, $8,554

and $7,508, respectively, consisting of life insurance premiums paid by North
American Coal for the benefit of Mr. Miercort.

(15) Prior to July 1, 2002, Mr. Muller was Vice President of NMHG, President of
NMHG Americas. Effective July 1, 2002, Mr. Muller became Executive Vice
President and Chief Operating Officer of NMHG.

(16) For Mr. Muller, these amounts were paid in cash pursuant to the NMHG
Short-Term Plan.

(17) For Mr. Muller, there was no payout for 2002 or 2001 under the NMHG
Executive Long-Term Plan. The amount listed for 2000 represents the
appreciation and interest on the book value units awarded to Mr. Muller in
1998, 1994 and 1993 under the NMHG Long-Term Plan, which was terminated in
2000. A portion of such amount was paid in cash and the remainder was
deferred into the NMHG Unfunded Benefit Plan.

(18) For Mr. Muller, the amounts listed for 2002, 2001 and 2000 include $14,180,
$16,432 and $19,500, respectively, consisting of contributions by NMHG
under the NMHG Profit Sharing Plan; $33,918, $47,342 and $64,797,
respectively, consisting of amounts credited and interest under the NMHG
Unfunded Benefit Plan; and $1,189, $1,095 and $943, respectively,
consisting of life insurance premiums paid by NMHG for the benefit of Mr.
Muller.

STOCK OPTION GRANTS

The Company did not grant any stock options under the Company's 1975 Stock
Option Plan or 1981 Stock Option Plan during the fiscal year ended December 31,
2002 to any person, including the Named Executive Officers. The Company has not
granted stock options since 1989 in the belief that the likely value realized is
unclear both in amount and in its relationship to performance. At December 31,
2002, there were no outstanding options to purchase shares of the Company's
Class A Common or Class B Common.

LONG-TERM INCENTIVE PLANS

The following table sets forth information concerning awards to the Named
Executive Officers during fiscal year 2002, and estimated payouts in the future,
under long-term incentive plans of the Company and its principal subsidiaries.

LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR

NUMBER OF PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
SHARES, OR OTHER NON-STOCK PRICE-BASED PLANS
UNITS OR PERIOD UNTIL -----------------------------------
OTHER RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME ($ OR #) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- ------------ ------------ --------- ---------- ----------

Alfred M. Rankin, Jr.(1) $1,165,120 2 years $0 $1,165,120 $1,808,849
$1,165,120 5 years $0 $ 0 $ 668,488
Reginald R. Eklund(2) $ 496,860 7 years $0 $ 875,716 (2)
Michael J. Morecroft(3) -- -- -- -- --
Clifford R. Miercort(4) $ 213,850 8 years $0 $ 213,850 (4)
Frank G. Muller(2) $ 200,785 7 years $0 $ 353,884 (2)

---------------

(1) Under the NACCO Long-Term Plan, participants, including Mr. Rankin, are
eligible for awards paid partly in shares of Class A Common and partly in
cash for performance against a target which is based upon the Company's
consolidated adjusted return on equity over multiple-year periods. Effective
January 1, 2002, participants were granted dollar-denominated target awards.
Final awards, if any, will be received in 2004 ("base period awards") based
upon the Company's consolidated adjusted return on equity performance for
the period from January 1, 2002 through December 31, 2003 against the target
established by the Nominating and Compensation Committee. Participants are
also eligible to receive a supplemental payout on such awards in 2007
("consistent performance awards") based upon the

Company's consolidated adjusted return on equity performance for the 5-year
period from January 1, 2002 through December 31, 2006 against the same
pre-established target. No consistent performance award is payable if the
Company's consolidated adjusted return on equity performance for the
relevant period is at or below target. The total amount of the base period
award and the consistent performance award paid to a participant in any
calendar year cannot exceed 200% of the base period target award. 65% of all
payouts are distributed in shares of Class A Common, with the number of
shares based upon the average closing price of Class A Common on the New
York Stock Exchange at the end of each week during 2003 (in the case of base
period awards) and 2006 (in the case of consistent performance awards).

The shares of Class A Common issued as a portion of these awards under the
NACCO Long-Term Plan are fully vested but may not be transferred until the
earlier of (a) December 31, 2013, (b) the participant's death or disability
or (c) five years after the participant's retirement. At any time after
three years after the end of the performance period, a participant may also
request that the Nominating and Compensation Committee authorize the lapse
of restrictions on up to 20% of the shares issued under the NACCO Long-Term
Plan for the purchase of a principal residence or payments of certain
medical or educational expenses. Because the total value of a final award is
currently taxable as income to the participant, the balance of the final
award is paid in cash in an amount which is intended to be the approximate
amount required to be withheld by the Company and paid to applicable
federal, state and local income taxing authorities based upon statutorily
determined withholding rates.

(2) Effective as of January 1, 2000, Messrs. Eklund and Muller became
participants in the NMHG Executive Long-Term Plan. Under the NMHG Executive
Long-Term Plan, participants, including Messrs. Eklund and Muller, are
eligible for awards for performance against a target which is based upon
NMHG's adjusted return on equity over two-year periods. Effective January 1,
2002, participants were granted dollar-denominated target awards. Awards, if
any, for the two-year performance period will be made in 2004 based upon
NMHG's adjusted return on equity for the period from January 1, 2002 through
December 31, 2003 against the target established by the NMHG Nominating,
Organization and Compensation Committee. The total award for any period
cannot exceed 150% of the target award. Under the NMHG Executive Long-Term
Plan, awards to participants are made in the form of "book value units"
which are subject to a payment restriction of five years from the date of
award. Such payment restriction shall automatically lapse upon the
participant's death, permanent disability or retirement, or in the event of
any other termination of employment with the approval of the NMHG
Nominating, Organization and Compensation Committee. Upon the lapse of the
payment restriction, the participant is entitled to receive a payment in
cash equal to (a) the book value of the units as of the end of the calendar
quarter coincident with or immediately preceding the date the payment
restriction lapses or (b) for participants who terminated employment for
reasons other than death, disability or retirement, the book value of the
units as of the end of the calendar quarter coincident with or immediately
preceding termination. At any time up to one year prior to the fifth
anniversary of the grant date of an award, a participant may elect to defer
the payout of the award under the plan for a period not to exceed ten years
from the grant date of the award. If the award is deferred for the entire
ten years, the participant may thereafter elect to further defer receipt of
the award, in which case the deferred amount will be paid under the NMHG
Unfunded Benefit Plan. There is no minimum or maximum value for final award
payouts under the plan.

(3) Through December 31, 2002, Dr. Morecroft was a participant in the Hamilton
Beach/Proctor-Silex, Inc. Long-Term Incentive Compensation Plan (the "HB/PS
Long-Term Plan"). Under the HB/PS Long-Term Plan, participants were awarded
"book value appreciation units" which vested ten years from the date of
award, or earlier in the event of the participant's death, permanent
disability or retirement, or in the event of any other termination of
employment, with the approval of the Hamilton Beach/Proctor-Silex
Nominating, Organization and Compensation Committee. At any time following
the fifth anniversary of the date of an award, a participant could also
annually request that such Committee permit the vesting of up to 20% of the
number of book value appreciation units in the event of a financial hardship
or unforeseen financial emergency, provided that such request could only
apply to an aggregate of 40% of the number of book value appreciation units
originally granted in an award. Upon vesting, the participant was entitled
to receive a payment in cash equal to the appreciation in the book value per
unit

from the base period price per unit to the value of the book value unit at
the end of the calendar quarter immediately preceding the date of vesting,
and vested book value units as to which payment is made were canceled. There
were no threshold or maximum values for an award. Dr. Morecroft was
previously awarded 32,544 book value appreciation units effective on
December 31, 1992, which units vested on December 30, 2002. Effective
December 31, 2002, the HB/PS Long-Term Plan was terminated and all
outstanding book value appreciation units became vested. Dr. Morecroft had
previously been awarded 5,724 book value appreciation units effective on
December 31, 1993; 7,748 book value appreciation units effective on January
1, 1994; and 150,200 book value appreciation units awarded effective January
29, 2001.

(4) Effective as of January 1, 2000, Mr. Miercort was awarded the right to
participate in The North American Coal Value Appreciation Plan for Years
2000 to 2009 (the "2000 to 2009 North American Coal Long-Term Plan"), which
replaced the North American Coal Long-Term Plan, at a rate equal to a
specified percentage of his salary range midpoint, as determined by the
North American Coal Nominating, Organization and Compensation Committee.
When the 2000 to 2009 North American Coal Long-Term Plan was adopted, the
North American Coal Nominating, Organization and Compensation Committee set
net income appreciation goals that are based upon achieving underlying
year-by-year targets for each year during the ten-year term of the Plan.
These goals are adjusted each year for inflation and to take into account
any "new projects" initiated in the interim. Once a plan year is completed,
the actual net income during that plan year is measured against the adjusted
net income goal for that plan year to determine the annual net income
appreciation of current and new projects (the "Annual Factor"). Similarly,
actual cumulative net income for the term of the Plan to date is measured
against the cumulative adjusted net income goals to date to determine the
cumulative net income appreciation of current and new projects (the
"Cumulative Factor") against the ten-year target.

When the 2000 to 2009 North American Coal Long-Term Plan was adopted, the
North American Coal Nominating, Organization and Compensation Committee also
set a goal for the cumulative net income appreciation due to new projects
over the term of the Plan. At the end of each plan year, the present value
of expected cumulative net income appreciation of all new projects initiated
during that year is measured against the cumulative new project goal to
determine the net income appreciation due to the acquisition of new projects
(the "New Project Factor"). In addition, if it is determined in any plan
year (an "Adjustment Year") that a new project has provided significantly
less net income appreciation than originally expected, then the amount of
any prior award previously attributed to that project as the result of a
prior year's New Project Factor will reduce the New Project Factor in the
Adjustment Year (the "New Project Adjustment"). If the New Project
Adjustment is large enough, it is possible for participants to receive
negative awards in a given year.

At the start of each year during the ten-year term of the 2000 to 2009 North
American Coal Long-Term Plan, a target award is set for each participant as
a percentage of salary midpoint. The amount shown for Mr. Miercort
represents the target award which is based upon his salary range midpoint
for 2001. Following the end of the year, this target amount is adjusted by
the Annual Factor, the Cumulative Factor and the New Project Factor. In
addition, the New Project Adjustment is made, if applicable. Target amounts
as so adjusted are credited or debited to an account for the benefit of the
participant, which earns interest based upon the average monthly rate of
ten-year U.S. Treasury Bonds. There are no threshold or maximum values for
an award. All amounts in these accounts vest at the rate of 20% each year,
and become fully vested on December 31, 2004. Vested amounts are payable in
cash on the earlier of December 31, 2009, or the participant's death,
disability, retirement or other reasons within the discretion of the North
American Coal Nominating, Organization and Compensation Committee. The
participant may elect to defer receipt of all or part of such amounts, in
which case the deferred amount will be paid under the North American Coal
Deferred Compensation Plan. Earlier payments of vested amounts may be
permitted within the discretion of the North American Coal Nominating,
Organization and Compensation Committee in the event of a financial hardship
or unforeseen financial emergency.

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

The Nominating and Compensation Committee of the Company's Board of
Directors and the Nominating, Organization and Compensation Committees of the
Company's subsidiary boards of directors (collectively, the "Compensation
Committee") have furnished the following report on executive compensation. The
members of the Nominating and Compensation Committee for 2002 were Robert M.
Gates, David H. Hoag, Richard de J. Osborne, Ian M. Ross (Chairman) and John F.
Turben. The members of the Nominating, Organization and Compensation Committees
of the Company's principal subsidiaries, NMHG, Hamilton Beach/Proctor-Silex and
North American Coal, consist of these individuals, as well as Dennis W. LaBarre
and Alfred M. Rankin, Jr. Messrs. LaBarre and Rankin are not members of the
Nominating and Compensation Committee of the Company, and their participation in
this report is limited to the portions of the report relating to the Company's
subsidiaries.

COMPENSATION POLICY

The guiding principle of the executive compensation program of the Company
and its subsidiaries in recent years has been the maintenance of a strong link
between an executive officer's compensation and individual performance and the
performance of the Company or the subsidiary for which the executive officer has
responsibility. Comprehensively defined target total compensation is established
for each executive officer position following rigorous evaluation standards to
ensure internal equity. Such total compensation is targeted explicitly in dollar
terms as the sum of base salary plus perquisites, short-term incentives and
long-term incentives. While the Company offers opportunities for its executive
officers to earn truly superior compensation for outstanding results, this link
includes significantly reduced compensation for weak results.

In accordance with the foregoing philosophy, the Compensation Committee
approves a mix of base salaries and incentive plans for each executive officer
such that base salary levels are at levels appropriate to allow incentive plans
to serve as significant motivating factors. Base salary and incentive
compensation levels for each officer are determined by the Compensation
Committee, which considers recommendations made by the Company's independent
outside compensation consultant. The consultant bases its recommendations upon
an analysis of similar positions at a broad range of domestic industries, as
well as an understanding of the Company's philosophy, as summarized above.
Incentive-based compensation plans are designed to provide significant rewards
for achieving or surpassing annual operating and financial performance
objectives, as well as to align the compensation interests of executive officers
with the long-term interests of stockholders by basing a substantial portion of
the incentive compensation package upon adjusted return on equity performance,
return on total capital employed and book value appreciation rather than on
cyclical movements in stock price. Finally, in addition to providing certain
other perquisites, target levels of perquisites for executive officers are
converted into fixed dollar amounts and paid in cash, an approach which
recognizes that perquisites are largely just another form of compensation,
albeit separate and distinct from salary and incentive compensation.

In sum, the executive compensation program at the Company and its
subsidiaries is designed to reward executive officers with competitive total
compensation for achievement of specific corporate and individual goals, while
at the same time making them long-term stakeholders in the Company. In years
when the Company has lower financial results, payouts under the incentive
components of the Company's compensation plans will be lower. In years when the
Company has better financial results, payouts under the incentive components of
the Company's compensation plans will be greater. The Company believes that over
time the program will encourage executive officers to earn incentive pay
significantly greater than 100% of target by delivering outstanding managerial
performance.

Under Section 162(m) of the Internal Revenue Code of 1986, as amended, a
public company is generally denied deductions for compensation paid to the chief
executive officer and the other four most highly compensated executive officers
to the extent that the compensation for any of such individuals exceeds one
million dollars for the taxable year. An exception to this general rule exists
for payments that are made for attainment of one or more performance goals
meeting certain criteria. In response to this law and the regulations
promulgated thereunder, the stockholders of the Company have approved the
Supplemental Short-Term Plan and the NACCO Long-Term Plan. Both plans were
designed so that, together with steps

taken by the Compensation Committee in the administration of the plans, payouts
on awards made under the plans should not count towards the one million dollar
cap, which the law imposes for purposes of federal income tax deductibility.
While the Compensation Committee intends to preserve the deductibility of
compensation payable to the Company's executive officers, deductibility will be
only one among a number of factors considered in determining appropriate levels
or modes of compensation. The Company intends to maintain the flexibility to
compensate executive officers based upon an overall determination of what it
believes is in the best interests of the Company and its stockholders.

EXECUTIVE COMPENSATION AND COMPANY PERFORMANCE

The three main elements of the Company's executive compensation
program -- base salary, short-term incentive compensation and long-term
incentive compensation -- are carefully reviewed by the Compensation Committee
in relation to the performance of the Company and its subsidiaries.

Base Salary. To assist the Compensation Committee in fixing base salary
levels which are at adequately competitive levels, an independent outside
consultant analyzes a survey of a broad group of domestic industrial
organizations from all segments of industry ranging in size from under $150
million to over $5 billion in annual revenues. Organizations participate in the
survey based upon their voluntary submission of data to the independent
consultant, as well as their ability to pass the consultant's quality assurance
controls. For 2002, participants included 574 parent organizations and 413
independent operating units. Comparing positions of similar scope and
complexity, the consultant derives a median salary level for each executive
officer position at the Company and its principal subsidiaries and provides that
information to the Compensation Committee. All information provided to the
Compensation Committee is on an industry-wide basis as opposed to a comparison
with individual companies that may compete with the Company and its principal
subsidiaries. The Compensation Committee uses the median, or salary midpoint
("Salary Midpoint"), for purposes of determining the salary range for each
executive officer. The Compensation Committee then sets the base salary for each
executive officer, which is within the salary range and is dependent upon
additional factors such as the executive officer's performance.

Because the Compensation Committee uses Salary Midpoints based on studies
of domestic industrial organizations from all segments of industry, the Company
does not believe that there is a meaningful relationship between executive
salary levels of each subsidiary determined by the Compensation Committee and
the executive salary levels of the companies that make up the Russell 2000
Producer Durables Index. That index, which is used by the Company as the
published industry index for comparison to the Company's stock price
performance, was chosen because NMHG, which manufactures forklifts, is the
Company's largest subsidiary in terms of asset value and revenues.

Short-Term Incentive Compensation. At the beginning of 2002, the
Compensation Committee adopted target performance levels for return on total
capital employed for the Company (upon which awards under the Company's
Supplemental Short-Term Plan are based) and its subsidiaries, and various
performance criteria for the Company's subsidiaries such as net income, economic
value income, revenue, sales development, standard margin and support costs
(depending on the business unit) (upon which awards under the Company's Annual
Incentive Compensation Plan (the "Short-Term Plan") and the annual incentive
compensation plans of the Company's subsidiaries are based) for that year. The
short-term incentive plans for the Company and its subsidiaries essentially
follow the same basic pattern for award determination. Performance targets are
established within the Compensation Committee's discretion, and are generally
based upon management's recommendations as to the performance objectives of the
particular business for the year. Target awards for executive officers are
established at specified percentages of each individual's Salary Midpoint.

Final awards for each individual under the short-term incentive plans of
the Company and its subsidiaries are based on the individual's target award,
adjusted for performance by the business unit against the established targets,
and for all such plans except the Supplemental Short-Term Plan, for performance
by the individual against individual goals. The Compensation Committee, in its
discretion, may also increase or decrease awards under all such plans (except
for the Supplemental Short-Term Plan pursuant to which awards for the Named
Executive Officers may be decreased, but not increased), and may approve the
17

payment of awards where business unit performance would otherwise not meet the
minimum criteria set for payment of awards. In no event will short-term
incentive payments exceed 150% of the target amount.

The short-term annual incentive plans of the Company and its subsidiaries
provide target compensation of 5% to 75% of Salary Midpoint, depending on the
executive officer's position. Although it varies by business unit, target awards
generally are tied to the annual operating and financial targets for the
particular business unit, and in most cases, to longer-term objectives such as
long-term return on total capital employed performance targets for the business
unit.

Long-Term Incentive Compensation. For 2002, the long-term incentive
compensation plans for the Company and its subsidiaries, established at target
performance levels by the Compensation Committee, were designed to provide the
equivalent of 10% to 145% of Salary Midpoint (unless the amount is currently
taxable, in which case the targets are increased as necessary to permit plan
participants to satisfy their tax withholding obligations).

The long-term incentive compensation plan for the parent holding company
used the Company's consolidated adjusted return on equity as a measure of
incentive compensation. The consolidated adjusted return on equity target is
established by the Nominating and Compensation Committee, and is set at a level
believed to provide an appropriate measure of stockholder protection. In
general, each year participants are granted dollar-denominated target base
period awards based on performance periods of two years and target consistent
performance awards based on performance periods of five years. Target awards are
set based on a percentage of each executive officer's Salary Midpoint, and are
adjusted as of the end of the base period based upon the Company's consolidated
adjusted return on equity. Consistent performance awards are intended to
supplement the base period awards granted to participants. No consistent
performance award is payable if the Company's consolidated adjusted return on
equity performance for the relevant period is at or below target. The long-term
incentive compensation plan for the parent company gives the Nominating and
Compensation Committee the authority to increase or decrease awards (except for
awards for the Named Executive Officers, which may be decreased, but not
increased), and adjust the incentive compensation measures (except for the
incentive compensation measures applicable to awards for the Named Executive
Officers).

Approximately 65% of all of the foregoing awards are distributed in shares
of Class A Common, the transfer of which is restricted for ten years, with the
number of shares awarded being based on the average closing price of Class A
Common on the New York Stock Exchange at the end of each week during the last
year of the appropriate performance period. An average price mechanism, rather
than year-end price or price on the date of payment, is used in determining the
number of shares to be awarded because the Nominating and Compensation Committee
believes that valuation at a single point in time in a year is likely to lead to
inappropriate results. The balance of the award is paid in cash and is intended
to be the approximate amount required to be withheld by the Company and paid to
applicable federal, state and local income taxing authorities based upon
statutorily determined withholding rates. The Nominating and Compensation
Committee has the power to adjust the percentage of awards that are paid in
stock.

The Nominating and Compensation Committee believes that these incentive
compensation plan awards promote a long-term focus on the profitability of the
Company because, although a recipient may receive a payout after the end of the
base period and each consistent performance period, the recipient is effectively
required to invest the noncash portion of the payout in the Company for up to
ten years. This is because the shares distributed may not be transferred for ten
years following the last day of the base period. During the restriction period,
the ultimate value of a payout is subject to change based upon the value of the
Class A Common. The value is enhanced as the value of the Class A Common
appreciates (or is decreased as the value of the Class A Common depreciates),
and thus such awards provide the recipient with an incentive over the ten-year
period to increase the value of the Company, to be reflected in the increased
value of the Class A Common.

The subsidiaries' long-term incentive compensation plans are linked to
future performance of the particular business unit. Similar to the parent
holding company's long-term incentive plan, each subsidiary plan establishes
target awards based on an executive officer's Salary Midpoint. NMHG's long-term
plans for 2002 use NMHG's adjusted return on equity as a measure of incentive
compensation. The adjusted return on
18

equity targets are established by the NMHG Nominating, Organization and
Compensation Committee and the target awards are adjusted as of the end of the
base period based upon NMHG's adjusted return on equity performance. The NMHG
long-term plans give the NMHG Nominating, Organization and Compensation
Committee the authority to increase or decrease awards and adjust the incentive
compensation measures. Participants are then awarded "book value units" which
have a five-year payment restriction from the date of the award. The actual
amount paid after the payment restriction lapses depends on the increase in the
book value of NMHG over the time period. Participants in the plan may elect to
have such amount deferred under the plan for up to ten years from the date of
the award, and if the award has been deferred through the full ten-year period,
the participant may further elect to have the award deferred and paid under the
NMHG Unfunded Benefit Plan. Under the Hamilton Beach/Proctor-Silex long-term
incentive compensation plan which was effective through December 31, 2002, the
target award was set as to each plan participant with the grant of "book value
appreciation units" to such participant. The actual amount paid ten years after
the date of original grant depends upon the increase in the book value of
Hamilton Beach/Proctor-Silex over the time period. The Hamilton
Beach/Proctor-Silex long-term incentive compensation plan has been replaced by a
new plan effective January 1, 2003. The North American Coal long-term incentive
compensation plan for 2002 provides for awards of the right to participate in
the plan at a rate equal to a specified percentage of the individual's Salary
Midpoint. The target amount allocated to a participant is adjusted at the end of
each year for the actual net income during that plan year to determine the
annual net income appreciation of current and new mining projects against
previously set annual targets. Similarly, the target amount is adjusted at the
end of each year for the actual cumulative net income for the term of the plan
to date to determine the cumulative net income appreciation of current and new
projects against previously set targets. At the end of each plan year, the
target amount is also adjusted for the present value of expected cumulative net
income appreciation of all new projects initiated during that year to determine
the net income appreciation due to the acquisition of new projects against
previously set targets. Finally, if it is determined in any plan year that a new
project has provided significantly less net income appreciation than originally
expected, then the amount of any prior award previously attributed to that
project will reduce the new project adjustment in that year. If the new project
adjustment is large enough, it is possible for participants to receive negative
awards in a given year. Amounts credited under the 2000 to 2009 North American
Coal Long-Term Plan, which became effective on January 1, 2000, vest at the rate
of 20% for each year following the effective date of the initial award, are
fully vested on December 31, 2004, and are paid in cash during the first
calendar quarter of 2010 (or if so elected by the participant, deferred and paid
under the North American Coal Deferred Compensation Plan).

The long-term incentive plans at the Company and its subsidiaries generally
require long-term commitment on the part of the Company's executive officers,
and cash withdrawals or stock sales are generally not permitted for a number of
years. Rather, the awarded amount is effectively invested in the enterprise for
an extended period to strengthen the tie between stockholders' and executive
officers' long-term interests. The ultimate compensation purpose of such
long-term incentive plans is to enable executive officers to accumulate capital
through future managerial performance, which contributes to the future success
of the Company's businesses.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

The compensation awarded to the Company's chief executive officer reflects
the basic philosophy generally discussed above that compensation for all
employees should be based on Company and individual performance.

The Nominating and Compensation Committee considered that each of the
Company's operating units, as well as the Company on a consolidated basis,
reported much improved operating profit and net income in 2002. The Committee
also considered that the restructuring and downsizing activities conducted at
the Hamilton Beach/Proctor-Silex and NACCO Materials Handling Group businesses
were major contributors to the Company's improved results in 2002. These
programs, which were designed to put these businesses in the best possible
position to compete in the depressed market conditions at the beginning of 2002,
and also to prepare these businesses to respond promptly when market conditions
improved, came to fruition in 2002. In addition, the Company continued its
progress towards completion of its strategic objectives at NACCO Materials
Handling Group and Hamilton Beach/Proctor-Silex in 2002 despite difficult market
conditions.
19

Overall, the Committee believes that Mr. Rankin continues to provide strong
leadership as chief executive officer of the Company.

After careful consideration of the overall results of the Company and its
subsidiaries, the on-going impact of the Company's previously completed
restructuring plans and continued progress towards strategic goals in 2002, the
Nominating and Compensation Committee increased Mr. Rankin's base salary by
three percent for 2003. The Nominating and Compensation Committee established
Mr. Rankin's short-term incentive compensation target for 2002 at 75% of his
Salary Midpoint. The actual performance of the Company in 2002 in terms of
consolidated return on total capital employed was below the targeted level of
performance, and the actual performance of certain subsidiaries in terms of net
income, economic value income and other strategic operating factors was
predominately above targeted levels of performance. The annual incentive awards
to Mr. Rankin were 150.0% under the Company's Short-Term Plan and 65.7% under
the Company's Supplemental Short-Term Plan, for an aggregate annual incentive
compensation performance against target for Mr. Rankin of 116.3%.

In addition to incentive compensation under these short-term plans, the
Nominating and Compensation Committee awarded a special cash bonus to Mr. Rankin
in the amount of $150,000. The award was based upon the Nominating and
Compensation Committee's assessment of the quality of the overall leadership of
the Company and its subsidiaries provided by Mr. Rankin in 2002, which
positioned the Company's businesses to respond promptly as market conditions
improve. Although the special award is included for purposes of determining the
one million dollar cap under Section 162(m), the Nominating and Compensation
Committee believes the award is consistent with its compensation policy of
rewarding executive officers for delivery of outstanding managerial performance.

The long-term award targeted for Mr. Rankin in 2002 by the Nominating and
Compensation Committee was 160.0% of his Salary Midpoint (adjusted from 145.0%
to take into consideration the fact that any award is currently taxable to Mr.
Rankin). Despite the improvement in the Company's 2002 financial results, the
Company's consolidated adjusted return on equity for the two-year period from
January 1, 2001 through December 31, 2002, on which payouts for such period
under the NACCO Long-Term Plan are based, was below the minimum threshold
established by the Nominating and Compensation Committee for Mr. Rankin.
Accordingly, Mr. Rankin received no payout under the NACCO Long-Term Plan for
2002.

The NACCO Long-Term Plan also provides for payment of "consistent
performance awards" when the Company's consolidated adjusted return on equity
over five-year periods exceeds a pre-established target. The consolidated
adjusted return on equity calculated pursuant to the 1998 NACCO Long-Term Plan
for the five-year period ending December 31, 2002 was below the target
established in 1998. Accordingly, no plan participants, including Mr. Rankin,
received consistent performance awards.

ROBERT M. GATES JOHN F. TURBEN
DAVID H. HOAG DENNIS W. LABARRE*
RICHARD DE J. OSBORNE ALFRED M. RANKIN, JR.*
IAN M. ROSS, CHAIRMAN

---------------

* Messrs. LaBarre and Rankin are members of the compensation committees of the
Company's principal subsidiaries only.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Dennis W. LaBarre, a director of the Company and its principal subsidiaries
and a member of the compensation committees of the principal subsidiaries of the
Company (but not of the Company), is a partner in the law firm of Jones Day.
Such firm provided legal services on behalf of the Company and its principal
subsidiaries during 2002 on a variety of matters, and it is anticipated that
such firm will provide such services in 2003.

Alfred M. Rankin, Jr., a director of the Company and its principal
subsidiaries and a member of the compensation committees of the principal
subsidiaries of the Company (but not of the Company), is chairman, president and
chief executive officer of the Company.

STOCK PRICE PERFORMANCE PRESENTATION

The following graphs compare the Company's total annual stock price
performance on Class A Common against the total stock price performance of the
Russell 2000 Index and, in the case of Graph 1, the Russell 2000 Producer
Durables Index for the periods indicated. The graphs present the year-end value
of a $100 investment, at the base point, for each index assuming the
reinvestment of dividends.

In accordance with the regulations promulgated by the SEC, Graph 1 compares
the stock price performance based upon the difference between the stock price at
the beginning of each fiscal year and the stock price at the end of the fiscal
year for the five-year period commencing January 1, 1998 (base point December
31, 1997) and ending December 31, 2002.

1998-2002 Stock Price Performance
Graph 1

[Performance Graph]

1997 1998 1999 2000 2001 2002
-----------------------------------------------------------------------------------------------

NACCO $100.00 $ 86.46 $ 52.87 $ 42.45 $ 55.98 $ 43.95
Russell 2000 $100.00 $ 97.76 $118.64 $115.18 $118.21 $ 94.01
Russell 2000 Producer Durables $100.00 $ 89.01 $122.21 $124.82 $131.78 $ 98.23

Assumes $100 invested at December 31, 1997 with dividends reinvested

The Company believes that the measurement set forth in Graph 1, which is
based upon the stock price at a single point in time in each year, does not
adequately reflect the Company's stock price performance over the period because
of the numerous periodic fluctuations throughout the year in both the price of
the Company's stock and the level of the Russell 2000 Index. The Company,
therefore, has provided Graph 2, which compares the returns for the Company and
the Russell 2000 Index based upon the average of the daily closing stock price
(portrayed by the data presented in bold type) compared with the corresponding
information from Graph 1, which is based upon the change in the stock price for
each fiscal year for the same period as in Graph 1.

1998-2002 Stock Price Performance
Graph 2

[Performance Graph]

1997 1998 1999 2000 2001 2002
-----------------------------------------------------------------------------------------------

NACCO $100.00 $ 86.46 $ 52.87 $ 42.45 $ 55.98 $ 43.95
Russell 2000 $100.00 $ 97.76 $118.64 $115.18 $118.21 $ 94.01
NACCO (12-Month Moving Average) $100.00 $110.32 $ 68.66 $ 40.87 $ 62.00 $ 53.70
Russell 2000 (12-Month Moving
Average) $100.00 $ 97.60 $100.87 $120.56 $112.65 $106.06

Assumes $100 invested at December 31, 1997 with dividends reinvested
12-month moving average data is based upon the daily closing price

The Company believes that although sustained operating and financial
performance will ultimately be reflected in stock price, the five-year period
portrayed in the foregoing graphs is too brief a period over which to measure
the results of significant strategic activities, and that corporate financial
and strategic performance will be reflected in stock price only when measured
over the long term. Accordingly, the long-term incentive compensation plans of
the Company and its subsidiaries are linked to values reflecting long-term
operating and financial achievement, not short-term stock price fluctuations, as
further described in the "Report of the Compensation Committee on Executive
Compensation -- Executive Compensation and Company Performance -- Long-Term
Incentive Compensation" on pages 18 and 19. The Company, therefore, has included
Graph 3, which compares the 10-year returns for the Company and the Russell 2000
Index based on the average stock price for the year computed using the same
method as in Graph 2 for the 10-year period commencing January 1, 1993 (base
point December 31, 1992) and ending December 31, 2002.

1993-2002 Stock Price Performance
Graph 3

[PERFORMANCE GRAPH]

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
-----------------------------------------------------------------------------------------------------------------------------------

NACCO (12-Month Moving
Average) $100.00 $ 95.31 $109.23 $112.98 $107.37 $150.25 $243.41 $151.50 $ 90.17 $136.78 $118.47
Russell 2000 (12-Month
Moving Average) $100.00 $108.08 $116.48 $132.56 $160.34 $192.05 $207.62 $214.58 $256.46 $239.62 $225.61

Assumes $100 invested at December 31, 1992 with dividends reinvested
12-month moving average data is based upon the daily closing price

The following table contains the annual returns expressed in percentages
for the indices set forth in the preceding graphs.

ANNUAL RETURNS OF INDICES INCLUDED ON STOCK PRICE PERFORMANCE GRAPHS

YEAR-END CLOSING PRICE
------------------------------- AVERAGE OF DAILY CLOSING PRICE
RUSSELL 2000 -----------------------------------
RUSSELL PRODUCER RUSSELL RUSSELL
YEAR NACCO 2000 DURABLES NACCO 2000 NACCO 2000
---- ------ ------- ------------ ------ ------- ------ -------

1992 0.00% 0.00%
1993 -4.69% 8.08%
1994 14.61% 7.77%
1995 3.44% 13.80%
1996 -4.96% 20.96%
1997 0.00% 0.00% 0.00% 0.00% 0.00% 39.93% 19.78%
1998 -13.54% -2.24% -10.99% 10.32% -2.40% 62.00% 8.11%
1999 -38.84% 21.36% 37.30% -37.76% 3.35% -37.76% 3.35%
2000 -19.70% -2.91% 2.13% -40.48% 19.52% -40.48% 19.52%
2001 31.87% 2.63% 5.58% 51.70% -6.57% 51.70% -6.57%
2002 -21.48% -20.48% -25.46% -13.39% -5.85% -13.39% -5.85%

PENSION PLANS

NORTH AMERICAN COAL PENSION PLANS

The following table sets forth the estimated maximum annual benefits under
the North American Coal defined benefit pension plans (both qualified and
non-qualified) which would be payable on a straight life annuity basis, in
various compensation classifications upon retirement at age 65, after selected
periods of service:

FINAL
AVERAGE YEARS OF SERVICE AT RETIREMENT (AGE 65)
ANNUAL PAY ----------------------------------------------------
AGE 65 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
---------- -------- -------- -------- -------- --------

$125,000 $ 27,042 $ 36,056 $ 45,070 $ 54,083 $ 57,208
150,000 33,042 44,056 55,070 66,083 69,833
175,000 39,042 52,056 65,070 78,083 82,458
200,000 45,042 60,056 75,070 90,083 95,083
225,000 51,042 68,056 85,070 102,083 107,708
250,000 57,042 76,056 95,070 114,083 120,333
300,000 69,042 92,056 115,070 138,083 145,583
350,000 81,042 108,056 135,070 162,083 170,833
400,000 93,042 124,056 155,070 186,083 196,083
450,000 105,042 140,056 175,070 210,083 221,333
500,000 117,042 156,056 195,070 234,083 246,583
550,000 129,042 172,056 215,070 258,083 271,833
600,000 141,042 188,056 235,070 282,083 297,083
650,000 153,042 204,056 255,070 306,083 322,333
700,000 165,042 220,056 275,070 330,083 347,583
750,000 177,042 236,056 295,070 354,083 372,833
800,000 189,042 252,056 315,070 378,083 398,083

For computing pension benefits under the North American Coal plans, "Final
Average Annual Pay" is based on the average annual earnings for the highest five
consecutive years during the last ten years prior to retirement. Earnings
include those amounts shown in the "Salary" and "Bonus" columns of the Summary
Compensation Table on page 11, which are paid to the executive officers, other
than amounts which represent severance payments, relocation allowances and other
similar fringe benefits. The 2002 earnings of Mr. Miercort that would be taken
into account under the plans is $539,685.

As of December 31, 2002, the number of years of service under the North
American Coal plans for Mr. Miercort is 27 years. The benefits under the North
American Coal plans for Mr. Miercort are not subject to a Social Security
offset.

HAMILTON BEACH/PROCTOR-SILEX PENSION PLANS

For 1996, Dr. Morecroft was covered by the defined benefit cash balance
plans (both qualified and non-qualified) of Hamilton Beach/Proctor-Silex.
Hamilton Beach/Proctor-Silex credited an amount to a notional account for each
covered employee under the plans based on a formula which took into account the
employee's age, compensation and Hamilton Beach/Proctor-Silex's profits.
Effective as of December 31, 1996, the defined benefit cash balance plans (both
qualified and non-qualified) of Hamilton Beach/Proctor-Silex were permanently
frozen for all participants.

The frozen notional account balances are credited with interest equal to 1%
above the one-year Treasury Bill rate (with a minimum of 5% and a maximum of
12%) until benefit commencement. The notional account balances are paid in the
form of a lump sum or are converted to an annuity to provide monthly benefit
payments. The estimated annual pension benefit for Dr. Morecroft under the cash
balance plans, based on compensation, service and interest credits through
December 31, 2002, which would be payable on a straight life annuity basis at
age 65, is $11,584.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership of such securities with the SEC and the New York Stock Exchange.
Officers, directors and greater than ten percent beneficial owners are required
by applicable regulations to furnish the Company with copies of all Section
16(a) forms they file.

Based upon its review of the copies of Section 16(a) forms received by it,
and upon written representations from reporting persons concerning the necessity
of filing a Form 5 Annual Statement of Changes in Beneficial Ownership, the
Company believes that, during 2002, all filing requirements applicable for
reporting persons were met, except as follows:

Susan Sichel filed a report on Form 5 which identified three late
transactions that should have been reported earlier on a Form 4; Colin Wilson
filed a late Form 3; Daniel Gerrone filed a late Form 3; and Michael Smith filed
a late Form 3.

2. CONFIRMATION OF APPOINTMENT OF INDEPENDENT AUDITORS

Ernst & Young LLP has been selected by the Audit Review Committee as the
principal independent auditors of the Company and its subsidiaries for the
current fiscal year. The Board of Directors of the Company recommends a vote for
confirmation of the appointment of Ernst & Young LLP as the independent auditors
of the Company and its subsidiaries to audit the books and accounts for the
Company and its subsidiaries for the current fiscal year. It is expected that
representatives of Ernst & Young LLP will attend the Annual Meeting, with the
opportunity to make a statement if they so desire, and, if a representative is
in attendance, the representative will be available to answer appropriate
questions.

The Company engaged Arthur Andersen LLP, its principal independent auditors
for 2001, to perform reviews of its first quarter 2002 financial statements. On
May 8, 2002, the Board of Directors, based on the

recommendation of the Audit Review Committee, dismissed its independent
auditors, Arthur Andersen LLP, and engaged the services of Ernst & Young LLP as
the new principal independent auditors of the Company and its subsidiaries to
review the books and accounts for the Company and its subsidiaries for the
second, third and fourth fiscal quarters of fiscal 2002, and audit such books
and records for the full 2002 fiscal year. This determination followed a
decision by the Board of Directors to seek proposals from independent public
accounting firms to audit the consolidated financial statements of the Company
and its subsidiaries.

The audit reports of Arthur Andersen LLP on the consolidated financial
statements of the Company and its subsidiaries for the fiscal years ended
December 31, 2001 and 2000 did not contain any adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope, or
accounting principles.

During the fiscal years ended December 31, 2001 and 2000, and the
subsequent interim period through May 8, 2002, there were no disagreements
between the Company and Arthur Andersen LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Arthur
Andersen LLP, would have caused them to make reference to the subject matter of
the disagreement in connection with their reports.

None of the reportable events described under Item 304(a)(1)(v) of
Regulation S-K occurred within the Company's fiscal years ended December 31,
2001 and 2000 or the subsequent interim period through May 8, 2002.

During the fiscal years ended December 31, 2001 and 2000, and the
subsequent interim period through May 8, 2002, neither the Company or anyone on
their behalf consulted with Ernst & Young LLP regarding any of the matters or
events set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.

AUDIT FEES

Ernst & Young LLP has billed the Company $1.5 million, in the aggregate,
for professional services rendered by Ernst & Young LLP for the audit of the
Company's annual financial statements for the fiscal year ended December 31,
2002 and the reviews of the interim financial statements included in the
Company's Forms 10-Q for the fiscal year ended December 31, 2002. In addition,
Arthur Andersen LLP has billed the Company $0.1 million, in the aggregate, for
professional services rendered by Arthur Andersen LLP for the review of the
interim financial statements included in the Company's Form 10-Q filed during
the first quarter of the fiscal year ended December 31, 2002.

AUDIT-RELATED FEES

Ernst & Young LLP has billed the Company $0.8 million, in the aggregate,
for audit-related services rendered by Ernst & Young LLP, consisting of fees for
audits of foreign subsidiaries required pursuant to the jurisdiction of
incorporation of such subsidiaries, employee benefit and welfare plan audits,
contractually required audits and accounting consultation services. In addition,
Arthur Andersen LLP has billed the Company $0.2 million, in the aggregate, for
professional services rendered by Arthur Andersen LLP during the fiscal year
ended December 31, 2002 for the review of the financial statements of the
Company's subsidiary, NMHG Holding Co., in connection with its Registration
Statement on Form S-4, declared effective by the SEC on August 12, 2002.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

Neither Ernst & Young LLP nor Arthur Andersen LLP billed the Company for
any financial information systems design or implementation services for the
fiscal year ended December 31, 2002.

ALL OTHER FEES

Ernst & Young LLP has billed the Company $0.7 million, in the aggregate,
for services rendered by Ernst & Young LLP for all other services (other than
those disclosed above under "Audit Fees" and "Audit-Related Fees") during the
fiscal year ended December 31, 2002. All other services includes (1) $0.3
million
26

of fees for tax services and (2) $0.4 million of fees for litigation support and
other services. Litigation support services provided by Ernst & Young LLP were
rendered in connection with litigation involving one of the Company's
subsidiaries and commenced prior to the decision by the Company's Board of
Directors to engage Ernst & Young LLP as its principal independent auditors. In
addition, Arthur Andersen LLP has billed the Company $0.3 million, in the
aggregate, for professional services rendered by Arthur Andersen LLP for tax
services during the fiscal year ended December 31, 2002.

The Audit Review Committee has considered whether the provision of the
non-audit services to the Company by Ernst & Young LLP is compatible with
maintaining their independence. The Audit Review Committee has also considered
whether the provision of the non-audit services to the Company by Arthur
Andersen LLP is compatible with maintaining their independence. In addition, as
a result of the recommendation of the Audit Review Committee, the Company has
adopted policies limiting the services provided by the Company's independent
auditors that are not audit or audit-related services.

SUBMISSION OF STOCKHOLDER PROPOSALS

Proposals of stockholders intended to be eligible for inclusion in the
Company's proxy statement and form of proxy relating to the Company's next
annual meeting must be received at the Company's executive offices on or before
November 28, 2003. Such proposals must be addressed to the Company, 5875
Landerbrook Drive, Mayfield Heights, Ohio 44124-4017, Attention: Secretary. The
Company's Nominating and Compensation Committee will consider stockholder
suggestions for nominees for election to the Company's Board of Directors if
such suggestions are in writing, set forth the nominee's name, address and
ownership of Class A Common and Class B Common, and are accompanied by a resume
of the nominee's education and business experience (including directorships,
employments and civic activities) and a written consent by the nominee that such
nominee is desirous of being considered as a nominee and, if nominated and
elected, such nominee will serve as a director. Such suggestions should be
submitted in the manner and to the address set forth above and must be received
at the Company's executive offices on or before December 31, 2003. Any
stockholder intending to propose any matter at the next annual meeting but not
intending for the Company to include the matter in its proxy statement and proxy
related to the next annual meeting must notify the Company by February 11, 2004
of such intention. If the Company does not receive such notice by that date, the
notice will be considered untimely. The Company's proxy for the next annual
meeting will grant authority to the persons named therein to exercise their
voting discretion with respect to any such matter of which the Company does not
receive notice by February 11, 2004. Notices should be submitted in the manner
and to the address set forth above.

SOLICITATION OF PROXIES

The Company will bear the costs of soliciting proxies from its
stockholders. In addition to the use of the mails, proxies may be solicited by
the directors, officers and employees of the Company by personal interview,
telephone or telegram. Such directors, officers and employees will not be
additionally compensated for such solicitation, but may be reimbursed for
out-of-pocket expenses incurred in connection therewith. Arrangements will also
be made with brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of solicitation material to the beneficial owners of Class A
Common and Class B Common held of record by such persons, and the Company will
reimburse such brokerage houses, custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred in connection therewith.

OTHER MATTERS

The directors know of no other matters which are likely to be brought
before the meeting. The Company did not receive notice by February 11, 2003 of
any other matter intended to be raised by a stockholder at the Annual Meeting.
Therefore, the enclosed proxy card grants to the persons named in the proxy card
the authority to vote in their best judgment regarding all other matters
properly raised at the Annual Meeting.

CHARLES A. BITTENBENDER
Secretary

Mayfield Heights, Ohio
March 27, 2003

IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO
NOT EXPECT TO ATTEND THE MEETING ARE URGED TO FILL OUT, DATE AND MAIL THE
ENCLOSED FORM(S) OF PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. STOCKHOLDERS WHO HOLD BOTH CLASS A COMMON AND CLASS
B COMMON SHOULD FILL OUT, SIGN, DATE AND RETURN BOTH FORMS OF PROXY.

[LOGO] NACCO, Industries, Inc.
5875 LANDERBROOK DRIVE ANNUAL MEETING OF STOCKHOLDERS
MAYFIELD HEIGHTS, OHIO 44124-4017
MAY 14, 2003

IMPORTANT: PLEASE VOTE, DATE AND SIGN YOUR

PROXY AND RETURN IT IN THE ENVELOPE PROVIDED

DETACH CARD

--------------------------------------------------------------------------------

[LOGO] NACCO INDUSTRIES, INC.

CLASS A COMMON STOCK

SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL
MEETING, MAY 14, 2003

P The undersigned hereby appoints Robert M. Gates, Alfred M.
Rankin, Jr. and Ian M. Ross, and each of them, as proxies, with
R full power of substitution, to vote and act for and in the name
of the undersigned as fully as the undersigned could vote and
O act if personally present at the annual meeting of stockholders
of NACCO Industries, Inc. to be held on May 14, 2003, and at
X any adjournment or adjournments thereof, as follows and in
accordance with their judgment upon any other matter properly
Y presented.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
DIRECTORS AND FOR PROPOSAL 2.

1. The election of the nominees listed below as directors:

[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below). to vote for all nominees listed below.

Instruction: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name listed below.

Owsley Brown II Robert M. Gates Leon J. Hendrix, Jr.
David H. Hoag

Dennis W. LaBarre Richard de J. Osborne Alfred M. Rankin, Jr.
Ian M. Ross

Michael E. Shannon Britton T. Taplin David F. Taplin
John F. Turben

(Continued and to be signed on reverse side)

DETACH CARD

--------------------------------------------------------------------------------

(Continued from other side)

2. Proposal to confirm the appointment of Ernst & Young LLP as
independent auditors.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

DATE: , 2003
--------------

--------------------------

Signature(s) of
stockholder(s)

NOTE: PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON. JOINT OWNERS
SHOULD EACH SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH.

PLEASE DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE -- NO POSTAGE NECESSARY

[LOGO] NACCO, Industries, Inc. ANNUAL MEETING OF STOCKHOLDERS
5875 LANDERBROOK DRIVE
MAYFIELD HEIGHTS, OHIO 44124-4017 MAY 14, 2003

IMPORTANT: PLEASE VOTE, DATE AND SIGN YOUR

PROXY AND RETURN IT IN THE ENVELOPE PROVIDED

--------------------------------------------------------------------------------
DETACH CARD

[LOGO] NACCO INDUSTRIES, INC.

CLASS B COMMON STOCK

SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL
MEETING, MAY 14, 2003

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
DIRECTORS AND FOR PROPOSAL 2.

1. The election of the nominees listed below as directors:

[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below). to vote for all nominees listed below.

Instruction: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name listed below.

Owsley Brown II Robert M. Gates Leon J. Hendrix, Jr.
David H. Hoag

Dennis W. LaBarre Richard de J. Osborne Alfred M. Rankin, Jr.
Ian M. Ross

Michael E. Shannon Britton T. Taplin David F. Taplin
John F. Turben

(Continued and to be signed on reverse side)

DETACH CARD

--------------------------------------------------------------------------------

(Continued from other side)

2. Proposal to confirm the appointment of Ernst & Young LLP as
independent auditors.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

DATE: , 2003
--------------

--------------------------

--------------------------
Signature(s) of stockholder(s)

NOTE: PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON. JOINT OWNERS
SHOULD EACH SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH.

PLEASE DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE -- NO POSTAGE NECESSARY