<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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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 28, 2000
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
10, 2000 at The Westin Stamford Hotel, Grove II 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 1999 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 10, 2000
----------------
February 28, 2000
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 Westin Stamford Hotel, Grove II Meeting Room, One
First Stamford Place, Stamford, Connecticut on Monday, April 10, 2000 at 10:00
a.m., Eastern Daylight Time, for the following purposes:
1. To elect four directors to serve for three year terms until the Annual
Meeting of Shareholders in 2003.
2. To consider and act upon a proposal to approve the selection of Deloitte
& Touche LLP as independent auditors for the Company for 2000.
3. To consider and act upon a proposal to approve the Crane Co. 2000
Non-Employee Director Stock Compensation Plan.
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 11,
2000 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 10, 2000
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 Stamford Hotel, Grove II Meeting Room, One First Stamford Place,
Stamford, Connecticut, on Monday, April 10, 2000, 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 2000 and for the proposal to approve
the Crane Co. 2000 Non-Employee Director Stock Compensation Plan. 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. Alternatively, shareholders of record may
vote their proxy via the Internet at the website www.eproxyvote.com/cr. Both
procedures allow 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 or via the Internet 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 March 1, 2000.
OUTSTANDING SHARES AND REQUIRED VOTES. As of the close of business on
February 11, 2000, the record date for determining shareholders entitled to
vote at the meeting, the Company had issued and outstanding 61,555,191 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 vote of the holders of shares of Common Stock present in person
or represented by proxy and entitled to vote at the meeting. The approval of
auditors and approval of the Crane Co. 2000 Non-Employee Director Stock
Compensation Plan each requires 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, provided in the case of the Plan
that the total vote cast "For" or "Against" such proposal constitutes more than
50% of the outstanding shares of Common Stock. 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 as to all matters
presented in this Proxy Statement. With regard to the election of directors,
votes may be cast in favor or withheld, and the four 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. With regard to the
Non-Employee Director Stock Compensation Plan, 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 proposal.
1
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of ten members divided into
three classes. At the meeting four directors are to be elected to hold office
for three year terms until the Annual Meeting in 2003 and until their
successors are elected and qualified. The enclosed proxy will be voted for
election of the four 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.
Under the Company's By-Laws, as amended on January 24, 2000 and effective
for annual meetings commencing in the year 2001, shareholders intending to
nominate any person for election as a director of the Company must notify the
Secretary of the Company in writing not more than 120 days nor less than 90
days prior to the anniversary date of the immediately preceding annual meeting,
unless the date of the current annual meeting is more than 30 days before or
after such anniversary date. The notice must set forth (a) as to each person
nominated, (i) the name, age, business address and residence address of such
person, (ii) the principal occupation of such person, (iii) the number of
shares of Common Stock beneficially owned by such person and (iv) any other
information required to be disclosed in solicitations for proxies for elections
of directors under the federal securities laws; and (b) as to the shareholder
giving such notice, (i) the name and record address of such shareholder and
(ii) the number of shares of Common Stock beneficially owned by such
shareholder. The notice must be accompanied by the executed consent of the
nominee to serve as a director if so elected.
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 11, 2000 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 2003
R. S. EVANS ................................................................. 3,063,756
Age 55; Director since 1979. Chairman and Chief Executive Officer of the
Company. Other directorships: Fansteel, Inc., HBD Industries, Inc., Hexcel
Corporation, Huttig Building Products, Inc., Southdown Corporation.
ERIC C. FAST ................................................................ 112,851
Age 50; Director since September 1999. President and Chief Operating
Officer of the Company since September 1999. Co-head of Global
Investment Banking of Salomon Smith Barney (investment banking firm)
from 1995 to 1998 and a Managing Director of that firm from 1988 to 1998.
DORSEY R. GARDNER ........................................................... 7,977
Age 57; Director from 1982 to 1986 and since 1989. President, Kelso
Management Company, Inc., Boston, MA (investment management).
General Partner, Hollybank Investments, L.P., and Thistle Investments,
L.P., Miami, FL (private investment funds). Other directorships: Huttig
Building Products, Inc., S 1 Corporation.
DWIGHT C. MINTON ............................................................ 41,437
Age 65; 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>
2
<PAGE>
<TABLE>
<CAPTION>
COMMON SHARES
BENEFICIALLY
OWNED (1)
--------------
<S> <C>
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2002
E. THAYER BIGELOW, JR. ....................................................... 24,649
Age 58; 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: Huttig Building Products, Inc., Lord Abbett & Co. Mutual
Funds.
JOHN J. LEE .................................................................. 1,638
Age 63; Director since April 1999. 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.
CHARLES J. QUEENAN, JR. ...................................................... 18,431
Age 69; Director since 1986. Senior Counsel since 1995 and prior thereto,
Partner, Kirkpatrick & Lockhart LLP. Pittsburgh, PA (attorneys at law).
Other directorships: Allegheny Technologies Incorporated, Teledyne
Technologies Incorporated, Water Pik Technologies, Inc.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2001
RICHARD S. FORTE ............................................................. 16,602
Age 55; 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). Other directorships: Huttig Building
Products, Inc.
WILLIAM E. LIPNER ............................................................ 730
Age 52; 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 ........................................................... 2,000
Age 52; 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: Huttig Building
Products, Inc., PSS Worldmed, 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 5.
3
<PAGE>
The Board of Directors met 11 times during 1999. Each director attended
over 75% of the Board and Committee meetings occurring during his period of
service except for Mr. Lee, who attended 73% of such meetings due to a
scheduling conflict with the first Board and Audit Committee meetings after his
election in April 1999.
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 1999. The Audit
Committee met four times in 1999 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 five times in
1999. (See the Committee's report on page 10.)
The memberships of committees during 1999 were as follows: Executive
Committee: R. S. Evans, D.C. Minton and J. L. L. Tullis; Audit Committee: R. S.
Forte, D. R. Gardner, J. J. Lee and C. J. Queenan, Jr. (Chairman); Organization
and Compensation Committee: E. T. Bigelow, Jr. (Chairman), D. R. Gardner, D. C.
Minton and J. L. L. Tullis.
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 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 1999 each non-employee director received 630 restricted shares of Common
Stock pursuant to the plan. The Non-Employee Director Restricted Stock Plan is
proposed to be replaced by the 2000 Non-Employee Director Stock Compensation
Plan. See page 16.
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. The Retirement Plan for Non-Employee Directors
will be terminated if the Non-Employee Director Stock Compensation Plan is
approved by
4
<PAGE>
shareholders, provided that (i) directors age 65 or older (Messrs. Minton and
Queenan) may elect to continue their participation in the Retirement Plan in
lieu of any option grants under the new Stock Compensation Plan, and (ii)
former directors will continue to receive their retirement benefits under the
Retirement Plan. See Proposal to Approve 2000 Non-Employee Directors Stock
Compensation Plan, page 16.
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 11,
2000 is as follows:
<TABLE>
<CAPTION>
SHARES STOCK SHARES IN
UNDER OPTIONS COMPANY TOTAL % OF SHARES
RESTRICTED EXERCISABLE SAVINGS SHARES OUTSTANDING
SHARES STOCK WITHIN PLAN BENEFICIALLY AS OF
OWNED PLANS (1) 60 DAYS (401(K)) OWNED (2) 2/11/00
------------------ ------------ ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Non-Employee Directors and
Nominees as a Group (8 persons) 108,424 5,040 -- -- 113,464 0.18%
R. S. Evans .................... 2,050,120(3) 546,580 458,103 8,953 3,063,756 4.94%
L. H. Clark .................... 59,566 154,005 -- 2,311 215,882 0.35%
E. C. Fast ..................... 60,000 52,851 -- -- 112,851 0.18%
D. S. Smith .................... 23,250 120,622 184,292 1,335 329,499 0.53%
A. I. duPont ................... 225 72,323 126,046 629 199,223 0.32%
M. L. Raithel .................. 180,134(4) 47,684 189,338 4,364 421,520 0.68%
Other Executive Officers
(5 persons) .................... 59,065 75,424 268,622 14,862 417,973 0.68%
Sub-Total--Directors and
Executive Officers as a Group
(19 persons) ................... 2,540,784 1,074,529 1,226,401 32,454 4,874,168 7.76%
Key Employees (138 persons) .... 110,674 287,503 120,300 172,523 691,000 1.12%
----------- --------- --------- ------- --------- ----
Total .......................... 2,651,458 1,362,032 2,573,102 204,977 5,565,168 8.68%
=========== ========= ========= ======= ========= ====
</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, 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 11, 2000, 4,402 other employees of the
Company held 1,625,404 shares of Common Stock in the Crane Co. Savings
and Investment Plan, 2,419 shares of Common Stock in the Crane Co. Union
Employees Savings and Investment Plan, and 209,186 shares of Common Stock
in the ELDEC Corporation and Interpoint Corporation Deferred Income Plan,
resulting in a total of 7,402,177 shares of Common Stock beneficially
owned by directors, officers and employees, or 11.54% of the outstanding
shares as of February 11, 2000.
(3) Includes 720 shares owned by Mr. Evans' spouse.
(4) Includes 20,785 shares owned by Mr. Raithel's spouse and 675 shares owned
by his daughter.
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 11, 2000.
<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) 12.64%
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, J. R. Packard and M.L. Raithel, 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
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation for each of the last three
completed fiscal years paid to the Company's Chief Executive Officer and each
of the four most highly paid executive officers other than the Chief Executive
Officer who were serving as executive officers at December 31, 1999 and the
former President and Chief Operating Officer who retired in September 1999.
<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 1999 725,000 548,675 213,743 -- 216,854 -- 9,956
Chairman and Chief 1998 670,000 1,107,159 217,668 439,228 260,225 2,895,411 13,193
Executive Officer 1997 640,000 870,683 207,176 448,077 97,584 2,612,558 4,536
L.H. Clark 1999 412,000 902,007 62,699 150,003 108,427 -- 9,008
President and Chief 1998 400,000 524,694 62,639 84,572 130,112 1,346,119 8,300
Operating Officer 1997 400,000 417,668 65,377 58,958 56,924 565,155 7,687
(to September 9, 1999)
E.C. Fast 1999 141,634 100,000 5,000 1,068,500 325,280 -- --
President and Chief 1998 -- -- -- -- -- -- --
Operating Officer 1997 -- -- -- -- -- -- --
(effective September 9,
1999)
D.S. Smith 1999 283,000 187,783 45,429 217,862 65,056 -- 5,636
Vice President-- 1998 275,000 375,974 46,318 297,366 78,067 579,082 5,766
Finance & Chief 1997 262,500 300,022 44,486 13,476 40,660 767,258 5,476
Financial Officer
A.I. duPont 1999 208,000 110,432 23,715 194,052 65,056 -- 5,794
Vice President, 1998 200,000 233,442 18,854 280,997 65,056 -- 5,900
General Counsel 1997 190,000 144,728 13,256 5,054 32,528 -- 5,595
and Secretary
M.L. Raithel 1999 180,000 142,916 18,449 109,526 37,949 -- 986
Vice President, 1998 176,000 279,410 18,558 51,834 45,539 506,697 11,028
Controller 1997 170,800 221,379 19,835 5,054 27,649 544,714 1,329
</TABLE>
6
<PAGE>
- ----------
(1) Represents the amounts paid to the named executives under the Company's
EVA Incentive Compensation Plan for Executive Officers (see Part B of the
Report on Executive Compensation by the Organization & Compensation
Committee on page 10). 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 $1,097,351; E.C. Fast $(81,801); D.S. Smith $375,566; A.I. duPont
$220,863; M.L. Raithel $285,832. Under the program one-third of the
account balance in any year will be payable to the named executive. In
the case of Mr. Clark, who retired from his position as President and
Chief Operating Officer on September 9, 1999, the amount paid for 1999
was his entire bank account balance.
(2) Amounts shown are the fair market value at date of grant of shares of
restricted stock awarded to the named executive officers with vesting
conditions other than Company performance. These include shares of
restricted stock 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
Part C of the Report on Executive Compensation by the Organization and
Compensation Committee on page 12). 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. Fast, Smith and duPont include the fair value of shares of
time-based restricted stock at date of grant. Such shares will vest on
the fifth anniversary of the date of grant (or in the case of the award
to Mr. Fast in 20% installments on each of the first five anniversaries
of the date of grant) if the executive continues in the employ of the
Company 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 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 31,1999 were as
follows:
<TABLE>
<CAPTION>
RESTRICTED STOCK AWARD PLAN
--------------------------------------------------------------
RESTRICTED AGGREGATE
STOCK HELD LTIP RESTRICTED
# OF SHARES # OF SHARES SHARES HELD AGGREGATE
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
R.S. Evans ........... 331,378 215,202 546,580 $10,863,278
L.H. Clark ........... 15,697 129,252 144,949 2,880,861
E.C. Fast ............ 52,851 -- 52,851 1,050,414
D.S. Smith ........... 20,136 95,486 115,622 2,297,987
A.I. duPont .......... 17,257 47,566 64,823 1,288,357
M.L. Raithel ......... 11,838 35,846 47,684 947,720
</TABLE>
The shares listed in the first column under the heading Restricted Stock
Held are subject only to time-based vesting criteria, principally 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 shares remains at-risk to
the executive. Dividends are paid on all restricted stock at the same rate
as other shares of Common Stock and are reported in the column Other Annual
Compensation of the Summary Compensation Table.
(4) Amounts include the Company's matching contribution for eligible
employees for the purchase of Common Stock in the Company's Saving &
Investment Plan (401k) 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, 1999. The number of shares covered by each option grant and the exercise
price thereof are shown as adjusted pursuant to the anti-dilution provisions of
the Stock Option Plan in connection with the December 16, 1999 spin-off of
Huttig Building Products, Inc. common stock to Crane Co. shareholders (see Part
F of the Report on Executive Compensation by the Organization and Compensation
Committee on page 13).
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE PRESENT VALUE
GRANTED FISCAL YEAR $/SHARE EXPIRATION DATE ($)
-------------- -------------- ------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
R. S. Evans . . . . . . . . . . 216,854 13.75% 21.96 4/5/2009 1,373,965
E. C. Fast . . . . . . . . . . . 162,640 10.31% 21.37 9/27/2009 1,002,773
E. C. Fast . . . . . . . . . . . 162,640 10.31% 19.61 10/25/2009 920,120
L. H. Clark . . . . . . . . . . 108,427 6.88% 21.96 4/5/2009 686,983
D. S. Smith . . . . . . . . . . 65,056 4.13% 21.96 4/5/2009 412,188
A. I. duPont . . . . . . . . . ... 65,056 4.13% 21.96 4/5/2009 412,188
M. L. Raithel . . . . . . . . . 37,949 2.41% 21.96 4/5/2009 240,441
</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 $5.74 per share for each option granted,
except for the options granted to Mr. Fast, which had a Black-Scholes
value of $5.59 per share for the September 27 grant and $5.13 per share
for the October 25 grant. The estimated values assume a risk-free rate of
return of 5.07% based upon the 10-year Treasury (adjusted for constant
maturities) from the Federal Reserve Statistical Release H.15(519), stock
price volatility of 25.14%, a dividend payout ratio of 1.85% and an option
duration of 5.12 years. The actual value, if any, that an executive may
realize will depend upon the excess of the stock price over the exercise
price on the date the option is exercised, and so the value realized by an
executive may be more or less than the value estimated by the
Black-Scholes model.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS AT IN-THE-MONEY
FISCAL OPTIONS/SARS AT FISCAL
SHARES YEAR-END (#) YEAR-END ($) (2)
ACQUIRED ON VALUE REALIZED ----------------------------- ----------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- -------------- --------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
R. S. Evans . . . . 0 0 349,676 371,363 597,946 --
E. C. Fast . . . . . 0 0 -- 325,280 -- 2,440
L. H. Clark . . . . 22,500 191,981 344,390 187,714 1,366,430 --
D. S. Smith . . . . 86,156 1,170,974 151,764 114,255 587,185 --
A. I. duPont . . . . 0 0 93,518 105,716 97,523 --
M. L. Raithel . . . 0 0 170,364 67,632 839,416 --
</TABLE>
(1) No SARs were held at December 31, 1999.
(2) Computed based upon the difference between aggregate fair market value at
December 31, 1999 and aggregate exercise price.
8
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the total return to shareholders
of an investment of $100 in each of Crane Co. Common Stock, the S&P 500 Index
and the Dow Jones Industrial-Diversified Index, in which the Company is
included as one of 13 companies, from December 31, 1994 to December 31, 1999.
"Total Return" means the increase in value of an investment in a security over
a given period assuming reinvestment in that security of all dividends received
thereon during the period.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG CRANE CO., S&P 500 AND DOW JONES INDUSTRIAL-DIVERSIFIED INDEX(1)
FISCAL YEAR ENDING DECEMBER 31, 1999
[GRAPHIC OMITTED]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Crane Co. ($ ) 100 140 169 255 270 189
S&P 500 ($ ) 100 138 169 226 290 351
DJ Industrial-Diversified ($ ) 100 131 169 222 255 278
</TABLE>
(1) Peer companies in the Dow Jones Industrial-Diversified Index are: Cooper
Industries, Danaher Corp., Dover Corp., FMC Corp., Honeywell
International, Illinois Tool Works, Ingersoll-Rand Co., ITT Industries,
Parker Hannifin Corp., PPG Industries, Stanley Works, Tyco International.
9
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
BY THE ORGANIZATION AND COMPENSATION
COMMITTEE OF THE COMPANY
In 1999 the Organization and Compensation Committee of the Board of
Directors of the Company (the "Committee") maintained 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 stock options the value of which is keyed to
increases in shareholder returns (through increases in the price of the
Company's Common Stock) and awards of restricted Common Stock for retention
purposes. 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. The Committee also authorized certain
anti-dilution adjustments to outstanding stock options and certain additional
grants of restricted Common Stock in connection with the spin-off of Huttig
Building Products, Inc. common stock to the Company's shareholders on December
16, 1999 (the "Huttig Spin-Off").
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
1999.
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
- ----------
* EVA is a registered trademark of Stern, Stewart & Co.
10
<PAGE>
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.
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, but is
paid in full if the executive dies, becomes disabled or retires at age 65 (or
earlier at the discretion of the Committee) or upon a sale of the executive's
business unit or a change-in-control of the Company. 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, 8.11% of the Company's
Common Stock is beneficially owned by directors, management and key employees,
with the Chairman and Chief Executive Officer owning 4.69% and the other
executive officers owning 2.4%. (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 1999, the Committee granted 1,576,930 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
officers and key 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. From 1990 to 1997, the Committee generally established
performance goals for the lapse of restrictions on stock awarded under the Plan
involving the achievement
11
<PAGE>
over 2 1/2 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 restricted stock awards are forfeited after five
years, subject to the discretion of the Committee to adjust the terms of such
awards. Beginning 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 189,900 shares of restricted stock were awarded
to officers and other key employees of the Company in 1999, and the
restrictions on such shares generally lapse on April 5, 2004, or in certain
cases in 20% installments on the first five anniversaries of the award date, or
upon the participant's earlier death, permanent disability, normal retirement
at age 65 or upon a change-in-control of the Company.
Since 1995, the Committee has administered 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 shares of restricted stock to selected officers
and key employees, 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 include a
competitive base salary but emphasize incentives closely linked to shareholder
return such as the Company's EVA Plan and significant grants of stock options
and/or performance-based restricted stock. The Committee determined to increase
the annual base salary of the Chief Executive Officer in 1999 from $670,000 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. The Chief Executive Officer's 1999
incentive compensation award under the EVA Incentive Compensation Plan for
Executive Officers was a negative $701,151 in 1999 because the Company's EVA in
1999, while substantially positive, was lower than in 1998, and the EVA Plan
weights the change in EVA more heavily than the EVA amount itself. The Chief
Executive Officer's negative award was calculated on the basis of the decrease
in the Company's EVA in 1999 plus a pre-established percentage of that EVA and
debited to his "account" as provided for in the EVA Plan. The actual amount
paid to the Chief Executive Officer for 1999 from his account was $548,675 due
to the positive account balance from prior years. The balance in the account is
subject to increase or decrease depending upon EVA in subsequent years. The
Chief Executive Officer was awarded 200,000 options under the Stock Option Plan
in 1999 (216,854 options after giving effect to anti-dilution adjustments by
reason of the spin-off of Huttig Building Products to the Company's
shareholders in December 1999), 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 1999, 69,066 shares of restricted stock were
forfeited at the five year interval of the Chief Executive Officer's 1994
grant, and no shares of restricted stock vested at the 2 1/2 year interval of
his 1997 grant.
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
12
<PAGE>
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 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 1999 to offset the impact of the tax
limitations on pension benefits, as well as the other time-based restricted
stock awarded in 1999 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.
F. ACTIONS RELATING TO THE HUTTIG SPIN-OFF. The Committee met three times
in the fall of 1999 to consider and approve certain adjustments with respect to
outstanding stock options and restricted stock in connection with the Huttig
Spin-Off. As the Huttig Spin-Off represented a pro-rata distribution of Huttig
common stock to all Crane Co. shareholders, the Committee approved
anti-dilution adjustments to outstanding stock options in accordance with the
terms of the Stock Option Plan. These adjustments were based on the relative
market prices of the Company's Common Stock immediately before and after the
distribution of Huttig common stock on December 16, 1999, and their effect was
to increase the number of shares of Common Stock subject to each outstanding
option by 8.44% and to decrease the option exercise price by 7.76% so as to
maintain the total value of the option, i.e. the aggregate spread between
current market price and the exercise price. With respect to outstanding awards
of restricted Common Stock held by executive officers and other key employees,
the Committee determined that, rather than distributing shares of Huttig common
stock to continuing Crane employees subject to vesting restrictions, it was
more appropriate to award additional shares of Common Stock having an
equivalent value to the Huttig distribution but subject to the same
restrictions as the original restricted stock award, thereby maintaining the
incentive value of the restricted stock awards. The additional shares of
restricted Common Stock were determined based on the relative market values of
the Company's Common Stock and Huttig common stock on the distribution date and
represented approximately 5.7% of the outstanding restricted stock awards.
Submitted by:
The Organization and Compensation
Committee of the Board of Directors of
Crane Co.
E. T. Bigelow, Jr.
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
13
<PAGE>
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.
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, 1999 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 97,936 117,524 137,111**
$250,000......... 41,675 83,350 104,188 125,025 145,863**
</TABLE>
- ----------
* 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 26, 9, 8 and 29 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 4 years of service credit under the Company's pension plan. Mr.
Fast joined the Company in 1999 and has less than one year of service
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, was increased to $160,000 for 1997, 1998 and 1999, and was
increased to $170,000 for 2000. In no event will the OBRA '93 Limitation
reduce any participant's accrued benefit as of December 31, 1993.
** 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
14
<PAGE>
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
1999 limit was $130,000, and was increased to $135,000 for 2000. 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.
OTHER AGREEMENTS AND INFORMATION
The Company has entered into indemnification agreements with R.S. Evans,
each other director of the Company, Messrs. Clark, Fast, Smith, duPont and
Raithel and the five 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.
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.
The Company entered into an arrangement with L. Hill Clark upon his
retirement from his position as President and Chief Operating Officer on
September 9, 1999 pursuant to which (i) Mr. Clark was paid base salary at his
then-current annual rate of $412,000 through December 31, 1999, (ii) he
received the $902,007 balance of his EVA bank account in January 2000, (ii) he
will provide administrative services with respect to the Company's Six Sigma
training programs during 2000 for which he will be paid $30,000, (iv) his
performance-based restricted stock remained outstanding until February 15,
2000, (v) his time-based restricted stock for retirement benefits will vest on
December 31, 2000 and (vi) his stock options will continue to vest through
December 3l, 2000 and will remain outstanding and exercisable until March 31,
2001.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
For the fiscal year ended December 31, 1999 each director and executive
officer of the Company timely filed all required reports under Section 16(a) of
the Securities Exchange Act of 1934, except
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<PAGE>
for one executive officer, Bradley L. Ellis, Vice President--Chief Information
Officer, who filed a late Form 4 reporting the open market purchase of 1,000
shares of Common Stock.
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 1999.
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 2000. 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.
PROPOSAL TO APPROVE
2000 NON-EMPLOYEE DIRECTOR
STOCK COMPENSATION PLAN
INTRODUCTION
The Company's 1998 Non-Employee Director Restricted Stock Plan (the "1998
Plan"), authorizing up to 75,000 shares of restricted Common Stock to be issued
to non-employee directors in payment of 50% of their annual retainer fee, was
approved by shareholders at the 1998 Annual Meeting along with the Stock Option
Plan and Restricted Stock Award Plan for officers and key employees. After a
review of competitive compensation practices for directors, the Board of
Directors has determined, upon the recommendation of the Organization and
Compensation Committee, to replace the 1998 Plan with a new plan adding
provisions for annual stock option grants. The new plan, to be known as the
2000 Non-Employee Director Stock Compensation Plan (the "2000 Plan" or the
"Plan"), also provides for one-time stock option grants to the current
non-employee directors to replace their accrued benefits under the Retirement
Plan for Non-Employee Directors, which will be terminated if the 2000 Plan is
approved by shareholders, provided that directors age 65 or older may elect to
continue their participation in the Retirement Plan in lieu of receiving any
option grants under the 2000 Plan and former directors will continue to receive
their benefits under the Retirement Plan.
The purposes of the 2000 Plan are to attract and retain well-qualified
persons for service as directors of the Company, to provide directors with the
opportunity to increase their proprietary interest in the Company through the
grant of options to purchase Common Stock and the payment of a portion of
directors' fees in shares of Common Stock and to increase shareholder value
over the long term. The closing price of Crane Co. Common Stock on February 25,
2000 as reported on the consolidated trading reporting system, was $19.125 per
share.
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PRINCIPAL PROVISIONS OF THE PLAN
Set forth below is a summary of the principal provisions of the Plan,
which summary is qualified in its entirety by reference to the complete text of
the Plan set forth in Exhibit A to this Proxy Statement.
GENERAL
If approved by the shareholders, the Plan will continue through May 31,
2010. All directors of the Company who are not full-time employees of the
Company, of which there are currently eight, are eligible to participate in the
Plan. None of the persons named in the Summary Compensation Table will be
eligible to participate in the Plan, and none of the non-employee directors
eligible to participate in the Plan are eligible to participate in any of the
other compensation plans of the Company. Up to 400,000 shares of Common Stock
may be issued under the Plan, subject to adjustment in the event of any stock
dividend, stock split, recapitalization or other similar event. Such shares may
be treasury shares or authorized and unissued shares. The Company intends to
register shares of Common Stock awarded pursuant to the Plan under the
Securities Act of 1933, as amended. The Plan will be administered by a
committee comprised of the Chairman of the Board, the President of the Company
and the Vice President and General Counsel of the Company (the "Committee").
RESTRICTED STOCK
Under the 2000 Plan, each non-employee director will receive 50% of his
annual retainer fee (currently $30,000) in shares of Common Stock subject to
certain restrictions, with the balance of the annual retainer fee paid in cash
in monthly installments. The shares of Common Stock to be issued to each
non-employee director is that number (rounded to the nearest 10 shares) which
has a fair market value on the date of grant equal to the 50% of the annual
retainer fee payable in stock. For example, based upon the fair market value of
$19.71 for a share of Common Stock on February 25, 2000 (defined as the average
of the high and low sales prices for the 10 trading days ending on that date as
reported in the consolidated transaction reporting system), each non-employee
director would receive a retainer fee for the year commencing with the 2000
Annual Meeting of $15,000 in cash and an award of 760 shares of Common Stock.
The actual number of restricted shares for the 2000 annual retainer fee would
be fixed on April 10, 2000.
A director who becomes a member of the Board after the Annual Meeting of
any year would be awarded a prorated number of shares based on the number of
full months of service for that year. For purposes of determining such number
of shares, the fair market value of a share of Common Stock for the 10 trading
days ending on the date of the director's election to the Board will be used.
An award is forfeitable if the director ceases to remain a member of the
Board until the Annual Meeting of the year following the year of the award,
except in the case of death or disability (as determined by the Committee). In
the event of such death or disability, an allocated portion of the award for
the year of death or disability shall become non-forfeitable and distributable
to the director or his legal representative as of the date of such death or
disability. Until such time as the risk of forfeiture lapses or the shares
awarded are forfeited, a director has the right to vote and to receive
dividends on and other distributions with respect to the shares awarded. A
director may not sell or otherwise transfer shares awarded under the Plan for a
period of five years after the date of the award, except in the event of death
or disability.
All restrictions on any Common Stock awarded to a director under the Plan
shall lapse in the event of a "change in control." For purposes of the Plan,
the term "change in control" means (i) the first purchase of shares pursuant to
a tender offer or exchange offer (other than a tender offer or exchange offer
by the Company) for all or part of the outstanding shares of Common Stock or
any securities convertible into such Common Stock, (ii) the receipt by the
Company of a Schedule 13D or other advice indicating that a person is the
"beneficial owner" (as that term is defined in Rule 13d-3 under the Exchange
Act) of 20% or more of the outstanding shares of Common Stock
17
<PAGE>
calculated as provided in paragraph (d) of said Rule 13d-3, (iii) the date of
approval by shareholders of the Company of an agreement providing for any
consolidation or merger of the Company in which the Company will not be the
continuing or surviving corporation or pursuant to which shares of Common Stock
of the Company would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of Common Stock of the
Company immediately prior to the merger would have the same proportion of
ownership of common stock of the surviving corporation immediately after the
merger, (iv) the date of the approval by shareholders of the Company of any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company,
(v) the adoption of any plan or proposal for the liquidation (but not a partial
liquidation) or dissolution of the Company or (vi) the date upon which the
individuals who constitute the Board of Directors as of April 10, 2000 (the
"Incumbent Board") cease for any reason to constitute at least a majority of
the Board of Directors, provided that any person becoming a director subsequent
to such date whose election, or nomination for election by the Company's
shareholders, was approved by the vote of at least three-quarters of the
directors comprising the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of directors of
the Company, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall, for purposes of the Plan, be
considered as though such person were a member of the Incumbent Board.
OPTIONS
Under the 2000 Plan, each non-employee director will be granted
automatically, at the conclusion of each Annual Meeting of the Company
commencing with the current Annual Meeting in 2000, an option to purchase 2,000
shares of Common Stock. A director who becomes a member of the Board after the
Annual Meeting in any year would be granted an option to purchase a prorated
number of shares based on the number of full months of service for that year.
The 2000 Plan also provides that each current non-employee director will
receive a one-time grant, upon approval of the Plan by shareholders, of an
option to purchase the number of shares set forth opposite such director's name
below:
<TABLE>
<CAPTION>
NON-EMPLOYEE DIRECTOR NUMBER OF SHARES SUBJECT TO INITIAL OPTION
- ---------------------------------- -------------------------------------------
<S> <C>
E. Thayer Bigelow, Jr. ........... 21,900
Richard S. Forte ................. 18,200
Dorsey R. Gardner ................ 20,400
John J. Lee ...................... 3,200
William E. Lipner ................ 1,500
Dwight C. Minton ................. 37,500
Charles J. Queenan, Jr. .......... 41,900
James L. L. Tullis ............... 2,800
</TABLE>
The number of shares for each director was determined by calculating the
discounted present value of his current accrued retirement benefit under the
Retirement Plan for Non-Employee Directors assuming retirement at age 70 (or in
the case of Mr. Queenan age 71 at the end of his current three-year term), and
dividing that amount by $5.66 which is the per share value of the option using
the Black-Scholes model, and rounding up to the nearest 100 shares. The
Retirement Plan for Non-Employee Directors will be terminated upon approval of
the 2000 Plan by shareholders, provided that directors age 65 or older (Messrs.
Minton and Queenan) may elect to continue their participation in the Retirement
Plan in lieu of receiving any options under the 2000 Plan and former directors
will continue to receive their benefits under the Retirement Plan.
Options will be granted at a price not less than 100% of the fair market
value of the Common Stock on the date of grant. Shares available for option or
subject to options granted and the option price thereof will be increased or
decreased proportionately for any stock split, stock dividend, recapitalization
or other similar event. The Committee may also make appropriate, discretionary
18
<PAGE>
adjustments for any future mergers, exchanges of securities, reorganizations or
liquidations in whole or in part of Common Stock. The purchase price shall be
paid in full upon the exercise of an option either in cash or in whole or in
part by the delivery (either actually or by attestation) of shares of Common
Stock previously owned by a director and valued on the basis of fair market
value on the date the option is exercised. The Committee may also authorize
payment of the exercise price in the form of an irrevocable notice of exercise
from a director in connection with a "cashless" exercise through a brokerage
firm. (The Committee requires that shares surrendered to exercise an option
have been held for at least six months thereby effectively prohibiting the
practice of "pyramiding" whereby an option holder could start with a relatively
small number of shares and by a series of successive and substantially
simultaneous exercises and surrenders exercise all then exercisable stock
options with no additional cash and no more investment than the few original
shares.) The Committee may also (although it shall not be obligated to do so)
authorize the acceptance of a director's surrender of the right to exercise an
option, or portion thereof, and the payment to the director of the difference
between the fair market value of the shares underlying the option or portion
thereof and the option price thereof, in cash, or partly in cash and partly in
shares.
Each option may be exercised in whole or in part commencing one year from
the date of grant and ending ten years from such date. Beginning one year from
the date of grant, unless the Committee fixes a different vesting schedule, an
option may be exercised by a director at a cumulative rate not in excess of 50%
of the total shares available during the second year, 75% during the third year
and 100% thereafter. No option shall be transferable except by will or by the
laws of descent or distribution, provided that options may be transferable,
without payment of consideration, to immediate family members of the director
or to trusts or partnerships for the benefit of such family members.
If a director retires or ceases to serve as a member of the Board by
reason of permanent disability or after a change in control, the director may
exercise all options theretofore granted, in whole or in part, and/or the
Committee may authorize the acceptance of the surrender of the right to
exercise such options or any portion thereof, at any time until the expiration
of the term of the option. If a director dies while a member of the Board or
after termination of service, all options theretofore granted to such director
may be exercised, in whole or in part, and/or the Committee may authorize the
acceptance of the surrender of the right to exercise such options or any
portion thereof, by the estate of such director (or by a person who shall have
acquired the right to exercise such option by bequest or inheritance), at any
time until expiration of the term of the option.
TERM; AMENDMENT
The Plan will remain in effect until May 31, 2010 unless sooner terminated
by the Board of Directors. The Board of Directors of the Company may at any
time amend, rescind or terminate the Plan, as it shall deem advisable;
provided, however, that (i) no change may be made in awards theretofore granted
under the Plan which would impair participants' rights without their consent;
and (ii) no amendment to the Plan shall be made without approval of the
Company's shareholders if the effect of such amendment would be to (a) increase
the number of shares reserved for issuance under the Plan, (b) materially
increase the benefits accruing to participants under the Plan, (c) materially
change the requirements for eligibility under the Plan, (d) materially modify
the method for determining the number of shares awarded under Section 4 of the
Plan or (e) increase the number of options to be granted under Section 6 of the
Plan or the minimum purchase price thereof; except that any such increase or
modification that results from anti-dilution adjustments does not require such
approval.
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<PAGE>
TAX ASPECTS
RESTRICTED STOCK
A director will be deemed to have ordinary income in the taxable year in
which the shares awarded become fully vested. Such income shall be an amount
equal to the fair market value of the shares on the date the risk of forfeiture
lapses. A director may make an election under Section 83 of the Internal
Revenue Code to have the full fair market value of shares awarded under the
Plan taxed as ordinary income at the date of grant. The Company will be
entitled to a deduction for federal income tax purposes in the same amount in
the Company's taxable year in which ordinary income is recognized by the
director.
OPTIONS
The grant of an option will not result in any immediate tax consequence to
the Company or the director. Upon exercise of an option, the director will
realize ordinary income in an amount equal to the fair market value of the
Common Stock at the time of exercise over the option exercise price, and the
Company will generally be entitled to a deduction in the same amount.
RECOMMENDATION
The Board of Directors recommends a vote FOR approval of The Crane Co.
2000 Non-Employee Director Stock Compensation Plan.
The affirmative vote of a majority of the shares present or represented
and entitled to vote at the Annual Meeting is required for the approval of The
Crane Co. 2000 Non-Employee Director Stock Compensation Plan, provided that the
total of the votes cast "For" or "Against" such proposal constitutes more than
50% of the outstanding shares of Common Stock. See also Outstanding Shares and
Required Votes, page 1.
20
<PAGE>
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
10-13 and the Performance Graph on page 9 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 2001 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 November 1, 2000. In addition, the Company's By-Laws provide that if
security holders intend to nominate directors or present proposals at the 2001
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
nominations or proposals no earlier than December 21, 2000 and no later than
January 20, 2001. If the Company does not receive notice by that date, then
such proposals may not be presented at the 2001 Annual Meeting.
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 28, 2000
21
<PAGE>
EXHIBIT A
THE CRANE CO.
2000 NON-EMPLOYEE DIRECTOR
STOCK COMPENSATION PLAN
1. Purpose.
The purposes of The Crane Co. 2000 Non-Employee Director Stock
Compensation Plan (the "Plan") are to attract and retain well-qualified persons
for service as directors of Crane Co. (the "Company"), to provide directors
through the payment of a portion of directors fees in shares of the Company's
Common Stock, par value $1.00 per share ("Common Stock"), and the annual grant
of options to purchase shares of Common Stock ("Options") with the opportunity
to increase their proprietary interest in the Company and thereby to increase
their personal interest in the Company's continued success.
2. Administration.
Responsibility and authority to administer and interpret the provisions of
this Plan shall be conferred upon a committee of at least three persons (all of
whom shall be persons not eligible to participate in this Plan) having full
authority to act (the "Committee"). The members of the Committee shall be the
Chairman of the Board (provided that he is not eligible to be a participant
under this Plan), the President of the Company, and at least one additional
disinterested person to be elected by the Chairman. The Committee shall record
its proceedings under this Plan. The Committee may employ attorneys,
consultants, accountants or other persons, and the Committee, the Company and
its officers and directors shall be entitled to rely upon the advice, opinions
or valuations of any such persons. All usual and reasonable expenses of the
Committee shall be paid by the Company. No member shall receive compensation
with respect to his services for the Committee except as may be authorized by
the Board of Directors. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all directors who have received awards, the Company and other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretations taken or made in good faith with respect to
this Plan or awards made hereunder, and all members of the Committee shall be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.
3. Eligibility; Stock Subject to Plan.
(a) All directors of the Company who are not full-time employees of the
Company shall be participants in this Plan, provided that any director who is
age 65 or older on the date this Plan is approved by stockholders and who
elects to continue his participation in the Crane Co. Retirement Plan for
Non-Employee Directors shall not be eligible to receive any stock option grants
under this Plan.
(b) The total number of shares initially authorized to be issued under
this Plan shall be 400,000 shares of Common Stock. The number of shares
available for issuance under the Plan shall be subject to adjustment in
accordance with Section 8 hereof. Such shares shall be made available, at the
discretion of the Board of Directors, either from the authorized but unissued
shares of Common Stock or from shares of Common Stock reacquired by the
Company, including shares purchased in the open market. Except as provided in
Section 6(d) hereof, any shares of restricted Common Stock awarded under this
Plan that are forfeited for any reason, or any shares subject to an Option
granted under this Plan that expires or is terminated for any reason without
having been exercised in full, shall continue to be available for future grants
under this Plan. If any shares of Common Stock are withheld from those
otherwise issuable or are tendered to the Company, by attestation or otherwise,
in connection with the exercise of an Option, only the net number of shares of
Common Stock issued as a result of such exercise shall be deemed delivered for
purposes of determining the maximum number of shares available for delivery
under the Plan.
A-1
<PAGE>
4. Annual Fee; Restricted Stock
(a) Each non-employee director shall be paid an annual director's fee, in
an amount fixed from time to time by the Board of Directors, which is not
dependent upon attendance at meetings (the "Base Fee"). The Base Fee shall be
payable 50% in stock and 50% in cash as provided hereunder. The stock portion
of the Base Fee shall be determined pursuant to this Section.
(b) At the Company's Annual Meeting each calendar year, each eligible
director shall be awarded the number of full shares of Common Stock of the
Company (rounded to the nearest ten shares) determined by dividing (i) the
dollar amount equal to the 50% of the Base Fee payable to such director in
shares of Common Stock by (ii) the Fair Market Value of a share of Common Stock
on the award date. For all purposes of this Plan, the term "Fair Market Value"
as of any date shall mean the average of the high and low prices of a share of
Common Stock on the New York Stock Exchange-Composite Transactions Tape on the
10 consecutive trading days ending on such date, or, if no sale of Common Stock
has been recorded on such date, then on the next preceding date on which a sale
was so made. Each such award shall be evidenced by a written agreement,
executed by the director and the Company, containing such restrictions, terms
and conditions as the Committee may require. A non-employee director who
becomes a member of the Board of Directors after the Annual Meeting in any year
shall be awarded a prorated number of full shares of Common Stock based on an
allocation of such director's Base Fee based on the number of full months of
service for that year. The price of Common Stock to be used in determining the
number of shares of Common Stock to which such director shall be entitled for
such year shall be the Fair Market Value of a share of Common Stock on the date
of the director's election to the Board of Directors.
(c) An award of Common Stock is forfeitable if the director ceases to
remain a member of the Board of Directors until the Annual Meeting of the year
following the year of the award, except in the case of death or disability (as
determined by the Committee), which disability renders the director unable to
continue to serve the Company or upon a Change in Control of the Company as set
forth in Section 4(d) hereof. In the event of death or disability, an allocated
portion of the award for the year of death or disability, based on the number
of full months of service, shall become vested and distributable as of the date
of such death or disability. Shares which are forfeited may be regranted.
(d) Notwithstanding anything else herein, all restrictions on any Common
Stock that may have been awarded to a director hereunder shall lapse in the
event of a "Change in Control." For purposes of this Plan, the term "Change in
Control" shall mean (i) the first purchase of shares pursuant to a tender offer
or exchange offer (other than a tender offer or exchange offer by the Company)
for all or part of the outstanding shares of the Company's Common Stock or any
securities convertible into such Common Stock, (ii) the receipt by the Company
of a Schedule 13D or other advice indicating that a person is the "beneficial
owner" (as that term is defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), of 20% or more of the outstanding
shares of the Company's Common Stock calculated as provided in paragraph (d) of
said Rule 13d-3, (iii) the date of approval by stockholders of the Company of
an agreement providing for any consolidation or merger of the Company in which
the Company will not be the continuing or surviving corporation or pursuant to
which shares of Common Stock of the Company would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of Common Stock of the Company immediately prior to the merger would
have the same proportion of ownership of common stock of the surviving
corporation immediately after the merger, (iv) the date of the approval by
stockholders of the Company of any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all or substantially
all the assets of the Company, (v) the adoption of any plan or proposal for the
liquidation (but not a partial liquidation) or dissolution of the Company or
(vi) the date upon which individuals who constitute the Board of Directors of
the Company (the "Board") as of April 10, 2000 (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to such date whose election, or
nomination for election by the Company's stockholders, was approved by a vote
of at least three-quarters of the directors comprising the Incumbent Board
A-2
<PAGE>
(other than an election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for
purposes of this Plan, considered as though such person were a member of the
Incumbent Board.
5. Terms and Conditions of Restricted Stock.
(a) The difference between the Base Fee and the portion of such Base Fee
awarded under this Plan in Common Stock (valued at Fair Market Value) shall be
paid to directors in cash on a monthly basis.
(b) Until such time as the risk of forfeiture lapses or the shares awarded
are forfeited, a director has the right to vote and to receive dividends on and
other distributions with respect to the shares awarded.
(c) At such time as the risk of forfeiture lapses, a director's Common
Stock will have all the rights of any other Common Stock. No payment will be
required from the director upon the issuance or delivery of any restricted
stock, except that any amount necessary to satisfy applicable federal, state or
local tax requirements shall be withheld or paid promptly upon notification of
the amount due and prior to or concurrently with the issuance or delivery of a
certificate representing such stock, provided that anything contained herein to
the contrary notwithstanding, the Committee may accept stock received in
connection with the award being taxed or otherwise previously acquired in
satisfaction of withholding requirements.
(d) No shares may be sold or transferred (including, without limitation,
transfer by gift or donation) prior to the fifth anniversary of the date of the
award or the departure or resignation of the director from the Board, whichever
is earlier; except with regard to shares which vest as a result of death or
disability or upon a Change in Control of the Company (as defined in Section
4(d) hereof), at which time all restrictions on transfer shall lapse.
(e) Certificates for shares of restricted stock issued under this Plan
shall be registered in the name of the director, and shall bear an appropriate
legend referring to the terms, conditions and restrictions applicable to such
award substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of The Crane Co. 2000 Non-Employee Director Stock Compensation
Plan. A copy of such Plan is on file in the offices of Crane Co., 100 First
Stamford Place, Stamford, CT 06902."
(f) Prior to termination of the restrictions on sale and transfer provided
herein, the certificates for the shares awarded pursuant to this Plan will be
held by the Company's Treasurer in custody for the director.
6. Stock Options.
(a) Upon approval of this Plan by the stockholders of the Company, the
persons then serving as non-employee directors shall be granted options to
purchase the number of shares set forth opposite his name on Annex I hereto. At
the conclusion of each Annual Meeting of the Company commencing with the Annual
Meeting in 2000, an Option to purchase 2,000 shares of Common Stock will be
granted automatically to each non-employee director of the Company. A
non-employee director who becomes a member of the Board of Directors after the
Annual Meeting in any year shall be granted an Option to purchase a prorated
number of shares of Common Stock based on the number of full months of service
until the next succeeding Annual Meeting.
(b) Each Option granted under this Plan shall be exercisable in whole or
in part from time to time beginning from the date the Option is granted,
subject to the provision that an Option may not be exercised by the optionee
(i) more than 10 years from the date the Option is granted, or (ii) prior
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<PAGE>
to the expiration of one year from the date the Option is granted; and provided
further that, unless otherwise determined by the Committee, the Option may not
be exercised in excess of 50% of the total shares subject to such Option during
the second year after the date of grant, 75% during the third year, and 100%
thereafter.
(c) The purchase price of each share of Common Stock upon exercise of any
Option granted hereunder shall not be less than 100% of the Fair Market Value
of the Common Stock on the date the Option is granted. The purchase price of
the shares purchased upon the exercise of an Option shall be paid in full at
the time of exercise in cash or in whole or in part by tendering (either
actually or by attestation) shares of Common Stock. The value of each share of
Common Stock delivered in payment of all or part of the purchase price upon the
exercise of an Option shall be the Fair Market Value of the Common Stock on the
date the Option is exercised. Exercise of Options shall also be permitted, if
approved by the Committee, in accordance with a cashless exercise program under
which, if so instructed by an optionee, shares of Common Stock may be issued
directly to the optionee's broker or dealer upon receipt of an irrevocable
written notice of exercise from the optionee.
(d) The Committee, upon such terms and conditions as it shall deem
appropriate, may (but shall not be obligated to) authorize on behalf of the
Company the acceptance of the surrender of the right to exercise an Option or a
portion thereof (but only to the extent and in the amounts that such Option
shall then be exercisable) and the payment by the Company therefor of an amount
equal to the excess of the Fair Market Value on the date of surrender of the
shares of Common Stock covered by such Option or portion thereof over the
aggregate option price of such shares. Such payment shall be made in shares of
Common Stock (valued at such Fair Market Value) or in cash, or partly in cash
and partly in shares of Common Stock, as the Committee shall determine. The
shares of Common Stock covered by any Option or portion thereof, as to which
the right to exercise shall have been so surrendered, shall not again be
available for the purposes of this Plan.
(e) Each Option granted under this Plan shall not be transferable by the
optionee otherwise than by will or the laws of descent and distribution, and
shall be exercisable, during the optionee's lifetime, only by the optionee.
Notwithstanding the foregoing, Options may be transferable, without payment of
consideration, to immediate family members of the optionee or to trusts or
partnerships for the benefit of such family members.
(f) The Company shall have the right to require an optionee to pay to the
Company the cash amount of any taxes which the Company is required to withhold
upon the exercise of an Option granted hereunder, provided that anything
contained herein to the contrary notwithstanding, the Committee may, in
accordance with such rules as it may adopt, accept shares of Common Stock
received in connection with the exercise of the Option being taxed or otherwise
previously acquired in satisfaction of any withholding requirements or up to
the entire tax liability arising from the exercise of such Option.
(g) The Committee, in its sole discretion, shall have the right (but shall
not in any case be obligated), exercisable at any time after the date of grant,
to permit the exercise of any Option prior to the time such Option would
otherwise become exercisable under the terms of the option agreement.
7. Exercise of Options upon Termination of Service.
(a) If an optionee shall retire or shall cease to serve as a director of
the Company by reason of permanent disability or after a Change in Control, all
Options theretofore granted to such optionee, whether or not previously
exercisable, may be exercised in whole or in part, and/or the Committee may
authorize the acceptance of the surrender of the right to exercise such Options
or any portion thereof as provided in Section 6(d) hereof, at any time prior to
the expiration of the term of the Option.
(b) If an optionee shall die while serving as a director of the Company or
after cessation or termination of such service, all Options theretofore granted
to such optionee, whether or not
A-4
<PAGE>
previously exercisable, may be exercised in whole or in part, and/or the
Committee may authorize the acceptance of the surrender of the right to
exercise such Options or any portion thereof as provided in Section 6(d)
hereof, by the estate of such optionee (or by a person who shall have acquired
the right to exercise such Option by bequest or inheritance), at any time prior
to the expiration of the term of the Option.
(c) If an optionee is removed from service as a director by action of the
Board of Directors (other than in connection with a Change in Control), such
optionee may exercise any Option in whole or in part, at any time within 90
days after such removal from service, but only to the extent such Option is
exercisable at the date of termination in accordance with Section 6(b) hereof.
In no event may any Option be exercised after the expiration of the term of the
Option.
8. Adjustments to Reflect Capital Changes.
In the event that there is an increase in the number of issued shares of
the Common Stock by reason of any stock dividend, stock split, recapitalization
or other similar event, the total number of shares available for issuance
hereunder and the number of shares remaining subject to purchase under each
outstanding Option shall be increased and the price per share of such
outstanding Options shall be decreased, in proportion to such increase in
issued shares. Conversely, in case the issued shares of Common Stock shall be
combined into a smaller number of shares, the total number of shares available
for issuance hereunder and the number of shares remaining subject to purchase
under each outstanding Option shall be decreased and the price per share of
such outstanding Options shall be increased, in proportion to such decrease in
issued shares. In the event of any merger, consolidation, reorganization or
liquidation in part or in whole, the Committee may make such adjustment in the
shares available for issuance hereunder and the shares subject to outstanding
Options and the price thereof as the Committee, in its sole discretion, deems
appropriate. In the event of an exchange of Common Stock, or other securities
of the Company convertible into Common Stock, for the stock or securities of
another corporation, the Committee may, in its sole discretion, equitably
substitute such new stock or securities for a portion or all of the shares of
Common Stock subject to outstanding Options.
9. Term, Amendment and Termination.
(a) This Plan shall be submitted to the stockholders of the Company at the
Annual Meeting in 2000 and, if approved by the stockholders, shall become
effective April 10, 2000. No shares shall be awarded nor Options granted under
this Plan after May 31, 2010.
(b) The Board of Directors of the Company may at any time amend, rescind
or terminate this Plan, as it shall deem advisable; provided, however, that (i)
no change may be made in awards theretofore granted under this Plan which would
impair participants' rights without their consent, and (ii) no amendment to
this Plan shall be made without approval of the Company's stockholders if the
effect of such amendment would be to (a) increase the number of shares reserved
for issuance hereunder; (b) materially increase the benefits accruing to
participants under this Plan; (c) materially change the requirements for
eligibility under Section 3 hereof; (d) materially modify the method for
determining the number of shares awarded under Section 4 hereof; or (e)
increase the number of Options to be granted under Section 6 hereof or the
minimum purchase price thereof; except that any such increase or modification
that results from adjustments authorized by Section 8 hereof shall not require
such approval.
10. General Provisions.
(a) Each Option granted under this Plan shall be evidenced by a written
agreement containing such terms and conditions as the Committee may require,
and no person shall have any rights under any Option granted under this Plan
unless and until such agreement has been executed and delivered by the optionee
and the Company.
(b) In the event of any conflict between the terms of this Plan and any
provision of any Option agreement, the terms of this Plan shall be controlling.
A-5
<PAGE>
(c) Neither this Plan nor any action taken hereunder shall be construed as
giving any director any right to serve as a director or in any other capacity
for the Company or any of its subsidiaries.
(d) The obligation of the Company to sell and deliver shares of Common
Stock upon exercise of Options granted hereunder shall be subject to, as deemed
necessary or appropriate by counsel for the Company, (i) all applicable laws,
rules and regulations and such approvals by any governmental agencies as may be
required, including, without limitation, the effectiveness of a registration
statement under the Securities Act of 1933, and (ii) the condition that such
shares shall have been duly listed on such stock exchanges as the Common Stock
is then listed.
(e) Anything in this Plan to the contrary notwithstanding, it is expressly
agreed and understood that if any one or more provisions of this Plan shall be
illegal or invalid such illegality or invalidity shall not invalidate this Plan
or any other provisions thereof, but this Plan shall be effective in all
respects as though the illegal or invalid provisions had not been included.
(f) All determinations made and actions taken pursuant to this Plan shall
be governed by the laws of the State of Delaware, other than the conflict of
laws provisions thereof.
ANNEX I
<TABLE>
<CAPTION>
NAME OF NON-EMPLOYEE DIRECTOR NUMBER OF SHARES FOR INITIAL OPTION GRANT
- ------------------------------- ------------------------------------------
<S> <C>
E. T. Bigelow, Jr. ............ 21,900
R. S. Forte ................... 18,200
D. R. Gardner ................. 20,400
J. J. Lee ..................... 3,200
W. E. Lipner .................. 1,500
D. C. Minton .................. 37,500
C. J. Queenan, Jr. ............ 41,900
J. L. L. Tullis ............... 2,800
</TABLE>
A-6
<PAGE>
CRANE CO.
ANNUAL MEETING OF SHAREHOLDERS APRIL 10, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P R O X Y
The undersigned does hereby appoint and constitute R. S. Evans and A.I. duPont
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 11, 2000 at the Annual
Meeting of Shareholders of Crane Co. to be held in the Grove II Meeting Room at
The Westin Stamford Hotel, One First Stamford Place, Stamford, Connecticut on
Monday, April 10, 2000 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 OR INTERNET WEB SITE ON THE REVERSE SIDE.
- ----------------
SEE REVERSE SIDE
- ----------------
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
-----
CRANE
-----
INFORMATION SERVICES FOR SHAREHOLDERS
We have designed a new web site and shareholder information hotline to provide
you with quick and easy access to a wide range of timely and useful financial
and corporate information about Crane Co. On our web site you will find detailed
information about the company, its component businesses, and stock performance.
It is just a click away at:
www.craneco.com
All information, including annual reports, SEC filings, news releases and more,
can be bookmarked, printed out or downloaded. You can also order a hard copy by
clicking "Info Request".
If you do not have access to the Internet, you may call our Shareholder Direct
toll-free line at:
1-888-CRANE-CR
This service is available 24 hours a day, 7 days a week. You can immediately
listen to recorded earnings and news releases or request copies by fax or
mail-all through the convenience of your telephone.
We think electronic delivery is the fastest, most cost-effective way to
disseminate information. Accordingly, we no longer maintain mailing lists for
copies of reports and releases. It is part of our company-wide effort to reduce
costs and increase efficiency, and thereby contribute to our goal of building
shareholder value.
<PAGE>
0309
[X] Please mark your 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 proposals 2 and 3.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES
AND FOR PROPOSALS 2 AND 3.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of [ ] [ ]
Directors. Nominees: 01. R.S. Evans
02. E.C. Fast
03. D.R. Gardner
For, except vote withheld from the following nominee(s): 04. D.C. Minton
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of Deloitte & Touche [ ] [ ] [ ]
LLP as independent auditors
for the Company for 2000.
3. Approval of 2000 Non- [ ] [ ] [ ]
Employee Director Stock
Compensation Plan.
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 attorney, executor, administrator, trustee or guardian, please
give full title as such.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
-----
CRANE
-----
You may also vote the shares held in this account by telephone or via the
Internet. 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 by phone or via the Internet, there is no need for you to mail back your
proxy card.
To vote electronically, please use the following directions:
o HAVE YOUR PROXY CARD AND SOCIAL SECURITY NUMBER AVAILABLE.
o BE READY TO ENTER THE PIN NUMBER PRINTED ON THIS CARD JUST BELOW THE
PERFORATION.
Proxy Vote-By-Phone
o DIAL 1-877-PRX-VOTE (1-877-779-8683) 24 HOURS A DAY, 7 DAYS A WEEK.
Proxy Vote-By-Internet
o LOG ON TO THE INTERNET AND GO TO THE WEB SITE HTTP://WWW.EPROXYVOTE.COM/CR
Both voting systems preserve the confidentiality of your vote and will confirm
your voting instructions with you. You may also change your selections on any or
all of the proposals to be voted.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
