<PAGE> 1
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)
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ ] $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:
----------------------------------------------------
[ X ] No fee required
<PAGE> 2
WESTINGHOUSE ELECTRIC CORPORATION
NOTICE OF 1997
ANNUAL MEETING
AND PROXY STATEMENT
APRIL 30, 1997
<PAGE> 3
DEAR FELLOW SHAREHOLDER:
It is my pleasure to invite you to attend Westinghouse Electric
Corporation's 1997 Annual Meeting of Shareholders. The meeting will be held at
the Minneapolis Hilton and Towers, Minneapolis, Minnesota on Wednesday, April
30, 1997, beginning at 10:30 a.m., Central Time. The accompanying Notice of
Annual Meeting and Proxy Statement describes the business to be transacted at
the meeting.
At the meeting, I will report on the activities of the Company. We will
then take action on the items described in the proxy statement. You are urged to
read the accompanying proxy statement for a discussion of the matters to be
voted on at the meeting. The meeting will conclude with a question and answer
period.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend, please complete, sign, date and return your proxy card
as soon as possible. Your vote is important to the Board of Directors. Thank you
for your time and attention to the accompanying proxy statement.
I look forward to seeing you at the meeting.
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 1997 Annual Meeting of Shareholders of Westinghouse Electric
Corporation will be held at the Minneapolis Hilton and Towers, 1001 Marquette
Avenue, Minneapolis, Minnesota on Wednesday, April 30, 1997, beginning at 10:30
a.m., Central Time. The purposes of the meeting are to consider and act upon:
(1) the election of fourteen directors, each for a term of one year;
(2) the election of independent accountants;
(3) if properly presented, the shareholder proposal contained herein; and
(4) such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on March 3, 1997 as
the record date for determining the shareholders entitled to notice of and to
vote at the meeting and any adjournment thereof.
The vote of each shareholder is important. In order to obtain the maximum
representation, we urge you to complete, sign, date and return your proxy card
as promptly as possible. In this way, if you are unable to attend, your shares
can nevertheless be voted at the meeting. A return envelope is enclosed for your
convenience. Your proxy may be revoked by delivering written notice of
revocation to the Secretary of the Company prior to the time voting is declared
closed, or by attending the meeting and voting your shares in person.
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.
IF YOU PLAN TO ATTEND THE MEETING, PLEASE KEEP THE ADMISSION TICKET
THAT IS ATTACHED TO THE PROXY CARD ACCOMPANYING THIS NOTICE OF ANNUAL
MEETING AND PROXY STATEMENT, AND ALSO CHECK THE APPROPRIATE BOX ON YOUR
PROXY CARD. YOUR NAME WILL THEN BE PLACED ON AN ADMISSION LIST HELD AT THE
ENTRANCE TO THE MEETING. SHAREHOLDERS WHO OWN SHARES THROUGH BANKS OR
BROKERS AND WHO PLAN TO ATTEND MUST HAVE THEIR NAMES ADDED TO THE ADMISSION
LIST BY SENDING A WRITTEN NOTIFICATION, ALONG WITH PROOF OF OWNERSHIP (SUCH
AS A BANK OR BROKERAGE FIRM ACCOUNT STATEMENT), TO THE SECRETARY'S OFFICE,
11 STANWIX STREET, PITTSBURGH, PENNSYLVANIA 15222-1384, OR BY BRINGING
SUCH INFORMATION TO THE MEETING.
On Behalf of the Board of Directors,
/s/ ANGELINE C. STRAKA
- -----------------------------
Angeline C. Straka
Vice President, Secretary
and Associate General Counsel
Pittsburgh, Pennsylvania
March 17, 1997
2
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
Election of Directors ...........................................................................4
The Board of Directors and its Committees.......................................................12
Director Compensation...........................................................................13
Transactions Involving Directors and Executive Officers.........................................15
Security Ownership..............................................................................15
Executive Compensation .........................................................................17
Option Grants...................................................................................19
Option Exercises and Fiscal Year-End Values.....................................................21
Pension Benefits................................................................................22
Compensation and Severance Arrangements.........................................................25
Compensation Committee Report on Executive Compensation.........................................28
Compensation Committee Interlocks and Insider Participation.....................................32
Shareholder Return Performance Presentation.....................................................32
Election of Independent Accountants.............................................................34
Shareholder Proposal: Redeem Shareholder Rights Plan............................................35
Voting Information..............................................................................38
Shareholder Proposal Submissions ...............................................................38
Solicitation of Proxies ........................................................................38
</TABLE>
3
<PAGE> 6
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 1997
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Westinghouse Electric Corporation ("Westinghouse" or
the "Company") of proxies for the 1997 Annual Meeting of Shareholders to be held
on April 30, 1997, and all adjournments thereof. This proxy statement and the
accompanying proxy card are first being sent to shareholders on or about March
17, 1997. Only the holders of record of common stock at the close of business on
March 3, 1997 are entitled to notice of and to vote at the meeting. On that
date, 608,900,735 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 Company 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.
The principal executive offices of the Company are in the Westinghouse
Building, 11 Stanwix Street, Pittsburgh, Pennsylvania 15222-1384.
1. ELECTION OF DIRECTORS
(Item 1 on proxy card)
At the 1997 Annual Meeting of Shareholders, fourteen directors are
to be elected to hold office until the 1998 Annual Meeting of Shareholders
and until their successors have been elected and qualified. The Board
presently consists of thirteen members. 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, Mel Karmazin, David K. P.
Li, Peter A. Lund, David T. McLaughlin, Richard R. Pivirotto, Raymond W.
Smith, Paula Stern and Robert D. Walter, all of whom, except for Peter A.
Lund, are now directors of the Company.
Information about the nominees is set forth on pages 5 through 11.
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 fourteen 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 Company.
4
<PAGE> 7
NOMINEES PROPOSED BY THE BOARD OF DIRECTORS
FRANK C. CARLUCCI, 66
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. He 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., BDM International, Inc., Kaman Corporation, Neurogen
Corporation, Quaker Oats Company, Northern Telecom, Ltd., Pharmacia &
Upjohn Inc., General Dynamics Corporation, SunResorts Ltd., N.V. and Texas
Biotechnology Corporation. Mr. Carlucci is also currently a director of Bell
Atlantic Corporation, however, he has determined not to seek reelection to
this board at its May 1997 annual meeting. Mr. Carlucci was first elected to
the Westinghouse Board in 1989.
ROBERT E. CAWTHORN, 61
Chairman Emeritus
Rhone-Poulenc Rorer Inc. (pharmaceuticals)
Collegeville, Pennsylvania
Managing Director, Global Health Care Partners
DLJ Merchant Banking Partners, L.P. (merchant banking)
Bala Cynwyd, Pennsylvania
Mr. Cawthorn was chief executive officer of Rhone-Poulenc Rorer Inc. from
1985 to 1995 and chairman from 1986 to 1996. Upon his retirement as chairman in
May 1996, Mr. Cawthorn was elected chairman emeritus of Rhone-Poulenc
Rorer Inc. In January 1997, Mr. Cawthorn joined DLJ Merchant Banking Partners,
L.P. as managing director, Global Health Care Partners. Mr. Cawthorn is a
director of Rhone-Poulenc Rorer Inc., Sun Company and the Vanguard Group of
Investment Companies. Mr. Cawthorn was first elected to the Westinghouse Board
in 1995.
5
<PAGE> 8
GARY M. CLARK, 61
Vice Chairman and President
Westinghouse Electric Corporation
Pittsburgh, Pennsylvania
Mr. Clark, who joined Westinghouse in 1957, has served as president and a
director of the Company since 1993. In addition, he was named the Company's
vice chairman in November 1996. From January 1993 to June 1993, Mr. Clark
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.
GEORGE H. CONRADES, 58
Chairman and Chief Executive Officer
BBN Corporation (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
president and chief executive officer of BBN Corporation, a provider of
Internet services, products and application solutions. In 1995, he was
appointed chairman of the board. Mr. Conrades is a director of BBN
Corporation, Cubist Pharmaceuticals, Inc. and CRA Managed Care, Inc.
Mr. Conrades was first elected to the Westinghouse Board in 1994.
6
<PAGE> 9
WILLIAM H. GRAY III, 55
President and Chief Executive Officer
The College Fund/UNCF (higher education assistance)
Fairfax, Virginia
Mr. Gray has been president and chief executive officer of The College
Fund/UNCF 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 The College Fund/UNCF, Warner-Lambert Company, The
Prudential Insurance Company of America, Union Pacific Corporation, MBIA,
Inc., Rockwell International Corporation, Electronic Data Systems Corporation
and The Chase Manhattan Bank, N.A. Mr. Gray was first elected to the
Westinghouse Board in 1991.
MICHAEL H. JORDAN, 60
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 Dell Computer Corporation, The College
Fund/UNCF and Aetna Life and Casualty Company. Mr. Jordan is also currently a
director of CVS Corporation, however, he has determined not to seek
reelection to this board at its May 1997 annual meeting. He also serves as a
member of President Clinton's Export Council and, in May 1996, was elected
chairman of the U.S.-Japan Business Council. He is also a member of the Board
of Trustees for the Museum of Television and Radio.
7
<PAGE> 10
MEL KARMAZIN, 53
Chairman and Chief Executive Officer
CBS Radio
New York, New York
Mr. Karmazin joined Westinghouse as chairman and chief executive officer of
CBS Radio in December 1996. He was president and chief executive officer of
Infinity Broadcasting Corporation, a radio broadcasting company, from 1986
until its purchase by Westinghouse in December 1996. Mr. Karmazin is a
director of Westwood One and a member of the Board of Trustees for the Museum
of Television and Radio. Mr. Karmazin was elected to the Westinghouse Board
in 1997.
DAVID K. P. LI, 57
Deputy Chairman and Chief Executive
The Bank of East Asia, Limited (banking)
Hong Kong
Dr. Li joined The Bank of East Asia, Limited in 1969 as chief accountant.
He held a number of management positions and was appointed chief executive
in 1981. In January 1995, Dr. Li was named deputy chairman and chief
executive. Dr. Li is a director of The Bank of East Asia, Limited, Campbell
Soup Company, Dow Jones & Company, Inc., Hong Kong Telecommunications Limited,
South China Morning Post (Holdings) Limited and Sime Darby Berhad. Dr. Li was
first elected to the Westinghouse Board in July 1995.
8
<PAGE> 11
PETER A. LUND, 56
President and Chief Executive Officer
CBS Television and Cable Group
New York, New York
Mr. Lund was named president and chief executive officer of the CBS Television
and Cable Group in January 1997. He was elected president and chief executive
officer of CBS Inc. in November 1995 following the acquisition of CBS by
Westinghouse. He had been president of the CBS/Broadcast Group in the year
prior to the merger. Mr. Lund served as president of the CBS Television
Network in 1994 and 1995 and was executive vice president of the CBS/Broadcast
Group from 1990 to 1994. He joined CBS in 1977. Mr. Lund serves on the boards
of the American Film Institute, the Center for Communications, American
Women in Television and Radio, the Motion Picture and Television Foundation
and the Central Park Conservancy. He is also a member of the President's
Council, Theatre Development Fund and the Board of Trustees of the University
of St. Thomas in St. Paul, Minnesota.
DAVID T. MCLAUGHLIN, 64
President and Chief Executive Officer
The Aspen Institute (leadership enhancement)
Queenstown, Maryland
In 1987, Mr. McLaughlin became chairman of The Aspen Institute and, in 1988,
was appointed president and 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, PartnerRe Services, Ltd., Standard Fusee Corporation and
Atlas Air Inc. Mr. McLaughlin was first elected to the Westinghouse Board in
1979.
9
<PAGE> 12
RICHARD R. PIVIROTTO, 66
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 and Immunomedics, Inc. He is also a trustee emeritus of Princeton
University, a trustee of the General Theological Seminary, and a trustee and
past chairman of the Greenwich Hospital Association. Mr. Pivirotto was
first elected to the Westinghouse Board in 1973.
RAYMOND W. SMITH, 59
Chairman and Chief Executive Officer
Bell Atlantic Corporation (telecommunications)
Philadelphia, Pennsylvania
Mr. Smith has been the chairman and chief executive officer of Bell Atlantic
Corporation since 1989. Prior to that, he was president and vice chairman.
He joined the Bell System in 1959. Mr. Smith is a director of Bell
Atlantic Corporation, US Airways Group, Inc. and Corestates Financial
Corp. In 1995, he was appointed to the President's Committee on the Arts
and Humanities. In 1996, he became a member of the National Education
Association's CEO Forum on Education and Technology and a member of the
board of trustees of Greater Washington Educational Telecommunications
Association, Inc. Mr. Smith was elected to the Westinghouse Board in 1997.
10
<PAGE> 13
PAULA STERN, 51
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., a
Washington-based trade and international economic advisory firm. From 1972 to
1988, Dr. Stern held various positions with the United States government,
including commissioner and then chairwoman of the U.S. International Trade
Commission. She is a director of Harcourt General and Wal-Mart Stores,
Inc. Dr. Stern was first elected to the Westinghouse Board in 1992.
ROBERT D. WALTER, 51
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 and
acquisitions, he has built Cardinal into one of the nation's largest
wholesalers of pharmaceutical and related health care products with annual
sales in 1996 of $8.9 billion. Mr. Walter is a director of Cardinal Health,
Inc., Banc One Corporation and Karrington Health, Inc. Mr. Walter was first
elected to the Westinghouse Board in 1994.
11
<PAGE> 14
THE BOARD OF DIRECTORS AND ITS COMMITTEES
In 1996, there were fifteen meetings of the Board. Each director attended
at least 81% of all meetings of the Board and its committees on which the
director served, except Dr. Li, who attended 60% of such meetings. 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 Company's by-laws. At
the present time, there are thirteen members of the Board.
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. All members of these
committees are independent directors.
The Audit Review Committee assists the Board in fulfilling its
responsibilities concerning the Company's accounting and financial reporting
practices and the ethical conduct of the Company and its employees. This
committee makes recommendations to the Board regarding the selection, retention
or termination of the Company's independent accountants and reviews the
professional services, proposed fees and independence of such accountants. This
committee also reviews with management and the independent accountants both the
controls established to protect the integrity of the quarterly reporting process
and the Company's annual financial statements. Mr. Pivirotto is chair of this
committee, and directors Carlucci, Cawthorn, Gray and Stern are members. This
committee held three meetings in 1996.
The Committee on Environment and Health oversees the Company's
environment and health policies. This committee reviews with management the
Company's policies and plans concerning activities which affect the
environment, reviews health and safety issues, and reviews the Company's
compliance with laws and regulations relating to the environment and
health and safety issues. Dr. Stern is chair of this committee, and
directors Carlucci, Cawthorn and Li are members. This committee held one
meeting in 1996.
The Compensation Committee assists the Board in establishing appropriate
compensation and benefits for the Company's directors, officers and
employees. This committee's general responsibilities include advising the
Board on certain compensation matters, evaluating and approving the chief
executive officer's and executive officer compensation, reporting to
shareholders on executive compensation, and evaluating new and existing
executive compensation and benefit programs. This committee also reviews and
makes recommendations concerning outside director compensation, and
administers annual incentives for key employees and the Company's long-term
incentive plans. During 1996, this committee engaged an independent
compensation consultant as an advisor. Mr. Conrades is chair of this
committee, and directors Li, McLaughlin, Pivirotto and Walter are members.
This committee held six meetings in 1996.
12
<PAGE> 15
The Nominating and Governance Committee makes recommendations to the
Board concerning the recruitment and selection of the chief executive
officer and Board candidates. This committee also reviews the Company's
position on all significant corporate governance issues and recommends
changes to the Board as appropriate. In addition, this committee assesses the
performance of the Board, reviews the size and composition of the Board and
committees, and makes appropriate recommendations. Mr. McLaughlin is chair
of this committee, and directors Conrades, Gray, Pivirotto and Walter are
members. This committee held three meetings in 1996.
Any shareholder desiring to recommend a Board 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. Any shareholder wishing
to nominate a candidate at the 1998 Annual Meeting of Shareholders must,
pursuant to the Company's by-laws, send a notice to the Secretary at the
principal executive offices of Westinghouse on or before January 29, 1998,
setting forth the information required by the by-laws. A candidate for
director should be highly experienced, have knowledge and a background that
will be useful to the Company, 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.
In 1994, the Board adopted guidelines identifying its policies with
respect to significant corporate governance matters. These guidelines
include a statement of the mission of the Board of Directors and the
structure by which it will operate. They also outline responsibilities of
the Board in such areas as selection and evaluation of the chairman and the
chief executive officer and assessment of Board performance. If you would
like to have a copy of these guidelines, please contact the Secretary's
Office and a copy will be sent to you.
DIRECTOR COMPENSATION
Directors who are employees of the Company are not compensated for service
on the Board. For 1996, non-employee directors received an annual
director's fee of $60,000 paid as follows: one-half in cash; one-fourth in
shares of the Company's common stock; and one-fourth in stock options. The
annual director's fee is subject to forfeiture on a pro rata basis in the
event a 75% attendance requirement is not met. The stock-based portion of
the annual director's fee has a mandatory holding period, and the
exercise price on one-third of the stock options is set at 125% of the fair
market value of the common stock on the grant date, with the remainder set
at 100% of such market value. Committee chairs, upon election in April
1996, received a committee chair's fee of $5,000 paid in shares of common
stock. Non-employee directors may also receive a $1,200 per diem fee in cash
for special services outside the scope of normal Board and committee
activities. Dr. Stern received per diem fees during 1996 of $2,400 for such
special services. Non-employee directors were able to defer all or a portion
of their cash fees on terms similar to the terms for deferral of annual
incentive awards described on page 18, including valuation of shares upon a
change in control. Upon termination of service as a director, deferred amounts
will be received in five annual installments.
13
<PAGE> 16
In April 1996, the Board terminated the Advisory Director's Plan (a
plan which provided post-retirement payments to non-employee directors who
retired at age 70 with at least five years of board service), and provided
for a termination payment to the then current non-employee directors. The
termination payment was based on the present value of the 1995 annual retainer
amount of $22,000 for the number of years of Board service (up to ten years) at
the plan termination date. All of these amounts were deferred, on terms
substantially the same as other director deferrals, and will be paid in cash
installments after the director leaves the Board.
Also in April 1996, the Board terminated the Director's Charitable
Giving Program as to any director who did not have at least one full year of
service at the end of July 1996. Under this program, upon the death of an
eligible director, the Company 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
donations are funded with the proceeds of life insurance maintained on the
directors. Individual directors derive no financial benefit from this
program since all charitable deductions accrue solely to the Company. In
the event of a change in control of the Company, donations may be made as
of the date of such change in control and paid on such basis and in such
form as the committee administering this program may prescribe.
The Company provides each non-employee director with accidental death and
dismemberment insurance in the principal amount of $500,000. Benefits will
generally be paid under this insurance if a covered event occurs while the
director is on Westinghouse business. The total annual cost to the Company
of this insurance for all non-employee directors in 1996 was approximately
$12,000.
The Company also maintains a gift matching program for directors. Under
this program, the Company will match personal contributions made to eligible
charitable or educational institutions. The maximum match per year is $2,000
to eligible colleges or universities and $1,000 to eligible charitable
organizations.
14
<PAGE> 17
TRANSACTIONS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
During 1996, the Company and its subsidiaries engaged in various
transactions in the ordinary course of business with unaffiliated corporations
with which certain of the non-employee directors are associated. The Company
does not consider the amounts involved in any of these transactions to be
material.
SECURITY OWNERSHIP
The following table sets forth the number of shares of common stock
beneficially owned on January 3, 1997 (except as otherwise noted) by each
director, by each of the named executive officers and by the directors and
executive officers of the Company as a group as reported by each such person.
Each person has sole voting and investment power over the shares reported
except as noted. No other equity securities of the Company or its subsidiaries
were beneficially owned, directly or indirectly, by any director, named
executive officer or other executive officer on January 3, 1997.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name Beneficial Ownership of Class
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
F. C. Carlucci 18,729 shares(1)(2)(3)(4)(5) *
R. E. Cawthorn 16,008 shares(3)(4) *
G. M. Clark 978,419 shares(6) *
G. H. Conrades 22,453 shares(1)(2)(3)(4) *
W. H. Gray 12,714 shares(1)(2)(3)(4) *
F. J. Harvey 307,660 shares(6) *
M. H. Jordan 1,609,362 shares(6) *
M. Karmazin 10,097,633 shares(6) 1.7%
D. K. P. Li 9,628 shares(3)(4) *
P. A. Lund 250,000 shares(6) *
D. T. McLaughlin 28,882 shares(1)(2)(3)(4)(5) *
R. R. Pivirotto 11,656 shares(1)(2)(3)(4) *
F. G. Reynolds 505,610 shares(6) *
R. W. Smith 808 shares(4) *
P. Stern 11,555 shares(1)(2)(3)(4) *
R. D. Walter 61,111 shares(1)(3)(4) *
All directors and all executive officers as a group 14,952,145 shares(1)(2)(3)(4)(5)(6)(7) 2.5%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
*Represents less than 1% of the Company's outstanding common stock.
- --------------------------------------------------------------------------------
(1) Includes the following common stock equivalents owned by the indicated
directors under the Company's Deferred Compensation and Stock Plan for
Directors: Carlucci 2,471; Conrades 415; Gray 1,506; McLaughlin 3,176;
Pivirotto 3,176; Stern 1,172; and Walter 103.
15
<PAGE> 18
(2) The indicated directors have deferred all or part of their cash
compensation. As a result of these deferrals, at a future date, these
directors will be entitled to receive the following number of shares,
which are reflected in the table, or cash for all or part thereof:
Carlucci 7,250; Conrades 3,015; Gray 4,300; McLaughlin 12,939; Pivirotto
1,057; and Stern 2,810.
(3) Includes the following shares not owned by the indicated directors on
January 3, 1997, but with respect to which they had the right to acquire
beneficial ownership within 60 calendar days through the exercise of stock
options: Carlucci 4,470; Cawthorn 4,470; Conrades 5,220; Gray 4,470; Li
2,382; McLaughlin 5,220; Pivirotto 5,220; Stern 4,470; and Walter 4,470.
(4) Includes 808 restricted shares granted to each non-employee director after
January 3, 1997 as part of their 1997 director compensation.
(5) Includes 3,000 shares over which Mr. Carlucci shares voting and investment
power and 2,944 shares owned by Mr. McLaughlin in his Keogh Plan.
(6) Includes the following shares not owned by the indicated executive
officers on January 3, 1997, but with respect to which they have the right
to acquire beneficial ownership within 60 calendar days through the
exercise of stock options or warrants: Clark 891,928; Harvey 307,500;
Jordan 1,560,862; Karmazin 9,012,519; Lund 250,000; and Reynolds 487,500.
(7) Includes 13,535,426 shares not owned by directors and executive officers
on January 3, 1997, but with respect to which they have the right to
acquire beneficial ownership within 60 calendar days through the exercise
of stock options or warrants.
Except as set forth below, Westinghouse does not know of any person who
beneficially owns more than five percent of the Company's common stock.
<TABLE>
<CAPTION>
Shares of
Name and Address Common Stock Percent
Beneficial Owner Beneficially Owned of Class
----------------- ------------------ --------
<S> <C> <C>
FMR Corp. 38,475,546 6.33% *
82 Devonshire Street
Boston, MA 02109
Lehman Brothers Holdings Inc. 36,306,974 5.97% *
24th Floor
3 World Financial Center
New York, NY 10285
</TABLE>
* These percentages are based on the number of shares of common stock of
the Company outstanding as of December 31, 1996.
16
<PAGE> 19
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the
compensation for services to the Company and its subsidiaries in 1994, 1995
and 1996 of the chief executive officer and each of the other four most highly
compensated executive officers of the Company at the end of 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
All Other
Annual Compensation Long-Term Compensation Compensation
------------------- ---------------------- ------------
Awards Payouts
------ -------
Name and Restricted Securities
Principal Stock Underlying LTIP
Position Year Salary Bonus(1) Award(s) Options(2) Payouts
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
M. H. Jordan ....... 1996 $1,000,000 $1,000,000(3) $272,813(3) 1,100,000 0 $19,702(4)
Chairman ....... 1995 $1,000,000 $1,500,000 0 360,000 0 $18,610
and Chief ....... 1994 $1,000,000 $ 356,554(5) 0 85,862(5) $185,000 $24,173
Executive
Officer
G. M. Clark ....... 1996 $ 607,912 $ 600,000 0 246,918 0 $64,181(4)
Vice Chairman ....... 1995 $ 580,821 $ 500,000 0 244,514 0 $53,555
and President ....... 1994 $ 532,068 $ 281,291(5) 0 197,268(5) $133,200 $40,653
P. A. Lund ....... 1996 $1,694,231 $1,000,000 0 0 0 $69,427(4)
President ....... 1995 $ 104,952(6) $ 29,167(6) 0 500,000 0 0
and Chief ....... 1994 N/A N/A N/A N/A N/A N/A
Executive Officer,
CBS Inc.
F. J. Harvey ....... 1996 $ 466,670 $ 749,900(7) 0 130,000 0 $ 59,346(4)
Executive VP ....... 1995 $ 300,000 $ 400,000 0 112,000 0 $139,721
and Chief ....... 1994 $ 235,000 $ 170,000 0 70,000 $22,940 $ 4,500
Operating
Officer of
Industries and
Technology Group
F. G. Reynolds ....... 1996 $ 421,670 $ 750,000 0 550,000 0 $301,942(4)
Executive VP ....... 1995 $ 379,162 $ 650,000 0 160,000 0 $ 6,613
and Chief ....... 1994 $ 291,660 $ 177,750(5) 0 287,500(5) 0 $ 96,000
Financial
Officer
</TABLE>
17
<PAGE> 20
(1) Represents incentive compensation awarded for 1996. Up to 100% of each
named executive officer's annual incentive award may be deferred, to be
paid either (i) in one installment in any future year not later than the
year of normal retirement, or (ii) in one installment 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 for the week preceding the regular January Board meeting. 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 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 Company, the value of the debentures is paid to a trustee
or otherwise on such terms as the Compensation Committee may prescribe or
permit. 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 Company's common
stock as of the day on which notice of the election is received by the
Company.
(2) Represents grants of standard non-qualified stock options. The standard
non-qualified stock grants in 1996 were 250,000; 200,000; 130,000; and
100,000 for Messrs. Jordan, Clark, Harvey and Reynolds, respectively. In
addition, during 1996, Messrs. Jordan and Reynolds also received
multi-year non-qualified stock option grants of 850,000 and 450,000,
respectively. Mr. Clark received 46,918 reload options as described in
footnote 4 on page 20.
(3) Mr. Jordan received a bonus of $1,272,813 in 1996, consisting of
$1,000,000 in cash and $272,813 in the form of a restricted stock award of
15,000 shares. This restricted stock award is included in the Restricted
Stock Awards column for 1996.
(4) The amounts shown in this column consist of (i) contributions by the
Company to the account of the named executive officer pursuant to the
contributory provisions of the Westinghouse Savings Program or the CBS
Employee Investment Fund; (ii) moving and relocation expenses of $53,417
for Dr. Harvey and $297,442 for Mr. Reynolds; (iii) $15,202 and $52,886 in
interest earned during 1996 on deferred amounts of long-term incentive
compensation for Messrs. Jordan and Clark, respectively; and (iv) $6,795;
$63,427 and $1,429 of executive life insurance premiums paid for Messrs.
Clark, Lund and Harvey, respectively.
(5) 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;
18
<PAGE> 21
67,268; and 37,500 stock options, respectively. These stock options were
included in the Securities Underlying Options column for 1994.
(6) The amounts shown for salary and bonus for 1995 represent the amounts paid
to Mr. Lund following the acquisition of CBS Inc. ("CBS") by Westinghouse
in late 1995. Mr. Lund's full salary and bonus for 1995 were $1,259,423
and $350,000, respectively.
(7) Dr. Harvey received a special incentive award in the amount of $249,900
for his contributions to the 1996 sale of the Company's defense and
electronic systems business.
OPTION GRANTS
The following table shows grants in 1996 of stock options to the executive
officers named in the summary compensation table on page 17.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
% of Total
Options
Granted to
Employees Exercise Grant Date
Options in Fiscal or Base Expiration Present Value(2)
Name Granted(1) Year Price Date Per Share Total
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
M. H. Jordan ........ 250,000 2.3% $18.88 3/01/06 $10.31 $2,577,500
........ 850,000(3) 7.7% $20.72 7/30/06 $ 8.32(3) $7,072,000
G. M. Clark ........ 200,000 1.8% $18.88 3/01/06 $10.31 $2,062,000
........ 46,918(4) 0.4% $18.25 4/25/04 $ 8.91(4) $ 418,039
P. A. Lund ........ 0 0.0% N/A N/A N/A N/A
F. J. Harvey ........ 130,000 1.2% $18.88 3/01/06 $10.31 $1,340,300
F. G. Reynolds ........ 100,000 0.9% $18.88 3/01/06 $10.31 $1,031,000
........ 450,000(3) 4.1% $20.72 7/30/06 $ 8.32(3) $3,744,000
</TABLE>
19
<PAGE> 22
(1) Except where noted, these stock options were granted to the named
executive officers on February 28, 1996. These stock options were granted
in tandem with limited rights. Options granted are for a term of ten years
from the date of award, or such lesser term as may be determined by the
Compensation Committee. The exercise price under each option may not be
less than the fair market value of the stock on the option grant date.
Except in the event of a change in control of the Company, 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 Company
and during the 30 days immediately following such change and only when the
fair market value on the exercise date exceeds the exercise price. When a
limited right is exercised, the employee is entitled to receive in cash
the difference between the exercise price of the related option and the
greater of (i) the highest closing sales price of the common stock on the
NYSE during the 60 days prior to exercise, or (ii) the highest price paid
for the common stock in the change in control transaction during such
period. Reload options are granted to employees at the time of an exercise
of a stock option through a Stock Swap (payment of the exercise price by
surrender of previously owned shares of common stock), 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) These values were derived using the following common assumptions: stock
price volatility .3060; dividend yield 1.22%; interest rate 7.5%; reload
premium 10%; and for each option, its full term and exercise price. 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.
(3) Multi-year, premium-priced, non-qualified stock option grants were made to
Messrs. Jordan and Reynolds on July 30, 1996 for 850,000 and 450,000,
respectively. The exercise price was 123% of the fair market value of the
common stock on the option grant date and one-third of the options vest
each year over a three year period. These grant date present values were
derived using the following common assumptions: stock price volatility
.3360; dividend yield 1.25%; interest rate 7.0%; reload premium 10%; and
for each option, its full term and exercise price. There were no
adjustments made for non-transferability or risk of forfeiture.
(4) This stock option is a grant of a reload option resulting from the
exercise of an initial option containing a reload option feature. The
reload option was granted in connection with the exercise of an existing
option through a Stock Swap. Such reload option may be exercised
immediately (i) for the number of shares of common stock shown, (ii) at
the fair market value of such shares on the date of the Stock Swap, and
(iii) then only for the remaining term of the original option. Reload
options are also subject to early termination if the shares acquired on
exercise of the original option are sold within the first year. This grant
date present value was derived using the following common assumptions:
stock price volatility .3099; dividend
20
<PAGE> 23
yield 1.10%; interest rate 6.4%; reload premium 10%; and for the option,
a remaining term of 8.3 years and its exercise price. There were no
adjustments made for non-transferability or risk of forfeiture.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information as to stock options to purchase
the Company's common stock exercised during 1996 by the named executive
officers; the unexercised options to purchase the Company's common stock
(including options granted in 1996 and prior years) owned by the named
executive officers; and the value of options held by them at year-end.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year-End Options at Fiscal Year-End(1)
Shares Acquired Value ----------------------------- -----------------------------
Name On Exercise Realized Exercisable Unexercisable(2) Exercisable Unexercisable(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
M. H. Jordan ........ 0 0 1,310,862 1,167,500 (3) $5,212,726 $659,219 (3)
G. M. Clark ........ 73,656 $487,971 691,928 239,000 (3) $2,548,981 $436,438 (3)
P. A. Lund ........ 0 0 250,000 250,000 $ 781,250 $781,250
F. J. Harvey ........ 0 0 177,500 151,000 (3) $1,133,425 $257,313 (3)
F. G. Reynolds ........ 0 0 387,500 580,000 (3) $2,492,969 $281,875 (3)
</TABLE>
(1) Based on the closing price of the Company's common stock as reported on
the NYSE composite tape on December 31, 1996 ($19.875).
(2) These options are unexercisable because they have not vested under their
terms.
(3) The table includes the following stock options and values, all of which
were contingent on attaining a 1996 stretch performance target: Jordan
67,500 for $409,219; Clark 39,000 for $236,438; Harvey 21,000 for
$127,313; and Reynolds 30,000 for $181,875. The 1996 stretch performance
target was not met and these options have since terminated.
21
<PAGE> 24
PENSION BENEFITS
All of the individuals named in the summary compensation table on page 17,
except Peter A. Lund, are participants in the Westinghouse Pension Plan (the
"Pension Plan"), which is a defined benefit plan. Mr. Lund participates in the
CBS Pension Plan (the "CBS Pension Plan") which is discussed on page 23.
The Pension Plan is designed to provide retirement income related to an
employee's salary and years of active service. The cost of the Pension Plan is
paid by both Westinghouse and employee contributions. All Westinghouse
contributions are actuarially determined. The Company's contributions to the
Pension Plan with respect to the individuals named in the summary compensation
table cannot readily be separately or individually calculated by the actuaries
for the Pension Plan.
In addition to the benefits provided by the Pension Plan, the Westinghouse
Executive Pension Plan (the "Executive Pension Plan") provides for supplemental
pension payments to a group of executives, including those named in the summary
compensation table, except Mr. Lund. Upon retirement, such individuals who have
at least five continuous years of service as an executive immediately prior to
retirement, meet the age and service requirements for retirement under the
Pension Plan, and contribute to the Pension Plan are entitled to receive
supplemental payments under the Executive Pension Plan. Such payments, when
added to their pensions under the Pension Plan, result in a total annual
pension equal to 1.47% for each year of service multiplied by their average
annual compensation as defined by the Executive Pension 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 Pension Plan. Participants
become vested in the event of a change in control of the Company and benefits
under the Executive Pension Plan may be paid on a present value or other basis.
For purposes of illustration, the following table indicates the
approximate amounts of annual retirement income that would be payable at the
present time under various assumptions as to average annual compensation and
years of service to employees who participate in the Pension Plan and are
eligible for supplemental payments pursuant to the Executive Pension Plan.
22
<PAGE> 25
<TABLE>
<CAPTION>
WESTINGHOUSE PENSION PLAN TABLE
Five year
average annual Estimated annual pension for
compensation specified years of credited service
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>
The amounts presented in the above table are based upon straight life
annuity amounts and are not subject to any reduction for Social Security
benefits or other offset amounts. As of December 31, 1996, Messrs. Jordan,
Clark, Reynolds and Harvey had the following credited full years of service
under the Pension Plan, respectively: 3 years; 39 years; 2 years; and 27 years.
Mr. Lund is a participant in the CBS Pension Plan, which is a defined
benefit plan. The CBS Pension Plan is designed to provide retirement income
related to an employee's salary and years of active service. The cost of the
CBS Pension Plan is paid entirely by CBS. In addition to the benefits provided
by the CBS Pension Plan, Mr. Lund participates in an unfunded plan that
provides for the payment of benefits in excess of amounts permitted to be paid
by tax-qualified benefit plans under Internal Revenue Service ("IRS")
regulations (the "Unfunded Plan"), as well as CBS's Supplemental Executive
Retirement Plan ("SERP"). The SERP is an unfunded plan which provides for
recognition for pension purposes of 50% of annual bonus amounts paid under
certain annual bonus plans (for purposes of the SERP, such bonus plans are
defined as "SERP Bonus Plans").
The applicable benefit payable under the CBS Pension Plan and the Unfunded
Plan is the sum of: 1.3% of Final Average Compensation up to the Social
Security covered compensation base times years of credited service (not to
exceed 35) plus 1.7% of Final Average Compensation in excess of the Social
Security covered compensation base times years of service (not to exceed 35).
Benefits under the CBS Pension Plan vest after a participant completes five
years of service (as defined). Final Average Compensation is the average of the
participant's highest five consecutive years of earnings out of the last ten
years of service. Earnings include only regular compensation (i.e., the amount
shown in the Salary column in the summary compensation table) and exclude
overtime, bonuses, deferred compensation and additional compensation of any
kind.
23
<PAGE> 26
The SERP benefit is based on 50% of annual bonus payments under one of the
SERP Bonus Plans. SERP Average Compensation is 50% of the average of the
participant's highest bonuses paid for five consecutive years out of the last
ten years of continuous service. To determine the SERP annual benefit, SERP
Average Compensation is multiplied by 1.7%, and the resulting product is
multiplied by years of service (not to exceed 35). SERP benefits are payable
only to "retirement eligible" participants, i.e., employees designated to
participate in SERP and each of whom, upon termination of employment, has
attained age 55 with not less than ten years of service (as defined).
For purposes of illustration, the following tables show the estimated
amounts of annual retirement income that would be payable at the present time
under various assumptions as to compensation and years of service to employees
who participate in the CBS Pension Plan, the Unfunded Plan and the SERP.
<TABLE>
<CAPTION>
CBS PENSION PLAN AND UNFUNDED PLAN TABLE
CBS Pension Plan Estimated annual pension for specified years of credited service
and Unfunded Plan ----------------------------------------------------------------------------------
(Base Salary) 5 10 15 20 25 30 35
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 300,000 $ 24,948 $ 49,897 $ 74,845 $ 99,794 $ 124,742 $ 149,691 $ 174,639
400,000 33,448 66,897 100,345 133,794 167,242 200,691 234,139
500,000 41,948 83,897 125,845 167,794 209,742 251,691 293,639
600,000 50,448 100,897 151,345 201,794 252,242 302,691 353,139
700,000 58,948 117,897 176,845 235,794 294,742 353,691 412,639
800,000 67,448 134,897 202,345 269,794 337,242 404,691 472,139
900,000 75,948 151,897 227,845 303,794 379,742 455,691 531,639
1,000,000 84,448 168,897 253,345 337,794 422,242 506,691 591,139
1,100,000 92,948 185,897 278,845 371,794 464,742 557,691 650,639
1,200,000 101,448 202,897 304,345 405,794 507,242 608,691 710,139
1,300,000 109,948 219,897 329,845 439,794 549,742 659,691 769,639
1,400,000 118,448 236,897 355,345 473,794 592,242 710,691 829,139
1,500,000 126,948 253,897 380,845 507,794 634,742 761,691 888,639
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
CBS SERP TABLE
50% of the average of five highest Estimated annual pension for specified years of credited service
consecutive bonuses received from supplemental executive retirement plan
- --------------------------------------------------------------------------------------------------------------
10 15 20 25 30 35
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 67,500 $ 11,475 $ 17,213 $ 22,950 $ 28,688 $ 34,425 $ 40,163
96,000 16,320 24,480 32,640 40,800 48,960 57,120
120,000 20,400 30,600 40,800 51,000 61,200 71,400
144,000 24,480 36,720 48,960 61,200 73,440 85,680
168,000 28,560 42,840 57,120 71,400 85,680 99,960
192,000 32,640 48,960 65,280 81,600 97,920 114,240
270,000 45,900 68,850 91,800 114,750 137,700 160,650
300,000 51,000 76,500 102,000 127,500 153,000 178,500
330,000 56,100 84,150 112,200 140,250 168,300 196,350
360,000 61,200 91,800 122,400 153,000 183,600 214,200
390,000 66,300 99,450 132,600 165,750 198,900 232,050
420,000 71,400 107,100 142,800 178,500 214,200 249,900
450,000 76,500 114,750 153,000 191,250 229,500 267,750
</TABLE>
The amounts presented in the above tables are based upon straight life
annuity amounts and are not subject to any reduction for Social Security
benefits or other offset amounts. As of December 31, 1996, Mr. Lund had 15
credited full years of service under the CBS Pension Plan, the Unfunded Plan
and the SERP.
COMPENSATION AND SEVERANCE ARRANGEMENTS
MICHAEL H. JORDAN
In June 1993, the Company retained the services of Michael H. Jordan as
chairman and chief executive officer of the Company. Under the executory
provisions of Mr. Jordan's employment agreement, he participates in the
Executive Pension Plan. The employment agreement modifies the Executive Pension
Plan requirement that he complete five years of continuous service as an
executive immediately prior to retirement 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 Pension Plan during his employment.
25
<PAGE> 28
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 Company without cause, Mr. Jordan is
entitled to a lump-sum payment equal to two times his highest base salary plus
the greater of (i) the sum of his two most recent actual annual incentive
awards or (ii) two times his highest annual incentive target award opportunity.
He would also receive prorated incentive payments and other specified benefits.
PETER A. LUND
As of November 28, 1995, in connection with the acquisition of CBS by the
Company, Mr. Lund entered into a new four-year employment agreement with CBS
and was elected to the position of president and chief executive officer of
CBS. This agreement superseded and canceled Mr. Lund's prior agreement with
CBS, except that the compensation arrangements set forth in the prior agreement
continued until January 1, 1996, and the bonus payment of $350,000 due to Mr.
Lund under the prior agreement was paid to him in February 1996.
Mr. Lund's employment agreement provides for an annual base salary of
$1,700,000; $1,950,000; $2,200,000; and $2,450,000, respectively, for the years
1996, 1997, 1998 and 1999. In addition to his base salary, Mr. Lund will have
an annual incentive target of $1,000,000 for each such year, with a guaranteed
minimum of $1,000,000 for 1996 and of $600,000 for each of 1997, 1998 and 1999.
Under the agreement, Mr. Lund is also entitled to the same benefit accruals as
were provided under the CBS Pension Plan (and related supplemental and excess
retirement plans) as in effect as of November 24, 1995, and to at least the
same level of benefits to which he was entitled on that date.
If Mr. Lund is terminated for a reason other than cause, or if he elects
to terminate the agreement for good reason as defined in the agreement (which
includes a change in control of the Company, removal from his title or position
as president and chief executive officer of CBS, a diminution of his authority
for the operation and management of CBS, or requiring him to report to someone
other than the Company's chief executive officer), all of Mr. Lund's options
granted will vest, and he will be entitled to receive immediately a lump-sum
payment equal to the greater of (i) the balance of all remaining unpaid base
salary and guaranteed bonus amounts through the end of the contract term, or
(ii) severance pay in accordance with CBS's present policy, but in no event
less than one year's base salary at the then-existing rate plus the guaranteed
bonus for that year.
Pursuant to the agreement, Mr. Lund also received on December 6, 1995 a
multi-year grant of options to purchase 500,000 shares of common stock of the
Company at an exercise price of $16.75 per share (the fair market value on the
grant date). 250,000 of the options vested after one year from the date of the
grant, and 250,000 of the options will vest after two years from the date of
the grant. An additional 100,000 options will be granted in December 1998 and
will vest one year from the date of the grant.
26
<PAGE> 29
DR. FRANCIS J. HARVEY
In March 1996, Dr. Francis J. Harvey assumed the position of executive
vice president and chief operating officer of the Industries & Technology Group
of Westinghouse. Pursuant to an agreement dated April 30, 1996, Dr. Harvey is
entitled to the separation benefits described below in the event that his
employment is terminated before he reaches age 60 (other than for cause or by
death or retirement). The separation benefits are not available if, in
connection with a termination of employment, Dr. Harvey was offered but did not
accept another senior level executive position with the Company. Under the
agreement, Dr. Harvey is entitled to receive, in lieu of any other salary
continuation or severance programs, each month after a qualifying termination
for a period of 24 months or through the end of the month in which he reaches
age 60, whichever occurs first, an amount equal to his monthly base salary (as
in effect immediately prior to such termination) reduced by 1.5% (with a
maximum reduction of $2,250 per year). In the event of such termination, Dr.
Harvey is also entitled to receive an annual incentive award in each of the two
Februaries immediately following such termination in the amount of his target
annual incentive opportunity for the year in which such termination occurs,
with certain limits if he reaches age 60 prior to payment. The agreement also
provides that, at the end of the period during which he received the
above-described payments as a result of such termination, for purposes of the
Executive Pension Plan, the age and service requirements for retirement
eligibility will be waived and he will be entitled to receive a pension benefit
under the Executive Pension Plan, subject to certain modifications intended to
include the above-described two year period and payments in the calculation of
such pension benefits. Dr. Harvey's outstanding stock options would vest and he
would be reimbursed for certain relocation expenses in the event of such
termination.
FREDRIC G. REYNOLDS
Early in 1994, the Company retained the services of Fredric G. Reynolds as
executive vice president and chief financial officer of the Company. Under the
executory provisions of his compensation arrangement, in the event of
termination by the Company 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
provisions of certain compensation or other employee benefit plans relating to
a change in control of the Company should not be adversely affected by any tax
imposed on such payments by reason of Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), and has authorized and directed the Company
in such event to make additional payments in an amount sufficient to satisfy
any such tax liability.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which is composed entirely of outside
independent directors, reviews, evaluates and approves the design and
implementation of the Company's compensation system for executive officers. The
Compensation Committee also determines the form and amount of compensation for
the chief executive and other executive officers. For purposes of making
compensation determinations, the Compensation Committee uses broad-based
industry surveys of what executives with comparable responsibilities are paid
and evaluates individual and Company performance. In 1996, the Compensation
Committee retained the services of Independent Consulting Resources, Inc., a
compensation consulting firm, to provide advice to the committee from time to
time on executive compensation matters.
THE WESTINGHOUSE EXECUTIVE COMPENSATION PROGRAM
The Westinghouse executive compensation program is a performance and
rewards compensation system consisting of base salaries and incentives (annual
and long-term) that pay executives for the achievement of levels of performance
designed to increase the shareholder value of the Company. The system also
enables the Company to hire, retain and motivate high-quality globally-oriented
executives who meet the immediate business challenges and improve the long-term
performance of the Company, 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 base salary and annual incentive
opportunities, the Compensation Committee uses the Towers Perrin entertainment
and industrial surveys and a manufacturing industry survey prepared by
Management Compensation Services, a division of Hewitt Associates, for
executives as appropriate. For purposes of measuring competitive long-term
incentive opportunities, the Compensation Committee uses surveys conducted by
Frederic W. Cook & Co., Inc. and Towers Perrin. The Compensation Committee
targets the median or 50th percentile of the competitive data for purposes of
establishing base salary and annual incentive opportunities and for making
long-term incentive grants, except when otherwise warranted by competitive
conditions or business need.
The individual performance of each executive officer is reviewed and
evaluated annually. Individual contributions as reflected in performance
reviews are based on comparative, organization-wide assessments of
contributions.
BASE SALARIES
Executive officers are assigned a grade and a salary range which take into
consideration the level of responsibility involved, the knowledge and skill
required and competitive levels as determined from the survey data. Each year,
the executive's performance is evaluated and any base salary adjustment is
based on an evaluation of competitive market adjustments and the individual's
performance and contribution. Each year, the chief executive
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<PAGE> 31
officer makes recommendations with respect to salary adjustments for all
executive officers, which are reviewed, modified where appropriate and approved
by the Compensation Committee.
ANNUAL INCENTIVES
The Compensation Committee administers various incentive plans under which
annual incentive compensation may be paid to key employees of the Company.
Under these plans, early in the year, the Compensation Committee approved a
target annual incentive award opportunity for each executive officer based on
competitive data. The Compensation Committee also established a range of 1996
financial objectives and other key performance indicators for the entire
Company and for each individual business unit. The various performance measures
included, as appropriate, such items as earnings before interest, taxes,
depreciation and amortization ("EBITDA"), operating profit, working capital or
total investment turnover, revenues and network ratings. Actual annual
incentive awards for 1996 for each individual executive officer were based on a
combination of the financial performance of the Company and/or the relevant
business unit, the other key business performance indicators and the
individual's performance.
The year 1996 reflects strong performance by the Company's executive
officers to position the Company to achieve future growth. For example, during
the year, the Company announced its plan to separate its industrial and media
businesses, realized excellent values in the divestiture of certain businesses
and acquired Infinity Broadcasting Corporation ("Infinity"). In the media area,
the radio group demonstrated strong revenue growth internally in addition to
growth through the Infinity acquisition, and steps were taken by the television
network toward improving its position in network ratings and by the cable unit
toward implementing a cable growth strategy. In the industries area, the
Company continued to increase its power generation installed base, reduced the
cost structure of both of its power systems businesses, increased operating
profit in the transport temperature control unit and aggressively managed costs
in the government operations unit.
After reviewing the relevant financial and other key business performance
indicators and individual performance against objectives, the chief executive
officer made recommendations with respect to incentive awards. These
recommendations were reviewed with and, to the extent determined appropriate,
approved by the Compensation Committee. Approved annual incentives were awarded
in cash, subject to deferral at the executive's election under the program
described on page 18.
LONG-TERM INCENTIVES
Long-term incentive opportunities were granted to executive officers
during 1996 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 on the part of
executives and to establish alignment with shareholders. Option grants for 1996
were made to executives based on the median or 50th percentile of the
above-referenced competitive data for their level of responsibility and on
individual performance. In determining the grant level, principal emphasis was
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placed on the preceding factors, which reflect the executive's role in
increasing shareholder value. The number of shares currently owned, directly
and through various deferral arrangements by an executive, was not a factor in
determining the final grant level. All stock option grants to executive
officers in 1996 had an exercise price per share equal to the fair market value
of the Company's common stock on the grant date other than the premium-priced
options described below.
In addition, the Compensation Committee has noted that competitive
compensation levels as reflected in the survey data are generally significantly
higher in the entertainment industry than for industrial companies. During
1996, the Compensation Committee approved additional multi-year grants of stock
options to Messrs. Jordan and Reynolds. These grants reflect the executives'
dual responsibilities for the Company's industrial and media businesses. The
Compensation Committee determined that it was more appropriate to address the
above-referenced disparity in competitive compensation levels with stock
options than with additional cash compensation in order to further align the
executives' interests with those of the Company's shareholders. The exercise
price for these stock options was set at a premium of 123% of the fair market
value of the Company's common stock on the grant date and the options vest at a
rate of one-third per year over a three year period.
As part of the 1995 long-term incentive grants, the Compensation Committee
granted stock options which would be exercisable only if and when the Company
had attained specific stretch performance targets designated by the Committee.
As these targets were not met, these options terminated.
COMPENSATION ARRANGEMENTS
From time to time, the Company enters into employment contracts or other
compensation arrangements with executives when appropriate for competitive or
other business reasons, for example, in connection with attracting new
executives. Currently, the Company has an employment agreement with Peter A.
Lund, which was negotiated in connection with the Company's acquisition of CBS
in November 1995 and the election of Mr. Lund to the position of president and
chief executive officer of CBS. Mr. Lund's compensation is paid in accordance
with the terms of that agreement, which is summarized on page 26.
1996 COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Individual Performance and Contribution. Total compensation (consisting of
base salary, annual incentive and long-term incentives) for Michael H. Jordan,
the chairman and chief executive officer of the Company, is based on a variety
of factors depending on the type of compensation involved as discussed below. A
significant factor which was taken into account by the Compensation Committee
in each case, however, was the full Board's detailed evaluation of Mr. Jordan's
performance as chief executive officer and his extensive contribution to the
Company and its shareholders in 1996.
Mr. Jordan's total compensation reflects the Board's positive evaluation
of his effective leadership of the Company during the past year and his
significant strategic accomplishments. During 1996, Mr. Jordan led the
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<PAGE> 33
formulation of an innovative corporate strategy to optimize the prospects of
the Company's media and industrial businesses and to enhance shareholder value
by separating the Company's industrial businesses. The acquisition of Infinity,
which, together with Group W and CBS, formed a premier group of 79 radio
stations in 16 markets across the country, was a major accomplishment in
growing and achieving the potential of the Company's media businesses. During
the year, the integration of CBS and Group W was achieved, the CBS television
network positioned itself to recapture its leadership, the cable group took
steps toward implementing a cable growth strategy, opportunities for
performance improvement were identified and plans were developed and applied
toward achieving such improvements. Steps were taken to strengthen the
industrial businesses through such actions as continuing to increase the power
generation installed base, aggressive cost management, intensifying the focus
of the energy systems unit on its fuel and services businesses and
restructuring the industrial headquarters.
Base Salary. In late 1995, the Compensation Committee reviewed Mr.
Jordan's annual base salary of $1,000,000. After consideration, the
Compensation Committee determined that this base salary was competitive and
should remain unchanged for 1996.
Annual Incentive. As an annual incentive for 1996, the Compensation
Committee awarded Mr. Jordan a bonus of $1,272,813, consisting of 15,000 shares
of Westinghouse restricted common stock and $1,000,000 of cash which was
deferred. The Compensation Committee based this award on Mr. Jordan's effective
leadership and significant strategic accomplishments during the year as
discussed above and on its assessment of Mr. Jordan's individual performance
and contribution and comparison with competitive information.
Long-term Incentives. Long-term incentives for Mr. Jordan during 1996
consisted of a grant of standard options for 250,000 shares of Westinghouse
common stock and a multi-year grant for 850,000 shares, with the multi-year
grant having an exercise price at a premium of 123% of the then current fair
market value of the common stock and vesting over three years. His grant level
was established considering his level of responsibility, previously discussed
competitive data and the Compensation Committee's evaluation of Mr. Jordan's
1996 performance and his role in increasing shareholder value. The level of the
premium-priced, multi-year option grant also reflects Mr. Jordan's dual
responsibilities for the Company's industrial and media businesses and the
above-referenced disparity in competitive compensation levels for the different
industries.
POLICY ON DEDUCTIBILITY OF COMPENSATION
It is the Compensation Committee's policy to establish measurable,
quantifiable performance targets as appropriate in connection with incentive
plans as part of the Company's performance and rewards compensation system for
executive officers. For example, in the case of stock options, the options only
have value as the Company's stock price increases. In the case of annual
incentives, the Compensation Committee establishes financial and non-financial
performance measures for that year's incentives that are designed to increase
the shareholder value of the Company.
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Under the federal tax laws, beginning in 1994, compensation for certain
individual executive officers is not deductible to the extent that the
officer's compensation for that year exceeds $1,000,000, after excluding
qualifying performance-based compensation that meets certain specified criteria
including shareholder approval. The Compensation Committee believes, based on
information currently available, that the Company's stock options to its
executive officers will qualify for exclusion. The Compensation Committee has
reviewed and will continue to review tax consequences as well as other relevant
considerations when making compensation decisions. The Compensation Committee
generally has required the deferral of compensation which would not qualify for
exclusion. However, given the structure of executive compensation in the media
and entertainment industry and in the compensation arrangements already
established for certain media executives at the time their companies were
acquired by Westinghouse, the Compensation Committee has excluded the executive
officers who are part of the Company's media businesses from this requirement.
COMPENSATION COMMITTEE
George H. Conrades, Chair
David K. P. Li
David T. McLaughlin
Richard R. Pivirotto
Robert D. Walter
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, Messrs. Conrades, McLaughlin, Pivirotto and Walter served as
members of the Compensation Committee, with Dr. Li joining the Committee in
April 1996.
In 1996, Mr. Jordan, chairman and chief executive officer of the Company,
served as a director and member of the compensation committee of the board of
directors of Rhone-Poulenc Rorer Inc., of which Mr. Cawthorn was the chairman
until May 1996. Mr. Cawthorn does not serve on the Compensation Committee of
the Company.
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth on the following page is a line graph comparing the total
returns (assuming reinvestment of dividends) of the Company's common stock, the
Standard & Poor's 500 Index ("S&P 500(R)"), the Standard & Poor's Entertainment
Index ("S&P(R) Entertainment"), and the Dow Jones Electrical Components &
Equipment Index (the "Dow Electrical"). The graph assumes $100 invested on
December 31, 1991 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), S&P(R) ENTERTAINMENT
AND DOW ELECTRICAL INDICES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
DEC-91 DEC-92 DEC-93 DEC-94 DEC-95 DEC-96
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Westinghouse Electric Corporation $100 $78 $84 $74 $101 $123
- ---------------------------------------------------------------------------------------------------
S&P 500(R) $100 $108 $118 $120 $165 $203
- ---------------------------------------------------------------------------------------------------
Dow Electrical $100 $100 $109 $114 $148 $181
- ---------------------------------------------------------------------------------------------------
S&P(R) Entertainment $100 $143 $165 $158 $189 $192
- ---------------------------------------------------------------------------------------------------
</TABLE>
* Assumes that the value of the investment in Westinghouse common stock and in
each index was $100 on December 31, 1991 and that all dividends were
reinvested.
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The Company selected the S&P(R) Entertainment as the industry index for
comparison for 1996 because of the Company's redeployment of assets into the
media area with the acquisition of CBS and Infinity. In view of such
redeployment, the Company believes that it is more appropriate to compare its
total returns to the entertainment companies in the S&P(R) Entertainment than to
the electrical component and equipment companies in the Dow Electrical. However,
the Company anticipates that after the planned separation of its industrial and
media businesses, the industrial company will use the Dow Electrical as the
industry index for comparison and the media company will use the S&P(R)
Entertainment as the industry index for comparison. As a result of the addition
of an index, the line graph compares the total returns of the Company's common
stock with both the S&P(R) Entertainment and Dow Electrical, as well as the S&P
500(R).
The total percentage return for the Westinghouse common stock for the
period from January 1, 1996 to December 31, 1996 was approximately 21.8%. This
compares with the total percentage return for such period of the S&P(R)
Entertainment, which was approximately 1.6%; the Dow Electrical, which was
approximately 22.3%; and the S&P 500(R), which was approximately 23%. These
percentages assume 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 Company's financial statements for 1997. The Audit Review Committee of
the Board has the responsibility to recommend to the Board annually, and at
other appropriate times, the selection, retention or termination of the
Company's independent accountants. The Audit Review Committee has nominated
KPMG Peat Marwick LLP ("KPMG"), and this firm has advised the Company that it
is willing to serve. The Board has approved this nomination. If KPMG is not
elected, or if elected, it should subsequently decline to serve, or if its
engagement by the Company is terminated, the Board, in conjunction with the
Audit Review Committee, will appoint other independent accountants.
The Company replaced Price Waterhouse LLP ("Price Waterhouse") as its
principal independent accounting firm, effective June 3, 1996. The action was
recommended by the Audit Review Committee and was approved by the Board. Price
Waterhouse's reports on the financial statements of the Company for the past
two years did not contain an adverse opinion or a disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope or accounting
principles. During the Company's two most recent fiscal years and any
subsequent interim period preceding the replacement of Price Waterhouse, (i)
there were no disagreements with Price Waterhouse on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Price
Waterhouse, would have caused Price Waterhouse to make a reference to the
subject matter of the disagreements in connection with its reports on the
financial statements for such years and subsequent interim period, and (ii)
there were no reportable events as described in Item 304 of Regulation S-K
under the Securities Act of 1933 and the Securities Exchange Act of 1934.
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The Company engaged KPMG as the Company's principal independent accounting
firm to audit the Company's financial statements, effective June 3, 1996. The
action was recommended by the Audit Review Committee and was approved by the
Board. Neither the Company nor anyone on its behalf had consulted with KPMG
regarding the application of accounting principles to a specified transaction,
either completed or proposed; or the type of audit opinion that might be
rendered on the Company's financial statements, and neither a written report
nor oral advice was provided to the Company that KPMG concluded was an
important factor considered by the Company in reaching a decision as to an
accounting, auditing or financial reporting issue during its two most recent
fiscal years or the subsequent interim period prior to engaging KPMG.
A representative of KPMG will be present at the 1997 Annual Meeting of
Shareholders and will have an opportunity to make a statement. He or she will
also respond to any appropriate questions.
The persons named in the enclosed proxy card (Messrs. Jordan, Clark and
Briskman) have advised that they intend to vote for the election of KPMG unless
a contrary direction is indicated on the proxy card.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION
OF KPMG AS INDEPENDENT ACCOUNTANTS.
The favorable vote of a majority of the votes cast on this proposal is
required for passage.
3. SHAREHOLDER PROPOSAL: REDEEM SHAREHOLDER RIGHTS ISSUED PURSUANT TO THE
SHAREHOLDER RIGHTS PLAN
(Item 3 on proxy card)
Westinghouse has been advised that the Central Pension Fund of the
International Union of Operating Engineers and Participating Employers, the
beneficial owner of 86,593 shares of common stock, located at 4115 Chesapeake
Street, N.W., Washington, D.C. 20016-4665, will submit the following proposal
at the meeting:
BE IT RESOLVED: That the shareholders of Westinghouse Electric Corporation
("Company") urge the Board of Directors to redeem the shareholder rights issued
pursuant to the Shareholder Rights Plan (adopted by the Board of Directors in
December 1995) unless said Plan is approved by a majority of the voting shares
at a meeting of shareholders held as soon as is practical.
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SUPPORTING STATEMENT
We strongly believe that the Company's financial performance is closely
linked to its corporate governance policies and procedures, and the level of
management accountability they impose. The Company's Shareholder Rights Plan
(commonly know as a "poison pill") is a powerful anti-takeover device which
effectively prevents a change in control of the Company without the approval of
the Board of Directors, despite a level of performance which may adversely
affect shareholder value.
Westinghouse's poison pill inhibits a potential bidder of Company stock
when they acquire 15% or more of the outstanding voting stock of the Company,
or they announce a tender offer that would result in the ownership of 30% or
more of the Company's voting stock. Triggering the poison pill has the effect
of substantially injuring the bidder by allowing Westinghouse shareholders to
buy shares in the bidder's company at half-price. Such a situation, we believe,
needlessly complicates tender offers and precludes shareholders of Westinghouse
from exercising their ownership rights in assessing offers from potential
bidders.
The poison pill forces potential investors to negotiate acquisitions with
management, instead of making their offer directly to shareholders. We strongly
believe that it is the shareholders (who are the owners of the Company), not
the directors and managers (who merely act as agents for the owners), who
should have the right to decide what is or is not a fair price for their
shareholdings.
The argument that our directors need a poison pill in order to negotiate a
better offer from potential bidders or prevent so-called "abusive takeover
practices" is unpersuasive. In the past five years, proposals to redeem or
allow shareholder votes on poison pills have received majority support at 24
U.S. publicly-traded companies including Advanced Micro Devices, Intel, Ryder,
and Wellman. Moreover, since 1990, Philip Morris, Time Warner, United
Technologies, and Lockheed have voluntarily redeemed their poison pills. None
of these companies have experienced any adverse impact attributable to
redemption of their poison pills.
Poison pills can pose such an obstacle to a takeover that management
becomes entrenched. We believe that the entrenchment of management, and the
lack of accountability that results, can adversely affect shareholder value.
The performance chart on page 30 of Westinghouse's 1996 proxy statement
indicates that the Company's stock has substantially underperformed the S&P
500(R) Index and its relevant peer group of companies. While it is impossible to
assess the degree to which the poison pill contributed to Westinghouse's
underperformance, it is indisputable that the poison pill effectively deters
attempts by shareholders to remove the current board and its management team
for nonperformance.
We urge you to VOTE FOR this proposal.
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THE RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors adopted the Shareholder Rights Plan (the "Rights
Plan") in December 1995 after the Company's acquisition of CBS. The Rights Plan
was designed to discourage attempts to acquire control of the Company that do
not deal fairly with and which are not in the best interests of all
Westinghouse shareholders. The Board adopted the Rights Plan shortly after the
CBS acquisition to help prevent coercive takeover attempts that could deprive
shareholders of the opportunity to realize the substantial benefits expected to
accrue from the CBS transaction. The Board continues to believe that the Rights
Plan is an appropriate means of protecting the interests of shareholders, and
is particularly important at the present time in view of the Company's recent
acquisition of Infinity and the Company's announcement of a plan to separate
its industrial and media businesses. A takeover attempt at the present time
could deprive shareholders of the opportunity of realizing the substantial
expected benefits of the Company's acquisition of CBS and Infinity, the value
of which will not be fully realized until management has had the opportunity to
integrate CBS and Infinity with the Company's other media assets, and to
complete the separation of the Company's industrial and media businesses.
The Rights Plan increases the Board's ability to represent the interests
of shareholders in the event of an unsolicited takeover attempt and helps
ensure that all shareholders receive fair and equal treatment in the event of
any proposal to acquire control of the Company. The Rights Plan is intended to
make abusive tactics more costly for an acquirer and to create an incentive for
an acquirer to negotiate with the Board. The Rights Plan gives the Board
sufficient time, if presented with an offer, to evaluate the offer and any
possible alternatives, and to take the steps necessary to best protect the
interests of shareholders.
The Rights Plan is not intended to prevent a takeover of the Company on
terms deemed by the Board to be beneficial to all shareholders and, in fact,
will not do so. In many instances, offers have been made to companies with
shareholder rights plans similar to the Rights Plan, and their boards have
redeemed the rights after determining that the offer price represented full and
fair value for the Company's stock and the acquisition of the company was in
the best interests of shareholders. In the event that the Board believes
redemption would be in the shareholders' interests, it may redeem the
shareholder rights issued under the Rights Plan for minimal consideration.
However, the Board believes that the proper time to consider redemption of
the shareholder rights is when a specific offer is made to acquire the
Company's stock. Consideration of a redemption of the shareholder rights prior
to that time would be premature, would deprive the Company's shareholders of an
important shield against takeover abuses, and would remove a significant
incentive for a potential acquirer to negotiate with the Board.
The Board was aware when it adopted the Rights Plan of arguments similar
to those made in this proposal. The Board carefully considered those views, but
concluded that the Rights Plan represented a sound, reasonable and appropriate
means of addressing the complex issues associated with the threat of coercive
takeovers.
The Board also notes that although this proposal implies that the Rights
Plan may have contributed to the underperformance of the Company's stock over
the past five years, the Company did not have a shareholder rights
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<PAGE> 40
plan from December 1992 through December 1995. For the year 1996, after the
adoption of the Rights Plan, the total percentage return for Westinghouse common
stock was approximately 21.8%. This compares with the total percentage return
for such period of the S&P(R) Entertainment, which was approximately 1.6%, the
Dow Electrical, which was approximately 22.3%, and the S&P 500(R), which was
approximately 23%.
The persons named in the enclosed proxy card (Messrs. Jordan, Clark and
Briskman) have advised that they intend to vote against the proposed resolution
unless a contrary direction is indicated on the proxy card.
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 Company's Restated Articles of
Incorporation and by-laws, the presence of a quorum is required to transact
business at the 1997 Annual Meeting of Shareholders. A quorum is defined as the
presence, either in person or by proxy, of a majority of the votes that all
shareholders are entitled to cast at the meeting. Abstentions, votes withheld
from director nominees, and broker-dealer non-votes will be counted for
purposes of determining a quorum.
Assuming the presence of a quorum, (i) the fourteen nominees for director
receiving the highest number of votes will be elected directors and (ii) the
affirmative vote of a majority of the votes cast by the shareholders is
required for the election of independent accountants and for the adoption of
the shareholder proposal.
Abstentions and broker-dealer non-votes are not votes "cast" in connection
with the election of independent accountants or the adoption of the shareholder
proposal. Therefore, they have the practical effect of reducing the number of
affirmative votes required to achieve a majority in each of these matters.
SHAREHOLDER PROPOSAL SUBMISSIONS
To be considered for inclusion in the proxy materials relating to the 1998
Annual Meeting of Shareholders, shareholder proposals must be received at the
principal executive offices of Westinghouse on or before November 17, 1997.
SOLICITATION OF PROXIES
This solicitation of proxies is made on behalf of the Board of the
Company. Solicitation will be by mail, except for any personal solicitation
made orally or in writing by or under the direction of directors, officers and
employees of Westinghouse. The cost of solicitation, including the cost of any
such personal solicitation, will be paid by the Company. Westinghouse may
request persons such as brokers, nominees and fiduciaries holding stock
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<PAGE> 41
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 officers of the Company) holding sizable
amounts of stock and in soliciting proxies from them.
A shareholder giving a proxy has the power to revoke the proxy by
delivering written notice of revocation to the Secretary prior to the time
voting is declared closed or by attending the meeting and voting in person. All
proxies will be voted if properly signed, received by the Secretary prior to
the time voting is declared closed and not revoked prior to that time.
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 1997 Annual Meeting of Shareholders. 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 17, 1997
<PAGE> 42
WESTINGHOUSE ELECTRIC CORPORATION
Proxy Solicited by the Board of Directors for Annual Meeting of
Shareholders, April 30, 1997
(See Proxy Statement for discussion of items.)
PROXY
The undersigned hereby appoints Michael H. Jordan, Gary M. Clark and Louis J.
Briskman, and each of them, jointly and severally, proxies, with power of
substitution, to vote all shares of common stock which the undersigned is
entitled to vote on all matters which may properly come before the 1997 Annual
Meeting of Shareholders of Westinghouse Electric Corporation, or any
adjournment thereof. If you are a participant in an employee savings plan
through which you own Westinghouse common stock, this proxy card will also
constitute your voting instructions to the trustee under that plan.
<TABLE>
<S> <C>
(change of address)
Election of Directors. Nominees: ------------------------------------
Frank C. Carlucci, Robert E. Cawthorn, Gary M. Clark, ------------------------------------
George H. Conrades, William H. Gray III, ------------------------------------
Michael H. Jordan, Mel Karmazin, David K. P. Li, ------------------------------------
Peter A. Lund, David T. McLaughlin, ------------------------------------
Richard R. Pivirotto, Raymond W. Smith, ------------------------------------
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 on the
reverse side. The proxies cannot vote your shares unless you sign and return this proxy card.
[SEE REVERSE]
[ SIDE ]
</TABLE>
DETACH PROXY CARD HERE
WESTINGHOUSE
ELECTRIC CORPORATION
11 STANWIX STREET
PITTSBURGH, PA 15222-1384
MINNEAPOLIS
HILTON AND TOWERS
1001 Marquette Avenue
Minneapolis, Minnesota 55403-2440
[MAP] phone: (612) 376-1000
fax: (612) 397-4875
1997 ANNUAL MEETING OF SHAREHOLDERS
<PAGE> 43
[X] Please mark your
votes in this
manner.
<TABLE>
<S> <C>
The shares represented by this proxy card will be voted as specified below, but if no specification is made they will be voted FOR
items 1 and 2 and AGAINST item 3 and at the discretion of the proxies on any other matter that may properly come before the
meeting.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
THE BOARD OF DIRECTORS recommends a vote FOR items 1 and 2 and AGAINST item 3.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. The election [ ] [ ] [ ] 3. Shareholder Proposal: [ ] [ ] [ ]
Directors. of independent Redeem Shareholder
(see reverse) accountants Rights Plan.
For, except vote withheld from the following nominee(s):
- -------------------------------------------------------
If you plan to attend the Annual Meeting, please check [ ]
this box.
If you receive more than one Annual Report at the address [ ]
set forth on this proxy card and have no need for the extra
copy, please check the box at the right. This will not
affect the distribution of dividends or proxy statements.
Change of Address [ ]
(on reverse).
SIGNATURE(S) -------------------------------------------------- DATE ---------------
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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DETACH PROXY CARD HERE
</TABLE>
ADMISSION TICKET
ANNUAL MEETING
OF
SHAREHOLDERS OF
WESTINGHOUSE ELECTRIC CORPORATION
April 30, 1997
10:30 a.m.
Minneapolis Hilton and Towers
1001 Marquette Avenue
Minneapolis, Minnesota
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