<PAGE> 1
TRIUMPH GROUP, INC.
FOUR GLENHARDIE CORPORATE CENTER
1255 DRUMMERS LANE - SUITE 200
WAYNE, PENNSYLVANIA 19087
(610) 975-0420
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 24, 1997
TO HOLDERS OF SHARES OF COMMON STOCK AND CLASS D COMMON STOCK:
You are invited to be present either in person or by proxy at
the annual meeting of stockholders (the "Meeting") of TRIUMPH GROUP, INC. (the
"Company") to be held at the Desmond Great Valley Hotel and Conference Center,
One Liberty Boulevard, Malvern, Pennsylvania 19355, on Thursday, July 24, 1997,
beginning at 10:00 a.m., local time, for the following purposes:
1. To consider and to elect all six (6) directors for a term ending at the
next annual meeting of stockholders and until such director's successor
is duly elected and qualified;
2. To consider and to ratify the selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending March 31,
1998; and
3. To consider and take action upon such other business as may properly
come before the Meeting or any postponements or adjournments thereof.
Management presently knows of no other business to be
presented at the Meeting. If any other matters come before the Meeting, the
persons named in the enclosed proxy will vote in accordance with their judgment
on such matters.
The Board of Directors has fixed the close of business on May
30, 1997 as the record date for determining stockholders entitled to notice of
and to vote at the Meeting and any adjournments thereof. A list of stockholders
entitled to vote at the Meeting will be available for examination by any
stockholder for any purpose germane to the Meeting ten days prior to the Meeting
during normal business hours at the Company's offices at Four Glenhardie
Corporate Center, 1255 Drummers Lane, Suite 200, Wayne, Pennsylvania. Such list
of stockholders will also be available for inspection at the Meeting.
To ensure that your vote is counted, please complete, date and
sign the enclosed proxy and return it promptly in the enclosed envelope, whether
or not you plan to attend the Meeting in person. A self-addressed, postage paid
envelope is enclosed for your convenience. If you do attend the Meeting, you may
then withdraw your proxy and vote your shares in person. In any event, you may
revoke your proxy prior to its exercise. Shares represented by proxies which are
returned properly signed but unmarked will be voted in favor of all director
nominees and the ratification of the selection of Ernst & Young LLP.
By Order of the Board of Directors,
Richard M. Eisenstaedt
June 25, 1997 Secretary
Wayne, Pennsylvania
YOUR VOTE IS IMPORTANT
PLEASE FILL IN, DATE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING.
NO POSTAGE IS NECESSARY IF THE ENVELOPE IS MAILED IN THE UNITED STATES.
<PAGE> 2
TRIUMPH GROUP, INC.
FOUR GLENHARDIE CORPORATE CENTER
1255 DRUMMERS LANE - SUITE 200
WAYNE, PENNSYLVANIA 19087
(610) 975-0420
--------------------
PROXY STATEMENT
FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 24, 1997
--------------------
GENERAL INFORMATION
This proxy statement is furnished in connection with the
solicitation by the Board of Directors (the "Board") of Triumph Group, Inc., a
Delaware corporation (the "Company") of proxies to be voted at its Annual
Meeting of Stockholders (the "Meeting") on Thursday, July 24, 1997, to be held
at 10:00 a.m., local time, at the Desmond Great Valley Hotel and Conference
Center, One Liberty Boulevard, Malvern, Pennsylvania 19355, and at any
adjournments thereof, for the purposes set forth in the accompanying notice of
the Meeting. It is expected that this proxy statement, the foregoing notice and
the enclosed proxy card are first being mailed to stockholders entitled to vote
on or about June 25, 1997.
Sending a signed proxy will not affect a stockholder's right
to attend the Meeting and vote in person since the proxy is revocable. Any
stockholder giving a proxy has the power to revoke it by, among other methods,
giving written notice to the Secretary of the Company at any time before the
proxy is exercised or by attending the Meeting and voting in person.
When your proxy card is returned properly signed, the shares
represented thereby will be voted in accordance with your instructions. The
Board knows of no matters that are likely to be brought before the Meeting,
other than the matters specifically referred to in the notice of the Meeting. If
any other matters properly come before the Meeting, the persons named in the
enclosed proxy, or their duly appointed substitutes acting at the Meeting, will
be authorized to vote or otherwise act thereon in accordance with their judgment
in such matters. In the absence of instructions, the shares represented at the
Meeting by the enclosed proxy will be voted "FOR" the nominees of the Board in
the election of directors and "FOR" the ratification of the selection of Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending March
31, 1998.
SOLICITATION OF PROXIES
The expense of this proxy solicitation will be borne by the
Company. In addition to solicitation by mail, proxies may be solicited in person
or by telephone or telecopy by officers or other regular employees of the
Company, without additional compensation to such officers and other employees.
The Company is required to pay, upon request, the reasonable expenses incurred
by record holders of the Company's Common Stock, par value $.001 per share (the
"Common Stock"), who are
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<PAGE> 3
brokers, dealers, banks, voting trustees or other nominees for mailing proxy
material and annual stockholder reports to any beneficial owners of Common Stock
they hold of record.
QUORUM AND VOTING RIGHTS
Holders of record of the Company's Common Stock and Class D
Common Stock, par value $.001 per share ("Class D Common Stock"), as of the
close of business on May 30, 1997, the record date fixed by the Board for the
determination of stockholders entitled to notice of and to vote at the Meeting
(the "Record Date"), will be entitled to notice and to vote at the Meeting and
at any adjournments thereof. Holders of shares of Common Stock are entitled to
vote on all matters brought before the Meeting. Holders of Class D Common Stock
are not entitled to vote with respect to the election of directors, but are
entitled to vote on all other matters brought before the Meeting. Each share of
Class D Common Stock may be converted into one share of Common Stock, at any
time, at the option of the holder thereof.
As of the Record Date, there were 6,021,626 shares of Common
Stock outstanding and entitled to vote on the election of directors. As of the
Record Date, there were 6,021,626 shares of Common Stock and 3,727,962 shares of
Class D Common Stock for a total of 9,749,588 shares outstanding and entitled to
vote on all other matters. Holders of Common Stock will vote on the election of
directors as a class and the holders of Common Stock and Class D Common Stock
will vote on all other matters together as a class. Each outstanding share of
Common Stock and Class D Common Stock entitles the holder to one vote.
The presence in person or by proxy of the holders of a
majority of the outstanding Common Stock and Class D Common Stock is necessary
to constitute a quorum at the Meeting.
Directors will be elected by a plurality of the votes cast by
holders of Common Stock, voting together as a class, represented in person or by
proxy at the Meeting. Abstentions with respect to the election of directors will
be counted for the purpose of determining whether a quorum is present at the
Meeting but will not be considered as votes cast. Because directors are elected
by a plurality of votes, abstentions will not have an impact on their election.
The holders of Common Stock are entitled to cumulate their
votes in the election of directors, which gives a holder of Common Stock the
right to cast as many votes in the aggregate as he is entitled to vote
multiplied by the number of directors to be elected and to cast all his votes
for one director candidate or distribute such votes among two or more director
candidates, as he sees fit. Each holder of Common Stock may indicate his
preference on the enclosed proxy. If no preference is indicated, all votes to
which such holder is entitled will be voted pro rata in favor of all the
nominees indicated.
Ratification of the Board's selection of the Company's
auditors and any matters brought before the Meeting, other than the election of
directors, will require the favorable vote of a majority of the outstanding
shares of Common Stock and Class D Common Stock, voting together as a class,
represented in person or by proxy at the Meeting. The Company is not aware of
any matter, other than as referred to in this proxy statement, to be presented
at the Meeting. Abstentions with respect to the approval of the selection of the
Company's auditors and of any other proposals will be counted for the purpose of
determining whether a quorum is present at the Meeting and as votes cast, and
will have the effect of a negative vote.
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Broker non-votes with respect to all proposals will not be
counted in determining the presence of a quorum and will not be considered as
votes cast, and thus will have no effect on the results of the votes.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Board currently consists of six directors and one vacant
seat. At the Meeting, the stockholders will elect all six directors for a term
ending at the next annual meeting of stockholders and until such director's
successor is duly elected and qualified. One vacancy will remain on the Board.
The table below sets forth the name of each person nominated
by the Board to serve as a director for the ensuing year. All of the nominees
are currently directors of the Company for terms expiring at the Meeting. Each
nominee has consented to be named as a nominee and, to the present knowledge of
the Company, is willing to serve as a director, if elected. Should any of the
nominees not remain a candidate at the end of the Meeting (a situation which is
not anticipated), proxies solicited hereunder will be voted in favor of those
who remain as candidates and may be voted for substitute nominees. Unless
contrary instructions are given on the proxy, the shares represented by a
properly executed proxy will be voted pro rata "FOR" the election of Richard C.
Ill, John R. Bartholdson, Richard C. Gozon, Claude F. Kronk, Joseph M. Silvestri
and Michael A. Delaney.
<TABLE>
<CAPTION>
Nominees for Additional Term Age Year First Elected a Director
- ---------------------------- --- -----------------------------
<S> <C> <C>
Richard C. Ill 54 1993
John R. Bartholdson 52 1993
Richard C. Gozon 58 1993
Claude F. Kronk 65 1993
Joseph M. Silvestri 35 1994
Michael A. Delaney 43 1996
</TABLE>
The principal occupations and qualifications of each nominee
for director are as follows:
Richard C. Ill has been President and Chief Executive Officer
and a director of the Company since 1993. Mr. Ill joined Alco Standard
Corporation (a publicly traded company which changed its name in January 1997 to
IKON Office Solutions, Inc. and is hereinafter referred to as "Alco") in 1968
and became Group Vice President of Metalsource, a steel distribution business,
in 1973. In 1975, Mr. Ill became President of Triumph Industries and, in 1983,
became President of Metalsource. In 1988, Mr. Ill became President of Alco
Diversified Services, a division of Alco. He was named a Vice President of Alco
in 1989. Mr. Ill is a member of the Advisory Board of Outward Bound, USA and the
Board of Directors, Chairman's Council and Policy and Planning Committees of the
Steel Service Center Institute.
John R. Bartholdson has been Senior Vice President, Chief
Financial Officer and Treasurer and a director of the Company since 1993. Mr.
Bartholdson joined Alco Diversified Services in the fall of 1992. Prior to
joining Alco Diversified Services, Mr. Bartholdson was employed for 14 years by
Lukens, Inc., a manufacturer of specialty steel products, the last five years in
the position of Senior Vice President and Chief Financial Officer. Mr.
Bartholdson serves on the Board of Directors of PBHG Funds, Inc.
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<PAGE> 5
Richard C. Gozon has been a director of the Company since
1993. Mr. Gozon has been Executive Vice President of Weyerhaeuser Company since
1994. From 1988 to 1993, Mr. Gozon served as President and Chief Operating
Officer and a director of Alco. Mr. Gozon serves on the Board of Directors of
U.G.I. Corporation and AmeriSource Health Corporation.
Claude F. Kronk has been a director of the Company since 1993.
Mr. Kronk has been Vice Chairman and Chief Executive Officer and a director of
J&L Specialty Steel, Inc. in excess of five years. Mr. Kronk serves on the Board
of Directors of Cold Metal Products, Co.
Joseph M. Silvestri has been a director of the Company since
1994. Mr. Silvestri has been employed by Citicorp Venture Capital, Ltd. ("CVC")
since 1990 and has been a Vice President since 1995. In that position, he is
responsible for evaluating, executing and monitoring equity investments for CVC.
Mr. Silvestri serves on the Board of Directors of International Media Group,
Polyfibron Technologies, Inc., Frozen Specialties, Inc., Glenoit Mills and
Euramax International, Inc.
Michael A. Delaney has been a director of the Company since
1996. Mr. Delaney has been a Vice President of CVC since 1989. From 1986 through
1989, Mr. Delaney was Vice President of Citicorp Mergers and Acquisitions. Mr.
Delaney serves on the Board of Directors of Sybron Chemicals, Inc., GVC
Holdings, JAC Holdings, Delco Remy International, Enterprise Media, Inc.,
Southern Coil Processing, Inc., Aetna Industries, CORT Business Services, Inc.,
Palomar Technologies, Inc., Farm Fresh, Inc. and AmeriSource Health Corporation.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" EACH OF THE NOMINEES
PRESENTED. THE SIX NOMINEES RECEIVING THE HIGHEST NUMBER OF AFFIRMATIVE VOTES OF
THE SHARES OF COMMON STOCK PRESENT OR REPRESENTED AND ENTITLED TO VOTE AT THE
MEETING WILL BE ELECTED AS DIRECTORS.
Meetings and Committees of the Board
The Board held six meetings during the Company's fiscal year
ended March 31, 1997 and also acted by unanimous consents in writing. The
standing committees of the Board are the Audit Committee and the Compensation
Committee. The Company does not have an executive committee or a nominating
committee. The Audit Committee, consisting of Messrs. Gozon, Kronk and Delaney,
met one time during the last fiscal year. The Audit Committee communicates and
receives information directly from the Company's independent accountants. The
Compensation Committee, consisting of Messrs. Gozon, Kronk and Silvestri met one
time during the last fiscal year. The Compensation Committee periodically
reviews and evaluates the compensation of the Company's officers, administers
the Company's 1996 Stock Option Plan (the "Plan") and establishes guidelines for
compensation of other personnel.
Compensation of Directors
Directors who are also employees of the Company or CVC do not
receive additional compensation for serving as directors. Each director who is
not an employee of the Company or CVC receives an annual fee of $15,000 and a
fee of $1,000 for attendance at each Board meeting and $500 for each committee
meeting (unless held on the same day as a Board meeting). All directors are
reimbursed for out-of-pocket expenses incurred in attending meetings of the
Board or committees thereof.
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EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to the
President and Chief Executive Officer and to each of the three most highly
compensated executive officers of the Company and its subsidiaries, other than
the President and Chief Executive Officer, for the fiscal years ended March 31,
1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE*
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) COMPENSATION(3)
- --------------------------- ---- ------ -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Richard C. Ill 1997 291,200 291,200 3,951 5,472
President and Chief Executive 1996 280,000 308,000 3,080 5,472
Officer 1995 255,000 89,250 3,080 6,653
John R. Bartholdson 1997 249,600 249,600 4,024 4,320
Senior Vice President, Chief 1996 240,000 264,000 3,080 4,320
Financial Officer and Treasurer 1995 205,000 71,750 3,080 4,792
Paul T. Stimmler 1997 103,500 50,000 2,674 4,950
Vice President and 1996 98,500 50,000 1,970 4,950
Assistant Secretary 1995 92,900 23,000 1,858 3,150
Kevin E. Kindig 1997 78,500 39,250 2,028 462
Controller and 1996 73,000 30,000 1,460 462
Assistant Secretary 1995 65,000 10,000 1,300 304
</TABLE>
- --------------------
* This Summary Compensation Table does not include information for Richard
M. Eisenstaedt, Vice President, General Counsel and Secretary of the
Company, since Mr. Eisenstaedt commenced employment with the Company in
October 1996, at an annual salary of $156,000. Mr. Eisenstaedt received a
bonus in the amount of $60,000 and all other compensation in the amount of
$1,080 for the fiscal year ended March 31, 1997. See notes (2) and (3)
below.
(1) The amounts shown consist of cash bonuses earned in the fiscal year
identified, of which only a portion was paid in that year.
(2) "Other Annual Compensation" reflects amounts contributed by the Company to
its 401(k) Plan for the benefit of the named employee.
(3) The amounts shown consist of group term life insurance premiums.
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The following table sets forth, for each of the executive
officers named above, certain information concerning options granted under the
Plan during the fiscal year ended March 31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------- Potential Realizable Value
Number of % of Total At Assumed Annual Rates
Securities Options of Stock Appreciation for
Underlying Granted to Exercise or Option Term (3)
Options Employees in Base Price Expiration ---------------------------
Name Granted (#)(1) Fiscal Year ($/sh)(2) Date 5% 10%
---- -------------- ----------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Richard C. Ill 35,000 13.99% $19.00 10/24/06 $418,250 $1,059,800
John R. Bartholdson 35,000 13.99% 19.00 10/24/06 418,250 1,059,800
Richard M. Eisenstaedt 10,000 4.00% 19.00 10/24/06 119,500 302,800
Paul T. Stimmler 10,000 4.00% 19.00 10/24/06 119,500 302,800
Kevin E. Kindig 10,000 4.00% 19.00 10/24/06 119,500 302,800
All employees as a group 250,140 100% 19.00 10/24/06 2,989,173 7,574,239
</TABLE>
----------------------------
<TABLE>
<CAPTION>
5% 10%
-- ---
<S> <C> <C>
Total potential stock price appreciation from October 24, 1996
to October 24, 2006 for all stockholders at assumed rates of
stock price appreciation(4)......................................... $116,507,577 $295,217,525
Potential actual realizable value of options granted to all
employees, assuming ten-year option terms, as a percentage of
total potential stock price appreciation from October 24, 1996
to October 24, 2006 for all stockholders at assumed rates of
stock price appreciation............................................ 2.57% 2.57%
</TABLE>
- --------------------
(1) The options vest in four equal installments on each of the first,
second, third and fourth anniversaries of October 24, 1996, the date of
grant.
(2) The exercise price for each option is equal to the fair market value of
the Common Stock on the date of grant.
3) Potential realizable value is based on the assumed annual growth rates
listed, compounded annually for the ten-year option term. The dollar
amounts set forth under this heading are the results of calculations
required by the Securities and Exchange Commission ("SEC") and are not
intended to forecast possible future appreciation, if any, of the value
of the Common Stock.
(4) Based on a price of $19.00 on October 24, 1996 and a total of 5,801,898
shares of Common Stock and 3,947,690 shares of Class D Common Stock
outstanding.
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None of the options held by the named executive officers are
currently exercisable. The following table sets forth, for each of the named
executive officers, certain information concerning the value of unexercised
options at March 31, 1997:
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at
Year-End (#) Fiscal Year-End ($)(1)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized($) Unexercisable Unexercisable
- ---- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C>
Richard C. Ill 0 0 0/35,000 0/$214,550
John R. Bartholdson 0 0 0/35,000 0/$214,550
Richard M. Eisenstaedt 0 0 0/10,000 0/$61,300
Paul T. Stimmler 0 0 0/10,000 0/$61,300
Kevin E. Kindig 0 0 0/10,000 0/$61,300
</TABLE>
- --------------------
(1) The fair market value of "in-the-money" options was calculated on the
basis of the difference between the exercise price of the options held
and the closing price per share for Common Stock on the New York Stock
Exchange of $25.13 on March 31, 1997, multiplied by the number of
options held.
Employment Agreements
The Company has entered into employment agreements with
Richard C. Ill and John R. Bartholdson (as applicable, the "Executive"),
effective October 1,1996, pursuant to which Messrs. Ill and Bartholdson will
serve as President and Chief Executive Officer and as Senior Vice President and
Chief Financial Officer, respectively, of the Company through September 30,
1999, unless earlier terminated by the Board of Directors or, in certain
circumstances following a change of control transaction, by the Executive. These
agreements provide for an annual salary to Mr. Ill of not less than $291,200 and
to Mr. Bartholdson of not less than $249,600, plus incentive compensation as
determined by the Board of Directors or the Compensation Committee, as such
authority may be delegated by the Board of Directors, and comparable benefits
and perquisites given to other members of senior management. Messrs. Ill and
Bartholdson are entitled to severance and other payments following the earlier
termination of employment by the Company or upon termination by the Executive
following a change in control of the Company. The Executive may terminate his
employment following a change of control transaction, if as a result of such
change in control, the Executive is required to accept a material reduction in
his duties and responsibilities or a geographical relocation or the successor
company fails to assume the Executive's employment agreement. In the event of
any early termination (other than for "cause" or death or disability), Messrs.
Ill and Bartholdson are entitled to receive a severance payment from the Company
equal to 24 months salary. Messrs. Ill and Bartholdson are required to devote
substantially all of their time and effort during normal business hours
(reasonable sick leave and vacations excepted) to the business and affairs of
the Company.
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<PAGE> 9
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Overall Policy
The Company's executive compensation program is designed to be
closely linked to corporate performance and results. To this end, the Company
has developed an overall compensation plan to provide its executive officers the
opportunity to earn cash compensation plus the opportunity to accumulate
stock-based wealth commensurate with the long-term growth and value created for
the Company's stockholders. The Company's compensation strategy is to place the
major portion of total compensation at risk in the form of annual incentives and
long-term, stock-based compensation programs. The overall objectives of this
strategy are to attract and retain the best and most experienced executive
talent, to motivate these executives to achieve the goals inherent in the
Company's business strategy, to link executive and stockholder interests through
equity based plans and finally to provide a compensation package that recognizes
individual contributions as well as overall business results.
The Compensation Committee has received a comprehensive report
from an independent compensation consultant which summarizes the Company's
compensation program. The Company seeks to offer base salaries for the Company's
executive officers at levels that are competitive with companies of similar size
in the aviation and general manufacturing industries (the "Industry Group"). In
addition, the Company provides significant incentive opportunities for its
executive officers. The Company's target for total cash compensation
opportunities (salary plus bonus) is between the median and the 75th percentile
for the Industry Group, with significant variability based on Company-wide,
business unit and individual performance. The Company's annual incentive plan
for executive officers is tied to business plans using a performance matrix
based on consolidated cash return on average operating assets and consolidated
operating income. The Company's target for annual incentives is 50% of base
salary for the Company's three most highly compensated executive officers and
25% for the next two most highly compensated executive officers. The maximum
award that may be earned is 100% of annual salary. Awards above 50% of salary
must be deferred, and executive officers may elect two year deferrals or career
deferrals. All deferrals are subject to the accrual of interest to be paid by
the Company to the executive officer. Stock options are awarded to executive
officers and other management employees to align the interest of the Company's
management with those of its stockholders.
The Compensation Committee determines the compensation of
Richard C. Ill, the President and Chief Executive Officer of the Company, and of
John R. Bartholdson, the Senior Vice President, Chief Financial Officer and
Treasurer of the Company. In addition, the Board of Directors reviews the
compensation proposed to be awarded by Messrs. Ill and Bartholdson to the
Company's other three executive officers and the presidents of each of the
Company's operating divisions and subsidiaries.
As discussed above, the key elements of the Company's
executive compensation consist of base salary, annual bonus and options granted
under the Plan. The Compensation Committee's policies with respect to each of
these elements, including the basis for the compensation awarded to Mr. Ill, the
Company's President and Chief Executive Officer, are discussed below. In
addition, while the elements of compensation described below are considered
separately, the Compensation Committee takes into account the full compensation
package afforded by the Company to the individual, including matching under its
401(k) plan, insurance and other benefits, as well as the programs described
below.
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<PAGE> 10
Base Salaries
Base salaries for executive officers are initially determined
by evaluating the responsibilities of the position held and the experience of
the individual, and by reference to the competitive marketplace for executive
talent, including a comparison to base salaries for comparable positions at
other companies in the Industry Group. Annual salary adjustments are determined
by evaluating the performance of the Company and of each executive officer, and
also take into account new responsibilities.
With respect to the base salary granted to Mr. Ill for the
fiscal year ended March 31, 1997, the Compensation Committee took into account a
comparison of base salaries of chief executive officers of the Industry Group,
the Company's success in meeting its financial objectives in such fiscal year,
the performance of the Common Stock and the assessment by the Compensation
Committee of Mr. Ill's individual performance. The Compensation Committee also
took into account the longevity of Mr. Ill's service to the Company and its
belief that Mr. Ill is an excellent representative of the Company to the public
by virtue of his stature in the community and the industry. Mr. Ill was granted
a base salary of $291,200 for the fiscal year ended March 31, 1997, as provided
by his Employment Agreement with the Company, an increase of 4.0% over his
$280,000 base salary for the fiscal year ended March 31, 1996.
Annual Bonus
The Company's executive officers are eligible for an annual
cash bonus. The corporate performance measure for bonus payments is tied to
business plans based on levels of consolidated cash return on operating assets
and consolidated operating income. If a minimum level of consolidated cash
return on operating assets and consolidated operating income is not met, no
bonuses will be paid. Individual non-financial performance measures are
considered and, where appropriate, unit performance measures, in determining
bonus.
The Company exceeded its maximum levels of consolidated cash
return on operating assets and consolidated operating income goal for the fiscal
year ended March 31, 1997. Based on these results, Mr. Ill was awarded a bonus
of $291,200. Mr. Ill's bonus of $291,200 represents a decrease of 5.5% from the
bonus paid for the fiscal year ended March 31, 1996. This decrease is due to a
change in the compensation plan design which resulted in a lower bonus award.
Fifty percent of Mr. Ill's bonus for the fiscal year ended March 31, 1997 has
been deferred.
Stock Options
Under the Plan, which was approved by the Company's
stockholders, stock options may be granted to the Company's executive officers
as well as its other employees. The Compensation Committee sets guidelines for
the size of stock option awards based on similar factors, including competitive
compensation data, as are used to determine base salaries and annual bonus. In
the event of poor corporate performance, the Compensation Committee may elect
not to award options.
Stock options are designed to align the interests of
executives with those of the stockholders. Stock options are granted with an
exercise price equal to the market price of the Common Stock on the date of
grant, vest over four years and may be exercised for up to ten years from the
date of grant. This approach is designed to incentivize the creation of
stockholder value over the long term
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<PAGE> 11
since the full benefit of the compensation package cannot be realized unless
stock price appreciation occurs over a number of years.
Mr. Ill received options to purchase 35,000 shares of Common
Stock with an exercise price of $19.00 per share during the fiscal year ended
March 31, 1997. The Compensation Committee retains the discretion to keep
individual items of compensation constant so long as total compensation fairly
reflects overall corporate performance and individual achievement. Mr. Ill now
owns 270,193 shares of Common Stock and, with the option grant, holds options to
purchase an additional 35,000 shares. The Compensation Committee believes that
significant equity interests in the Company held by the Company's management
align the interests of stockholders and management.
Conclusion
Through the programs described above, a significant portion of
the Company's executive compensation is linked directly to individual and
corporate performance and stock price appreciation. For the fiscal year ended
March 31, 1997, over a majority of the Company's executive compensation
consisted of these performance-based variable elements. The Compensation
Committee intends to continue the policy of linking executive compensation to
corporate performance and returns to stockholders, recognizing that the ups and
downs of the business cycle from time to time may result in an imbalance for a
particular period.
COMPENSATION COMMITTEE
Richard C. Gozon
Claude F. Kronk
Joseph M. Silvestri
This report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933, as
amended (the "Securities Act") or under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under the Securities Act and the Exchange Act and shall not be deemed
soliciting material.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board is composed of Richard
C. Gozon, Claude F. Kronk and Joseph M. Silvestri. None of the members of the
Compensation Committee at March 31, 1997 are employees of the Company. Richard
C. Ill served as an ex-officio member of the Compensation Committee for part of
the fiscal year ended March 31, 1997, but has not served in this capacity since
August 1996.
10
<PAGE> 12
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
Management
As of May 20, 1997, the following nominees for director, the
following executive officers, and all directors and executive officers as a
group were known to the Company to be beneficial owners (as defined in
regulations issued by the SEC) of the outstanding Common Stock and Class D
Common Stock.
<TABLE>
<CAPTION>
Shares Beneficially Owned (1)
-----------------------------
Percent of
Total Shares
Name Number Outstanding(2)
---- ------ --------------
<S> <C> <C>
Richard C. Ill............................. 270,193 2.8%
John R. Bartholdson........................ 254,126(3) 2.6
Richard M. Eisenstaedt..................... 1,000 *
Paul T. Stimmler........................... 61,469(4) *
Kevin E. Kindig............................ 30,753(5)
Richard C. Gozon........................... 66,095 *
Claude F. Kronk............................ 64,969 *
Joseph M. Silvestri........................ 23,824 *
Michael A. Delaney......................... 20,922 *
Citicorp Venture Capital, Ltd.............. 5,298,535(6) 54.3
399 Park Avenue
New York, NY 10043
All executive officers and
directors as a group
(9 persons) ............................. 793,351 8.1%
</TABLE>
- --------------------
* Less than one percent.
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this proxy statement
upon the exercise of options and warrants. Each beneficial owner's
percentage ownership is determined by assuming that options and warrants
that are held by such person (but not those held by any other person) and
that are exercisable within 60 days from the date of this proxy statement
have been exercised. Unless otherwise noted, the Company believes that all
persons named in the table have sole voting and investment power with
respect to all shares of Common Stock and Class D Common Stock beneficially
owned by them.
(2) Based upon outstanding shares of Common Stock and Class D Common Stock.
(3) Mr. Bartholdson disclaims beneficial ownership with respect to 1,500 shares
of Common Stock beneficially owned by his daughters.
(4) Mr. Stimmler disclaims beneficial ownership of 25,000 shares of Common Stock
held by his wife.
(5) Mr. Kindig disclaims beneficial ownership of 200 shares of Common Stock
beneficially owned by his children.
(6) Includes 920,573 shares of Common Stock and 3,727,962 shares of Class D
Common Stock, which Class D Common Stock cannot be voted in the election of
directors. Includes also 650,000 shares of Common Stock which may be
acquired upon exercise by World Equity Partners, L.P. ("WEP"), an affiliate
of CVC, of an outstanding warrant held by WEP (the "Warrant"). Excludes an
aggregate of 253,063 shares of Common Stock held by affiliates of CVC,
including Messrs. Silvestri and Delaney, as to which CVC disclaims
beneficial ownership.
11
<PAGE> 13
Principal Stockholders
As of May 20, 1997, the following persons were known to the
Company to be "beneficial owners" (as defined in regulations issued by the SEC)
of more than five percent of the outstanding Common Stock and/or Class D Common
Stock.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership(1) of Class (2)
- -------------- ------------------- ----------------------- ------------
<S> <C> <C> <C>
Common Stock Citicorp Venture Capital, Ltd. 5,298,535(3) 52.9%
and Class D 399 Park Avenue
Common Stock New York, NY 10043
</TABLE>
- --------------------
(1) Except as otherwise specified in footnotes to this table, the person
named has sole voting and investment power with respect to all shares
of Common Stock and Class D Common Stock owned. The information in the
table was furnished by the owners listed in reports to the Company and
by filings with the SEC.
(2) The percents in this table are based on the number of shares of Common
Stock and Class D Common Stock outstanding as of May 30, 1997.
(3) Includes 920,573 shares of Common Stock and 3,727,962 shares of Class D
Common Stock, which Class D Common Stock cannot be voted in the
election of directors. Includes 650,000 shares of Common Stock which
may be acquired upon exercise by WEP, an affiliate of CVC, of the
Warrant. Excludes an aggregate of 253,063 shares of Common Stock held
by affiliates of CVC, including Messrs. Silvestri and Delaney, as to
which CVC disclaims beneficial ownership.
Performance Graph
The following graph compares the percentage change in
cumulative total stockholder return on the Common Stock, on a quarterly basis,
from October 24, 1996 to the present with the cumulative total return over the
same period of (i) Standard & Poor's 500 Stock Index and (ii) the
Aerospace/Defense Industry Index published by Standard & Poor's. The Company has
not paid cash dividends on the Common Stock. HISTORIC STOCK PRICE IS NOT
INDICATIVE OF FUTURE STOCK PRICE PERFORMANCE.
12
<PAGE> 14
COMPARISON OF 5 MONTH CUMULATIVE TOTAL RETURN*
AMONG TRIUMP GROUP, INC. THE S & P 500 INDEX
AND THE S & P AEROSPACE/DEFENSE INDEX
<TABLE>
<CAPTION>
10/25/96 12/31/96 3/31/97
DOLLARS
<S> <C> <C> <C>
Triumph Group, Inc. 100 110 116
S & P 500 100 108 111
S & P Aerospace/Defense 100 110 103
</TABLE>
* $100 INVESTED ON 10/25/96 IN STOCK OR ON
9/30/96 IN INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS, FISCAL YEAR ENDING MARCH 31.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 22, 1993, in connection with the acquisition by the
Company of the aviation and metals businesses of Alco, the Company issued to
World Subordinated Debt Partners, L.P., an affiliate of CVC, 11% senior
subordinated notes in the principal amount of $15 million, which notes accrued
interest at the rate of 11% per annum, were payable semiannually in arrears and
were payable in full in equal installments on July 22, 2000 and July 22, 2001.
On July 19, 1996, the Company repaid these notes in full from borrowings under
the Company's revolving credit facility.
PROPOSAL NO. 2 - RATIFICATION OF SELECTION OF AUDITORS
The Board has selected Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 1998 and the
stockholders are asked to ratify this selection. Ernst &
13
<PAGE> 15
Young LLP has advised the Company that it has no direct or material indirect
interest in the Company or its affiliates. Representatives of Ernst & Young LLP
are expected to attend the Meeting, will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions.
The favorable vote of a majority of shares of Common Stock and
Class D Common Stock entitled to vote at the Meeting, voting together as a
class, is required to approve the ratification of the selection of auditors.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING MARCH 31, 1998.
GENERAL AND OTHER MATTERS
The Board knows of no matter, other than as referred to in
this proxy statement, which will be presented at the Meeting. However, if other
matters properly come before the Meeting, or any of its adjournments, the person
or persons voting the proxies will vote them in accordance with their judgment
in such matters.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's
directors, officers (including a person performing a principal policy-making
function) and persons who own more than 10% of a registered class of the
Company's equity securities ("10% Holders") to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Directors, officers and 10% Holders are
required by SEC regulations to furnish the Company with copies of all of the
Section 16(a) reports they file. Based solely upon a review of the copies of the
forms furnished to the Company and the representations made by the reporting
persons to the Company, the Company believes that during the fiscal year ended
March 31, 1997, its directors, officers and 10% Holders complied with all filing
requirements under Section 16(a) of the Exchange Act, except Messrs. Ill and
Kindig who each failed to file, on a timely basis, one report for one
transaction as required by Section 16(a) of the Exchange Act.
STOCKHOLDER PROPOSALS - 1998 ANNUAL MEETING
Proposals of stockholders intended to be presented at the
Annual Meeting of Stockholders in 1998 must be received by February 26, 1998 in
order to be considered for inclusion in the Company's proxy statement and form
of proxy relating to that meeting. Stockholder proposals should be directed to
the Corporate Secretary, at the address of the Company set forth on the first
page of this proxy statement.
By Order of the Board of Directors,
Richard M. Eisenstaedt
Secretary
June 25, 1997
14
<PAGE> 16
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TRIUMPH GROUP, INC.
The undersigned hereby appoints Richard C. Ill and John R. Bartholdson
as proxies, with power to act without the other and with power of substitution,
and hereby authorizes them to represent and vote, as designated on the other
side, all the shares of stock of Triumph Group, Inc. standing in the name of
the undersigned with all powers which the undersigned would possess if present
at the Annual Meeting of Stockholders of the Company to be held on July 24,
1997 or any adjournments thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 17
If no direction is made or if you vote "For" the election of the nominees as
directors, the proxies will allocate votes in their discretion among the
nominees, unless otherwise specified.
<TABLE>
<CAPTION>
mark
your votes as
indicated in /X/
this example
<S> <C>
1. ELECTION AS DIRECTORS The Board recommends a vote "FOR" the following directors:
FOR all nominees WITHHOLD Nominees: Richard C. Ill, John R. Bartholdson, Claude F. Kroak,
listed to the right AUTHORITY Richard C. Gozoa, Joseph M. Silvestri and Michael A. Delaney
(except as marked to vote for all
to the contrary) nominees listed To distribute your votes on a cumulative basis, write below the name(s) of the
to the right nominee(s) you wish to vote for and the number of votes you wish to cast for each.
/ / / /
----------------------------------------------------------------------------------
The Board recommends a vote "FOR" proposal 2.
2. Ratify appointment of Ernst & Young LLP as independent auditors.
FOR AGAINST ABSTAIN
/ / / / / /
Signature____________________________________________Signature_______________________________________Date_______________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
FOLD AND DETACH HERE
</TABLE>
