<PAGE>
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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Crane Co.
- -------------------------------------------------------------------------------
(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>
[CRANE LOGO]
CRANE CO. 100 FIRST STAMFORD PLACE, STAMFORD, CONNECTICUT 06902
February 18, 1999
DEAR CRANE SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of the Shareholders
of Crane Co., to be held at 10:00 a.m. Eastern Daylight Time on Monday, April
5, 1999 at The Weston Stamford Hotel, Rainbow Meeting Room, One First Stamford
Place, Stamford, Connecticut.
The Notice of Meeting and Proxy Statement on the following pages describe
the matters to be presented at the meeting. Management will report on current
operations and there will be an opportunity for discussion of the Company and
its activities. Our 1998 Annual Report accompanies this Proxy Statement.
It is important that your shares be represented at the meeting regardless
of the size of your holdings. If you are unable to attend in person, we urge
you to participate by voting your shares by proxy. You may do so by filling out
and returning the enclosed proxy card, or by using the toll-free telephone
number on the proxy card.
Sincerely,
/s/ R.S. EVANS
-------------------------------------
R.S. EVANS
Chairman and Chief Executive Officer
<PAGE>
CRANE CO.
100 FIRST STAMFORD PLACE
STAMFORD, CONNECTICUT 06902
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 5, 1999
----------------
February 18, 1999
To The Shareholders of Crane Co.:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of the Shareholders of
Crane Co. will be held at The Weston Stamford Hotel, Rainbow Room, One First
Stamford Place, Stamford, Connecticut on Monday, April 5, 1999 at 10:00 a.m.,
Eastern Daylight Time, for the following purposes:
1. To elect three directors to serve for three year terms until the Annual
Meeting of Shareholders in 2002.
2. To consider and act upon a proposal to approve the selection of Deloitte
& Touche LLP as independent auditors for the Company for 1999.
3. To consider and act upon a proposal to amend Article IV of the Company's
Certificate of Incorporation to increase the number of authorized shares
of Common Stock from 80,000,000 shares to 200,000,000 shares.
4. To transact such other business as may properly come before the meeting
in connection with the foregoing or otherwise.
The Board of Directors has fixed the close of business on February 5, 1999
as the record date for the purpose of determining shareholders entitled to
notice of and to vote at said meeting or any adjournment thereof. A complete
list of such shareholders will be open to the examination of any shareholder
during regular business hours for a period of ten days prior to the meeting at
the offices of the Company at 100 First Stamford Place, Stamford, Connecticut.
In order to assure a quorum, it is important that shareholders who do not
expect to attend the meeting in person fill in, sign, date and return the
enclosed proxy in the accompanying envelope, or use the toll-free telephone
number set forth on the enclosed proxy card.
By Order of the Board of Directors,
AUGUSTUS I. DUPONT
Secretary
--------------------------------------------------------------------------
IF YOU EXPECT TO ATTEND THE MEETING IN PERSON, WE REQUEST THAT YOU WRITE
FOR YOUR CARD OF ADMISSION TO THE SECRETARY, CRANE CO., 100 FIRST STAMFORD
PLACE, STAMFORD, CONNECTICUT 06902.
--------------------------------------------------------------------------
<PAGE>
CRANE CO.
100 FIRST STAMFORD PLACE
STAMFORD, CONNECTICUT 06902
----------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 5, 1999
The enclosed proxy is solicited by the Board of Directors of Crane Co.
(the "Company") for use at the Annual Meeting of Shareholders to be held at The
Westin Hotel, Rainbow Meeting Room, One First Stamford Place, Stamford,
Connecticut, on Monday, April 5, 1999, at 10:00 a.m., Eastern Daylight Time, or
at any adjournment thereof. The enclosed proxy, when properly executed and
received by the Secretary prior to the meeting, and not revoked, will be voted
in accordance with the directions thereon. If no directions are indicated, the
proxy will be voted for each nominee for election as a director, for the
proposal to approve the selection of Deloitte & Touche LLP as independent
auditors for the Company for 1999 and for the proposal to increase the number
of authorized shares of Common Stock. If any other matter should be presented
at the Annual Meeting upon which a vote may properly be taken, the shares
represented by the proxy will be voted with respect thereto in accordance with
the discretion of the person or persons holding such proxy. Proxies may be
revoked by shareholders at any time prior to the voting of the proxy by written
notice to the Company, by submitting a new proxy or by personal ballot at the
meeting.
Shareholders of record may vote their proxy by using the toll-free number
listed on the proxy card as an alternative to using the written form of proxy.
The telephone voting procedure is designed to authenticate votes cast by use of
a Personal Identification Number. The procedure allows shareholders to appoint
a proxy to vote their shares and to confirm that their instructions have been
properly recorded. The Company has been advised by counsel that these
procedures are consistent with the requirements of applicable law. Specific
instructions to be followed by any shareholder of record interested in voting
by telephone are set forth on the enclosed proxy card.
The first date on which this proxy statement and enclosed form of proxy
are being sent to the Company's shareholders is on or about February 18, 1999.
OUTSTANDING SHARES AND REQUIRED VOTES. As of the close of business on
February 5, 1999, the record date for determining shareholders entitled to vote
at the meeting, the Company had issued and outstanding shares of Common
Stock, par value $1.00 per share ("Common Stock"). Each share of Common Stock
is entitled to one vote at the meeting. Directors will be elected by a
plurality, and the approval of auditors will require the affirmative vote of
the holders of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote at the meeting. The amendment of the
Certificate of Incorporation to increase the number of authorized shares of
Common Stock requires the affirmative vote of the holders of a majority of the
shares of Common Stock outstanding and entitled to vote at the meeting.
Abstentions may be specified as to all proposals to be brought before the
meeting other than the election of directors. Under the rules of the New York
Stock Exchange, Inc. (the "NYSE"), brokers holding shares for customers have
authority to vote on certain matters even if they have not received
instructions from the beneficial owners, but do not have such authority as to
certain other matters (so-called "broker non-votes"). The NYSE has advised the
Company that member firms of the NYSE may vote without specific instructions
from beneficial owners only as to the election of directors and the selection
of auditors. With regard to the election of directors, votes may be cast in
favor or withheld, and the three persons receiving the highest number of
favorable votes will be elected as directors of the Company. As to the approval
of auditors, if a shareholder abstains from voting certain shares it will have
the effect of a negative vote. In the case of the proposed amendment of the
Certificate of Incorporation, abstentions will also have the effect of a
negative vote, although they will not be counted as votes "Against" for NYSE
purposes, and broker non-votes will not be counted "For" or "Against" such
proposals.
1
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of nine members divided
into three classes. At the meeting three directors are to be elected to hold
office for three year terms until the Annual Meeting in 2002 and until their
successors are elected and qualified. The enclosed proxy will be voted for
election of the three directors of such class named in the following table,
whose election has been proposed and recommended by the Board of Directors. If
any nominee shall, prior to the meeting, become unavailable for election as a
director, the persons named in the accompanying form of proxy will vote for
such nominee, if any, as may be recommended by the Board of Directors, or the
Board of Directors may reduce the number of directors to eliminate the vacancy.
The age, position with the Company, period of service as a director of the
Company, business experience during the past five years, directorships in other
companies and shareholdings in the Company as of February 5, 1999 for each of
the nominees for election and for each of those directors whose term will
continue are set forth below:
<TABLE>
<CAPTION>
COMMON SHARES
BENEFICIALLY
OWNED (1)
--------------
<S> <C>
NOMINEES FOR DIRECTOR TO BE ELECTED FOR TERMS TO EXPIRE IN 2002
E. THAYER BIGELOW, JR. ..................................................... 18,298
Age 57; Director since 1984. Senior Advisor, Time Warner Inc., New York,
NY (a media and entertainment company) since October 1998. Chief
Executive Officer, Court TV, New York, NY, an affiliate of Time Warner
Entertainment LP (cable television program services) March 1997 to
October 1998. President and Chief Executive Officer, Time Warner Cable
Programming Inc., Stamford, CT, a subsidiary of Time Warner
Entertainment LP (cable television program services), 1991 to 1997. Other
directorships: Lord Abbett & Co. Mutual Funds.
JOHN J. LEE ................................................................ 1,000
Age 62; Nominee for Director. Chairman and Chief Executive Officer, Hexcel
Corporation, Stamford, CT (manufacturer of composite materials and
engineered products) since January 1994, except for the period
February 1995 to February 1996 when he did not hold the position of
Chairman. Chairman, President and Chief Executive Officer of Lee
Development Corporation, Stamford, CT (merchant banking company)
since 1987. Other directorships: Hexcel Corporation, Hvide Marine, Inc.
CHARLES J. QUEENAN, JR. .................................................... 18,239
Age 68; Director since 1986. Senior Counsel since 1995 and prior thereto,
Partner, Kirkpatrick & Lockhart LLP, Pittsburgh, PA (attorneys at law).
Other directorships: Allegheny Teledyne Incorporated.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2001
RICHARD S. FORTE ........................................................... 15,814
Age 54; Director since 1983. President, Dawson Forte Cashmere Company,
South Natick, MA (importer) since January 1997. Chairman since
January 1997 and, prior thereto, President, Forte Cashmere Company,
Inc. (importer and manufacturer).
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
COMMON SHARES
BENEFICIALLY
OWNED (1)
--------------
<S> <C>
WILLIAM E. LIPNER .......................................................... 500
Age 51; Director since January 1999. Chairman, Chief Executive Officer and
President, NFO Worldwide, Inc., Greenwich, CT (marketing information/
research services worldwide). Other directorships: NFO Worldwide, Inc.
JAMES L. L. TULLIS ......................................................... 285
Age 51; Director since 1998. Chairman and Chief Executive Officer,
Tullis-Dickerson & Co., Inc., Greenwich, CT (venture capital investments
in the health care industry) since 1986. Other directorships: Acme United
Corporation, PSS Worldmed, Inc.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2000
R. S. EVANS ................................................................ 2,808,008
Age 54; Director since 1979. Chairman and Chief Executive Officer of the
Company. Other directorships: Fansteel, Inc., HBD Industries, Inc.,
Southdown Corporation.
DORSEY R. GARDNER .......................................................... 7,213
Age 56; Director from 1982 to 1986 and since 1989. President, Kelso
Management Company, Inc., Boston, MA (investment management). Other
directorships: Filene's Basement Corp., Security First Technologies, Inc.
DWIGHT C. MINTON ........................................................... 40,807
Age 64; Director since 1983. Chairman of the Board, Church & Dwight Co.,
Inc., Princeton, NJ (manufacturer of consumer and specialty products).
Other directorships: Church & Dwight Co., Inc.
</TABLE>
- ----------
(1) As determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934. No director except Mr. R. S. Evans owns more than 1% of the
outstanding shares of Common Stock. See Beneficial Ownership of Common
Stock by Directors and Management, page .
The Board of Directors met 12 times during 1998. All directors attended
75% or more of the Board and Committee meetings which they were scheduled to
attend.
The Board of Directors has an Executive Committee, Audit Committee and
Organization and Compensation Committee. The Company does not have a standing
nominating committee. The Executive Committee, which meets when a quorum of the
full Board of Directors cannot be readily obtained, met once in 1998. The Audit
Committee met three times in 1998 with the Company's management, internal
auditors and independent auditors to review matters relating to the quality of
financial reporting and internal accounting controls and the nature, extent and
results of their audits, and otherwise maintained communications between the
auditors of the Company and the Board of Directors. The duties of the
Organization and Compensation Committee include review and approval of the
compensation of officers and business unit presidents, annual review of
director compensation, administration of the EVA Incentive Compensation Plan,
Stock Option Plan and Restricted Stock Award Plan and review and approval of
significant changes or additions to the compensation policies and practices of
the Company. The Organization and Compensation Committee met two times in 1998.
(See the Committee's report on page .)
The memberships of committees during 1998 were as follows: Executive
Committee: E. T. Bigelow, Jr., R. S. Evans, D.C. Minton and B. Yavitz; Audit
Committee: E. T. Bigelow, Jr., R. S. Forte, D. R. Gardner and C. J. Queenan,
Jr. (Chairman); Organization and Compensation Committee: D. R. Gardner, D. C.
Minton, J. L. L. Tullis and B. Yavitz (Chairman).
COMPENSATION OF DIRECTORS. The Company's standard retainer payable to each
non-employee director is $30,000 per annum. Pursuant to the Non-Employee
Director Restricted Stock
3
<PAGE>
Plan, non-employee directors receive, in lieu of cash, shares of Common Stock
of the Company (rounded to the nearest ten shares) with a market value equal to
that portion of the standard annual retainer which exceeds $15,000. All
directors who are not full-time employees of the Company, of which there are
eight, participate in the plan. The shares are issued each year after the
Company's annual meeting, are forfeitable if the director ceases to remain a
director until the Company's next annual meeting, except in the case of death,
disability or change in control, and may not be sold for a period of five years
or such earlier date as the director leaves the Board. In April 1998 each
non-employee director received 285 restricted shares of Common Stock pursuant
to the plan.
Directors also receive $500 for each Board meeting attended. Non-employee
members of the Executive Committee receive an annual retainer of $2,000.
Members of other committees receive $500 and chairmen receive $750 for each
committee meeting attended.
The Crane Co. Retirement Plan for Non-Employee Directors provides for a
benefit upon retirement at or after age 65 equal to the participant's annual
retainer in effect at the time service terminates, payable for a period of time
equal to the number of years the participant has served on the Board and not as
an employee. After two years of service, participants are 50% vested in
benefits payable, and after each full year of service thereafter, participants
are vested in an additional 10%. In the event of death, disability or change in
control, participants are automatically 100% vested and, in the case of a
change in control, a minimum of seven years of retirement benefits is payable.
Additionally, a participant leaving the Board after a change in control would
be entitled to receive, in lieu of installment payments, a lump sum cash
payment such that the participant will retain, after all applicable taxes, the
actuarial equivalent of the benefits payable under the plan. A former director
may receive his benefits prior to age 65 on an actuarially reduced basis. The
plan is unfunded and benefits thereunder are payable from the Company's general
assets, either in the form of a joint and survivor annuity or, if the director
so elects upon reaching age 55, in the form of a survivor annuity should the
director die while in service.
4
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY DIRECTORS AND MANAGEMENT
To focus management attention on growth in shareholder value, the Company
believes that officers and key employees should have a significant equity stake
in the Company. It therefore encourages its officers and key employees to
increase their ownership of and to hold Common Stock through the Stock Option,
Restricted Stock Award and Savings and Investment Plans. Directors also receive
50% of their annual retainer in restricted stock issued under the Non-Employee
Director Restricted Stock Plan. The beneficial ownership of Common Stock by the
non-employee directors as a group (see pages 2 and 3 for individual holdings),
the executive officers named in the Summary Compensation Table and all
directors and executive officers of the Company as a group as of February 5,
1999 is as follows:
<TABLE>
<CAPTION>
STOCK SHARES IN
SHARES OPTIONS COMPANY TOTAL % OF SHARES
UNDER EXERCISABLE SAVINGS SHARES OUTSTANDING
SHARES RESTRICTED WITHIN PLAN BENEFICIALLY AS OF
OWNED STOCK PLANS(1) 60 DAYS (401(K)) OWNED(2) 2/5/99(2)
------------------ ---------------- ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Non-Employee Directors
and Nominees as a Group
(10 persons) (3) ........... 116,118 1,995 -- -- 118,113 0.17%
R. S. Evans ................. 2,050,120(4) 586,158 163,125 8,605 2,808,008 4.09%
L. H. Clark ................. 37,066 164,971 252,937 2,073 457,047 0.67%
D. S. Smith ................. 46,500 126,134 172,312 2,113 347,059 0.51%
M. L. Raithel ............... 180,136 49,147 124,125 4,077 357,485 0.52%
A. I. duPont ................ 225 53,175 40,312 419 94,131 0.14%
Other Executive Officers
(4 persons) ................ 57,958 49,635 121,593 11,333 240,519 0.35%
Sub-Total--Directors and
Executive Officers as a
Group (18 persons) ......... 2,488,123 1,031,215 874,404 28,620 4,422,362 6.38%
Key Employees
(150 persons) .............. 201,788 291,891 1,053,714 174,557 1,721,950 2.48%
----------- --------- --------- ------- --------- ----
Total ....................... 2,689,911 1,323,106 1,928,118 203,177 6,144,312 8.73%
=========== ========= ========= ======= ========= ====
</TABLE>
- ----------
(1) Subject to forfeiture if established performance and/or service
conditions are not met.
(2) As determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934. Does not include 7,778,416 shares of Common Stock owned by
The Crane Fund (see Principal Shareholders of the Company, page 6); nor
510,471 shares of Common Stock owned by the Crane Fund for Widows and
Children; nor an aggregate of 683,715 shares of Common Stock held by
trusts for the pension plans of the Company and certain of its
subsidiaries which shares may be voted or disposed of in the discretion
of the trustees unless the sponsor of a particular plan directs
otherwise. Mr. duPont, Mr. Raithel, Mr. Smith and two other executive
officers are trustees of The Crane Fund and the Crane Fund for Widows and
Children. None of the directors or trustees has any direct beneficial
interest in, and all disclaim beneficial ownership of, the shares held by
the trusts. In addition, as of February 5, 1999, other employees
of the Company held 1,356,298 shares of Common Stock in the Crane Co.
Savings and Investment Plan, 1,271 shares of Common Stock in the Crane
Co. Union Employees Savings and Investment Plan, and 181,709 shares of
Common Stock in the ELDEC Corporation and Interpoint Corporation Deferred
Income Plan, resulting in a total of 7,751,065 shares of Common Stock
beneficially owned by directors, officers and employees, or % of the
outstanding shares as of February 5, 1999.
(3) This group includes, in addition to the directors listed under "Election
of Directors", Mr. Boris Yavitz, a current director of the Company who is
not standing for reelection when his term expires at the Annual Meeting.
Mr. Yavitz beneficially owns 11,090 shares of Common Stock, including 285
shares under the Non-Employee Director Restricted Stock Plan.
(4) Includes 720 shares owned by Mr. Evans' spouse.
5
<PAGE>
PRINCIPAL SHAREHOLDERS OF THE COMPANY
The following table sets forth the ownership by each person who owned of
record or was known by the Company to own beneficially more than 5% of its
Common Stock on February 5, 1999.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- -------------- ------------------------- --------------- ---------
<S> <C> <C> <C>
Common Stock (1) ......... The Crane Fund (1) 7,778,416 (1) %
100 First Stamford Place
Stamford, CT 06902
</TABLE>
- ----------
(1) The Crane Fund is a charitable trust managed by trustees appointed by the
Board of Directors of the Company. The incumbent trustees are: G.A.
Dickoff, A.I. duPont, R.B. Phillips, M.L. Raithel and D.S. Smith, all of
whom are executive officers of the Company. Pursuant to the trust
instrument, the shares held by the trust shall be voted by the trustees as
directed by the Board of Directors, the distribution of the income of the
trust for its charitable purposes is subject to the control of the Board
of Directors and the shares may be sold by the trustees only upon the
direction of the Board of Directors. None of the directors or the trustees
has any direct beneficial interest in, and all disclaim beneficial
ownership of, shares held by The Crane Fund.
EXECUTIVE COMPENSATION
A. SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid to the Company's
Chief Executive Officer and to each of the four most highly paid executive
officers for each of the last three completed fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------------------- ----------------------------------------------------
OTHER RESTRICTED SECURITIES ALL(4)
ANNUAL STOCK UNDERLYING LTIP(3) OTHER
NAME AND COMPENSATION AWARD(2) OPTIONS/ PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS(1)($) ($) ($) SARS(#) ($) ($)
- ---------------------- ------ ----------- ------------- -------------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R.S. Evans 1998 670,000 1,107,159 217,668 439,228 240,000 2,895,411 10,169
Chairman and Chief 1997 640,000 870,683 207,176 448,077 90,000 2,612,558 4,536
Executive Officer 1996 640,000 660,392 194,399 757,254 67,500 1,530,258 8,782
L. Hill Clark 1998 400,000 524,694 62,639 84,572 120,000 1,346,119 8,156
President and Chief 1997 400,000 417,668 65,377 58,958 52,500 565,155 7,687
Operating Officer 1996 375,000 324,243 54,614 45,518 56,250 203,722 7,687
D.S. Smith 1998 275,000 375,974 46,318 297,366 72,000 579,082 5,766
Vice President-- 1997 262,500 300,022 44,486 13,476 37,500 767,258 5,476
Finance & Chief 1996 255,000 224,462 40,090 12,414 33,750 404,721 5,177
Financial Officer
M.L. Raithel 1998 176,000 279,410 18,558 51,834 42,000 506,697 11,028
Controller 1997 170,800 221,379 19,835 5,054 25,500 544,714 1,329
1996 165,000 170,345 19,863 16,552 22,500 228,866 5,435
A.I. duPont 1998 200,000 233,442 18,854 280,997 60,000 0 5,900
Vice President, 1997 190,000 144,728 13,256 5,054 30,000 0 5,595
General Counsel 1996 180,000 104,699 25,700 4,138 33,750 0 765
and Secretary
</TABLE>
- ----------
(1) Represents the amounts paid to the named executives under the Company's EVA
Incentive Compensation Plan for Executive Officers (see Company's
Organization & Compensation Committee Report on page XX). After giving
effect to such payments, the named executives have credited to their
accounts under such plan the following amounts, which are subject to
increase or decrease in future years: R.S. Evans $2,214,318; L.H. Clark
$1,049,388; D.S. Smith $751,949; M.L. Raithel $558,820; A.I. duPont
$466,884. Under the program one third of the account balance in any year
will be payable to the named executive.
6
<PAGE>
(2) Amounts shown are the fair market value at date of grant of shares of
restricted stock awarded to the named executive officers to provide
retirement benefits that would have been earned by them under the
Company's qualified pension plan but for the application of certain limits
imposed by the Internal Revenue Code (see Report on Executive Compensation
by the Organization and Compensation Committee on page XX). Such shares
will vest after 10 years of service or upon age 65, unless the
restrictions are waived by the Committee upon early retirement. In
addition the amounts shown for Messrs. Smith and duPont include the fair
value at date of grant of shares of time-based restricted stock that will
vest if the executive continues in the employ of the Company through April
20, 2003 or upon his earlier death or permanent disability or upon a
change in-control of the Company.
(3) Shares of restricted stock issued under the Company's Restricted Stock
Award Plan that are subject to performance-based conditions on vesting are
classified as long-term incentive awards reportable in the column LTIP
Payouts of the Summary Compensation Table upon vesting. Amounts shown in
the column LTIP Payouts include a gross-up for taxes payable in respect of
the compensation earned upon vesting of the restricted stock award that
vested in 1996 and one of the two awards of restricted stock that vested
during 1997. The shares of Common Stock under the Restricted Stock Award
Plan held by each of the named executive officers and the aggregate value
thereof at December 31,1998 were as follows:
<TABLE>
<CAPTION>
RESTRICTED STOCK AWARD PLAN
--------------------------------------------------------------
RESTRICTED AGGREGATE
STOCK HELD LTIP RESTRICTED AGGREGATE
# OF SHARES # OF SHARES SHARES HELD VALUE
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
R.S. Evans ........... 313,500 272,658 586,158 $17,694,645
L.H. Clark ........... 8,550 156,421 164,971 4,980,062
D.S. Smith ........... 9,900 116,234 126,134 3,807,670
M.L. Raithel ......... 6,600 42,547 49,147 1,483,625
A.I. duPont .......... 8,175 45,000 53,175 1,605,220
</TABLE>
The shares listed in the first column under the heading "Restricted Stock
Held" are subject only to time-based vesting criteria, including shares
awarded to provide certain retirement benefits as described under note (2)
above. The shares of restricted stock which are performance-based, listed
under the heading "LTIP", may lapse upon failure to achieve the performance
criteria and so the value presented above for such and are reported in
the column Other Annual Compensation of the Summary Compensation Table. The
amount shown in such column for Mr. duPont in 1996 also includes a $20,000
bonus paid upon commencement of employment.
(4) Amounts include the Company's matching contribution for eligible employees
for the purchase of Common Stock in the Company's Saving & Investment Plan
(401(k)) and premiums for life insurance.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options to the
named executive officers of the Company during the fiscal year ended
December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF % OF
SECURITIES TOTAL OPTIONS/
UNDERLYING SARS
OPTIONS/ GRANTED TO EXERCISE OR GRANT DATE
SAR'S EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR(1) $/SHARE(2) DATE VALUE ($)(3)
- ----------------------- ------------ ---------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
R. S. Evans ........... 240,000 17.55% 36.37 04/20/2008 2,642,400
L. H. Clark ........... 120,000 8.78% 36.37 04/20/2008 1,321,200
D. S. Smith ........... 72,000 5.27% 36.37 04/20/2008 792,720
M. L. Raithel ......... 42,000 3.07% 36.37 04/20/2008 462,420
A. I. duPont .......... 60,000 4.39% 36.37 04/20/2008 660,600
</TABLE>
(1) No SARs were granted.
(2) The exercise price of options granted under the Company's Stock Option
Plan were and may not be less than 100% of the fair market value of the
shares on the date of grant. Options granted become exercisable 50% one
year, 75% two years and 100% three years after grant and expire, unless
exercised, 10 years after grant. If employment terminates, the optionee
generally may exercise the option only to the extent it could have been
exercised on the date his employment terminated and must be exercised
within three months thereof. In the event employment terminates by reason
of retirement, permanent disability or change in control, options become
fully exercisable. The exercise price may be paid by delivery of shares
owned for more than six months and income tax obligations related to
exercise may be satisfied by surrender of shares received upon exercise,
subject to certain conditions.
(3) The amounts shown were calculated using a Black-Scholes option pricing
model which derives a value of $11.01 per share for each option granted.
The estimated values assume a risk-free rate of return of 5.60% based
upon the 10-year Treasury (adjusted for constant maturities) from the
Federal Reserve Statistical Release H.15(519), stock price volatility of
24.22%, a dividend payout ratio of .92% and an option duration of 5.29
years. The actual value, if any, that an executive may realize will
depend upon the excess of the stock price over the exercise price on the
date the option is exercised, and so the value realized by an executive
may be more or less than the value estimated by the Black-Scholes model.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS/SARS(1) AT OPTIONS/SARS(1) AT
NAME EXERCISE (#) REALIZED ($) FISCAL YEAR-END (#) FISCAL YEAR-END ($)(2)
- ----------------------- -------------- -------------- --------------------------- --------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
--------------------------- --------------------------
<S> <C> <C> <C> <C>
R. S. Evans . ......... 337,500 $11,998,931 163,125 / 301,875 1,908,436 / 531,352
L. H. Clark ........... 0 0 252,937 / 160,313 3,698,360 / 358,677
D. S. Smith ........... 0 0 172,312 / 99,188 2,595,030 / 237,641
M. L. Raithel ......... 0 0 124,125 / 60,375 1,882,561 / 160,293
A. I. duPont .......... 0 0 40,312 / 83,438 404,453 / 209,600
</TABLE>
(1) No SARs were held at December 31, 1998.
(2) Computed based upon the difference between aggregate fair market value at
December 31, 1998 and aggregate exercise price.
8
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the total return to shareholders
of an investment of $100 in each of Crane Co. Common Stock, the S&P 500 Index
and the Dow Jones Industrial-Diversified Index, in which the Company is
included as one of 19 companies, from December 31, 1993 to December 31, 1998.
"Total Return" means the increase in value of an investment in a security over
a given period assuming reinvestment in that security of all dividends received
thereon during the period.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG CRANE CO., S&P 500 AND DOW JONES INDUSTRIAL-DIVERSIFIED INDEX(1)
FISCAL YEAR ENDING DECEMBER 31,
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
Crane Co. ($) 100 112 157 188 285 301
- ----------------------------------------------------------------------------------------
S&P 500 Index ($) 100 101 139 171 229 294
- ----------------------------------------------------------------------------------------
Dow Jones Industrial -- Diversified ($) 100 92 120 155 204 234
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Peer companies in the Dow Jones Industrial-Diversified Index are:
Aeroquip-Vickers, Allied-Signal, Cooper Industries, Danaher Corp., Dover
Corp., FMC Corp., Harsco Corp., Illinois Tool Works, Ingersoll-Rand Co.,
ITT Industries, National Service Industries, Parker Hannifin Corp., PPG
Industries, Raychem Corp., Stanley Works, Tenneco Inc., Timken Co., Tyco
International.
9
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
BY THE ORGANIZATION AND COMPENSATION
COMMITTEE OF THE COMPANY
In 1998 the Organization and Compensation Committee of the Board of
Directors of the Company (the "Committee") continued to review and, where
appropriate, adjust its previously established three-pronged approach to
executive officer and key employee compensation: competitive base salaries;
short and medium-term cash incentive compensation linked to measurable
increases in shareholder value; and long-term incentive compensation utilizing
awards of restricted Common Stock and stock options the value of which is keyed
to increases in shareholder returns (primarily increases in the price of the
Company's Common Stock). The Committee has established targets for ownership of
Company Common Stock to encourage executive officers and key employees to hold
a significant portion of their net worth in the Company's Common Stock so that
the future price of the Company's Common Stock will constitute a key element in
their financial planning and ultimately in their net worth. In addition, the
Committee continued a program using shares of restricted stock to offset
significant limitations in pension benefits imposed upon certain executive
officers and key employees by federal tax policies while concurrently
preserving the incentive linkage between improved share performance and the
recipient's ultimate return.
A. BASE SALARIES. While the Committee believes the Company's base salaries
remain sufficiently competitive to attract and retain qualified executive
officers and key managers, the Committee continued to shift its compensation
emphasis from base salary and bonus based on a percentage thereof to incentive
compensation, the amount of and eligibility for which are based on measurable
increases in shareholder value and improved stock performance as discussed
below. Increases in base salaries of executive officers averaged 3.2% during
1998.
B. SHORT AND MEDIUM-TERM INCENTIVE COMPENSATION--FOCUSED ON ECONOMIC VALUE
ADDED. The Company's annual incentive compensation program utilizes the
principles of economic value added ("EVA") with a three year rolling horizon.
EVA* is defined as the difference between the return on total capital invested
in the business and the cost of capital, multiplied by total capital employed.
The Committee believes that, compared to such common performance measures as
return on capital, return on equity, growth in earnings per share and growth in
cash flow, EVA has the highest correlation with the creation of value for
shareholders over the long term.
The program does not involve the meeting of pre-established goals, as
such. Rather, the increase or decrease in EVA for a business unit during the
year, both absolutely and compared to the prior year, is the sole basis for any
incentive compensation award, thereby motivating managers to focus on
continuous value improvement. Awards are generally uncapped to provide maximum
incentive to create value and, because awards may be positive or negative,
executives can incur penalties when value is reduced.
While particular EVA formulas are tailored to the size and unique
characteristics of the business unit or units for which a specific executive is
responsible, the key elements of the EVA formula applicable to any individual
are the cost of capital (generally the cost of capital to the Company), the
return on capital, the amount of capital employed in the business unit, the net
operating profit of the unit after tax and the prior year's EVA. Thus, the EVA
formula requires the executive to focus on improvement in the unit's balance
sheet as well as the income statement. Awards are calculated on the basis of
year end results, and award formulas utilize both a percentage of the change in
EVA of a business unit from the prior year, whether positive or negative, and a
percentage of the positive EVA, if any, in the current year. EVA awards are
calculated for the Company as a whole for the corporate executives or where
appropriate for the business unit for which the executive is responsible.
Executives receive a percentage of the measured entity's award. For executives
responsible for more than one business unit, the formula is based on a
percentage of the aggregate EVA, positive or negative, of the units reporting
to the executive.
- ----------
* EVA is a registered trademark of Stern, Stewart & Co.
10
<PAGE>
After the EVA award, whether positive or negative, for a particular year
has been determined, it is credited to the executive's "bank account." If the
executive's account is a positive number, one-third of the account balance is
paid to the executive in cash annually. The remainder of the account balance
represents that individual's "equity" in the account for future years. If an
EVA award is negative, the amount will be deducted from the balance in the
account. If the account balance is negative, the executive will receive no
incentive compensation payments until the aggregate of subsequent EVA awards
results in a positive account balance. Each year, the Company adds interest to
a positive balance or charges interest on a negative balance at an appropriate
money market rate. The account is subject to forfeiture in the event an
executive leaves the Company by reason of termination or resignation. The bank
account concept with the three year payout at risk gives the incentive
compensation program a longer term perspective and provides participants with
ownership incentives as the account balances build or decline. Although the
program is formula driven, the Committee retains discretion to review and
adjust its impact on business units and individuals for reasonableness and to
preserve its incentivizing objectives, except that the EVA award percentages of
the individuals named in the Summary Compensation Table are capped by the
Committee at the beginning of the year.
C. LONG-TERM INCENTIVE COMPENSATION--FOCUSED ON SHAREHOLDER RETURN. The
Company has used its Stock Option Plan and Restricted Stock Award Plan as the
foundation for a long-term stock-based incentive compensation program focused
on shareholder return. The Committee believes that executive officers approach
their responsibilities more and more like owners of the Company as their
holdings of and potential to own Company Common Stock increase. This philosophy
starts with the Board of Directors, whose non-employee members receive 50% of
their annual retainer in Company Common Stock. To date, % of the Company's
Common Stock is beneficially owned by directors, management and key employees,
with the Chairman and Chief Executive Officer owning % and the other
executive officers owning %. (See Beneficial Ownership of Common Stock by
Directors and Management, page 5.) The Committee has established targets for
ownership of Company Common Stock by executive officers and key employees
(expressed as a multiple of their base salary, ranging from a multiple of one
for salaries up to $125,000 to a multiple of five for salaries above $500,000).
The Committee also continued to discourage sales of stock acquired by such
individuals through the vesting of restricted stock grants and option
exercises.
(i) The Stock Option Plan. The Stock Option Plan is administered by the
Committee, which is authorized to grant options to key employees of the Company
or any majority-owned subsidiary of the Company. Options granted become
exercisable 50% one year after the grant date, 75% two years after the grant
date and 100% three years after the grant date and the option price must not be
less than 100% of the average fair market value on the date of grant. Options
expire, unless exercised, 10 years after grant. Because the Company's Stock
Option Plan requires that options be granted at no less than fair market value,
a gain can only result if the Company's share price increases from the date of
grant. This incentive program is, therefore, directly tied to increases in
shareholder value. In 1998, the Committee granted 910,900 stock options to the
officers and key employees of the Company.
(ii) Restricted Stock Award Plan. Under the Restricted Stock Award Plan,
restricted shares of the Company's Common Stock may be awarded to selected key
officers and employees. The Committee administers the Plan and has the
authority to select participants to determine the amount and timing of awards,
restriction periods, market value thresholds and any terms and conditions
applicable to grants. Since 1990, the Committee generally has established
performance goals for the lapse of restrictions on stock awarded under the Plan
involving the achievement over 21/2 and 5 year intervals of returns for the
Company's shareholders (Common Stock price appreciation plus dividends) equal
to or better than certain performance benchmarks, e.g. 125% of the shareholder
return of the S&P 500, 150% of such return or 17.5% compounded annually. Each
such award has also required that the price of the Company's Common Stock must
be higher than the price on the date of grant, or the restrictions will not
lapse. If the conditions are not met, such
11
<PAGE>
restricted stock awards are forfeited after five years, subject to the
discretion of the Committee to adjust the terms of such awards. In 1998, the
Committee determined to reduce the aggregate number of shares of restricted
stock to be awarded and to award such restricted stock with time-vesting
criteria only to selected employees for long-term retention purposes. A total
of 91,950 shares of restricted stock were awarded to officers and other key
employees of the Company in 1998 (compared to an annual average of
approximately 300,000 shares over the previous five years), and the
restrictions on such shares lapse on April 20, 2003 or upon the participant's
earlier death, permanent disability, normal retirement at age 65 or upon a
change-in-control of the Company.
In 1995, the Committee adopted a program to make up the shortfall in
executive officer and key employee pension benefits imposed by certain federal
tax policies which limit the amount of compensation that can be considered for
determining benefits under tax-qualified plans. Under this program, the
Committee will grant to certain executive officers and key employees who have
been impacted by such tax limitations amounts of restricted stock with a market
value at the date of grant approximately equivalent to the present value of
that portion of the Company's retirement benefit at normal retirement (age 65)
or, in the case of the Chairman and Chief Executive Officer, at age 55 with 15
years of service in that capacity, lost by reason of the tax limitations. The
Committee is of the view that the grants provide the potential to offset the
tax limitations on the executive's future pension benefits, but require the
recipient to look to future increases in shareholder value if that objective is
to be actually achieved. On the basis of that approach, the Committee awarded
the amounts of restricted stock set forth in the Summary Compensation Table,
the restrictions on which will lapse after 10 years of service or upon reaching
age 65, whichever is earlier, with the understanding that the Committee can
waive the conditions for the lapse of restrictions in the event of a request
for early retirement.
D. COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER. The Committee is of the
view that the Chief Executive Officer compensation package should emphasize
incentives closely linked to shareholder return through significant grants of
stock options and/or performance-based restricted stock. After considering the
record performance of the Company in 1998 and the key role of the Chief
Executive Officer, the Committee determined to increase the annual base salary
of the Chief Executive Officer to $725,000, a level which, in the judgment of
the Committee, is appropriate for the chief executive officer of a corporation
of the size and complexity of the Company in its industrial category. Further
compensation to the Chief Executive Officer can only result from improvements
in corporate performance and shareholder returns. The Chief Executive Officer's
1998 incentive compensation award of $1,475,630 under the EVA Incentive
Compensation Plan for Executive Officers was calculated on the basis of the
increase in the Company's EVA in 1998 plus a pre-established percentage of that
EVA and credited to his "account" as provided for in the EVA Plan. The actual
amount paid to the Chief Executive Officer for 1998 from his account was
$1,107,159. The balance in the account is subject to increase or decrease
depending upon EVA in subsequent years. The Chief Executive Officer was awarded
240,000 options under the Stock Option Plan in 1998, which in the Committee's
judgment will maintain the appropriate incentives to a chief executive officer
of a company the size and breadth of Crane Co. In 1998, restrictions lapsed on
30,000 shares of restricted stock at the five year interval of the Chief
Executive Officer's 1993 grant (100%), but no shares of restricted stock vested
at the 2 1/2 year interval of his 1996 grant. The Chief Executive Officer was
also granted 12,075 shares of time-based restricted stock to offset the impact
of the tax limitations on his pension benefit under the Company's defined
benefit pension plans. (See paragraph C above.)
E. OMNIBUS BUDGET REVENUE RECONCILIATION ACT OF 1993. In 1993, Congress
adopted the Omnibus Budget Revenue Reconciliation Act of 1993, certain
provisions of which (Section 162(m) of the Internal Revenue Code) for tax years
beginning after December 31, 1993 limit to $1 million per employee the
deductibility of compensation paid to the executive officers required to be
listed in the Company's proxy statement unless the compensation meets certain
specific requirements. The EVA Incentive Compensation Plan for Executive
Officers, which was approved by the shareholders at the 1994 Annual Meeting, is
intended to constitute a performance-based plan meeting the criteria for
12
<PAGE>
continued deductibility set out in the applicable regulations. In addition, the
Company believes that all stock options granted to date under the Stock Option
Plan and all performance-based grants of restricted stock to date under the
Restricted Stock Award Plan will meet the requirements of Section 162(m) for
deductibility. The shares of time-based restricted stock granted in 1998 to
offset the impact of the tax limitations on pension benefits, as well as the
other time-based restricted stock awarded in 1998 as described in paragraph C
above, would not satisfy the criteria of Section 162(m), and accordingly
compensation expense in respect of income recognized by the executive officer
upon lapse of the restrictions would not be deductible to the extent that such
income, together with all other compensation in such year that did not satisfy
the criteria of Section 162(m), exceeded $1 million. As a matter of policy, the
Committee intends to develop and administer compensation programs which will
maintain deductibility under Section 162(m) for all executive compensation,
except in the limited circumstance when the materiality of the deduction is in
the judgment of the Committee significantly outweighed by the incentive value
of the compensation.
Submitted by:
The Organization and Compensation
Committee of the Board of Directors of
Crane Co.
B. Yavitz, Chairman
D. R. Gardner
D. C. Minton
J. L. L. Tullis
RETIREMENT BENEFITS
All officers of the Company, including the individuals identified in the
Summary Compensation Table, are participants in the Company's pension plan for
non-bargaining employees. Directors who are not employees do not participate in
the plan. Eligibility for retirement benefits is subject to certain vesting
requirements, which include completion of five years of service where
employment is terminated prior to normal or other retirement or death, as
determined by applicable law and the plan. Benefit accruals continue for years
of service after age 65.
The annual pension benefits payable under the pension plan are equal to
1 2/3% per year of service of the participant's average annual compensation
during the five highest compensated consecutive years of the 10 years of
service immediately preceding retirement less 1 2/3% per year of service of the
participant's Social Security benefit, up to a maximum deduction of 50% of the
Social Security benefit. Compensation for purposes of the pension plan is
defined as total W-2 compensation less (i) the imputed income value of group
life insurance and auto allowance, (ii) income derived from participation in
the Restricted Stock Award Plan and (iii) on or after January 1, 1993, income
derived from the Stock Option Plan and a former stock appreciation rights plan.
In general, such covered compensation for any year would be equivalent to the
sum of the salary set forth in the Summary Compensation Table for such years
plus the bonus shown in the Table for the immediately preceding year.
13
<PAGE>
The table below sets forth the estimated annual benefit payable on
retirement at normal retirement age (age 65) under the Company's pension plan
based on benefit accruals through December 31, 1998 for specified salary and
years of service classifications, and assumes benefits to be paid in the form
of a single life annuity. The amounts have not been reduced by the Social
Security offset referred to-above.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE
ANNUAL -----------------------------------------------------------------
COMPENSATION 10 20 25 30 35
- -------------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
$150,000 ........... $25,005 $50,010 $62,513 $75,015 $ 87,518
$175,000 ........... 29,173 58,345 72,931 87,518 102,104
$200,000 ........... 33,340 66,680 83,350 100,020 116,690
$225,000 ........... 37,508 75,015 93,769 112,523 131,276*
$235,000 ........... 39,175 78,349 97,936 117,524 136,111*
$250,000** ......... 41,675 83,350 104,188 125,025 145,863*
</TABLE>
- ----------
* Effective January 1, 1996, the actual retirement benefit at normal
retirement date payable pursuant to Section 235(a) of the Tax Equity and
Fiscal Responsibility Act of 1982 (and subsequent to 1986 at the age at
which unreduced Social Security benefits may commence pursuant to the Tax
Reform Act of 1986) may not exceed the lesser of $120,000 or 100% of the
officer's average compensation during his highest three consecutive
calendar years of earnings (the "Tax Act Limitation"). The Tax Act
Limitation may be adjusted annually for changes in the cost of living.
The 1998 limit was $130,000, and the limit remains at $130,000 for 1999.
The dollar limit is subject to further reduction to the extent that a
participant has fewer than 10 years of service with the Company or 10
years of participation in the defined benefit plan.
** Between January 1, 1989 and December 31, 1993, for the purpose of
determining benefit accruals and benefit limitations under the pension
plan for all plan years beginning in 1989, a participant's compensation
is deemed to be limited to $200,000 indexed for inflation ($235,840 for
1993) ("Limitation"). As a result of the Limitation, the covered
compensation under the Company's pension plan for each of Messrs. Evans,
Clark, Smith and Raithel (who have 25, 8, 7 and 28 years of service
credit, respectively) was limited to $235,840 in 1993. (Mr. duPont was
not employed by the Company in 1993; he joined the Company in 1996 and
now has 3 years of service credit under the Company's pension plan.)
However, in no event will the Limitation reduce any participant's accrued
benefit below his accrued benefit as of December 31, 1988. Commencing
January 1, 1994, the compensation limit was further reduced to $150,000
indexed for inflation in future years ("OBRA '93 Limitation"). As a
result of the OBRA '93 Limitation, the covered compensation under the
Company's pension plan for the foregoing individuals for the years 1994
through 1996 was limited to $150,000, and was increased to $160,000 for
1997, 1998 and 1999. In no event will the OBRA '93 Limitation reduce any
participant's accrued benefit as of December 31, 1993.
OTHER AGREEMENTS AND INFORMATION
The Company has entered into indemnification agreements with R.S. Evans,
each other director of the Company, Messrs. Clark, Smith, Raithel and duPont
and the four other executive officers of the Company, the form of which was
approved by the shareholders of the Company at the 1987 Annual Meeting. The
Indemnification Agreements require the Company to indemnify the officers or
directors to the full extent permitted by law against any and all expenses
(including advances thereof), judgments, fines, penalties and amounts paid in
settlement incurred in connection with any claim against such person arising
out of the fact that he was a director, officer, employee, trustee, agent or
fiduciary of the Company or was serving as such for another entity at the
request of the Company, and to maintain directors and officers liability
insurance coverage or to the full extent permitted by law to indemnify such
person for the lack thereof.
14
<PAGE>
Each of the individuals named in the Summary Compensation Table (and
certain other executive officers) has an agreement which, in the event of a
change in control of the Company, provides for the continuation of the
employee's then current base salary, bonus plan and benefits for the three year
period following the change in control. Upon termination within three years
after a change in control, by the Company without cause or by the employee with
"Good Reason" (as defined in the agreement), the employee is immediately
entitled to a proportionate amount of the greater of the last year's bonus or
the average bonus paid in the three prior years, three times the sum of his
annual salary and the greater of the last year's bonus or the average of the
last three years' bonuses, and all accrued deferred compensation and vacation
pay, and employee benefits, medical coverage and other benefits also continue
for three years after termination. "Good Reason" under the agreements includes,
among other things, any action by the Company which results in a diminution in
the position, authority, duties or responsibilities of the employee. The
agreements also provide that the employee may terminate his employment for any
reason during the 30 day period immediately following the first year after the
change of control, which shall be deemed "Good Reason" under the agreement. If
it is determined that any economic benefit or payment or distribution by the
Company to the individual, pursuant to the agreement or otherwise (including,
but not limited to, any economic benefit received by the employee by reason of
the acceleration of rights under the various options and restricted stock plans
of the Company) ("Payment"), is subject to the excise tax imposed by Section
4999 of the Internal Revenue Code, the agreements provide that the Company
shall make additional cash payments to the employee such that after payment of
all taxes including any excise tax imposed on such payments, the employee will
retain an amount equal to the excise tax on all the Payments. The agreements
are for a three-year period, but are automatically renewed annually for a
three-year period unless the Company gives notice that the period shall not be
extended.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
For the fiscal year ended December 31, 1998 each director and executive
officer of the Company timely filed all required reports under Section 16(a) of
the Securities Exchange Act of 1934.
OTHER TRANSACTIONS AND RELATIONSHIPS
TRANSACTIONS
The law firm of Kirkpatrick & Lockhart LLP, of which Mr. Queenan is senior
counsel, furnished legal services to the Company in 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Organization and Compensation Committee is or has ever
been an employee of the Company and no executive officer of the Company has
served as a director or member of a compensation committee of another company
of which any member of the Committee is an executive officer.
APPROVAL OF THE SELECTION OF AUDITORS
The Board of Directors proposes and recommends that the shareholders
approve the selection of the firm of Deloitte & Touche LLP as independent
auditors for the Company for 1999. Deloitte & Touche LLP have been the
independent auditors for the Company since 1979. Unless otherwise directed by
the shareholders, proxies will be voted for approval of the selection of
Deloitte & Touche LLP to audit the books and accounts of the Company for the
current year. In accordance with the Company's practice, a member of the firm
will attend the Annual Meeting, have an opportunity to make a statement if he
desires to do so and to respond to appropriate questions which may be asked by
shareholders.
15
<PAGE>
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has unanimously approved, and recommends to the
shareholders that they adopt, an amendment to Article IV of the Certificate of
Incorporation that would increase the number of authorized shares of Common
Stock from 80,000,000 to 200,000,000 shares.
Of the 80,000,000 currently authorized shares of Common Stock, shares
were issued and outstanding as of February 5, 1999. As of such date,
shares were held in treasury and shares were reserved for issuance under
the Company's stock option and restricted stock plans. The additional shares of
Common Stock for which authorization is sought would be a part of the existing
class of Common Stock and, if and when issued, would have the same rights and
privileges as the shares of Common Stock currently outstanding. No holder of
Common Stock has any preemptive rights. The Company has no plans for the
issuance of any shares of Common Stock at the present time.
The full text of the proposed amendment to the Certificate of
Incorporation is attached to this Proxy Statement as Exhibit A, which
shareholders are urged to read carefully.
PURPOSES AND EFFECTS OF THE PROPOSED INCREASE IN THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK
The Board of Directors believes that the proposed increase in the number
of authorized shares of Common Stock would benefit the Company and its
shareholders by giving the Company needed flexibility in its corporate planning
and in responding to developments in the Company's business, including possible
acquisition transactions, stock splits or stock dividends and other general
corporate purposes. Having such authorized shares available for issuance in the
future would give the Company greater flexibility and allow shares of its
Common Stock to be issued without the expense of a special shareholders'
meeting or waiting until the next annual meeting.
Since the last increase of the authorized shares of Common Stock in 1987,
the Company has effected three stock splits, each on a three-for-two basis in
the form of a 50% stock dividend, in order to maintain a reasonable price level
for the Common Stock following significant increases in the market price of the
Common Stock. The current number of authorized shares of Common Stock that are
not outstanding or reserved is not sufficient for the Company to effect any
further stock splits.
In addition, the Company has been an active acquiror of companies as part
of its strategy to broaden and strengthen its portfolio of product lines,
geographic markets and distribution channels. Such acquisitions have in the
past and may in the future involve payment with shares of Common Stock. The
Board of Directors believes that the proposed increase in the number of
authorized shares of Common Stock is desirable to maintain the Company's
flexibility in choosing how to pay for acquisitions and other corporate actions
such as equity offerings to raise capital and adoption of additional benefit
plans.
Unless otherwise required by applicable law or regulation, the shares of
Common Stock proposed to be authorized will be issuable without further
shareholder action and on such terms and for such consideration as may be
determined by the Board of Directors. However, the New York Stock Exchange, on
which the Common Stock is listed, currently requires shareholder approval as a
prerequisite to listing shares in several instances, including acquisition
transactions where the present or potential issuance of shares could result in
an increase of 20 percent or more in the number of shares of Common Stock
outstanding.
The Board of Directors could use the additional shares of Common Stock to
discourage an attempt to change control of the Company, even thought a change
in control might be perceived as desirable by some shareholders, by selling a
substantial number of shares of common stock to persons who have an arrangement
with the Company concerning the voting of such shares, or by distributing
Common Stock, or rights to receive such stock, to the shareholders. The Board
of
16
<PAGE>
Directors, however, has no present intention of issuing any shares of Common
Stock or rights to acquire Common Stock for such purposes, and there are no
arrangements with any person for the purchase of shares of Common Stock in the
event of an attempted change of control.
RECOMMENDATION
The Board of Directors, believing that the Company and its shareholders
will benefit from the increase in the number of authorized shares of Common
Stock, recommends that shareholders vote FOR adoption of the proposed amendment
of Article IV of the Certificate of Incorporation.
The affirmative vote of the majority of the shares of Common Stock
outstanding and entitled to vote at the Annual Meeting will be required to
adopt the proposed amendment of Article IV of the Certificate of Incorporation.
See also Outstanding Shares and Required Votes, page 1.
MISCELLANEOUS
Solicitation of Proxies. The Company will bear all of the costs of the
solicitation of proxies for use at the Annual Meeting. In addition to the use
of the mails, proxies may be solicited by personal interview, telephone and fax
by directors, officers and employees of the Company, who will undertake such
activities without additional compensation. To aid in the solicitation of
proxies, the Company has retained Beacon Hill Partners, Inc. which will receive
a fee for its services of $5,500 plus up to $1,800 in expenses. Banks,
brokerage houses and other institutions, nominees and fiduciaries will be
requested to forward the proxy materials to the beneficial owners of the Common
Stock held of record by such persons and entities and will be reimbursed for
their reasonable expenses in forwarding such material.
Incorporation by Reference. The Report on Executive Compensation on pages
and the Performance Graph on page of this Proxy Statement shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934 except to the extent that the Company
specifically incorporates said report or said graph by reference and neither
the report nor the graph shall otherwise be deemed filed under such Acts.
Next Annual Meeting; Shareholder Proposals. The By-Laws provide that the
Annual Meeting of the Shareholders of the Company will be held on the second
Monday in May in each year unless otherwise determined by the Board of
Directors. Appropriate proposals of security holders intended to be presented
at the 2000 Annual Meeting must be received by the Company for inclusion in the
Company's proxy statement and form of proxy relating to that meeting on or
before October 21, 1999. In addition, if security holders intend to present
proposals at the 2000 Annual Meeting other than through inclusion of such
proposals in the Company's proxy materials for that meeting, then the Company
must receive notice of such proposals by January 4, 2000. If the Company does
not receive notice by that date, and such proposals are presented at the 2000
Annual Meeting, management proxies may use their discretionary voting authority
with respect to such proposals.
Shareholders who do not expect to attend in person are urged to sign, date
and return the enclosed proxy in the envelope provided, or to use the toll-free
telephone number on the enclosed proxy card. In order to avoid unnecessary
expense, we ask your cooperation in voting your proxy promptly, no matter how
large or how small your holdings may be.
By Order of the Board of Directors,
AUGUSTUS I. DUPONT
Secretary
February 18, 1999
17
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EXHIBIT A
PROPOSED AMENDMENT
OF ARTICLE IV OF THE CERTIFICATE OF INCORPORATION
RESOLVED, that the first paragraph of Article IV of the Certificate of
Incorporation be amended in its entirety to read as follows:
"The total number of shares of all classes of stock which the Corporation
shall have authority to issue is Two Hundred Million (200,000,000) shares
of common stock, par value $1.00 per share ("Common Stock"), and Five
Million (5,000,000) shares of preferred stock, par value $.01 per share
("Preferred Stock").
A-1
<PAGE>
PROXY
CRANE CO.
ANNUAL MEETING OF SHAREHOLDERS APRIL 5, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby appoint and constitute R.S. Evans, A.I. duPont
and D.S. Smith, and each of them, true and lawful agents and proxies of the
undersigned, with power of substitution, and hereby authorizes each of them
to vote, as directed on the reverse side of this card, or, if not so
directed, in accordance with the Board of Directors' recommendations, all
shares of Crane Co. held of record by the undersigned at the close of
business on February 5, 1999 at the Annual Meeting of Shareholders of Crane
Co. to be held in the Rainbow I and II Room at The Westin Stamford Hotel, One
First Stamford Place, Stamford, Connecticut on Monday, April 5, 1999 at 10:00
a.m., Eastern Daylight Time, or at any adjournment thereof with all the
powers the undersigned would possess if then and there personally present,
and to vote, in their discretion, upon such other matters as may come before
said meeting.
You are encouraged to specify your choices by marking the appropriate boxes
(SEE REVERSE SIDE), but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxies cannot
vote your shares unless you sign and return this card or use the toll-free
telephone number on the reverse side.
[SEE REVERSE SIDE]
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
<PAGE>
[X] Please mark your --- | 0309
votes as in this | |
example -----------
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR election of
directors and FOR proposal 2 and 3.
- -------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees and FOR
proposals 2 and 3.
FOR WITHHELD Nominees: E.T. Bigalow, Jr.
1. Election of [ ] [ ] J.J. Lee
Directors C.J. Queenan, Jr.
For, except vote withheld from the following nominee(s):
- ----------------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of Deloitte & Touche [ ] [ ] [ ]
LLP as Independent auditors
for the Company for 1999.
3. Approval of amendment to
Article IV of the Certificates of [ ] [ ] [ ]
Incorporation.
The signer hereby revokes all proxies heretofore given by the
signer to vote at said meeting or any adjournments thereof.
SIGNATURE(S) DATE
---------------------- ----------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as a attorney, executor, administrator, trustee or guardian,
please give full title as such.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
[CRANE LOGO]
Dear Shareholder:
Crane Co. encourages you to take advantage of a new and convenient way by
which you can vote your shares. You can vote your shares electronically
through the telephone. This eliminates the need to return the proxy card.
To vote your shares electronically you must use the control number printed in
the box above, just below the perforation. The series of numbers that appear
in the box above must be used to access the system.
To vote over the telephone:
o On a touch-tone telephone call 1-800-OK2-VOTE (1-800-652-8683) 24 hours
a day, 7 days a week.
Your electronic vote authorizes the named proxies in the same manner as if
you marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is no need for you to
mail back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
