<PAGE>
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:
/ / 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 Section240.14a-11(c) or
Section240.14a-12
VARLEN CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
VARLEN CORPORATION
55 SHUMAN BOULEVARD
P.O. BOX 3089
NAPERVILLE, ILLINOIS 60566-7089
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 26, 1999
-------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Varlen
Corporation, a Delaware corporation (the "Company"), will be held at the
Radisson Hotel Lisle-Naperville, 3000 Warrenville Road, Lisle, Illinois 60532 on
Wednesday, May 26, 1999, at 10:00 A.M. (local time), for the following purposes:
1. To elect a Board of Directors.
2. To transact such other and further business as may properly come before
the meeting or any adjournment or adjournments thereof.
Common stockholders of record at the close of business on April 1, 1999 are
entitled to notice of and to vote at the meeting. A complete list of such
stockholders is open to the examination of any stockholder for any purpose
germane to the meeting, during ordinary business hours, at the offices of the
Company at 55 Shuman Boulevard, Naperville, Illinois 60566-7089.
A copy of the Company's Annual Report for the fiscal year ended January 31,
1999 is enclosed herewith.
By Order of the Board of Directors,
VICKI L. CASMERE,
SECRETARY
Dated: April 16, 1999
STOCKHOLDERS ARE URGED TO FILL IN, SIGN, DATE AND MAIL THE ENCLOSED PROXY. IF
YOU ATTEND THE MEETING AND VOTE IN PERSON, THE PROXY WILL NOT BE USED. IF MAILED
IN THE UNITED STATES IN THE ENCLOSED ENVELOPE, NO POSTAGE IS REQUIRED. THE
PROMPT RETURN OF YOUR PROXY WILL SAVE THE EXPENSE INVOLVED IN FURTHER
COMMUNICATION.
<PAGE>
VARLEN CORPORATION
55 SHUMAN BOULEVARD
P.O. BOX 3089
NAPERVILLE, ILLINOIS 60566-7089
--------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 26, 1999
-------------
April 16, 1999
To the Stockholders:
This Proxy Statement is furnished to you in connection with the solicitation
by the Board of Directors of Varlen Corporation, a Delaware corporation (the
"Company"), of Proxies in the accompanying form to be used at the Annual Meeting
of Stockholders to be held at the Radisson Hotel Lisle-Naperville, 3000
Warrenville Road, Lisle, Illinois 60532 on Wednesday, May 26, 1999, at 10:00
A.M. (local time) and at any subsequent time which may be necessary by the
adjournment thereof.
If you were a holder of record of Common Stock of the Company at the close
of business on April 1, 1999, you are entitled to vote at the meeting. If,
however, you cannot be present in person, a form of Proxy is enclosed which the
Board of Directors of the Company requests you to execute and return as soon as
possible. You can, of course, revoke your Proxy at any time before it is voted,
if you so desire, either in person at the meeting or by delivery of a duly
executed written statement to that effect to the Secretary of the Company.
The Company is paying all costs of the solicitation of Proxies, including
the expenses of printing and mailing to its stockholders this Proxy Statement
and the accompanying Notice of Annual Meeting of Stockholders and form of Proxy.
Officers or employees of the Company may solicit Proxies in person, or by mail,
telegram or telephone, but such persons will receive no compensation for such
work, other than their normal compensation as such officers or employees.
At the close of business on April 1, 1999, 17,010,934 shares of Common Stock
were outstanding and are entitled to vote at the Annual Meeting. Each
outstanding share is entitled to one vote. This Proxy Statement and the enclosed
Proxy are first being mailed to the stockholders of the Company on or about
April 16, 1999.
PROXIES AND VOTING
The persons named in the accompanying form of Proxy intend to vote Proxies
for the election of the nominees for director described herein unless authority
to vote for directors is withheld. In the event that any nominee at the time of
election shall be unable or unwilling to serve or is otherwise unavailable for
election (which contingency is not now contemplated or foreseen), and in
consequence other nominees shall be nominated, the persons named in the form of
Proxy shall have the discretion and authority to vote or to refrain from voting
in accordance with their judgment on such other nominations.
The presence in person or by proxy of a majority of the shares of Common
Stock outstanding and entitled to vote at the meeting is required for a quorum.
If a quorum is present, those nominees receiving a plurality of the votes cast
will be elected. Accordingly, neither shares withheld in the election of
directors
<PAGE>
nor abstentions will count as negative votes. The other matters being submitted
to stockholders at the meeting require the affirmative vote of a majority of the
shares voted (including abstention votes) for approval.
Shares held by brokers and other stockholder nominees sometimes are voted on
certain matters but not others. This can occur, for example, when the broker
does not have the discretionary authority to vote shares of Common Stock and is
instructed by the beneficial owner thereof to vote on a particular matter but is
not instructed on one or more others. These are known as "non-voted" shares.
With respect to Proposal 1, "non-voted" shares will not be counted as a vote.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
Directors are to be elected to hold office until the next Annual Meeting of
Stockholders and until their respective successors shall have been elected and
qualified or until resignation, removal, disqualification or death as provided
in the Bylaws of the Company. The nominees for director, together with certain
information furnished to the Company by each nominee (see also "Certain
Relationships and Related Transactions" and "Security Ownership of Certain
Beneficial Owners and Management" herein), are set forth below:
<TABLE>
<CAPTION>
COMMON STOCK OF THE
COMPANY BENEFICIALLY
OWNED AS OF
APRIL 1, 1999(1)
----------------------------
NAME, AGE AND DIRECTOR NUMBER PERCENT
POSITION WITH COMPANY SINCE OF SHARES OF CLASS
- ---------------------------------------------------------------------- -------- ----------------- --------
<S> <C> <C> <C>
Ernest H. Lorch, 66 .................................................. 1984 10,102shares(2) 0.1%
Senior Chairman
Richard L. Wellek, 60 ................................................ 1983 223,033shares(3) 1.3%
Chairman
Raymond A. Jean, 56 .................................................. 1997 156,357shares(4) .9%
President and Chief Executive Officer
L. William Miles, 65 ................................................. 1993 4,053shares(2) *
Greg A. Rosenbaum, 46 ................................................ 1985 16,946shares(2) 0.1%
Joseph J. Ross, 53 ................................................... 1994 5,642shares(2) *
Theodore A. Ruppert, 68 .............................................. 1971 985,671shares(5) 5.8%
</TABLE>
- ------------------------
* The number of shares of Common Stock beneficially owned is less than .1% of
class.
(1) As of April 1, 1999, all directors, nominees and officers of the Company as
a group (11 persons) owned beneficially 1,539,402 shares of the Company's
Common Stock (8.9% of class), 564,979 of which were held directly (including
shares which are deemed to be beneficially owned solely because of the
existence of currently exercisable options to acquire such shares, shares
held by sole trustees and shares held as a custodian) and 974,423 of which
were held subject to shared voting and dispositive power.
(2) Held directly.
2
<PAGE>
(3) Of such shares, 169,306 are deemed to be beneficially owned by Mr. Wellek
because he is the sole trustee of a trust of which he is the sole
beneficiary and 53,727 are deemed to be beneficially owned solely because of
the existence of currently exercisable options to acquire such shares.
(4) Of such shares, 46,983 are deemed to be beneficially owned by Mr. Jean
because he is the sole trustee of a trust of which he is the sole
beneficiary, 107,724 are deemed to be beneficially owned by Mr. Jean solely
because of the existence of currently exercisable options to acquire such
shares and 1,650 are deemed to be beneficially owned because they are held
as a custodian for the benefit of his daughter.
(5) Of such shares, 11,248 are held directly and 974,423 are deemed to be
beneficially owned by Mr. Ruppert solely because he is one of the trustees
of several trusts in which he and members of his family have an interest.
Mr. Lorch is Of Counsel to Whitman Breed Abbott & Morgan, attorneys, a
position he has held since January 1993. He retired as Chairman and Chief
Executive Officer of The Dyson-Kissner-Moran Corporation ("DKM"), a private
investment company, in December 1992, a position he held since January 1990. DKM
owned approximately 30% of the Common Stock of the Company prior to the
Company's purchase of all of the Company's shares owned by DKM in January 1993.
Mr. Lorch was President of DKM from June 1984 to January 1990. Mr. Lorch is also
a director of Tyler Corporation. Tyler Corporation, headquartered in Dallas,
Texas, is a provider of technology, software data warehousing, and electronic
document management systems and services for local governments and other
enterprises. Tyler also operates in the retail automotive parts business.
Mr. Wellek has been Chairman of the Company since May 1997. He retired from
employment with the Company as its Chief Executive Officer in January 1999, and
previously served as President, and as Chief Executive Officer of the Company
since December 1983.
Mr. Jean was elected President and Chief Executive Officer of the Company in
February 1999. He was elected President and Chief Operating Officer in May 1997.
He was Executive Vice President and Chief Operating Officer of the Company since
1993. Mr. Jean joined the Company in 1988 as Group Vice President.
Mr. Miles is Vice President for Administration at Fairfield University,
Connecticut, a position he has held since July 1992. From February 1988 to June
1992 he was Senior Vice President of Call Interactive, a subsidiary of American
Express Co., and a provider of interactive telephone services. Mr. Miles is also
a director of Bouton Corporation, a manufacturer of safety glasses.
Mr. Rosenbaum has been President of Palisades Associates, Inc., a merchant
banking and consulting company, since August 1989. Mr. Rosenbaum is a director
of McLaren/Hart, Inc., an environmental services consulting firm to large
corporations, including, among others, the Company. Mr. Rosenbaum owns less than
a 5% interest in McLaren/Hart, Inc.
Mr. Ross is Chairman, President and Chief Executive Officer of Federal
Signal Corporation, a manufacturer of public safety, signaling and
communications equipment. He has been Chairman of Federal Signal since February
1990 and has served as its President and Chief Executive Officer since December
1987.
Mr. Ruppert is the sole proprietor of Village Development Partnership, a
real estate, manufacturing and oil development holding company, prior to which
he was, a general partner, for more than the previous five years; Chairman,
Chief Executive Officer, President and a director of Glaize Development
Corporation, a real estate developer; and a director of Pioneer Bank & Trust
Company. (See "Security Ownership of Certain Beneficial Owners and Management"
herein.)
3
<PAGE>
During the fiscal year ended January 31, 1999 ("1998"), the Board of
Directors held eleven meetings. The Board has an Audit Committee consisting of
Messrs. Ross and Ruppert; a Compensation Committee consisting of Messrs. Lorch,
Miles and Rosenbaum and a Nominating and Organization Committee consisting of
Messrs. Ross, Lorch and Wellek. The primary function of the Audit Committee,
which during 1998 held two meetings, is to review the scope and results of each
year's annual independent audit, establish the scope and review the results of
the internal audit function and review the Company's internal control
procedures. The primary functions of the Compensation Committee, which during
1998 held three meetings, are to determine the compensation of the Company's
executive officers and operating unit presidents and to administer the Company's
stock option and purchase plans. The primary function of the Nominating and
Organization Committee, which held one meeting during 1998, is to advise the
board on board membership, committee structure and Chief Executive Officer
succession. Each director attended more than 85% of the meetings of the Board of
Directors and committees on which he served during 1998.
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE
COMPENSATION PHILOSOPHY
The Executive Compensation program is administered by the Compensation
Committee of the Board of Directors, which is composed of a majority of
nonemployee directors who are all outside directors, and is designed to attract,
retain and motivate executive personnel whose sustained performance will
increase stockholder value through successful achievement of short-term
corporate goals and long-term Company objectives. The compensation program is
directly integrated with the achievement of the Company's strategic business
plans. The following program components have been designed to meet these
objectives:
BASE SALARY
The base salary program is designed to pay for individual performance within
a structure that is internally equitable and externally competitive with
comparable companies. Base salaries are a function of:
(1) the relative value and potential impact of each position on the
performance of the Company. Value is measured by responsibilities,
complexity and scope of markets, sales volume, technological requirements,
business strategy, etc. The evaluation process results in the assignment of
a position grade;
(2) salary ranges, assigned to each pay grade, which establish a
competitive position with median salary compensation levels at comparable
companies;
(3) individual performance, within established base salary ranges.
The program is designed to provide executives who continue to meet
performance expectations with base compensation that is competitive with median
market rates at comparable companies. The Company compares base salary, bonus,
and salary ranges of its executives to those of similar positions in comparable
companies as reported in a salary survey conducted by an independent consulting
firm. Independent surveys are also used to develop a merit increase budget.
Within this budget, executives may or may not receive a base salary increase
dependent upon performance in the prior year and their position in their
respective salary ranges. The amount of increase will vary with individual
performance against established performance objectives.
4
<PAGE>
ANNUAL INCENTIVE -- A target bonus is paid when both financial performance
(E.G., consolidated return on invested capital/return on net assets employed)
and individual performance objectives are met. Financial goals are directly
related to the strategic business plan. Individual performance goals are value
added, representing achievements of annually agreed upon objectives within the
control of the executive beyond normal position expectations.
If both objectives are not met, the bonus will be reduced. If performance is
below the minimum threshold for both objectives, there will be no bonus.
Similarly, if performance exceeds the objectives, a higher bonus will be paid,
subject to a cap.
LONG-TERM CONSISTENCY BONUS -- An additional compensation opportunity is
directly correlated with consistent achievement of annual incentive goals over a
multi-year period. This bonus is contingent upon achievement of financial and
individual performance objectives for more than one year of a three year period.
If minimum financial objectives are not met, no consistency bonus is paid.
CONTINGENT STOCK AWARD -- As a result of a 1997 study by an independent
compensation consulting firm completed at the request of the Compensation
Committee, it was determined that the long-term compensation for certain
executives needed to be enhanced for competitive reasons. The Compensation
Committee and the Board of Directors approved the implementation of a plan tied
directly to the improvement in the price of the Company's Common Stock over a
targeted period, usually five years.
STOCK OPTIONS -- This long-term compensation rewards management for
long-term strategic direction and enhancement of stockholder value. Options also
promote recruitment and retention of key management personnel by providing
meaningful incentives dependent upon successful corporate performance. Stock
options are awarded based upon an overall evaluation of each eligible employee.
Outstanding options held are not considered in the award of new options.
1993 DEFERRED INCENTIVE STOCK PURCHASE PLAN -- The "Stock Purchase Plan" was
adopted by the Board of Directors of the Company on March 29, 1993, and became
effective when it was approved by stockholders on May 25, 1993. The Purchase
Plan provides for the offer to selected officers and other key employees of
rights to purchase Common Stock of the Company. Within thirty days after receipt
of an offer, each offeree seeking to participate in the Purchase Plan must
execute a deferred purchase right agreement evidencing the offeree's commitment
to purchase a specified number of shares of Common Stock of the Company at a
specified price at the expiration of five years. Payments are made quarterly. A
purchase right shall also entitle the offeree to receive a cash bonus equivalent
to the amount of dividends which would have been payable on the number of shares
the offeree committed to purchase under the purchase right, when and as
dividends are paid on the Common Stock.
COMPANY PERFORMANCE AND CHIEF EXECUTIVE OFFICER ("CEO") COMPENSATION
As discussed previously, the Company's executive compensation program,
including that of the CEO, is based on business performance, both short-term
(base salary and annual incentive bonus) and long-term (long-term consistency
bonus, contingent stock, stock options and Stock Purchase Plan). The
compensation of the CEO serves as a model for this pay-for-performance program.
Sales and earnings for the 1998 fiscal year were the highest in Company history.
Net sales rose 23.8% to a record $646,672,000 from $522,254,000 in 1997. Net
earnings increased 60.8% in 1998 to $41,242,000 or $2.38 per diluted share--
both records. Earnings before interest, taxes, depreciation and amortization was
at a record $103,964,000 in 1998 or a 31% increase over the $79,257,000 in 1997.
All corporate financial goals were exceeded. The Company's book value per share
increased to an all time high of $14.18, or 19% above the $11.94 in 1997
5
<PAGE>
and $10.18 in 1996, after restatement for stock splits and dividends. In
addition, significant steps were taken to advance Varlen's long-term strategy.
Mr. Wellek's action and leadership played a key role in the achievement of
the Company's strategic objectives and strong performance. Varlen is now
significantly larger, more international, and positioned for further growth. Of
his annual incentive, 75% was objectively determined based upon return on
invested capital, which was 14.2% in 1998 compared to 10.5% in 1997. The balance
of the annual incentive, 25%, was based upon non-financial goals. Achievement of
these non-financial goals included strategic, organizational and succession
planning. Mr. Wellek retired as the Company's Chief Executive Officer effective
January 30, 1999 after a successful transition of responsibilities to Raymond A.
Jean, who served as the Company's President and Chief Operating Officer. In
addition, Mr. Wellek qualified for a long-term consistency bonus based upon the
Company's performance over a multi-year period. Base salary adjustment for Mr.
Wellek was made using data provided by independent consultants and was based
upon the Company's larger size and international development, as well as his
performance.
OTHER MATTERS
The Revenue Reconciliation Act of 1993 limits the annual deduction a
publicly held corporation may take for certain types of compensation paid or
accrued with respect to certain executives to $1 million per year per executive
for taxable years beginning after December 31, 1993. The compensation paid to
its executives in 1998 was affected by the limitation on tax deductibility
primarily due to the vesting of Common Stock purchases made over the last five
years under the Company's Stock Purchase Plan. The Company annually reviews its
compensation plans in the context of the requirements for tax deductibility
under the rules. The Company intends that compensation realized upon the
exercise of an option or SAR granted under the Company's 1998 Long-Term Equity
Incentive Plan be regarded as "performance-based" under Section 162(m) of the
Internal Revenue Code and that such compensation be deductible by the Company
without regard to the limitation on tax deductibility imposed by Section 162(m).
Respectfully submitted
Greg A. Rosenbaum (Chairman)
Ernest H. Lorch
L. William Miles
April 8, 1999
6
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's Chief
Executive Officer and each of the Company's four executive officers who earned
compensation during fiscal 1998, based on salary and bonus earned during 1998.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION SECURITIES LONG-
UNDERLYING TERM
FISCAL ---------------------- STOCK INCENTIVE ALL OTHER
NAME PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(2) PAYOUTS COMP.
- -------------------- -------------------- ------ ----------- -------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard L. Wellek Chairman (13) 1998 $ 556,172 $382,500 -- $506,008(8) $124,314(3)
1997 443,332 337,500 18,750(12) 253,700(8) 105,677(3)
1996 405,828 307,582 18,563(12) 236,172(8) 95,783(3)
Raymond A. Jean President and CEO 1998 332,672 231,200 15,000 280,364(9) 75,750(4)
(14)
1997 290,992 201,280 15,000(12) 144,582(9) 71,067(4)
1996 263,328 175,028 14,438(12) 130,744(9) 53,544(4)
George W. Hoffman Vice President 1998 203,081 38,745 6,875 11,046(10) 22,416(5)
1997 198,880 63,180 6,563(12) 26,510(10) 19,702(5)
1996 187,229 28,723 8,250(12) 26,510(10) 20,806(5)
Richard A. Nunemaker VP Finance, CFO 1998 193,500 117,000 8,437 110,582(11) 41,976(6)
1997 184,667 111,600 8,438(12) 90,650(11) 42,816(6)
1996 176,750 106,800 8,250(12) 85,621(11) 33,059(6)
Vicki L. Casmere VP, General 1998 148,833 60,000 3,750 25,875 27,222(7)
Counsel and 1997 141,667 57,200 3,750(12) 10,220 20,000(7)
Secretary (15) 1996 112,566 45,000 4,125(12) 0 7,225(7)
</TABLE>
- --------------------------
(1) Reflects bonus earned during the fiscal year. All bonuses were paid during
the following fiscal year.
(2) Number of shares of Common Stock subject to options granted in 1998, 1997
and 1996, respectively.
(3) Consists of $16,000, $15,200 and $12,875 in Company contributions to the
Company's Profit Sharing and Retirement Savings Plan; $83,327, $77,929 and
$58,491 to the Company's Shadow 401(k) Plan; $0, $0 and $12,000 for services
as a director of the Company and $24,987, $12,548 and $12,417 in other
miscellaneous non-cash benefits, in 1998, 1997 and 1996.
(4) Consists of $16,000, $15,200 and $12,875 in Company contributions to the
Company's Profit Sharing and Retirement Savings Plan; $47,060, $42,296 and
$29,184 to the Company's Shadow 401(k) Plan; and $12,690, $13,571 and
$11,485 in other miscellaneous non-cash benefits, in 1998, 1997 and 1996.
(5) Consists of $8,800, $8,800 and $6,403 in Company contributions to the
Company's Profit Sharing and Retirement Savings Plan; $6,346, $3,707 and
$6,967 to the Company's Shadow 401(k) Plan; and $7,270, $7,195 and $7,436 in
other miscellaneous non-cash benefits, in 1998, 1997 and 1996.
(6) Consists of $16,000, $15,200 and $12,875 in Company contributions to the
Company's Profit Sharing and Retirement Savings Plan; $20,107, $20,722 and
$14,951 to the Company's Shadow 401(k) Plan; and $5,869, $6,894 and $5,233
in other miscellaneous non-cash benefits, in 1998, 1997 and 1996.
(7) Consists of $16,000, $15,200 and $2,869 in Company contributions to the
Company's Profit Sharing and Retirement Savings Plan; $5,442, $0 and $0 to
the Company's Shadow 401(k) Plan; and $5,780, $4,800 and $4,356 in other
miscellaneous non-cash benefits, in 1998, 1997 and 1996.
7
<PAGE>
(8) Includes $27,615, $66,275 and $66,275 in non-cash compensation earned under
the Stock Purchase Plan, $97,214, $0 and $0 in non-cash compensation earned
under the Contingent Stock Award Plan and $173,429, $0 and $0 in non-cash
compensation earned under a Deferred Cash Payment Grant in each of 1998,
1997 and 1996. The shares of Common Stock were paid out under the Stock
Purchase Plan in June 1998.
(9) Includes $16,569, $39,765 and $39,765 in non-cash compensation earned under
the Stock Purchase Plan, $41,300, $0 and $0 in non-cash compensation earned
under the Contingent Stock Award Plan and $102,000, $0 and $0 in non-cash
compensation earned under a Deferred Cash Payment Grant in each of 1998,
1997 and 1996. The shares of Common Stock were paid out under the Stock
Purchase Plan in June 1998.
(10) Includes $11,046, $26,510 and $26,510 in non-cash compensation earned under
the Stock Purchase Plan in each of 1998, 1997 and 1996. The shares of Common
Stock were paid out under the Stock Purchase Plan in June 1998.
(11) Includes $11,046, $26,510 and $26,510 in non-cash compensation earned under
the Stock Purchase Plan, $10,325, $0 and $0 in non-cash compensation earned
under the Contingent Stock Award Plan and $20,400, $0 and $0 in non-cash
compensation earned under a Deferred Cash Payment Grant in each of 1998,
1997 and 1996. The shares of Common Stock were paid out under the Stock
Purchase Plan in June 1998.
(12) Restated for the 5 for 4 stock split in the form of a stock dividend in
1998.
(13) Mr. Wellek retired from the Company in January 1999. The expiration of his
non-qualified options was extended to January 30, 2001. In addition, in
January 1999, the Board of Directors granted Mr. Wellek the right to have
his benefit under the Company's Supplemental Executive Retirement Plan
calculated as if he retired at age 62 rather than age 60 resulting in an
increase in his benefit of $3,926. See a discussion of the consulting
agreement and termination arrangements on page 13.
(14) Mr. Jean was appointed Chief Executive Officer in February 1999 and was
elected President in May 1997.
(15) Ms. Casmere was elected Vice President, General Counsel and Secretary of
the Company in April 1996.
SUMMARY OF LONG-TERM INCENTIVE PLANS
The following table presents information concerning compensation earned
under long-term incentive plans during the most recent fiscal year for the
Company's Chief Executive Officer and each of the Company's four executive
officers who earned compensation under long-term incentive plans during fiscal
1998.
8
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PAYOUTS UNDER
NON-STOCK
PERFORMANCE OR PRICE-BASED PLANS
NUMBER OF SHARES, OTHER PERIOD -------------------
UNITS OR OTHER UNTIL MATURATION DOLLAR VALUE OF
NAME RIGHTS(1) OR PAYOUT ESTIMATED PAYOUT
- ------------------------------------------------------ ----------------- ----------------- -------------------
<S> <C> <C> <C>
Richard L. Wellek
Contingent Stock Award Plan(2)(3).............. 1998 19,836 $ 97,214
Long-Term Consistency Bonus(6)................. 1998 207,750
Deferred Long-Term Incentive(7)................ 1998 Jan. 30, 1999 173,429
Raymond A. Jean
Contingent Stock Award Plan(2)(4).............. 1998 50,000 Feb. 2, 2003
Long-Term Consistency Bonus(6)................. 1998 120,495
Deferred Long-Term Incentive(7)................ 1998 April 7, 2002 425,000
George W. Hoffman
Long-Term Consistency Bonus(6)................. 1998 0
Richard A. Nunemaker
Contingent Stock Award Plan(2)(5).............. 1998 12,500 Feb. 2, 2003
Long-Term Consistency Bonus(6)................. 1998 68,811
Deferred Long-Term Incentive(7)................ 1998 April 7, 2002 85,000
Vicki L. Casmere
Long-Term Consistency Bonus(6)................. 1998 25,875
</TABLE>
- ------------------------
(1) These are 1998 Contingent Stock Award Plan awards which were granted on
February 2, 1998 and vest on February 2, 2003, except for Mr. Wellek's
awards, which will be paid out in 1999 based on his accrued award earnings
through his retirement date of January 30, 1999. These amounts were restated
for a 5 for 4 stock split in the form of a stock dividend in 1998.
(2) This compensation represents the amortization of the difference between the
award price at issuance and fair market value of stock at the date of grant
times the percentage of the award earned in fiscal 1998. See discussion of
the 1998 Contingent Stock Award Plan in the Executive Compensation section
of this Proxy Statement.
(3) Compensation earned under the Contingent Stock Award Plan was $97,214 in
1998, is included in Long-Term Compensation in the Summary Compensation
Table above and will be his total pay-out under the plan.
(4) Compensation earned under the Contingent Stock Award Plan was $41,300 in
1998 and is included in Long-Term Compensation in the Summary Compensation
Table above.
(5) Compensation earned under the Contingent Stock Award Plan was $10,325 in
1998 and is included in Long-Term Compensation in the Summary Compensation
Table above.
(6) Represents compensation under the Long-Term Consistency Bonus, which was
earned in 1998 and paid in 1999 and is included in Long-Term Compensation in
the Summary Compensation Table above. See additional discussion in the
Executive Compensation section of this Proxy Statement.
9
<PAGE>
(7) This deferred payment was granted in November of 1997 and is payable in
April of 2002 providing the executive is still an employee of the Company at
that time. The executive may, under certain circumstances, be entitled to a
pro-rata portion of this payment if he ceases to be an employee of the
Company prior to April of 2002. Mr. Wellek's amount presented is the payment
he will receive due to his retirement in January 1999.
DIRECTOR COMPENSATION
During 1997, the manner in which directors who are not employees of the
Company ("Nonemployee Directors") were paid was amended effective June 1, 1997.
Nonemployee Directors were previously paid $12,000 per year for their director
services which was increased to $18,000 per year effective June 1, 1997. The
Senior Chairman received $5,000 per year and each committee chairman received
$2,500 per year for serving in such capacity in addition to the director service
fee. Nonemployee Directors receive $750 per board of directors meeting attended
which increased to $1,000 effective June 1, 1997 ($250 per board of directors
meeting by telephone) and $750 per committee meeting attended which was
increased to $1,000 effective June 1, 1997 ($500 if the committee meeting is in
conjunction with a board of directors meeting). Nonemployee Directors also
receive an annual award of $12,000 of restricted Company Common Stock per year
granted as of the date of the Annual Meeting of Stockholders. Mr. Wellek, who
ceased to be an employee of the Company in January 1999, will receive $5,000 per
year for his services as Chairman in addition to the other customary payments as
a non-employee director, as noted above, beginning in fiscal 1999.
STOCK PERFORMANCE CHART
The Company has replaced the S&P 500 Index and the S&P Manufacturing and
Diversified Industry Group Index with the Russell 2000 Index and the Russell
2000 Automotive and Transportation Index as these indexes more accurately
represent the Company's peers. The Company became a member of the Russell 2000
Group of companies in 1998, and is a company included in these two Russell
indexes.
The following two charts compares the change in the value of $100 invested
in the Company's Common Stock with $100 invested in the S&P 500 Index and the
S&P Manufacturing and Diversified Industry Group Index during the five fiscal
years ended January 31, 1999 and against the Russell 2000 Index and the Russell
2000 Automotive and Transportation Index during the same time period. The
comparison assumes $100 was invested on January 31, 1994 in the Company's Common
Stock and in each of the foregoing indices and assumes reinvestment of
dividends.
10
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL VALUE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P MANUFACTURING AND
<S> <C> <C> <C>
Diversified Industry Group
Varlen Corporation S&P 500 Index Index
Jan-94 $100.00 100.00 100.00
Jan-95 $92.38 100.52 99.97
Jan-96 $103.29 139.33 146.53
Jan-97 $91.73 175.94 193.96
Jan-98 $179.50 223.26 227.66
Jan-99 $218.71 295.79 269.56
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RUSSELL 2000 AUTO AND TRANSPORTATION
VARLEN CORPORATION RUSSELL 2000 INDEX INDEX
<S> <C> <C> <C>
Jan-94 $100.00 100.00 100.00
Jan-95 $92.38 93.99 91.20
Jan-96 $103.29 122.14 99.54
Jan-97 $91.73 145.28 119.72
Jan-98 $179.50 171.54 157.78
Jan-99 $218.71 172.12 156.86
</TABLE>
11
<PAGE>
OPTION GRANTS DURING 1998
The following table provides information related to options granted to the
named executive officers during 1998:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL RATES OF
----------------------------------------------------------------------- STOCK PRICE APPRECIATION
NUMBER OF % OF TOTAL MARKET FOR
SECURITIES OPTIONS GRANTED PRICE ON OPTION TERM(1)
UNDERLYING OPTIONS TO EMPLOYEES IN EXERCISE DATE OF EXPIRATION ---------------------------
NAME GRANTED(2) 1998 PRICE(3) GRANT DATE 0% 5% 10%
- ------------------------------ ------------------ --------------- -------- -------- ---------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard L. Wellek............. -- -- -- -- -- -- -- --
Raymond A. Jean............... 6,062 3.8% $29.73 $30.20 04/06/08 $ 2,849 $117,982 $294,619
8,938 5.6 27.33 30.20 04/06/08 25,649 195,386 455,796
George W. Hoffman............. 6,875 4.3 30.20 30.20 04/06/08 -- 130,574 330,901
Richard A. Nunemaker.......... 8,437 5.3 29.73 30.20 04/06/08 3,965 164,206 410,047
Vicki L. Casmere.............. 3,750 2.3 29.73 30.20 04/06/08 1,763 72,985 182,254
</TABLE>
- ------------------------
(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately prior
to the expiration of their term, assuming the specified compounded rates of
appreciation on the Company's Common Stock over the term of the options.
These numbers do not take into account provisions providing for termination
of the option following termination of employment, nontransferability or
vesting periods.
(2) Options become exercisable 20% after each of the first four years since
their issuance with all options exercisable after 4 1/2 years.
(3) The option exercise price may be paid in cash or by delivery of shares of
Common Stock owned either by the optionee prior to the exercise of the
option or, for certain options with the consent of the Compensation
Committee, by the optionee as a result of the exercise of the option.
OPTION EXERCISES DURING 1998 AND FISCAL YEAR END OPTION VALUES
The following table provides information related to options exercised by the
named executive officers during 1998 and the number and value of options held at
fiscal year end. The Company does not have any stock appreciation rights as of
January 31, 1999.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT FISCAL YEAR
SHARES OPTIONS AT FISCAL YEAR END END(1)
ACQUIRED ON VALUE -------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- ------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Richard L. Wellek (2)......... 132,407 $ 2,792,915 72,477 -- $ 1,056,351 $ --
Raymond A. Jean............... -- -- 97,250 41,559 1,687,985 376,009
George W. Hoffman............. 3,750 76,485 40,465 20,251 662,423 190,218
Richard A. Nunemaker.......... 3,285 76,446 29,534 23,313 452,021 210,228
Vicki L. Casmere.............. -- -- 2,400 9,225 33,699 75,562
</TABLE>
- ------------------------
(1) The closing price for the Company's Common Stock as reported by the Nasdaq
National Market on January 31, 1999 was $24.00. Value is calculated on the
basis of the difference between the option exercise prices and $24.00
multiplied by the number of shares of Common Stock underlying the option.
12
<PAGE>
(2) Of these exercisable options, 18,750 must be exercised within 90 days after
Mr. Wellek's retirement on January 30, 1999. The remaining options expire as
to exercise on January 30, 2001.
SEVERANCE AND CHANGE IN CONTROL AGREEMENTS
The Company has severance agreements with Messrs. Hoffman, Jean and
Nunemaker, which provide for payments to such executive officers in the event
their employment by the Company is terminated without cause (as defined) after a
"Change in Control" of the Company. Subject to the terms and conditions of these
agreements, such payments are to be made at the rate of the terminated executive
officer's base salary (including the average of annual cash bonuses for the
prior three years), on a monthly basis and for a period of two years, commencing
on the date of termination. For purposes of this agreement, "Change in Control"
means a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act, or any successor provision thereto, whether or not the Company is
then subject to such reporting requirement; provided, however, without limiting
the generality of the foregoing, a Change in Control shall be deemed to have
occurred if: (i) any Person or Group (as those terms are defined in Section
13(d) and 14(d) of the Exchange Act) is or becomes the record or "Beneficial
Owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly
of 20% or more of the securities of the Company entitled to vote generally in
the election of directors of the Company; or (ii) a reorganization, merger,
consolidation, complete liquidation or dissolution of the Company or the sale or
disposition of all or substantially all of the assets of the Company or other
similar transaction (in each case, other than pursuant to any bankruptcy,
insolvency or similar law) occurs; or (iii) a change occurs in the composition
of a majority of the board of directors of the Company as constituted on January
1, 1993, excluding any change where nomination of a successor director was
approved by at least a majority of those members who are members of the board on
January 1, 1993, or their successors if so approved for nomination by a majority
of the board.
CONSULTING AGREEMENT AND TERMINATION ARRANGEMENTS
Mr. Wellek will receive $250,000 per year until January 30, 2001 under a
Consulting Agreement with the Company under which Mr. Wellek agreed to provide
services and not compete with the Company; these fees are not intended as
payments for services as a director. In addition, the Compensation Committee of
the Board of Directors agreed to extend the expiration of three previously
issued stock option grants, that would have otherwise expired within ninety days
of his retirement date, to expire on the termination of Mr. Wellek's Consulting
Agreement.
PENSION PLANS
Effective January 1, 1986, the Company instituted the Varlen Profit Sharing
& Retirement Savings Plan (the "401(k) Plan"), a defined contribution plan, in
which Mr. Jean, Mr. Hoffman, Mr. Nunemaker and Ms. Casmere are participants. The
Company also maintains the Supplemental Executive Retirement Plan of Varlen
Corporation and its Participating Subsidiaries (the "SERP Plan") and the Varlen
Corporation Excess Benefits Plan (the "Shadow 401(k) Plan") in which Mr. Jean,
Mr. Hoffman, Mr. Nunemaker and Ms. Casmere participate.
The following table sets forth, where applicable, the current covered
compensation under each plan and the total number of years of credited service
for benefit plan purposes for Mr. Jean, Mr. Hoffman, Mr. Nunemaker and Ms.
Casmere. Covered compensation under the plans consists of total cash
compensation, except that the 401(k) Plan is limited by law to $160,000 in
calendar 1998 and 1999. Under the
13
<PAGE>
SERP Plan, bonuses are attributed to the year they are earned instead of the
year they are paid. Amounts paid in lieu of dividends under the Deferred
Incentive Stock Purchase Plan are excluded from compensation under the SERP and
Shadow 401(k) plans.
<TABLE>
<CAPTION>
COVERED COMPENSATION
---------------------------------- CREDITED
SERP SHADOW SERVICE
NAME 401(K) PLAN 401(K) TO DATE
- --------------------------------------------------------------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Raymond A. Jean................................................ $ 160,000 $ 684,367 $ 684,367 11 years
George W. Hoffman.............................................. 160,000 241,826 241,826 19 years
Richard A. Nunemaker........................................... 160,000 379,311 379,311 13 years
Vicki L. Casmere............................................... 160,000 234,708 234,708 2 Years
</TABLE>
The 401(k) Plan is maintained for the benefit of all eligible salaried and
certain hourly employees of the Company and its participating subsidiaries,
including the officers mentioned above. The eligibility requirement of the
401(k) Plan is six months of continuous service. The Employee Retirement Income
Security Act of 1974 places certain limitations on amounts contributed under the
401(k) Plan.
The 401(k) Plan provides for both employee and employer contributions.
Employees may contribute up to 14% of total cash compensation during the
calendar year, subject to certain limitations under Federal income tax law
($10,000 in calendar 1998 and 1999). Amounts contributed by an employee are not
subject to income tax until the funds are withdrawn from the plan. Employer
contributions are divided into two parts. First, the Company pays 25% of the
amount contributed by the employee, up to 6% of total compensation. Second,
there is a profit sharing contribution made to the account of each participant
regardless of whether any employee contributions are made. The profit sharing
contribution cannot be less than 2% of compensation per year and may be higher,
based on the financial performance of the Company and established guidelines.
Participants are immediately 100% vested with respect to their own
contributions and any matching contributions. Profit sharing contributions are
subject to a vesting schedule under which the participant becomes 40% vested
after two years of service. An additional 20% vests after each additional year
of service thereafter until the participant becomes 100% vested after 5 years of
service. The vested portion of the participant's account balance becomes payable
in a lump sum or in installments upon the earliest to occur of retirement,
disability, death or termination of employment.
Effective January 1, 1988, the Shadow 401(k) Plan was instituted to provide
additional benefits to certain executives, as determined by the Board of
Directors. In this funded plan, benefits are earned based on the application of
any or all three IRS limitations with respect to the 401(k) Plan. Participants'
Shadow 401(k) Plan accounts are credited with matching contributions or
discretionary profit sharing contributions which are disallowed from the 401(k)
Plan because of the limit on individual contributions ($10,000 in calendar
1998), the limit on covered compensation ($160,000 in calendar 1998), or the
limit on total contributions of $30,000 or 25% of compensation from all sources.
Account balances are adjusted for investment earnings or losses quarterly and
all benefits earned are subject to the same vesting and payment schedule as is
applied to the 401(k) Plan.
The SERP Plan is an unfunded plan designed to provide supplemental
retirement benefits to certain executives selected by the Board of Directors. At
age 62 with 15 years of service, the executive is entitled upon retirement to
full supplemental retirement benefits which, when added to the executive's total
annual retirement benefit, equals 50% of the average of the five highest years
of the final ten years of covered compensation. Any such executive may retire at
age 55 or any age thereafter prior to age 62 with at least 15 years of service
with reduced benefits. Executives with less than 15 years of service can also
retire at age 62
14
<PAGE>
or thereafter with reduced benefits. To compute the reduced benefits, the 50%
factor is reduced by 3.3% for each year of service less than the required 15
years at age 62, and for each year of retirement prior to age 62.
The following table sets forth the annual retirement benefit payable under
the SERP Plan to participants retiring at age 62 in 1996. These benefits will be
reduced by any profit sharing benefits from the 401(k) Plan or the Shadow 401(k)
Plan, Company funded retirement benefits from prior pension plans and 50% of
primary Social Security benefits. Benefits are unreduced for retirement starting
at age 62, with 15 years of credited service.
<TABLE>
<CAPTION>
ANNUAL BENEFITS FOR GIVEN YEARS OF SERVICE
----------------------------------------------
COVERED COMPENSATION 15 20 25 30
- ----------------------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$ 150,000............................................ $ 75,000 $ 75,000 $ 75,000 $ 75,000
200,000............................................ 100,000 100,000 100,000 100,000
250,000............................................ 125,000 125,000 125,000 125,000
300,000............................................ 150,000 150,000 150,000 150,000
350,000............................................ 175,000 175,000 175,000 175,000
400,000............................................ 200,000 200,000 200,000 200,000
450,000............................................ 225,000 225,000 225,000 225,000
500,000............................................ 250,000 250,000 250,000 250,000
550,000............................................ 275,000 275,000 275,000 275,000
600,000............................................ 300,000 300,000 300,000 300,000
650,000............................................ 325,000 325,000 325,000 325,000
700,000............................................ 350,000 350,000 350,000 350,000
</TABLE>
The SERP Plan also contains optional methods of benefit payment, payments to
the surviving beneficiary of an employee and other qualifications to the
foregoing.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Lorch, Miles and Rosenbaum, all independent directors, comprise the
Company's Compensation Committee.
15
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
ownership of shares of the Company's Common Stock by (i) persons who were the
beneficial owners, as of April 1, 1999, of more than 5% of the outstanding
shares of the Company's Common Stock and (ii) the Company's five most highly
compensated executive officers.
<TABLE>
<CAPTION>
NUMBER
OF SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF 5% BENEFICIAL OWNER OWNED CLASS
- ------------------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
Theodore A. Ruppert, as trustee........................................................... 974,423(1) 5.7%
One Barclay Woods Drive
St. Louis, Missouri 63124
Lazard Freres & Co. LLC................................................................... 963,819 5.7%
30 Rockefeller Plaza
New York, New York 10020
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
BENEFICIALLY PERCENT OF
NAME OF EXECUTIVE OFFICER OWNED CLASS
- ------------------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
Raymond A. Jean........................................................................... 156,357(2) 0.9%
George W. Hoffman......................................................................... 74,731(3) 0.4%
Richard A. Nunemaker...................................................................... 58,142(4) 0.3%
Vicki L. Casmere.......................................................................... 4,725(5) *
</TABLE>
- ------------------------
* The number of shares of Common Stock beneficially owned is less than .1% of
class.
(1) Such shares are held by several trusts, each of which Mr. Ruppert is one of
the trustees. The trusts are for the benefit of Berenice T. Ruppert and
members of her family. Excludes 11,248 shares held directly by Theodore A.
Ruppert.
(2) Of such shares, 46,983 are deemed to be beneficially owned by Mr. Jean
because he is the sole trustee of a trust of which he is the sole
beneficiary, 107,724 are deemed to be beneficially owned by Mr. Jean solely
because of the existence of currently exercisable options to acquire such
shares and 1,650 are deemed to be beneficially owned because they are held
as a custodian for the benefit of his daughter.
(3) Of such shares, 28,340 are held directly and 46,391 are deemed to be
beneficially owned solely because of his ownership of currently exercisable
options to acquire such shares.
(4) Of such shares, 23,682 are held directly and 34,460 are deemed to be
beneficially owned solely because of his ownership of currently exercisable
options to acquire such shares.
(5) Deemed to be beneficially owned solely because of her ownership of currently
exercisable options to acquire such shares.
16
<PAGE>
INDEPENDENT AUDITORS
The Board of Directors of the Company intends to appoint, subject to final
proposal acceptance, the firm of Deloitte & Touche LLP as its independent
auditors for the fiscal year ending January 31, 2000. Deloitte & Touche LLP
served in such capacity for the Company's preceding fiscal year. A
representative of Deloitte & Touche LLP is expected to be present at the Annual
Meeting of Stockholders and will be given an opportunity to make a statement if
he desires to do so and is expected to be available to respond to appropriate
questions.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters which are to
be brought before the meeting. If any other matters should be presented for
proper action, it is the intention of the persons named in the Proxy to vote in
accordance with their discretion pursuant to the terms of the Proxy.
PROPOSALS OF STOCKHOLDERS
Any stockholder proposals must have been received by the Company by March 3,
1999 to be presented at the 1999 Annual Meeting of Stockholders. Proposals of
stockholders intended to be presented at the 2000 Annual Meeting of Stockholders
must be received at the Company's executive offices on or before December 18,
1999 in order to be considered for inclusion in the Company's Proxy Statement.
Any stockholder proposals to be presented at the 2000 Annual Meeting of
Stockholders must be received by the Company at its executive offices between
February 11, 2000 and March 2, 2000.
VARLEN CORPORATION
By RAYMOND A. JEAN
President and Chief
Executive Officer
It is important that Proxies be returned promptly. Therefore, stockholders
who do not expect to attend the meeting in person are urged to fill in, sign,
date and return the enclosed Proxy.
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1999, filed with the Securities and Exchange Commission, may be
obtained without charge by any stockholder of the Company of record as of April
1, 1999 by writing to: Mr. Richard A. Nunemaker, Vice President, Finance and
Chief Financial Officer, Varlen Corporation, 55 Shuman Boulevard, P.O. Box 3089,
Naperville, Illinois 60566-7089.
17
<PAGE>
PROXY PROXY
VARLEN CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 26, 1999
THE UNDERSIGNED hereby appoints RICHARD L. WELLEK, THEODORE A. RUPPERT AND
RICHARD A. NUNEMAKER, with full power of substitution and revocation, as
proxies to vote all the stock outstanding in the name of the undersigned
entitled to vote at the Annual Meeting of Stockholders of Varlen Corporation
to be held at the Radisson Hotel Lisle - Naperville, 3000 Warrenville Road,
Lisle, Illinois 60532, on Wednesday, May 26, 1999, at 10:00 A.M. (local time)
and at any adjournment or adjournments thereof, with the same powers as the
undersigned would possess if personally present, as specified herein.
(Continued and to be DATED AND SIGNED on REVERSE SIDE)
<PAGE>
Varlen Corporation
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR ALL NOMINEES FOR DIRECTOR.
For all
For all Withheld nominees
nominees from all except as
nominees marked below
1. Election of Directors for a One Year Term: / / / / / /
Nominees: Raymond A. Jean, Ernest H. Lorch,
L. William Miles, Greg A. Rosenbaum,
Joseph J. Ross, Theodore A. Ruppert
and Richard L. Wellek.
Withhold my vote for the following nominees:
- ---------------------------------------------
Comments:
A majority of such proxies as shall be present at the meeting (or if only one
shall be present then that one) may exercise all the power of the proxies
hereunder. The undersigned hereby revokes all proxies heretofore given with
respect to the voting of such stock at such Annual Meeting. The undersigned
hereby acknowledges receipt of the Company's Proxy Statement dated April 16,
1999, and of its Annual Report for the fiscal year ended January 31, 1999.
2. In their discretion, upon any other matter which may properly come before
the Annual Meeting or any adjournment or adjournments thereof.
The proxies will vote as instructed herein. If no choice is specified,
proxies will vote FOR the election of all nominees for director.
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
Signature(s)
Dated , 1999
----------------------------
Signature of Stockholder should correspond exactly with name as stenciled
hereon. When signing as an agent, attorney, executor, administrator, trustee,
guardian or corporate official, please give your full title as such. Each
joint owner or trustee should sign the proxy.
Please date, sign and return this Proxy in the enclosed envelope.
