<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
BRUSH WELLMAN INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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: ...........................................................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
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 Forum, One Cleveland Center, 1375 East Ninth Street, Cleveland, Ohio on
Tuesday, May 4, 1999 at 11:00 A.M. (Eastern Daylight Time), for the following
purposes:
(1) To elect three 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 LLP as independent
auditors of the Company for the year 1999.
(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, 1999 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the meeting or any adjournment thereof.
MICHAEL C. HASYCHAK
Secretary
March 15, 1999
IMPORTANT -- YOUR PROXY IS ENCLOSED
PLEASE SIGN, DATE AND RETURN YOUR ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
<PAGE> 3
BRUSH WELLMAN INC.
17876 St. Clair Avenue
Cleveland, Ohio 44110
PROXY STATEMENT
MARCH 15, 1999
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 4, 1999.
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, 1999, the record date for the meeting, the Company had
outstanding and entitled to vote 16,322,886 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 for purposes of
determining whether those matters are approved.
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> 4
1. ELECTION OF DIRECTORS
At the present time it is intended that proxies will be voted for the
election of Albert C. Bersticker, Charles F. Brush III and David L. Burner.
If any of these nominees should become unavailable, it is intended that the
proxies will be voted as the Board of Directors shall determine. The Company has
no reason to believe that any of the nominees will be unavailable. The three
nominees receiving the greatest number of votes will be elected as directors of
the Company. Pursuant to the Company's Code of Regulations, the class of
directors whose terms expire in 2000 has been increased by the Board of
Directors from three members to four. Mr. David H. Hoag was appointed by the
Board of Directors as a director on February 2, 1999 as the fourth member of
this class.
The following table sets forth information concerning the nominees and the
directors whose terms of office will continue after the meeting:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NOMINEES WHOSE TERMS END IN 2002 CURRENT EMPLOYMENT
- --------------------------------------------------------------------------------
<S> <C>
ALBERT C. BERSTICKER Chairman, Ferro Corporation
Director since 1993 (Specialty Chemicals)
Member -- Governance Committee and
Organization and
Compensation Committee
Age -- 64
</TABLE>
Mr. Bersticker was elected Chairman of Ferro Corporation in February 1996. He
served as Chief Executive Officer of Ferro Corporation from 1991 until January
of 1999 and as its President from 1990 until February 1996. Mr. Bersticker is a
director of Ferro Corporation, KeyCorp Inc. and Oglebay Norton Company.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
DR. CHARLES F. BRUSH, III Personal investments
Director since 1958
Member -- Audit and Organization
and Compensation Committee
Age -- 75
</TABLE>
There has been no change in Dr. Brush's occupation during the past five years.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
DAVID L. BURNER Chairman, Chief Executive Officer,
Director since 1995 and President
Member -- Audit Committee, The B.F.Goodrich Company
Organization and Compensation (Specialty Chemicals and Aircraft Systems and
Committee Services)
Age -- 59
</TABLE>
Mr. Burner was elected Chairman of the B.F. Goodrich Company in July 1997. He
has served as Chief Executive Officer of the B.F. Goodrich Company since
December 1996 and as President since December 1995. Prior to his election as
President, he served as Executive Vice President of The B.F.Goodrich Company
from October 1993 and as Senior Vice President from April 1990. Mr. Burner is a
director of The B.F.Goodrich Company and Milacron Inc.
- --------------------------------------------------------------------------------
2
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS END IN 2001 CURRENT EMPLOYMENT
- --------------------------------------------------------------------------------
<S> <C>
JOSEPH P. KEITHLEY Chairman, Chief Executive Officer & President,
Director since 1997 Keithley Instruments, Inc. (Electronic Test &
Member -- Governance Committee and Measurement Products)
Organization and Compensation
Committee
Age -- 50
</TABLE>
Mr. Keithley has been Chairman of the Board of Keithley Instruments, Inc. since
1991. He has served as Chief Executive Officer of Keithley Instruments, Inc.
since November 1993 and as its President since May 1994. He is a director of
Keithley Instruments, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
WILLIAM R. ROBERTSON Managing Partner, Kirtland Capital Partners (Private
Director since 1997 Equity Investments)
Member -- Audit Committee and
Organization and Compensation
Committee
Age -- 57
</TABLE>
Mr. Robertson has been a Managing Partner of Kirtland Capital Partners since
September 1997. Prior to that time, he was President of National City
Corporation from October 1995 until July 1997. He also served as Deputy Chairman
from August 1988 until October 1995.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
JOHN SHERWIN, JR. President, Mid-Continent Ventures, Inc. (Venture
Director since 1981 Capital Company)
Member -- Audit Committee and
Organization and Compensation
Committee
Age -- 60
</TABLE>
Mr. Sherwin has been President of Mid-Continent Ventures, Inc. during the past
five years.
- --------------------------------------------------------------------------------
3
<PAGE> 6
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS END IN 2000 CURRENT EMPLOYMENT
- --------------------------------------------------------------------------------
<S> <C>
GORDON D. HARNETT Chairman of the Board, President and Chief Executive
Director since 1991 Officer of the Company
Age -- 56
</TABLE>
Mr. Harnett has been Chairman of the Board, President and Chief Executive
Officer of the Company during the past five years. He is a director of Essef
Corporation, Lubrizol Corporation, MA Hanna Company and National City Bank,
Cleveland.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
WILLIAM P. MADAR Chairman of the Board,
Director since 1988 Nordson Corporation
Member -- Audit Committee, Governance (Industrial Application Equipment Manufacturer)
Committee and Organization
and Compensation Committee
Age -- 59
</TABLE>
Mr. Madar was elected Chairman of the Board of Nordson Corporation effective
October 1997. Prior to that time, he served as Vice Chairman of Nordson
Corporation from August 1996 until October 1997 and as Chief Executive Officer
from February 1986 until October 1997. From February 1986 until August 1996 he
also served as its President. He is a director of Lubrizol Corporation, National
City Bank, Cleveland and Nordson Corporation.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ROBERT M. MCINNES Business Consultant
Director since 1977
Member -- Governance Committee and
Organization and Compensation
Committee
Age -- 68
</TABLE>
Mr. McInnes was Of Counsel to the law firm of Arter & Hadden from November 1988
to November 1994. Prior to that time he was Group Executive Vice President of
Cleveland-Cliffs Inc. He 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>
DAVID H. HOAG Retired Chairman -- The LTV Corporation
Director since 1999 (Integrated Steel Producer and Metal Fabricator)
Member -- Organization and
Compensation Committee and
Governance Committee
Age -- 59
</TABLE>
Mr. Hoag retired as Chairman of the Board of the LTV Corporation in January of
1999. He had served as its Chairman since June 1991 and as Chief Executive
Officer from February 1991 until September 1998 and President from January 1991
until July 1997. Mr. Hoag is a director of The Chubb Corporation and Lubrizol
Corporation. He is also a member of the Federal Reserve Board of Cleveland.
- --------------------------------------------------------------------------------
4
<PAGE> 7
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors maintains, among other committees, an Audit
Committee, Governance Committee and Organization and Compensation Committee, the
members of which are identified in the above table.
The Audit Committee held two meetings in 1998. Its principal functions
include reviewing the engagement of independent auditors and 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 code of conduct.
The Governance Committee held one meeting in 1998. Its principal 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), recommendations to the full Board of Directors of
candidates to fill executive vacancies that arise from time to time and Board of
Directors governance matters.
The Organization and Compensation Committee held three meetings in 1998.
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 other awards, recommending action on matters relating to
management succession and changes in organizational structure and review of the
investment of pension assets and funding position of retirement pensions.
The Board of Directors held seven meetings in 1998. All of the directors
attended at least 75% of the total meetings held by the Board of Directors and
the Committees on which they served during 1998.
DIRECTOR COMPENSATION
Each director who is not an officer of the Company receives an annual
retainer fee of $16,500 for each calendar year. The Chairman of each Committee
(if not an officer) receives an additional $1,000 on an annual basis. In
addition, each director who is not an officer of the Company receives a fixed
meeting fee of $17,500 on an annual basis.
The Company maintains a Deferred Compensation Plan for Non-Employee
Directors, which was approved by shareholders in 1992. The Plan provides each
non-employee 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. Directors are
encouraged to take all or a portion of their compensation in the form of Common
Stock. For 1998, directors elected to receive an aggregate of $207,000 ($172,000
for 1999) worth of Common Stock on a deferred basis under this Plan.
The Company had also maintained a Stock Option Plan for Non-Employee
Directors, which was approved by shareholders in 1990. The Stock Option Plan for
Non-Employee Directors was replaced by the 1997 Stock Incentive Plan for
Non-Employee Directors, which was approved by shareholders in 1998. The Stock
Option Plan for Non-Employee Directors authorized a one-time grant of a
non-qualified option to purchase shares of Common Stock, at fair market value at
the date of grant, to each non-employee director who had never been an employee
of the Company. Eleven directors each received a grant between April 1990 and
October 1996 for 5,000 shares of Common Stock. Pursuant to a one-year extension
of the term of the Plan by the Board of Directors during 1997, one additional
director received a grant on June 3, 1997 for 5,000 shares. Each option became
exercisable six months after the date of grant and will expire ten years
5
<PAGE> 8
after the date of grant, subject to earlier termination in the event of
termination of service on the Board or disability. There are no more shares
available under this Plan. Under the 1997 Stock Incentive Plan for Non-Employee
Directors, one director received a grant on December 2, 1997 of an option for
5,000 shares at an exercise price of $23.78 and one director received a grant on
February 3, 1999 of an option for 5,000 shares at an exercise price of $14.66.
In addition, the 1997 Stock Incentive Plan for Non-Employee Directors provides
for an automatic grant of 500 deferred shares of Common Stock to each eligible
Director on the business day following the annual meeting of shareholders
beginning with the 1998 annual meeting. During 1998 eight directors were
credited with 500 shares of Common Stock each.
6
<PAGE> 9
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND MANAGEMENT
The following table sets forth information regarding ownership of the
Company's Common Stock as of February 19, 1999 by directors, each of the
executive officers named in the Summary Compensation Table, 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 sole 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................ 13,196(2)(3) *
Dr. Charles F. Brush, III........... 237,589(2)(3)(4) 1.4%
David L. Burner..................... 13,427(2)(3) *
David H. Hoag....................... 1,000
Joseph P. Keithley.................. 6,994(2)(3) *
William P. Madar.................... 27,135(2)(3) *
Robert M. McInnes................... 20,541(2)(3) *
William R. Robertson................ 18,323(2)(3)(5) *
John Sherwin, Jr.................... 30,512(2)(3)(6) *
NAMED EXECUTIVE OFFICERS
Gordon D. Harnett................... 350,709(2) 2.1%
John J. Paschall.................... 15,016(2) *
Alfonso T. Lubrano.................. 13,489(2) *
Stephen Freeman..................... 62,061(2) *
Brian J. Derry...................... 15,853(2) *
Carl Cramer......................... 35,934(2) *
All directors and executive officers
as a group (including the Named
Executive Officers) (23 persons).. 1,243,411(7) 7.3%
OTHER PERSONS
Trimark Financial Corporation
One First Canadian Place
Suite 5600, P.O. Box 487
Toronto, Ontario, Canada.......... 1,952,100(8) 11.5%
Joseph L. Harrosh
40900 Grimmer Blvd.
Fremont, California............... 1,270,020(9) 7.5%
Brush Wellman Inc. Savings and
Investment Plan................... 1,258,906(10) 7.4%
Private Capital Management, Inc.
3003 Tamiami Trail North
Naples, Florida................... 964,510(11) 5.7%
Pioneering Management Company
60 State Street,
Boston, Massachusetts............. 897,500(12) 5.3%
</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 in the table include shares credited to the account of each
executive officer under the Company's Savings and Investment Plan. The
shares shown in the table
7
<PAGE> 10
do not purport to represent beneficial ownership for any purpose other than
compliance with the Commission's reporting requirements.
(2) Includes shares covered by outstanding options exercisable within 60 days,
as follows: Mr. Harnett, 315,000; Mr. Paschall, 9,300; Mr. Lubrano, 6,800;
Mr. Freeman, 55,000; Mr. Derry, 11,000; Mr. Cramer, 29,000; and 5,000 for
each of Messrs. Bersticker, Brush, Burner, Keithley, Madar, McInnes,
Robertson, and Sherwin. Also includes Performance Restricted Shares granted
in 1998 pursuant to the 1995 Stock Incentive Plan, which are subject to
forfeiture if performance goals are not met, as follows: Mr. Harnett,
11,606; Mr. Paschall, 1,915; Mr. Lubrano, 1,990; Mr. Freeman, 3,869; Mr.
Derry, 3,385; and Mr. Cramer, 4,269.
(3) Includes shares deferred under the Deferred Compensation Plan for
Non-Employee Directors, and 1997 Stock Incentive Plan for Non-Employee
Directors as follows: Mr. Bersticker, 7,696; Dr. Brush, 9,153; Mr. Burner,
8,427; Mr. Keithley, 994; Mr. Madar, 20,935; Mr. McInnes, 11,441; Mr.
Robertson, 2,823; and Mr. Sherwin, 7,383.
(4) Includes 40,000 shares owned by the Charles F. Brush III Charitable
Remainder Unitrust of which Dr. Brush is trustee and 3,000 shares owned by
Dr. Brush's wife, as to all of which Dr. Brush disclaims ownership. The
shares shown in the table do not include 100,000 shares held in trust for
Dr. Brush's wife by their children as trustees. Dr. Brush disclaims
ownership of all such shares.
(5) Includes 500 shares owned by Mr. Robertson's wife of which Mr. Robertson
disclaims ownership.
(6) Includes 7,326 shares owned by Mr. Sherwin's wife and children and 3,008
shares held by Mr. Sherwin as Trust advisor of a charitable remainder
trust, as to all of which Mr. Sherwin disclaims beneficial ownership.
(7) Includes 700,900 shares subject to outstanding options held by officers and
directors and exercisable within 60 days.
(8) Information regarding share ownership was obtained from Amendment No. 6 to
Schedule 13G filed with the Commission on February 1, 1999.
(9) Information regarding share ownership was obtained from Schedule 13G filed
with the Commission on February 2, 1999.
(10) The Northern Trust Company, Chicago, Illinois, trustee for the Brush
Wellman Inc. Savings and Investment Plan holds the shares in trust. All
participants share voting power with the trustee of the Plan with respect
to shares credited to their account.
(11) Information regarding share ownership was obtained from Schedule 13G filed
with the Commission on February 16, 1999.
(12) Information regarding share ownership was obtained from Schedule 13G filed
with the Commission on January 8, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act")
requires the Company's Directors and officers and persons who own 10% or more of
a registered class of the Company's equity securities to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the SEC. Directors,
officers and 10% or greater shareholders are required by SEC regulations to
furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, and written representations by such persons, the Company believes that
all of its Directors and officers complied with all filing requirements
applicable to them with respect to transactions in the Company's equity
securities during the fiscal year ended December 31, 1998, except that the Form
3 of William R. Seelbach, President, Alloy Products, was filed 5 days late. In
addition, the annual grant of stock options was inadvertently omitted from the
1997 Form 5 reports of all executive officers. The grants have been included on
the 1998 Form 5 reports.
8
<PAGE> 11
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth total annual compensation earned during the
Company's last three fiscal years by the Chief Executive Officer and by the four
most highly compensated executive officers, and one former executive officer,
other than the Chief Executive Officer.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
---------------------------- --------------------
AWARDS PAYOUTS
---------- -------
SECURITIES
NAME AND UNDERLYING LTIP ALL OTHER
PRINCIPAL OPTIONS PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) (#) ($)(2) ($)(3)
--------- ---- --------- -------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gordon D. Harnett 1998 435,163(4) -- 30,000 -- 70,169(4)
Chairman of the Board, 1997 398,879(5) 160,846(6) 40,000 -- 18,001(5)
President and Chief 1996 366,222(5) 201,171(6) -- 170,145 16,305(5)
Executive Officer
John J. Paschall 1998 158,923(4) 84,700 6,000 26,081 6,802(4)
President, Williams 1997 133,759(5) 67,807 6,000 -- 5,031(5)
Advanced Materials Inc. 1996 125,580(5) 33,952 -- -- --(5)
Alfonso T. Lubrano 1998 165,143(4) 9,360 6,000 47,866 10,495(4)
President, Technical 1997 139,338(5) 85,368 6,000 -- 6,024(5)
Materials, Inc. 1996 125,440(5) 72,611 -- 46,146 5,101(5)
Stephen Freeman 1998 206,537(4) -- 6,000 -- 17,585(4)
Vice President, 1997 176,438(5) 50,054 9,000 -- 7,602(5)
Alloy Products 1996 162,726(5) 76,958 -- 53,595 6,721(5)
Brian J. Derry 1998 181,480(4) -- -- -- 6,044(4)
Vice President, 1997 127,884 20,000 -- -- 3,138
Operations 1996 -- -- -- -- --
- ------------------------------
Carl Cramer(7) 1998 228,868(4) -- 6,000 -- 8,705(4)
Former Vice President 1997 213,916(5) 61,316 9,000 -- 8,773(5)
Finance and Chief 1996 200,850(5) 78,507 -- 66,167 8,285(5)
Financial Officer
</TABLE>
- ---------------
(1) No compensation was paid to any of the named executive officers that
requires disclosure as "Other Annual Compensation."
(2) Payouts in 1998 reflect Performance Restricted Shares and Performance Shares
awarded in 1996 which were earned by the named Executive Officers for the
performance period 1996 through 1998, valued at the Company's Common stock
price at February 2, 1999 plus accumulated dividends earned on those shares.
Payouts in 1996 reflect Performance Restricted Shares awarded in 1995, which
were earned by the named Executive Officers for the performance period 1995
through 1996, valued at the Company's Common stock price at February 4, 1997
plus accumulated dividends earned on those shares. Performance Restricted
Shares and Performance Shares awarded in 1998 are indicated on the table on
page 11.
(3) Except as noted in (4), and (5) amounts in All Other Compensation consist of
Company matching contributions to the Brush Wellman Inc. Savings and
Investment Plan.
(4) Salary for 1998 includes compensation the executive elected to replace with
options to purchase property other than Brush Wellman securities under the
Company's Key Employee Share Option Plan as follows: Mr. Harnett, $22,292;
Mr. Paschall, $4,004; Mr. Lubrano, $9,051; Mr. Freeman, $9,659; Mr. Derry,
$2,489 and Mr. Cramer $35,119. All Other Compensation for 1998 includes
amounts in connection with options to purchase property other than Brush
Wellman securities under the Company's Key Employee Share Option Plan as
follows: Mr. Harnett, $65,369; Mr. Paschall, $2,002; Mr. Lubrano, $5,695;
Mr. Freeman, $12,785; Mr. Derry, $1,244 and Mr. Cramer, $12,443. The Key
Employee Share Option Plan provides for options covering property with an
initial value equal to the amount of compensation they replace, divided by
75%, and with an exercise price equal to the difference between that amount
and the amount of compensation replaced. Thus, the executive may realize the
increase or decrease in market value of the entire amount of the property
covered by the option, including the exercise price.
(5) Salary for 1997 and 1996 includes deferred compensation as follows: Mr.
Harnett, $19,385 and $18,202; Mr. Paschall, $463 and $0; Mr. Lubrano, $4,081
and $2,002; Mr. Freeman, $9,340 and $7,401; and Mr. Cramer, $13,242 and
$12,652; each respectively. All Other Compensation for 1997 and 1996
includes deferred compensation in respect of Company matching credits under
the Brush Wellman Inc. Supplemental Retirement Benefit Plan as follows: Mr.
Harnett, $13,201 and $12,228; Mr. Paschall $231 and $0; Mr. Lubrano, $1,224
and $601; Mr. Freeman, $2,802 and $2,221; and Mr. Cramer, $3,973 and $7,575;
each respectively.
(6) Bonus for 1997 and 1996 includes deferred compensation of $3,868 and $7,018
respectively.
(7) Mr. Cramer, a former employee, was an executive officer through December 2,
1998.
9
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information about stock options exercised by
the executive officers who are included in the Summary Compensation Table and
the value of such officers' unexercised options at December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
SHARES AT DECEMBER 31, OPTIONS
ACQUIRED VALUE 1998(#) AT DECEMBER 31,
ON EXERCISE REALIZED EXERCISABLE/ 1998($) EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- --------------------- --------------------
<S> <C> <C> <C> <C>
Gordon D. Harnett -- -- 315,000/ $452,363/
-- --
John J. Paschall -- -- 9,300/ $ 5,414/
-- --
Alfonso T. Lubrano 7,500 $60,408 6,800/ $ 1,350/
-- --
Stephen Freeman -- -- 55,000/ $ 84,413/
-- --
Brian J. Derry -- -- 11,000/ -0-/
-- --
Carl Cramer -- -- 29,000/ $ 11,238/
-- --
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information about stock option grants during
1998 to the executive officers who are included in the Summary Compensation
Table. There was one grant of options to the named executive officers during the
year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
OPTIONS ASSUMED ANNUAL RATES OF
(#) OF GRANTED STOCK
SECURITIES TO EXERCISE PRICE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTION 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 30,000 14.95 $26.72 5/5/2008 $0 $504,122 $1,277,544
John J. Paschall 6,000 2.99 $26.72 5/5/2008 $0 $100,824 $ 255,509
Alfonso T. Lubrano 6,000 2.99 $26.72 5/5/2008 $0 $100,824 $ 255,509
Stephen Freeman 6,000 2.99 $26.72 5/5/2008 $0 $100,824 $ 255,509
Brian J. Derry 6,000 2.99 $26.72 5/5/2008 $0 $100,824 $ 255,509
Carl Cramer 6,000 2.99 $26.72 5/5/2008 $0 $100,824 $ 255,509
</TABLE>
10
<PAGE> 13
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The table below presents information about Performance Restricted Shares
and Performance Shares awarded during the year pursuant to the 1995 Stock
Incentive Plan. Each Performance Restricted Share and Performance Share that is
earned entitles the holder to receive Common shares in accordance with the
table, depending on the degree of achievement of a specified Company objective.
In addition, an amount equal to 50% of the value of Performance Restricted
Shares and Performance Shares earned is treated as Performance Units, which are
applied to offset amounts required to be withheld for taxes.
<TABLE>
<CAPTION>
PERFORMANCE
NUMBER OF OR OTHER
SHARES, UNITS PERIODS UNTIL
OR OTHER MATURATION OR
NAME RIGHTS(#)(1) PAYOUT
---- ------------- -------------
<S> <C> <C>
Gordon D. Harnett 17,409 3 Years
John J. Paschall 2,873 3 Years
Alfonso T. Lubrano 2,985 3 Years
Stephen Freeman 5,804 3 Years
Brian J. Derry 5,078 3 Years
Carl Cramer 6,404 3 Years
</TABLE>
- ---------------
(1) Amounts listed represent the aggregate numbers of Performance Restricted
Shares and Performance Shares awarded during 1998. The number of Performance
Restricted Shares included in the table for each named executive officer is
as follows: Mr. Harnett 11,606; Mr. Paschall 1,915; Mr. Lubrano 1,990; Mr.
Freeman 3,869; Mr. Derry 3,385; and Mr. Cramer 4,269. The number of
Performance Shares included in the table for each named executive officer is
as follows: Mr. Harnett, 5,803; Mr. Paschall, 958; Mr. Lubrano, 995; Mr.
Freeman, 1,935; Mr. Derry 1,693; and Mr. Cramer, 2,135.
Performance Restricted Shares are issued at the time of award subject to
forfeiture and the Performance Shares are issued only at the end of the
performance period assuming the objectives are achieved. The Organization and
Compensation Committee established a threshold, target and maximum, based solely
on stock price appreciation, over a three year period as the management
objective for determining such award. If the management objective is attained at
the threshold level, 25% of the Performance Restricted Shares will become
nonforfeitable. All of the Performance Restricted Shares will be earned if
performance attains the target level. If the management objective is attained
over the threshold level, but less than the target level, a proportionate number
of Performance Restricted Shares will become nonforfeitable. If the management
objective is at the maximum level, all of the Performance Shares will be earned.
If the management objective is attained at a level between the target and
maximum levels of achievement, a proportionate number of Performance Shares will
be earned.
11
<PAGE> 14
REPORT OF ORGANIZATION AND COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
The Organization and Compensation Committee of the Board of Directors (the
"Committee") is composed of all independent, nonemployee directors of the Board.
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 expectation, 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, annual performance compensation and long-term incentives. Base salary is
generally established at moderately competitive levels, and greater weight is
put on the performance-driven portions of the compensation package.
In late 1997, the Committee and management initiated an in-depth study of
the Company's total compensation practices for executives. The Company retained
the services of a nationally recognized compensation consultant to conduct the
study. The consultant utilized a variety of published and proprietary surveys to
determine appropriate total compensation levels for each position. These surveys
included data gathered from numerous companies in the metals industry and
general manufacturing, including surveys focusing on comparably-sized companies.
Accordingly, the survey samples were substantially broader than the group of
other companies used on the performance graph.
BASE SALARY
Base salaries are established by the Committee based on an executive's job
responsibilities, level of experience, individual performance and contribution
to the business. As a result of the above-mentioned total compensation study,
executive base salary changes in 1998 were reflective of adjustments to those
executives whose base salaries were less than market median (50th percentile)
and general market increases of approximately 3% for those who were already at
that level. The CEO's base salary was determined to be slightly less than market
median, and was, therefore, increased by the Committee by 5% from $400,000 to
$420,000.
ANNUAL PERFORMANCE COMPENSATION
A Management Performance Compensation Plan (the "Plan") provides for
annual, single-sum cash payments that are based on achieving preestablished
financial objectives. These objectives are established by the Committee on an
annual basis. The CEO's annual performance compensation is based entirely on
financial performance and is 100% dependent on total Company results. The other
executive officers' annual performance compensation is also completely based on
financial performance and is dependent on Company results and/or relevant
business unit results.
The percentage of base salary available for annual performance compensation
under the Plan varies according to the level of the individual's responsibility.
The CEO may attain 52% of base pay for achieving the targeted objective, 104%
for exceeding the maximum objective, and
12
<PAGE> 15
0% if the minimum objective is not attained. Likewise, the other executive
officers may achieve 37%, 74% and 0%, respectively. In 1998, the Company's
minimum objective, which was based on earnings per share, was not achieved. As a
result, the CEO did not receive a payout from the Plan. In addition, with the
exception of the Presidents of Williams Advanced Materials and Technical
Materials Inc., the other executives did not receive a payout from the Plan.
LONG-TERM INCENTIVES
STOCK INCENTIVE PLAN
The shareholder-approved 1995 Stock Incentive Plan (the "Incentive Plan")
was designed to afford the Committee flexibility in making awards to align the
Company's long-term incentives with shareholder interest. The Incentive Plan
provides the Committee the ability to design stock-based incentives for the
achievement of superior results over three-year periods.
In accordance with the Incentive Plan, in early 1996, the Committee granted
performance-based awards based on management objectives to be measured over a
three-year performance period beginning January 1, 1996, through December 31,
1998. Eligible participants were granted combined awards of Performance
Restricted Shares and Performance Shares, which are earned only if the
management objectives specified by the Committee are reached during the
performance period. All of the Performance Restricted Shares covered by an award
could be earned if the management objectives set by the Committee are attained
at target level. Performance Shares, however, could only become payable for
performance above target.
The Committee established return on invested capital ("ROIC") as the
Company's objective for the performance period January 1, 1996, through December
31, 1998. Since the level of ROIC attained did not meet the minimum objective,
there were no awards earned from the Incentive Plan. The CEO forfeited the
19,639 Performance Restricted Shares that were granted him in 1996 and there
were no Performance Shares earned.
The Presidents of Williams Advanced Materials and Technical Materials Inc.
had objectives based on return on assets ("ROA") during the 1996 through 1998
performance period and, based on the level of ROA attained, both received awards
from the Incentive Plan. They were the only executives to receive performance
awards payouts for the performance period.
In early 1998, the Committee granted new performance awards with management
objectives based solely on stock price appreciation for a three-year performance
period from January 1, 1998, through December 31, 2000, under the Incentive
Plan. Eligible participants were granted combined awards consisting of
Performance Restricted Shares, Performance Shares and Performance Units which
will be earned only if the management objectives are reached during the
performance period. (Performance Units, which had not been awarded previously
under the Incentive Plan, mirror the performance of the stock, are paid in cash
and are intended to offset tax withholding obligations. The use of Performance
Units in this award period does not increase the overall opportunity as compared
to the prior award period.) The amount of each of these awards was established
by applying a factor to the base salary in effect on January 1, 1998, for each
eligible individual. The CEO's 1998-2000 award gives him the opportunity to earn
Performance Restricted Shares equivalent to 66.6% of his base pay and
Performance Units equivalent to 33.3% of his base pay, based on the average
stock price at the day of grant (January 27, 1998). The CEO was granted 11,606
Performance Restricted Shares and 5,803 Performance Units which will be
forfeited to the extent the goal specified by the Committee is not met. In
addition, he will be eligible to receive 5,803 Performance Shares and 2,902
Performance Units only if, and to the extent that, the performance over the
three-year period exceeds target.
The other executive officers received similar performance awards in
accordance with the Incentive Plan and such awards are also based solely on
stock price appreciation. Their
13
<PAGE> 16
opportunity to receive a combination of Performance Restricted Shares and
Performance Units for the 1998-2000 performance period was equivalent to 45% to
70% of base pay in effect on January 1, 1998. As in the case of the CEO, these
Performance Restricted Shares and Performance Units will be forfeited to the
extent the performance goal is not met. In addition, one half the number of
Performance Restricted Shares were granted in the form of Performance Shares and
one half the number of the Performance Restricted Shares and Performance Shares
were granted in additional Performance Units. As in the case of the CEO, these
Performance Shares and Performance Units will be received only if and to the
extent that the performance exceeds target.
STOCK OPTIONS
Stock Options are typically granted annually to executives and other
selected employees whose contributions and skills are important in the long-term
success of the Company. The options are granted with an exercise price equal to
the market price of the Company's stock on the day of grant and vest over a
period of up to four years and expire after ten years.
In 1998, a total of 134 selected employees were awarded options. The
overall number of option shares granted was approximately 1.1% of total shares
outstanding.
The Committee established a range of potential option awards for the CEO
and executive officers based on the above-mentioned total compensation study.
The specific number of stock options granted to an executive is determined by
the Committee based upon the individual's level of responsibility,
recommendations by management, and a subjective judgment of the Committee of the
executive's contribution to the performance of the corporation. The number of
options currently held by each executive is not taken into consideration. In
1998, the Committee granted the CEO a stock option covering 30,000 shares of
Brush Wellman common stock.
The Company has continued a limited share buyback program in 1998 to offset
for stock dilution that may occur as a result of the above programs.
DEDUCTIBILITY OF COMPENSATION IN EXCESS OF $1 MILLION A YEAR
In 1993, Congress enacted Section 162(m) of the Internal Revenue Code of
1986, effective for tax years beginning in 1994. This legislation precludes a
public corporation from taking a deduction for compensation in excess of $1
million per year for its CEO or any of its four other highest-paid executive
officers. However, certain performance-based compensation is specifically exempt
from the deduction limit. The limitation has no immediate applicability to the
Company. However, any compensation derived from Performance Restricted Shares or
Performance Shares awarded under the Incentive Plan is expected to be exempt
from the limit on corporate tax deductions.
The foregoing report has been furnished by the Committee.
William P. Madar (Chairman)
Albert C. Bersticker
Charles F. Brush, III
David L. Burner
Joseph P. Keithley
Robert M. McInnes
William R. Robertson
John Sherwin, Jr.
14
<PAGE> 17
CUMULATIVE TOTAL SHAREHOLDER RETURN
The following graph sets forth the cumulative shareholder return on the
Company's Common Stock as compared to the cumulative total return of (a) the S&P
500 Index for the five year period ending December 31, 1998, and (b) a
self-constructed index consisting of the Company, Cabot Corporation, Carpenter
Technology Corp., Chase Brass Industries Inc., Olin Corporation, Precision
Castparts Corp. and Worthington Industries, Inc.(1)
COMPARISON OF FIVE YEAR TOTAL RETURN(2)
<TABLE>
<CAPTION>
BRUSH WELLMAN INC. S&P 500 SELF-CONSTRUCTED INDEX
------------------ ------- ----------------------
<S> <C> <C> <C>
1993 100.00 100.00 100.00
1994 123.00 101.00 105.00
1995 124.00 139.00 162.00
1996 121.00 171.00 164.00
1997 188.00 229.00 193.00
1998 140.00 294.00 150.00
</TABLE>
(1) The Company is a leading international producer and supplier of beryllium,
beryllium containing alloys, beryllia ceramic, engineered material systems,
precious metal and specialty alloy products. Most competitors are either
divisions or subsidiaries of larger corporations, or privately-held
companies. As such, the Company does not fit easily into any standardized
peer company listing. A customized peer group has been developed, consisting
of specialty engineered materials producers that either compete directly
with the Company for major portions of their business, operate using similar
production technologies, or serve similar markets. During 1998, Handy and
Harmon Inc., formerly included in the Company's 1998 Self-Constructed Index
was acquired by WHX Corporation.
(2) Assumes that the value of the Company's Common Stock and each index was $100
on December 31, 1993 and that all dividends were reinvested.
15
<PAGE> 18
PENSION AND RETIREMENT BENEFITS
The Brush Wellman Pension Plan for Salaried Employees is a defined benefit
plan under which Messrs. Harnett, Freeman, Derry and Cramer are currently
accruing benefits. The Technical Materials, Inc. Pension Plan is a defined
benefit plan under which Mr. Lubrano is currently accruing benefits. The
Williams Advanced Materials Inc. Retirement Plan is a defined benefit plan under
which Mr. Paschall is currently accruing benefits. The following tables show the
estimated annual pension benefits under the respective qualified 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 respective
qualified pension plan, which would be payable, without reduction for any
optional form of payment, to employees in various compensation classifications
upon retirement at age 65 after selected periods of service.
TABLE FOR PARTICIPANTS OF
BRUSH WELLMAN PENSION PLAN FOR SALARIED EMPLOYEES
<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 $ 19,128 $ 28,692 $ 38,256 $ 47,820 $ 57,384 $ 66,948
200,000 26,271 39,406 52,542 65,677 78,813 91,948
300,000 40,557 60,835 81,113 101,391 121,670 141,948
400,000 54,842 82,263 109,685 137,106 164,527 191,948
500,000 69,128 103,692 138,256 172,820 207,384 241,948
600,000 83,414 125,121 166,827 208,534 250,241 291,948
700,000 97,699 146,549 195,399 244,249 293,098 341,948
800,000 111,985 167,978 223,970 279,963 335,955 391,948
900,000 126,271 189,406 252,542 315,677 378,813 441,948
</TABLE>
TABLE FOR PARTICIPANTS OF
TECHNICAL MATERIALS, INC. PENSION PLAN
<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
- ------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000 $19,154 $28,731 $38,308 $47,884 $ 57,461
200,000 25,538 38,308 51,077 63,846 76,615
300,000 38,308 57,461 76,615 95,769 114,923
</TABLE>
TABLE FOR PARTICIPANTS OF
WILLIAMS ADVANCED MATERIALS INC. RETIREMENT PLAN
<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 $20,295 $30,443 $ 40,590 $ 50,738 $ 60,885 $ 71,033
200,000 27,795 41,693 55,590 69,488 83,385 97,283
300,000 42,795 64,193 85,590 106,988 128,385 149,783
400,000 57,795 86,693 115,590 144,488 173,385 202,283
</TABLE>
The compensation covered by the respective qualified pension plan and the
Supplemental Retirement Benefit Plan is regular base salary, sales commissions,
and certain performance compensation. The compensation covered by these plans is
the same as the amounts shown in the salary, bonus, and certain amounts of the
LTIP Payouts columns of the Summary Compensa-
16
<PAGE> 19
tion Table on page 9. Credited service for pension benefit purposes for Messrs.
Harnett, Cramer, Derry, Freeman, Lubrano and Paschall is 21, 4, 1, 6, 6, and 10,
respectively. The Supplemental Retirement Benefit Plan adds 14 years to Mr.
Harnett's Brush Wellman Inc. pension service. The amounts shown in the above
tables are computed on the basis of a straight-life annuity (for the employee's
life only). The benefits shown in the Brush Wellman pension plan table are
subject to reductions, 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 9. 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 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
at least four years (three years under the agreements for Messrs. Paschall and
Lubrano) 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
17
<PAGE> 20
that none of the foregoing will constitute "parachute payments" under Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"). 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 agreements for
Messrs. Paschall and Lubrano contain comparable provisions that limit payments
to each of them to two times their average taxable income for a period of 5
years.
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.
2. APPOINTMENT OF AUDITORS
The Board of Directors recommends ratification and approval of the
appointment of Ernst & Young LLP, independent auditors, to audit the books and
accounts of the Company for the year 1999. 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 LLP 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
The Company must receive by November 17, 1999, any proposal of a
stockholder intended to be presented at the 2000 annual meeting of stockholders
of the Company (the "2000 Meeting") and to be included in the Company's proxy,
notice of meeting and proxy statement related to the 2000 Meeting pursuant to
Rule 14a-8 under the Exchange Act. Such proposals should be submitted by
certified mail, return receipt requested. Proposals of stockholders submitted
outside the processes of Rule 14a-8 under the Exchange Act in connection with
the 2000 Meeting ("Non-Rule 14a-8 Proposals") must be received by the Company by
January 31, 2000 or such proposals will be considered untimely under Rule
14a-4(c) of the Exchange Act. The Company's proxy related to the 2000 Meeting
will give discretionary authority to the proxy holders to vote with respect to
all Non-Rule 14a-8 Proposals received by the Company after January 31, 2000.
18
<PAGE> 21
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.
MICHAEL C. HASYCHAK
Secretary
Cleveland, Ohio
March 15, 1999
19
<PAGE> 22
DETACH CARD
- --------------------------------------------------------------------------------
BRUSH WELLMAN INC. -- PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Gordon D. Harnett, or if he is unable or unwilling to
act, then Michael C. Hasychak, with full power of substitution, to vote and act
for and in the name of the undersigned as fully as the undersigned could vote
and act if personally present at the annual meeting of shareholders of Brush
Wellman Inc. to be held on May 4, 1999 and at any adjournment or postponement
thereof:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN PROPOSAL 1 AND 2
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS, Nominees: WITHHOLD AUTHORITY [ ]
FOR all nominees listed below [ ] to vote for all nominees listed below
(except as indicated to the contrary below)
</TABLE>
Albert C. Bersticker, Charles F. Brush III, David L. Burner
INSTRUCTION: (TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
-----------------------------------------------------------------------------
2. Confirming the appointment of Ernst & Young LLP as independent auditors of
the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In accordance with his judgment upon any other matter properly presented.
(CONTINUED, AND TO BE SIGNED ON OTHER SIDE)
<PAGE> 23
DETACH CARD
- --------------------------------------------------------------------------------
PROXY NO. SHARES
(Continued from the other side)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF DIRECTIONS
ARE NOT INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR ITEM 2.
Dated................, 1999
...........................
Signature
...........................
Signature
...........................
Title
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.
PLEASE SIGN, DATE AND RETURN YOUR PROXY
PROMPTLY
IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO
POSTAGE.
<PAGE> 24
DETACH CARD
- --------------------------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTIONS
TO: THE NORTHERN TRUST COMPANY, 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 4, 1999 and at any adjournment or postponement thereof, on the
following matters as checked below:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN PROPOSAL 1 AND 2
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS, Nominees: WITHHOLD AUTHORITY [ ]
FOR all nominees listed below [ ] to vote for all nominees listed below
(except as indicated to the contrary below)
</TABLE>
Albert C. Bersticker, Charles F. Brush III, David L. Burner
INSTRUCTION: (TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
-----------------------------------------------------------------------------
2. Confirming the appointment of Ernst & Young LLP as independent auditors of
the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In accordance with his judgment upon any other matter properly presented.
(CONTINUED, AND TO BE SIGNED ON OTHER SIDE)
<PAGE> 25
DETACH CARD
- --------------------------------------------------------------------------------
(Continued from the other side)
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. THE TRUSTEE SHALL NOT VOTE SHARES OF
THE COMPANY FOR WHICH IT DOES NOT RECEIVE 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.
Dated................, 1999
...........................
Signature
...........................
Signature
...........................
Title
NOTE: Please sign exactly
as name appears hereon.
When signing as attorney,
executor, administrator,
trustee or guardian, please
add your title as such.
PLEASE SIGN, DATE AND RETURN YOUR VOTING
CARD PROMPTLY
IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO
POSTAGE.
<PAGE> 26
DETACH CARD
- --------------------------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTIONS
TO: THE NORTHERN TRUST COMPANY, 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 4, 1999 and at
any adjournment or postponement thereof, on the following matters as checked
below:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN PROPOSAL 1 AND 2
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS, Nominees: WITHHOLD AUTHORITY [ ]
FOR all nominees listed below [ ] to vote for all nominees listed below
(except as indicated to the contrary below)
</TABLE>
Albert C. Bersticker, Charles F. Brush III, David L. Burner
INSTRUCTION: (TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
-----------------------------------------------------------------------------
2. Confirming the appointment of Ernst & Young LLP as independent auditors of
the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In accordance with his judgment upon any other matter properly presented.
(CONTINUED, AND TO BE SIGNED ON OTHER SIDE)
<PAGE> 27
DETACH CARD
- --------------------------------------------------------------------------------
(Continued from the other side)
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. THE TRUSTEE SHALL VOTE SHARES OF THE
COMPANY FOR WHICH IT DOES NOT RECEIVE INSTRUCTIONS IN THE SAME PROPORTION AS
SUCH SHARES FOR WHICH IT RECEIVES VOTING 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.
Dated................, 1999
...........................
Signature
...........................
Signature
...........................
Title
NOTE: Please sign exactly
as name appears hereon.
When signing as attorney,
executor, administrator,
trustee or guardian, please
add your title as such.
PLEASE SIGN, DATE AND RETURN YOUR VOTING
CARD PROMPTLY
IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO
POSTAGE.
