<PAGE> 1
BRUSH WELLMAN INC.
17876 St. Clair Avenue
Cleveland, Ohio 44110
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of Brush Wellman Inc. will be held at
the Stouffer Tower City Plaza Hotel, 24 Public Square, Cleveland, Ohio on
Tuesday, May 3, 1994 at 11:00 A.M. (Cleveland time), for the following purposes:
(1) To elect four directors, each to serve for a term of three years and
until a successor shall have been elected and qualified.
(2) To ratify and approve the selection of Ernst & Young as independent
auditors of the Company for the year 1994.
(3) The transaction of such other business as may properly come before such
meeting.
The Board of Directors has fixed the close of business on March 8, 1994 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the meeting or any adjournment thereof.
CLARK G. WAITE
Secretary
March 11, 1994
IMPORTANT -- YOUR PROXY IS ENCLOSED
PLEASE SIGN, DATE AND RETURN YOUR ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
<PAGE> 2
BRUSH WELLMAN INC.
17876 St. Clair Avenue
Cleveland, Ohio 44110
PROXY STATEMENT
MARCH 11, 1994
This statement is furnished in connection with the solicitation by the
Board of Directors of Brush Wellman Inc. (the "Company") of proxies to be used
at the annual meeting of shareholders of the Company to be held on May 3, 1994.
This statement and the related form of proxy are being sent to shareholders on
or about the date of this statement.
If the enclosed form of proxy is properly executed and returned, the shares
represented by it will be voted at the meeting. The proxy may be revoked at any
time prior to its exercise by giving notice to the Company in writing or in open
meeting.
As of March 8, 1994, the record date for the meeting, the Company had
outstanding and entitled to vote 16,088,315 shares of Common Stock.
Each outstanding share of Common Stock is entitled to one vote on each
matter brought before the meeting. Under Ohio law shareholders have cumulative
voting rights in the election of directors, provided not less than 48 hours
notice in writing is given by any shareholder to the President, any Vice
President or the Secretary of the Company that he desires that voting at such
election be cumulative, and an announcement of the giving of such notice is made
upon the convening of the meeting. When cumulative voting applies, each share
has a number of votes equal to the number of directors to be elected, and a
shareholder may give all of his votes to one nominee or divide his votes among
as many nominees as he sees fit. Unless contrary instructions are received on
proxies given to the Company, in the event that cumulative voting applies, all
votes represented by such proxies will be divided evenly among the candidates
nominated by the Board of Directors except that if voting in such manner would
not be effective to elect all such nominees, such votes will be cumulated in the
discretion of the Company so as to maximize the number of such nominees elected.
At the annual meeting, the results of shareholder voting will be tabulated
by the inspector of elections appointed for the annual meeting. Under Ohio law
and the Company's Articles of Incorporation and Regulations, properly executed
proxies that are marked "abstain" or are held in "street name" by brokers and
not voted on one or more of the items (if otherwise voted on at least one item)
will be counted for purposes of determining whether a quorum has been achieved
at the annual meeting. Votes withheld in respect of Item 1 will not be counted
in determining the election of Directors. Abstentions and broker non-votes in
respect of Item 2 will not be considered as votes cast.
In addition to the solicitation of proxies by the use of the mails,
officers and other employees of the Company may solicit the return of proxies by
personal interview, telephone and telecopy. Brokerage houses, banks and other
custodians, nominees and fiduciaries will be requested to forward soliciting
material to the beneficial owners of shares and will be reimbursed for their
expenses. The costs of the solicitation of proxies will be borne by the Company.
<PAGE> 3
ELECTION OF DIRECTORS
At the present time it is intended that proxies will be voted for the
election of Gordon D. Harnett, William P. Madar, Robert M. McInnes and Henry G.
Piper as directors for a term of three years and until the election of their
successors. Each of such nominees has been previously elected as a director by
shareholder action.
If any of these nominees should become unavailable, it is intended that the
proxies will be voted as the Company shall determine. The Company has no reason
to believe that any of the nominees will be unavailable. The four nominees
receiving the greatest number of votes will be elected as directors of the
Company.
The following table sets forth information concerning the nominees and the
directors whose terms of office will continue after the meeting:
<TABLE>
<CAPTION>
NOMINEES FOR TERMS ENDING IN 1997 CURRENT EMPLOYMENT
<S> <C>
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GORDON D. HARNETT Chairman of the Board, President and Chief
Director since 1991 Executive Officer of the Company
Age -- 51
</TABLE>
Mr. Harnett was elected Chairman of the Board, President and Chief Executive
Officer of the Company effective January 1991. He had served as a Senior Vice
President of The B. F. Goodrich Company from November 1988. He is a director of
Essef Corporation and National City Bank, Cleveland.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
WILLIAM P. MADAR President and Chief Executive Officer,
Director since 1988 Nordson Corporation
Member -- Audit Committee, Nominating (industrial equipment manufacturer)
Committee and Organization
and Compensation Committee
Age -- 54
</TABLE>
Mr. Madar has been President and Chief Executive Officer of Nordson Corporation
during the past five years. He is a director of Lubrizol Corporation, National
City Bank, Cleveland and Nordson Corporation.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ROBERT M. MCINNES Of Counsel, Arter & Hadden (law firm)
Director since 1977
Member -- Audit Committee, Organization
and Compensation Committee and
Finance Committee
Age -- 63
</TABLE>
Mr. McInnes has been Of Counsel to the law firm of Arter & Hadden during the
past five years. Prior to that time he was Group Executive Vice President of
Cleveland-Cliffs Inc. He had also served as President and Chief Executive
Officer of Pickands Mather & Co., which became a wholly-owned subsidiary of
Cleveland-Cliffs Inc. in December 1986.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
HENRY G. PIPER Retired President and Chief Executive Officer
Director since 1967 of the Company
Member -- Nominating Committee
and Pension Review Committee
Age -- 71
</TABLE>
Mr. Piper served as President, Chairman of the Board and Chief Executive Officer
of the Company until his retirement from the Company on December 31, 1988. Mr.
Piper resumed employment with the Company as President and Chief Executive
Officer on January 23, 1990. Mr. Piper resigned from his positions effective
upon the election of Mr. Harnett as Chairman of the Board, President and Chief
Executive Officer on January 22, 1991. He remained an employee of the Company
until April 30, 1991. He is a Director of First Union Management Inc.
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2
<PAGE> 4
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<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS END IN 1996 CURRENT EMPLOYMENT
<S> <C>
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ALBERT C. BERSTICKER President and Chief Executive Officer, Ferro
Director since 1993 Corporation (specialty materials)
Member -- Organization and
Compensation Committee and
Pension Review Committee
Age -- 59
</TABLE>
Mr. Bersticker was elected Chief Executive Officer of Ferro Corporation in 1991.
He has been its President during the past five years. Mr. Bersticker is a
director of Ferro Corporation, Centerior Energy Corporation, Key Bancshares Inc.
and Oglebay Norton Company.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
DR. CHARLES F. BRUSH, III Personal investments
Director since 1958
Member -- Finance Committee,
Nominating Committee and
Organization and Compensation
Committee
Age -- 70
</TABLE>
There has been no change in Dr. Brush's occupation during the past five years.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLARK G. WAITE Senior Vice President-Finance and
Director since 1978 Administration, Chief Financial Officer and
Age -- 61 Secretary of the Company
</TABLE>
Mr. Waite was elected Senior Vice President-Finance and Administration in
October 1991. He was elected Chief Financial Officer in September 1987 and
served as Vice President, Finance from September 1976 until his election as
Senior Vice President in September 1989. Mr. Waite was elected Secretary
effective January 1, 1988. He was Treasurer from December 31, 1987 to April 24,
1990.
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS END IN 1995 CURRENT EMPLOYMENT
<S> <C>
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FRANK B. CARR Managing Director, Corporate Finance,
Director since 1970 McDonald & Company Securities, Inc.
Member -- Audit Committee, (investment banking and securities brokerage
Finance Committee and firm)
Nominating Committee
Age -- 66
</TABLE>
Mr. Carr has been a Managing Director, Corporate Finance of McDonald & Company
Securities, Inc. during the past five years. He is a director of Invacare
Corporation and Preformed Line Products Company.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
JULIEN L. MCCALL Retired Chairman and Chief Executive
Director since 1986 Officer, National City Corporation
Member -- Finance Committee and (bank holding company)
Pension Review Committee
Age -- 72
</TABLE>
Mr. McCall was Chairman and Chief Executive Officer of National City Corporation
from December 1980 until his retirement in May 1986. He is a director of Acme
Metals, Inc. and R B & W Corporation.
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3
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS END IN 1995 CURRENT EMPLOYMENT
<S> <C>
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GERALD C. MCDONOUGH Retired Chairman and Chief Executive Officer,
Director since 1983 Leaseway Transportation Corp. (trucking,
Member -- Finance Committee, leasing and distribution services company)
Nominating Committee and
Organization and
Compensation Committee
Age -- 65
</TABLE>
Mr. McDonough was Chairman and Chief Executive Officer of Leaseway
Transportation Corp. until his retirement in 1988. He is a director of
Acme-Cleveland Corporation, Associated Estates Realty Corporation, Commercial
InterTech Corp., York International Corp. and is also a Trustee of the Fidelity
Funds.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
JOHN SHERWIN, JR. President, Mid-Continent Ventures, Inc.
Director since 1981 (venture capital company)
Member -- Audit Committee and
Pension Review Committee
Age -- 55
</TABLE>
Mr. Sherwin has been President of Mid-Continent Ventures, Inc. during the past
five years.
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- --------------------------------------------------------------------------------
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors maintains, among other committees, an Audit
Committee, Finance Committee, Nominating Committee, Organization and
Compensation Committee and Pension Review Committee, the members of which are
identified in the above table.
The Audit Committee held three meetings in 1993. Its principal functions
include the engagement of independent auditors or recommending action by the
full Board of Directors with respect thereto; reviewing the scope and results of
the audit and any non-audit services performed by such auditors; reviewing the
adequacy of the Company's internal auditing, accounting and financial controls;
and reviewing with independent auditors their report and opinion upon completion
of their audit, including a review of any significant transactions not in the
ordinary course of business and compliance with Company policies and codes of
conduct.
The Finance Committee held four meetings during 1993. Its principal
functions include monitoring and making recommendations to the Board of
Directors regarding debt, capital structure, dividend policy and shareholder
relations.
The Nominating Committee held three meetings in 1993. Its functions include
evaluation of candidates for Board membership (including any nominations of
qualified candidates submitted in writing by security holders to the Secretary
of the Company) and recommendations to the full Board of Directors of candidates
to fill executive vacancies that arise from time to time.
The Organization and Compensation Committee held three meetings in 1993.
Its principal functions include reviewing executive compensation, taking action
where appropriate or making recommendations to the full Board of Directors with
respect thereto, recommending the adoption of executive benefit plans, granting
stock options and stock appreciation rights, and recommending action on matters
relating to management succession and changes in organizational structure.
The Pension Review Committee held two meetings during 1993. Its principal
function is reviewing the investment of pension funds and the investment
elections available to participants in the Savings and Investment Plan.
4
<PAGE> 6
The Board of Directors held nine meetings during 1993. All of the directors
attended at least 75% of the total meetings held by the Board of Directors and
by the Committees on which they served during 1993.
DIRECTOR COMPENSATION
Each director who is not an officer of the Company receives fees of $16,500
for each calendar year plus $1,000 for attending each meeting of the Board of
Directors and each meeting of a Committee thereof. The Chairman of each
Committee (if not an officer) receives an additional $1,000 on an annual basis.
The Deferred Compensation Plan for Nonemployee Directors was approved by
shareholders in 1992. The Plan provides each nonemployee director the
opportunity to defer receipt of all or a portion of the compensation payable for
his services as a director. The Company, in turn, transfers an amount equal to
the reduction in compensation to a trust, which amounts are invested, at the
director's discretion, in the Company's Common Stock or in accordance with the
Company's investment policy.
The Company established a Stock Option Plan for Non-Employee Directors in
1990. The Plan authorizes a one-time grant of a non-qualified option to purchase
shares of Common Stock to each non-employee director who has never been an
employee of the Company. Eight directors each received a grant on April 25, 1990
for 5,000 shares of the Company's Common Stock at an exercise price of $22.81.
One director received a grant on April 27, 1993 for 5,000 shares of the
Company's Common Stock at an exercise price of $11.81. The option price of each
option granted under the Plan is equal to the mean market price of the Common
Stock on the date of grant. Each option becomes exercisable six months after the
date of grant and expires ten years after the date of grant, subject to earlier
termination in the event of termination of service on the Board or disability.
The Plan also provides for one-time grants for up to three future directors upon
their election or appointment to the Board.
The Company's Directors Retirement Plan provides that a non-officer
director, upon reaching age 65 and who shall thereafter die or retire from the
Board and shall have served as a director for a minimum of seven years or
attained the age of 70, shall receive for the number of years equal to his
non-employee service, but not exceeding 15 years, after the date of his death or
retirement, annual compensation in an amount equal to the rate of the annual
retainer, including any Committee chairmanship, for non-officer directors in
effect on the date of such death or retirement. Such amount shall be paid
quarterly or, at the director's election and subsequent approval by the
Organization and Compensation Committee, or in the event of death, in a lump sum
equivalent to the present value of the unpaid quarterly payments using the
Pension Benefit Guaranty Corporation interest rate in effect for determining
lump sum benefits under the Brush Wellman Inc. Salaried Pension Plan. The Plan
was amended in February 1993 to change the interest rate used for determining
lump sum payments from 10% to the interest rate as described in the immediately
preceding sentence. Directors, except those having reached age 65 before
December 31, 1988, shall retire at the end of the year in which they reach their
seventieth birthday.
5
<PAGE> 7
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information regarding ownership of the
Company's Common Stock as of January 31, 1994 by Directors, each of the named
Executive Officers, all Directors and Executive Officers as a group and certain
other persons owning more than 5% of the Company's Common Stock. Unless
otherwise indicated, persons named below held sole voting power and investment
power with respect to their shares of the Company's Common Stock.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK PERCENT OF COMMON STOCK
NON-OFFICER DIRECTORS BENEFICIALLY OWNED(1) BENEFICIALLY OWNED
-------------------------------- ---------------------- -----------------------
<S> <C> <C>
Albert C. Bersticker............ 5,500(2) *
Dr. Charles F. Brush, III....... 331,136(2)(3) 2.0
Frank B. Carr................... 7,000(2) *
William P. Madar................ 10,689(2) *
Julien L. McCall................ 5,500(2) *
Gerald C. McDonough............. 21,807(2)(4) *
Robert M. McInnes............... 9,100(2) *
Henry G. Piper.................. 152,069(2)(5) *
John Sherwin, Jr................ 33,188(2)(6) *
EXECUTIVE OFFICERS
Gordon D. Harnett............... 157,478(2) *
Clark G. Waite.................. 167,709(2)(7) 1.0
Stephen Freeman................. 2,568(2) *
Craig B. Harlan................. 94,323(2) *
Andrew J. Sandor................ 71,261(2) *
All Directors and Executive
Officers as a group (17
persons)...................... 1,186,232(8) 7.1
OTHER PERSONS
State of Wisconsin Investment
Board
P.O. Box 7842
Madison, Wisconsin............ 1,247,800(9) 7.8%
Trimark Investment Management
Inc.
40 King Street West 5200
Toronto, Ontario, Canada...... 1,304,000(10) 8.1%
</TABLE>
- ---------
* Less than 1% of Common Stock.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Reported in accordance with the beneficial ownership rules of the
Securities and Exchange Commission (the "Commission"), under which a person
is deemed to be the beneficial owner of a security, for these purposes, if
he has or shares voting power or investment power in respect of such
security or has the right to acquire such security within 60 days. The
shares shown include shares credited to the account of each executive
officer under the Company's Savings and Investment Plan. Society National
Bank, Cleveland, Ohio, the Trustee for the Brush Wellman Inc. Savings and
Investment Plan, holds in trust for the participants 830,713 shares, or
5.2% of the outstanding Common Stock of the Company. All participants in
the Savings and Investment Plan share voting power with the Trustee of the
Plan with respect to the shares credited to their accounts. The shares
shown in the table do not purport to represent beneficial ownership for any
purpose other than compliance with the Commission's reporting requirements.
6
<PAGE> 8
(2) Includes shares covered by outstanding options exercisable within 60 days,
as follows: Mr. Piper, 140,900; Mr. Harnett, 155,000; Mr. Waite, 117,000;
Mr. Harlan, 91,700; Mr. Sandor, 69,000; Mr. Freeman, 2,400; and 5,000 for
each of Messrs. Bersticker, Brush, Carr, Madar, McCall, McDonough, McInnes
and Sherwin.
(3) Includes 3,000 shares owned by Dr. Brush's wife of which Dr. Brush
disclaims ownership.
(4) Includes 1,000 shares owned by Mr. McDonough's wife of which Mr. McDonough
disclaims ownership.
(5) Includes 400 shares owned by Mr. Piper's minor child of which Mr. Piper
disclaims ownership.
(6) Includes 10,000 shares owned by Sherwick Fund (Charitable Foundation) of
which Mr. Sherwin is the President, and 10,393 shares owned by his wife and
children. Mr. Sherwin disclaims ownership of these shares.
(7) Includes 11,478 shares owned by Mr. Waite's wife of which Mr. Waite
disclaims ownership.
(8) Includes 726,440 shares subject to outstanding options held by officers and
directors and exercisable within 60 days.
(9) Information regarding share ownership was obtained from Amendment No. 4 to
Schedule 13G filed with the Commission on February 8, 1994.
(10) Information regarding share ownership was obtained from Amendment No. 2 to
Schedule 13G filed with the Commission on February 12, 1993.
7
<PAGE> 9
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth total annual compensation earned during the
Company's last three years by the Chief Executive Officer and by the four most
highly compensated executive officers other than the Chief Executive Officer.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1) ------------
- ----------------------------------------------------------- AWARDS(2)
NAME AND SECURITIES
PRINCIPAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(3)
- ----------------------------- ----- -------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Gordon D. Harnett 1993 315,000(4) 0 30,000 18,615(4)
Chairman of the 1992 311,250 307,500 40,000 7,088
Board, President and 1991 283,333 150,000 115,000 -0-
Chief Executive Officer
Clark G. Waite 1993 167,600 0 15,000 6,914
Senior Vice President 1992 166,450 83,800 15,000 5,894
Finance and Administration, 1991 161,333 30,000 7,500 4,825
Chief Financial
Officer and Secretary
Craig B. Harlan 1993 165,600 0 10,000 6,694
Vice President Business 1992 163,300 57,540 15,000 5,379
Development 1991 156,833 16,000 7,500 5,905
Stephen Freeman(5) 1993 142,104 0 15,000 2,142
Vice President 1992 N/A N/A N/A N/A
Sales and Marketing 1991 N/A N/A N/A N/A
Andrew J. Sandor 1993 131,850 0 15,000 5,316
Vice President 1992 128,450 45,360 15,000 4,333
Operations 1991 123,333 16,000 7,500 4,900
</TABLE>
- ---------------
(1) No compensation was paid to any of the executive officers that requires
disclosure as "Other Annual Compensation."
(2) There were no restricted stock awards to any of the executive officers for
any of the years listed.
(3) Represents Company matching contributions to the Brush Wellman Inc. Savings
and Investment Plan.
(4) Salary for 1993 includes $16,169 deferred compensation and all other
compensation includes $11,809 Company matching contributions pursuant to the
Brush Wellman Inc. Supplemental Retirement Benefit Plan.
(5) Mr. Freeman became an executive officer on August 3, 1993.
8
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants during 1993 to
the executive officers included in the Summary Compensation Table. There was one
grant of options to each of the named executive officers during the year. All
options listed in the table become exercisable June 19, 1994, six months from
date of grant.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
(#) OF OPTIONS ASSUMED ANNUAL RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES OR BASE TERM
OPTIONS IN FISCAL PRICE EXPIRATION ------------------------------
NAME GRANTED YEAR ($/SH) DATE 0% ($) 5% ($) 10% ($)
- --------------------- ---------- ----------- -------- ---------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Gordon D. Harnett
Chairman of the
Board, President and
Chief Executive
Officer 30,000 11.92 $13.56 12/19/03 $ -0- $225,835 $648,335
Clark G. Waite
Senior Vice President
Finance and
Administration, Chief
Financial Officer
and Secretary 15,000 5.96 $13.56 12/19/03 $ -0- $127,918 $324,168
Craig B. Harlan
Vice President
Business
Development 10,000 3.97 $13.56 12/19/03 $ -0- $ 85,280 $216,110
Stephen Freeman
Vice President Sales
and Marketing 15,000 5.96 $13.56 12/19/03 $ -0- $127,918 $324,168
Andrew J. Sandor
Vice President
Operations 15,000 5.96 $13.56 12/19/03 $ -0- $127,918 $324,168
</TABLE>
9
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information concerning unexercised stock
options held by the executive officers included in the Summary Compensation
Table and the value of such officers' unexercised options at December 31, 1993.
No stock options were exercised by such officers during 1993.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-
UNEXERCISED OPTIONS AT THE-MONEY OPTIONS AT
DECEMBER 31, 1993(#) DECEMBER 31, 1993($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ---------------------------------------- ------------------------- -------------------------
<S> <C> <C>
Gordon D. Harnett 155,000/ $33,750/
Chairman of the Board, 30,000 $20,700
President and
Chief Executive Officer
Clark G. Waite 117,000/ $13,500/
Senior Vice President 15,000 $10,350
Finance and Administration,
Chief Financial Officer and Secretary
Craig B. Harlan 91,700/ $16,875/
Vice President 10,000 $ 6,900
Business Development
Stephen Freeman 2,400/ $ 0/
Vice President Sales 18,600 $10,350
and Marketing
Andrew J. Sandor 69,000/ $16,875/
Vice President Operations 15,000 $10,350
</TABLE>
REPORT OF ORGANIZATION AND COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
The Organization and Compensation Committee of the Board of Directors (the
"Committee") is composed entirely of nonemployee directors. The Committee is
responsible for developing and making policy recommendations to the Board with
respect to the Company's executive compensation. In addition, the Committee,
pursuant to authority delegated by the Board, determines on an annual basis the
compensation to be paid to the Chief Executive Officer (the "CEO") and each of
the other executive officers of the Company.
COMPENSATION PHILOSOPHY -- PAY FOR PERFORMANCE
The Committee's compensation philosophy is to recognize superior results
with superior monetary rewards. Where results are below expectations, pay will
directly reflect the less-than-targeted performance.
TOTAL COMPENSATION STRATEGY
The executive compensation strategy is to attract and retain qualified
executives and to provide appropriate incentives to achieve the long-term
success of the Company and to enhance shareholder value over the long term. The
Company employs a total compensation strategy, taking into consideration base
pay, performance compensation, and long-term incentives (stock options). Base
salary is generally established at moderately competitive levels, and greater
weight is put on the performance-driven portions of the compensation package.
10
<PAGE> 12
BASE SALARY
Base salary ranges have been aligned with market medians (50th percentile)
for comparable positions in the marketplace, and the average base salary for all
positions in each range is, also, near this median. The market medians are from
a group of comparably sized companies from the metals and general industry, and
because the Company competes for talent on a broader basis, this group is
broader than the Dow Jones Non-Ferrous U.S. Metals Index used on the performance
graph. The analysis was conducted by a consulting firm which used a variety of
published and proprietary surveys. In 1993, average base salary increases were
limited to approximately one half of generally published average market
increases and no base salary increases were made to the CEO or the Chief
Financial Officer (the "CFO").
PERFORMANCE COMPENSATION
A Management Performance Compensation Plan (the "Plan") provides for annual
single-sum cash payments that are based on achieving pre-established financial
objectives. There are two separate financial measures which are established by
the Committee on an annual basis. Each financial measure has a minimum and
maximum value. Plan awards for executive officers as a percentage of base salary
are based in part on achieving an annual earnings objective and in part on
achieving a return on invested capital objective that exceeds the three-year
trailing median of Standard & Poor's "A" rated industrial companies. If either
earnings or return on invested capital is at or below minimum, no related
performance compensation is earned for that particular objective. The CEO is a
participant in the Plan, and annual performance compensation is based on the
above specific factors that relate solely to the financial performance of the
Company. The percentage of base salary available for performance compensation
varies according to the level of performance achieved and the level of the
individual's responsibility. The CEO and CFO can attain 52% of base pay for
achieving the earnings target and 50% of base pay for achieving the return on
invested capital target. Likewise, the other executive officers can attain 37%
and 35% respectively. In 1993, neither the CEO nor any other executive officer
received performance compensation under the Plan because the Company's financial
performance fell short of the minimum performance objectives.
LONG-TERM INCENTIVES
Long-term incentives are provided through the grant of options to purchase
stock under option plans approved by shareholders. In 1993 a total of 113
management employees were awarded options.
The Company has a performance management process which establishes personal
and team objectives at the start of each year and a review of progress toward
those objectives at year end. Option awards in 1993 were based on individual
performance reviews and the optionee's potential impact on the success of the
Company. The Committee decided on the option amounts for the CEO and executive
officers based upon the Committee's judgment of their individual performance and
also taking into account the level of option awards made to both individuals and
in the aggregate during prior periods. The overall number of option shares
granted was approximately 1.5% of total shares outstanding, consistent with
average grants over the past several years.
The Company has a Stock Appreciation Rights (SAR) Plan that was approved by
shareholders in 1977. Under the Plan, SAR's may be granted only in tandem with
stock options and the underlying option must be surrendered if and when the SAR
is exercised. The SAR Plan was originally designed to provide liquidity to the
executive for taxes due upon exercise of options when SEC rules prohibited
immediate resale by insiders. No SAR's have been issued since 1988.
11
<PAGE> 13
1993 TAX ACT
The $1 million limitation of deductibility for executive compensation
imposed by the 1993 Tax Act has no immediate applicability to the Company. The
Committee's general philosophy will be to "qualify" future long-term incentive
plans for tax deductibility wherever appropriate, recognizing that, under
certain circumstances, the limit may be exceeded.
The foregoing report has been furnished by the Committee.
William P. Madar (Chairman)
Albert C. Bersticker
Charles F. Brush, III
Gerald C. McDonough
Robert M. McInnes
CUMULATIVE TOTAL SHAREHOLDER RETURN
The following graph sets forth the five-year cumulative total shareholder
return on the Company's Common Stock as compared to the cumulative total return
for the same period of the S&P 500 Index and the Dow Jones Non-Ferrous U.S.
Metals Index. The Company is a member of the Dow Jones Non-Ferrous U.S. Metals
Index.
COMPARISON OF FIVE YEAR TOTAL RETURN*
<TABLE>
<CAPTION>
DJ NON-
MEASUREMENT PERIOD BRUSH WELL- FERROUS U.S.
(FISCAL YEAR COVERED) MAN INC. S&P 500 METALS
<S> <C> <C> <C>
1988 100 100 100
1989 81 132 117
1990 55 128 101
1991 55 166 106
1992 64 179 119
1993 60 197 118
</TABLE>
* Assumes that the value of the Common Stock of Brush Wellman Inc. and each
index was $100 on December 31, 1988 and that all dividends were reinvested.
12
<PAGE> 14
PENSION AND RETIREMENT BENEFITS
The Company's Pension Plan for Salaried Employees is a defined benefit
plan. The following table shows the estimated annual pension benefits under the
Salaried Pension Plan as well as benefits provided under the Company's
Supplemental Retirement Benefit Plan to the extent that they supplement benefits
provided under the Salaried Pension Plan, which would be payable, without
reduction for any optional form of payment, to employees in various compensation
classifications upon retirement in 1993 at age 65 after selected periods of
service:
<TABLE>
<CAPTION>
FINAL AVERAGE YEARS OF SERVICE AT AGE 65
ANNUAL PAY -------------------------------------------------------------------------
AT AGE 65 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 150,000 $ 30,000 $ 45,000 $ 52,500 $ 60,000 $ 67,500 $ 75,000
200,000 40,000 60,000 70,000 80,000 90,000 100,000
300,000 60,000 90,000 105,000 120,000 135,000 150,000
400,000 80,000 120,000 140,000 160,000 180,000 200,000
500,000 100,000 150,000 175,000 200,000 225,000 250,000
600,000 120,000 180,000 210,000 240,000 270,000 300,000
700,000 140,000 210,000 245,000 280,000 315,000 350,000
800,000 160,000 240,000 280,000 320,000 360,000 400,000
900,000 180,000 270,000 315,000 360,000 405,000 450,000
</TABLE>
The compensation covered by the Salaried Pension Plan and Supplemental
Retirement Benefit Plan is regular base salary, sales commissions, and
performance compensation. The compensation covered by the Salaried Pension Plan
and Supplemental Retirement Benefit Plan is the same as the amounts shown in the
salary and bonus columns of the Summary Compensation Table on page 8. Credited
service for pension benefit purposes for Messrs. Harnett, Waite, Harlan, Sandor
and Freeman is 17, 33, 17, 32 and 1 years, respectively. The Supplemental
Retirement Benefit Plan adds 14 years to Mr. Harnett's Brush Wellman Inc.
pension service. The amounts shown in the above table are computed on the basis
of a straight-life annuity (for the employee's life only) and are shown without
reduction for Social Security benefits or other offset amounts. The benefits
shown in the above table are subject to reductions based on Social Security
benefit amounts and, in the case of Mr. Harnett, for certain pension benefits
from previous employers.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with certain senior
executives, including all of the executive officers named in the Summary
Compensation Table on page 7. These agreements provide certain benefits to the
senior executives in the event there is a change in control of the Company. The
material aspects of the employment agreements are summarized below.
In general, a change in control of the Company is deemed to have occurred
whenever:
(i) the Board of Directors fails to include a majority of Directors
who are either "Original Directors" (those in office on February 20, 1989)
or "Approved Directors" (those who, after February 20, 1989, are elected,
or are nominated for election by the shareholders, by a vote of at least
two-thirds of the Original Directors and the Approved Directors, if any);
(ii) any "person" (as defined in Section 1701.01(G) of the Ohio
General Corporation Law) shall have accumulated shares exceeding specified
threshold levels (one-fifth, one-third or a majority) of the Company's
voting power without first having obtained the
13
<PAGE> 15
shareholder approval required by, and otherwise complied with, the Ohio
Control Share Acquisition Act (principally Section 1701.831 of the Ohio
General Corporation Law); or
(iii) the Board of Directors determines in good faith that (a) any
particular actual or proposed accumulation of Company shares, tender offer,
merger, consolidation, sale of assets, proxy contest or other event or
series of events will, or is likely to, if carried out, result in a
situation specified in (i) or (ii) above and (b) it is in the best
interests of the Company and its shareholders, and will serve the intended
purposes of the agreements, if the agreements thereupon become immediately
operative.
In the event of such a change in control, each executive will (if then an
employee of the Company) remain employed in substantially his then position for
four years or, if earlier, until the first to occur of the death of the
executive or his reaching age 65 (the "Window Period"). During the Window
Period, he will receive an annual amount at least equal to his salary rate in
effect at the beginning of the Window Period (or, if higher, his salary rate at
any time during the two full calendar years immediately preceding the change in
control) plus the highest incentive compensation award received by him in any of
the prior three years. In addition, he is entitled during the Window Period to
continue to participate in all Company benefit plans in which he was
participating and to receive all perquisites which were available to him (or to
other benefits and perquisites at the same level as those he enjoyed) at the
time of the change in control.
After a change in control, the executive may be terminated by the Company
for "cause" (the commission of a felony). If he is terminated without cause, or
if he terminates for any of the specified reasons described below, he will be
entitled to receive in a lump sum payment the present value of the remaining
aggregate direct remuneration (salary and incentive compensation) which would
otherwise have been paid to him for the remainder of the Window Period. The
Company is obligated to secure these payments through a trust to be funded at or
prior to the time of any change in control. The executive will also be entitled
in such a case to the continuation of benefits and perquisites. The agreements
include procedures intended to provide that none of the foregoing will
constitute "parachute payments" under Section 280G of the Internal Revenue Code
of 1986, as amended. In general, tax penalties would be imposed on the executive
and the Company if any of the foregoing were determined to constitute parachute
payments. The executive may terminate employment with the Company and still be
entitled to receive the payments specified above in the event of: (a) his good
faith determination that, due to changed circumstances significantly affecting
his position with the Company, he is unable to carry out his duties and
responsibilities; (b) any reduction in compensation or any substantial reduction
in position; or (c) any requirement that he have as his principal office any
place more than 50 miles from his principal residence at the time of the change
in control.
If the executive is terminated without cause, or if the executive
terminates for any of the reasons specified above, he is, in general, obligated
for a period of two years (or, if less, the balance of the Window Period) to use
reasonable efforts to seek other comparable employment. He is also generally
obligated to pay over to the Company 50% of all employment income from other
employers earned by him during that time and is subject for the same time to
specified prohibitions on competition.
The Company is obligated to pay all attorneys' and related fees and
expenses incurred by an executive as a result of the Company's failure to
perform its obligations under his agreement or as a result of specified
challenges to the validity or enforceability of, or the executive's performance
under, such agreement. This obligation of the Company must be secured by
insurance or as the Board of Directors otherwise determines.
In determining whether the Window Period commences, the agreements continue
for five years. They will thereafter continue for successive two year increments
unless either the Company or the executive gives a specified notice to the
other.
14
<PAGE> 16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. McInnes, a director of the Company, is a member of the Organization and
Compensation Committee and is Of Counsel to the law firm of Arter & Hadden. The
Company has retained Arter & Hadden as bond counsel and Company counsel for the
refunding of certain of the Company's Industrial Revenue Bonds.
RELATED PARTY TRANSACTIONS
The Company has retained McDonald & Company Securities, Inc. as co-agent
with respect to a $75 million Medium-Term Note program. Mr. Carr, a director of
the Company, is Managing Director, Corporate Finance of McDonald & Company
Securities, Inc. The Company also retained the law firm of Arter & Hadden as
bond counsel and Company counsel for the refunding of certain of the Company's
Industrial Revenue Bonds. Mr. McInnes, a director of the Company, is Of Counsel
to Arter & Hadden.
APPOINTMENT OF AUDITORS
The Board of Directors recommends ratification and approval of the
appointment of Ernst & Young, independent auditors, to audit the books and
accounts of the Company for the year 1994. This proposal will be approved if a
majority of the votes cast on this proposal at the annual meeting are in favor
of the proposal.
It is expected that a representative of Ernst & Young will attend the
meeting, with the opportunity to make a statement if he so desires and will be
available to answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the annual meeting of
shareholders in 1995 must be received by the Company at 17876 St. Clair Avenue,
Cleveland, Ohio, 44110, Attention: Secretary for inclusion in the Company's
proxy statement and form of proxy for that meeting not later than November 3,
1994.
GENERAL
The Company does not know of any matters to be brought before the meeting
except as indicated in the notice. However, if any other matters properly come
before the meeting for action, it is intended that the person authorized under
solicited proxies may vote or act thereon in accordance with his own judgment.
By order of the Board of Directors.
BRUSH WELLMAN INC.
CLARK G. WAITE
Secretary
Cleveland, Ohio
March 11, 1994
15
<PAGE> 17
BRUSH WELLMAN INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
R The undersigned appoints Gordon D. Harnett, or if he is unable or
unwilling to act, then Clark G. Waite, with full power of
O substitution, to vote and act for and in the name of the
undersigned as fully as the undersigned could vote and act if
X personally present at the annual meeting of shareholders
of Brush Wellman Inc. to be held on May 3, 1994 and at any
Y adjournment or postponement thereof:
<TABLE>
<S> <C>
Election of Directors, Nominees: (change of address)
Gordon D. Harnett, William P. Madar, Robert M. McInnes and ________________________________
Henry G. Piper. ________________________________
________________________________
________________________________
(If you have written in the above
space, please mark the
corresponding box on the reverse
side of this card.)
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN
AND RETURN THIS CARD.
/ SEE REVERSE /
/ SIDE /
<PAGE> 18
<TABLE>
<S> <C> <C> <C>
/ X / PLEASE MARK YOUR SHARES IN YOUR NAME REINVESTMENT SHARES
VOTES AS IN THIS |
EXAMPLE. |
-----------
</TABLE>
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINT ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C>
1. Election of / / / / 2. Confirming the / / / / / / 3. In accordance with his judgment
Directors appointment of upon any other matter properly
(see reverse) Ernst & Young presented.
as independent
auditors of the
For, except vote withheld from the Company.
following nominee(s)
__________________________________ THE SHARES REPRSENTED BY THIS PROXY
VOTED AS DIRECTED OR, IF DIRECTIONS
ARE NOT INDICATED, WILL BE VOTED
FOR THE ELECTION OF DIRECTORS AND
FOR ITEM 2.
Change / /
of
Address
Attend / / PLEASE SIGN, DATE AND RETURN YOUR
Meeting PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE WHICH REUIRES NO POSTAGE
</TABLE>
<TABLE>
<S> <C>
SIGNATURE(S) __________________________________________________ DATE ____________
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 add your title as such.
</TABLE>
<PAGE> 19
CONFIDENTIAL VOTING INSTRUCTIONS
TO: SOCIETY NATIONAL BANK, TRUSTEE UNDER THE BRUSH WELLMAN INC. PAYSOP
Pursuant to section 6.8 of the Brush Wellman Inc. Savings and
Investment Plan, the undersigned as a participant in the Plan hereby
directs the Trustee to vote (in person or by proxy) all shares of
Common Stock of Brush Wellman Inc. credited to the undersigned's PAYSOP
Contribution Account under the Plan on the record date for the annual
meeting of shareholders of Brush Wellman Inc. to be held on May 3, 1994
and at any adjournment or postponement thereof, on the following
matters as checked below:
Election of Directors, Nominees:
Gordon D. Harnett, William P. Madar, Robert M. McInnes and
Henry G. Piper.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY
BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF
DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES
UNLESS YOU SIGN AND RETURN THIS CARD.
/ SEE REVERSE /
/ SIDE /
<PAGE> 20
<TABLE>
<S> <C>
/ X / PLEASE MARK YOUR
VOTES AS IN THIS |
EXAMPLE. |
-----------
</TABLE>
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINT ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C>
1. Election of / / / / 2. Confirming the / / / / / / 3. In accordance with his judgment
Directors appointment of upon any other matter properly
(see reverse) Ernst & Young presented.
as independent
auditors of the PLEASE SIGN EXACTLY AS NAME APPEARS
For, except vote withheld from the Company. BELOW. THE TRUSTEE SHALL NOT VOTE
following nominee(s) ---
__________________________________ SHARES OF THE COMPANY FOR WHICH IT
DOES NOT RECIEVE INSTRUCTIONS.
THIS CONFIDENTIAL VOTING INSTRUCTIONS
CARD WILL BE SEEN ONLY BY AUTHORIZED
PERSONNEL OF THE TRUSTEE. THE SHARES
REPRESENTED BY THIS CARD WILL BE
VOTED AS DIRECTED, OR IF DIRECTIONS
ARE NOT INDICATED BUT THIS CARD IS
EXECUTED AND RETURNED, WILL BE VOTED
FOR THE ELECTION OF DIRECTORS AND FOR
ITEM 2.
Change / /
of
Address
Attend / / PLEASE SIGN, DATE AND RETURN YOUR
Meeting VOTING CARD PROMPTLY IN THE ENCLOSED
ENVELOPE WHICH REUIRES NO POSTAGE
</TABLE>
<TABLE>
<S> <C>
SIGNATURE __________________________________________________ DATE ____________
NOTE: Please sign exactly as name appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, please add your title as such.
</TABLE>
<PAGE> 21
CONFIDENTIAL VOTING INSTRUCTIONS
TO: SOCIETY NATIONAL BANK, TRUSTEE UNDER THE BRUSH WELLMAN INC.
SAVINGS AND INVESTMENT PLAN.
Pursuant to section 6.8 of the Brush Wellman Inc. Savings and
Investment Plan, the undersigned as a participant in the Plan hereby
directs the Trustee to vote (in person or by proxy) all shares of
Common Stock of Brush Wellman Inc. credited to the undersigned's
account (other than shares credited under the PAYSOP Contribution
Account) under the Plan on the record date for the annual meeting of
shareholders of Brush Wellman Inc. to be held on May 3, 1994 and at any
adjournment or postponement thereof, on the following matters as
checked below:
Election of Directors, Nominees:
Gordon D. Harnett, William P. Madar, Robert M. McInnes and
Henry G. Piper.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY
BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF
DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES
UNLESS YOU SIGN AND RETURN THIS CARD.
/ SEE REVERSE/
/ SIDE /
<PAGE> 22
<TABLE>
<S> <C>
/ X / PLEASE MARK YOUR
VOTES AS IN THIS |
EXAMPLE. |
-----------
</TABLE>
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINT ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C>
1. Election of / / / / 2. Confirming the / / / / / / 3. In accordance with his judgment
Directors appointment of upon any other matter properly
(see reverse) Ernst & Young presented.
as independent
auditors of the PLEASE SIGN EXACTLY AS NAME APPEARS
For, except vote withheld from the Company. BELOW. THE TRUSTEE SHALL NOT VOTE
following nominee(s) ---
__________________________________ SHARES OF THE COMPANY FOR WHICH IT
DOES NOT RECIEVE INSTRUCTIONS IN THE
SAME PROPORTION AS SUCH SHARES FOR
WHICH IT RECEIVES VOTING INSTRCTKONS.
THIS CONFIDENTIAL VOTING INSTRUCTIONS
CARD WILL BE SEEN ONLY BY AUTHORIZED
PERSONNEL OF THE TRUSTEE. THE SHARES
REPRESENTED BY THIS CARD WILL BE
VOTED AS DIRECTED, OR IF DIRECTIONS
ARE NOT INDICATED BUT THIS CARD IS
EXECUTED AND RETURNED, WILL BE VOTED
FOR THE ELECTION OF DIRECTORS AND FOR
ITEM 2.
Change / /
of
Address
Attend / / PLEASE SIGN, DATE AND RETURN YOUR
Meeting VOTING CARD PROMPTLY IN THE ENCLOSED
ENVELOPE WHICH REUIRES NO POSTAGE
</TABLE>
<TABLE>
<S> <C>
SIGNATURE __________________________________________________ DATE ____________
NOTE: Please sign exactly as name appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, please add your title as such.
</TABLE>
