<PAGE>
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:
- --------------------------------------------------------------------------------
[ ] 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>
================================================================================
[Logo of Commercial Intertech]
Notice of
Annual Meeting
of
Shareholders
March 24, 1999
and
Proxy Statement
Commercial Intertech Corp.
1775 Logan Avenue
Youngstown, Ohio 44505
================================================================================
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 24, 1999
To the Shareholders of Commercial Intertech Corp.:
The Annual Meeting of the Shareholders of Commercial Intertech Corp. (the
"Annual Meeting") will be held at The Butler Institute of American Art, 524 Wick
Avenue, Youngstown, Ohio on Wednesday, March 24, 1999, at 10:00 A.M., Eastern
Time, 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 of the Company's financial statements for the fiscal year
ending October 31, 1999; and
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 25, 1999
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
/s/ SHIRLEY M. SHIELDS
SHIRLEY M. SHIELDS
Vice President and Corporate Secretary
January 29, 1999
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.
2
<PAGE>
COMMERCIAL INTERTECH CORP.
PROXY STATEMENT
Annual Meeting of Shareholders
March 24, 1999
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 at The
Butler Institute of American Art, 524 Wick Avenue, Youngstown, Ohio 44502, on
Wednesday, March 24, 1999, 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, 1999.
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 no effect
on the voting on the proposal to elect four directors of the First Class and
will have the same effect as votes cast against the proposal to ratify the
selection of Ernst & Young LLP as independent auditors. 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 the voting on the proposals being considered at the
meeting.
VOTING SHARES
The Board of Directors has fixed the close of business January 25,
1999 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 January 14, 1999 consisted of 14,287,465 shares of its $1 par
value common stock (the "Common Stock") (exclusive of 1,943,866 shares of
treasury stock) and 926,070 shares of its ESOP Convertible Preferred Stock
Series B, no par value, each of which will be entitled to one vote at the Annual
Meeting.
3
<PAGE>
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 the Annual 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 and must be received at the principal executive offices of the
Company no later than 10:00 A.M., Eastern Time, on March 22, 1999.
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 being currently set at 12) and that the Board shall be classified with
respect to the time for which directors 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 First Class are to be elected at the Annual
Meeting for a term of three years expiring at the annual meeting in 2002. 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 as directors of the four nominees
listed in the table set forth below. Directors of the First Class whose terms
of office expire at the Annual Meeting and who are nominated for reelection at
the Annual Meeting are Messrs. Charles Cushwa, Galvin, Hill and Kassling, all of
whom were elected to their present terms of office by the shareholders at the
Company's annual meeting held March 27, 1996.
The Board of Directors has no reason to believe that any of 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.
4
<PAGE>
The terms of office of Messrs. Bresnahan, William Cushwa, Humphrey and
Midgley, directors of the Second Class, will expire at the Company's annual
meeting of shareholders in 2000, and the terms of office of Messrs. McDonough,
Powers, Smart and Tucker, directors of the Third Class, will expire at the
Company's annual meeting of shareholders in 2001. Except for Messrs. William W.
Cushwa and Charles B. Cushwa III, who are brothers, none of the directors is
related to any other director.
Required Vote
The four 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 of the
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 these nominees, are
set forth below:
Charles B. Cushwa III, age 64 - Director since 1972.
[PHOTO] Retired in 1998 as Director of Cushwa Center for
Entrepreneurship, Youngstown State University. 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 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 is a director of Home
Savings and Loan Company, Youngstown, Ohio.
Nominee for First Class (present term expires in 1999).
5
<PAGE>
John M. Galvin, age 66 - Director since 1993.
[PHOTO] Private investor and consultant following his retirement in
1992. He was Vice Chairman and Director of The Irvine Company
from 1987 to 1992. 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. He received
his bachelor's degree in Business Administration from Indiana
University. Mr. Galvin is a Director of Global Marine, Inc.,
Houston, Texas, and CUNO Incorporated, Meriden, Connecticut.
Nominee for First Class (present term expires in 1999).
Richard J. Hill, age 68 - Director since 1993.
[PHOTO] Retired in 1990 as a 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.
Nominee for First Class (present term expires in 1999).
William E. Kassling, age 54 - Director since 1996.
[PHOTO] Chairman, Chief Executive Officer and President of Westinghouse
Air Brake Company since 1990. 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. 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 is a director of Dravo Corporation, Pittsburgh,
Pennsylvania, and Scientific Atlanta, Inc., Atlanta, Georgia.
Nominee for First Class (present term expires in 1999).
6
<PAGE>
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 48 - Director since 1995.
[PHOTO] President of Hynes Industries. 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 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. 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 61 - Director since 1975.
[PHOTO] Retired in 1996 as Vice President Planning and Assistant
Treasurer of the Company. Mr. Cushwa joined the Company in
1960, was elected Assistant Treasurer in 1969, Director of
Corporate Planning in 1977 and Vice President Planning and
Assistant Treasurer in 1983. 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.
Director of Second Class (present term expires in 2000).
7
<PAGE>
Neil D. Humphrey, age 70 - Director since 1985.
[PHOTO] President Emeritus of Youngstown State University, having
retired as President in 1992 after eight years in that position.
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. 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.
Director of Second Class (present term expires in 2000).
C. Edward Midgley, age 61 - Director since 1995.
[PHOTO] Advisory Director, PaineWebber Incorporated since 1995. 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
received his bachelor's of arts degree in Economics from
Princeton University and his master's degree in Business
Administration from the Harvard Business School. Mr. Midgley is
a director of CUNO Incorporated, Meriden, Connecticut.
Director of Second Class (present term expires in 2000).
Gerald C. McDonough, age 70 - Director since 1992.
[PHOTO] 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.
Director of Third Class (present term expires in 2001).
8
<PAGE>
Paul J. Powers, age 63 - Director since 1984.
[PHOTO] Chairman, President and Chief Executive Officer of the
Company. 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 received his bachelor's
degree in Economics from Merrimack College and his master's
degree in Business Administration from George Washington
University. 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.
Director of Third Class (present term expires in 2001).
George M. Smart, age 53 - Director since 1995.
[PHOTO] President and Chairman of the Board of Phoenix
Packaging Corporation. 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 received his bachelor's of science degree
from The Defiance College and his master's degree in Business
Administration from the Wharton School, University of
Pennsylvania. Mr. Smart is a director of Phoenix Packaging
Corporation, North Canton, Ohio; First Energy Corp., Akron,
Ohio; and The Defiance College, Defiance, Ohio.
Director of Third Class (present term expires in 2001).
Don E. Tucker, age 70 - Director since 1977.
[PHOTO] Retired Senior Vice President and Chief Administrative
Officer of the Company. 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 received his bachelor's of arts
degree from Aurora College and his bachelor's of law degree from
Yale University.
Director of Third Class (present term expires in 2001).
9
<PAGE>
BOARD MEETINGS AND COMMITTEE INFORMATION
The Board of Directors held 12 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
98%.
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
Company 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. This 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, this Committee held 11 meetings. This 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, this Committee
held three 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 Company'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, this Committee held one meeting. This Committee consists of six
members: Messrs. McDonough (Chairman),
10
<PAGE>
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.
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 officers of the Company on an annual basis for purposes of compensation.
During the past year, this Committee held four meetings. This Committee is
comprised of the following five independent directors: Messrs. Humphrey
(Chairman), Galvin, Hill, McDonough and Midgley. None of the members of the
Management Evaluation and Compensation Committee is an employee or former
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, 1998, all
officers, directors and greater than ten-percent beneficial owners complied with
applicable Section 16(a) filing requirements; except that Mr. William Cushwa
inadvertently failed to timely file a Form 5 to report one exempt transaction.
Mr. Cushwa subsequently filed a Form 5.
11
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the cash
compensation paid by the Company for services rendered during the fiscal years
ended October 31 of the years listed below to its Chief Executive Officer and
the four highest-paid executive officers of the Company whose total annual
salary and bonus exceed $100,000 during fiscal 1998 (each, including the Chief
Executive Officer, a "Named Executive Officer").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
------------------------------------------
Annual Compensation Awards Payouts
--------------------------------- ---------------------------- -----------
Securities
Under-
Restricted lying LTIP All Other
Name and Salary Bonus Stock Awards Options Payouts Compensation
Principal Position Year ($) ($) ($) (2) (#) (3) ($) ($)
- ------------------- ------ --------- -------- ------------- ----------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul J. Powers 1998 529,167 487,500 195,007 45,000 2,470,596 18,633(4)
Chairman, President 1997 500,000 500,000 -0- 55,000 -0- 15,870
and Chief Executive 1996 472,500 640,000 191,995 94,132 846,943 16,023
Officer
Bruce C. Wheatley 1998 243,333 116,250 46,494 11,500 404,517 12,808(5)
Senior Vice President- 1997 235,000 86,250 34,508 12,500 -0- 9,478
Administration 1996 233,333 105,000 42,002 22,412 201,653 8,098
John Gilchrist 1998 227,000 100,000 -0- 15,000 73,656 12,318(6)
Group Vice President 1997 212,000 60,000 -0- 15,000 -0- 8,788
1996 210,000 33,125 -0- 22,412 237,930 7,398
Steven J. Hewitt 1998 220,833 120,000 48,007 17,500 57,791 11,079(7)
Senior Vice President 1997 194,583 110,000 -0- 12,500 -0- 6,352
and Chief Financial 1996 132,500 60,000 -0- 5,604 29,927 856
Officer
Robert A. Calcagni (1) 1998 207,500 120,000 -0- 12,000 146,193 11,733(8)
Group Vice President 1997 195,000 155,000 -0- 10,000 -0- 8,278
1996 193,083 75,000 -0- 17,930 60,495 6,891
</TABLE>
12
<PAGE>
(1) Robert A. Calcagni retired on January 1, 1999.
(2) 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, 1998 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 - 60,755 shares/$1,082,198; Bruce C. Wheatley - 7,234
shares/$128,856; John Gilchrist - 644 shares/$11,471; Steven J. Hewitt -
644 shares/$11,471 and Robert A. Calcagni - 0 shares/$ 0. Regular quarterly
dividends are paid on Restricted Stock held by these individuals.
(3) The number of shares reported for 1996 reflects adjustments made by the
Management Evaluation and Compensation Committee in connection with the
spin-off of CUNO Incorporated in 1996.
(4) Includes Company matching contributions to Mr. Powers' Non-Qualified Stock
Purchase Plan account in the amount of $11,075; Company matching
contribution to his 401(k) Plan account in the amount of $2,000; and
Company pay-based contribution to his Employee Stock Ownership Plan account
in the amount of $5,558.
(5) Includes Company matching contributions to Mr. Wheatley's Non-Qualified
Stock Purchase Plan account in the amount of $2,500; 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 $5,558.
(6) Includes Company matching contributions to Mr. Gilchrist's Non-Qualified
Stock Purchase Plan account in the amount of $2,010; 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 $5,558.
(7) Includes Company matching contributions to Mr. Hewitt's Non-Qualified
Stock Purchase Plan account in the amount of $1,521; Company matching
contribution to his 401(k) Plan account in the amount of $4,000; and
Company pay-based contribution to his Employee Stock Ownership Plan account
in the amount of $5,558.
(8) Includes Company matching contributions to Mr. Calcagni's Non-Qualified
Stock Purchase Plan account in the amount of $1,425; 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 $5,558.
13
<PAGE>
The following table sets forth, for each of the Named Executive Officers,
options to purchase Common Stock granted during fiscal 1998 pursuant to the
Commercial Intertech Corp. Stock Option and Award Plan of 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (2)
- --------------------------------------------------------------------------------------------- -----------------------------
Percent of
Number of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees Price Expira-
Granted in Fiscal ($/Share) tion 5% 10%
Name (#)(1) Year ($)(1) Date ($) ($)
- ------------------ ------------ ------------ ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul J. Powers 45,000 32.1 18.9375 1/27/08 536,026 1,358,387
Bruce C. Wheatley 11,500 8.2 18.9375 1/27/08 136,984 347,143
John Gilchrist 15,000 10.7 18.9375 1/27/08 178,675 452,796
Steven J. Hewitt 17,500 12.5 18.9375 1/27/08 208,455 528,262
Robert A. Calcagni 12,000 8.6 18.9375 1/27/08 142,940 362,237
</TABLE>
(1) The non-qualified stock options listed in the above table were granted
subject to a three-year vesting period, with the options granted becoming
exercisable with respect to 50% of the underlying shares of Common Stock on the
second anniversary of the grant date and becoming exercisable with respect to
the remaining 50% of the underlying shares on the third anniversary of the grant
date. 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 will be dependent on the
future performance of the Common Stock and the option holders' continued
employment throughout the vesting period. The amounts reflected in the table
may not necessarily be achieved.
14
<PAGE>
The following table sets forth, for each of the Named Executive Officers,
information regarding the exercise of options to purchase Common Stock during
fiscal 1998 and unexercised options held as of the end of fiscal 1998, pursuant
to the Company's Stock Option and Award Plans.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Year-End Fiscal Year-End (1)
# ($)
Shares ---------------------- -----------------------
Acquired Value
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ------------------- -------------- ------------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
Paul J. Powers 123,567 1,944,579 288,858/147,066 3,117,948/713,555
Bruce C. Wheatley 11,733 160,605 49,904/ 35,206 520,657/166,953
John Gilchrist 28,717 324,361 0 / 41,206 0 /179,297
Steven J. Hewitt 5,043 64,825 0 / 32,802 0 / 88,032
Robert A. Calcagni 22,413 241,103 0 / 30,965 0 /133,564
</TABLE>
(1) The value per option is calculated by subtracting the exercise price from
the October 31, 1998 closing price of the Company's Common Stock on the New
York Stock Exchange, which was $17.8125 per share.
15
<PAGE>
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 Pension Plan for Salaried Employees and supplemental executive
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
PENSION PLAN TABLE
<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, 1998, the following executive
officers had the following credited years of service under the pension plan with
the Company: Mr. Powers, 16; Mr. Wheatley, 6; Mr. Gilchrist, 30; Mr. Hewitt,
29; and Mr. Calcagni, 32.
16
<PAGE>
MANAGEMENT EVALUATION AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Overall Policy and Administration
The Company's executive compensation program, as developed and administered
by the Management Evaluation and 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 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 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.
17
<PAGE>
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.
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.
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 35% 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 100 in 1998) and determines accompanying target award ranges (from 10% to
40% of base salary) according primarily to individual responsibility levels 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
18
<PAGE>
period associated with the stock award is three years and the shares are
forfeited in the event a participant voluntarily leaves the Company (other than
upon retirement) 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 1998, no performance share grants were made.
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.
Chief Executive Officer Compensation
Mr. Powers' annual base salary for fiscal 1998 was $529,167. Mr. Powers'
salary was based on the Compensation Committee's judgment regarding his
performance, his service to the Company and competitive salary levels for CEOs
of comparably sized durable goods manufacturing companies.
For performance in fiscal 1998, Mr. Powers received a payment under the
SMTIP of $449,400. 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
19
<PAGE>
provisions of Internal Revenue Code Section 162(m). In addition, Mr. Powers
received a payment from the SEIP of $200,600 based on the Compensation
Committee's judgment as to Mr. Powers' achievement of individual goals and
objectives during 1998.
Mr. Powers received options to purchase 45,000 shares of Common Stock in
1998. 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 did not receive a performance share grant
in 1998.
Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code caps at $1 million the
allowable federal income tax deduction for compensation paid to each of the
proxy-reported executive officers of a public company. However, 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 and Compensation Committee
Neil D. Humphrey, Chairman Gerald C. McDonough
John M. Galvin C. Edward Midgley
Richard J. Hill
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 and reimbursement for related expenses. They also receive
$950 for attending each committee meeting. Each director can elect to take up
to 100% of his 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.
A non-employee director who retires with at least ten years of non-employee
Board service will be paid a retirement benefit for life consisting of an annual
amount equal to the Board retainer being paid to such director 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 also 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.
In addition, non-employee directors received awards of 1,500 performance shares
on November 1, 1997 and 2,000 performance shares on November 1, 1998 and
biannually thereafter will receive awards of 2,000 performance shares. The
1,500 performance shares
20
<PAGE>
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.
One of the Company's non-employee directors, Don E. Tucker, who was
formerly Senior Vice President and Chief Administrative Officer of the Company,
provides consulting services to the Company. Fees paid by the Company to Mr.
Tucker for those services during fiscal 1998 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 Compensation Committee.
Additionally, under the Employment Agreement Mr. Powers must 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 provides that, in the event of Mr. Powers' termination without cause
(as defined in the Employment Agreement), Mr. Powers will receive a lump sum
payment equal to two and one-half times his most recent annual cash
compensation. Finally, the Employment Agreement provides that 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.
Termination Benefits
During 1996, the Company entered into termination and change of control
agreements ("Termination Agreements") with the executive officers listed in the
Summary Compensation Table. Under these Termination Agreements, each of such
executive 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 his base salary and his
highest annual bonus, (ii) his highest recent bonus, (iii) the actuarial
value of his accrued benefit under the supplemental retirement benefit plans,
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, outplacement services, club
dues, tax planning, relocation expenses
21
<PAGE>
(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, if applicable.
Under the Termination Agreements, each executive officer has agreed not to
compete against the Company for certain periods of time.
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
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
--------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
TEC $100.00 $149.18 $138.16 $219.67 $334.23 $377.77
DJID $100.00 $103.38 $116.94 $151.09 $188.56 $181.43
NYSE $100.00 $103.72 $121.76 $148.68 $193.44 $223.13
</TABLE>
22
<PAGE>
Comparison of Five Year Cumulative Total Return (cont.)
Assumes $100 invested on October 31, 1993.
Total return assumes reinvestment of dividends.
Data as of October 31 of each year.
In accordance with Securities and Exchange Commission 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 this 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.
23
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The directors, nominees for the office of director, the Named 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, 1998, as set forth
below. Unless otherwise indicated below, the persons in the following table
have sole voting and sole investment power with respect to all shares shown as
beneficially owned by them.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
--------------------------------------------- Percent
Name of Beneficial of Voting
Owner Common Preferred (11) Shares
- ------------------------ --------------------- ------------------- ------------------
<S> <C> <C> <C>
William J. Bresnahan 7,691(1) - *
Robert A. Calcagni 70,887(1)(2)(3) 1,191 *
Charles B. Cushwa III 232,017(1)(4)(5)(6) - 1.52%
William W. Cushwa 181,407(1)(3)(4)(7) 389 1.19%
John M. Galvin 16,382(1) - *
John Gilchrist 62,678(1)(3) 1,121 *
Steven J. Hewitt 42,946(1)(2)(3) 628 *
Richard J. Hill 16,512(1)(8) - *
Neil D. Humphrey 14,455(1)(9) - *
William E. Kassling 18,862(1) - *
Gerald C. McDonough 9,362(1) - *
C. Edward Midgley 29,179(1) - *
Paul J. Powers 611,986(1)(2)(3) 1,414 3.93%
George M. Smart 9,358(1) - *
Don E. Tucker 150,493(1)(2)(4)(10) - *
Bruce C. Wheatley 108,869(1)(2)(3) 569 *
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
--------------------------------------------- Percent
Name of Beneficial of Voting
Owner Common Preferred Shares
- ------------------------ --------------------- ------------------- ------------------
<S> <C> <C> <C>
All Directors and
Executive Officers as a
Group (18) people 1,682,923 7,343 10.72%
*less than 1%
</TABLE>
(1) Includes shares of Common Stock acquirable within 60 days of December
31, 1998 upon exercise of options issued under the Company's Stock Option and
Award Plans as follows: Mr. Bresnahan - 3,612 shares; Mr. Calcagni - 13,965
shares; Mr. Charles Cushwa - 3,362 shares; Mr. William Cushwa - 750 shares; Mr.
Galvin - 8,405 shares; Mr. Gilchrist - 18,706 shares; Mr. Hewitt - 9,052 shares;
Mr. Hill - 3,362 shares; Mr. Humphrey - 2,431 shares; Mr. Kassling - 3,362
shares; Mr. McDonough - 3,362 shares; Mr. Midgley - 4,112 shares; Mr. Powers -
363,424 shares; Mr. Smart - 3,362 shares; Mr. Tucker - 5,043 shares; and Mr.
Wheatley - 67,360 shares.
(2) 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 - 2,495 shares; Mr. Hewitt - 2,323 shares; Mr. Powers - 14,184 shares;
Mr. Tucker - 11,483 shares; and Mr. Wheatley - 5,489 shares. Participants in
the Company's 401(k) plan have shared voting power and sole dispositive power of
the shares in their accounts.
(3) 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 (the "ESOP Plan"): Mr. Calcagni - 1,009 shares;
Mr. William Cushwa - 1,909 shares; Mr. Gilchrist - 1,003 shares; Mr. Hewitt - 5
shares; Mr. Powers - 2,183 shares; and Mr. Wheatley - 515 shares. Participants
in the ESOP Plan have shared voting power and no dispositive power of the shares
in their accounts.
(4) Does not include Common Stock owned by the members of the above-
mentioned individuals' families who share their homes, as follows: Mr. Charles
Cushwa - 947 shares; Mr. William Cushwa - 32,189 shares; Mr. Tucker - 1,146
shares. Beneficial ownership thereof is disclaimed by the respective named
individuals.
(5) Includes 23,300 shares of Common Stock held in various trusts, 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.
Includes 38,396 shares of Common Stock held in a 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. Includes 35,000 shares of
Common Stock held in various trusts, in which the children of Charles B. Cushwa
III's deceased sister have a
25
<PAGE>
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) Includes 47,908 shares of Common Stock held by the Charles B. Cushwa
III Limited Partnership over which Mr. Cushwa has sole voting and dispositive
power.
(7) Includes 35,000 shares of Common Stock held in various trusts, 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. Includes 53,550
shares of Common Stock held in various trusts, 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.
(8) Includes 10,749 shares of Common Stock held by a trust of which
Richard J. Hill is sole trustee.
(9) Includes 2,488 shares of Common Stock (fractional shares not shown)
held by a trust of which Neil D. Humphrey is co-trustee, with his wife, and
4,469 shares of Common Stock (fractional shares not shown), over all of which
Dr. Humphrey shares voting and investment power with his wife.
(10) Includes 130,963 shares of Common Stock held by a trust of which Don
E. Tucker is sole trustee.
(11) Shares of Series B Preferred Stock which are convertible into Common
Stock upon participant's termination from employment at a rate of 3.0227 per
share (fractional shares not shown) held as a result of participation in the
ESOP Plan.
The information set forth above concerning beneficial ownership is based on
information received from the persons named. None of such persons, directly or
indirectly, owns beneficially any equity securities of any subsidiary of the
Company.
26
<PAGE>
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, 1998 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. 778,287 (1) 5.44% 5.11%
P.O. Box 450
Youngstown, OH 44501
Common LaSalle National Bank 369,219 (2) 2.58% 2.42%
135 South LaSalle St.
Chicago, IL 60603
Series B LaSalle National Bank 926,070 (3) 100.0% 6.08%
Preferred 135 South LaSalle St.
Chicago, IL 60603
</TABLE>
(1) National City Bank has sole voting power over 634,978 shares, shared
voting power over 140,551 shares and no voting power over 2,758 shares, and
National City Bank has sole investment power over 107,285 shares, shared
investment power over 553,112 shares and no investment power over 117,890
shares.
(2) LaSalle National Bank has shared voting power and sole investment power
over all of these 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 of these 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.
27
<PAGE>
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, 1999. 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 auditors of the Company's financial statements for the fiscal year
ending October 31, 1999.
Required Vote
The affirmative vote of the holders of a majority of the voting shares
represented in person or by proxy at the Annual Meeting is required for such
ratification.
Board Recommendation
The Board of Directors recommends a vote FOR the approval of Ernst & Young
LLP as independent auditors.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report of the Company and its subsidiaries for the fiscal year
ended October 31, 1998, including financial statements reflecting the financial
position and results of 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.
2000 ANNUAL MEETING OF SHAREHOLDERS
The deadline for receipt by the Company of shareholders' proposals for
inclusion in the Company's proxy statement and form of proxy for its 2000 annual
meeting of shareholders (the "2000 Meeting") is October 1, 1999. Any
shareholder proposal for consideration at the 2000 Meeting will be considered
untimely if received by the Company later than December 15, 1999. The Company
form of proxy for the 2000 Meeting will confer discretionary authority upon the
persons named as proxies to vote on any untimely shareholder proposals.
28
<PAGE>
FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1998, as filed with the Securities and Exchange Commission,
may be obtained by shareholders after January 31, 1999, without charge, on
written request directed to the Secretary, Commercial Intertech Corp., P.O. Box
239, Youngstown, Ohio 44501.
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. The
cost of preparing, printing, assembling and mailing will be paid by the Company.
Officers, directors and 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 materials 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 Common Stock of record to
forward proxy materials to the beneficial owners of such shares. For these
services, the Company will pay Morrow & Co., Inc. a fee estimated not to exceed
$5,500, 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
/S/ SHIRLEY M. SHIELDS
SHIRLEY M. SHIELDS
Vice President and Corporate Secretary
Youngstown, Ohio
January 29, 1999
29
<PAGE>
COMMERCIAL INTERTECH CORP.
1775 Logan Avenue
Youngstown, Ohio 44505
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MARCH 24, 1999
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
Butler Institute of American Art, 524 Wick Avenue, Youngstown, Ohio on
Wednesday, March 24, 1999, at 10:00 A.M., Eastern Time, 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 THE ENCLOSED ENVELOPE
Dated: ________________________, 1999
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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>
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, 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 Ernst & Young as
independent 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 THE NOMINEES FOR DIRECTOR
AND FOR RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
