SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined:
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
5) Total fee paid:
_____________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
1) Amount previously paid: _________________________________________________
2) Form, Schedule or Registration No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
<PAGE>
[THE WEST COMPANY LOGO]
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
March 25, 1998
Dear Shareholder,
The Annual Meeting of Shareholders of The West Company, Incorporated
will be held at the Company's headquarters, 101 Gordon Drive, Lionville,
Pennsylvania 19341, on Tuesday, April 28, 1998, at 9:30 A.M., to consider and
take action on the following:
1. Re-election of four directors: George W. Ebright, L. Robert Johnson,
John P. Neafsey and Geoffrey F. Worden, each for a term of three years;
2. Ratification of the appointment of Coopers & Lybrand L.L.P. as
independent accountants for 1998;
3. Approval of the 1998 Key Employee Incentive Compensation Plan; and
4. Transact such other business as may properly be brought before the
meeting.
Your Board of Directors recommends a vote "in favor of" all three
proposals.
The Board has fixed the close of business, Monday, March 16, 1998, 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
<PAGE>
PROXY STATEMENT
We, the Board of Directors of The West Company, Incorporated, invite
you to submit the enclosed proxy "vote card" for use at the Company's 1998
Annual Meeting of Shareholders. The Annual Meeting will be held on Tuesday,
April 28, 1998, at 9:30 A.M., at the Company's headquarters, 101 Gordon Drive,
Lionville, Pennsylvania 19341. You may also be contacted by officers and other
employees of the Company about submitting your proxy. The proxy and this Proxy
Statement are being mailed on or about March 25, 1998.
You may vote at the meeting only if you were the record owner of the
Company's common stock at the close of business on March 16, 1998. On that date,
16,844,735 shares of common stock were outstanding. You are entitled to one vote
for each share owned. You may vote "FOR" or "AGAINST," or "WITHHOLD" your vote
on, each of the directors. You may vote "FOR," "AGAINST," or "ABSTAIN" from
voting on, the proposals to ratify the appointment of independent accountants
and to approve the 1998 Key Employee Incentive Compensation Plan. You may
revoke or revise your proxy by notifying the Company's Secretary, or by voting
in person at the meeting.
Please sign, date and mark your voting instructions on the proxy vote
card, and then return it to the Company in the enclosed envelope. Your votes
will be cast according to your instructions. If you do not mark your voting
instructions on a signed and returned card, your votes will be cast "FOR" each
of the three proposals listed in the Notice of Meeting accompanying this Proxy
Statement. Your proxy also gives the persons named on the card as proxies the
discretionary authority to vote all of your shares on any other matter that is
properly presented for action at the meeting.
A quorum is necessary to take action at the meeting. A quorum means
that shareholders of record holding at least a majority of the outstanding
shares are present, either in person or represented by proxy. Abstentions are
counted toward the quorum requirement. Directors are elected by a plurality of
the votes cast at the meeting. Abstentions with respect to one or more of the
nominees will not be counted as votes cast and, accordingly, will have no effect
on the outcome of the vote. Similarly, shares that brokers do not have the
authority to vote in the absence of timely instructions from the beneficial
owners ("broker non-votes"), if any, will not be counted and, accordingly, will
have no effect on the outcome of the vote. A majority of votes cast in favor of
Proposals 2 and 3 is required for shareholder approval of those proposals.
Abstentions and broker non-votes will not be counted as votes cast and,
therefore, will have no effect on the outcome of the vote.
We are not aware of any matters to be presented at the meeting other
than those set forth in the Notice of Meeting. If any other matters properly
come before the meeting, the persons named on the card as proxies will vote
according to their best judgment.
PROPOSAL #1: ELECTION OF DIRECTORS
Our Board of Directors has three classes. Each year, the directors in
one class are elected to serve a three-year term. We may increase or decrease
the size of the Board, elect directors to fill vacancies on the Board and assign
directors to a class. In October 1997, we increased the Board to eleven members
from ten, and Mr. John W. Conway was appointed a director in Class III. He will
serve until the next Class III election in 1999.
We have nominated George W. Ebright, L. Robert Johnson, John P. Neafsey
and Geoffrey F. Worden for election as Class II directors at the 1998 Annual
Meeting. All of the nominees are incumbent directors. Each nominee has agreed to
be named and to serve if elected.
<PAGE>
If any nominee becomes unavailable, which we do not expect, the Board's
Nominating and Corporate Governance Committee will recommend to us a substitute
nominee or nominees. We may then designate the nominee(s) to stand for election.
If you voted for the unavailable nominee, your vote will be cast for his
designated replacement.
If you want to nominate candidates for election as directors at future
annual meetings, you must comply with procedures contained in the Company's
bylaws. You may get a copy of the bylaws from the Secretary of the Company.
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Class II Director Nominees For Terms to Expire in 2001
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George W. Ebright Mr. Ebright, age 59, is retired from Cytogen
Director since 1992 Corp., a biotechnology pharmaceutical company,
where he was Chairman of the Board from 1990
to 1995 and Chief Executive Officer from 1989
to 1994. He is a director of NABI and Arrow
International Incorporated.
L. Robert Johnson Mr. Johnson, age 56, is Managing General
Director since 1989 Partner of Founders Capital Partners, L.P., a
venture capital partnership. He is a director
of Genetic Microsystems Inc., Axint
Technologies Corp., RSVP Information Inc.,
Telesales Inc. and Agris Corporation. Mr.
Johnson is a member of the Corporation of the
Massachusetts Institute of Technology and a
trustee of the Maryland Institute-College of
Art.
John P. Neafsey Mr. Neafsey, age 58, is President of JN
Director since 1987 Associates, an investment consulting firm. He
is Chairman of the Board of Alliance Coal
Company, an advisory director of The Beacon
Group of New York, Chairman of the Management
Policy Council, and a director of Longhorn
Partners Pipeline Company and Provident Mutual
Life Insurance Company of Philadelphia. Mr.
Neafsey is a trustee of Cornell University.
Geoffrey F. Worden Mr. Worden, age 58, is President of South
Director since 1993 Street Capital, Inc., an investment company.
Mr. Worden is a director of APT, Inc. and
Princess House, Inc. and is Chairman of the
Board of Directors of the New York City
Outward Bound Center.
We recommend that you vote FOR these nominees.
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Class III Directors Whose Terms Expire in 1999
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Tenley E. Albright, M.D. Dr. Albright, age 62, is a physician and
Director since 1993 surgeon. Since 1993 she has been Chairman of
Western Resources, Inc. and a member of the
Corporation of the New England Baptist
Hospital and Woods Hole Oceanographic
Institution. Dr. Albright is a director of
State Street Bank and Trust Company, State
Street Boston Corporation and Whitehead
Institute for Biomedical Research. She is
Chairman of the Alumni Fund, Harvard Medical
School.
John W. Conway Mr. Conway, age 52, has been a director since
Director since 1997 1997 and Executive Vice President and
President of the Americas Division since 1996
of Crown, Cork & Seal Company, Inc., a
supplier of packaging products. He was its
Executive Vice President and President,
International Division from 1993 to 1996.
J. Roffe Wike, II Mr. Wike, age 71, was Senior Partner and a
Director since 1962 director of Cooke & Bieler, investment
counselors, until his retirement in 1994.
2
<PAGE>
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Class I Directors Whose Terms Expire in 2000
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William G. Little Mr. Little, age 55, has been Chairman of the
Director since 1991 Board of the Company since 1995 and its
President and Chief Executive Officer since
1991. Mr. Little is a director of Fox Chase
Cancer Center and Cytyc Corporation.
William H. Longfield Mr. Longfield, age 59, has been Chief
Director since 1995 Executive Officer and Chairman of the Board
since 1994 and Chief Operating Officer from
1989 to 1994 of C.R. Bard, Inc., a medical
device manufacturer. He is 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. Dr. Trout, age 66, has been Chairman of the
Director since 1991 Board of Cytyc Corporation, a medical
diagnostic company, since January 1998 and is
Chairman Emeritus of American Healthcare
Systems, a network of integrated healthcare
systems, where he was Chairman of the Board,
President and Chief Executive Officer until
his retirement in 1995. He was Chief Executive
Officer of Cytran Inc., a biotechnology
company, from March 1996 to July 1996. Dr.
Trout is a director of Science Applications
International Corporation (SAIC), Baxter
International Inc. and the University of
California San Diego Foundation.
Anthony Welters Mr. Welters, age 43, has been Chairman,
Director since 1997 President and Chief Executive Officer of
AmeriChoice Corporation, a managed health-care
services holding company, and its predecessor
companies since 1989.
PROPOSAL #2: RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
Upon recommendation of the Board's Audit Committee, we reappointed Coopers
& Lybrand L.L.P. as independent accountants for the Company in 1998, subject to
ratification by shareholders. If the appointment is not ratified, we 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 and to respond to questions from shareholders.
We recommend that you vote FOR ratification of the selection of
Coopers & Lybrand L.L.P. as independent accountants for 1998.
PROPOSAL #3: APPROVAL OF THE 1998 KEY EMPLOYEE
INCENTIVE COMPENSATION PLAN
We propose that shareholders approve the 1998 Key Employee Incentive
Compensation Plan (the "1998 Plan"), which we adopted in March 1998. The Plan
will replace the Company's Long-Term Incentive Plan, which effectively expired
earlier this year. By offering the opportunity to receive incentive compensation
tied to the performance of the Company's common stock, the 1998 Plan is designed
to assist the Company retain key employees and align their interests with the
interests of shareholders.
3
<PAGE>
Eligibility
Participation in the 1998 Plan is limited to employees of the Company and
its subsidiaries who are in positions in which their decisions, actions and
counsel significantly affect the Company's growth and financial success.
Directors of the Company who are not also employees or officers of the Company
or a subsidiary are not eligible to participate in the 1998 Plan. Approximately
58 employees were granted stock options or other awards under the Long-Term
Incentive Plan last year, and it is anticipated that approximately the same
number of employees will be eligible to receive awards under the 1998 Plan this
year. However, it is not possible at this time to determine who may be selected
to receive awards under the Plan or the number or amount of awards to be
received by any individual. The selections and determinations will be made by
the Committee on the basis of the duties, responsibilities, and present and
future contributions of individuals to the success of the Company.
Administration
The 1998 Plan is administered by the Compensation Committee of the Board
consisting of four independent directors. The Committee may choose 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. The Committee has authority
to make all determinations necessary or advisable for the administration of the
1998 Plan.
Members of the Committee must be "non-employee" directors within the
meaning of that term under Rule 16b-3 of the Securities Exchange Act of 1934, as
amended, and also be "outside" directors as that term is defined in section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The
current Compensation Committee members meet these criteria.
Awards and Grants Under the 1998 Plan
A variety of incentive compensation using common stock may be awarded to
participants under the 1998 Plan. These awards are stock options (both
non-qualified and incentive stock options ("ISOs") under section 422A of the
Code), stock appreciation rights and grants of shares of common stock or of a
right to receive shares (or their cash equivalent) in the future, including any
combination of the above.
Stock Options. The Committee determines the number of shares to be covered
by each option award, the option price, the term of the option, the period of
time for options to vest after grant, and other option terms and limitations
consistent with the 1998 Plan document, a copy of which is attached to this
Proxy Statement as Exhibit A. Those limitations include that the option price of
an ISO cannot be less than the fair market value of the Company's common stock,
and no option may have a term longer than 10 years. Payment of the exercise
price may be made 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 of cash and stock. The Committee, in its
discretion, may allow for transferability of non-qualified stock options by a
participant to immediate family members.
Stock Appreciation Rights. The 1998 Plan permits the Committee to grant
stock appreciation rights in connection with any stock options. These rights
enable a participant to surrender an option and to receive cash or common stock,
as determined by the Committee, equal to the difference between the option price
and the fair market value of the common stock on the date of surrender.
Other Stock Awards. The Committee may grant shares of common stock or a
right to receive shares of common stock (or their cash equivalent or a
combination of both) in the future. Each stock award is subject to such
conditions, restrictions and contingencies as the Committee may determine, which
may include specific performance measures.
4
<PAGE>
Shares Eligible for Delivery Under the 1998 Plan
A maximum of 1,500,000 shares of common stock may be delivered under the
1998 Plan, which may be unauthorized and unissued shares, shares repurchased by
the Company or treasury shares. This amount may be adjusted in the event of a
corporate transaction involving the Company such as a stock dividend or
distribution, stock split, recapitalization, merger, consolidation, split-up,
combination or exchange of shares.
No person may receive stock options covering more than 200,000 shares
under the 1998 Plan in any calendar year. No person may receive stock awards in
any performance period with a fair market value at the time of grant in excess
of $300,000.
Term; Termination and Amendments
If approved by shareholders, the 1998 Plan will take effect as of the date
of adoption by the Board of Directors (i.e., March 10, 1998) and will remain in
effect until all awards have been satisfied, but no award may be granted more
than ten years after the date of adoption. The Board of Directors may amend the
1998 Plan at any time, except for amendments that increase the number of shares
that may be delivered under the 1998 Plan or change the class of eligible
employees. No termination or amendment of the Plan may, without the consent of a
participant, affect a participant's rights under an award previously granted.
THE FOREGOING SUMMARY OF THE 1998 PLAN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE PROVISIONS OF THE 1998 PLAN, A COPY OF WHICH IS ATTACHED AS
EXHIBIT A TO THIS PROXY STATEMENT.
We recommend that you vote FOR adoption of the Plan.
INFORMATION ABOUT THE BOARD AND BOARD COMMITTEES
Board of Directors
We have designated directors who are independent of management as
"independent directors." All of the directors, other than the Company's
President and Chief Executive Officer William G. Little, are 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. One independent director is
designated as the "Chairman, Independent Directors." The Chairman, Independent
Directors confers with the Chief Executive Officer on the Board's agenda items
and information requirements. He also calls meetings of the independent
directors. Monroe E. Trout is the current Chairman, Independent Directors.
The Board met five times during 1997 and the independent directors met
once. All directors attended more than 75% of the total number of meetings of
the Board and the committees on which they served.
Board Committees
The Board has four standing committees: Audit, Compensation, Finance and
Nominating and Corporate Governance. The Audit Committee met four times, the
Finance Committee and the Nominating and Corporate Governance Committee each met
five times and the Compensation Committee met seven times during the year.
5
<PAGE>
The Audit Committee performs the following functions: (1) recommends
annually to the Board the appointment of a firm of independent accountants for
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 their comments and recommendations. Directors Johnson
(Chairman), Albright, Conway, Welters and Worden serve on the Audit Committee.
The Compensation 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 management incentive
compensation plans. Directors Longfield (Chairman), Ebright, Neafsey and Trout
serve on the Compensation Committee.
The Finance 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, major capital-expenditure
requests and similar matters. The Committee makes recommendations on these
matters to the Board. Directors Neafsey (Chairman), Ebright, Johnson, Wike and
Worden serve on the Finance Committee.
The Nominating and Corporate Governance Committee recommends nominees to
be elected to the Board and appointments to Board committees and evaluates and
makes recommendations on director candidates. After review by the independent
directors, this Committee formally recommends to the Board a successor to the
Chief Executive Officer. The Nominating and Corporate Governance Committee also
reviews the Company's legal compliance policies and programs periodically with
the Company's General Counsel. The members of the Nominating and Corporate
Governance Committee are Directors Trout (Chairman), Albright, Longfield and
Wike.
Compensation of Directors
Each independent director receives an annual retainer of $20,000. He or
she also receives $1,500 for each board and independent-director meeting and
$1,000 for each committee meeting attended. An additional annual fee of $3,500
is paid to the chairman of each board committee and to the Chairman, Independent
Directors. Directors may defer all or any part of their director's fees.
Deferred fees may be placed either in an interest-bearing cash account or in a
cash-only "phantom stock" account. "Phantom stock" parallels the performance of
the Company's common stock. Directors receive their deferred fees upon their
retirement or termination as a director.
After five years of service on the Board, each independent director
becomes entitled to receive an annual retirement benefit. This benefit commences
upon retirement after age 60 and runs until the earlier of 15 years or the
director's death. The amount of the benefit is between 50% and 100%, depending
on the length of service, of his or her base annual retainer at the time of
retirement. Non-employee directors also 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 expires five years from the date of
grant.
6
<PAGE>
OWNERSHIP OF COMPANY STOCK
The following table and footnotes contain, as of March 1, 1998,
information about persons who beneficially own more than 5% of the outstanding
common stock. Except as indicated below, the beneficial owners have sole voting
and investment power over the shares shown opposite their names. This table was
compiled from Company records and Securities and Exchange Commission
share-ownership reports that were delivered to the Company.
<TABLE>
<CAPTION>
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Amount and Percent
Name and Address of Nature of Beneficial of
Beneficial Owner Ownership Class
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<S> <C> <C>
Jean Wike Faust .................................................. 1,255,984(1) 7.5%
16 Fox Chase Road
Malvern, PA 19355
First Union Corporation........................................... 1,284,339(2) 7.6%
One First Union Center
301 S. Tryon St.
Charlotte, NC 28288-0137
Lazard Freres & Co. LLC........................................... 1,207,340(3) 7.2%
30 Rockefeller Plaza
New York, NY 10020
William S. West................................................... 950,047(4) 5.6%
101 Gordon Drive
Lionville, PA 19341
J. Roffe Wike, II................................................. 1,682,688(1)(5) 10.0%
2125 Twinbrook Road
Berwyn, PA 19312
Wilmington Trust Corporation...................................... 911,310(6) 5.4%
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
</TABLE>
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(1) Includes 226,000 shares held by a trust of which Mrs. Faust is the sole
beneficiary. As trustee, J. Roffe Wike, II, the brother of Mrs. Faust, has
sole investment and voting power over those shares. Also includes 577,204
shares held by a trust as to which Mrs. Faust and Mr. Wike share voting and
investment power.
(2) Based upon information as of December 31, 1997 set forth in a Schedule 13G
filing made by First Union Corporation dated February 12, 1998. Includes
(i) sole voting power with respect to 1,268,039 shares, (ii) sole
investment power with respect to 502,000 shares and (iii) shared investment
power with respect to 691,364 shares.
(3) Based upon information as of December 31, 1997 set forth in a Schedule 13G
filing made by Lazard Freres & Co. LLC dated February 17, 1998. Includes
(i) sole voting power with respect to 1,124,340 shares and (ii) sole
investment power with respect to 1,207,340 shares.
(4) Includes shared voting power over 446,264 shares. Does not include
184,074 shares owned by Mr. West's wife because he disclaims beneficial
ownership of those shares.
(5) Includes options to acquire 7,500 shares under the Company's 1992
Non-Qualified Stock Option Plan for Non-Employee Directors. Does not
include 7,840 shares owned by Mr. Wike's wife because he disclaims
beneficial ownership of those shares.
(6) Based upon information as of December 31, 1997 set forth in a Schedule 13G
filing made by Wilmington Trust Corporation, Wilmington Trust Company and
Wilmington Trust FSB dated February 17, 1998. Includes (i) sole voting
power with respect to 440,620 shares and (ii) shared voting and investment
power with respect to 640,690 shares.
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<PAGE>
The following table shows the beneficial ownership of common stock by each
director, each executive officer named in the Summary Compensation Table on page
11 and all directors and executive officers as a group. The plan amounts are
included as of December 31, 1997 and all other information is as of March 17,
1998. Also included are `phantom-stock' units held in deferred compensation
accounts by directors. Where a director or executive officer has the right to
acquire shares within 60 days after March 17, 1998, through the exercise of
stock options, these shares are treated as beneficially owned by the individual
and as outstanding when computing the percentages owned by the individual and
the group. The amounts include shares of common stock beneficially owned by the
individuals, common stock underlying stock options and stock granted under the
Company's Long-Term Incentive Plan and Savings Plan. The table is compiled from
information provided by the individuals and from Company records.
<TABLE>
<CAPTION>
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Right to Acquire Phantom Stock
Shares Owned Percent of Ownership Under Units Under
Directly and Common Stock Options Exercisable Directors' Deferred
Name Indirectly(1)(2) Outstanding Within 60 Days Compensation Plan
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Tenley E. Albright 1,000 * 5,000
John W. Conway 0 * 0
J. E. Dorsey 6,496 * 50,000
George W. Ebright 1,000 * 7,500
Steven A. Ellers 5,176 * 32,500
Lawrence P. Higgins 373 * 10,000
L. Robert Johnson 6,000 * 6,000
William G. Little 47,611 * 30,000
William H. Longfield 1,000 * 3,000 1,904
John P. Neafsey 3,500 * 7,500 2,087
Monroe E. Trout 5,000 * 4,500 8,646
John A. Vigna 0 * 10,000
Anthony Welters 300 * 1,500
J. Roffe Wike, II 1,675,188 10.0% 7,500 12,750
Geoffrey F. Worden 2,000 * 6,000 4,341
All directors and executive officers 1,794,594 12.3% 318,860
as a group (20 persons)
</TABLE>
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* Indicates ownership of less than 1% of the shares outstanding.
(1) These amounts include restricted shares granted under the Company's
Management Incentive Bonus Plan, as follows: Mr. Little--1,219 shares; Mr.
Dorsey--594 shares; Mr. Vigna--0 shares; Mr. Higgins--55 shares; Mr.
Ellers--164 shares; and all directors and executive officers as a
group--3,074 shares. The holders of restricted shares have voting power
over the shares. The restricted shares are subject to transfer and
forfeiture restrictions.
(2) These amounts include shares granted as the Company's contributions under
the Company's Savings Plan, as follows: Mr. Little--944 shares; Mr.
Dorsey--420 shares; Mr. Vigna--0 shares; Mr. Higgins--96 shares; Mr.
Ellers--1,146 shares; and all directors and officers as a group-- 7,584
shares. The holders of Savings Plan shares have voting power over the
shares. These shares vest in five equal annual installments over the first
five years of service for the Company.
8
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16 of the Securities Exchange Act of 1934, as amended, and
related Securities and Exchange Commission rules, the Company's directors and
officers must file initial reports of their beneficial ownership of the
Company's common stock and subsequent changes to that ownership. Initial reports
are due within 10 days after an individual becomes a director or officer and
must be filed even if the director or officer owns no shares at the time of
filing. The Company assists officers and directors in meeting their obligations
under these rules by preparing the forms for their review and signature and then
filing the completed, signed forms on their behalf. In March 1997, Company
personnel delayed in the preparation and filing of the initial ownership form
for Anthony Welters. As a result, his report was filed seven days late in March
1997. Mr. Welters owned no stock at that time. All other reports required to be
filed were filed on time.
BOARD COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Introduction
The Company's executive-compensation program is designed to achieve four
goals: (1) link shareholder and management interests; (2) reward management for
producing superior results relative to comparable companies; (3) recognize
individual performance; and (4) attract and retain key executives of the highest
caliber.
The components of compensation are base salary, annual incentive bonus and
long-term incentive compensation in the form of stock options. Base salaries are
targeted to approximate the 50th percentile of compensation for comparable
positions. Total compensation (i.e., base salary, bonus opportunity and stock
options) is targeted to approximate the 75th percentile. To achieve the targeted
compensation range, executives must meet annual and long-term corporate
financial performance and strategic goals.
A significant portion of executive compensation is "at risk." As described
in more detail below, bonuses are tied to achievement of specified financial and
strategic targets, and the value of stock options is dependent on an increase in
market value of common stock over the exercise price. In making compensation
decisions, the Committee relies heavily on survey data and recommendations from
an outside compensation consultant.
To further align management and shareholder interests, the Committee
expects executive officers to own, within five to seven years of attaining their
respective positions, common stock with a market value equal to specified
multiples of the executive's base salary, ranging from 200% of base salary for
senior executives to 500% of base salary for the Chief Executive Officer. Each
executive's progress toward meeting his or her share-ownership goal is reviewed
annually. The guidelines are not mandatory, and the Committee has no set policy
on failure to meet the guidelines.
Base Salaries
In setting 1997 base salaries, the Committee relied primarily on
competitive market compensation data from three separate surveys of general
industry, which were compiled by a compensation consultant. The Committee also
considered recommendations of the Chief Executive Officer regarding individual
performance of other executives and their relative experience. All of the named
executive officers' base salaries for 1997 approximated the surveys' market
consensus median level. Mr. Little's base salary was set at approximately 7%
above the survey's median level, which reflects his additional responsibilities
as Chairman of the Company and the Committee's satisfaction with his performance
and the performance of the Company in 1996.
9
<PAGE>
Management Incentive Bonus Plan
Each of the named executive officers participates in the Company's
Management Incentive Bonus Plan (the "Bonus Plan"). The Company uses the Bonus
Plan to compensate executives and other key employees based 80% on achievement
of a specific corporate financial performance target and 20% on achievement of
strategic, non-financial goals. Last year, the Committee used return-on-equity
(ROE) as the corporate financial performance measurement. However, in future
years the Committee is considering using other criteria, such as
earnings-per-share, that it considers more appropriate measures of the Company's
growth and creation of shareholder value.
The Bonus Plan targets are set prior to the commencement of the year.
Participants will receive a 100% payout if the Company reaches its financial
target and all of the other goals are met. A higher payout is made when the
Company exceeds its financial target and no payout is made if the actual
financial performance is less than 80% of the target.
To encourage share ownership, one-fourth of a Bonus Plan participant's
after-tax annual bonus is paid in shares of common stock, referred to as "bonus
shares." 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 amount received by each of the named executive officers under the
Bonus Plan is calculated as a percentage of their base salary. For 1997, the
Committee set Mr. Little's bonus target at 75% of base salary. Other executive
officers' bonus targets ranged from 40% to 65% of base salary. These levels are
within the 75th percentile level for comparable positions, as indicated in the
survey data noted above.
In December 1996, the Committee set the 1997 ROE performance target level
at 13.9%, which was the ROE contained in management's 1997 operating plan. The
Committee considered this level to be an appropriate increase from the
year-earlier ROE of 12.0% (excluding a restructuring charge recognized in the
first quarter of 1996). The non-financial strategic goals for 1997, also set at
the December meeting, were tied to the execution of a strategic growth plan,
advancement of novel-drug delivery technology and development of new-business
opportunities.
The Company reported 1997 ROE of 16.7%, or approximately 120.4% of the
target. These results include net income-tax benefits related primarily to a
reorganization of the Company's German subsidiaries. Excluding this tax benefit,
the Company's ROE was 14.0%, or 100.5% of target. The Committee decided to pay
the named executives and Mr. Little 105.5% of their bonus opportunity. This
determination reflected the Committee's judgment of management's overall
performance for the year, and was based on the Company exceeding its ROE target
and the Committee's satisfaction that management substantially achieved its 1997
objectives.
Based on the bonus payout, Mr. Little received a bonus of $371,902, which
included 1,629 bonus shares. He also received 407 restricted shares. The other
named executives also were paid in a combination of cash, bonus and restricted
shares.
Long-Term Incentive Compensation
Stock options are granted in numbers that are targeted to produce a
long-term compensation opportunity within the 75th percentile of comparable
positions within general industry. These options are aligned with the Company's
performance since they will have value only when the stock price increases. This
rewards management for increases in shareholder value. The value of these
options is determined using the Black-Scholes valuation method. All options are
granted with an exercise price equal to the fair market value of a share of
common stock on the grant date. In addition, the option agreements contain
forfeiture provisions which will cause any unexercised option to expire
immediately if the executive engages in conduct detrimental to the Company such
as competitive activities.
In 1997, each of the Company's executive officers received two separate
grants of stock options. The number of options in the first grant was calculated
to reflect Company performance as stated above. These options vested immediately
and will expire five years from the date of grant. The second grant equaled
three times the annual allotment, but will vest in five equal annual
installments. All unvested options will become immediately exercisable if,
within the next five years, the market price of common stock exceeds for 30
consecutive days a targeted share price equal to approximately 160% of the fair
market value on the date of grant. The second grant of options
10
<PAGE>
expires ten years from the grant date. In making the second grant of options,
the Committee intended to increase the incentives for executives to achieve
results that will grow shareholder value. The Committee does not intend to make
additional option grants to the named executives for another three years, unless
the targeted market share value is achieved.
Deductible Compensation under the Tax Laws
Under section 162(m) of the Internal Revenue Code, a publicly held
corporation such as the Company is denied a federal tax deduction for
compensation in excess of $1,000,000 which is paid to its chief executive
officer and its four most-highly compensated executive officers other than the
CEO. "Qualified performance-based compensation" and certain other compensation
is not subject to the deduction limitation. The Board of Directors has taken
action to ensure that awards of stock options, bonus and incentive shares under
the Company's incentive plans will be treated as qualified performance-based
compensation, and therefore, remain tax deductible by the Company. While there
is no firm policy on whether to permit executive compensation to exceed the
$1,000,000 limit, the Committee periodically monitors the compensation of
Company executives and believes that no tax deductions for executive
compensation will be lost in the near future.
William H. Longfield, Chairman
George W. Ebright
John P. Neafsey
Monroe E. Trout
COMPENSATION OF NAMED EXECUTIVE OFFICERS
Summary Compensation Table
The following table contains information on compensation paid to the
Company's CEO and the four other most highly compensated executive officers.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation Awards
Other Restricted Securities
Annual Stock Underlying All Other
Name & Principal Position Year Salary($)(1) Bonus($)(1) Compensation($) Award(s)($)(2) Options(#) Compensation($)(3)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
William G. Little 1997 461,538 371,902 6,376 12,801 165,000 14,701
Chairman, President and 1996 438,240 291,074 4,329 10,083 -0- 14,002
Chief Executive Officer 1995 412,231 -0- 4,329 -0- 120,000 13,182
J. E. Dorsey 1997 284,320 198,193 4,703 6,840 90,000 8,525
Executive Vice President 1996 262,701 155,898 3,674 5,387 15,000 7,877
and Chief Operating 1995 234,934 -0- 3,674 12,000 7,045
Officer -0-
John A. Vigna(4) 1997 194,368 -0- 2,097 -0- 55,000 5,830
Senior Vice President,
Finance and
Administration
Lawrence P. Higgins(5) 1997 180,950 77,656 6,686 3,183 55,000 -0-
Corporate Vice President 1996 109,744 48,470 3,858 1,520 -0- -0-
Global Operations
Steven A. Ellers 1997 173,287 78,077 5,754 3,263 55,000 5,181
Group President, Sales 1996 159,037 57,561 5,754 2,403 10,000 4,765
1995 140,677 -0- -0- -0- 8,000 4,214
</TABLE>
- -----------------
(1) The Bonus columns include the value of any bonus (unrestricted) shares
awarded under the Bonus Plan, but not the value of any restricted shares,
which are shown in the Restricted Stock Award(s) column. Bonuses are paid
in the fiscal year following the fiscal year in which they are earned.
11
<PAGE>
(2) Restricted stock awards are made in the fiscal year following the fiscal
year in 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 Company's common stock on the
grant date, which was $27.63 for 1996 and $31.38 for 1997 awards. Dividends
are paid on restricted stock and reinvested in additional shares of common
stock.
The following table contains information on the restricted stock held by
the named executives at December 31, 1997. Values are determined by
multiplying the number of shares by $29.75, the December 31, 1997 closing
price of the common stock.
Number of Restricted Current Market Value
Name Shares Held of Restricted Shares Held
-------------------------------------------------------------------------
William G. Little 1,219 $ 36,265
J. E. Dorsey 594 17,672
John A. Vigna 0 0
Lawrence P. Higgins 55 1,636
Steven A. Ellers 164 4,879
(3) Represents Company contributions under the Company's Savings Plan and
Non-Qualified Deferred Compensation Plan for Designated Executive Officers.
With respect to Mr. Little, includes for 1997, 1996 and 1995 term life
insurance premiums paid by the Company of $860, $860 and $819,
respectively.
(4) Mr. Vigna started working at the Company on March 3, 1997 and resigned on
March 12, 1998, and did not receive a bonus or restricted stock for 1997.
Mr. Ellers was promoted to Senior Vice President, Finance and
Administration following Mr. Vigna's resignation.
(5) Mr. Higgins started working at the Company on May 15, 1996.
Option Grants During 1997
The following table provides information on stock options granted in 1997
to the named executive officers under the Company's Long-Term Incentive Plan.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates of
Individual Stock Price Appreciation
Grants for Option Term
----------------------------------------------- ---------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price Expiration
Name Granted in 1997 ($/Sh)(3) Date 5%($)(4) 10%($)(4)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
W. G. Little 165,000(2) 22.04 29.41 8/04/2007 3,051,783 7,733,862
J. E. Dorsey 15,000(1) 2.00 27.50 3/26/2002 113,966 251,835
75,000(2) 10.02 29.41 8/04/2007 1,387,242 3,515,392
J. A. Vigna 10,000(1) 1.34 27.50 3/26/2002 75,977 167,890
45,000(2) 6.01 29.41 8/04/2007 832,304 2,109,235
L. P. Higgins 10,000(1) 1.34 27.50 3/26/2002 75,977 167,890
45,000(2) 6.01 29.41 8/04/2007 832,304 2,109,235
S. A. Ellers 10,000(1) 1.34 27.50 3/26/2002 75,977 167,890
45,000(2) 6.01 29.41 8/04/2007 832,304 2,109,235
</TABLE>
- --------------
(1) Option grants are for a five-year term and became exercisable on the date of
grant.
(2) Option grants are for a ten-year term and first become exercisable in five
equal annual installments beginning on the first anniversary of the grant
date. Vesting may be accelerated if the market prices of common stock
reaches 160% of the grant date price for a period of 30 days.
12
<PAGE>
(3) The exercise price represents the average of the highest and lowest
reported sale price on the date of grant (March 27, 1997 and August 5,
1997). 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 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.
(4) These amounts, based on assumed annual appreciation rates of 5% and 10% as
prescribed by the Securities and Exchange Commission rules are not
intended to forecast possible future appreciation, if any, of the
Company's stock price.
1997 Stock Option Exercises and Year-End Option Values
The following table shows how many stock options were exercised by each of
the named executive officers in 1997. It also shows the number and value of
their unexercised options as of December 31, 1997.
Aggregated Option Exercises in Last Fiscal Year
and 1997 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>
W. G. Little 30,141 539,843 60,000 285,000 877,500 56,711
J. E. Dorsey 0 0 58,000 75,000 303,563 25,778
J. A. Vigna 0 0 10,000 45,000 22,500 15,467
L. P. Higgins 0 0 10,000 45,000 22,500 15,467
S. A. Ellers 2,116 19,309 37,000 45,000 192,250 15,467
</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 31, 1997 ($29.75) 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 31, 1997.
Pension Plan Table
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 annual
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, multiplied by his or her years of service up to 25 years, 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, bonus (cash and stock) and other non-deferred cash remuneration.
The Internal Revenue Code limits the maximum annual benefit that 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.
13
<PAGE>
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
700,000 199,500 266,000 332,500 350,000 367,500
750,000 213,750 285,000 356,250 375,000 393,750
800,000 228,000 304,000 380,000 400,000 420,000
</TABLE>
As of December 31, 1997, the credited full years of service for the named
executive officers were as follows: Mr. Little--22 years; Mr. Dorsey--5 years;
Mr. Vigna--10 months; Mr. Higgins--1 year; and Mr. Ellers--14 years.
Employment and Other Agreements
Mr. Little has an employment agreement with the Company under which he
serves as President and Chief Executive Officer. His base annual salary is
determined according to Company compensation-review policies. The agreement also
entitles him to participate in the Company's annual and long-term incentive
plans. The Company may terminate his employment by giving two years' prior
notice or earlier for cause, or due to disability or death.
The Company has entered into agreements with Messrs. Little, Dorsey, Vigna
and Ellers that provide benefits if their employment is terminated 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. The 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 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 prohibits each executive from
being employed by any competitor of the Company or competing with the Company in
any part of the United States (any market or territory, in the case of Mr.
Little) for up to one year following employment termination for any reason. The
payment of severance compensation is not conditioned upon the executive seeking
other employment and is not subject to reduction if the executive secures other
employment consistent with the agreement.
14
<PAGE>
The Company has entered into a severance agreement with Mr. Higgins
providing him with continuing salary at the level prior to termination and
continuation of certain health and welfare benefits for one year following
termination of his employment. The agreement contains non-compete restrictions
similar to those described in the preceding paragraph.
SHAREHOLDER RETURN PERFORMANCE GRAPHS
The following graph compares the cumulative total return to holders of the
Company's 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, 1997. 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, 1992 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 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.
FIVE YEAR CUMULATIVE TOTAL RETURN
In the printed version there appears a line graph with the following
plot points depicted:
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
West Company 100 111 127 110 135 145
S&P 400 100 109 113 152 187 233
Peer Group 100 106 118 158 196 210
15
<PAGE>
The following graph shows the total cumulative return to shareholders as
compared to the S&P 400 and the peer group noted above for calendar year 1997.
These amounts are calculated in the same manner as the amounts on the previous
chart, assuming a $100 investment made on December 31, 1996. This chart shows
the relative performance of the Company following the implementation of a
restructuring in 1996.
1997 CUMULATIVE TOTAL RETURN
QUARTER ENDING
In the printed version there appears a line graph with the following
plot points depicted:
Dec 96 Mar 97 Jun 97 Sep 97 Dec 97
West Company 100.00 96.50 102.35 118.56 107.36
S&P 400 100.00 97.84 111.69 129.64 124.34
Peer Group 100.00 101.39 112.09 112.96 104.33
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1999 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 25, 1998 for inclusion in
the proxy statement and form of proxy.
16
<PAGE>
EXHIBIT A
1998 KEY EMPLOYEE INCENTIVE COMPENSATION PLAN
SECTION 1
GENERAL
1.1 Purpose. The Plan has been established by the Company (i) to
attract and retain persons eligible to participate in the Plan; (ii) motivate
participants, by means of appropriate incentives, to achieve long-range goals;
and (iii) link participants' interests with those of the Company's other
shareholders through compensation that is based on the Company's common stock,
and thereby promote the continued growth and financial success of the Company.
1.2 Participation. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, from among the
Eligible Employees, those persons who will be granted one or more awards under
the Plan, and thereby become "Participants" in the Plan. Persons eligible to
participate shall be limited to those officers and key employees of the Company
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 shall not be eligible to participate in the Plan.
1.3 Operation, Administration and Definitions. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 4 (relating to operation and
administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 7).
SECTION 2
OPTIONS AND SARS
2.1 Definitions.
a) The grant of an "Option" entitles the Participant to purchase shares of
Common Stock at an Exercise Price established by the Committee. Options
granted under this Section 2 may be either Incentive Stock Options or
Non-Qualified Options, as determined in the discretion of the
Committee. An "Incentive Stock Option" is an Option that is intended to
satisfy the requirements applicable to an "incentive stock option"
described in section 422A of the Code. A "Non-Qualified Option" is an
Option that is not intended to be an "incentive stock option" as that
term is described in section 422A of the Code.
b) A stock appreciation right (an "SAR") entitles the Participant to
receive, in cash or Stock (as determined in accordance with subsection
2.5), value equal to all or a portion of the excess of: (a) the Fair
Market Value of a specified number of shares of Common Stock at the
time of exercise; over (b) an Exercise Price established by the
Committee.
A-1
<PAGE>
2.2 Exercise Price. The "Exercise Price" of each Option and SAR granted
under this Section 2 shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option or
SAR is granted; except that the Exercise Price shall not be less than 100
percent of the Fair Market Value of a share of Common Stock as of the Pricing
Date. As used in this subparagraph the "Pricing Date" shall be the date on which
the Option or SAR is granted, except that the Committee may provide that the
Pricing Date is the date on which the recipient is hired or promoted (or similar
event), if the grant of the Option or SAR occurs not more than 90 days after the
date of such hiring, promotion or other event.
2.3 Exercise. An Option and an SAR shall be exercisable in accordance
with such terms and conditions and during such periods as may be established by
the Committee. The Committee shall have the power to permit in its discretion an
acceleration of the previously determined exercise or vesting periods of, and
the expiration of the applicable restriction period with respect to, any Option
or SAR, under such circumstances, including a change in control of the Company,
and upon such terms and conditions as it deems appropriate.
2.4 Expiration Date. The "Expiration Date" with respect to an Option
means the date established as the Expiration Date by the Committee at the time
of the grant; provided, however, that the Expiration Date with respect to any
Option shall not be later than the earliest to occur of:
a) the ten-year anniversary of the date on which the Option is granted
(the five-year anniversary in the case of an Incentive Stock Option
granted to an individual who owns stock possessing more than 10 percent
of the total combined voting power of all classes of stock of the
Company);
b) if the Participant's Date of Termination occurs by reason of
Retirement, death or disability. the one-year anniversary after such
Termination Date; or
c) if the Participant's Date of Termination occurs by reasons other than
Retirement, death or disability, the 90-day anniversary of such Date of
Termination.
The existence of Retirement and the existence of and the date of
disability shall be determined by the Committee in its sole discretion.
2.5 Payment of Option Exercise Price. The payment of the Exercise Price
of an Option granted under this Section 2 shall be subject to the following:
a) Subject to the following provisions of this subsection 2.5, the full
Exercise Price for shares of Common Stock purchased upon the exercise
of any Option shall be paid at the time of such exercise (except that,
in the case of an exercise arrangement approved by the Committee and
described in paragraph 2.5 (c), payment may be made as soon as
practical after the exercise).
b) The Exercise Price shall be payable in cash or by tendering shares of
Common Stock (by either actual delivery of shares or by attestation,
with such shares valued at Fair Market Value as of the date of
exercise), or in any combination thereof, as determined by the
Committee. Such determination may include a restriction on the use of
any shares of Common Stock unless they have been held by the
Participant for at least six months before delivery, and have not been
used for another exercise during such period.
c) The Committee may permit a Participant to elect to pay the Exercise
Price upon the exercise of an Option by authorizing a third party to
sell shares of Common Stock (or a sufficient portion of the shares)
acquired upon exercise and remit to the Company a sufficient portion of
the sale proceeds to pay the entire Exercise Price and any tax
withholding resulting from such exercise.
A-2
<PAGE>
2.6 Settlement of Award. Distribution following exercise of an Option
or SAR, and shares of Common Stock distributed pursuant to such exercise, shall
be subject to such conditions, restrictions and contingencies as the Committee
may establish. Settlement of SARs may be made in shares of Common Stock (valued
at their Fair Market Value at the time of exercise), or in any combination
thereof, as determined by the Committee. The Committee, in its discretion, may
impose such conditions, restrictions and contingencies with respect to shares of
Common Stock acquired pursuant to the exercise of an Option or an SAR as the
Committee determines to be desirable.
SECTION 3
OTHER STOCK AWARDS
3.1 Definition. A Stock Award is a grant of shares of Common Stock or
of a right to receive shares of Common Stock (or their cash equivalent or a
combination of both) in the future.
3.2 Restrictions on Stock Awards. Each Stock Award shall be subject to
such conditions, restrictions and contingencies as the Committee shall
determine. These may include continuous service and/or the achievement of
performance measures. At any time prior to the payment of the Stock 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.
SECTION 4
OPERATION AND ADMINISTRATION
4.1 Effective Date. Subject to the approval of the shareholders of the
Company at the Company's 1998 annual meeting of shareholders, the Plan shall be
effective as of March 10, 1998 (the "Effective Date"); provided, however, that
any Awards made under the Plan prior to its approval by shareholders shall be
contingent on approval of the Plan by the shareholders of the Company. The Plan
shall be unlimited in duration and, in the event of Plan termination, shall
remain in effect as long as any Awards under it are outstanding; provided,
however, that, no Award may be made under the Plan more than ten years from the
Effective Date.
4.2 Shares Subject to the Plan. a)
i) Subject to the following provisions of this subsection 4.2,
the maximum number of shares that may be delivered to
Participants and their beneficiaries under the Plan shall not
exceed 1,500,000 shares of Common Stock. Such shares may be
authorized and unissued shares or treasury shares.
ii) Any shares of Common Stock granted under the Plan that are
forfeited because of the failure to meet an Award contingency
or condition shall again be available for delivery pursuant to
new Awards granted under the Plan. To the extent any shares of
Common Stock covered by an Award are not delivered to a
Participant or beneficiary because the Award is forfeited or
canceled, or the shares are not delivered because the Award is
settled in cash, such shares shall not be deemed to have been
delivered for purposes of determining the maximum number of
shares of Common Stock available for delivery under the Plan.
iii) If the Exercise Price of any stock option granted under the
Plan is satisfied by tendering shares of Common Stock to the
Company (by either actual delivery or by attestation), only
the number of shares issued net of the shares of Common Stock
tendered shall be deemed
A-3
<PAGE>
delivered for purposes of determining the maximum number of
shares of Common Stock available for delivery under the Plan.
iv) Shares of Common Stock delivered under the Plan in settlement,
assumption or substitution of outstanding awards (or
obligations to grant future awards) under the plans or
arrangements of another entity shall not reduce the maximum
number of shares of Common Stock available for delivery under
the Plan, to the extent that such settlement, assumption or
substitution is a result of the Company or a Subsidiary
acquiring another entity (or an interest in another entity).
b) Subject to paragraph 4.2 (c), the following additional maximums are
imposed under the Plan.
i) The maximum number of shares of Common Stock that may be
issued by Options intended to be Incentive Stock Options shall
be 1,500,000 shares.
ii) The maximum number of shares of Common Stock that may be
covered by Awards granted to any one individual pursuant to
Section 2 (relating to Options and SARs) shall be 200,000
shares during any calendar year.
iii) The maximum payment that can be made for awards granted to any
one individual pursuant to Section 3 (relating to Stock
Awards) shall be $300,000 for any single or combined
performance goals established for any performance period. If
an Award granted under Section 3 is, at the time of grant,
denominated in shares, the value of the shares of Common Stock
for determining this maximum individual payment amount will be
the Fair Market Value of a share of Common Stock on the date
of award.
c) In the event of a corporate transaction involving the Company
(including, without limitation, any stock dividend or distribution,
stock split, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination or exchange of shares), the Committee
may adjust Awards to preserve the benefits or potential benefits of the
Awards. Action by the Committee may include adjustments of: (i) the
number and kind of shares that may be delivered under the Plan; (ii)
the number and kind of shares subject to outstanding Awards; and (iii)
the Exercise Price of outstanding Options and SARs; as well as any
other adjustments that the Committee determines to be equitable.
4.3 Limits on Distribution. Distribution of shares of Common Stock or
other amounts under the Plan shall be subject to the following:
a) Notwithstanding any other provision of the Plan, 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, the Company
shall have no liability to deliver any shares of Common Stock under the
Plan or make any other distribution of benefits under the Plan unless
such listing, registration, qualification, consent, approval or
agreement shall have been effected or obtained free of any conditions
not acceptable to the Committee.
b) To the extent that the Plan provides for issuance of stock certificates
to reflect the issuance of shares of Common Stock, the issuance may be
effected on a non-certificate basis, to the extent not prohibited by
applicable law or the applicable rules of any stock exchange.
A-4
<PAGE>
4.4 Tax Withholding. 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 for such shares, or in the discretion of the
Committee, the Company may withhold from the shares to be delivered shares
sufficient to satisfy all or a portion of such tax withholding requirements.
Whenever under the Plan payments are to be made in cash, such payments may be
net of an amount sufficient to satisfy any Federal, state and local tax
withholding requirements.
4.5 Dividends. An Award may provide the Participant with the right to
receive dividends with respect to Common Stock, which may be either paid
currently or credited to an account for the Participant, and may be settled in
cash or Common Stock as determined by the Committee. Any such settlements, and
any such crediting of dividends or reinvestment in shares of Common Stock, may
be subject to such conditions, restrictions and contingencies as the Committee
shall establish.
4.6 Payments. Awards may be settled through cash payments, the delivery
of shares of Common Stock, or combination thereof as the Committee shall
determine. Any Award settlement may be subject to such conditions, restrictions
and contingencies as the Committee shall determine.
4.7 Transferability. No Awards may be transferred by the Participant
otherwise than by will, by the laws of descent and distribution or pursuant to a
qualified domestic relations order, and during the Participant's lifetime the
Option may be exercised only by him or her; provided, however, that the
Committee, in its discretion, may allow for transferability of Non-Qualified
Options by the Participant to "Immediate Family Members."
"Immediate Family Members" means children, grandchildren, spouse or
common law spouse, siblings or parents of the Participant or to bona fide
trusts, partnerships or other entities controlled by and of which the
beneficiaries are Immediate Family Members of the Participant. Any Option grants
that are transferable are further conditioned on the Participant and Immediate
Family Members agreeing to abide by the Company's then current stock option
transfer guidelines.
4.8 Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by a Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Secretary of the Company
or other person designated by the Committee at such times, in such form, and
subject to such restrictions and limitations, not inconsistent with the terms of
the Plan, as the Committee shall require.
4.9 Agreement with the Company. At the time of an Award to a
Participant, the Committee may require a Participant to enter into an agreement
with the Company (the "Agreement") in a form specified by the Committee,
agreeing to the terms and conditions of the Plan and to such additional terms
and conditions, not inconsistent with the Plan, as the Committee may, in its
sole discretion, prescribe.
4.10 Limitation of Implied Rights.
a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of
the Company or any Subsidiary whatsoever, including, without
limitation, any specific funds, assets, or other property which the
Company or any Subsidiary, in their sole discretion, may set aside in
anticipation of a liability under the Plan. A Participant shall have
only a contractual right to the stock or amounts, if any, payable under
the Plan, unsecured by any assets of the Company or any Subsidiary.
Nothing contained in the Plan shall constitute a guarantee that the
assets of such companies shall be sufficient to pay any benefits to any
person.
A-5
<PAGE>
b} 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 any Subsidiary or affect any right which
the Company or any Subsidiary may have to terminate the employment of
such Participant.
4.11 Stock Forfeiture Provision. Notwithstanding any other provision of
this Plan to the contrary, the Committee may provide for the forfeiture of
Awards under the 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 Options and the forfeiture of gain realized from the
exercise thereof. Such provisions shall be included in the 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
subsection whenever it (or its duly appointed agent) determines in its sole
discretion that such action is in the best interests of the Company.
SECTION 5
COMMITTEE
5.1 Administration. The authority to control and manage the operation
and administration of the Plan shall be vested in a committee (the "Committee")
in accordance with this Section 5.
5.2 Selection of Committee. The Committee shall be selected by the
Board, and shall consist of two or more members of the Board. The Committee
shall be composed solely of directors who: (i) meet the requirements necessary
to be considered "non-employee directors" as that term is defined in Rule 16b-3
of the Securities Exchange Act of 1934. In addition, no member of the Committee
shall participate in any compensation decision under the Plan who is not, at the
time of the decision, an "outside director" as that term is defined under Code
section 162(m).
5.3 Powers of Committee. The authority to manage and control the
operation and administration of the Plan shall be vested in the Committee,
subject to the following:
a) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select from among the Eligible Employees
those persons who shall receive Awards, to determine the time or times
of receipt, to determine the types of Awards and the number of shares
covered by the Awards, to establish the terms, conditions, performance
criteria, restrictions and other provisions of such Awards, and
(subject to the restrictions imposed by Section 6) to cancel or suspend
Awards. In making such Award determinations, the Committee may take
into account the nature of services rendered by the individual, the
individual's present and potential contribution to the Company's
success and such other factors as the Committee deems relevant.
b) The Committee will have the authority and discretion to interpret the
Plan, to establish, amend and rescind any rules and regulations
relating to the Plan, to determine the terms and provisions of any
agreements made pursuant to the Plan, and to make all other
determinations that may be necessary or advisable for the
administration of the Plan.
c) Any interpretation of the Plan by the Committee and any decision made
by it under the Plan is final and binding.
5.4 Delegation by Committee. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee may
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Committee at any time.
A-6
<PAGE>
SECTION 6
AMENDMENT AND TERMINATION
The Board may amend or terminate 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 4.2(c) hereof) or change the class of Eligible Employees. 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.
SECTION 7
DEFINED TERMS
For purposes of the Plan, the following terms shall have the meanings
set forth below:
a) "Award" means any award or benefit granted to any Participant under the
Plan, including, without limitation, the grant of Options, SARs, and
Stock Awards.
b) "Board" means the Board of Directors of the Company.
c) "Code" means the Internal Revenue Code of 1986, as amended. A reference
to any provision of the Code shall include reference to any successor
provision of the Code.
d) "Common Stock" means shares of the Company's common stock, $.25 par
value per share.
e) "Date of Termination" means the date on which a Participant ceases to
be employed by the Company or any Subsidiary. In the event of
employment termination due to Retirement, the Date of Termination shall
be: (i) with respect to a Pension Optionee, the date on which such an
optionee is immediately eligible to collect pension benefits under any
Pension Plan; and (ii) with respect to a Non-Pension Optionee, a date
determined by the Committee.
f) "Eligible Employee" means any employee of the Company or a Subsidiary
providing key services to the Company or a Subsidiary.
g) "Fair Market Value" of Common Stock on any given date shall be
determined according to the following rules:
i) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, then the "Fair Market Value"
shall be the mean between the highest and lowest prices of the
Common Stock on the date in question on the principal national
securities exchange on which it is then listed or admitted to
trading. If no reported sale of Common Stock takes place on
the date in question on the principal exchange, then the
reported closing asked price of the Common Stock on such date
on the principal exchange shall be determinative of "Fair
Market Value."
ii) If the Common Stock is not at the time listed or admitted to
trading on a stock exchange, the "Fair Market Value" shall be
the mean between the highest reported asked price and lowest
reported bid price of the Common Stock on the date in question
in the over-the-counter market, as such prices are reported in
a publication of general circulation selected by the Committee
and regularly reporting the market price of Common Stock in
such market.
A-7
<PAGE>
iii) If the Common Stock is not listed or admitted to trading on
any stock exchange or traded in the over-the-counter market,
the "Fair Market Value" shall be as determined in good faith
by the Committee.
h) "Pension Plan" means an individual pension scheme or pension plan
sponsored by the Company or a Subsidiary.
i) "Pension Optionee" means an optionee under the Plan who is an active
participant in any Pension Plan and a "Non-Pension Optionee" means an
optionee under the Plan who is not an active participant in any Pension
Plan.
j) "Subsidiary" means any "subsidiary corporation" (as that term is
defined in Code section 424(f)) with respect to the Company.
k) "Retirement" means: (i) with respect to a Pension Optionee, termination
of employment with the Company or a Subsidiary under the provisions of
any Pension Plan; and (ii) with respect to a Non-Pension Optionee,
termination of employment with the Company or a Subsidiary under the
procedures established by the Committee.
A-8
<PAGE>
[THE WEST COMPANY LOGO]
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 John R. Gailey III and William G.
Little 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 16, 1998, at the Annual Meeting of Shareholders to be held
on April 28, 1998 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 and 3.
(To be Signed on Reverse Side)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
[X] Please mark your
votes as in this
example.
FOR WITHHOLD AUTHORITY FOR AGAINST ABSTAIN
1. Election of [] all the [] to vote for 2. Ratification of the appointment
4 Class II nominees the nominees of Coopers & Lybrand L.L.P. as [ ] [ ] [ ]
Directors listed listed below independent accountants of the
below corporation for the fiscal year ending
December 31, 1998.
(except as marked to the contrary) 3. Approval of the 1998 Key Employee [ ] [ ] [ ]
Incentive Compensation Plan.
(INSTRUCTION: To withhold authority to vote for any
individual nominee, strike a line through the nominee's name
in the list below.)
George W. Ebright, L. Robert Johnson, John P. Neafsey, 4. In their discretion, the Proxies
Geoffrey F. Worden 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, this Proxy will be voted FOR Proposals
1, 2 and 3.
</TABLE>
SIGNATURE(S)________________________________________ DATE______________
Please sign exactly as your name appears hereon. When signing as attorney,
executor, administrator, trustee, guardian, or in any other representative
capacity, please so indicate.
