<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
TRW INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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)(1) 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: ..............................................................
(4) Date Filed: ................................................................
================================================================================
<PAGE> 2
[TRW LOGO]
NOTICE OF
1998 ANNUAL MEETING
OF SHAREHOLDERS
AND PROXY STATEMENT
TRW Inc.
1900 Richmond Road
Cleveland, Ohio 44124
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
Notice of Annual Meeting of Shareholders.................... 1
Questions and Answers....................................... 2
1998 Proposals to be Voted Upon............................. 3
Board of Directors.......................................... 4
Nominees for Election................................. 4
Continuing Directors.................................. 6
Director Committees and Meetings...................... 9
Director Compensation................................. 11
Management Ownership of Shares.............................. 12
Compensation of Executive Officers.......................... 13
Report of the Compensation and Stock Option Committee
on Executive Compensation.......................... 13
Stock Performance Graph............................... 17
Summary Compensation Table............................ 18
Stock Option Grants in 1997........................... 20
Stock Option Exercises in 1997 and Year-End Option
Values............................................... 20
Pension Plan Information.............................. 21
Other Compensation Arrangements....................... 21
Other Information........................................... 23
</TABLE>
<PAGE> 4
TRW INC.
- --------------------------------------------------------------------------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
The annual meeting of shareholders of TRW Inc. will be held at the Company's
executive offices located at 1900 Richmond Road, Lyndhurst, Ohio, on Wednesday,
April 29, 1998, at 8:30 a.m., to vote on the following:
(1) election of five Directors: Michael H. Armacost, Carl H. Hahn, George H.
Heilmeier, John D. Ong and Richard W. Pogue, each for a term of three years
ending in the year 2001;
(2) ratification of the Directors' appointment of Ernst & Young LLP as the
Company's independent auditors for the year ending December 31, 1998; and
(3) any other business properly brought before the meeting.
The shareholders of record at the close of business on February 13, 1998 will be
entitled to vote.
/s/ William B. Lawrence
William B. Lawrence
Secretary
March 16, 1998
Your vote is important. If you do not expect to attend the annual meeting of
shareholders, or if you do plan to attend but wish to vote by proxy, please
mark, date, sign and return promptly the enclosed proxy card in the envelope
provided.
<PAGE> 5
QUESTIONS AND ANSWERS
WHO CAN VOTE?
Record holders of TRW Common Stock and Serial Preference Stock II (Series 1 and
3) as of the close of business on February 13, 1998 are entitled to vote at the
meeting. On that date, 122,617,110 shares of TRW Common Stock, 43,881 shares of
Serial Preference Stock II (Series 1), and 74,142 shares of Serial Preference
Stock II (Series 3) were outstanding.
WHAT IS BEING VOTED ON?
- - Election of five Directors for terms ending in the year 2001.
- - Ratification of the Directors' appointment of Ernst & Young LLP as the
Company's independent auditors for the year ending December 31, 1998.
The Directors do not know of any other matters that are to be presented at the
meeting. If any other matter requiring a vote properly comes before the meeting,
the holders of the proxies will vote your shares on that matter, as well.
HOW DO I VOTE?
Mark, sign and date your proxy card and return it to the Company. A postage-paid
envelope is provided. If you do not indicate your voting preferences on your
proxy card, your shares will be voted in favor of the two proposals.
MAY I CHANGE MY VOTE?
You may revoke your proxy in any one of the following three ways:
(1) by sending a written notice to the Company stating that you want to revoke
your proxy;
(2) by submitting a properly signed proxy with a later date; or
(3) by voting in person at the annual meeting.
IS MY VOTE CONFIDENTIAL?
The Company's policy on confidential voting provides that no proxy, ballot or
voting tabulation that identifies the particular vote of a shareholder will be
disclosed to Directors or officers of the Company except (i) as necessary to
meet legal requirements, (ii) to permit the inspectors of election to certify
the results of the vote, or (iii) in a contested proxy election. The policy also
provides for confidential treatment of shareholder comments and for an
independent inspector of elections to certify the vote and confirm the integrity
of the voting process.
WHO IS SOLICITING PROXIES?
The enclosed proxy is being solicited by the Directors of the Company, and the
Company will pay the cost of the solicitation.
The Company has retained Georgeson & Company Inc. to aid in the solicitation of
proxies. The anticipated cost of their services is $12,000, plus disbursements.
Solicitations may be made by personal interview, mail, telephone and telegram.
It is anticipated that the solicitations will consist primarily of requests to
brokerage houses, custodians, nominees and fiduciaries to forward the soliciting
material to the beneficial owners of shares held of record by those persons. In
addition, certain officers and other employees of the Company may, by telephone,
telegram, letter or personal interview, request the return of proxies.
2
<PAGE> 6
WHEN ARE 1999 SHAREHOLDER PROPOSALS DUE?
In order to be considered for action at the 1999 annual meeting, shareholder
proposals must be received by November 16, 1998. The proposals must be submitted
in writing and sent to the Secretary of the Company at TRW Inc., 1900 Richmond
Road, Cleveland, Ohio 44124.
1998 PROPOSALS TO BE VOTED UPON
ELECTION OF DIRECTORS
Nominees for election this year are Michael H. Armacost, Carl H. Hahn, George H.
Heilmeier, John D. Ong and Richard W. Pogue. (See pages four and five for
biographical information on the nominees.) Each of the nominees currently serves
as a Director, and each has agreed to stand for re-election. According to the
retirement policy for Directors, Carl H. Hahn is expected to retire in April
1999.
Your Board recommends a vote FOR these nominees. If any of the nominees is
unable to stand for election, the Board may provide for a lesser number of
nominees or designate a substitute. In the latter event, shares represented by
proxies may be voted for the substitute.
In order for the nominees to be elected, they must receive enough votes to equal
a majority of the outstanding shares of TRW Common. Shares represented by proxy
will be voted FOR the nominees unless you specify otherwise on your proxy card.
If you abstain from voting or withhold your vote for the nominees, it will have
the same effect as voting against them.
RATIFICATION OF ERNST & YOUNG AS INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the accounting firm of Ernst &
Young LLP has been appointed by the Directors, subject to your ratification, to
continue to serve as the Company's independent auditors for the fiscal year
ending December 31, 1998. Ernst & Young has been serving the Company in this
capacity for a number of years and is considered to be highly qualified.
Representatives of Ernst & Young are expected to be present at the annual
meeting to respond to any shareholder questions.
Your Board recommends a vote FOR this proposal. Shares represented by proxy will
be voted FOR this proposal unless you specify otherwise on your proxy card.
3
<PAGE> 7
BOARD OF DIRECTORS
The Company's Regulations fix the number of Directors at a range between 12 and
18. Currently, there are 15 Directors. Set forth below is biographical
information on the five nominees for election and the other continuing Company
Directors with unexpired terms of office.
NOMINEES FOR ELECTION
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
MICHAEL H. ARMACOST [PHOTO OF MICHAEL H.
ARMACOST]
Age: 60
Term: Expires in 1998; Director since 1993
Recent Business Experience: Mr. Armacost has been President of the Brookings
Institution since October 1995. He served as a
distinguished fellow and visiting professor at the
Asia/Pacific Research Center of Stanford University from
1993 to 1995. Mr. Armacost was U.S. Ambassador to Japan
from 1989 to 1993.
Other Directorships: American Family Life Assurance Company, Applied
Materials, Inc. and Cargill, Incorporated
- --------------------------------------------------------------------------------------------------------------
CARL H. HAHN [PHOTO OF CARL H.
HAHN]
Age: 71
Term: Expires in 1998; Director since 1993
Recent Business Experience: Dr. Hahn served as Chairman of the Board of Volkswagen
AG from 1981 until his retirement at the end of 1992.
Other Directorships: PACCAR Inc. Dr. Hahn is a member of the supervisory
board of Perot Systems Corporation. He also serves as a
member of the supervisory boards of a number of European
companies, including DAF Trucks N.V. and Thyssen AG.
- --------------------------------------------------------------------------------------------------------------
GEORGE H. HEILMEIER [PHOTO OF GEORGE H.
HEILMEIER]
Age: 61
Term: Expires in 1998; Director since 1992
Recent Business Experience: Chairman Emeritus of Bell Communications Research
(Bellcore) since the beginning of the year. Dr.
Heilmeier served as Chairman and Chief Executive Officer
of Bellcore from 1997 to 1998. He also served as
President and Chief Executive Officer of Bellcore from
1991 to year-end 1996.
Other Directorships: Automatic Data Processing, Inc., Compaq Computer
Corporation and Perot Systems Corporation. Dr. Heilmeier
also is a trustee of The MITRE Corporation.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 8
NOMINEES FOR ELECTION
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
JOHN D. ONG [PHOTO OF JOHN D.
ONG]
Age: 64
Term: Expires in 1998; Director since 1995
Recent Business Experience: Mr. Ong is Chairman Emeritus of The BFGoodrich Company.
He served as Chairman of BFGoodrich from 1979 to 1997.
He was also Chief Executive Officer of BFGoodrich from
July 1979 to year-end 1996.
Other Directorships: Ameritech Corporation, ASARCO, Inc., Cooper Industries
Defiance, Inc., The Geon Company and The Kroger Company
- --------------------------------------------------------------------------------------------------------------
RICHARD W. POGUE [PHOTO OF RICHARD W.
POGUE]
Age: 69
Term: Expires in 1998; Director since 1994
Recent Business Experience: Mr. Pogue has served as senior advisor to Dix & Eaton, a
public relations firm, since 1994. He was senior partner
at the law firm of Jones, Day, Reavis & Pogue from 1993
to 1994 and managing partner of that firm from 1984 to
1992.
Other Directorships: Continental Airlines, Inc., Derlan Industries Limited,
M. A. Hanna Company, KeyCorp, Lamalie Associates, Inc.
and OHM Corporation
- --------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 9
CONTINUING DIRECTORS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
MARTIN FELDSTEIN [PHOTO OF MARTIN
FELDSTEIN]
Age: 58
Term: Expires in 1999; Director from 1981 to 1982 and since
1984
Recent Business Dr. Feldstein has been Professor of Economics at Harvard
Experience: University since 1967. He also is President and Chief
Executive Officer of the National Bureau of Economic
Research, a position he held from 1977 to 1982 and from
July 1984 until the present. He was elected a Director
of the Company in 1981, resigned his position upon
joining the government in August 1982 and was again
elected a Director of the Company in July 1984.
Other Directorships: American International Group, Inc. and J. P. Morgan &
Co. Incorporated
- --------------------------------------------------------------------------------------------------------------
ROBERT M. GATES [PHOTO OF ROBERT M.
GATES]
Age: 54
Term: Expires in 1999; Director since 1994
Recent Business Experience: From 1991 to 1993, Dr. Gates served as Director of
Central Intelligence for the United States. He served as
Assistant to the President of the United States and
Deputy National Security Advisor from 1989 to 1991.
Other Directorships: The Charles Stark Draper Laboratory, Inc., LucasVarity
plc, and NACCO Industries, Inc. Dr. Gates also is a
trustee of The Fidelity Funds, a consultant to Koch
Industries and Placer Dome Inc., and a senior advisor to
The Mitchell Group.
- --------------------------------------------------------------------------------------------------------------
JOSEPH T. GORMAN [PHOTO OF JOSEPH T.
GORMAN]
Age: 60
Term: Expires in 2000; Director since 1984
Recent Business Experience: Mr. Gorman has been Chairman of the Board and Chief
Executive Officer of TRW since 1988. He also served as
President of TRW from 1985 to 1991 and as Chief
Operating Officer of TRW from 1985 to 1988.
Other Directorships: Aluminum Company of America and The Procter & Gamble
Company
- --------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 10
CONTINUING DIRECTORS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PETER S. HELLMAN [PHOTO OF PETER S.
HELLMAN]
Age: 48
Term: Expires in 2000; Director since 1995
Recent Business Experience: Mr. Hellman has been President and Chief Operating
Officer of TRW since 1995. He was Executive Vice
President and Assistant President of TRW from 1994 to
1995. He also served as Executive Vice President and
Chief Financial Officer of TRW from 1991 to 1994.
Other Directorships: Arkwright Mutual Insurance Company
- --------------------------------------------------------------------------------------------------------------
KAREN N. HORN [PHOTO OF KAREN N.
HORN]
Age: 54
Term: Expires in 2000; Director since 1990
Recent Business Experience: Mrs. Horn has served as Senior Managing Director and
Head of International Private Banking of Bankers Trust
New York Corporation since 1996. She was Chairman of
Bank One, Cleveland, N.A. from 1987 to 1996 and also
served as Chief Executive Officer of Bank One from 1987
to 1995.
Other Directorships: The British Petroleum Company p.l.c., Eli Lilly and
Company and Rubbermaid Incorporated
- --------------------------------------------------------------------------------------------------------------
E. BRADLEY JONES [PHOTO OF E. BRADLEY
JONES]
Age: 70
Term: Expires in 1999; Director since 1982
Recent Business Experience: Mr. Jones served as Chairman and Chief Executive Officer
of Republic Steel Corporation and its successor LTV
Steel Company from 1982 until his retirement in 1984.
Other Directorships: Birmingham Steel Corporation, Consolidated Rail
Corporation and RPM, Inc. Mr. Jones also is a trustee of
The Fidelity Funds.
- --------------------------------------------------------------------------------------------------------------
WILLIAM S. KISER [PHOTO OF WILLIAM S.
KISER]
Age: 70
Term: Expires in 2000; Director since 1985
Recent Business Experience: Dr. Kiser has been Vice Chairman and Chief Medical
Officer of Primary Health Systems, Inc. since 1994. He
served as medical director of American Health Care
Management, Inc. from 1992 to 1994.
Other Directorships: Dr. Kiser also is a trustee and an officer of the
American Foundation of Urologic Diseases.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 11
CONTINUING DIRECTORS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
DAVID BAKER LEWIS [PHOTO OF DAVID
BAKER LEWIS]
Age: 53
Term: Expires in 1999; Director since 1995
Recent Business Experience: Mr. Lewis has been Chairman of the Board of Lewis &
Munday, a Detroit law firm, since 1982.
Other Directorships: Comerica Bank, Consolidated Rail Corporation, M. A.
Hanna Company and LG&E Energy Corporation
- --------------------------------------------------------------------------------------------------------------
JAMES T. LYNN [PHOTO OF JAMES T.
LYNN]
Age: 71
Term: Expires in 1999; Director since 1993
Recent Business Experience: Mr. Lynn served as Chairman of the Board and Chief
Executive Officer of Aetna Life and Casualty Company
from 1984 until his retirement in 1992. He served as a
senior advisor to Lazard Freres & Co. LLC, investment
bankers, from November 1992 through 1997.
Other Directorships: None
- --------------------------------------------------------------------------------------------------------------
LYNN M. MARTIN [PHOTO OF LYNN M.
MARTIN]
Age: 58
Term: Expires in 2000; Director since 1995
Recent Business Experience: Ms. Martin has chaired Deloitte & Touche's Council on
the Advancement of Women and has served as an advisor to
the firm since 1993. She also has held the Davee chair
at the J. L. Kellogg Graduate School of Management,
Northwestern University, since 1993. Ms. Martin served
as U.S. Secretary of Labor from 1991 to 1993.
Other Directorships: Ameritech Corporation, Dreyfus Funds, Harcourt General,
Inc., The Procter & Gamble Company and Ryder System,
Inc.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 12
DIRECTOR COMMITTEES AND MEETINGS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
AUDIT COMMITTEE
Members: E. Bradley Jones (Chair), Michael H. Armacost, Robert M.
Gates and Karen N. Horn
Number of 1997 Meetings: Four
Principal Responsibilities: - select the Company's independent auditors, subject to
shareholder ratification
- review and discuss the audits conducted by both the
independent auditors and the Company's internal auditors
- review the Company's internal accounting controls,
accounting practices, financial structure and financial
reporting
- review the Company's financial statements as certified by
the independent auditors
- -----------------------------------------------------------------------------------------------------
COMPENSATION AND STOCK
OPTION COMMITTEE
Members: William S. Kiser (Chair), Martin Feldstein, Carl H. Hahn,
Karen N. Horn, David B. Lewis and John D. Ong
Number of 1997 Meetings: Three
Principal Responsibilities: - determine the compensation of all the Company's executive
officers
- approve any compensation arrangements with non-employee
Directors (other than for their service as a Director of the
Company)
- approve compensation and benefit plans that do not
generally apply to all salaried employees and that involve
the Company's executive officers
- -----------------------------------------------------------------------------------------------------
EXECUTIVE COMMITTEE
Members: Joseph T. Gorman (Chair), Peter S. Hellman, E. Bradley Jones
and William S. Kiser; alternates John D. Ong and Richard W.
Pogue
Number of 1997 Meetings: None
Principal Responsibilities: - approve matters that require immediate action during the
intervals between Directors' meetings
- has all the authority of the Directors, other than the
authority to fill vacancies among the Directors or in any
committee of the Directors
- -----------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 13
DIRECTOR COMMITTEES AND MEETINGS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
NOMINATING COMMITTEE
Members: Karen N. Horn (Chair), Carl H. Hahn, George H. Heilmeier, E.
Bradley Jones, James T. Lynn, Lynn M. Martin and Richard W.
Pogue
Number of 1997 Meetings: One
Principal Responsibilities: - establish the criteria for selection of nominees for
Directors of the Company
- evaluate all candidates submitted by interested persons,
including Directors and shareholders of the Company
- seek out possible candidates and aid in attracting highly
qualified candidates
- -----------------------------------------------------------------------------------------------------
PUBLIC POLICY COMMITTEE
Members: George H. Heilmeier (Chair), Robert M. Gates, Carl H. Hahn,
Lynn M. Martin and Richard W. Pogue
Number of 1997 Meetings: Three
Principal Responsibilities: - review and make recommendations on various Company
policies and programs regarding the Company's relationships
with its employees, customers, shareholders, governments
at all levels, local communities and the general public
- -----------------------------------------------------------------------------------------------------
RETIREMENT FUNDING
COMMITTEE
Members: Martin Feldstein (Chair), Michael H. Armacost, William S.
Kiser, David B. Lewis, James T. Lynn and John D. Ong
Number of 1997 Meetings: Two
Principal Responsibilities: - review the Company's activities with respect to funding
policies for, and the administration and operation of, the
Company's various employee benefit plans
- review the performance of investment managers and trustees
for those plans
- -----------------------------------------------------------------------------------------------------
</TABLE>
Your Directors met seven times during 1997. Each Director attended 75 percent or
more of the total number of meetings of Directors and meetings of committees on
which he or she served, with the exception of Carl H. Hahn, Peter S. Hellman and
Lynn M. Martin.
10
<PAGE> 14
DIRECTOR COMPENSATION
General. An officer of the Company who also serves as a Director does not
receive any additional compensation for serving as a Director or as a member or
chair of a committee.
1997 Director Compensation Restructuring. As reported in last year's proxy
statement, at the February 1997 Directors' meeting, a comprehensive
restructuring of Director compensation was approved. The restructuring is based
on the following principles:
- that a significant portion of Director compensation should be aligned
with creating and sustaining shareholder value;
- that Directors should hold a significant number of shares of TRW
Common; and
- that total compensation should be structured to attract and retain a
diverse and truly superior Board of Directors.
The new compensation package for non-employee Directors became effective July 1,
1997 and is comprised of the following components:
- a base annual retainer of $70,000, 50 percent of which is
automatically deferred in shares of TRW Common;
- an additional annual chair retainer of $5,000 for chairs of the Audit
and the Compensation and Stock Option Committees;
- an additional annual chair retainer of $3,000 for chairs of any other
committees;
- an elective deferral of the remaining 50 percent of the base annual
retainer and any chair retainer, in a choice of investment
alternatives; and
- an annual stock option to purchase 1,500 shares of TRW Common, granted
under the 1997 TRW Long-Term Incentive Plan shareholders approved last
April.
Payment of the automatic deferral portion of a Director's retainer will not be
made until the Director ceases to serve as a Director. Finally, the pension plan
for non-employee Directors was frozen as of June 30, 1997, and no future
benefits will accrue under that plan.
Since January 1, 1998, George H. Heilmeier also has served as a consultant and
adviser to the Company. Dr. Heilmeier's consulting arrangement with the Company
expires December 31, 1999 but is renewable year-to-year thereafter. Under the
agreement, the Company will pay Dr. Heilmeier an annual fee of $210,000 in
monthly installments.
11
<PAGE> 15
MANAGEMENT OWNERSHIP OF SHARES
The following table shows share ownership for the Directors and executive
officers as of the close of business on March 2, 1998. Unless there is a
footnote to the contrary, sole voting and investment power in the shares owned
are held either by the named individual alone or by the named individual and his
or her spouse.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF TRW COMMON(1)
---------------------------------------------------------------
SHARES
BENEFICIALLY EXERCISABLE DEFERRED
NAME OWNED(2) OPTIONS(3) SHARE UNITS(4)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
M. H. Armacost 2,400 1,500 677
M. Feldstein 2,901 0 422
R. M. Gates 1,449 1,500 422
J. T. Gorman 250,648(5) 906,659 0
C. H. Hahn 2,900 1,500 848
T. W. Hannemann 49,799 127,330 0
G. H. Heilmeier 3,577 1,500 422
P. S. Hellman 42,748 242,994 11,375
K. N. Horn 2,800 1,500(6) 422
E. B. Jones 4,000 1,500 422
W. S. Kiser 6,000 1,500 422
D. B. Lewis 1,511 1,500 422
J. T. Lynn 2,600 1,500 422
L. M. Martin 2,300 1,500 635
J. D. Ong 1,000 1,500 422
R. W. Pogue 6,245 1,500 422
J. S. Remick 20,719 68,330 0
J. P. Stenbit 48,862 141,330 0
- -----------------------------------------------------------------------------------------------------------
All Directors and executive
officers as a group 577,090 2,082,623 19,750
</TABLE>
(1) All persons listed own less than one percent of outstanding TRW Common. All
Directors and executive officers as a group own 2.2 percent of outstanding
TRW Common.
(2) Includes shares of TRW Common held in The TRW Employee Stock Ownership and
Savings Plan.
(3) As required by the Securities and Exchange Commission, this column shows the
number of shares that may be acquired within 60 days of March 2, 1998, upon
exercise of stock options.
(4) This column shows units of TRW Common which were credited under deferred
compensation plans and other nonqualified benefit plans.
(5) This number does not include 2,887 shares of TRW Common, held by an
immediate family member, of which J. T. Gorman disclaims beneficial
ownership.
(6) Mrs. Horn transferred her option for 1,500 shares to her minor child.
12
<PAGE> 16
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE ON
EXECUTIVE COMPENSATION
PRINCIPLES
The Compensation and Stock Option Committee of the Board consists entirely of
non-employee Directors. The Committee determines the compensation of all
executive officers of the Company, based on the Company's executive compensation
philosophy. This philosophy has five primary principles:
- to link executive compensation to the creation of sustainable
increases in shareholder value;
- to provide compensation rewards contingent upon performance;
- to differentiate compensation based on individual executive
contribution;
- to promote teamwork among executives and other Company employees; and
- to encourage the retention of a strong management team.
FACTORS CONSIDERED IN DETERMINING COMPENSATION
The Compensation Committee determines an appropriate compensation package for
each executive officer, based on his or her responsibilities, duties,
performance and experience. The Compensation Committee annually reviews
comparable company data in order to establish general guidelines for executive
compensation. The compensation of executive officers who manage business
operations is compared to that of executives at other corporations in similar
industries. The compensation of the Chief Executive Officer, the President and
corporate staff Executive Vice Presidents is compared to compensation data from
multi-industry groups consisting of nearly 40 companies. This data is compiled
by independent compensation consultants. The multi-industry group is comprised
of corporations most likely to compete with the Company for services of
executive officers and is not limited to any particular manufacturing business.
The Compensation Committee formulates general compensation guidelines by
targeting the salary and yearly performance bonus of each executive officer at
the 60th percentile of the comparable data and the long-term compensation at the
75th percentile of such comparable data.
The Compensation Committee also considers the tax deductibility of compensation
paid to the executive officers. At the 1997 Annual Meeting of Shareholders, the
Company sought and obtained the shareholder approval necessary so that awards
made under the 1997 Long-Term Incentive Plan would be eligible to meet the
requirements of Section 162(m) of the Internal Revenue Code. Section 162(m)
provides that certain annual compensation in excess of $1 million paid by a
public company to certain executive officers is not deductible for federal tax
purposes. The Compensation Committee intends to preserve the deductibility of
compensation and benefits to the extent practicable and to the extent consistent
with its other compensation objectives.
13
<PAGE> 17
ANNUAL COMPENSATION
Annual Salary. The Compensation Committee determines the annual salary of each
executive officer based on that officer's level of duties and responsibilities,
experience and prior performance, and comparable company data. The Compensation
Committee reviews the salary of each executive officer annually and increases it
when warranted by the financial performance of the Company, the executive's
performance and/or competitive compensation practices of comparable companies.
Yearly Performance Bonus. Each year the Compensation Committee establishes both
quantitative and qualitative goals for the Company as a whole and for the
individual business units. The yearly performance bonus of each executive
officer is based on the performance of the Company against Company goals and the
performance of the officer's unit within the Company against that unit's goals.
The Compensation Committee reviews and weighs these goals with respect to each
executive officer. The quantitative goals for 1997 bonuses included:
- specific profit targets;
- return-on-assets-employed targets;
- cash flow targets;
- value added targets; and
- sales awards targets.
The qualitative goals for 1997 bonuses included:
- business infrastructure and core capabilities (including asset
management, cost reduction, quality, continuous process improvement,
technology management and innovation, productivity, and employee
satisfaction);
- strategic positioning and business development;
- customer satisfaction;
- staff functional goals;
- legal and ethical conduct;
- teamwork and collaboration; and
- diversity.
LONG-TERM COMPENSATION
Long-term compensation, designed to link shareholder and executive interests,
forms a significant component of the total executive compensation package. On
average, long-term compensation, including strategic incentive grants,
represents 60 percent of each executive officer's total target compensation. The
Compensation Committee granted stock options and awarded strategic incentive
grants to individual executive officers based on (i) its general belief that
long-term compensation should be set at the 75th percentile of comparable
companies, and (ii) its evaluation of each executive officer's anticipated
contribution to the Company, and his responsibilities, duties, performance and
experience.
Stock Option Grants. In order to focus employees on the long-term performance
of the Company, the Company has long maintained stock option plans for certain
managerial and profes-
14
<PAGE> 18
sional employees, including all executive officers. In 1997, the Company granted
stock options to more than 900 employees. All options become exercisable at a
rate of one-third per year for each full year of continuous employment with the
Company after the date of grant. The plans under which the stock options were
granted require that options have an exercise price of not less than the fair
market value of TRW Common on the date of grant.
Strategic Incentive Grants. In April 1994, the Company made strategic incentive
grants to executive officers under the 1994 TRW Long-Term Incentive Plan. The
awards consist of performance units pursuant to which the grantees are entitled
to receive shares of TRW Common or cash equivalent values in the event that
certain returns-on-assets-employed are achieved for each of the four years from
1994 through 1997. Although these grants extend over a four-year period, a
percentage of the total grant awarded in 1994 may be paid out annually based on
actual performance compared to annual return-on-assets-employed milestone goals
set for the executive officer's business unit and/or the Company as a whole. The
strategic incentive grants require continuously improved financial performance
in successive grant years for annual payments in such successive grant years to
be made.
The Compensation Committee believes that strategic incentive grants promote a
long-term focus on the profitability of the Company and the executive officer's
unit within the Company. However, in accordance with the regulations of the
Securities and Exchange Commission, the payout in any given year is deemed an
annual payment and is consequently disclosed under the "Bonus" column of the
Summary Compensation Table.
STOCK OWNERSHIP GUIDELINES
The Company's stock ownership guidelines for senior executives reinforce the
relationship of individual rewards to the long-term performance of the Company
and ensure clear alignment of the executives' interests with those of
shareholders. Senior executives are expected to hold a number of shares equal to
certain multiples of their annual salary, ranging from 1.5 times annual salary
to 6 times annual salary for the Chief Executive Officer. Senior executives who
are not currently holding shares at the guideline level will be expected to do
so generally by the year 2000.
COMPENSATION OF JOSEPH T. GORMAN, CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
The Compensation Committee determines the CEO's annual and long-term
compensation on the basis of comparable company information and:
- the financial performance of the Company;
- Mr. Gorman's performance as Chairman and CEO;
- Mr. Gorman's importance to the Company; and
- Mr. Gorman's implementation of the Company's strategic goals.
While the Compensation Committee considers all these factors, no specific weight
is assigned to any particular factor, and Mr. Gorman's total compensation is not
established pursuant to a fixed formula. The Compensation Committee attempts to
maintain a high proportion of Mr. Gorman's compensation as being "at-risk"
compensation. Currently, more than 75 percent
15
<PAGE> 19
of Mr. Gorman's target compensation is not firmly fixed until after the
Compensation Committee has reviewed and evaluated his performance.
Annual Salary. The Compensation Committee set Mr. Gorman's salary for 1997 at
the rate of $1,134,000, a five percent increase over his 1996 salary. The
Compensation Committee increased Mr. Gorman's salary for 1997 based on:
- his leadership in sustaining high levels of performance;
- his role in exceeding the quantitative and qualitative goals described
above under "Annual Compensation; Yearly Performance Bonus;" and
- the relationship of his salary and total compensation to that of CEO's
of comparable companies.
While the Compensation Committee considered all of these factors in determining
Mr. Gorman's salary, no specific weights were placed on any of the factors.
Yearly Performance Bonus. Based on comparable company information, the
Compensation Committee established Mr. Gorman's target yearly performance bonus
for 1997 at 60 percent of his salary. For 1997, the Compensation Committee
awarded Mr. Gorman a performance bonus of $1,061,400, which is approximately 94
percent of his 1997 salary.
Mr. Gorman's 1997 yearly performance bonus was based on the performance of the
Company against the quantitative and qualitative goals described above under
"Annual Compensation; Yearly Performance Bonus." The Compensation Committee
reviewed and evaluated these factors in establishing general guidelines for the
amount of Mr. Gorman's 1997 yearly performance bonus. In addition, the
Compensation Committee considered Mr. Gorman's contributions in a variety of
other important dimensions, including his leadership, vision, integrity and
judgment, and his ability to represent the Company with key constituents, such
as shareholders, customers, employees and governments.
Stock Option and Strategic Incentive Grants. The Company awarded Mr. Gorman an
option to purchase 190,000 shares of TRW Common in 1997. His 1994 strategic
incentive grant is structured as a four-year grant with target payout of 120,000
units of TRW Common over the four-year term. His 1997 strategic incentive payout
was tied by formula to the return-on-assets-employed targets revised in 1997 and
compared to the Company's 1997 performance, as described above under "Long-Term
Compensation; Strategic Incentive Grants."
BY: THE TRW INC. COMPENSATION AND STOCK OPTION COMMITTEE
<TABLE>
<S> <C> <C>
William S. Kiser, Chair Carl H. Hahn David Baker Lewis
Martin Feldstein Karen N. Horn John D. Ong
</TABLE>
16
<PAGE> 20
STOCK PERFORMANCE GRAPH
The chart below compares the five-year cumulative total return on TRW Common
with that of the S&P 500 Index and a peer industry group. This graph assumes
$100 was invested on December 31, 1992 in each of TRW Common, the S&P 500
companies and a peer group of companies. The peer group is composed of an
Automotive segment and a Space, Defense and Information Systems segment,
reflecting the Company's two industry segments. The Automotive segment is
represented by the average of two published indices, the Dow Jones
Transportation Equipment Index and the Dow Jones Auto Parts and Equipment
(excluding Tire and Rubber) Index. The Space, Defense and Information Systems
segment is represented by the Dow Jones Aerospace and Defense Index. The two
segments are weighted according to the relative annual revenues of the Company's
Automotive and Space, Defense and Information Systems segments. Cumulative total
return assumes the reinvestment of dividends.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Peers S&P 500 TRW
<S> <C> <C> <C>
1992 100 100 100
1993 129.28 110.08 124.11
1994 123.26 111.53 121.69
1995 161.90 153.45 147.04
1996 205.74 188.68 192.48
1997 264.60 251.64 212.28
</TABLE>
17
<PAGE> 21
SUMMARY COMPENSATION TABLE
This table sets forth compensation paid to or accrued for the Chief Executive
Officer and the other four highest-paid executive officers in each of the
last three fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
SECURITIES
UNDERLYING
NAME AND OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) OTHER(2) (#)(3) COMPENSATION(4)
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
J. T. GORMAN 1997 $1,129,500 $4,265,778 $108,022 190,000 $97,828
Chairman of the Board 1996 1,074,500 3,902,000 75,859 170,000 90,607
and Chief Executive
Officer 1995 1,007,417 3,808,400 77,099 140,000 73,930
- -----------------------------------------------------------------------------------------------------------
P. S. HELLMAN 1997 605,000 2,440,221 -- 65,000 38,580
President and Chief 1996 545,833 2,209,875 53,879 50,000 39,602
Operating Officer 1995 495,833 2,115,950 -- 40,000 35,115
- -----------------------------------------------------------------------------------------------------------
T. W. HANNEMANN 1997 368,462 1,399,626 -- 40,000 25,338
Executive Vice President 1996 357,500 1,316,400 -- 24,000 25,233
and General Manager, 1995 330,000 1,242,400 -- 18,000 19,450
Space & Electronics Group
- -----------------------------------------------------------------------------------------------------------
J. S. REMICK 1997 377,500 1,344,957 -- 40,000 28,257
Executive Vice President 1996 337,500 1,044,940 116,682 24,000 21,270
and General Manager, 1995 290,900 775,840 64,999 12,000 15,201
Occupant Restraint
Systems Group
- -----------------------------------------------------------------------------------------------------------
J. P. STENBIT 1997 372,563 1,434,526 -- 40,000 21,471
Executive Vice President, 1996 343,078 789,900 -- 24,000 17,700
Telecommunications 1995 305,000 1,121,000 -- 18,000 21,514
</TABLE>
18
<PAGE> 22
FOOTNOTES TO SUMMARY COMPENSATION TABLE
(1) The dollar amounts included in this column are comprised of the (i) yearly
performance bonus which is paid in February of the year following the year
to which it relates and (ii) amounts earned pursuant to the Company's
strategic incentive grants (the "SIGs") under the 1994 TRW Long-Term
Incentive Plan. The SIGs are four-year grants, pursuant to which annual
payments are made based on continuous and increasing
return-on-assets-employed goals established at the time of grant. However,
in accordance with the regulations of the Securities and Exchange
Commission, the SIG payouts are deemed annual compensation and are
consequently disclosed under the "Bonus" column of the Summary Compensation
Table.
The amounts set forth in the "Bonus" column for 1997, 1996 and 1995 include
the following amounts attributable to the yearly performance bonus and SIG
payouts:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------- ----------------------- -----------------------
Bonus SIG Bonus SIG Bonus SIG
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. T. Gorman $1,061,400 $3,204,378 $ 894,500 $3,007,500 $1,170,200 $2,638,200
P. S. Hellman 571,000 1,869,221 455,500 1,754,375 577,000 1,538,950
T. W. Hannemann 331,500 1,068,126 313,900 1,002,500 363,000 879,400
J. S. Remick 351,600 993,357 239,200 805,740 248,200 527,640
J. P. Stenbit 366,400 1,068,126 188,400 601,500 241,600 879,400
</TABLE>
Payments under the SIGs are made in shares of TRW Common or, if performance
exceeds target, a combination of shares of TRW Common and cash, unless the
Compensation and Stock Option Committee determines to pay the excess over
target in shares of TRW Common. Any stock portion of a SIG payout is valued
based on the fair market value of TRW Common on the date of payment.
(2) The Other Annual Compensation reported includes the following: Mr. Gorman
(1997) -- $44,764 (personal use of Company aircraft) and $43,512 (automobile
allowance), (1996) -- $28,194 (personal use of Company aircraft) and $20,299
(automobile allowance), (1995) -- $30,236 (personal use of Company aircraft)
and $20,380 (automobile allowance); Mr. Hellman (1996) -- $19,587 (personal
use of Company aircraft) and $18,380 (automobile allowance); and Mr. Remick
(1996) -- $90,000 (club dues), (1995) -- $47,426 (relocation allowance).
(3) The number of securities underlying options in 1995 and 1996 has been
adjusted to reflect the two-for-one stock split, effected in the form of a
stock dividend, declared by the Directors on October 23, 1996.
(4) Amounts disclosed in this column reflect the following Company matching
contributions on behalf of the named executives with regard to The TRW
Employee Stock Ownership and Savings Plan and other nonqualified plans,
imputed life insurance costs and the premium paid by the Company with
respect to split-dollar life insurance agreements. Also included in this
column is the net excess cost of $2,302 on behalf of each named executive in
connection with an executive health insurance plan.
<TABLE>
<CAPTION>
Stock Savings Plan and Imputed Life Split-Dollar
Other Nonqualified Plans Insurance Life Insurance
------------------------ ------------ --------------
<S> <C> <C> <C>
J. T. Gorman $60,896 $23,029 $11,601
P. S. Hellman 31,902 2,867 1,509
T. W. Hannemann 20,471 2,048 517
J. S. Remick 18,550 4,659 2,746
J. P. Stenbit 16,786 1,740 643
</TABLE>
19
<PAGE> 23
STOCK OPTION GRANTS IN 1997
The following table sets forth information concerning the grant of stock options
to the Chief Executive Officer and the other four highest-paid executive
officers in 1997.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION GRANT DATE
NAME GRANTED(1) FISCAL YEAR PRICE(1) DATE PRESENT VALUE(2)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
J. T. Gorman 190,000 9.4% $50.13 02/03/2007 $2,243,900
P. S. Hellman 65,000 3.2% 50.13 02/03/2007 767,650
T. W. Hannemann 40,000 2.0% 50.13 02/03/2007 472,400
J. S. Remick 40,000 2.0% 50.13 02/03/2007 472,400
J. P. Stenbit 40,000 2.0% 50.13 02/03/2007 472,400
</TABLE>
(1) The indicated options were granted pursuant to the 1994 TRW Long-Term
Incentive Plan. The options were granted at the fair market value of TRW
Common on February 4, 1997, have 10-year terms and become exercisable in
equal annual increments over a three-year period. The options are
transferable to immediate family members. Vesting of the options is
accelerated by the occurrence of a change in control (see "Other
Compensation Arrangements"). Vested options must be exercised within 90 days
of termination of employment to the extent that the grantee's employment is
terminated prior to age 55 (other than by death or disability).
(2) The Grant Date Present Value was calculated using the Black-Scholes
valuation model, assuming a volatility rate of 20 percent, a risk-free rate
of return of 5.83 percent, a dividend yield of 2.54 percent, a projected
time of exercise of six years, and a projected risk of forfeiture of 5
percent. The actual amount, if any, realized upon the exercise of stock
options will depend upon the market price of TRW Common relative to the
exercise price per share of the stock option at the time of exercise. There
is no assurance that the hypothetical grant date present values of the stock
options reflected in this table will actually be realized.
STOCK OPTION EXERCISES IN 1997
AND YEAR-END OPTION VALUES
This table shows the number and value of stock options exercised by the Chief
Executive Officer and the other four highest-paid executive officers in 1997 and
the value of in-the-money options held by those individuals on December 31,
1997. The value of unexercised stock options is based on the difference between
the exercise price of the options and the closing price of TRW Common on
December 31, 1997, which was $53.375. The value realized on exercised options is
based on the difference between the exercise price for the options and the
closing price of TRW Common on the date of exercise.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END
NUMBER OF -----------------------------------------------------------
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. T. Gorman 57,238 $1,397,666 739,999 350,001 $19,328,587 $2,665,263
P. S. Hellman 8,000 213,000 191,332 111,668 4,951,330 805,245
T. W. Hannemann 44,000 1,555,000 100,000 62,000 2,605,460 406,640
J. S. Remick 26,000 888,250 43,000 60,000 956,595 364,520
J. P. Stenbit 22,000 718,970 114,000 62,000 3,048,210 406,640
</TABLE>
20
<PAGE> 24
PENSION PLAN INFORMATION
The following table shows the approximate annual pension benefits payable under
the Company's qualified and nonqualified supplemental plans.
<TABLE>
<CAPTION>
AVERAGE
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000 $ 105,000
- ---------------------------------------------------------------------------------------------
400,000 90,000 120,000 150,000 180,000 210,000
- ---------------------------------------------------------------------------------------------
600,000 135,000 180,000 225,000 270,000 315,000
- ---------------------------------------------------------------------------------------------
800,000 180,000 240,000 300,000 360,000 420,000
- ---------------------------------------------------------------------------------------------
1,000,000 225,000 300,000 375,000 450,000 525,000
- ---------------------------------------------------------------------------------------------
1,200,000 270,000 360,000 450,000 540,000 630,000
- ---------------------------------------------------------------------------------------------
1,400,000 315,000 420,000 525,000 630,000 735,000
- ---------------------------------------------------------------------------------------------
1,600,000 360,000 480,000 600,000 720,000 840,000
- ---------------------------------------------------------------------------------------------
1,800,000 405,000 540,000 675,000 810,000 945,000
- ---------------------------------------------------------------------------------------------
2,000,000 450,000 600,000 750,000 900,000 1,050,000
- ---------------------------------------------------------------------------------------------
2,200,000 495,000 660,000 825,000 990,000 1,155,000
- ---------------------------------------------------------------------------------------------
2,400,000 540,000 720,000 900,000 1,080,000 1,260,000
</TABLE>
Compensation covered for executive officers named in the Summary Compensation
Table on page 18 is the actual amount of salary and bonus shown in columns 3 and
4 of the Table, less the portion of the bonus that constitutes a payout under
the Company's strategic incentive grants of amounts earned during a given year.
These estimated amounts assume payments in the form of a single life annuity
following retirement on or after age 60. Retirement benefits are reduced after
the retiree reaches age 62 to reflect Social Security benefits.
The years of service completed by the executive officers named in the Summary
Compensation Table on page 18 are as follows: J. T. Gorman (age 60) -- 30 years
of service; P. S. Hellman (age 48) -- 9 years of service; T. W. Hannemann (age
55) -- 28 years of service; J. S. Remick (age 59) --33 years of service; and J.
P. Stenbit (age 57) -- 28 years of service.
OTHER COMPENSATION ARRANGEMENTS
The Company has entered into agreements with each of its current executive
officers, including each person named in the Summary Compensation Table, and
certain other key employees. These agreements are designed generally to assure
continued management in the event of a change in control of the Company and are
operative only if a change in control occurs. The agreements provide that,
following a change in control, the officer will be employed by the Company for a
period of three years (the "Employment Period"). During the Employment Period,
the officer will be entitled to receive an annual base salary and to continue
participation in employee benefit plans at levels not less than those in effect
prior to the change in control. The incentive portion of the officer's
compensation will equal the highest incentive award paid to the officer for any
of three calendar years preceding the change in control. If the officer's
employment were to be terminated by the Company during the Employment Period for
reasons other than disability or cause, or by the officer for reasons relating
to changed circumstances or during the 60-day period immediately following the
first anniversary of the occurrence of a change in
21
<PAGE> 25
control, the officer would be entitled to receive a severance payment equal to
the net present value of (i) the salary and incentive pay that the officer would
have received under the agreement for the remainder of the Employment Period or
two years, whichever is longer (the "Remaining Period"), and (ii) the employee
benefits (other than employee welfare benefits and stock options and similar
compensatory benefits) that the officer would have received for the Remaining
Period, including under the Company's retirement plans, assuming vesting. The
Company would also provide the officer with health insurance and similar welfare
benefits for the Remaining Period, subject to reduction for comparable welfare
benefits received in subsequent employment. If any payments to the officer are
determined to be "excess parachute payments" under the Internal Revenue Code,
the officer would be entitled to receive an additional payment (net of income
taxes) to compensate the officer for the excise tax imposed by the Internal
Revenue Code on such payments. The agreements also provide that the Company
would reimburse the officer for his or her costs to enforce the agreement.
The Company also has entered into split-dollar life insurance agreements with
certain key executive officers, including each of the persons named in the
Summary Compensation Table. Under the split-dollar agreements, the Company owns,
and pays the premiums on, the life insurance policies and the executive has the
right to designate a beneficiary to receive a fixed portion of the policy death
benefit. The balance of the death benefit will be payable to the Company as a
recovery of its investment. Upon a change in control, ownership of the policies
will transfer to an irrevocable trust, and the Company will be required to fund
the trust with sufficient assets to pay future premiums on the policies.
For purposes of these agreements, as well as the Company's stock option grants,
a change in control is defined as a change occurring (a) by virtue of certain
mergers or consolidations or sale or transfer of assets by the Company to
another corporation or (b) by virtue of a change in the majority of the
Directors of the Company during any two-year period unless the election of each
new Director was approved by a two-thirds vote of the Directors in office at the
beginning of such period or (c) through the acquisition of shares representing
20 percent or more of the voting power of the Company other than acquisitions by
the Company, a subsidiary of the Company or a Company-sponsored employee benefit
plan or (d) through any other change in control reported in any filing with the
Securities and Exchange Commission.
22
<PAGE> 26
OTHER INFORMATION
OUTSTANDING SECURITIES
To the knowledge of the Company, except as set forth below, no person
beneficially owns more than five percent of any class of the Company's voting
stock. The following table presents information as of December 31, 1997 derived
from Schedules 13G filed with the Securities and Exchange Commission by persons
beneficially owning more than five percent of TRW Common:
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
The TRW Employee Stock Ownership and Savings Plan 21,003,783(2) 17.1%
1900 Richmond Road
Cleveland, Ohio 44124
- ------------------------------------------------------------
Putnam Investments, Inc. 6,609,656(3) 5.0%
One Post Office Square
Boston, Massachusetts 02109
- ------------------------------------------------------------
Scudder Kemper Investments, Inc. 8,493,697(4) 6.9%
345 Park Avenue
New York, New York 10154
</TABLE>
(1) Each beneficial owner listed in the table certified in its Schedule 13G
that, to the best of its knowledge and belief, the TRW Common beneficially
owned by it was acquired in the ordinary course of business and not for the
purpose of changing or influencing control of the Company.
(2) Bankers Trust New York Corporation and its wholly-owned subsidiary Bankers
Trust Company (together "Bankers Trust"), 280 Park Avenue, New York, New
York 10017, served as trustee of The TRW Employee Stock Ownership and
Savings Plan during 1997. Although Bankers Trust was the record owner of
these shares, it disclaimed beneficial ownership of the shares. Of the total
reported beneficially owned by The TRW Employee Stock Ownership and Savings
Plan, the Plan reported shared voting and dispositive power over all the
shares.
(3) Of the total amount reported beneficially owned by Putnam Investments, Inc.,
a wholly-owned subsidiary of Marsh & McLennan Companies, Inc. ("PI"), Putnam
Investment Management, a wholly-owned, registered investment advisor of PI,
has shared dispositive power over 6,504,049 shares of TRW Common but no sole
or shared voting power and no sole dispositive power over any shares of TRW
Common reported beneficially owned by PI. The Putnam Advisory Company, Inc.,
another wholly-owned, registered investment advisor of PI, has shared voting
power over 87,985 shares of TRW Common and shared dispositive power over
105,607 shares of TRW Common but no sole voting power or sole dispositive
power over any shares of TRW Common reported beneficially owned by PI. Marsh
& McLennan has no voting or dispositive power of any kind over any of the
shares of TRW Common reported beneficially owned by PI.
(4) Of the total amount reported beneficially owned by Scudder Kemper
Investments, Inc., Scudder has sole voting power over 1,778,790 shares,
shared voting power over 6,100,072 shares, sole dispositive power over
8,446,925 shares, and shared dispositive power over 46,772 shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and the rules promulgated
under it require that certain officers, Directors and beneficial owners of the
Company's equity securities ("insiders") file various reports of transactions
effected in TRW Common with the Securities and Exchange Commission. The Company
has procedures in place to assist insiders in preparing and filing these reports
on a timely basis. All required reports were filed timely, with the exception of
one transaction which was filed late on behalf of T. W. Hannemann.
23
<PAGE> 27
CUMULATIVE VOTING
Any shareholder of the Company may exercise cumulative voting rights for the
election of Directors (i) if the shareholder notifies the President, a Vice
President or the Secretary of the Company in writing, not less than 48 hours
before the time of the meeting, that cumulative voting is being requested, and
(ii) if an announcement of such request is made at the beginning of the meeting
by the Chairman or Secretary of the Company or by or on behalf of the
shareholder making the request. Cumulative voting allows each shareholder to
cumulate his or her voting power by (i) casting his or her cumulated votes for
one nominee or by (ii) distributing his or her votes (the number of shares held
multiplied by the number of Directors to be elected) among two or more nominees.
The Company does not currently anticipate that cumulative voting will be
requested at the annual meeting. Nevertheless, if cumulative voting is
requested, the persons named in the proxy will vote cumulatively the shares
represented by the proxy FOR such of the nominees as they may determine, unless
specifically directed otherwise by the shareholder. Of course, no votes
represented by proxy will be cumulated or cast for a nominee from whom the
shareholder executing the proxy has specifically directed that such votes be
withheld.
William B. Lawrence
Secretary
March 16, 1998
24
<PAGE> 28
(TRW LOGO)
TRW INC. 1998 PROXY
THIS PROXY IS SOLICITED BY THE DIRECTORS OF TRW INC. FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 29, 1998.
The undersigned appoints J. T. Gorman, P. S. Hellman and W. B. Lawrence
as proxies, each with the power to appoint his substitute, and
authorizes them to vote all shares that the shareholder named on the
reverse side is entitled to vote at the Annual Meeting of Shareholders
of the Company to be held at 1900 Richmond Road, Lyndhurst, Ohio on
April 29, 1998, at 8:30 a.m., including any adjournment thereof, in the
manner specified on this proxy card and as fully as the undersigned
could do if personally present at the meeting. The proxies are also
authorized to vote at their discretion upon all other matters as
properly may be brought before the meeting.
The nominees for Director are M. H. Armacost, C. H. Hahn, G. H.
Heilmeier, J. D. Ong and R. W. Pogue or, if any of the nominees are
unavailable for election, the remaining nominees and such other persons
as are nominated by the Directors.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER. IN ORDER FOR YOUR SHARES TO BE VOTED BY THE PROXIES AT THE
ANNUAL MEETING, YOUR PROXY CARD MUST BE COMPLETED, SIGNED, DATED AND
RETURNED TO THE COMPANY BEFORE OR AT THE ANNUAL MEETING ON APRIL 29,
1998.
(Continued, and to be completed, signed and dated, on the other side)
WHITE CARD -- SHAREHOLDER
<PAGE> 29
TRW INC. 1998 PROXY
- -------------------------------------------------------------------------------
USE AN "X" IN THE BOXES TO INDICATE YOUR VOTE. IF YOU DO NOT GIVE DIRECTIONS BY
MARKING THE BOXES, YOUR SIGNED PROXY WILL BE VOTED "FOR" THE DIRECTOR NOMINEES,
"FOR" PROPOSAL 2, AND AT THE DISCRETION OF THE NAMED PROXIES UPON ANY OTHER
MATTER THAT MAY COME BEFORE THE MEETING.
DIRECTORS RECOMMEND A VOTE FOR.
<TABLE>
<CAPTION>
FOR WITHHOLD
<S> <C> <C>
1. Election of [ ] [ ]
Directors
(see other side)
</TABLE>
Instruction: To withhold
authority to vote for any
individual nominee, print that
nominee's name on the
following line:
-------------------------------
DIRECTORS RECOMMEND A
VOTE FOR.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Appointment of [ ] [ ] [ ]
Independent
Auditors
</TABLE>
The proxies are authorized to
vote at their discretion upon
any other matter that may come
before the meeting.
Signature(s) should agree with
name(s) shown at left. If
signing for a corporation,
partnership, estate or trust or
as agent, attorney or
fiduciary, title or capacity
should be stated. If shares are
held jointly, every holder
should sign.
Signature
------------------------------
Signature
------------------------------
Date
1998
------------------------------
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY IN THE RETURN
ENVELOPE.
WHITE CARD -- SHAREHOLDER
<PAGE> 30
(TRW LOGO)
SOLICITATION BY THE DIRECTORS OF TRW INC.
1998 CONFIDENTIAL VOTING INSTRUCTIONS
TO: CO-TRUSTEES UNDER THE TRW EMPLOYEE STOCK OWNERSHIP
AND SAVINGS PLAN
C/O NATIONAL CITY BANK, CLEVELAND, OHIO
I hereby direct that the voting rights pertaining to shares of stock of
TRW Inc. allocated to my account under the above-named plan shall be
exercised at the Annual Meeting of Shareholders of TRW Inc. to be held
April 29, 1998, and at any adjournment of the meeting, as designated on
the other side of this card.
The nominees for Director are M. H. Armacost, C. H. Hahn, G. H.
Heilmeier, J. D. Ong and R. W. Pogue or, if any of the nominees are
unavailable for election, the remaining nominees and such other persons
as are nominated by the Directors.
I understand that the voting rights will be exercised as directed by the
participants in the plan and that all shares for which you have not
received any instructions prior to the meeting will be voted at your
discretion.
(Continued, and to be completed, signed and dated, on the other side)
WHITE CARD -- US STOCK SAVINGS PLAN
<PAGE> 31
TRW INC. 1998 VOTING INSTRUCTIONS
- ------------------------------------------------------------------------------
USE AN "X" IN THE BOXES TO INDICATE YOUR VOTE.
DIRECTORS RECOMMEND A VOTE FOR.
<TABLE>
<CAPTION>
FOR WITHHOLD
<S> <C> <C>
1. Election of [ ] [ ]
Directors
(see other side)
</TABLE>
Instruction: To withhold
authority to vote for any
individual nominee, print that
nominee's name on the
following line:
------------------------------
DIRECTORS RECOMMEND A
VOTE FOR.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Appointment of [ ] [ ] [ ]
Independent
Auditors
</TABLE>
Signature should agree with
name shown at left.
Signature
---------------------------
Date 1998
---------------------------
PLEASE COMPLETE, SIGN, DATE AND RETURN THESE INSTRUCTIONS IMMEDIATELY IN THE
RETURN ENVELOPE.
WHITE CARD -- US STOCK SAVINGS PLAN
<PAGE> 32
(TRW LOGO)
SOLICITATION BY THE DIRECTORS OF TRW INC.
1998 CONFIDENTIAL VOTING INSTRUCTIONS
TO: THE ROYAL TRUST COMPANY
TRUSTEE UNDER THE TRW CANADA STOCK SAVINGS PLAN
I hereby direct that the voting rights pertaining to shares of stock of
TRW Inc. held by you, as Trustee, and allocated to my account under the
above-named plan shall be exercised at the Annual Meeting of
Shareholders of TRW Inc. to be held April 29, 1998, and at any
adjournment of the meeting, as designated on the other side of this
card.
The nominees for Director are M. H. Armacost, C. H. Hahn, G. H.
Heilmeier, J. D. Ong and R. W. Pogue or, if any of the nominees are
unavailable for election, the remaining nominees and such other persons
as are nominated by the Directors.
I understand that the voting rights will be exercised as directed by the
participants in the plan and that all shares for which you have not
received any instructions prior to the meeting will be voted at your
discretion.
(Continued, and to be completed, signed and dated, on the other side)
WHITE CARD -- CANADIAN STOCK SAVINGS PLAN
<PAGE> 33
TRW INC. 1998 VOTING INSTRUCTIONS
- ------------------------------------------------------------------------------
USE AN "X" IN THE BOXES TO INDICATE YOUR VOTE.
DIRECTORS RECOMMEND A VOTE FOR.
<TABLE>
<CAPTION>
FOR WITHHOLD
<S> <C> <C>
1. Election of [ ] [ ]
Directors
(see other side)
</TABLE>
Instruction: To withhold
authority to vote for any
individual nominee, print that
nominee's name on the
following line:
-------------------------------
DIRECTORS RECOMMEND A
VOTE FOR.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Appointment of [ ] [ ] [ ]
Independent
Auditors
</TABLE>
Signature should agree with
name shown at left.
Signature
------------------------------
Date
1998
------------------------------
PLEASE COMPLETE, SIGN, DATE AND RETURN THESE INSTRUCTIONS IMMEDIATELY IN THE
RETURN ENVELOPE.
WHITE CARD -- CANADIAN STOCK SAVINGS PLAN
<PAGE> 34
(TRW LOGO)
TRW INC. 1998 PROXY
THIS PROXY IS SOLICITED BY THE DIRECTORS OF TRW INC. FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 29, 1998.
The undersigned appoints J. T. Gorman, P. S. Hellman and W. B. Lawrence
as proxies, each with the power to appoint his substitute, and
authorizes them to vote all shares that the shareholder named on the
reverse side is entitled to vote at the Annual Meeting of Shareholders
of the Company to be held at 1900 Richmond Road, Lyndhurst, Ohio on
April 29, 1998, at 8:30 a.m., including any adjournment thereof, in the
manner specified on this proxy card and as fully as the undersigned
could do if personally present at the meeting. The proxies are also
authorized to vote at their discretion upon all other matters as
properly may be brought before the meeting.
The nominees for Director are M. H. Armacost, C. H. Hahn, G. H.
Heilmeier, J. D. Ong and R. W. Pogue or, if any of the nominees are
unavailable for election, the remaining nominees and such other persons
as are nominated by the Directors.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER. IN ORDER FOR YOUR SHARES TO BE VOTED BY THE PROXIES AT THE
ANNUAL MEETING, YOUR PROXY CARD MUST BE COMPLETED, SIGNED, DATED AND
RETURNED TO THE COMPANY BEFORE OR AT THE ANNUAL MEETING ON APRIL 29,
1998.
(Continued, and to be completed, signed and dated, on the other side)
BLUE CARD -- BROKER
<PAGE> 35
TRW INC. 1998 PROXY
- -------------------------------------------------------------------------------
USE AN "X" IN THE BOXES TO INDICATE YOUR VOTE. IF YOU DO NOT GIVE DIRECTIONS BY
MARKING THE BOXES, YOUR SIGNED PROXY WILL BE VOTED "FOR" THE DIRECTOR NOMINEES,
"FOR" PROPOSAL 2, AND AT THE DISCRETION OF THE NAMED PROXIES UPON ANY OTHER
MATTER THAT MAY COME BEFORE THE MEETING.
DIRECTORS RECOMMEND A VOTE FOR.
<TABLE>
<CAPTION>
FOR WITHHOLD
<S> <C> <C>
1. Election of [ ] [ ]
Directors
(see other side)
</TABLE>
Instruction: To withhold
authority to vote for any
individual nominee, print that
nominee's name on the
following line:
------------------------------
DIRECTORS RECOMMEND A
VOTE FOR.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Appointment of [ ] [ ] [ ]
Independent
Auditors
</TABLE>
The proxies are authorized to
vote at their discretion upon
any other matter that may come
before the meeting.
Shares of Common Stock
Shares of Serial Preference
Stock II ($4.40 Series 1)
Shares of Serial Preference
Stock II ($4.50 Series 3)
Signature(s) should agree with
name(s) shown at left. If
signing for a corporation,
partnership, estate or trust or
as agent, attorney or
fiduciary, title or capacity
should be stated. If shares are
held jointly, every holder
should sign.
Signature
------------------------------
Signature
------------------------------
Date
1998
------------------------------
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY IN THE RETURN
ENVELOPE.
BLUE CARD -- BROKER
<PAGE> 36
(TRW LOGO)
SOLICITATION BY THE DIRECTORS OF TRW INC.
1998 CONFIDENTIAL VOTING INSTRUCTIONS
TO: CO-TRUSTEES UNDER THE BDM 401(K) SAVINGS PLAN
C/O NATIONAL CITY BANK, CLEVELAND, OHIO
I hereby direct that the voting rights pertaining to shares of stock of
TRW Inc. allocated to my account under the above-named plan shall be
exercised at the Annual Meeting of Shareholders of TRW Inc. to be held
April 29, 1998, and at any adjournment of the meeting, as designated on
the other side of this card.
The nominees for Director are M. H. Armacost, C. H. Hahn, G. H.
Heilmeier, J. D. Ong and R. W. Pogue or, if any of the nominees are
unavailable for election, the remaining nominees and such other persons
as are nominated by the Directors.
I understand that the voting rights will be exercised as directed by the
participants in the plan and that all shares for which you have not
received any instructions prior to the meeting will be voted at your
discretion.
(Continued, and to be completed, signed and dated, on the other side)
YELLOW CARD -- BDM SAVINGS PLAN
<PAGE> 37
TRW INC. 1998 VOTING INSTRUCTIONS
- -------------------------------------------------------------------------------
USE AN "X" IN THE BOXES TO INDICATE YOUR VOTE.
DIRECTORS RECOMMEND A VOTE FOR.
<TABLE>
<CAPTION>
FOR WITHHOLD
<S> <C> <C>
1. Election of [ ] [ ]
Directors
(see other side)
</TABLE>
Instruction: To withhold
authority to vote for any
individual nominee, print that
nominee's name on the
following line:
-------------------------------
DIRECTORS RECOMMEND A
VOTE FOR.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Appointment of [ ] [ ] [ ]
Independent
Auditors
</TABLE>
Signature should agree with
name shown at left.
Signature
------------------------------
Date
1998
------------------------------
PLEASE COMPLETE, SIGN, DATE AND RETURN THESE INSTRUCTIONS IMMEDIATELY IN THE
RETURN ENVELOPE.
YELLOW CARD -- BDM SAVINGS PLAN
