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 Rule 14a-11(c) or Rule 14a-12
THE WEST COMPANY, INCORPORATED
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(Name of Registrant as Specified in its Charter)
[INSERT NAME OF FILER WHEN APPLICABLE]
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
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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):
- --------------------------------------------------------------------------------
(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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(3) Filing Party:
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(4) Date Filed:
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 30, 1996
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, April 30, 1996, at 9:30 A.M., for the following
purposes:
1. To elect three directors in Class III (term expiring in
1999).
2. To ratify the appointment of Coopers & Lybrand L.L.P. as
independent accountants for 1996.
3. To approve and ratify a proposal to amend the 1992
Non-Qualified Stock Option Plan for Non-Employee Directors.
4. To approve and ratify a proposal to amend the Long-Term
Incentive Plan.
5. To transact such other business as may properly be brought
before the meeting.
The Board of Directors has fixed the close of business, Monday,
March 18, 1996, 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
March 27, 1996
<PAGE>
THE WEST COMPANY, INCORPORATED
101 Gordon Drive
Lionville, Pennsylvania 19341
PROXY STATEMENT
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, April 30, 1996, 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 27, 1996. The Company will bear the costs of
solicitation of proxies. Following the mailing of proxy soliciting material,
directors, officers and other employees of the Company may solicit proxies in
person or by telephone.
Only holders of record of the Company's common stock, $.25 par value,
("Common Stock") at the close of business on March 18, 1996 will be entitled to
vote at the meeting. At that date, 16,640,880 shares of Common Stock were
outstanding. Each outstanding share entitles the holder to one vote on all
business of the meeting. Any shareholder signing a proxy card may revoke or
revise it at any time before it is voted by giving written notice to John R.
Gailey III, Secretary, Vice President and General Counsel of the Company, or by
voting in person at the meeting.
The persons named in the accompanying form of proxy will vote such
proxy in accordance with the specification made thereon with respect to each of
the proposals contained therein. If no instructions are given and the proxy card
is properly signed and returned, all shares covered by the proxy will be voted
by such persons for election of the nominees listed below as directors, for the
proposal to ratify the appointment of independent accountants, for approval and
ratification of the amendment of the 1992 Non-Qualified Stock Option Plan for
Non-Employee Directors and for approval and ratification of the amendment of the
Long-Term Incentive Plan. Unless otherwise indicated by the shareholder, proxy
cards also give the persons named as proxies discretionary authority to vote all
shares of Common Stock represented by the proxy on any other matter that is
properly presented for action at the meeting.
Directors are elected by a plurality vote of all votes cast at the
meeting. Accordingly, directions to withhold authority will have no effect on
the outcome of the vote. For each other matter specified in the accompanying
notice, the affirmative vote of a majority of votes cast by holders of Common
Stock entitled to vote is required for approval. Abstentions will be treated 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 other
proposals.
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.
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table and footnotes set forth, as of March 21, 1996,
information to the best of the Company's knowledge concerning persons who
beneficially own more than 5% of the Company's Common Stock. Except as indicated
below, the Company is informed that the beneficial owners have sole voting and
sole dispositive 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) 7.5%
16 Fox Chase Road
Malvern, PA 19355
First Union Corporation of New Jersey............................. 850,239(2) 5.1%
550 Broad Street
Newark, NJ 07102
Reich & Tang Asset Management L.P................................. 979,800(3) 5.9%
600 Fifth Avenue
New York, NY 10020
TriMark Financial Corporation..................................... 1,298,000(4) 7.8%
One First Canadian Place, Suite 5600
P.O. Box 487
Toronto, Ontario M5X 1E5
William S. West................................................... 1,265,812(5) 7.6%
101 Gordon Drive
Lionville, PA 19341
J. Roffe Wike, II................................................. 1,743,554(1)(6) 10.5%
2125 Twinbrook Road
Berwyn, PA 19312
Wilmington Trust Corporation...................................... 1,242,310(7) 7.5%
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
dispositive 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 dispositive power.
(2) Based upon information as of December 31, 1995 set forth in a Schedule 13G
filing made by First Union Corporation of New Jersey and First Fidelity
Incorporated and dated February 9, 1996. Includes sole voting power with
respect to 403,975 shares and shared dispositive power with respect to an
aggregate of 808,528 shares.
(3) Based upon information as of December 31, 1995 set forth in a Schedule 13G
filing made by reporting person and dated February 15, 1996. Represents
shared voting and dispositive power.
(4) Based upon information as of December 31, 1995 set forth in a Schedule
13G filing made by reporting person and dated February 12, 1996.
(5) Includes shared voting power over 746,264 shares. Does not include
220,354 shares owned by Mr. West's wife, as to which he disclaims
beneficial ownership.
(6) Does not include 7,840 shares owned by Mr. Wike's wife, as to which he
disclaims beneficial ownership.
(7) Based upon information as of December 31, 1995 set forth in a Schedule
13G filing made by Wilmington Trust Corporation, Wilmington Trust Company
and Wilmington Trust FSB and dated February 12, 1996. Includes (i) sole
voting power with respect to 440,620 shares and (ii) shared voting and
investment power with respect to 801,690 shares.
<PAGE>
1. ELECTION OF DIRECTORS
Board of Directors
The Company's articles of incorporation divide the Board of Directors
into three classes. Each year, the directors in one class are elected to serve a
three-year term. The Company's bylaws allow the directors to increase (and
decrease) the size of the board, to elect directors to fill the vacancies
created by the increase and to assign the elected directors to a class. Pursuant
to that authority, in November 1995, the Board of Directors elected William H.
Longfield to serve as a director of the Company until the 1997 annual meeting of
shareholders. Mr. Longfield was elected to fill the vacancy created by the
retirement of Walter F. Raab. Also during 1995, William J. Avery resigned from
the Board. Victor E. Ziegler, a director whose term expires at the 1996 Annual
Meeting, has decided not to stand for reelection in view of his anticipated
retirement this year. The Board intends to address the imbalance among the
director classes created by Mr. Ziegler's retirement.
The Board has nominated Dr. Tenley E. Albright, Mr. William S. West and
Mr. J. Roffe Wike, II for election as directors at the 1996 Annual Meeting. All
of the nominees are incumbent directors. Each nominee has consented to being
named and to serve if elected. If any nominee 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. Shareholders who want to nominate candidates
for election as directors at future annual meetings must comply with procedures
in the Company's bylaws. A copy of the bylaws may be obtained from the Secretary
of the Company.
<TABLE>
<CAPTION>
Name, Age and
Year First Elected Director Business Experience and Other Directorships or Significant Affiliations
- --------------------------------- -----------------------------------------------------------------------------------
<S> <C>
Nominees
For Terms to Expire in 1999
Tenley E. Albright, M.D. Dr. Albright is a physician and surgeon. Since 1993 she has been Chairman of
Age 60 Western Resources, Inc. and a member of the Corporation of the New England
1993 Baptist Hospital and Woods Hole Oceanographic Institution. From 1989 to 1993 she
was President, then Chairman of the Institute for Clinical
Applications/Vital Sciences Inc. (clinical diagnostic
research laboratory). Dr. Albright also serves as a director
of State Street Bank and Trust Company, State Street Boston
Corporation and Whitehead Institute for Biomedical Research.
William S. West From 1985 to 1993 Mr. West served as Chairman of the Board of the Company. Mr.
Age 68 West became President of the Company in 1965 and Chief Executive Officer in 1980
1958 and continued in these positions until his retirement in 1985.
J. Roffe Wike, II From 1965 to 1994 Mr. Wike was Senior Partner and a director of Cooke & Bieler
Age 69 (investment counselors).
1962
<PAGE>
The Board of Directors recommends a vote FOR these nominees.
Director Whose Term Expires in 1996
Victor E. Ziegler Mr. Ziegler has been Executive Vice President of the Company since 1992. He was
Age 65 Division President, Health Care from 1991 to 1992 and Group President,
1991 Manufacturing of the Company prior to 1991. Mr. Ziegler also serves as a
director of Brandywine Hospital.
Directors Whose Terms Expire in 1997
George J. Hauptfuhrer, Jr. Mr. Hauptfuhrer is Of Counsel of Dechert Price & Rhoads (law firm), where he
Age 69 served as Chairman and Chief Executive Officer from 1984 until 1990.
1973
William G. Little Mr. Little has been Chairman of the Board since 1995 and President and Chief
Age 53 Executive Officer of the Company since 1991. He was Division President of
1991 Kendall Inc. (medical device manufacturer) from 1990 to 1991 and Group Vice
President and Division President of C.R. Bard, Inc.(medical device manufacturer)
from 1975 to 1990. Mr. Little also serves as a director of Fox Chase Cancer
Center.
William H. Longfield Mr. Longfield has been Chief Executive Officer and Chairman of the Board since
Age 57 1994 and Chief Operating Officer from 1989 to 1994 of C.R. Bard, Inc. (medical
1995 device manufacturer). He also serves as a director of United Dental Care, Inc.,
Manor Care Inc., the Health Industry Manufacturers Association, Horizon Mental
Health Management, Inc. and Atlantic Health System.
Monroe E. Trout, M.D. Since March 1996, Dr. Trout has been Chief Executive Officer of Cytran Inc.
Age 64 (biotechnology company). He also is Chairman Emeritus of American Healthcare
1991 Systems (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 also serves as a director of Gensia Inc., Science
Applications International Corporation (SAIC), Baxter International Inc., Cytyc
Inc. and the University of California San Diego Foundation.
Directors Whose Terms Expire in 1998
George W. Ebright Mr. Ebright is a director of Cytogen Corp. (biotechnology pharmaceutical
Age 58 company), where he served as Chairman of the Board from 1990 to 1995 and Chief
1992 Executive Officer from 1989 to 1994. He also serves as a director of NABI and
Arrow International Incorporated.
L. Robert Johnson Mr. Johnson is Managing General Partner of Founders Capital Partners, L.P.
Age 54 (venture capital partnership). He also serves as a director of Axint
1989 Technologies Corp., RSVP Information Inc. and Agris Corporation.
John P. Neafsey Mr. Neafsey has been President of JN Associates (investment consulting firm)
Age 56 since 1993. He was President and Chief Executive Officer of Greenwich Capital
1989 Markets, Inc. (investment banking firm) from 1990 to 1993. Mr. Neafsey also
serves as an advisory director of The Beacon Group of New York and as 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 was President of Pharma-Gummi Wimmer West GmbH from 1960 to 1994. He
Age 66 serves as a director of Vetter Pharma, DIN Berlin/German Medical Standard
1979 Organization and Verien zur Normung im Bereich der Medizin.
Geoffrey F. Worden Since 1992, Mr. Worden has been President of South Street Capital, Inc.
Age 56 (investment company). He was Managing Director of Kidder, Peabody & Co.,
1993 Incorporated prior to 1992. Mr. Worden also serves as a director of APT, Inc.
and Princess House, Inc.
</TABLE>
<PAGE>
Operation of the Board of Directors
Independent Directors
The Board of Directors has adopted guidelines for designating directors
who are independent of management as "independent directors" and has established
the position of "Chairman, Independent Directors." In accordance with these
guidelines, the Board has designated each director, other than Victor E.
Ziegler, Executive Vice President, and William G. Little, Chairman of the Board,
President and Chief Executive Officer, as an independent director. George J.
Hauptfuhrer, Jr., serves as 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.
Board Committees
The Board has four standing committees: the Audit Committee, the
Nominating and Corporate Governance Committee, the Compensation Committee
and the Finance Committee.
The Audit Committee consists of L. Robert Johnson (Chairman), William H.
Longfield and Geoffrey F. Worden. The Audit Committee 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, George W. Ebright, Monroe E.
Trout, William S. West and J. Roffe Wike, II. 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 and makes recommendations to the Board and various Board committees
with regard to such matters. In March 1995, the Nominating and Corporate
Governance Committee also was 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 Compensation Committee consists of Monroe E. Trout (Chairman), George
J. Hauptfuhrer, Jr., John P. Neafsey and William S. West. This Committee
determines the Company's compensation arrangements with executive management and
reports its actions to the Board of Directors. This Committee also administers
the Company's Long-Term Incentive Plan.
The Finance Committee consists of John P. Neafsey (Chairman), George W.
Ebright, L. Robert Johnson, J. Roffe Wike, II and Geoffrey F. Worden. 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.
<PAGE>
Board and Committee Meetings
The Board of Directors held five meetings in 1995, including three
meetings of the independent directors. During 1995, the Compensation Committee
met six times, and the Audit Committee, Nominating and Corporate Governance
Committee and Finance Committee each met five times. All directors attended more
than 75% of the total number of meetings of the Board and the committees on
which they served.
Compensation of Directors
Each director who is not employed by the Company or one of its
subsidiaries receives an annual retainer of $20,000 per year, plus attendance
fees of $1,500 for board and independent-director meetings and $1,000 for
committee meetings. 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.
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, and a related holding company
approximately 25.5% of the equity interests in five European-based companies,
which were held by them, 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 ($31,468,531 at an average 1995 exchange rate of DM
1.43), of which DM 30,000,000 ($20,979,021) was paid in cash. The remaining DM
15,000,000 ($10,489,510) was paid by delivery to Mr. Wimmer 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 the closing of the transaction
to permit a public distribution of the shares. During 1995, one of the Company's
German subsidiaries leased its facilities from Henrik Wimmer, a son of Hans
Wimmer. Lease payments totaled DM 99,564 ($69,625) during 1995. In January 1996,
this facility was purchased from Henrik Wimmer for a purchase price of DM 1.5
million ($1,048,951).
Stock Ownership of Directors and Executive Officers
The following table sets forth, as of March 21, 1996, information
concerning the beneficial ownership of Common Stock by each director, each named
executive officer and all directors and executive officers as a group, and
includes shares of Common Stock beneficially owned under the Company's Long-Term
Incentive Plan and Savings Plan (the Plan amounts are included as of December
31, 1995, the latest information reasonably available). The information is
furnished by the respective directors and officers. Where a director or
executive officer has the right to acquire shares within 60 days after March 21,
1996, through the exercise of stock options, these shares are treated as
beneficially owned by the individual and as outstanding for purposes of
computing the percentages owned by the individual and the group. No director or
officer beneficially owns more than 1% of the outstanding Common Stock except
William S. West, who owns beneficially 7.6% of the outstanding Common Stock, and
J. Roffe Wike, II, who is the beneficial owner of 10.5% of the Common Stock. All
directors and officers as a group are the beneficial owners of 23.9% of the
Common Stock. Additional information concerning the beneficial ownership of
Messrs. West and Wike is contained in footnotes related to the table on page 2.
<PAGE>
<TABLE>
<CAPTION>
Right to Acquire
Shares Owned Ownership Under
Directly and Options Exercisable
Name Indirectly Within 60 Days
------------------------------------------------ ------------------------ -----------------------------
<S> <C> <C>
Tenley E. Albright 410 3,000
J. E. Dorsey 3,387 31,393
George W. Ebright 1,000 4,500
George J. Hauptfuhrer, Jr. 6,000 6,000
L. Robert Johnson 3,000 6,000
Raymond J. Land 2,350 30,101
William G. Little 23,126 124,578
William H. Longfield 1,000 0
John P. Neafsey 2,000 6,000
Monroe E. Trout 2,000 4,500
Ulf C. Tychsen 1,373 32,000
William S. West 1,265,812 0
J. Roffe Wike, II 1,737,554 6,000
Hans Wimmer 440,000 0
Geoffrey F. Worden 1,500(1) 3,000
Victor E. Ziegler 18,708 48,000
All directors and executive officers
as a group (23 persons) 3,556,769 427,797
------------------
</TABLE>
(1) 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 beneficially more than ten percent of the Company's Common
Stock, to report such ownership and changes in 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 1995. With one
exception, all of these filing requirements were satisfied by its directors and
executive officers. Victor E. Ziegler, a director and the Company's Executive
Vice President, reported in June 1995 a transaction by his wife and son that was
attributable to him under Commission regulations, which should have been
reported in April 1995.
Board Compensation Committee Report On Executive Compensation
The Compensation Committee of the Board approves compensation policy and
sets compensation for the Company's executive officers, including the
individuals named in the Summary Compensation Table below. The Compensation
Committee is composed entirely of non-employee directors.
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 caliber.
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.
<PAGE>
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 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 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
1995, the bonus target for Mr. Little 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. The Board may adjust
the corporate performance target to reflect specified events that have an impact
on the Company's financial performance and that are unanticipated or reasonably
beyond the control of management. These events include, but are not limited to,
accounting-rule changes, unanticipated regulatory changes, and a capital or
business restructuring.
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 received. The
restricted shares are forfeited if the bonus shares are transferred within four
years of the date of grant.
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 policy, 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.
<PAGE>
Establishing Corporate Performance Goals -- At its December meeting, the
Board of Directors establishes the corporate-performance target under the Bonus
Plan for the following year as part of its approval of that year's overall
operating plan. The Committee recommends and advises the Board with respect to
the specific corporate financial performance measure to be used. For the past
several years, the Board has selected return-on-equity (ROE) as the Bonus-Plan
performance measure.
In November 1994, the Committee reviewed the findings of a study of the
Company's compensation programs, which was conducted by an independent
compensation consulting firm. This study compared the Company's financial
performance with a self-selected peer group of 12 companies (the "Peer Group")
and with the Standard & Poor's 400 index. The findings of the study were:
The Company's executives' base salaries are, on average, at the 50th
percentile.
The total cash and incentive compensation approximate the 75th
percentile.
The Company's ROE performance targets over the past three years have
been consistent with its strategy of increasing its ROE goals
toward a 15% target level.
Since January 1991, the Company's total return to shareholders has
been above the 75th percentile of both the Peer Group and the
S&P 400.
The guidelines used for selecting the Peer Group companies 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 14.
In December 1994, the Board of Directors established 14.8%
return-on-equity (ROE) as a corporate financial-performance target under the
Bonus Plan for 1995. In the view of the Board and the Committee, this target
represented reasonable progress toward the Company's desired ROE performance of
15%.
1995 Compensation -- Following a review of Mr. Little's performance in
March 1995, his annual base salary was established at $412,232, an increase of
6.1% from the prior year. In setting Mr. Little's 1995 salary, the Committee
considered the favorable performance of the Company in 1994, as compared to
budget, and the achievement of his individual objectives. The salary also is
consistent with the 50th percentile of companies of comparable size in general
industry, according to data supplied by the Committee's independent consultant.
In September 1995, Mr. Little's salary was increased to $425,000, retroactive to
his election to the additional post of Chairman of the Board. The amount of the
increase was based on the typical increases granted to CEO's of similarly sized
companies upon promotion to chairman. The other named executive officers each
received salary adjustments to bring their base salary in line with median
market practice as evidenced by executives with similar responsibilities in
companies of comparable size in general industry.
No annual incentive awards were made to any of the named executive
officers, including Mr. Little, because the Company failed to attain the
predetermined ROE target for 1995.
In September 1995, Mr. Little was granted a non-qualified stock option for
120,000 shares at an exercise price of $30.125, the fair market value of the
Common Stock on the date of grant. The option first becomes exercisable on the
third anniversary of the grant date, when it will vest in 40,000-share portions
annually thereafter. The Committee determined the size of the option as
approximately three times the average annual long-term incentive opportunity as
indicated by comparable industry data provided by its compensation consultant.
During 1995, each of the Company's other executive officers received an
additional grant of stock options consistent with the Committee's stock-option
award program described above.
Monroe E. Trout, Chairman
George Hauptfuhrer, Jr.
John P. Neafsey
William S. West
<PAGE>
Compensation of Named Executive Officers
General
The following table sets forth, for 1993, 1994 and 1995, compensation
provided by the Company to each of the named executive officers in all
capacities in which they served.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Award
------------------- ------------------
Other Restricted Securities
Annual Stock Underlying All Other
Name & Principal Position Year Salary($)(1) Bonus($)(1) Compensation($) Award(s)($)(2) Options(#) Compensation($)(3)
- ------------------------- ---- ----------- ----------- --------------- ------------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
William G. Little 1995 $412,231 $ -0- $4,329 $10,682 $120,000 $13,182
Chairman, President 1994 363,684 256,327 4,329 11,624 -0- 8,904
and Chief 1993 343,176 259,189 4,329 10,774 -0- 9,136
Executive Officer
Victor E. Ziegler 1995 229,652 -0- 4,095 3,644 12,000 6,884
Executive Vice 1994 219,628 104,691 4,095 4,695 12,000 6,583
President 1993 212,271 107,379 4,095 4,389 12,000 6,362
J. E. Dorsey 1995 234,934 -0- 3,674 4,817 12,000 7,045
Executive Vice 1994 221,081 138,589 3,674 6,244 8,000 6,630
President and 1993 191,880 105,796 3,674 4,315 8,000 3,105
Chief Operating
Officer
Raymond J. Land 1995 198,639 -0- 3,674 3,112 8,000 7,544
Senior Vice 1994 189,343 90,291 3,674 4,010 8,000 6,836
President, 1993 180,874 92,605 3,674 3,741 8,000 4,732
Finance and
Administration
Ulf C. Tychsen 1995 230,745 -0- 9,904 2,784 8,000 -0-
Group Vice 1994 212,467 87,211 9,202 3,020 8,000 -0-
President, 1993 194,649 91,921 6,344 3,940 8,000 -0-
Europe & Asia Pacific
</TABLE>
- -----------------
(1) 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 earned. Mr. Tychsen's 1995, 1994 and 1993 compensation was
paid in Deutsche Marks, as follows: Salary DM 329,966, DM 329,282 and DM
321,171, respectively; and bonus DM -0-, DM 141,282 and DM 142,459,
respectively. The U.S. dollar figures shown are based on average exchange
rates of 1.43, 1.62 and 1.65 for 1995, 1994 and 1993, respectively.
(2) 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 $24.94 for 1993 awards and $25.38 for 1994 awards.
Dividends are paid on restricted stock and reinvested in additional shares
of Common Stock.
The following table contains information relating to the outstanding
holdings of restricted stock of the named executives at December 31, 1995.
Values are determined by multiplying the number of shares by $23.50, the
December 29, 1995 closing price of the Common Stock.
Current Market
Number of Value of
Restricted Restricted
Name Shares Held Shares Held
-------------- ----------- -----------
William G. Little 1,354 $31,819
Victor E. Ziegler 347 8,155
J. E. Dorsey 532 12,502
Raymond J. Land 296 6,956
Ulf C. Tychsen 268 6,298
<PAGE>
- -----------------
(3) Represents Company contributions under the Company's Savings Plan and
Deferred Compensation Plan for Designated Executive Officers. With respect
to Mr. Little, includes for 1995, 1994 and 1993 term life insurance
premiums paid by the Company of $819, $648 and $648, respectively.
Stock Option Grants
The following table provides information concerning stock options
granted in 1995 under the Company's Long-Term Incentive Plan to the named
executive officers.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Individual Stock Price Appreciation
Grants for Option Term
----------------------------------------------- ---------------------------
% of
Number of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price Expiration
Name Granted(#)(1) in 1995 ($/Sh)(2) Date(2) 5%($)(3) 10%($)(3)
------------------- ---------------- ---------------- ------------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
William G. Little 120,000 36.1% $30.13 9/7/05 $2,273,400 $5,761,800
Victor E. Ziegler 12,000 3.6 25.31 3/6/00 83,970 185,490
J. E. Dorsey 12,000 3.6 25.31 3/6/00 83,970 185,490
Raymond J. Land 8,000 2.4 25.31 3/6/00 55,980 123,660
Ulf C. Tychsen 8,000 2.4 25.31 3/6/00 55,980 123,660
</TABLE>
- --------------
(1) Option grants for each executive other than Mr. Little are for a five-year
term and first became exercisable six months after the date of grant. Mr.
Little's option first becomes exercisable on the third anniversary of the
grant date, when it will vest in 40,000-share portions annually thereafter
and remain exercisable for a 10-year term from the grant date.
(2) The exercise price represents the average of the highest and lowest
reported sale price on the date of grant (September 8, 1995 in the case of
Mr. Little and March 7, 1995 for the other individuals). 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.
(3) These amounts, based on assumed appreciation rates of 5% and 10% prescribed
by the Securities and Exchange Commission rules, are not intended to
forecast possible future appreciation, if any, of the Company's stock
price.
1995 Stock Option Exercises
The following table provides information relating to the exercise of
stock options by the named executive officers in 1995, as well as the number and
value of their unexercised options as of December 31, 1995. 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, and an option in 1995,
which vests over a six-year period.
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Shares Number of Shares Value of Unexercised
Acquired Underlying Unexercised In-the-Money
on Value Options Held at Options at
Name Exercise(#) Realized($)(1) Fiscal Year-End(#) Fiscal Year-End($)(1)(2)
--------------------- ------------- ---------------- ---------------------------- ---------------------------------
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
William G. Little 20,422 $271,868 124,578 120,000 $1,005,000 0
Victor E. Ziegler 8,889 56,667 57,000 0 175,875 --
J. E. Dorsey 0 -- 34,000 0 44,380 --
Raymond J. Land 1,899 21,245 30,101 0 49,340 --
Ulf C. Tychsen 0 -- 32,000 0 58,000 --
</TABLE>
- ---------------
(1) Market value on the date of exercise of shares covered by options exercised,
less option exercise price.
(2) The dollar amounts shown under the Exercisable
and Unexercisable columns of this heading represent the
number of exercisable and unexercisable options, respectively, multiplied
by the difference between the closing price of the Company's Common Stock
on December 29, 1995 ($23.50) and the exercise price of the options. No
value has been assigned to the 120,000 shares covered by an option granted
to Mr. Little in 1995 because the option exercise price ($30.13) exceeds
the closing price on December 29, 1995.
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. The normal retirement
benefit equals 1.9% of the average of an employee's five highest consecutive
calendar years of earnings out of his or her last ten calendar years of service
("Average Annual Earnings"), plus 0.5% of such earnings multiplied by his or her
years of service in excess of 25 but not more than 35 years. In general, the
earnings covered by the Retirement Plan include salary, cash and stock bonus and
other non-deferred cash remuneration. 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 age 65 to all eligible employees,
including the named executives, in specified remuneration and years-of-service
classifications, based on a straight-life annuity form of retirement income.
Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
------------------------------------------------------------------------
Five Year
Average Annual
Earnings 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
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>
As of December 31, 1995, the credited years of service for the named
executive officers are as follows: Mr. Little--20 years; Mr. Ziegler--35 years;
Mr. Dorsey--3 years; and Mr. Land--4 years.
<PAGE>
Employment and Other Agreements
Mr. Little has an employment agreement with the Company under which he
serves as President and Chief Executive Officer for a base annual salary
determined in accordance with Company compensation review policies. The
agreement also entitles him 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.
The Company has entered into agreements with each of the named executive
officers, other than Mr. 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 Graph
The following graph compares 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
for the five years ended December 31, 1995. Cumulative
total-return-to-shareholders is measured by dividing total dividends (assuming
dividend reinvestment) plus the 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 on an investment of $100 on December 31, 1990 and is compared to
the cumulative total return of the S&P 400 and peer group over the period with a
like amount invested.
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.
<PAGE>
FIVE YEAR CUMULATIVE TOTAL RETURN
[GRAPHIC]
In the printed version a line graph appears displaying the plot points as
listed below.
West Company S&P 400 Peer Group
------------ ------- -----------
1990 100 100 100
1991 155 131 145
1992 191 138 160
1993 211 151 169
1994 241 156 189
1995 210 210 253
2. PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee, has
reappointed Coopers & Lybrand L.L.P. as independent public accountants for the
Company in 1996, subject to ratification by the holders of Common Stock. If the
appointment of Coopers & Lybrand L.L.P. is not ratified, 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 ratification of the selection of Coopers & Lybrand L.L.P.
as independent accountants for 1996.
3. AMENDMENT OF THE 1992 NON-QUALIFIED STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
On March 9, 1996 the Board of Directors adopted an amendment to the
Company's 1992 Non-Qualified Stock Option Plan for Non-Employee Directors (the
"Directors' Option Plan"), subject to approval by the shareholders of the
Company, increasing the number of shares for issuance pursuant to stock-option
grants thereunder by 100,000 shares and extending the term of the Directors'
Option Plan for an additional four-year period. The Board of Directors believes
that the Directors' Option Plan is important to the Company's efforts to attract
and retain the services of knowledgeable and experienced non-employee directors
for the benefit of the Company and its shareholders. By acquiring a proprietary
interest in the Company, such directors will have an additional incentive to
contribute to the continued growth and financial success of the Company.
Summary of Principal Plan Provisions
Number of Shares; Eligible Directors. The Directors' Option Plan provides
for the grant of an option to purchase 1,500 shares of Common Stock to each
director of the Company who is not otherwise an employee of the Company or any
of its subsidiaries ( "Eligible Director") on the first working day following
the 1992 through 1996 annual shareholders' meetings. There are currently 11
Eligible Directors. The aggregate number of shares of Common Stock that may be
issued pursuant to the exercise of options may not exceed 100,000 shares,
subject to certain adjustments made by the Board of Directors as specified in
the plan document. Such shares will be made available from the Company's
authorized but unissued Common Stock or from Common Stock issued and held in the
treasury of the Company.
<PAGE>
Stock Options. In general, an option will become exercisable following the
first anniversary of the grant date, but will become immediately exercisable
upon an Eligible Director's retirement or if a change in control (as defined in
the Directors' Option Plan) occurs. During an option holder's lifetime, an
option may be exercised only by the holder and will not be transferable except
by will or by inheritance laws. The option (if otherwise exercisable) may be
exercised within six months after termination of board service for any reason
other than retirement or removal for cause. An option may be exercised within
two years following retirement, but no longer than six months after death. Any
unexercised option terminates upon an Eligible Director's removal for cause.
Each option expires five years from the date of grant unless sooner exercised or
terminated pursuant to the terms of the Directors' Option Plan.
The exercise price per share with respect to each option is 100% of the
fair market value of the Common Stock on the date of grant, measured by the
average of the highest and lowest prices of actual sales of the Common Stock on
the New York Stock Exchange on the grant date or, if there are no trades on such
date, then on the nearest preceding date on which a sale occurred. Payment
for shares received upon option exercises may be made in cash, in Common Stock,
or any combination thereof, having a fair market value on the exercise date
equal to the total option exercise price.
Termination and Amendment. The Board of Directors has the authority to
amend or discontinue the Directors' Option Plan, subject to the requirement of
shareholder approval when necessary to comply with any tax or regulatory
requirements. In addition, the Board may make adjustments in the total number
and kind of shares available for options and the option price in the event of a
change in the corporate structure or capital stock of the Company. The rights
under an outstanding option, however, cannot be adversely affected without the
consent of the option holder. The Directors' Option Plan will terminate with
respect to new grants following the grant of options at the 1996 Annual Meeting.
Proposed Amendment of the Directors' Option Plan
It is proposed that the Directors' Option Plan be amended to: (i)
authorize the issuance of an additional 100,000 shares pursuant to the exercise
of options granted thereunder; and (ii) extend the term of the Directors' Option
Plan by providing for annual grants of additional options to each Eligible
Director on the first working day following the 1997 through the 2001 annual
shareholders' meetings. The terms of the additional grants are as described
above. Such amendment would become effective upon shareholder approval. If the
amendment is approved, a maximum of 200,000 shares of Common Stock will be
authorized for issuance upon exercise of options, and the Directors' Option Plan
will terminate upon the grant of options following the 2001 Annual Meeting of
Shareholders.
The affirmative vote of a majority of the shares voted at the meeting
is required to approve and ratify the amendment of the Directors' Option Plan.
The Board of Directors recommends that shareholders vote FOR approval and
ratification of this amendment.
4. AMENDMENT OF THE LONG-TERM INCENTIVE PLAN
On March 9, 1996 the Board of Directors adopted an amendment to the
Company's Long-Term Incentive Plan (the "LTIP"), subject to approval by the
shareholders of the Company, increasing the number of shares for issuance
pursuant to stock option grants and stock awards under the LTIP by 800,000
shares (about 4.9% of the Company's outstanding shares) to 2,925,000 shares and
setting an annual limit of 135,000 shares that may be granted to any individual
participant. The Board of Directors believes that it is advisable and in the
Company's best interest to have these additional shares available for issuance
pursuant to the terms of the LTIP as they provide an incentive to key employees
to remain in the employ of the Company and increase their interest in the
Company's success through ownership of its Common Stock.
<PAGE>
Summary of Principal Plan Provisions
Administration. The LTIP is administered by the Compensation Committee of
the Board of Directors, consisting of "disinterested" directors within the
meaning of that term under Rule 16b-3 of the Securities Exchange Act of 1934, as
amended, and "outside" directors as that term is defined in section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). The Committee is
vested with broad authority to make all determinations necessary or advisable
for the administration of the LTIP.
Eligibility and Awards. Awards under the LTIP may be in the form of stock
options (both non-qualified and incentive stock options ("ISOs") under Section
422A of the Code), stock appreciation rights, restricted stock and performance
awards or such other forms of compensation using Common Stock as the Committee
may in its discretion deem appropriate, including any combination of the above.
Currently, a maximum of 2,125,000 shares is authorized for issuance under the
Plan. Grants and awards under the LTIP may be made only to those employees of
the Company and its subsidiaries who are in positions in which their decisions,
actions and counsel significantly affect the growth and financial success of the
Company. Directors of the Company who are not also employees or officers of the
Company or a subsidiary are not eligible to participate in the LTIP. Options and
grants of shares are nontransferable in the hands of the participant, except by
will or by the laws of descent. Currently, approximately 96 employees have been
designated as participants under the LTIP.
Subject to the foregoing and to other limitations outlined below, the
Committee is authorized to determine the employees to whom awards will be made,
the type of award, the amount, size and terms of each award and the time when
awards will be granted. However, generally stock option grants are made in March
of each year and have a value (determined using the Black-Scholes valuation
method) intended to produce competitive long-term compensation when compared to
general industry. Awards of stock are also generally made in connection with the
Company's annual incentive bonus plan with a fair market value equal to 25% of
the after-tax amount of the participant's annual bonus. Each bonus-plan
participant also receives a number of additional restricted shares equal to 25%
of the number of bonus (unrestricted) shares received. The restricted shares are
forfeited if the bonus shares are transferred within four years of the date of
grant.
Stock Options. The Committee determines the number of shares to be covered
by each option award, the option price, the term of the options, the period of
time for options to vest after grant, and other terms and limitations applicable
to the exercise of an option, consistent, however, with certain limitations set
forth in the plan document. Those limitations are: the option price per share of
Common Stock of an ISO cannot be less than 100% of the fair market value of the
Common Stock; no option shall be exercisable within the first six months
following the grant date; and no option shall have a term longer than 10 years.
Stock options granted under the LTIP within the past five years have been
non-qualified stock options, with an exercise price per share equal to the fair
market value of the Common Stock on the date of the grant, measured by the
average of the highest and lowest prices of actual sales on the New York Stock
Exchange or, if there are no such trades on such date, then on the nearest
preceding date on which a sale occurred. Options may be exercised by a
participant in accordance with the terms of the related stock option agreement
and paid for in cash, shares of Common Stock (whether by delivery of previously
owned shares or by having the Company withhold a portion of the shares to be
received) having a fair market value at time of exercise equal to the option
price, or in a combination thereof, as determined by the Committee.
Stock Bonus and Restricted Share Awards. Performance awards under the LTIP
must be evidenced by written agreements, which specify the period over which the
award may be earned and the specific performance objectives for such period, all
of which are determined by the Committee. Performance awards may be in the form
of shares of Common Stock or cash. Restricted stock awards may be granted
restricted as to transfer and subject to substantial risks of forfeiture and/or
the attainment of performance objectives.
<PAGE>
Amendment; Adjustments; Termination. The LTIP took effect on May 9, 1988
and will remain in effect until all awards have been satisfied, but no award may
be granted after March 9, 1998. The Board of Directors may amend the LTIP at any
time, except that shareholder approval is required for any amendment that would
increase the maximum number of shares that may be issued under the LTIP, change
the class of eligible employees, or otherwise amend the LTIP in a fashion that
requires approval of the Company's shareholders in order to maintain the
exemption available under Rule 16b-3 of the Securities Exchange Commission. The
LTIP requires the Committee to adjust the number of shares that may be issued
under the LTIP and any outstanding grant or award or shares issuable pursuant
thereto, to account for any change in the outstanding Common Stock by reason of
a stock dividend or distribution, recapitalization, merger, combination or the
like. No termination or amendment of the LTIP shall, without the consent of a
participant, affect a participant's rights under an award previously granted.
Proposed Amendment of LTIP
Most of the shares currently authorized to be issued under the LTIP either
have been issued or are subject to outstanding options. In light of this fact,
and having determined that the LTIP continues to serve its stated purposes, the
Board adopted an amendment to the Plan, subject to shareholder approval,
authorizing an additional 800,000 shares for issuance under the LTIP. It is
expected that the additional shares will permit the continuation of the LTIP for
an additional three years.
Under section 162(m) of the Code, a publicly held corporation such as the
Company is denied a federal tax deduction for compensation paid to its chief
executive officer and its four most-highly compensated officers other than the
CEO, to the extent that the compensation exceeds $1 million. "Qualified
performance-based compensation" and certain other compensation is not subject to
the deduction limitation of section 162(m). Compensation awarded pursuant to a
company benefit plan, including compensation recognized upon the grant of stock
and the exercise of stock options, will be considered qualified
performance-based compensation if the plan is approved by shareholders and
states, among other things, the maximum number of shares with respect to which
options or rights may be granted during a specified period to any employee.
To qualify compensation received pursuant to the LTIP as qualified
performance-based compensation for purposes of section 162(m), the Board
adopted, subject to approval by shareholders, an amendment to the LTIP that
limits the grants and awards to any one participant in any given year to no more
than 135,000 shares of Common Stock. The Board believes such a limitation is
consistent with the requirements of section 162(m), as well as the Company's
compensation philosophy.
The amendment of the LTIP will become effective upon shareholder approval.
The Board of Directors recommends that the shareholders vote FOR approval and
ratification of this amendment, which requires the affirmative vote of a
majority of the shares voted at the meeting.
<PAGE>
ADDITIONAL INFORMATION RELATED TO PLAN AMENDMENTS
The following table sets forth the awards that were made under the LTIP
and the Directors' Option Plan to the individuals and indicated class of persons
in 1995:
Plan Benefits
Long-Term Incentive Plan and
1992 Non-Qualified Stock Option Plan for Non-Employee Directors
<TABLE>
<CAPTION>
Directors'
Long-Term Incentive Plan Option Plan
-------------------------------------------- ------------
Unrestricted Restricted
Name & Principal Position Options Shares Shares Options
- ------------------------- -------------- --------------- ------------- ------------
<S> <C> <C> <C> <C>
William G. Little.................................. 120,000 1,687 422 N/A
Chairman, President and Chief Executive Officer
Victor E. Ziegler.................................. 12,000 681 171 N/A
Executive Vice President
J. E. Dorsey....................................... 12,000 903 226 N/A
Executive Vice President and Chief Operating
Officer
Raymond J. Land.................................... 8,000 582 146 N/A
Senior Vice President, Finance and
Administration
Ulf C. Tychsen..................................... 8,000 438 110 N/A
Group Vice President, Europe & Asia Pacific
Executive Officers as a Group...................... 200,400 6,024 1,512 N/A
Non-Executive Directors as a Group................. N/A N/A N/A 16,500
All Employees, excluding
Executive Officers, as a Group..................... 132,000 6,870 1,760 N/A
</TABLE>
Certain Federal Income Tax Consequences. Options granted under the
Directors' Option Plan and the LTIP are not intended to qualify as "incentive
stock options" as that term is defined in Section 422A of the Code. The exercise
of a non-qualified stock option would result in ordinary income for the grantee
and a deduction for the Company measured by the difference between the option
price and the fair market value of the shares received at the time of exercise.
Upon the sale of stock acquired through exercise of a non-qualified stock
option, the gain (measured by the difference between the sale price and the
amount included in income upon exercise of the option plus the option price)
would be short-term or long-term capital gain. At the time of a subsequent sale
of any shares of the Company's common stock obtained upon the exercise of an
option, any gain or loss will be a capital gain or loss to the option holder.
Market Value of Common Stock. The closing market price of the Common Stock
as reported on the New York Stock Exchange Composite Transactions listing on
March 21, 1996 was $23.00 per share.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1997 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 November 26, 1996 for inclusion in
the proxy statement and form of proxy.
THE WEST COMPANY, INCORPORATED
March 27, 1996
<PAGE>
THE WEST COMPANY, INCORPORATED
LONG-TERM INCENTIVE PLAN
Purpose. The purpose of The West Company Long-Term Incentive Plan (the
"Plan") is to improve the financial performance of The West Company,
Incorporated (the "Company"). The Plan provides long-term incentives to those
officers and key executive employees of the Company and its subsidiaries who, in
the opinion of the Committee, are largely responsible for the continued growth
and financial success of the Company and its subsidiaries.
Effective Date. The Plan as amended and restated hereby shall be effective
on February 25, 1992, the date of approval of this amendment and restatement of
the Plan by the Company's Board of Directors.
Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"). No member
of the Committee shall be an employee of the Company or shall have been eligible
within a one-year period prior to his appointment to receive an award or to be
selected as a participant under any other discretionary plan of the Company or
any of its affiliates entitling them to acquire stock, stock options or stock
appreciation rights of the Company or any of its affiliates. The Committee shall
have full and final authority in its sole discretion to interpret the provisions
of the Plan and to decide all questions of fact arising in its application; to
determine the employees to whom awards shall be made under the Plan; to
determine the type of award to be made and the amount, size and terms of each
such award; to determine the time when awards will be granted; and to make all
other determinations necessary or advisable for the administration of the Plan.
Shares Subject to Plan. The shares that may be issued under the Plan
pursuant to paragraph 6 shall not exceed in the aggregate 2,925,000 shares of
the Company's common stock. Such shares may be authorized and unissued shares or
treasury shares. Except as otherwise provided herein, any shares subject to an
option or right which for any reason expires or is terminated unexercised shall
again be available under the Plan.
Participants. Persons eligible to participate shall be limited to those
officers and other key executive employees of the Company and its subsidiaries
who, in the opinion of the Committee, are in positions in which their decisions,
actions, and counsel significantly affect the growth and financial success of
the Company. Directors of the Company who are not otherwise officers or
employees of the Company or a subsidiary shall not be eligible to participate in
the Plan. For purposes of this Plan, the term "subsidiary" has the meaning
ascribed to the term by Section 425(f) of the Internal Revenue Code, and the
term "Company" shall include any corporation described in Section 425(e) of the
Internal Revenue Code.
Awards under the Plan. Awards under the Plan may be in the form of stock
options (both non-qualified stock options and incentive stock options (ISOs)
under Section 422A of the Internal Revenue Code or any amendment thereof of
substitute therefor), stock appreciation rights (SARs), restricted stock and
performance awards, or such other forms of compensation using the Company's
common stock as the Committee may in its discretion deem appropriate, including
any
<PAGE>
combination of the above. Notwithstanding any other provision of this Plan to
the contrary, no grant or award under this Plan shall be made in any calendar
year, which entitles the recipient to receive in excess of 135,000 shares of the
Company's common stock.
Stock Options. Options shall be evidenced by stock option agreements in
such form and not inconsistent with this Plan as the Committee shall approve
from time to time, which agreements shall contain in substance the following
terms and conditions;
Option Price. The purchase price per share of stock deliverable upon the
exercise of an ISO shall not be less than 100 percent of the fair market value
of the stock on the day the option is granted. For purposes of this Plan, the
fair market value of the Company's common stock on any given date shall be equal
to the mean between the highest and lowest prices of actual sales of the stock
on the principal national securities exchange on which it is listed on such date
or, if there are no such sales, on the next preceding date on which a sale
occurred. The option price for an option other than an ISO may be less than the
fair market value of the stock on the day the option is granted but in no event
less than the par value of the stock.
Each stock option agreement shall state the period or periods of time, as
may be determined by the Committee, within which the option may be exercised by
the participant, in whole or in part, provided that the option may not be
exercised earlier than six months after the date of the grant of the option nor
later than ten years after the date of the grant of the option. The Committee
shall have the power to permit in its discretion an acceleration of the
previously determined exercise terms, subject to the terms of this Plan, under
such circumstances and upon such terms and conditions as it deems appropriate.
Payment for Shares. Stock purchased pursuant to an option agreement shall
be paid for in full at the time of purchase, either in the form of cash, common
stock of the Company valued at its fair market value on the date of exercise, or
in combination thereof, as the Committee may determine.
Rights upon Termination of Employment. In the event that an optionee ceases
to be an employee of the Company for any cause other than death, disability or
retirement, as hereinafter defined, the optionee shall have the right to
exercise the option during its term within a period of three months after such
termination to the extent that the option was exercisable at the date of such
termination of employment, or during such other period subject to such terms as
may be determined by the Committee. In the event that an optionee dies or
becomes disabled prior to termination of his option without having fully
exercised his option, the optionee or his successor shall have the right to
exercise the option during its term within a period of 12 months after the date
of termination due to death or disability, to the extent that the option was
exercisable at the date of termination due to death or disability, or during
such other period and subject to such terms as may be determined by the
Committee. Retirement means termination of employment with the Company pursuant
to the provisions of a Company pension plan (a "Pension Plan"). Retirement date
means the date on which an optionee is immediately eligible to collect pension
benefits under a Pension Plan. In the event that an optionee ceases to be an
employee of the Company due to Retirement, the
- 2 -
<PAGE>
optionee shall have the right to exercise the option during its term within a
period of three years after the Retirement Date to the extent that the option
was exercisable at the Retirement Date; provided, however, that if the optionee
dies during the three-year period after the Retirement Date, the option may be
exercised during its term until the earlier of the end of such three-year period
or 12 months after death, or during such other period and subject to such terms
as may be determined by the Committee.
The existence of Retirement and the Retirement Date and the existence of
and the date of disability shall be determined by the Committee in its sole
discretion.
Individual Limitations.
The aggregate fair market value (determined as of the time the option is
granted) of the shares with respect to which ISOs may first become exercisable
by an optionee in any one calendar year under the Plan and any other plan of the
Company or a subsidiary shall not exceed $100,000.
No ISO shall be granted to any individual if at the time the option is to
be granted the individual owns stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Company unless at the
time such option is granted the option price is at least 110 percent of the fair
market value of the stock subject to the option and such option by its terms is
not exercisable after the expiration of five years from the date such option is
granted.
Other Terms. Each ISO agreement shall contain such other terms, conditions
and provisions as the Committee may determine to be necessary or desirable in
order to qualify such option as an incentive stock option within the meaning of
Section 422A of the Internal Revenue Code.
Stock Appreciation Rights. SARs shall be evidenced by SAR agreements in
such form and not inconsistent with this Plan as the Committee shall approve
from time to time, which agreements shall contain in substance the following
terms and conditions:
Award. An SAR may be granted in connection with an option and shall entitle
the grantee, subject to such terms and conditions determined by the Committee,
to receive upon surrender of the option and exercise thereof the excess of (i)
the fair market value of a specified number of shares of common stock of the
Company at the time of exercise, as determined by the Committee, over (ii) 100
percent of the fair market value of the stock at the time the option was
granted. An SAR may be granted in connection with all or any portion of a
previously or contemporaneously granted non-qualified stock option, but may not
be granted in connection with an ISO.
Term. SARs shall be granted for a period of not less than one year nor more
than ten years and shall be exercisable in whole or in part, at such time or
times and subject to such
- 3 -
<PAGE>
other terms and conditions as shall be prescribed by the Committee at the time
of grant, subject to the following:
No SAR shall be exercisable, in whole or in part, during the six-month
period starting with the date of grant; and
SARs will be exercisable only during a grantee's employment by the Company
except that in the discretion of the Committee an SAR may be made exercisable
for up to three months after the grantee's employment is terminated for any
reason other than death or disability. In the event that a grantee's employment
is terminated as a result of disability without having fully exercised his SARs,
the grantee or his successor shall have the right to exercise the SARs during
their term within a period of twelve months after the date of such termination
due to death or disability to the extent that the right was exercisable at the
date of such termination, or during such other period and subject to such terms
as may be determined by the Committee. The Committee in its sole discretion may
reserve the right to accelerate previously determined exercise terms, within the
terms of the Plan, under such circumstances and upon such terms and conditions
as it deems appropriate.
The Committee shall establish such additional terms and conditions, without
limiting the foregoing, as it determines to be necessary or desirable to avoid
"insider-trading" liability in connection with an SAR under Section 16(b) of the
Securities and Exchange Act of 1934.
Payment. Upon exercise of an SAR, payment shall be made in the form of
common stock of the Company (valued at fair market value on the date of
exercise), in cash, or in combination thereof, as the Committee may determine.
Restricted Stock Awards. Restricted stock awards under the Plan shall be in
the form of shares of common stock of the Company, restricted as to transfer and
subject to forfeiture, and shall be evidenced by restricted stock agreements in
such form and not inconsistent with this Plan as the Committee shall approve
from time to time, which agreements shall contain in substance the following
terms and conditions:
Award. The Committee shall determine the amount of a restricted stock award
to be granted to an eligible employee based on the participant's salary, job
performance, and other factors deemed by the Committee to be appropriate.
Restriction Period. Restricted stock awards made pursuant to this Plan
shall be subject to such terms, conditions and restrictions, including without
limitation, substantial risks of forfeiture and/or attainment of performance
objectives, and for such period or periods as shall be determined by the
Committee at the time of grant. The Committee shall have the power to permit, in
its discretion, an acceleration of the expiration of the applicable restriction
period with respect to any part or all of the award to any participant.
- 4 -
<PAGE>
Restrictions Upon Transfer. Shares awarded, and the right to vote such
shares and receive dividends thereon, may not be sold, assigned, transferred,
exchanged, pledged, hypothecated, or otherwise encumbered, except as herein
provided, during the restriction period applicable to such shares.
Notwithstanding the foregoing, and except as otherwise provided in the Plan, the
participant shall have all other rights of a stockholder including, but not
limited to, the right to receive dividends and the right to vote such shares.
Certificates. Each certificate issued with respect to the restricted stock
shares awarded to the participant shall bear a legend stating, but not limited
to, the restricted period, the manner in which restrictions will lapse, and the
rights of the holder during the restricted period.
Lapse of Restrictions. The Agreement shall specify the terms and conditions
upon which any restrictions on the right to receive shares representing
Restricted Stock awarded under the Plan shall lapse, as determined by the
Committee. Upon the lapse of such restrictions, shares of common stock free of
any restrictive legend shall be issued to the participant or his legal
representative.
Termination Prior to Lapse of Restrictions. In the event of a participant's
termination of employment for any reason prior to the lapse of restrictions
applicable to a Restricted Stock Award made to such participant, all rights to
shares as to which there still remain unlapsed restrictions shall be forfeited
by such participant to the Company without payment or any consideration by the
Company, and neither the participant nor any successors, heirs, assigns or
personal representatives of such participant shall thereafter have any further
rights or interest in such shares.
Performance Awards. Performance awards under the Plan shall be evidenced by
performance plan agreements in such form and not inconsistent with this Plan as
the Committee shall approve from time to time, which agreements shall contain in
substance the following terms and conditions:
Performance Period. At the time of the award, the Committee shall establish
with respect to each award a performance period over which the award may be
earned.
Award. The Committee shall determine the amount and conditions under which
a performance award will be granted to an eligible employee, including without
limitation, the requirement that the participant or the Company attain specific
performance objectives for such period as shall be determined by the Committee
at the time of grant. In determining the amount of the contingent performance
award, the Committee shall take into account the participant's responsibility
level, performance, potential and other considerations as it deems appropriate.
Form. The Committee shall determine whether performance awards earned will
be in the form of shares of stock ("Performance Shares") or cash ("Performance
Units") prior to the beginning of each performance period.
- 5 -
<PAGE>
Payment of Award. Following the conclusion of each performance period, the
Committee shall determine the extent to which performance targets have been
attained for such period as well as the other terms established by the
Committee. Payment in cash or stock as determined by the Committee shall be made
as promptly as practical following the end of the performance period.
Adjustments. At any time prior to the payment of the awards, the Committee
may adjust previously established performance targets and other terms and
conditions, including the Company's financial performance for Plan purposes, to
reflect major unforeseen events such as changes in laws, regulations or
accounting practice, mergers, acquisitions or divestitures or extraordinary,
unusual or nonrecurring items or events.
Termination Prior to Award Being Fully Earned. A performance award granted
to an employee shall terminate for all purposes if the participant is not in the
continuous employ of the Company or its subsidiaries at all times during the
performance period, except in the case of death, disability, or retirement. A
participant or the participant's estate whose employment was terminated due to
death, disability or retirement shall be eligible to receive a pro rata portion
of the payment of his award based upon the portion of the performance period
during which the participant was employed, as the Committee shall determine in
each case.
General Restrictions. The Plan and each award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (i) the listing, registration or qualification of the shares of common
stock subject or related thereto upon any securities exchange or under any state
or federal law, (ii) the consent or approval of any government regulatory body,
or (iii) an agreement by the recipient of an award with respect to the
disposition of shares of common stock, is necessary or desirable as a condition
of, or in connection with the Plan or the granting of such award or the issue or
purchase of shares of common stock thereunder, such Plan will not be effective
and the award may not be consummated in whole or in part unless such listing,
registration, qualification, consent, approval or agreement shall have been
effected or obtained free of any conditions not acceptable to the Committee.
Rights of a Shareholder. The recipient of any award under the Plan shall
have no rights as a shareholder with respect thereto unless and until legended
certificates for shares of common stock are issued.
Rights to Terminate Employment. Nothing in the Plan or in any agreement
entered into pursuant to the Plan shall confer upon any participant the right to
continue in the employment of the Company or its subsidiaries or affect any
right which the Company or its subsidiaries may have to terminate the employment
of such participant.
Withholding of Taxes. Whenever the Company proposes or is required to issue
or transfer shares of common stock under the Plan, the Company shall have the
right to require the recipient to remit to the Company an amount sufficient to
satisfy any federal, state or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares.
- 6 -
<PAGE>
Withholding requirements may be satisfied by cash payments or at the election of
a plan participant by having the Company withhold a portion of the shares to be
received having a value equal to the amount to be withheld (or such portion
thereof as the participant may elect). The value of the shares to be withheld
shall be their fair market value on the date that the amount of tax to be
withheld is to be determined (the "Tax Date"). Any election to have shares
withheld under this Section shall be subject to the following restrictions:
the election shall be irrevocable;
the election shall be subject, in whole or in part, to the approval of the
Committee and to such rules as it may adopt;
the election may not be made within six months of the date of grant (except
that this limitation shall not apply in the event that the death or disability
of the participant occurs prior to the expiration of such six-month period); and
the election is made either (i) not less than six months prior to the Tax
Date, or (ii) during the period beginning on the third business day following
the date of release for publication of the Company's quarterly or annual summary
statements of sales and earnings and ending on the twelfth business day
following such date.
Whenever payments under the Plan are to be made in cash, such payments
shall be net of an amount sufficient to satisfy any federal, state or local
withholding tax requirements.
Non-Assignability. No award or grant under the Plan shall be assignable or
transferable by the recipient thereof except by will or by the laws of descent
and distribution. During the life of the recipient, such grant or award shall be
exercisable only by such person or by such person's guardian or legal
representative.
Non-Uniform Determinations. The Committee's determinations under the Plan
(including without limitation determinations of the persons to receive options
or awards, the form, amount and timing of such awards or grants, the terms and
provisions of the agreements evidencing same, and the establishment of
performance targets) need not be uniform and may be made by it selectively among
persons who receive, or are eligible to receive, awards under the Plan, whether
or not such persons are similarly situated.
Adjustments. In the event of any change in the outstanding common stock of
the Company by reason of a stock dividend or distribution, recapitalization,
merger, consolidation, split-up, combination, exchange of shares or the like,
the Committee shall adjust the number of shares of common stock which may be
issued under the Plan and shall provide for an equitable adjustment of any
outstanding grant or award or shares issuable pursuant to an outstanding grant
or award under this Plan.
- 7 -
<PAGE>
Amendment. The Board of Directors of the Company may amend the Plan at any
time, except that without shareholder approval, the Board may not increase the
maximum number of shares which may be issued under the Plan (other than
increases pursuant to Paragraph 17 hereof) change the class of eligible
employees, or otherwise amend the Plan in a fashion which requires approval of
the Company's shareholders in order to maintain the exemption available under
Rule 16b-3 (or any similar rule) of the Securities and Exchange Commission. The
termination or any modification or amendment of the Plan shall not, without the
consent of a participant, affect a participant's rights under an award
previously granted.
Effect on Other Plan. Participation in this Plan shall not affect an
employee's eligibility to participate in any other benefit or incentive plan of
the Company and any awards made pursuant to this Plan shall not be used in
determining the benefits provided under any other plan of the Company unless
specifically provided by such other plan.
Stock Forfeiture Provision. Notwithstanding any other provision of this
Plan to the contrary, the Committee may provide for the forfeiture of grants and
awards under this Plan and the benefits derived therefrom, in the event a
participant engages in conduct deemed to be harmful to, or not in the best
interests of, the Company. Such forfeiture may include, without limitation, the
cancellation of unexercised stock options and the forfeiture of gain realized
from the exercise thereof. Such provisions shall be included in the stock option
agreements approved from time to time by the Committee. The Committee, or its
duly appointed agent, may waive any or all of the restrictions authorized under
this Section whenever it (or its duly appointed agent) determines in its sole
discretion that such action is in the best interests of the Company
Duration of the Plan. The Plan shall remain in effect until all awards
under the Plan have been satisfied by the issuance of shares or the payment of
cash, but no award shall be granted more than ten years after the date the Plan
is adopted by the Board of Directors.
Funding of the Plan. This Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any award under this Plan.
- 8 -
<PAGE>
THE WEST COMPANY, INCORPORATED
1992 NON-QUALIFIED STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
ADOPTED MAY 7, 1992
<PAGE>
THE WEST COMPANY, INCORPORATED
1992 NON-QUALIFIED STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
Table of Contents
1. Purpose ............................................................1
2. Definitions.........................................................1
3. Administration .....................................................2
4. Shares Subject to the Plan
(a) Total Number...............................................2
(b) Reduction in Number of Shares Available....................2
(c) Increase in Number of Shares Available.....................3
(d) Other Adjustments .........................................3
5. Grant of Options ...................................................3
6. General Terms
(a) Option Price ..............................................4
(b) Option Period .............................................4
(c) Service Period ............................................4
(d) Transfer and Exercise .....................................4
(e) Method of Exercise ........................................4
(f) Issuance of Certificates; Payment of Cash .................5
7. Change in Control
(a) Effect of Change in Control ...............................5
(b) Definition ................................................5
8. Amendments and Termination
(a) Board Authority ...........................................6
(b) Prior Stockholder and Optionee Approval ...................6
9. General Provisions
(a) Compliance with Regulations ...............................7
(b) Other Plans ...............................................7
(c) Withholding of Taxes ......................................8
(d) Conformity with Law .......................................8
(e) Insufficient Shares .......................................8
10. Effective Date and Termination .....................................8
<PAGE>
THE WEST COMPANY, INCORPORATED
1992 NON-QUALIFIED STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
1. Purpose.
The purposes of the Plan are to attract and retain the services of
experienced and knowledgeable non-employee directors and to encourage
eligible directors of The West Company to acquire a proprietary and vested
interest in the growth and performance of the Company, thus enhancing the
value of the Company for the benefit of its stockholders.
2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the common stock, par value $0.25 per share, of
the Company.
(d) "Company" means The West Company, Incorporated.
(e) "Eligible Director" means each director of the Company who is not an
employee of the Company or any of the Company's subsidiaries (as
defined in section 424 (f) of the Code).
(f) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(g) "Fair Market Value" means with respect to the Common Stock on any
given date the mean between the highest and lowest prices of actual
sales of the stock on the principal national securities exchange on
which it is listed on such date or, if there are no such sales, on the
next preceding date on which a sale occurred.
(h) "Grant Date" means the date on which an Option is granted.
(i) "Option" means any right granted to an Optionee allowing such Optionee
to purchase Shares at such price or prices and during such period or
periods as are set forth in the Plan. All Options shall be
non-qualified options and shall not be qualified for the favorable tax
treatment afforded under section 422 of the Code.
<PAGE>
(j) "Option Letter" means a written instrument evidencing an Option
granted hereunder and signed by an authorized representative of the
Company.
(k) "Optionee" means an Eligible Director who receives an Option under the
Plan.
(l) "Shares" means shares of Common Stock.
3. Administration.
Subject to the terms of the Plan, the Board shall have the power to
interpret the provisions and supervise the administration of the Plan.
4. Shares Subject to the Plan.
(a) Total Number. Subject to adjustment as provided in this Section, the
total number of Shares as to which Options may be granted under the
Plan shall be 200,000 Shares. Any Shares issued pursuant to Options
hereunder may consist, in whole or in part, of authorized and unissued
Shares or treasury Shares.
(b) Reduction in Number of Shares Available.
(i) The grant of an Option shall reduce the Shares as to which
Options may be granted by the number of Shares subject to
such Option.
(ii) Any Shares issued by the Company under any other stock
option plan of the Company shall not reduce the Shares
available for grants under this Plan.
(c) Increase in Number of Shares Available. The lapse, expiration,
cancellation, or other termination of an Option that has not been
fully exercised shall increase the number of Shares as to which
Options may be granted by the number of Shares that have not been
issued upon exercise of such Option.
(d) Other Adjustments. The total number and kind of Shares available for
Options under the Plan, the number and kind of Shares subject to
outstanding Options, and the exercise price for such Options shall be
appropriately adjusted by the Board for:
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<PAGE>
(i) any increase or decrease in the number of outstanding Shares
resulting from a stock dividend, subdivision, combination of
Shares, reclassification, or other change in corporate
structure or capitalization affecting the Shares,
(ii) any conversion of the Shares into or exchange of the Shares
for other shares as a result of any merger or consolidation
(including a sale of assets), or
(iii) any other event such that an adjustment is made reasonably
necessary to maintain the proportionate interest of the
Optionee.
5. Grant of Options.
On the first working day following the Annual Meeting of Shareholders, from
1997 through 2001, inclusive, each person who is an Eligible Director on
such date shall be granted an Option to acquire 1,500 Shares.
6. General Terms.
The following provisions shall apply to each Option.
(a) Option Price. The purchase price per Share purchasable under an Option
shall be 100% of the Fair Market Value of a Share on the Grant Date.
(b) Option Period. Each Option granted shall expire 5 years from its Grant
Date, and shall be subject to earlier termination as hereinafter
provided.
(c) Service Period. Each Option granted under the Plan shall become
exercisable by the Optionee only after the completion of one year of
Board service immediately following the Grant Date, except that such
Option shall become immediately exercisable upon the Optionee's
retirement from the Board in accordance with the Company's Retirement
Plan for Non-Employee Directors. As used in this Section (c) and in
Section (e) below, the term "one year" shall mean the period
commencing on the Grant Date and ending on the day immediately
preceding the date of the next Annual Meeting of Shareholders.
- 3 -
<PAGE>
(d) Transfer and Exercise. No Option shall be transferable by the Optionee
except by will or the laws of descent and distribution. In the event
of the death or any other termination of Board service of an Optionee
except for retirement under the Company's normal policy for retirement
of directors from office or except for removal for cause, the Option,
if otherwise exercisable by the Optionee at the time of such
termination, may be exercised within six months after such
termination. In the event of the retirement of an Optionee, the
Option, if otherwise exercisable by the Optionee at the time of
retirement, may be exercised within three years after retirement;
provided, however, that if the Optionee dies during the three year
period after retirement, the Option may be exercised until the earlier
of the end of such three year period or six months after death. In the
event of removal for cause, all previously granted Options shall be of
no further force and effect.
(e) Method of Exercise. Any Option may be exercised, after one year has
elapsed since grant, by the Optionee in whole or in part at such time
or times and by such methods as the Board may specify. The applicable
Option Letter may provide that the Optionee may make payment of the
Option price in cash, Shares, or such other consideration as the Board
may specify, or any combination thereof, having a Fair Market Value on
the exercise date equal to the total Option price.
(f) Issuance of Certificates; Payment of Cash. Only whole Shares shall be
issuable upon exercise of Options. Any right to a fractional Share
shall be satisfied in cash. Upon payment to the Company of the option
price, the Company shall deliver to the Optionee a certificate for the
number of whole Shares and a check for the Fair Market Value on the
date of exercise of the fractional share to which the Optionee is
entitled.
7. Change in Control.
(a) Effect of Change in Control. Notwithstanding anything in the Plan to
the contrary, in the event of a Change in Control of the Company, the
Options granted under
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<PAGE>
Section 5 shall vest and become immediately exercisable; provided,
however, that at least six months shall elapse from the Grant Date of
an Option to the date of disposition of any Shares issued upon
exercise of such Option.
(b) Definition. For purposes of the Plan, a "Change in Control of the
Company" shall be deemed to have occurred when, in connection with or
as the direct or indirect result of a Control Transaction, either of
the following events shall have occurred:
(i) within one year after a Control Transaction, individuals who were
directors of the Company immediately prior to such Control
Transaction shall cease to constitute a majority of the Board (or
of the Board of Directors of any successor to the Company); or
(ii) any entity or person either alone or acting in concert with
others acquires shares of the Company's stock for the purpose of
effecting a change in the Board specified in clause (i) above and
such acquisition results in that entity or person either alone or
acting in concert with others directly or indirectly owning
beneficially 51% or more of the Company's outstanding shares. The
term "Control Transaction" in the preceding sentence shall mean
any acquisition or sale of any assets or capital stock of the
Company, whether or not approved by the Company's Board of
Directors or its Shareholders.
8. Amendments and Termination.
(a) Board Authority. The Board may amend, alter, or terminate the Plan,
but no amendment, alteration, or termination shall be made (i) that
would impair or adversely affect the rights of an Optionee under an
Option theretofore granted, without the Optionee's consent, or (ii)
without the approval of the stockholders if such approval is necessary
to comply with any tax or regulatory requirement, including for these
purposes any approval requirement that is a prerequisite for exemptive
relief from Section 16(b) of the Exchange Act, or if the proposed
alteration or amendment would increase the aggregate number of Shares
that may
- 5 -
<PAGE>
be issued upon the exercise of Options (other than pursuant to Section
4(d)); provided, however, that in no event shall this Plan be amended more
frequently than once every six months, other than to comport with changes
in the Code, the Employee Retirement Income Security Act, or the rules
thereunder.
(b) Prior Stockholder and Optionee Approval. Anything herein to the
contrary notwithstanding, in the event that amendments to the Plan are
required in order that the Plan or any other stock-based compensation
plan of the Company comply with the requirements of Rule 16b-3 issued
under the Exchange Act as amended from time to time or any successor
rule promulgated by the Securities and Exchange Commission related to
the treatment of benefit and compensation plans under Section 16 of
the Exchange Act, the Board is authorized to make such amendments
without the consent of Optionees or the stockholders of the Company.
9. General Provisions.
(a) Compliance with Regulations. All certificates for Shares delivered
under the Plan pursuant to the exercise of any Option shall be subject
to such stock transfer orders and other restrictions as the Board may
deem advisable under the rules, regulations, and other requirements of
the Securities and Exchange Commission, any stock exchange upon which
the Shares are then listed, and any applicable federal or state
securities law, and the Board may cause a legend or legends to be put
on any such certificates to make appropriate reference to such
restrictions. The Company shall not be required to issue or deliver
any Shares under the Plan prior to the completion of any registration
or qualification of such Shares under any federal or state law, or
under any ruling or regulation of any governmental body or national
securities exchange that the Board in its sole discretion shall deem
to be necessary or appropriate.
(b) Other Plans. Nothing contained in the Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject
to stockholder approval if
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<PAGE>
such approval is required by applicable law or the rules of any stock
exchange on which the Common Stock is then listed; and such
arrangements may be either generally applicable or applicable only in
specific cases.
(c) Withholding of Taxes. Each Optionee shall pay to the Company, upon the
Company's request, all amounts necessary to satisfy the Company's
federal, state and local tax withholding obligations with respect to
the grant or exercise of any Option.
(d) Conformity With Law. If any provision of the Plan is or becomes or is
deemed invalid, illegal, or unenforceable in any jurisdiction, or
would disqualify the Plan or any Option under any law deemed
applicable by the Board, such provision shall be construed or deemed
amended in such jurisdiction to conform to applicable laws or if it
cannot be construed or deemed amended without, in the determination of
the Board, materially altering the intent of the Plan, it shall be
stricken and the remainder of the Plan shall remain in full force and
effect.
(e) Insufficient Shares. In the event there are insufficient Shares
remaining to satisfy all of the Option grants under Section 5 made on
the same day, such Option grants shall be reduced pro-rata.
10. Effective Date and Termination.
The Plan became effective on May 7, 1992 and was to terminate immediately
following the grant of Options in 1996. Pursuant to resolutions adopted by
the Board on March 9, 1996, and subject to approval by the Company's
shareholders at the 1996 Annual Meeting of Shareholders, the Plan shall be
extended so as to terminate immediately following the grant of Options
called for by Section 5 above in 2001. With respect to outstanding Options,
the Plan shall terminate on the date on which all outstanding Options have
expired or terminated.
- 7 -
<PAGE>
[GRAPHIC OMITTED]
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 18, 1996, at the Annual Meeting of Shareholders
to be held on April 30, 1996 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, 2, 3 and 4.
(To be Signed on Reverse Side)
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
|X| Please mark your
votes as in this
example.
FOR WITHHOLD AUTHORITY FOR AGAINST ABSTAIN
1. all the / / To vote for 2. Ratification of the appointment / / / / / /
Election of / / nominees the nominees of Coopers & Lybrand L.L.P. as
3 Class III listed listed below independent accountants of the
Directors below corporation for the fiscal year ending
December 31, 1996.
(except as marked to the contrary) 3. Approval and ratification of / / / / / /
Amendment to the 1992 Non-Qualified
(INSTRUCTION: To withhold authority to vote for any Stock Option Plan for Non-Employee
individual nominee, strike a line through the nominee's name Directors.
in the list below.)
4. Approval and ratification of / / / / / /
Tenley E. Albright, William S. West, J. Roffe Wike, II Amendment to the Long-Term Incentive
Plan.
5. In their discretion, the Proxies
are authorized to vote upon such other
business as may properly come before the
meeting.
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, 2, 3 and 4.
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.
</TABLE>
