<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
DRESSER INDUSTRIES, INC.
(Name of Registrant as Specified In Its Charter)
DRESSER INDUSTRIES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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:
------------------------------------------------------------------------
<PAGE>
DRESSER INDUSTRIES, INC.
2001 ROSS AVENUE
DALLAS, TEXAS 75201
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 17, 1994
---------------------
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Dresser Industries, Inc., a Delaware
corporation, will be held at the Pavillion at Trammell Crow Center, 2001 Ross
Avenue, Dallas, Texas on Thursday, March 17, 1994, at 10:00 a.m., for the
following purposes:
1. To elect thirteen Directors to serve for the ensuing year or until their
successors are elected and qualified.
2. To transact any other business as properly may come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business January 25, 1994, are
entitled to notice of and to vote at the meeting or any adjournment thereof.
We hope you will be represented at the meeting by signing and returning the
enclosed proxy card in the accompanying envelope as promptly as possible,
whether or not you expect to be present in person. Your vote is important -- as
is the vote of every shareholder -- and the Board of Directors of the Company
appreciates the cooperation of shareholders in directing proxies to vote at the
meeting.
By order of the Board of Directors
REBECCA R. MORRIS
VICE PRESIDENT -- CORPORATE COUNSEL
AND SECRETARY
February 7, 1994
<PAGE>
DRESSER INDUSTRIES, INC.
2001 ROSS AVENUE
DALLAS, TEXAS 75201
FEBRUARY 7, 1994
------------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited on behalf of the Board of Directors of
Dresser Industries, Inc. (the "Company"), for use at the Annual Meeting of
Shareholders to be held Thursday, March 17, 1994, at 10:00 a.m. at the Pavillion
at Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas and at any and all
adjournments of the meeting.
OUTSTANDING SHARES AND VOTING RIGHTS
The close of business January 25, 1994, is the record date for the
determination of shareholders entitled to notice of and to vote at the meeting.
At January 25, 1994, the Company had outstanding and entitled to vote at the
meeting 175,283,941 shares of Common Stock. Each share entitles the holder to
one vote.
Any shareholder giving a proxy for the meeting may revoke it prior to the
voting thereof on any matter (without affecting, however, any vote taken prior
to revocation) by written notice to the Secretary of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The Company knows of no person or group believed to own beneficially more
than 5% of any class of the Company's outstanding voting securities.
The following table states the number of shares of Common Stock of the
Company owned by each current Director and nominee, each of the executive
officers named in the Summary Compensation Table, and by all Directors and
executive officers as a group as of January 3, 1994.
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The number of shares beneficially owned by all Directors and executive officers
as a group represented less than 1% of the outstanding shares. Except as
otherwise indicated, each individual named has sole investment and voting power
with respect to the securities shown.
<TABLE>
<CAPTION>
NAMES NUMBER OF SHARES
- ------------------------------------------------ ---------------------------------
<S> <C> <C>
William E. Bradford............................. 97,615 (Note A)
James L. Bryan.................................. 70,029 (Note A)
Samuel B. Casey, Jr............................. 6,022
Lawrence S. Eagleburger......................... 870
Rawles Fulgham.................................. 16,000
John Gavin...................................... 8,822
Ray L. Hunt..................................... 144,025 (Note B)
J. Landis Martin................................ 201,911 (Note C)
John J. Murphy.................................. 321,388 (Note A)
W. George Nancarrow............................. 9,916
Lionel H. Olmer................................. 7,210
Jay A. Precourt................................. 2,000 (Note C)
A. Kenneth Pye.................................. 11,664
Bill D. St. John................................ 121,880 (Note A)
Donald C. Vaughn................................ 57,865 (Note A)
Richard W. Vieser............................... 4,754
All Directors, Nominees and executive officers
as a group (23 persons)........................ 1,239,297 (Notes A and D)
</TABLE>
The above information does not include contingent stock units credited to
accounts in the Company's Deferred Compensation Plan which are considered
beneficially owned "derivative securities" for purposes of Section 16 of the
Securities Exchange Act of 1934 but not considered beneficially owned for
purposes of this proxy statement. At January 15, 1993 a total of 4,012, 72,759,
88,974 and 17,820 stock units were credited to the accounts of Messrs. Bradford,
Murphy, St. John and Vaughn, respectively, and 216,641 stock units were credited
to the accounts of all executive officers as a group.
NOTE A: Shares shown include stock options issued under the Company's 1982
Stock Option Plan and 1992 Stock Compensation Plan which are exercisable on or
within sixty days after January 3, 1994 to purchase a number of shares of the
Company's Common Stock which together with related restricted incentive stock
awards under the 1989 Restricted Incentive Stock Plan and 1992 Stock
Compensation Plan total 53,887; 59,799; 190,885; 82,881; and 57,115 for Messrs.
Bradford, Bryan, Murphy, St. John and Vaughn, respectively, and 584,439 for all
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Directors and executive officers as a group. Under the Rules of the Securities
and Exchange Commission, such shares are considered to be beneficially owned for
the purpose of this Proxy Statement. For the purpose of calculating percentage
ownership, such shares were also considered to be outstanding.
NOTE B: Shares shown include 77,427 shares, in which Mr. Hunt disclaims
beneficial interest, owned by trusts for the benefit of his children. Mr. Hunt
and his wife serve as members of an advisory board for each trust.
NOTE C: Shares shown are the number acquired upon the conversion of Baroid
common stock into 0.4 shares of Common Stock of the Company at the closing on
January 21, 1994, of the merger of BCD Acquisition Corporation, a wholly-owned
subsidiary of the Company, with Baroid Corporation (the "Merger"). Shares
reflected for Mr. Martin are owned directly or indirectly by him. Shares
reflected for Mr. Precourt include 1,600 stock options which are exercisable on
or within 60 days after January 21, 1994.
NOTE D: Mr. Paul M. Bryant, Vice President -- Human Resources of the
Company, is Trustee of the Company's Stock Purchase Plan which, as of January
25, 1994, owned of record 969,515 shares of Common Stock of the Company. Mr.
Bryant disclaims any beneficial ownership of the shares held by him as Trustee
for the participants of the Stock Purchase Plan. Under terms of the Plan, the
Trustee has discretionary voting authority as to shares allocated to accounts of
Participants from whom he does not timely receive voting instructions.
ELECTION OF DIRECTORS
At the meeting, thirteen Directors are to be elected, each to hold office
for one year or until a successor is elected and qualified. Unless otherwise
instructed, it is intended that the shares represented by the enclosed proxy
will be voted for the election of the thirteen nominees named below. All
nominees were previously elected by the shareholders except Messrs. Martin and
Precourt who were elected by the Board of Directors effective upon the closing
of the Merger on January 21, 1994 pursuant to an amendment of the Company's
By-Laws, subject to the consummation of the Merger, adopted by the Board of
Directors increasing the number of members of the Board from twelve to fourteen.
Under the Board's retirement policy for Directors, Mr. Nancarrow, who recently
became 70 years of age, will not stand for re-election as a Director of the
Company. Accordingly, the Company's By-Laws have been further amended, effective
with the election of Directors at the Annual Meeting of Shareholders, to reduce
the number of members of the Board from fourteen to thirteen. The Board of
Directors has no reason to believe that any nominee will be unable to serve if
elected. In the event that any nominee shall become
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<PAGE>
unavailable for election, it is intended that such shares will be voted for the
election of a substitute nominee selected by the persons named in the enclosed
proxy unless the Board should determine to further reduce the number of
Directors pursuant to the By-Laws of the Company.
The affirmative vote of a plurality of the shares present in person or
represented by proxy at the meeting and entitled to vote is required for the
election of Directors. Votes will be tabulated by inspectors of election
appointed by the Company's Board of Directors. An abstention from voting will be
tabulated as a vote withheld on the election, and will be included in computing
the number of shares present for purposes of determining the presence of a
quorum for the shareholders meeting and whether nominees have received the vote
of a plurality of shares present at the meeting.
The following includes certain information concerning the nominees furnished
by them to the Company.
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE DURING PAST 5 YEARS AND ELECTED
NAME (AGE) OTHER INFORMATION DIRECTOR
- ----------------------------------- ------------------------------------------------------------- -----------
<S> <C> <C>
William E. Bradford (59) President of the Company since March 1992; President and 1992
Chief Executive Officer of Dresser-Rand Company, February
1988 - March 1992; Senior Vice President - Operations of the
Company, March 1984 - March 1992. Director, Diamond
Shamrock, Inc.; and Oryx Energy Company.
Samuel B. Casey, Jr. (66) Chairman of the Board, Dixon Ticonderoga Company, 1983
manufacturer and marketer of writing products, Vero Beach,
Florida, October 1985 until retirement February 1989.
Director, Dixon Ticonderoga Company; First America
Corporation, INDRESCO Inc.; and Northbrook, Inc., a Division
of JMB, Inc.
Lawrence S. Eagleburger (63) Senior Foreign Policy Advisor, Baker, Worthington, Crossley, 1993
Stansberry & Woolf since January 1993; United States
Secretary of State, Department of State, December 1992 -
January 1993; Acting Secretary of State, Department of
State, August 1992 - December 1992; Deputy Secretary of
State, Department of State, February 1989 - August
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE DURING PAST 5 YEARS AND ELECTED
NAME (AGE) OTHER INFORMATION DIRECTOR
- ----------------------------------- ------------------------------------------------------------- -----------
1992; President, Kissinger Associates, New York, New York,
provider of strategic consulting services to international
companies, September 1984 - January 1989. Director,
Jefferson Bankshares; Phillips Petroleum Company; Universal
Corporation.
<S> <C> <C>
Rawles Fulgham (66) Senior Advisor, Merrill Lynch & Co., Inc., financial 1975
services, Dallas, Texas, since September 1989; Executive
Director, Merrill Lynch Private Capital, Inc., private
financings, Dallas, Texas, August 1982 - September 1989.
Director, BancTec, Inc.; INDRESCO Inc.; NCH Corporation; and
Republic Financial Services, Inc.
John A. Gavin (62) For more than five years, Chairman of the Board and 1986
President, Gamma Services International, venture capital &
international consulting firm, Los Angeles, California;
Chairman, The Century Council, a nonprofit organization,
since June 1990; President, Univisa Satellite
Communications, a Spanish language international television
network, Los Angeles, California, May 1987 - January 1990.
Director, Atlantic Richfield Company; and Pinkerton, Inc..
Ray L. Hunt (50) For more than five years, Chairman of the Board and Chief 1984
Executive Officer, Hunt Oil Company, oil and gas exploration
and development, Dallas, Texas; Chairman of the Board, Chief
Executive Officer, and President, Hunt Consolidated, Inc.,
Dallas, Texas; Chairman of the Board, Chief Executive
Officer and President, RRH Corporation, Dallas, Texas.
Director, Brinker International, Inc.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE DURING PAST 5 YEARS AND ELECTED
NAME (AGE) OTHER INFORMATION DIRECTOR
- ----------------------------------- ------------------------------------------------------------- -----------
<S> <C> <C>
J. Landis Martin (48) For more than five years, President and Chief Executive 1994
Officer of NL Industries, Inc., a manufacturer and marketer
of titanium dioxide pigments and specialty chemicals;
Chairman of the Board of Baroid Corporation, a wholly owned
subsidiary of the Company effective January 21, 1994 (and
its predecessor) August 1990 - January 1994; Chief Executive
Officer of Baroid Corporation December 1988 - January 1994;
Chairman of Tremont Corporation, an integrated producer of
titanium metals, since August 1990 and Chief Executive
Officer since 1988. Director, NL Industries, Inc.; and
Tremont Corporation.
John J. Murphy (62) Chairman of the Board and Chief Executive Officer of the 1982
Company since August 1983; President of the Company, August
1982 - March 1992. Director, PepsiCo Inc.; Kerr-McGee
Corporation; and NationsBank Corporation.
Lionel H. Olmer (59) Partner, Paul, Weiss, Rifkind, Wharton & Garrison, law firm, 1986
Washington, D.C., since June 1985.
Jay A. Precourt (56) For more than five years, Vice Chairman and Chief Executive 1994
Officer of Tejas Gas Corporation, a natural gas pipeline
company; until December 1988, President of the Energy
Related Group and Senior Executive Vice President of
Hamilton Oil Corporation. Director, Apache Corporation,
Founders Funds, Inc.; Tejas Gas Corporation.
A. Kenneth Pye (62) President, Southern Methodist University, Dallas, Texas, 1993
since August 1987. Director, J. C. Penney Company, Inc.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE DURING PAST 5 YEARS AND ELECTED
NAME (AGE) OTHER INFORMATION DIRECTOR
- ----------------------------------- ------------------------------------------------------------- -----------
<S> <C> <C>
Bill D. St. John (62) Vice Chairman of the Company since March 1992; Chief 1984
Financial Officer since October 1993; Executive Vice
President - Administration of the Company, November 1982 -
March 1992.
Richard W. Vieser (66) Chairman of the Board, President and Chief Executive Officer, 1989
FL Industries, Inc., electrical equipment and high
efficiency industrial and commercial heating and cooling
equipment, Livingston, New Jersey, June 1985 until
retirement November 1989; Chairman of the Board, President
and Chief Executive Officer, Lear Siegler, Inc., Livingston,
New Jersey, March 1987 until retirement November 1989;
Chairman and Chief Executive Officer, FL Aerospace Corp.,
Livingston, New Jersey, September 1986 until retirement
November 1989. Director, Ceridian Corporation (formerly
Control Data Corporation); INDRESCO Inc.; Sybron
Corporation; and Varian Associates, Inc.
</TABLE>
ADDITIONAL INFORMATION RELATING TO THE BOARD OF DIRECTORS
The Company has standing Audit and Finance, Executive Compensation,
Executive and Nominating Committees of the Board of Directors. The Audit and
Finance Committee consists of Messrs. Fulgham (Chairman), Casey, Eagleburger,
Gavin, Hunt, Martin, Nancarrow, Olmer, Precourt, Pye and Vieser. The functions
of the Committee, which held two meetings during fiscal 1993, are to recommend
to the Board of Directors independent accountants, whose duty it is to audit the
books and accounts of the Company and its subsidiaries for the fiscal year for
which they are appointed, and review and approve the scope of the annual audit
activities of the independent accountants and the Company's internal
accountants.
The Executive Compensation Committee is composed of Messrs. Casey
(Chairman), Eagleburger, Fulgham, Gavin, Hunt, Martin, Nancarrow, Olmer,
Precourt, Pye and Vieser. The Committee, which held four meetings during fiscal
1993, and acted on one occasion by unanimous written consent, reviews and
recommends to the Board salaries of officers, reviews the key employees of the
Company and recommends to the Board those to be granted options and related
7
<PAGE>
restricted incentive stock awards under the Company's 1992 Stock Compensation
Plan and administers the Company's Stock Compensation, Stock Option and
Restricted Incentive Stock Plans, the Deferred Compensation Plans, the
Performance Stock Unit Plan for officers and headquarters staff, the Incentive
Stock Unit Plan for operating unit executives, the Incentive Compensation Plan
for Officers and Headquarters Staff of the Company and the Long Term Performance
and Annual Incentive Plans for Selected Employees of The M. W. Kellogg Company.
The Executive Committee, consisting of Messrs. Murphy (Chairman), Bradford,
Fulgham, Hunt, Nancarrow and St. John, exercises, during the intervals between
meetings of the Board of Directors, all powers, except to the extent limited by
law, of the Board of Directors. The Executive Committee acted on two occasions
by unanimous written consent during fiscal 1993.
The Nominating Committee, consisting of Messrs. Hunt (Chairman), Casey,
Fulgham, Nancarrow, Olmer, and (as a non-voting member) Murphy, searches for and
recommends candidates for election as a Director. It will also consider nominees
recommended by shareholders for election as Director. Any such recommendation,
together with the nominee's qualifications and consent to be considered as a
nominee, should be sent to the Secretary of the Company. The Nominating
Committee held one meeting during fiscal 1993.
During fiscal 1993, there were twelve meetings of the Board of Directors.
Attendance at the Board and Committee meetings averaged approximately 93% in
1993, and each member of the Board of Directors attended 75% or more of the
aggregate number of the meetings of the Board and of any Committee of which he
is a member. A Director who is an employee of the Company receives no fees or
remuneration, as such, for services as a member of the Board of Directors or any
Committee of the Board. During fiscal 1993, each Director of the Company who was
not an employee received an annual retainer equal to $23,000 ($28,000 beginning
August 1, 1993) for Board membership, plus $2,500 for each Committee membership,
plus $1,000 for service as Chairman of a Committee, plus $1,000 ($1,250
beginning August 1, 1993) for each day on which one or more meetings of the
Board of Directors or any Committee thereof was attended. A fee of $350 was paid
for meetings attended by telephone conference. In addition, each non-employee
Director may be paid a fee of $1,000 for each day on which he is engaged in
Company business, other than attendance at meetings of the Board of Directors or
any Committee thereof, at the request of the Chairman of the Board. Directors
may elect to defer payment of all or a portion of the foregoing fees through a
deferred cash or common stock equivalence account.
In addition, the Company's 1989 Director Retirement Plan provides shares of
the Company's common stock in lieu of retirement benefits to members of the
Company's Board of Directors who are not also employees. Awards under the Plan
consist of grants of shares of the Company's Common Stock in August of each
odd-numbered year approximately equal in value to
8
<PAGE>
60% of the annual retainer payable for services as a Director at the end of the
period for which the award is made. The Plan was amended in July 1993 to allow
Directors to elect to defer awards otherwise payable under the Plan. In fiscal
1993, a total of 12,981 shares were awarded under the Plan, including 1,527 to
each of Messrs. Casey, Fulgham, Gavin, Hunt, Nancarrow, Olmer and Vieser.
Messrs. Eagleburger and Pye and Mrs. Lillian Edwards, a Director of the Company
until March 1992, were each awarded 764 shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the merger of BCD Acquisition Corporation, a wholly-owned
subsidiary of the company, with Baroid Corporation, Mr. Martin received
$1,290,000 from Baroid under an advisory agreement among Baroid, Mr. Martin and
other Baroid executives, for services in connection with the merger; and,
pursuant to a severance agreement, $1,300,000 in cash, shares of Baroid valued
at approximately $616,000 in exchange for the difference in value between the
exercise price of Mr. Martin's unvested Baroid stock options and the January 20,
1994, average of the highest and lowest sales prices of Baroid Common Stock; and
certain other payments and a continuation of other benefits valued at
approximately $347,000 upon termination of his employment from Baroid. If any
amount paid to Mr. Martin under the advisory agreement subjects him to federal
income tax in respect of such amount, Baroid has agreed to provide a
commercially reasonable defense to Mr. Martin and to indemnify him for up to 70%
of the excise tax, interest and penalties, plus any federal income or excise
taxes imposed because of the indemnification.
On July 30, 1993, Baroid acquired from Tremont Corporation ("Tremont"), of
which Mr. Martin is a director and executive officer, all of the outstanding
stock of Bentonite Corporation, a producer of Wyoming bentonite, for $20 million
in cash. The Board of Directors of Baroid determined the purchase price in this
transaction following negotiations with Tremont, with Mr. Martin not
participating in such determination or negotiations.
Baroid has outstanding approximately $2.4 million and $9.1 million in
letters of credit under a bank facility which was established in connection with
certain insurance relationships of NL Industries, Inc. ("NL"), of which Mr.
Martin is a director and executive officer, and Tremont, respectively. NL and
Tremont are obligated to indemnify Baroid for any losses or expenses in respect
of these letters of credit.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1993 members of the Executive Compensation Committee of the
Company were Messrs. Casey (Chairman), Eagleburger, Fulgham, Gavin, Hunt,
Nancarrow, Olmer, Pye and Vieser. Mr. Olmer is a partner in the law firm of
Paul, Weiss, Rifkind, Wharton and Garrison, one of a number of firms which the
Company engaged in the past year for various legal services.
9
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any other matter to be presented for
action at the meeting. However, if any other matter is properly presented, it is
the intention of the persons named in the enclosed form of proxy to vote in
accordance with their judgment on such matter.
INFORMATION ON INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has unanimously reappointed the firm
of Price Waterhouse as independent accountants for the 1994 fiscal year. A
representative of Price Waterhouse will be present at the Annual Meeting to
answer appropriate questions from the shareholders and will be afforded an
opportunity to make any statement on behalf of Price Waterhouse that he may
desire.
OTHER INFORMATION FURNISHED PURSUANT TO REGULATIONS
OF SECURITIES AND EXCHANGE COMMISSION
EXPENSE OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition,
the Company will reimburse brokers or other persons holding stock in their names
or in the names of their nominees for charges and expenses in forwarding proxies
and proxy material to the beneficial owners. Solicitations may further be made
by officers and regular employees of the Company, without additional
compensation, by use of the mails, telephone, telegraph or by personal calls.
The Company has retained D. F. King & Co., Inc., New York, New York, to assist
in the solicitation at a cost of $9,500 (plus reasonable out-of-pocket
expenses).
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1995 Annual Meeting of Shareholders of the
Company must be received no later than October 7, 1994, at the Company's
principal executive office, 2001 Ross Avenue, Dallas, Texas 75201, directed to
the attention of the Secretary.
EXECUTIVE COMPENSATION
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Executive Compensation Committee of the Board of Directors. During 1993 the
Committee was increased from
10
<PAGE>
seven to nine independent, nonemployee directors. The Committee is committed to
a strong, positive link between business, performance, and strategic goals, and
compensation and benefit programs.
OVERALL EXECUTIVE COMPENSATION POLICY
Our compensation policy is designed to support the overall objective of
enhancing value for our shareholders by:
- Attracting, developing, rewarding, and retaining highly qualified and
productive individuals.
- Directly relating compensation to both Company and individual performance.
- Ensuring compensation levels that are externally competitive and
internally equitable.
- Encouraging executive stock ownership to enhance a mutuality of interest
with other shareholders.
The Committee considers all elements of compensation when determining
individual components of pay. The Committee relies in part on recommendations
from the Chairman, Chief Executive Officer, regarding compensation levels for
executive officers excluding himself. Following is a description of the elements
of Dresser executive compensation and how each relates to the objectives and
policy outlined above.
BASE SALARY
The Committee reviews each executive officer's salary annually. In
determining appropriate salary levels, we consider level and scope of
responsibility, experience, a subjective evaluation of overall Company
performance, individual performance, internal equity, as well as pay practices
of other companies relating to executives of similar responsibility. No specific
weightings are assigned to these criteria.
By design, we strive to pay executives salaries in line with competitive
market levels. In defining the competitive market, we include companies in the
energy services industry as well as major equipment producers with an average
size comparable to the Company. These companies are representative of those with
whom the Company competes for executive talent, and are a broader group of
companies than those comprising the S & P Oil Well Equipment & Services Index
included in the Performance Graph. To provide an additional point of reference,
the Committee also reviews available survey data on general industry practices.
We review the size-adjusted median (50th percentile) of the competitive market,
which serves as a reference point in determining base salary levels.
11
<PAGE>
We believe maximum performance can be encouraged through the use of
appropriate incentive programs. Incentive programs for executives are as
follows:
ANNUAL INCENTIVES
The annual incentive plan emphasizes a positive link between enhanced
shareholder value and incentive compensation. Incentive payments under the plan
are based solely on achievement of specified levels of Return on Equity, with a
threshold level below which no incentives are paid. The Committee believes
incentive opportunities are commensurate with the performance required to
achieve increasing levels of Return on Equity. Target incentive opportunities
are not established for each individual executive. Rather, incentive
opportunities, as an increasing percentage of base salary directly related to
the level of Return on Equity, are the same for all participants in the plan in
order to foster a team based approach. For 1993, the level of Return on Equity
led to incentive payments amounting to 59% of base salaries. In addition, in
1993 the Committee made special incentive awards to three executives on the
basis of a subjective evaluation of their individual performance.
Because Return on Equity is used to measure performance, total direct
compensation (base salary plus annual incentive) is positively correlated with
the performance of the Company. The named executives, as a group, excluding Mr.
Murphy whose compensation is discussed later, fall within the median base salary
and total direct compensation ranges of the competitive market.
LONG-TERM INCENTIVES
The Company's long-term compensation philosophy is that long-term incentives
should be related to improvement in long-term shareholder value, thereby
creating a mutuality of interest with shareholders. In furtherance of this
objective, the Company awards to its executive officers Performance Stock Units
and stock options usually coupled with restricted stock awards. The objective is
to provide a competitive total long-term incentive opportunity, utilizing the
market survey data previously described.
STOCK OPTIONS
Stock options encourage and reward effective management that results in
long-term corporate financial success, as measured by stock price appreciation.
The Stock Option Program is compatible with shareholder interests and
encourages executives to hold a long term equity interest. For 1993, target
stock option grant levels were established subjectively based on assessment of
each executive's scope of responsibilities and level within the organization.
Previously granted outstanding options were deducted from target grant levels to
determine the 1993 stock option grants. The initial exercise price of the 1993
grants was the average of the high and low trading prices of the Company's
common stock on the
12
<PAGE>
New York Stock Exchange on the date of grant. The exercise price will increase
on each anniversary of the date of grant by 7.5% of the option price in effect
during the immediately preceding year minus $.60, approximating 30 year Treasury
Bond yields (decreased by the Company dividend rate) at time of grant. Such
options are exercisable in three equal installments beginning six months after
date of grant. To encourage increased equity holdings, the Committee's current
guidelines call for stock option awards to be granted each January equal to the
number of options exercised in the preceding year if the executive who paid the
exercise price in cash continues to hold at least one-half of the shares
received. If previously-owned shares are used to pay the exercise price, one
hundred percent of the shares must be held to be eligible for such grants. The
initial exercise price of such grants will be the average of the high and low
trading prices of the Company's common stock on the New York Stock Exchange on
the date of grant and will increase annually in a manner similar to the 1993
grants. Under terms of the Program, the Committee has full and sole authority to
change the guidelines for grant of stock options at any time subject only to the
express provisions of the Program.
RESTRICTED INCENTIVE STOCK AWARDS
To further encourage executive officers to exercise stock options and hold
the stock following exercise, stock option grants to executive officers usually
are made in tandem with restricted incentive stock awards. Recipients of
Restricted Incentive Stock awards are issued, upon exercise of the related
option, one share of restricted stock for every five-option shares exercised
which the Committee believes is an appropriate inducement for promoting enhanced
equity interest by executives. Provided the related option shares are held on
that date, restrictions on Restricted Incentive Stock lapse on the third
anniversary of the date of issue or, if earlier, upon termination of employment
by reason of death, disability or approved retirement. If the related option
shares are sold or otherwise transferred prior to lapse of restrictions, the
Restricted Incentive Stock is forfeited.
PERFORMANCE STOCK UNITS
This program is intended to reward executives when the Company attains
preset goals over a period of four years, thus encouraging and rewarding long
term planning and performance. Such awards are made every second year. The
objective for the four-year period ended October 31, 1993 was to achieve net
after tax earnings which average no less than 10% Return on Equity. The
objectives for the four-year periods ending October 31, 1995 and 1997 are to
achieve, respectively, an average of not less than 12.5% and 15% Return on
Equity. Performance Stock Unit Awards are subjectively based upon each
individual executive's responsibilities and level within the organization. Each
unit has a maximum value based on the value of the Company's Common Stock at the
beginning of the award cycle. Payment is made only if the objective is met
13
<PAGE>
and is correspondingly reduced if the value of the Company's Common Stock is
lower at the end than at the beginning of the award cycle. In addition, earned
awards are paid in installments, 50% at the end of the cycle and 50% one year
later, subject to continued employment, except in cases of death, disability, or
approved termination of employment, in an effort to retain executives. In fiscal
1993 payments were made representing the remaining one-half of awards earned for
the four year cycle ended October 31, 1991. For the four year cycle ending
October 31, 1993, the performance criteria was not met, therefore no long term
incentive payments will be made for the cycle.
In lieu of annual incentive and Performance Stock Unit awards referred to
above, one executive officer participates in plans of The M.W. Kellogg Company
intended to encourage and reward enhanced net earnings. The annual incentive
plan provides for an award directly related to the level of net earnings of M.W.
Kellogg as defined by the plan. An additional amount directly related to net
earnings is deferred. The deferred award also is in lieu of normal pension plan
benefits.
RATIONALE FOR CEO COMPENSATION
Mr. Murphy has been Chairman and CEO of Dresser since 1983. His compensation
package has been designed to encourage short and long-term performance in line
with the interests of our shareholders. A substantial portion of his
compensation is at risk, in the form of performance bonuses, stock options, and
restricted stock awards. He is a participant in the incentive plans described
above.
Mr. Murphy's salary was increased $25,000 to $925,000 effective November 1,
1992, and is in the upper quartile of the competitive market. The factors which
the Committee considered in determining Mr. Murphy's base salary for fiscal 1993
were his scope of responsibility, experience and individual performance, a
subjective evaluation of overall Company performance, and pay practices of other
companies relating to executives of similar responsibility. No specific
weightings are assigned to these criteria. The annual incentive paid to Mr.
Murphy for fiscal year 1993, determined as explained above, was $545,750, which
was equivalent to 59% of his base salary. Mr. Murphy's total direct compensation
(base salary plus bonus) is in the third quartile of the competitive market for
fiscal 1993.
In fiscal 1993 Mr. Murphy received a payment equal in value to $272,258,
under the Performance Stock Unit Plan, which was paid in combination of stock
and cash (in the amount of required tax withholding) representing the remaining
one-half of the payment earned for the Company's achieving the objective of 10%
average annual Return on Equity for fiscal years 1988 through 1991.
14
<PAGE>
In 1993 a target stock option grant level of 250,000 was established for Mr.
Murphy's position, and he was granted options to purchase 131,000 shares of
common stock utilizing the same criteria used to determine grants to other
executives.
POLICY REGARDING SECTION 162(M) OF THE INTERNAL REVENUE CODE
Recently enacted Section 162(m) of the Internal Revenue Code generally
limits the corporate deduction to one million dollars for compensation paid to a
person who on the last day of fiscal years beginning on or after January 1, 1994
is either the Chief Executive Officer or among the four most highly compensated
officers other than the Chief Executive Officer, except for qualified
performance-based compensation. Section 162(m) will be applicable to Dresser for
the Company's 1995 fiscal year beginning November 1, 1994. The Stock Option
Program and the Performance Stock Unit Program currently qualify as
performance-based compensation under IRS transition rules. The Incentive
Compensation Plan for Officers and Headquarters Staff, The M.W. Kellogg Company
Annual Incentive Plan and The M.W. Kellogg Company Long-Term Performance Plan
are based on performance measures of Dresser and The M.W. Kellogg Company,
respectively, but do not qualify as performance-based under proposed tax
regulations. Prior to release of the proposed regulations, the Committee
requested a comprehensive review of the Company's compensation plans in fiscal
1994. Following completion of the review, the Committee will take such action as
it deems appropriate to qualify compensation paid by the Company as
performance-based to the extent practicable.
EXECUTIVE COMPENSATION COMMITTEE
<TABLE>
<S> <C>
Samuel B. Casey W. George Nancarrow
Lawrence S. Eagleburger Lionel H. Olmer
Rawles Fulgham A. Kenneth Pye
John Gavin Richard W. Vieser
Ray L. Hunt
</TABLE>
The Board Compensation Committee Report on Executive Compensation 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 this information by reference, and shall not otherwise
be deemed filed under such Acts.
15
<PAGE>
SUMMARY COMPENSATION TABLE
The following sets forth information concerning the compensation of the
Company's Chief Executive Officer and each of the other four most highly
compensated executive officers of the Company at the end of the last completed
fiscal year. No information is given as to any person for any fiscal year during
which such person was not an executive officer of the Company.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION
--------------------------------- AWARDS
OTHER ---------------------- PAYOUTS
ANNUAL RESTRICTED SECURITIES ---------
COMPEN- STOCK UNDERLYING LONG TERM ALL OTHER
NAME AND SALARY SATION AWARDS OPTIONS INCENTIVE COMPEN-
PRINCIPAL POSITION YEAR ($) BONUS ($) ($)(1)(2) ($)(3) /SARS(#) PAYOUTS SATION ($)(2)
(A) (B) (C) (D) (E) (F) (G) (H) (I)
- -------------------------------- ---- --------- ----------- ------- ---------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John J. Murphy, Chairman and
Chief Executive Officer 1993 $928,000 $ 545,750 $ -0- $ 33,663 131,000 $272,258 $ -0-
1992 900,000 -0- -0- 28,448 289,369
1991 840,000 226,160 -0- 25,900 -0-
Bill D. St. John, Vice Chairman 1993 496,167 376,180 -0- -0- 53,000 107,668 -0-
1992 452,004 -0- -0- 17,973 115,519
1991 375,000 212,025 9,735 11,600 -0-
William E. Bradford, President
and Chief Operating Officer 1993 496,250 378,540 -0- -0- 13,000 -0- -0-
1992 426,546 184,000 -0- 62,075 -0-
Donald C. Vaughn, Senior Vice
President - Operations,
Chairman and President - The
M.W. Kellogg Company 1993 336,739 508,578 (4) -0- -0- 55,000 -0- 11 (5)
1992 316,667 218,592 -0- 10,607 -0-
James L. Bryan, Vice President -
Operations 1993 273,208 164,610 -0- -0- 51,000 -0- -0-
1992 260,992 -0- -0- 9,016 -0-
1991 246,250 113,080 -0- 7,900 -0-
<FN>
- ------------------------
(1) Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation, if any, does not exceed
the lesser of $50,000 or 10 percent of the total amount of annual salary
and bonus for any named individual.
(2) In accordance with the rules of the Securities and Exchange Commission,
information with respect to fiscal years 1991 and 1992 is omitted.
(3) Since 1989 Restricted Incentive Stock ("RIS") Awards have been coupled
with most stock option grants to officers of the Company. Recipients of
Restricted Incentive Stock Awards
</TABLE>
16
<PAGE>
<TABLE>
<S> <C>
are issued, upon the exercise of the related option, one share of
Restricted Incentive Stock for every five option shares exercised.
Provided the related option shares are held on that date, restrictions on
Restricted Incentive Stock lapse on the third anniversary of the date of
issue or, if earlier, upon termination of employment by reason of death,
disability or approved retirement. If the related option shares are sold
or otherwise transferred prior to lapse of restrictions, the Restricted
Incentive Stock is forfeited. Restricted stock awards shown in the table
represent Restricted Incentive Stock issued upon exercise of related stock
options and are valued at the closing price of the Company's unrestricted
stock on the New York Stock Exchange on the date of issue. Dividend and
voting rights of such stock are the same as all other shares of the
Company's outstanding Common Stock. At the end of the last completed
fiscal year, the number and value (at the closing price of the Company's
unrestricted stock on the New York Stock Exchange on October 30, 1993, the
last trading day of the Company's fiscal year) of the aggregate restricted
stock holdings of the named individuals were 1,444 ($31,046) and 440
($9,460) for Messrs. Murphy and St. John, respectively.
(4) Includes $254,289 non-elective deferral under terms of an unfunded plan in
lieu of normal pension benefits which provides for vesting in one-third of
the award on each of the crediting date and the next two anniversaries
thereof. The plan generally provides for payment of vested benefits in a
lump sum or ten equal annual installments following retirement, death or
termination of employment. However, the Executive Compensation Committee
has discretion to distribute all or a portion of vested benefits in
certain emergencies, to fully vest all benefits upon death, disability and
termination of employment other than resignation or termination for cause,
and all benefits may be forfeited under certain circumstances, all as
defined in the plan.
(5) Company contribution to a defined contribution pension plan.
</TABLE>
17
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options under the
Company's 1992 Stock Compensation Plan to the named executive officers of the
Company during the fiscal year ended October 31, 1993.
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE
NUMBER OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS/SARS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO PRICE APPRECIATION
OPTIONS/SARS EMPLOYEES EXERCISE OR FOR OPTION TERM (4)
GRANTED IN FISCAL BASE PRICE EXPIRATION ---------------------
NAME (#)(1,2) YEAR(2) ($/SH)(3) DATE 5% 10%
(A) (B) (C) (D) (E) (F) (G)
- ------------------------------ ------------ ----------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. J. Murphy.................. 43,666 3.8 $ 17.375 1/20/2003 $ 477,979 $1,206,328
43,667 3.8 18.08 1/20/2003 447,205 1,175,570
43,667 3.8 18.84 1/20/2003 414,018 1,142,383
B. D. St. John................ 17,666 1.5 17.375 1/20/2003 193,376 488,045
17,667 1.5 18.08 1/20/2003 180,932 475,618
17,667 1.5 18.84 1/20/2003 167,505 462,191
W. E. Bradford................ 4,333 0.3 17.375 1/20/2003 47,430 119,705
4,333 0.3 18.08 1/20/2003 44,375 116,650
4,333 0.3 18.84 1/20/2003 41,092 113,383
D. C. Vaughn.................. 18,333 1.6 17.375 1/20/2003 200,678 506,472
18,333 1.6 18.08 1/20/2003 187,753 493,547
18,334 1.6 18.84 1/20/2003 173,829 479,640
J. L. Bryan................... 17,000 1.5 17.375 1/20/2003 186,086 469,646
17,000 1.5 18.08 1/20/2003 174,101 457,661
17,000 1.5 18.84 1/20/2003 161,181 444,741
<FN>
- ------------------------
(1) Stock options are shown at the price and in the sequence they first become
exercisable, respectively: July 22, 1993; January 21, 1994; and January
21, 1995. Terms of the Plan allow acceleration of exercisability of stock
options and lapse of restrictions on restricted Incentive Stock in
circumstances described on pages 22-23. Stock Options granted were coupled
with a total of 26,200; 10,600; 2,600; 11,000; and 10,200 Restricted
Incentive Stock ("RIS") Awards to Messrs. Murphy, St. John, Bradford,
Vaughn and Bryan, respectively. Recipients of RIS Awards will be issued,
upon the exercise of the related option, one share of restricted stock for
every five option shares exercised. Provisions for lapse of restrictions
are described in Note 3 to the Summary Compensation Table. Guidelines
currently used by the Executive Compensation Committee for grant of
subsequent options are described on pages 12-13.
</TABLE>
18
<PAGE>
<TABLE>
<S> <C>
(2) Prior to 1992 stock options were granted to executive officers usually in
tandem with SARs, such that the exercise of one option in the combination
resulted in the surrender of corresponding rights to the other related
option or options in the combination. In April 1991 holders of SARs
including all executive officers entered into an agreement with the Compa-
ny pursuant to which all outstanding SARs previously granted to such
persons were cancelled. No subsequent SARs have been granted to any
executive officer.
(3) The initial exercise price of $17.375 for the first tranche of options
granted in 1993 is the average of the high and low trading prices of the
Company's Common Stock prices on the New York Stock Exchange on the date
of grant. The exercise price will increase on each anniversary of such
date by 7.5% of the option price in effect during the immediate preceding
year minus $.60, approximating 30 year Treasury Bond yields (decreased by
the Company dividend rate) at time of grant.
(4) As required by rules of the Securities and Exchange Commission ("SEC"),
potential values stated are based on the prescribed assumption that the
Company's Common Stock will appreciate in value from the date of grant to
the end of the option term (ten years from the date of grant) at
annualized rates of 5% and 10% (total appreciation of 63% and 159%),
respectively, and therefore are not intended to forecast future
appreciation, if any, in the price of the Company's Common Stock. The
total of all stock options granted to employees, including executive
officers, during fiscal 1993 was less than 0.84% of total shares outstand-
ing during the year. Accordingly, the potential realizable value of such
options for all optionees under the prescribed assumptions is less than
0.84% of the potential realizable value of all shareholders for the same
period under the same assumptions. As an alternative to the assumed
potential realizable values stated in Columns (f) and (g), SEC rules would
permit stating the present value of such options at the date of grant.
Methods of computing present value suggested by different authorities can
produce significantly different results. Moreover, since stock options
granted by the Company are not transferrable, there is no objective
criteria by which any computation of present value can be verified.
Consequently, the Company's management does not believe there is a
reliable method of computing the present value of such stock options.
</TABLE>
19
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
The following table provides information concerning each option exercised
during the last fiscal year by each of the named executive officers and the
value of unexercised options held by such executive officers at the end of the
fiscal year.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY
/SARS AT OPTIONS AT
FISCAL YEAR FISCAL YEAR
SHARES END (#) END ($)(1)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
(A) (B) (C) (D) (E)
- --------------------------------------------------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C>
J. J. Murphy....................................... 22,062(2) $ 205,491 96,766/ $ 314,741/
131,270 332,896
B. D. St. John..................................... -0- -0- 42,907/ 139,527/
57,166 136,014
W. E. Bradford..................................... 6,600 41,456 37,851/ 65,545/
61,924 107,373
D. C. Vaughn....................................... -0- -0- 25,534/ 85,048/
49,173 128,682
J. L. Bryan........................................ -0- -0- 28,754/ 78,310/
46,562 116,428
<FN>
- ------------------------
(1) Values stated are based on the closing price of $21.50 per share of the
Company's Common Stock on the New York Stock Exchange on October 29, 1993,
the last trading day of the fiscal year.
(2) Under current guidelines (described on pages 12-13) used by the Company's
Executive Compensation Committee for the grant of stock options beginning
January 20, 1993, on January 20, 1994, Mr. Murphy was granted options to
purchase 22,062 shares of the Company's Common Stock coupled with 4,412 RIS
Awards.
</TABLE>
20
<PAGE>
DRESSER RETIREMENT PLANS
The estimated total annual retirement benefits payable under defined benefit
pension plans in which Messrs. Murphy, St. John, Bradford and Bryan participate
are set forth below. The chart illustrates benefits accrued to October 31, 1993.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
REMUNERATION* 15 20 25 30 35
- -------------------------------------- ----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
$ 300,000............................. $ 77,077 $ 105,972 $ 134,867 $ 163,761 $ 192,656
450,000............................. 117,127 161,021 204,916 248,811 292,706
600,000............................. 157,177 216,071 274,966 333,861 392,756
750,000............................. 197,227 271,121 345,016 418,911 492,806
900,000............................. 237,276 326,171 415,066 503,961 592,856
1,050,000............................ 277,326 381,221 485,116 589,011 692,906
1,200,000............................ 317,377 436,271 555,166 674,061 792,956
1,350,000............................ 357,427 491,321 625,216 759,111 893,006
1,500,000............................ 397,476 546,371 695,266 844,161 993,056
1,650,000............................ 437,527 601,421 765,316 929,211 1,093,106
1,800,000............................ 477,577 656,471 835,366 1,014,261 1,193,156
<FN>
- ------------------------
* As of October 31, 1993, assuming attained age 65.
</TABLE>
Less than 10% of the amounts shown in columns (c) and (d) of the Summary
Compensation Table for each of the named individuals (except Mr. Vaughn who is
not a participant in the Company's defined benefit plans) is excluded in
determining benefits. Years of credited service used in determining benefits for
the individuals named in the Summary Compensation Table are as follows: Mr.
Murphy 35 years, Mr. St. John 33.16 years, Mr. Bradford 30.25 years, and Mr.
Bryan 33 years. Benefits are computed as straight-life annuity amounts which may
be paid in various forms. Amounts shown in the preceding Pension Plan Table
reflect a deduction for estimated Social Security benefits and are not subject
to further deduction for Social Security or other offset amounts.
The covered compensation, years of credited service and estimated total
annual retirement benefits payable to Mr. Vaughn at age 65 under defined benefit
pension plans are set forth below. Covered compensation differs more than 10%
from amounts shown in columns (c) and (d) of the Summary Compensation Table
because the Plans were frozen several years ago.
21
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED
SERVICE
-----------------------
REMUNERATION 30
- ----------------------------------------------------- -----------------------
<S> <C>
$230,000............................................. $ 67,513
</TABLE>
Benefits are computed as a straight-life annuity which may be paid in
various forms and is not subject to any deduction for Social Security or other
offset amounts.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
Prior to 1984, the Company entered into severance compensation agreements
with certain key employees. All rights under such agreements were relinquished
by the individual holders early in fiscal 1993. Such agreements were in effect
until relinquished in fiscal 1993 for Messrs. Murphy, St. John. Bradford and
Bryan. The severance agreements, which were designed to retain the employees and
provide for continuity of management in the event of an actual or threatened
change in control of the Company (as defined in the severance agreements),
provided that in the event of a change in control of the Company, each such key
employee would have specific rights and receive certain benefits if, after such
change in control, either the employee's employment were terminated by the
Company without "cause" (as defined in the agreement) or the employee were to
terminate his employment for "good reason" (as defined in the agreement). In
such circumstances the compensation, which the employee would be entitled to
receive, included the following: (a) his full base salary through the date of
termination at the rate in effect at the time of termination plus an amount
equal to the incentive compensation, if any, allocated to the employee for the
fiscal year prior to the date of termination pro rated for the period from the
end of the last fiscal year to the date of termination and (b) in lieu of
further salary payments, an amount equal to the employee's annual base salary at
the rate in effect on the day of termination plus the amount, if any, awarded to
the employee under the incentive compensation plan in which he participated for
the fiscal year prior to termination (but not less than the employee's total
annual compensation for the fiscal year immediately prior to the change in
control) multiplied by three. Upon termination of employment, the employee would
also be entitled to all benefits under all of the benefit plans of the Company
in effect on the date of his termination and certain additional retirement
benefits.
Pursuant to the 1992 Stock Compensation and 1982 Stock Option Plans, in the
case of an impending merger, reorganization, or liquidation of the Company, or
of a sale of substantially all of its business or property, the Board may at its
discretion and without shareholder approval, declare some or all outstanding
Options to be immediately exercisable in full (except for required abatements in
the case of combinations of Options), without regard for prescribed waiting
periods contained in said Options.
22
<PAGE>
Pursuant to the 1992 Stock Compensation and 1989 Restricted Incentive Stock
Plans, in the event of a change in control of the Company without approval of
the majority of members of the Board of Directors in office immediately prior to
the event, all restrictions on outstanding Restricted Stock shall immediately
lapse if the related Option Shares have not been disposed of prior to such
change in control.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16 of the Securities and Exchange Act of 1934 requires Directors and
executive officers and persons, if any, owning more than ten percent of a class
of the Company's equity securities to file with the Securities and Exchange
Commission ("SEC") and the New York Stock Exchange initial reports of ownership
and reports of changes in ownership of the Company's equity and derivative
securities.
A report on Form 4 filed in October 1993 by Mr. Casey with respect to shares
of the Company's Common Stock acquired pursuant to the Dresser Industries, Inc.
1989 Director Retirement Plan was late, and a report on Form 5 filed in December
1993 by Mr. Willey with respect to a sale of a fractional share of the Company's
Common Stock held in trust for his children was late. A Form 3 for the same
trust was also filed late. However, identical information had previously been
reported on Mr. Willey's individual Form 4 in his role as Co-Trustee.
PERFORMANCE GRAPH
The following Performance Graph 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 such information by reference, and shall not otherwise be deemed
filed under such Acts.
The graph compares the yearly percentage change in the cumulative total
shareholder return on the Company's Common Stock (as measured by dividing: (i)
the sum of: (A) the cumulative amount of dividends for the measurement period,
assuming dividend reinvestment and treating as a special dividend the
distribution on August 21, 1992 of one share of 25 CENTS par value common stock
of INDRESCO Inc. for each five shares of the Company's issued and outstanding
Common Stock held of record August 7, 1992 and (B) the difference between the
Company's share price at the end and the beginning of the measurement period; by
(ii) the share price at the beginning of the measurement period) with the
cumulative total return assuming reinvestment of dividends of (1) the S&P 500
Index and (2) the S&P Oil Well Equipment & Service Index.
23
<PAGE>
<TABLE>
<CAPTION>
S&P-R- Oil Well
Dresser Equip. &
Industries S&P 500-R- Services Index
----------- ----------- ---------------
<S> <C> <C> <C>
October 1988......................................................... $ 100 $ 100 $ 100
January 1989......................................................... $ 119 $ 108 $ 111
April 1989........................................................... $ 140 $ 113 $ 124
July 1989............................................................ $ 158 $ 127 $ 138
October 1989......................................................... $ 147 $ 126 $ 140
January 1990......................................................... $ 157 $ 123 $ 156
April 1990........................................................... $ 178 $ 125 $ 167
July 1990............................................................ $ 195 $ 136 $ 211
October 1990......................................................... $ 135 $ 117 $ 175
January 1991......................................................... $ 175 $ 134 $ 182
April 1991........................................................... $ 172 $ 147 $ 189
July 1991............................................................ $ 170 $ 153 $ 199
October 1991......................................................... $ 159 $ 156 $ 192
January 1992......................................................... $ 151 $ 164 $ 164
April 1992........................................................... $ 174 $ 168 $ 174
July 1992............................................................ $ 168 $ 173 $ 187
October 1992......................................................... $ 163 $ 172 $ 182
January 1993......................................................... $ 159 $ 181 $ 171
April 1993........................................................... $ 182 $ 183 $ 201
July 1993............................................................ $ 214 $ 188 $ 206
October 1993......................................................... $ 189 $ 197 $ 192
<FN>
- ------------------------
Source: Georgeson and Company
</TABLE>
The foregoing notice and proxy statement are sent by order of the Board of
Directors.
REBECCA R. MORRIS
VICE PRESIDENT -- CORPORATE COUNSEL
AND SECRETARY
February 7, 1994
24
<PAGE>
--------------------------------
--------------------------------
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD
MARCH 17, 1994
AND
PROXY STATEMENT
[LOGO]
DRESSER INDUSTRIES, INC.
2001 ROSS AVENUE
DALLAS, TEXAS 75201
--------------------------------
--------------------------------
<PAGE>
CONFIDENTIAL PROXY VOTING INSTRUCTION CARD
DRESSER INDUSTRIES, INC.
VOTING INSTRUCTIONS FOR PROXY SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
MARCH 17, 1994
The undersigned hereby instructs Merrill Lynch Trust Company as Trustee of the
Savings Plan for Employees of NL Industries (the "Plan") to represent and to
vote, as designated below, all the shares of Common Stock ("Common Stock") of
Dresser Industries, Inc. ("Dresser") credited to the Plan account of the
undersigned on January 25, 1994 at the Annual Meeting of Shareholders of
Dresser to be held at the Pavilion at Trammell Crow Center, 2001 Ross Avenue,
Dallas, Texas on Thursday, March 17, 1994 at 10:00 a.m. (local time), and any
adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" DIRECTORS
(continued and to be signed on reverse side)
<PAGE>
Your shares of Common Stock, when this instruction card is properly executed and
timely received by the Trustee, will be voted in the manner directed herein. If
no direction is made, your shares will not be voted by the Trustee.
(1) ELECTION OF DIRECTORS:
Nominees: W. Bradford, S. Casey, L. Eagleburger, R. Fulgham, J. Gavin,
R. Hunt, L. Martin, J. Murphy, L. Olmer, J. Precourt, K. Pye,
B. St. John and R. Vieser.
/ / FOR all Nominees / / VOTE WITHHELD from all nominees.
To withhold authority to vote for one or more individual nominees,
write the nominee name(s) in the space provided below.
--------------------------------------------------------------------
Signature(s)___________________________________ Date________________________
Please sign exactly as name appears
above. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
<PAGE>
CONFIDENTIAL PROXY VOTING INSTRUCTION CARD
DRESSER INDUSTRIES, INC.
VOTING INSTRUCTIONS FOR PROXY SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
MARCH 17, 1994
The undersigned hereby instructs Merrill Lynch Trust Company as Trustee of the
Savings Plan for Employees of Baroid Corporation (the "Plan") to represent and
to vote, as designated below, all of the shares of Common Stock ("Common Stock")
of Dresser Industries, Inc. ("Dresser") credited to the Plan account of the
undersigned on January 25, 1994 at the Annual Meeting of Shareholders of Dresser
to be held at the Pavilion at Trammell Crow Center, 2001 Ross Avenue, Dallas,
Texas on Thursday, March 17, 1994 at 10:00 a.m. (local time), and any
adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" DIRECTORS
(continued and to be signed on reverse side)
<PAGE>
Your shares of Common Stock, when this instruction card is properly executed and
timely received by the Trustee, will be voted in the manner directed herein. If
no direction is made, your shares will be voted FOR Directors.
(1) ELECTION OF DIRECTORS:
Nominees: W. Bradford, S. Casey, L. Eagleburger, R. Fulgham, J. Gavin,
R. Hunt, L. Martin, J. Murphy, L. Olmer, J. Precourt, K. Pye,
B. St. John and R. Vieser.
/ / FOR all Nominees / / VOTE WITHHELD from all nominees.
To withhold authority to vote for one or more individual nominees,
write the nominee name(s) on the line below.
--------------------------------------------------------------------
Signature(s)___________________________________ Date________________________
Please sign exactly as name appears
above. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
<PAGE>
DRESSER INDUSTRIES, INC.
The Board of Directors recommends a vote "FOR" Directors
1. ELECTION OF DIRECTORS:
Nominees: W. Bradford, S. Casey, L. Eagleburger, R. Fulgham, J. Gavin, R. Hunt,
L. Martin, J. Murphy, K. Pye, L. Olmer, J. Precourt, B. St. John
and R. Vieser.
/ / FOR all nominees / / VOTE WITHHELD from all nominees
To withhold authority to vote for one or more individual nominees, write the
nominee name(s) on the line below.
_______________________________________
DATED ___________________________, 1994
_______________________________________
Signature
________________________________________
Signature
Please sign your name as it appears
hereon. Joint owners should each sign.
Executors, administrators, trustees,
etc., should give full title as such. If
the signer is a corporation, please sign
full corporate name by duly authorized
officer.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
- ------------------------------------------------------------------------------
DRESSER INDUSTRIES, INC.
This proxy is Solicited on Behalf of the Board of Directors
JOHN J. MURPHY, BILL D. ST. JOHN AND WILLIAM E. BRADFORD, or any of them,
with power of substitution to each, are hereby authorized to represent the
undersigned at the Annual Meeting of Shareholders of Dresser Industries, Inc.,
to be held in the Pavilion at Trammell Crow Center, 2001 Ross Ave., Dallas,
Texas, on March 17, 1994 at 10:00 a.m., and to vote the number of shares which
the undersigned would be entitled to vote if personally present on all matters
properly coming before the meeting or any adjournment thereof. The proxies are
authorized to vote in their discretion upon such other business as may properly
come before the Meeting and any and all adjournments thereof.
To vote in accordance with the Board of Directors' recommendation, just sign
the reverse side; no boxes need to be checked.
This proxy will be voted as you direct; in the absence of such direction, it
will be voted "FOR" all nominees.
(over)
<PAGE>
DRESSER LOGO
DRESSER INDUSTRIES, INC. - 2001 ROSS AVENUE - DALLAS, TEXAS 75201
EXECUTIVE OFFICES 214/740-6000
February 7, 1994
TO THE FORMER STOCKHOLDERS OF
BAROID CORPORATION
We are pleased to advise you that, following the approval by the
stockholders of Baroid Corporation ("Baroid") and Dresser Industries, Inc.
("Dresser"), the merger of BCD Acquisition Corporation, a wholly-owned
subsidiary of Dresser, into Baroid became effective January 21, 1994.
As a result of the merger, Baroid became a wholly-owned subsidiary of
Dresser, and each of your shares of Baroid has been converted into the right to
receive 0.4 shares of Dresser Common Stock. We will forward by February 11, 1994
detailed instructions for exchanging your shares of Baroid Common Stock for
Dresser Common Stock.
Although you will not yet have exchanged your shares of Baroid Common Stock
for Dresser Common Stock, you were as a result of the merger a shareholder of
Dresser on January 25, 1994, the record date for determining shareholders
entitled to receive Notice of and vote at the Annual Meeting of Shareholders of
Dresser to be held March 17, 1994. Accordingly, enclosed is a proxy card, Notice
of Annual Meeting and Proxy Statement for Dresser's Annual Meeting of
Shareholders. PLEASE REVIEW THE PROXY STATEMENT, MARK YOUR VOTE ON THE SPECIFIED
AGENDA ITEM, SIGN THE CARD AS YOUR NAME APPEARS THEREON, AND RETURN THE CARD IN
THE ENCLOSED BUSINESS REPLY ENVELOPE.
Once again, it is a pleasure to welcome you as a shareholder of Dresser. We
remain committed to continually enhancing shareholder value.
Sincerely,
John J. Murphy
Chairman of the Board and
Chief Executive Officer
