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WESTINGHOUSE ELECTRIC CORPORATION
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders of Westinghouse Electric
Corporation will be held at the Corporation's Power Generation Manufacturing
Operations Division, located at 8301 Scenic Highway, Pensacola, Florida, on
Wednesday, April 27, 1994 commencing at 10:30 a.m. The purposes of the meeting
are to (1) vote for the election of eight directors, each for a term of one
year, (2) vote for the election of independent accountants for 1994, (3) vote
on a proposal to approve the 1993 Long-Term Incentive Plan, (4) vote on a
proposal to approve an amendment of the Corporation's Restated Articles of
Incorporation to increase the number of authorized common shares, (5) vote
on the shareholder proposal set forth in this proxy statement and (6)
transact such other business as may properly come before the meeting.
The Board of Directors has established February 5, 1994 as the record
date for determining the shareholders entitled to vote at the annual meeting.
Only holders of record of common stock at the close of business on that date
will be entitled to vote at the meeting.
If you plan to attend, please return the ticket request provided on
page 49 and a ticket will be sent to you about a week before the meeting. If
you do not plan to attend, please be advised that a summary of the meeting and
the actions taken will be included in the second quarter report to shareholders.
Whether or not you plan to attend the meeting, please sign, date and
return the enclosed proxy card promptly. Your cooperation is appreciated since
a majority of the outstanding shares of common stock must be represented,
either in person or by proxy, to constitute a quorum for purposes of conducting
business.
On Behalf of the Board of Directors
/s/ Angeline C. Straka
- ------------------------
Angeline C. Straka
Vice President, Secretary
and Associate General Counsel
Pittsburgh, Pennsylvania
March 11, 1994
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TABLE OF CONTENTS
-----------------
Proxy Statement............................................... 3
Election of Directors..................................... 3
Election of Independent Accountants....................... 35
Proposal to Approve the 1993 Long-Term Incentive Plan..... 36
Proposal to Approve an Amendment to the Restated
Articles of Incorporation............................... 43
Shareholder Proposal...................................... 44
Voting Information........................................ 47
Shareholder Proposal Submissions.......................... 47
Solicitation of Proxies................................... 47
Ticket Request................................................ 49
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1994
The principal executive offices of Westinghouse Electric Corporation
are in the Westinghouse Building, 11 Stanwix Street, Pittsburgh, Pennsylvania
15222.
This proxy statement and the proxy card are first being sent to
shareholders on or about March 11, 1994. Only the holders of record of common
stock at the close of business on February 5, 1994 are entitled to vote at the
meeting. On that date 353,366,776 shares of common stock were outstanding, each
of which entitles the holder to one vote on each matter to come before the
meeting.
The by-laws of the Corporation provide that proxies, ballots and
voting tabulations that identify individual shareholders will be kept
confidential, except as may be necessary to meet applicable legal requirements.
Information that identifies individual shareholders is available for
examination only by the judge of election and persons associated with an
independent third-party tabulator.
1. ELECTION OF DIRECTORS
(Item 1 on proxy card)
At the 1994 Annual Meeting, eight directors are to be elected to hold
office until the 1995 Annual Meeting and until their successors have been
elected and qualified. The Board presently consists of ten members. The Board
of Directors proposes Frank C. Carlucci, Gary M. Clark, George H. Conrades,
William H. Gray III, Michael H. Jordan, David T. McLaughlin, Richard R.
Pivirotto and Paula Stern, each of whom is now a director of the Corporation,
for election to the Board. Leo W. Yochum, a director since October 1991,
resigned from the Board on January 12, 1994 and will not be standing for
re-election. Mr. Yochum, previously the Corporation's Chief Financial Officer,
returned to the Corporation as a director and Chairman and Chief Executive
Officer of Westinghouse Financial Services, Inc. in October 1991. The Board
wishes to thank Mr. Yochum for his dedication and service to the Corporation
which spanned a five decade period.
Information about the nominees and the other directors is set forth on
pages 4 through 10.
The persons named in the enclosed proxy card (Messrs. Jordan, Clark and
Briskman) have advised that, unless a contrary direction is indicated on the
proxy card, they intend to vote for the election of the proposed nominees. They
have also advised that in the event any of the eight nominees shall not be
available for election, they will vote for the election of such substitute
nominee or nominees, if any, as the Board may propose.
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NOMINEES PROPOSED BY THE BOARD OF DIRECTORS
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FRANK C. CARLUCCI, 63
Chairman
The Carlyle Group (merchant banking)
Washington, D.C.
A graduate of Princeton University, Mr. Carlucci attended the Harvard Graduate
School of Business Administration. In January 1989, he joined The Carlyle
Group, a Washington-based merchant bank, as vice chairman and became its
chairman in February 1993. Mr. Carlucci was secretary of defense from November
1987 to January 1989, and assistant to the president for National Security
Affairs from 1986 to 1987. He has also been deputy director of the Office of
Manpower and Budget; deputy director of the Central Intelligence Agency; under
secretary of Health, Education and Welfare; deputy secretary of defense; and
ambassador to Portugal. Mr. Carlucci is a director of Ashland Oil, Inc., Bell
Atlantic Corporation, CB Commercial Real Estate Group, Inc., Kaman Corporation,
Neurogen Corporation, Quaker Oats Company, Northern Telecom, Ltd., Connecticut
Mutual Life Insurance Company, The Upjohn Company, General Dynamics
Corporation, SunResorts Ltd., N.V., and Texas Biotechnology Corporation. He was
first elected to the Westinghouse Board in 1989.
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GARY M. CLARK, 58
President
Westinghouse Electric Corporation
Pittsburgh, Pennsylvania
Mr. Clark, who joined Westinghouse in 1957, is currently president of
Westinghouse and a director. He has served in these positions since January 27,
1993. From January 27 to June 30, 1993, Mr. Clark also served as interim chief
executive officer. A graduate of the Georgia Institute of Technology, he also
attended the Harvard Business School's program for management development.
After holding various posts within Westinghouse, he was appointed general
manager of the medium motor and gearing division in 1976 and vice president and
general manager of Westinghouse Electric Supply Company's Pacific division in
1978. In 1981, Mr. Clark became vice president of marketing for the industry
products company and an elected officer of the Corporation. He later served as
vice president of marketing for the Industries and International Group, vice
president and general manager of the distribution and control business and
executive vice president of the Industries Group. He was appointed executive
vice president of industries and corporate resources in January 1991. Mr. Clark
is a director of The Western Pennsylvania Healthcare Systems, Inc., the
National Electrical Manufacturers Association, the Manufacturers' Alliance for
Productivity and Innovation, Inc. and the National Association of
Manufacturers.
GEORGE H. CONRADES, 55
President and Chief Executive Officer
Bolt Beranek & Newman Inc. (high technology)
Cambridge, Massachusetts
A 1961 graduate of Ohio Wesleyan University, Mr. Conrades earned an MBA in 1971
from the University of Chicago. Mr. Conrades joined International Business
Machines Corporation (IBM) in 1961 and held a number of marketing management
and general management positions in the United States and Asia. At the time of
his retirement from IBM in 1991, he was senior vice president, corporate
marketing and services. From 1992 to January 1994, Mr. Conrades was a partner
in Conrades/Reilly Associates, a business consulting company. In January 1994,
he was named to his current position as president and chief executive officer
of Bolt Beranek & Newman Inc. Mr. Conrades is a director of Bolt Beranek, GEV
Corporation and Wave Systems Corporation. Mr. Conrades was elected to the
Westinghouse Board on January 26, 1994.
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WILLIAM H. GRAY III, 52
President
United Negro College Fund (non-profit fund-raising)
New York, New York
A 1963 graduate of Franklin and Marshall College, Mr. Gray earned a master of
divinity degree from Drew Theological Seminary and a master of theology from
Princeton Theological Seminary. From 1963 to 1974, Mr. Gray held various
ministerial positions with the Baptist churches in Philadelphia, Pennsylvania
and Montclair, New Jersey, including that of senior minister, Bright Hope
Baptist Church in Philadelphia. From 1979 until September 1991, Mr. Gray served
as Democratic representative from Pennsylvania's second district when he
resigned to become president of the United Negro College Fund. While in
Congress, Mr. Gray served as house majority whip, chair of the Democratic
caucus, chairman of the House budget committee and as a member of the House
appropriations committee. Mr. Gray is a director of Warner-Lambert Company,
Scott Paper Company, The Prudential Insurance Company of America, Union Pacific
Corporation, MBIA, Inc., Rockwell International and The Chase Manhattan Bank,
N.A. Mr. Gray was first elected to the Westinghouse Board in 1991.
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MICHAEL H. JORDAN, 57
Chairman and Chief Executive Officer
Westinghouse Electric Corporation
Pittsburgh, Pennsylvania
Mr. Jordan was elected chairman and chief executive officer of Westinghouse
Electric Corporation, and a member of the Board, on June 30, 1993. Mr. Jordan
graduated from Yale University in 1957, and earned his master's degree from
Princeton University in 1959. From 1964 to 1974, following a four-year tour of
duty with the U.S. Navy, he was a consultant and principal with McKinsey and
Company, a management consultant firm. Mr. Jordan joined PepsiCo, Inc., a
beverage, snack food and restaurant company, in 1974 as director of financial
planning and was named senior vice president of planning and development in
1976. From 1977 to 1982 he served as senior vice president of manufacturing
operations for PepsiCo's Frito-Lay Division. After one year as president of
PepsiCo Foods International, Mr. Jordan became president and chief executive
officer of Frito-Lay in 1983. In 1985 he was named executive vice president of
finance and administration and a member of the PepsiCo board of directors. Mr.
Jordan served as president and chief executive officer of PepsiCo Worldwide
Foods from 1987 to 1991, and then as chairman of the PepsiCo International
Foods and Beverages Division. From September 1992 until June 30, 1993, he was a
partner with Clayton, Dubilier & Rice, Inc., a private investment firm. Mr.
Jordan is a director of Rhone-Poulenc Rorer, Melville Corporation, Dell
Computer Corporation, Aetna Life and Casualty Company, The Van Kampen Merritt
Companies, Inc. (including VKM Holding, Inc.), and the United Negro College
Fund.
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DAVID T. MCLAUGHLIN, 61
President and Chief Executive Officer
The Aspen Institute (leadership enhancement)
Queenstown, Maryland
A 1954 graduate of Dartmouth College, Mr. McLaughlin earned an MBA from
Dartmouth College's Amos Tuck School of Business Administration the following
year. Commencing in 1957, he served in a number of executive positions with
Champion International Corporation, then joined The Toro Company as president
in 1970. He assumed the additional role of chief executive officer of Toro in
1973 and was named chairman in 1977. He served in that capacity until February
1981. From 1981 until July 1987 he served as president of Dartmouth College. In
October 1987 he became chairman of The Aspen Institute and in May 1988 was
appointed its president and chief executive officer. Mr. McLaughlin is a
director of Atlantic Richfield Company, The Chase Manhattan Corporation, The
Chase Manhattan Bank, N.A., Partnerre Re and Standard Fusee Corporation. He is
also active in civic and educational organizations, including membership on the
Maryland Higher Education Commission. Mr. McLaughlin was first elected to the
Westinghouse Board in 1979.
RICHARD R. PIVIROTTO, 63
Retired Chairman
Associated Dry Goods Corporation
New York, New York
A graduate of Princeton University, Mr. Pivirotto earned an MBA from the
Harvard Business School. Following graduation from Harvard, he joined the
Joseph Horne Company in Pittsburgh, formerly a member store in the Associated
Dry Goods chain. Mr. Pivirotto served as president of Horne's from 1961 to
1970, vice chairman of Associated Dry Goods from 1970 to May 1972 and president
from May 1972 to February 1976, at which time he was elected chairman. He
served in that capacity until his retirement in 1981. He continued to serve on
the board of Associated Dry Goods until its acquisition by May Department
Stores in October 1986 and is a member of the boards of General American
Investors Company, Inc., The Gillette Company, New York Life Insurance Company,
Immunomedics, Inc. and the General Theological Seminary. He is also a trustee
emeritus of Princeton University and a trustee and chairman of the Greenwich
Hospital Corporation. Mr. Pivirotto was first elected to the Westinghouse Board
in 1973.
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PAULA STERN, 48
President
The Stern Group, Inc. (economic analysis and
trade advisory services) Washington, D.C.
A graduate of Goucher College, with a master's degree from Harvard University
and two masters' degrees from the Fletcher School of Law & Diplomacy, Dr. Stern
earned a PhD from the Fletcher School in 1976. From 1972 to 1988 she served the
United States government in various capacities, including legislative assistant
to U.S. Senator Gaylord Nelson, political analyst for the Carter-Mondale
transition team, and commissioner and then chairwoman of the International
Trade Commission. While serving as Senior Fellow at the Progressive Policy
Institute, she is also a director of Scott Paper Company, Harcourt General and
Dynatech Corporation. Dr. Stern was first elected to the Westinghouse Board in
May 1992.
DIRECTORS WITH TERMS CONTINUING TO 1995
- ---------------------------------------
RENE C. MCPHERSON, 69
Retired Chairman
Dana Corporation
Toledo, Ohio
A graduate of Case Institute of Technology with an MBA from the Harvard
Business School, Mr. McPherson joined the Dana Corporation in 1952 as a sales
engineer. He held various executive positions with Dana, being elected
executive vice president in 1966, president in 1968 and chairman and chief
executive officer in 1972. Mr. McPherson retired from Dana to serve as dean of
the Graduate School of Business at Stanford University from 1980 to 1983. He is
a director of The Andersons, Banc One Corporation, Dow Jones & Company, Inc.,
Mercantile Stores Company, Inc. and Milliken & Company. Mr. McPherson was first
elected to the Westinghouse Board in 1984.
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RICHARD M. MORROW, 68
Retired Chairman and Chief Executive Officer
Amoco Corporation (petroleum and petroleum products)
Chicago, Illinois
A graduate of Ohio State University, Mr. Morrow was elected president of Amoco
Corporation in 1978 and served as chairman of the board and chief executive
officer from 1983 until his retirement in February 1991. He was chairman of the
executive committee and had served as a director of Amoco since 1976. He joined
Amoco in 1948. From January 27, 1993 until June 30, 1993, Mr. Morrow served as
Chairman of the Board of Directors of Westinghouse. Mr. Morrow is a director of
First Chicago Corporation, The First National Bank of Chicago, R. R. Donnelly &
Sons Co., Potlatch Corporation, the Marsh & McLennan Companies and Seagull
Energy Corp. He also is chairman of the National Academy of Engineering. He is
a member of the Business Council and serves as a trustee of the University of
Chicago and Rush-Presbyterian-St. Luke's Medical Center. Mr. Morrow was first
elected to the Westinghouse Board in 1986.
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THE BOARD OF DIRECTORS AND ITS COMMITTEES
In 1993, there were fifteen meetings of the Board. Each director
attended at least 88% of all meetings of the Board and its committees on which
the director served. Consistent with Westinghouse's long-standing practice and
its by-laws, a majority of the members of the Board are "independent" as
defined under the Corporation's by-laws. At the present time, there are ten
members of the Board. During the course of the year, the Board intends to
identify additional qualified candidates for director who will join the Board.
In connection with a series of by-law changes adopted by the Board in December
of 1992, the classified Board has been eliminated. As a result, all directors
will be elected annually beginning in 1995, following the expiration of the
current term of the last incumbent class.
Westinghouse has four standing Board committees: the Audit Review
Committee, the Committee on Environment and Health, the Management Compensation
Policy Committee and the Nominating and Governance Committee. As required by
the Corporation's by-laws, all members of the Management Compensation Policy
Committee and the Nominating and Governance Committee are "independent" as
defined under the by-laws. In addition, all members of the Audit Review
Committee and the Committee on Environment and Health are "independent."
The responsibilities of the Audit Review Committee include
recommendation regarding the selection, retention and termination of the
Corporation's independent accountants and review of the professional services,
proposed fees and independence of such accountants. The Committee also reviews
internal control systems, the annual audit plans, the Corporation's annual
financial report to shareholders, and reports with respect to loss
contingencies, the public disclosure of which may be legally required. The
Committee exercises general oversight of pension and employee benefit plans and
programs. In addition, the Committee addresses issues and reviews those matters
relating to ethical conduct by the Corporation and its employees in all phases
of the Corporation's activities. In performing its duties, the Committee
consults with the independent accountants, internal auditors and management of
the Corporation. The independent accountants and the internal auditors have
direct access to the Committee, with and without the presence of management
representatives. Mr. McLaughlin is chair of this Committee, and directors
Carlucci, Gray, McPherson, Morrow, Pivirotto and Stern are members. There were
three meetings held by this Committee during 1993.
The Committee on Environment and Health oversees the Corporation's
environment and health policies and plans. It reviews the Corporation's
programs and procedures for the protection of and for compliance with laws and
regulations relating to the environment. It also reviews health and safety
issues affecting employees and the general public, and reviews significant
pending or threatened environmental litigation and significant regulatory
proceedings. Mr. Morrow is chair of this Committee, and directors Carlucci,
Gray, Pivirotto and Stern are members. During 1993, there was one meeting held
by this Committee and a special presentation on environmental matters was made
to the Board at the request of the Committee.
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The Management Compensation Policy Committee makes recommendations to
the Board concerning specific and general matters of management compensation.
It periodically reviews management compensation policies and practices,
determines incentive compensation awards and salary adjustments for officers,
and administers the Annual Performance Plan and the Corporation's long-term
incentive plans. During 1993, the Committee engaged an independent compensation
consultant as an adviser. Mr. Pivirotto is chair of this Committee, and
directors Carlucci, McLaughlin, McPherson and Morrow are members. There were
nine meetings held by this Committee during 1993.
The Nominating and Governance Committee makes recommendations to the
Board concerning the recruitment and selection of directors and the Chief
Executive Officer. It seeks and aids in attracting qualified candidates for the
Board, recommends to the Board candidates to be nominated by the Board for
election at the annual meeting of shareholders and recommends candidates to
fill vacancies in the Board or newly-created directorships. Mr. McPherson is
chair of this Committee, and directors Gray, McLaughlin and Pivirotto are
members. There were twenty-one meetings held by this Committee in 1993, the
majority of which concerned the recruitment and selection of Chairman and Chief
Executive Officer Michael H. Jordan.
With respect to nominees to the Board, any shareholder desiring to
recommend a candidate for consideration by the Nominating and Governance
Committee should furnish to the Secretary a resume of the experience and
qualifications of the proposed nominee and a written statement signed by the
proposed nominee consenting to be nominated to the Board and to serve if
elected. Pursuant to the Corporation's by-laws, any shareholder wishing to
nominate a candidate at the 1995 Annual Meeting of Shareholders, must send such
recommendation to the Secretary at the principal executive offices of
Westinghouse on or before January 26, 1995. A candidate for director should be
highly experienced, have knowledge and a background that will be useful to the
Corporation and the ability to exercise sound business judgment. The candidate
must also be willing and able to commit the time and effort needed to be an
effective director.
DIRECTOR COMPENSATION
A director who is an employee of the Corporation receives no
additional compensation for services as a director. Directors who are not
employees of the Corporation are paid an annual retainer of $22,000. Mr. Morrow
received an additional retainer of $100,000 for 1993 in recognition of his
significant contribution to the Corporation as Chairman of the Board from
January 27, 1993 until June 30, 1993. Non-employee directors receive $1,200 for
each Board and Committee meeting attended and receive a $2,000 annual fee for
serving as a Committee Chair. Non-employee directors may also receive a $1,200
per diem fee for special services outside the scope of normal Board and
Committee activities. For the significant time commitment and special efforts
rendered in connection with the recruitment and selection of Chairman and Chief
Executive Officer Michael H. Jordan, members of the Nominating and Governance
Committee received special per diem fees in 1993. Mr. McPherson, Chair of the
Committee, received $30,000 while Messrs. Gray, McLaughlin and Pivirotto each
received $15,000. Non-employee directors may defer all or a portion of their
retainer and fees on terms similar to the terms for deferral of annual and
long-term incentive awards described on page 19. All directors who received
additional retainer or special fees in
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1993 deferred such amounts. A director will receive deferred amounts in
five annual installments following termination of service as a director. In the
event of a change in control, these deferred amounts may be paid as prescribed
by the Management Compensation Policy Committee.
Each non-employee director elected at an annual meeting or continuing
to serve on the Board subsequent to such meeting receives 400 common stock
equivalents that yield dividend equivalents. These common stock equivalents are
held in a deferred stock account, and are paid in Westinghouse common stock in
January of the year following the year of termination of service as a director.
In the event of a change in control of the Corporation, these stock equivalents
will have a value based on the highest price of the common stock during the
thirty days preceding such change in control and may be paid as the Management
Compensation Policy Committee may prescribe. In April 1993, each continuing
non-employee director was granted 400 common stock equivalents pursuant to the
above-described program.
Under the Advisory Director's Plan, a non-employee director who
accumulates at least five years of Board service and retires at age 70 (or such
earlier date as may be approved by the Advisory Plan committee) will receive a
post-retirement annual payment of an amount equal to 100% of the annual
retainer in effect at the time of the director's retirement. An eligible
director receives one such annual payment for each full year of Board service
up to a maximum of ten payments. In the event of a change in control, such
benefits vest immediately and the value of unpaid benefits are paid on such
terms as the Advisory Plan committee may prescribe.
As part of its overall program to promote charitable giving, the
Corporation established the Director's Charitable Giving Program funded by life
insurance policies maintained by the Corporation on directors. A non-employee
director, upon completing five years of Board service, and the chairman and
chief executive officer of the Corporation, are eligible to participate in this
program. Upon the death of an individual director, the Corporation will make a
donation of $500,000 to a single qualifying charitable or other non-profit
organization, or a donation of $250,000 to each of two such organizations,
selected by the individual director. The Corporation will subsequently be
reimbursed by life insurance proceeds. In the event of a change in control,
donations may be made as of the date of such change and paid on such basis and
in such form as the Program committee may prescribe. Individual directors
derive no financial benefit from this program since all charitable deductions
accrue solely to the Corporation.
TRANSACTIONS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
During 1993, the Corporation and its subsidiaries engaged in various
transactions in the ordinary course of business with unaffiliated corporations
of which certain of the non-employee directors are executive officers. The
Corporation does not consider the amounts involved in any of these transactions
to be material.
In the normal course of its business, WCI Communities, Inc. (WCI),
a subsidiary of the Corporation, conducts promotional campaigns pursuant
to which it offers to sell property at discounted prices. These promotional
campaigns are undertaken in an attempt to enhance the visibility and
marketability of new projects. During
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1993, as part of its ordinary course of promotional activities, WCI
offered property, at discounted prices, to certain members of management as
well as to individuals not associated with the corporation. Mr. Clark entered
into an agreement to purchase and an option to purchase property from WCI for a
total purchase price of $1,342,500, representing a discount of $152,500 from
generally prevailing sales prices.
LITIGATION INVOLVING DERIVATIVE CLAIMS AGAINST DIRECTORS
In December 1988, a derivative action was filed in the United States
District Court, District of New Jersey, against the Corporation and certain of
its previous and current directors (not including current directors Carlucci,
Clark, Conrades, Gray, Jordan and Stern) seeking disqualification of such
persons from continuing to serve as directors and other legal, equitable or
declaratory relief as the court deems proper plus costs and attorneys' fees.
This action alleged violations by the directors of certain provisions of the
federal securities laws in connection with the construction of a nuclear power
plant in the Republic of the Philippines. The complaint also asserted state law
breach of fiduciary duty claims arising from the alleged failure to pursue
causes of action the Corporation was alleged to possess against those
individuals responsible for any alleged wrongdoing in connection with the
procurement of the contract to construct the Philippines nuclear power plant.
In a related matter, a 15 count lawsuit was filed against the Corporation in
connection with the construction of this plant. In May 1993 a jury ruled in
favor of the Corporation on one of the counts. The remaining counts are the
subject of an ongoing arbitration. In January, 1994, after numerous motions,
the parties submitted to the District Court a stipulation dismissing the
derivative action without prejudice. In the stipulation, plaintiffs reserved
the right to reinstate the action if the 1993 judgment in favor of the
Corporation is reversed or modified or the Corporation is found liable on any
other claim asserted against it arising out of the construction of the
Philippines plant.
In April and December 1991, derivative actions were filed in the
United States District Court, Western District of Pennsylvania, against the
Corporation and certain of its previous and current directors (not including
current directors Clark, Conrades, Gray, Jordan and Stern) alleging violation
of the directors' common law fiduciary duties in connection with the operation
of WFSI and Westinghouse Credit Corporation, former subsidiaries of the
Corporation. This suit was amended in June 1992 to allege violations of the
federal securities laws. All of the non-employee directors named as defendants
have been dismissed without prejudice. This suit was dismissed in its entirety
in July 1993. However, plaintiffs subsequently refiled the action and
defendants have moved to dismiss the refiled complaint.
In December 1991, a derivative action was filed in the same court
against the Corporation and its previous and current directors (not including
current directors Clark, Conrades, Gray, Jordan and Stern) alleging that the
directors wasted corporate assets by paying to management incentive
compensation for 1990 that was allegedly in
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excess of the limits permitted by the Annual Performance Plan. In
October 1992, the District Court dismissed the complaint, and the shareholder
appealed to the United States Court of Appeals for the Third Circuit (Third
Circuit). In December 1993, the Third Circuit affirmed the
trial court's dismissal. The time period to appeal the Third Circuit's decision
has not yet expired.
In June 1993, a derivative action was filed in the Court of Common
Pleas of Allegheny County, Pennsylvania against the Corporation and certain of
its previous and current directors (not including current directors Conrades
and Jordan) challenging the compensation paid to the non-employee directors
and the compensation awarded to former Chairman and Chief Executive Officer
Paul E. Lego at the time of his retirement. In November 1993, the trial court
dismissed the suit for failure to make a demand on the Board. Plaintiffs
appealed the dismissal but subsequently decided to voluntarily discontinue
the case.
Westinghouse and the individual director defendants believe that these
actions are without merit and intend to defend the suits vigorously.
In accordance with Article XVII of its by-laws, Westinghouse intends
to indemnify the director defendants against reasonable expenses and any
liability or amounts paid in settlement or incurred by them in connection
with the foregoing to the extent not prohibited by law. In addition,
Westinghouse maintains policies of insurance under which its directors are
insured, subject to specified exclusions and deductibles and maximum amounts,
against loss arising from any civil claim or claims which may be made against
any director by reason of any breach of duty, neglect, error, misstatement,
misleading statement, omission or other act done or wrongfully attempted as
a director.
SECURITY OWNERSHIP
The following table sets forth the number of shares of Westinghouse
common stock beneficially owned on January 7, 1994 by each director and
nominee (other than Mr. Conrades who was recently elected to the Board), by
each of the named executive officers and, as a group, by those persons and all
other executive officers, as reported by each such person. On that date, all
such persons as a group beneficially owned less than one percent of the
outstanding common stock of the Corporation. Each person has sole voting
and investment power over the shares reported, except as noted. No other equity
securities of the Corporation or its subsidiaries, other than director
qualifying shares, were beneficially owned, directly or indirectly, by any
nominee, director, named executive officer or other executive officer on
January 7, 1994.
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<TABLE>
<CAPTION>
Amount and Nature of
Name Beneficial Ownership
- ----------------------------------------------------------------------------------------------------------
<S> <C>
F. C. Carlucci 7,528 shares(1)(2)(3)
G. M. Clark 313,775 shares(4)
G. H. Conrades 3,000 shares(1)
W. H. Gray 4,223 shares(1)(2)
M. H. Jordan 1,688 shares
W. C. Korn 55,500 shares(4)
P. E. Lego 1,012,805 shares(4)
R. A. Linder 303,230 shares(4)
D. T. McLaughlin 13,453 shares(1)(2)
R. C. McPherson 25,056 shares(1)(2)
R. M. Morrow 26,939 shares(1)(2)
R. R. Pivirotto 4,156 shares(1)(2)
B. B. Staniar 282,609 shares(4)
P. Stern 1,028 shares(1)
R. A. Watson 456,220 shares(4)
All directors and all executive officers as a group 3,381,701 shares(1)(2)(3)(4)(5)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 2,655 common stock equivalents received by each non-employee
director under the Corporation's Deferred Stock and Compensation Plan for
Directors, except Mr. Carlucci, Mr. Gray and Dr. Stern who have received
1,977; 1,049; and 728 common stock equivalents, respectively. Mr. Conrades
was elected to the Board on January 26, 1994 and as a result has not yet
received any common stock equivalents. Mr. Conrades' stock ownership is
as of March 4, 1994.
16
<PAGE> 17
(2) Directors Carlucci, Gray, McLaughlin, McPherson, Morrow and Pivirotto have
deferred all or part of their annual retainer or fees. As a result of these
deferrals, these directors will be entitled to receive at a future date
4,551; 2,774; 9,998; 15,801; 23,884 and 1,101 shares, respectively, which
are reflected in the table, or cash in lieu of all or part thereof.
(3) Includes 1,000 shares over which Mr. Carlucci shares voting and investment
power.
(4) Includes 271,802, 55,500, 986,548, 277,341, 280,000 and 452,000 shares
not owned by Messrs. Clark, Korn, Lego, Linder, Staniar, and Watson,
respectively, on January 7, 1994, but with respect to which they had the
right to acquire beneficial ownership within 60 days through the exercise
of stock options.
(5) Includes 8,648 shares held by immediate family members of executive
officers (including 6,000 shares as to which beneficial ownership is
disclaimed) and 3,118,809 shares not owned by directors and executive
officers on January 7, 1994, but with respect to which they had the right
to acquire beneficial ownership within 60 calendar days after such date
through the exercise of stock options.
The Corporation is not aware of any person who has or shares voting
or investment power over more than five percent of the Corporation's common
stock.
Under the federal securities laws, the Corporation's directors,
executive officers and holders of more than 10% of the Corporation's common
stock are required to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of the common stock of
the Corporation. Paul E. Lego after retiring from the Corporation but
during the post-retirement continuing reporting period inadvertently failed to
file two Form 4s on a timely basis to report seven transactions. Mr. Lego
promptly reported the transactions upon learning that a filing was required.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the
compensation for services to the Corporation and its subsidiaries in 1991, 1992
and 1993 of those persons who served as chief executive officer during 1993,
each of the other four most highly compensated executive officers of the
Corporation at the end of 1993 and one person who would have been among the
four most highly compensated executive officers but for the fact that he ceased
active employment before year-end.
17
<PAGE> 18
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
All Other
Annual Compensation Long-Term Compensation Compensation(2)
------------------------------------ ----------------------------------- ---------------
Awards Payouts
---------------------- ---------
Other Securities
Name and Annual Restricted Underlying
Principal Compen- Stock Options/ LTIP
Position Year Salary Bonus(1) sation(2) Award(s) SARs(3) Payouts
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
M. H. Jordan ........1993 $503,799 $400,000(4) -- 0 1,000,000 N/A $ 7,075(7)
Chairman .........1992 N/A N/A N/A N/A N/A N/A N/A
and Chief .........1991 N/A N/A N/A N/A N/A N/A N/A
Executive
Officer
P. E. Lego .........1993 $ 58,333 0 -- 0 0 $418,000 $1,401,750(5)
Former .........1992 $699,996 0 $13,411 0 50,000 0 $ 11,575
Chairman .........1991 677,083 0 -- 0 700,000 0 --
and Chief
Executive
Officer
G. M. Clark(6) .......1993 $481,742 $400,000 -- 0 130,000 $136,800 $7,075(7)
President .......1992 $277,491 $300,000 $5,082 0 15,000 0 $8,717
.......1991 $266,988 0 -- 0 230,000 0 --
R. A. Watson .......1993 $660,000 $630,000 -- 0 80,000 $3,795,066(8) $5,075,165(9)
Former .......1992 $304,545 $300,000 $4,500 $2,859,750(10) 452,000 N/A $ 406,866
Chairman and .......1991 N/A N/A -- N/A N/A N/A --
Chief Executive
Officer, Financial
Services
B. B. Staniar .......1993 $418,414 $400,000 -- 0 80,000 $136,800 $7,075(7)
Chairman, Knoll.......1992 $363,996 $300,000 $6,865 0 15,000 0 $8,949
& Group W .......1991 $354,996 0 -- 0 230,000 --
Broadcasting
W. C. Korn .......1993 $395,004 $325,000 -- 0 58,000 $370,000 $7,075(7)
President, .......1992 N/A(11) N/A N/A N/A N/A N/A N/A
Group W .......1991 N/A(11) N/A -- N/A N/A N/A --
Broadcasting
</TABLE>
18
<PAGE> 19
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. A. Linder 1993 $340,250 $200,000 -- 0 80,000 $136,800 $7,075(7)
President 1992 $300,000 $160,000 $5,245 0 29,186 0 $8,998(12)
Electronic 1991 $283,328 0 -- 0 230,000 0 --
Systems
</TABLE>
(1) This column shows awards of incentive compensation under the Annual
Performance Plan. The recipient of an award may elect to defer up to 50% of
the award, to be paid either (i) in one installment in any future year not
later than the year of normal retirement, or (ii) in a lump sum or annual
installments after termination of service. The deferred amount is treated
as if it were invested in putative convertible debentures with a fixed
interest rate, compounded annually, equal to the seven year U.S. Treasury
Bond rate (or future equivalent U.S. Treasury security rate if the
seven-year U.S. Treasury Bonds are not issued during the relevant week) for
the week preceding the regular January Board meeting on or after the date
of the award. Each debenture is deemed to have a face value of $100 and is
deemed to be convertible into shares of Westinghouse common stock at a
conversion rate determined by dividing $100 by the mean of the high and low
prices of Westinghouse common stock as reported by the composite tape of
the New York Stock Exchange on the last trading day preceding the regular
January Board meeting. At the time a deferred installment is paid, the
employee receives the greater value of (i) the cash amount equal to the
face value of such debentures due for such installment, plus cash equal to
accrued interest on such installment, or (ii) shares of the Corporation's
common stock equaling the number of shares into which the debentures due
for such installment are convertible at the above conversion rate, plus
cash equal to accrued interest on such installment. In the event of a
change in control, shares are valued based upon the highest price of the
common stock during the thirty days preceding such change in control. A
participant who has deferred compensation until after termination of
service may elect, after attaining age 57 1/2 and prior to ceasing to be an
employee, to establish the ultimate payable value of each putative
debenture based on the fair market value of the Corporation's common stock
as of the day on which notice of the election is received by the
Corporation.
(2) Information for years prior to fiscal 1992 is not required to be
disclosed. However, the amounts for all years were less than $50,000.
(3) Options granted in 1993 under the 1993 Long-Term Incentive Plan (the
1993-Plan) are subject to shareholder approval of that plan.
(4) The named executive officer was paid a special $400,000 payment pursuant
to an employment agreement between the Corporation and that officer in
connection with the commencement of his employment and in lieu of annual
incentive for 1993.
19
<PAGE> 20
(5) This amount consists of (i) a special $800,000 payment to the named
executive officer pursuant to a separation agreement between the
Corporation and that officer in connection with the officer's retirement,
(ii) a $600,000 payment for consulting services during 1993, and (iii)
$1,750 contributed for 1993 by the Corporation to such officer's account
pursuant to the contributory provisions of the Westinghouse Personal
Investment Plan.
(6) Mr. Clark was Interim Chief Executive Officer for the period January 27,
1993 to June 30, 1993.
(7) These amounts for 1993 consist of 1993 contributions by the Corporation
to the account of the named executive officer pursuant to the
contributory provisions of the Westinghouse Personal Investment Plan.
(8) This award was made under the 1992-94 Equity Plus Program and was measured
based on the financial performance of WFSI.
(9) This amount consists of (i) $2,070,000 which reflects the sum of $1,200,000
(the $300,000 minimum annual incentive awards for each of calendar years
1994, 1995, 1996 and 1997 in accordance with the executive's original
employment agreement) plus $870,000 (the amounts by which the annual
incentive awards for calendar years 1994, 1995, 1996, and 1997 exceeded the
respective minimum annual incentive awards guaranteed under the original
employment agreement and thereby reflect his performance against
established objectives) as more fully described on pages 26 and 31;
(ii) $2,904,000 for salary he would have been entitled to under his
original employment agreement for the period January 1, 1994 through
December 31, 1997, as more fully described on pages 26 and 31; (iii)
$94,090 in lieu of certain benefit programs he would have been entitled to
under his original employment agreement; and (iv) $7,075 contributed for
1993 by the Corporation to such officer's account pursuant to the
contributory provisions of the Westinghouse Personal Investment Plan.
(10) One-third of this award vested June 29, 1993 and was paid during 1993.
The value on December 31, 1993 of the remaining two-thirds of this award
outstanding was $2,106,591. This value was based on a market interest rate
of 6.88% applied through December 31, 1993.
(11) Mr. Korn became an executive officer of the Corporation in October 1993.
(12) The amount shown in this column for 1992 consists of (i) $6,866
contributed for 1992 by the Corporation to the account of the named
executive officer pursuant to the contributory provisions of the
Westinghouse Personal Investment Plan, and (ii) $2,132 as a benefit to the
named executive officer of the Corporation's premium payments made in 1992
for split dollar life insurance.
20
<PAGE> 21
OPTION GRANTS
The following table shows all grants in 1993 of stock options to the
executive officers named in the summary compensation table on page 18. All of
these grants were made under the 1993 Long-Term Incentive Plan (the 1993-Plan)
and are subject to shareholder approval of that plan. No stock appreciation
rights were granted during 1993.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Percent of Total Grant Date
Options Granted Present Value(3)
Options to Employees Exercise or Expiration Per Share Total
Name Granted (1)(2) in Fiscal Year Base Price Date
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
M. H. Jordan 750,000 $15.44 6/30/03 $5.56 $4,170,000
250,000 20% $26.00 6/30/03 $3.49 $ 872,500
P. E. Lego 0 0% N/A N/A N/A N/A
G. M. Clark 130,000 3% $15.44 5/26/03 $5.56 $ 722,800
R. A. Watson 80,000 2% $15.44 5/26/03 $5.56 $ 444,800
B. B. Staniar 80,000 2% $15.44 5/26/03 $5.56 $ 444,800
W. C. Korn 58,000 1% $15.44 5/26/03 $5.56 $ 322,480
R. A. Linder 80,000 2% $15.44 5/26/03 $5.56 $ 444,800
</TABLE>
(1) All stock options were granted to the named executive officers on May 26,
1993, except those options granted to Mr. Jordan which were granted
on June 30, 1993. These stock options were granted in tandem with
limited rights. Options granted to date under the 1993-Plan are for a term
of ten years from the date of award, or such lesser term as may be
determined by the Committee. Except in the event of a change in control,
generally an option is exercisable in whole or in part after the
commencement of the second year of its term and until the option
terminates. Limited rights are exercisable only in the event of a change
in control and during the thirty days immediately following such change.
When a limited right is exercised, the employee is entitled to receive
the difference between the exercise price and the greater of (i) the
highest sales price of the common stock during the sixty days prior to
exercise, or (ii) the highest price paid for the common stock in the change
in control transactions during such period. Under the 1993-Plan, the
purchase price of stock under each option may not be less than the fair
market value of the
21
<PAGE> 22
stock on the date the option is granted. Reload options
are granted to employees at the time of an exercise of a stock option
through a stock swap. The reload option is granted for the number of shares
the employee tenders to pay the exercise price of the related option.
(2) Total options granted to all other executive officers under the 1993-Plan
was 522,500. Other options granted under the 1993-Plan totaled 425,500.
Equity Plus grants for the 1992-1994 performance period with a total
dollar grant value of $150,000 were also granted in early 1994 under the
1993 Plan to two executive officers. All options and grants under the
1993-Plan are subject to shareholder approval of that Plan.
(3) These values were derived using the Black-Scholes option pricing model and
the following common assumptions, all of which are representative of
conditions existing when these stock options were granted: stock price
volatility .28; dividend yield 2.7%; interest rate 6.5%; and a ten-year
term. There were no adjustments made for non-transferability or risk of
forfeiture. The values and assumptions presented here were provided by
Frederick W. Cook & Co., Inc. The actual value, if any, that an executive
officer may realize from his stock options (assuming that they are
exercised) will depend solely on the gain in stock price over the exercise
price when the shares are sold.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information as to the unexercised
options to purchase the Corporation's common stock granted in 1993 and prior
years to the named executive officers and the value of options held by them at
year-end. None of the named executive officers exercised any options during
1993.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options at
Options at Fiscal Year-End Fiscal Year-End(1)
Name Exercisable Unexercisable(2) Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
M. H. Jordan 0 1,000,000 $0 $0
P. E. Lego 986,548 0 $0 $0
G. M. Clark 271,802 130,000 $0 $0
R. A. Watson 452,000 80,000 $0 $0
B. B. Staniar 280,000 80,000 $0 $0
W. C. Korn 55,500 58,000 $0 $0
R. A. Linder 277,341 80,000 $0 $0
</TABLE>
(1) Based on the closing price of the Corporation's common stock as reported by
the composite tape of the New York Stock Exchange on December 31, 1993
($14.125).
(2) These options are unexercisable because they have not vested under their
terms.
22
<PAGE> 23
LONG-TERM INCENTIVE PLAN AWARDS
The following table describes Equity Plus Grants granted in 1993
under the 1984 Long-Term Incentive Plan (the 1984-Plan) to the named executive
officers of the Corporation.
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Performance or
Other Period Estimated Future Payouts
Until Maturation Under Non-Stock Price-Based Plans
Name Grants (1) or Payout Minimum Threshold Target Maximum
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
M. H. Jordan $500,000(2) 1.5 years $0 $175,000 $500,000 $1,500,000*
P. E. Lego 0
G. M. Clark 0
R. A. Watson 0
B. B. Staniar 0
W. C. Korn 0
R. A. Linder 0
</TABLE>
* The value reflected in the table is the maximum value of the award if all
financial targets are met. However, since the maximum value of the award is
based on a stock appreciation multiplier, the maximum value of the award
cannot be determined at this time.
(1) Under the 1992-94 long-term incentive Equity Plus program, contingent
dollar grants are made for a three-year performance period. The value of
the grants depends upon the achievement of financial performance targets
over the period approved by the Management Compensation Policy Committee.
Mr. Jordan's grant is for the 1992-1994 performance period and is on the
same basis as other awards made to senior executives in 1992. The
performance targets for these grants are income before taxes of the
Corporation's ongoing core businesses (excluding accounting changes, WFSI
performance, and certain 1993 fourth quarter charges related to
restructuring and other strategic actions) and investment turnover
(computed as sales divided by average investment) which must be achieved to
receive the targeted cash award. To the extent performance targets are met,
the grants have the potential to increase in proportion to the appreciation
in the Westinghouse common stock price during the three-year performance
period, measured from July 28, 1992, and therefore may exceed the maximum
value shown above. The award, if any, after the withholding tax, is
converted to and paid in shares of Westinghouse common stock based upon the
stock price at the time the final award is determined. Failure to achieve
the threshold performance results in no award. The entire award or some
portion thereof may be deferred under the deferral arrangements described
on page 19. In the event of a change in control, Equity Plus grants may be
deemed to have been earned and such amounts, as well as any grants
previously earned and deferred, may be paid on such basis as the Management
Compensation Policy Committee may prescribe.
(2) A grant under the 1992-1994 Equity Plus Program was awarded to Mr. Jordan
upon the commencement of his employment June 30, 1993. No Equity Plus
grants were made for the period 1993-1995.
23
<PAGE> 24
PENSION BENEFITS
With the exception of Mr. Lego, all of the individuals named in the
summary compensation table on page 18 are participants in the Westinghouse
Pension Plan, which is a defined benefit plan. The Plan is designed to provide
retirement income related to an employee's salary and years of active service.
The cost of the Plan is paid by both Westinghouse and employee contributions.
All Westinghouse contributions are actuarially determined. The Corporation's
contributions to the Plan with respect to the individuals named in the summary
compensation table cannot readily be separately or individually calculated by
the actuaries for the Plan. As of December 31, 1993, the individuals named in
the summary compensation table had the following credited full years of service
under the Plan: Mr. Jordan, 0 years; Mr. Clark, 36 years; Mr. Staniar, 13
years; Mr. Korn, 3 years; and Mr. Linder, 36 years. At the time of his
retirement, Mr. Lego had 36 years of credited service under the Plan. Upon
his retirement, Mr. Lego elected to receive a lump sum distribution
from the Plan and as a result, is no longer accruing any benefits under the
Plan. Under his original employment agreement, Mr. Watson is deemed to have
credited years of service under the Westinghouse Executive Pension Plan
from April 15, 1968. The Plan provides for the vesting of all participants
in the event of a change in control of the Corporation.
In addition to the benefits provided by the Westinghouse Pension
Plan, the Westinghouse Executive Pension Plan provides for supplemental pension
payments to a group of executives, including those named in the summary
compensation table other than Mr. Lego. Upon retirement, such individuals who
meet the age and service requirements for retirement under the Westinghouse
Pension Plan and contribute to that plan are entitled to receive supplemental
payments under this Plan which, when added to their pensions under the
Westinghouse Pension Plan, result in a total annual pension equal to 1.47% for
each year of service multiplied by their "average annual compensation" as
defined by the Plan. Average annual compensation is equal to the sum of the
average of the five highest annualized December base salaries and the average
of the five highest annual incentive awards, each in the last ten years of
employment. In the event of retirement prior to age 60, the total annual
pension will be reduced by an amount equal to the reduction in the benefits
payable under the Westinghouse Pension Plan. Participants become vested in the
event of a change in control and benefits under the Westinghouse Executive
Pension Plan may be paid on a present value or other basis.
For purposes of illustration, the following table indicates the
approximate amounts of annual retirement income that would be payable at the
present time under various assumptions as to average annual compensation and
years of service to employees who participate in the Westinghouse Pension Plan
and are eligible for supplemental payments pursuant to the Westinghouse
Executive Pension Plan. The amounts presented in the table are based upon
straight life annuity amounts and are not subject to any reduction for Social
Security benefits or other offset amounts.
24
<PAGE> 25
<TABLE>
<CAPTION>
Five year average Estimated annual pension for
compensation including specified years of credited service
incentive award ---------------------------------------------------------------------------------
15 20 25 30 35 40
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 22,050 $ 29,400 $ 36,750 $ 44,100 $ 51,450 $ 58,800
300,000 66,150 88,200 110,250 132,300 154,350 176,400
500,000 110,250 147,000 183,750 220,500 257,250 294,000
700,000 154,350 205,800 257,250 308,700 360,150 411,600
900,000 198,450 264,600 330,750 396,900 463,050 529,200
1,100,000 242,550 323,400 404,250 485,100 565,950 646,800
1,500,000 330,750 441,000 551,250 661,500 771,750 882,000
2,000,000 441,000 588,000 735,000 882,000 1,029,000 1,176,000
</TABLE>
EMPLOYMENT AND SEVERANCE ARRANGEMENTS
Michael H. Jordan
In June 1993, the Corporation retained the services of Michael H.
Jordan as Chairman and Chief Executive Officer of the Corporation. Under the
terms of Mr. Jordan's employment agreement, he will receive an annual base
salary in 1993 and 1994 of $1,000,000, of which $503,799 was paid for the
period he was employed during 1993. Beginning in 1995 Mr. Jordan's annual base
salary will be subject to yearly review. Mr. Jordan is eligible for annual
incentive awards based on performance measures set by the Management
Compensation Policy Committee. In lieu of annual incentive compensation for
1993, Mr. Jordan received $400,000 upon entering into his employment agreement,
and his incentive compensation for 1994 will not be less than $300,000.
Under the agreement, Mr. Jordan received a $500,000 Equity Plus grant
for the 1992-1994 performance cycle. The potential value of this grant, which
is subject to the same performance measures as other Equity Plus grants made in
1992, is set forth in the table on page 23. Mr. Jordan also received options
to purchase an aggregate of 1,000,000 shares of common stock of the
Corporation, as set forth in the table on page 21, subject to shareholder
approval of the 1993-Plan. The exercise price of these options are set forth in
the table on page 21. Beginning in 1996, or earlier if the Management
Compensation Policy Committee so determines, he will be eligible to receive
long-term incentive grants on the same basis as other senior-level executives
of the Corporation.
The agreement further provides that Mr. Jordan will participate in
the Westinghouse Executive Pension Plan and specifically modifies the
requirement that he complete five years of continuous service and provides that
there will be no actuarial reduction for commencement of supplemental pension
benefits prior to age 65. Such benefits are subject to Mr. Jordan contributing
the maximum amounts possible to the Westinghouse Pension Plan during his
employment.
25
<PAGE> 26
Mr. Jordan's employment agreement extends until he attains age 65, or
until termination in accordance with the terms of the agreement, whichever is
earlier. In the event of termination by the Corporation without cause, Mr.
Jordan is entitled to a lump-sum payment equal to two times his highest base
salary plus the greater of (i) the sum of his two most recent actual annual
incentive awards, or (ii) two times his highest annual incentive target award
opportunity. He would also receive prorated incentive payments and other
specified benefits.
PAUL E. LEGO
On January 27, 1993, Mr. Lego announced his intention to retire from
the Corporation effective February 1. In recognition of his November 1992
strategic initiatives and willingness to perform consulting services after
retirement, Mr. Lego, upon his retirement, received the following: a special
separation allowance of $800,000; a total annual pension benefit recalculated
from approximately $710,000 to approximately $910,000 based on his attaining
age 65 and as if he had received compensation for two years that would have
placed him in approximately the 50th percentile of total annual compensation
received by chief executive officers of similarly sized diversified
corporations; and an annual fee of $600,000 for 1993 and 1994 for his services
as a consultant to the Corporation. Stock options granted to Mr. Lego in 1992
were deemed vested at the time of his retirement.
Upon his retirement, Mr. Lego was also eligible, to the extent that
annual incentive awards were paid by the Corporation for 1993 under the Annual
Performance Plan, to be considered for payment of a full award for 1993; the
Management Compensation Policy Committee determined, however, that no annual
incentive would be paid. Mr. Lego was eligible to receive payment on a
non-prorated basis of the contingent Equity Plus grants made to him in 1991 and
1992 for measurement periods ending in 1993 and 1994, respectively, to the
extent such awards were made to other executives. He was paid $418,000 on this
basis for the measurement period ended in 1993.
ROBERT A. WATSON
In 1992, the Corporation retained the services of Robert A. Watson as
president and chief executive officer of WFSI and its affiliated companies.
Because the announced plan to exit the financial services business has been
substantially completed, the Corporation and Mr. Watson entered into an
amendment of his employment agreement which resulted in his being placed on a
paid leave of absence as of December 17, 1993.
Under the terms of Mr. Watson's original employment agreement, he
received a monthly base salary of $50,000, subject to a minimum 10% increase on
January 1, 1993 and 1994. Upon entering into his employment agreement, he
received a special payment of $400,000.
Under the original agreement, Mr. Watson received a grant of 452,000
stock options having a per share exercise price of $17.44, the average price of
Westinghouse common stock on the date of grant. These options have a term of
ten years and vested one year from the date of grant. Mr. Watson received on
June 29, 1992 a grant equivalent in value to 164,000 shares of Westinghouse
common stock at $17.44 per share. He also received a $2,000,000 Equity Plus
grant for the three-year performance period ending in 1994. The agreement
further provided certain pension benefits to Mr. Watson under the Westinghouse
Executive Pension Plan.
26
<PAGE> 27
Mr. Watson and the Corporation entered into an amendment of his
original employment agreement effective as of December 17, 1993. The amendment
provides that Mr. Watson would be placed on a paid leave of absence through
December 31, 1997, which, under his original employment agreement, entitled him
to receive a lump sum cash payment of all guaranteed amounts. The terms of the
amendment reflect the outstanding job by Mr. Watson in reducing, by over $8.7
billion, the net portfolio exposure at Financial Services. In addition, it
reflects the substantial progress made in disposing of assets at Financial
Services ahead of schedule and at prices in excess of net book value. As a
result of these dispositions, Mr. Watson would have exceeded his target annual
incentive for the remainder of his employment agreement. The amendment provides
for cash payments to Mr. Watson equal to (i) an annual incentive award of
$630,000 for 1993, an annual incentive award of $570,000 for 1994 and the
target annual incentive award of $500,000 for 1995 through 1997, rather than
the $300,000 annual incentive guaranteed under his original employment
agreement for these years, (ii) an award of $3,795,006 for his outstanding
1992-94 Equity Plus Grant in lieu of the $1,000,000 guaranteed under the
original employment agreement, and $2,904,000 for salary for the years 1994
through 1997, as provided in his original employment agreement. The amendment
also provides that the non-vested portions of his grant under the Corporation's
deferral program equivalent in value to 164,000 shares of Westinghouse common
stock vested on December 17, 1993 and have been paid in cash. While on a paid
leave of absence, Mr. Watson will continue to accrue service for pension
purposes and will be entitled to begin receiving a pension benefit on January
1, 1998.
OTHER COMPENSATION
The Board has determined that employees receiving payments pursuant
to change in control provisions of any compensation or other employee benefit
plan should not be adversely affected by any tax imposed on such payments by
reason of Section 4999 of the Internal Revenue Code of 1986, as amended, and
has authorized the Corporation to make additional payments in an amount
sufficient to satisfy any such tax liability.
MANAGEMENT COMPENSATION POLICY COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Committee, which is composed entirely of outside independent
directors, monitors, reviews and approves the design and implementation of the
Corporation's executive compensation system. The Committee also determines the
amount and form of compensation for the CEO. For purposes of making compensation
determinations, the Committee uses broad based industry surveys of what
executives with comparable responsibilities are paid and evaluates individual
performance. In 1993, the Committee retained the services of Sibson & Company,
Inc., a compensation specialist, to review the executive compensation program
and to provide the Committee with the results of their evaluation of the
Corporation's compensation system. Sibson & Company continues to provide advice
to the Committee on executive compensation matters. In 1993, the Committee
performed a complete review of the executive compensation system and implemented
a number of changes to insure that executives are fairly rewarded for their
performance and to realign the specific performance criteria to the needs of the
Corporation.
27
<PAGE> 28
THE WESTINGHOUSE EXECUTIVE COMPENSATION PROGRAM -- The Westinghouse executive
compensation program is a pay for performance based total compensation system
consisting of base salaries and incentives that pay executives for the
achievement of performance levels designed to increase shareholder value of the
Corporation. These incentives consist of annual incentives, which reward for
achievements against pre-established goals, and long-term incentives, which
reward for significant increases in the value of the businesses over several
years.
The executive compensation system enables the Corporation to reward those
executives whose performance increases shareholder value. The system also
enables the Corporation to hire, retain and motivate high-quality globally
oriented executives who successfully meet the immediate business challenges and
improve the long-term performance of the Corporation. The system of base
salaries, annual and long-term incentives is designed:
o to pay for performance as measured against predetermined Corporate and
Business Unit financial and non-financial goals;
o to link annual and long-term incentive compensation opportunities to
performance goals that will benefit shareholders;
o to encourage stock ownership and provide a significant portion of long-term
incentives in the form of stock options, aligning the executive's interests
with those of shareholders; and
o to pay base salaries and provide total compensation opportunities which are
competitive as measured against industry norms in order to motivate,
attract and retain key personnel.
For purposes of measuring competitive compensation opportunities, the Committee
uses a manufacturing industry survey prepared by Management Compensation
Services, a division of Hewitt Associates. This survey of 289 companies, which
derive over 50% of their revenue from manufacturing operations, provides
information on base salaries and annual incentives paid to executives. The data
is segregated by industry classification, assigned responsibilities and size of
business as measured by sales revenue. The Committee targets the median or 50th
percentile for comparable size and scope of responsibilities of this database
for purposes of establishing base salary and annual incentive opportunities for
Westinghouse executives. A separate specific broadcasting industry survey is
used for executives in that business segment.
For purposes of measuring competitive long-term incentive opportunities, the
Committee uses a survey conducted by Frederick W. Cook, Inc. on behalf of 37
multibillion dollar revenue companies. This survey uses a consistent
methodology for converting all forms of actual long-term incentive grants into
equivalent annual stock option grants. The Committee targets the median or 50th
percentile of this survey for the purposes of making competitive long-term
incentive grants.
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<PAGE> 29
BASE SALARIES -- Each executive officer position is assigned a grade and a
salary range which takes into consideration the level of responsibility
involved, the knowledge and experience required, and competitive levels as
determined from the survey data. Each year, the executive's performance is
evaluated and any base salary increase is based on a subjective evaluation of
individual performance and contribution. Each year, recommendations for salary
adjustments for all executives are prepared by the chief executive officer and
are reviewed, modified where appropriate, and approved by the Committee.
In June 1993, as part of its review of executive compensation practices, the
Committee adjusted some base salaries that were below the competitive 50th
percentile as determined from the previously mentioned survey. These special
base salary adjustments considered the executive's performance, evaluated on
the same basis as for annual salary increases, and the competitive salary
range. Targeted annual incentive award opportunities were revised downward for
1993 by the same amount to maintain competitive total compensation opportunity.
ANNUAL INCENTIVE -- The Committee administers the Annual Performance Plan, a
shareholder-approved plan under which annual incentive compensation may be paid
to executive officers of the Corporation of up to 5% of consolidated net income
of the Corporation before deducting income taxes and subject to certain
exclusions the Committee may make. The Committee determined to exclude the
fourth quarter 1993 charge related to restructuring and other strategic
actions. The restructuring charges resulted from actions taken in order to
achieve the Corporation's goal of higher future performance and increased
shareholder value.
For 1993, the Committee established early in the year threshold and target
financial objectives for the total Corporation and each individual business
unit. Some of the executive officers were measured solely on the basis of
corporate income before tax. Awards for executive officers associated with a
specific business unit were weighted 75% on the performance of their business
unit and 25% on the basis of Corporate performance. Business unit performances
were measured against pre-determined objectives typically on the basis of 55%
income before tax, 25% cash flow and 20% specific non-financial initiatives.
Other executive officers were measured up to 80% on the basis of corporate
income before tax against the pre-determined objectives, with the remainder
based on performance against specific strategic initiatives.
Overall corporate financial performance, after the exclusion of
extraordinary items, was above threshold but below target objective due
primarily to the poor performance of Environmental Services. All other business
units were above threshold, with four of the business units' financial
performance being above previously established target objectives. As a result of
this financial performance, the Chief Executive Officer made an award
recommendation for each executive officer of the Corporation. These
recommendations were reviewed with and, to the extent determined appropriate,
approved by the Committee. Annual incentive awards for 1993 to current executive
officers as a group, other than the Chief Executive Officer, totaled
$3,044,100. In terms of the competitive targeted compensation, this
results in the executives being paid, on average, at the 25th percentile.
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<PAGE> 30
LONG-TERM INCENTIVES -- Long-term incentive opportunities were granted to
executive officers during 1993 in the form of non-qualified stock option
grants. These stock option grants were made to provide a performance based
incentive that rewards executives when shareholder value increases. This
long-term incentive opportunity is also intended to promote a sense of
ownership, both direct and potential, on the part of executives, and to
establish a community of interest with shareholders. Option grants for 1993
were made to executives based on their level of responsibility and a
subjective evaluation of individual performance using the 50th percentile
data from the Frederick W. Cook, Inc. survey referenced earlier.
In determining the grant level, principal emphasis was placed on such
factors and the executive's potential role in increasing shareholder value, and
the number of shares currently owned directly and through various deferral
arrangements by an executive were not considered.
In prior years, a portion of the long-term incentive opportunity granted to
executive officers was made in the form of an Equity Plus grant. An Equity Plus
grant is a long-term contingent dollar grant that can increase or decrease in
value during a three-year measurement period, depending upon two multipliers.
The first multiplier is based on the financial performance of the Corporation
or specific business unit as measured against income and balance sheet
objectives. An executive officer can receive from zero up to three times the
original grant amount based on the Corporation's or business unit's performance
against objectives over the measurement period. The second multiplier is based
on stock appreciation during the same measurement period. Again, if the market
value of the stock increases, both the executive and the shareholder benefit.
However, the stock multiplier is applied only when the stock price increases
and the threshold financial performance measurements are met. The executive may
defer 100% of any awards of Equity Plus grants made by the Committee and
amounts currently paid are generally made in shares of Westinghouse common
stock.
Equity Plus grants for the period 1991-1993 to all current executive officers
as a group had a total dollar grant value of $2,704,000 and were contingent on
financial performance for the Corporation and for specific business units for
the measurement period. For all current executive officers as a group, awards
with a total dollar value of $1,928,056 were made to 16 of the 18 executive
officers. Of the 16 executive officers, 7 received grants contingent on the
performance of their specific business unit, while 9 received grants contingent
on Corporate performance. As implemented, the financial performance objectives
for Corporate performance were measured 100% on income before tax of the
Corporation's ongoing core businesses after achieving targeted investment
turnover (sales divided by investment) goals. Financial performance objectives
for business unit executives were measured 50% on business unit income before
tax and 50% on investment turnover.
Corporate financial performance as measured against the above indicated
goals for the three-year period of 1991-1993 was 0.38 of the target objective,
which was above the threshold Corporate performance level that was established.
For business unit executive officers, one business unit failed to achieve
threshold performance and that award will not be paid. The other six business
units' performance multipliers ranged from 0.85 to 1.99 for financial
performance over the three year period. In measuring Corporate performance, the
Committee had ex-
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<PAGE> 31
cluded the operations designated for sale as part of the November 1992
restructuring plan and the Financial Services business unit financial
performance during the period in order to motivate executives to focus on
building shareholder value of the ongoing businesses of Westinghouse through
operating performance. The Committee also excluded the fourth quarter 1993
charge related to restructuring and other strategic actions which are intended
to result in higher future performance and increased shareholder value. The
stock multiplier was not applicable to any of the awards. Non-deferred awards,
after tax-withholding, were generally paid in Westinghouse common stock.
EMPLOYMENT CONTRACTS -- The compensation for Mr. Jordan, Chairman and Chief
Executive Officer of the Corporation, Mr. Lego, former Chairman and Chief
Executive Officer, and Mr. Watson, former chairman and chief executive officer
of the Corporation's Financial Services unit, are determined through contracts.
Mr. Jordan's and Mr. Lego's contracts are discussed under the heading Chief
Executive Officer; Mr. Watson's contract is discussed below. No other
executive officers had contracts in 1993.
</R<
In June 1992, the Corporation retained the services of Robert A. Watson
as president and chief executive officer of its Financial Services unit, and
entered into an employment contract with him in that capacity structured to
attract and motivate Mr. Watson to accept the challenges presented by the
Corporation's financial services business. That agreement is described on pages
26 and 27. Due to the level of disposition of Financial Services assets that
has been achieved while Mr. Watson has managed this unit, Mr. Watson would have
been entitled to resign in July 1994 and receive benefits under this contract
for a termination other than by voluntary resignation or for cause.
As, under Mr. Watson's management, the Corporation has substantially completed
the portion of its November 1992 restructuring plan relating to exiting the
financial services business, the Corporation and Mr. Watson mutually agreed
that he would cease to be an active employee and would resign all offices and
titles with the Corporation as of December 17, 1993. In accordance with his
amended contract, Mr. Watson received during 1993 cash payment of all
guaranteed amounts to which he would have been entitled had he continued to be
actively employed by the Corporation to July 1994. His outstanding stock
options have vested and are exercisable until the end of their respective
terms, subject, in the case of the grant under the 1993 Long-Term Incentive
Plan, to shareholder approval of that plan.
During Mr. Watson's time in office, the net portfolio exposure of the Financial
Services unit was reduced by over $8.7 billion. In 1993, proceeds from the
disposition of assets for which Mr. Watson was responsible were more than 10%
above net book value. As a result, the Committee determined that Mr. Watson had
performed in an outstanding manner as reflected in the substantial reduction of
net portfolio exposure in less than half the time originally anticipated and in
the very favorable prices obtained against the original estimates in selling
assets. Accordingly, the Committee determined that Mr. Watson had achieved the
maximum target under the 1992 Equity Plus grant and he received an award with
respect to this grant of $3,795,066 (the maximum award of $4,000,000, reduced
to reflect payment at this time). No multiplier based on stock price
appreciation was applicable to this
31
<PAGE> 32
award. Based on a target award provision of $500,000 in his employment
contract and on the above-described performance, the Committee also set Mr.
Watson's annual incentive awards for 1993 through 1997 at $630,000, $570,000,
$500,000, $500,000, and $500,000, respectively, rather than the $300,000 annual
guaranteed minimum amount provided in the contract. The Committee thus
authorized $870,000 more in annual incentives than Mr. Watson would have
received according to the terms of his original employment agreement. The
Committee determined that this was an appropriate recognition of the
achievement of the reduction of net portfolio exposure in less than half the
time anticipated and the very favorable prices obtained in selling assets.
CHIEF EXECUTIVE OFFICER -- On June 30, 1993, the Corporation retained the
services of Michael H. Jordan as Chairman and Chief Executive Officer of the
Corporation. The terms of the Corporation's employment contract with Mr. Jordan
were negotiated by the Committee and were structured to attract Mr. Jordan to
accept the challenges presented by the Corporation's businesses, to motivate
him to take the actions necessary and to reward him for increased value to
shareholders. The major provisions of this agreement are summarized on pages 25
and 26.
Mr. Jordan's base salary, annual incentive and long-term incentive compensation
are paid in accordance with this agreement. In negotiating and reviewing the
agreement, the Committee referenced information provided by executive
compensation consulting firms -- Sibson & Company and Towers-Perrin --
regarding compensation levels for chief executive officers of companies of
similar size and diversity as the Corporation. Mr. Jordan's 1994 guaranteed
total compensation consists of a base salary of $1,000,000 and minimum 1994
annual incentive of $300,000. Mr. Jordan's initial base salary was set in part
based on (i) competitive base salaries, (ii) annual salary reviews not beginning
until calendar year 1995, and (iii) to compensate for housing and transportation
expenses Mr. Jordan will incur in lieu of immediate relocation expenses. He
received a signing bonus of $400,000 in lieu of any annual incentive for 1993.
Mr. Jordan's long-term incentive opportunities include stock options for
1,000,000 shares of Westinghouse common stock, which are subject to shareholder
approval of the 1993 Long-Term Incentive Plan, and a $500,000 Equity Plus grant
for the period 1992-1994.
The large initial grant of stock options is "front-end-loaded" in replacement
of annual grants that would normally be made over the next three years. 750,000
of the options have an exercise price of $15.44 per share, the market price
on the date of grant, to motivate and reward Mr. Jordan for the value provided
to shareholders during his tenure. 250,000 of the options have an exercise
price of $26.00 per share as an additional incentive to increase the value of
Westinghouse beyond the current value. The Equity Plus incentive opportunity
has the same performance measures and other requirements as those applicable to
the outstanding 1992-1994 Equity Plus grants to other senior-level corporate
executives and was intended to place him on a par with these executives.
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<PAGE> 33
On January 27, 1993, the Board named Gary M. Clark as President and Interim
Chief Executive Officer. Mr. Clark served as Interim Chief Executive Officer
until Mr. Jordan's election on June 30, 1993 and continues to serve as
President.
Mr. Clark's 1993 base salary was evaluated by the Committee in light of his
additional responsibilities and was increased effective February 1, 1993 to an
annual salary of $500,000.
For 1993, Mr. Clark received an annual bonus of $400,000 based on: (i) the level
of corporate income before tax for the Corporation as described earlier in this
report, (ii) judgmental evaluation by the Committee of Mr. Clark's individual
performance and contribution and (iii) competitive data from the surveys
previously mentioned. Mr. Clark also received payment of the contingent 1991
Equity Plus grant based on Corporate performance for the period ending in 1993
as described earlier in the amount of $136,800, which is 38% of original grant
value. In 1993, Mr. Clark also received a grant, subject to shareholder
approval of the 1993 Long-Term Incentive Plan, of stock options to purchase
130,000 shares of common stock of the Corporation, with the same terms and
conditions as options granted to other senior-level executives. His grant level
was established considering previously discussed competitive data and the
Committee's subjective evaluation of Mr. Clark's performance.
As reported in last year's proxy statement, the Committee and the Board
entered into an agreement with Mr. Lego which is summarized on page 26. The
Committee's rationale for this agreement, as described on page 27 of the 1993
proxy statement and at the 1993 Annual Meeting, was to recognize that
Mr. Lego's early retirement would not enable him to share in the results of
the new strategic initiatives that he had put in place in 1992.
As part of the agreement, Mr. Lego was eligible, to the extent that annual
incentive awards were paid by the Corporation for 1993 under the Annual
Performance Plan, to be considered for payment of a full award for 1993; the
Committee determined, however, that no annual incentive would be paid. Mr. Lego
was also to receive a non-prorated payment of the contingent Equity Plus grant
made to him in 1991 to the extent such awards were paid to other executives, and
accordingly, has been paid $418,000 on the basis of Corporate performance as
described earlier for the measurement period ended in 1993.
The Omnibus Budget Reconciliation Act of 1993 provides that beginning in 1994
compensation for certain individual executive officers will not be deductible
to the extent the officer's compensation for that year exceeds one million
dollars. With the current structure of compensation and the availability of
deferral opportunities, the Committee believes the Corporation will not be
denied any significant tax deductions over the next two years. The Committee
has reviewed and will continue to review tax consequences as well as other
relevant considerations when making compensation decisions. Qualifying
performance-based compensation will be excluded from the one million dollar cap
and the Committee believes, based on information currently available, that the
Corporation's stock options to its executive officers will qualify for this
exclusion.
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<PAGE> 34
MANAGEMENT COMPENSATION POLICY COMMITTEE
Richard R. Pivirotto, Chair
Frank C. Carlucci
David T. McLaughlin
Rene C. McPherson
Richard M. Morrow
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the total returns (assuming
reinvestment of dividends) of the Corporation's common stock, the Standard &
Poor's 500 (S&P 500) Index and the Dow Jones Electrical Components & Equipment
(Dow Electrical) Index. The graph assumes $100 invested on December 31, 1988 in
Westinghouse common stock and each of the indices.
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<PAGE> 35
COMPARISON OF FIVE-YEAR TOTAL RETURN*
WESTINGHOUSE COMMON, S&P 500 AND DOW ELECTRICAL INDICES
<TABLE>
<CAPTION>
Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93
- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Westinghouse $100 $146 $117 $78 $61 $66
- --------------------------------------------------------------------
S&P 500 $100 $132 $128 $166 $179 $197
- --------------------------------------------------------------------
Dow Jones Electrical
Component & Equipment
Index $100 $127 $117 $146 $147 $160
- --------------------------------------------------------------------
</TABLE>
* Assumes that the value of the investment in Westinghouse common
stock and each index was $100 on December 31, 1988 and that all
dividends were reinvested.
2. ELECTION OF INDEPENDENT ACCOUNTANTS
(Item 2 on proxy card)
Independent accountants are to be elected to audit and express an
opinion as to the fairness of the presentation to the shareholders of the
financial statements for 1994. During the year ended December 31, 1993, Price
Waterhouse served as the principal independent accounting firm for the
Corporation. During such period, the Corporation and its consolidated
subsidiaries paid Price Waterhouse approximately $10,900,000 for various audit
and non-audit services.
Price Waterhouse is named as a defendant in a class action and an
individual action brought by present and former shareholders of the Corporation
against the Corporation and others. These actions allege federal securities
35
<PAGE> 36
law and common law violations. The claims against Price Waterhouse
relate to the audits of the Westinghouse consolidated financial statements for
the years 1989 and 1990 and the reports rendered thereon. In July of 1993, all
claims against Price Waterhouse were dismissed. Plaintiffs have subsequently
refiled the claims and Price Waterhouse has again moved to dismiss the claims.
Price Waterhouse believes that these actions are without merit and intends to
defend the suits vigorously.
Before making its recommendation to the entire Board, the Audit Review
Committee carefully considers the qualifications of the candidate for the
Corporation's independent accountants. In the case of Price Waterhouse, this
consideration has included a review of its performance in prior years as well as
its reputation for integrity and for competence in the fields of accounting and
auditing. The Audit Review Committee has expressed its satisfaction with Price
Waterhouse in all of these respects. The Committee's review of Price Waterhouse
included inquiry concerning litigation involving Price Waterhouse and the
existence of any investigations by the SEC. In this respect, the Audit Review
Committee has concluded that the ability of Price Waterhouse to perform services
for the Corporation is not in any way adversely affected by these matters.
The persons named in the enclosed proxy card (Messrs. Jordan, Clark and
Briskman) have advised that they intend to vote for the election of Price
Waterhouse unless a contrary direction is indicated on the proxy card.
A representative of Price Waterhouse will be present at the 1994 Annual
Meeting and will have an opportunity to make a statement. He or she will also
respond to any appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF PRICE WATERHOUSE AS INDEPENDENT ACCOUNTANTS.
3. APPROVAL OF 1993 LONG-TERM INCENTIVE PLAN
(Item 3 on proxy card)
During 1993, the Board of Directors of the Corporation adopted the
1993 Long-Term Incentive Plan (the 1993-Plan) as approved and recommended by
the Management Compensation Policy Committee of the Board, subject to
shareholder approval. The 1993-Plan replaces the 1984 Long-Term Incentive Plan
and is similar to previous long-term incentive plans approved by the
Corporation's shareholders in that it provides for the granting of incentive
and non-qualified stock options, stock appreciation rights and performance
awards. The directors believe that the Corporation's long-term incentive plans
provide an important means of attracting, retaining and motivating key
management employees. The directors also believe that the 1993-Plan will foster
and promote the long-term financial success of the Corporation and increase
shareholder value.
Because executive officers (who may also be members of the Board) are
eligible to receive awards under the 1993-Plan, each of them has a personal
interest in the adoption of this proposal.
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<PAGE> 37
SUMMARY OF THE 1993-PLAN
The following general description of certain features of the
1993-Plan is qualified in its entirety by reference to the complete text of the
1993-Plan which appears as Exhibit A of this Proxy Statement.
Term. The 1993-Plan will become effective on the date it is approved
by the shareholders of the Corporation. The 1993-Plan has no fixed expiration
date; however, no awards may be granted after May 25, 2003 other than reload
options provided for with respect to options outstanding prior to that date.
Administration. The 1993-Plan will be administered by a Committee of
three or more directors who are not employees of the Corporation. The Committee
will have the exclusive authority to interpret, administer and make
determinations under the 1993-Plan, including the exclusive authority to select
participants for the 1993-Plan and to make awards under the 1993-Plan.
Participation and Award. Participation in the 1993-Plan is limited to
employees holding key management positions and who are selected from time to
time by the Committee. The granting of awards under the 1993-Plan is at the
discretion of the Committee; therefore it is not possible to indicate which
employees may receive awards under the 1993-Plan or the amount of the awards.
Approximately 240 employees are eligible to be selected by the Committee to
receive awards. Stock options and two other awards were granted under the
1993-Plan during 1993 and early 1994 subject to shareholder approval of the
1993-Plan. See pages 21 and 22 for awards in 1993 under the 1993-Plan.
Types of Awards. Awards under the 1993-Plan may be in the form of any
of the following: (A) Incentive Stock Options and Non-statutory Stock Options;
(B) Stock Appreciation Rights and Limited Stock Appreciation Rights; (C)
Performance Awards; and (D) Restricted Stock.
Shares Available for Awards and Closing Quotation. The maximum number
of shares of stock which may be issued for all purposes under the 1993-Plan is
4,000,000, increased each January 1st, beginning in 1994 and ending January 1,
2003, by a number of shares equal to one percent (1%) of the number of shares
of stock outstanding on December 31st of the preceding year. Of this total
amount, the number of shares which may be issued pursuant to the exercise of
Incentive Stock Options is 1,000,000 increased by 1,000,000 each January 1st,
beginning in 1994 and ending January 1, 2003. The maximum number of shares
subject to options to purchase stock of the Corporation, Stock Appreciation
Rights and Limited Stock Appreciation Rights under the 1993-Plan awarded
to any one participant may not exceed one percent (1%) of the number of
shares of stock outstanding at the time the options, Stock Appreciation Rights
or Limited Stock Appreciation Rights are granted. The Corporation expects that
the majority of the shares authorized by the 1993-Plan will be granted in the
form of stock options based on its current assessment of business, accounting
and tax issues.
As of March 3, 1994, the closing price of the Corporation's common
stock as reported on the NYSE composite tape was $14.63.
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<PAGE> 38
Stock Options. Options may be issued to purchase either the
Corporation's common stock or formula value stock (stock). Formula value stock
would be a special class or classes of stock, the value of which is derived from
a formula established by the Committee which reflects financial measures
determined by the Committee. The Committee may award Incentive Stock Options and
Non-statutory Stock Options. Each award of a stock option will be evidenced by a
written agreement containing such terms and conditions as the Committee may
require. The current policy of the Corporation is to issue stock options for a
term of ten years or less. The Corporation expects to continue this policy
unless business, accounting or tax issues would otherwise dictate. The options
shall become exercisable at such time or times as the Committee may specify. The
Committee may at any time accelerate the time at which any option may be
exercised. The purchase price for the stock under each option will not be less
than the fair market value of the stock on the date the option is awarded.
Subject to certain restrictions, including required shareholder approval to
lower the option exercise price either by amending options or by canceling
options and granting replacement options, the Committee can amend or cancel
existing stock options or other awards.
The Committee may also grant "reload" options to participants who use
currently-owned stock to exercise an option. The additional shares obtained by
the participant must be held for one year. The reload option will be to
purchase, at fair market value as of the date the original option was
exercised, a number of shares of stock equal to the number of whole shares used
by the participant to exercise the original option. The reload option will be
exercisable only until the date of expiration of the original option, and it
may contain additional terms and conditions as the Committee may require. The
Committee has retained the power to cancel the reload feature. If a
participant's service with the Corporation terminates other than as a result of
retirement, death or disability, or with the Committee's consent, then all
outstanding stock options terminate immediately.
Stock Appreciation Rights. A stock appreciation right (SAR) entitles
a participant to a payment in cash or stock, as determined by the Committee
generally, equal to the appreciation in the fair market value of the stock
between the date of exercise and the date the stock appreciation right was
granted. The Committee may also place limits on the amount of this payment.
SARs may be awarded in connection with stock options (Tandem SARs) or
independently of options (Independent SARs). SARs will be evidenced by either a
stock option agreement or a separate agreement.
Except as otherwise provided, Tandem SARs are exercisable only at the
same time, to the same extent and subject to the same conditions as the related
option is exercisable, and only when the fair market value of the stock to
which it relates exceeds the option exercise price. Exercise of a SAR cancels
the related option. Independent SARs become exercisable on such conditions as
the Committee may specify. Unless otherwise determined by the Committee, no SAR
shall become exercisable for six months following the date on which it was
granted or the effective date of the 1993-Plan, whichever is later. Each SAR
shall expire on the date determined by the Committee or upon the earlier of (i)
the termination of the related option in the case of Tandem SARs, (ii)
expiration of the six month period following the participant's termination of
service to the Corporation with the consent of the Committee or as a result of
his or her death, disability or retirement, or (iii) the participant ceasing
service to the Corporation for any other reason.
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<PAGE> 39
Limited Rights. The Committee may award Limited Stock Appreciation
Rights (Limited Rights) to the holder of a stock option. A Limited Right may be
exercised only during the thirty-day period beginning on the first day
following a change in control of the Corporation, as defined in the 1993-Plan,
and only when the fair market value of the stock exceeds the option exercise
price of the related option. Upon the exercise of a Limited Right, the holder
shall receive cash equal to the excess over the related option exercise price
of the higher of (A) the highest gross price paid or to be paid for a share
involved in the change in control, or (B) the highest reported closing sales
price of a share of the Corporation's common stock on the NYSE, in each case
during the sixty-day period before the date on which the Limited Right is
exercised. Each Limited Right shall be exercisable only to the same extent that
the related option is exercisable and in no event after termination of the
related option. In no event shall a Limited Right be exercised during the first
six months after the granting of a Limited Right or the effective date of the
Plan, whichever is later. Upon the exercise of Limited Rights, the related
option shall be considered to have been exercised to the same extent. Upon
exercise or termination of the related option, the Limited Rights with respect
to such option shall be considered to have been exercised or terminated.
Performance Awards. The Committee may, upon such terms and conditions
as it determines, grant Performance Awards which provide for the recipient to
receive cash or stock or a combination (as determined by the Committee)
following the attainment of performance goals, which may be related to personal
performance, corporate performance (including stock performance), departmental
performance, or any other category of performance deemed by the Committee to be
important to the success of the Corporation. The Committee determines the goals
and the measurement period for the awards. Regardless of the degree to which
performance goals are attained, the awards will be paid only when, if and to
the extent that the Committee determines to make such payment.
The Committee will also have the authority at the time any other type
of award is granted under the 1993-Plan to impose the condition (in addition to
other conditions) that performance goals be met prior to the participant's
realization of any payment or benefit under the award.
Restricted Stock. The Committee may make restricted stock awards with
a restriction period and such other terms and conditions as it may prescribe. A
certificate representing the number of shares of common stock of the
Corporation designated as a Restricted Stock Award is registered in the
recipient's name, but deposited with the Corporation along with a stock power
endorsed in blank. Subject to transfer restrictions, the recipient will have
the rights of an owner of the shares during the restriction period, except that
the Committee may provide that dividends will be accumulated during this period
and be subject to the same forfeiture provisions as the Restricted Stock. Upon
expiration of the restriction period and satisfaction of any other conditions
of the award, or waiver by the Committee, the deposited shares are redelivered
to the participant.
In the event a participant's service with the Corporation is
terminated due to death, disability or retirement or with the consent of the
Committee, the restrictions on theRrestricted Stock will lapse to the extent of
such number of shares as are determined by the Committee, with any remaining
shares being forfeited. In the event a participant's employment is terminated
for any other reason, all Restricted Stock Awards will be forfeited.
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<PAGE> 40
Deferral. The Committee may designate certain awards or types of
awards as eligible for deferral, and a participant may elect to defer payment
of such awards within such limits and subject to such terms and conditions as
the Committee may establish. Deferred awards are deemed to have been awarded in
cash and the cash deferred. Unless otherwise determined by the Committee, and
subject to such changes as it may determine, the deferred amount will be
treated during the deferral period as if it were invested in putative
convertible debentures with a fixed interest rate, compounded annually, for the
entire deferral period. For purposes of determining the value of the deferred
amount at time of payment, a putative debenture is deemed to be convertible
into common stock of the Corporation at a conversion rate computed by reference
to the fair market value of said stock on the last trading day prior to the
regular January Board meeting on or preceding the deferral date. Payment of
deferred amounts may be in cash, stock or a combination, in the Committee's
discretion, and at such times as the Committee may determine. Unless the
Committee determines otherwise, a participant may elect to establish the
ultimate payable value of each deferred amount by reference to the fair market
value of the Corporation's common stock as of the day on which such alternate
valuation election is received by the Corporation in accordance with procedures
established by the Committee.
Federal Income Tax Consequences. Under the provisions of the Internal
Revenue Code of 1986, as amended (the "Code") and regulations promulgated
thereunder, the federal income taxation of options, SARs, performance awards
and Restricted Stock granted under the 1993-Plan is generally as follows:
Non-statutory Stock Options. No taxable income will be recognized by a
participant upon the granting of a Non-statutory Stock Option (including a
"reload option"). Upon the exercise of a Non-statutory Stock Option, however,
the participant will recognize taxable compensation in the year of exercise in
an amount equal to the difference between the option price and the fair market
value of the shares on the date of exercise. The participant's tax basis in the
shares will be the sum of the option price plus any income recognized upon
exercise.
At the time of any subsequent sale or other disposition of the
shares, the participant will realize capital gain (or loss) equal to the
difference between the amount received for the shares and his or her tax basis
in such shares. The capital gain or loss will be long-term or short-term,
depending on the participant's holding period for such shares.
SARs and Performance Awards. No taxable income will be recognized by
a participant upon the granting of an SAR (including Limited Right) or
Performance Award. Upon exercise of an SAR or the receipt of a payment with
respect to a Performance Award, the amount of compensation will be equal to the
cash received and the fair market value (as of the date of exercise for an SAR
or of receipt for a Performance Award) of any shares issued to the participant
in lieu of cash.
Participants who elect under the terms of the 1993-Plan to defer
receipt of Performance Awards by participating in the deferral provisions
of the 1993-Plan will, on the basis of existing court decisions, not
recognize federal taxable income (with exception of FICA and Medicare
taxes) until payment of the putative convertible debentures is made to
the participant, at which time the payments will be treated as ordinary
income in the same manner as described above.
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Incentive Stock Options. Under present federal income tax law and
regulations thereunder, there generally will be no federal income tax
consequences (other than those relating to the Alternative Minimum Tax) to
either the Corporation or a participant when an Incentive Stock Option is
granted or exercised. There are, however, federal income tax consequences
when the stock is disposed of through a sale or otherwise. If a participant
retains the shares acquired upon exercise of an Incentive Stock Option for
the requisite holding periods, any gain or loss realized by the participant
upon a subsequent disposition will constitute long-term capital gain or loss,
measured by the difference between the amount realized on the disposition and
the option price paid for the stock. The requisite holding periods are two
years after an Incentive Stock Option is granted and more than one year after
the shares are transferred to the participant. If the participant disposes of
the shares prior to the expiration of the requisite holding periods, ordinary
income will be recognized by the participant in an amount equal to the excess
of the fair market value at the time of exercise over the option price paid
for the shares. Any gain that is recognized in excess of the ordinary income
recognized on disposition is taxed as capital gain, which will be long-term
or short-term depending upon the participant's holding period. If the amount
realized upon a sale or exchange is less than the fair market value of the
stock at the time of exercise of the option, the amount of compensation
income recognized by the participant is limited to the amount realized upon
such sale or exchange over the option price. If the proceeds received upon a
disqualifying disposition are less than the option price, the participant
will recognize either a long-term or short-term capital gain loss depending
on how long the shares are held before disposition. In general, if a
disposition occurs prior to the expiration of the requisite holding periods,
the Corporation is entitled to a tax deduction equal to the compensation
income recognized by the participant.
Stock Swaps. If previously owned shares are used to exercise
Non-statutory Stock Options, no additional income results unless other property,
including money, is received by the participant in the exchange. Assuming no
gain or loss is recognized, the participant's tax basis and holding period of
the previously owned shares will be carried over to the equivalent number of
shares received on exercise. Any additional shares received upon exercise will
result in the participant recognizing taxable compensation equal to the fair
market value of the shares on the date of exercise. The tax basis of the
additional shares will be equal, in the aggregate, to the taxable compensation
recognized by the participant plus any cash paid. The holding period will begin
on the day after the tax basis of the shares is determined. However, if the
previously owned shares had been acquired on the exercise of an Incentive Stock
Option and the holding period requirement for those shares was not satisfied at
the time they were used to exercise this option, such use would constitute a
disposition of such previously owned shares resulting in the recognition of
ordinary income as described above.
Restricted Stock. No income tax will result to a participant upon the
receipt of shares of Restricted Stock under the 1993-Plan. When the
restrictions on ownership and transferability lapse and the shares of
Restricted Stock vest, the participant will recognize compensation income in an
amount equal to the fair market value of the Restricted Stock on the date of
vesting. However, the participant may make an election within 30 days of the
date of grant under Section 83(b) of the Code to recognize the fair market
value of the Restricted Stock as taxable income at the time of grant. If,
however, the restrictions on transferability are not satisfied and the shares
are
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forfeited, no taxable loss will be recognized. Dividends paid to a
participant on Restricted Stock prior to vesting are taxable as compensation
income in the year received.
At the time of any subsequent sale or other disposition of the
shares, the participant will realize capital gain (or loss) equal to the
difference between the amount received for the shares and his or her basis in
such shares. The participant's basis in the shares will be equal to the amount
of compensation income recognized in connection with the vesting of the stock.
The capital gain or loss will be long-term or short-term, depending on the
participant's holding periods for such shares.
Ordinary Income Versus Capital Gains. The value of gains that are
received from Incentive Stock Options, Non-statutory Stock Options, SARs,
Performance Awards and Restricted Stock are classified as either ordinary
income or capital gains for federal income tax purposes. The Omnibus Budget
Reconciliation Act of 1993 (OBRA 93) has increased the individual top marginal
income tax rate while the capital gains rate remained at 28%, with the limited
exception for gains on qualified small business stock. Therefore, different tax
rates apply to capital gains versus ordinary income (28% versus 39.6%).
Westinghouse Tax Deduction. The Corporation will be entitled to a
deduction for federal income tax purposes at the same time the participant
recognizes ordinary income under the rules described above. OBRA 93 placed a
one million dollar cap on the amount of compensation paid to certain executives
that may be deducted by the Corporation. However, excluded from the one million
dollar deduction limitation are certain shareholder approved performance-based
compensation plans, provided certain conditions are met. This deduction
limitation is effective for taxable years beginning on or after January 1,
1994.
The foregoing is a summary only and applies only to United States
federal income taxes. The law on which the above discussion is based is subject
to change at any time.
Other Provisions. In the event of a change in control, as defined in
the 1993-Plan, all options and, subject to certain exercise provisions, Limited
Rights (but not stock appreciation rights) become immediately exercisable, all
performance awards shall be deemed earned on such basis as the Committee may
determine and then shall be paid or deferred, if elected by the participant,
all restricted stock awards shall be deemed earned and restriction periods
expired on terms determined by the Committee, and all amounts deferred under
the 1993-Plan shall be paid to a trustee or otherwise as determined by the
Committee. The rights of a participant with respect to any award under the
1993-Plan, other than Limited Rights, are subject, until all benefits have been
received, to the condition that the participant not engage in any business
activity competitive with any business conducted by the Corporation and that
the participant be available for consultation at management's request. No
option, SAR, Performance Award, Restricted Stock or deferred amount under the
1993-Plan shall be transferable by a participant other than by will or laws of
descent and distribution. The 1993-Plan also provides for adjustments upon
certain changes in the stock, for tax withholdings and for non-uniform
determination by the Committee.
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The 1993 Plan will become effective on the date on which it is
approved by the shareholders of the Corporation.
The Board of Directors may at any time amend, suspend or terminate
the 1993-Plan provided no amendment shall, without shareholder approval,
effectuate a change for which shareholder approval is required for the
1993-Plan to continue to qualify under Rule 16b-3 under the Securities Exchange
Act of 1934.
The persons named in the enclosed proxy card (Messrs. Jordan, Clark
and Briskman) have advised that they intend to vote to approve the 1993-Plan
unless a contrary direction is indicated on the proxy card.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL
OF THE ADOPTION OF THE 1993 LONG-TERM INCENTIVE PLAN.
The favorable vote of a majority of the shares of common stock
present, either in person or by proxy, and entitled to vote on the matter at
the annual meeting, is required to approve the 1993-Plan.
4. AMENDMENT TO RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED COMMON SHARES
(Item 4 on proxy card)
At a meeting of the Board held on January 10, 1994, the Board adopted a
resolution amending section A of Article FIFTH of the Corporation's Restated
Articles of Incorporation to increase the number of the authorized shares of
common stock of the Corporation from 480 million to 630 million. The Board has
determined that the capital requirements of the Corporation require additional
equity to be issued. Part of the increase in authorized shares may be used in
connection with the Corporation's announced intention to take actions to
rebuild its equity base, including the issuance of equity securities. The
amended capital structure will also enhance the ability of the Corporation to
effectuate other programs, such as employee benefit plans. Additionally the
increase would make shares available for acquisitions and other general
corporate purposes. No change is being proposed in the number of authorized
shares of preferred stock. If approved by the shareholders, the increase in the
number of authorized shares of common stock would become effective upon the
filing of the Articles of Amendment with the Pennsylvania Department of State,
which filing would take place shortly after the Annual Meeting of Shareholders.
To effect the proposed amendment, the following resolution is
presented for adoption by the shareholders:
RESOLVED, that section A of Article FIFTH of the Restated Articles of
Incorporation, be and is hereby amended and restated in its entirety to read as
follows: (A) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 655 million consisting of (1) 25
million shares of Preferred Stock, par value $1.00 per share ("Preferred
Stock"), and (2) 630 million shares of Common Stock, par value $1.00 per share
("Common Stock").
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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR AN
AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK.
The favorable vote of a majority of the outstanding shares of common
stock of the Corporation on the record date is required to amend the Restated
Articles of Incorporation.
5. SHAREHOLDER PROPOSAL: CERES PRINCIPLES
(Item 5 on proxy card)
Westinghouse has been advised that The Ministers & Missionaries
Benefit Board of the American Baptist Churches, P.O. Box 851, Valley Forge,
Pennsylvania 19482-0851, the beneficial owner of 100 shares of common stock;
the School Sisters of Notre Dame Cooperative Investment Fund, 3753 West Pine
Boulevard, St. Louis, Missouri 63108-3305, the beneficial owner of 54 shares of
common stock and the Corporation of the Convent of the Sisters of Saint Joseph,
Chestnut Hill, Philadelphia, Pennsylvania 19118-2693, the beneficial owner of
100 shares of common stock, will propose the following resolution at the
meeting:
"WHEREAS WE BELIEVE:
The responsible implementation of sound environmental policy
increases long-term shareholder value by increasing efficiency, decreasing
clean-up costs, reducing litigation, and enhancing public image and product
attractiveness;
Adherence to public standards for environmental performance gives a
company greater public credibility than is achieved by following standards
created by industry alone. In order to maximize public credibility and
usefulness, such standards also need to reflect what investors and other
stakeholders want to know about the environmental records of their companies;
Standardized environmental reports will provide shareholders with
useful information which allows comparisons of performance against uniform
standards and comparisons of progress over time. Companies can also attract new
capital from investors seeking investments that are environmentally
responsible, responsive, progressive, and which minimize the risk of
environmental liability.
"AND WHEREAS:
The Coalition for Environmentally Responsible Economies (CERES) -
which comprises large institutional investors with $150 billion in
stockholdings (including shareholders of this Company), public interest
representatives, and environmental experts - consulted with dozens of
corporations and produced comprehensive public standards for both environmental
performance and reporting. Over 50 companies have endorsed the CERES Principles
- - including the Sun Company, a Fortune 500 company - to demonstrate their
commitment to public environmental accountability.
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In endorsing the CERES Principles, a company commits to work toward:
1. Protection of the biosphere
2. Sustainable use of natural resources
3. Waste reduction and disposal
4. Energy conservation
5. Risk reduction
6. Safe products and services
7. Environmental restoration
8. Informing the public
9. Management commitment
10. Audits and reports
The full text of the CERES Principles and the accompanying CERES
Report Form are available from CERES, 711 Atlantic Avenue, Boston, MA 02110;
tel: 617/451-0927.
Concerned investors are asking the Company to be publicly accountable
for its environmental impact, including collaboration with this corporate,
environmental, investor, and community coalition to develop (a) standards for
environmental performance and disclosure; (b) appropriate goals relative to
these standards; (c) evaluation methods and tools for measurement of progress
toward these goals; and (d) formate for public reporting of this progress.
We believe this request is consistent with regulation adopted by the
European Community for companies' voluntary participation in verified and
publicly-reported eco-management and auditing.
"RESOLVED: Shareholders request the Company to endorse the CERES
Principles as a commitment to be publicly accountable for its environmental
impact.
SUPPORTING STATEMENT
"We invite the Company to endorse the CERES Principles by (1) stating
its endorsement in a letter signed by a senior officer, (2) committing to
implement the Principles; and (3) annually completing the CERES Report.
Endorsing these Principles complements rather than supplants internal corporate
environmental policies and procedures.
"We believe that without this public scrutiny, corporate
environmental policies and reports lack the critical component of adherence to
standards set not only by management but also by other stakeholders.
Shareholders are asked to support this resolution, to encourage our Company to
demonstrate environmental leadership and accountability for its environmental
impact."
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THE RECOMMENDATION OF THE BOARD OF DIRECTORS
Westinghouse's long-standing commitment to environmental
responsibility predates the CERES Principles (formerly the Valdez Principles).
As established both through internal corporate directives and its public
statements, the Corporation's commitment to the environment is to design and
market its products and services and to conduct its operations in an
environmentally sound, socially responsible manner. This policy
includes consideration of the impact of the Corporation's actions on the
environment as well as the health and safety of its employees, subcontractors
and customers.
Beyond its well established policy on environmental responsibility,
Westinghouse, through its environmental management system, continues to
demonstrate its commitment to the environment. In 1981, the Board of Directors
of Westinghouse established a separate committee of the Board --the Committee
on Environment and Health -- to provide oversight of the Corporation's
activities relating to the environment and health. The following year,
Westinghouse established a centralized Environmental Affairs organization to
direct these activities in concert with the efforts of the environmental,
health and safety specialists located at its plant sites. Since that time,
Westinghouse has implemented a number of programs including an audit program to
monitor compliance, a Clean Technologies Program to minimize the generation of
waste, a training and communications program, and an environmental planning
program to facilitate a focused management approach at the business unit and
division level. These are just a sampling of the key proactive activities that
Westinghouse has embarked upon.
Thus, the Board believes that endorsement of the CERES Principles
would not add significantly to Westinghouse's commitment and could subject the
Corporation to potential increased liability and costs.
In particular, the CERES Principles include an open-ended public
disclosure requirement that would result in potentially vague and uncertain
disclosure obligations. Westinghouse could incur potential additional liability
or expense or be placed in an uncompetitive business position as a result of
this requirement.
Finally, the CERES Principles obligate a signatory company to
complete the public CERES Report. The proposal maintains that standardized
environmental reporting will allow comparison of a company's environmental
performance against "uniform" standards. To date, however, there are no
generally accepted environmental performance standards that apply to companies
operating in different industries and under varying circumstances. Without such
standards, the Board believes that the Corporation's reports would be subject
to possible misinterpretation which could also result in potential increased
liability and costs. This proposal was submitted and voted on last year and
received only 8.5% of the vote.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THE PROPOSED
RESOLUTION.
The favorable vote of a majority of the votes cast on this proposal
is required for passage.
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VOTING INFORMATION
Under Pennsylvania law and the Corporation's Restated Articles of
Incorporation and by-laws, the presence of a quorum is required to transact
business at the annual meeting. A quorum is defined as the presence, either in
person or by proxy, of a majority of the votes entitled to be cast at the
meeting. Votes withheld from director nominees, abstentions and broker-dealer
non-votes will be counted in determining the presence of a quorum.
Assuming the presence of a quorum, (i) the eight nominees for director
receiving the highest number of votes will be elected directors, (ii) the
affirmative vote of a majority of all common shares outstanding on the record
date is required to approve the amendment to the Restated Articles of
Incorporation, (iii) the affirmative vote of majority of the common shares
present, either in person or by proxy, and entitled to vote, is required
to approve the 1993-Plan, and (iv) the affirmative vote of a majority of all
shares cast by the shareholders is required for the election of independent
accountants and for the adoption of the shareholder proposal.
Abstentions and broker-dealer non-votes are not counted in determining
the number of votes cast in connection with the election of independent
accountants and the adoption of the shareholder proposal. While
abstentions and broker-dealer non-votes are not cast and therefore do not count
either for or against the election of independent accountants or the
shareholder proposal, they do have the practical effect of reducing the number
of affirmative votes required to achieve majority in each of these matters.
Abstentions are considered as present in determining the number of votes
required to pass the 1993-Plan. An affirmative vote of a majority of all shares
present is required to approve the 1993-Plan, therefore, an abstention with
respect to the approval of the 1993-Plan will have the same effect as a vote
against this proposal. Broker-dealer non-votes are not shares entitled to vote
on the adoption of the 1993-Plan. Abstentions and broker-dealer non-votes
represent outstanding shares and have the same effect as a vote against the
proposal to amend the Restated Articles of Incorporation.
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SHAREHOLDER PROPOSAL SUBMISSIONS
To be considered for inclusion in the proxy materials relating to the
1995 Annual Meeting of Shareholders, shareholder proposals must be received at
the principal executive offices of Westinghouse on or before November 11, 1994.
SOLICITATION OF PROXIES
The solicitation of proxies is made on behalf of the Board of
Directors of the Corporation. Solicitation by the Corporation will be by mail,
except for any incidental personal solicitation made by directors, officers and
employees of Westinghouse. The cost of solicitation, including the cost of any
such personal solicitation, will be paid by the Corporation. Westinghouse may
request persons, such as brokers, nominees and fiduciaries, holding stock in
their names to forward proxy materials to the beneficial owners and it will
reimburse such persons for their reasonable expenses incurred in doing so. In
addition, Westinghouse has retained Georgeson & Company Inc., Wall Street
Plaza, New York, New York 10005, for a fee of $12,000 plus incidental and
related expenses, to assist in providing proxy materials to brokers, nominees,
fiduciaries and individuals, other than the officers of the Corporation,
holding sizable amounts of stock and in soliciting proxies from them.
A shareholder giving a proxy has the power to revoke the proxy by
notice to the Secretary of the Corporation. All proxies will be voted if
properly signed, received by the Secretary of the Corporation prior to the
close of voting at the meeting and not revoked.
As of the time of preparation of this proxy statement, the Board
knows of no matter, other than those described in the foregoing paragraphs,
that will be presented at the meeting. However, if any other matters properly
come before the meeting or any adjournment thereof, the person or persons
voting the proxies will vote them in accordance with their best judgment.
March 11, 1994
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TICKET REQUEST
If you plan to attend the 1994 Annual Meeting of Shareholders on
April 27, 1994, the form below may be used to request an admission ticket(s).
Only shareholders of record or their proxies and beneficial owners of
Westinghouse common stock having evidence of ownership are entitled to attend
the meeting. Each person attending should have a ticket to expedite admission
to the meeting. Please fill in your name and address and a ticket(s) will be
sent to you about a week before the meeting. A prompt return would be
appreciated. The envelope provided for return of your proxy card may be used to
return this form.
(Cut along dotted line)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I plan to attend the 1994 Annual Meeting of Shareholders. I have
indicated in the block provided to the right the number of shareholders for
whom tickets are requested.
- --------------------------------------------------------------------------------
Name (please print)
- --------------------------------------------------------------------------------
Street Address
- --------------------------------------------------------------------------------
City State Zip Code
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EXHIBIT A
1993 LONG-TERM INCENTIVE PLAN
ARTICLE I
GENERAL
1.1 Purpose
The purposes of the 1993 Long-Term Incentive Plan ("Plan") for key
management personnel of Westinghouse Electric Corporation ("Corporation") and
its Subsidiaries (the Corporation and its Subsidiaries severally and
collectively referred to in the Plan as the "Company") are to foster and
promote the long-term financial success of the Company and materially increase
stockholder value by (i) attracting and retaining key management personnel of
outstanding ability, (ii) strengthening the Company's capability to develop,
maintain and direct a competent management team, (iii) motivating key
management personnel, by means of performance-related incentives, to achieve
long-range performance goals, (iv) providing incentive compensation
opportunities competitive with those of other major companies and (v) enabling
key management personnel to participate in the long-term growth and financial
success of the Company.
1.2 Administration
(a) The Plan shall be administered by a committee of the Board of
Directors of the Corporation ("Committee") which shall consist of three or more
members. Each member shall be a "disinterested person," as that term is defined
by Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and an "outside director," as that term is defined by
Section 162(m) of the Internal Revenue Code of 1986, as amended. The members
shall be appointed by the Board of Directors, and any vacancy on the Committee
shall be filled by the Board of Directors.
The Committee shall keep minutes of its meetings and of any action
taken by it without a meeting. A majority of the Committee shall constitute a
quorum, and the acts of a majority of the members present at any meeting at
which a quorum is present shall be the acts of the Committee. Any action that
may be taken at a meeting of the Committee may be taken without a meeting if a
consent or consents in writing setting forth the action so taken shall be
signed by all of the members of the Committee. The Committee shall make
appropriate reports to the Board of Directors concerning the operations of the
Plan.
(b) Subject to the limitations of the Plan, the Committee shall have the
sole and complete authority: (i) to select in accordance with Section 1.3
persons who shall participate in the Plan ("Participant" or "Participants"),
(ii) to make Awards and payments in such forms and amounts as it shall
determine, (iii) to impose such limitations,
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restrictions and conditions upon such Awards as it shall deem appropriate,
(iv) to interpret the Plan and the terms of any document relating
to the Plan and to adopt, amend and rescind administrative guidelines and other
rules and regulations relating to the Plan, (v) to amend or cancel an existing
Award in whole or in part, except that the Committee may not, unless otherwise
provided in the Plan, or unless the Participant affected thereby consents, take
any action under this clause that would adversely affect the rights of such
Participant with respect to the Award and except that the Committee may not take
any action to amend any outstanding Option under the Plan in order to decrease
the Option Price under such Option or to cancel and replace any such Option with
an Option with a lower Option Price unless such action is approved by the common
stockholders of the Corporation and (vi) to make all other determinations and to
take all other actions necessary or advisable for the interpretation,
implementation and administration of the Plan. The Committee's determinations on
matters within its authority shall be conclusive and binding upon the company
and all other persons.
(c) The Committee shall act with respect to the Plan on behalf of the
Corporation and on behalf of any subsidiary issuing stock under the Plan,
subject to appropriate action by the board of directors of any such Subsidiary.
All expenses associated with the Plan shall be borne by the Corporation subject
to such allocation to its Subsidiaries and operating units as it deems
appropriate.
1.3 Selection for Participation
Participants selected by the Committee shall be Eligible Persons (as
defined below) who occupy key management positions and have the capacity to
contribute to the success of the Company. "Eligible Persons" are persons who
are regular, full-time salaried employees of the Company exempt from the
minimum wage and overtime provisions of the Fair Labor Standards Act of 1938,
as amended ("Employee" or "Employees"). In addition, Participants selected by
the Committee for Awards of options, SARs or Limited Rights under Article II or
III of the Plan shall be elected officers of the Corporation or business unit
general managers or shall hold comparable-level positions. In making this
selection and in determining the form and amount of Awards, the Committee may
give consideration to the functions and responsibilities of the Eligible
Person, his or her past, present and potential contributions to the Company and
other factors deemed relevant by the Committee.
1.4 Types of Awards under Plan
Awards ("Awards") under the Plan may be in the form of any one or
more of the following: (i) Incentive Stock Options ("ISOs") and Non-statutory
Stock options ("NSOs") (Incentive Stock Options and Non-statutory Stock Options
severally and collectively referred to in the Plan as "Options"), as described
in Article II, (ii) Stock Appreciation Rights ("SARs") and Limited Stock
Appreciation Rights ("Limited Rights"), as described in Article III, (iii)
Performance Awards ("Performance Awards") as described in Article IV, and (iv)
Restricted Stock ("Restricted Stock") as described in Article V.
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1.5 Shares Subject to the Plan
Shares of stock issued under the Plan may be in whole or in part
authorized and unissued or treasury shares of the Corporation's common stock,
par value $1.00 ("Common Stock"), or "Formula Value Stock" as defined in
Section 8.12(d) (Common Stock and Formula Value Stock severally and
collectively referred to in the Plan as "Stock").
The maximum number of shares of Stock which may be issued for all
purposes under the Plan shall be 4,000,000 increased on January 1 of each
calendar year from and including 1994 to and including 2003 by a number of
shares equal to one percent (1%) of the number of shares of Stock outstanding
on December 31 of the preceding year. The maximum number of such shares which
may be issued pursuant to the exercise of ISOs shall be 1,000,000 increased on
January 1 of each calendar year from and including 1994 to and including 2003
by 1,000,000 shares. The maximum number of shares subject to options to
purchase Stock, SARs and Limited Rights under the Plan awarded to any one
Participant may not exceed one percent (1%) of the number of shares of Stock
outstanding at the time of option, SAR or Limited Rights grant.
Except as otherwise provided below, any shares of Stock subject to an
Option or other Award which is canceled or terminates without having been
exercised shall again be available for Awards under the Plan. Shares subject to
an option canceled upon the exercise of an SAR shall not again be available for
Awards under the Plan except to the extent the SAR is settled in cash. To the
extent that an Award is settled in cash, shares of Stock subject to that Award
shall again be available for Awards. Shares of Stock tendered by a Participant
or withheld by the Company to pay the exercise price of an Option or to satisfy
the tax withholding obligations of the exercise or vesting of an Award shall be
available again for Awards under the Plan, but only to persons who are not
required to file reports ("nonreporting Persons") pursuant to Section 16(a)
under the Exchange Act. Shares of Restricted Stock forfeited to the Company in
accordance with the Plan and the terms of the particular Award shall be
available again for Awards under the Plan unless the Participant has received
the benefits of ownership (within the applicable interpretation under Rule
16b-3 under the Exchange Act), in which case such shares may only be available
for Awards to nonreporting Persons.
No fractional shares shall be issued, and the Committee shall
determine the manner in which fractional share value shall be treated.
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ARTICLE II
STOCK OPTIONS
2.1 Award of Stock Options
The Committee may, from time to time, subject to the provisions of
the Plan and such other terms and conditions as the Committee may prescribe,
award to any Participant ISOs and NSOs to purchase Stock.
The Committee may provide with respect to any option to purchase
Stock that, if the Participant, while an Eligible Person, exercises the option
in whole or in part using already-owned Stock, the Participant will, subject to
this Section 2.1 and such other terms and conditions as may be imposed by the
Committee, receive an additional option ("Reload Option"). The Reload Option
will be to purchase, at Fair Market Value as of the date the original option
was exercised, a number of shares of Stock equal to the number of whole shares
used by the Participant to exercise the original option. The Reload Option will
be exercisable only between the date of its grant and the date of expiration of
the original option.
A Reload Option shall be subject to such additional terms and
conditions as the Committee shall approve, which terms may provide that the
Committee may cancel the Participant's right to receive the Reload Option and
that the Reload Option will be granted only if the Committee has not canceled
such right prior to the exercise of the original option. Such terms may also
provide that, upon the exercise by a Participant of a Reload Option while an
Eligible Person, an additional Reload Option will be granted with respect to
the number of whole shares used to exercise the first Reload Option.
2.2 Stock Option Agreements
The award of an option shall be evidenced by a signed written
agreement ("Stock Option Agreement") containing such terms and conditions as
the Committee may from time to time determine.
2.3 Option Price
The purchase price of Stock under each Option ("Option Price") shall
be not less than the Fair Market Value of such Stock on the date the Option is
awarded.
2.4 Exercise and Term of Options
(a) Except as otherwise provided in the Plan, Options shall become
exercisable at such time or times as the Committee may specify. The Committee
may at any time and from time to time accelerate the time at which all or any
part of the Option may be exercised.
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(b) The Committee shall establish procedures governing the exercise of
options and shall require that written notice of exercise be given. Stock
purchased on exercise of an option must be paid for as follows: (1) in cash or
by check (acceptable to the Company in accordance with guidelines established
for this purpose), bank draft or money order payable to the order of the
Company or (2) if so provided by the Committee (not later than the time of
grant, in the case of an ISO) (i) through the delivery of shares of Stock which
are then outstanding and which have a Fair Market Value on the last business
day preceding the date of exercise equal to the exercise price, (ii) by
delivery of an unconditional and irrevocable undertaking by a broker to deliver
promptly to the Company sufficient funds to pay the exercise price, or (iii) by
any combination of the permissible forms of payment.
2.5 Termination of Eligibility
In the event the Participant is no longer an Eligible Person and
ceased to be such as a result of termination of service to the Company with the
consent of the Committee or as a result of his or her death, retirement or
disability, each of his or her outstanding Options shall be exercisable by the
Participant (or his or her legal representative or designated beneficiary), to
the extent that such Option was then exercisable, at any time prior to an
expiration date established by the Committee at the time of award, but in no
event after such expiration date. If the Participant ceases to be an Eligible
Person for any other reason, all of the Participant's then outstanding Options
shall terminate immediately.
ARTICLE III
STOCK APPRECIATION RIGHTS AND LIMITED RIGHTS
3.1 Award of Stock Appreciation Right
(a) An SAR is an Award entitling the recipient on exercise to receive an
amount, in cash or Stock or a combination thereof (such form to be determined
by the Committee), determined in whole or in part by reference to appreciation
in Stock value.
(b) In general, an SAR entitles the Participant to receive, with respect
to each share of Stock as to which the SAR is exercised, the excess of the
share's Fair Market Value on the date of exercise over its Fair Market Value on
the date the SAR was granted.
(c) SARs may be granted in tandem with options granted under the Plan
("Tandem SARS") or independently of Options ("Independent SARs"). An SAR
granted in tandem with an NSO may be granted either at or after the time the
option is granted. An SAR granted in tandem with an ISO may be granted only at
the time the option is granted.
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(d) SARs awarded under the Plan shall be evidenced by either a Stock
Option Agreement (when SARs are granted in tandem with an Option) or a separate
agreement between the Company and the Participant.
(e) Except as otherwise provided herein, a Tandem SAR shall be exercisable
only at the same time and to the same extent and subject to the same conditions
as the option related thereto is exercisable, and the Committee may prescribe
additional conditions and limitations on the exercise of the SAR. The exercise
of a Tandem SAR shall cancel the related Option. Tandem SARs may be exercised
only when the Fair Market Value of Stock to which it relates exceeds the Option
Price.
(f) Except as otherwise provided herein, an Independent SAR will become
exercisable at such time or times, and on such conditions, as the Committee may
specify, and the Committee may at any time accelerate the time at which all or
any part of the SAR may be exercised.
The Committee may provide, under such terms and conditions as it may
deem appropriate, for the automatic grant of additional SARs upon the full or
partial exercise of an Independent SAR.
Any exercise of an Independent SAR must be in writing, signed by the
proper person and delivered or mailed to the Company, accompanied by any other
documents required by the Committee.
(g) Except as otherwise provided herein, all SARs shall automatically
be exercised on the last trading day prior to the expiration date established
by the Committee at the time of the award for the SAR, or, in the case of a
Tandem SAR, for the related Option, so long as exercise on such date will
result in a payment to the Participant.
(h) Unless otherwise provided by the Committee, no SAR shall become
exercisable or shall be automatically exercised for six months following the
date on which it was granted or the effective date of the Plan, whichever is
later.
(i) At the time of award of an SAR, the Committee may limit the amount of
the payment that may be made to a Participant upon the exercise of the SAR. The
Committee may further determine that, if the amount to be received by a
Participant in any year is limited pursuant to this provision, payment of all
or a portion of the amount that is unpaid as a result of the limitation may be
made to the Participant at a subsequent time. No such limitation shall require
a Participant to return to the Company any amount theretofore received by him
or her upon the exercise of an SAR.
(j) Payment of the amount to which a Participant is entitled upon the
exercise of an SAR shall be made in cash, Stock, or partly in cash and partly
in Stock, as the Committee shall determine. To the extent that payment is made
in Stock, the shares shall be valued at their Fair Market Value on the date of
exercise of the SAR.
(k) Each SAR shall expire on a date determined by the Committee or earlier
upon the occurrence of the first of the following: (i) in the case of a Tandem
SAR, termination of the related option, (ii) expiration of a period of six
months after the Participant's ceasing to be an Eligible Person as a result of
termination of service to the Company
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with the consent of the Committee or as a result of his or her death,
retirement or disability, or (iii) the Participant ceasing to be an
Eligible Person for any other reason.
3.2 Limited Rights
(a) The Committee may award Limited Rights pursuant to the provisions of
this Section 3.2 to the holder of an Option to purchase Common Stock granted
under the Plan (a "Related Option") with respect to all or a portion of the
shares subject to the Related Option. A Limited Right may be exercised only
during the period beginning on the first day following a Change in Control, as
defined in Section 7.2 of the Plan, and ending on the thirtieth day following
such date. Each Limited Right shall be exercisable only to the same extent that
the Related Option is exercisable, and in no event after the termination of the
Related Option. In no event shall a Limited Right be exercised during the first
six months after the date of grant of the Limited Right or the effective date
of the Plan, whichever is later. Limited Rights shall be exercisable only when
the Fair Market Value (determined as of the date of exercise of the Limited
Rights) of each share of Common Stock with respect to which the Limited Rights
are to be exercised shall exceed the Option Price per share of Common Stock
subject to the Related option.
(b) Upon the exercise of Limited Rights, the Related Option shall be
considered to have been exercised to the extent of the number of shares of
Common Stock with respect to which such Limited Rights are exercised. Upon the
exercise or termination of the Related Option, the Limited Rights with respect
to such Related Option shall be considered to have been exercised or terminated
to the extent of the number of shares of Common Stock with respect to which the
Related Option was so exercised or terminated.
(c) The effective date of the grant of a Limited Right shall be the date
on which the Committee approves the grant of such Limited Right. Each grantee
of a Limited Right shall be notified promptly of the grant of the Limited Right
in such manner as the Committee shall prescribe.
(d) Upon the exercise of Limited Rights, the holder thereof shall receive
in cash an amount equal to the product computed by multiplying
(i) the excess of (a) the higher of (x) the Minimum Price Per Share (as
hereinafter defined), or (y) the highest reported closing sales price of a
share of Common Stock on the New York Stock Exchange at any time during the
period beginning on the sixtieth day prior to the date on which such Limited
Rights are exercised and ending on the date on which such Limited Rights are
exercised, over (b) the Option Price per share of Common Stock subject to the
Related Option, by (ii) the number of shares of Common Stock with respect to
which such Limited Rights are being exercised.
(e) For purposes of this Section 3.2, the term "Minimum Price Per Share"
shall mean the highest gross price (before brokerage commissions and soliciting
dealers' fees) paid or to be paid for a share of Common Stock (whether by way
of exchange, conversion, distribution upon liquidation or otherwise) in any
Change in Control which is in effect at any time during the period beginning on
the sixtieth day prior to the date on which such
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Limited Rights are exercised and ending on the date on which such
Limited Rights are exercised. For purposes of this definition, if the
consideration paid or to be paid in any such Change in Control shall consist, in
whole or in part, of consideration other than cash, the Board shall take such
action, as in its judgement it deems appropriate, to establish the cash value of
such consideration.
ARTICLE IV
PERFORMANCE AWARDS
4.1 Nature of Performance Awards
A Performance Award provides for the recipient to receive an amount
in cash or Stock or a combination thereof (such form to be determined by the
Committee) following the attainment of Performance Goals. Performance Goals may
be related to personal performance, corporate performance (including corporate
stock performance), departmental performance or any other category of
performance deemed by the Committee to be important to the success of the
Company. The Committee shall determine the Performance Goals, the period or
periods during which performance is to be measured and all other terms and
conditions applicable to the Award. Regardless of the degree to which
Performance Goals are attained, a Performance Award shall be paid only when, if
and to the extent that the Committee determines to make such payment.
4.2 Other Awards Subject to Performance Condition
The Committee may, at the time any Award described in this Plan is
granted, impose the condition (in addition to any conditions specified or
authorized in the Plan) that Performance Goals be met prior to the
Participant's realization of any payment or benefit under the Award.
ARTICLE V
RESTRICTED STOCK
5.1 Award of Restricted Stock
The Committee may award to any Participant shares of Stock subject to
this Article V and such other terms and conditions as the Committee may
prescribe, such Stock referred to herein as "Restricted Stock."
Each certificate for Restricted Stock shall be registered in the name
of the Participant and deposited by him or her, together with a stock power
endorsed in blank, with the Corporation.
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5.2 Restricted Stock Agreement
Shares of Restricted Stock awarded under the Plan shall be evidenced
by a signed written agreement containing such terms and conditions as the
Committee may determine.
5.3 Restriction Period
At the time of award, there shall be established for each Participant
a "Restriction Period" of such length as shall be determined by the Committee.
The Restriction Period may be waived by the Committee. Shares of Restricted
Stock may not be sold, assigned, transferred, pledged or otherwise encumbered,
except as hereinafter provided, during the Restriction Period. Subject to such
restriction on transfer, the Participant as owner of such shares of Restricted
Stock shall have the rights of the holder of such Restricted Stock, except that
the Committee may provide at the time of the Award that any dividends or other
distributions paid on such Stock during the Restriction Period shall be
accumulated and held by the Company and shall be subject to forfeiture under
Section 5.4.
Upon the expiration or waiver by the Committee of the Restriction
Period, the Corporation shall redeliver to the Participant (or his or her legal
representative or designated beneficiary) the shares deposited pursuant to
Section 5.1.
5.4 Termination of Eligibility
In the event the Participant is no longer an Eligible Person and
ceased to be such as a result of termination of service to the Company with the
consent of the Committee, or as a result of his or her death, retirement or
disability, the restrictions imposed under this Article V shall lapse with
respect to such number of shares theretofore awarded to him or her as shall be
determined by the Committee. All other shares of Restricted Stock theretofore
awarded to him or her which are still subject to restrictions, along with any
dividends or other distributions thereon that have been accumulated and held by
the Company, shall be forfeited, and the Corporation shall have the right to
complete the blank stock power.
In the event the Participant ceases to be an Eligible Person for any
other reason, all shares of Restricted Stock theretofore awarded to him or her
which are still subject to restrictions, along with any dividend or other
distributions thereon that have been accumulated and held by the Company, shall
be forfeited, and the Corporation shall have the right to complete the blank
stock power.
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ARTICLE VI
DEFERRAL OF PAYMENTS
6.1 Deferral of Amounts
If the Committee makes a determination to designate Awards or, from
time to time, groups or types of Awards, eligible for deferral hereunder, a
Participant may, subject to such terms and conditions and within such limits as
the Committee may from time to time establish, elect to defer the receipt of
amounts due to him or her under the Plan. Amounts so deferred are referred to
herein as "Deferred Amounts." The Committee may also permit amounts now or
hereafter deferred or available for deferral under any present or future
incentive compensation program or deferral arrangement of the Company to be
deemed Deferred Amounts and to become subject to the provisions of this
Article. Awards which are so deferred will be deemed to have been awarded in
cash and the cash deferred as Deferred Amounts.
The period between the date on which the Participant's Deferred
Amount would have been payable absent deferral and the final payment of such
Deferred Amount shall be referred to herein as the "Deferral Period."
6.2 Investment During Deferral Period
Unless otherwise determined by the Committee, and subject to such
changes as the Committee may determine, the Deferred Amount will be treated
during the Deferral Period as if it were invested in putative convertible
debentures with a fixed interest rate, compounded annually, for the entire
Deferral Period. For purposes of determining the value of the Deferred Amount
at the time of payment, each putative debenture will be deemed to be
convertible into Common Stock at a conversion rate computed by reference to the
Fair Market Value of the Common Stock on the last trading day prior to the
regular January meeting of the Board of Directors on or preceding the date of
deferral. Payment of Deferred Amounts may be made in cash, Stock, or partly in
cash and partly in Stock, in the Committee's sole discretion.
6.3 Participant Reports
Annually, each Participant who has a Deferred Amount will receive a
report setting forth all of his or her then Deferred Amounts and the yield
thereon to date.
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6.4 Payment of Deferred Amounts
Payment of Deferred Amounts will be made at such time or times, and
may be in cash, Stock, or partly in cash and partly in Stock, as the Committee
shall from time to time determine. The limitations respecting the issuance of
Stock or other limitations on aggregate awards payable contained in the Annual
Performance Plan of the Corporation, Article XVI of the by-laws of the
Corporation, the 1974 Stock Option Plan, the 1979 Stock Option and Long-Term
Incentive Plan, the 1984 Long-Term Incentive Plan, the Plan and in any plan
hereafter adopted by the stockholders shall be limitations applicable to the
payment of any Deferred Amounts under this Article VI.
6.5 Alternative Valuation Election
Unless otherwise determined by the Committee, a Participant may, at a
time established by the committee, but prior to such Participant's ceasing to
be an Eligible Person, elect to establish the ultimate payable value of each
Deferred Amount by reference to the Fair Market Value of the Common Stock as of
the day on which an alternate valuation election is received by the corporation
in accordance with procedures established by the Committee.
Notwithstanding the establishment of the ultimate payable value
resulting from the alternate valuation election by the Participant, the yield
will continue as though no such election had been made and will continue to be
subject to the limitations set forth in Section 6.2, and Deferred Amounts and
the yield thereon will be paid as otherwise provided in this Article.
ARTICLE VII
CHANGES IN CONTROL
7.1 Effect of Change in Control
Notwithstanding any other provision of the Plan, upon the occurrence
of a Change in Control, as defined in Section 7.2: (i) all Options and, subject
to the exercise provisions of Section 3.2(a) of the Plan, Limited Rights, but
not SARS, outstanding and unexercised on the date of the Change in Control
shall become immediately exercisable; (ii) all Performance Awards shall be
deemed to have been earned on such basis as the Committee may prescribe and
then paid on such basis, at such time and in such form as the Committee may
prescribe, or deferred in accordance with the elections of Participants; (iii)
all Restricted Stock shall be deemed to be earned and the Restriction Period
shall be deemed expired on such terms and conditions as the Committee may
determine; and (iv) all amounts deferred under this Plan shall be paid to a
trustee or otherwise on such terms as the Committee may prescribe or permit.
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7.2 Definition of Change in Control
The term "Change in Control" means the occurrence of one or more of
the following events: (a) there shall be consummated (i) any consolidation or
merger of the Corporation in which the Corporation is not the continuing or
surviving corporation or pursuant to which shares of the Common Stock would be
converted into cash, securities or other property, other than a merger of the
Corporation in which the holders of Common Stock immediately prior to the
merger have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (ii) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Corporation, or (b) the stockholders
of the Corporation shall approve any plan or proposal for the liquidation or
dissolution of the Corporation, or (c) (i) any person (as such term is defined
in Section 13(d) of the Exchange Act), corporation or other entity shall
purchase any Common Stock of the Corporation (or securities convertible into
Common Stock) for cash, securities or any other consideration pursuant to a
tender offer or exchange offer, unless, prior to the making of such purchase of
Common Stock (or securities convertible into Common Stock), the Board shall
determine that the making of such purchase shall not constitute a Change in
Control, or (ii) any person (as such term is defined in Section 13(d) of the
Exchange Act), corporation or other entity (other than the Corporation or any
benefit plan sponsored by the Corporation or any of its subsidiaries) shall be
the "beneficial owner" (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Corporation
representing twenty percent or more of the combined voting power of the
Corporation's then outstanding securities ordinarily (and apart from any rights
accruing under special circumstances) having the right to vote in the election
of directors (calculated as provided in Rule 13d-3(d) in the case of rights to
acquire any such securities), unless, prior to such person so becoming such
beneficial owner, the Board shall determine that such person so becoming such
beneficial owner shall not constitute a Change in Control, or (d) at any time
during any period of two consecutive years, individuals who at the beginning of
such period constituted the entire Board shall cease for any reason to
constitute at least a majority thereof, unless the election or nomination for
election of each new director during such two-year period was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such two-year period.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Transferability
No Option, SAR, Performance Award or share of Restricted Stock or Deferred
Amount under the Plan shall be transferable by the Participant other than by
will or the applicable laws of descent and distribution. All Awards and
Deferred Amounts shall be exercisable or received during the Participant's
lifetime only by such Participant or his or her legal representative. Any
transfer contrary to this Section 8.1 will nullify the option, SAR, Performance
Award or share of Restricted Stock, and any attempted transfer of a Deferred
Amount contrary to this Section 8.1 will be void and of no effect.
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8.2 Beneficiaries
The Committee may establish procedures not inconsistent with Section
8.1 under which a Participant may designate a beneficiary or beneficiaries to
receive amounts due under an Award or with respect to Deferred Amounts in the
event of the Participant's death.
8.3 Adjustments Upon Changes in Stock
If there shall be any change in the Stock of the Company, through
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, split up, dividend in kind or other change in the corporate structure or
distribution to the stockholders, appropriate adjustments may be made by the
Board of Directors of the Company (or if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation) in the aggregate number and kind of shares subject to the Plan,
and the number and kind of shares and the price per share subject to
outstanding Options or which may be issued under outstanding Performance Awards
or Awards of Restricted Stock. Appropriate adjustments may also be made by the
Board of Directors or the Committee in the terms of any Awards under the Plan
to reflect such changes and to modify any other terms of outstanding Awards on
an equitable basis, including modifications of performance targets and changes
in the length of Performance Periods.
8.4 Conditions of Awards
(a) The rights of a Participant with respect to any Award received under
this Plan shall be subject to the conditions that, until the Participant has
fully received all payments, transfers and other benefits under the Award, he
or she shall (i) not engage, either directly or indirectly, in any manner or
capacity as advisor, principal, agent, partner, officer, director, employee,
member of any association or otherwise, in any business or activity which is at
the time competitive with any business or activity conducted by the Company and
(ii) be available, unless he or she shall have died, at reasonable times for
consultations at the request of the Company's management with respect to phases
of the business with which he or she is or was actively connected during his or
her employment, but such consultations shall not (except in the case of a
Participant whose active service was outside the United States) be required to
be performed at any place or places outside of the United States of America or
during usual vacation periods or periods of illness or other incapacity. In the
event that either of the above conditions is not fulfilled, the Participant
shall forfeit all rights to any unexercised option or SAR, or any Performance
Award or Stock held which has not yet been determined by the Committee to be
payable or unrestricted (and any unpaid amounts equivalent to dividends or
other distributions or amounts equivalent to interest relating thereto) as of
the date of the breach of condition. Any determination by the Board of
Directors of the Corporation, which shall act upon the recommendation of the
Chief Executive Officer, that the Participant is, or has, engaged in a
competitive business or activity as aforesaid or has not been available for
consultations as aforesaid shall be conclusive.
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(b) This Section 8.4 shall not apply to Limited Rights.
8.5 Use of Proceeds
All cash proceeds from the exercise of options shall constitute
general funds of the Company.
8.6 Tax Withholding
The Company will withhold from any cash payment made pursuant to an
Award an amount sufficient to satisfy all federal, state and local withholding
tax requirements (the "withholding requirements").
In the case of an Award pursuant to which Stock may be delivered,
the Committee will have the right to require that the Participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery of any Stock.
If and to the extent that such withholding is required, the Committee may
permit the Participant or such other person to elect at such time and in such
manner as the Committee provides to have the Company hold back from the shares
to be delivered, or to deliver to the Company, Stock having a value calculated
to satisfy the withholding requirement. In the alternative, the Committee may,
at the time of grant of any such Award, require that the Company withhold from
any shares to be delivered Stock with a value calculated to satisfy applicable
tax withholding requirements.
If at the time an ISO is exercised the Committee determines that the
Company could be liable for withholding requirements with respect to a
disposition of the Stock received upon exercise, the Committee may require as a
condition of exercise that the person exercising the ISO agree (i) to inform
the Company promptly of any disposition of Stock received upon exercise, and
(ii) to give such security as the Committee deems adequate to meet the
potential liability of the Company for the withholding requirements and to
augment such security from time to time in any amount reasonably deemed
necessary by the Committee to preserve the adequacy of such security.
8.7 Non-Uniform Determinations
The Committee's determinations under the Plan, including without
limitation, (i) the determination of the Participants to receive Awards, (ii)
the form, amount, timing and payment of such Awards, (iii) the terms and
provisions of such Awards and (iv) the agreements evidencing the same, need not
be uniform and may be made by it selectively among Participants who receive, or
who are eligible to receive, Awards under the Plan, whether or not such
Participants are similarly situated.
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8.8 Leaves of Absence; Transfers
The Committee shall be entitled to make such rules, regulations and
determinations as it deems appropriate under the Plan in respect to any leave
of absence from the Company granted to a Participant. Without limiting the
generality of the foregoing, the Committee shall be entitled to determine (i)
whether or not any such leave of absence shall be treated as if the Participant
ceased to be an employee and (ii) the impact, if any, of any such leave of
absence on Awards under the Plan. In the event a Participant transfers within
the Company, such Participant shall not be deemed to have ceased to be an
employee for purposes of the Plan.
8.9 General Restriction
(a) Each Award under the Plan shall be subject to the condition that, if
at any time the Committee shall determine that (i) the listing, registration or
qualification of shares of Stock upon any securities exchange or under any
state or federal law, (ii) the consent or approval of any government or
regulatory body or (iii) an agreement by the Participant with respect thereto,
is necessary or desirable, then such Award shall not be consummated in whole or
in part unless such listing, registration, qualification, consent, approval or
agreement shall have been effected or obtained free from any conditions not
acceptable to the Committee. (b) Shares of Common Stock for use under the
provisions of this Plan shall not be issued until they have been duly listed,
upon official notice of issuance, upon the New York Stock Exchange and such
other exchanges, if any, as the Board of Directors of the Corporation shall
determine, and a registration statement under the Securities Act of 1933 with
respect to such shares shall have become, and be, effective.
8.10 Effective Date
The Plan shall be effective on the date on which it is approved by
the common stockholders of the Corporation. Grants of Awards under the Plan may
be made prior to that date (but not before the date on which the Plan is
adopted by the Board of Directors), subject to such approval.
No Award may be granted under the Plan after May 25, 2003, but Awards
previously made may extend beyond that date and Reload Options and additional
Reload Options provided for with respect to original options outstanding prior
to that date may continue unless the Committee otherwise provides and subject
to such additional terms and conditions as the Committee may provide except
that all Reload Options issued after that date shall be NSOs, and the
provisions of Article VI of the Plan shall survive and remain effective as to
all present and future Deferred Amounts until such later date as the Committee
or the Board of Directors shall determine.
The adoption of the Plan shall not preclude the adoption by
appropriate means of any other stock option or other incentive plan for
employees.
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8.11 Amendment, Suspension and Termination of Plan
The Board of Directors may at any time or times amend the Plan for
any purpose which may at the time be permitted by law, or may at any time
suspend or terminate the Plan as to any further grants of Awards, provided that
(except to the extent expressly required or permitted by the Plan) no such
amendment shall, without the approval of the stockholders of the Corporation,
effectuate a change for which stockholder approval is required in order for the
Plan to continue to qualify under Rule 16b-3 promulgated under Section 16 of
the Exchange Act.
8.12 Certain Definitions
(a) Unless otherwise determined by the Committee, the terms "retirement"
and "disability" as used under the Plan shall be construed by reference to the
provisions of the Westinghouse Pension Plan or other similar plan or program of
the Company applicable to a Participant.
(b) The term "Fair Market Value" as it relates to Common Stock means the
mean of the high and low prices of the Common Stock as reported by the
Composite Tape of the New York Stock Exchange (or such successor reporting
system as shall be selected by the Committee) on the relevant date or, if no
sale of the Common Stock shall have been reported for that day, the average of
such prices on the next preceding day and the next following day for which
there were reported sales. The term "Fair Market Value" as it relates to
Formula Value Stock shall mean the value determined by the Committee.
(c) The term "Subsidiary" shall mean, unless the context otherwise
requires, any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the corporation if each of the corporations other
than the last corporation in such chain owns stock possessing at least 50% of
the voting power in one of the other corporations in such chain.
(d) "Formula Value Stock" means shares of a class or classes of stock the
value of which is derived from a formula established by the Committee which
reflects such financial measures as the Committee shall determine. Such shares
shall have such other characteristics as shall be determined at time of their
authorization.
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PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS,
APRIL 27, 1994
(See Proxy Statement for discussion of items.)
Westinghouse <Logo>
Electric Corporation
The undersigned hereby appoints Michael H. Jordan, Gary M. Clark and
Louis J. Briskman, and each of them jointly and severally, proxies,
with power of substitution, to vote all shares of common stock which
the undersigned is entitled to vote on all matters which may come
before the 1994 Annual Meeting of Shareholders of Westinghouse
Electric Corporation, or any adjournment thereof.
Date 1994 Signature
PLEASE DATE, SIGN --------------------- -------------------------------
AND RETURN Date 1994 Signature
--------------------- -------------------------------
Please sign your name as it appears above. A representative such as an
executor, administrator or trustee should give his or her full title. If shares
are held jointly, each shareholder should sign.
The shares represented by this proxy will be voted as specified below, but if
no specification is made they will be voted FOR items 1, 2, 3 and 4 and AGAINST
Items 5 and 6.
WESTINGHOUSE DIRECTORS RECOMMEND A VOTE FOR ITEMS 1, 2, 3 AND 4
1. Election of Directors
F. C. Carlucci, G. M. Clark, G. H. Conrades, W. H. Gray, M. H. Jordan,
D. T. McLaughlin, R. R. Pivirotto and P. Stern
[ ] FOR all nominees listed above
[ ] WITHHOLD authority to vote for all nominees
[ ] WITHHOLD authority to vote for any nominee(s) (write the name(s)
of such nominee(s) on the space provided to the right) _______________
FOR AGAINST ABSTAIN
2. Election of Independent Accountants............ [ ] [ ] [ ]
3. Approval of 1993 Long-Term Incentive Plan...... [ ] [ ] [ ]
4. Amendment to Restated Articles of Incorporation [ ] [ ] [ ]
WESTINGHOUSE DIRECTORS RECOMMEND A VOTE AGAINST ITEMS 5 AND 6
FOR AGAINST ABSTAIN
5. Shareholder Proposal A: CERES Principles....... [ ] [ ] [ ]
6. Shareholder Proposal B: Separation of
Chairman and CEO............................... [ ] [ ] [ ]
(To be dated and signed on reverse side)
