<PAGE>
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:
[ ] 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 Section 240.14a-11(c) or Section 240.14a-12
Carpenter Technology Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes: This document is being released to stockholders on September 25, 1998.
<PAGE>
[LOGO OF CARPENTER TECHNOLOGY]
CARPENTER TECHNOLOGY
CORPORATION
P.O. BOX 14662
READING, PA 19612-4662
TEL.: 610.208.2000
September 25, 1998
To Our Stockholders:
It is our pleasure to invite you to attend the 1998 Annual Meeting of
Stockholders of Carpenter Technology Corporation, to be held at 4:00 p.m. on
October 26, 1998. The meeting will be held at The Inn At Reading, located in
Wyomissing, Pennsylvania. The doors of the ballroom will open at 3:00 p.m.
Business scheduled to be considered at the meeting includes the election of
four (4) Directors, the approval of the appointment of PricewaterhouseCoopers
LLP as independent public accountants for Carpenter for fiscal 1999 and the
approval of an amendment to the Corporation's Restated Certificate of
Incorporation to increase the number of authorized shares of common stock.
Additional information concerning these matters is included in the Notice of
Annual Meeting and Proxy Statement. I will review with you Carpenter's
operations during the past year and will be available to respond to questions
during the meeting.
If you plan to attend the meeting, please bring the Admission Ticket located
on the bottom half of your Proxy Card with you. If your shares are currently
held in the name of your broker, bank or other nominee, and you wish to attend
the meeting, you should obtain a letter from your broker, bank or other
nominee indicating that you are the beneficial owner of a stated number of
shares of stock as of the record date, September 1, 1998.
This year, you will be able to vote either by telephone or by returning your
Proxy Card. To ensure proper representation of your shares at the meeting,
please follow the instructions that you will be given after dialing the toll-
free number on your Proxy Card or mark your Proxy Card, then sign, date and
return it at your earliest convenience.
I look forward to seeing you at the meeting.
Sincerely,
LOGO
/s/ ROBERT W. CARDY
ROBERT W. CARDY
Chairman,
President and Chief Executive Officer
<PAGE>
September 25, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
NOTICE OF ANNUAL MEETING................................................... iii
PROXY STATEMENT............................................................ 1
General Information........................................................ 1
Ownership of Common Stock by Certain Beneficial Owners..................... 2
Security Ownership of Directors and Officers............................... 4
Board of Directors and Committees of the Board............................. 4
Election of Directors...................................................... 7
Nominees -- Term to Expire 2001............................................ 7
Incumbent Directors to Continue in Office.................................. 8
Human Resources Committee Report........................................... 10
Executive Compensation..................................................... 13
Section 16(a) Beneficial Ownership Reporting Compliance.................... 17
Stockholder Return Performance Presentation................................ 17
Approval of Independent Accountants........................................ 19
Approval of Amendment to Restated Certificate of Incorporation............. 19
1999 Stockholder Proposals................................................. 20
Other Business............................................................. 20
Incorporation by Reference................................................. 20
Form of Amendment to Restated Certificate of Incorporation................. A-1
</TABLE>
ii
<PAGE>
[LOGO OF CARPENTER TECHNOLOGY]
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
ON
OCTOBER 26, 1998
----------------
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of
CARPENTER TECHNOLOGY CORPORATION will be held at The Inn At Reading,
Wyomissing, Pennsylvania on Monday, October 26, 1998 at 4:00 p.m., local time,
for the purpose of:
(1) Electing four (4) Directors (Proposal No. 1);
(2) Approving the appointment of independent accountants for the fiscal
year ending June 30, 1999 (Proposal No. 2);
(3) Approving an amendment to Carpenter's Restated Certificate of
Incorporation to increase the number of authorized shares of common
stock from 50,000,000 to 100,000,000 (Proposal No. 3); and
(4) Transacting such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on September 1, 1998,
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting. A list of stockholders will be available at the
time and place of the meeting, and during the 10 days prior to the meeting, at
the office of the Corporate Secretary, 101 West Bern Street, Reading,
Pennsylvania.
It is important that your shares be represented at the meeting regardless of
the number of shares that you own. You are encouraged to take advantage of the
easy and cost-effective telephone voting that is offered to you for the first
time this year. To vote by telephone, simply dial the toll-free number on your
enclosed Proxy Card. Alternatively, you may complete and sign the Proxy Card,
which is being solicited by the Board of Directors of Carpenter, and return it
in the enclosed postage pre-paid envelope as soon as you can.
You are cordially invited to attend the meeting. A map showing the location
of The Inn At Reading appears at the end of the Proxy Statement. PLEASE NOTE
THAT THE ACCESS TO THE INN AT READING FROM ROUTE 422 HAS BEEN CLOSED. If you
plan to attend the meeting, please use the Admission Ticket attached to your
Proxy Card. You may, of course, attend the meeting without an Admission
Ticket, upon proper identification.
By Order of the Board of Directors,
LOGO
/S/ JOHN R. WELTY
JOHN R. WELTY
Vice President,
General Counsel and Secretary
iii
<PAGE>
[LOGO OF CARPENTER TECHNOLOGY]
September 25, 1998
------------
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies to be used at the Annual Meeting of Stockholders to be held on October
26, 1998, and at any adjournment thereof. Carpenter's Annual Report to
Stockholders, including financial statements, accompanies this Notice and
Proxy Statement, but is not incorporated as part of the Proxy Statement and is
not to be regarded as part of the proxy solicitation material. These materials
are being sent to stockholders on or about September 25, 1998.
SOLICITATION OF PROXIES
Proxies are solicited by the Board of Directors of Carpenter in order to
provide every stockholder an opportunity to vote on all matters scheduled to
come before the meeting, whether or not the stockholder attends the meeting in
person. To access the telephone voting system, please dial the toll-free
number on the enclosed Proxy Card and follow the telephone instructions that
will lead you through the voting process. Telephone voting will provide the
proxies the same authority to vote your shares as if you returned the Proxy
Card. When the Proxy Card is properly signed and returned, the shares
represented thereby will be voted by the proxy holders named on the card in
accordance with the stockholder's directions. You are urged to specify your
choices by following the telephone instructions or marking the appropriate
boxes on the enclosed Proxy Card. If the Proxy Card is signed and returned
without specifying choices, the shares will be voted as recommended by the
Board of Directors. A stockholder giving a proxy may revoke it at any time
before it is voted by filing with the Corporate Secretary an instrument
revoking it, or by a duly executed Proxy Card bearing a later date. If you
attend the meeting, you may vote by ballot, thereby canceling any proxy vote
previously given.
If you wish to give a proxy to someone other than those designated on the
Proxy Card, you may do so by crossing out the names of the designated proxies
and by then inserting the name of another person(s). The signed Proxy Card
should be presented at the meeting by the person(s) representing you.
Solicitation of proxies is made on behalf of the Board of Directors of
Carpenter, and the cost of preparing, assembling, and mailing the Notice of
Annual Meeting, Proxy Statement and Proxy Card will be paid by Carpenter. In
addition to the use of the mail, proxies may be solicited by Directors,
Officers and regular employees of Carpenter, without additional compensation,
in person or by telephone or telegraph. Solicitation of proxies will also be
made on behalf of Carpenter by D. F. King at a cost of approximately $4,500.
Carpenter will reimburse brokerage houses and other nominees for expenses in
forwarding proxy material to beneficial owners of Carpenter stock.
STOCKHOLDER VOTING
On September 1, 1998, there were 22,729,354 shares of Carpenter common stock
("Common Stock") issued and outstanding and entitled to vote. Each share of
Common Stock is entitled to one vote. There were also 439.29 shares of
Carpenter's series A convertible preferred stock held by the Trustee of the
Carpenter Employee Stock Ownership Plan (ESOP). Each share of preferred stock
is convertible, per operation of the ESOP, into 2,000 shares of Common Stock,
with the equivalent of 1.3 votes for each such common share, subject to anti-
dilution adjustments and to limitations under applicable securities laws and
stock exchange regulations.
1
<PAGE>
The preferred stock votes together with the Common Stock as a single class
on all matters upon which the Common Stock is entitled to vote. Each ESOP
participant is entitled to direct the Trustee how to vote both the shares of
preferred stock allocated to the participant's account and his or her
proportionate share of any unvoted or unallocated shares of preferred stock.
Under the Savings Plan of Carpenter Technology Corporation ("Savings Plan"),
each participant is entitled to direct the Trustee how to vote the shares of
Common Stock allocated to his or her account. The Trustee will vote any
undirected shares in the same proportion and manner as the directed shares.
The holders of a majority of the outstanding shares must be present in
person or by proxy at the Annual Meeting in order to constitute a quorum for
the purpose of transacting business. Approval of the proposals presented at
the meeting is governed by Carpenter's By-Laws and Delaware law. Directors are
elected by a plurality of the votes cast by written ballot. A majority of the
votes cast must approve the appointment of independent accountants. Holders of
a majority of the outstanding shares must approve the amendment to the
Restated Certificate of Incorporation.
An abstention occurs when a stockholder is present either in person or by
proxy at the meeting but the stockholder abstains from voting. Brokers who
hold shares in street name for customers have the authority to vote only on
certain routine matters in the absence of instruction from the beneficial
owners. A broker non-vote occurs when the broker does not have the authority
to vote on a particular proposal. Abstentions and broker non-votes are not
included in the tabulations for election of the Directors or approval of the
accountants. However, abstentions and broker non-votes are counted in the
tabulation for the votes on the proposal to amend the Restated Certificate of
Incorporation and will have the effect of a negative vote.
OWNERSHIP OF COMMON STOCK BY CERTAIN BENEFICIAL OWNERS
Listed below are the only individuals and entities known to the Board of
Directors and Management to own more than 5% of the issued and outstanding
shares of Common Stock as of September 1, 1998:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- ------------------------------------ ------------------ --------
<S> <C> <C>
Mr. & Mrs. Peter C. Rossin 2,387,494(/1/) 10.5%
1500 Oliver Bldg.
Pittsburgh, PA 15222
State Street Bank and Trust Company 2,154,428(/2/) 9.5%
P.O. Box 1389
Boston, MA 02104
Franklin Resources, Inc. ("Franklin") 1,422,870(/3/) 6.2%
777 Mariners Island Boulevard
San Mateo, CA 94404
</TABLE>
- ------------
(/1/) As a result of Carpenter's acquisition of Dynamet Incorporated, Mr.
Peter C. Rossin became a Director of the Corporation. He and his wife
own of record or beneficially a total of 2,387,494 shares of Common
Stock or approximately 10% of the shares outstanding as of September 1,
1998. These shares are subject to a Standstill Agreement which provides
for certain limitations on either the increase or disposal of their
interest in the Common Stock, solicitation of proxies, involvement in
tender offers, business combinations or restructuring of voting
securities affecting Carpenter and on their ability to seek control of
or influence Carpenter's Board of Directors or Management. In addition,
the Standstill Agreement provides that the Board will recommend the
election, as a Director of Carpenter, of Mr. Rossin or another person
that he and the other former Dynamet shareholders designate, if, after
consultation, the Board determines such person is reasonably acceptable.
The Standstill Agreement expires in 2007, unless terminated earlier as a
result of a change in control of Carpenter or a reduction of the voting
power of the former Dynamet shareholders below 5% of the Corporation's
outstanding shares.
2
<PAGE>
(/2/) State Street Bank and Trust Company has advised Carpenter that, acting
as Trustee for various collective investment funds for employee benefit
plans, other index accounts, and various personal trusts, it has sole
voting power with respect to 116,194 shares of Common Stock; sole
dispositive power with respect to 118,294 shares of Common Stock; acting
as Trustee for the Corporation's Savings Plan, it has shared voting
power and shared dispositive power with respect to 1,157,553 shares of
Common Stock; and acting as Trustee for the Corporation's ESOP, it has
shared voting power and shared dispositive power with respect to 878,581
shares of Common Stock, representing the amount of Common Stock that
would be held if the shares of series A convertible preferred stock
actually held were converted into Common Stock using the ratio of one
preferred share equal to 2,000 shares of Common Stock.
(/3/) This information is as of June 30, 1998, and is based solely on a
Schedule 13(f) filed by Franklin with respect to itself and the
following institutional investment managers: Franklin Advisors, Inc.;
Templeton Global Advisors Limited; Templeton Investment Counsel, Inc.;
Templeton Franklin Investment Services, Inc.; Franklin Advisory
Services, Inc.; Franklin Mutual Advisors, Inc.; and Franklin Management,
Inc. Franklin reported that as of June 30, 1998, it and these other
institutional investment managers owned an aggregate of 1,422,870 shares
of Common Stock, representing approximately 6% of the 22,847,116 shares
outstanding as of June 30, 1998; shared dispositive power with respect
to all of these shares; had sole voting power with respect to 1,391,900
shares; and had no voting power with respect to 30,970 shares.
3
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth information as of September 1, 1998,
regarding beneficial ownership of Common Stock of each Director, Carpenter's
five most highly compensated Officers (the "Named Officers") and the Directors
and Officers as a group.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(/1/)
<TABLE>
<CAPTION>
AGGREGATE NUMBER PERCENT OF
OF SHARES OUTSTANDING
NAME BENEFICIALLY OWNED(/2/) SHARES(/3/)
---- ----------------------- -----------
<S> <C> <C>
Bennett, M.C. ............................ 8,068
Cardy, R. W. ............................. 71,692(a),(b) .3
Dietrich, W. S. .......................... 9,240
Evarts, C. M. ............................ 13,494
Fitzpatrick, J. M. ....................... 4,246
Hudson, W. J. ............................ 10,332
Kay, E. W. ............................... 14,000
Lawless, R. J. ........................... 4,240
Miller, M. ............................... 14,040
Pokelwaldt, R. N. ........................ 0
Rossin, P.C. ............................. 2,278,650(c) 10.0
Turner, K. C. ............................ 7,725
Wolfe, K.L. .............................. 9,240
Draeger, D. M. ........................... 41,311(a) .2
Cottrell, G. W. .......................... 52,956(a) .2
Fiore, N. F. ............................. 52,781(a) .2
Weiler, R. J. ............................ 42,337(a) .2
All Directors and Officers as a group (25
in all).................................. 2,761,283 12.0
</TABLE>
- --------
(/1/)Excludes fractional shares owned under the Carpenter Dividend
Reinvestment Plan. The Directors and Officers have sole voting and
investment power over all shares of Common Stock except as described in
these footnotes.
(/2/)The amounts include Common Stock subject to outstanding stock options,
exercisable within 60 days of September 1, 1998, as follows: R. W. Cardy,
30,000 shares; D. M. Draeger, 24,000 shares; G. W. Cottrell, 45,260
shares; N. F. Fiore, 47,353 shares; R. J. Weiler, 37,200 shares; M.
Miller, 13,000 shares; C. M. Evarts, 12,000 shares; J.M. Fitzpatrick,
3,000 shares; E. W. Kay, 7,000 shares; R.J. Lawless, 2,000 shares; K. L.
Wolfe, 8,000 shares; M. C. Bennett, W. S. Dietrich and W. J. Hudson,
6,000 shares each; K. C. Turner, 6,502 shares; and Directors and Officers
as a group, 348,815 shares.
(a) Share ownership includes 2,836; 491; 1,250; 11; 346; and 15,077 shares
held under the Savings Plan respectively by Messrs. Cardy, Draeger,
Cottrell, Fiore, Weiler and all Officers as a group. Share ownership
also includes 113 shares each for Messrs. Cardy, Cottrell, Fiore and
Weiler, 27 shares for Mr. Draeger and 1,393 shares for all Officers as
a group held under the ESOP, representing the equivalent amount of
Common Stock if the amounts of the ESOP preferred stock actually held
were converted into Common Stock using the ratio of one preferred
share equal to 2,000 shares of Common Stock. Participants in the
Savings Plan and the ESOP may direct the plan Trustee how to vote
their respective interest in the plans.
(b) Mr. Cardy shares voting and investment power with respect to 19,000
shares.
(c) Mr. Rossin's holdings are subject to a Standstill Agreement as
detailed in footnote 1, on page 2 of this Proxy Statement. Mr. Rossin
shares voting and investment power with respect to these shares.
(/3/)Ownership is rounded to nearest 0.1% and is less than 0.1% except where
indicated.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors held 13 meetings during fiscal year 1998. Except for
Mr. Bennett, whose average attendance at the Board and Committee meetings was
71%, the average attendance for Carpenter's Directors at these meetings was
97%.
No Director who is an employee of Carpenter is compensated as a member of
the Board or as a member of any Committee of the Board. Compensation for non-
employee Directors currently consists
4
<PAGE>
of an annual retainer of $20,000 and a $1,000 fee, plus travel expenses, where
appropriate, for each Board meeting attended and a fee of $800 for each
Committee meeting attended. Each Committee Chairperson receives an additional
annual retainer of $3,000. In addition, as more fully described below, non-
employee Directors are provided stock based compensation opportunities.
The Board of Directors has four standing Committees: Audit, Corporate
Governance, Human Resources, and Finance.
AUDIT COMMITTEE
The Audit Committee reviews the adequacy of Carpenter's financial reporting,
accounting systems and controls and recommends the independent accountants to
conduct the annual audit of the financial statements of Carpenter. The Audit
Committee also evaluates Carpenter's internal and external auditing
procedures, the security of data processing systems, and its environmental
compliance program. The Committee maintains a direct line of communication
with Carpenter's independent accountants and Carpenter's Manager-Internal
Audit. The Committee held three meetings during fiscal year 1998. No member of
the Audit Committee may be an employee or former employee of the Corporation.
The Audit Committee currently consists of Messrs. Kay, Chairman; Bennett;
Fitzpatrick; Hudson; Miller; Pokelwaldt; and Ms. Turner.
CORPORATE GOVERNANCE COMMITTEE
The Corporate Governance Committee reviews and recommends any action
proposed with respect to changes in the Restated Certificate of Incorporation
or By-Laws and any stockholder proposals. The Committee reviews and recommends
to the Board the size, composition and committee structure of the Board, as
well as nominees to the Board of Directors and its Committees. The Committee
also considers the performance and potential conflicts of incumbent Directors
in determining whether to recommend them to the Board as nominees for
reelection, and maintains guidelines informing the Directors of their duties
and obligations. The Committee met three times during fiscal year 1998. No
member of the Corporate Governance Committee may be an employee or former
employee of Carpenter. Members of the Corporate Governance Committee currently
are Messrs. Dietrich, Chairman; Fitzpatrick; Kay; Lawless; and Wolfe.
The Corporate Governance Committee will consider sound and meritorious
nomination suggestions from stockholders. Under Carpenter's By-Laws, all
letters of recommendation for nomination at the 1999 Annual Meeting of
Stockholders must be received by the Corporate Secretary at Carpenter's
headquarters on or before August 27, 1999, but not sooner than July 28, 1999.
A stockholder's notice to the Secretary should set forth the following
information: (a) as to each person whom the stockholder proposes to nominate
for election or reelection as a Director, (i) the name, age, business address
and residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class and number of shares of capital
stock of the Corporation which are beneficially owned by the person, and (iv)
any other information relating to the person that is required to be disclosed
in solicitations for proxies for election of Directors pursuant to Schedule
14A under the Securities Exchange Act of 1934, as amended; and (b) as to the
stockholder giving the notice, (i) the name and record address of the
stockholder, and (ii) the class and number of shares of capital stock of
Carpenter which are beneficially owned by the stockholder. Carpenter may
require any proposed nominee to furnish other information as may reasonably be
required to determine the eligibility of such proposed nominee to serve as
Director of the Corporation. No person shall be eligible for election as a
Director unless nominated in accordance with the procedures set forth in the
Corporation's By-Laws and applicable law. A signed statement from the person
recommended for nomination should accompany the letter of recommendation
indicating that he or she consents to be considered as a nominee.
5
<PAGE>
HUMAN RESOURCES COMMITTEE
The Human Resources Committee reviews and recommends actions to the Board of
Directors on such matters as the salary of the Chief Executive Officer and
approves the salary and other compensation of other Officers. The Human
Resources Committee also (1) oversees the administration of Carpenter's
pension plans (other than pension fund asset management), (2) reviews the
Corporation's succession plan for Officers, (3) has the authority to
administer, grant and award stock and stock options under Carpenter's
incentive equity plans, and (4) reviews and reports on the Corporation's
progress on affirmative action and equal opportunity matters, employee health
and safety issues and workers' compensation costs. The Committee held two
meetings during fiscal year 1998. No member of the Human Resources Committee
may be an employee or former employee of Carpenter. Current members of the
Committee are Messrs. Bennett, Chairman; Dietrich; Evarts; Hudson; Pokelwaldt;
Rossin; and Ms. Turner.
FINANCE COMMITTEE
The Finance Committee reviews and recommends certain actions to the Board of
Directors relating primarily to the Corporation's capital structure, pension
fund asset management and dividend policy. The Committee met three times
during fiscal year 1998. Current members of the Committee are Messrs. Miller,
Chairman; Cardy; Evarts; Lawless; Rossin; and Wolfe.
DIRECTOR COMPENSATION PROGRAM
Following stockholder approval in 1997 of the Carpenter Technology
Corporation Stock Based Compensation Plan for Non-Employee Directors, the
Director compensation program was revised to ensure that the program is fully
competitive, highly performance oriented, and linked more closely to
Carpenter's performance and shareholder returns. Directors, along with
Officers of Carpenter, are subject to share ownership guidelines that
encourage the accumulation of a specified number of shares over a period of
three years.
Each non-employee who joins the Board is granted an option to purchase 2,000
shares of Common Stock. In addition, following each annual meeting, each non-
employee Director is granted an option to purchase 2,000 shares. These options
permit the Director, after one year of service following the grant, to
purchase shares of Common Stock at the stock's fair market value on the date
of grant. Unless sooner exercised or terminated under the terms of the Plan,
the options expire ten years from the date of grant.
At least 50% of the $20,000 annual retainer for Board service is paid in
stock units that convert to an equivalent number of shares of Common Stock
following retirement or termination of service on account of disability. The
value of these stock units will vary depending on the fair market value of the
shares. At the Director's election, the remaining 50% of the retainer is paid
in cash or deferred and paid in either cash or shares of stock at the time of
distribution.
With the exception of Edward W. Kay, who will retire as of the 1998 Annual
Meeting under the terms of the Carpenter Technology Directors' Retirement
Plan, active Directors no longer accrue retirement benefits in connection with
the Directors' Retirement Plan. The value previously earned under this Plan by
active Directors has been awarded in the form of stock units that convert to
an equivalent number of shares at retirement.
Under the new compensation program, non-employee Directors will receive an
opportunity to earn a target performance share award. This program replaced
the Directors' Retirement Plan and links future compensation more closely with
the Corporation's performance and shareholder returns. The target share award
is reviewed annually and is currently set at 200 shares. The actual number of
performance shares awarded to each Director is tied to Carpenter's fiscal year
return on equity (ROE) relative to the Standard & Poor's (S&P) 500 average ROE
for the preceding calendar year. If Carpenter's actual ROE is less than 85% of
the average S&P 500's ROE, no performance shares will be awarded.
6
<PAGE>
The number of performance shares awarded will be greater or lesser
than the target share award, based upon actual ROE measurements and, assuming
the 85% threshold is achieved. Performance shares are awarded after completion
of the fiscal year. Due to his Standstill Agreement with the Corporation, Mr.
Peter C. Rossin does not participate in any stock or option program; in lieu
thereof, he receives a comparable amount in cash. The performance share award
for fiscal 1998 was 240 shares.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Corporation's Board of Directors will consist of 12 Directors serving in
three classes, the respective terms of which expire alternately over a three-
year period.
As of the date of the 1998 Annual Meeting, Mr. Edward W. Kay is retiring from
service on the Board. He will retire from the Board in accordance with the By-
Laws which generally require any Director to retire at the next annual meeting
of stockholders after the Director attains age 70.
Unless otherwise specified by the stockholders, the shares represented by
the proxies will be voted for the four nominees for Directors listed below.
Messrs. Robert W. Cardy, Robert J. Lawless, Robert N. Pokelwaldt and Ms.
Kathryn C. Turner are nominated for terms which will expire at the October
2001 Annual Meeting of Stockholders. Each nominee for Director has consented
to be nominated as a Director and, so far as the Board and Management are
aware, will serve as a Director if elected. The names and biographical
summaries of the persons who have been nominated to stand for election at the
1998 Annual Meeting of Stockholders and the remaining eight Directors whose
terms are continuing appear below.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MESSRS.
CARDY, LAWLESS, POKELWALDT AND MS. TURNER.
NOMINEES -- TERM TO EXPIRE 2001
[Picture of ROBERT W. CARDY, age 62, is Chairman of the Board, President
Robert W. and Chief Executive Officer and Director of Carpenter
Cardy] Technology Corporation. Mr. Cardy joined Carpenter in 1962 and
held a variety of management positions, becoming Executive
Vice President in 1989, President and Chief Operating Officer
in 1990, and Chairman of the Board, President and Chief
Executive Officer in 1992. He also serves as Director of the
Reading Hospital & Medical Center, United Way of Berks County,
and a member of the Executive Committee of the Pennsylvania
Business Roundtable. Mr. Cardy has been a Director of
Carpenter since 1990, and is a member of the Finance Committee.
[Picture of ROBERT J. LAWLESS, age 51, is Chief Executive Officer and
Robert J. Director, McCormick & Company, Incorporated. Mr. Lawless had
Lawless] been serving as President and Chief Operating Officer since
January 1996. He served as Executive Vice President and Chief
Operating Officer since 1995. Mr. Lawless serves as a member
of the Board of Directors of the United Way of Central
Maryland, the Greater Baltimore Committee, Kennedy Kreiger
Institute and the Grocery Manufacturers of America, Inc., and
serves on the Junior Achievement of Central Maryland Executive
Council. Mr. Lawless has been a Director of Carpenter since
1997, and serves on the Corporate Governance Committee and
Finance Committee.
7
<PAGE>
- -------------- ROBERT N. POKELWALDT, age 61, is Chairman, President and Chief
[Picture of Executive Officer and a Director of York International
Robert N. Corporation. He became Chairman and Chief Executive Officer in
Pokelwaldt] 1993. He had been named President and Chief Executive Officer
in 1991 after serving as President and Chief Operating Officer
since 1990. Mr. Pokelwaldt joined Applied Systems Worldwide, a
division of York International, as Vice President in 1988. Mr.
Pokelwaldt also serves as a Director of Mohawk Industries,
Inc., the Air Conditioning and Refrigeration Institute and
A.O. Smith Corporation and as a member of the Board of
Trustees of York College. Mr. Pokelwaldt has been a Director
of Carpenter since June 1998, and is a member of the Audit
Committee and Human Resources Committee.
- --------------
[Picture of KATHRYN C. TURNER, age 51, is Chairperson and Chief Executive
Kathryn C. Officer of Standard Technology, Inc. Ms. Turner founded
Turner] Standard Technology, Inc., an engineering and manufacturing
firm in 1985. Standard Technology, Inc. is headquartered in
Rockville, Maryland, with offices in northern Virginia and
Jacksonville, Florida. Ms. Turner was appointed to the
President's Export Council in 1994, and also serves as a
Director of COMSAT Corporation and Phillips Petroleum Company.
She is actively involved in both the Urban League and The Boy
Scouts. Ms. Turner has been a Director of Carpenter since
1994, and is a member of the Audit Committee and Human
Resources Committee.
Although the Board of Directors and Management do not contemplate that any
of the nominees will be unable to serve, in the event that prior to the
meeting, any of the nominees becomes unable to serve because of special
circumstances, the shares of stock represented by the proxies may be voted for
the election of a nominee designated by the Board.
INCUMBENT DIRECTORS TO CONTINUE IN OFFICE
The following are the other Directors whose terms continue after this year's
meeting, as indicated:
TERM TO EXPIRE 1999
[Picture of MARCUS C. BENNETT, age 62, is Executive Vice President and
Marcus C. Chief Financial Officer and a Director of Lockheed Martin
Bennett] Corporation. He joined Martin Marietta Corporation in 1959 and
has held various administrative and finance positions with
Martin Marietta and Lockheed Martin Corporation. He also is a
Director of COMSAT Corporation and Martin Marietta Materials,
Inc. and a member of the Board of Directors of the Private
Sector Council and the Georgia Tech Advisory Board. Mr.
Bennett has been a Director of Carpenter since 1993, chairs
the Human Resources Committee and serves on the Audit
Committee.
[Picture of WILLIAM S. DIETRICH II, age 60, is Chairman of the Board,
William S. Dietrich Industries, Inc. and President, Mallard Fund, Inc.
Dietrich II] Mr. Dietrich served as President of Dietrich Industries, Inc.,
from 1968 to 1998. Dietrich Industries, a subsidiary of
Worthington Industries, Inc. is a manufacturer of metal
framing for commercial and residential construction markets.
Mr. Dietrich serves on the Board of Directors of Worthington
Industries, Inc. He is an active community leader, serving on
11 boards in western Pennsylvania, that include the Greater
Pittsburgh Chamber of Commerce, the Allegheny Conference on
Community Development, the University of Pittsburgh, and the
Pittsburgh Ballet Theater. Mr. Dietrich has been a Director of
Carpenter since 1996, chairs the Corporate Governance
Committee and is a member of the Human Resources Committee.
8
<PAGE>
[Picture of J. MICHAEL FITZPATRICK, age 51, is Vice President and Chief
J. Michael Technology Officer, Rohm and Haas. Dr. Fitzpatrick, who will
Fitzpatrick] assume the positions of President and Chief Operating Officer
at Rohm and Haas at the end of 1998, was named Chief
Technology Officer in 1995. He was elected Vice President and
Director of Research in 1993. Dr. Fitzpatrick is a member of
The Scientific Advisory Board of Ampersand Ventures, the
Corporate Advisory Board of the Commonwealth Division of the
American Cancer Society and is also a member of the Board of
Trustees of the Franklin Institute. Dr. Fitzpatrick has been a
Director of Carpenter since 1997, and is a member of the Audit
Committee and Corporate Governance Committee.
[Picture of MARLIN MILLER, JR., age 66, is President, Chief Executive
Marlin Miller Officer and Director, Arrow International, Inc. Mr. Miller
Jr.] founded Arrow International, Inc. in 1975. Arrow is located in
Reading, Pennsylvania, and is a leading producer of medical
devices for critical care medicine. He serves as a member of
the Board of Trustees of Alfred University and of the Reading
Hospital & Medical Center. Mr. Miller has been a Director of
Carpenter since 1989, chairs the Finance Committee and serves
as a member of the Audit Committee.
TERM TO EXPIRE 2000
[Picture of DR. C. McCOLLISTER EVARTS, age 67, is Chief Executive Officer,
Dr. C Senior Vice President for Health Affairs, Dean, College of
Mccollister Medicine, and Professor of Orthopaedics, The Pennsylvania
Evarts] State University, College of Medicine and University
Hospitals, The Milton S. Hershey Medical Center. He has held
these positions since 1987. He also became President and Chief
Academic Officer of the Pennsylvania State Health System in
July 1997. He is past Chair of the Board of Directors of the
Association of Academic Health Centers, a member of the
Association of American Medical Colleges and a member of the
National Academy of Sciences Institute of Medicine. He serves
on the Board of Directors of Hershey Foods Corporation,
Hershey Trust Company, M.S. Hershey Foundation, the Board of
Managers of Milton Hershey School, Capital Region Health
Futures Project, the Capital Region Economic Development
Corporation, and the Lehigh Valley Hospital. Dr. Evarts has
been a Director of Carpenter since 1990, and is a member of
the Finance Committee and Human Resources Committee.
[Picture of WILLIAM J. HUDSON, JR., age 64, is Vice Chairman and Director,
William J. AMP Incorporated. Mr. Hudson joined AMP Incorporated in 1961,
Hudson Jr.] and held a variety of management positions, becoming Executive
Vice President, International in 1991, a Director in 1992, and
was elected Chief Executive Officer and President in 1993,
positions he held until 1998. He also serves as Chairman of
the Pacific Basin Economic Council, Vice Chairman of the
National Association of Manufacturers and a member of the
Executive Committee of the U.S. Council of International
Business, the Board of Governors of the National Electrical
Manufacturers Association and the Business Roundtable. He is a
Presidential Appointee to the Advisory Council on U.S. Trade
Policy and a Director of The Goodyear Tire & Rubber Company.
Mr. Hudson has been a Director of Carpenter since 1992, and
serves as a member of the Audit Committee and Human Resources
Committee.
9
<PAGE>
[Picture of PETER C. ROSSIN, age 74, is the former Chairman, Chief
Peter C. Executive Officer and founder of Dynamet Incorporated. Before
Rossin] founding Dynamet in 1967, Mr. Rossin held various production and
operations positions at Crucible Steel Corporation, Fansteel
Metallurgical Corporation, and Cyclops Corporation. He has
been a Director of Carpenter since 1997, and is a member of
the Finance Committee and Human Resources Committee.
[Picture of KENNETH L. WOLFE, age 59, is Chairman of the Board, Chief
Kenneth L. Executive Officer and Director, Hershey Foods Corporation. Mr.
Wolfe] Wolfe was elected President and Chief Operating Officer in
1985, positions he held through 1993. He was elected Vice
President, Finance and Chief Financial Officer of the
Corporation in 1981, and Senior Vice President, Chief
Financial Officer and Director in 1984. He serves as a
Director of Bausch & Lomb Inc., the Hershey Trust Company and
is a member of the Board of Managers, Milton Hershey School.
Mr. Wolfe has been a Director of Carpenter since 1995, and is
a member of the Corporate Governance Committee and Finance
Committee.
There is no family relationship between any of the Directors or nominees.
HUMAN RESOURCES COMMITTEE REPORT
The Human Resources Committee of the Board of Directors (the "Committee") is
composed entirely of nonmanagement Directors, and the Committee is responsible
for the establishment and oversight of Carpenter's executive compensation
programs.
Compensation Philosophy
Carpenter's executive compensation programs are designed to fulfill the
following objectives:
--Attract, retain, and motivate highly effective executives.
--Link executive reward with enhanced stockholder value and profitability.
--Reward sustained corporate, functional, and/or individual performance
with an appropriate base salary and incentive opportunity.
--Communicate Carpenter's goals through performance measures linked to pay
that focus executives on achievement of business objectives.
--Stimulate and sustain significant management ownership in Carpenter.
This philosophy remains unchanged in 1998 and continues to serve as the
foundation for executive compensation policy and program application.
The Corporation targets pay at market competitive (median) levels for
achievement of expected levels of performance. During fiscal 1998, the
Committee worked with an outside consulting firm to conduct an extensive
review of the competitiveness of the executive compensation program. The
analysis compared Carpenter's pay levels to the pay levels of a comparator
group made up of general industrial and capital goods manufacturers of similar
size. These comparators were selected to reflect the Corporation's labor pool
for executive talent as opposed to the industry competitors depicted in
Carpenter's performance graph. On an overall basis, the Corporation's pay
levels fall below the market median--with gaps appearing primarily in earned
bonus awards and long-term incentive opportunities. The nature and magnitude
of any shortfalls vary for each Named Officer.
10
<PAGE>
Base Salary
In the aggregate, base salaries are targeted at market 50th percentile
levels and are adjusted by the Committee to recognize each individual's
responsibility, experience, and value to the organization. Increases to base
salary are driven primarily by assessments of individual performance. Base
salary ranges were adjusted by 2% in fiscal year 1998 to reflect competitive
market movement. Actual base salary adjustments for executives varied based on
performance, position value, current pay in relation to competitive norms, and
to a lesser extent, positioning within respective job grades. As a group, the
Named Officers' base salaries approximate or rest slightly below the market
50th percentile (adjusted for company size differences).
Annual Incentives
The Executive Annual Compensation Plan (EACP) provides short-term variable
compensation for the Named Officers and other eligible executives with
payments based on combinations of corporate and business unit financial
performance and to a lesser extent, based on individual contributions. At
targeted levels of performance, 80% of each award is tied to financial results
and 20% is tied to individual performance. For purposes of EACP
administration, corporate financial performance is defined by return on equity
(ROE), whereas, unit financial performance is characterized by return on
assets or controllable earnings before income taxes (EBIT). Threshold levels
of financial results must be attained to earn awards under the Plan. The Plan
provides the Committee with the flexibility to adjust awards for other
material factors influencing performance.
For fiscal year 1998, the Committee established an ROE objective and a
target performance threshold level before any payout was made of 80% of
target. Given the Corporation's performance in relation to target, actual
payouts were 101.2% of financial target. The EACP payments for Mr. Draeger and
Dr. Fiore were based upon a combination of total Corporation performance and
business unit performance of Specialty Alloys Operations and the Engineered
Products Group, respectively. As a result, the EACP payments for Mr. Draeger
and Dr. Fiore were 101.6% and 118.9% of financial targets, respectively. The
amounts paid under the EACP to the Named Officers for fiscal year 1998 are
included in the Summary Compensation Table.
Long-Term Incentives
Carpenter continues to deliver a significant portion of an executive's total
pay opportunity in the form of long-term incentive compensation. Long-term
incentives are viewed to be a key program element given the Committee's desire
to reinforce connections between sustainable financial performance,
shareholder value creation and executive pay. Long-term incentive awards in
1998 included grants of nonqualified stock options and performance shares. All
1998 stock option awards were issued with exercise prices equal to the fair
market value of the underlying shares. Under the performance share provisions
of the stock based incentive plan, 1998 participants were granted the
opportunity to receive shares of Common Stock at the conclusion of a three-
year performance period. All performance share awards are contingent on the
Corporation's ROE achievement measured relative to the performance of the S&P
500 Index. Performance equal to that of the S&P 500 yields a target grant of
shares; performance greater than the S&P 500 generates a larger grant; and
performance lower than the S&P 500 generates a smaller grant--with the
potential for no grant if performance fails to reach a threshold level.
Participants were issued common shares for the 1998 transaction period.
Carpenter achieved a 17.0% ROE, compared to the ROE performance of the S&P 500
Index of 16.5%. Based on this achievement, participants were awarded 100% of
their target shares.
The magnitude of stock option grants and performance share opportunities is
reviewed annually. Based on the results of a review conducted by an outside
consulting firm, long-term incentive grant
11
<PAGE>
guidelines were increased to more closely match 50th percentile pay
opportunities. New award guidelines affect stock option and performance share
opportunities granted or initiated on June 25, 1998. Although competitive
practices influence long-term incentive grant guidelines, actual grants can be
increased or decreased based on the Committee's assessment of Carpenter's
performance, individual contribution, and other relevant factors, such as
marketplace trends.
Stock Ownership Guidelines
In keeping with the objectives of increasing management's ownership stake,
Carpenter introduced stock ownership guidelines in 1997. Over time, executives
are expected to achieve and maintain ownership of 3 times base salary for the
Chief Executive Officer, 1.5 times base salary for Senior Vice Presidents and
Vice Presidents, and 1 time base salary for other covered executives. The
primary intent of these guidelines is to significantly increase the extent to
which each executive's personal wealth is directly linked to the performance
of Carpenter's Common Stock. During 1998, beneficial ownership of this group
of executives increased 61% over 1997 ownership levels.
Policy with Respect to the $1 Million Deduction Limit
Section 162(m) of the Internal Revenue Code generally limits the corporate
tax deduction for compensation paid to certain individuals, including the
Named Officers, to $1 million, unless certain requirements are met.
Carpenter's long-term incentive arrangements have been structured to conform
with Internal Revenue Code guidelines for performance-based compensation and,
as such, should preserve the deductibility of these amounts. The Committee
will continue to monitor the potential deductibility of other components of
the Corporation's pay package.
CEO Compensation
In 1998, Mr. Cardy led Carpenter to an outstanding year of record sales
and earnings. Net sales were a record $1,177 million, a 25% increase over
the prior year. Net income was a record $84 million, exceeding the level of
$60 million last year by 40%. Diluted earnings per share increased to a
record $3.84 from $3.16, an increase of 22%.
Coupled with the record financial performance, there were a number of
significant strategic growth initiatives achieved under Mr. Cardy's
leadership during the year. The Corporation acquired five (5) businesses,
including the acquisition of Talley Industries, Inc.
In 1998, an outside consulting firm completed a detailed competitive
analysis of compensation for the Chief Executive Officer. Results indicated
that the CEO total compensation rests below the 50th percentile level.
Shortfalls were attributed primarily to long-term incentive opportunities.
After reviewing Carpenter's business results and Mr. Cardy's outstanding
1998 contributions, the Committee approved pay adjustments that are
consistent with Carpenter's performance-oriented pay philosophy.
Base Salary
Based on findings from the external review of executive compensation, Mr.
Cardy's base salary has been increased by 3.8% to $540,000. This adjustment
is effective August 1, 1998.
Annual Incentives
In accordance with the terms of the EACP (annual bonus plan), Mr. Cardy
would have earned an award of $324,458 (63.6% of base salary). Based on an
overall assessment of business results and the attainment of key strategic
goals, the Committee approved an award for Mr. Cardy in the amount of
$500,000. The 1998 bonus award recognizes Mr. Cardy's exceptional
performance in 1998 and acknowledges the significant operational and
strategic achievements attained in this unprecedented year.
12
<PAGE>
Long-Term Incentives
During fiscal 1998, the Committee approved a grant of 41,700 nonqualified
stock options. These options will vest fully one year after the date of
grant. The Committee also granted the opportunity to earn 7,800 performance
shares. The actual number of shares awarded to Mr. Cardy in connection with
this grant will vary with the Corporation's actual ROE relative to the S&P
500 during the period 1998-2001. Mr. Cardy also received an award of 1,433
common shares in connection with his 1998 performance share grant. This
award of shares reflects Carpenter's ROE performance relative to the S&P
500 over a 24-month period ending June 30, 1998. The size of these awards
was based upon predetermined Carpenter award guidelines and upon
assessments of individual performance.
SUBMITTED BY THE HUMAN RESOURCES COMMITTEE OF CARPENTER'S BOARD OF DIRECTORS
Marcus C. Bennett, Chairman
William S. Dietrich
Dr. C. McCollister Evarts
William J. Hudson, Jr.
Robert N. Pokelwaldt
Peter C. Rossin
Kathryn C. Turner
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation paid by the Corporation for services rendered during the fiscal
years ended June 30, 1998, 1997 and 1996 to Carpenter's Chief Executive
Officer and each of the other Named Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION(/1/) LONG TERM COMPENSATION
------------------ ----------------------------------
AWARDS PAYOUTS
----------------------- ---------- (I)
(A) (B) (C) (D) (F) (G) (H) ALL OTHER
NAME AND SECURITIES COMPEN-
PRINCIPAL FISCAL RESTRICTED UNDERLYING SATION
POSITION YEAR SALARY $ BONUS $ STOCK $(/2/) OPTIONS# LTIP$(/3/) $(/4/)
--------- ------ --------- -------- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert W. Cardy 1998 510,154 500,000 0 41,700 72,008 15,252
Chairman, 1997 451,585 165,732 0 30,000 65,560 4,500
President, and CEO 1996 411,200 230,709 0 32,000 0 4,471
Dennis M. Draeger 1998 318,462 186,937 0 18,100 36,833 9,554
Executive Vice
President 1997 294,231 104,452 0 15,000 33,535 8,827
G. Walton Cottrell 1998 217,296 122,120 0 10,600 25,125 6,273
Senior Vice 1997 212,679 54,658 0 8,000 22,875 4,703
President Finance & CFO 1996 196,046 81,566 0 10,700 0 4,540
Nicholas F. Fiore 1998 209,827 114,985 0 8,200 25,125 6,055
Senior Vice 1997 200,014 116,608 0 6,900 22,875 4,633
President Engineered 1996 190,888 79,410 0 10,600 0 4,586
Products Group
Richard J. Weiler 1998 183,756 77,912 0 3,500 13,417 5,513
Vice President 1997 177,173 38,978 0 3,700 12,215 4,569
Corporate Development 1996 170,844 62,868 0 4,600 0 4,518
</TABLE>
13
<PAGE>
- ------------
(/1/)There is no "Other Annual Compensation" to report and column (e) has been
omitted pursuant to SEC rules.
(/2/)There were no awards of restricted stock during fiscal years 1996, 1997
or 1998. In 1995, 6,530 shares of restricted stock were awarded in the
aggregate to the Named Officers at $32.5625 per share. These shares were
to vest over a period of five years. At the end of fiscal year 1998,
Messrs. Cardy, Cottrell, Fiore and Weiler held 2,296; 588; 616; and 444
shares, respectively of restricted stock valued at $115,374; $29,547;
$30,954; and $22,311 based on the June 30, 1998, closing price of $50.25.
These shares are scheduled to vest over the next two years. Dividends on
all restricted stock awards are paid at the same rate as paid to all
stockholders.
(/3/)This column reports the cash value earned in Performance Shares following
fiscal years 1997 and 1998.
(/4/)These are amounts contributed by Carpenter for fiscal 1998, 1997, and
1996 for the Named Officers under the Savings Plan and the Deferred
Compensation Plan for Officers and Key Employees. For fiscal 1998, these
amounts were as follows: Savings Plan: $4,800; $4,731; $4,686; $4,706 and
$4,680 respectively for Messrs. Cardy, Draeger, Cottrell, Fiore and
Weiler. Deferred Compensation Plan: $10,452; $4,823; $1,587; $1,349 and
$833 respectively for Messrs. Cardy, Draeger, Cottrell, Fiore and Weiler.
In addition, under the ESOP, 21.5 units of preferred stock were allocated
to each of the accounts of Messrs. Cardy, Cottrell, Fiore and Weiler; and
12.9 units were allocated to the account of Mr. Draeger. As of December
31, 1997 these units were valued at $48.063.
LONG-TERM INCENTIVE AWARDS
The following table provides information about opportunities for long-term
incentive awards approved by the Board in fiscal year 1998 for the Named
Officers pursuant to the performance share provisions of the Stock-Based
Incentive Compensation Plan for Officers and Key Employees.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-
BASED PLAN
(A) (B) (C) ------------------------
NUMBER OF PERIOD (D) (E) (F)
SHARES UNTIL THRESHOLD TARGET MAXIMUM
NAME (#) PAYOUT (#) (#) (#)
---- --------- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Robert W. Cardy..................... 7,800 3 years 6,240 7,800 11,700
Dennis M. Draeger................... 3,600 3 years 2,880 3,600 5,400
G. Walton Cottrell.................. 2,100 3 years 1,680 2,100 3,150
Nicholas F. Fiore................... 2,100 3 years 1,680 2,100 3,150
Richard J. Weiler................... 1,400 3 years 1,120 1,400 2,100
</TABLE>
The actual number of shares of Common Stock that each Named Officer will
receive at the conclusion of the three year period ending June 30, 2001, will
depend on Carpenter's average ROE over this period relative to the performance
of the S&P 500 Index. Performance equal to that of the S&P 500 will result in
a grant of the target number of shares. Performance greater than the S&P 500
will generate a larger grant, up to 150% of the target number. Conversely,
performance lower than the S&P 500 will generate a grant less than the target.
If Carpenter's average three year ROE relative to the average S&P 500 ROE is
between 85% and 94.9%, the Named Officers will receive 80% of their target
awards. If Carpenter's ROE fails to reach the 85% level, no shares will be
granted.
SAVINGS PLAN OF CARPENTER TECHNOLOGY CORPORATION
The Savings Plan is a profit sharing plan established pursuant to Sections
401(a) and 401(k) of the Internal Revenue Code. Under this Plan, Carpenter
contributes 3% of the base pay of each eligible employee, including Officers,
to a Trustee for investment into one or more pre-established investment funds
as the participant may choose. If the Corporation's contribution for an
employee under the Savings Plan is limited by the Internal Revenue Code, such
employee will have such lost Savings Plan contributions granted under the
Deferred Compensation Plan for Officers and Key Employees. In addition, a
participant may authorize the Corporation to make salary deferral
contributions, limited to 17% of total pay. Amounts in the Summary
Compensation Table include amounts deferred.
EMPLOYEE STOCK OWNERSHIP PLAN
The Carpenter Technology Corporation Employee Stock Ownership Plan (ESOP)
was established in 1991. The Trustee of the ESOP, State Street Bank and Trust
Company, purchased 461.5 shares
14
<PAGE>
of series A convertible preferred stock from Carpenter at a price of $65,000
per share, or an aggregate purchase price of approximately $30 million, for a
fifteen year note issued by the Trustee to the Corporation and a small amount
of cash.
The shares of series A convertible preferred stock have a liquidation
preference of $65,000 per share, plus any accrued and unpaid dividends.
Dividends on the preferred stock are paid annually and accrue quarterly at the
rate of the higher of (1) $1,340.625 per share of preferred stock or (2) the
dividends paid for such quarter on the number of shares of Common Stock into
which the share of preferred stock is convertible. Each share of preferred
stock is convertible, at the Trustee's option, into 2,000 shares of Common
Stock at a conversion price of $32.50 per share of Common Stock. The ESOP
preferred shares are divided into units, each representing 1/2000 of each
convertible preferred share. Each ESOP unit was initially convertible into one
whole share of Common Stock. On the effective date of the ESOP, September 6,
1991, an initial unit allocation was made to each eligible employee.
Additional units are allocated among employees as the loan is repaid.
Generally, only those employees who are actively employed with Carpenter on
the last day of the plan year, December 31, will receive an allocation in
respect of such plan year. The funds used by the ESOP to repay the ESOP loan
are acquired from contributions by the Corporation and dividends on the shares
held by the ESOP.
STOCK OPTIONS
The following table shows as to the Named Officers, certain information with
respect to stock options granted as of the end of fiscal year 1998. While the
Corporation's stock-based incentive plan permits the granting of stock
appreciation rights (SARs), there were no SARs granted in fiscal year 1998 and
there are no SARs outstanding at this time.
STOCK OPTION GRANTS IN FISCAL YEAR 1998
INDIVIDUAL GRANTS(/1/)
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F)
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR ($/SH) DATE VALUE(/2/)
---- ---------- ------------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Robert W. Cardy......... 41,700 13.8% $49.7500 06/25/2008 $475,700
Dennis M. Draeger....... 18,100 6.0% $49.7500 06/25/2008 $206,479
G. Walton Cottrell...... 10,600 3.5% $49.7500 06/25/2008 $120,921
Nicholas F. Fiore....... 8,200 2.7% $49.7500 06/25/2008 $ 93,543
Richard J. Weiler....... 3,500 1.2% $49.7500 06/25/2008 $ 39,927
</TABLE>
- ------------
(/1/)Options are granted at no less than market value on the date of grant,
are exercisable after one year of employment following the date of grant,
and will expire no more than ten years after the date of grant.
(/2/)Based on the Black-Scholes option pricing model adapted for use in
valuing officer stock options. The actual value, if any, an executive may
realize will depend on the excess of the stock price over the exercise
price on the date the option is exercised, so that there is no assurance
the value realized by an executive will be at or near the value estimated
by the Black-Scholes model. The estimated values under that model are
based on certain assumptions for stock price volatility, risk-free
interest rates, and future dividend yield. Specifically, the Black-
Scholes valuation employed the following factors; risk-free rate of
return of 5.52% based upon the five year Treasury rates as of grant date,
dividend yield of 2.7% based upon the annualized value of the quarterly
dividend preceding the option grant date, exercise term of five years,
stock price volatility of 22.8% based upon the variance in daily stock
price changes for the year preceding the option grant date, and that no
adjustments have been made for transferability or risk of option
forfeiture.
15
<PAGE>
STOCK OPTION EXERCISES AND FISCAL YEAR END HOLDINGS
<TABLE>
<CAPTION>
(D) (E)
(A) (B) (C) NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FISCAL YEAR END FISCAL YEAR END(/2/)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED(/1/) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Cardy......... 32,000 $512,256 30,000 41,700 $140,625 $20,850
Dennis M. Draeger....... 10,000 $165,000 24,000 18,100 $237,938 $ 9,050
G. Walton Cottrell...... 9,960 $243,070 45,260 10,600 $820,770 $ 5,300
Nicholas F. Fiore....... 0 0 47,353 8,200 $896,670 $ 4,100
Richard J. Weiler....... 0 0 37,200 3,500 $775,944 $ 1,750
</TABLE>
- ------------
(/1/)Calculated as fair market value at exercise minus exercise price.
(/2/)Based on June 30, 1998, market closing price of $50.25 per share of
Common Stock.
SPECIAL SEVERANCE AGREEMENTS
Carpenter entered into Special Severance Agreements dated April 3, 1995 with
Robert W. Cardy, G. Walton Cottrell and Nicholas F. Fiore, and dated August 8,
1996 with Dennis M. Draeger. Under these Agreements, if the Officer's
employment is terminated following a "change in control" of the Corporation,
he will receive his full salary and all other bonuses, pension and other
benefits through the termination date. In addition, if the termination is by
the Corporation, other than for cause, or by the Officer for good reason, the
Officer will receive a lump sum payment equal to two years' salary, bonus and
pension benefits and the value of all outstanding options and restricted
stock, whether or not then vested. The Special Severance Agreements continue
until December 31, 1998 and automatically renew for additional one-year
periods, subject to termination upon appropriate notice.
RETIREMENT BENEFITS
The General Retirement Plan of Carpenter, as amended, provides for
retirement benefits for employees, including the Named Officers, at the age of
65 (with five years of service), or as early as age 55 (with ten years of
service); or at any age with 30 years service. Such benefits are based on
either: (1) a fixed monthly rate for each year of service; or (2) the product
of 1.3% times each of the first 20 years of service, plus 1.4% times the
number of years of service over 20, multiplied by the individual's highest
average earnings during any five consecutive year period that ends (within the
last ten years of service) on the individual's retirement anniversary. For
pension purposes, earnings include all salaries, bonuses, and extra
compensation. As of June 30, 1998, the years of service credited under the
Plan were as follows: Mr. Cardy, 35.9 years; Mr. Draeger, 2 years; Mr.
Cottrell, 9.3 years; Dr. Fiore, 8.3 years; and Mr. Weiler, 39.6 years.
Carpenter has two retirement plans, the Benefit Equalization Plan and the
Earnings Adjustment Plan, for those participants in the General Retirement
Plan for whom benefits are reduced because of limitations imposed under the
Internal Revenue Code. These Plans will pay the difference between the amount
payable under the General Retirement Plan and the amount that would have been
paid but for the Code limitations. In general, benefits under these Plans are
subject to the same terms and conditions as the benefits payable under the
General Retirement Plan.
Certain executives have been designated by the Board of Directors as
recipients of benefits under the Supplemental Retirement Plan for Executives.
These executives or their beneficiaries are entitled to receive an annual
supplemental retirement benefit for 15 years commencing in the month following
the month in which retirement occurs, or, at the election of a disabled
participant, commencing at a
16
<PAGE>
later specified date. The benefit is calculated so that following retirement,
a participant will receive General Retirement Plan benefits, Benefit
Equalization Plan benefits, Earnings Adjustment Plan benefits, primary Social
Security benefits, pension benefits from any prior employment and supplemental
retirement benefits, the aggregate of which will be equivalent to
approximately 60% of the participant's earnings (calculated in the same manner
as the General Retirement Plan) if retirement takes place upon the
participant's attaining 30 years service with the Corporation. However, the
benefits for Messrs. Cottrell and Fiore are to be calculated without regard to
pension benefits from prior employment. Messrs. Cardy, Draeger, Cottrell,
Fiore, and Weiler have been designated participants in the Plan.
The Officers' Supplemental Retirement Plan of the Corporation provides
supplemental pension benefits to certain key employees who qualify for
benefits under the General Retirement Plan and for whom benefits under the
General Retirement Plan are reduced by reason of amounts deferred pursuant to
the Deferred Compensation Plan. The Officers' Supplemental Retirement Plan
will pay the difference between the amount payable (prior to application of
Internal Revenue Code limitations) to the participant under the General
Retirement Plan and the amount which the participant would have been paid by
disregarding the above-mentioned deferred compensation. Benefits under this
Plan are subject to the same terms and conditions as the benefits payable to
the participant under the General Retirement Plan.
The following table illustrates the total annual retirement benefits payable
under the Retirement Plans described in this Section. All such Retirement
Plans are payable for the life of the participant and, if applicable, the life
of a survivor, with the exception of the Supplemental Retirement Plan for
Executives which is payable for 15 years certain.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
EARNINGS FOR THE ANNUAL GROSS PENSION BENEFITS
APPLICABLE YEARS FOR YEARS OF SERVICE SHOWN(/1/)
OF SERVICE PERIOD --------------------------------------------
PRECEDING RETIREMENT 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- -------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000.......................... $ 70,375 $ 75,000 $ 75,000 $ 75,000 $ 76,563
150,000.......................... 84,450 90,000 90,000 90,000 91,875
175,000.......................... 98,525 105,000 105,000 105,000 107,188
200,000.......................... 112,600 120,000 120,000 120,000 122,500
250,000.......................... 140,750 150,000 150,000 150,000 153,125
300,000.......................... 168,900 180,000 180,000 180,000 183,750
350,000.......................... 197,050 210,000 210,000 210,000 214,375
400,000.......................... 225,200 240,000 240,000 240,000 245,000
450,000.......................... 253,350 270,000 270,000 270,000 275,625
500,000.......................... 281,500 300,000 300,000 300,000 306,250
</TABLE>
- ------------
(/1/)Amounts payable under the General Retirement Plan that exceed the maximum
permitted by the Internal Revenue Code are paid under the Benefit
Equalization Plan and/or the Earnings Adjustment Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Based solely upon the Corporation's review of copies of such reports
furnished to it and upon representations by persons required to file reports
under Section 16(a), all persons subject to Section 16(a) filing requirements
were in compliance during fiscal year 1998.
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below for the five year period commencing June 30, 1993 and ending
June 30, 1998 is a line graph comparing the yearly change in the cumulative
total stockholder return on the Corporation's Common Stock against the
cumulative total return of the S&P Composite -- 500 Stock Index and the Peer
Group Index.
17
<PAGE>
STOCKHOLDER RETURN PERFORMANCE TABLE
[CHART ILLUSTRATING COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN]
COMPARATIVE ANALYSIS
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Carpenter Technology Corp. ....... 100 113.854 135.088 131.431 194.895 220.124
S&P 500........................... 100 101.412 127.820 161.035 216.891 282.274
Peer Group........................ 100 89.719 127.560 143.930 209.668 192.173
</TABLE>
(/1/) Assumes that the value of the investment in Carpenter's Common Stock,
and each index, was $100 on June 30, 1993, and that all dividends were
reinvested.
18
<PAGE>
the Index or the Peer Group as the case may be; and (3) multiplying the
percentage determined in (2) above by the total stockholder return of the
company in question for each respective period.
PROPOSAL NO. 2
APPROVAL OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Unless otherwise specified by the stockholders, the shares of stock
represented by the proxies will be voted for the approval of the appointment
of PricewaterhouseCoopers LLP, a firm of independent accountants, to audit and
report upon the financial statements of Carpenter for fiscal year 1999.
PricewaterhouseCoopers was formed on July 1, 1998, upon the merger of Coopers
& Lybrand L.L.P. and Price Waterhouse LLP. Coopers & Lybrand L.L.P. had been
the independent accountants of the Corporation since 1918. In the opinion of
the Board of Directors and Management, PricewaterhouseCoopers is well
qualified to act in this capacity.
Audit services performed by PricewaterhouseCoopers in fiscal year 1998
included audits of the financial statements of Carpenter and certain of the
pension and other employee benefit plans of the Corporation, limited reviews
of quarterly financial statements of the Corporation and other accounting
related matters. Fees and expenses in fiscal year 1998 for these audit and
accounting services were $759,000.
A representative of PricewaterhouseCoopers is expected to be present at the
Annual Meeting. The representative will have the opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions. Carpenter has been advised by PricewaterhouseCoopers
that the firm has no financial interest, direct or indirect, in Carpenter,
except its providing tax counseling, acquisition, auditing and independent
accounting services during the period stated.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF
THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS.
PROPOSAL NO. 3
APPROVAL OF AMENDMENT TO THE CORPORATION'S
RESTATED CERTIFICATE OF INCORPORATION
On March 26, 1998, the Board of Directors approved the adoption and the
submission to the stockholders for approval of an amendment to Article 4 of
Carpenter's Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock, par value $5 per share, from 50,000,000 to
100,000,000. The form of amendment to the Restated Certificate of
Incorporation is annexed to this Proxy Statement as Appendix A.
The Board of Directors has no current plans, arrangements or understandings
for any future issuance of Common Stock. The Board believes it prudent to have
additional authorized shares of stock for issuance from time to time for such
proper purposes as determined by the Board. Such proper corporate purposes
might include the following: declaration of a stock split or stock dividend;
the strategic acquisition of other companies; the acquisition of additional
capital funds through the issuance of shares; issuance of shares under
approved employee benefit plans; and other corporate objectives requiring
flexibility by the Board in issuing additional shares of stock in order to act
in the best interests of the stockholders.
The proposed increase in the number of authorized shares of Common Stock
will not change the rights of holders of currently outstanding shares of
Common Stock. The newly authorized shares will have the same rights as
currently outstanding shares. Stockholders do not have preemptive rights with
19
<PAGE>
respect to Carpenter's stock. Thus, should the Board determine to issue shares
of Common Stock, existing stockholders would not have any preferential rights
to purchase such shares.
If this proposal is adopted, there will be approximately 74 million
authorized shares of Common Stock available for issuance (based on the
outstanding shares as of September 1, 1998) after taking into account the
shares reserved for issuance under employee benefit plans and the equivalent
amount of Common Stock if the preferred stock in the ESOP were converted, the
conversion ratio being one preferred share equal to 2,000 shares of Common
Stock.
No further authorization by vote of the stockholders will be solicited for
the issuance of the additional shares proposed to be authorized, except as may
be required by law, securities regulations or rules of the New York Stock
Exchange.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL TO
APPROVE THE AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
1999 STOCKHOLDER PROPOSALS
In the event a stockholder desires to have a proposal included in the Proxy
Statement for the 1999 Annual Meeting of Stockholders, the proposal must be
received by Carpenter in writing on or before May 28, 1999, by certified mail,
return receipt requested, and must comply in all respects with applicable
rules and regulations of the Securities and Exchange Commission, the laws of
the state of Delaware and the Corporation's By-Laws relating to such
inclusion. Stockholder proposals may be mailed to the Corporate Secretary,
Carpenter Technology Corporation, 101 West Bern Street, Reading, PA 19601.
Under Carpenter's By-Laws, stockholder proposals that are not included in
the proxy materials may be presented at the 1999 Annual Meeting of
Stockholders only if they meet the requirements set forth above and the
Corporate Secretary is notified in writing of the proposals by August 27,
1999, but no earlier than July 28, 1999. The notice must set forth as to each
matter the stockholder proposes to bring before the meeting (i) a brief
description of the business and the reason for conducting such business at the
meeting; (ii) the name and record address of the stockholder proposing such
business; (iii) the number of shares of the Corporation which are beneficially
owned by the stockholder; and (iv) any material interest of the stockholder in
such business.
OTHER BUSINESS
The Board of Directors and Management know of no matters to be presented at
the meeting other than those set forth in this Proxy Statement. Carpenter was
not notified of any such matters by August 21, 1998, as determined pursuant to
the By-Laws, and accordingly, if any other business is brought before the
meeting or any adjournment thereof, the proxy holders will vote in regard
thereto according to their discretion insofar as such proxies are not limited
to the contrary.
INCORPORATION BY REFERENCE
The audited financial statements, disclosures about market risks and
Management's discussion and analysis required by Item 13 of Schedule 14A are
incorporated herein by reference to Carpenter's Annual Report on Form 10-K,
which was filed with the SEC on or about September 24, 1998. The Form 10-K
will be furnished without charge upon written request of any stockholder.
Requests should be directed to the Vice President and Treasurer, Carpenter
Technology Corporation, P.O. Box 14662, Reading, PA 19612-4662.
By order of the Board of Directors.
JOHN R. WELTY
Secretary
20
<PAGE>
APPENDIX A
FORM OF AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
The Restated Certificate of Incorporation of Carpenter Technology
Corporation shall be amended such that the initial paragraph of Article 4 is
amended to read as follows:
The Corporation shall have authority to issue 102,000,000 shares of
stock, consisting of 2,000,000 shares of Series Preferred Stock, par value
$5 per share, and 100,000,000 shares of Common Stock, par value $5 per
share.
A-1
<PAGE>
[LOGO OF MAP ILLUSTRATING DIRECTIONS TO ANNUAL MEETING
OF CARPENTER TECHNOLOGY CORPORATION AT THE INN AT READING]
<PAGE>
CARPENTER TECHNOLOGY CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OCTOBER 26, 1998
P The undersigned stockholder of Carpenter Technology Corporation appoints
R MARLIN MILLER, JR. and JOHN R. WELTY, or either of them, proxies with
O full power of substitution, to vote all shares of stock which the
X stockholder would be entitled to vote if present at the Annual Meeting
Y of Stockholders of CARPENTER TECHNOLOGY CORPORATION to be held at The
Inn At Reading, Wyomissing, Pennsylvania, on Monday, October 26, 1998,
at 4 p.m., local time, and at any adjournments thereof, with all powers
the stockholder would possess if present. The stockholder hereby revokes
any proxies previously given with respect to such meeting.
Election of Directors: Comments: (change of address)
NOMINEES -- TERM TO EXPIRE 2001 -------------------------------
1. Robert W. Cardy -------------------------------
2. Robert J. Lawless
3. Robert N. Pokelwaldt
4. Kathryn C. Turner
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE, BUT IF NO
SPECIFICATION IS MADE, IT WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 AND WILL BE
VOTED IN THE DISCRETION OF THE PROXIES ON OTHER MATTERS AS MAY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
YOU ARE ENCOURAGED TO TAKE ADVANTAGE OF A NEW AND COST EFFECTIVE WAY TO VOTE
YOUR SHARES - BY TELEPHONE.
THIS CARD ALSO CONSTITUTES VOTING INSTRUCTIONS FOR ANY SHARES HELD FOR THE
- --------------------------------------------------------------------------
STOCKHOLDER IN CARPENTER TECHNOLOGY CORPORATION'S EMPLOYEE STOCK OWNERSHIP
- --------------------------------------------------------------------------
PLAN AND SAVINGS PLAN. (PLEASE DATE AND SIGN ON REVERSE SIDE.)
- ---------------------
FOLD AND DETACH HERE
[CARPENTER LOGO APPEARS HERE]
A TOLL-FREE TELEPHONE NUMBER FOR
SHAREHOLDERS OF CARPENTER TECHNOLOGY CORPORATION
Telephone inquiries regarding your stock should be made to
First Chicago Trust Company's automated Toll-Free
Telephone Response Center at:
1-800-519-3111
Representatives are available at the toll-free number Monday through Friday
from 8:30 a.m. until 7:00 p.m. Eastern Time.
Our automated telephone system will be available Monday 8:00 a.m.
through Saturday 9:00 p.m.
TDD telephone number for the hearing impaired: (201) 222-4955
Internet Address: http://www.fctc.com E-Mail Address: [email protected]
DIRECTSERVICE(TM)
As part of Carpenter's ongoing effort to provide enhanced shareholder
services, Carpenter Technology Corporation offers a DirectSERVICE, a Dividend
Reinvestment and a Common Stock Purchase Program.
. The program is available to both registered shareholders and non-
shareholders.
. Shareholders of record are automatically eligible to participate in the
program.
. New shareholders can open an account with as little as $500.00.
. Carpenter pays your transaction fees and brokerage commissions for stock
purchases with additional cash payments and reinvested dividends.
. You can reinvest dividends in full or in part, or receive cash dividend
payments electronically or by check.
. Your purchase and sale orders are processed at least once every five business
days.
. You can deposit your stock certificates for safe keeping or you can request
a certificate for whole shares at any time. In either case, there is no cost
to you.
The plan is administered by First Chicago Trust Company of New York.
SERVICE AVAILABLE -- TO ASSIST OUR STOCKHOLDERS
ELECTRONIC FUNDS TRANSFER (DIRECT DEPOSIT) OF DIVIDENDS
. Dividend monies deposited directly into your bank account.
. No worry of lost dividend checks.
. Immediate access of dividend money, no mail delays.
. Verification of dividend receipt on monthly bank statement.
- -------------------------------------------------------------------------------
Inquiries concerning the DirectSERVICE Program should be directed to the
Agent: First Chicago Trust Company, P.O. Box 2598, Jersey City, NJ 07303-2598
Telephone: 1-800-519-3111
To obtain an Electronic Funds Transfer Authorization Form, please contact:
Carpenter Shareholder Services, First Chicago Trust Company, P.O. Box 2500,
Jersey City, NJ 07303-2500
<PAGE>
[X] PLEASE MARK YOUR +-- | 276
VOTES AS IN THIS | +-----
EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF
DIRECTORS AND FOR PROPOSALS 2 AND 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES AND PROPOSALS 2 AND 3.
- --------------------------------------------------------------------------------
1. Election of Directors.
(See Reverse)
FOR WITHHELD
[_] [_]
To withhold your vote for any nominee(s), write the name(s) here:
- ----------------------------
2. Approval of independent accountants.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Approval of amendment to Restated Certificate of Incorporation to increase
number of authorized shares of common stock.
FOR AGAINST ABSTAIN
[_] [_] [_]
I PLAN TO ATTEND THE MEETING.
YES NO
[_] [_]
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
Please sign exactly as your name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
SIGNATURE(S) _______________________ DATE ______
- --------------------------------------------------------------------------------
TELEPHONE VOTING INSTRUCTIONS
You may use the telephone to vote your share electronically 24 hours a day, 7
days a week. To access the telephone voting system, you must use the control
number printed in the box above. Using a touch-tone telephone, call 1-800-OK2-
VOTE (1-800-652-8683).
Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card. If you choose to vote your
shares electronically, there is no need for you to mail back your proxy card.
ANNUAL MEETING
OF
STOCKHOLDERS OF CARPENTER TECHNOLOGY CORPORATION
MONDAY, OCTOBER 26, 1998 AT 4:00 P.M.
THE INN AT READING WYOMISSING, PENNSYLVANIA
- --------------------------------------------------------------------------------
AGENDA
. Election of four Directors.
. Approving the appointment of independent accountants of Carpenter for
the fiscal year ending June 30, 1999.
. Approving an amendment to Restated Certificate of Incorporation to
increase number of authorized shares.
. Transacting such other business as may properly come before the meeting.
- --------------------------------------------------------------------------------
ADMISSION TICKET
If you plan to attend the 1998 Annual Meeting of Stockholders, please mark
the appropriate box on the proxy card above.
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