SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 2, 1995
To the Shareholders of
The West Company, Incorporated:
The Annual Meeting of Shareholders of The West Company, Incorporated
will be held at the Company's headquarters at 101 Gordon Drive, Lionville,
Pennsylvania 19341, on Tuesday, May 2, 1995, at 9:30 A.M., for the following
purposes:
1. To elect five directors in Class II (term expiring in 1998).
2. To approve the appointment of Coopers & Lybrand L.L.P. as
independent accountants for 1995.
3. To transact such other business as may properly be brought before
the meeting.
The Board of Directors has fixed the close of business, Friday, March
17, 1995, as the record date for the meeting. Only shareholders of record at
that time will be entitled to notice of and to vote at the meeting.
Please date, sign and return the enclosed proxy in the enclosed
envelope, whether or not you expect to attend the meeting in person.
By Order of the Board of Directors,
John R. Gailey III
Secretary
Lionville, PA 19341
March 24, 1995
<PAGE>
PROXY STATEMENT
-----------
THE WEST COMPANY, INCORPORATED
101 Gordon Drive
Lionville, Pennsylvania 19341
-----------
The enclosed proxy is solicited by the Board of Directors of The West
Company, Incorporated (the "Company") for use at the Annual Meeting of
Shareholders to be held at the Company's headquarters, 101 Gordon Drive,
Lionville, Pennsylvania, on Tuesday, May 2, 1995, at 9:30 A.M., and at all
adjournments thereof. The proxy and this proxy statement are being mailed to
shareholders on or about March 24, 1995.
In addition to solicitation by mail, directors, officers and other
employees of the Company may solicit proxies personally and by telephone. The
cost of soliciting proxies will be borne by the Company. Proxies may be revoked
by the person giving it at any time before it is exercised by giving written
notice to the Secretary of the Company or by submitting a new proxy.
Only shareholders of record at the close of business on March 17, 1995
will be entitled to vote at the meeting. At that date, there were 16,508,400
shares of the Company's Common Stock (the "Common Stock") outstanding and
entitled to vote. Each outstanding share entitles the holder to one vote on all
business of the meeting. Shareholders attending the Annual Meeting may vote
their shares in person whether or not a proxy has been previously executed and
returned. If the accompanying proxy card is signed and returned to the Company,
and not revoked, it will be voted in accordance with the instructions contained
therein. Unless contrary instructions are given, the persons designated as proxy
holders on the proxy card will vote FOR election of the nominees listed below as
directors and FOR the proposal to approve the appointment of independent
accountants.
Directors are elected by a plurality vote of all votes cast at the
meeting. A shareholder may withhold votes from any or all nominees by notation
to that effect on the accompanying form of proxy. The affirmative vote of a
majority of the votes cast by holders of Common Stock entitled to vote is
required for approval of the appointment of independent accountants.
Votes cast by proxy or in person at the meeting will be counted by
persons appointed by the Company to act as judges of election. The judges of
election will treat abstentions and broker non-votes as present for purposes of
determining the presence of a quorum. Because directors are elected by a
plurality of votes, abstentions and broker non-votes will not have an impact on
their election. Abstentions and broker non-votes will not be counted in
tabulating the number of votes cast on approval of the appointment of
independent accountants.
The Board of Directors is not aware of any matters to be presented at
the meeting other than those set forth in the accompanying notice. If any other
matters properly come before the meeting, the persons named in the enclosed
proxy will vote in accordance with their best judgment.
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 20, 1995, certain
information concerning each person known to the Company to have been the
beneficial owner of more than 5% of the Common Stock. Except as indicated below,
the Company is informed that the beneficial owners have sole voting and sole
investment power over the shares shown opposite their names.
<TABLE>
<CAPTION>
Amount and Percent
Name and Address of Nature of Beneficial of
Beneficial Owner Ownership Class
<S> <C> <C>
Jean Wike Faust .................................................. 1,261,734(1) 7.6%
16 Fox Chase Road
Malvern, PA 19355
Mitchell Hutchins Institutional Investors Inc..................... 1,351,100(2) 8.2%
1285 Avenue of the Americas
New York, NY 10019
TriMark Investment Management Inc................................. 998,000 6.0%
One First Canadian Place, Suite 5600
P.O. Box 487
Toronto, Ontario M5X 1E5
Franklin H. West.................................................. 839,939(3) 5.1%
619 Broad Acres Road
Narberth, PA 19072
William S. West................................................... 1,274,956(3)(4) 7.7%
101 Gordon Drive
Lionville, PA 19341
J. Roffe Wike, II................................................. 1,741,554(1)(5) 10.5%
2125 Twinbrook Road
Berwyn, PA 19312
Wilmington Trust Company.......................................... 1,314,360(6) 8.0%
1100 North Market Street
Wilmington, DE 19890
</TABLE>
- ---------------
(1) Includes 226,000 shares held by a trust of which Mrs. Faust is the sole
beneficiary. J. Roffe Wike, II, the brother of Mrs. Faust, has sole
investment and voting power over such shares in his capacity as trustee.
Also includes 582,954 shares held by a trust as to which Mrs. Faust and
Mr. Wike share voting and investment power.
(2) Represents shared voting and investment power.
(3) Franklin H. West, William S. West and Fidelity Bank, N.A. share the
investment power over the same 746,264 shares which are held by two trusts
of which they are co-trustees. Does not include 134,785 shares owned by
Franklin West's wife and children, as to which he disclaims beneficial
ownership.
(4) Does not include 221,900 shares owned by Mr. West's wife, as to which he
disclaims beneficial ownership.
(5) Includes options to acquire 4,500 shares. Does not include 7,840 shares
owned by Mr. Wike's wife, as to which he disclaims beneficial ownership.
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<PAGE>
(6) Includes (i) sole voting power with respect to 440,620 shares, (ii) shared
voting power with respect to 873,740 shares and shared investment power
with respect to 866,640 shares.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 20, 1995, information
concerning the beneficial ownership of Common Stock by each director and nominee
for director, each of the Company's executive officers named in the Summary
Compensation Table on page 10 of this proxy statement and all directors and
executive officers as a group. No director or officer owns more than 1% of the
outstanding Common Stock except William S. West, who owns 7.7% of the
outstanding Common Stock, and J. Roffe Wike, II, who, including shares that may
be acquired within 60 days, is the beneficial owner of 10.5% of the Common
Stock. All directors and officers as a group are the beneficial owners of 23.2%
of the Common Stock, including shares that may be acquired by them within 60
days. Additional information concerning the beneficial ownership of Messrs. West
and Wike is contained in footnotes related to the table on the preceding page.
<TABLE>
<CAPTION>
Shares owned Shares which
Name directly and may be acquired
indirectly(1) within 60 days(2)
<S> <C> <C>
Tenley E. Albright....................................... 0 1,500
William J. Avery......................................... 500 4,500
J. E. Dorsey............................................. 3,155 22,000
George W. Ebright........................................ 1,000 3,000
George J. Hauptfuhrer, Jr................................ 6,000 4,500
L. Robert Johnson........................................ 2,000 4,500
Raymond J. Land.......................................... 1,970 24,000
William G. Little........................................ 17,899 115,000
John P. Neafsey.......................................... 2,000 4,500
Walter F. Raab........................................... 4,000 4,500
Monroe E. Trout.......................................... 2,000 3,000
Ulf C. Tychsen........................................... 1,393 24,000
William S. West.......................................... 1,274,956 0
J. Roffe Wike, II........................................ 1,737,054 4,500
Hans Wimmer.............................................. 440,000 0
Geoffrey F. Worden....................................... 1,500(3) 1,500
Victor E. Ziegler........................................ 23,447 45,000
All directors and executive officers
as a group (23 persons).............................. 3,558,766 361,465
</TABLE>
- -----
(1) Includes shares allocated to individual accounts under the Company's
Savings Plan and/or restricted shares granted under the Company's Stock
Bonus Program as follows: Mr. Dorsey - 367 and 246 shares, respectively;
Mr. Land - 425 and 158 shares, respectively; Mr. Little - 861 and 458
shares, respectively; Mr. Tychsen - 119 restricted shares; Mr. Ziegler -
5,936 and 185 shares, respectively; and all directors and executive
officers as a group - 12,931 and 1,584 shares, respectively.
(2) Stock options available for exercise within 60 days under the Company's
Long-Term Incentive Plan and 1992 Non-Qualified Stock Option Plan for
Non-Employee Directors.
(3) Does not include 500 shares held by Mr. Worden's wife, as to which he
disclaims beneficial ownership.
Section 16(a) Reporting
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
regulations thereunder require the Company's directors and executive officers,
and persons who own more than ten percent of the Company's Common Stock, to
report their ownership of Common Stock and changes to that ownership to the
Securities and Exchange Commission and the New York Stock Exchange. Specific due
dates for these reports have been established, and the Company is required to
report in this proxy statement any failure to file by these dates during 1994.
With two exceptions, all of these filing requirements were satisfied by its
directors and executive
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<PAGE>
officers. Steven A. Ellers, the Company's Vice President, Operations, filed an
initial report of ownership 11 days following the due date. J. Roffe Wike, II, a
director of the Company, reported in October 1994 a transaction by his daughter
that was attributable to him under Commission regulations which should have been
reported in August 1994.
BOARD OF DIRECTORS AND ITS COMMITTEES
In December 1994, the Board of Directors established guidelines for
designating directors who are independent of management as "independent
directors" and established the position of "Chairman, Independent Directors." In
accordance with these guidelines, the Board designated each director, other than
Victor E. Ziegler, Executive Vice President, and William G. Little, President
and Chief Executive Officer, as an independent director. George J. Hauptfuhrer,
Jr., was elected Chairman, Independent Directors. The independent directors'
primary duties are to evaluate the performance of the Company's Chief Executive
Officer, to assure that he has appropriate leadership succession plans, and to
review and monitor achievement of his long-range strategic plans for the
Company. The Chairman, Independent Directors is responsible for conferring with
the Chief Executive Officer on board agenda items and information to be provided
to the Board and for calling meetings of the independent directors as
appropriate.
The Board of Directors held six meetings in 1994, including one meeting of
the independent directors. All directors attended more than 75% of the total
number of meetings of the Board and the committees on which they served.
The Board has four standing committees: the Audit Committee, the
Nominating and Corporate Governance Committee, the Compensation Committee and
the Finance Committee. In March 1995, the Board established an ad hoc Research
and Development Committee, which will review the Company's R&D activities. The
Audit Committee consists of L. Robert Johnson (Chairman), George W. Ebright,
Walter F. Raab and Geoffrey F. Worden. This Committee, which met five times in
1994, performs the following functions: (1) recommends annually to the Board a
firm of independent accountants for appointment as auditors of the Company; (2)
reviews the fees paid to the independent accountants; (3) reviews with the
independent accountants the scope and results of each annual audit; and (4)
reviews with the independent accountants and the Company's financial officers
comments and recommendations made by the same.
The Nominating and Corporate Governance Committee consists of George J.
Hauptfuhrer, Jr. (Chairman), Tenley E. Albright, Monroe E. Trout, William S.
West and J. Roffe Wike, II. During 1994, this Committee met five times. This
Committee recommends to the Board nominees to be elected to the Board by the
shareholders or by the Board in the case of vacancies that occur between
meetings of shareholders. After review by the independent directors, this
Committee recommends formally to the Board a successor to the Chief Executive
Officer when a vacancy occurs. In addition, this Committee recommends to the
Board appointments to be made to various Board committees and evaluates all
Company policies relating to the recruitment of directors (such as compensation
arrangements) and makes recommendations to the Board and various Board
committees with regard to such matters. In March 1995, the Nominating and
Corporate Governance Committee was also charged with reviewing the Company's
policies and programs in such areas as equal employment opportunity, employee
health and safety, charitable contributions, political action and legislative
affairs and legal compliance, including environmental protection. As part of
these additional responsibilities, this Committee reviews periodically with the
Company's General Counsel, in light of new legislation, regulations and other
developments, the Company's Code of Business Ethics, and makes recommendations
to the Board for any changes to the Code that the Committee believes are
desirable.
The Nominating and Corporate Governance Committee will consider
nominations for directors made by shareholders who deliver written notice
thereof to the Secretary of the Company not less than 60 days nor more than 90
days prior to the meeting of shareholders, except that if the date of the
meeting is not publicly announced by the Company more than 20 days prior to the
meeting, the notice must be delivered not later than
4
<PAGE>
the close of business on the earlier of (i) the seventh day following the day on
which notice of the date of the meeting was first mailed to shareholders or such
public disclosure was made, whichever occurs first, or (ii) the fourth day prior
to the meeting. The notice must set forth certain information concerning the
shareholder and his nominees, including the following: their names and
addresses; a representation as to the number of shares beneficially owned by the
shareholder and that such shareholder is the holder of record of the Company's
shares and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; a description of all arrangements
or understandings between the shareholder and each nominee and any other person
or persons pursuant to which the nominations are to be made; such other
information as would be required to be included in a proxy statement soliciting
proxies for the election of the nominees; and the consent of each nominee to
serve as a director if so elected. The chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
The Compensation Committee consists of John P. Neafsey (Chairman), George
J. Hauptfuhrer, Jr. and Monroe E. Trout. During 1994, this Committee met seven
times. This Committee determines the Company's compensation arrangements with
executive management and reports its actions to the Board of Directors. In
addition, this Committee administers the Company's Long-Term Incentive Plan.
The Finance Committee consists of William J. Avery (Chairman), George W.
Ebright, L. Robert Johnson, John P. Neafsey and J. Roffe Wike, II. During 1994,
this Committee held seven meetings. This Committee serves as liaison between
management and the Board on important financial transactions and
financial-policy matters. The Finance Committee also consults with and advises
management on financial strategies, policies and procedures, acquisitions,
divestitures, capital-expenditure requests and similar matters, and makes
recommendations on such matters to the Board.
Compensation of Directors
Each director who is not employed by the Company or one of its
subsidiaries receives an annual retainer of $16,000 per year, plus attendance
fees of $1,000 for board meetings and $750 for committee meetings. The Chairman
of the Board receives an annual fee of $35,000. The chairman of each board
committee and the Chairman, Independent Directors each receive an annual fee of
$3,500. Directors may elect annually to defer all or any part of their
director's fees, which deferred amounts will be payable upon their termination
as a director. In addition, Geoffrey F. Worden and John P. Neafsey were
separately engaged by the Company during 1994 as consultants in certain
financial matters. The Company paid Mr. Worden and Mr. Neafsey a total of
$59,000 and $32,000, respectively, in fees for their services during 1994.
Each non-employee director who has completed five years of service as a
director will be entitled to receive an annual retirement benefit, commencing at
age 60, of between 50% and 100% of his or her base annual retainer at the time
of retirement, depending on the length of service, for a maximum period of 15
years or until the director's earlier death. Non-employee directors are eligible
to receive annually an option to acquire 1,500 shares of Common Stock under the
Company's 1992 Non-Qualified Stock Option Plan for Non-Employee Directors. Each
option will expire five years from the date of grant.
Certain Transactions
In November 1994, the Company acquired from Hans Wimmer, a director and
former executive officer of the Company, approximately 25.5% of the equity
interests in five European-based companies, which were held by Mr. Wimmer,
resulting in the Company owning 100% of those companies. The acquisition was
completed pursuant to an amended and restated put and call agreement entered
into in March 1993. The Company paid a total purchase price of DM 45,000,000
($27,777,777 at an average 1994 exchange rate of DM 1.62), of which DM
30,000,000 ($18,518,519) was paid in cash. The remaining DM 15,000,000
($9,259,259) was paid by delivery of 363,214 shares of Common Stock. Mr. Wimmer
has the right to require the Company to file a registration statement with the
Securities and Exchange Commission on one occasion during each of the two years
following
5
<PAGE>
the closing of the transaction to permit a public distribution of the shares.
One of the Company's German subsidiaries leases its facilities from Henrik
Wimmer, a son of Hans Wimmer. Lease payments totaled DM 99,564 ($61,459) during
1994.
6
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, the terms of which
expire alternatively over a three-year period. The Board proposes the election
of five directors in Class II to serve for three years until the 1998 Annual
Meeting and until their successors have been elected and qualified. The Board's
nominees, George W. Ebright, L. Robert Johnson, John P. Neafsey, Hans Wimmer and
Geoffrey F. Worden, are incumbent directors. Each nominee has consented to being
named and to serve if elected.
In the event that any of the nominees becomes unavailable, which the
Company does not expect, it is intended that, pursuant to the accompanying
proxy, votes will be cast for such substitute nominee or nominees as may be
designated by the Board of Directors upon the recommendation of the Nominating
and Corporate Governance Committee.
Nominees for Director in Class II - Term to Expire 1998
<TABLE>
<S> <C>
George W. Ebright Mr. Ebright, 57, has been a director since 1992. He is a director and the former
Chairman of the Board and Chief Executive Officer of Cytogen Corp., a
biotechnology pharmaceutical company. Mr. Ebright is a director of Univax
Biologics, Inc. and Arrow International Incorporated.
L. Robert Johnson Mr. Johnson, 53, has been a director since 1989. He is Managing General
Partner of Founders Capital Partners, L.P., a venture capital partnership. Mr.
Johnson currently serves as a director of Axint Technologies Corp., RSVP
Information Inc., Agris Corporation, Digital Delivery Inc. and Symbiotics Inc.
John P. Neafsey Mr. Neafsey, 55, has been a director since 1987. He is President of JN
Associates, an investment consulting firm. Previously, Mr. Neafsey was President
and Chief Executive Officer of Greenwich Capital Markets, Inc., an investment
banking firm. He is an advisory director of The Beacon Group of New York
and a director of the Management Policy Council, Provident Mutual Life
Insurance Company of Philadelphia and the American Council for Capital
Formation.
Hans Wimmer Mr. Wimmer, 65, has been a director
since 1979. Prior to his retirement in November
1994, he was President of Pharma-Gummi Wimmer
West GmbH. Mr. Wimmer is also a director of
Vetter Pharma, DIN Berlin/German Medical
Standard Organization and Verien zur Normung im
Bereich der Medizin.
Geoffrey F. Worden Mr. Worden, 55, has been a director since 1993. He has been President of
South Street Capital, Inc., an investment company, since 1992. Previously, Mr.
Worden was a Managing Director of Kidder, Peabody & Co., Incorporated.
</TABLE>
The Board of Directors recommends a vote "FOR" these nominees.
7
<PAGE>
DIRECTORS CONTINUING IN OFFICE
Class III - Term Expiring in 1996
<TABLE>
<S> <C>
Tenley E. Albright, M.D. Dr. Albright, 59, has been a director since 1993. She is a physician and surgeon,
Chairman of Western Resources, Inc. and member of the Corporation of the
New England Baptist Hospital and Woods Hole Oceanographic Institution.
From 1989 through 1993 Dr. Albright was Founder, President, then Chairman
of the Institute for Clinical Applications/Vital Sciences Inc., a clinical diagnostic
research laboratory. She is also a director of State Street Bank and Trust
Company, State Street Boston Corporation and Whitehead Institute for
Biomedical Research.
Walter F. Raab Mr. Raab, 70, has been a director since 1973. Prior to his retirement in 1990,
he was Chairman and Chief Executive Officer of AMP Incorporated, producers
of electrical/electronic connection devices, where he continues to serve as a
director. Mr. Raab is also a director of Dauphin Deposit Corporation, Harris
Corporation and Holy Spirit Hospital.
William S. West Mr. West, 67, has been a director since 1958 and Chairman of the Board since
July 1985. Previously, he served as the Company's President and Chief
Executive Officer.
J. Roffe Wike, II Mr. Wike, 68, has been a director since 1962. Prior to his retirement in January
1994, Mr. Wike was Senior Partner and a director of Cooke & Bieler,
investment counselors.
Victor E. Ziegler Mr. Ziegler, 64, has been a director since 1991 and
Executive Vice President since 1992. He was Division
President, Health Care from 1991 to 1992 and Group President,
Manufacturing prior to 1991.
</TABLE>
Class I - Term Expiring in 1997
<TABLE>
<S> <C>
William J. Avery Mr. Avery, 54, has been a director since 1992. He is Chairman of the Board,
President and Chief Executive Officer of Crown Cork & Seal Company, Inc.,
manufacturer of cans, crowns and machinery. He is also a director of Can
Manufacturers Institute, the Connelly Foundation, Pennsylvania Chamber of
Business & Industry and the YMCA.
George J. Hauptfuhrer, Jr. Mr. Hauptfuhrer, 68, has been a director since 1973. He is Of Counsel of
Dechert Price & Rhoads, a law firm where he was a partner, Chairman and
Chief Executive Officer until his retirement in 1990.
William G. Little Mr. Little, 52, has been a director, President and
Chief Executive Officer since 1991. He was Division President
of Kendall Inc., a medical device manufacturer, from 1990 to
1991 and Group Vice President and Division President of C.R.
Bard, Inc., a medical device manufacturer, from 1975 to 1990.
He is a director of Paoli Memorial Hospital and Fox Chase
Cancer Center.
Monroe E. Trout, M.D. Dr. Trout, 63, has been a director since 1991. Dr. Trout is Chairman Emeritus
of American Healthcare Systems, a network of integrated healthcare systems,
where he served as Chairman of the Board, President and Chief Executive
Officer until his retirement in January 1995. Dr. Trout is a director of Gensia
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
Inc., Science Applications International
Corporation (SAIC), Baxter International Inc.,
Cytyc Corporation and the University of
California San Diego Foundation.
</TABLE>
EXECUTIVE COMPENSATION
REPORT OF THE BOARD COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Compensation Philosophy -- The Company's executive compensation philosophy
is designed to further the following four objectives: (1) link shareholder and
management interests; (2) reward management for producing superior corporate
results relative to comparable companies; (3) recognize individual performance;
and (4) assist the Company in attracting and retaining key executives of the
highest calibre.
These four principles are implemented through an executive compensation
program that includes base salary, annual incentive bonus awards and long-term
incentives in the form of non-qualified stock options. Base salaries are set to
approximate the 50th percentile level of comparable positions, while total
compensation (salary, bonus and stock options) is targeted to parallel the
Company's competitive performance. The Company has a target financial
performance objective of top quartile results, and thus, total compensation is
generally targeted at the 75th percentile of comparable positions, subject to
meeting corporate and individual performance goals.
To further the goal of aligning management and shareholder interests, as
well as providing executives an opportunity and incentive to realize long-term
appreciation of assets, the Compensation Committee has established guidelines
that call for executives to own, within five to seven years of attaining their
respective positions, an amount of Common Stock with a market value equal to:
five times base salary for the Chief Executive Officer; three times base salary
for executive vice presidents; and two times base salary for other senior
executives. Although the share ownership guidelines are not mandatory, the
Committee reviews annually each executive's progress toward meeting his or her
share ownership goal. The Committee has no set policy on failure to meet the
guidelines.
Principal Compensation Elements -- The Compensation Committee, which is
composed entirely of independent directors, annually determines the targeted
compensation for each of the Company's executive officers. In setting base
salaries, annual incentive bonus awards and stock-option grants, the Committee
relies primarily on compensation data from outside surveys of companies in
general industry with comparable annual revenues and employee base. The
Committee also takes into consideration recommendations of the President and
Chief Executive Officer with regard to the performance and relative experience
of the individual involved.
Bonus awards are made under the Company's Management Incentive Bonus Plan
(the "Bonus Plan"). These awards are contingent principally (75%) upon the
Company attaining a pre-specified level of financial performance with additional
weight (25%) given to achievement of individual objectives. Individual
objectives focus on such factors as new product development, new business
initiatives, productivity and quality improvements and are designed to correlate
to the Company's overall strategic objectives for the year. Mr. Little's
individual objectives are approved by the Committee, and objectives for each
other executive officer are approved by that individual's direct supervisor.
Annual-incentive bonus ranges are established for each job position. For
1994, the bonus target for the President and Chief Executive Officer was 75% of
base salary. For other executive officers, the bonus targets range from 40% to
65% of base salary. Executives may receive a maximum of 150% of their target
bonus if corporate financial performance meets or exceeds the target by 125%. No
awards are granted if actual corporate performance is less than 90% of target.
In support of the goal of linking shareholder and management interests,
one-fourth of a Bonus Plan participant's after-tax annual bonus is paid in the
form of Common Stock. Each participant also receives a number of additional
restricted shares equal to 25% of the number of bonus shares
9
<PAGE>
received. The restricted shares are forfeited if the bonus shares are
transferred within four years of the date of grant.
10
<PAGE>
The Company's long-term incentive program is designed to reward management
for consistent improvement of shareholder value, primarily through the use of
non-qualified stock options. Stock options are viewed as an excellent method of
linking management interests with those of shareholders because the value of a
stock option is created by increases in the market value of the Common Stock, an
important indicator of shareholder value. Under the Committee's stock-option
award program, a fixed number of shares are granted each year in amounts
estimated to produce competitive long-term compensation when compared to general
industry. Stock option values are determined using the Black-Scholes valuation
method. Although there is no direct relationship between the size of option
awards and the Company's share-ownership guidelines, stock options are
considered the primary vehicle to assist executives in meeting these guidelines.
Establishing Financial Performance Goals -- The Board of Directors
annually establishes the corporate financial performance target under the Bonus
Plan for the following year as part of the overall budget approval process with
the advice and concurrence of the Committee. In providing this advice, the
Committee reviews comparative financial-performance data of a self-selected peer
group of 12 companies (the "Peer Group") and of the Standard & Poor's 400 index.
The guidelines used for selecting the Peer Group companies were both
quantitative and qualitative in nature and included such factors as nature of
business, revenues, employee base, technology base, market share, customer type
and customer relationship. The Peer Group is the same group used in the
shareholder-return performance chart on page 15. Return-on-equity (ROE) was used
as the financial-performance measurement for 1994. In November 1993, the
Committee reviewed data compiled by an independent compensation consultant that
indicated the Company's ROE performance equalled the Peer Group's actual 75th
percentile performance, while being somewhat below that of the S&P 400. Based on
this information, the Committee believes that the 1994 annual-incentive ROE
target set by the Board was consistent with the Company's goal of matching
executive pay with corporate performance.
1994 Compensation -- For 1994, William G. Little, the Company's President
and Chief Executive Officer, received a base salary of $363,684, an increase of
5.9% from the prior year. The Committee set Mr. Little's 1994 salary based upon
compensation survey data that indicated this salary to be at the median level of
chief executive officer positions of companies of comparable size in general
industry. In setting this base salary, the Committee also considered the
continued improvement in the Company's financial performance and the fact that
Mr. Little met or exceeded each of his individual objectives for the prior year,
including the Company's 1993 financial performance target. Each of the other
named executive officers received salary adjustments to bring his base salary in
line with median market practice as evidenced by executives with similar
responsibilities in companies of comparable size in general industry.
Annual incentive awards for each of the named executive officers,
including Mr. Little, reflect the Company's attainment of the predetermined ROE
target and the level of achievement of individual goals by each executive
officer. The Company's actual 1994 ROE was 92% of the performance target.
Accordingly, the Committee authorized a bonus award of $256,327 for Mr. Little
for 1994. In accordance with the terms of the Bonus Plan, Mr. Little received a
portion of his bonus in the form of 1,832 bonus shares and was granted 458
restricted shares of Common Stock.
At the time of his hiring in 1991, Mr. Little was granted a non-qualified
stock option for 150,000 shares that vests over a four-year period. The
Committee considered comparable compensation data and competitive market factors
in determining the terms of Mr. Little's stock option. During 1994, each of the
Company's other executive officers received an additional grant of stock options
consistent with the Committee's stock-option award program described above.
11
<PAGE>
The foregoing discussion does not apply to Mr. Wimmer whose 1994
compensation was determined by the terms of management contracts with various
European subsidiaries and by a separate agreement under which he received an
annual bonus based on European Division profits. Mr. Wimmer retired from his
position in November 1994.
John P. Neafsey, Chairman
George Hauptfuhrer, Jr.
Monroe E. Trout
Compensation of Named Executives
General
The following table sets forth, for 1992, 1993 and 1994, compensation
provided by the Company to each of the named executives in all capacities in
which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
Other
Annual Restricted Securities All Other
Compensa- Stock Underlying Compensa-
Name & Principal Position Year Salary Bonus tion Award(s) Options ation
($)(A) ($)(A) ($) ($)(B) (#) ($)(C)
<S> <C> <C> <C> <C> <C> <C> <C>
William G. Little 1994 363,684 256,327 4,329 11,624 0 8,904
President and Chief 1993 343,176 259,189 4,329 10,774 0 9,136
Executive Officer 1992 331,828 250,000 3,164 10,375 0 4,900
Victor E. Ziegler 1994 219,628 104,691 4,095 4,695 12,000 6,583
Executive Vice 1993 212,271 107,379 4,095 4,389 12,000 6,362
President 1992 206,992 100,754 2,993 0 12,000 4,914
J. E. Dorsey(D) 1994 221,081 138,589 3,674 6,244 8,000 6,630
Executive Vice 1993 191,880 105,796 3,674 4,315 8,000 3,105
President and 1992 125,864 61,500 2,402 2,760 6,000 0
Chief Operating
Officer
Raymond J. Land 1994 189,343 90,291 3,674 4,010 8,000 5,677
Senior Vice President, 1993 180,874 92,605 3,674 3,741 8,000 4,497
Finance and 1992 172,221 88,193 2,685 0 8,000 842
Administration
Ulf C. Tychsen(D) 1994 203,261 87,211 9,202 3,020 8,000 0
Group Vice President, 1993 194,649 86,339 6,344 3,940 8,000 0
Europe & Asia Pacific 1992 -- -- -- -- -- --
Hans Wimmer(D) 1994 185,637 433,697 9,485 0 0 0
Former President, 1993 214,753 510,370 8,865 0 0 0
Pharma-Gummi Wimmer 1992 196,803 494,000 -- 0 0 0
West GmbH
</TABLE>
- -----------------
(A) Amounts shown reflect salary and bonuses earned by the named executives
for the applicable fiscal year and include the value of any restricted and
unrestricted shares awarded under the Company's Management Incentive Bonus
Plan. Bonuses are paid in the fiscal year following the fiscal year for
which they are
12
<PAGE>
earned. Mr. Tychsen's 1994 and 1993 compensation was paid in Deutsche
Marks, as follows: Salary DM 329,282 and DM 321,171, respectively; and
bonus DM 141,282 and DM 142,459, respectively. Mr. Wimmer's 1994, 1993 and
1992 compensation also was paid in Deutsche Marks, as follows: Salary DM
300,732, DM 354,342 and DM 307,012, respectively; and bonus DM 702,590, DM
842,110 and DM 770,640, respectively. The U.S. dollar figures shown are
based on average exchange rates of 1.62, 1.65 and 1.56 for 1994, 1993 and
1992, respectively.
(B) Restricted stock awards are made in the fiscal year following the fiscal
year for which they are earned. Restricted stock awards vest four years
from the grant date. Values are determined by multiplying the number of
shares awarded by the closing market price of the Common Stock on the
grant date, which was $20.75 for 1992 awards, $24.94 for 1993 awards and
$25.38 for 1994 awards. Dividends are paid and reinvested on restricted
shares.
The following table contains information relating to the outstanding
holdings of restricted stock of the named executives at December 31, 1994.
The table does not include restricted stock granted in 1995 with respect
to 1994 service. Values are determined by multiplying the number of shares
by $27.50, the December 30, 1994 closing price for the Company's Common
Stock.
<TABLE>
<CAPTION>
Current
Number of Market
Restricted Value of
Name Shares Held Restricted
Shares Held
<S> <C> <C>
William G. Little.......................... 932 $25,630
Victor E. Ziegler.......................... 176 4,840
J. E. Dorsey............................... 306 8,415
Raymond J. Land............................ 150 4,125
Ulf C. Tychsen............................. 158 4,345
Hans Wimmer................................ 0 --
</TABLE>
(C) Includes for 1994, 1993 and 1992: (i) term life insurance premiums paid by
the Company for Mr. Little--$648, $648 and $536, respectively; and (ii)
Company contributions under the Savings Plan for Mr. Little--$8,256,
$8,488 and $4,364, respectively, Mr. Ziegler--$6,583, $6,362, and $4,914,
respectively, Mr. Dorsey--$6,630, $3,105 and $0, respectively, and Mr.
Land--$5,677, $4,497 and $842, respectively.
(D) Information is provided only for fiscal years during which the individual
served as an executive officer. Mr. Tychsen first became an executive
officer of the Company in 1993. Mr. Dorsey commenced his employment with
the Company on April 21, 1992. Although Mr. Wimmer had been President of
Pharma-Gummi Wimmer West GmbH, one of the Company's European subsidiaries,
for many years, he first became an executive officer of the Company in
1992. Mr. Wimmer retired in November 1994.
13
<PAGE>
Stock Options
The following table provides information concerning the grant of stock
options in 1994 under the Company's Long-Term Incentive Plan.
OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
Individual Grants
- ------------------------------------------------------------------------------------------------------
Number of
Securities % of
Underlying Total Grant
Options Options Date
Granted to Granted to Exercise Present
Employees Employees Price(B) Expiration Value(C)
Name in 1994(A) in 1994 ($/Sh) Date ($)
- ---- ----------- -------- ------- ----- ---
<S> <C> <C> <C> <C> <C>
William G. Little 0 -- -- -- --
Victor E. Ziegler 12,000 6.1% 24.94 3/1/99 79,920
J. E. Dorsey 8,000 4.1% 24.94 3/1/99 53,280
Raymond J. Land 8,000 4.1% 24.94 3/1/99 53,280
Ulf C. Tychsen 8,000 4.1% 24.94 3/1/99 53,280
Hans Wimmer 0 -- -- -- --
</TABLE>
- --------------
(A) Option grants are for a five-year term and first became exercisable six
months after the date of grant.
(B) The exercise price of $24.94 represents the average of the highest and
lowest reported sale price on March 1, 1994 (the date of grant). The
exercise price (and any applicable withholding taxes) may be paid in cash,
shares of Common Stock valued at fair market value on the date of exercise
or pursuant to a cashless exercise procedure under which the optionee
provides irrevocable instructions to a brokerage firm to sell the
purchased shares and to remit to the Company, out of the sale proceeds, an
amount equal to the exercise price plus all applicable withholding taxes.
(C) The estimated value has been determined by application of the
Black-Scholes option-pricing model, based upon the terms of the option
grant and the Company's stock price performance history as of the date of
grant (March 1, 1994). The key assumptions set forth below used in the
valuation are based upon historical experience, and are not a forecast of
future stock-price performance or volatility or of future dividend policy.
No adjustments have been made for forfeitures or non-transferability.
Dividend Yield: 1.8%
Volatility: .277
Risk-Free Rate of Return: 6.28%
Expected Exercise Period: 5 Years
1994 Stock Option Exercises
The following table provides information relating to the exercise of stock
options by the named executives in 1994, as well as the number and value of
their unexercised options as of December 31, 1994.
14
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value Number of Shares Value of
Shares Realized Underlying Unexercised
Acquired (Market Value Unexercised In-the-Money
on Less Any Options Held at Options at
Name Exercise(#) Exercise Price)($) 12/31/94(#) 12/31/94($)(A)(B)
- -----------------------------------------------------------------------------------------------------------------------------------
Not Not
Exercisable Exercisable Exercisable Exercisable
<S> <C> <C> <C> <C> <C> <C>
William G. Little 0 -- 115,000 30,000 1,423,125 371,250
Victor E. Ziegler 12,000 41,250 53,889 0 418,020 --
J. E. Dorsey 0 -- 22,000 0 120,880 --
Raymond J. Land 0 -- 24,000 0 142,500 --
Ulf C. Tychsen 0 -- 24,000 0 142,500 --
Hans Wimmer 0 -- 0 0 -- --
</TABLE>
- ---------------
(A) The value of unexercised options represents the difference between the
closing price of the Company's Common Stock on December 30, 1994 ($27.50)
and the exercise price of each unexercised option held by the named
executives.
(B) All option grants to the named executives other than Mr. Little are for a
five-year term and first became exercisable six months after the date of
grant. Mr. Little was granted an option in 1991, which vests over a
four-year period.
Retirement Plan
The Company's Salaried Employees' Retirement Plan (the "Retirement Plan")
is a non-contributory defined benefit plan. It provides for normal retirement at
age 65 and permits early retirement in certain cases. Benefits are based upon
years of service and compensation (including salary, bonuses and stock award
distributions ("Covered Compensation")) for the five consecutive calendar years
within the ten years prior to retirement during which the compensation was the
highest.
The Internal Revenue Code limits the maximum annual benefit which may be
paid to any individual from the Retirement Plan's trust fund and the amount of
compensation that may be recognized. Under the Company's Supplemental Employees'
Retirement Plan (the "Supplemental Plan"), the Company will make supplemental,
unfunded payments to offset any reductions in benefits that may result from such
limitations.
The following table shows the estimated annual retirement benefits payable
(before reduction by the offset for Social Security payments) under the
Retirement Plan and the Supplemental Plan at normal retirement date to all
eligible employees, including the named executives, in specified remuneration
and years of service classifications.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
-----------------------------------------------------------------------------------------------
Five Year
Average
Compensation 15 20 25 30 35
------------ --- --- --- --- --
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 57,000 $ 76,000 $ 95,000 $ 100,000 $ 105,000
250,000 71,250 95,000 118,750 125,000 131,250
</TABLE>
15
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
300,000 85,500 114,000 142,500 150,000 157,500
400,000 114,000 152,000 190,000 200,000 210,000
500,000 142,500 190,000 237,500 250,000 262,500
600,000 171,000 228,000 285,000 300,000 315,000
650,000 185,250 247,000 308,750 325,000 341,250
</TABLE>
Amounts shown are calculated on a straight-line annuity basis. Under the
Retirement Plan, credited years of service and Covered Compensation for 1994 are
19 years and $622,873 for Mr. Little, 34 years and $327,007 for Mr. Ziegler, 2
years and $326,877 for Mr. Dorsey, and 3 years and $281,948 for Mr. Land.
Employment and Other Agreements
The Company has entered into an employment agreement with Mr. Little under
which he serves as President and Chief Executive Officer of the Company for a
base annual salary determined in accordance with Company compensation review
policies. Mr. Little also is entitled to participate in the Company's annual and
long-term incentive plans. The employment term may be ended by the Company upon
two years' notice of termination but may be terminated earlier by the Company
for cause, or due to disability or death.
Mr. Wimmer, who retired in November 1994, is entitled to receive an annual
pension in the amount of DM 360,000 ($222,222 at an average 1994 exchange rate
of 1.62).
The Company has entered into agreements with each of the named executive
officers other than Messrs. Wimmer and Tychsen, which provide for benefits in
the event of employment termination following a change in control of the
Company. These agreements are designed to assist the Company in attracting and
retaining highly qualified executives and to help ensure that if the Company is
faced with an unsolicited tender offer proposal, its executives will continue to
manage the Company without being unduly distracted by the uncertainties of their
personal affairs and thereby will be better able to assist in evaluating such a
proposal in an objective manner.
Each executive is entitled to receive severance compensation under his
agreement if, within two years following a change in control of the Company, he
resigns following a constructive termination of his employment or his employment
is terminated by the Company other than by reason of death, disability, willful
misconduct, or normal retirement. Such severance compensation includes the
immediate vesting of the executive's interest, if any, in the Company's employee
benefit plans, continuing salary and bonus payments at the level prior to
termination and continuation of certain health and welfare benefits for up to
three years following such termination. A "change in control" is defined
generally as a change in a majority of the Company's Board of Directors or
purchase of more than 51% of the Company's stock. Each agreement also provides
that during the term of the executive's employment with the Company and for a
period of one year thereafter, whether or not a change in control of the Company
occurs, the executive will neither be employed by any competitor of the Company
nor compete with the Company in any part of the United States (any market or
territory, in the case of Mr. Little). The payment of severance compensation is
not conditioned upon the executive seeking other employment nor is it subject to
reduction in the event the executive secures other employment consistent with
the agreement.
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following graph compares for fiscal years 1990 through 1994 the yearly
change in the cumulative total returns to holders of Common Stock with the
cumulative total return of the Standard & Poor's 400 Industrials-Limited Index
(the "S&P 400") and of a company-selected peer group. Cumulative
total-return-to-shareholders is measured by dividing total dividends (assuming
dividend reinvestment) plus per-share price change for the period by the share
price at the beginning of the period. The Company's cumulative shareholder
return is based
16
<PAGE>
on an investment of $100 on December 31, 1989 and is compared to the cumulative
total return of the S&P 400 and peer group over the period with a like amount
invested.
17
<PAGE>
The peer-group companies were selected by the Company based principally on
nature of business, revenues, employee base, technology base, market share,
customer type and customer relationship. The peer group was developed initially
as part of an assessment of the Company's executive compensation levels. The
peer group is composed of Amphenol Corporation, Andrew Corporation, Applied
Magnetics Corporation, Augat Inc., Beckman Instruments, Inc., C.R. Bard, Inc.,
CTS Corp., Millipore Corporation, Pall Corporation, The Perkin-Elmer
Corporation, Sealed Air Corporation and Thomas & Betts Corporation.
<TABLE>
<CAPTION>
West Company S&P 400 Peer Group
<S> <C> <C> <C>
12/89 100.00 100.00 100.00
12/90 66.58 99.11 98.18
12/91 103.40 129.59 142.54
12/92 127.13 136.98 156.78
12/93 140.75 149.35 166.04
12/94 160.63 155.05 185.34
</TABLE>
APPOINTMENT OF AUDITORS
At the Annual Meeting, the Company's shareholders will be asked to approve
the appointment of Coopers & Lybrand L.L.P., independent accountants, as
auditors of the Company for 1995. If the Company's shareholders do not approve
the appointment of Coopers & Lybrand L.L.P., the Board of Directors will
consider the appointment of other auditors. A representative of Coopers &
Lybrand L.L.P. is expected to be present at the Annual Meeting and will have the
opportunity to make a statement, if he desires to do so, and to respond to
questions from shareholders.
The Board of Directors recommends that the shareholders vote FOR the
appointment of Coopers & Lybrand L.L.P. If approval is withheld, the Board will
reconsider its selection.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1996 Annual Meeting of Shareholders must be
received by the Office of the Secretary of the Company, 101 Gordon Drive,
Lionville, Pennsylvania 19341, no later than December 1, 1995 for inclusion in
the proxy statement and form of proxy.
18
<PAGE>
PROXY
THE WEST COMPANY, INCORPORATED
101 Gordon Drive, Lionville, Pennsylvania 19341
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William S. West and George J. Hauptfuhrer,
Jr. as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
common stock of The West Company, Incorporated, held of record by the
undersigned on March 17, 1995, at the Annual Meeting of Shareholders to be held
on May 2, 1995 or any adjournment thereof.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this Proxy will
be voted FOR Proposals 1 and 2.
(To be Signed on Reverse Side)
Please mark your
votes as in this
example.
FOR WITHOUT AUTHORITY
1. Election of all the To vote for
5 Class II nominees the nominees
Directors listed below listed below
(except as marked to the contrary)
2. Approval of the appointment of Coopers & Lybrand L.L.P. as independent
accountants of the corporation for the fiscal year
ending December 31, 1995.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.)
George W. Ebright, L. Robert Johnson, John P. Neafsey, Hans Wimmer, Geoffrey F.
Worden
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, Proxy will be
voted FOR Proposals 1 and 2.
SIGNATURE(S)_________________________________ DATE ________________
Please sign exactly as your name appears thereon. When signing as attorney,
executor, administrator, trustee, guardian, or in any other representative
capacity, please so indicate.
