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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ X ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Commercial Intertech Corp.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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 of other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
____________________________________________________________
4) Proposed maximum aggregate value of transaction:
____________________________________________________________
Set forth the amount on which the filing fee is calculated and state how it
was determined.
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[ ] 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 of Registration Statement No.:
__________________________________________________
3) Filing Party:
__________________________________________________
4) Date Filed:
__________________________________________________
Notes:
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* * * * *
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COMMERCIAL
INTERTECH
Notice of
Annual Meeting of
Shareholders
March 27, 1996
and
Proxy Statement
Commercial Intertech Corp.
1775 Logan Avenue
Youngstown, Ohio 44501
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 27, 1996
To the Shareholders of Commercial Intertech Corp.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
Commercial Intertech Corp. will be held at the HYDRAULIC CYLINDER DIVISION
LOCATED AT 2701 INTERTECH DRIVE, YOUNGSTOWN, OHIO, on Wednesday, March 27,
1996, at 2:00 P.M., for the following purposes:
1. Election of four (4) directors of the First Class to serve for a term of
three (3) years and until their successors shall have been elected and
qualified;
2. Ratification of the selection of Ernst & Young LLP as independent auditors
for the fiscal year ending October 31, 1996;
3. Transaction of such other business as may properly come before the meeting
and any adjournments or postponements thereof;
all in accordance with the accompanying Proxy Statement.
The Board of Directors has fixed the close of business on January 22, 1996 as
the record date for the determination of the shareholders entitled to notice of
and to vote at such meeting.
BY ORDER OF THE BOARD OF DIRECTORS
SHIRLEY M. SHIELDS
Secretary
January 29, 1996
VOTING YOUR PROXY IS IMPORTANT
PROMPT ACTION IN SENDING IN YOUR PROXY WILL ELIMINATE THE
EXPENSE OF FURTHER SOLICITATION. AN ENVELOPE IS PROVIDED
FOR YOUR USE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. YOU ARE RECEIVING A PROXY FOR EACH ACCOUNT IN YOUR
HOUSEHOLD. PLEASE VOTE, SIGN AND MAIL ALL PROXIES YOU RECEIVE.
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MARCH 27, 1996
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Commercial Intertech Corp. (the "Company") of proxies in
the form enclosed herewith to be voted at the Annual Meeting of Shareholders to
be held at the HYDRAULIC CYLINDER DIVISION, 2701 INTERTECH DRIVE, YOUNGSTOWN,
OHIO, 44509 on Wednesday, March 27, 1996, at 2:00 P.M., and at any adjournments
or postponements thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting of Shareholders. This Proxy Statement and the accompanying
form of proxy were first released to shareholders on or about January 29, 1996.
Any shareholder giving a proxy will have the right to revoke it at any time
prior to the voting thereof by giving written notice to the Secretary of the
Company. All shares represented by effective proxies will be voted at the
meeting or at any adjournments or postponements thereof. In addition, if you
are present at the meeting, you may revoke your proxy at that time and vote
personally on all matters brought before the meeting. All shares represented
by effective proxies marked "abstain" will be counted as present and entitled
to vote for purposes of reaching a quorum at the meeting or at any adjournments
or postponements thereof and will be counted for purposes of voting on any
proposal presented at the meeting or any adjournments or postponements thereof.
Abstentions will have the same effect as votes cast against a proposal. If a
broker indicates on a proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter and will
have no effect on the vote on such matter.
VOTING SHARES
The Board of Directors has fixed the close of business January 22, 1996 as
the record date for the determination of shareholders entitled to notice of and
to vote at said meeting. Only shareholders of record at the close of business
on that date will be entitled to vote at the meeting or any adjournments or
postponements thereof. The Company's voting securities outstanding on December
31, 1995 consisted of 15,414,229 shares of its $1 par value common stock
("Common Stock") (exclusive of 149,884 shares of treasury stock) and 1,053,508
shares of ESOP Convertible Preferred Stock Series B, no par value. Each share
of the Common Stock is entitled to one vote at the meeting. Due to the Common
Stock dividend paid on September 15, 1994, in the form of a 3-for-2 stock
split, and the requirement of equivalent voting rights of Common Stock and
Convertible Preferred Stock Series B, each share of Convertible Preferred Stock
Series B will be entitled to one and one-half votes at the meeting.
Under the General Corporation Law of Ohio, if a shareholder gives written
notice to the President, a Vice President, or the Secretary of the Company, not
less than forty-eight hours before the time fixed for holding a meeting to
elect directors, of his desire that the voting be cumulative, and if an
announcement of the giving of such notice is made upon the convening of the
meeting, each shareholder has the right to cumulate such voting power as he
possesses and to give one candidate the number of votes equal to the number of
directors to be elected multiplied by the number of shares he holds or to
distribute his votes on the same principle among two or more candidates, as he
sees fit. A shareholder notice to exercise cumulative voting rights at
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the meeting must be in writing, addressed to the President, Vice President or
Secretary of the Company, and must be received at the principal executive
offices of the Company not less than 48 hours before 2:00 P.M., March 27, 1996.
The ESOP Convertible Preferred Stock Series B is held of record by a trustee
for the Commercial Intertech Corp. Employee Stock Ownership Plan and the
Commercial Intertech Retirement Stock Ownership and Savings Plan. The trust
for these plans contains pass-through voting provisions for the participants of
the plans. Shares which are allocable to a participant's account will be voted
by the trustee as directed by the participant. The trustee will vote the
shares which are either not allocable to any participant's account or which are
allocable, but which were not voted by the participant, proportionately as the
allocable shares voted by participants were voted.
1. ELECTION OF DIRECTORS
The Code of Regulations of the Company provides that the Company shall have
twelve directors and that the Board shall be classified with respect to the
time for which members shall severally hold office by dividing them into three
classes, each of such classes consisting of four directors to hold office for a
term of three years. Four directors of the First Class are to be elected at
the annual meeting on March 27, 1996 for a term of three years expiring at the
annual meeting in 1999. It is the intention of the persons named in the
enclosed form of proxy to vote such proxy as specified and, if no specification
is made on a signed and returned proxy, to vote such proxy for the election as
directors of the four nominees listed in the table set forth below to serve for
a term of three years and until their successors shall be elected and qualify.
Directors of the First Class whose terms of office expire at the annual meeting
of shareholders on March 27, 1996 are Messrs. Charles B. Cushwa III, John M.
Galvin, Richard J. Hill and John Nelson, all of whom were elected to their
present terms of office by the shareholders at the annual meeting held March
24, 1993. Mr. Nelson will retire from the Board of Directors in accordance
with the terms of the Board of Directors' retirement policy and will not be
running for reelection. The new director nominee, nominated by the Board of
Directors, is William E. Kassling. Mr. Kassling is Chairman, Chief Executive
Officer and President of Westinghouse Air Brake Company.
The Board of Directors has no reason to believe that the persons nominated
will not be available. In the event that a vacancy among such original
nominees occurs prior to the meeting, shares represented by the proxies so
appointed will be voted for a substitute nominee or nominees designated by the
Board of Directors and for the remaining nominees. All of the original
nominees have consented to serve if elected. In the event cumulative voting is
appropriately called for, the enclosed proxy may be voted in favor of any one
or more of the below-named nominees, to the exclusion of the others, and in
such order of preference as the proxy holder may determine in his discretion.
In any event, the shares represented by the proxy will be voted for the
election of directors unless instructed to the contrary.
The terms of office of Messrs. Bresnahan, William Cushwa, Humphrey and
Midgley, directors of the Second Class, will expire at the annual meeting in
1997 and the terms of office of Messrs. McDonough, Powers, Smart and Tucker,
directors of the Third Class, will expire at the annual meeting in 1998.
Except for Messrs. William W. Cushwa and Charles B. Cushwa III, who are
brothers, none of the directors are related.
Candidates for the office of Director receiving the greatest number of votes
shall be elected.
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INFORMATION AS TO NOMINEES
The names of the nominees for the office of director, together with certain
information concerning such nominees, are set forth below:
Charles B. Cushwa III, age 61 - Director since 1972.
Director of Cushwa Center for Entrepreneurship, Youngstown State
University since 1988. Mr. Cushwa received his bachelor of arts degree
in Sociology and his master of arts degree in Economics from the
University of Notre Dame. Mr. Cushwa joined the Company in 1961 and
held various management positions with the Company until retiring in
1988 as the Secretary of the Company. Mr. Cushwa is a director of Home
Savings and Loan Company of Youngstown, Youngstown, Ohio.
NOMINEE FOR FIRST CLASS (PRESENT TERM EXPIRES IN 1996).
John M. Galvin, age 63 - Director since 1993.
Private investor and consultant following retirement in 1992. He was
Vice Chairman and Director of The Irvine Company from 1987 to 1992. He
received his bachelor's degree in Business Administration from Indiana
University. He has served as President of The Rust Group of Austin,
Texas; as Senior Vice President of Aetna Life and Casualty; and as
Chief Executive Officer of Aetna's International and Diversified
Business Division. Mr. Galvin is a Director of Global Marine, Inc. of
Houston, Texas and Oasis Residential Inc. of Las Vegas, Nevada.
NOMINEE FOR FIRST CLASS (PRESENT TERM EXPIRES IN 1996).
Richard J. Hill, age 65 - Director since 1993.
Retired in 1990 as Certified Public Accountant with Hill, Barth & King,
CPAs, a regional certified public accounting firm operating in Ohio,
Pennsylvania and Florida. Mr. Hill formerly was a general partner and
chairman of the Executive Committee of Hill, Barth & King. He received
his bachelor's degree in Business Administration from Youngstown State
University. Mr. Hill is a director of Panelmatic, Inc., Youngstown,
Ohio.
NOMINEE FOR FIRST CLASS (PRESENT TERM EXPIRES IN 1996).
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William E. Kassling, age 51.
Chairman, Chief Executive Officer and President of Westinghouse Air
Brake Company. Mr. Kassling received his bachelor of science degree
in Industrial Management from Purdue University and his master's degree
in Business Administration from the University of Chicago. He has
served as Management Consultant for Boston Consulting Group; Director,
Planning and Development for Clark Equipment Company; and Vice
President, Planning, Vice President Group Executive Building
Specialties Group and Railway Products Group for American Standard
Incorporated. He is a director of Dravo Corporation, Pittsburgh,
Pennsylvania and Scientific Atlanta, Inc., Atlanta, Georgia.
NOMINEE FOR FIRST CLASS.
INFORMATION CONCERNING DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE
MEETING
The names of the remaining eight directors of the Company, and certain
information with respect to such directors, are as follows:
William J. Bresnahan, age 45 - Director since 1995.
President of Hynes Industries. Mr. Bresnahan received his bachelor of
science degree in Business Administration from Youngstown State
University and his master's degree in Business Administration from
the University of Pittsburgh. He held sales and marketing positions
with Proctor & Gamble and Pharmacia, Inc. before joining Hynes
Industries in 1980. He held sales and general management positions at
Hynes Industries until he was named President in 1989. Mr. Bresnahan
is a director of the Mahoning National Bank, Youngstown, Ohio.
DIRECTOR IN SECOND CLASS (PRESENT TERM EXPIRES IN 1997).
William W. Cushwa, age 58 - Director since 1975.
Vice President Planning and Assistant Treasurer of the Company. Mr.
Cushwa received his bachelor of arts degree from the University of
Notre Dame and his master's degree in Business Administration from
Case Western Reserve University. Mr. Cushwa joined the Company in
1960, was elected Assistant Treasurer in 1969, and Director of
Corporate Planning in 1977 and was elected to his current position in
1983.
DIRECTOR IN SECOND CLASS (PRESENT TERM EXPIRES IN 1997).
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Neil D. Humphrey, age 67 - Director since 1985.
President Emeritus of Youngstown State University, having retired as
President in 1992 after eight years in that position. Dr. Humphrey
received his bachelor of arts degree from Idaho State University, his
master of science degree in Government Management from the School of
Business Administration of the University of Denver, and his doctorate
degree in Education from Brigham Young University. His prior
experience includes 10 years as Chancellor of the University of Nevada
System. He also served as Budget Director for the State of Nevada.
DIRECTOR IN SECOND CLASS (PRESENT TERM EXPIRES IN 1997).
C. Edward Midgley, age 58 - Director since 1995.
Advisory Director, PaineWebber, Incorporated. Mr. Midgley received his
bachelor of arts degree in Economics from Princeton University and his
master's degree in Business Administration from Harvard Business
School. Until 1994 he was Co-Head of Investment Banking, Executive
Managing Director, Head of Mergers and Acquisitions and Member
of the Board of Directors of Kidder, Peabody & Co. Incorporated. He
has served as Managing Director, Partner and Head of Corporate
Finance/Client Coverage Group at Bankers Trust Company; Vice Chairman,
Office of the Chief Executive at Fieldcrest Cannon, Inc.; and Vice
Chairman at Amoskeag Company.
DIRECTOR IN SECOND CLASS (PRESENT TERM EXPIRES IN 1997).
Gerald C. McDonough, age 67 - Director since 1992.
Retired in July 1988 as Chairman of the Board and Chief Executive
Officer of Leaseway Transportation Corporation. Mr. McDonough received
his bachelor's degree in Business Administration from Case Western
Reserve University. Mr. McDonough is a director of York International,
York, Pennsylvania, Acme-Cleveland Corp., Cleveland, Ohio,
Brush-Wellman Corporation, Cleveland, Ohio, and Associated Estates
Realty Corporation, Cleveland, Ohio, and a Trustee of the Fidelity
Funds, Boston, Massachusetts.
DIRECTOR IN THIRD CLASS (PRESENT TERM EXPIRES IN 1998).
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Paul J. Powers, age 60 - Director since 1984.
Chairman, President, Chief Executive Officer and Chief Operating
Officer of the Company. Mr. Powers received his bachelor's degree in
Economics from Merrimack College and his master's degree in Business
Administration from George Washington University. Mr. Powers joined
the Company in 1982 as Group Vice President of Hydraulics, was elected
President and Chief Operating Officer in 1984 and was elected Chairman
and Chief Executive Officer in 1987. Mr. Powers is a director of
Acme-Cleveland Corp., Cleveland, Ohio, Ohio Edison Company, Akron,
Ohio, Twin Disc, Inc., Racine, Wisconsin, and Global Marine, Inc.,
Houston, Texas.
DIRECTOR IN THIRD CLASS (PRESENT TERM EXPIRES IN 1998).
George M. Smart, age 50 - Director since 1995.
President and Chairman of the Board of Phoenix Packaging Corporation.
Mr. Smart received his bachelor of science degree from The Defiance
College and his master's degree in Business Administration from Wharton
School, University of Pennsylvania. He was President and CEO of
Central States Can Co. from 1978 to 1993. He has been President and
Chairman of Phoenix Packaging Corporation since 1993. Mr. Smart is a
director of Phoenix Packaging Corporation, North Canton, Ohio, Belden &
Blake Corporation, North Canton, Ohio, Ohio Edison Company, Akron,
Ohio, and The Defiance College, Defiance, Ohio.
DIRECTOR IN THIRD CLASS (PRESENT TERM EXPIRES IN 1998).
Don E. Tucker, age 67 - Director since 1977.
Retired Senior Vice President and Chief Administrative Officer of the
Company. Mr. Tucker received his bachelor of arts degree from Aurora
College and his bachelor of law degree from Yale University. Mr.
Tucker joined the Company in 1972 as General Counsel and Assistant
Secretary, was elected Senior Vice President and Chief Administrative
Officer in 1984 and retired in 1993. Mr. Tucker is a director of Bank
One Youngstown N.A., Youngstown, Ohio.
DIRECTOR IN THIRD CLASS (PRESENT TERM EXPIRES IN 1998).
BOARD MEETINGS AND COMMITTEE INFORMATION
The Board of Directors held six meetings during the year and has established
four committees to assist in the discharge of its responsibilities. These are
the Executive, Audit, Pension Investment and Compensation
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Committees. There is no nominating committee; the Board as a whole nominates
directors for election after receiving recommendations from the Executive
Committee. During the year, all directors attended 75% or more of the
aggregate of meetings of the Board and the Board committees to which they were
assigned. The attendance at the meetings of the Board of Directors and
committee meetings during the year was 99%.
The Executive Committee, during the intervals between the meetings of the
Board of Directors, possesses and may exercise all the powers of the Board of
Directors in the management of the business and affairs of the corporation in
so far as may be permitted by law, except that no obligations or indebtedness
other than those properly pertaining to current business shall be contracted
without authorization by the Board of Directors; and such Executive Committee
shall have such other powers and perform such other duties as shall from time
to time be prescribed by the Board of Directors. The committee is also
responsible for making recommendations to the Board of Directors on candidates
for election to the Board and on the qualifications, retirement and
compensation of directors. During the past year the committee held eight
meetings. The committee consists of five members as follows: Messrs. Powers
(Chairman), Humphrey, McDonough, Nelson and Tucker (Secretary).
The Audit Committee has the responsibility for recommending the selection of
independent auditors by the Board of Directors; reviewing with such auditors,
prior to the commencement of or during such audit for each fiscal year, the
scope of the examination to be made; reviewing with such auditors the audited
financial reports, any changes in accounting policies, the services rendered by
such auditors (including management consulting services) and the effect of such
services on the independence of such auditors; reviewing the corporation's
internal audit and control functions; considering such other matters relating
to such audits and to the accounting procedures employed by the corporation as
the Audit Committee may deem appropriate; and reporting to the full Board of
Directors regarding all of the foregoing. During the past year, the committee
held four meetings with the auditors. This committee consists of five members
as follows: Messrs. Hill (Chairman), Charles Cushwa, Galvin, Nelson and
Smart. None of the members of the Audit Committee is an employee of the
Company.
The Pension Investment Committee has the responsibility for overseeing and
evaluating the investments of the corporation's pension plan trusts, selecting
fund managers and reviewing their performance and designating the proportion of
pension contributions to be assigned to such managers. During the past year,
the committee held two meetings. The committee consists of six members:
Messrs. McDonough (Chairman), Charles Cushwa, Humphrey, Midgley, Smart and
Tucker. None of the members of the Pension Investment Committee is an employee
of the Company.
The Compensation Committee has the authority to determine annual salaries and
bonuses for all elected officers and senior management; constitutes the
"Committee" contemplated by the corporation's various stock option and award
plans with the responsibility for administering such plans; and has the
authority to approve incentive and deferred compensation plans, and funding
arrangements related thereto, for elected officers and senior management.
During the past year, the committee held six meetings. The committee consists
of five members: Messrs. Humphrey (Chairman), Galvin, Hill, McDonough and
Midgley. None of the members of the Compensation Committee is an employee of
the Company.
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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Act") requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten-percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended October 31, 1995 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with; except that,
inadvertently, one report of two transactions was filed late by Charles B.
Cushwa III and one report of three transactions was filed late by William W.
Cushwa.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overall Policy and Administration
The Company's executive compensation program, as developed by the
Compensation Committee, is designed to preserve and enhance shareholder value.
Within a strategy that links executive and shareholder financial interests, the
executive compensation program is designed to:
- -- Motivate executives toward long term strategic management of the
Company's assets and operations through stock programs that focus
executive attention on increasing shareholder value;
- -- Recognize and reward individual contributions and achievements as well
as overall business performance via annual incentives which are
tied to annual operating, financial and strategic objectives;
- -- Provide a competitive salary structure to attract and retain the
executive talent necessary to ensure the Company's continued
profitable growth.
The executive compensation program is administered by the Compensation
Committee of the Board of Directors of the Company (the Committee), which is
comprised of five independent directors, none of whom has interlocking or other
relationships which might be considered conflicts of interest. The Committee
establishes salaries for corporate officers and administers the Company's
Senior Management Target Incentive Plan (SMTIP), Salaried Employee Incentive
Plan (SEIP) and Stock Option and Award Plans. In its decision-making process,
the Committee utilizes independent compensation consultants and may
periodically seek input from appropriate Company executives.
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To further the Committee's strategy of linking executive and shareholder
financial interests, in recent years the Committee has adjusted the mix of an
executive's overall compensation components to increase the emphasis on
performance based (annual cash incentive awards; stock options; performance
shares) versus fixed (base salary and restricted stock) compensation.
Base Salaries
In establishing base salaries of Company executives, the Committee generally
targets market median (50th percentile) compensation levels of senior
executives and other corporate officers in comparably sized durable goods
manufacturing companies. Other factors such as availability of talent, the
recruiting requirements of the particular situation, experience and anticipated
performance are considered in determining individual base salary compensation
levels and may result in salaries above or below the stated target.
The Committee uses data from several executive compensation surveys. The
number of participant companies appearing in these surveys is more extensive
than the peer group established for performance graph purposes, reflecting the
broader group of companies with which the Company competes for executive
talent.
Any adjustments in the base salaries of senior executives and other corporate
officers are normally effective as of January 1 each year and are dependent
upon such factors as the executive's current responsibilities and experience,
competitive compensation practices at comparably sized durable goods
manufacturing companies, and the Committee's judgment regarding the performance
of the executive.
Annual Incentive Compensation
Beginning in fiscal 1995, the Committee administers two annual incentive
plans. The SMTIP was approved by shareholders in 1995 and is a
performance-based plan in which payouts are set in accordance with the
requirements of Internal Revenue Code Section 162(m). These requirements are:
- -- The compensation must be payable on account of the attainment of one or
more pre-established objective performance goals;
- -- The performance goals must be established by a Compensation Committee
of the Board of Directors that is comprised solely of two or more
"outside directors";
- -- The terms of the compensation and the performance criteria must be
disclosed to and approved by shareholders before payment;
- -- The Compensation Committee must certify in writing that the performance
goals have been satisfied before payment.
In addition, the Committee also administers the SEIP which provides
compensation that is not performance-based as defined in Code Section 162(m),
but which is based on both objective and subjective evaluations of individual
executive performance.
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The Senior Management Target Incentive Plan
The SMTIP provides annual incentive compensation to the Company's eight
senior executives based solely on the achievement of predetermined financial
performance objectives, including group operating income and corporate net
income, return on group sales and return on group assets. Target awards, as a
percent of salary, range from 22.5 to 52.5 percent.
The Salaried Employee Incentive Plan
The SEIP provides senior and top managers an opportunity to earn annual cash
payments (target incentive awards) based primarily on the achievement of
important financial goals (operating and net income, return on sales, and
return on assets) as well as individual objectives. A threshold level of net
income must be achieved before any payments are made.
Selection of participants by the Committee, which in 1995 totaled 145
individuals, and accompanying target award ranges (from 7.5 to 30 percent of
base salary) are determined according to individual responsibility levels,
business judgment and market median data for comparably sized durable goods
manufacturing companies.
To enhance the Company's objectives of encouraging additional executive stock
ownership and increasing Company cash flow, about one-half of participants in
the SEIP may elect to receive their earned awards in cash or stock or a
combination of the two. If the participant elects to receive all or part of an
earned award in restricted stock, the Company increases the stock award by a
fixed percentage. The vesting period associated with the stock award is three
years, and in the event a participant voluntarily leaves the Company or is
terminated "for cause," the shares are forfeited.
The Stock Option and Award Plans
The Company's Stock Option and Award Plans allow for the grant of a variety
of stock incentive instruments, including nonqualified (i.e., not
tax-preferred) and incentive stock options, stock appreciation rights,
restricted stock and performance shares. For many years, the Company has
granted stock options to its key executives to create a direct link between
shareholder and executive interests. In the past the Company has also
periodically granted time-lapse restricted stock to its key executives.
The performance share program, first initiated in fiscal 1993, is a
longer-term incentive program designed to motivate key executives whose efforts
result in the achievement of sustained financial results leading to increased
shareholder value. Designed to replace substantially the restricted stock
grants previously made to key executives, the Committee believes performance
shares better align executive and shareholder financial interests. The
Committee selected 63 executives throughout the Company for participation in
the performance share program.
Depending on responsibilities within the Company, performance shares are
earned based on average corporate and/or group Return On Equity (ROE),
divisional operating income and, for certain executives, individual specific
objectives over a three-year performance period. In future years, the
Committee may
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consider other measures of shareholder value and performance periods, as
appropriate, in light of the Company's strategic objectives. Threshold levels
of ROE and, in certain cases, operating income must be achieved before any
distributions are made.
Historically the Company has granted stock options on an annual basis while
performance shares are granted every other year. In determining stock option
awards, the Committee considers such factors as median competitive award
levels, the size of previous stock option awards and Company and individual
performance.
The Company has modified its practice of awarding restricted stock to key
executives. Restricted stock is now used only in special circumstances, such
as to attract new key executives for employment with the Company and in other
similar non-recurring circumstances.
Chief Executive Officer Compensation
Mr. Powers' annual base salary for 1995 was $481,667. This rate was based on
the Committee's judgment regarding his performance, his service to the Company
and competitive compensation levels for CEOs of comparably sized durable goods
manufacturing companies. For performance in fiscal 1995, Mr. Powers received a
payment under the SMTIP of $331,013. This payment was based on a predetermined
formula based on corporate net income set by the Committee and certified by the
Committee in accordance with the provisions of Code Section 162(m). In
addition, Mr. Powers received a payment from the SEIP of $218,987 based on the
Committee's judgment on Mr. Powers' achievement of personal goals and
objectives during 1995.
Mr. Powers received options to purchase 34,000 shares of Common Stock in
1995. In determining this grant, the Committee considered Company and
individual performance, the size of previous awards and market median long-term
incentive statistics.
Internal Revenue Section 162(m)
A 1993 Internal Revenue Code amendment caps the allowable federal income tax
deduction for compensation paid to each of the proxy-reported officers of a
public company. The deduction limit, which was effective in 1994, does not
apply to compensation paid under a plan that meets certain requirements for
performance-based compensation. It is the Committee's general policy to
structure the major components of the Company's incentive compensation programs
to satisfy the requirements of performance-based compensation and preserve the
deductibility of compensation paid to executive officers on an ongoing basis.
To implement the above policy, the Company asked for and received shareholder
approval of the Stock Option and Award Plan of 1995. Such approval preserved
the full tax deductibility of Stock Options, Performance Shares and Annual
Incentive Awards awarded to the Company's executive officers. The Stock Option
and Award Plan of 1995 links compensation to the attainment of key financial
objectives leading to increases in shareholder value.
By: The Compensation Committee
Neil D. Humphrey, Chairman Gerald C. McDonough
John M. Galvin C. Edward Midgley
Richard J. Hill
13
<PAGE> 16
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- Awards
------------
Secu-
rities
Under-
Other Restricted lying
Annual Stock Op-
Name and Salary Bonus Compensa Awards tions All Other
------ ----- tion Compensation
Principal Position Year ($) ($) ($) ($)(4) (#) ($)
-------------------- ---- --- --- ---- ------ --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Paul J. Powers 1995 481,667 440,000 -0- 131,995 34,000 15,810(5)
Chairman, President, 1994 461,667 400,000 -0- 835,634 37,500 15,876
Chief Executive 1993 434,500 165,000 -0- -0- 36,000 16,105
Officer and Chief
Operating Officer
Mark G. Kachur (1) 1995 247,500 135,000 38,414 24,008 15,000 -0-
Senior Vice President- 1994 134,300 120,000 -0- 174,375 15,000 -0-
Fluid Purification 1993 - - - - - -
Group
Bruce C. Wheatley 1995 223,833 90,000 -0- 36,002 7,500 8,075(6)
Senior Vice President- 1994 216,500 50,000 -0- 59,996 7,500 5,428
Administration 1993 207,500 45,000 4,539 -0- 7,500 -0-
Philip N. 1995 201,125 112,000 -0- -0- -0- 7,394(7)
Winkelstern(2) 1994 256,167 51,250 -0- 184,499 15,000 9,704
Former Senior Vice 1993 235,167 68,000 -0- -0- 15,000 10,073
President and Chief
Financial Officer
Hubert Jacobs van 1995 204,777 67,200 7,193 20,152 7,500 1,085(8)
Merlen (3) 1994 - - - - - -
Senior Vice President 1993 - - - - - -
and Chief Financial
Officer
John Gilchrist 1995 194,167 30,000 -0- 11,995 7,000 6,930(9)
Group Vice President 1994 160,000 75,000 -0- 29,998 7,500 5,913
1993 132,500 25,000 -0- -0- 7,500 5,506
</TABLE>
14
<PAGE> 17
(1) Mr. Kachur became an employee of the Company on April 11, 1994.
(2) Mr. Winkelstern retired from the Company on August 1, 1995.
(3) Mr. Jacobs van Merlen became Senior Vice President and Chief Financial
Officer of the Company on August 1, 1995.
(4) This column shows the market value of restricted share awards on the date
of award. The aggregate holdings/value of Restricted Stock held on October
31, 1995 by the individuals listed in this table, not including awards which
were earned after the end of the fiscal year as part of the SEIP and were
elected to be taken in the form of restricted stock, as described in the
Compensation Committee Report on Executive Compensation, are: Paul J. Powers -
75,059 shares/$1,266,621; Mark G. Kachur - 11,250 shares/$189,844; Bruce C.
Wheatley - 7,154 shares/$120,724; Philip N. Winkelstern - 17,218
shares/$290,554; Hubert Jacobs van Merlen - 2,413 shares/$40,719; and John
Gilchrist - 2,302 shares/$38,846. Regular quarterly dividends are paid on
Restricted Stock held by these individuals.
(5) Includes Company matching contributions pursuant to the Non-Qualified
Stock Purchase Plan in the amount of $10,475; Company matching contributions
pursuant to the 401(k) Plan in the amount of $3,975; and Company contribution
pursuant to the Employee Stock Ownership Plan in the amount of $1,360.
(6) Includes Company matching contributions pursuant to the Non-Qualified
Stock Purchase Plan in the amount of $2,740; Company matching contributions
pursuant to the 401(k) Plan in the amount of $3,975; and Company contribution
pursuant to the Employee Stock Ownership Plan in the amount of $1,360.
(7) Includes Company matching contributions pursuant to the Non-Qualified
Stock Purchase Plan in the amount of $3,184; Company matching contributions
pursuant to the 401(k) Plan in the amount of $2,850; and Company contribution
pursuant to the Employee Stock Ownership Plan in the amount of $1,360.
(8) Includes Company matching contributions pursuant to the Non-Qualified
Stock Purchase Plan in the amount of $1,085.
(9) Includes Company matching contributions pursuant to the Non-Qualified
Stock Purchase Plan in the amount of $1,850; Company matching contributions
pursuant to the 401(k) Plan in the amount of $3,720; and Company contribution
pursuant to the Employee Stock Ownership Plan in the amount of $1,360.
15
<PAGE> 18
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (2)
----------------- --------------------
% of
Number of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees Price Expira-
Granted (#) in Fiscal ($/Share) tion 5% 10%
Name (1) Year (1) Date ($) ($)
---- --- ---- --- ---- --- ---
<S> <C> <C> <C> <C> <C>
Paul J. 34,000 29.1% $19.375 1/24/05 $414,354 $1,050,048
Powers
Mark G. 15,000 12.8 19.375 1/24/05 182,803 463,256
Kachur
Bruce C. 7,500 6.4 19.375 1/24/05 91,402 231,628
Wheatley
Philip N. -0- - - - - -
Winkelstern
Hubert Jacobs 7,500 6.4 18.50 7/31/05 87,274 221,168
van Merlen
John 7,000 6.0 19.375 1/24/05 85,308 216,186
Gilchrist
</TABLE>
(1) The options listed in the above table were granted subject to a three-year
vesting period, with 50% of the options granted becoming exercisable on the
second anniversary of the grant date and 50% on the third anniversary. No SARs
were granted. The exercisability of the options may be accelerated in the
event of a change in control or a potential change in control.
(2) Potential Realizable Value is presented net of the option exercise price
but before any federal or state income taxes associated with exercise. These
amounts represent certain assumed rates of appreciation only. Actual gains are
dependent on the future performance of the Company's Common Stock and the
option holders' continued employment throughout the vesting period. The
amounts reflected in the table may not necessarily be achieved.
16
<PAGE> 19
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End FY-End (1)
(#) ($)
Shares --- ---
Acquired Value
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- --- --- ------------- --------------
<S> <C> <C> <C> <C>
Paul J. Powers 15,000 $118,125 115,500/89,500 $532,437/$205,810
Mark G. Kachur -0- -0- -0-/30,000 -0-/20,625
Bruce C. Wheatley 7,500 61,562 3,750/18,750 13,906/41,718
Philip N. Winkelstern 18,000 153,000 60,000/-0- 259,999/-0-
Hubert Jacobs van -0- -0- -0-/7,500 -0-/-0-
Merlen
John Gilchrist -0- -0- 8,862/18,250 39,253/41,718
</TABLE>
(1) The value per option is calculated by subtracting the exercise
price from the October 31, 1995 closing price of the Company's
Common Stock on the New York Stock Exchange of $16.875.
17
<PAGE> 20
LONG-TERM INCENTIVE PLAN AWARDS TABLE
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Estimated Future Payouts
-------------------------
Under Non-Stock Price Based Plans
---------------------------------
Number of Performance or
Shares, Other Period
Units or Other Until
Rights Maturation or Threshold Target Maximum
Name (#) Payout(1) (#) (#) (#)
---- --- --------- --- --- ---
<S> <C> <C> <C> <C> <C>
Paul J. Powers 42,750 1/25/98 21,375 42,750 64,125
Mark G. Kachur 12,000 1/25/98 6,000 12,000 18,000
Bruce C. Wheatley 7,000 1/25/98 3,500 7,000 10,500
Philip N.Winkelstern -0- - - - -
Hubert Jacobs van Merlen 6,000 1/25/98 3,000 6,000 9,000
John Gilchrist 6,000 1/25/98 3,000 6,000 9,000
</TABLE>
Payouts of awards are tied to achieving specified levels of return on equity
("ROE") over a three-year period. At Threshold ROE, 50% of shares will be
distributed. 100% of award will be paid at Target and 150% of award at
Maximum. The Compensation Committee of the Board of Directors may, at or after
grant, accelerate the vesting of all or part of any Performance Share Award.
(1) The date in the column represents the date on which award payments will be
made. The amounts of the awards are based on the three-year performance period
ending October 31, 1997.
18
<PAGE> 21
RETIREMENT BENEFITS
Employees may retire from the Company with unreduced benefits under the
Company's retirement plans at age 65 or later with 25 or more years of service.
The table below shows the estimated annual pension benefits provided under the
Company's defined benefit retirement plans for employees in higher salary
classifications retiring at age 65 or later.
ESTIMATED TOTAL ANNUAL RETIREMENT BENEFITS UNDER THE PENSION PLAN FOR
SALARIED EMPLOYEES AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS
<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$ 150,000 $40,684 $54,245 $67,806 $71,196 $74,587
200,000 55,684 74,245 92,806 97,446 102,087
250,000 70,684 94,245 117,806 123,696 129,587
300,000 85,684 114,245 142,806 149,946 157,087
400,000 115,684 154,245 192,806 202,446 212,087
500,000 145,684 194,245 242,806 254,946 267,087
600,000 175,684 234,245 292,806 307,446 322,087
700,000 205,684 274,245 342,806 359,946 377,087
800,000 235,684 314,245 392,806 412,446 432,087
900,000 265,684 354,245 442,806 464,946 487,087
</TABLE>
Benefits under the plans are calculated generally under a formula of 50% of
the participant's final average compensation reduced by 50% of the
participant's estimated social security benefits, reflected in the table in the
form of a straight life annuity. The compensation covered by the pension plan
is base salary as set forth in the Salary column of the Summary Compensation
Table on page 14. The compensation covered by the supplemental executive
retirement plans is also base salary for those executives participating other
than the Chief Executive Officer, for which the compensation covered is base
salary plus bonus as set forth in the Summary Compensation Table. As of
November 30, 1995, the following executive officers had the following credited
years of service with the Company; Mr. Powers, 13; Mr. Kachur, 1; Mr. Wheatley,
3; Mr. Jacobs van Merlen, 8; Mr. Gilchrist, 28.
19
<PAGE> 22
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG COMMERCIAL INTERTECH CORP., NYSE
AND DOW JONES INDUSTRIAL DIVERSIFIED INDUSTRY GROUP INDICES
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
TEC 100.00 116.93 149.81 167.04 240.07 215.23
NYSE 100.00 131.75 140.72 166.94 173.15 203.26
DJID 100.00 139.82 151.60 189.82 195.39 220.73
</TABLE>
20
<PAGE> 23
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN (CONT.)
Assumes $100 invested on October 31, 1990.
Total return assumes reinvestment of dividends.
Data as of October 31 of each year.
In accordance with SEC guidelines, the New York Stock Exchange (NYSE) Index was
selected as the broad market indicator because Commercial Intertech (TEC)
shares are traded on the NYSE.
The Dow Jones Industrial Diversified (DJID) Index was selected as the industry
index because TEC is included in said index along with a number of competitors
and other companies involved in two or more industries or whose products are
used in many different industries.
EMPLOYMENT AGREEMENTS
On July 27, 1994, the Company entered into an Employment Agreement with Paul
J. Powers. Mr. Powers' Employment Agreement expires on February 28, 2000. The
Employment Agreement provides for the payment of a base salary which can be
increased at the discretion of the Company. Additionally, Mr. Powers shall be
eligible to (1) receive cash bonuses as part of the Company's SEIP; and (2)
participate in other incentive, stock option, profit sharing and similar plans
maintained by the Company for the benefit of its executives. In addition, the
employment agreement with Mr. Powers provides that in the event of his
termination without cause (as defined in his employment agreement), Mr. Powers
shall receive a lump sum payment equal to two and one-half times his most
recent annual cash compensation. Finally, Mr. Powers will be included in all
other employee benefit plans to the extent that he is eligible. Such plans
include, but are not limited to, group life insurance plans, hospitalization
and medical plans and long-term disability plans.
On May 18, 1992, the Company entered into an Employment Agreement with Bruce
C. Wheatley and on December 3, 1993, the Company entered into an Employment
Agreement with Mark G. Kachur. Mr. Wheatley's Employment Agreement is for a
term of three years and Mr. Kachur's Employment Agreement is for a term of
three years. The Employment Agreement with Mr. Wheatley provides for a base
salary of $200,000 and Mr. Kachur's Employment Agreement provides for a base
salary of $240,000. Both employment agreements provide for participation in
the Company's SEIP as well as other Company benefit programs, including group
life insurance, hospitalization and medical plans. The Employment Agreements
also provide for the grant of stock options under certain stock option plans,
subject to vesting requirements, and also provide for participation in a
supplemental deferred compensation arrangement. In the event of a change in
control of the Company, the Employment Agreements provide for a lump sum
severance payment in the amount of two years' cash compensation as well as
continued participation in Company benefit programs for two years following
termination.
21
<PAGE> 24
The base salary and cash bonuses payable under all these Employment
Agreements are included in calculating the cash compensation paid to Messrs.
Powers, Kachur and Wheatley, respectively, as reported in the Summary
Compensation Table on page 14.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an annual retainer fee
in the amount of $16,000, plus $1,000 for attending each meeting of the Board
of Directors. They also receive $750 for attending each committee meeting.
Directors who are employees of the Company do not receive compensation for
serving as directors.
Non-employee directors who retire with at least ten years of non-employee
Board service will be paid a retirement benefit consisting of an annual amount
equal to the Board retainer being paid to such directors at the time of
retirement. Retiring directors with less than ten years of non-employee Board
service will receive proportionally decreased amounts. Non-employee directors
are entitled to receive automatically a non-qualified stock option to purchase
2,250 shares of Common Stock upon the outside director's election to a new
three-year term during the term of the Stock Option and Award Plan of 1995.
Mr. Don E. Tucker, former Senior Vice President and Chief Administrative
Officer of the Company, provides consulting services to the Company. Fees paid
for those services during fiscal 1995 were $48,000.
TERMINATION BENEFITS
On February 15, 1988, the Company entered into a Severance Compensation and
Consulting Agreement with Paul J. Powers. On June 25, 1992, the Company
entered into a Severance Compensation Agreement with John Gilchrist, on July
20, 1992 with Bruce C. Wheatley, and on March 25, 1995 with Mark G. Kachur.
The Severance Compensation and Consulting Agreement and the Severance
Compensation Agreements are referred to collectively as the "Agreements." The
Agreements were the result of a determination by the Board of Directors that it
is appropriate and in the best interest of the Company and its shareholders
that, in the event of a possible change in control of the Company, the
stability and continuity of management would be maintained, free of the
distractions incident to any change in control.
For purposes of the Agreements, a "change in control" shall be deemed to have
occurred if (i) there shall be consummated (a) any consolidation or merger of
the Company in which the Company is not the continuing surviving corporation or
pursuant to which shares of the Company's Common Stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of the Company's Common Stock immediately prior to the merger have
substantially the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (b) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of the Company, or (ii) the shareholders of the
Company shall approve any plan or proposal for the liquidation or dissolution
of the Company, or (iii) any person [as such term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")], other than the Company or a subsidiary or any employee benefit plan
sponsored by the Company or a subsidiary, shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of securities of the
Company representing 30% or more of the
22
<PAGE> 25
combined voting power of the Company's then outstanding securities ordinarily
(and apart from rights accruing in special circumstances) having the right to
vote in the election of directors, as a result of a tender or an exchange
offer, open market purchases, privately negotiated purchases or otherwise, or
(iv) at any time during a period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the Company
shall cease for any reason to constitute at least the majority thereof, unless
the election or the nomination for election by the Company's shareholders of
each new director during such two-year period is approved by a vote of at least
two-thirds of the directors then still in office who were directors in the
beginning of such two-year period.
Benefits are payable under the Agreements only if a change in control has
occurred and within two years after such change in control the officer's
employment is terminated involuntarily without cause or voluntarily by the
officer for reasons such as demotion, reduction in base salary, relocation,
loss of benefits or other changes. The principal benefits to be provided to
Mr. Powers under his Agreement are (i) a lump sum payment equal to two times
his annual cash compensation (base salary and incentive compensation), (ii)
continued participation in the Company's employee benefit programs for three
years following termination, and (iii) a consulting fee equal to his annual
cash compensation in consideration for consulting services over a one-year
period after termination. The principal benefits to be provided to Messrs.
Kachur, Wheatley, and Gilchrist under the Agreements are (i) a lump sum payment
equal to two times the officer's annual cash compensation (base salary and
incentive compensation) and (ii) continued participation in the Company's
employee benefit programs for two years following termination. If the
officer's termination occurs after age 62, separation payments are reduced by a
factor based upon the number of months remaining until the officer reaches age
65. The Agreements are not employment agreements, and do not impair the right
of the Company to terminate the employment of the executive with or without
cause prior to a change in control, or the right of the executive to
voluntarily terminate his employment. Each Agreement generally terminates on
the earlier of the date on which the officer reaches age 65 or five years from
the date of the Agreement, provided that the term of the Agreement will be
automatically extended for additional one-year periods until the officer
reaches age 65 or the Company or the officer determines not to extend the
Agreement.
Effective August 15, 1995, Mr. Kipton C. Kumler resigned from his positions
as an executive officer and director of the Company and its subsidiaries. In
connection with such resignation, the Company and Mr. Kumler entered into a
consulting agreement pursuant to which Mr. Kumler will receive approximately
$14,600 per month and health insurance coverage for a period of 24 months and
was paid a lump sum of $332,500. The Company also agreed to pay certain
amounts relating to the relocation of Mr. Kumler and his family, including
moving expenses and certain amounts relating to his Ohio house and property.
23
<PAGE> 26
SECURITY OWNERSHIP OF MANAGEMENT
The directors, nominees for the office of director, the Chief Executive
Officer, the four other highly-compensated executive officers, a former
executive officer and all directors and executive officers as a group were the
beneficial owners of the Company's voting shares, as of December 31, 1995, as
set forth below:
<TABLE>
<CAPTION>
Amount and Nature Percent
Name of Beneficial of Beneficial of Voting
Owner Ownership Shares
----- --------- ------
<S> <C> <C>
William J. Bresnahan 300 *
Charles B. Cushwa III 206,770 (1)(4)(5) 1.3%
(8)(12)(16)
William W. Cushwa 226,250 (1)(2)(3)(4)(6)(7) 1.4%
(8)(10)(13)
(14)(16)
John M. Galvin 3,000 (8) *
John Gilchrist 33,227 (8)(9)(10)(14) *
Richard J. Hill 9,535 (8)(9) *
Neil D. Humphrey 5,829 (8)(9) *
Hubert Jacobs van Merlen 13,410 (17) *
Mark G. Kachur 25,026 *
William E. Kassling 0 -
Gerald C. McDonough 3,750 (8) *
C. Edward Midgley 10,000 *
John Nelson 14,573 (1)(8) *
Paul J. Powers 322,424 (2)(8)(10)(14) 1.9%
George M. Smart 2,000 *
Don E. Tucker 137,724 (1)(2)(11)(14) *
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
Amount and Nature Percent
Name of Beneficial of Beneficial of Voting
Owner Ownership Shares
----- --------- ------
<S> <C> <C>
Bruce C. Wheatley 30,301 (8)(15) *
Philip N. Winkelstern 176,518 (1)(2)(3)(8) 1.1%
(10)(14)
All Directors and
Executive Officers as a Group
(21 people) 1,329,534 7.9%
</TABLE>
*less than 1%
(1) Does not include Common Stock owned by the members of the
above-mentioned directors' families who share their homes, as follows: of Mr.
Charles Cushwa - 2,147 shares; of Mr. William Cushwa - 26,548 shares; of Mr.
Nelson - 28,675 shares; of Mr. Tucker - 1,146 shares; of Mr. Winkelstern -
5,479 shares. Beneficial ownership thereof is disclaimed by the respective
directors.
(2) Includes the beneficial interest in Common Stock (fractional shares not
shown) credited to the accounts of the above-mentioned beneficial owners by the
Trustee acting under the provisions of the Company's Employee Savings and Stock
Purchase Plan, as follows: Mr. William Cushwa - 4,254 shares; Mr. Powers -
1,595 shares; Mr. Tucker - 9,243 shares; and Mr. Winkelstern - 8,529 shares.
(3) Includes Common Stock held by the directors as custodians for their
minor children as follows: minor children of Mr. William Cushwa - 4,011
shares; and minor grandchildren as follows: minor grandchild of Mr.
Winkelstern - 750 shares.
(4) Charles B. Cushwa III and William W. Cushwa are two of three
beneficiaries of a trust, of which they are not trustees, which consists of
294,000 shares of Common Stock the income from which will be paid to the
beneficiaries equally during their lives. These shares are not included in the
amounts shown in the table.
(5) Includes 46,500 shares of Common Stock held in trust, in which the
children of Charles B. Cushwa III have a remainder interest, and of which
National City Bank, N.E. and Charles B. Cushwa III are co-trustees. Beneficial
ownership thereof is disclaimed by Mr. Charles B. Cushwa III.
(6) Does not include 11,250 shares of Common Stock held in trust, of which
William W. Cushwa is not a trustee, for the benefit of his child and of which
beneficial ownership is disclaimed by Mr. William W. Cushwa.
(7) Includes 44,000 shares of Common Stock held in trust, in which the
children of William W. Cushwa have a remainder interest, and of which National
City Bank, N.E. and William W. Cushwa are co-trustees. Beneficial ownership
thereof is disclaimed by Mr. William W. Cushwa.
25
<PAGE> 28
(8) Includes shares of Common Stock acquirable within 60 days of December
31, 1995 upon exercise of options issued under the Company's Stock Option and
Award Plans as follows: Mr. Charles Cushwa - 1,500 shares; Mr. William Cushwa
- - 10,125 shares; Mr. Galvin - 1,500 shares; Mr. Gilchrist - 12,612 shares;
Mr. Hill - 1,500 shares; Mr. Humphrey - 1,500 shares; Mr. McDonough - 1,500
shares; Mr. Nelson - 1,500 shares; Mr. Powers - 134,250 shares; Mr. Wheatley -
7,500 shares; and Mr. Winkelstern - 60,000 shares.
(9) Includes shares of Common Stock (fractional shares not shown) credited
to the accounts of the above-mentioned beneficial owners by the administrator
of the Company's Automatic Dividend Reinvestment Plan, as follows: Mr.
Gilchrist - 1,448 shares; Mr. Hill - 3,035 shares; and Mr. Humphrey - 1,429
shares.
(10) Includes in each case 232 shares of Series B Preferred Stock
(fractional shares not shown) and the following number of Common Stock
(fractional shares not shown) credited to the accounts of the above-mentioned
beneficial owners by the Trustee acting under the provisions of the Company's
401(k) plan: Mr. William Cushwa - 762 shares; Mr. Gilchrist - 270 shares; Mr.
Powers - 4,432 shares; and Mr. Winkelstern - 270 shares.
(11) Includes 190 shares of Series B Preferred Stock (fractional shares not
shown) and 4,919 shares of Common Stock (fractional shares not shown) credited
by the Trustee acting under the provisions of the Company's 401(k) plan.
(12) Includes 39,244 shares of Common Stock held in trust, in which the
children of Charles B. Cushwa III have a remainder interest, and of which
National City Bank, N.E. and Charles B. Cushwa III are co-trustees. Beneficial
ownership thereof is disclaimed by Mr. Charles B. Cushwa III.
(13) Includes 61,000 shares of Common Stock held in trust, in which the
children of William W. Cushwa have a remainder interest, and of which National
City Bank, N.E. and William W. Cushwa are co-trustees. Beneficial ownership
thereof is disclaimed by Mr. William W. Cushwa.
(14) Includes in each case one share of Common Stock (fractional shares not
shown) as a result of participation in the Commercial Intertech Employee Stock
Ownership Plan and the following number of shares of Series B Preferred Stock
(fractional shares not shown) as a result of participation in the Commercial
Intertech Employee Stock Ownership Plan: Mr. William Cushwa - 266 shares; Mr.
Gilchrist - 323 shares; Mr. Powers - 619 shares; Mr. Tucker - 464 shares; and
Mr. Winkelstern - 604 shares.
(15) Includes 11 shares of Series B Preferred Stock (fractional shares not
shown) and 1,364 shares of Common Stock (fractional shares not shown) held
under the provisions of the Company's 401(k) plan. Includes 58 shares of
Series B Preferred Stock (fractional shares not shown) as a result of
participation in the Commercial Intertech Employee Stock Ownership Plan.
(16) Charles B. Cushwa III and William W. Cushwa are two of three
beneficiaries of a trust, of which they are not trustees, containing 48,625
shares distribution of which is dependent upon the resolution of certain
probate estate matters. The shares are not included in the amounts shown in
the table.
26
<PAGE> 29
(17) Includes the beneficial interest in 123 shares of Common Stock
(fractional shares not shown) credited by the Trustee acting under the
provisions of the Company's Non-Qualified Stock Purchase Plan.
The information set forth above concerning beneficial shareholdings of the
beneficial owners is based on information received from the persons named.
None of such beneficial owners, directly or indirectly, owns beneficially any
equity securities of any subsidiary of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The name of any person or "group" (as that term is used in the Exchange Act)
known by the Company to be the beneficial owner of more than five percent (5%)
of any class of the Company's voting securities as of December 31, 1995 is set
forth below:
<TABLE>
<CAPTION>
Title Name and Address Amount and Percent Percent of
of of Nature of of All Voting
Class Beneficial Owner Beneficial Class Shares
----- ---------------- Ownership ----- ------
---------
<S> <C> <C>
Common National City Bank, N.E. 1,219,766 (1) 7.91% 7.18%
P O. Box 450
Youngstown, OH 44501
Common Norwest Corporation 1,163,153 (2) 7.55% 6.84%
6th and Marquette
Minneapolis, MN 55479
Series B Mellon Bank N.A. 1,053,508 (3) 100.00% 9.30%
Preferred P. O. Box 444
Pittsburgh, PA 15230
</TABLE>
(1) This figure includes 175,250 shares of Common Stock held in trust
by National City Bank, N.E. (trustee) for the benefit of participants in the
Commercial Intertech Corp. Employee Savings and Stock Purchase Plan.
This figure includes 3,109 shares of Common Stock held in trust by National
City Bank (trustee) for the benefit of participants in the Non-Qualified Stock
Purchase Plan of Commercial Intertech Corp.
National City Bank has sole voting power over 873,878 shares and shared
voting power over 172,029 shares. National City Bank has sole investment power
over 328,589 shares and shared investment power over 891,177 shares.
(2) Norwest Corporation holds Common Stock in a fiduciary capacity for
various institutional and personal accounts.
27
<PAGE> 30
Norwest Corporation has sole voting power over 950,703 shares and shared
voting power over 600 shares. Norwest Corporation has sole investment power
over 1,163,003 shares and shared investment power over 150 shares.
(3) This figure represents all of the outstanding ESOP Convertible Preferred
Stock Series B held of record by Mellon Bank N.A. (trustee) for the benefit of
participants in the Commercial Intertech Employee Stock Ownership Plan and the
Commercial Intertech Retirement Stock Ownership and Savings Plan. The trust
for these plans contains provisions for pass-through voting rights to the
employee participants in the plans.
Mellon Bank has shared voting power and shared investment power over all
shares of Preferred Stock Series B.
2. SELECTION OF INDEPENDENT AUDITORS
-------------------------------------
The Board of Directors has selected Ernst & Young LLP to audit the financial
statements of the Company and its consolidated subsidiaries for the fiscal year
ending October 31, 1996. Ernst & Young LLP has served the Company in this
capacity since 1921. A representative of Ernst & Young LLP is expected to be
present at the annual meeting with the opportunity to make a statement if such
representative so desires and will also be available to respond to appropriate
questions from shareholders.
Unless contrary instructions are noted on the proxy, it will be voted to
ratify the selection by the Board of Directors of Ernst & Young LLP as
independent public auditors for the fiscal year ending October 31, 1996. The
affirmative vote of the holders of a majority of the voting shares represented
at the meeting is required for such ratification.
ANNUAL REPORT TO SHAREHOLDERS
The annual report of the Company and its subsidiaries for the fiscal year
ended October 31, 1995, including financial statements reflecting the financial
position and operations of the Company and its subsidiaries for that year, is
being mailed to shareholders simultaneously with this Proxy Statement. The
annual report is not deemed to have been filed with the Securities and Exchange
Commission and is not part of this proxy solicitation.
1997 ANNUAL MEETING OF SHAREHOLDERS
The deadline for receipt of shareholders' proposals for inclusion in
the Company's 1997 proxy material is October 1, 1996.
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER 31, 1995,
MAY BE OBTAINED BY SHAREHOLDERS AFTER JANUARY 31, 1996 WITHOUT CHARGE, ON
WRITTEN REQUEST DIRECTED TO THE SECRETARY, COMMERCIAL INTERTECH CORP., P. O.
BOX 239, YOUNGSTOWN, OHIO 44501.
28
<PAGE> 31
3. OTHER MATTERS
-----------------
The Board of Directors does not know of any matters of business to be
presented for action at the meeting other than as set forth above. The
enclosed proxy does, however, confer discretionary authority upon the persons
named therein, or their substitutes, to take action with respect to any other
matters that may properly be brought before the meeting.
SOLICITATION OF PROXIES
The enclosed form of proxy is solicited by the Board of Directors. Shares
represented by the proxy will be voted at the meeting and, where a choice has
been specified with respect to a proposal, such shares will be voted in
accordance with such specification. The cost of preparing, printing,
assembling and mailing will be paid by the Company. Officers, directors or
other employees of the Company, without additional remuneration, may solicit
proxies personally or by other appropriate means, if deemed advisable. The
Company will also request brokers, banks and other nominees to send proxy
material to and obtain proxies from their principals, and it will reimburse
such persons for their expenses in so doing. In addition, the Company has
retained Morrow & Co., Inc. to assist in the solicitation of proxies. Morrow &
Co., Inc. will request brokerage houses and other nominees, fiduciaries and
custodians nominally holding shares of the Company's Common Stock of record to
forward proxy solicitation material to the beneficial owners of such shares.
For these services, the Company will pay Morrow & Co., Inc. a fee estimated not
to exceed $4,500 plus reimbursement of expenses.
Please complete, sign, date and return your proxy promptly to ensure that
your shares will be voted at the meeting. We hope that you will attend the
meeting. For your convenience, a self-addressed envelope, which requires no
additional postage if mailed in the United States, is enclosed.
BY ORDER OF THE BOARD OF DIRECTORS
SHIRLEY M. SHIELDS
Secretary
Youngstown, Ohio
January 29, 1996
29
<PAGE> 32
APPENDIX
1. Commercial Intertech Corp. logo appears on first page.
2. Pictures of members of the Board of Directors appear on pages 5 through 8.
3. Performance graph appears on page 20.
<PAGE> 33
COMMERCIAL INTERTECH CORP.
1775 Logan Avenue
Youngstown, Ohio 44501
P R O X Y
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING OF SHAREHOLDERS, MARCH 27, 1996
The undersigned hereby appoints JOHN S. ANDREWS, JOHN NELSON, AND DON E.
TUCKER, and each or any of them, attorneys and proxies with full power of
substitution, to represent the undersigned and to vote all shares of stock of
Commercial Intertech Corp. which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of Commercial Intertech Corp. to be held at the
Hydraulic Cylinder Division located at 2701 Intertech Drive, Youngstown, Ohio
on Wednesday, March 27, 1996, at 2:00 P.M., or at any adjournments or
postponements thereof, upon all matters as set forth in the Notice of Annual
Meeting and Proxy Statement, receipt of which is hereby acknowledged.
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
Dated: _________________, 1996
______________________________
______________________________
Signature of Stockholder
THIS PROXY SHOULD BE SIGNED
EXACTLY AS NAME APPEARS HEREON
Executors, administrators, trustees,
attorneys, etc., should give full title
as such. If the signer is a
corporation or partnership, please sign
full corporate or partnership name by
duly authorized officer.
<PAGE> 34
1. ELECTION OF DIRECTORS
Nominees: Charles B. Cushwa III, John M. Galvin, Richard J. Hill and
William E. Kassling.
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above to vote for all
(except as listed nominees listed
to the contrary above
below)
If you wish to withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.
______________________________________________________________________
The Board of Directors recommends a vote FOR the election of all the
nominees as directors.
2. RATIFY SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR the approval of auditors.
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF.
THIS PROXY WILL BE VOTED AS DIRECTED ABOVE, OR IF RETURNED EXECUTED WITH NO
DIRECTION GIVEN, WILL BE VOTED FOR THE ELECTION OF ALL OF THE NOMINEES AS
DIRECTORS AND FOR RATIFICATION OF ERNST & YOUNG LLP AS AUDITORS.
