<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Cooper Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Diane K. Schumacher
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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:
- --------------------------------------------------------------------------------
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
{LOGO}
March 18, 1994
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to attend the Annual
Shareholders' Meeting in Houston, Texas on Tuesday, April 26, 1994 at 11:00 a.m.
The meeting will be held in the Austin Room, Four Seasons Hotel, 1300 Lamar
Street, Houston, Texas.
The attached notice and proxy statement describe the business to be conducted at
the meeting, including the election of three directors. The Board of Directors
has nominated Messrs. Clifford J. Grum, Sir Ralph H. Robins and A. Thomas Young.
The Board of Directors appreciates and encourages shareholder participation.
Whether or not you plan to attend the meeting, it is important that your shares
be represented. Please take a moment now to sign, date and return your proxy in
the envelope provided even if you actually can be present. We hope you will be
able to attend the meeting.
Sincerely,
/s/ Robert Cizik
Robert Cizik
Chairman and Chief Executive Officer
<PAGE> 3
COOPER INDUSTRIES, INC.
P.O. BOX 4446
HOUSTON, TEXAS 77210
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
<TABLE>
<S> <C>
TIME............................... 11:00 a.m. on Tuesday, April 26, 1994
PLACE.............................. Four Seasons Hotel, Austin Room, 1300 Lamar Street, Houston,
Texas
ITEMS OF BUSINESS.................. 1. To elect three directors to serve for terms of three years
expiring at the annual meeting to be held in 1997.
2. If presented at the meeting, to consider and act upon the
following two shareholder proposals described in the
accompanying Proxy Statement:
(a) endorse the CERES Principles; and
(b) institute a policy concerning the Company's environmental
and human rights practices in Mexico.
3. To act upon any other matters properly coming before the
meeting or any adjournment thereof.
RECORD DATE........................ Holders of Common and $1.60 Convertible Exchangeable Preferred
Stock of record at the close of business on March 8, 1994 are
entitled to vote at the meeting.
ANNUAL REPORT...................... The annual report of the Company for the year 1993 was mailed
previously to all shareholders.
IMPORTANT.......................... In order to avoid additional soliciting expense to the Company,
please SIGN, DATE and MAIL your proxy PROMPTLY in the return
envelope provided, even if you plan to attend the meeting. If
you attend the meeting and wish to vote your shares in person,
arrangements will be made for you to do so.
</TABLE>
By order of the Board of Directors:
/s/ Diane K. Schumacher
Diane K. Schumacher
Vice President, Administration and
Corporate Secretary
Houston, Texas
March 18, 1994
<PAGE> 4
COOPER INDUSTRIES, INC.
MARCH 18, 1994
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 1994
VOTING SECURITIES, PRINCIPAL HOLDERS AND PROXIES
Only shareholders of record as of the close of business on March 8, 1994
(the "Record Date") will be entitled to notice of and to vote at the Annual
Meeting of Shareholders or any adjournment thereof. On the Record Date, there
were outstanding 115,912,510 shares of Common Stock and 33,182,454 shares of
$1.60 Convertible Exchangeable Preferred Stock ("$1.60 Preferred Stock"), which
constituted the only outstanding voting securities. Each share of Common Stock
has one vote. Each share of $1.60 Preferred Stock has one-tenth vote.
Shares may be voted at the meeting in person or by proxy. The accompanying
proxy is solicited by the Board of Directors of Cooper Industries, Inc.
(hereinafter referred to as "Company" or "Cooper"), and is intended to permit
each shareholder as of the Record Date to vote. All valid proxies received prior
to the meeting will be voted. Unless marked to the contrary, such proxies will
be voted for the election of the three directors and against the shareholder
proposals set forth in the attached Notice. If any other business is brought
before the meeting, the proxies will be voted in accordance with the judgment of
the persons voting the proxies. A shareholder who has given a proxy may revoke
it at any time prior to such proxy being voted at the meeting by filing with the
Secretary of the Company an instrument revoking it or a duly executed proxy
bearing a later date, or by attending the meeting and giving notice of such
revocation. Attendance at the meeting does not by itself constitute revocation
of a proxy.
Cooper has adopted a confidential voting policy which provides that
shareholder votes at Company shareholder meetings are kept confidential by an
independent inspector of election, who may be the transfer agent, except as may
be necessary to meet applicable legal requirements or to respond to written
comments on proxy cards. Each proxy solicited by the Board which identifies the
vote of a specific shareholder will be treated in accordance with this policy
unless the shareholder elects not to have such vote kept confidential. In the
event of a contested solicitation, if the Company and the opposing party can
agree in writing on mutually acceptable confidentiality procedures which would
apply to each party's solicitation, the Company agrees to be bound by the
confidentiality procedures set forth in such agreement. If the parties do not
agree on mutually acceptable confidentiality procedures, the Company's policy on
confidential voting shall not apply to the solicitation.
The Company's confidential voting policy shall not operate to impair free
and voluntary communication between Cooper and its shareholders, including
disclosure by shareholders of the nature of their votes.
In addition to the use of the mails, proxies may be solicited by the
directors, officers and employees of the Company without additional
compensation, by personal interview, telephone, telegram, or otherwise.
Arrangements also may be made with brokerage firms and other custodians,
nominees and fiduciaries who hold the voting securities of record for the
forwarding of solicitation material to the beneficial owners thereof. The
Company will reimburse such brokers, custodians, nominees and fiduciaries for
the reasonable out-of-pocket expenses incurred by them in connection therewith.
In addition, Georgeson & Company Inc. has been engaged to solicit proxies at a
fee of $16,000 plus out-of-pocket costs and expenses. Expenses of solicitation
will be borne by the Company.
The accompanying proxy card includes all shares of Common Stock and $1.60
Preferred Stock held of record on March 8, 1994.
If you are a participant in the Cooper Dividend Reinvestment and Stock
Purchase Plan ("DRP"), shares of Cooper stock held in your DRP account are
included on and may be voted through the proxy card accompanying this mailing.
The DRP administrator, as the shareholder of record, may only vote the DRP
shares for which it has received directions to vote from the DRP participants.
For Cooper Employees: If you are a participant in the Cooper Savings Plans
and/or Stock Ownership Plan ("CO-SAV") or the Cameron Iron Works USA, Inc.
Savings-Investment Plan for Hourly Employees ("Cameron Plan"), the accompanying
proxy card will include the number of equivalent shares credited to your account
by
<PAGE> 5
Citibank, N.A., as Trustee for CO-SAV and the Cameron Plan ("Trustee"). When
your proxy card is returned properly signed, it will serve as direction to the
Trustee to vote the shares held in CO-SAV or in the Cameron Plan for your
account in accordance with your directions. If you return a proxy card properly
signed, but do not indicate your voting preferences, the shares represented by
your proxy card will be voted For the election of all nominees for director
named in the Notice and Against the two shareholder proposals. Your properly
signed proxy card also will serve as a direction to the Trustee to vote all of
the uninstructed shares of Common Stock and $1.60 Preferred Stock credited to
other participants' accounts and, for CO-SAV, shares of Common Stock not yet
allocated to participants' accounts, in the same manner as you have indicated.
If no directions are received on the Common Stock or if shares of Common Stock
are not yet allocated to participants' accounts, the Trustee will vote such
shares of Common Stock in the same proportion (for/against) as the shares of
Common Stock for which instructions are received from CO-SAV participants. The
Trustee will vote shares of $1.60 Preferred Stock for which instructions are not
received in the same manner and in the same proportion as the shares of $1.60
Preferred Stock for which instructions are received from other CO-SAV
participants for uninstructed shares in CO-SAV and from other Cameron Plan
participants for uninstructed shares in the Cameron Plan. If you fail to return
a proxy card properly signed, the equivalent shares of Common Stock and $1.60
Preferred Stock credited to your account will then be voted by the Trustee in
the same proportion as the shares for which instructions were received from
other CO-SAV participants or Cameron Plan participants, as appropriate.
The Company knows of no person who was the beneficial owner as of the
Record Date of more than five percent (5%) of the outstanding shares of any
class of stock, other than the following which have filed statements of
ownership on Schedule 13G with the Securities and Exchange Commission:
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
-------------- ------------------- ---------- -------
<S> <C> <C> <C>
$1.60 Preferred Stock..... Fayez Sarofim & Co. 4,610,258(1) 13.9%(1)
(independent investment advisor)
Fayez S. Sarofim
(President, director and principal
shareholder of Fayez Sarofim & Co.)
Two Houston Center
Suite 2907
Houston, Texas 77002
$1.60 Preferred Stock..... Delaware Management Company, Inc. 4,302,975 13.0%(2)
(independent investment advisor)
1818 Market Street
Philadelphia, Pennsylvania 19103
</TABLE>
In addition, Citibank, N.A., as Trustee of CO-SAV and the Cameron Plan,
holds of record 8,272,857 shares of Cooper Common Stock, which is 7.1% of the
outstanding shares of Common Stock, and 249,773 shares of $1.60 Preferred Stock
(0.75%). The CO-SAV and Cameron Plan participants have voting rights with
respect to all such shares.
- ---------------
(1) Includes 4,256,524 shares held in accounts managed by Fayez Sarofim & Co.
("Sarofim") and 225,000 shares owned directly by Sarofim for its own
account, and 128,734 shares held in accounts managed by Sarofim Trust Co.
(the "Trust"), a wholly-owned subsidiary of Sarofim or owned by the Trust
for its own account. Sarofim has investment discretion with respect to all
such shares, and in some cases, shares voting power with the Trust, various
trustees, clients or others. Because Mr. Sarofim is the controlling person
of Sarofim, he may be deemed to be a beneficial owner of all such shares for
purposes of Rule 13d-3, as well as 3,000 shares held in trusts with respect
to which Mr. Sarofim is a trustee and 1,250 shares owned beneficially by his
spouse and children.
(2) The reported shares are held in various institutional accounts for which
Delaware Management Company, Inc. provides investment advisory service and
has investment discretion.
2
<PAGE> 6
PROPOSAL 1
ELECTION OF DIRECTORS
Alan E. Riedel, Vice Chairman since 1992 and a director since 1981, has
elected early retirement as of March 31, 1994 and, in accordance with Board
policy, will thus retire from the Board of Directors prior to the Annual Meeting
of Shareholders. Effective with his retirement, the authorized number of
directors has been reduced to ten, divided into three classes, one having four
members and two classes having three members each. Each class is elected for a
term of three years, so that the term of one class of directors expires at every
annual meeting.
NOMINEES
The Board of Directors has nominated three persons for election as
directors in the class whose term will expire in April 1997, or when their
successors are elected and qualified. The nominees are: Clifford J. Grum, Sir
Ralph H. Robins and A. Thomas Young, all of whom are directors and members of
the class whose term expires at the meeting. The affirmative vote of the holders
of at least a majority of a quorum is required in order to elect each director.
Under the Code of Regulations of the Company, a quorum is constituted by the
presence, in person or by proxy, of a majority of the voting power of the
Company. Abstentions will be counted for purposes of determining whether a
quorum is present and will be counted as voting. Broker nonvotes are not counted
for purposes of voting.
If any nominee should be unable to serve as a director, an event not now
anticipated, it is intended that the shares represented by proxies will be voted
for the election of such substitute as the Board of Directors may nominate. Set
forth on the following four pages are the names of and certain information with
respect to the persons nominated as directors and the current directors of the
Company.
3
<PAGE> 7
NOMINEES FOR TERMS EXPIRING IN 1997
<TABLE>
<S> <C>
-------------------
- ----------------------- Received a B.A. degree from Austin College and an
CLIFFORD J. GRUM M.B.A. from University of Pennsylvania, Wharton School
of Finance. Joined Temple Industries, Inc. in 1968 as
Chairman and Chief Vice President, Finance. After a merger with Time Inc.
Executive Officer, in 1973, held various positions with Time Inc.,
Temple-Inland Inc. {PHOTO} including Treasurer, publisher of Fortune magazine and
Executive Vice President. Elected a director of Time
Chairman - Finance Inc. in 1980 and, after a spin-off of Temple-Inland
Committee (container and containerboard, pulp and paperboard,
building products and financial services) by Time Inc.
Member - Executive in 1983, became President and Chief Executive Officer
Committee, Audit and a director of Temple-Inland. In 1991, became Chairman of the Board and
Committee and Committee Chief Executive Officer of Temple-Inland.
on Nominations and
Corporate Governance Director: Temple-Inland Inc. and Premark International, Inc.
Director since 1982 Director, Texas Chamber of Commerce. Trustee: Austin College, Sherman,
Age 59 Texas; Lufkin Industrial Foundation; and Memorial Medical Center of East
Texas.
-------------------
- ----------------------- Received a B.S. degree from Imperial College, London
SIR RALPH H. ROBINS and is a Chartered Engineer. Joined Rolls-Royce
(aerospace engines and industrial power equipment) in
Chairman, Rolls-Royce 1955 as a Graduate Apprentice and held various
plc {PHOTO} positions with the Aero Engine Division before being
named Executive Vice President of Rolls-Royce Aero
Member - Audit Engines Inc. in 1972 and then Managing Director of the
Committee and Finance Rolls-Royce Industrial and Marine Division in 1973.
Committee Elected to the Board of Rolls-Royce plc in 1982 as
Commercial Director, then appointed Managing Director
Director Since 1991 in 1984. Became Deputy Chairman in 1989, Chief
Age 61 Executive in 1991 and Chairman in October 1992.
Director: Rolls-Royce plc; ASW Holdings PLC; Marks & Spencer plc; Schroders
plc; and Standard Chartered PLC.
Chairman, Defence Industries Council. Member, Institution of Mechanical
Engineers. Fellow: Royal Aeronautical Society and the Royal Academy of
Engineering.
-------------------
- ----------------------- Received Bachelor of Aeronautical Engineering and
A. THOMAS YOUNG Mechanical Engineering degrees from University of
Virginia and a Master of Management degree from
President and Chief Massachusetts Institute of Technology. Had a 21-year
Operating Officer, {PHOTO} career with NASA before joining Martin Marietta
Martin Marietta Corporation (aerospace, electronic and defense products
Corporation and services) in 1982 as Vice President of Aerospace
Research and Engineering. Named Senior Vice President
Member - Audit and President of Martin Marietta Electronics & Missiles
Committee and Finance Group in 1987. Served as Executive Vice President in
Committee 1989 until appointment as President and Chief Operating Officer in 1990.
Director since 1990 Director: Martin Marietta Corporation and The Dial Corp.
Age 55
Chairman, Business Committee for the Arts. Director: American Defense
Preparedness Association; Council for Excellence in Government; NASA Alumni
League; and Virginia Engineering Foundation, University of Virginia.
Fellow: American Institute of Aeronautics & Astronautics and American
Astronautical Society. Member: Aerospace Industries Association; Defense
Industry Initiative on Business Ethics & Conduct; National Academy of
Engineering; Navy League of the United States; National Space Club; and
Industrial Advisory Committee, University of Virginia. Advisory Board,
National Technology Transfer Center.
</TABLE>
4
<PAGE> 8
PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 1995
<TABLE>
<S> <C>
-------------------
- ----------------------- Graduated with honors from the University of
ROBERT CIZIK Connecticut. Received an M.B.A. degree with High
Chairman and Chief Distinction from the Harvard Graduate School of
Executive Officer Business Administration, where he was also a Baker
{PHOTO} Scholar. Awarded an Honorary LL.D from Kenyon College.
Chairman - Executive Joined Cooper in 1961 and served in various financial,
Committee planning and management positions. Named President and
Chief Operating Officer in 1973, then elected Chief
Director since 1971 Executive Officer in 1975. Elected Chairman of the
Age 62 Board in April 1983.
Director: Air Products and Chemicals Company; Harris Corporation; Panhandle
Eastern Corporation; and Temple-Inland Inc.
Chairman of Executive Committee, National Association of Manufacturers.
Chairman, United Way of the Texas Gulf Coast, 1994-95 Campaign. Vice
Chairman of Board of Trustees, Committee for Economic Development.
Director: Associates of Harvard Business School; Fund for Large Enterprises
in Russia; Greater Houston Partnership; National Business Committee for the
Arts; Texas Business and Education Coalition; and Texans for Judicial
Election Reform. Member: Policy Committee of The Business Roundtable and
National Advisory Council of the Texas Heart Institute.
-------------------
- ----------------------- Received a B.S. degree in business administration, an
HAROLD S. HOOK M.A. in accounting and a Doctor of Laws from University
of Missouri, and a Doctor of Laws from Westminster
Chairman and Chief College. Also a graduate of Southern Methodist
Executive Officer, {PHOTO} University, Institute of Insurance Marketing. Joined
American General American General Corporation (insurance) in 1970 as
Corporation President and Chief Executive Officer of
California-Western States Life Insurance Co. Elected a
Member - Finance director in 1972 and then named President of American
Committee, Management General in 1975. Elected Chairman and Chief Executive
Development Officer in 1978.
and Compensation
Committee and Executive Director: American General Corporation; Chemical Banking Corporation;
Committee Chemical Bank; Panhandle Eastern Corporation; Sprint Corporation; Texas
Commerce Bancshares, Inc.; and Texas Commerce Bank National Association.
Director since 1986
Age 62 Vice Chairman and a member of Council of Overseers, Rice University (Jesse
Jones Graduate School). National Executive Board, Boy Scouts of America and
Advisory Board, Boy Scouts of America, Sam Houston Area Council. Director:
Greater Houston Partnership, Inc; Society for the Performing Arts; Texas
Association of Taxpayers, Inc.; Texas Medical Center; and Texas Research
League. Board of Trustees, Baylor College of Medicine.
</TABLE>
5
<PAGE> 9
<TABLE>
<S> <C>
-------------------
- ----------------------- Received an A.A. degree from City College of San
FRANK A. OLSON Francisco. Joined The Hertz Corporation (rental cars
and trucks) in 1964 and held various positions until
Chairman, Chief 1973 when named Executive Vice President and 1974 when
Executive and Chief {PHOTO} elected to the Board of Directors. Named President and
Operating Officer, The Chief Executive Officer of The Hertz Corporation in
Hertz Corporation 1977 and Chairman in 1980. Also in 1980, was elected a
Group Executive President of RCA Corporation, then
Member - Finance parent company of Hertz. In 1985, after Hertz was sold
Committee and to UAL, Inc., became a director of UAL, Inc., which
Management Development became Allegis Corporation. In June 1987, was elected Chairman and Chief
and Compensation Executive Officer of Allegis Corporation and President and Chief Executive
Committee Officer of United Airlines, a position he held until December 1987 after
which he continued as Chairman, Chief Executive Officer and Chief Operating
Director since 1989 Officer of The Hertz Corporation.
Age 61
Director: The Hertz Corporation; Becton, Dickinson & Company; UAL
Corporation; and The Commonwealth Edison Company.
Director: National Multiple Sclerosis Society and The Swedish-American
Chamber of Commerce, Inc. Trustee, National Committee Against Drunk
Driving. Member, Advisory Board of Religion in American Life. Board of
Visitors: Berry College and Duke University Fuqua School of Business.
-------------------
- ----------------------- Received B.A. and M.A. degrees in history from Ohio
JOHN D. ONG State University. Received an LL.B. degree from Harvard
Law School. Joined The BFGoodrich Company (chemicals
Chairman and Chief and aerospace products) in 1961 and held various
Executive Officer, {PHOTO} positions in the international division. Elected a
The BFGoodrich Company Group Vice President in 1972 and then Executive Vice
President and a director in 1973. Elected Vice Chairman
Chairman - Management of the Board in 1974 and President in 1975. Named
Development and Chairman and Chief Executive Officer in 1979.
Compensation Committee
and Committee on Director: The BFGoodrich Company; Ameritech Corporation; ASARCO, Inc.; The
Nominations and Geon Company; and The Kroger Company.
Corporate Governance
Director, National Alliance of Business. Chairman, The Business Roundtable.
Director since 1975 Trustee, University of Chicago. Member: The Business Council and The
Age 60 Conference Board.
</TABLE>
6
<PAGE> 10
PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 1996
<TABLE>
<S> <C>
-------------------
- ----------------------- Received a B.S. degree in electrical engineering from
WARREN L. BATTS Georgia Institute of Technology and an M.B.A. from
Harvard Business School. Joined Dart Industries in 1980
Chairman and Chief and was President in 1980 when Dart Industries merged
Executive Officer, {PHOTO} with Kraft, Inc. Became President of Dart & Kraft, Inc.
Premark International, in 1981 and Chief Operating Officer in 1983; served in
Inc. these positions until October 1986, when Premark
International, Inc. (food containers, commercial food
Chairman - Audit equipment, housewares and decorative laminates) was
Committee created by Dart & Kraft, Inc. Has been Chairman and
Chief Executive Officer and a director of Premark since 1986.
Member - Management
Development and Director: Premark International, Inc.; Allstate Corporation; Sears, Roebuck
Compensation Committee and Co.; and Sprint Corporation.
and Committee on
Nominations and Director, Children's Memorial Hospital. Trustee, Northwestern University.
Corporate Governance
Director since 1986
Age 61
-------------------
- ----------------------- Graduate of Ecole Des Hautes Etudes Commerciales in
CONSTANTINE S. Paris, France. Received a Juris Doctor degree and a
NICANDROS doctorate in economics from the University of Paris Law
School and an M.B.A. from Harvard Graduate School of
President and Chief {PHOTO} Business Administration. Joined Conoco (petroleum
Executive Officer, products) in 1957 and held various positions in many
Conoco Inc. areas of the company. Named Executive Vice President
for Worldwide Supply and Transportation in 1975 and
Vice Chairman, E.I. du Group Executive Vice President, Petroleum Products in
Pont de Nemours and 1978. Named President, Petroleum Operations in 1983 and
Company elected President and Chief Executive Officer in March 1987. Named Vice
Chairman of E.I. du Pont de Nemours and Company (chemical, specialty
Member - Audit products and energy) in 1991.
Committee, Management
Development and Director: Conoco Inc.; E.I. du Pont de Nemours and Company; Consol Inc.;
Compensation Committee and Texas Commerce Bancshares, Inc.
and Executive Committee
Director: American Petroleum Institute; Texas Research League; The Greater
Director since 1990 Houston Partnership; and Houston Symphony. Chairman and a Trustee, Houston
Age 60 Grand Opera. Trustee: Baylor College of Medicine; Houston Ballet
Foundation; and Houston Museum of Fine Arts. Member: Board of Governors of
The Forum Club of Houston; International Institute for Strategic Studies;
and National Petroleum Council.
-------------------
- ----------------------- Received a B.S. degree in industrial engineering from
H. JOHN RILEY, JR. Syracuse University. Also a graduate of the Harvard
Advanced Management Program. Joined Crouse-Hinds
President and Chief Company in 1962 and held various manufacturing
Operating Officer positions before appointment as Corporate Vice
{PHOTO} President in 1979. In 1982, after Cooper acquired
Director since Crouse-Hinds Company, became Executive Vice President,
September 1992 Operations for Cooper. Named President and Chief
Age 53 Operating Officer in September 1992.
Director and Vice Chairman, Junior Achievement of
Southeast Texas. Director: Central Houston, Inc.;
Harvard Business School Club of Houston; and Houston Symphony. Governor,
National Electrical Manufacturers' Association. Member, Corporate Advisory
Council of Syracuse University School of Management.
</TABLE>
7
<PAGE> 11
INFORMATION ABOUT MANAGEMENT AND ORGANIZATION
OF THE BOARD OF DIRECTORS
EXECUTIVE OFFICERS
The following sets forth certain information with respect to Cooper's
present executive officers. All executive officers are elected to terms which
expire at the organizational meeting of the Board of Directors, which follows
the Annual Meeting of Shareholders.
<TABLE>
<CAPTION>
YEARS
OF OFFICER
NAME POSITION AGE SERVICE SINCE
---- -------- --- ------ -------
<S> <C> <C> <C> <C>
Robert Cizik............. Chairman and Chief Executive Officer 62 32 1963
Alan E. Riedel........... Vice Chairman 63 34 1963
H. John Riley, Jr........ President and Chief Operating Officer 53 31 1982
Dewain K. Cross.......... Senior Vice President, Finance 56 27 1969
Ralph E. Jackson, Jr..... Executive Vice President, Operations 52 18 1992
Carl J. Plesnicher, Jr... Senior Vice President, Human Resources 56 26 1979
Michael J. Sebastian..... Executive Vice President, Operations 63 15 1980
Nishan Teshoian.......... Executive Vice President, Operations 52 16 1993
Thomas W. Campbell....... Vice President, Public Affairs 63 12 1981
James A. Chokey.......... Vice President and General Counsel 50 2 1991
Walter F. DuPont......... Vice President, Information Services 60 19 1991
Alan J. Hill............. Vice President and Treasurer 49 16 1979
D. Bradley McWilliams.... Vice President, Taxes and Real Estate 52 22 1982
Diane K. Schumacher...... Vice President, Administration and Corporate Secretary 40 14 1988
Donald R. Sheley, Jr..... Vice President and Controller 51 13 1986
Robert W. Teets.......... Vice President, Environmental Affairs and Risk 43 16 1993
Management
David A. White, Jr....... Vice President, Corporate Planning and Development 52 22 1988
</TABLE>
All of the above executive officers have been employed by Cooper in
management positions for more than five years, except James A. Chokey, who was
Vice President, General Counsel and Secretary of A.O. Smith Corporation (a
manufacturer of automobile structural components, electrical motors, residential
and commercial waterheaters and fiberglass pipe and fittings) from 1988 through
October 1991.
SECURITY OWNERSHIP OF MANAGEMENT
As of the Record Date, each director and executive officer named in the
Summary Compensation Table owned the number of shares of Common Stock of the
Company set forth in the following Table. None of the persons listed owned any
shares of $1.60 Preferred Stock. Each of the named individuals and all directors
and executive officers as a group, beneficially owned less than one percent of
the Company's outstanding Common Stock.
<TABLE>
<CAPTION>
SHARES
WHICH
MAY BE
ACQUIRED
WITHIN
SHARES OWNED 60 DAYS
DIRECTLY OF THE
NAME OF AND RECORD
BENEFICIAL OWNER INDIRECTLY DATE
--------------- ---------- --------
<S> <C> <C>
Robert Cizik............................................ 257,495 -0-
Warren L. Batts......................................... 2,000 10,000
Clifford J. Grum........................................ 6,000 8,000
Harold S. Hook.......................................... 8,000 -0-
Constantine S. Nicandros................................ 2,500 -0-
Frank A. Olson.......................................... 1,000 8,000
John D. Ong............................................. 1,200 4,000
Alan E. Riedel.......................................... 78,728 -0-
H. John Riley, Jr....................................... 79,144 -0-
Sir Ralph H. Robins..................................... 208 -0-
A. Thomas Young......................................... 200 2,000
Michael J. Sebastian.................................... 74,368 -0-
Dewain K. Cross......................................... 69,834 -0-
All Directors and Executive Officers as a Group......... 714,553 104,495
</TABLE>
8
<PAGE> 12
REPORTING OF SECURITIES TRANSACTIONS
The Company's executive officers and directors are required under the
Securities Exchange Act of 1934 to file reports of ownership and changes in
ownership of Cooper stock with the Securities and Exchange Commission and the
New York Stock Exchange. In 1993 two reports were filed late by Frank A. Olson
for two transactions completed on behalf of Mr. Olson by his investment advisor
in an uninstructed discretionary investment account. The reports were filed as
soon as Mr. Olson had knowledge of the transactions.
MEETINGS OF THE COOPER BOARD AND ITS COMMITTEES
The Board of Directors of Cooper met on five occasions during 1993. All the
directors attended seventy-five percent or more of the meetings of the Board and
the committees of the Board on which they served, except Mr. Olson.
Cooper has five committees composed of directors:
Audit Committee
The Audit Committee in 1993 consisted of five nonemployee directors: Warren
L. Batts, Chairman, Clifford J. Grum, Constantine S. Nicandros, Sir Ralph H.
Robins and A. Thomas Young. Three Committee meetings were held during the year.
Activities of the Committee included conferring with management and the
independent auditors regarding the 1992 financial statements; reviewing and
approving fees paid to the independent auditors; reviewing the scope of the 1993
audit by the independent auditors; and making a recommendation acted on by the
Board of Directors to appoint Ernst & Young as the Company's independent
auditors for 1993. During 1993, the Committee also reviewed the following
matters: the 1993 internal audit program; officers' travel and entertainment
expenses; the financial organization key personnel; compliance with the
Company's conflicts of interest policies; the effectiveness of the Company's
internal controls; the status of tax audits; the scope of the 1994 internal
audit program; and the Company's litigation and environmental matters and risk
management program.
Executive Committee
The Executive Committee in 1993 consisted of two employee directors, Robert
Cizik, Chairman, and Alan E. Riedel, and three nonemployee directors, Clifford
J. Grum, Harold S. Hook and Constantine S. Nicandros. Under the Code of
Regulations of the Company, the Executive Committee has, during the intervals
between the meetings of the directors, all of the powers of the directors in the
management and control of the business and property of the Company. The
Executive Committee did not meet during 1993.
Finance Committee
The Finance Committee in 1993 consisted of five nonemployee directors:
Clifford J. Grum, Chairman, Harold S. Hook, Frank A. Olson, Sir Ralph H. Robins
and A. Thomas Young. Three Committee meetings were held during the year. The
activities of the Committee included reviewing pension plan assets management
and the Company's capital structure and debt composition; and making
recommendations to the Board regarding dividends and the redemption of the
Company's 7 7/8% Notes due 1997.
Management Development and Compensation Committee
The Management Development and Compensation Committee in 1993 consisted of
five nonemployee directors: John D. Ong, Chairman, Warren L. Batts, Harold S.
Hook, Constantine S. Nicandros and Frank A. Olson. Two meetings of the Committee
were held in 1993. Actions of the Committee included determination of
performance targets and awards for the Annual Management Incentive Plan;
consideration of 1993 stock option grants; selection of officers and salary
action for officers; distributions under the 1990-1993 cycle of the Executive
Restricted Stock Incentive Plan; distributions under the Deferred Compensation
Plan; oversight of administration of the Company's pension plans; establishment
of 1994 Salary Policy and 1994 Annual Incentive Plan targets; determination of
the eligibility list for 1994 for the Management Incentive Compensation Deferral
Plan; and review of the Company's Management Development and Planning
activities.
Committee on Nominations and Corporate Governance
The Committee on Nominations and Corporate Governance consists of three
nonemployee directors: John D. Ong, Chairman, Warren L. Batts and Clifford J.
Grum. One meeting of the Committee was held in 1993. Matters
9
<PAGE> 13
reviewed and considered by the Committee included general matters of corporate
governance; frequency and adequacy of Board meetings; quality and timeliness of
information provided by management to the Board; performance of directors;
committee structure; election of members of the Board to committees; and
nominations for election or appointment of directors.
EXECUTIVE MANAGEMENT COMPENSATION
Table 1 presents information concerning compensation paid to, or accrued
for services by, the Chief Executive Officer and the four most highly
compensated executive officers of Cooper during fiscal years 1991, 1992 and
1993.
Table 2 compares the total shareholder return on the Company's Common Stock
for the five-year period December 31, 1988 through December 31, 1993 to the
total returns for the same period of (a) the Standard & Poor's 500 Stock Index;
(b) the Standard & Poor's Electrical Equipment Group; and (c) the Standard &
Poor's Diversified Machinery Group. The Company chose the two industry indices
for comparison since Cooper's product offerings are so diverse. Standard &
Poor's assigns Cooper to its Diversified Machinery Group, while many analysts
compare Cooper to other electrical equipment manufacturers since this is a
significant part of Cooper's business. Management believes that a comparison to
two different indices is appropriate.
TABLE 1
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION(1) AWARDS(2) PAYOUTS
-------------------------- --------- ---------
(a) (b) (c) (d) (f) (h) (i)
RESTRICTED
STOCK LTIP ALL OTHER
NAME AND SALARY BONUS AWARD(S) PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(3) ($)(4) ($)(5)
------------------ ---- ------- ------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Cizik, R. -- Chairman & Chief 1993 835,000 400,000 0 0 37,575
Executive Officer.................... 1992 798,750 0 1,332,800 0 52,500
1991 750,000 300,000 0 4,077,492 60,750
Riedel, A. E. -- Vice Chairman......... 1993 470,000 160,000 0 0 21,150
1992 440,000 0 599,200 0 26,550
1991 406,250 150,000 0 1,912,452 31,331
Riley Jr., H. J. -- President & 1993 435,000 225,000 0 0 19,575
Chief Operating Officer.............. 1992 343,333 0 425,600 0 20,625
1991 317,500 115,000 0 1,551,162 24,637
Sebastian, M. J. -- Executive 1993 357,500 125,000 0 0 17,065
Vice President, Operations........... 1992 335,000 0 386,400 0 20,817
1991 308,750 110,000 0 1,262,940 23,119
Cross, D. K. -- Senior Vice 1993 308,000 115,000 0 0 15,136
President, Finance................... 1992 295,500 0 308,000 0 17,797
1991 283,000 100,000 0 1,118,604 20,610
</TABLE>
- ---------------
(1) Column (e) "Other Annual Compensation" has been omitted since there are no
amounts to report. The aggregate amount of perquisites and other personal
benefits for any named executive does not exceed $50,000 or 10% of the total
of annual salary and bonus for any such named executive.
(2) Column (g) "Options/SARs" has been omitted since no options or SARs were
awarded to the named executives during the years shown.
(3) The figures in this column reflect the fair market value on the date of
grant of awards of restricted stock that are subject to forfeiture in the
event that the executive does not remain employed by the Company for a
period of four-years. The awards shown for 1992 are valued at $56.00 a
share, which was the fair market value on the grant date, February 18, 1992.
The forfeiture restrictions lapse on December 31, 1995.
10
<PAGE> 14
The forfeiture period for restricted stock awarded in 1990 lapsed on
December 31, 1993 and the following shares were issued: Mr. Cizik -- 27,500
shares; Mr. Riedel -- 11,900 shares; Mr. Riley -- 10,100 shares; Mr.
Sebastian -- 8,600 shares; and Mr. Cross -- 7,700 shares.
The following chart shows the total number of shares of restricted stock
and performance-based restricted stock awards held as of December 31, 1993
and the value of such shares as of the end of 1993:
<TABLE>
<CAPTION>
(a) (b) (c) (d)
MARKET
VALUE SHARES
OF OF MARKET
SHARES RESTRICTED PERFORMANCE-BASED VALUE
OF STOCK RESTRICTED OF LTIP
RESTRICTED AS OF STOCK AS OF
STOCK 12/31/93 ("LTIP") 12/31/93
---------- ---------- ------- ---------
<S> <C> <C> <C> <C>
Cizik....................... 23,800 $1,172,150 71,400 $3,516,450
Riedel...................... 10,700 $ 526,975 32,100 $1,580,925
Riley...................... 7,600 $ 374,300 22,800 $1,122,900
Sebastian.................. 6,900 $ 339,825 20,700 $1,019,475
Cross...................... 5,500 $ 270,875 16,500 $ 812,625
</TABLE>
All of the shares of restricted stock [column (a)] are subject to
forfeiture in the event that the named executive does not remain employed
until December 31, 1995, which is a period of four years from the beginning
of the performance period, unless the employee sooner retires at age 65 in
accordance with corporate policy. Dividends are paid on the shares of
restricted stock at the dividend rate payable on all outstanding shares of
Company Common Stock.
The shares shown in column (c) are the maximum number of performance-based
restricted stock that may be earned. Payout of the shares is tied to
achieving performance targets that are expressed as a compound growth rate
in earnings per share over a specified target during the four-year period
from January 1, 1992 through December 31, 1995. Given that the performance
targets for the first two years of the performance cycle have not been met,
it is unlikely that the maximum number of shares as shown in column (c)
will be earned.
All of the awards granted to Mr. Riedel will be forfeited upon his
voluntary early retirement on March 31, 1994.
(4) The figures in this column for the year 1991 reflect the value of the
performance-based shares awarded in 1988 that were earned over a four-year
period 1988-1991 for achieving a compound annual growth rate in earnings
per share of 16.75%.
No shares of performance-based restricted stock were earned for the
four-year performance period ending December 31, 1993.
(5) This column reflects the Company's contributions to the Cooper Industries,
Inc. Employees' Savings and Stock Ownership Plan and to the Cooper
Industries, Inc. Supplemental Excess Defined Contribution Plan.
11
<PAGE> 15
TABLE 2
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL
SHAREHOLDER RETURNS
[GRAPH]
<TABLE>
<CAPTION>
S&P S&P
MEASUREMENT PERIOD ELECTRICAL DIVERSIFIED
(FISCAL YEAR COVERED) COOPER S&P 500* EQUIPMENT MACHINERY*
<S> <C> <C> <C> <C>
1988 100.00 100.00 100.00 100.00
1989 152.67 131.59 140.87 118.99
1990 161.30 127.49 129.53 102.64
1991 229.47 166.17 171.67 122.03
1992 194.63 178.81 187.96 124.52
1993 207.81 196.75 226.73 184.35
</TABLE>
* Includes Cooper
REPORT OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION
It is the policy of the Management Development and Compensation Committee
("Committee") to compensate executive officers based on their responsibilities,
achievement of annual established goals and the Company's annual and longer-term
performance. The compensation of the Chief Executive Officer and the other
senior executive officers consists of a base salary, an annual bonus opportunity
and long-term, performance-based restricted stock awards.
BASE SALARY
A base salary range is established for each executive officer using the Hay
Job Evaluation System, which uses a comparative assessment of know-how,
problem-solving and accountability factors in the job rating process. The
competitiveness of the base salary is also considered since the Committee
believes it is critical to attract and retain the best qualified executives. The
Committee uses the annual Hay Survey of Compensation Practices to establish the
ranges of executives' salaries. In 1993, the Hay Survey of Compensation
Practices included 736 industrial companies, which is a broader universe than
the companies included in the S&P Electrical Equipment Index and the S&P
Diversified Machinery Index appearing in the performance graph. The Committee
believes that the broader group of companies provides a more appropriate basis
for establishing salary levels since it minimizes the distortion of results that
occurs when using a small sample group.
The Committee's policy is to establish a salary range for each particular
job position, to set the midpoint of the range between the 50th and the 75th
percentile of the Hay Survey, and to pay compensation within the established
range, depending on individual performance. The Committee verifies the Hay data
through use of a separate compensation study, known as Project 777, which is
compiled by Management Compensation Services. This data bank includes 342
companies, 60 percent of which are in the Fortune 500. During 1993, the actual
base salaries for the named executive officers were slightly above the 50th
percentile of the Hay Survey.
12
<PAGE> 16
ANNUAL INCENTIVE COMPENSATION
An annual cash bonus opportunity, which is awarded at the discretion of the
Committee, is designed to tie annual incentive compensation to overall corporate
and individual performance. The awarding of the bonus is based on performance
goals established by the Committee in February of the bonus year. A bonus pool
is established by the Committee based upon an increase in earnings per share
over the prior year. The individual bonus amount awarded, if any, is tied to the
individual's job performance during the year as well as to increase in share
earnings.
In February 1993 the Committee established three levels of targets (Good,
Commendable and Outstanding) for the payout of bonuses for the year ended
December 31, 1993. Each target level was based on an increase in earnings per
share in 1993 over the prior year. In February 1994, the Committee determined
that the performance target at the "Good" level was achieved. The amounts paid
to each named executive officer were determined by the Committee after an
assessment of each executive's individual performance and contribution to the
Company during 1993. In addition, the Committee considered several extraordinary
events that occurred during 1993, including the successful completion of the
initial public offering of Belden Inc. stock, the negotiation of the sale of
Cameron Forged Products Division, and the spin-off of Gardner-Denver Industrial
Machinery Division.
LONG-TERM INCENTIVES
It is the policy of the Committee to provide incentives to executive
officers that are tied to the long-term performance of the Company. For this
purpose, the Committee has, since 1978, biennially granted share awards to the
named executive officers pursuant to the Executive Restricted Stock Incentive
Plan, which was approved by the shareholders. Initial share awards are granted,
subject to forfeiture if the named executive does not remain employed by the
Company for a period of four years from January 1 in the year the award is
granted, unless the Executive sooner retires at age 65 in accordance with
corporate policy. For each award, the Committee establishes a four-year
performance cycle and a range of additional awards may be earned based on
achievement of the performance goals. Performance goals are based on compound
annual increases in earnings over a specified target. The Committee determines
the number of shares awarded to each individual based on actual compensation,
assumptions relating to stock price and earnings growth, a review of
compensation for executive officers of similar companies, and recommendations
and advice from Frederic Cook & Co., a compensation consulting firm. The
Committee generally establishes the value of the grant at the median
compensation level of large industrial companies. Since awards are granted every
two years, no restricted stock awards were granted in 1993. The Committee also
determined that the minimum performance target established in 1990 for the
four-year performance period ending on December 31, 1993 was not met, and
therefore, awards of performance-based restricted stock to the named executive
officers would not be paid.
No stock options were granted in 1993 to the named executive officers or to
executive officers who received an award of restricted stock in 1992. However,
other executive officers as well as 984 other middle and upper level Company
employees received stock options in 1993. These options were granted pursuant to
the Company's 1986 Stock Option Plan, which was approved by the shareholders.
The Committee believes that both the restricted stock awards and the stock
option program tie the individual's compensation to the Company's performance
and directly link the employees' personal interests to the interests of the
Company and its shareholders.
COMPENSATION TO CEO
During 1993, the Committee reviewed Mr. Cizik's base salary, which had been
in effect since March 1992, and approved an increase of 9.8 percent in his base
salary effective September 1, 1993. The decision was not based on any specific
formula, but was made after evaluating Mr. Cizik's individual performance and
his continuing contribution to the Company (including guiding the Company's
long-term strategic direction through actions such as the initial public
offering of Belden Wire & Cable, the acquisitions of several complementary
product lines and of the Hawker Fusegear Group, the divestiture of Cameron Forge
and the spin-off of Gardner-Denver Industrial Machinery), and the Company's
financial performance (including factors such as revenues, earnings per share
and total shareholder returns). The Committee also considered the compensation
levels of chief executive officers of companies of comparable size and in
similar businesses, using the surveys previously discussed. Through the
restricted stock awards, a significant portion of the Chief Executive Officer's
compensation is tied directly to corporate performance and return to
shareholders.
13
<PAGE> 17
SUMMARY
The Committee continues to believe that the total executive compensation
program appropriately links compensation to corporate and individual
performance. In 1992 the Committee engaged a compensation consultant, Frederic
W. Cook & Co., to review the Company's overall executive compensation program.
The study confirmed that the Company's total compensation levels were
competitive with those companies included in the S&P Diversified Machinery Index
and the S&P Electrical Equipment Index and the program appropriately focuses on
performance and enhancing shareholder wealth.
The Committee has reviewed the provisions of the Omnibus Budget
Reconciliation Act of 1993 and the regulations issued under the Act that impose
a limit, with certain exceptions, on the amount that a publicly held corporation
may deduct in any year for the compensation paid to its five most highly
compensated officers. The regulations provide certain transition rules that will
preserve the deductibility for the Company of the restricted stock awards
granted prior to 1993. The Committee intends to review the compensation program
described in this Report during 1994 in view of the new tax rules, and to try to
preserve the tax deductibility of all executive compensation while maintaining
the Committee's policy of compensating executives based on their
responsibilities, achievement of annual goals and the Company's annual and
longer-term performance.
John D. Ong, Chairman
Warren L. Batts Constantine S. Nicandros
Harold S. Hook Frank A. Olson
PENSION BENEFITS
The executives named in the Summary Compensation Table may upon retirement
be entitled to retirement benefits from the Salaried Employees' Retirement Plan
of Cooper Industries, Inc., ("Cooper Retirement Plan"), the Cooper Industries,
Inc. Supplemental Excess Defined Benefit Plan ("Supplemental Plan") and the
Crouse-Hinds Officers' Disability and Supplemental Pension Plan ("Crouse-Hinds
Officers' Plan).
Pursuant to the Cooper Retirement Plan, the Company credits to the
individual's Plan account four percent of each year's total compensation up to
the Social Security wage base for the year, plus 8% of each year's total
compensation which exceeds the Social Security wage base. For this purpose,
total compensation is cash remuneration paid by the Company to or for the
benefit of a member of the Plan for services rendered while an employee. For the
executives named in the Summary Compensation Table (Table 1), the total
compensation is shown in columns (c) and (d) of the Summary Compensation Table.
However, if an executive elects to defer any compensation, his total
compensation under the Plan is reduced by the amount deferred. The Executive
Stock Plan awards shown in columns (f) and (h) of Table 1 are not included for
purposes of determining the credits under the Cooper Retirement Plan. This
formula for determining benefit credits became effective on July 1, 1986.
Benefits for service through June 30, 1986, were determined based on the
retirement plan formula then in effect and converted to initial balances under
the Cooper Retirement Plan. Both initial balances and credits for benefits after
July 1, 1986 receive interest credits until the participant commences benefit
payments. The Plan's interest credit rate for 1993 was 5.0% and will be 4.25%
for 1994. Benefits at retirement are payable, as the participant elects, in the
form of an escalating annuity, a level annuity with or without survivorship, or
a lump-sum payment.
The Cooper Retirement Plan "grandfathers" prior plan benefits for
participants (including some of the executives named in the Summary Compensation
Table) who meet certain age and service requirements. Under this "grandfather"
provision, an eligible participant is assured that his or her actual pension
benefit payable from the Cooper Retirement Plan will not be less than the
benefit he or she would have received at retirement under the prior plan formula
calculated based on service and earnings through June 30, 1991.
The Supplemental Plan is an unfunded, nonqualified plan which provides to
certain employees, including those named in the Summary Compensation Table,
Cooper Retirement Plan benefits that cannot be paid from a qualified, defined
benefit plan due to Internal Revenue Code provisions. The Plan also provides
benefits equal to what would have been paid under the Cooper Retirement Plan on
amounts of deferred compensation had those amounts not been deferred. The
Crouse-Hinds Officers' Plan, an unfunded, nonqualified plan assumed by the
Company following the acquisition of Crouse-Hinds Company, may provide to one
Cooper officer benefits in addition to amounts payable under other retirement
plans of the Company.
14
<PAGE> 18
PENSION BENEFITS
<TABLE>
<CAPTION>
CREDITED
SERVICE
AS YEAR ANNUAL
OF INDIVIDUAL ESTIMATED
JANUARY REACHES BENEFIT
1, AGE AT AGE
1994 65 65
---- ---- --------
<S> <C> <C> <C>
Robert Cizik.................................................. 32.4 1996 $495,000
Alan E. Riedel................................................ 34.0 1995 $259,000
H. John Riley, Jr............................................. 31.2 2005 $267,000
Michael J. Sebastian.......................................... 15.3 1995 $ 90,000
Dewain K. Cross............................................... 27.3 2002 $186,000
</TABLE>
For each of the individuals shown in the Summary Compensation Table, the
table above shows current credited years of service, the year each attains age
65, and the projected annual pension benefit at age 65. The projected annual
pension benefit is based on the following assumptions: benefits paid on a
straight-life annuity basis; continued compensation at the 1993 levels; and an
interest credit rate of 4.25%. Amounts payable under the Supplemental Plan, but
not the Crouse-Hinds Officers' Plan, are included in the Estimated Annual
Benefit.
CHANGE IN CONTROL ARRANGEMENTS
The executives named in the Summary Compensation Table participate in the
Company's Executive Restricted Stock Incentive Plan ("Executive Stock Plan").
This Plan was approved by the shareholders on April 26, 1988. The Plan is
designed to tie executive compensation to increase in earnings per share thus
benefiting stock price appreciation and shareholder wealth. Under the Executive
Stock Plan, which is administered by the Management Development and Compensation
Committee of the Board of Directors, initial share awards are tentatively
granted, subject to forfeiture if the executive does not remain in the employ of
Cooper for a period of four years from the date of the award. Additional
incentive shares (and cash equal to the amount of dividends that would have been
paid thereon) may be earned during the four-year period in accordance with a
formula which is dependent upon the achievement of performance criteria
established by the Board Committee. At the conclusion of the four-year period,
the initial share awards plus the incentive shares earned, if any, are issued
(and cash equal to the dividends on the incentive shares is paid). Each
executive may elect during the first three years to defer receipt of shares or
dividends beyond the time when the shares are earned. With the Company's consent
an executive may elect to receive, in lieu of a portion of the incentive shares,
the fair market value cash equivalent of up to 50% of the total incentive shares
earned. This cash election was inserted by the Board Committee to assist the
executive in paying withholding tax on the fair market value of the stock
distributed.
The Executive Stock Plan provides that upon a change in control of the
Company, the executive officers may receive cash in lieu of shares under the
Executive Stock Plan in amounts equal to the fair market value of all
outstanding share awards.
There are no circumstances presently foreseeable under which the aggregate
dollar amount payable reasonably can be estimated to have a material, adverse
effect on the operating or financial condition of the Company. The Company has
established a trust that will be used to fund its obligations under the
Executive Stock Plan and certain otherwise unfunded benefit plans in the event
of a change in control or a potential change in control. In 1988, the Company
also established a trust that will be used to fund its obligations under
otherwise unfunded benefit plans providing deferred compensation and retirement
benefits to nonemployee directors of the Company. Presently these trusts have
been nominally funded.
COMPENSATION TO DIRECTORS
The Annual Basic Retainer of nonemployee directors is $45,000 per annum. In
addition, nonemployee directors are paid meeting attendance fees of $800 for
regular committee meetings and $2,000 for special Board or committee meetings.
An additional annual retainer of $6,000 is paid to each nonemployee chairman of
a standing committee.
In lieu of receiving the Annual Basic Retainer and meeting fees in cash,
each nonemployee director may elect, pursuant to the Directors Deferred
Compensation Plan, to defer receipt of such amounts until a date determined by
the director or until retirement from the Board. Alternatively, each nonemployee
director may elect to receive, in lieu of
15
<PAGE> 19
the Annual Basic Retainer fee, a nonqualified stock option covering 2,000 shares
of the Company's Common Stock pursuant to the 1989 Director Stock Option Plan
(the "Director Plan"). The exercise price is determined as follows:
<TABLE>
<S> <C> <C> <C> <C>
Fair Market Value Annual Basic Retainer
of a Share of - ---------------------- = Cash Exercise
Common Stock on 2,000 Price Per Share
Date of Grant
</TABLE>
provided that the minimum Exercise Price is $5.00 per share. The maximum number
of shares to be issued under the Director Plan, the number of shares subject to
each option (including the denominator of 2,000) and the minimum price per share
are subject to adjustment in the event of stock splits or other changes in the
Cooper Common Stock or capital structure.
Any such options will be granted on the date following commencement of the
Annual Meeting of Shareholders. Options granted to nonemployee directors become
fully exercisable on the first anniversary of the date of grant of the option,
and terminate upon the expiration of five years from the date of grant, subject
to prior termination pursuant to the terms of the Director Plan.
In 1993, two nonemployee directors elected to receive a stock option in
lieu of the Annual Basic Retainer for the year April 1993 to April 1994. During
1993, options for a total of 4,000 shares of Cooper Common Stock were granted
and no shares were issued pursuant to the Director Plan. As of December 31,
1993, options were outstanding for 32,000 shares under the Director Plan.
Pursuant to the Cooper Industries, Inc. Directors Retirement Plan, any
director with at least 10 years of service as a director (counting a fractional
year as a full year), or who retires in accordance with a resolution regarding
director tenure adopted by the Board on February 17, 1975, as thereafter from
time to time amended, will be entitled to receive a benefit amount equal to the
annual basic retainer for nonemployee directors in effect at the time of
retirement, exclusive of special compensation for services as a Committee
Chairman or attendance at meetings. The benefit amount will be paid annually on
January 2, or quarterly if elected, for the number of years in which the
director has served on the Board (counting a fractional year as a full year).
Payment ceases with the death of the retired director.
SHAREHOLDER PROPOSALS
Five shareholders have notified the Company of their intention to propose
two separate resolutions at the Annual Meeting of Shareholders. The proposals
and proponents' supporting statements have been reprinted exactly as submitted.
The affirmative vote of the majority of the voting power, in person or by proxy,
is required for approval. Abstentions will be counted for purposes of
determining whether a quorum is present and will be counted as voting. Broker
nonvotes are not counted for purposes of voting.
The Board of Directors realizes that the shareholder proposals set forth
below involve issues of concern to shareholders. The Board of Directors is
always mindful of its fiduciary obligations to all shareholders and it has spent
a substantial amount of time carefully considering each of the subjects
discussed in the following shareholder proposals.
For the reasons that are set forth below, THE BOARD OF DIRECTORS RECOMMENDS
THAT SHAREHOLDERS VOTE AGAINST BOTH SHAREHOLDER PROPOSALS, which follow as
Proposals 2 and 3.
PROPOSAL 2
Two shareholders, The Domestic and Foreign Missionary Society of the
Protestant Episcopal Church in the United States of America, 815 Second Avenue,
New York, New York 10017-4594, owner of 100 shares of Cooper Common Stock, and
the Priests of the Sacred Heart, 1925 Loop 431, #302, Eagle Pass, Texas
78852-4466, owner of 12,500 shares of Cooper Common Stock, have informed the
Company that they intend to present the following proposal at the Annual
Meeting:
WHEREAS, we believe:
The responsible implementation of sound environmental policy increases
long-term shareholder value by increasing efficiency, decreasing clean-up costs,
reducing litigation, and enhancing public image and product attractiveness;
16
<PAGE> 20
Adherence to public standards for environmental performance gives a company
greater public credibility than is achieved by following standards created by
industry alone. In order to maximize public credibility and usefulness, such
standards also need to reflect what investors and other stock holders want to
know about the environmental records of their companies;
Standardized environmental reports will provide shareholders with useful
information which allows comparisons of performance against uniform standards
and comparisons of progress over time. Companies can also attract new capital
from investors seeking investments that are environmentally responsible,
responsive, progressive, and which minimize the risk of environmental liability.
and WHEREAS:
The Coalition of Environmentally Responsible Economies (CERES), which
comprises large institutional investors with $150 billion in stockholdings
(including shareholders in this Company), public interest representatives, and
environmental experts -- consulted with dozens of corporations and produced
comprehensive public standards for both environmental performance and reporting.
Over 50 companies have endorsed the CERES Principles -- including the Sun
Company, a Fortune-500 company -- to demonstrate their commitment to public
environmental accountability.
In endorsing the CERES Principles, a company commits to work toward:
1. Protection of biosphere
2. Sustainable use of natural resources
3. Waste reduction & disposal
4. Energy conservation
5. Risk reduction
6. Safe products and services
7. Environmental restoration
8. Informing the public
9. Management commitment
10. Audits and reports
The full text of the CERES Principles and the accompanying CERES Report
Form are available from CERES, Atlantic Avenue, Boston MA 02110, tel:
617/451-0927.
Concerned investors are asking the Company to be publicly accountable for
its environmental impact, including collaboration with this corporate,
environmental, investor, and community coalition to develop (a) standards for
environmental performance and disclosure; (b) appropriate goals relative to
these standards; (c) evaluation methods and tools for measurement of progress
toward these goals; and (d) a format for public reporting of this progress.
We believe this request is consistent with regulation adopted by the
European Community for companies' voluntary participation in verified and
publicly-reported eco-management and auditing.
Resolved, Shareholders request the company to endorse the CERES Principles
as a commitment to be publicly accountable for its environmental impact.
PROPONENT'S STATEMENT IN SUPPORT
We invite the Company to endorse the CERES Principles by (1) stating its
endorsement in a letter signed by a senior officer; (2) committing to implement
the principles; and (3) annually completing the CERES Report. Endorsing these
Principles complements rather than supplants internal corporate environmental
policies and procedures.
We believe that without this public scrutiny, corporate environmental
policies and reports lack the critical component of adherence to standards set
not only by management but also by other stakeholders. Shareholders are asked to
support this resolution, to encourage our Company to demonstrate environmental
leadership and accountability for its environmental impact.
17
<PAGE> 21
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 2
Cooper is committed to a clean environment and to compliance with federal,
state, local and foreign laws that have as their purpose the safeguarding of
human health and the environment. Cooper's Environmental Policy, which was
adopted in 1990, and its environmental management and audit program affirm this
commitment.
Cooper has a proactive environmental management program. Its objectives are
to ensure that the Company's facilities are in compliance with existing
environmental laws and to make changes in the manufacturing processes at such
facilities in an effort to eliminate or reduce the generation of pollutants at
the source. Elements of this program include a comprehensive survey at each
manufacturing facility in North America to identify problems and opportunities;
an Environmental Audit team of over 50 people to conduct environmental
compliance audits at such facilities on a regular basis; comprehensive education
and training programs, including compliance seminars and advanced technology
workshops; and a competent staff of environmental engineers and specialists who
coordinate major projects and assist the operating division managers. The
environmental management program is headed by a Vice President who reports
directly to the President and Chief Operating Officer. On an annual basis, the
Vice President presents a report on current compliance and remedial efforts to
the Company's Board of Directors.
In 1991, Cooper voluntarily joined the Environmental Protection Agency's
33/50 Program. Under this program, the EPA asked companies to reduce emissions
of 17 priority chemicals by 33 percent by the end of 1992 and by 50 percent by
the end of 1995. Cooper has surpassed both of these goals two years ahead of
schedule and has now set its own goal of 75 percent by the end of 1995.
This past year, Cooper became a corporate partner in the EPA's Green Lights
Program, which involves a commitment to install energy-efficient lighting in our
facilities. The installation of new lighting fixtures at several locations has
already shown measurable reductions in electrical consumption. On January 19,
1994, the Company's Cooper Lighting Division was honored by the EPA as the Green
Lights "1994 Manufacturing Ally of the Year."
As in the case of any large manufacturing company that has been in business
for a long time, Cooper has environmental problems that it continues to address.
Cooper has been identified as a potentially responsible party with respect to
about 100 multi-generator sites designated for cleanup under various
environmental laws. Many of these sites came to Cooper as the result of
acquisitions and mergers over the past 10 years. At most of these sites, Cooper
and its predecessors' involvement is less than five percent. Further, in almost
every case, the activity for which remediation is now sought was lawful when
committed. Cooper is working with the applicable governmental agencies in
connection with remediation of these sites. Cooper also has faced potential
penalties from various environmental regulatory authorities. During 1992 and
1993 Cooper paid penalties in the amount of $200,000 and $217,600, respectively.
We strive to operate our facilities in compliance with the law and to work with
the regulatory authorities.
The Proponents request that the Company endorse the CERES Principles,
commit to their implementation and annually complete the CERES Report. We
strongly oppose this request. Cooper already has implemented a responsible
Environmental Policy. In addition, the Company already complies with the
numerous and varying reporting requirements imposed by federal, state and local
laws, which require more than a thousand reports to be filed each year.
We believe that a pro-environment policy is a characteristic of good
management and good corporate citizenship. The establishment and enforcement of
environmental policy should not be ceded to a private, self-appointed
organization like CERES, which is accountable to no one. Matters of
environmental policy should be determined by the legislators, who are
responsible to the voters, and by the Board of Directors, who are responsible to
all of the Company's shareholders.
For these reasons, your Board of Directors recommends a vote AGAINST
Proposal 2.
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<PAGE> 22
PROPOSAL 3
Three shareholders, Sisters of Loreto, 527 Larkhill Court, St. Louis,
Missouri 63119-4943, owner of 458 shares of Cooper Common Stock; Benedictine
Sisters, 3120 W. Ashby, San Antonio, Texas 78228, owner of 210 shares of Cooper
Common Stock; and Sisters of the Holy Spirit and Mary Immaculate, 301 Yucca
Street, San Antonio, Texas 78203, owner of at least $1,000 in value of Cooper
Stock, have informed the Company that they intend to present the following
proposal at the Annual Meeting:
WHEREAS international trade has a significant impact on the environment and
on people's ability to meet basic needs;
WHEREAS the socially-concerned proponents of this resolution have pursued
implementation of environmental standards and socially responsible conduct in
the maquiladora workplace for more than five years and firmly believe there is a
need for strict, enforceable standards of conduct for corporations operating in
Canada, Mexico and the United States.
WHEREAS in past years, over twenty U.S. corporations have been urged to
adopt standards of conduct relative to their maquiladora operations in Mexico.
These standards address:
- - Responsible practices for handling hazardous wastes and protecting the
environment: Corporations must be guided by the principle that they will
follow regulations setting forth high standards of environmental protection
and secure the best possible protection of the environment.
- - Health and safety practices: Corporations must be guided by the principle that
they will follow regulations setting forth high standards of occupational
safety and health.
- - Fair employment practices and standard of living: Corporations must respect
workers' basic rights and human dignity.
- - Community impact: Corporations must recognize social responsibility to
communities in which they locate facilities and promote community economic
development and improvements in quality of life.
WHEREAS the United Nations Declaration of Human Rights states everyone has
the right to "just and favorable conditions of work," "protection against
unemployment," "equal pay for equal work," "just and favorable remuneration
ensuring . . . an existence worth of human dignity," and "join trade unions,"
(Article 23) "rest and leisure, including reasonable limitation of working
hours," (Article 24) "a standard of living adequate for health and well being."
(Article 25)
WHEREAS debate in the U.S., Canada and Mexico about the North American Free
Trade Agreement (NAFTA) exposed major problems with the maquiladora industry.
These include severe environmental problems resulting from corporate
irresponsibility, major workplace hazards and wages at such low levels as to be
inadequate to feed an employee's family. U.S. officials responded by drafting
side agreements on labor and the environment. We urge official corporate policy
to correct past problems and chart a new course for the future.
THEREFORE BE IT RESOLVED the shareholders request the Board of Directors to
institute as official corporate policy that as our company continues or expands
its business in Mexico, it will evaluate the environmental and human rights
context in which we operate. The policy should include:
1. Prepare a publicly available plan explaining how we will improve work
conditions, health benefits, vocational training and salaries to
economically and socially responsible levels.
2. Disclose policies to prevent environmental harm, repair damaged
environment where corporate practices may have caused destruction and
prevent cross border dumping of toxic wastes.
3. Publish plans and progress in supporting infrastructure needs and
community economic development.
4. Support the establishment of a council, with equal representation from
Canada, Mexico and the United States, to monitor progress in raising the
standards of labor, health and environmental to meet goals for
sustainable economic development.
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<PAGE> 23
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 3
The Board of Directors does not believe that it is appropriate to adopt a
policy specific to the Company's operations in Mexico. Cooper has operations
worldwide, with manufacturing plants located in 20 different countries and
employees in 38 countries. Cooper has adopted corporate policies relating to
environmental, health, safety and employment practices which apply equally to
all of these countries.
Specifically, during 1993, as part of the Company's on-going audit program,
environmental audits were conducted at five of the Company's 12 manufacturing
plants in Mexico. In addition, the operational practices of our Mexican
facilities were reviewed last year for the purpose of improving employee health
and safety. An element of Cooper's Management Philosophy is to treat all
employees with dignity and respect and to pay wages that are competitive in the
community and the relevant industry. The wages paid to employees in Mexico are
reviewed regularly in accordance with the Company's practices for all of its
operations worldwide.
Accordingly, your Board of Directors recommends a vote AGAINST Proposal 3.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
During the year ended December 31, 1993, Ernst & Young was employed
principally to perform the annual audit and to render other services.
Representatives of Ernst & Young will be present at the meeting and will be
available to answer questions and discuss matters pertaining to the Report of
Independent Accountants contained in the 1993 Annual Report to Shareholders,
which was mailed earlier to all shareholders. Representatives of Ernst & Young
will have the opportunity to make a statement, if they desire to do so.
SHAREHOLDERS' PROPOSALS
Shareholders' proposals intended to be presented at the 1995 Annual Meeting
should be sent by certified mail, return receipt requested, and must be received
by the Company at its principal executive offices (Attention: Corporate
Secretary) on or before November 18, 1994 for inclusion in the proxy statement
and the form of proxy for that meeting. Such proposals may be made only by
persons who are shareholders, beneficially or of record, on the date the
proposal is submitted and who continue in such capacity through the meeting
date, of at least 1% or $1,000 in market value of securities entitled to be
voted at the meeting, and have held such securities for at least one year.
OTHER BUSINESS
The Board of Directors is aware of no other matter that will be presented
for action at the meeting. If any other matter requiring a vote of the
shareholders properly comes before the meeting, the persons authorized under
management proxies will vote and act according to their best judgment.
FORM 10-K
A copy of the 1993 Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 as filed with the Securities and Exchange Commission may be
obtained upon request and without charge, by writing:
Public Affairs Department
Cooper Industries, Inc.
P.O. Box 4446
Houston, Texas 77210
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<PAGE> 24
X PLEASE MARK YOUR VOTES
- --- AS IN THIS EXAMPLE
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES. THE BOARD RECOMMENDS A VOTE AGAINST PROPOSALS 2 AND 3
<S> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
Election of Directors. 2. Proposal relating to Ceres
1. Nominees: C.J. Grum, Principles --- ------- -------
--- ----- R.H. Robins, A.T. Young
3. Proposal relating to Mexico
To withhold your vote for any nominee(s), write --- ------- -------
the name(s) here.
- -----------------------------------------------
</TABLE>
I plan to attend the meeting.
------
Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
---------------------------------------------------------------------
---------------------------------------------------------------------
Signature(s) Date
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT {COOPER LOGO}
SERVICES AVAILABLE
TO ASSIST OUR SHAREHOLDERS
<TABLE>
<CAPTION>
ELECTRONIC FUNDS TRANSFER A TELEPHONE RESPONSE CENTER IS AVAILABLE AT
(DIRECT DEPOSIT) OF DIVIDENDS COOPER'S TRANSFER AGENT, FIRST CHICAGO TRUST, TO
PROVIDE SHAREHOLDERS PERSONAL ASSISTANCE WITH:
<S> <C>
{ }Dividend monies deposited into your bank account { }Verifying the number of Cooper shares in your account.
{ }No worry of lost dividend checks. { }Lost or stolen stock certificates
{ }Immediate access of dividend money, { }Name changes on stock in the event of marriage, death and
no mail delays. estate transfers, gifts of stock to minors in custodial
account...any transfer of stock ownership.
{ }Verification of dividend receipts on
monthly bank statement.
DIVIDEND REINVESTMENT PLAN
{ }Dividends automatically reinvested in your { }Inquiries about lost or stolen dividend checks & 1099-DIV's.
account to purchase additional shares of
Cooper common stock.
{ }No commission or service charge is paid { }Any shareholder inquiries concerning Cooper common and preferred
to purchase shares. stock will be answered courteously and promptly.
{ }Whole and fractional shares will be credited Call First Chicago Trust Company of New York at
to your account. (201) 324-0498, or write:
{ }Optional cash payments for purchase of additional First Chicago Trust Company of New York
shares of Cooper common stock can be made, P.O. Box 2500
regardless of whether dividends are being reinvested. Jersey City, NJ 07303-2500
</TABLE>
<PAGE> 25
COOPER INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS {COOPER LOGO}
APRIL 26, 1994
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Cooper Industries, Inc. ("Cooper") appoints
Robert Cizik and Diane K. Schumacher, or either of them, proxies, with full
power of substitution, to vote all shares of stock which the shareholder would
be entitled to vote if present at the Annual Meeting of Shareholders of Cooper
on Tuesday, April 26, 1994, at 11:00 a.m. (central time) in the Austin Room,
Four Seasons Hotel, 1300 Lamar Street, Houston, Texas, and at any adjournments
thereof, with all powers the shareholder would possess if present. The
shareholder hereby revokes any proxies previously given with respect to such
meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE, BUT IF NO
SPECIFICATION IS MADE, IT WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR (CLIFFORD
J. GRUM, SIR RALPH H. ROBINS AND A. THOMAS YOUNG) AND WILL BE VOTED AGAINST
PROPOSALS 2 AND 3 AND IN THE DISCRETION OF THE PROXIES ON OTHER MATTERS AS MAY
COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
This card also constitutes voting instructions for any shares held for the
shareholder in the following: Cooper's Dividend Reinvestment and Stock Purchase
Plan; the Cooper Industries, Inc. Stock Ownership Plan; the Cooper Industries,
Inc. Savings Plans; and the Cameron Iron Works USA Inc. Savings-Investment
Plan for Hourly Employees, as described in the Notice of Meeting and Proxy
Statement.
(Please date and sign on the reverse side)
