<PAGE> 1
SCHEDULE 14A
(RULE14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE
ACT OF 1934
(AMENDMENT NO. )
Filed by 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 Rule 14a-11(c) or Rule 14a-12
Commercial Intertech Corp.
- --------------------------------------------------------------------------------
(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) (1)
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:
- --------------------------------------------------------------------------------
<PAGE> 2
[ ] 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> 3
================================================================================
COMMERCIAL
INTERTECH
Notice of
Annual Meeting
of
Shareholders
March 25, 1998
and
Proxy Statement
Commercial Intertech Corp.
1775 Logan Avenue
Youngstown, Ohio 44505
================================================================================
<PAGE> 4
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 25, 1998
To the Shareholders of Commercial Intertech Corp.:
The Annual Meeting of the Shareholders of Commercial Intertech Corp.
(the "Annual Meeting") will be held in the EDWARD J. DEBARTOLO STADIUM CLUB AT
YOUNGSTOWN STATE UNIVERSITY, ONE UNIVERSITY PLAZA, YOUNGSTOWN, OHIO on
Wednesday, March 25, 1998, at 10:00 A.M., eastern time, for the following
purposes:
1. Election of four (4) directors of the Third 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,
1998;
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 26,
1998 as the record date for the determination of the shareholders entitled to
notice of and to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
SHIRLEY M. SHIELDS
Vice President and Corporate Secretary
January 29, 1998
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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<PAGE> 5
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MARCH 25, 1998
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Commercial Intertech Corp. (the "Company") of
proxies to be voted at the Annual Meeting of Shareholders to be held in the
EDWARD J. DEBARTOLO STADIUM CLUB AT YOUNGSTOWN STATE UNIVERSITY, ONE UNIVERSITY
PLAZA, YOUNGSTOWN, OHIO 44555, on Wednesday, March 25, 1998, at 10:00 A.M.,
eastern time, 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, 1998.
All shares represented by effective proxies will be voted at the
Annual Meeting or any adjournments or postponements thereof, and such vote will
be in accordance with the instructions noted on such proxies. 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. 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
Annual Meeting or at any adjournments or postponements thereof and will be
counted for purposes of voting on any proposal presented at the Annual Meeting
or any adjournments or postponements thereof. Abstentions will have the same
effect as votes cast against a proposal. Broker non-votes will be included in
determining the presence of a quorum, but will not be considered as present and
entitled to vote with respect to any matter. Broker non-votes will have no
effect on voting on the proposals being considered at the meeting.
VOTING SHARES
The Board of Directors has fixed the close of business January 26,
1998 as the record date for the determination of shareholders entitled to notice
of and to vote at the Annual Meeting. Only shareholders of record at the close
of business on that date will be entitled to vote at the Annual Meeting or any
adjournments or postponements thereof. The Company's voting securities
outstanding on December 31, 1997 consisted of 14,083,224 shares of its $1 par
value common stock (the "Common Stock") (exclusive of 1,931,625 shares of
treasury stock) and 942,552 shares of ESOP Convertible Preferred Stock
Series B, no par value, each of which will be entitled to one vote 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 48 hours before the time fixed for holding a meeting to
elect directors, of such shareholder's 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
such shareholder 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 such
shareholder holds or to distribute such shareholder's votes on the same
principle among two or more candidates, as such shareholder sees fit. A
shareholder notice to exercise cumulative voting rights at the meeting must be
in writing,
3
<PAGE> 6
addressed to the President, a Vice President or the Secretary of the Company,
and must be received at the principal executive offices of the Company not less
than 48 hours before 10:00 A.M., eastern time, on March 25, 1998.
The ESOP Convertible Preferred Stock Series B is held of record by a
trustee for the Commercial Intertech Employee Stock Ownership Plan. The trust
for this plan contains pass-through voting provisions for the participants in
the plan. 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 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 currently provides that the
Company shall have not less than nine nor more than 15 directors (the number
of directors currently being set at 12) 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 currently consisting of
four directors) to hold office for a term of three years.
Four directors of the Third Class are to be elected at the Annual
Meeting for a term of three years expiring at the annual meeting in 2001. It is
the intention of the persons named in the enclosed form of proxy to vote such
proxy as specified or, if no specification is made on a signed and returned
proxy, to vote such proxy for the election of 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 Third Class
whose terms of office expire at the Annual Meeting and who are nominated for
reelection at the Annual Meeting are Messrs. McDonough, Powers, Smart and
Tucker, all of whom were elected to their present terms of office by the
shareholders at the annual meeting held March 22, 1995.
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 Annual Meeting, shares represented by the proxies
so appointed will be voted for a substitute nominee or nominees designated by
the Board of Directors. 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 or her discretion.
The terms of office of Messrs. Charles Cushwa, Galvin, Hill and
Kassling, directors of the First Class, will expire at the annual meeting in
1999, and the terms of office of Messrs. Bresnahan, William Cushwa, Humphrey and
Midgley, directors of the Second Class, will expire at the annual meeting in
2000. Except for Messrs. William W. Cushwa and Charles B. Cushwa III, who are
brothers, none of the directors is related to any other director.
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<PAGE> 7
Required Vote
Candidates for the office of Director receiving the greatest number
of votes shall be elected.
Board Recommendation
The Board of Directors recommends a vote FOR the election of all
nominees as directors.
INFORMATION AS TO NOMINEES
The names of the nominees for the office of director to be elected at
the Annual Meeting, together with certain information concerning the nominees,
are set forth below:
Gerald C. McDonough, age 69 - 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; CUNO Incorporated, Meriden,
Connecticut; and Associated Estates Realty
Corporation, Cleveland, Ohio; and he is
Chairman of the Independent Trustees of the
Fidelity Funds, Boston, Massachusetts.
NOMINEE FOR THIRD CLASS (PRESENT TERM
EXPIRES IN 1998).
Paul J. Powers, age 62 - Director since
1984.
Chairman, President and Chief Executive
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 Chairman of the Board of
Directors of CUNO Incorporated, Meriden,
Connecticut; he is a director of First
Energy Corp., Akron, Ohio; Twin Disc, Inc.,
Racine, Wisconsin; and Global Marine, Inc.,
Houston, Texas.
NOMINEE FOR THIRD CLASS (PRESENT TERM
EXPIRES IN 1998).
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<PAGE> 8
George M. Smart, age 52 - Director since
1995.
President and Chairman of the Board of
Phoenix Packaging Corporation. Mr. Smart
received his bachelor's 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 Chief Executive Officer
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; First
Energy Corp., Akron, Ohio; and The Defiance
College, Defiance, Ohio.
NOMINEE FOR THIRD CLASS (PRESENT TERM
EXPIRES IN 1998).
Don E. Tucker, age 69 - Director since 1977.
Retired Senior Vice President and Chief
Administrative Officer of the Company. Mr.
Tucker received his bachelor's of arts
degree from Aurora College and his
bachelor's 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.
NOMINEE FOR THIRD CLASS (PRESENT TERM
EXPIRES IN 1998).
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:
Charles B. Cushwa III, age 63 - Director
since 1972.
Director of Cushwa Center for
Entrepreneurship, Youngstown State
University since 1988. Mr. Cushwa received
his bachelor's of arts degree in Sociology
and his master's 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,
Youngstown, Ohio.
DIRECTOR OF FIRST CLASS (PRESENT TERM
EXPIRES IN 1999).
6
<PAGE> 9
John M. Galvin, age 65 - 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., Houston, Texas; Oasis
Residential Inc., Las Vegas, Nevada; and
CUNO Incorporated, Meriden, Connecticut.
DIRECTOR OF FIRST CLASS (PRESENT TERM
EXPIRES IN 1999).
Richard J. Hill, age 67 - 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, Florida and
Virginia. 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.
DIRECTOR OF FIRST CLASS (PRESENT TERM
EXPIRES IN 1999).
William E. Kassling, age 53 - Director since
1996.
Chairman, Chief Executive Officer and
President of Westinghouse Air Brake Company.
Mr. Kassling received his bachelor's 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 of
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.
DIRECTOR OF FIRST CLASS (PRESENT TERM
EXPIRES IN 1999).
7
<PAGE> 10
William J. Bresnahan, age 47 - Director
since 1995.
President of Hynes Industries. Mr. Bresnahan
received his bachelor's 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 Procter & 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 OF SECOND CLASS (PRESENT TERM
EXPIRES IN 2000).
William W. Cushwa, age 60 - Director since
1975.
Retired Vice President Planning and
Assistant Treasurer of the Company. Mr.
Cushwa received his bachelor's 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, Director of Corporate Planning in 1977
and was elected Vice President Planning and
Assistant Treasurer in 1983. He retired
December 31, 1996.
DIRECTOR OF SECOND CLASS (PRESENT TERM
EXPIRES IN 2000).
Neil D. Humphrey, age 69 - 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's of arts
degree from Idaho State University, his
master's 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 OF SECOND CLASS (PRESENT TERM
EXPIRES IN 2000).
8
<PAGE> 11
C. Edward Midgley, age 60 - Director since
1995.
Advisory Director, PaineWebber Incorporated
since 1995. Mr. Midgley received his
bachelor's of arts degree in Economics from
Princeton University and his master's degree
in Business Administration from Harvard
Business School. Until 1995 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 of Bankers Trust Company; Vice
Chairman, Office of the Chief Executive at
Fieldcrest Cannon, Inc.; and Vice Chairman
of Amoskeag Company. Mr. Midgley is a
director of CUNO Incorporated, Meriden,
Connecticut.
DIRECTOR OF SECOND CLASS (PRESENT TERM
EXPIRES IN 2000).
9
<PAGE> 12
BOARD MEETINGS AND COMMITTEE INFORMATION
The Board of Directors held six meetings during the year. The Board
has established four committees to assist in the discharge of its
responsibilities. These are the Executive and Finance, Audit, Pension and
Pension Investment, and Management Evaluation and Compensation Committees. There
is no nominating committee; the Board as a whole nominates directors for
election after receiving recommendations from the Executive and Finance
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 total attendance at the meetings of the Board of Directors and committee
meetings during the year was 97%.
The Executive and Finance Committee functions as the Executive
Committee provided for in the Company's Code of Regulations and, 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
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. The Committee is
responsible for making recommendations to the Board of Directors on candidates
for election and reelection to the Board; has the responsibility for
overseeing and ensuring that the Company's financial resources are managed
prudently and cost effectively, with emphasis on those issues which are
long-term in nature; and also makes recommendations to the Board of Directors as
to debt and capital structure, issuance of shares or repurchase of outstanding
shares, dividend policy and the declaration of dividends, acquisitions and
divestitures, and any other financial matters deemed appropriate by the
Committee. During the past year, the Committee held seven meetings. The
Committee consists of six members as follows: Messrs. Powers (Chairman), Galvin,
Humphrey, McDonough, Midgley and Tucker.
The Audit Committee has the responsibility for recommending the
selection of the independent auditors by the Board of Directors; reviewing with
such auditors, prior to the commencement of or during the audit for each fiscal
year, the scope of the examination to be made; reviewing with such auditors the
certified 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
Company's internal audit and control functions; considering such other matters
relating to such audits and to the accounting procedures employed by the
Company 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
seven members as follows: Messrs. Hill (Chairman), Bresnahan, Charles Cushwa,
William Cushwa, Kassling, Smart and Tucker. None of the members of the Audit
Committee is an employee of the Company.
The Pension and Pension Investment Committee has the responsibility
for overseeing and evaluating the investment of the corporation's pension plan
assets, selecting fund managers, reviewing their performance, designating the
proportion of pension contributions assigned to such managers and monitoring
plan liabilities for changes which might influence investment decisions. During
the past year, the Committee held two meetings. The Committee consists of six
members: Messrs. McDonough (Chairman), Bresnahan, Charles Cushwa, William
Cushwa, Kassling and Smart. None of the members of the Pension and Pension
Investment Committee is an employee of the Company.
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<PAGE> 13
The Management Evaluation and Compensation Committee has the
authority to determine annual salaries and bonuses for all elected officers and
senior management; constitutes the "Committee" contemplated by the Company's
various stock option and award plans with the responsibility for administering
such plans; approves incentive and deferred compensation plans and the funding
arrangements related thereto for elected officers and senior management; and has
the responsibility for evaluating the performance of the Chief Executive Officer
and senior officers of the Company on an annual basis for purposes of
compensation. During the past year, the Committee held four meetings. The
Committee consists of five members: Messrs. Humphrey (Chairman), Galvin, Hill,
McDonough and Midgley. None of the members of the Management Evaluation and
Compensation Committee is an employee of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
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, 1997, all
officers, directors and greater than ten-percent beneficial owners complied with
applicable Section 16(a) filing requirements.
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<PAGE> 14
EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Securities
Other Annual Under-
Compen- Restricted lying LTIP All Other
Name and Salary Bonus sation Stock Awards Options Payouts Compensation
Principal Position Year $ ($) ($) ($) (1) (#) (2) ($) ($)
------------------ ---- --- ---- --- ------- ------- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Paul J. Powers 1997 500,000 500,000 -0- -0- 55,000 -0- 15,870 (3)
Chairman, President and 1996 472,500 640,000 -0- 191,995 94,132 846,943 16,023
Chief Executive Officer 1995 481,667 440,000 -0- 131,995 76,206 -0- 15,810
Bruce C. Wheatley 1997 235,000 86,250 -0- 34,508 12,500 -0- 9,478 (4)
Senior Vice President- 1996 233,333 105,000 -0- 42,002 22,412 201,653 8,098
Administration 1995 223,833 90,000 -0- 36,002 16,810 -0- 8,075
John Gilchrist 1997 212,000 60,000 -0- -0- 15,000 -0- 8,788 (5)
Group Vice President 1996 210,000 33,125 -0- -0- 22,412 237,930 7,398
1995 194,167 30,000 -0- 11,995 15,690 -0- 7,185
Steven J. Hewitt 1997 194,583 110,000 -0- -0- 12,500 -0- 6,352 (6)
Senior Vice President and 1996 132,500 60,000 -0- -0- 5,604 29,927 856
Chief Financial Officer 1995 116,000 40,000 -0- 11,995 4,482 -0- 1,034
Robert A. Calcagni 1997 195,000 155,000 -0- -0- 10,000 -0- 8,278 (7)
Group Vice President 1996 193,083 75,000 -0- -0- 17,930 60,495 6,891
1995 182,083 30,000 22,735 -0- 13,448 -0- 6,708
<FN>
</TABLE>
12
<PAGE> 15
(1) 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, 1997
by the individuals listed in this table, not including awards which were earned
after the end of the fiscal year as part of the Salaried Employee Incentive
Plan (the "SEIP") and were elected to be taken in the form of restricted stock,
as described in the Management Evaluation and Compensation Committee Report on
Executive Compensation, were: Paul J. Powers - 67,564 shares/$1,097,915;
Bruce C. Wheatley - 8,874 shares/$144,203; John Gilchrist - 2,346
shares/$38,123; Steven J. Hewitt - 1,495 shares/$24,294 and Robert A.
Calcagni - -0- shares/$-0-. Regular quarterly dividends are paid
on Restricted Stock held by these individuals.
(2) The number of shares reported for 1996 and 1995 reflects adjustments made by
the Management Evaluation and Compensation Committee in connection with the
spin-off of CUNO Incorporated in 1996.
(3) Includes Company matching contributions to his Non-Qualified Stock Purchase
Plan account in the amount of $10,250; Company matching contribution to his
401(k) Plan account in the amount of $3,192; and Company pay-based contribution
to his Employee Stock Ownership Plan account in the amount of $2,428.
(4) Includes Company matching contributions to his Non-Qualified Stock Purchase
Plan account in the amount of $2,300; Company matching contribution to his
401(k) Plan account in the amount of $4,750; and Company pay-based contribution
to his Employee Stock Ownership Plan account in the amount of $2,428.
(5) Includes Company matching contributions to his Non-Qualified Stock Purchase
Plan account in the amount of $1,610; Company matching contribution to his
401(k) Plan account in the amount of $4,750; and Company pay-based contribution
to his Employee Stock Ownership Plan account in the amount of $2,428.
(6) Includes Company matching contributions to his Non-Qualified Stock Purchase
Plan account in the amount of $833; Company matching contribution to his 401(k)
Plan account in the amount of $3,334; and Company pay-based contribution to his
Employee Stock Ownership Plan account in the amount of $2,185.
(7) Includes Company matching contributions to his Non-Qualified Stock Purchase
Plan account in the amount of $1,100; Company matching contribution to his
401(k) Plan account in the amount of $4,750; and Company pay-based contribution
to his Employee Stock Ownership Plan account in the amount of $2,428.
13
<PAGE> 16
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (2)
----------------- -------------------
% of
Number of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees Price Expira-
Granted in Fiscal ($/Share) tion 5% 10%
Name (#)(1) Year ($)(1) Date ($) ($)
---- ------ ---- ------ ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
Paul J. Powers 55,000 39.7 12.875 1/20/07 445,411 1,128,751
Bruce C. Wheatley 12,500 9.0 12.875 1/20/07 101,230 256,534
John Gilchrist 15,000 10.8 12.875 1/20/07 121,476 307,841
Steven J. Hewitt 12,500 9.0 12.875 1/20/07 101,230 256,534
Robert A. Calcagni 10,000 7.2 12.875 1/20/07 80,984 205,228
<FN>
(1) The non-qualified stock options listed in the above table were granted
subject to a three-year vesting period, with 50% of the options granted becoming
exercisable on the second anniversary of the grant date and the remaining 50%
becoming exercisable on the third anniversary. The exercisability of the
options may be accelerated in the event of a change in control or a potential
change in control. No SARs were granted in the last fiscal year.
(2) Potential Realizable Value is presented net of the option exercise price but
before any federal or state income taxes associated with exercise. These amounts
represent certain assumed rates of appreciation prescribed by rules of the
Securities and Exchange Commission. Actual gains are dependent on the future
performance of the Company's Common Stock and the option holders' continued
employment throughout the vesting period. The amounts reflected in the table may
not necessarily be achieved.
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End FY-End (1)
(#) ($)
Shares --- ---
Acquired Value
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- --- --- ------------- -------------
<S> <C> <C> <C> <C>
Paul J. Powers -0- -0- 327,256/187,235 3,389,160/1,212,328
Bruce C. Wheatley -0- -0- 42,026/43,317 412,771/281,564
John Gilchrist 31,800 339,888 9,666/45,257 78,561/285,742
Steven J. Hewitt 6,944 70,182 -0- /20,345 -0- /103,102
Robert A. Calcagni 23,738 290,810 6,724/34,654 51,141/225,254
<FN>
(1) The value per option is calculated by subtracting the exercise price from
the October 31, 1997 closing price of the Company's Common Stock on the New York
Stock Exchange, which was $16.25.
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
Estimated Future Payouts
------------------------
Under Non-Stock Price Based Plans
---------------------------------
Number of Performance
Shares, or Other
Units or Period Until
Other Rights Maturation or Threshold Target Maximum
Name (#) Payout(1) (#) (#) (#)
---- --- --------- --- --- ---
<S> <C> <C> <C> <C> <C>
Paul J. Powers 72,500 10/31/99 36,250 72,500 108,750
Bruce C. Wheatley 9,000 10/31/99 4,500 9,000 13,500
John Gilchrist 10,000 10/31/99 5,000 10,000 15,000
Steven J. Hewitt 12,000 10/31/99 6,000 12,000 18,000
Robert A. Calcagni 7,000 10/31/99 3,500 7,000 10,500
Payouts of awards are tied to the Company's achievement of specified
levels of return on equity (the "ROE") over a three-year period. At Threshold
ROE, 50% of shares will be distributed. 100% of awards will be paid at Target
ROE and 150% of awards at Maximum ROE. The Management Evaluation and
Compensation Committee of the Board of Directors may, at or after grant,
accelerate the vesting of all or part of any Performance Share Award.
<FN>
(1) The date in the column represents the end of the three-year performance
period.
</TABLE>
16
<PAGE> 19
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 $ 40,226 $ 53,635 $ 67,044 $ 70,396 $ 73,748
200,000 55,226 73,635 92,044 96,646 101,248
250,000 70,226 93,635 117,044 122,896 128,748
500,000 145,226 193,635 242,044 254,146 266,248
750,000 220,226 293,635 367,044 385,396 403,748
1,000,000 295,226 393,635 492,044 516,646 541,248
1,250,000 370,226 493,635 617,044 647,896 678,748
</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 12. The compensation covered by the supplemental executive retirement
plans is also base salary, as set forth in the Summary Compensation Table, for
those executives participating, other than the Chief Executive Officer and the
Senior Vice Presidents, for which the compensation covered is base salary plus
bonus as set forth in the Summary Compensation Table plus bonus earned but
elected to be taken in the form of restricted stock and deferred into a later
year. As of December 31, 1997, the following executive officers had the
following credited years of service under the pension plan with the Company: Mr.
Powers, 15; Mr. Wheatley, 5; Mr. Gilchrist, 29; Mr. Hewitt, 28 and Mr. Calcagni,
31.
17
<PAGE> 20
MANAGEMENT EVALUATION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
OVERALL POLICY AND ADMINISTRATION
The Company's executive compensation program, as developed by the
Management Evaluation & Compensation Committee of the Board of Directors (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, which is comprised of five independent directors. The Compensation
Committee establishes salaries for corporate officers and administers the
Company's Senior Management Target Incentive Plan (the "SMTIP"), Salaried
Employee Incentive Plan (the "SEIP") and the Stock Option and Award Plans. In
its decision-making process, the Compensation Committee uses independent
compensation consultants and may periodically seek input from appropriate
Company executives.
To further the Compensation Committee's strategy of linking executive
and shareholder financial interests, in recent years the Compensation Committee
has adjusted the mix of each executive's overall compensation components to
increase the emphasis on performance-based (annual cash incentive awards, stock
options and performance shares) versus fixed (base salary and restricted stock)
compensation.
BASE SALARIES
In establishing base salaries of Company executives, the Compensation
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.
18
<PAGE> 21
The Compensation 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.
During fiscal 1997, the Compensation Committee changed the review
date for any adjustments in the base salaries of corporate officers from January
1 to November 1. Such action was designed to align any changes in base salaries
with the Company's fiscal year. Any adjustments in the base salaries of senior
executives and other corporate officers 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
Compensation Committee's judgment regarding the performance of the executive.
As part of a company wide cost reduction program initiated in
September 1996, salaries for senior executives and all other corporate officers
were frozen for the remainder of calendar 1996 and all of fiscal 1997.
ANNUAL INCENTIVE COMPENSATION
The Compensation Committee administers two annual incentive plans.
The SMTIP was approved by shareholders in 1995 and is a performance-based plan
in which potential payouts are set in accordance with the requirements of
Internal Revenue Code Section 162(m).
In addition, the Compensation Committee 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.
The Senior Management Target Incentive Plan
The SMTIP provides annual incentive compensation to the Company's six
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 range
from 26.25% to 60% of base salary.
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.
The Compensation Committee selects participants in the SEIP (of
which there were 106 in 1997) and determines accompanying target award ranges
(from 8.75% to 40% of base salary) according to
19
<PAGE> 22
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, certain participants
in the SMTIP and SEIP may elect to receive up to 50% of their earned awards in
the form of restricted stock. If the participant elects 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 the shares are forfeited in the event a participant voluntarily leaves the
Company or is terminated "for cause."
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., non-
tax-preferred) and incentive stock options, stock appreciation rights,
restricted stock and performance shares.
For many years, the Company has made annual stock option grants to
its key executives to create a direct link between shareholder and executive
interests. In determining stock option awards, the Compensation Committee
considers such factors as median competitive award levels, the size of previous
stock option awards and Company and individual performance.
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 Compensation Committee believes
performance shares better align executive and shareholder financial interests.
In 1997, the Compensation Committee selected 69 executives throughout the
Company for participation in the performance share program, in which grants are
made on a biannual basis.
Depending on the responsibilities within the Company, performance
shares are earned based on average corporate and/or group return on equity
(the "ROE") (and divisional operating income for certain executives), over a
three-year performance period. In future years, the Compensation Committee may
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 the past the Company has also periodically granted time-lapse
restricted stock to its 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.
20
<PAGE> 23
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Powers' annual base salary for fiscal 1996 and fiscal 1997 was
$500,000. In 1996, $25,000 of this amount was paid to Mr. Powers by CUNO
Incorporated for duties associated with its spin-off from Commercial Intertech.
Mr. Powers' salary was based on the Compensation Committee's judgment
regarding his performance, his service to the Company and competitive salary
levels for CEO's of comparably sized durable goods manufacturing companies.
For performance in fiscal 1997, Mr. Powers received a payment under
the SMTIP of $330,000. This payment was based on a predetermined formula based
on corporate net income set by the Compensation Committee and certified by the
Compensation Committee in accordance with the provisions of Internal Revenue
Code Section 162(m). In addition, Mr. Powers received a payment from the SEIP of
$170,000 based on the Compensation Committee's judgment as to Mr. Powers'
achievement of personal goals and objectives during 1997.
Mr. Powers received options to purchase 55,000 shares of Common Stock
in 1997. In determining this grant, the Compensation Committee considered
Company and individual performance, the size of previous awards and market
median long-term incentive statistics. Mr. Powers received a performance share
grant of 72,500 shares in 1997 as required by his employment agreement.
INTERNAL REVENUE CODE 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 does not apply to compensation
paid under a plan that meets certain requirements for performance-based
compensation. It is the Compensation Committee's general policy to structure the
major components of the Company's incentive compensation programs to qualify as
performance-based compensation and to preserve the deductibility of compensation
paid to executive officers on an ongoing basis.
By: The Management Evaluation & Compensation Committee
Neil D. Humphrey, Chairman Gerald C. McDonough
John M. Galvin C. Edward Midgley
Richard J. Hill
21
<PAGE> 24
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an annual
retainer fee in the amount of $20,000, plus $1,000 for attending each meeting of
the Board of Directors. They also receive $950 for attending each committee
meeting. Directors can elect to take up to 100% of the annual retainer and board
meeting fees in the form of Company stock, in which case the amount is increased
by 20%. 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 election to a new three-year term.
Non-Employee directors received awards of 1,500 performance shares on November
1, 1997 and biannually thereafter will receive awards of 2,000 performance
shares. The 1,500 performance shares awarded to each non-employee director in
1997 will be earned based upon the achievement of certain Company financial
targets during a two-year cycle, and future performance share awards will be
earned during a three-year cycle.
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 1997 were $48,000.
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 of
$465,000 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.
22
<PAGE> 25
TERMINATION BENEFITS
During 1996, the Company entered into termination and change of
control agreements ("Termination Agreements") with the officers listed in the
Summary Compensation Table. Under these Termination Agreements, each of such
officers is entitled to receive the following:
- If a termination of employment occurs prior to a "Change of Control"
(as defined in the Termination Agreements) and is at the request of
the Company but without "cause" (as defined in the Termination
Agreements), the officer will receive one times his base salary, and
otherwise vested amounts and benefits under the Company's
compensation and benefit plans.
- If the termination of employment occurs after a Change of Control and
is either at the Company's request but without cause, or is initiated
by the officer for "Good Reason" (as defined in the Termination
Agreements), the officer will receive (i) three times the sum of base
salary and his highest annual bonus, (ii) a pro rata portion of his
highest recent bonus, (iii) the actuarial value of his accrued
benefit under the supplemental retirement benefit plan, including,
for certain officers, additional years of accrual, (iv) the full
value of performance shares assuming at least 100% target
performance, (v) vested and accrued benefits under other benefit and
compensation plans, and (vi) a continuation of medical benefits for
three years and certain other perquisites including automobile lease
payments, out-placement services, club dues, tax planning, relocation
expenses (including home repurchase) and insurance. The Company is
obligated to set aside in trust sufficient assets to fund its
obligations. In addition, because payments could be subject to an
excise tax, the officers will receive an additional amount for excise
tax payments.
Under the Termination Agreements, each officer has agreed not to
compete against the Company for certain periods of time.
23
<PAGE> 26
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
COMMERCIAL INTERTECH CORP. ("TEC"), NEW YORK STOCK EXCHANGE ("NYSE")
AND DOW JONES INDUSTRIAL DIVERSIFIED INDUSTRY GROUP ("DJID") INDICES
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
TEC $100.00 $116.34 $173.56 $160.73 $255.57 $388.84
DJID $100.00 $126.50 $131.28 $148.42 $191.74 $240.27
NYSE $100.00 $118.64 $123.05 $144.45 $176.39 $229.49
</TABLE>
24
<PAGE> 27
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN (CONT.)
Assumes $100 invested on October 31, 1992.
Total return assumes reinvestment of dividends.
Data as of October 31 of each year.
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.
25
<PAGE> 28
SECURITY OWNERSHIP OF MANAGEMENT
The directors, nominees for the office of director, the Chief
Executive Officer, the four other highly-compensated executive officers and all
directors and executive officers as a group were the beneficial owners of the
Company's voting shares, as of December 31, 1997, as set forth below:
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
----------------------------------------- Percent
Name of Beneficial of Voting
Owner Common Preferred Shares
----- ------ --------- ------
<S> <C> <C> <C>
William J. Bresnahan 4,250 (6) - *
Robert A. Calcagni 72,030 (6)(7)(10)(11) 957 (12) *
Charles B. Cushwa III 217,189 (1)(2)(3)(6)(8) - 1.45%
William W. Cushwa 216,591 (1)(2)(4)(5)(6) 376 (12) 1.44%
(9)(11)
John M. Galvin 13,756 (6) - *
John Gilchrist 66,236 (6)(11) 889 (12) *
Steven J. Hewitt 34,207 (6)(10)(11) 430 (12) *
Richard J. Hill 14,313 (6) - *
Neil D. Humphrey 11,760 (6)(7) - *
William E. Kassling 15,224 (6) - *
Gerald C. McDonough 7,681 (6) - *
C. Edward Midgley 24,724 (6) - *
Paul J. Powers 591,669 (6)(10)(11) 1,225 (12) 3.84%
George M. Smart 6,668 (6) - *
Don E. Tucker 147,274 (1)(6)(10)(11) 216 (12) *
Bruce C. Wheatley 94,802 (6)(10)(11) 355 (12) *
</TABLE>
26
<PAGE> 29
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
----------------------------------------- Percent
of Voting
Name of Beneficial Common Preferred Shares
Owner ------ --------- ------
-----
<S> <C> <C> <C>
All Directors and
Executive Officers as a
Group (18 people)
1,624,361 6,069 10.45%
<FN>
*less than 1%
</TABLE>
(1) Does not include Common Stock owned by the members of the
above-mentioned individuals' families who share their homes, as follows: of Mr.
Charles Cushwa - 947 shares; of Mr. William Cushwa - 46,949 shares; of Mr.
Tucker - 1,146 shares. Beneficial ownership thereof is disclaimed by the
respective individuals.
(2) 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.
(3) Includes 35,000 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.
(4) 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.
(5) Includes 35,000 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.
(6) Includes shares of Common Stock acquirable within 60 days of
December 31, 1997 upon exercise of options issued under the Company's Stock
Option and Award Plans as follows: Mr. Bresnahan - 1,181 shares; Mr. Calcagni -
22,413 shares; Mr. Charles Cushwa - 1,681 shares; Mr. William Cushwa - 9,525
shares; Mr. Galvin - 6,724 shares; Mr. Gilchrist - 28,717 shares; Mr. Hewitt -
5,043 shares; Mr. Hill - 1,681 shares; Mr. Humphrey - 1,681 shares; Mr. Kassling
- - 1,681 shares; Mr. McDonough - 1,681 shares; Mr. Midgley - 1,681 shares; Mr.
Powers - 412,425 shares; Mr. Smart - 1,681 shares; Mr. Tucker - 3,362 shares;
and Mr. Wheatley - 61,637 shares.
27
<PAGE> 30
(7) 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. Calcagni - 1,733 shares; and Mr. Humphrey - 1,886 shares.
(8) Includes 38,396 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.
(9) 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.
(10) Includes the following number of shares of Common Stock
(fractional shares not shown) credited to the accounts of the above-named
beneficial owners by the trustee acting under the provisions of the Company's
401(k) plan: Mr. Calcagni - 2,424 shares; Mr. Hewitt - 2,055 shares; Mr. Powers
- - 13,590 shares; Mr. Tucker - 11,158 shares; and Mr. Wheatley - 4,852 shares.
(11) Includes the following number of shares of Common Stock
(fractional shares not shown) as a result of participation in the Commercial
Intertech Employee Stock Ownership Plan: Mr. Calcagni - 873 shares; Mr. William
Cushwa - 1,647 shares; Mr. Gilchrist - 869 shares; Mr. Hewitt - 4 shares; Mr.
Powers - 1,883 shares; Mr. Tucker - 375 shares; and Mr. Wheatley - 447 shares.
(12) Series B Preferred Stock (fractional shares not shown) held as a
result of participation in the Commercial Intertech Employee Stock Ownership
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.
28
<PAGE> 31
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,
1997 is set forth below:
<TABLE>
<CAPTION>
Amount and
Title Name and Address Nature of Percent Percent of
of of Beneficial of All Voting
Class Beneficial Owner Ownership Class Shares
----- ---------------- --------- ----- ------
<S> <C> <C> <C> <C>
Common National City Bank, N.E. 713,936 (1) 5.07% 4.75%
P.O. Box 450
Youngstown, OH 44501
Common LaSalle National Bank 385,675 (2) 2.74% 2.57%
135 South LaSalle St.
Chicago, IL 60603
Series B LaSalle National Bank 942,552 (3) 100.0% 6.27%
Preferred 135 South LaSalle St.
Chicago, IL 60603
<FN>
(1) This figure does not include 3,643 shares of Common Stock held in
trust by National City Bank (as custodian) for the benefit of participants in
the Non-Qualified Stock Purchase Plan of Commercial Intertech Corp.
National City Bank has sole voting power over 571,885 shares and
shared voting power over 142,051 shares. National City Bank has sole investment
power over 86,120 shares, shared investment power over 589,674 shares and no
investment power over 38,142 shares.
(2) LaSalle National Bank has shared voting power and sole investment
power over all shares.
(3) This figure represents all of the outstanding ESOP Convertible
Preferred Stock Series B held of record by LaSalle National Bank (trustee) for
the benefit of participants in the Commercial Intertech Employee Stock Ownership
Plan.
LaSalle National Bank has shared voting power and sole
investment power over all shares of Preferred Stock Series B. The trust for
this Plan contains provisions for pass-through voting rights to the employee
participants in the plan.
</TABLE>
29
<PAGE> 32
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, 1998. 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, 1998.
Required Vote
The affirmative vote of the holders of a majority of the voting
shares represented at the Annual Meeting is required for such ratification.
Board Recommendation
The Board of Directors recommends a vote FOR the approval of Ernst &
Young as independent auditors.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report of the Company and its subsidiaries for the fiscal
year ended October 31, 1997, 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.
1999 ANNUAL MEETING OF SHAREHOLDERS
The deadline for receipt of shareholders' proposals for inclusion in
the Company's 1999 proxy material is October 2, 1998.
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, 1997
MAY BE OBTAINED BY SHAREHOLDERS AFTER JANUARY 31, 1998, WITHOUT CHARGE, ON
WRITTEN REQUEST DIRECTED TO THE SECRETARY, COMMERCIAL INTERTECH CORP., P.O., BOX
239, YOUNGSTOWN, OHIO 44501.
30
<PAGE> 33
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 in accordance with
the shareholder's written instructions. 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
$5,000 plus reimbursement of expenses.
Please complete, sign, date and return your proxy promptly to ensure
that your shares will be voted at the Annual Meeting. We hope that you will
attend the Annual 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
Vice President and Corporate Secretary
Youngstown, Ohio
January 29, 1998
31
<PAGE> 34
APPENDIX
1. Commercial Intertech Corp. logo appears on first page.
2. Pictures of members of the Board of Directors appear on pages 5 through 9.
3. Performance graph appears on page 24.
<PAGE> 35
COMMERCIAL INTERTECH CORP.
1775 Logan Avenue
Youngstown, Ohio 44501
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING OF SHAREHOLDERS, MARCH 25, 1998
The undersigned hereby appoints JOHN S. ANDREWS, RICHARD J. HILL 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
Edward J. DeBartolo Stadium Club at Youngstown State University, One University
Plaza, Youngstown, Ohio on Wednesday, March 25, 1998, at 10:00 A.M., eastern
time, or at any adjournments or postponements thereof, upon all matters 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:____________________, 1998
______________________________________
______________________________________
Signature of Shareholder(s)
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, partnership or limited
liability company, please sign full
corporate, partnership or limited
liability company name by duly
authorized person.
<PAGE> 36
1. ELECTION OF DIRECTORS
Nominees: Gerald C. McDonough, Paul J. Powers, George M. Smart and Don E.
Tucker.
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all nominees
as listed to the listed above
contrary below)
If you wish to withhold authority to vote for any individual nominee, you may
write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the election of all nominees listed
above as directors.
2. RATIFICATION OF THE 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 DIRECTORS AND FOR
RATIFICATION OF ERNST & YOUNG LLP AS AUDITORS.
