<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
COLTEC INDUSTRIES INC
------------------------------------------------------------------------
(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:
<PAGE>
Coltec Industries COLTEC INDUSTRIES INC
[LOGO] 3 COLISEUM CENTRE
2550 WEST TYVOLA ROAD
CHARLOTTE, NC 28217
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS--MAY 8, 1997
To the Shareholders of Coltec Industries Inc:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Coltec
Industries Inc ('Coltec') will be held at The Park Hotel, 2220 Rexford Road,
Charlotte, North Carolina, on Thursday, May 8, 1997, at 9:30 a.m., local time,
for the following purposes and for the transaction of such other business as may
be properly brought before the meeting:
1. Electing a Board of Directors consisting of seven members.
[Proposal 1]
2. Acting upon a proposal to approve and authorize the 1997 Restricted
Stock Plan for Outside Directors. [Proposal 2]
3. Ratifying the appointment of Arthur Andersen LLP as the independent
public accountants of Coltec to serve as such at the pleasure of the Board
of Directors. [Proposal 3]
Only holders of record of Common Stock of Coltec at the close of business
on March 25, 1997, are entitled to notice of the meeting and to vote thereat and
at any and all adjournments thereof.
By order of the Board of Directors
Robert J. Tubbs
Secretary
April 4, 1997
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
TO VOTE YOUR SHARES, PLEASE MARK, SIGN AND DATE THE ENCLOSED
PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID
RETURN ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
Coltec Industries COLTEC INDUSTRIES INC
[LOGO] 3 COLISEUM CENTRE
2550 WEST TYVOLA ROAD
CHARLOTTE, NC 28217
- --------------------------------------------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS -- MAY 8, 1997
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of Coltec Industries Inc ('Coltec') of proxies
for use at the Annual Meeting of Shareholders of Coltec to be held on May 8,
1997, and at any adjournments thereof (the 'Annual Meeting'). The approximate
date on which this Proxy Statement and the accompanying form of proxy will first
be sent to Coltec's shareholders is April 4, 1997. Any proxy being solicited
herewith may be revoked at any time prior to its exercise, but the revocation of
the proxy shall not be effective until notice thereof has been given to the
Secretary of Coltec. Appearance in person at the Annual Meeting will not
constitute a revocation of an otherwise valid proxy. In the event that shares
are represented by more than one properly executed proxy, the proxy bearing the
most recent date will be voted at the Annual Meeting.
Each shareholder of record on March 25, 1997 is entitled to vote every
share held in his or her name on the books of Coltec. On March 25, 1997, there
were outstanding 66,469,666 shares of Coltec's Common Stock, par value $.01 per
share (not including 3,961,618 shares held in treasury and 25,000,000 shares
held by a wholly owned subsidiary) (the 'Common Stock'). Coltec's transfer books
will not be closed. Each share which may be voted at the Annual Meeting is
entitled to one vote on all matters to be considered. Votes will be counted and
certified by the Inspector of Election, who is an employee of ChaseMellon
Shareholder Services, L.L.C., Coltec's independent Transfer Agent and Registrar.
Under Securities and Exchange Commission rules, boxes and designated blank
spaces are provided on the accompanying form of proxy for shareholders to mark
if they wish either to withhold authority to vote for one or more nominees for
director or to abstain on Proposals 2 or 3. Votes withheld in connection with
the election of one or more of the nominees for director will not be counted as
votes cast for such individual. In accordance with Pennsylvania law, abstentions
are not counted in determining the votes cast in connection with Proposals 2 or
3. Under New York Stock Exchange rules, the election of directors and
appointment of independent auditors are considered 'discretionary' items upon
which brokerage firms may vote in their discretion on behalf of their clients if
such clients have not furnished voting instructions within ten days of the
shareholders' meeting.
The presence at the meeting, in person or by proxy, of the holders of a
majority of the outstanding shares of stock entitled to vote is the required
quorum for the transaction of business at the meeting.
PROPOSAL 1 -- ELECTION OF DIRECTORS
One purpose of the meeting is to elect seven directors to serve until the
next Annual Meeting or until their successors are elected and qualified. The
seven nominees receiving the greatest number of votes cast by the holders of the
Common Stock entitled to vote at the meeting will be elected directors of Coltec
(assuming a quorum is present). All proxies will be voted in accordance with
instructions contained thereon. If no specific instructions are given, the
persons named as proxies in the accompanying form of proxy will vote for the
seven nominees named by the Board of Directors of Coltec and listed below. In
the event that, by reason of death or other unexpected occurrence, any one or
more of such nominees shall not be available for election, the persons named as
proxies in the form of proxy have advised that they will vote for such
substitute nominees as the Board of Directors of Coltec may propose. A vote FOR
the nominees includes discretionary authority to vote for a substitute nominee
if any of the nominees listed becomes unable or unwilling to serve.
All nominees are currently directors of Coltec and, except for Mr. William
H. Grigg and Mr. David D. Harrison, were previously elected by the shareholders.
Messrs. Grigg and Harrison were elected by the Board of Directors in August 1996
and October 1996, respectively.
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR OF
COLTEC (OR
PREDECESSOR)
NAME, AGE AND BUSINESS EXPERIENCE DURING PAST FIVE YEARS SINCE
- ----------------------------------------------------------------------------------------------------- ------------
<S> <C>
Joseph R. Coppola, 66................................................................................ 1994
Member of the Audit Committee of Coltec. Chairman, Chief Executive Officer and President of Giddings
& Lewis, Inc., a machine tool manufacturing company, since July 1993. From prior to 1992 to July 1993
he was Senior Vice President, Manufacturing Services of Cooper Industries, Inc., a diversified
manufacturing company. Director of Belden Inc., a manufacturer of electrical wire and cable.
William H. Grigg, 64................................................................................. 1996
Member of the Audit Committee and member of the Stock Option and Compensation Committee (the
'Compensation Committee') of Coltec. Chairman and Chief Executive Officer of Duke Power Company since
April 1994. Vice Chairman of Duke Power Company from prior to 1992 to April 1994. Director of Duke
Power Company and the following mutual funds: Hatteras Income Securities Inc., Nations Fund Inc.,
Nations Fund Trust, Nations Fund Portfolios Inc., Nations LifeGoal Portfolios Inc., Nations
Institutional Reserves Inc., Nations Government Income Term Trust 2003, Inc., Nations Government
Income Term Trust 2004, Inc. and Nations Balanced Target Maturity Inc.
John W. Guffey, Jr., 59.............................................................................. 1991
Chairman of the Board, Chief Executive Officer and President of Coltec since February 1995. Member of
the Executive Committee of Coltec. President and Chief Operating Officer of Coltec from prior to 1992
to January 1995. Director of Gleason Corp., a manufacturer of machine tools, and Giddings & Lewis,
Inc.
David D. Harrison, 49................................................................................ 1996
Executive Vice President and Chief Financial Officer of Coltec since August 1996. Treasurer of Coltec
from October 1996 to January 1997. Executive Vice President and Chief Financial Officer of Pentair
Inc., a diversified manufacturing company, from February 1994 to August 1996. From prior to 1992 to
February 1994 Vice President, Finance of General Electric Appliances Canada (CAMCO).
David I. Margolis, 67................................................................................ 1963
Chairman of the Executive Committee of Coltec since October 1994. Chairman of the Board and Chief
Executive Officer of Coltec from prior to 1992 to retirement from Coltec in January 1995. Director of
Burlington Industries, Inc., a manufacturer of textiles, and Fort Howard Corporation, a manufacturer
of paper products.
Joel Moses, 55....................................................................................... 1992
Chairman of the Compensation Committee and member of the Executive Committee of Coltec. Provost,
Massachusetts Institute of Technology ('MIT'), since June 1995. D.C. Jackson Professor of Computer
Science and Engineering, MIT since prior to 1992. Dean, School of Engineering, MIT, from prior to
1992 to June 1995. Director of Analog Devices, Inc., a manufacturer of integrated circuits.
Richard A. Stuckey, 65............................................................................... 1994
Member of the Audit Committee and member of the Compensation Committee of Coltec. Chief Economist,
E.I. du Pont de Nemours and Company from prior to 1992 to retirement from E.I. du Pont de
Nemours and Company in December 1994. Economic consultant since January 1995.
</TABLE>
2
<PAGE>
EXECUTIVE AND SENIOR OFFICERS OF COLTEC
Information concerning the executive senior officers of Coltec is as
follows:
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OF EMPLOYMENT/MATERIAL
NAME AND AGE POSITIONS HELD DURING PAST FIVE YEARS
- --------------------------------- ------------------------------------------------------------------------------
<S> <C>
Joseph F. Andolino (44) Vice President, Taxes since March 1997. Staff Vice President, Taxes from June
1995 to March 1997. Senior Tax Counsel of AlliedSignal Inc., a diversified
manufacturing company, from prior to 1992 to May 1995.
Michael J. Burdulis (51) Senior Vice President, Group Operations since June 1996. Group President from
January 1995 to May 1996. President of the Garlock Sealing Technologies
Division from February 1994 to December 1994. President of the Central Moloney
Transformer Division from prior to 1992 to January 1994.
John M. Cybulski (60) Senior Vice President, Aerospace since prior to 1992.
Richard L. Dashnaw (60) Senior Vice President, Group Operations and President of the Fairbanks Morse
Engine Division since January 1994. Group President and President of the
Fairbanks Morse Engine Division from prior to 1992 to December 1993.
John W. Guffey, Jr. (59) Chairman of the Board of Directors, Chief Executive Officer and President
since February 1995. President and Chief Operating Officer from prior to 1992
to January 1995.
David D. Harrison (49) Executive Vice President and Chief Financial Officer since August 1996.
Treasurer From October 1996 to January 1997. Executive Vice President and
Chief Financial Officer of Pentair Inc., a diversified manufacturing company
from February 1994 to August 1996. From prior to 1992 to February 1994 Vice
President, Finance of General Electric Appliances Canada (CAMCO).
John N. Maier (45) Vice President and Controller since March 1997. Staff Vice President and
Controller from March 1995 to March 1997. Vice President and Controller of
Lukens, Inc., a specialty steel and industrial products company, from prior to
1992 to February 1995.
Laurence H. Polsky (53) Executive Vice President, Administration since January 1994. Senior Vice
President, Administration from April 1992 to December 1993. Vice President,
Personnel for Cooper Industries, Inc., a diversified manufacturing company,
from prior to 1992 to April 1992.
Robert J. Tubbs (49) Executive Vice President, General Counsel and Secretary since January 1997.
Senior Vice President, General Counsel and Secretary from November 1995 to
January 1997. Senior Vice President and General Counsel from March 1995 to
November 1995. General Counsel-Operations of Olin Corporation ('Olin'), a
chemical and metals manufacturing company, from May 1993 to February 1995.
Deputy General Counsel of Olin from prior to 1992 to May 1993.
</TABLE>
All officers serve at the pleasure of the Board. None of the executive
officers or directors of Coltec is related to any other executive officer or
director by blood, marriage or adoption.
BOARD OF DIRECTORS, COMMITTEES AND ATTENDANCE AT MEETINGS
The Board of Directors of Coltec held 11 meetings during l996. The Board of
Directors of Coltec has standing audit, compensation and executive committees
and does not have a nominating committee.
The Audit Committee, which currently consists of Rear Admiral J. Bradford
Mooney, Jr. (Chairman) who is not standing for re-election, Mr. Coppola, Mr.
Grigg and Mr. Stuckey, held two meetings during l996. This
3
<PAGE>
Committee meets with representatives of Coltec's independent public accountants
and meets with Coltec's internal auditors and representatives of the financial
departments to consider matters relating to the annual audit (including
objectives, scope and fees) and such other matters as such auditors and
representatives wish to raise for consideration. This Committee also reviews
with representatives of the financial departments and internal auditors and
representatives of Coltec's independent public accountants recommendations of
any of such auditors to improve internal accounting procedures and controls.
This Committee reports to the Board of Directors and serves as liaison between
the Board of Directors and Coltec's independent public accountants.
The Compensation Committee, which consists of Professor Moses (Chairman)
and Messrs. Grigg, Mooney and Stuckey, held five meetings during 1996. This
Committee prescribes salaries, incentive awards and other compensation of the
executive officers of Coltec. This Committee also administers certain of
Coltec's compensation plans.
The Executive Committee, which consists of Mr. Margolis (Chairman) and
Messrs. Guffey and Moses, held one meeting in 1996. This Committee provides
oversight of Board affairs, oversight of relationships with principal
shareholders, long-term strategic planning, and advice on political and
legislative matters.
During l996, each director attended 75% or more of the aggregate of (i) the
total number of meetings of the Board of Directors and (ii) the total number of
meetings held by all committees on which he served.
Since January 1, 1996, Coltec and its subsidiary corporations have
purchased machine tool products and related services from Giddings & Lewis, Inc.
for amounts aggregating approximately $2,758,000. These purchases were effected
in the ordinary course of business on terms at least as favorable to Coltec and
its subsidiaries as those obtainable in similar transactions with unaffiliated
parties.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is certain information (as of March 3, 1997) with respect
to persons known to Coltec to be the beneficial owners of more than five percent
of the Common Stock. This information is based on statements on Schedules 13D or
13G filed by beneficial owners with the Securities and Exchange Commission and
other information available to Coltec.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS (A)
- ---------------------------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
J.P. Morgan & Co. Incorporated ......................................................... 10,006,362 15.1(b)
60 Wall Street
New York, NY 10260
Neuberger & Berman LLC ................................................................. 8,127,046 12.2(c)
605 Third Avenue
New York, NY 10158
GSB Investment Management, Inc. ........................................................ 5,287,010 8.0(d)
301 Commerce Street, Suite 1501
Fort Worth, TX 76102
MacKay-Shields Financial Corporation ................................................... 4,332,850 6.5(e)
9 West 57th Street
New York, NY 10019
Mellon Bank Corporation ................................................................ 4,211,000 6.3(f)
One Mellon Bank Center
Pittsburgh, PA 15258
Gabelli Funds, Inc. .................................................................... 3,547,600 5.3(g)
One Corporate Center
Rye, NY 10580
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
(a) The percentage is calculated on the basis of 66,466,466 shares of Common Stock outstanding on March 3, 1997.
(b) In its Amendment No. 6 to Schedule 13G, J.P. Morgan & Co. Incorporated reported that it had sole voting power
for 7,238,933 shares, shared voting power for 43,500 shares, sole investment power for 9,891,162 shares and
shared investment power for 67,700 shares.
(c) In its Amendment No. 2 to Schedule 13G dated February 10, 1997, Neuberger & Berman LLC reported that it had
sole voting power for 1,749,310 shares, shared voting power for 4,778,900 shares and shared investment power
for 8,127,046 shares and that it had filed such Schedule 13G as a broker dealer and registered investment
adviser.
(d) In its Amendment No. 1 to Schedule 13G dated January 31, 1997, GSB Investment Management, Inc. reported that
it had sole voting power for 2,216,025 shares, sole investment power for 5,010,460 shares and shared
investment power for 276,550 shares and that it had filed such Schedule 13G as a registered investment
adviser.
(e) In its Schedule 13G dated February 7, 1997, MacKay-Shields Financial Corporation reported that it had shared
voting and shared investment power for 3,762,850 shares and that its parent, New York Life Insurance Company,
had sole voting and sole investment power for 200,000 shares and shared voting and shared investment power for
370,000 shares and that it had filed such Schedule 13G as a registered investment adviser.
(f) In its Schedule 13G dated January 24, 1997, Mellon Bank Corporation reported that it had sole voting power for
4,211,000 shares, sole investment power for 235,000 shares and shared investment power for 3,976,000 shares
and that it had filed such Schedule 13G on its behalf and on behalf of certain of its affiliates as a parent
holding company.
(g) In its Schedule 13G dated October 28, 1996, Gabelli Funds, Inc. reported that it had sole voting power for
3,516,600 shares and sole investment power (with certain of its affiliates) with respect to all such shares
and that it had filed such Schedule 13G on its behalf and on behalf of certain of its affiliates as a parent
holding company.
</TABLE>
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is information as of March 3, 1997, concerning ownership of
Common Stock by all directors and nominees, individually, the executive officers
named in the Summary Compensation Table below and all current executive officers
and directors of Coltec as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OWNERSHIP(A) CLASS (B)
- ---------------------------------------------------------------------------------------- ------------ ----------
<S> <C> <C>
Joseph R. Coppola....................................................................... 5,000 *
John M. Cybulski (c).................................................................... 201,006 *
William H. Grigg........................................................................ 1,500 *
John W. Guffey, Jr. (c)................................................................. 566,720 *
David D. Harrison (c)................................................................... 80,196 *
David I. Margolis....................................................................... 352,844 *
J. Bradford Mooney, Jr.................................................................. 5,250 *
Joel Moses.............................................................................. 7,200 *
Laurence H. Polsky (c).................................................................. 188,565 *
Richard A. Stuckey...................................................................... 5,200 *
Robert J. Tubbs (c)..................................................................... 57,221 *
All directors and executive officers as a group, consisting of 13 persons............... 1,720,096 2.6
</TABLE>
- ------------------
* Less than 1%.
<TABLE>
<S> <C>
(a) Includes shares subject to options exercisable presently or within 60 days as follows: Mr. Coppola, 4,000
shares; Mr. Cybulski, 112,000 shares; Mr. Guffey, 381,000 shares; Mr. Margolis, 300,000 shares; Messrs. Mooney
and Moses, 5,000 shares each; Mr. Polsky, 154,000 shares; Mr. Stuckey, 5,000 shares; Mr. Tubbs, 56,000 shares;
and all directors and executive officers as a group, 1,197,000 shares.
(b) The percentages are calculated on the basis of 66,466,466 shares of Common Stock outstanding on March 3, 1997,
plus, for any individual or the group, that number of shares deemed to be outstanding because the indicated
persons or certain members of the group, respectively, have the right to acquire beneficial ownership within
60 days.
(c) As participants in the Coltec Retirement Savings Plan for Salaried Employees (the 'Savings Plan'), Messrs.
Cybulski, Guffey, Harrison, Polsky and Tubbs have the following shares of Common Stock credited to their
individual accounts as of December 31, 1996 and such shares are included in the table above: Mr. Cybulski,
3,539 shares; Mr. Guffey, 5,740 shares; Mr. Harrison, 196 shares; Mr. Polsky, 2,468 shares; and Mr. Tubbs,
1,221 shares.
</TABLE>
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation of Coltec's Chief Executive Officer during 1996 and each of the
four other most highly compensated executive officers of Coltec (determined as
of December 31, 1996) (hereinafter referred to as the 'named executive
officers') for the fiscal years ended December 31, 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ------------------------------ ---------
--------------------------------------------
(E) (F) (G) (H)
(C) (D) ------------ ---------------- ---------- ---------
(A) (B) ------- --------- OTHER ANNUAL RESTRICTED STOCK SECURITIES LTIP
- --------------------------- ---- SALARY BONUS COMPENSATION AWARDS UNDERLYING PAYROLL
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)(1) OPTIONS ($)(2)
- --------------------------- ---- ------- --------- ------------ ---------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
John W. Guffey, Jr. ....... 1996 693,000 1,300,000 -- 152,584 -- 1,396,500
Chairman of the Board, 1995 666,360 944,000 -- -- 550,000 --
President and Chief 1994 534,240 855,000 -- -- 115,000 --
Executive Officer
Laurence H. Polsky ........ 1996 326,280 475,000 -- 26,708 -- 441,000
Executive Vice President, 1995 307,800 350,000 -- -- 250,000 --
Administration 1994 285,000 400,000 -- -- -- --
David D. Harrison ......... 1996 123,340 400,000 -- 1,041,250 250,000 --
Executive Vice President
and Chief Financial Officer
Robert J. Tubbs ........... 1996 231,060 350,000 -- -- -- --
Senior Vice President, 1995 183,400 180,000 -- -- 220,000 --
General Counsel and
Secretary (elected
Executive Vice President in
January 1997)
John M. Cybulski .......... 1996 346,140 275,000 -- 36,597 -- 264,600
Senior Vice President, 1995 336,060 210,000 -- -- 160,000 --
Aerospace 1994 320,040 240,000 -- -- -- --
<CAPTION>
(I)
------------
(A) ALL OTHER
- --------------------------- COMPENSATION
NAME AND PRINCIPAL POSITION ($)(3)
- --------------------------- ------------
<S> <C>
John W. Guffey, Jr. ....... 328,205
Chairman of the Board, 111,920
President and Chief 51,421
Executive Officer
Laurence H. Polsky ........ 141,708
Executive Vice President, 49,167
Administration 29,815
David D. Harrison ......... 166,762
Executive Vice President
and Chief Financial Officer
Robert J. Tubbs ........... 95,321
Senior Vice President, 28,456
General Counsel and
Secretary (elected
Executive Vice President in
January 1997)
John M. Cybulski .......... 108,631
Senior Vice President, 44,035
Aerospace 33,080
</TABLE>
- ------------------
(1) The amounts for Messrs. Guffey, Polsky and Cybulski reflect the increase in
value of restricted stock received on January 10, 1996 resulting from the
15% increase to amounts accrued but not paid under the 1977 Long-Term
Performance Plan (the 'Performance Plan') that terminated as of December 31,
1993 with accrued amounts converted to restricted stock on January 10, 1996.
The accrued amounts for each year were previously reported in the year of
accrual. The restricted stock owned by each of the named executive officers
at December 31, 1996 and the values thereof based on the closing price of
the Common Stock on December 31, 1996 were as follows: Mr. Guffey, 104,232
shares, $1,967,379; Mr. Polsky, 16,190 shares, $305,586; Mr. Harrison,
70,000 shares, $1,321,250; and Mr. Cybulski, 31,917 shares, $602,433. With
respect to Mr. Guffey's shares, restrictions on 85,746 shares lapsed on
January 2, 1997 and restrictions on an additional 18,486 shares are
scheduled to lapse on January 2, 1998. With respect to Mr. Polsky's shares,
restrictions on 9,714 shares lapsed on January 2, 1997 and restrictions on
an additional 3,238 shares are scheduled to lapse on each of January 2, 1998
and 1999. With respect to Mr. Harrison's shares, restrictions on 23,333
shares are scheduled to lapse on each of August 1, 1997 and 1998 and
restrictions on an additional 23,334 shares are scheduled to lapse on August
1, 1999. With respect to Mr. Cybulski's shares, restrictions on 27,481
shares lapsed on January 2, 1997 and restrictions on an additional 4,436
shares are scheduled to lapse on January 2, 1998. Any dividends payable on
the Common Stock would also be payable on such restricted stock.
(2) The amounts for Messrs. Guffey, Polsky and Cybulski are payments in January
1997 of the value of the three-year 1994 Performance Cycle that ended on
December 31, 1996 pursuant to the 1994 Long-Term Incentive Plan (the '1994
Incentive Plan') and reflect the effect of the termination of the prior
one-year plan on December 31, 1993. One-third of such amounts were converted
into restricted stock (24,564 shares for Mr. Guffey, 7,757 shares for Mr.
Polsky and 4,654 shares for Mr. Cybulski) with restrictions scheduled to
lapse in three equal annual installments beginning January 1, 1998.
(3) Relocation expenses in 1996 in connection with the move of the corporate
office to Charlotte, North Carolina, for each of the named executive
officers were as follows: Mr. Guffey, $213,213 (including $93,778 as
reimbursement for taxes); Mr. Polsky, $101,131 (including $36,846 as
reimbursement for taxes); Mr. Harrison, $135,179 (including $57,306 as
reimbursement for taxes); Mr. Tubbs, $52,202 (including $19,219 as
reimbursement for taxes); and Mr. Cybulski, $75,263 (including $34,496 as
reimbursement for taxes), and such amounts are included in the amounts in
column (i) above.
Pursuant to the Savings Plan, the amounts credited by Coltec for 1996, 1995
and 1994 for each of the named executive officers were as follows: Mr.
Guffey, $9,000 for each of 1996 and 1995 and $8,912 for 1994; Mr. Polsky,
$9,000 for each of 1996 and 1995 and $8,996 for 1994; Mr. Harrison, $3,500
for 1996; Mr. Tubbs, $9,000 for 1996 and $6,990 for 1995; and Mr. Cybulski,
$9,000 for each of 1996 and 1995 and $8,972 for 1994, and such amounts are
included in the amounts in column (i) above. Pursuant to the defined
contribution portion of the Benefits Equalization Plan, the amounts credited
by Coltec for 1996, 1995 and 1994 for each of the named executive officers
were as follows: Mr. Guffey, $89,220 for 1996, $82,281 for 1995 and $23,142
for 1994; Mr. Polsky, $31,577 for 1996, $33,468 for 1995 and $8,104 for
1994; Mr. Harrison, $2,050 for 1996, Mr. Tubbs, $15,664 for 1996 and $2,914
for 1995; and Mr. Cybulski, $24,368 for 1996, $25,564 for 1996 and $10,230
for 1994, and such amounts are included in the amounts in column (i) above.
The costs to Coltec for 1996, 1995 and 1994 for whole life insurance,
measured by the excess of premiums paid over the cash surrender value,
pursuant to arrangements wherein Coltec is the sole owner and beneficiary of
the insurance policy with an obligation to make certain payments to a
beneficiary over a 15 year period in the event of a named executive
officer's death while employed, for the named executive officers were as
follows: Mr. Guffey, $16,772 for 1996, $20,639 for 1995 and $19,367 for
1994; Mr. Polsky, $6,699 for 1995 and $12,715 for 1994; Mr. Harrison,
$26,033 for 1996; Mr. Tubbs, $18,455 for 1996 and $18,552 for 1995; and Mr.
Cybulski, $9,471 for 1995 and $13,878 for 1994, and such amounts are
included in the amounts in column (i) above.
7
<PAGE>
STOCK OPTIONS
The following table contains information concerning 1996 grants of stock
options under Coltec's 1992 Stock Option and Incentive Plan (the 'Option Plan')
to the named executive officers and the potential realizable value of these
option grants based on assumed rates of stock appreciation of 5% and 10% per
year over the 10-year term of the options.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- -------------------------------------------------------------------------------------------- ----------------------
(A) (B) (C) (D) (E) (F) (G)
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES PRICE
NAME (#)(1) IN 1996 ($/SH) EXPIRATION DATE 5%($) 10%($)
- ----------------------------- -------------- ---------- -------- ---------------- --------- ---------
David D. Harrison............ 250,000 53 $ 14.875 August 18, 2006 6,057,500 9,645,000
</TABLE>
- ------------------
(1) The options are nonqualified options exercisable to the extent of 20% of the
total commencing August 19, 1997 with an additional 20% becoming exercisable
annually thereafter until fully exercisable on August 19, 2001. Exercise of
an option may be by cash, negotiable certificates representing whole shares
of Coltec Common Stock (or, subject to the approval of the Compensation
Committee, through the withholding of Common Stock which would otherwise
have been received upon exercise of the option) or any combination thereof.
The option agreement contains provisions protecting the option holder in the
event of a change-in-control. See 'Employment Contracts and Termination of
Employment and Change-In-Control Arrangements' for additional information.
Mr. Harrison's compensation arrangement with Coltec also includes Coltec's
agreement to reimburse him for any loss of economic benefit resulting from
the $1.25 per share increase in the market value of Coltec Common Stock
between the date of the offer of employment and the date of the grant of the
stock option on August 19, 1996.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the named
executive officers concerning the options held as of December 31, 1996 (none of
the named executive officers having exercised options during 1996):
AGGREGATED OPTION EXERCISES IN 1996
AND DECEMBER 31, 1996 OPTION VALUES
<TABLE>
<CAPTION>
(C)
(B) ----------------------------
----------------------------
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
(A) DECEMBER 31, 1996 DECEMBER 31 ,1996
- --------------------------------------------------------- ---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John W. Guffey, Jr....................................... 336,000 554,000 $ 1,712,000 $ 3,930,500
Laurence H. Polsky....................................... 139,000 232,000 449,250 1,637,000
David D. Harrison........................................ -0- 250,000 -0- 1,000,000
Robert J. Tubbs.......................................... 44,000 176,000 120,000 480,000
John M. Cybulski......................................... 96,000 144,000 508,000 1,040,000
</TABLE>
8
<PAGE>
PENSION PLAN
The following table shows the estimated annual pension benefits payable to
a covered participant upon retirement at normal retirement age (age 65) on a
single life annuity basis under Coltec's qualified defined benefit plan, as well
as nonqualified supplemental pension plans that provide benefits that would
otherwise be denied participants by reason of certain Internal Revenue Code
limitations on qualified plan benefits, based for the most part on five-year
average final compensation (salary and bonus during the 60 highest-paid
consecutive months out of the last 120 months of service) and years of credited
service with Coltec and its subsidiaries and not subject to deduction for Social
Security or other payments:
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
FIVE-YEAR AVERAGE ----------------------------------------------------------------------------
FINAL COMPENSATION 10 15 20 25 30 35
- --------------------------------- -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 400,000....................... $ 65,900 $ 98,900 $ 131,900 $ 164,800 $ 197,800 $ 230,800
600,000....................... 99,900 149,900 199,900 249,800 299,800 349,800
800,000....................... 133,900 200,900 267,900 334,800 401,800 468,800
1,000,000....................... 167,900 251,900 335,900 419,800 503,800 587,800
1,200,000....................... 201,900 302,900 403,900 504,800 605,800 706,800
1,400,000....................... 235,900 353,900 471,900 589,800 707,800 825,800
1,600,000....................... 269,900 404,900 539,900 674,800 809,800 944,800
1,800,000....................... 303,900 455,900 607,900 759,800 911,800 1,063,800
2,000,000....................... 337,900 506,900 675,900 844,800 1,013,800 1,182,800
2,200,000....................... 371,900 557,900 743,900 929,800 1,115,800 1,301,800
2,400,000....................... 405,900 608,900 811,900 1,014,800 1,217,800 1,420,800
2,600,000....................... 439,900 659,900 879,900 1,099,800 1,319,800 1,539,800
2,800,000....................... 473,900 710,900 947,900 1,184,800 1,421,800 1,658,800
3,000,000....................... 507,900 761,900 1,015,900 1,269,800 1,523,800 1,777,800
3,200,000....................... 541,900 812,900 1,083,900 1,354,800 1,625,800 1,896,800
</TABLE>
As of December 31, 1996, the five-year average final compensation (or
average compensation for all months of credited service for a participant with
less than 60 months of service) and current years of credited service for each
of the following persons were: Mr. Guffey, $1,324,000 and 18 years (includes 7
years of credited service as an employee of one of Coltec's subsidiary
corporations); Mr. Polsky, $568,507 and 5 years; Mr. Harrison $123,340 and 4
months; Mr. Tubbs $324,251 and 2 years; and Mr. Cybulski, $561,656 and 15 years
(includes 9 years of credited service as an employee of one of Coltec's
subsidiaries in Canada). Compensation covered under the pension plans includes
amounts reported in columns (c) and (d) of the Summary Compensation Table.
Coltec has agreed to calculate Mr. Guffey's pension benefits as if his prior
service with a subsidiary was earned under the plan (the benefits of which are
set forth in the above table) with payments to be made to him from the qualified
plan, non-qualified plans and from Coltec. In addition, Coltec has agreed to
calculate Mr. Cybulski's pension benefits as if his prior service with a
Canadian subsidiary was earned under the plan (the benefits of which are set
forth in the above table) and with an offset for benefits earned under the
Canadian Pension Plan. Payments will be made to him from the Canadian Pension
Plan, the qualified plan, non-qualified plans and from Coltec.
COMPENSATION OF DIRECTORS
Directors who are not also employees of Coltec receive a retainer at the
annual rate of $25,000 ($30,000 if Chairperson of a Committee) and receive
$1,250 per meeting for attendance at meetings of the Board of Directors and its
committees with a maximum of $2,000 for more than one meeting on the same day
($2,500 if Chairperson of one of the meetings). The Board of Directors of Coltec
has established a retirement age policy which provides that a director shall not
be eligible for nomination to the Board of Directors if such person has attained
the age of 70. The pension arrangement for directors who are not entitled to a
pension from Coltec or any subsidiary thereof
9
<PAGE>
was terminated in July 1996 for all directors serving at that time. Subject to
approval of the 1997 Restricted Stock Plan for Outside Directors [Proposal 2],
the present value of the accrued lifetime pension benefit for these directors
was calculated and arrangements were made to convert these amounts to restricted
stock based on market values on the dates the directors would otherwise have
vested in pension benefits. The restrictions on the shares will lapse at
termination of membership on the Board of Directors. Directors elected after
July 1996 will receive restricted stock at the time of first election by the
shareholders in a number of shares based on one-half of the amount of the
director annual retainer in effect at that time and the then market value of the
Common Stock. See 'Proposal 2 -- Approval of 1997 Restricted Stock Plan for
Outside Directors.'
Payment of director retainer, committee or attendance fees may be deferred
in whole or in part, at the option of a non-employee director, under Coltec's
Deferred Compensation Plan for Non-Employee Directors (the 'Deferred
Compensation Plan') adopted by the Board of Directors of Coltec on January 10,
1996. The Deferred Compensation Plan provides that any fees deferred thereunder
shall be credited at the end of each quarter to (i) a share account, which
allows for the purchase of share units that represent shares of Common Stock,
(ii) a cash account, which pays interest at a rate based on the ninety-day
Treasury bill rate over the past twelve months, or (iii) a combination of both.
The amount deferred under the Deferred Compensation Plan will be paid, at the
non-employee director's option, in a lump sum or over a ten-year period
commencing on the first business day of the calendar year following the year
during which the non-employee director ceases to be a director of Coltec.
Pursuant to the 1994 Stock Option Plan for Outside Directors of Coltec
Industries Inc (the '1994 Stock Option Plan for Outside Directors'),
non-employee directors in 1994 each received an initial grant of an option to
purchase 10,000 shares of Common Stock and will receive subsequent option grants
to purchase 2,000 shares of Common Stock on each alternate re-election date
during their service on the Board of Directors. Unless earlier terminated by the
Board of Directors of Coltec, the 1994 Stock Option Plan for Outside Directors
will terminate on July 1, 2004 and no further options will be awarded after that
date. In May 1996, options to purchase 2,000 shares were granted to Messrs.
Mooney, Moses and Stuckey at an option exercise price of $13.05 per share
exercisable in two equal annual installments commencing May 1, 1997.
On May 30, 1995, the Board of Directors approved Change in Control
arrangements for non-employee directors who do not continue to serve as a
director of Coltec during any part of the two year period following a Change in
Control for reasons other than voluntary resignation or voluntary choice not to
stand for re-election. Pursuant thereto each such director would receive a lump
sum amount equal to five times the amount of the director's annual retainer
being paid at the time he or she ceases to be a director.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
All currently outstanding agreements granting restricted stock or stock
options to the named executive officers in the Summary Compensation Table above
contain change-in-control provisions. In the case of the restricted stock, in
the event of a change-in-control, all restrictions on assignment, transfer or
other disposition of the restricted stock lapse. In the case of stock options,
in the event of a change-in-control, the options become fully exercisable or, in
the alternative, the named executive officer may surrender all or part of his or
her options to Coltec (or its successor) during a one-year period after the
change-in-control in exchange for a cash payment for each option surrendered
equal to the excess of the fair market value of the Common Stock on the date of
surrender over the option price. Fair market value for this purpose equals the
last sales price of the Common Stock on the surrender date on the New York Stock
Exchange Composite Tape (or, if no such sale occurred on such date, the last
date preceding such date on which a sale was reported), except that, in the case
of a change of ownership of more than 35% of the outstanding shares of Common
Stock, fair market value means the amount of cash and fair market value of other
consideration tendered for such outstanding shares.
As of June 1, 1995, Coltec entered into employment agreements with Messrs.
Guffey, Polsky, Tubbs and Cybulski. The agreements expire on May 31, 2000 for
Mr. Guffey, on May 31, 1999 for Mr. Polsky, on May 31, 1999 for Mr. Tubbs
(pursuant to an amendment dated in January 1997) and on May 31, 1998 for Mr.
Cybulski. As of August 19, 1996, Coltec entered into an employment agreement
with Mr. Harrison that expires on August 18, 2001. Compensation payable under
the employment agreements is at salary rates not less than those in effect on
June 1, 1995 (August 19, 1996 for Mr. Harrison), with participation in incentive
and employee benefit plans at
10
<PAGE>
the discretion of the Board of Directors. The executive's functions, duties and
responsibilities are not subject to change. If during the term of any such
agreement a Change-in-Control (as defined in the agreements) occurs and the
executive resigns for Good Reason (as defined in the agreements) within two
years after a Change-in-Control, the executive is (i) to be paid a lump sum
equal to salary plus highest annual bonus over the prior three years multiplied
by five for Mr. Guffey, by four for Messrs. Polsky, Harrison and Tubbs, and by
three for Mr. Cybulski, (ii) to continue participation as an active participant
in all Coltec perquisites as well as benefit plans and fringe benefit programs
for a period of time from the date of termination. Such period of time for Mr.
Guffey is five years, for Messrs. Polsky, Harrison and Tubbs is four years and
for Mr. Cybulski is three years. Amounts to be paid are to include an additional
tax gross-up covering any excise tax on severance payments. The June 1, 1995
agreements supersede all prior employment agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Guffey is a director of Giddings & Lewis, Inc. and Mr. Coppola is
Chairman, Chief Executive Officer and President of Giddings & Lewis, Inc. Mr.
Coppola was a member of Coltec's Stock Option and Compensation Committee during
1996 until his resignation from the Committee in October 1996.
STOCK OPTION AND COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee, whose members are all non-employee directors of
Coltec, is charged with establishing and monitoring Coltec's executive
compensation program. The Compensation Committee is of the opinion that Coltec's
total compensation program for executives should be competitive with the market
and that each component should reflect both individual and Coltec performance.
In order to ensure that Coltec's total compensation program meets these
objectives, the Compensation Committee meets regularly with a recognized expert
in executive compensation.
Coltec's executive compensation program is designed in large part to reward
senior management for the creation of shareholder value. This is accomplished by
providing annual and longer-term incentives to achieve certain financial goals
tied to business performance that, over time, should result in an increase in
Coltec's stock price. In addition, a substantial portion of each executive's
total compensation is represented by stock options. These stock options only
have value if the stock price increases.
Coltec considers its senior corporate officers, including the named
executive officers listed on the Summary Compensation Table, as a team for
purposes of designing its total compensation program. The Compensation Committee
has implemented this approach by using the same performance criteria to
determine all senior executive incentive compensation awards and basing each
award on the scope of an executive's responsibilities and years of experience in
a given position. Therefore, the discussion below of the determination of Mr.
Guffey's 1996 incentive award is also applicable to the determination of
incentive awards for the other senior corporate officers.
BASE SALARY
Base salaries for senior corporate officers are typically adjusted on an
annual basis within the applicable salary range. The level of an executive's
annual salary adjustment is based on the Compensation Committee's assessment of
the executive's contribution to Coltec's profitability and the median salaries
paid to executives in similar positions at other companies. In determining
competitive salary levels, Coltec relies on published survey data from a number
of recognized surveys covering hundreds of companies including, but not
necessarily limited to, companies in the Standard & Poor's 500 Index and/or the
Dow Jones Industrial Average.
Mr. Guffey's base salary was increased on January 1, 1996 from $666,360 to
$693,000 to reflect his individual performance in 1995. The increase reflected
the approximate median salary level for other chief executive officers in
companies of similar size and complexity as reported in the published surveys
noted above, the experience of Mr. Guffey, and his contribution to Coltec's
overall performance in 1995.
11
<PAGE>
ANNUAL INCENTIVE (BONUS) COMPENSATION
Coltec's Annual Incentive Plan (the 'Annual Plan') provides for an annual
bonus pool for cash incentive awards for any year equal to 6% of Coltec's
operating profit. No award may be paid in any year to participating executives
unless the operating profit for that year exceeds $100 million. In addition,
awards to either of the two executives with the highest base salaries at the end
of a plan year cannot exceed 20% of the available bonus pool in any one year.
Annual incentive awards are determined by Coltec's annual performance
compared to its historical performance and the performance of other
manufacturing companies included in the Fortune 1000 (formerly referred to as
the Fortune 500 industrial companies) on the basis of return on assets and
return on capital, two generally accepted measures for evaluating company
business performance. To focus on sales and profitable growth for 1997 and
forward, Coltec is modifying its incentive compensation plan to emphasize growth
in earnings per share while maintaining high levels of return on assets and
return on capital. Target bonus levels for participating executives are based on
the same published survey data used to determine base salaries. The Compensation
Committee has established target bonus levels which are payable for the
achievement of corporate performance regarded by the Compensation Committee to
be the equivalent of performance of other comparable manufacturing companies. If
Coltec's actual performance exceeds the established target performance level,
actual incentive compensation can significantly exceed individual incentive
targets. Conversely, if actual performance does not meet established targets,
actual incentive compensation can be reduced or eliminated, as warranted.
The level of Mr. Guffey's incentive compensation for 1996 was determined by
comparing Coltec's performance with its historical performance and the
performance of two groups of companies during the first nine months of 1996. The
first 'traditional' group consists of a peer group of Fortune 1000 manufacturing
companies with comparable business and/or organizational structures. The second
'select' peer group consists of Fortune 1000 companies which rank in the top 25%
of Fortune 1000 manufacturing companies in terms of return on assets, return on
equity, return on sales, ten-year average growth rate in earnings per share, and
ten-year average total return to shareholders. Many of the companies from the
traditional and select peer groups are included in the Standard & Poor's 500
Index and/or The Dow Jones Industrial Average.
Mr. Guffey's incentive compensation reflects Coltec's 1996 performance
compared with that of both peer groups during the first nine months of 1996
based on return on assets and return on capital, the annual financial measures
(in addition to the measurement of earnings per share added in 1997) that the
Compensation Committee believes significantly influence shareholder value.
Coltec's results were the highest of all traditional peer group companies for
return on assets and return on capital. Among the select peer group, Coltec's
results were in the top 25% of return on capital and approximately in the top
20% for return on assets. It is projected that the sum of Mr. Guffey's 1996
salary plus bonus is comparable to that paid to other peer group chief executive
officers with comparable 1996 financial performance.
The Committee also considered a number of significant non-financial
accomplishments that will benefit Coltec in future years. These include:
o The sale of the OEM automotive operations allowing Coltec to pay down a
significant amount of debt and engage in a share buy-back program;
o Strategic acquisitions to enhance and expand capabilities of high growth
businesses;
o Relocation of the corporate offices and a one-third reduction in
corporate staff. The move is estimated to save Coltec $4.5 million
annually; and
o Refinancing of high yield debt significantly reducing current and future
interest costs.
LONG-TERM PERFORMANCE PLANS
The objective of Coltec's long-term compensation program is to measure and
reward senior corporate officers for the achievement of longer-term business
goals linked to an increase in shareholder value. This program consists of the
1992 Stock Option and Incentive Plan (the 'Option Plan') and the 1994 Long-Term
Incentive Plan (the '1994 Incentive Plan').
12
<PAGE>
The Option Plan provides for grants of stock options at an exercise price
equal to the market price of the Common Stock on the date of grant. This plan
ties awards directly to the growth in shareholder value by linking option
recipient gains to Common Stock price increases above the exercise price. It is
the Compensation Committee's general policy to make stock option grants to an
executive once every four years, and more frequently to reflect the assignment
of increased responsibilities. Only Mr. Harrison, upon his employment with
Coltec, received a stock option grant in 1996. The number of option shares
granted was consistent with Coltec's prior practice and with competitive
practices of companies similar to Coltec for executives with like
responsibilities.
The 1994 Incentive Plan replaced the 1977 Long-Term Performance Plan. Both
the 1994 Incentive Plan and its predecessor plan were designed to focus Coltec's
senior corporate and divisional executives on certain financial goals deemed
essential for Coltec's long-term profitability and continued increase in
shareholder value, but which may not be directly tied to short-term increases in
the market value of Coltec's Common Stock.
The 1994 Incentive Plan provides for annual grants of performance units
('Units') to senior corporate executives of Coltec and its subsidiaries who are
selected by the Compensation Committee. Amounts paid under the 1994 Incentive
Plan qualify as 'performance-based' compensation which is excludable from the $1
million executive compensation deduction limit (Section 162(m) of the Internal
Revenue Code of 1986, as amended) passed by Congress in 1993.
The value of each Unit is determined on the basis of Coltec's cumulative
operating profit measured over a three-year performance cycle. The 1994
Incentive Plan provides that no more than 300,000 Units may be awarded for any
performance cycle and that no more than 50,000 Units may be awarded to any
participant in a given cycle. For the 1996 performance cycle, Mr. Guffey
received 35,000 Units reflecting his new responsibilities as Chairman and Chief
Executive Officer.
For each three-year performance cycle, the threshold level for cumulative
operating profit is $551.8 million (adjusted for significant acquisitions or
divestitures). If that operating profit is achieved, each Unit will have an
award value of $12 and will increase by $.0333 for each $1 million that
cumulative operating profit for the award cycle exceeds $551.8 million, except
for the performance cycle commencing January 1, 1994. In this instance only,
awards had a value of $36 at $551.8 million of cumulative operating profit and
increased by $.10 for each $1 million of operating profit above the $551.8
million threshold. The 1994 performance cycle award values were transitional and
were intended to replace the incentive opportunity lost for the years 1994 and
1995 as a result of the replacement of the 1977 Long-Term Performance Plan with
the 1994 Incentive Plan. There is no maximum limit on the award value that can
be earned per Unit. No amounts are payable for a Unit if cumulative operating
profit for a performance cycle is less than $551.8 million.
Due to the sale of the OEM automotive operations, the threshold cumulative
operating profit level has been reduced by $48.2 million for each year beginning
January 1, 1996.
To tie the executive's compensation more closely to the performance of
Coltec Common Stock, actual award value, starting July 1, 1996, will also be
dependent on the change in the value of Coltec stock during the three-year
performance cycle. The award earned based on the level of achieved operating
profit will be increased or decreased by the percentage by which the Coltec
stock price performance exceeds or falls short of that of the Standard & Poor's
500 Index during the performance cycle.
Awards are paid two-thirds in cash and one-third in Common Stock that vests
in equal installments over three years thus continuing to tie the ultimate value
received by the executive to shareholder value. To encourage additional
executive stock ownership, executives electing to receive an additional part of
an earned award in Common Stock will receive Common Stock with a value which is
15% greater than the foregone cash award. No more than .5% (1% in 1997) of the
issued and outstanding Common Stock may be awarded under the 1994 Incentive Plan
in any year.
BENEFITS
Coltec also maintains certain benefit programs in which the executive group
participates. The compensation attributed to the named executive officers for
1996 from these programs is detailed in this proxy statement. (See Column (i)
entitled 'All Other Compensation' on the Summary Compensation Table). The
Compensation
13
<PAGE>
Committee believes that the level of benefits received by Mr. Guffey for
participation in these programs reflects the levels received by comparable
executives in similar organizations.
STOCK OWNERSHIP GUIDELINES
Coltec has adopted guidelines to assist the top 150 key employees,
including executive officers, in determining appropriate levels of Common Stock
ownership. The guidelines set forth a minimum value of Common Stock which Coltec
requires each key employee hold. The minimum value established for any
particular individual relates to varying multiples of his or her salary
depending upon the individual's position with Coltec. The multiple is the
highest for the Chief Executive Officer at five times base salary. Coltec
expects the guidelines will be met no later than May, 2001 by all current
covered executives and within five years after hire or promotion for all new
executives covered by the guidelines. Coltec further expects that executives
will make significant progress each year towards reaching the final stock
ownership guidelines.
The existence of these guidelines is not intended to prevent executives
from selling stock that they currently own or receive pursuant to a stock option
or other compensation program. In fact, independent third party advisors have
recommended, and as a result of these recommendations Coltec expects that
executives, including the named executive officers, will continue to
periodically sell shares based on tax, estate planning and other personal
considerations.
SECTION 162(M) LIMITATIONS
During 1993, Congress enacted legislation that could limit the
deductibility of compensation paid to Coltec's named executive officers. This
legislation provides that compensation paid to any one executive in excess of $1
million will not be deductible unless the compensation falls into certain
exemptions or is paid under a shareholder approved plan and qualifies as
'performance-based' compensation.
The Compensation Committee believes that the annual incentive awards and
the long-term compensation program components of Coltec's executive compensation
program are 'performance-based' and that the process by which compensation
levels are determined and payments are made is sound and should be continued. In
1994, shareholders approved amendments to the Annual Plan and the Option Plan,
and adopted the 1994 Incentive Plan. As a result of these shareholder actions,
the Compensation Committee believes that incentive payments made to the named
executive officers under Coltec's incentive compensation plans meet the Internal
Revenue Service requirements for 'performance-based' compensation.
Joel Moses, Chairman
William H. Grigg
J. Bradford Mooney, Jr.
Richard A. Stuckey
14
<PAGE>
PERFORMANCE GRAPH
The following is a line graph presentation comparing Coltec's cumulative
total shareholder return on the Common Stock with the Standard & Poor's 500
Index and the Dow Jones Industrial Average for the period since March 25, 1992,
the date when trading began in connection with Coltec's initial public offering
on April 1, 1992 to December 31, 1996 (assuming an investment of $100 in each on
March 24, 1992):
[PERFORMANCE GRAPH]
3/24/92 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
Coltec Industries $100 $128 $125 $114 $ 78 $126
Dow Jones Industrial 100 104 121 127 174 224
S&P 500 100 109 120 122 167 206
Based on the same assumptions as above, but including only the year 1996,
the line graph is as follows:
[PERFORMANCE GRAPH]
12/31/95 12/31/96
Coltec Industries $100 $162
Dow Jones Industrial 100 129
S&P 500 100 123
15
<PAGE>
PROPOSAL 2 -- APPROVAL OF
1997 RESTRICTED STOCK PLAN FOR OUTSIDE DIRECTORS
On January 9, 1997 the Board of Directors adopted the 1997 Restricted Stock
Plan for Outside Directors (the '1997 Directors Restricted Stock Plan'), subject
to the approval of the 1997 Directors Restricted Stock Plan by the shareholders
of Coltec at the 1997 annual meeting of shareholders. The shareholders of Coltec
are asked to consider and act upon the matter of approving the 1997 Directors
Restricted Stock Plan. Approval of this Proposal 2 will require the affirmative
vote of the holders of a majority of the shares of Common Stock voting at the
meeting (assuming a quorum is present). The Board of Directors recommends
approval of this Proposal 2. All proxies will be voted in accordance with the
instructions contained thereon. If no specific instructions are given, the
persons named as proxies in the accompanying form will vote FOR Proposal 2.
DESCRIPTION OF THE 1977 DIRECTORS RESTRICTED STOCK PLAN
The 1997 Directors Restricted Stock Plan has been adopted to replace the
pension arrangement for Outside Directors that previously was adopted by the
Board of Directors on July 14, 1982 and has since been terminated. The summary
of the 1997 Directors Restricted Stock Plan which follows is not intended to be
complete and is qualified in its entirety by reference to the text of the 1997
Directors Restricted Stock Plan which is attached to this Proxy Statement as
Exhibit A.
The 1997 Directors Restricted Stock Plan provides for grants of restricted
shares of the Common Stock ('Restricted Shares') to each member of the Board of
Directors first elected after July 11, 1996 who is neither an employee of Coltec
or any of its subsidiaries nor entitled to a pension from Coltec or any of its
subsidiaries ('Outside Directors'). Each individual initially elected as an
Outside Director at the Annual Meeting or at any annual or special meeting of
shareholders occurring after the Annual Meeting will receive a grant of
Restricted Shares equal in value to one-half of the annual retainer fee
scheduled to be paid to the Outside Director for his first year of service as a
director of Coltec in accordance with Coltec's policy for such payments at that
time. The date of grant of such Restricted Shares will be the date of the
applicable annual or special meeting. The per share value of the Restricted
Shares will be the average closing price of a share of Common Stock as reported
on the New York Stock Exchange Composite Trading Tape for the date of grant and
the four preceding trading days.
The Restricted Shares may not be sold, transferred, assigned, conveyed,
pledged, encumbered, hypothecated or in any manner disposed of during the period
beginning on the date of grant and ending on the date the Outside Director
ceases to be an Outside Director. Any Outside Director who is granted Restricted
Shares shall not be entitled to delivery of stock certificates representing such
Restricted Shares until the expiration of the restricted period.
In the event of an Outside Director's removal (other than for cause) or
termination as a member of the Board, the restrictions on the Restricted Stock
will lapse. In the event of the removal of the Outside Director from the Board
of Directors for cause, the Restricted Stock will be forfeited as of the date of
such removal.
Certain individuals initially elected as Outside Directors on or prior to
July 11, 1996 have agreed to accept Restricted Shares under the 1997 Directors
Restricted Stock Plan in lieu of any pension benefits such Outside Directors
would have been eligible to receive under the terminated pension arrangement
previously discussed. Restricted Shares will be granted to each of these Outside
Directors at such times and in such amounts as specified on Exhibit A to the
1997 Directors Restricted Stock Plan. Such Restricted Shares also shall be
subject to the terms and conditions generally applicable to Restricted Shares
under the 1997 Directors Restricted Stock Plan.
It is not possible at the present time to predict the number of shares that
will be issued under the 1997 Directors Restricted Stock Plan to Outside
Directors. The 1997 Directors Restricted Stock Plan is administered by the Chief
Executive Officer ('CEO') of Coltec. The CEO has authority under the 1997
Directors Restricted Stock Plan to interpret, administer and apply it, and to
determine whether the removal of an Outside Director is for cause.
Subject to certain limitations set forth in the plan document, the Board of
Directors has the right to amend or terminate the 1997 Directors Restricted
Stock Plan at any time.
Assuming the nominees named by the Board of Directors of Coltec for
election to the Board of Directors are elected at the 1997 annual shareholders
meeting, four Outside Directors will be eligible to participate in the 1997
Directors Restricted Stock Plan.
16
<PAGE>
Subject to certain limitations set forth in the plan document, the Board of
Directors has the right to amend or terminate the 1997 Directors Restricted
Stock Plan at any time.
The following table sets forth the benefits that will be received by
Outside Directors under the 1997 Directors Restricted Stock Plan, as proposed.
No benefit will be received by an employee or executive officer of Coltec under
the proposed plan.
NEW PLAN BENEFITS
1997 RESTRICTED STOCK PLAN FOR OUTSIDE DIRECTORS
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE NUMBER OF UNITS
- -------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
All current non-executive officer directors as a group $ 31,233(1)(2) (2)(3)
</TABLE>
- ------------------
(1) For individuals first elected as Outside Directors at the Annual Meeting,
the dollar value is equal to one-half of the annual retainer fee scheduled
to be paid to the Outside Director. In 1997, one-half of the annual retainer
fee is $12,500 (or $15,000 if Chairperson of a committee of the Board of
Directors).
(2) Restricted Shares will be granted to certain individuals elected as Outside
Directors on or prior to July 11, 1996 at such times and in such amounts as
specified in Exhibit A to the 1997 Directors Restricted Stock Plan, which is
attached to this Proxy Statement as Exhibit A.
(3) For purposes of this table, units are Restricted Shares. The number of
Restricted Shares to be granted to individuals first elected as Outside
Directors at the Annual Meeting will be determined as of the date of the
Annual Meeting by dividing $12,500 (or $15,000 if such individual serves as
Chairperson of a committee of the Board of Directors) by the average closing
price of the Common Stock as reported on the New York Stock Exchange
Composite Trading Tape for the date of the Annual Meeting and the four
trading days preceding the Annual Meeting.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief description of the federal income tax consequences
related to the issuance of Restricted Shares to Outside Directors under the 1997
Directors Restricted Stock Plan. This discussion is intended for information of
shareholders considering how to vote at the 1997 annual meeting and not as tax
guidance to Outside Directors who participate in the 1997 Directors Restricted
Stock Plan.
An Outside Director generally will not recognize any income for income tax
purposes at the time the Outside Director receives the Restricted Shares and
will not recognize income until the restrictions lapse, except to the extent
that the Outside Director receives dividends with respect to the Restricted
Shares. An amount equal to the fair market value of the Restricted Shares at the
time the restrictions lapse generally will be includible in the gross income of
the Outside Director for income tax purposes for the year in which the
restrictions lapse. If the Outside Director makes a special election pursuant to
Section 83(b) of the Internal Revenue Code, as amended, by filing a written
statement with the Internal Revenue Service and Coltec within 30 days after
receipt of the Restricted Shares, the fair market value of the Restricted Shares
will be recognized by the Outside Director as taxable income upon receipt. The
fair market value for this purpose is determined without regard to the
restrictions that will lapse after the end of the restricted period. If a
Section 83(b) election is made, no deduction may be taken by the Outside
Director in the event the Restricted Shares are forfeited.
Coltec will receive a corresponding deduction in the same amount that the
Outside Director recognizes as taxable income at the same time that the Outside
Director recognizes such income.
Any dividends received by the Outside Director on the Restricted Shares
prior to the lapse of the restrictions are taxed to the Outside Director as
compensation and are deductible by Coltec. If, however, the value of the
Restricted Shares is includible in the gross income of the Outside Directors
before the restrictions lapse pursuant to a Section 83(b) election, dividends on
such shares will be dividend income to the Outside Director and will not be
deductible by Coltec. If an Outside Director forfeits previously taxed
Restricted Shares, Coltec is required to include in income any deductions that
it claimed with respect to the forfeited Restricted Shares.
17
<PAGE>
PROPOSAL 3 -- RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Arthur Andersen LLP, independent
public accountants, as the auditors of Coltec, to serve at the pleasure of the
Board of Directors for l997. A member of that firm will be present at the Annual
Meeting with the opportunity to make a statement and respond to appropriate
questions by shareholders.
The shareholders of Coltec are asked to consider and act upon the matter of
ratifying the appointment of Arthur Andersen LLP. Approval of this Proposal 3 by
the shareholders will require the affirmative votes of the holders of a majority
of the shares of Common Stock voting at the meeting (assuming a quorum is
present). The Board of Directors recommends approval of this Proposal 3. All
proxies will be voted in accordance with instructions contained thereon. If no
specific instructions are given, the persons named as proxies in the
accompanying form will vote FOR Proposal 3.
OTHER MATTERS
In addition to the use of the mails, proxies may be solicited, at the
expense of Coltec, by employees and directors of Coltec personally or by
telephone, facsimile transmission, telegram or other means of communication. In
addition, Kissel-Blake Inc. has been retained by Coltec as soliciting agent and
will be paid a fee of $5,500 by Coltec for this service. Coltec will reimburse
brokerage firms, banks, trustees, nominees and other persons for their
out-of-pocket expenses in forwarding proxy material to beneficial owners of
Common Stock.
As of the date of this Proxy Statement, management has no knowledge of any
business other than that described herein that will be presented for
consideration at the meeting. In the event any other business is presented at
the meeting, it is intended that the persons named in the enclosed proxy will
have authority to vote such proxy in accordance with their judgment on such
business.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1998 Annual Meeting
of Shareholders must be received by December 5, 1997, by the Secretary of Coltec
(at the address set forth on page one of this Proxy Statement) for inclusion in
the Proxy Statement and form of proxy relating to that meeting.
ANNUAL REPORTS
Coltec's 1996 Annual Report to Shareholders, which contains financial
statements for the year ended December 31, 1996, accompanies this Proxy
Statement. Coltec's Annual Report on Form 10-K for its fiscal year ended
December 31, 1996, will be made available (without exhibits), free of charge, to
interested shareholders upon written request to the Secretary of Coltec (at the
address set forth on page one of this Proxy Statement).
By order of the Board of Directors
John W. Guffey, Jr.
Chairman of the Board, President
and Chief Executive Officer
Charlotte, North Carolina
April 4, 1997
YOUR VOTE IS IMPORTANT.
TO VOTE YOUR SHARES, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL
IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE.
18
<PAGE>
EXHIBIT A
1997 RESTRICTED STOCK PLAN FOR
OUTSIDE DIRECTORS
OF
COLTEC INDUSTRIES INC
1. Purpose of Plan. The purposes of the 1997 Restricted Stock Plan for
Outside Directors of Coltec Industries Inc (the 'Plan') are to enable the
Company to retain qualified persons who are not employees of the Company to
serve as members of the Board of Directors of the Company and to replace the
pension arrangement for Outside Directors that previously was adopted by the
Board of Directors on July 14, 1982.
2. Definitions. Throughout this Plan, the following terms shall have the
meanings indicated:
(a) 'Board' shall mean the Board of Directors of the Company.
(b) 'Common Stock' shall mean the common stock of the Company, par
value $.01 per share.
(c) 'Company' shall mean Coltec Industries Inc, a Pennsylvania
corporation.
(d) 'Exchange Act' shall mean the Securities Exchange Act of 1934, as
amended.
(e) 'Fair Market Value' shall mean the average of the closing prices
for the Common stock as reported on the New York Stock Exchange Composite
Trading Tape for the date of determination and the four preceding trading
days.
(f) 'First Election Date' shall mean the date of an individual's first
election to the board as an Outside Director by the shareholders of the
Company.
(g) 'Outside Director' shall mean a member of the Board who is not an
employee of the Company or any of its subsidiaries (excluding any Director
who has the right to a pension provided by the Company or any subsidiary).
(h) 'Restricted Period' shall mean the period beginning on the Outside
Director's First Election Date and ending on the date that the Outside
Director ceases to be an Outside Director.
(i) 'Restricted Stock' shall mean Common Stock issued to Outside
Directors under this Plan which is subject to the restrictions set forth
herein.
3. Participation. All outside Directors whose First Election Date occurs
after July 11, 1996 shall participate in the Plan and be granted Restricted
Stock in accordance with the provisions of Section 4 hereof. Certain Outside
Directors whose First Election Date occurred on or prior to July 11, 1996 shall
participate in the Plan and be granted Restricted Stock only in accordance with
the provisions of Section 5 hereof.
4. Grants of Restricted Stock to Outside Directors First Elected After July
11, 1996. Each Outside Director whose First Election Date occurs after July 11,
1996 shall receive, as of such First Election Date, the number of whole shares
of Restricted Stock which equals
(a) one-half of the annual retainer fee scheduled to be paid to the
Outside Director in consideration of his first year of service as a
director of the Company in accordance with the Company's policy for such
payments in effect on the First Election Date
(b) divided by the Fair Market Value of one share of Common Stock on
his First Election Date.
Fractional shares of .50 or more shall be rounded up to the next share.
Fractional shares of less than .50 shall be disregarded.
5. Grants of Restricted Stock to Outside Directors First Elected On or
Prior to July 11, 1996. Attached hereto as Exhibit A is a list of certain
Outside Directors whose First Election Date occurred on or prior to July 11,
1996, each of whom was eligible to receive pension benefits under the pension
arrangement adopted by the Board on July 14, 1982. Such pension arrangement has
been terminated and each of the Outside Directors listed
A-1
<PAGE>
on Exhibit A hereto has agreed to accept shares of Restricted Stock under this
Plan in lieu of and in complete satisfaction of the pension benefits such
Outside Directors have and would have accrued and been eligible to receive under
the aforementioned pension arrangement. Shares of Restricted Stock will be
issued to each of these Outside Directors at such times and in such amounts and
in accordance with the terms and conditions specified on Exhibit A hereto. Such
shares of Restricted Stock also shall be subject to all other terms and
conditions of general applicability to the Restricted Stock issued under this
Plan.
6. No Delivery of Certificate. The stock certificates representing
Restricted Stock granted to an Outside Director hereunder shall be held by the
Company, and the Outside Director shall not be entitled to delivery thereof
until the expiration of the Restricted Period.
7. Rights as Shareholder and Otherwise during Restricted Period. Except as
otherwise provided herein, an Outside Director to whom Restricted Stock has been
awarded shall have the entire beneficial ownership of the Restricted Stock and
shall be entitled to exercise the rights and privileges of a shareholder with
respect to the Restricted Stock, including the right to receive dividends and
the right to vote such Restricted Stock. However, prior to the expiration of the
Restricted Period, an Outside Director shall not either voluntarily or
involuntarily sell, transfer, assign, convey, pledge, encumber, hypothecate or
in any manner dispose of the Restricted Stock.
8. Expiration of Restricted Period: Exception for Cause. Upon the
expiration of the Restricted Period and receipt of stock certificates for the
shares of Restricted Stock, the Outside Director (or his beneficiary in the
event of his death) may transfer his Common Stock, subject to any applicable
federal or state laws that restrict such transfer. Notwithstanding the
foregoing, in the event an Outside Director is removed from the Board for
'cause,' the Restricted Stock granted to such Outside Director immediately shall
be forfeited as of the date of the Outside Director's removal from the Board.
The determination of whether an Outside Director has been removed from the Board
for 'cause' shall be determined by the Chief Executive Officer of the Company.
9. Other General Restrictions on Restricted Stock. Restricted Stock may
not be granted to an Outside Director unless and until (i) a registration
statement under the Securities Act of 1933, as amended, pertaining to the
Restricted Stock has been duly filed and declared effective and the Restricted
Stock has been duly qualified under applicable state securities or blue sky laws
or (ii) the Board, in its sole discretion after securing the advice of counsel,
determines that such registration or qualification is not required as a result
of the availability of an exemption from registration or qualification under
such laws.
Without limiting the foregoing, if at any time the Board shall determine in
its discretion that the listing, registration or qualification of the Restricted
Stock under any state or federal law or on any securities exchange, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of Restricted
Stock, such Restricted Stock may not be granted unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board. In addition, if at
any time the Board shall determine in its discretion that the grant of the
Restricted Stock would violate any securities laws, then such Restricted Stock
may not be granted until such time as the Board shall determine that such grant
may be effected other than in violation of such laws.
10. Administration. The Plan shall be administered by the Chief Executive
Officer of the Company. All questions of interpretation, administration and
application of the Plan shall be determined by the Chief Executive Officer of
the Company. The Chief Executive Officer shall not be liable for any
determination, action or failure to act in connection with the administration of
the Plan except for the Chief Executive Officer's own willful misconduct.
11. Amendment, Suspension or Termination of Plan. The Plan may be altered,
amended, suspended or terminated at any time by the Board; provided, however,
that any amendment which under the requirements of applicable law, including the
rules and regulations of any national securities exchange on which the Common
Stock may be listed, must be approved by the shareholders of the Company shall
not be effective unless and until such shareholder approval has been obtained in
compliance with such law; and provided further, that any amendment requiring
action pursuant to Rule 16b-3(d) of the Exchange Act in order to ensure that the
Common Stock will be exempt from Section 16(b) of the Exchange Act, or any
successor provision, shall not be effective unless and until such action has
been taken in compliance with such rule.
A-2
<PAGE>
Notwithstanding the foregoing, no termination or amendment of the Plan may
affect any Outside Director's rights under the provisions of the Plan with
respect to Restricted Stock theretofore granted under the Plan without the
consent of the Outside Director so affected.
12. No Right to Reelection. Nothing in the Plan shall be deemed to create
any obligation on the part of the Board to nominate any of its members for
reelection by the Company's shareholders, nor confer upon any Outside Director
the right to remain a member of the Board for any period of time.
13. No Restriction on Company's Right to Effect Corporate Changes. The
Plan shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of stock
or of options, warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks whose rights are superior to or affect the
Common Stock, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
14. Approval by Shareholders. No Restricted Stock shall be granted
pursuant to this Plan unless and until this Plan has been approved, to the
extent such approval is required by law or by any self-regulatory organization,
by the shareholders of the Company.
15. Governing Law. This Plan and all rights and obligations hereunder
shall be construed in accordance with and governed by the laws of the State of
North Carolina.
16. Headings. Titles and headings to sections in this Plan are inserted
for reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Plan.
17. Construction of Terms. Any reference herein to the masculine shall
include the feminine or neuter, and any reference herein to the singular or
plural shall be construed as plural or singular whenever the context requires.
The words 'hereof,' 'herein,' 'hereunder' and any other similar compounds of the
word 'here' shall mean and refer to the entire Plan and not to any particular
provision or section.
A-3
<PAGE>
EXHIBIT A
TO THE 1997 RESTRICTED STOCK PLAN FOR OUTSIDE
DIRECTORS OF COLTEC INDUSTRIES INC
Special Grants of Restricted Stock to Certain Outside Directors Whose
First Election Date Occurred On or Prior to July 11, 1996
<TABLE>
<CAPTION>
FIRST GRANT VALUE OF
NAME ELECTION DATE DATE* RESTRICTED STOCK**
- ---------------------------------------------------------- ------------- ----------- ------------------
<S> <C> <C> <C>
Joel Moses................................................ 6/11/92 6/11/97 $18,733.18
6/11/98 $ 4,068.25
6/11/99 $ 4,420.15
6/11/00 $ 4,805.86
6/11/01 $ 5,229.55
6/11/02 $ 5,696.05
Richard A. Stuckey........................................ 6/21/94 6/21/99 $53,961.22
6/21/00 $11,921.72
6/21/01 $13,205.19
6/21/02 $14,669.87
Joseph R. Coppola......................................... 10/12/94 10/12/99 $59,608.53
10/12/00 $13,205.19
10/12/01 $14,669.87
</TABLE>
- ------------------
* The named individual must be an Outside Director on the indicated date of
grant in order to receive the Restricted Stock. If the individual has ceased
to be an Outside Director as of such date, all remaining outstanding grants
of Restricted Stock shall be forfeited.
** The Outside Director shall receive the number of whole shares of Restricted
Stock which equals the monetary amount listed divided by the Fair Market
Value of one share of Common Stock on the date of grant. Fractional shares of
.50 or more shall be rounded up to the next share. Fractional shares of less
than .50 shall be disregarded.
A-4
Coltec Industries Coltec Industries Inc
[LOGO] 3 Coliseum Centre
2550 West Tyvola Road
Charlotte, North Carolina
THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JOHN W. GUFFEY, JR., and DAVID D. HARRISON,
and each of them, with full power of substitution, as proxy or proxies to
vote all stock of Coltec Industries Inc owned by the undersigned, with like
effect as if the undersigned were personally present and voting at the
annual meeting of shareholders of Coltec Industries Inc to be held at 9:30
a.m., local time, on Thursday, May 8, 1997, at The Park Hotel, 2220 Rexford
Road, Charlotte, North Carolina, and at any adjournment or adjournments
thereof, on the items of business set forth on the reverse side hereof and
on such other business as may properly come before the meeting and hereby
revokes any proxy or proxies heretofore given.
This proxy is continued on the reverse side. Please sign on the reverse side
and return promptly.
FOLD AND DETACH HERE
<PAGE>
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is
returned, such shares will be voted "FOR" the nominees in Proposal 1 and
"FOR" Proposals 2 and 3.
Please mark your votes as indicated in this example /X/
The Board of Directors recommends a vote "FOR" the nominees in Proposal 1
and "FOR" Proposals 2 and 3.
FOR ALL NOMINEES STANDING FOR ELECTION / / WITHHELD FOR ALL / /
Proposal 1- Election of the following nominees as
Directors:
Joseph R. Coppola David I. Margolis
William H. Grigg Joel Moses
John W. Guffey, Jr. Richard A. Stuckey
David D. Harrison
A vote FOR the nominees includes discretionary
authority to vote for a substitute nominee if any of the nominees listed
becomes unable or unwilling to serve.
Withhold for the following only (Write the name of the nominee(s) in the
space below)
- -----------------------------------
Proposal 2- 1997 Restricted Stock Plan for Outside Directors
FOR AGAINST ABSTAIN
/ / / / / /
Proposal 3- Appointment of Independent Public Accountants
FOR AGAINST ABSTAIN
/ / / / / /
Signatures(s) _________________________ Dated __________, 1997
Note: Please sign as name appears above. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title.
FOLD AND DETACH HERE
<PAGE>
CONFIDENTIAL VOTING INSTRUCTIONS
-----------------------------------
Common Stock
The shares to which these instructions relate will be voted as directed. If
no direction is given when the duly executed instructions are returned, the
shares will be voted in the same proportion as instructions are received
for shares credited to the accounts of participants in the Walbar Canada
Inc. Employee Savings and Profit Sharing Plan.
PLEASE MARK YOUR CHOICE LIKE THIS: |X| IN BLUE OR BLACK INK
The undersigned hereby instructs the Trustees of the Walbar Canada
Inc. Employee Savings and Profit Sharing Plan, to vote all stock of Coltec
Industries Inc credited to my account in the Walbar Canada Inc. Employee
Savings and Profit Sharing Plan at the annual meeting of shareholders of
Coltec Industries Inc to be held at 9:30 a.m., local time, on Thursday, May
8, 1997, at The Park Hotel, 2220 Rexford Road, Charlotte, North Carolina,
and at any adjournment or adjournments thereof, on the items of business
set forth below and on such other business as may properly come before the
meeting.
PROPOSAL 1 - Election of the following nominees as Directors:
Joseph R. Coppola, William H. Grigg, John W. Guffey,
Jr., David D. Harrison, David I. Margolis, Joel Moses
and Richard A. Stuckey.
Instructions to vote for the nominees includes discretionary authority to
vote for a substitute nominee if any of the nominees listed becomes unable
or unwilling to serve.
FOR ALL NOMINEES STANDING FOR ELECTION |_|
WITHHELD FOR ALL NOMINEES |_|
Withheld for the following only (write
the name of the nominee(s) in the space below)
- --------------------------------------
PROPOSAL 2 - 1977 Restricted Stock Plan for Outside Directors
FOR AGAINST ABSTAIN
|_| |_| |_|
PROPOSAL 3 - Appointment of Independent Public Accountants
FOR AGAINST ABSTAIN
|_| |_| |_|
DATE:___________________________________
SIGNATURE:______________________________
