<PAGE>
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 Pursuant to Rule 240.14a-11(c) or Rule 240.14a-12
TB Wood's Corporation
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
-------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
5) Total fee paid:
-------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE>
[GRAPHIC OMITTED]
TB Woods
NOTICE OF ANNUAL MEETING OF THE
STOCKHOLDERS OF
TB WOOD'S CORPORATION
TO THE STOCKHOLDERS OF
TB WOOD'S CORPORATION:
The Annual Meeting of Stockholders of TB Wood's Corporation (the
"Company") will be held at the Hilton New York & Towers, 1335 Avenue of the
Americas, New York City, New York on April 27, 1999, commencing at 10:00 a.m.,
at which meeting only holders of the Company's Common Stock of record at the
close of business on March 26, 1999 will be entitled to vote, for the following
purpose:
1. To elect one director of the first class.
You are cordially invited to attend the meeting in person. Whether or
not you plan to attend the meeting, please execute the enclosed proxy and mail
it promptly. Should you attend the meeting, you may revoke your proxy and vote
in person. A return envelope which requires no postage if mailed in the United
States is enclosed for your convenience.
TB WOOD'S CORPORATION
By:
Emma K. Gross
Corporate Secretary
Chambersburg, Pennsylvania
April 1, 1999
<PAGE>
TB WOOD'S CORPORATION
440 North Fifth Avenue, Chambersburg, PA 17201
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 27, 1999
This proxy statement is furnished to the stockholders of TB Wood's
Corporation (the "Company"), in connection with the solicitation of proxies for
use at the Annual Meeting of Stockholders to be held on Tuesday, April 27, 1999
at 10:00 a.m. at the Hilton New York & Towers, 1335 Avenue of the Americas, New
York City, New York and any adjournment thereof (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting. The Board of
Directors (the "Board") does not know of any business to be presented for
consideration at the Annual Meeting or any adjournment thereof other than as
stated in the Notice of Annual Meeting. This proxy statement and the enclosed
form of proxy are first being mailed to stockholders on or about April 1, 1999.
Whether or not you expect to be personally present at the Annual
Meeting, you are requested to fill in, sign, date and return the enclosed form
of proxy. Any person giving such proxy has the right to revoke it at any time
before it is voted by giving written notice to the Secretary of the Company. All
shares of TB Wood's Corporation common stock, par value $.01 per share (the
"Common Stock") represented by duly executed proxies in the accompanying form
will be voted as directed unless proxies are properly revoked prior to the
voting thereof. If the proxy is signed and returned without any direction given,
shares will be voted FOR the election of the nominee of the Board.
The close of business on March 26, 1999, has been fixed as the record
date for the determination of stockholders entitled to vote at the Annual
Meeting (the "Record Date"). As of the Record Date, there were outstanding and
entitled to be voted at the Annual Meeting 5,887,698 shares of Common Stock. The
holders of the Common Stock will be entitled to one vote for each share of
Common Stock held of record on the Record Date.
A copy of the Company's Annual Report to Stockholders for the fiscal
year ended January 1, 1999, accompanies this proxy statement.
The solicitation of this proxy is made by the Board. The solicitation
will be by mail and the expense thereof will be paid by the Company.
Solicitation of proxies may be made by telephone, telefax, or telegram by
directors, officers or other employees or agents of the Company.
ELECTION OF DIRECTOR
At the Annual Meeting, one director of the Company is to be elected for
a term ending at the 2002 Annual Meeting of Stockholders, or until his successor
has been elected and has been qualified. Certain information with respect to the
nominee for election as director and the other directors whose terms of office
as directors will continue after the Annual Meeting is set forth below. Should
the nominee be unable or unwilling to serve (which is not expected), the proxies
(except proxies marked to the contrary) will be voted for such other person or
persons as the Board may recommend.
<PAGE>
Information Regarding the Nominee for Director to be Elected in 1999
for a Term Ending in 2002.
First Class
-----------
Thomas C. Foley - Chairman of the Board and Director of the Company,
Age 47, present term expires 1999, Director and Chairman of the Company since
its formation in 1995; served as Chairman of the Board of Directors of TB Wood's
Incorporated since December 1986. Mr. Foley is also a director of The NTC Group,
Inc., a private investment firm, and Stevens Aviation, Inc. Mr. Foley holds an
AB from Harvard College and an MBA from Harvard Business School. Mr. Foley was
previously a director, officer, and principal shareholder of The Bibb Company
which on July 3, 1996 filed a voluntary petition under Federal Bankruptcy laws
as part of a "prepackaged" restructuring. The Bibb Company's plan of
reorganization was confirmed and became effective during September 1996.
Information Regarding the Directors Who Are Not Nominees for Election
and Whose Terms Continue Beyond 1999.
Second Class
------------
Michael L. Hurt - President and Director of the Company, Age 53,
present term expires 2000; Director and President of the Company since its
formation in 1995; President and a Director of TB Wood's Incorporated since
January 1991. Before joining the Company, Mr. Hurt spent 23 years at The
Torrington Company, a subsidiary of Ingersoll-Rand Corp. Mr. Hurt is a
Registered Professional Engineer and holds an MBA from Clemson-Furman University
and a BSME from Clemson University.
Robert J. Dole - Director of the Company, Age 75, present term expires
2000, Director since 1997. Mr. Dole is currently special counsel at Verner,
Liipfert, Bernard, McPherson and Hand. He was formerly Majority Leader of the
United States Senate. Mr. Dole is also a director of Community Health Systems
and Tiger Management. Mr. Dole serves on the Forstmann Little Advisory Board and
the Ryan White Foundation Advisory Board. Mr. Dole holds a BA and an LLB from
Washburn University.
Third Class
-----------
Jean-Pierre L. Conte - Director of the Company, Age 35, present term
expires 2001, Director of the Company since its formation in 1995. Mr. Conte is
currently a Managing Director of Genstar Capital LLC. Prior to Genstar, Mr.
Conte was a principal of The NTC Group, Inc. Mr. Conte is also a Director of
Andros Incorporated, NEN Life Science Products, Inc., Skyway Freight Systems,
Inc., and serves as the Chairman of Panolam Industries. Mr. Conte holds a BA
degree from Colgate University and an MBA from Harvard Business School.
2
<PAGE>
Craig R. Stapleton - Director of the Company, Age 53, present term
expires 2001, Director of the Company since 1996. Mr. Stapleton is President of
Marsh & McLennan, Real Estate Advisors, Inc. Mr. Stapleton is also a director of
Allegheny Properties, Inc., Cendant Corporation, Cornerstone Properties, Inc.,
and Vacu-Dry Company. Mr. Stapleton holds an AB from Harvard College and an MBA
from Harvard Business School.
BOARD OF DIRECTORS AND COMMITTEES
The Board currently consists of five members and is classified into
three classes. One class of directors is elected each year and the members of
such class hold office for a three-year term or until their successors are duly
elected and qualified. There were four meetings of the Board during 1998.
The Company had no standing nominating committee during 1998. The Audit
Committee reports to the Board and provides assistance to the Board in
discharging its responsibilities in connection with the financial accounting
practices of the Company and the internal controls related thereto and
represents the Board in connection with the services rendered by the Company's
independent accountants. Messrs. Conte and Stapleton serve on the Audit
Committee. The Compensation Committee reports to the Board and is responsible
for the review of executive compensation. Messrs. Conte and Stapleton serve on
the Compensation Committee. The Audit Committee held one meeting in 1998. The
Compensation Committee had one meeting in 1998. Each director of the Company
attended at least 75% of the aggregate meetings held by the Board and by the
Committees on which he served during the periods that he served.
Director Nomination Procedures
Nominations for election of directors of the Company may be made by the
Board or by any stockholder entitled to vote in the election of directors. The
Company's Bylaws require that stockholders intending to nominate candidates for
election as directors deliver written notice thereof to the Secretary of the
Company no later than 60 days in advance of the meeting of stockholders;
provided, however, that in the event that the date of the meeting is not
publicly announced by the Company by inclusion in a report filed with the
Securities and Exchange Commission or furnished to stockholders, or by mail,
press release or otherwise more than 75 days prior to the meeting, notice by the
stockholder to be timely must be delivered to the Secretary of the Company no
later than the close of business on the tenth day following the day on which
such announcement of the date of the meeting was so communicated. The Company's
Bylaws further require that the notice by the stockholder set forth certain
information concerning such stockholder and such stockholder's nominees,
including their names and addresses, a representation that the stockholder is
entitled to vote at such meeting and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice, the class
and number of shares of the Company's stock owned or beneficially owned by such
3
<PAGE>
stockholder, a description of all arrangements or understandings between the
stockholder and each nominee, such other information as would be required to be
included in a proxy statement soliciting proxies for the election of the
nominees of such stockholder and the consent of each nominee to serve as a
director of the Company if so elected. The presiding officer of the Annual
Meeting may refuse to acknowledge the nomination of any person not made in
compliance with these requirements.
Compensation of Directors
The Company paid an aggregate of $75,500 of directors' fees in fiscal
year 1998 for directors who were not employees or officers of the Company.
Directors who are employees of the Company do not receive additional
compensation for serving on the Board or Committees. Each outside Director
receives an annual fee of $30,000, a meeting attendance fee of $1,000 and
reimbursement of applicable travel and other expenses.
MANAGEMENT
Executive officers are appointed by, and serve at, the discretion of
the Board. There are no family relationships among any of the directors or
executive officers of the Company. The current executive officers of the
Company, each of whom is elected for a term of one year or until his successor
is duly elected and qualified, are:
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
Thomas C. Foley 47 Chairman of the Board
Michael L. Hurt 53 President and Director
Carl R. Christenson 39 Vice President/General Manager - Mechanical Business
Jeffrey A. Petry 49 Vice President/General Manager - Electronics Business
David R. Bishop 31 Treasurer
Cedric A. Cleminson 63 President of Plant Engineering Consultants, Inc.
Harold L. Coder, III 47 Vice President, Sales
David H. Halleen 59 Vice President, Finance
Michael H. Iversen 55 President of T. B. Wood's Canada Ltd.
William R. Juergens 49 Vice President of Quality/General Manager, Foundry Operations
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Willard C. Macfarland,Jr. 43 Vice President, International
Stanley L. Mann 48 Vice President, Advanced Technology - Electronics
Durand M. Miller 47 Vice President, Marketing - Electronics
James E. Williams 52 Vice President, Electronics Operations and Logistics
</TABLE>
Mr. Christenson has been Vice President/General Manager - Mechanical
Business of the Company since its formation, and of TB Wood's since October
1994. Mr. Christenson joined TB Wood's in June 1991 as Director of Mechanical
Engineering and in 1992 assumed the additional responsibility of Vice President
of Engineering - Mechanical Products of TB Wood's. Mr. Christenson holds an MBA
from Rensselaer Polytechnic Institute, and an MSME and BSME from The University
of Massachusetts.
Mr. Petry has served as Vice President/General Manager - Electronics
Business of the Company and TB Wood's since August 1998. From 1990 to 1998 he
was a Vice President at Torrington, a subsidiary of Ingersoll-Rand Corp., first
as a Vice President/General Manager of Torrington Precision Components Div. and
then Vice President of Technology, responsible for both information systems and
new product development. Mr. Petry holds a BSME degree from Worcester
Polytechnic Institute and has studied at the graduate schools of the University
of Michigan, Dartmouth College and Northwestern University Kellogg School of
Management.
Mr. Bishop has been Treasurer of the Company and TB Wood's since
January 1999. Mr. Bishop's previous assignments include Manager of
Treasury/Credit from 1996 to 1997, and Director of Finance/Systems from 1998 to
1999. Mr. Bishop joined TB Wood's in July 1995 as Credit/Collection Manager and
served in that position until 1996. Prior to his employment at TB Wood's, from
1993 to 1995, Mr. Bishop was an Officer of Unitas National Bank, a wholly owned
subsidiary of First Commonwealth Financial Corporation. Mr. Bishop holds an MBA
degree from Mount Saint Mary's College and a BA Degree in Economics from the
University of Richmond.
Mr. Cleminson has been President of Plant Engineering Consultants, Inc.
("PEC"), a wholly-owned subsidiary of the Company, since January 1995. Mr.
Cleminson joined TB Wood's as Vice President Marketing - Electronics Products in
May 1994. Previously, he was Vice President of Marketing and Strategic Planning
of the Industrial Electronic Controls Division Emerson/Control Techniques, Inc.
from 1991 to May 1994. Mr. Cleminson holds an Advanced Business Degree from
Bowling Green University, and an EE from Faraday House Electrical College of
London, United Kingdom.
Mr. Coder has been Vice President, Sales of the Company since its
formation, and of TB Wood's since October 1991. Mr. Coder holds a BS degree from
Shippensburg University.
Mr. Halleen has been Vice President, Finance, of the Company from
October 1998 to present. He also served as Vice President, Finance of the
Company from its formation until July 1997. He served as Vice President, Finance
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<PAGE>
of TB Wood's from June 1992 to July 1997 and from October 1998 to present. Mr.
Halleen served as Treasurer of the Company from its formation until January
1999, and of TB Wood's from June 1992 to January 1999. Mr. Halleen is a
Certified Management Accountant and holds a BSBA from Niagara University.
Mr. Iversen has been President of T. B. Wood's Canada Ltd., a
subsidiary of the Company, ("TBWC") since April 1998. Mr. Iversen served as
Executive Vice President, Marketing of the Company from its formulation until
March 1998, and of TB Wood's from January 1992 to March 1998, and was
responsible for sales and marketing. Mr. Iversen holds a BIE from Georgia
Institute of Technology.
Mr. Juergens has served as Vice President of Quality/General Manager -
Foundry Operations of the Company and of TB Wood's since September 1998. His
previous assignment was Vice President of Quality/Human Resources of the Company
from its formation until 1998 and Vice President of Quality/Human Resources of
TB Wood's from 1994 to 1998. Mr. Juergens holds an MBA from Frostburg State
University, and MS and BSIE degrees from Western Michigan University.
Mr. Macfarland has been Vice President, International of the Company
since its formation and of TB Wood's since August 1994. He also serves as
Managing Director of TB Wood's (Deutschland) GmbH since June 1998, Berges
electronic GmbH since since August 1998, and President of the Board of Directors
of Berges electronic s.r.l., Naturno, Italy (formerly Berges Holding Italiana
S.R.L.) since December 1997. Mr. Macfarland's previous assignment was President
of T. B. Wood's Canada Ltd. from August 1994 to March 1998. From 1989 to August
1994, Mr. Macfarland was Director - Marketing and Sales of Roller Bearing
Company of America. Mr. Macfarland holds an MBA from Case Western Reserve
University and a BSME degree from Worcester Polytechnic Institute.
Mr. Mann has been Vice President, Advanced Technology - Electronics of
the Company and of TB Wood's since April 1997. He joined TB Wood's in May 1984
as Chief Electronics Engineer and became Director of Advanced Technology,
Electronics in July 1996. He holds a BSEE from the University of Illinois.
Mr. Miller has been Vice President, Marketing - Electronics of the
Company and of TB Wood's since April 1998. Previously he was Vice President
Marketing - Electronic Products of the Company and of TB Wood's from 1997 to
1998. Mr. Miller joined TB Wood's in January 1996 as Marketing Manager -
Electronic Products. From 1991 to 1996 Mr. Miller held various management
positions, including Product Manager, Product Planning Manager, and Program
Manager for Group Schnieder/Square D and Reliance Electric. Mr. Miller holds a
BSEE from the University of Maryland.
Mr. Williams has been Vice President, Electronic Operations and
Logistics of the Company and of TB Wood's since April 1998. Mr. Williams served
as Vice President, Marketing - Mechanical Products of the Company from its
formation, and TB Wood's from 1994 to 1998. Mr. Williams joined TB Wood's in
September 1993 as Program Manager and assumed responsibility for installation of
the new Management Information System. Mr. Williams holds a BS degree from
Indiana University.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to beneficial
ownership of the Common Stock as of February 1, 1999 by (i) each of the
Company's directors and certain of its executive officers, (ii) each person who
is known by the Company to own beneficially more than 5% of the Common Stock and
(iii) all of the Company's directors and executive officers as a group. Except
as noted below, the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned by
them, except for shares deemed to be beneficially owned by them. Except as noted
below, the persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
Except as otherwise listed below, the address of each person is c/o the Company,
440 North Fifth Avenue, Chambersburg, Pennsylvania 17201.
Security Ownership of Certain Beneficial Owners and Management
<TABLE>
<CAPTION>
Number of
Common Stock Percent
Name Shares (1) of Class (2)
---- ---------- ------------
<S> <C> <C>
Wellington Management Company, LLP 526,000(3) 8.9%
75 State Street
Boston, MA 02109
FMR Corp., Edward C. Johnson III
and Abigail P. Johnson 618,900(4) 10.5%
c/o 82 Devonshire Street
Boston, MA 02109
Fleet Financial Group, Inc. 307,000(5) 5.2%
One Federal Street
Boston, MA 02110
Thomas C. Foley 2,771,328(6) 47.1%
Chairman of the Board and Director
Michael L. Hurt 116,745 2.0%
President and Director
Jean-Pierre L.Conte 79,922 1.4%
Director
Robert J. Dole 4,000 *
Director
Craig R. Stapleton 66,500 1.1%
Director
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Michael H. Iversen 32,461 *
President T. B. Wood's Canada Ltd.
Carl R. Christenson 13,635 *
Vice President/General Manager - Mechanical Business
Willard C. Macfarland, jr. 5,668 *
Vice President, International
Harold L. Coder, III 11,342 *
Vice President, Sales
All executive officers and directors as a group (18 persons) 3,145,548 53.4%
</TABLE>
- ---------------
(1) Includes options exercisable within sixty days of February 1, 1999 for the
following number of shares:
Thomas C. Foley 12,500
Michael L. Hurt 25,000
Michael H. Iversen 13,125
Carl R. Christenson 8,586
Jean-Pierre L. Conte 76,922
Harold L. Coder, III 9,900
All executive officers and directors as a group 189,561
(2) * Indicates less than one percent of class.
(3) Information concerning the shares beneficially owned by Wellington
Management Company, LLP ("Wellington") was obtained from a Schedule 13G filed as
of February 8, 1999. The filing indicates that in its capacity as investment
adviser, Wellington may be deemed to beneficially own 526,000 shares of the
Common Stock. Wellington reports that it has no sole voting power with respect
to any shares of the Common Stock, shared voting power with respect to 336,000
shares of the Common Stock and shared dispositive power with respect to 526,000
shares of the Common Stock.
(4) Information concerning the shares beneficially owned by FMR Corp., Edward C.
Johnson III and Abigail P. Johnson was obtained from a Schedule 13G filed as of
February 1, 1999. The filing indicates that in its capacity as investment
adviser, Fidelity Management and Research Company ("Fidelity"), a wholly owned
subsidiary of FMR Corp., is the beneficial owner of 618,900 shares of the
Company's Common Stock as a result of acting as investment advisor to various
investment companies. Edward C. Johnson III, FMR Corp., through its control of
Fidelity, and the funds each has sole power to dispose of the 618,900 shares of
Common Stock owned by the funds. Neither Edward D. Johnson, III nor FMR
Corporation has the sole power to vote or direct the voting of the Company's
Common Stock owned directly by the funds. Edward C. Johnson III owns
approximately 12.0% and Abigail P. Johnson owns 24.5% of the aggregate
outstanding voting stock of FMR Corp. Mr. Johnson III is Chairman of FMR Corp.
and Abigail P. Johnson is a Director of FMR Corp. The Johnson family group and
all other Class B shareholders have entered into a shareholders' voting
agreement under which all Class B shares will be voted in accordance with the
majority vote of Class B shares. Accordingly, through their ownership of voting
common stock and the execution of the shareholders' voting agreement, members of
the Johnson family may be deemed, under the Investment Company Act of 1940, to
form a controlling group with respect to FMR Corp.
8
<PAGE>
(5) Information concerning the shares beneficially owned by Fleet Financial
Group, Inc. ("Fleet") was obtained from a Schedule 13G filed as of February 16,
1999. The filing indicates that in its capacity as a parent holding company,
Fleet may be deemed to have sole power to vote or to direct the vote of 210,400
shares and sole power to dispose or to direct the disposition of 307,000 shares
of common stock. Fleet reports that it has no shared power to vote or direct the
vote nor shared power to dispose or to direct the disposition of the Common
Stock.
(6) Includes 72,922 shares of Common Stock over which Mr. Foley has granted
stock options to Mr. Conte and 6,000 shares of Common Stock over which Mr. Foley
has granted stock options to a former employee of NTC. Also includes 90,000
shares of Common Stock donated by Mr. Foley to the Foley Family Foundation, a
charitable trust he controls.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain information
concerning the compensation paid or accrued by the Company for services rendered
during the fiscal year ended January 1, 1999 by the Company's Chairman,
President and each of the Company's next four most highly paid executive
officers (the "Named Officers") whose salary and bonus exceeded $100,000 for
fiscal year 1998.
9
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
Securities
Fiscal Underlying All Other
Name and Principal Position Year Salary Bonus Options (1) Compensation
- --------------------------- ---- ------ ----- ----------- ------------
<S> <C> <C> <C> <C> <C>
Thomas C. Foley 1998 $288,750 $165,000 18,750 $29,304(2)
Chairman 1997 272,917 300,000 18,750 1,218(2)
1996 229,167 250,000 0 655(2)
Michael L. Hurt 1998 263,750 165,000 37,500 68,341(3)
President 1997 248,333 300,000 37,500 29,212(3)
1996 228,750 305,000 0 28,736(3)
Michael H. Iversen 1998 123,951 20,000 6,000 43,985(4)
President - T. B. Wood's 1997 126,000 55,000 7,500 13,360(4)
Canada, Ltd. 1996 120,000 40,000 0 12,814(4)
Carl R. Christenson 1998 115,833 40,000 7,500 20,341(5)
Vice President/General Mgr. 1997 108,000 80,000 7,500 12,420(5)
- Mechanical Business 1996 96,750 75,000 0 10,073(5)
Willard C. Macfarland, Jr. 1998 107,000 25,000 6,000 45,733(6)(7)
Vice President, International 1997 104,708 50,000 6,000 60,659(6)(7)
1996 102,198 50,000 0 29,570(6)(7)
Harold L. Coder, III 1998 100,000 30,000 6,000 19,839(8)
Vice President, Sales 1997 96,000 55,000 4,950 9,314(8)
1996 92,883 40,000 0 9,305(8)
</TABLE>
(1) No Stock Appreciation Rights or restricted stock awards were granted.
(2) Includes $655 in 1996 and $1,218 in each of 1997 and 1998 in life insurance
premium payments by the Company; and $28,086 in 1998 pursuant to the TB Wood's
Corporation Supplemental Executive Retirement Plan ("SERP").
(3) Includes $2,016 in each of 1996, 1997 and 1998 in life insurance premium
payments by the Company; $4,500 in 1996, and $4,800 in each of 1997 and 1998 in
Company matching contributions to the Company's 401(k) plan; $20,000 each year
in split dollar life insurance premium payments by the Company; and $39,003 in
1998 pursuant to the SERP.
10
<PAGE>
(4) Includes $1,094 in 1996 and $1,164 in each of 1997 and 1998 in life
insurance premium payments by the Company; $4,500 in 1996, $4,800 in 1997, and
$3,980 in 1998 in Company matching contributions to the Company's 401(k) plan;
$5,000 each year in split dollar life insurance premium payments by the Company;
$3,980 in auto allowance and $6,567 in housing allowance in 1998, and $20,759 in
1998 pursuant to the SERP.
(5) Includes $203 in 1996 and $224 in each of 1997 and 1998 in life insurance
premium payments by the Company; $4,500 in 1996 and $4,800 in each of 1997 and
1998 in Company matching contributions to the Company's 401(k) plan; $5,000 each
year in split dollar life insurance premium payments by the Company; and $7,795
in 1998 pursuant to the SERP.
(6) Includes $160 in 1996 and $335 in 1997 and 1998 in life insurance premium
payments by the Company; $3,695 in 1996 and $4,800in each of 1997 and 1998 in
Company matching contributions to the Company's 401(k) plan; $2,722 in housing
allowance, $14,380 in moving allowance, $4,113 in auto allowance, and $4,500 in
tax preparation in 1996; $31,819 moving allowance, $1,955 in auto allowance and
$500 for tax preparation in 1997; and $20,431 moving allowance, $18,212 interest
on loan, and $1,955 in auto allowance in 1998.
(7) The Company provided a $250,000 interest free secured loan to Mr. Macfarland
on May 31, 1996 to assist in his relocation to Chambersburg, PA. Mr. Macfarland
derived an estimated benefit in the amount of $10,208 in 1996, based on a market
interest of 7%; $21,250 in 1997 based on a market interest of 8-1/2%; and
$18,212 in 1998 based on a market interest of 7.75% as a result of such interest
free loan. A partial payment of this loan was made in the first quarter of 1998
and the balance was paid in full in January 1999.
(8) Includes $466 in 1996 and $494 in each of 1997 and 1998 in life insurance
premium payments by the Company; $4,339 in 1996, $4,320 in 1997, and $4,230 in
1998 in Company matching contributions to the Company's 401(k) plan; $4,500 each
year in split dollar life insurance premium payments by the Company; and $10,615
in 1998 pursuant to the SERP.
Option Grants in Fiscal 1998
The following table sets forth information concerning grants of stock
options during 1998 to each of the Named Officers and the potential realizable
value of such options at assumed annual rates of stock price appreciation for
the option terms.
11
<PAGE>
Option Grants in 1998(1)
Individual Grants
<TABLE>
<CAPTION>
Number of Percent of Potential Realizable Value at
Securities Total Options Exercise Assumed Annual Rates of Stock
Underlying Granted to or Base Price Appreciation for Option
Options Employees in Price Expir. Term (2)
Name Granted (#) Fiscal Year ($/SH) Date 5% ($) 10% ($)
- ---- ----------- ----------- ------ ---- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas C. Foley 6,250 2.76% 21.00 1/28/08 82,550 209,181
12,500 5.52% 28.00 1/28/03 0 72,763
Michael L. Hurt 12,500 5.52% 21.00 1/28/08 165,100 418,363
25,000 11.03% 28.00 1/28/03 0 145,525
Carl R. Christenson 2,500 1.10% 21.00 1/28/08 33,020 83,673
5,000 2.21% 28.00 1/28/03 0 29,105
Michael H. Iversen 2,000 0.88% 21.00 1/28/08 26,416 66,938
4,000 1.76% 28.00 1/28/03 0 23,284
Willard C. Macfarland, Jr. 2,000 0.88% 21.00 1/28/08 26,416 66,938
4,000 1.76% 28.00 1/28/03 0 23,284
Harold L. Coder, III 2,000 0.88% 21.00 1/28/08 26,416 66,938
4,000 1.76% 28.00 1/28/03 0 23,284
</TABLE>
(1) The Company granted non-qualified options under the provisions of the 1996
Stock-based Incentive Compensation Plan. On January 29, 1998, 50,550 options
with an option price of $21.00 per share and 101,100 options with an option
price of $28.00 per share were granted. On August 1, 1998, 25,000 options with
an option price of $17.88 per share and 50,000 options with an option price of
$28.00 per share were granted. The options vest evenly over a three year period
from the grant date. The options may be exercised as they vest.
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission rules and are not
intended to forecast possible future appreciation, if any, in the Company's
stock price.
Option Exercises in 1998
The table which follows sets forth information concerning exercises of
stock options during 1998 by each of the Named Officers and the value of each
such officer's unexercised options as of January 1, 1999 based on a closing
stock price of $12.06 per share of the Company's Common Stock on such date:
12
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values(1)
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired Options at Fiscal Year End at Fiscal Year End
On Value (1/1/99) (Exercisable/ (1/1/99) (Exercisable/
Exercise Realized Unexercisable) Unexercisable)
Name (#) ($) (#) ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas C. Foley 0 0 6,250/31,270 0/0
Michael L. Hurt 57,236 1,068,527 12,500/62,500 0/0
Carl R. Christenson 3,797 70,026 6,086/18,336 29,369/47,797
Michael H. Iversen 5,625 64,048 5,313/16,812 26,836/55,446
Willard C. Macfarland, Jr. 0 0 2,000/10,000 0/0
Harold L. Coder, III 0 0 7,900/17,050 51,188/63,473
</TABLE>
(1) The Company has not granted any Stock Appreciation Rights.
Supplemental Executive Retirement Plan
Effective January 1, 1998, the Company adopted the Supplemental
Executive Retirement Plan (the "Plan"), which is designed to offer additional
retirement benefits to a select group of executive employees. Coverage under the
Plan is limited to executives who have completed five years of service with the
Company and whose benefits under the Retirement Savings and Investment Plan are
limited because of restrictions imposed by the Internal Revenue Code on the
amount of benefits that may be contributed on behalf of executive employees
under that type of a tax-qualified plan.
The Plan credits each participant's account with additional retirement
contributions on December 31 of each year. Each year, the Company credits a
participant's account with a contribution plus any earnings on contributions for
prior years. The contributions are made using a "target benefit formula" which
is intended to insure (but does not guarantee) that the value of a participant's
account, at age 65, will equal the value of a single life annuity for 50% of the
participant's final average earnings with the Company less the following
amounts: (1) benefits under our tax-qualified retirement plan, (2) the
participant's social security benefits and (3) a portion of any amount received
by a participant from certain split-dollar life insurance policies that have
been purchased for such participants.
13
<PAGE>
A participant is 25% vested in his or her account in the first year of
participation in the Plan and vests ratably over the subsequent ten year period
based on continued employment with us. A participant is entitled to a
distribution of the vested portion of his or her account after the earliest of
the following: (1) the participant's termination of employment (other than for
Cause, as defined in the Plan), (2) the participant's death, (3) the
participant's disability, (4) a Change of Control (as defined in the Plan) or
(5) termination of the Plan.
Executive Employment Contract
The following sets forth a description of the executive employment
contract which is in place for the individuals named in the Summary Compensation
Table.
Michael L. Hurt
Mr. Hurt's employment contract was effective on April 14, 1998 and
provides that he will continue to serve as our President or other senior
executive officer until December 31, 2002. The contract sets Mr. Hurt's annual
salary at $265,000, which may be adjusted if we and Mr. Hurt agree to any such
adjustment. Mr. Hurt's employment contract further provides that he will be
entitled to participate in all employee benefit plans or programs that are made
available to our executive employees.
If Mr. Hurt voluntarily terminates his employment with us without good
reason or we terminate his employment for cause or because his performance does
not satisfy the terms of his contract, Mr. Hurt will not be entitled to any
payments or benefits beyond his last day of employment. If Mr. Hurt terminates
his employment with us for good reason or he is terminated following a change of
control, we will pay him $350,000 per year for the two year period following his
termination. Finally, if we terminate Mr. Hurt's employment because we no longer
need his services, we have agreed to continue his then-current compensation for
a period of twenty-four months, provided that Mr. Hurt refrains from competing
with us during that period. Mr. Hurt's contract also provides that Mr. Hurt is
subject to noncompetition, nonsolicitation and confidentiality restrictions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act") requires the Company's directors, officers and persons who own
more than 10% of a registered class of the Company's Common Stock to file
reports about their beneficial ownership of the Company's Common Stock. All the
directors and officers of the Company filed reports as required by Section 16(a)
of the Exchange Act with respect to the fiscal year 1998 on a timely basis
except for Mr. Williams who did not file timely reports as required in relation
to dividend reinvestment transactions in January, April, July, August and
October 1998 which resulted in the acquisition of 16.4 shares.
14
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE REGARDING COMPENSATION
Executive Compensation Program. The Company's executive
compensation program is designed to attract and retain highly-qualified
executives and to motivate them to contribute to the Company's goals and
objectives and its overall financial success. The Board believes that executives
should have a greater portion of their compensation at risk than other
employees, and that compensation should be tied directly to the performance of
the business. Compensation for the Company's executives consists of both cash
and equity-based compensation. In determining executive compensation, the
Compensation Committee reviews and evaluates information supplied by management
and bases decisions on management recommendations as well as on the Company's
performance and on the individual's contribution and performance.
Salary. The Compensation Committee reviews the salary of each
executive officer in relation to previous salaries, personal performance,
salaries of executive officers in the industry and general economic conditions.
The salaries are set at levels intended to motivate and retain highly qualified
executives whom the Board believes are important to the continued success of the
Company.
Bonuses. The Company's annual incentive payments to executive
officers are intended to encourage and reward excellent individual performances
by managers who make significant contributions to the Company's financial
success. During 1998 an executive officer could earn bonus compensation based in
part upon achievement by the Company of certain financial performance objectives
and in part by achievement of individual operating objectives designed to
enhance future performance by the Company. For 1998, the Company did not meet
its performance objectives and as a result no bonus compensation was paid to
executives on that basis. However, individual operating objectives were met by
each of Messrs. Iversen, Christenson, Macfarland, and Coder and as a result each
such executive was paid bonus compensation.
Incentive Stock Options. The Company grants stock options to
provide long-term incentives for the executive officers. The option grants under
the 1996 Stock Based Incentive Compensation Plan are designed to better align
the interests of the executive officers with those of the stockholders and to
provide each individual with a significant incentive to manage the Company from
the perspective of an owner and to remain employed by the Company. The number of
shares subject to each option grant is based on the officer's level of
responsibility and relative position within the Company.
1998 Compensation of Chairman and President
Chairman
The Compensation Committee determined the 1998 compensation
for Mr. Foley in accordance with the guidelines described above. Mr. Foley's
salary increased in 1998 from $272,917 to $288,750 based upon an evaluation of
his personal performance and the Company's financial performance, as well as a
cost of living increase. No specific weighting was assigned to these factors in
determining the base salary increase. Mr. Foley earned a bonus of $165,000 based
15
<PAGE>
on his achievement of certain personal operating objectives designed to enhance
future long-term performance of the Company including his strategic direction of
the Company and his active participation in the two acquisitions completed by
the Company in 1997. The decrease in his bonus from $300,000 in 1997 was based
upon the failure of the Company to meet its performance objectives.
President
The Compensation Committee determined the 1998 compensation
for Mr. Hurt in accordance with the guidelines described above. Mr. Hurt's
salary increased in 1998 from $248,333 to $263,750, based upon an evaluation of
his personal performance and the Company's financial performance, as well as a
cost of living increase. No specific weighting was assigned to these factors in
determining the base salary increase. Mr. Hurt earned a bonus of $165,000 based
upon his achievement of certain personal operating objectives designed to
enhance future long-term performance of the Company including the achievement of
certain return on investment performance objectives and the cost-reduction
programs put in place by Mr. Hurt during 1997 . The decrease in his bonus from
$300,000 in 1997 was based upon the failure of the Company to meet its
performance objectives and upon the determination by the Committee that a larger
portion of Mr. Hurt's compensation should be in the form of equity interest in
order to more closely link his management of the Company with the interests of
shareholders.
Deductibility of Compensation. Section 162(m) of the Internal
Revenue Code of 1986, as amended, generally imposes a $1 million limit on the
deductibility of compensation paid to executive officers of public companies.
The Compensation Committee believes that all of the compensation awarded to the
Company's executive officers during 1998 is fully deductible in accordance with
this limit.
This report is respectfully submitted by the members of the
Compensation Committee of the Company.
COMPENSATION COMMITTEE
Craig R. Stapleton
Jean-Pierre L. Conte
16
<PAGE>
PERFORMANCE GRAPH
Comparison of
Cumulative Total Returns Among
TB Wood's, Russell 2000, and Peer Group
- --------------------------------------------------------------------------------
220...........................................................................
210...........................................................................
+
200...........................................................................
190..............................................#............................
D 180...........................................................................
O +
L 170...........................................................................
L
A 160...........................................................................
R
S 150...........................................................................
140...........................................................................
+ *
130.................................................................*.........
120...........................................................................
110.........................*.......................................#.........
100#*+........................................................................
#
90..........................................................................
- --------------------------------------------------------------------------------
2/8/96 1/3/97 1/2/98 1/1/99
# = TBW * = Russell 2000 + = Peer Group
No published industry index accurately mirrors the Company's business.
Accordingly, the Company has created a special peer group index ("Peer Group")
of companies operating in the power transmission or mechanical manufacturing
industries. The Peer Group includes the following: Baldor Electric Company;
Bridgeport Machines, Inc.; Franklin Electric Co., Inc.; MagneTek, Inc.;
Kollmorgen Corp.; and Regal-Beloit Corporation.
INDEPENDENT AUDITORS
Arthur Andersen LLP was the auditor for the 1998 fiscal year and has
been selected as the Company's auditor for the 1999 fiscal year. Representatives
of Arthur Andersen LLP will be present at the Annual Meeting with an opportunity
to make a statement if they desire to do so and will be available to respond to
appropriate questions.
VOTING
The holders of a majority of the outstanding shares of Common Stock
must be present in person or by proxy to constitute a quorum. When a quorum is
present at the Annual Meeting, the affirmative vote of the holders of a
plurality of the shares represented at the Annual Meeting or any adjournment
thereof which actually vote is required to elect directors and the affirmative
17
<PAGE>
vote of the holders of a majority of the shares represented at the Annual
Meeting is required to act on any other matters properly brought before the
meeting. Shares represented by (i) proxies which are marked "withhold authority"
with respect to the election of any one or more nominees for election as
directors, (ii) proxies which are marked to deny discretionary authority on
other matters, and (iii) broker non-votes will be counted for the purpose of
determining the number of shares represented at the meeting but will not be
counted as voting.
STOCKHOLDER PROPOSALS
Any stockholder proposals submitted for inclusion in the Company's
Proxy Statement and proxy for the 2000 Annual Meeting of Stockholders must be
received by the Secretary of the Company at the address appearing on the front
page of this proxy statement no later than December 3, 1999, and must comply in
all other respects with applicable rules and regulations of the Securities and
Exchange Commission relating to such inclusion. Any stockholder proposal
submitted to the Company for inclusion in the Company's Proxy Statement for the
2000 Annual Meeting of Stockholders after February 15, 2000 is considered
untimely. In addition, any stockholder intending to present a proposal for
consideration at the 2000 Annual Meeting of Stockholders must comply with
certain provisions of the Company's Certificate of Incorporation and Bylaws.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
BEING SOLICITED BY THIS PROXY STATEMENT, ON THE WRITTEN REQUEST OF SUCH PERSON,
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO) AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUESTS SHOULD BE
DIRECTED TO THE SECRETARY OF THE COMPANY, AT THE ADDRESS OF THE COMPANY SET
FORTH ON THE FIRST PAGE OF THIS PROXY STATEMENT.
18
<PAGE>
[Front of Card]
TB Wood's Corporation
This proxy is solicited by the Board of Directors of TB Wood's
Corporation for the Annual Meeting of Stockholders on April 27, 1999.
The undersigned Stockholder of TB Wood's Corporation (the
"Corporation"), hereby revoking any contrary proxy previously given, hereby
appoints Thomas C. Foley, Michael L. Hurt, and David H. Halleen or any one of
them (with full power to act alone and to designate substitutes and to make
revocations) attorneys and proxies of the undersigned, with authority to vote
and act with respect to all shares of common stock of the Corporation which the
undersigned would be entitled to vote, at the Annual Meeting of Stockholders, to
be held on April 27, 1999, at 10:00 a.m. at the Hilton New York & Towers, 1335
Avenue of the Americas, New York City, New York, and any adjournments thereof,
with all the powers the undersigned would possess if personally present, upon
the matter noted on the reverse and upon such other matters as may properly come
before the meeting. The shares represented by this proxy shall be voted as
follows:
(To be signed on the reverse side)
- --------------------------------------------------------------------------------
<PAGE>
TB WOOD'S CORPORATION
[Back of Card]
/ X / Please mark your
votes as in this
example.
FOR the foregoing WITHHOLD AUTHORITY
nominee to vote for foregoing nominee
1. To elect / / / /
Thomas C. Foley
as Director of the
First Class
This proxy confers authority to vote "FOR" the proposal listed unless otherwise
indicated. If any other business is transacted at said meeting, this proxy shall
be voted in accordance with the judgment of the proxies. The Board of Directors
recommends a vote "FOR" the listed proposal.
This proxy is solicited on behalf of the Board of Directors of TB Wood's
Corporation and may be revoked prior to its exercise.
<TABLE>
<CAPTION>
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
<S> <C> <C> <C>
______________________________________ Dated: _______________, 1999 _________________________________ Dated: ______________, 1999
SIGNATURE(S) OF STOCKHOLDER SIGNATURE(S) OF STOCKHOLDER
NOTE: Signature(s) should follow exactly the name(s) on the stock certificate. Executor, administrator, trustee or guardian should
sign as such. If more than one trustee, all should sign. ALL JOINT OWNERS MUST SIGN.
</TABLE>
