<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
Wyman Gordon Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
WYMAN-GORDON COMPANY
244 WORCESTER STREET
NORTH GRAFTON, MA
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
ON OCTOBER 21, 1998
To the Holders of Common Stock:
The 1998 Annual Meeting of Stockholders of Wyman-Gordon Company will be
held at Worcester Historical Museum, 30 Elm Street, Worcester, Massachusetts on
Wednesday, October 21, 1998 at 10:00 A.M. for the following purposes:
(1) To elect four persons to the Board of Directors, each for a three-year
term expiring in 2001 and until his successor is elected and qualified.
(2) To vote upon the selection of independent auditors for the Company for
the fiscal year 1999.
(3) To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
By vote of the directors, stockholders of record at the close of business
on August 19, 1998 are the stockholders entitled to vote at the 1998 Annual
Meeting.
It is important that your stock be represented at the Annual Meeting. You
are encouraged to date, sign and return your proxy in the accompanying envelope
to State Street Bank & Trust Company, c/o Boston EquiServe Limited Partnership,
P. O. Box 8200, Boston, Massachusetts 02266-8200 whether or not you expect to be
able to attend the meeting in person. Your proxy is revocable up to the time it
is voted, and you may vote in person at the Annual Meeting even though you have
previously submitted your proxy.
Directions to Worcester Historical Museum are included on the outside cover
of this Notice of 1998 Annual Meeting, Proxy Statement and Form 10-K.
WALLACE F. WHITNEY, JR.
Clerk
September 3, 1998
<PAGE> 3
WYMAN-GORDON COMPANY
244 WORCESTER STREET
NORTH GRAFTON, MASSACHUSETTS
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 21, 1998
This Proxy Statement is furnished in connection with the Annual Meeting of
Stockholders of Wyman-Gordon Company to be held at Worcester Historical Museum,
30 Elm Street, Worcester, Massachusetts, on Wednesday, October 21, 1998 at 10:00
A.M. The Proxy Statement and the accompanying form of proxy are being mailed to
stockholders on or about September 3, 1998.
Proxies delivered in response to this solicitation may be revoked by
persons executing them at any time prior to the exercise of the power they
confer. The proxies are solicited by the Board of Directors of the Company. All
expenses in connection with the solicitation of proxies will be borne by the
Company. Solicitation may be made in part by telephone.
August 19, 1998 has been fixed as the record date for determination of
stockholders entitled to notice of and to vote at the Annual Meeting. The
outstanding capital stock of the Company, as of August 19, 1998 consisted of
36,560,848 shares of common stock, par value $1.00 per share, (the "Shares").
The Shares vote as a single class and each Share has one vote.
1. ELECTION OF DIRECTORS
Four directors will be elected at the meeting to hold office until the 2001
Annual Meeting of Stockholders and until their successors are elected and
qualified. Unless authority to do so has been withheld or limited in the proxy,
it is the intention of the persons named as proxies to vote the Shares to which
the proxy relates for the election to the Board of Directors of the four
nominees listed below. The affirmative vote of a majority of the Shares voting
at the Annual Meeting is required for election.
NOMINEES FOR THREE-YEAR TERM
DAVID P. GRUBER, age 56, Chairman of the Board and Chief Executive Officer
of the Company. Director of the Company since 1992. Term expires in 1998.
Mr. Gruber was elected to his current position in October 1997 having
served as President and Chief Executive Officer from May 1994 until October 1997
and as President and Chief Operating Officer of the Company from October 1991
until May 1994. Prior to that time, he was employed by Norton Company
(manufacturer of abrasives and ceramic products) since 1978 including serving as
its Vice President, Advanced Ceramics from 1987 to 1991. He is a Director of
State Street Corporation, a Trustee of the Manufacturers' Alliance for
Productivity and Innovation, and is a member of the Mechanical Engineering
Advisory Committee of the Worcester Polytechnic Institute.
ROBERT L. LEIBENSPERGER, age 59, Executive Vice President, Chief Operating
Officer & President - Bearings of The Timken Company, Canton, Ohio (a
manufacturer of precision bearings.)
Mr. Leibensperger joined the Company's Board of Directors in January 1998.
Mr. Leibensperger has been employed by The Timken Company since 1960, where he
has held various research, engineering, sales and marketing, and executive
positions. Mr. Leibensperger is a member of the American Bearing Manufacturers
Association Executive Committee, the Council on Competitiveness Global R&D
Committee, the Stark County (Ohio) Capital Campaigns Committee, the Cultural
Center for the Arts (Canton, Ohio) House & Grounds Committee and the Goodwill
Industries (Canton, Ohio) Transportation Services Committee.
ANDREW E. LIETZ, age 59, President and Chief Executive Officer and Director
of HADCO Corporation, Salem, New Hampshire. (Manufacturer of electronic
interconnect products.)
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<PAGE> 4
Mr. Lietz joined the Company's Board of Directors in January 1998. Mr.
Lietz has held various executive positions with HADCO Corporation since 1984. He
is a director of EnergyNorth, Inc., Business and Industry Association and
National Electronics Manufacturing Initiative, as well as a member of the
Advisory Board of the University of New Hampshire Whittemore School of Business
and the Executive Committee of New Hampshire Industrial Research Center.
J. DOUGLAS WHELAN, age 59, President and Chief Operating Officer of the
Company.
Mr. Whelan joined the Company's Board of Directors in 1998. He was elected
to his current position in October 1997 having served from 1994 as the President
of the Company's Forgings Division. From 1965 through 1994, Mr. Whelan served in
various capacities with the Cameron forging operations of Cooper Industries,
which operations merged with the Company in 1994. Mr. Whelan is a director of
Sifco Industries, Inc. and a member of the President's Council of Manufacturers
Alliance.
CONTINUING DIRECTORS
E. PAUL CASEY, age 68, Chairman and General Partner, Metapoint Partners,
Peabody, Massachusetts (an investment partnership). Director of the Company
since 1993. Term expires in 1999.
Mr. Casey established Metapoint Partners in 1988. He served as Vice
Chairman of Textron, Inc. from 1986 to 1987 and as Chief Executive Officer and
President of Ex-Cell-O Corporation from 1978 to 1986. Mr. Casey is a Director of
Comerica, Inc. and Hood Enterprises, Inc., a Trustee of Henry Ford Health Care
System, and President of the Hobe Sound, Florida Community Chest.
WARNER S. FLETCHER, age 53, Attorney and Director of the law firm of
Fletcher, Tilton & Whipple, P.C., Worcester, Massachusetts. Director of the
Company since 1987. Term expires in 1999.
Mr. Fletcher is an Advisory Director of Bank of Boston, Worcester. He is
also Chairman of The Stoddard Charitable Trust, a Trustee of The Fletcher
Foundation, the George I. Alden Trust, the Worcester Polytechnic Institute, the
Worcester Foundation for Biomedical Research, the Bancroft School and the
Worcester Art Museum.
ROBERT G. FOSTER, age 60, President, Chief Executive Officer and Chairman
of the Board of Commonwealth BioVentures, Inc., Portland, Maine (a venture
capital company engaged in biotechnology) since 1987. Director of the Company
since 1989. Term expires in 2000.
Mr. Foster is a Director of United Timber Corp., Meridian Medical
Technologies, Phytera, the Small Enterprise Growth Fund for the State of Maine,
Intellicare American, and Epic Pharmaceuticals.
CHARLES W. GRIGG, age 59, Chairman, Chief Executive Officer and President
of SPS Technologies, Inc., Jenkintown, Pennsylvania (a manufacturer of high
technology products in the fields of fastening, precision components and
materials handling). Director of the Company since 1996. Term expires in 2000.
Prior to joining SPS Technologies in 1993, Mr. Grigg spent ten years at
Watts Industries, Inc. (a Massachusetts manufacturer of valves for industrial
applications), the last nine of which he served as President and Chief Operating
Officer.
M HOWARD JACOBSON, age 65, Senior Advisor, Private Advisory Services,
Bankers Trust. Director of the Company since 1993. Term expires in 1999.
Mr. Jacobson was for many years President and Treasurer and a Director of
Idle Wild Foods, Inc. until that company was sold in 1986. Mr. Jacobson is a
Director of Allmerica Financial Corporation, Stonyfield Farm, Inc. and Boston
Chicken, Inc. He is Chairman of the Overseers of WGBH Public Broadcasting, a
Trustee of the Worcester Foundation for Biomedical Research, the Massachusetts
Biotechnology Research Institute, the Worcester Polytechnic Institute,
University of Massachusetts Memorial Healthcare and a member of the Harvard
University Overseers' Committee on University Resources. He also is a member of
the Commonwealth of Massachusetts Board of Higher Education.
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<PAGE> 5
DAVID A. WHITE, JR., age 56, Senior Vice President, Strategic Planning of
Cooper Industries, Inc. Director of the Company since 1996. Term expires in
1999.
Since joining Cooper Industries as a Planning Analyst in 1971, Mr. White
has served in various planning and finance capacities. In 1980, he was named
Vice President and General Manager of the Cooper Power Tools Division and in
1988 he became Vice President, Corporate Planning and Development. He assumed
his present position in 1996. Mr. White serves as Chairman of the Strategic
Planning and Development Council of the Manufacturers' Alliance for Productivity
and Innovation.
RETIRING DIRECTORS
Three individuals who have served as directors during the 1998 fiscal year
will discontinue their affiliation with the Board after the Annual Meeting.
Russell E. Fuller, has been a Director of the Company since 1988. His current
term expires at the Annual Meeting and since Mr. Fuller has reached the
Company's mandatory retirement age for Directors, he will not stand for
re-election. H. John Riley, Jr., who has been a Director since 1994 and whose
term expires at the Annual Meeting, has decided not to stand for re-election.
Judith S. King who has been a Director since 1990, has decided to retire from
the Board.
COMMITTEES OF THE BOARD
The Board of Directors has standing Compensation, Finance and Audit,
Directors and Environment, Health and Safety Committees.
The members of the Compensation Committee are Mr. Casey (Chairman), Mr.
Grigg, Mrs. King, and Mr. Riley. Its principal functions are to review and
determine remuneration arrangements for senior management and to administer
awards under the Company's long-term incentive programs. The Committee held four
meetings during the Company's 1998 fiscal year.
The members of the Finance and Audit Committee are Mr. Jacobson (Chairman),
Mr. Fletcher, Mr. Foster, and Mr. White. The principal functions of the
Committee are to monitor the overall financial condition of the Company, to
provide oversight of pension and employee savings plan investments, to review
the systems of internal control, to recommend the engaging or discharging of
independent auditors, to consider the scope of the annual audit, and to review
the audit. The Finance and Audit Committee and the predecessor Audit Committee
each met once during the Company's 1998 fiscal year.
The members of the Directors Committee are Mr. Fuller (Chairman), Mr.
Casey, Mr. Gruber and Mr. Jacobson. Its principal functions are to assist in the
identification of nominees for positions on the Board and to advise on the
structure and operation of the Board. The Committee met once during the
Company's 1998 fiscal year.
The members of the Environment, Health and Safety Committee are Mr. Grigg
(Chairman), Mr. Fletcher, Mr. Gruber and Mr. White. The principal functions of
the Committee are to review and assess the Company policies, procedures and
practices relating to environmental protection, employee health and workplace
safety as well as compliance with applicable environmental, health and safety
laws and regulations. The Committee met once during the Company's 1998 fiscal
year.
MEETINGS OF THE BOARD
The Board of Directors held five meetings during the Company's 1998 fiscal
year. Non-employee directors of the Company received annual remuneration of
$15,000 for their services plus a fee of $1,000 for each Board and Committee
meeting attended. Committee chairmen receive an additional annual retainer of
$2,000. Non-employee directors will also receive an additional annual retainer
of $5,000 paid in shares of restricted stock valued as of the date of each
Annual Meeting of the Stockholders. Except for Mr. Foster (who attended five out
of seven meetings) and Mr. Leibensperger (who attended one out of two meetings)
each director attended at least seventy-five percent of the total number of
Board and Committee meetings held while he or she served as a director or member
of a Committee.
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SHARES OF COMPANY STOCK BENEFICIALLY OWNED BY CERTAIN OWNERS AND BY MANAGEMENT
The following table shows as of August 17, 1998, information with respect
to the holdings of Shares of the Company's common stock, which is the only class
of stock outstanding, by shareholders beneficially owning 5% or more of the
outstanding Shares and with respect to holdings of Shares by the Company's
directors, nominees for director, and executive officers.
<TABLE>
<CAPTION>
SHARES OF OPTIONS
COMPANY STOCK EXERCISABLE PERCENT
NAME AND ADDRESS OF BENEFICIALLY WITHIN OF
BENEFICIAL OWNER (1) OWNED 60 DAYS CLASS(2)
-------------------- ------------- ----------- --------
<S> <C> <C> <C>
Cooper Industries, Inc.(3).................................. 14,000,000 38.3%
600 Travis,
Suite 5800
Houston, TX 77002
Directors and Officers:
E. Paul Casey............................................. 25,000 3,999
Edward J. Davis........................................... -- --
Warner S. Fletcher(4)(5).................................. 2,749,127 3,999 7.5%
Robert G. Foster.......................................... 700 3,999
Russell E. Fuller(6)...................................... 1,271,025 3,999 3.5%
Charles W. Grigg.......................................... 1,000 1,666
David P. Gruber........................................... 183,530 134,167
M Howard Jacobson......................................... 1,000 3,999
Judith S. King(4)......................................... 1,709,999 3,999 4.7%
Robert L. Leibensperger................................... -- --
Andrew E. Lietz........................................... 1,000 --
H. John Riley, Jr.(3)..................................... -- 3,999
Sanjay N. Shah............................................ 14,247 145,548
J. Stewart Smith.......................................... 10,010 3,333
Colin Stead............................................... 15,040 20,063
J. Douglas Whelan......................................... 23,250 46,417
David A. White, Jr.(3).................................... -- 1,666
Wallace F. Whitney, Jr.................................... 12,507 121,583
Frank J. Zugel............................................ 23,620 74,126
All directors and executive officers as a group........... 4,403,175 576,562 13.6%
</TABLE>
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(1) The address of all directors and executive officers is Wyman-Gordon Company,
244 Worcester Street, North Grafton, MA 01536
(2) Unless otherwise indicated, less than one percent. Includes exercisable
options.
(3) Pursuant to an Investment Agreement (the "Investment Agreement") between the
Company and Cooper Industries, Inc. ("Cooper") dated as of January 10, 1994,
the Company issued 16,500,000 Shares to Cooper on May 26, 1994 in connection
with the Company's acquisition of Cooper's Cameron Forged Products Division.
The Investment Agreement provides, in part, that during the term of the
Agreement, the Company will use its best efforts to cause two persons
designated by Cooper and reasonably acceptable to the Company to be elected
to the Board of Directors of the Company and to serve as directors of the
Company until their successors are duly elected and qualified. Cooper
previously designated H. John Riley, Jr., the Chairman, President and Chief
Executive Officer of Cooper, and David A. White, Jr., Senior Vice President,
Strategic Planning of Cooper, as its representatives on the Company's Board
of Directors. The Company has agreed to vote all Shares for which the
Company's management or Board of Directors holds proxies or is otherwise
entitled to vote in favor of the election of the designees of Cooper except
as may otherwise be provided by shareholders submitting such proxies. In
December 1995, Cooper issued 16,500,000 6.0% Exchangeable Notes due January
1, 1999 (DECS(SM)). At maturity, the DECS will be mandatorily exchanged by
Cooper into Shares, or at Cooper's option, cash. Pursuant to the Investment
Agreement, the Company registered the up to 16,500,000 Shares that may be
delivered pursuant to the terms of the DECS and paid a portion of the costs
of registration and
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associated costs. In August 1997 Cooper and the Company cooperated in
preparing and filing a Post-Effective Amendment to the Company's DECS
Registration Statement to permit Cooper to make exchanges of the Company's
common stock for the DECS prior to maturity of the DECS, and, to the extent
that such exchanges are made on a basis of less than one share of the
Company's common stock for each DECS, to sell such excess shares. At the
same time, the Company provided Cooper with such consents as were required
under the Investment Agreement to permit such early exchanges as well as the
contribution to and subsequent sale of 345,000 Shares by Cooper Industries
Foundation, a charitable foundation. Cooper, in fact, has exchanged
2,500,000 DECS previously held by Forum Capital Markets L.P. for 2,155,000
Shares which that entity subsequently sold on the open market. As a result,
Cooper now owns 14,000,000 Shares. Because Cooper continues to own the
14,000,000 Shares, the provisions of the Investment Agreement will remain in
force until such Shares are exchanged at the maturity of the DECS. In light
of the January 1, 1999 maturity of the DECS, Cooper will not require the
Company to elect a Cooper representative to the Board of Directors to
replace H. John Riley, Jr. who has decided not to stand for re-election.
(4) Warner S. Fletcher and Judith S. King are two of the five trustees of The
Stoddard Charitable Trust (the "Stoddard Trust"), a charitable trust which
owns 1,458,000 Shares. The Shares owned by the Stoddard Trust are therefore
reported in the above table. Mr. Fletcher and Mrs. King disclaim any
beneficial interest in the Shares owned by the Stoddard Trust.
(5) Mr. Fletcher is a trustee of the Fletcher Foundation, which holds 311,000
Shares and of other trusts that hold 179,880 Shares for the benefit of
Judith S. King and her sister, who are his cousins, and 313,733 Shares for
the benefit of his sister. Although the Shares owned by the Fletcher
Foundation and by such trusts are therefore reported in the above table, Mr.
Fletcher disclaims beneficial ownership of such Shares.
(6) Russell E. Fuller is one of six trustees of the George F. and Sybil H.
Fuller Foundation (the "Fuller Foundation") and 1,266,025 Shares owned by
the Fuller Foundation are therefore reported in the above table. Mr. Fuller
disclaims any beneficial interest in the Shares beneficially owned by the
Fuller Foundation.
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COMPENSATION COMMITTEE REPORT
Overall Policy
The Compensation Committee (the "Committee") of the Board of Directors is
composed entirely of non-employee directors. The Committee is responsible for
setting and administering the policies that govern the Company's executive
compensation and stock ownership programs.
The Company's executive compensation program is designed to be closely
linked to corporate performance and return to stockholders. To this end, the
Company maintains an overall compensation policy and specific compensation plans
that tie a significant portion of executive compensation to the Company's
success in meeting specified annual performance goals and to appreciation in the
Company's stock price. The overall objectives of this strategy are to attract
and retain talented executives, to motivate these executives to achieve the
goals inherent in the Company's business strategy, to link executive and
stockholder interests through equity based incentive plans and finally to
provide a compensation package that recognizes individual contributions as well
as overall business results.
The Committee approves the compensation of David P. Gruber, Chairman and
Chief Executive Officer, and other corporate executives, including Messrs.
Davis, Whelan, Whitney and Zugel. The Committee also sets policies in order to
ensure consistency throughout the executive compensation program. In reviewing
the individual performance of the executives whose compensation is determined by
the Committee (other than Mr. Gruber), the Committee takes into account Mr.
Gruber's evaluation of their performance.
There are three principal elements of the Company's executive compensation
program: base salary, annual bonus and long-term stock-based incentives
consisting of stock options and performance share grants. The Committee's
policies with respect to each of these elements, including the bases for the
compensation awarded to Mr. Gruber, are discussed below. In addition, while the
elements of compensation described below are considered separately, the
Committee takes into account the full compensation package provided by the
Company to the individual, including pension benefits, supplemental retirement
benefits, savings plans, severance plans, insurance and other benefits, as well
as the programs described below. In carrying out its responsibilities the
Committee has in recent years obtained advice from William M. Mercer & Co. and
Towers Perrin, compensation consulting firms.
BASE SALARIES
Base salaries for new executive officers are initially determined by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace, including a
comparison to base salaries for comparable positions at other companies.
Annual salary adjustments are determined by evaluating the performance of
the Company and of each executive officer, and also take into account changed
responsibilities. The Committee also uses industry surveys to assist in ensuring
that executive salaries are consistent with industry practice.
Mr. Gruber serves as Chairman and Chief Executive Officer of the Company
pursuant to a May 16, 1994 Employment Agreement. Mr. Gruber's Employment
Agreement calls for the payment of an annual base salary of $300,000 during his
service as the Company's Chief Executive Officer or such higher amount as the
Board may determine. The Committee and the Board have set Mr. Gruber's annual
salary at $475,000 and have voted to increase such annual salary to $510,000
effective October 1998.
ANNUAL BONUS
The Company maintains a Management Incentive Plan ("MIP") under which
executive officers are eligible for an annual cash bonus. The Committee approves
individual employee's participation in, and awards under, the MIP based on
recommendations of Mr. Gruber. The Committee established goals for earnings per
share and return on investment as the basis of MIP payouts for Fiscal Year 1998.
In addition, the Committee retained a 20% discretionary factor in determining
annual incentive compensation. Under the MIP, Mr. Gruber can receive an
incentive payment up to 90% of his base salary. For other participants in the
MIP,
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the maximum bonus opportunities range from 55% to 75% of base salary. Due in
large measure to the unexpected problems with the Company's 29,000 ton press in
Houston, the Company did not meet its goals for earnings per share and return on
investment for Fiscal Year 1998. Recognizing, however, the efforts by management
in overcoming the problems created by the press outage, the Committee authorized
bonus payments equal to the 20% discretionary factor. As a result, Mr. Gruber
earned a bonus of $85,500 for Fiscal Year 1998 while other executive officers
earned bonuses ranging from 11% to 15% of base salary.
STOCK BASED COMPENSATION
Under the Company's 1997 Long-Term Incentive Plan, which was approved by
stockholders at the 1997 Annual Meeting of Stockholders, and under predecessor
plans, options with respect to the Company's common stock may be granted to the
Company's key employees. In addition, the Committee may grant other stock-based
awards such as restricted shares, performance shares, phantom shares,
performance units and bonus awards. The Committee sets guidelines for the size
of awards based on similar factors, including industry surveys, as those used to
determine base salaries and annual bonus.
Stock-based compensation is designed to align the interests of executives
with those of the stockholders. The approach is designed to provide an incentive
for the creation of stockholder value since the benefit of the compensation
package cannot be realized unless stock price appreciates. In the past the
Committee has made annual grants of stock options, and during the Company's 1998
Fiscal Year the Committee granted options to a total of 124 key employees. The
Committee believes that broad dissemination of options within the Company
enhances the benefits to the Company of stock-based incentives. The Committee
also believes that significant equity interests in the Company held by the
Company's management align the interests of stockholders and management and
foster an emphasis on the creation of stockholder value.
In order to focus on the creation of long-term stockholder value, and with
the advice of Towers Perrin, in 1996 the Committee developed an Executive
Long-Term Incentive Plan ("LTIP") which results in significant payouts to the
participants if significant price appreciation in the Company's stock is
achieved. Under the LTIP the Company's executive officers (including Messrs.
Gruber, Whelan, Whitney and Zugel) and other key executives will not participate
in the annual grant of stock options for the five year term of the LTIP. The
LTIP provides for a one-time grant of stock options which are the normal options
under the Company's stock option plan except that they vest in equal
installments over four years rather than three. The second element of the plan
consists of performance stock options that are ten year options that vest upon
the achievement of certain stock prices. For example, 10% of the performance
stock options vest if the stock reaches $21.00 per Share, and at $30.00 per
Share the performance stock options become fully vested. In any event, the
options vest seven years after the date of grant. The third element of the LTIP
consists of performance shares which are subject to risk of loss and forfeiture
if the price of the Shares does not achieve certain price levels. The price
levels are the same as under the performance stock options, and if the stock
reaches a price of $21.00 per Share, 10% of the performance shares vest and are
not subject to forfeiture. Similarly if the price reaches $30.00 per Share, the
performance shares vest in their entirety. If the stock fails to reach the
target levels during the five year term of the LTIP, then the performance shares
are forfeited to the extent the target levels have not been attained. At the
time of the grants to executive officers under the LTIP on April 17, 1996, the
price of the Company's stock was $16 5/8 per Share. As of September 15, 1997 the
price of the Company's stock had reached the $27 per Share level and therefore
80% of the performance stock options have vested and restrictions on 80% of the
performance shares have lapsed. Under the terms of the LTIP, the Committee has
granted 202,125 stock options, 928,375 performance stock options, and 226,800
performance shares, including the grant to Mr. Gruber of 25,000 stock options,
115,000 performance stock options and 28,500 performance shares.
When Mr. Gruber became Chief Executive Officer on May 24, 1994 the
Committee granted him 150,000 Shares under a Performance Share Agreement at
which time the Company's stock price was $5.125 per Share. The Shares granted to
Mr. Gruber pursuant to this Agreement are subject to restrictions. Under the
Performance Share Agreement, the Shares vested in Mr. Gruber only if he remained
in the employ of the Company for a period of five years and if the Company's
stock reached target price levels of at least $10 per Share with full vesting at
$12 per Share. The $12 target has been achieved, and consequently the Committee
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has approved an arrangement whereby the 150,000 Shares were transferred to an
irrevocable trust that will hold the Shares until May 24, 1999 when they will be
distributed to Mr. Gruber or his estate. Mr. Gruber now beneficially owns
185,852 Shares, including the 150,000 Shares issued to him in accordance with
the Performance Share Agreement and the 28,500 Shares granted to him under the
LTIP. In addition, Mr. Gruber has been granted options to purchase a total of
372,000 Shares.
TAX MATTERS
The Omnibus Budget Reconciliation Act of 1993 imposes a limit, with certain
exceptions, on the amount that a publicly held corporation may deduct in any
year for the compensation paid or accrued with respect to its five most highly
compensated officers. The Committee intends to try to preserve the tax
deductibility of all executive compensation while maintaining the Company's
compensation program as described in this report. Towards this end the Company's
1997 Long-Term Incentive Plan approved by the shareholders at the 1997 Annual
Meeting of Shareholders has been designed in such a manner so that awards
thereunder to the Company's executive officers, including LTIP awards, will
qualify as performance-based compensation and, therefore, deductible by the
Company.
CONCLUSION
Through the incentive and stock-based option programs described above, a
significant portion of the Company's executive compensation is linked directly
to individual and corporate performance and stock price appreciation. The
Committee intends to continue the policy of linking executive compensation to
corporate performance and return to stockholders.
E. Paul Casey, Chairman
Charles W. Grigg
Judith S. King
H. John Riley, Jr.
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EXECUTIVE COMPENSATION
The remuneration of the Company's Chief Executive Officer and each of the
four most highly compensated executive officers at May 31, 1998 for services
rendered to the Company during its fiscal year then ended and the Company's
prior two fiscal years ended May 31, 1997 and 1996 is reported in the table set
forth below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM AWARDS
ANNUAL COMPENSATION -------------------------
NAME AND FISCAL ------------------- PERFORMANCE NUMBER OF ALL OTHER
PRINCIPAL POSITION YEAR ENDED SALARY BONUS SHARE AWARDS OPTIONS COMPENSATION(1)
------------------ ---------- -------- -------- ------------ --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
David P. Gruber........... 05/31/98 $458,340 $ 85,500 -- -- $24,738
Chairman and Chief 05/31/97 400,004 286,875 -- -- 16,001
Executive Officer 05/31/96 333,336 262,500 28,500(2) 165,000 10,577
J. Douglas Whelan......... 05/31/98 295,833 45,000 -- -- 18,144
President and 05/31/97 242,333 123,750 -- -- 14,677
Chief Operating Officer 05/31/96 204,000 428,400 19,000(2) 104,500 6,916
Edward J. Davis(3)........ 05/31/98 64,169 30,000 -- 75,000 880
Vice President, Chief 05/31/97 -- -- -- -- --
Financial Officer and 05/31/96 -- -- -- -- --
Treasurer
Wallace F. Whitney, Jr.... 05/31/98 184,168 20,460 -- -- 9,744
Vice President, General 05/31/97 173,340 78,000 -- -- 6,827
Counsel and Clerk 05/31/96 161,500 82,500 14,000(2) 78,000 6,222
Frank J. Zugel............ 05/31/98 215,004 28,600 -- -- 13,110
President, Marketing 05/31/97 198,335 76,200 -- -- 9,569
05/31/96 184,015 30,400 19,000(2) 104,500 6,886
</TABLE>
- ---------------
(1) Consists of group term life insurance premiums, the value of the Shares
allocated to the executive's account under the Company's Savings/Investment
Plan and Deferred Compensation Plan as a matching contribution, in the case
of Mr. Whelan and moving expense reimbursement and related income tax
gross-up in 1998, and in the case of Mr. Zugel, automobile allowance.
(2) These Shares were issued to Messrs. Gruber, Whelan, Whitney, and Zugel
pursuant to the Long-term Incentive Plan described on page 8 hereof. Such
Shares are subject to restrictions and risk of forfeiture. At May 31, 1998
these Shares issued to Messrs. Gruber, Whelan, Whitney, and Zugel had market
values of $565,013, $376,675, $277,550, and $376,675, respectively. The
holders of such Shares are entitled to receive dividends, if any, paid by
the Company with respect to such Shares.
(3) Mr. Davis joined the Company in February 1998 and accordingly, the
information presented in the Summary Compensation Table reflects
compensation from February through the May 31 fiscal year end. Mr. Davis'
annual salary is $220,000
During the Company's fiscal year ended May 31, 1998 Messrs. Gruber, Whelan,
Whitney and Zugel were not granted any stock options ("Options") because such
officers participate in the LTIP described in the Compensation Committee Report
on page 8 of this proxy statement. Upon joining the Company in February 1998,
Mr. Davis received options to purchase 75,000 Shares.
10
<PAGE> 12
The following table relates to aggregate grants of Options and SAR's under
the 1997 Executive Long-Term Incentive Program and predecessor plans. Options
granted prior to 1992 had stock appreciation rights ("SAR's") attached. No SAR's
are attached to the Options granted since 1991.
AGGREGATE OPTION/SAR EXERCISES IN
THE COMPANY'S 1998 FISCAL YEAR
AND MAY 31, 1998 OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
NO. OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SAR'S OPTIONS/SAR'S
ACQUIRED AT 5/31/98 AT 5/31/98(1)
ON VALUE (EXERCISABLE/ (EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE) UNEXERCISABLE)
---- -------- ---------- -------------- -------------------
<S> <C> <C> <C> <C>
D.P. Gruber........................ 94,000 $2,125,747 134,167/43,833 $ 641,710/$175,789
J.D. Whelan........................ 38,750 $ 427,501 46,417/27,333 $ 262,523/$102,164
E.J. Davis......................... -- -- 0/75,000 0/0
W.F. Whitney, Jr................... 14,000 $ 299,250 121,583/20,417 $ 1,175,476/$77,023
F.J. Zugel......................... 22,873 $ 247,281 74,126/27,333 $ 417,001/$102,164
</TABLE>
- ---------------
(1) The value of an SAR attached to an Option granted prior to 1992 is equal to
80% of the excess of the fair market value of Shares of the Company's common
stock on the date of exercise over the exercise price of such option.
PENSION BENEFITS
All salaried employees and executive officers of the Company participate in
a defined benefit pension plan (the "Plan"). Under the terms of the Plan each
eligible employee receives a retirement benefit based on the number of years of
his or her credited service (to a maximum 35 years) and average annual total
earnings (salary plus incentive bonus only) for the five consecutive most highly
paid years during the ten years preceding retirement. In addition, the executive
officers covered by the Summary Compensation Table and certain other key
executives designated by the Compensation Committee (the "Committee") are
eligible to receive benefits under the Supplemental Retirement Plan for Senior
Executives (the "SERP"). Under the SERP, participants who have been employed by
the Company for at least five years who retire at age 62 are entitled to receive
a pension equal to their highest average annual earnings during any preceding
60-consecutive month period multiplied by 4% for each year of service up to ten
years and 2% per year from ten to fifteen years. This supplemental benefit is
reduced if the participant retires prior to age 62 and is further reduced by
benefits payable under the Company's qualified pension plan and by social
security payments. If the Committee so determines, payments under the SERP may
be terminated if a retired participant becomes "substantively employed," as
defined in the SERP, by another employer before age 65. The following table
indicates the aggregate estimated annual benefit payable, as single life annuity
amounts, under both the Plan and the SERP to participants retiring in various
categories of earnings and years of service. To the extent that an annual
retirement benefit exceeds the limits imposed by the Internal Revenue Code, the
difference will be paid from the general operating funds of the Company.
As of May 31, 1998, the individuals named in the Summary Compensation Table
had full credited years of service with the Company as follows: Mr. Gruber, six
years; Mr. Whelan, four years; Mr. Whitney, seven years, and Mr. Zugel, five
years.
11
<PAGE> 13
PENSION BENEFITS
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------
15 AND
REMUNERATION 5 10 ABOVE
------------ ------- ------- -------
<S> <C> <C> <C>
$250,000................................................ 50,000 100,000 125,000
350,000................................................ 70,000 140,000 175,000
450,000................................................ 90,000 180,000 225,000
550,000................................................ 110,000 220,000 275,000
650,000................................................ 130,000 260,000 325,000
750,000................................................ 150,000 300,000 375,000
</TABLE>
TOTAL STOCKHOLDER RETURN
The graph presented below compares the yearly percentage change in the
Company's cumulative total stockholder return, assuming dividend reinvestment,
with the cumulative total return of the Dow Jones Equity Market Index, a broad
market index, and the Dow Jones Aerospace & Defense Sector index, which includes
several of the Company's most significant customers and other aerospace industry
companies, for the five-year period ending May 31, 1998.
[CHART]
<TABLE>
5/28/93 5/27/94 6/2/95 5/31/96 5/30/97 5/29/98
------- ------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Aerospace & Defense 100 125.5 175.1 259.8 314.1 334.7
Equity Mkt Index 100 104.2 124.4 160.2 206.1 270.5
Wyman-Gordon Co. 100 125.1 219.9 342.6 446.6 390.2
</TABLE>
AGREEMENTS WITH MANAGEMENT
At the time of his election as President and Chief Executive Officer in
1994, Mr. Gruber and the Company entered into an agreement that provides for a
two year rolling term of employment and for continuation of employee benefits in
the event of termination of his employment under specified conditions. Mr.
Gruber and the Company have also entered into a Severance Agreement described
below, a Performance Share Agreement and irrevocable trust arrangement as
described on page 13, as well as the agreements pursuant to the LTIP described
on page 8.
The Company has entered into Severance Agreements with each of its
executive officers, that would provide such officers with specified benefits in
the event of termination of employment within three years following a change of
control of the Company when both employment termination and such change in
control
12
<PAGE> 14
occur under conditions defined in the agreements. Such benefits include a
payment equal to a maximum of 250% of the executive officer's annual
compensation, continuation of insurance coverages for up to twenty-four months
following termination and accelerated vesting of existing options and stock
appreciation rights. No benefits are payable under the Severance Agreements in
the event of an executive officer's termination for cause, in the event of
retirement, disability or death or in cases of voluntary termination in
circumstances other than those specified in the agreements that would entitle an
executive officer to benefits. In addition the Company has entered into
agreements with its executive officers pursuant to the LTIP described on page 8
hereof.
2. SELECTION OF AUDITORS
The Board of Directors, on the advice of the Audit Committee recommends the
selection of Ernst & Young as auditors for the fiscal year 1999. That firm was
appointed as the Company's auditors in 1992, upon the recommendation of
management and approval of the Audit Committee.
The affirmative vote of a majority of the Shares voting at the Meeting is
required for the selection of Ernst & Young as auditors. Representatives of
Ernst & Young will be present at the Meeting to respond to questions and will
have an opportunity to make a statement if they desire to do so.
The Board of Directors recommends a vote FOR this proposal.
SECURITIES AND EXCHANGE COMMISSION REPORTS
During the Company's fiscal year ended May 31, 1998 Securities and Exchange
Commission ("SEC") Forms 4 (Statement of Changes in Beneficial Ownership) were
not timely filed by Mrs. King. Such filings have been subsequently corrected.
STOCKHOLDER PROPOSALS -- 1999 ANNUAL MEETING
All proposals of stockholders to be presented at the annual meeting of the
Company which will be held in 1999 must be received by the Clerk of the Company
before July 22, 1999, in order to be included in the proxy statement and form of
proxy which will relate to that meeting.
VOTING INSTRUCTIONS
The matters set forth in the Notice of Annual Meeting will be voted upon in
the order in which they are listed in the Notice. The proxy form accompanying
this Proxy Statement provides boxes by means of which stockholders executing the
proxy forms may vote for or withhold authority in the election of management's
nominees for election of directors. Proxies will be voted in accordance with
such designation or, if no such designation is indicated, will be voted in favor
of the election of the nominees. While management has no reason to believe that
any of the nominees will not be available as a candidate at the Annual Meeting,
should any of the nominees not be a candidate, the proxy will, unless authority
to vote has been withheld by the person giving the proxy, be voted for a
substitute designated by management. Proxies will be voted in accordance with
the marking of boxes on the other questions specified on the proxy and in the
absence of a designation, will be voted in the affirmative. If any other
business is brought before the meeting, proxies will be voted in accordance with
the judgment of the persons voting the proxies. Broker non-votes are counted in
establishing a quorum for the transaction of business at the Annual Meeting, but
are not voted for or against matters presented for stockholder consideration.
Proxy cards which are executed and returned without any designated voting
direction are voted in the manner stated on the proxy card. Abstentions with
respect to a proposal are not counted as favorable votes, and therefore have the
same effect as a vote against the proposal.
13
<PAGE> 15
OTHER BUSINESS
The management of the Company knows of no other matters which may come
before the Annual Meeting. As to any other business which may properly come
before the meeting, proxies will be voted in accordance with the best judgment
of the persons voting such proxies.
14
<PAGE> 16
WYMAN-GORDON COMPANY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS OCTOBER 21, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby authorizes and appoints Edward J. Davis and Wallace F.
Whitney, Jr., or either of them, as proxies with full power of substitution in
each, to vote all shares of common stock par value $1.00 per share ("Shares"),
of Wyman-Gordon Company (the "Company") held of record by the undersigned at the
Annual Meeting of Shareholders (the "Meeting") to be held at the Worcester
Historical Museum, 30 Elm Street, Worcester, Massachusetts on Wednesday, October
21, 1998 at 10:00 a.m., and at any adjournments or postponements thereof, on all
matters that may properly come before said meeting.
This proxy when properly executed will be voted as directed on the reverse side,
or, in the absence of such directions, this proxy will be voted (i) FOR each of
the nominees named in Proposal 1 and FOR Proposal 2 and (ii) in accordance with
the best judgment of the persons voting such proxies.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) must correspond exactly with the name(s) as shown above. Where
stock is registered jointly in the names of two or more persons, ALL must sign.
If this proxy is submitted by a corporation or partnership, it must be executed
in the full corporate or partnership name by a duly authorized person. When
signing in a fiduciary or representative capacity (as attorney, trustee,
corporate officer, etc.) give your full title as such.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ----------------------------- -----------------------------
- ----------------------------- -----------------------------
- ----------------------------- -----------------------------
<PAGE> 17
<TABLE>
<S> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
Abstain FOR AGAINST
1.) Election of each of the following four 2.) Approval of the selection of Ernst & Young
persons to the Board of Directors for LLP as independent auditors for the [ ] [ ] [ ]
a three year term expiring in 2001 and Company for Fiscal Year 1999
until his successor is elected and
qualified.
WITH- FOR ALL
FOR HOLD EXCEPT
David P. Gruber [ ] [ ] [ ]
Robert L. Leibensperger [ ] [ ] [ ] THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE
PROPOSALS LISTED ABOVE
Andrew E. Lietz [ ] [ ] [ ]
J. Douglas Whelan [ ] [ ] [ ]
------------
Please be sure to sign and date this Proxy Date
- -------------------------------------------------------
Shareholder sign here Co-owner sign here
MARK BOX AT RIGHT IF COMMENTS OR ADDRESS CHANGE HAVE [ ]
- ------------------------------------------------------- BEEN NOTED ON THE REVERSE SIDE OF THIS CARD.
</TABLE>
- --------------------------------------------------------------------------------
DETACH CARD
WYMAN-GORDON COMPANY
Dear Shareholder:
Please take note of the important information in the proxy materials enclosed
with this Proxy Ballot.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders,
October 21, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely
Wallace F. Whitney, Jr.
Clerk
