<PAGE> 1
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SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
WESTINGHOUSE ELECTRIC CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WESTINGHOUSE ELECTRIC CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------
(5) Total fee paid:
------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------
(3) Filing Party:
--------------------------------------------------
(4) Date Filed:
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<PAGE> 2
WESTINGHOUSE
ELECTRIC
CORPORATION
Notice of 1995 Annual Meeting
and Proxy Statement
April 26, 1995
[WESTINGHOUSE LOGO]
<PAGE> 3
TO OUR SHAREHOLDERS:
We hope that you will be able to join us at our Annual Meeting of
Shareholders to be held at the Corporation's Electronic Systems plant,
Linthicum, Maryland, on Wednesday, April 26, 1995 beginning at 10:30 a.m.,
Eastern Standard Time.
After the business of the meeting has been concluded, I will report to
shareholders on the activities of the Corporation. A discussion period will
follow the report.
It is important that your shares be represented at the meeting. Please give
careful consideration to the matters to be voted upon, complete and sign the
accompanying Proxy, and return it promptly in the envelope provided. The vote of
each shareholder is important to the Board of Directors. We appreciate your time
and attention to the accompanying proxy statement.
Sincerely,
/s/ Michael H. Jordan
Michael H. Jordan
Chairman of the Board and
Chief Executive Officer
1
<PAGE> 4
WESTINGHOUSE ELECTRIC CORPORATION
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders of Westinghouse Electric Corporation will
be held at the Corporation's Electronic Systems plant, located at 7323 Aviation
Boulevard, Linthicum, Maryland, on Wednesday, April 26, 1995 commencing at 10:30
a.m., Eastern Standard Time. The purposes of the meeting are to (1) vote for the
election of eleven directors, each for a term of one year, (2) vote for the
election of independent accountants for 1995, (3) vote on a proposal to amend
the Deferred Stock and Compensation Plan for Directors, (4) vote on a proposal
to amend the 1993 Long-Term Incentive Plan, (5) if properly presented, vote on
the shareholder proposals 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 4, 1995 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 54
and a ticket will be sent to you approximately one 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 10, 1995
2
<PAGE> 5
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Proxy Statement............................................................... 4
Election of Directors..................................................... 4
Election of Independent Accountants....................................... 29
Proposal to Amend the Deferred Stock and Compensation Plan for Directors.. 30
Proposal to Amend the 1993 Long-Term Incentive Plan....................... 34
Shareholder Proposals..................................................... 35
Voting Information........................................................ 38
Shareholder Proposal Submissions for 1996 Annual Meeting.................. 39
Solicitation of Proxies................................................... 40
Ticket Request................................................................ 54
</TABLE>
3
<PAGE> 6
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 1995
The principal executive offices of Westinghouse Electric Corporation are in
the Westinghouse Building, 11 Stanwix Street, Pittsburgh, Pennsylvania 15222.
This proxy statement and the accompanying proxy card are first being sent to
shareholders on or about March 10, 1995. Only the holders of record of common
stock at the close of business on February 4, 1995 are entitled to vote at the
meeting. On that date, 357,414,645 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 1995 Annual Meeting, eleven directors are to be elected to hold
office until the 1996 Annual Meeting and until their successors have been
elected and qualified. The Board presently consists of eleven members. In
accordance with the Corporation's retirement policy for non-employee directors,
Rene C. McPherson will retire from the Board at the 1995 Annual Meeting. The
Board of Directors proposes for election Frank C. Carlucci, Robert E. Cawthorn,
Gary M. Clark, George H. Conrades, William H. Gray III, Michael H. Jordan, David
T. McLaughlin, Richard M. Morrow, Richard R. Pivirotto, Paula Stern and Robert
D. Walter, all of whom except Robert E. Cawthorn are now directors of the
Corporation.
Information about the nominees is set forth on pages 5 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 eleven 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, or, in lieu thereof, the
Board may reduce the number of directors in accordance with the by-laws of the
Corporation.
4
<PAGE> 7
NOMINEES PROPOSED BY THE BOARD OF DIRECTORS
[PHOTO] FRANK C. CARLUCCI, 64
Chairman
The Carlyle Group (merchant banking)
Washington, D.C.
In 1989, Mr. Carlucci joined The Carlyle Group, a Washington-based merchant
bank, as vice chairman and became its chairman in 1993. Mr. Carlucci served the
United States government in various capacities, including Secretary of Defense
from 1987 to 1989 and Assistant to the President for National Security Affairs
from 1986 to 1987. 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.
[PHOTO] ROBERT E. CAWTHORN, 59
Chairman and Chief Executive Officer
Rhone-Poulenc Rorer Inc. (pharmaceuticals)
Collegeville, Pennsylvania
Mr. Cawthorn joined Rorer Group Inc. (now known as Rhone-Poulenc Rorer Inc.) in
1982 as executive vice president and president of Rorer's International
Division. He became president of Rorer Group in 1984, chief executive officer in
1985, and chairman in 1986. Mr. Cawthorn is a director of Rhone-Poulenc Rorer
Inc., Sun Company, the Vanguard Group of Investment Companies, and Applied
Immune Sciences, Inc.
5
<PAGE> 8
[PHOTO] GARY M. CLARK, 59
President
Westinghouse Electric Corporation
Pittsburgh, Pennsylvania
Mr. Clark, who joined Westinghouse in 1957, has served as president of
Westinghouse and a director since 1993. From January 1993 to June 1993, Mr.
Clark also served as interim chief executive officer. After holding various
management posts with Westinghouse, he was named executive vice president of the
industries group in 1988 and appointed executive vice president of industries
and corporate resources in 1991. Mr. Clark is a director of The Western
Pennsylvania Healthcare Systems, Inc., the Manufacturers' Alliance for
Productivity and Innovation, Inc. and the National Association of Manufacturers.
[PHOTO] GEORGE H. CONRADES, 56
President and Chief Executive Officer
Bolt Beranek & Newman Inc. (high technology)
Cambridge, Massachusetts
Mr. Conrades joined International Business Machines (IBM) in 1961 and held a
number of management positions in the United States and Asia. At the time of his
retirement from IBM in 1992, he was senior vice president, corporate marketing
and services. In 1992, he became a partner in Conrades/Reilly Associates, a
business consulting company. In 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 & Newman Inc., GEV Corporation and Comprehensive
Rehabilitation Associates. Mr. Conrades was first elected to the Westinghouse
Board in 1994.
6
<PAGE> 9
[PHOTO] WILLIAM H. GRAY III, 53
President and Chief Executive Officer
United Negro College Fund, Inc. (non-profit fund-raising)
Fairfax, Virginia
Mr. Gray has been president and chief executive officer of United Negro College
Fund, Inc. since 1991. From 1979 until 1991, he was a member of the United
States House of Representatives and served as house majority whip. Mr. Gray is a
director of Warner-Lambert Company, The Prudential Insurance Company of America,
Union Pacific Corporation, MBIA, Inc., Rockwell International, The Chase
Manhattan Bank, N.A. and Lotus Development Corporation. Mr. Gray was first
elected to the Westinghouse Board in 1991.
[PHOTO] MICHAEL H. JORDAN, 58
Chairman and Chief Executive Officer
Westinghouse Electric Corporation
Pittsburgh, Pennsylvania
Mr. Jordan was elected chairman and chief executive officer of Westinghouse, and
a member of the Board, in 1993. From 1974 to 1992, Mr. Jordan held various
management positions with PepsiCo, Inc., a beverage, snack food and restaurant
company, retiring as chairman of the PepsiCo International Foods and Beverages
Division in 1992. From 1992 until June 1993, he was a partner with Clayton,
Dubilier & Rice, Inc., a private investment firm. Mr. Jordan is a director of
Rhone-Poulenc Rorer Inc., Melville Corporation, Dell Computer Corporation,
United Negro College Fund, Inc., and Aetna Life and Casualty Company.
7
<PAGE> 10
[PHOTO] DAVID T. MCLAUGHLIN, 62
Chairman and Chief Executive Officer
The Aspen Institute (leadership enhancement)
Washington, D.C.
In 1987, Mr. McLaughlin became chairman of The Aspen Institute and in 1988 was
appointed chief executive officer. From 1970 to 1981, Mr. McLaughlin served in
various management roles at The Toro Company, being named chairman and chief
executive officer in 1977. From 1981 to 1987, he was president of Dartmouth
College. Mr. McLaughlin is a director of Atlantic Richfield Company, The Chase
Manhattan Corporation, The Chase Manhattan Bank, N.A., Partnerre Re Holdings
Ltd. and Standard Fusee Corporation. Mr. McLaughlin was first elected to the
Westinghouse Board in 1979.
[PHOTO] RICHARD M. MORROW, 69
Retired Chairman and Chief Executive Officer
Amoco Corporation (petroleum and petroleum products)
Chicago, Illinois
From January 1993 until June 1993, Mr. Morrow served as chairman of the board of
directors of Westinghouse. From 1983 until his retirement in 1991, he was
chairman of the board and chief executive officer of Amoco Corporation. 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. Mr. Morrow was first elected to the
Westinghouse Board in 1986.
8
<PAGE> 11
[PHOTO] RICHARD R. PIVIROTTO, 64
President
Richard R. Pivirotto Co., Inc. (management consulting)
Greenwich, Connecticut
Mr. Pivirotto is president of Richard R. Pivirotto Co., Inc., a management
consulting firm. Mr. Pivirotto served as chairman of Associated Dry Goods
Corporation from 1976 until his retirement in 1981. He continued to serve on the
board of Associated Dry Goods until its acquisition by May Department Stores in
1986. Mr. Pivirotto is a director 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 Association. Mr.
Pivirotto was first elected to the Westinghouse Board in 1973.
[PHOTO] PAULA STERN, 49
President
The Stern Group, Inc. (economic analysis and trade advisory services)
Washington, D.C.
Since 1988, Dr. Stern has been president of The Stern Group, Inc. and in 1993
became senior fellow at the Progressive Policy Institute. From 1972 to 1988,
Dr. Stern held various positions with the United States government, including
commissioner and then chair of the U.S. International Trade Commission. She is
a director of Scott Paper Company, Harcourt General, Dynatech Corporation and
Duracell International, Inc. Dr. Stern was first elected to the Westinghouse
Board in 1992.
9
<PAGE> 12
[PHOTO] ROBERT D. WALTER, 49
Chairman and Chief Executive Officer
Cardinal Health, Inc. (wholesale pharmaceutical distributor)
Dublin, Ohio
Mr. Walter is the founder, chairman and chief executive officer of Cardinal
Health, Inc. Since 1970, through internal growth, acquisitions and a public
offering in 1983, Mr. Walter has built Cardinal into one of the nation's largest
wholesalers of pharmaceutical and related health care products with annual sales
in 1993 of $7 billion. Mr. Walter is a director of Banc One Corporation and
Columbia/HCA Healthcare Corporation. He was elected to the Westinghouse Board in
December 1994.
10
<PAGE> 13
THE BOARD OF DIRECTORS AND ITS COMMITTEES
In 1994, there were nine meetings of the Board. Each director attended at
least 86% 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 eleven members of the
Board. Mr. McPherson will retire from the Board at the annual meeting. The
remaining ten directors and Mr. Cawthorn have been nominated to serve as
directors.
Westinghouse has four standing Board committees: the Audit Review Committee,
the Committee on Environment and Health, the Compensation Committee, and the
Nominating and Governance Committee. As required by the Corporation's by-laws,
all members of the Compensation Committee and the Nominating and Governance
Committee are independent as defined under the by-laws. The Compensation
Committee consists of at least three Board members, who must also be
disinterested persons as defined by Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, and outside directors as defined by Section 162(m) of the
Internal Revenue Code of 1986, as amended (Code). In addition, all members of
the Audit Review Committee and the Committee on Environment and Health are
independent.
The Audit Review Committee assists the Board in fulfilling its
responsibilities concerning the Corporation's accounting and financial reporting
practices and the ethical conduct of the Corporation and its employees. The
Committee makes recommendations to the Board regarding the selection, retention
or termination of the Corporation's independent auditors, and reviews the
professional services, proposed fees and independence of such auditors. The
Committee reviews with management and the independent auditors both the controls
established to protect the integrity of the quarterly reporting process and the
Corporation's annual financial statements. The Committee exercises general
oversight of pension and employee benefit plans and programs. Mr. McLaughlin is
chair of this Committee, and directors Carlucci, Gray, McPherson, Morrow,
Pivirotto and Stern are members. This Committee held three meetings in 1994.
The Committee on Environment and Health oversees the Corporation's
environment and health policies. The Committee reviews with management the
Corporation's policies and plans concerning activities which affect the
environment, reviews health and safety issues affecting employees and the
general public, and reviews the Corporation's compliance with laws and
regulations relating to the environment and health and safety issues. Mr. Morrow
is chair of this Committee, and directors Carlucci, Gray, Pivirotto and Stern
are members. This Committee held one meeting in 1994.
The Compensation Committee assists the Board in the establishment of
appropriate compensation and benefits for the Corporation's directors, officers
and employees. The Committee's general responsibilities include advising the
Board on significant compensation matters, reporting on executive compensation
to shareholders as appropriate, evaluating existing executive compensation and
benefit programs, and reviewing, evaluating and approving proposed new executive
programs. The Committee also reviews and makes recommendations concerning
outside director compensation. This Committee administers the Annual Performance
Plan and the Corporation's
11
<PAGE> 14
long-term incentive plans. This Committee engages an independent compensation
consultant as an advisor. Mr. Pivirotto is chair of this Committee, and
directors Carlucci, Conrades, McLaughlin, McPherson, and Morrow are members.
This Committee held four meetings in 1994.
The Nominating and Governance Committee makes recommendations to the Board
concerning the recruitment and selection of the chief executive officer and of
Board candidates. This Committee is also responsible for assessing the
performance of the Board. In addition, the Committee reviews the size and
composition of the Board and makes appropriate recommendations. Mr. McPherson is
chair of this Committee, and directors Conrades, Gray, McLaughlin and Pivirotto
are members. This Committee held four meetings in 1994.
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
1996 Annual Meeting must send a notice to the Secretary at the principal
executive offices of Westinghouse on or before January 25, 1996 setting forth
the information required by the Corporation's by-laws. 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 cash retainer of $22,000. 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. Messrs. Conrades, McPherson and Pivirotto
received total per diem fees during 1994 of $1,200, $8,400 and $1,200,
respectively, for special services relating to the search for additional
qualified candidates for director. 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 pages 17 and 18. 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 of the
Corporation, these deferred amounts may be paid as prescribed by the
Compensation Committee.
Each non-employee director elected at an annual meeting receives 400 common
stock equivalents annually that yield dividend equivalents. These common stock
and dividend 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 Westinghouse common stock during the thirty days preceding such
change in control
12
<PAGE> 15
and may be paid as the Compensation Committee prescribes. In April 1994, each
continuing non-employee director received 400 common stock equivalents and in
December 1994, Mr. Walter received 100 common stock equivalents upon his
election as a director, pursuant to the above-described program.
Under the Advisory Director's Plan, a non-employee director who completes 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 of the Corporation, 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 a 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 that
director. The Corporation will subsequently be reimbursed by life insurance
proceeds. In the event of a change in control of the Corporation, donations may
be made as of the date of such change in control 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.
One of the items being voted on at the annual meeting is a proposal to amend
the Deferred Stock and Compensation Plan for Directors. If the proposal is
adopted, a director's annual compensation will be modified as follows: beginning
April 26, 1995, in addition to the annual cash retainer, each non-employee
director elected at an annual meeting will receive an option grant to purchase
3,000 shares of the Corporation's common stock in lieu of the prior practice of
receiving annual grants of 400 common stock equivalents as described above.
Committee chairs will receive an annual option grant to purchase 750 shares of
the Corporation's common stock in addition to the $2,000 annual fee. For more
information on these proposed changes, see pages 30 through 34.
TRANSACTIONS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
During 1994, 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, the Corporation paid $105,964 during
1994 to Newmyer Associates, Incorporated, a firm that provides newsletters and
monitoring and reporting services to companies on congressional and executive
branch developments. Mr. Carlucci is chairman and a 10% shareholder of Newmyer.
The Corporation expects to continue to use the services of Newmyer in 1995.
13
<PAGE> 16
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 directors and current directors McLaughlin, McPherson, Morrow and
Pivirotto, 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. A 15 count lawsuit was filed
against the Corporation in connection with the construction of this plant. In
July 1993, a jury ruled in favor of the Corporation on one of the counts. The
remaining counts are the subject of an arbitration proceeding which was
completed in October 1994; the parties await a decision. 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 July 1993 judgment
in favor of the Corporation is reversed or modified or if the Corporation is
found liable on any other claim asserted against it arising out 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 directors and current directors Carlucci,
McLaughlin, McPherson, Morrow and Pivirotto, alleging violation of the
directors' common law fiduciary duties in connection with the operation of
Westinghouse Financial Services, Inc. and Westinghouse Credit Corporation,
former subsidiaries of the Corporation. This suit was amended in June 1992 to
allege violations of the federal securities laws. This suit was dismissed in its
entirety in July 1993. Plaintiffs subsequently refiled the action and defendants
moved to dismiss the refiled complaint. On January 20, 1995, the court again
dismissed plaintiffs' claims. However, the plaintiffs appealed this ruling on
February 8, 1995.
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.
14
<PAGE> 17
SECURITY OWNERSHIP
The following table sets forth the number of shares of Westinghouse common
stock beneficially owned on January 6, 1995 by each director or nominee, by each
of the named executive officers and by the directors and executive officers as a
group 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 director, nominee, named executive officer or
other executive officer on January 6, 1995.
<TABLE>
<CAPTION>
Amount and Nature of
Name Beneficial Ownership
- - ---------------------------------------------------------------------------------------------------
<S> <C>
F. C. Carlucci 10,279 shares(1)(2)(3)
R. E. Cawthorn 0 shares(6)
G. M. Clark 448,926 shares(4)
G. H. Conrades 5,404 shares(1)
W. H. Gray 6,511 shares(1)(2)
M. H. Jordan 520,169 shares(4)
W. C. Korn 113,500 shares(4)
R. A. Linder 382,509 shares(4)
D. T. McLaughlin 18,050 shares(1)(2)
R. C. McPherson 44,892 shares(1)(2)
R. M. Morrow 38,429 shares(1)(2)
R. R. Pivirotto 4,692 shares(1)(2)
F. G. Reynolds 158,000 shares(4)
P. Stern 1,443 shares(1)
R. D. Walter 15,100 shares(1)
All directors and all executive officers and nominees as a group 2,200,557 shares(1)(2)(3)(4)(5)
- - ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 3,099 common stock equivalents owned by each non-employee director
under the Corporation's Deferred Stock and Compensation Plan for Directors,
except Mr. Carlucci, Mr. Conrades, Mr. Gray, Dr. Stern and Mr. Walter who
have received 2,411; 404; 1,469; 1,143 and 100 common stock equivalents,
respectively.
(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
6,868; 4,642; 11,207; 28,693; 34,929 and 1,193 shares, respectively, which
are reflected in the table, or cash in lieu of all or part thereof.
15
<PAGE> 18
(3) Includes 1,000 shares over which Mr. Carlucci shares voting and investment
power.
(4) Includes 401,802, 500,000, 113,500, 357,341 and 150,000 shares not owned by
Messrs. Clark, Jordan, Korn, Linder and Reynolds, respectively, on January
6, 1995, but with respect to which they have the right to acquire beneficial
ownership within 60 days through the exercise of stock options.
(5) Includes 1,934,315 shares not owned by directors, nominees and executive
officers on January 6, 1995, but with respect to which they have the right
to acquire beneficial ownership within 60 calendar days after such date
through the exercise of stock options.
(6) Mr. Cawthorn is not currently a director of the Corporation but has been
nominated for election at the 1995 Annual Meeting.
Except as set forth below, Westinghouse does not know of any person who
beneficially owns more than five percent of the Corporation's common stock.
<TABLE>
<CAPTION>
Shares of
Name and Address Common Stock Percent
Beneficial Owner Beneficially Owned of Class
- - ---------------------- ------------------ ---------
<S> <C> <C>
FMR Corp. 22,844,661* 6.5%
82 Devonshire Street
Boston, MA 02109-3614
</TABLE>
* FMR Corp. notified the Corporation on February 16, 1995 that it filed a
Schedule 13G stating that it had beneficial ownership of 22,844,661 shares
or 6.5% of the Corporation's common stock. FMR Corp. has sole voting power
with respect to 730,099 shares of common stock.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
for services to the Corporation and its subsidiaries in 1992, 1993 and 1994 of
the chief executive officer, and each of the other four most highly compensated
executive officers of the Corporation at the end of 1994.
16
<PAGE> 19
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
----------------------------------------------- --------------------------------------
Awards Payouts
----------------------- ---------
Securities
Name and Other Restricted Underlying
Principal Annual Stock Options/ LTIP
Position Year Salary Bonus(1) Compensation Awards SARs Payouts
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
M. H. Jordan................. 1994 $1,000,000 $ 356,554 (3) -- 0 86,862 (3) $ 185,000
Chairman................... 1993 $ 503,799 $ 400,000 -- 0 1,000,000 N/A
and Chief.................. 1992 N/A N/A N/A N/A N/A N/A
Executive
Officer
G. M. Clark.................. 1994 $ 532,068 $ 281,291 (3) -- 0 197,286 (3) $ 133,200
President.................. 1993 $ 481,742 $ 400,000 -- 0 130,000 $ 136,800
.................. 1992 $ 277,491 $ 300,000 $ 5,082 0 15,000 $ 0
W. C. Korn................... 1994 $ 417,917 $ 500,000 -- 0 70,000 $ 74,000
Chairman................... 1993 $ 395,004 $ 325,000 -- 0 58,000 $ 370,000
and Chief.................. 1992 N/A N/A N/A N/A N/A N/A
Executive
Officer
Westinghouse Broadcasting
Company
F. G. Reynolds............... 1994 $ 291,660 $ 177,750 (3)(4) -- 0 287,500 (3) $ 0 (4)
Executive VP............... 1993 N/A N/A N/A N/A N/A N/A
Chief Financial............ 1992 N/A N/A N/A N/A N/A N/A
Officer
R. A. Linder................. 1994 $ 361,500 $ 200,000 -- 0 80,000 $ 133,200
Chairman................... 1993 $ 340,250 $ 200,000 -- 0 80,000 $ 136,800
Electronic Systems......... 1992 $ 300,000 $ 160,000 $ 5,245 0 29,186 $ 0
<CAPTION>
All Other
Compensation(2)
---------------
Name and
Principal
Position
- - ----------------------------------------------
<S> <C>
M. H. Jordan................. $ 24,173
Chairman................... $ 7,075
and Chief.................. N/A
Executive
Officer
G. M. Clark.................. $ 4,500
President.................. $ 7,075
.................. $ 8,717
W. C. Korn................... $ 4,500
Chairman................... $ 7,075
and Chief.................. N/A
Executive
Officer
Westinghouse Broadcasting
Company
F. G. Reynolds............... $ 96,000
Executive VP............... N/A
Chief Financial............ N/A
Officer
R. A. Linder................. $ 4,500
Chairman................... $ 7,075
Electronic Systems......... $ 8,998
</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 100% 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 ten-year U.S. Treasury Bond rate (or
future equivalent U.S.
17
<PAGE> 20
Treasury security rate if the ten-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 (NYSE) 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 of the Corporation, shares
are valued based upon the highest price of the common stock during the
thirty days preceding such change in control of the Corporation. 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) The amounts shown in this column for 1994 consist of (i) 1994 contributions
by the Corporation to the account of the named executive officer pursuant to
the contributory provisions of the Westinghouse Savings Program, and (ii)
moving expenses of $19,672 for Mr. Jordan and $92,375 for Mr. Reynolds.
(3) Messrs. Jordan, Clark and Reynolds received 1994 bonuses of $700,000,
$550,000 and $300,000 respectively. In lieu of receiving the full amount in
cash, Messrs. Jordan, Clark and Reynolds received 85,862, 67,268 and 37,500
stock options respectively. These stock options are included in the
Securities Underlying Options/SARs column.
(4) Mr. Reynolds' received a $27,750 payout in connection with a grant he
obtained upon commencement of his employment. This grant had the same
performance measures and other requirements as those applicable to the
1992-1994 long-term incentive grant made to other senior-level corporate
executives. However, because Mr. Reynolds has been with the Corporation for
less than a year, his payout is not considered to be long-term and is
therefore included in the Bonus column.
18
<PAGE> 21
OPTION GRANTS
The following table shows all grants in 1994 of stock options to the
executive officers named in the summary compensation table on page 17. All of
these grants were made under the 1993 Long-Term Incentive Plan ( 1993 Plan ). No
stock appreciation rights were granted during 1994.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% of Total
Options
Granted to Grant Date
Employees Exercise Present Value(3)
Options in Fiscal or Base Expiration -------------------
Name Granted(1)(2) Year Price Date Per Share Total
- - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
M. H. Jordan............. 0 0% N/A N/A N/A N/A
G. M. Clark.............. 130,000 3.2% $11.63 4/25/04 $5.19 $674,700
W. C. Korn............... 70,000 1.7% $11.63 4/25/04 $5.19 $363,300
F. G. Reynolds........... 150,000 $14.31 2/28/04 $6.17 $925,500
........... 100,000 5.9% $11.63 4/25/04 $5.19 $519,000
R. A. Linder............. 80,000 2.0% $11.63 4/25/04 $5.19 $415,200
</TABLE>
(1) All stock options were granted to the named executive officers on April 26,
1994, except for a grant of options for 150,000 shares made to Mr. Reynolds
upon commencement of his employment. 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 Compensation Committee. Except in the event of a change
in control of the Corporation, 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 of the Corporation 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 of the related
option 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 exercise price under each option may not be less
than the fair market value of the stock on the option date. Reload options
are granted to employees at the time of an exercise
19
<PAGE> 22
of a stock option through a stock swap, unless the Compensation Committee
cancels the reload feature before such exercise. The reload option is
granted for the number of shares the employee tenders to pay the exercise
price of the related option.
(2) Not included in this chart are 85,862, 67,268 and 37,500 stock options
granted on January 25, 1995 to Messrs. Jordan, Clark and Reynolds
respectively in connection with their year end 1994 bonuses. These stock
options have an exercise price of $13.81, are immediately exercisable and
otherwise have the same general terms as the options described in footnote 1
to this chart.
(3) These values were derived using the following common assumptions, all of
which are representative of conditions existing when these stock options
were granted: for the options with a $14.31 exercise price: stock price
volatility .2706; dividend yield 1.4%; interest rate 6.14%; for the options
with an $11.63 exercise price: stock price volatility .2890; dividend yield
1.72%; interest rate 7.04%; and for all options, 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 Frederic W. Cook &
Co., Inc. and were based on the Black-Scholes option pricing model. The
actual value, if any, that an executive officer may realize from his or her
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 1994 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 1994.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised
Options at Value of Unexercised
Fiscal Year-End(1) Options at Fiscal Year-End(2)
---------------------------------- ----------------------------------
Name Exercisable Unexercisable(3) Exercisable Unexercisable(3)
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
M. H. Jordan.... 500,000 500,000 $0 $ 0
G. M. Clark..... 401,802 130,000 $0 $81,250
W. C. Korn...... 113,500 70,000 $0 $43,750
F. G. Reynolds.. 0 250,000 N/A $62,500
R. A. Linder.... 357,341 80,000 $0 $50,000
</TABLE>
20
<PAGE> 23
(1) Not included in this chart are 85,862, 67,268 and 37,500 stock options
granted on January 25, 1995 to Messrs. Jordan, Clark and Reynolds
respectively in connection with their year end 1994 bonuses.
(2) Based on the closing price of the Corporation's common stock as reported by
the composite tape of the NYSE on December 30, 1994 ($12.25).
(3) These options are unexercisable because they have not yet vested under their
terms.
PENSION BENEFITS
All of the individuals named in the summary compensation table on page 17
are participants in the Westinghouse Pension Plan (the 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, 1994, the individuals named in the summary compensation table had
the following credited full years of service under the Plan: Mr. Jordan, 1 year;
Mr. Clark, 37 years; Mr. Korn, 4 years; Mr. Reynolds, 0 years; and Mr. Linder,
37 years.
In addition to the benefits provided by the Plan, the Westinghouse Executive
Pension Plan (the Executive Plan) provides for supplemental pension payments to
a group of executives, including those named in the summary compensation table.
Upon retirement, such individuals who have five continuous years of service,
meet the age and service requirements for retirement under the Plan, and
contribute to the Plan are entitled to receive supplemental payments under the
Executive Plan which, when added to their pensions under the 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 Executive 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 Plan. Participants become vested
in the event of a change in control of the Corporation and benefits under the
Executive 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 Plan and are eligible for supplemental
payments pursuant to the Executive 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.
21
<PAGE> 24
<TABLE>
Estimated annual pension for
Five year average specified years of credited service
compensation including --------------------------------------------------------------------------------------------------
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>
COMPENSATION 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 received an annual base salary in 1993 and
1994 of $1,000,000. For 1993, Mr. Jordan was paid $503,799 for the period he was
employed. Beginning in 1995, Mr. Jordan's annual base salary is subject to
yearly review. Mr. Jordan is eligible for annual incentive awards based on
performance measures set by the Compensation Committee.
Under the agreement, Mr. Jordan received a $500,000 Equity Plus grant for
the 1992-1994 performance cycle. The payout of this grant, which was subject to
the same performance measures as other Equity Plus grants made in 1992, is set
forth in the table on page 17. Mr. Jordan also received options to purchase an
aggregate of 1,000,000 shares of common stock of the Corporation, of which
750,000 have an exercise price of $15.44 per share and 250,000 have an exercise
price of $26.00 per share. Beginning in 1996, or earlier if the Compensation
Committee so determines, he is 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 contingent upon Mr. Jordan's contribution of
the maximum possible amounts to the Westinghouse Pension Plan during his
employment.
Mr. Jordan's employment agreement extends until he attains age 65 or until
terminated 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
22
<PAGE> 25
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.
FREDRIC G. REYNOLDS
Early in 1994, the Corporation retained the services of Fredric G. Reynolds
as executive vice president and chief financial officer of the Corporation. In
order to attract Mr. Reynolds to the Corporation, his annual base salary in 1994
was set at $350,000, of which $291,660 was paid for the period he was employed.
Beginning in 1995, Mr. Reynolds' annual base salary is subject to yearly review.
Mr. Reynolds is eligible for annual incentive awards based on performance
measures set by the Compensation Committee, and is entitled to minimum annual
incentive compensation of $150,000 for 1994 and 1995.
Mr. Reynolds also received a $75,000 Equity Plus grant for the 1992-1994
performance cycle. The payout of this grant, which was subject to the same
performance measures as other Equity Plus grants made in 1992, is set forth in
the table on page 17. Mr. Reynolds also received options to purchase an
aggregate of 150,000 shares of common stock of the Corporation, as set forth in
the table on page 19, on his employment date. Mr. Reynolds is also eligible to
receive long-term incentive grants on the same basis as other senior-level
executives of the Corporation.
In the event of termination by the Corporation without cause, Mr. Reynolds
is entitled to receive each month after termination, for a period of twelve
months, an amount equal to his then applicable monthly base salary, which will
be in lieu of any other salary continuation programs.
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 Code, and has authorized the Corporation to make
additional payments in an amount sufficient to satisfy any such tax liability.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Committee, which is composed entirely of outside independent directors,
reviews, approves and monitors the design and implementation of the
Corporation's executive compensation system. The Committee also determines the
amount and form of compensation for the chief executive officer. 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 1994, the Committee retained the services
of Independent Consulting Resources Inc., a compensation consulting firm, to
provide advice to the Committee on executive compensation matters.
23
<PAGE> 26
THE WESTINGHOUSE EXECUTIVE COMPENSATION PROGRAM
The Westinghouse executive compensation program is a pay-for-performance
compensation system consisting of base salaries and incentives (annual and
long-term) that pay executives for the achievement of performance levels
designed to increase shareholder value of the Corporation. 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 and is
designed to pay base salaries and provide total compensation opportunities which
are competitive as measured against industry norms.
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 335
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, except where a higher percentile is
justified by consistently higher performance. The Towers-Perrin Entertainment
Industry Survey is used for executives in the broadcasting business segment.
For purposes of measuring competitive long-term incentive opportunities, the
Committee uses a survey conducted by Frederick W. Cook & Co., Inc. on behalf of
33 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 purpose of making competitive long-term
incentive grants.
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 judgmental 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.
ANNUAL INCENTIVES
The Committee administers the Annual Performance Plan, a
shareholder-approved plan under which annual incentive compensation may be paid
to key employees of the Corporation in an aggregate amount up to 5% of
consolidated net income of the Corporation before deducting income taxes and
subject to certain exclusions the Committee may make.
24
<PAGE> 27
For 1994, the Committee established early in the year threshold, target and
maximum financial objectives for the total Corporation and each individual
business unit. Awards for executive officers associated with specific business
units were weighted 75% on the performance of their business unit and 25% on the
basis of corporate performance. Business unit performances were measured against
the pre-determined objectives, typically on the basis of 40% operating profit,
24% investment turnover, 16% revenue and 20% specific non-financial initiatives.
Other executive officers were measured up to 50% 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 for 1994 with adjustments as
permitted by the Annual Performance Plan was slightly below target objective. As
a result of financial performance and performance of specific initiatives, 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. In terms of the competitive
targeted compensation, this results in the executives being paid, on average, at
the 50th percentile. The Committee made annual incentive awards to the chief
executive officer, president and chief financial officer part in cash, subject
to deferral, and part as grants of stock options for Westinghouse common stock.
Annual incentives to other executive officers were awarded in cash, subject to
deferral under the program described on pages 17 and 18.
LONG-TERM INCENTIVES
Long-term incentive opportunities were granted to executive officers during
1994 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 1994 were made to executives based on their level of
responsibility and a subjective evaluation of individual performance using the
50th percentile of data from the Frederick W. Cook & Co., Inc. survey referenced
earlier. In determining the grant level, principal emphasis was placed on the
preceding factors and on the executive's potential role in increasing
shareholder value. The number of shares currently owned directly and through
various deferral arrangements by an executive was not considered in making these
award grants.
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 these
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 shareholders benefit. However, the
stock multiplier is applied
25
<PAGE> 28
only when the stock price increases and the threshold financial performance
measurements are met. The executive may defer up to 100% of any awards of Equity
Plus grants made by the Committee, and amounts currently paid are generally
delivered in shares of Westinghouse common stock.
Equity Plus grants for the period 1992-1994 were contingent on financial
performance of the Corporation for the measurement period against financial
performance objectives. Corporate financial performance was measured against
objectives based 100% on the income before tax of the Corporation's continuing
businesses (other than Knoll and WCI Communities) after achieving targeted
investment turnover (sales divided by investment) goals.
Corporate financial performance as measured against the above indicated
goals for the three-year period of 1992-1994 was 37% of the target objective,
which was above the established threshold corporate performance level. In
measuring corporate performance, the Committee had excluded 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 other
Westinghouse businesses through operating performance. The Committee also
excluded the fourth quarter 1993 and 1994 charges related to restructuring and
other strategic actions which are intended to result in higher future
performance and increased shareholder value and the fourth quarter 1994 pension
settlement charge. The stock multiplier was not applicable to any of the awards.
Non-deferred awards, after appropriate withholdings, were generally paid in
Westinghouse common stock with some paid in cash.
COMPENSATION ARRANGEMENTS
As described below, the Corporation has entered into an employment contract
with its chief executive officer, Michael H. Jordan. In addition, in order to
attract the chief financial officer, Fredric G. Reynolds, to the Corporation in
early 1994, the Corporation set his 1994 base salary and agreed to provide Mr.
Reynolds with a separation benefit equal to his then applicable base salary,
payable for a year, under certain conditions as summarized on page 23. Mr.
Reynolds also received incentives designed to motivate and to reward him for
increased value to shareholders in the form of a stock option grant, a 1992-1994
Equity Plus grant with the same performance measurements and other requirements
applicable to grants to other senior-level executives, and minimum annual
incentive awards for 1994 and 1995.
CHIEF EXECUTIVE OFFICER
Michael H. Jordan joined the Corporation as its chairman and chief executive
officer on June 30, 1993. 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. In negotiating and reviewing this agreement, the
Committee referenced information provided by executive compensation consulting
firms - Sibson & Company and Towers-Perrin regarding compensation levels for
chief executive officers of
26
<PAGE> 29
companies of similar size and diversity as the Corporation. Mr. Jordan's base
salary, annual incentive and long-term incentive compensation are paid in
accordance with this agreement. The major provisions of this agreement are
summarized on page 22.
Mr. Jordan was paid a base salary of $1,000,000 for 1994. This base salary
is set forth in his employment agreement and was set in part based on
competitive base salaries and annual salary reviews not beginning until calendar
year 1995.
For 1994, the Committee determined to award Mr. Jordan an annual bonus of
$700,000, part of which was deferred and part of which was delivered as options
for Westinghouse common stock. The Committee based this award on: (i) the
Corporation's income before tax, as described earlier in this report, (ii)
performance on specific financial and non-financial initiatives, (iii)
judgmental evaluation by the Committee of Mr. Jordan's individual performance
and contribution and (iv) competitive data from the surveys previously
mentioned.
As part of Mr. Jordan's contract, he received in 1993 long-term incentive
opportunities consisting of an initial, front-end-loaded grant of stock options
for 1,000,000 shares of Westinghouse common stock, of which 750,000 have an
exercise price of $15.44 per share and 250,000 have an exercise price of $26.00
per share, and a $500,000 Equity Plus grant for the period of 1992-1994. The
Equity Plus incentive opportunity had 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. Mr. Jordan did not receive any additional stock
options as a long-term incentive for 1994. Mr. Jordan received payment of the
contingent Equity Plus grant for the 1992-1994 period based on corporate
performance for the period ending in 1994 as described earlier in the amount of
$185,000, which is 37% of original grant value.
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 that the officer's compensation for that year exceeds
$1,000,000. 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 for 1994 or 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 $1,000,000 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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COMPENSATION COMMITTEE
Richard R. Pivirotto, Chair
Frank C. Carlucci
George H. Conrades
David T. McLaughlin
Rene C. McPherson
Richard M. Morrow
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Pivirotto, Carlucci, Conrades, McLaughlin, McPherson and Morrow
served as members of the Compensation Committee during 1994. Mr. Carlucci is
chairman and a 10% shareholder of Newmyer Associates, Incorporated, a firm that
offers companies newsletters and monitoring and reporting services on
congressional and executive branch developments. In the normal course of its
business, the Corporation paid Newmyer $105,964 during 1994 for such services,
and expects to continue to use such services in 1995.
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, 1989 in
Westinghouse common stock and each of the indices.
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COMPARISON OF FIVE-YEAR TOTAL RETURN*
WESTINGHOUSE COMMON, S&P 500(R) AND DOW ELECTRICAL INDICES
<TABLE>
<CAPTION>
DOW JONES
ELECTRICAL COMPONENTS
YEAR WESTINGHOUSE COMMON S&P 500(R) & EQUIPMENT INDEX
- - ---- ------------------- ------- ---------------------
<S> <C> <C> <C>
DEC 89 100 100 100
DEC 90 80 97 92
DEC 91 54 126 115
DEC 92 42 136 115
DEC 93 45 150 125
DEC 94 40 152 131
</TABLE>
*Assumes that the value of the investment in Westinghouse common stock and
in each index was $100 on December 31, 1989 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 on
the Corporation's financial statements for 1995. During the year ended December
31, 1994, Price Waterhouse LLP (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 $11,627,000 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 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 1993, all
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<PAGE> 32
claims against Price Waterhouse were dismissed. Plaintiffs have subsequently
refiled the claims and Price Waterhouse has again moved to dismiss the claims.
On January 20, 1995 these claims were again dismissed. Plaintiffs have notified
the court that they intend to appeal this decision.
Before making its recommendation to the entire Board, the Audit Review
Committee carefully considers the qualifications of the candidates 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 Committee's review of Price Waterhouse also included inquiry
concerning litigation involving Price Waterhouse and the existence of any
investigations by the Securities and Exchange Commission (SEC).
The Audit Review Committee has expressed its satisfaction with Price
Waterhouse in all of these respects.
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 1995 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.
The favorable vote of a majority of the votes cast on this proposal is
required for passage.
3. PROPOSAL TO AMEND THE DEFERRED STOCK AND COMPENSATION PLAN FOR DIRECTORS
(Item 3 on proxy card)
GENERAL INFORMATION
The Compensation Committee and the Board periodically review director
compensation, including competitive data from independent surveys. The
Compensation Committee and the Board believe that compensation provides an
important means of attracting, retaining and motivating high-quality,
experienced individuals to serve as the Corporation's directors. Other than
providing for fees for special services outside the scope of normal Board and
Committee activities, the Board has not approved an increase in director
compensation since April 1991. The Compensation Committee has now recommended
and the Board approved on February 22, 1995, subject to the approval of the
holders of the Corporation's common stock, an increase in non-employee director
compensation as follows: (i) the current automatic annual grant to each director
of 400 common stock equivalents would be replaced by an automatic annual grant
to each director of options to purchase 3,000 shares of common stock of the
Corporation (Common Stock), and (ii) the annual Committee chair fee of $2,000
would be increased by adding an automatic annual grant of options to purchase
750 shares of Common Stock. For each of these grants, two-thirds of the options
would have an exercise price at the fair market value of the Common Stock on the
date of grant and
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<PAGE> 33
the remaining one-third would have an exercise price of 125% of that fair market
value. Directors would be required to hold any stock they receive when an option
is exercised for a designated period of time.
The Compensation Committee and the Board believe that these modifications to
the Corporation's compensation for non-employee directors are appropriate in
light of available competitive data on comparable companies, and believe that
stock options are an appropriate vehicle for compensating directors. Granting
stock options and requiring directors to hold option stock for a designated
period of time encourage stock ownership by directors and serve to further align
the directors' interests with those of shareholders. As the exercise price for
two-thirds of the shares subject to such options will be at the fair market
value of the Common Stock on the date of grant and the remaining shares will be
at 125% of such value, the directors will benefit only when shareholders
benefit.
PROPOSED AMENDMENT
The Board proposes to implement these changes by amendment to the existing
Deferred Stock and Compensation Plan for Directors, which was approved by
shareholders in April 1992. The proposed amendment also includes an increase in
shares available under this plan from 150,000 to 500,000 shares of Common Stock
in order to accommodate the proposed stock option grants and provide for ongoing
plan needs.
Because the non-employee director nominees, if elected, will participate in
the Deferred Stock and Compensation Plan for Directors as amended (Directors
Plan) and will benefit from the proposed amendment, each of them has a personal
interest in the adoption of this proposal.
SUMMARY
The following is a general description of the principal features of the
Directors Plan. It is qualified in its entirety by reference to the complete
text of the Directors Plan, which is attached to this proxy statement as Exhibit
A and is incorporated herein by reference.
The Directors Plan is available only to directors of the Corporation who are
not employees or officers of the Corporation or its subsidiaries and is
administered by the Compensation Committee. The number of participants will vary
with the number of non-employee directors. Had the proposed amendment been in
effect during 1994, non-employee directors as a group would have received stock
options for 24,750 shares of Common Stock, in place of 3,300 common stock
equivalents, and Committee chairs as a group would have received stock options
for 3,000 shares of Common Stock.
There will be 500,000 shares of Common Stock authorized for issuance under
the Directors Plan after shareholder approval of the proposed amendment. Any
shares subject to an award or deferral under the Directors Plan which are
forfeited or for any other reason are not issued to a director and any shares
tendered to pay the exercise price of a stock option will automatically be
available again for use under the Directors Plan as long as such share
replenishment is permitted under Rule 16b-3 of the Securities Exchange Act of
1934 (Exchange Act) and interpretations thereof by the staff of the SEC.
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<PAGE> 34
The Directors Plan continues the current plan feature that permits a
non-employee director to elect to defer all or a portion of his or her annual
cash retainer and other cash fees, with a deferred amount being treated as if it
were a convertible debenture. However, the proposed amendment will replace the
current automatic annual grant of 400 common stock equivalents to each
non-employee director with stock option grants. Common stock equivalents already
credited to directors' accounts will continue to earn hypothetical dividends
until they are paid out.
Under the proposed amendment, beginning April 26, 1995, each year each
non-employee director will automatically receive a grant of non-statutory
options (Stock Options) to purchase 3,000 shares of Common Stock. Each Committee
chair will also automatically receive each year a grant of Stock Options to
purchase 750 shares of Common Stock. These Stock Options will include the
following terms and such additional terms as the Compensation Committee may
require:
Exercise Price. For each grant of Stock Options, two thirds of such options
will have an exercise price equal to 100% of the fair market value of the
Common Stock (defined as the mean of the high and low prices of the Common
Stock as reported by the composite tape of the NYSE, or, if no sales are
reported on the relevant date, the average of such prices on the next
preceding and next following days with reported sales) on the date of grant
and the remaining one-third of such options will have an exercise price
equal to 125% of the fair market value of the Common Stock on the date of
grant. As of March 2, 1995, the closing price of the Corporation's Common
Stock as reported on the NYSE composite tape was $14.63.
Exercisability. Stock Options will be immediately exercisable by the
director in whole or in part.
Mandatory Holding of Common Stock. Once a director exercises a Stock Option,
he or she must hold the Common Stock so acquired until the earlier of (i)
three years from the exercise date, (ii) two years after he or she ceases to
be a director, or (iii) the occurrence of a change in control of the
Corporation (as defined in the Directors Plan) (the Holding Period).
Generally, the Holding Period will not apply to a director's estate.
Option Term and Early Termination. Generally, a Stock Option will have a
ten-year term. However, after the death of a director, an outstanding Stock
Option can only be exercised by the person the director designated as his or
her beneficiary or by those entitled to do so under the director's will or
the applicable laws of descent or distribution, and then only for two years
after the director's death (or until the expiration of the ten-year term, if
earlier). Also, if a director is removed from office for cause (as defined
in the Directors Plan), his or her outstanding Stock Options will cease to
be exercisable after the director is so removed.
Payment of Exercise Price. The exercise price of a Stock Option can be paid
in cash, by check or money order, through the delivery of shares of Common
Stock held at least six months with a fair market value on the business day
before exercise equal to the exercise price (a stock swap), by delivery of
an unconditional, irrevocable undertaking by a broker to deliver the
necessary funds to the Corporation, or by a combination of any of these
methods. Reload options are not available under the Directors Plan.
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<PAGE> 35
Federal Income Tax Consequences. The federal income taxation under the
provisions of the Code and regulations promulgated thereunder of the Stock
Options is generally as follows:
No taxable income will be recognized by a director upon the granting of a
Stock Option. Upon the exercise of a Stock Option, however, the director
will recognize taxable income in the year of exercise in an amount equal to
the difference between the option exercise price and the fair market value
of the Common Stock received on the date of exercise. The director's tax
basis in these shares will be the sum of the option exercise price plus any
income recognized upon exercise.
At the time of any subsequent sale or other disposition of the shares, the
director 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
director's holding period for such shares.
If a director uses previously owned shares to exercise Stock Options, no
additional income results unless other property, including money, is
received by the director in the exchange. Assuming no gain or loss is
recognized, the director'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 director recognizing taxable income 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 income recognized by
the director 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 Stock Option, such use would constitute
a disposition of such previously owned shares resulting in the recognition
of ordinary income as described above.
The value of gains that are received from Stock Options are classified as
either ordinary income or capital gains for federal income tax purposes. The
Omnibus Budget Reconciliation Act of 1993 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%).
The Corporation will be entitled to a deduction for federal income tax
purposes at the same time the director recognizes ordinary income under the
rules described above.
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.
The Directors Plan also provides that Stock Options and rights to receive
payments or distributions under the Directors Plan are not assignable or
transferable by a director, other than pursuant to certain domestic relations
orders and certain limited transfers on a director's death. Stock acquired from
exercising a Stock Option is also
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<PAGE> 36
nontransferable prior to the end of the applicable Holding Period, with limited
exceptions for domestic relations orders and on death. The shares available
under the Directors Plan and the terms of awards and deferrals are subject to
adjustment to reflect certain changes in the Corporation's Common Stock. The
Directors Plan can be terminated by the Board at any time and can be amended by
the Board subject to certain timing and shareholder approval requirements stated
in the plan.
The proposed amendment to the Directors Plan will be effective on the date
on which it is approved by the holders of the Corporation's Common Stock. If the
amendment is not approved, the current Deferred Stock and Compensation Plan for
Directors, without the amendment, will remain in effect. With the proposed
amendment, the name of the plan would also change to reflect the replacement of
common stock equivalents (Deferred Stock) with options for stock.
The persons named in the enclosed proxy card (Messrs. Jordan, Clark and
Briskman) have advised that they intend to vote to approve the amendment unless
a contrary direction is indicated on the proxy card.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE
AMENDMENT TO THE DEFERRED STOCK AND COMPENSATION PLAN FOR DIRECTORS.
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 amend the Deferred Stock and Compensation Plan for
Directors.
4. PROPOSAL TO AMEND THE 1993 LONG-TERM INCENTIVE PLAN
(Item 4 on proxy card)
GENERAL INFORMATION
The Corporation's 1993 Long-Term Incentive Plan (1993 Plan) was initially
approved by the Corporation's shareholders at the Corporation's 1994 Annual
Meeting. Subject to its terms and conditions, the 1993 Plan authorizes the
Compensation Committee of the Board to grant various awards, including stock
options to purchase shares of the Corporation's common stock, SARs and limited
rights, to a designated group of employees. When the 1993 Plan was proposed for
shareholder approval in April 1994, the Internal Revenue Service (IRS) had just
published proposed regulations relating to Section 162(m) of the Code, but had
not yet published final regulations or guidance on how the regulations would be
interpreted. The 1993 Plan was drafted to comply with the proposed regulations.
After more than a year, proposed revised regulations have been published
together with extensive commentary on Section 162(m) of the Code. Based on the
revised regulations relating to Section 162(m) and in order for the Corporation
to more fully avail itself of the provisions of Section 162(m), the Corporation
is proposing that the 1993 Plan be amended as follows:
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PROPOSED AMENDMENTS
The proposed amendments, which were recommended and approved by the
Compensation Committee and adopted by the Board on January 25, 1995 and February
22, 1995, subject to approval of the holders of the Corporation's common stock,
would (i) expand the class of eligible participants who can receive stock
options, SARs, and limited rights that qualify as performance based compensation
under Section 162(m) of the Code, by expanding overall plan eligibility to all
key salaried employees who have the capacity to contribute to the success of the
Company, and (ii) substitute a fixed numerical limit (3,500,000 shares) for the
current percentage limit on the receipt by any one participant of stock options,
SARs and limited rights. This number would be an annual limit with unused
amounts being available for awards in future years. The full text of the
proposed amendments is set forth in Exhibit B to this proxy statement and is
incorporated herein by reference.
The persons named in the enclosed proxy card (Messrs. Jordan, Clark and
Briskman) have advised that they intend to vote to approve the amendment unless
a contrary direction is indicated on the proxy card.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE
AMENDMENTS TO 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 amend the 1993 Long-Term Incentive Plan.
5. SHAREHOLDER PROPOSAL: COMPENSATION TIED TO DIVIDEND
(Item 5 on proxy card)
Westinghouse has been advised that Robert J. Clark, the beneficial owner of
2,400 shares of common stock, and Scarlett Clark, the beneficial owner of 4,000
shares of common stock, both residing at P.O. Box 999, Southhampton, New York
11969, will submit the following proposal at the meeting:
WHEREAS we, the shareholders, are the owners of the Company and
WHEREAS we have no control over the salaries, bonuses, incentives,
separation payments and other monies paid to individuals and
WHEREAS payments made to officers of the Company and others in some
instances appear to be unrelated to their contributions to the earnings of the
Company as in the cases of $14.5 million reported to have been paid to R. A.
Watson for eighteen months work and other payments to individuals while
employees were being laid off and the dividend cut,
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It is herewith resolved that, in all future contracts of employment calling
for annual pay including salary, bonuses, incentives, and other payments of
$200,000 per year or more, the total payments made to such individuals will be
reduced at the same annual rate as the annual rate of any cut in the dividends
per common share of the Company, such reduction in pay to take effect on the
same date that the reduced dividend becomes effective. The holders of present
contracts will be offered the opportunity to renegotiate their contract to
include the foregoing provision. No employee affected by this provision shall
take a total cut in Company payments of more than 25% for any one cut in the
dividend. The names of those accepting renegotiation will be published in the
next annual meeting statement or any suitable medium.
It is further resolved that no stock purchase options shall be offered at an
exercise price lower than 20% above the closing price on the New York Stock
Exchange of the Company's common shares on the day the options are offered.
No particular element in this proposal shall be implemented if it
specifically causes the Company to violate any federal, state, or local laws
specifically pertaining thereto.
Management will tell us to vote against this proposal because they know how
to run the Company without the advice of the shareholders. The price of the
common shares disputes this. Management will also tell us they need enormous
salaries to attract the best people. The best performers are attracted by the
best opportunities, not by money alone.
THE RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board believes that it is in the best interests of the Corporation and
its shareholders to link compensation, particularly for executives, to corporate
performance and increases in shareholder value. In addition, the Corporation
must have the ability to attract, retain and motivate high-quality executives
and other employees through compensation plans that are competitive as measured
against norms and that reward employees for their individual job performance.
The Corporation's current executive compensation program was carefully developed
under the auspices of the Compensation Committee, which is comprised exclusively
of outside independent directors. Executive compensation is closely linked to
corporate and individual performance and rewards executives for the achievement
of performance goals designed to increase shareholder value. The dividend rate
which is the focus of this proposal is not, by itself, an appropriate standard
to measure corporate performance and establish compensation levels for the
Corporation's employees. It neglects a whole range of operational and financial
goals of the Corporation that could enhance shareholder value, and fails to
recognize significant contributions made by executive officers and other
employees.
The Board agrees that "money alone" is not enough to maintain the human
resources needed by the Corporation, but compensation undeniably (and
understandably) is a critical factor. The compensation of the Corporation's
executives has been designed to attract, motivate and retain talented
individuals in order to accomplish the shared
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goals of the Corporation and its shareholders. These goals would not be served
by arbitrarily pegging compensation to just the dividend rate, nor by imposing a
downside risk on executives with no countervailing upside potential.
Stock options are an important feature of total executive compensation, and
reinforce the common interest of our shareholders and management in the vitality
of the Corporation. They are very much a performance based incentive that
rewards executives when shareholder value increases. The Compensation Committee
has granted stock options with a premium exercise price over current market
price when appropriate, as in the case of options for 250,000 shares to Mr.
Jordan when he joined the Corporation. However, as options are an important part
of the total compensation picture, the Compensation Committee must retain
maximum flexibility with respect to stock option awards. This proposal would
limit the Compensation Committee's flexibility.
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.
6. SHAREHOLDER PROPOSAL: LINK COMPENSATION TO DIVIDEND, TERMINATE ALL BONUSES,
CAP EXECUTIVE COMPENSATION AT ONE MILLION FIVE HUNDRED THOUSAND DOLLARS
(Item 6 on proxy card)
Westinghouse has been advised that Rollin R. Brandenburg and Elaine M.
Brandenburg, residing at 2715 Russell Road, Winthrop Harbor, Illinois
60096-1103, the beneficial owners of 3,715 shares of common stock, will submit
the following proposal at the meeting:
Over a period of years each time the Westinghouse Electric Company does well
(the stock advanced), the Chief Executive Officer, other board members and high
level managers pat themselves on the back and reward themselves with bonuses and
long-term incentives. Now, because of poor management practices over a number of
years, we believe when the Company does poorly these same high level personnel
should take as severe a cutback, as do the stockholders.
We propose that:
The board of directors review their executive compensation basis and
consider the stockholders using the following guidelines. All compensation to
personnel above the Professional level be tied to the stock dividend rates being
paid to stockholders, all bonuses be stopped immediately, in no case will any
Executives total compensation and incentives exceed One Million, Five Hundred
Thousand Dollars ($1,500,000) and all Executive pay be proportional to the Stock
Dividend paid to Stockholders up to the Maximum of $1,500,000.
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THE RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board believes that it is in the best interests of the Corporation and
its shareholders to link compensation, particularly for executives, to corporate
performance and increases in shareholder value. In addition, the Corporation
must have the ability to attract, retain and motivate high-quality executives
and other employees through compensation plans that are competitive as measured
against industry norms and that reward employees for their individual job
performance. The Corporation believes that its compensation plans and policies
achieve these goals and that the interests of the Corporation and its
shareholders would be adversely affected if the Corporation were to operate
under the rigid and arbitrary standards sought to be imposed by this proposal.
The Corporation's current executive compensation program was carefully
developed under the auspices of the Compensation Committee, which is comprised
exclusively of outside independent directors. Executive compensation is closely
linked to corporate and individual performance and rewards executives for the
achievement of performance goals designed to increase shareholder value. The
dividend rate which is the focus of the proposal is not, by itself, an
appropriate standard to measure corporate performance and establish compensation
levels for the Corporation's employees. It neglects a whole range of operational
and financial goals of the Corporation that could enhance shareholder value and
fails to recognize significant contributions made by executive officers and
other employees.
In addition, because the Corporation sets the dividend, the Corporation
believes that linking compensation in the form of benefits under the
Corporation's several benefit plans to the dividend may place the Corporation in
violation of the Employee Retirement Income Security Act of 1974, which mandates
that such benefits not be subject to employer discretion.
Moreover, immediately stopping all bonuses or arbitrarily modifying
compensation could expose the Corporation to liability for breach of employment
contracts and collective bargaining agreements in violation of state and federal
law.
THE BOARD OF DIRECTORS 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.
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.
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Assuming the presence of a quorum, (i) the eleven nominees for director
receiving the highest number of votes will be elected directors, (ii) the
affirmative vote of a majority of the common shares present, either in person or
by proxy, and entitled to vote is required to approve the amendment to the
Deferred Stock and Compensation Plan for Directors and the amendments to the
1993 Plan and (iii) 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 proposals.
Abstentions and broker-dealer non-votes are not counted in determining the
number of votes cast in connection with the election of independent accountants
or the adoption of the shareholder proposals. 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 proposals,
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 approve the
amendment to the Deferred Stock and Compensation Plan for Directors and the
amendments to the 1993 Plan. An affirmative vote of a majority of all shares
present and entitled to vote is required to amend the Deferred Stock and
Compensation Plan for Directors and to amend the 1993 Plan. Therefore, an
abstention with respect to either of these amendments will have the same effect
as a vote against such amendments.
SHAREHOLDER PROPOSAL SUBMISSIONS
To be considered for inclusion in the proxy materials relating to the 1996
Annual Meeting, shareholder proposals must be received at the principal
executive offices of Westinghouse on or before November 12, 1995.
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SOLICITATION OF PROXIES
The solicitation of proxies is made on behalf of the Board of the
Corporation. Solicitation by the Corporation will be by mail, except for any
personal solicitation made orally or in writing 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 10, 1995
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EXHIBIT A
DEFERRED COMPENSATION AND STOCK PLAN FOR DIRECTORS
(as amended as of April 26, 1995)
SECTION 1. INTRODUCTION
1.1 Establishment. Westinghouse Electric Corporation, a Pennsylvania
corporation (the Company ), has established the Deferred Compensation and Stock
Plan for Directors as amended as of April 26, 1995 (the Plan ) for those
directors of the Company who are neither officers nor employees of the Company.
The Plan provides (i) for the grant of awards in the form of Common Stock
Equivalents to Directors prior to April 26, 1995 and in the form of Stock
Options to Directors beginning April 26, 1995, and (ii) the opportunity for the
Directors to defer receipt of all or a part of their cash compensation through a
tax effective investment mechanism. Unless otherwise provided for herein, the
term Company includes Westinghouse Electric Corporation and its subsidiaries.
1.2 Purposes. The purposes of the Plan are to encourage the Directors to own
shares of the Company's stock and thereby to align their interests more closely
with the interests of the other shareholders of the Company, to encourage the
highest level of Director performance by providing the Directors with a direct
interest in the Company's attainment of its financial goals, and to provide a
financial incentive that will help attract and retain the most qualified
Directors.
1.3 Effective Date of Amendment. This Plan shall be effective on the date on
which the amendment to the Deferred Stock and Compensation Plan for Directors is
approved by the common shareholders of the Corporation. In the event that this
amendment is not so approved, the Deferred Stock and Compensation Plan for
Directors as in effect prior to the amendment shall remain in full force and
effect.
SECTION 2. DEFINITIONS
2.1 Definitions. The following terms shall have the meanings set forth
below:
(a) "Board" means the Board of Directors of the Company.
(b) "Cash Account" means the account established by the Company in respect
of each Director pursuant to Section 6.3 hereof and to which will be credited
annual retainer and/or fees and other amounts deferred pursuant to the Plan.
(c) "Cause" means any act of (a) fraud or intentional misrepresentation, or
(b) embezzlement, misappropriation or conversion of assets or opportunities of
the Company or any of its direct or indirect majority-owned subsidiaries.
(d) "Change in Control" shall have the meaning assigned to it in Section 8.2
hereof.
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(e) "Committee" means the Compensation Committee of the Board or any
successor established by the Board.
(f) "Common Stock Equivalent" means a hypothetical share of Stock which
shall have a value on any date equal to the mean of the high and low prices of
the Stock as reported by the composite tape of the New York Stock Exchange on
that date.
(g) "Common Stock Equivalent Award" means an award of Common Stock
Equivalents granted to a Director pursuant to Section 5 of the Plan.
(h) "Debenture" means a hypothetical debenture of the Company that has a
face value of $100, bears interest at a rate equal to the seven year U.S.
Treasury Bond rate (beginning January 1, 1995, the ten year U.S. Treasury Bond
rate) in effect the week prior to the regular January meeting of the Board (or,
if no such meeting is held, the week prior to the first trading day of the New
York Stock Exchange in February) in the year in respect of which deferred
amounts are earned, and is convertible into Stock at a conversion rate
determined by dividing $100 by the mean of the high and low prices of the Stock
as reported by the composite tape of the New York Stock Exchange on the date the
Debenture is credited to the Deferred Debenture Account pursuant to Section 6.3
hereof.
(i) "Deferred Debenture Account" means the account established by the
Company in respect of each Director pursuant to Section 6.3 hereof and to which
will be credited Debentures and other amounts pursuant to the Plan.
(j) "Deferred Stock Account" means the account established by the Company in
respect of each Director pursuant to Section 5.2 hereof and to which will be
credited Common Stock Equivalents pursuant to the Plan.
(k) "Director" means a member of the Board who is neither an officer nor an
employee of the Company. For purposes of the Plan, an employee is an individual
whose wages are subject to the withholding of federal income tax under section
3401 of the Internal Revenue Code, and an officer is an individual elected or
appointed by the Board or chosen in such other manner as may be prescribed in
the By-laws of the Company to serve as such.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
(m) "Fair Market Value" means the mean of the high and low prices of the
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 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.
(n) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(o) "Stock" means the $1.00 par value Common Stock of the Company.
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(p) Stock Option means a non-statutory stock option to purchase shares of
Stock for a purchase price per share equal to the Exercise Price (as defined in
Section 7.2(a) below) in accordance with the provisions of the Plan.
2.2 Gender and Number. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition of
any term herein in the singular shall also include the plural.
SECTION 3. PLAN ADMINISTRATION
(a) The Plan shall be administered by the Committee. The members of the
Committee shall be members of the Board appointed by the Board, and any vacancy
on the Committee shall be filled by the Board.
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 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 impose such limitations, restrictions and
conditions upon such awards as it shall deem appropriate, (ii) to interpret the
Plan and to adopt, amend and rescind administrative guidelines and other rules
and regulations relating to the Plan and (iii) to make all other determinations
and to take all other actions necessary or advisable for the implementation and
administration of the Plan. Notwithstanding the foregoing, the Committee shall
have no authority, discretion or power to select the Directors who will receive
awards pursuant to the Plan, determine the awards to be granted pursuant to the
Plan, the number of shares of Stock to be issued thereunder or the price thereof
or the time at which such awards are to be granted, establish the duration and
nature of awards or alter any other terms or conditions specified in the Plan,
except in the sense of administering the Plan subject to the provisions of the
Plan. The Committee's determinations on matters within its authority shall be
conclusive and binding upon the Company and all other persons. The Plan shall be
interpreted and implemented in a manner so that Directors will not fail, by
reason of the Plan or its implementation, to be disinterested persons within the
meaning of Rule 16b-3 under Section 16 of the Exchange Act, as such rule may be
amended.
(c) The Committee shall act on behalf of the Company as sponsor of the Plan.
All expenses associated with the Plan shall be borne by the Company.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. 500,000 shares of Stock are authorized for issuance
under the Plan in accordance with the provisions of the Plan, subject to
adjustment and substitution as set forth in this Section 4. This authorization
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may be increased from time to time by approval of the Board and by the
shareholders of the Company if such shareholder approval is required. The
Company shall at all times during the term of the Plan retain as authorized and
unissued Stock at least the number of shares from time to time required under
the provisions of the Plan, or otherwise assure itself of its ability to perform
its obligations hereunder.
4.2 Other Shares of Stock. Any shares of Stock that are subject to a Common
Stock Equivalent Award, a Stock Option Award or a Debenture and which are
forfeited, any shares of Stock that for any other reason are not issued to a
Director, and any shares of Stock tendered by a Director to pay the Exercise
Price of a Stock Option shall automatically become available again for use under
the Plan if Rule 16b-3 under the Exchange Act and interpretations of the
Securities and Exchange Commission or its Staff thereunder permit such share
replenishment.
4.3 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, spinoff, split up, dividend in
kind or other change in the corporate structure or distribution to the
shareholders, appropriate adjustments may be made by the Committee (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 which may be
issued under the Plan. Appropriate adjustments may also be made by the Committee
in the terms of any awards or Debentures under the Plan to reflect such changes
and to modify any other terms of outstanding awards on an equitable basis as the
Committee in its discretion determines.
SECTION 5. COMMON STOCK EQUIVALENT AWARDS
5.1 Grants of Common Stock Equivalent Awards. Common Stock Equivalents equal
to 400 shares of Stock shall be granted automatically each year, immediately
following the Annual Meeting (as described in the Company's By-laws) up to but
not including the Annual Meeting held in 1995, to each Director elected at such
meeting or then continuing to serve on the Board subsequent to such meeting. In
addition, if a person is elected to the Board at any time other than at an
Annual Meeting and prior to the Annual Meeting held in 1995, whether by action
of the shareholders of the Company or the Board, such person upon becoming a
Director shall be granted automatically (i) if such election shall occur after
the Annual Meeting and prior to July 1, Common Stock Equivalents equal to 300
shares of Stock, (ii) if such election shall occur on or after July 1 and prior
to October 1, Common Stock Equivalents equal to 200 shares of Stock, and (iii)
if such election shall occur on or after October 1 and prior to January 1 of the
following year, Common Stock Equivalents equal to 100 shares of Stock. All
Common Stock Equivalents granted pursuant to this Section 5.1 shall be adjusted
as provided in Section 4.3.
5.2 Deferred Stock Account. A Deferred Stock Account shall be established
for each Director elected prior to the Annual Meeting held in 1995. The Deferred
Stock Account shall consist of compensation in the form of Common Stock
Equivalents awarded to the Director hereunder by the Company plus Common Stock
Equivalents credited to the Deferred Stock Account in respect of dividends and
other distributions on the Stock pursuant to Sections 5.3 and 5.4.
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5.3 Hypothetical Investment. Compensation awarded hereunder in the form of
Common Stock Equivalents is assumed to be a hypothetical investment in shares of
Stock, and will be adjusted to reflect stock dividends, splits and
reclassifications and as otherwise set forth in Section 4.3.
5.4 Hypothetical Dividends. Dividends and other distributions on Common
Stock Equivalents shall be deemed to have been paid as if such Common Stock
Equivalents were actual shares of Stock issued and outstanding on the respective
record or distribution dates. Common Stock Equivalents shall be credited to the
Deferred Stock Account in respect of cash dividends and any other securities or
property issued on the Stock in connection with reclassifications, spinoffs and
the like on the basis of the value of the dividend or other asset distributed
and the value of the Common Stock Equivalents on the date of the announcement of
the dividend or asset distribution, all at the same time and in the same amount
as dividends or other distributions are paid or issued on the Stock. Fractional
shares shall be credited to a Director's Deferred Stock Account cumulatively but
the balance of shares of Common Stock Equivalents in a Director's Deferred Stock
Account shall be rounded to the next highest whole share for any payment to such
Director pursuant to Section 5.6 hereof.
5.5 Statement of Account. A statement will be sent to each Director as to
the balance of his Deferred Stock Account at least once each calendar year.
5.6 Payment of Deferred Stock. Upon termination of services as a Director,
the balance of the Director's Deferred Stock Account shall be paid to such
director in Stock in January of the year following the year of termination of
services as a Director on the basis of one share of Stock for each Common Stock
Equivalent in such Director's Deferred Stock Account.
5.7 Payments to a Deceased Director's Estate. In the event of a Director's
death before the balance of his Deferred Stock Account is fully paid to him,
payment of the balance of the Director's Deferred Stock Account shall then be
made to his estate in the time and manner selected by the Committee in the
absence of a designation of a beneficiary pursuant to Section 5.8 hereof. The
Committee may take into account the application of any duly appointed
administrator or executor of a Director's estate and direct that the balance of
the Director's Deferred Stock Account be paid to his estate in the manner
requested by such application.
5.8 Designation of Beneficiary. A Director may designate a beneficiary in a
form approved by the Committee.
SECTION 6. DEFERRAL OF COMPENSATION
6.1 Amount of Deferral. A Director may elect to defer receipt of all or a
specified portion of the cash annual retainers and/or cash meeting fees
otherwise payable to the Director for serving on the Board or any committee
thereof.
6.2 Manner of Electing Deferral. A Director shall make elections permitted
hereunder by giving written notice to the Company in a form approved by the
Committee. The notice shall include: (i) the percentage of
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meeting fees and/or annual retainer to be deferred, which amount must be stated
in whole increments of 5 percent; and (ii) the time as of which deferral is to
commence. Notwithstanding the foregoing, the election by a Director to
participate in the Company's Deferral Program for Directors, which this Plan
amends, shall continue in full force and effect with respect to this Plan
without any action required to be taken by such Director and such election shall
be deemed to be an election by a Director to defer such Director's cash
compensation paid by the Company in respect of annual retainers and meeting
fees.
6.3 Accounts. A Cash Account and a Deferred Debenture Account shall be
established for each Director electing to defer hereunder. Each Cash Account
shall be credited with the amounts deferred on the date such compensation is
otherwise payable. Such deferred amounts shall accrue interest from time to time
at a rate equal to the seven year U.S. Treasury Bond rate (beginning January 1,
1995, the ten year U.S. Treasury Bond rate) in effect the week prior to the
regular January meeting of the Board (or, if no such meeting is held, the week
prior to the first trading day of the New York Stock Exchange in February) in
the year in respect of which such deferred amounts are earned until the last
trading day of the New York Stock Exchange prior to the regular January meeting
of the Board (or, if no such meeting is held, until the first trading day of
February) in the year following the year in respect of which deferred amounts
are earned, at which time such deferred amounts, including interest, shall be
invested in Debentures and credited to the Deferred Debenture Account. Deferred
amounts shall be credited to the Deferred Debenture Account only in $100
amounts. Fractional amounts of $100 shall remain in the Cash Account and
continue to accrue interest.
6.4 Time for Electing Deferral. Any election to (i) defer cash annual
retainer and/or cash meeting fees, (ii) alter the portion of such amounts
deferred, or (iii) revoke an election to defer such amounts, must be made no
later than six months prior to the time such compensation is earned by the
Director or, if permitted by the rules under Section 16 of the Exchange Act, no
later than six months prior to the time such deferred compensation is invested
in Debentures and credited to the Deferred Debenture Account pursuant to Section
6.3 hereof. An election to commence a deferral may be made at any time in
accordance with the procedures set forth in Section 6.2. Any election so made
shall remain in effect beginning six months from the date of election until the
Director ceases to be a Director or six months from the date the Director elects
in writing to change his election.
6.5 Payment of Deferred Amounts. Payments from a Deferred Debenture Account
shall be made in five consecutive annual installments beginning in the January
following the Director's termination of service. Payments from a Deferred
Debenture Account shall consist of accumulated interest on the Debentures (which
amount shall only be payable in cash) plus the greater value of (i) the face
value of the Debentures or (ii) the shares of Stock into which the Debentures
are convertible. In the event the value of the payment is determined by the
amount referred to in clause (i), payment shall be made in cash. In the event
such value is determined by clause (ii), such payment shall be made in Stock,
other than the value of fractional shares which will be paid in cash.
6.6 Payments to a Deceased Director's Estate. In the event of a Director's
death before the balance of his Cash Account or Deferred Debenture Account is
fully paid to him, payment of the balance of the Cash Account or
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Deferred Debenture Account shall then be made to his estate in the time and
manner selected by the Committee in the absence of a designation of a
beneficiary pursuant to Section 6.7 hereof. The Committee may take into account
the application of any duly appointed administrator or executor of a Director's
estate and direct that the balance of the Director's Cash Account or Deferred
Debenture Account be paid to his estate in the manner requested by such
application.
6.7 Designation of Beneficiary. A Director may designate a beneficiary in a
form approved by the Committee.
SECTION 7. STOCK OPTION AWARDS
7.1 Grants of Stock Option Awards.
(a) Stock Options for 3,000 shares of Stock shall be granted automatically
each year, immediately following the Annual Meeting (as described in the
Company's By-laws), beginning with the Annual Meeting held in 1995, to each
Director elected at such meeting or then continuing to serve on the Board
subsequent to such meeting. In addition, if a person is elected to the Board at
any time after the Annual Meeting held in 1995 and other than at an Annual
Meeting, whether by action of the shareholders of the Company or the Board, such
person upon becoming a Director shall be granted automatically (i) if such
election shall occur after the Annual Meeting and prior to July 1, Stock Options
for 2,250 shares of Stock, (ii) if such election shall occur on or after July 1
and prior to October 1, Stock Options for 1,500 shares of Stock, and (iii) if
such election shall occur on or after October 1 and prior to January 1 of the
following year, Stock Options for 750 shares of Stock.
(b) Stock Options for 750 shares of Stock shall be granted automatically
each year, immediately following the Annual Meeting and the organization meeting
of the Board related to such Annual Meeting, beginning with the Annual Meeting
and related organization meeting held in 1995, to each Director elected at such
organization meeting to serve as Chair of a standing Committee of the Board.
(c) All Stock Options granted pursuant to Section 7.1 shall be adjusted as
provided in Section 4.3.
7.2 Terms and Conditions of Stock Options. Stock Options granted under the
Plan shall be subject to the following terms and conditions:
(a) Exercise Price. The purchase price at which each Stock Option may be
exercised ( Exercise Price ) shall be determined as follows: on any date of
grant pursuant to Section 7.1 above ( Grant Date ), (i) Stock Options for two
thirds of the option shares granted on the Grant Date shall have an Exercise
Price per share at 100% of Fair Market Value on the Grant Date and (ii) Stock
Options for the remaining one third of the option shares granted on the Grant
Date shall have an Exercise Price per share at 125% of Fair Market Value on the
Grant Date.
(b) Exercisability. Subject to the terms and conditions of the Plan and of
the agreement referred to in Section 7.2(i), a Stock Option may be exercised in
whole or in part upon written notice of exercise to the Company
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commencing on the first day after the Grant Date and until it terminates. During
a Director's lifetime, a Stock Option may be exercised only by the Director or
the Director's guardian or legal representative.
(c) Mandatory Holding of Stock. Except as otherwise provided in Section 7.5,
any Stock acquired on exercise of a Stock Option must be held by the grantee for
a minimum of (1) three years from the date of exercise, (2) two years from the
date the grantee ceases to be a director of the Company, or (3) until the
occurrence of a Change of Control, whichever first occurs (the "Holding
Period").
(d) Option Term. The term of a Stock Option (the "Option Term") shall be the
period of ten years from its Grant Date or until the date the Stock Option
ceases to be exercisable as provided in Section 7.2(g), whichever is earlier.
(e) Payment of Exercise Price. Stock purchased on exercise of a Stock 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, (2) 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, (3) 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 (4) by a
combination of the permissible forms of payment; provided, that any portion of
the Exercise Price representing a fraction of a share must be paid in cash and
no share of Stock held for less than six months may be delivered in payment of
the Exercise Price of a Stock Option.
(f) Rights as a Shareholder. The holder of a Stock Option will not have any
of the rights of a shareholder with respect to any shares of Stock subject to
the Stock Option until such shares are issued by the Company following the
exercise of the Stock Option.
(g) Termination of Eligibility. If a grantee ceases to be a Director for any
reason, any outstanding Stock Options shall be exercisable according to the
following provisions:
(1) If a grantee ceases to be a Director for any reason other than removal
for Cause or death, any outstanding Stock Options held by such grantee shall be
exercisable by the grantee at any time prior to the expiration of the Option
Term;
(2) If a grantee is removed from office as a director of the Company for
Cause, any outstanding Stock Options held by such grantee shall be exercisable
by the grantee at any time prior to the expiration of the Option Term or on or
before the date the grantee is so removed from office, whichever first occurs;
and
(3) Following the death of a grantee while a Director or after the grantee
ceased to be a Director for any reason other than removal for Cause, any Stock
Options that are outstanding and exercisable by such grantee at the time of
death shall be exercisable by the person or persons entitled to do so under the
grantee's will, by a properly designated beneficiary in the event of death, or
by the person or persons entitled to do so under the
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applicable laws of descent and distribution at any time prior to the earlier of
(a) the expiration of the Option Term and (b) two years after the date of death.
(h) Termination of Stock Option. A Stock Option shall terminate on the
earlier of (1) exercise of the Stock Option in accordance with the terms of the
Plan, and (2) the expiration of the Option Term as specified in Sections 7.2(d)
and 7.2(g).
(i) Stock Option Agreement. All Stock Options shall be confirmed by an
agreement, or an amendment thereto, which shall be executed on behalf of the
Company by the Chief Executive Officer, the President or any Vice President and
by the grantee.
(j) General Restriction.
(1) The obligation of the Company to issue Stock pursuant to Stock Options
under the Plan shall be subject to the condition that, if at any time the
Committee shall determine that (a) the listing, registration or qualification of
shares of Stock upon any securities exchange or under any state or federal law
or (b) the consent or approval of any government or regulatory body is necessary
or desirable, then such Stock shall not be issued unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free from any conditions not acceptable to the Committee.
(2) Shares of Stock for use under the provisions of this Section 7 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 Company shall determine, and a registration statement under
the Securities Act of 1933 with respect to such shares shall have become, and
be, effective.
Subject to the foregoing provisions of this Section 7.2 and the other
provisions of the Plan, any Stock Option granted under the Plan shall be subject
to such restrictions and other terms and conditions, if any, as shall be
determined, in its discretion, by the Committee and set forth in the agreement
referred to in Section 7.2(i), or an amendment thereto; provided, that in no
event shall the Committee or the Board have any power or authority which would
cause the Directors to cease to be disinterested persons or transactions
pursuant to the Plan to cease to be exempt from the provisions of Section 16(b)
of the Exchange Act under Rule 16b-3.
7.3 Annual Statement. A statement will be sent to each Director as to the
status of his Stock Options at least once each calendar year.
7.4 Designation of a Beneficiary. A Director may designate a beneficiary to
hold and exercise outstanding Stock Options in accordance with the Plan in the
event of the Director's death.
7.5 Holding Period Applicable to a Deceased Grantee's Estate. As long as at
least six months have elapsed since the Grant Date, a properly designated
beneficiary or a person holding a Stock Option under a deceased grantee's will
or under the applicable laws of descent or distribution exercising a Stock
Option in accordance with
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Section 7.2(g) will not be subject to the Holding Period with respect to shares
of Stock received on exercise of a Stock Option.
Section 8. Change of Control
8.1 Settlement of Compensation. In the event of a Change in Control of the
Company as defined herein, (a) (i) to the extent not already vested, all
benefits hereunder shall be vested immediately, and (ii) awards as to a period
of time less than a full year may be made as the Committee may determine as of
the date of such Change in Control and then paid on such basis and in such form
as the Committee may prescribe; and (b) the value of all unpaid benefits and
deferred amounts shall be paid in cash to PNC Bank, N.A. (formerly known as
Pittsburgh National Bank) the trustee pursuant to a trust agreement dated
November 24, 1987, or any successor trustee, or otherwise on such terms as the
Committee may prescribe or permit. For purposes of this paragraph, the value of
deferred amounts shall be equal to the sum of (i) the value of all Common Stock
Equivalent Awards then held in such Director's Deferred Stock Account (the value
of which shall be based upon the highest price of the Stock as reported by the
composite tape of the New York Stock Exchange during the thirty days immediately
preceding the Change in Control) and (ii) the greater value of (x) the cash
amount equal to the face value of the Debentures plus cash equal to accrued
interest or (y) the number of shares of Stock into which the Debentures are
convertible (the value of which shall be based upon the highest price of the
Stock as reported by the composite tape of the New York Stock Exchange during
the thirty days immediately preceding the Change in Control), plus cash equal to
accrued interest.
8.2 Definition of Change in Control. A Change in Control shall mean the
occurrence of one or more of the following events:
(a) there shall be consummated (i) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company's 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 Company, or (b) the shareholders of the Company shall
approve of any plan or proposal for the liquidation or dissolution of the
Company, 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 Stock of the
Company (or securities convertible into the Company's 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 Stock (or securities
convertible into 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 Company or any benefit plan sponsored by the Company or
any of its subsidiaries) shall become the beneficial owner (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or
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indirectly, of securities of the Company representing twenty percent or more of
the combined voting power of the Company'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 is 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.
SECTION 9. ASSIGNABILITY
The right to receive payments or distributions hereunder (including any
"derivative security" issued pursuant to the Plan, as such term is defined by
the rules promulgated under Section 16 of the Exchange Act) and any Stock
Options granted hereunder shall not be transferable or assignable by a Director
other than by will, by the laws of descent and distribution, to a properly
designated beneficiary in the event of death, or pursuant to a domestic
relations order as defined by Section 414(p)(1)(B) of the Internal Revenue Code
or the rules thereunder that satisfies Section 414(p)(1)(A) of that Code or the
rules thereunder. In addition, Stock acquired on exercise of a Stock Option
shall not be transferable prior to the end of the applicable Holding Period, if
any, set forth in Sections 7.2(a) and 7.5, other than by will, by transfer to a
properly designated beneficiary in the event of death, by the applicable laws
of descent and distribution or pursuant to a domestic relations order as
defined by Section 414(p)(1)(B) of the Internal Revenue Code or the rules
thereunder that satisfies Section 414(p)(1)(A) of that Code or the rules
thereunder.
SECTION 10. PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and from time to time may amend or
modify the Plan, provided, however, that no amendment or modification may become
effective without approval of the amendment or modification by the shareholders
if shareholder approval is required to enable the Plan to satisfy any applicable
statutory or regulatory requirements and provided further, that no amendment or
modification shall be made more than once every six months that would change the
amount, price, or timing of the Common Stock Equivalent Awards or Stock Option
Awards hereunder, other than to comport with changes in the Internal Revenue
Code, the Employment Retirement Income Security Act, or the rules promulgated
thereunder.
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SECTION 11. REQUIREMENTS OF LAW
11.1 Federal Securities Law Requirements. Transactions pursuant to the Plan
shall be subject to all conditions required under Rule 16b-3 to qualify such
transactions for any exemption from the provisions of Section 16(b) of the
Exchange Act available under that Rule.
11.2 Governing Law. The Plan and all agreements hereunder shall be construed
in accordance with and governed by the laws of the Commonwealth of Pennsylvania.
EXHIBIT B
PROPOSED AMENDMENTS TO THE
1993 LONG-TERM INCENTIVE PLAN
The 1993 Long-Term Incentive Plan is hereby amended as follows:
1. The word "management" is deleted from the phrase key management personnel
each place it appears in Section 1.1.
2. Section 1.3 is amended and restated in its entirety as follows:
"1.3 SELECTION FOR PARTICIPATION
Participants selected by the Committee shall be Eligible Persons (as defined
below) who are key employees and have the capacity to contribute to the success
of the Company. Eligible Persons are persons who are salaried employees of the
Company ("Employee" or "Employees"). 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."
3. The last sentence of the second paragraph of Section 1.5 is amended and
restated in its entirety to read as follows:
"The maximum number of such shares subject to options to purchase stock,
SARs and Limited Rights under the Plan awarded to any one Participant in any one
calendar year may not exceed 3,500,000 shares plus unused share amounts that
could have been awarded to that Participant in previous calendar years."
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TICKET REQUEST
If you plan to attend the 1995 Annual Meeting, 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)
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I plan to attend the 1995 Annual Meeting. I have indicated in the block provided
to the right the number of shareholders for whom tickets are requested. / /
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Name (please print)
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Street Address
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City State Zip Code
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[WESTINGHOUSE LOGO]
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WESTINGHOUSE ELECTRIC CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
SHAREHOLDERS, APRIL 26, 1995
(See Proxy Statement for discussion of items.)
P The undersigned hereby appoints Michael H. Jordan, Gary M. Clark and Louis
J. Briskman, and each of them, jointly and severally, proxies, with power
R of substitution, to vote all shares of common stock which the undersigned
is entitled to vote on all matters which may come before the 1995 Annual
O Meeting of Shareholders of Westinghouse Electric Corporation, or any
adjournment thereof.
X
Election of Directors. Nominees: (change of address/comments)
Y
Frank C. Carlucci, Robert E. Cawthorn,
Gary Clark,
--------------------------------
George H. Conrades, William H. Gray III,
--------------------------------
Michael H. Jordan, David T. McLaughlin,
--------------------------------
Richard M. Morrow, Richard R. Pivirotto,
--------------------------------
Paula Stern and Robert D. Walter.
--------------------------------
(if you have written in the
above space, please mark the
corresponding box on the
reverse side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND
RETURN THIS CARD.
SEE REVERSE
SIDE
<PAGE> 59
/X/ Please mark your 4568
votes as in this
example.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED BELOW, BUT IF
NO SPECIFICATION IS MADE THEY WILL BE FOR ITEMS 1, 2, 3 AND 4 AND AGAINST
ITEMS 5 AND 6.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, AND 4
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FOR WITHHELD
1. Election of Directors (see reverse) / / / /
For, except vote withheld from the following nominee(s):
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FOR AGAINST ABSTAIN
2. The election of independent / / / / / /
accountants for 1995.
3. Amendment to the Deferred Stock / / / / / /
and Compensation Plan for Directors.
4. Amendment to the 1993 Long-Term / / / / / /
Incentive Plan.
5. Shareholder Proposal: / / / / / /
Employment contracts and stock
options.
6. Shareholder Proposal: / / / / / /
Employee compensation and
executive compensation cap.
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
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SIGNATURE(S) DATE
