<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 Section 240.14a-11(c) or Section
240.14a-12
Dresser Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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), 14a-6(i)(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:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* 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:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
DRESSER INDUSTRIES, INC.
2001 ROSS AVENUE
DALLAS, TEXAS 75201
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 16, 1995
---------------------
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Dresser Industries, Inc., a Delaware
corporation, will be held at the Pavilion at Trammell Crow Center, 2001 Ross
Avenue, Dallas, Texas on Thursday, March 16, 1995, 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 consider and approve amendments to the Dresser Industries, Inc. 1992
Stock Compensation Plan.
3. To consider and approve the 1995 Executive Incentive Compensation Plan.
4. To act upon the shareholder proposal as described in the attached Proxy
Statement.
5. 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 27, 1995, 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 6, 1995
<PAGE>
DRESSER INDUSTRIES, INC.
2001 ROSS AVENUE
DALLAS, TEXAS 75201
FEBRUARY 6, 1995
------------------------
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 16, 1995, at 10:00 a.m. at the Pavilion
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 27, 1995, is the record date for the
determination of shareholders entitled to notice of and to vote at the meeting.
At January 27, 1995, the Company had outstanding and entitled to vote at the
meeting 184,228,395 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 4, 1995.
1
<PAGE>
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............................. 124,165 (Note A)
James L. Bryan.................................. 97,698 (Note A)
Samuel B. Casey, Jr............................. 6,022
Lawrence S. Eagleburger......................... 894
Sylvia A. Earle................................. -0-
Rawles Fulgham.................................. 16,000
John Gavin...................................... 8,822
Ray L. Hunt..................................... 146,733 (Note B)
J. Landis Martin................................ 201,979
John J. Murphy.................................. 409,020 (Note A)
Lionel H. Olmer................................. 7,442
Jay A. Precourt................................. 3,500
Bill D. St. John................................ 151,991 (Note A)
Donald C. Vaughn................................ 85,313 (Note A)
Richard W. Vieser............................... 15,318
All Directors, Nominees and executive officers
as a group (23 persons)........................ 1,600,228 (Notes A and C)
</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 4, 1995, a total of 4,171; 75,637;
92,493; and 23,798 stock units were credited to the accounts of Messrs.
Bradford, Murphy, St. John and Vaughn, respectively, and 242,438 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 4, 1995 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 72,037; 87,468; 262,575; 105,212; and 84,563 for Messrs.
Bradford, Bryan, Murphy, St. John and Vaughn, respectively, and 891,665 for all
Directors and executive officers as a group. Under the Rules of the Securities
and Exchange
2
<PAGE>
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 79,993 shares, in which Mr. Hunt disclaims
beneficial interest, owned by trusts for the benefit of his children. Mr. Hunt
and/or his wife serve as members of an advisory board or trustee for each trust.
NOTE C: Mr. Paul M. Bryant, Vice President -- Human Resources of the
Company, is Trustee of the Company's Stock Purchase Plan which, as of January
27, 1995, owned of record 950,084 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 Dr. Sylvia A.
Earle, who is nominated to replace A. Kenneth Pye who died on July 11, 1994. 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 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 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.
3
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE DURING PAST 5 YEARS AND ELECTED
NAME (AGE) OTHER INFORMATION DIRECTOR
- ---------------------------- ------------------------------------------------------------ ----------
<S> <C> <C>
William E. Bradford (60) President and Chief Operating Officer of the Company since 1992
March 1992; President and 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. (67) 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; INDRESCO Inc.; and
Northbrook, Inc., a Division of JMB, Inc.
Sylvia A. Earle, Ph.D. (59) Founder, Director, Deep Ocean Engineering, Inc., designer Nominee
and manufacturer of underwater equipment, San Leandro,
California, since 1981; President, Chief Executive Officer
and Chairman 1988-1990; President, Deep Ocean Exploration
and Research, Inc., a consulting firm, Oakland, California,
since 1992; Chairman, Sea Change Trust and the Caribbean
Marine Research Center, non-profit organization for
scientific research, Covington, Virginia, since 1993; Chief
Scientist, National Oceanic and Atmospheric Administration,
1990-1992, Advisor to the Administrator, 1992-1993.
Lawrence S. Eagleburger (64) Senior Foreign Policy Advisor, Baker, Donelson, Bearman & 1993
Caldwell 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 1992; President, Kissinger
Associates,
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE DURING PAST 5 YEARS AND ELECTED
NAME (AGE) OTHER INFORMATION DIRECTOR
- ---------------------------- ------------------------------------------------------------ ----------
<S> <C> <C>
New York, New York, provider of strategic consulting
services to international companies, September 1984 -
January 1989. Director, Jefferson Bankshares; Phillips
Petroleum Company; Stimsonite; and Universal Corporation.
Rawles Fulgham (67) 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 (63) For more than five years, Chairman of the Board, President, 1986
and Chief Executive Officer, Gamma Services International,
venture capital & international consulting firm, Los
Angeles, California. Director, Atlantic Richfield Company;
Pinkerton, Inc.; and WireKraft Holdings.
Ray L. Hunt (51) 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.
J. Landis Martin (49) 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
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE DURING PAST 5 YEARS AND ELECTED
NAME (AGE) OTHER INFORMATION DIRECTOR
- ---------------------------- ------------------------------------------------------------ ----------
<S> <C> <C>
the Board and Chief Executive Officer of Baroid
Corporation, a wholly owned subsidiary of the Company
effective January 21, 1994 (and its predecessor) August
1990 - January 1994; Chairman of Tremont Corporation, an
integrated producer of titanium metals, since August 1990,
Chief Executive Officer since 1988 and President since
1987. Director, NL Industries, Inc.; Tremont Corporation;
and Apartment Investment and Management Corporation (a real
estate investment trust).
John J. Murphy (63) 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 (60) Partner, Paul, Weiss, Rifkind, Wharton & Garrison, law firm, 1986
Washington, D.C., since June 1985. Under Secretary of
Commerce for International Trade, United States Department
of Commerce, 1981 - 1985. Director, SIPEX Corporation;
International Rescue Committee; Richard M. Nixon Center for
Peace and Freedom.
Jay A. Precourt (57) For more than five years, Vice Chairman and Chief Executive 1994
Officer of Tejas Gas Corporation, a natural gas pipeline
company. Director, Apache Corporation, Founders Funds,
Inc.; and Tejas Gas Corporation.
Bill D. St. John (63) 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.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE DURING PAST 5 YEARS AND ELECTED
NAME (AGE) OTHER INFORMATION DIRECTOR
- ---------------------------- ------------------------------------------------------------ ----------
<S> <C> <C>
Richard W. Vieser (67) Chairman of the Board, President and Chief Executive 1989
Officer, 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 International; 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, Olmer, Precourt, and Vieser. The functions of the
Committee, which held two meetings during fiscal 1994, 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, Olmer, Precourt and
Vieser. The Committee, which held four meetings during fiscal 1994, 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 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
7
<PAGE>
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 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 one occasion by unanimous
written consent during fiscal 1994.
The Nominating Committee, consisting of Messrs. Hunt (Chairman), Casey,
Fulgham, Olmer, Gavin, 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 1994.
During fiscal 1994, there were nine meetings of the Board of Directors.
Attendance at the Board and Committee meetings averaged approximately 91% in
1994, 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 except Mr. Eagleburger. 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 1994, each Director of
the Company who was not an employee received an annual retainer equal to $28,000
for Board membership, plus $2,500 for each Committee membership, plus $1,000 for
service as Chairman of a Committee, plus $1,250 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 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.
8
<PAGE>
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.
Baroid has outstanding approximately $6.2 million and $9 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 Dresser for any losses or expenses in respect of these
letters of credit.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1994 members of the Executive Compensation Committee of the
Company were Messrs. Casey (Chairman), Eagleburger, Fulgham, Gavin, Hunt, 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.
APPROVAL OF AMENDMENTS TO THE DRESSER INDUSTRIES, INC.
1992 STOCK COMPENSATION PLAN (PROXY ITEM NO. 2)
At the Annual Meeting of Shareholders held March 19, 1992 the Dresser
Industries, Inc. 1992 Stock Compensation Plan (the "1992 Plan" or the "Plan")
was approved by shareholders in order to aid the Company in attracting,
retaining and motivating management employees with outstanding ability,
competence and potential, and to encourage these employees to hold a proprietary
interest in the Company's success. In view of tax legislation which imposes
limits on Dresser's ability to deduct employee compensation, the Executive
Compensation Committee of the Board of Directors (the "Committee") has reviewed
the 1992 Plan and recommends certain amendments thereto be approved by
shareholders. In order for certain incentive awards to be
9
<PAGE>
deductible by Dresser under the current Internal Revenue Code, they must be paid
under a plan like the 1992 Plan, as amended, and described below. Amendments to
the Plan are set forth in Exhibit A attached hereto.
Effective August 1, 1993, Part B, Section 4 was amended to provide that for
Restricted Incentive Stock Awards granted on or after August 1, 1993, Restricted
Stock would only be issued if at the time of exercise of the underlying Stock
Option, the Participant is actively employed by the Company, a Subsidiary or an
Affiliated Company and is not disabled. Amendment No. 2 establishes a maximum
number of shares with respect to which awards may be granted to any individual
during any fiscal year, clarifies circumstances under which the Plan may be
amended without shareholder approval, clarifies that the Committee has
discretion, but is not obliged, to make awards under the Restricted Incentive
Stock Program with respect to grants of Stock Options, adds a provision
permitting the pledge of related Option Shares as security for a loan the
proceeds of which are used exclusively to fund the exercise of such Option
Shares without causing forfeiture of related Restricted Stock, and clarifies
that payment of Awards under the Performance Stock Unit Program will be made
only upon certification by the Committee of the attainment of the Objective. The
full text of Amendments No. 1 and 2 is annexed hereto as Exhibit A and should be
referred to for a complete description of their provisions. The Committee and
the Board of Directors recommend that the shareholders ratify the adoption of
Amendment No. 1 and approve the adoption of Amendment No. 2 to the 1992 Plan.
The affirmative vote of the holders of a majority of shares of Dresser
Common Stock, present in person or by proxy, voted at the meeting is required
for ratification and approval of the amendments.
Principal features of the 1992 Plan are summarized below, but such summary
is qualified in its entirety by reference to the terms of the 1992 Plan, as
amended.
The 1992 Plan is comprised of Stock Option, Restricted Incentive Stock and
Performance Stock Unit Programs. The maximum number of shares of Common Stock of
the Company that may be awarded under the 1992 Plan is 10 million shares
(subject to adjustment as provided in the 1992 Plan). Currently, 7,999,376
shares remain available for awards under the 1992 Plan.
AMENDMENT OR TERMINATION
Unless the shareholders of the Company shall have first approved thereof, no
amendment of the 1992 Plan shall be effective which would increase the maximum
number of shares of Dresser Common Stock which may be delivered under the Plan
or to any one individual, except to the extent specifically provided for certain
changes in corporate structure, extend the maximum
10
<PAGE>
period during which awards may be granted under the Plan, change the Objective
pursuant to which Performance Stock Units are earned, modify the requirements as
to eligibility for participation in the 1992 Plan, or if shareholder approval is
required to exempt transactions under the Plan from the operation of Section
16(b) of the Securities Exchange Act of 1934, as amended.
ELIGIBILITY
Officers and key employees of the Company and its present and future
Subsidiaries are eligible to receive awards in the Stock Option Program and the
Performance Stock Unit Program. Participation in the Restricted Incentive Stock
Program is limited to officers elected by the Board of Directors of the Company.
Because the number of officers and key employees may change over time, it is
impossible to determine the number of persons who will be eligible for awards
under the 1992 Plan during its term. However, 12 current executive officers and
44 key employees have been granted awards under the Plan since its inception.
Future awards will be made under the Plan if approved by the shareholders.
AWARD MAXIMUM
No participant may receive Awards with respect to more than 500,000 shares
under the 1992 Plan in any calendar year.
ADMINISTRATION
The Committee, none of the members of which are eligible to participate in
any of the Programs, selects the employees to participate in the Programs and
the awards to be granted to each. The Committee is authorized to interpret,
amend and rescind all rules and regulations relating to the Programs, and take
all actions necessary to administer the Programs.
THE STOCK OPTION PROGRAM
PARTICIPATION
The 1992 Plan provides for the issuance of Nonqualified Options, Phantom
Options and Incentive Stock Options (all as defined in the Program), as well as
tandem combinations. Any option may be granted separately or in combination with
one or more other options, such that the exercise of one option in the
combination results in the surrender of corresponding rights to the other
related option or options in the combination.
OPTION PRICE
The option price will be as recommended by the Committee, but not less than
100% of the Fair Market Value (as defined in the Program) on the date the option
is granted. Stock purchased upon the exercise of an Incentive Stock Option or a
Nonqualified Option must be paid for in full at the time of exercise either (1)
in cash, or (2) by the surrender to the Company at Fair Market
11
<PAGE>
Value of shares of Common Stock owned by the Employee (other than shares subject
to restrictions that have not lapsed), or (3) by any combination of cash and
surrendered stock, as the Employee may elect.
TERMS OF OPTIONS
No Option shall be exercisable after the expiration of ten years from the
Option Date (or other period as may be provided under the section of the
Internal Revenue Code that deals with incentive stock options). No Incentive
Stock Option may be granted under this Plan more than ten years after March 19,
1992, the date of approval of this Plan by the shareholders (or other period as
may be provided under the section of the Internal Revenue Code that deals with
incentive stock options).
FEDERAL TAX CONSEQUENCES
An optionee will realize no taxable income at the time a stock option is
granted under the 1992 Plan.
With regard to Incentive Stock Options, no income will be recognized by an
optionee upon transfer to the optionee of shares pursuant to exercise of an
Incentive Stock Option. In order to receive this tax benefit, the optionee must
make no disposition of the shares so received before he or she has held such
shares for at least one year and at least two years have passed since the option
was granted. Assuming compliance with this and other applicable tax provisions,
an optionee will realize long-term capital gain or loss upon disposition of the
shares, measured by the difference between the Option Price and the amount
received for the shares at the time of disposition. If the optionee disposes of
shares acquired by exercise of the option before the expiration of the
above-noted periods, any amount realized from such disqualifying disposition
will be taxable as ordinary income in the year of disposition to the extent that
the lesser of:
(a) Fair Market Value on the date the option was exercised, or
(b) the amount realized upon such disposition,
exceeds the Option Price. Any amount realized in excess of Fair Market Value on
the date of exercise will be treated as long or short-term capital gain,
depending upon the holding period of the shares. If the amount realized upon
such disposition is less than the Option Price, the loss will be treated as long
or short-term capital loss, depending upon the holding period of the shares.
With regard to Nonqualified Options, ordinary income will be realized by the
optionee at the time of exercise of an option. The amount of income will be
equal to the difference between the Option Price and the Fair Market Value of
the shares on the date of exercise. Tax withholding is
12
<PAGE>
required on such income. When an optionee disposes of shares acquired upon the
exercise of the option, any amount received in excess of the Fair Market Value
of the shares on the date of exercise will be treated as long or short-term
capital gain, depending upon the holding period of the shares, and if the amount
received is less than the Fair Market Value of the shares on the date of
exercise, the loss will be treated as long or short-term capital loss, depending
upon the holding period of the shares.
Ordinary income will be realized by the recipient of a Phantom Option at the
time shares are transferred or cash is paid pursuant to exercise thereof. The
amount of such income will be equal to the cash received or the Fair Market
Value of such shares on the exercise date (including any amounts withheld for
taxes as required by law).
No deduction will be allowed by the Company for Federal income tax purposes
at the time of the grant or exercise of an Incentive Stock Option. At the time
of a disqualifying disposition by an optionee, the Company will be entitled to a
deduction for the amount taxable to the optionee as ordinary income. The Company
will be entitled to a deduction for Federal income tax purposes at the same time
and in the same amount as the employee is considered to have realized ordinary
income in connection with the exercise of a Nonqualified Option or a Phantom
Option.
The opinions above are based upon present Federal income tax laws, and thus
are subject to change when laws change.
THE RESTRICTED INCENTIVE STOCK PROGRAM
GRANTS
Eligible employees will be notified of any Restricted Incentive Stock
("RIS") Award. On the date an underlying Stock Option is exercised, if the
eligible employee accepts the restrictions imposed on the Restricted Stock, the
Company will issue one share of Restricted Stock for each five Option Shares
exercised. From the date Restricted Stock is issued, the eligible employee shall
have absolute ownership of such Restricted Stock, including the right to vote
and receive dividends, subject to terms of the Program.
RESTRICTIONS
Restricted Stock issued to a Participant may not be sold or otherwise
transferred for three years from the date of its issue. If related Option Shares
are sold, pledged (except as specifically permitted) or otherwise transferred
prior to the third anniversary of issuance of the Restricted Stock or a
Participant's employment with the Company or any subsidiary or any joint venture
in
13
<PAGE>
which the Company has a substantial equity interest terminates, except by reason
of death, disability, or approved retirement, Restricted Stock shall be
immediately returned to the Company, and all rights of the Participant to those
shares shall immediately terminate.
CHANGE IN CONTROL
In the event of a change in control of the Company, as defined in the
Program, all restrictions imposed on outstanding Restricted Stock shall
immediately lapse if the related Option Shares have not been sold, pledged
(except as specifically permitted) or otherwise transferred prior to such change
in control.
FEDERAL TAX CONSEQUENCES
A participant will recognize ordinary income equal to the Fair Market Value
of the Restricted Stock at the time the restrictions lapse unless the
Participant elects under the Internal Revenue Code of 1986, as amended, to
report as ordinary income the Fair Market Value of the Restricted Stock on the
date of issue. The Company may deduct the amount of income that is includable in
the employee's compensation subject, if applicable, to the limitation on
deduction of compensation other than that which is performance-based. Such
income is subject to withholding by the employer.
THE PERFORMANCE STOCK UNIT PROGRAM
AWARDS
Each Award of Stock Units covers an Award Cycle of four consecutive fiscal
years of the Company beginning November 1 of each odd-numbered year. Under
current proposed regulations, no Awards under the program can be made after
March 16, 2000 unless the Plan is again approved by shareholders.
PERFORMANCE MEASURES
The Committee will establish an Objective on which payment of Awards is
conditioned at the time Awards are made. The Objective will be based on average
annual return on investment, earnings per share, earnings before taxes or other
criterion or combination thereof. No payment will be made if the Objective is
not met.
PAYMENT
Following the end of an Award Cycle, the Committee will certify whether the
Objective was met for such Award Cycle and will determine whether any payment of
such Awards will be in cash or stock or some combination of cash and stock. If
paid in cash, the Award is computed by multiplying the number of Stock Units
awarded by the lesser of: (1) the average of the daily closing prices of the
Company's Common Stock on the New York Stock Exchange (the "closing
14
<PAGE>
price") for the first month of December falling in that Award Cycle, or (2) the
closing price for the month of October at the end of the Award Cycle. If paid in
shares of the Company's Common Stock, the number of such shares will be
determined by dividing the cash award as provided above by the average of the
closing price for the month of December following the Award Cycle. One-half of
the Award amount is to be paid on or before January 15 following the end of the
Award Cycle and the remainder is to be paid one year later.
TERMINATION OF EMPLOYMENT
A Participant's Stock Units relating to an Award Cycle will be forfeited if
his or her employment terminates before the end of the Award Cycle either for
cause or without the Company's concurrence. If the Participant's employment
terminates without cause and with the Company's concurrence, full or partial
payment may be made if the Company determines that such payment is in the best
interest of the Company. If the Participant's employment terminates because of
retirement, death or disability, the Award will be prorated for the portion of
the Award Cycle prior to the date of termination of employment.
APPROVAL OF 1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
(PROXY ITEM NO. 3)
In furtherance of its belief that the continued success of Dresser depends
on its ability to attract, retain and motivate key employees, and in view of
recent tax legislation which imposes limits on Dresser's ability to deduct
employee compensation, the Committee has reviewed Dresser's executive incentive
compensation program and recommends that Dresser shareholders approve the 1995
Executive Incentive Compensation Plan (the "1995 EICP" or the "Plan"). In order
for payment of certain incentive awards to be deductible by Dresser under the
current Internal Revenue Code, they must be paid under a plan like the 1995
EICP. Shareholder approval of the 1995 EICP is necessary to pay the incentive
awards contemplated by the Plan.
The affirmative vote of the holders of a majority of shares of Dresser
Common Stock, present in person or by proxy, voted at the meeting is required
for adoption of the 1995 EICP.
The principal features of the 1995 EICP and of the operating guidelines
which the Committee has adopted to implement the Plan are described below. The
full text of the 1995 EICP is annexed hereto as Exhibit B and should be referred
to for a complete description of its provisions.
15
<PAGE>
GENERALLY. The 1995 EICP provides for officers and key employees of Dresser
to be granted annual incentive awards consistent with the objectives and
limitations of the Plan. If approved by shareholders, the first awards under the
1995 EICP will be paid for the 1995 fiscal year.
ADMINISTRATION. The 1995 EICP vests broad powers in the Committee to
administer and interpret the Plan. The Committee shall consist of two or more
members of Dresser's Board of Directors who are considered outside and
disinterested for the purposes of the Internal Revenue Code and the Securities
Exchange Act of 1934.
The Committee's powers include authority, within the limitations set forth
in the Plan, to select the persons to be granted awards, to determine the time
when awards will be granted, to determine whether objectives and conditions for
earning awards have been met, and to determine whether an award or payment of an
award should be reduced or eliminated.
ELIGIBILITY TO RECEIVE AWARDS. Executive officers of Dresser will be
granted, and other key employees of Dresser, may at the discretion of the
Committee be granted, annual incentive awards under the 1995 EICP. Because the
number of executive officers may change over time and because the selection of
participants is discretionary, it is impossible to determine the number of
persons who will be eligible for awards under the Plan during its term. However,
12 executive officers and 3 other key employees have been granted awards for the
1995 fiscal year, subject to approval of the Plan by shareholders.
ANNUAL INCENTIVE AWARDS. The amount of annual incentive awards paid to
eligible executives under the 1995 EICP will be based upon the achievement by
Dresser of specified return on equity targets which have been established in
advance by the Committee. No payment will be made if the minimum return on
equity target is not met. The amount of the award increases if higher return on
equity targets are achieved.
In calculating return on equity for the purpose of certifying that a
performance target has been achieved, the Committee will use the Company's
reported net after-tax earnings divided by shareholder's equity (13-month
average of equity at the end of each month during and the month preceding the
fiscal year), both adjusted to reflect accounting principles in effect at the
beginning of the fiscal year.
NEGATIVE DISCRETION. Notwithstanding attainment of a target established for
an award under the 1995 EICP, the Committee has the discretion to reduce some or
all of an award that would otherwise be paid.
AWARD MAXIMUM. No participant may receive more than $2.5 million under the
1995 EICP in any calendar year.
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<PAGE>
AMENDMENT AND TERMINATION. The Committee may amend or terminate the 1995
EICP so long as such action does not adversely affect any rights or obligations
with respect to awards already outstanding under the Plan. Unless the
shareholders of Dresser shall have first approved thereof, no amendment of the
Plan may increase the maximum amount per year which can be paid to any one
participant under the Plan, change the performance goals for the awards or
modify the requirements as to eligibility for participation in the Plan. The
Committee may amend the Plan operating guidelines from time to time, consistent
with the Plan.
No awards may be made under the 1995 EICP after December 31, 2005.
FEDERAL TAX CONSEQUENCES. Under the Internal Revenue Code as presently in
effect, a grant of an award under the 1995 EICP would have no federal income tax
consequence. The payment of the award is taxable to a participant as ordinary
income. Amounts taxable to employees under the Plan will be deductible by
Dresser as compensation.
The Board of Directors recommends that shareholders vote FOR approval of
this Plan.
The following table sets forth Awards made under the 1992 Stock Compensation
Plan in the last fiscal year and an estimate of the awards which would have been
made if the 1995 Executive Incentive Plan had been in effect during the last
fiscal year. No awards will be made during fiscal 1995 under the Performance
Stock Unit Program since the Award Cycles under the plan begin on November 1 of
each odd-numbered year.
17
<PAGE>
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
1992 STOCK COMPENSATION PLAN
----------------------------------------------------
RESTRICTED PERFORMANCE STOCK
INCENTIVE STOCK UNIT PROGRAM
STOCK OPTION PROGRAM ----------------- 1995 EXECUTIVE
PROGRAM ---------------- MAXIMUM DOLLAR INCENTIVE PLAN
------------- NUMBER OF VALUE OF --------------
NUMBER OF RESTRICTED STOCK PERFORMANCE STOCK DOLLAR VALUE
NAME AND POSITION STOCK OPTIONS AWARDS UNITS ($) ($)
- --------------------------------------------- ------------- ---------------- ----------------- --------------
<S> <C> <C> <C> <C>
J. J. Murphy, Chairman and Chief Executive
Officer..................................... 22,062 4,412 $ 799,990 $ 787,200
B. D. St. John, Vice Chairman................ 0 0 462,194 428,860
W. E. Bradford, President and Chief Operating
Officer..................................... 0 0 462,194 434,600
D. C. Vaughn, Senior Vice President --
Operations, Chairman, President and Chief
Executive Officer -- The M. W. Kellogg
Company..................................... 0 0 0 0
J. L. Bryan, Senior Vice President --
Operations.................................. 0 0 262,955 246,000
Executive Officer Group...................... 91,559 18,311 2,588,083 2,922,700
Non-Executive Director Group................. 0 0 0 0
Non-Executive Officer Employee Group......... 264,870 1,560 590,637 293,232
</TABLE>
SHAREHOLDER PROPOSAL (PROXY ITEM NO. 4)
A proposal has been submitted by a shareholder with notice of intention to
present it for action at the meeting. The name and address and number of shares
held by the shareholder submitting the following proposal will be furnished by
the Company to any person either orally or in writing as requested, promptly
upon the receipt of any oral or written request therefor.
It should be noted that the DIRECTORS RECOMMEND A VOTE AGAINST THIS
PROPOSAL.
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<PAGE>
SHAREHOLDER PROPOSAL
WHEREAS, on May 24, 1994, South Africa's newly elected President Nelson
Mandela invited his country and its supporters to eradicate apartheid's economic
and social legacy, stating:
"My government's commitment to create a people-centered society of liberty
binds us to the pursuit of the goals of freedom from want, freedom from
hunger, freedom from deprivation, freedom from ignorance, freedom from fear.
These freedoms are fundamental to the guarantee of human dignity. They will
therefore constitute part of the centerpiece of what this government will
seek to achieve..."
South Africa's apartheid policies left its economy unjust and unproductive:
- One out of four children is physically and/or mentally stunted as a result
of malnutrition;
- More than seven million people are homeless or inhabit makeshift shanties;
- The black community's illiteracy and unemployment rates exceed 50%;
- Black South African's average income is one-tenth of whites;
- National economic growth declined between 1986 and 1993, to an annual
average of less than 1%.
We believe corporations can play a major role in building a productive
democratic South African economy. In 1993, the South African Council of Churches
(SACC) issued its Code of Conduct for Business Operating in South Africa,
inviting companies to help "reverse this crippling legacy and to improve the
economic well-being of all South Africans" by reshaping investments" in the
image of an equitable, democratic and life-enhancing society."
This ethical framework grew out of work with the African National Congress
(ANC), Coalition of South African Trade Unions (COSATU), and numerous other
political, community, business and international organizations.
The SACC Code encourages business to play a constructive and creative role in
partnership with employees, communities and other members of society to lay the
economic foundations for a stable and prosperous South Africa. Its planks call
for equal opportunity, training and education to increase productive capacities,
protection of workers' rights, a safe and healthy workplace, job creation,
social responsibility programs developed in consultation with communities
affected, disclosure of product hazards to consumers, environmentally sound
products and practices, support for black-owned businesses, and disclosure of
information needed to monitor Code implementation.
19
<PAGE>
Many U.S. companies have pledged to do their South African business in the
spirit of this code, stating that their current practices and commitment to good
corporate citizenship are already consistent with the Code.
We believe it is in our company's best interest to invest responsibly in South
Africa, whose gross domestic product of approximately $100 billion is 80% that
of Southern Africa, and half that of the African continent. In our view
adherence to the SACC Code will help stabilize our company's investment
environment, improve its standing in its South African communities and markets,
and prepare it to meet requirements the new government may legislate.
THEREFORE, shareholders request the Board of Directors:
1. to commit to uphold the Code of Conduct for Business Operating in South
Africa as it does business in that country and
2. report to shareholders on its implementation.
STATEMENT BY DIRECTORS AGAINST THE PROPOSAL
This resolution would require the Company to commit itself to uphold the
"Code of Conduct for Businesses Operating in South Africa" that was promulgated
on June 30, 1993 by the South African Council of Churches. That code covers nine
areas of corporate activity, including equal opportunity, labor relations,
community relations, affirmative action and consumer and environmental policies.
Companies doing business in South Africa are encouraged to operate in a manner
consistent with the code. This resolution would also require the Company to
report on its implementation of the code.
While your Board of Directors is dedicated to supporting the political and
economic reforms of the Mandela government, it recommends a vote AGAINST this
proposal because it may be contrary to that objective. For the following four
specific reasons, shareholders should decline to impose these two new
requirements on the Company:
First, the code was promulgated in 1993 as an interim measure, one that
would be superseded by the laws and policies enacted and adopted by a democratic
South African government elected freely by all South Africans. In the opinion of
your Directors, the introduction itself makes this point clear, when it states,
in relevant part: "While these standards are also expected to inform the
policies of a democratically-elected government, IN THE INTERIM, they are
designed to apply to companies operating, in South Africa." [emphasis added] It
is the opinion of your
20
<PAGE>
Directors that the South African Council of Churches intended that the code,
which was issued on June 30, 1993, would serve as a standard from the date of
issuance until South Africa's first universal-franchise election. That election
took place in April 1994.
Second, South Africa's first democratically-elected government has enacted
laws and established policies already in the areas covered by the code. That
government, in the exercise of its sovereignty, will continue to do so. Dresser
is obligated to obey the laws of each country, including South Africa, in which
the Company operates. Whereas the legal obligations of the Company in South
Africa may change as that country's laws change, the code is static. Conflicts
between South Africa law and the code could arise. The Company cannot,
therefore, commit itself to upholding this code since that commitment could
require the company to violate South African law.
Third, the report that would be required by the resolution is inconsistent
with the policy of the South African Council of Churches, the entity that issued
the code. On November 30, 1994, the South African Council of Churches issued a
document entitled "Memorandum on the Implementation of the SACC Code of Conduct
for Business," which states, in relevant part, that companies' expression of
support for the code "...in no way be construed to be a 'subscription' to the
code or a contractual commitment to report on compliance with any of the aspects
of the code."
Fourth, the reporting requirement imposed by this resolution is contrary to
the Company's and its shareholders' interests. Such a report, in order to be at
all meaningful, would require public disclosure of proprietary information. In
the judgment of your directors, it is in the Company's best business interests
that such information be kept confidential. Any report of the type required by
this proposal that omitted proprietary information would be, at best,
meaningless, and misleading to the Company's shareholders, the press, potential
investors, and to the public.
Your Directors are of the opinion that the commitment to uphold the South
African Council of Churches' Code of Conduct for Business Operating in South
Africa and the reporting about it that are required by this resolution would be
harmful to the interests of the Company and its shareholders. This resolution
should, therefore, be rejected.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
The affirmative vote of a majority of the shares present in person or
represented by proxy at the meeting and voting on this proposal is required for
the adoption of the Shareholder Proposal.
21
<PAGE>
Abstentions and broker non-votes will not be tabulated as negative votes on the
proposal, but will be included in computing the number of shares present for
purposes of determining the presence of a quorum for the shareholders meeting.
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 1995 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 $10,000 (plus reasonable out-of-pocket
expenses).
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1996 Annual Meeting of Shareholders of the
Company must be received no later than October 9, 1995, at the Company's
principal executive office, 2001 Ross Avenue, Dallas, Texas 75201, directed to
the attention of the Secretary.
22
<PAGE>
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. The Committee is
comprised of 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.
During 1994, an independent compensation and benefits consulting firm
evaluated the competitiveness of the executives' total compensation. The
Executive Compensation Committee reviewed the results of that study with the
consultant. The consultant's results confirmed the stated compensation policy.
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.
23
<PAGE>
By design, we strive to pay executives salaries in line with appropriate
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
as such 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.
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
specified threshold level below which no incentives are paid. The Committee
believes incentive opportunities are commensurate with the performance required
to achieve higher levels of Return on Equity. Target incentive opportunities are
not established for each individual executive. Rather, for 1994 incentive
opportunities, as an increasing percentage of base salary directly related to
the level of Return on Equity, were the same for all executive officers
participating in the plan in order to foster a team based approach. For 1994,
the level of Return on Equity produced incentive payments amounting to 82% of
base salaries.
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.
24
<PAGE>
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 maintain a long term equity interest. In 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 stock option grants. The initial exercise price of the 1994 grants
is 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. The exercise price will
increase on each anniversary of the grant date by 6.25% 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
original 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.
25
<PAGE>
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
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 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 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. For the four-year
cycle ended October 31, 1993, the performance criteria was not met, therefore no
payment was made.
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. The majority of his compensation is at
risk, in the form of performance bonuses, stock options, restricted stock
awards, and performance stock units.
Mr. Murphy's salary was increased $35,000 to $960,000 effective November 1,
1993, 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 1994
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 1994, determined as explained above, was $787,200 which
was equivalent to 82% of his base salary. Mr. Murphy's total direct compensation
(base salary plus bonus) is in the upper quartile of the competitive market for
fiscal 1994.
26
<PAGE>
In fiscal 1994, Mr. Murphy was granted options to purchase 22,062 shares of
common stock which is equivalent to the number of options exercised during the
previous calendar year.
POLICY REGARDING SECTION 162(M) OF THE INTERNAL REVENUE CODE
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) is applicable to Dresser for the Company's 1995
fiscal year which began November 1, 1994. It is the Committee's intention that,
so long as it is consistent with its overall compensation objectives,
substantially all executive compensation be deductible for federal income tax
purposes. If the 1995 Executive Incentive Compensation Plan (see page 15) and
the proposed amendments to the 1992 Stock Compensation Plan (see page 9) are
approved by shareholders, the Committee believes that, under current tax law, it
will have achieved this objective.
EXECUTIVE COMPENSATION COMMITTEE
<TABLE>
<S> <C>
Samuel B. Casey J. Landis Martin
Lawrence S. Eagleburger Lionel H. Olmer
Rawles Fulgham Jay A. Precourt
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.
27
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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.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION
---------------------------------- AWARDS
OTHER ----------------------- PAYOUTS
ANNUAL RESTRICTED SECURITIES ---------
COMPEN- STOCK UNDERLYING LONG TERM ALL OTHER
NAME AND SATION AWARDS OPTIONS INCENTIVE COMPEN-
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1)(2) ($)(3) (#) PAYOUTS SATION ($)(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 1994 $961,500 $787,200 $-0- $37,680 22,062 $ -0- $-0-
1993 928,000 545,750 -0- 33,663 131,000 272,258 -0-
1992 900,000 -0- -0- 28,448 289,369
Bill D. St. John, Vice Chairman 1994 517,500 428,860 -0- 19,745 -0- -0- -0-
1993 496,167 376,180 -0- -0- 53,000 107,668 -0-
1992 452,004 -0- -0- 17,973 115,519
William E. Bradford, President and
Chief Operating Officer 1994 525,000 434,600 -0- 31,938 -0- -0- -0-
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, 1994 372,191 517,868(4) -0- -0- -0- -0- 11(5)
Chairman, President and Chief 1993 336,739 508,578(4) -0- -0- 55,000 -0- 11(5)
Executive Officer - The M.W. 1992 316,667 437,184(4) -0- 10,607 -0-
Kellogg Company
James L. Bryan, Senior Vice
President - Operations 1994 295,575 246,000 -0- -0- -0- -0- -0-
1993 273,208 164,610 -0- -0- 51,000 -0- -0-
1992 260,992 -0- -0- 9,016 -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 year 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 are
</TABLE>
28
<PAGE>
<TABLE>
<S> <C>
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 31, 1994, the last trading day of
the Company's fiscal year) of the aggregate restricted stock holdings of
the named individuals were 3,299 ($70,104), 1,320 ($28,050) and 1,400
($29,750) for Messrs. Murphy, St. John and Bradford, respectively.
(4) Includes $258,934, $254,289 and $218,592 for 1994, 1993 and 1992,
respectively, non-elective deferral under terms of an unfunded plan in lieu
of normal pension benefits which provides for vesting in one-third of the
award on each of the crediting date and the next two anniversaries thereof.
The plan generally provides for payment of vested benefits in a lump sum or
ten equal annual installments following retirement, death or termination of
employment. However, the Executive Compensation Committee has discretion to
distribute all or a portion of vested benefits in certain emergencies, to
fully vest all benefits upon death, disability and termination of
employment other than resignation or termination for cause, and all
benefits may be forfeited under certain circumstances, all as defined in
the plan.
(5) Company contribution to a defined contribution pension plan.
</TABLE>
29
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options under the
Company's 1992 Stock Compensation Plan to the named executive officers of the
Company during the fiscal year ended October 31, 1994.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
PERCENT OF RATES OF STOCK
NUMBER OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS FOR OPTION TERM
UNDERLYING GRANTED TO EXERCISE OR (3)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ------------------
NAME GRANTED (#)(1,2) FISCAL YEAR ($/SH)(3) DATE 5% 10%
(A) (B) (C) (D) (E) (F) (G)
- ---------------------------------------- ---------------- ------------ ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
J. J. Murphy............................ 7,354 2.2 $22.25 1/19/2004 $103,085 $260,166
7,354 2.2 23.04 1/19/2004 97,270 254,352
7,354 2.2 23.88 1/19/2004 91,093 248,174
B. D. St. John.......................... -0-
W. E. Bradford.......................... -0-
D. C. Vaughn............................ -0-
J. L. Bryan............................. -0-
<FN>
- ------------------------------
(1) Stock options are shown at the price and in the sequence they first become
exercisable, respectively: July 21, 1994; January 20, 1995; and January 20,
1996. Terms of the Plan allow acceleration of exercisability of stock
options and lapse of restrictions on restricted Incentive Stock in
circumstances described on page 35. Stock Options granted were coupled with
a total of 4,412 Restricted Incentive Stock ("RIS") Awards to Mr. Murphy.
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
page 25.
(2) The initial exercise price of $22.25 for the first tranche of options
granted in 1994 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
6.25% 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.
(3) 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
</TABLE>
30
<PAGE>
<TABLE>
<S> <C>
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 1994 was less than 0.19% of
total shares outstanding during the year. Accordingly, the potential
realizable value of such options for all optionees under the prescribed
assumptions is less than 0.19% 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>
31
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION 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 VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT FISCAL
FISCAL YEAR END (#) YEAR END ($)(1)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
(A) (B) (C) (D) (E)
- -------------------------------------------------- --------------- ------------------ ------------------- -----------------
<S> <C> <C> <C> <C>
J. J. Murphy...................................... 14,087(2) $84,566 154,436/ $317,913/
81,575 198,870
B. D. St. John.................................... 6,900(2) 56,709 63,815/ 132,517/
29,385 207,138
W. E. Bradford.................................... 7,000(2) 25,250 55,128/ 76,523/
37,647 58,527
D. C. Vaughn...................................... -0- -0- 48,794/ 129,349/
25,913 66,793
J. L. Bryan....................................... -0- -0- 51,833/ 119,115/
23,483 66,603
<FN>
- ------------------------
(1) Values stated are based on the closing price of $21.25 per share of the
Company's Common Stock on the New York Stock Exchange on October 31, 1994,
the last trading day of the fiscal year.
(2) Under current guidelines (described on page 25) used by the Company's
Executive Compensation Committee for the grant of stock options since 1993,
on January 19, 1995, Messrs. Murphy, St. John and Bradford were granted
options to purchase 14,087, 6,900, and 7,000 shares of the Company's Common
Stock coupled with 2,817, 1,380, and 1,400 RIS Awards, respectively.
</TABLE>
32
<PAGE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The following table describes performance stock awards under the Dresser
Industries, Inc. 1992 Stock Compensation Plan Performance Stock Unit Program to
the named executive officers of Dresser.
<TABLE>
<CAPTION>
ESTIMATED
FUTURE PAYOUTS
UNDER NON- STOCK
PRICE- BASED
PERFORMANCE OR PLANS
OTHER PERIOD ---------------
UNTIL MATURATION MAXIMUM DOLLAR
NAME OR PAYOUT (1) AMOUNT (1)
- ---------------------------------------- ---------------- ---------------
<S> <C> <C>
J.J. Murphy............................. October 31, 1997 $799,990
B.D. St. John........................... October 31, 1997 462,194
W.E. Bradford........................... Otcober 31, 1997 462,194
J.L. Bryan.............................. October 31, 1997 262,955
<FN>
- ------------------------
(1) In fiscal 1994, the Executive Compensation Committee awarded contingent
Stock Units having the maximum values stated above under the Company's 1992
Stock Compensation Plan for the four year cycle ending October 31, 1997
including 39,550, 22,850, 22,850 and 13,000 to Messrs. Murphy, St. John,
Bradford and Bryan, respectively. Such Awards will not be paid unless the
Objective upon which payment of the Award is conditioned as established by
the Executive Compensation Committee at the time of the Award has been met.
If the Objective is met, one half of the Award amount will be paid on or
before January 15 following the end of the Award Cycle and the remainder
will be paid one year later.
</TABLE>
33
<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, 1994.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------
REMUNERATION* 15 20 25 30 35
- ----------------------------------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 300,000.......................... $ 75,737 $104,570 $133,402 $ 162,234 $ 191,067
450,000.......................... 115,187 159,020 202,852 246,684 290,517
600,000.......................... 154,637 213,470 272,302 331,134 389,967
750,000.......................... 194,087 267,920 341,752 415,584 489,417
900,000.......................... 233,537 322,370 411,202 500,034 588,867
1,050,000......................... 272,987 376,820 480,652 584,484 688,317
1,200,000......................... 312,437 431,270 550,102 668,934 787,767
1,350,000......................... 351,887 485,720 619,552 753,385 887,217
1,500,000......................... 391,337 540,170 689,002 837,835 986,667
1,650,000......................... 430,787 594,620 758,452 922,284 1,086,117
1,800,000......................... 470,237 649,070 827,902 1,006,734 1,185,567
1,950,000......................... 509,687 703,520 897,352 1,091,184 1,285,017
2,100,000......................... 549,137 757,970 966,802 1,175,635 1,384,467
<FN>
- ------------------------
*As of October 31, 1994, 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 34.16 years, Mr. Bradford 31.25 years, and Mr.
Bryan 34 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.
34
<PAGE>
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.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
30 YEARS
REMUNERATION OF SERVICE
- ------------------------------------------------------------ ----------
<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
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.
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.
35
<PAGE>
Based solely upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons that no Forms
5 were required, the Company believes that during the fiscal 1994 year all
filing requirements applicable to its officers and Directors were met except (i)
one report on Form 4 of Mr. Pye, reflecting his son's acquisitions of the
Company's common stock was filed late, and (ii) three reports of initial
ownership, Form 3, were filed late for trusts of which Mr. Hunt, is a trustee.
Mr. Hunt had previously reported, although ownership was disclaimed, all of the
trusts' transactions and filed the Form 3 as soon as he became aware of the
additional reporting requirement.
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.
36
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DRESSER INDUSTRIES INC. S&P 500 INDEX OIL WELL EQUIPMENT & SERVICE INDEX
<S> <C> <C> <C>
1989 100 100 100
1990 91.78 92.52 125.15
1991 108.11 123.51 137.71
1992 110.4 135.81 130.35
1993 128 156.1 137.65
1994 132.03 162.14 136.25
</TABLE>
Prepared by Standard & Poor's Compustat, a division of McGraw-Hill, Inc.
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 6, 1995
37
<PAGE>
EXHIBIT A
AMENDMENT NO. 1 TO
THE DRESSER INDUSTRIES, INC.
1992 STOCK COMPENSATION PLAN
Effective August 1, 1993, Part B, Section 4 of the Plan, relating to
restricted incentive stock, is amended by restating the introductory paragraph
and subsection (a) thereof as follows:
"The Committee shall grant Restricted Incentive Stock Awards to Eligible
Employees with respect to nonqualified stock options or incentive stock options
granted to them by the Company under Part A. Stock Option Program of the Plan
("Stock Options"). From the date of such grant the Eligible Employee shall be a
Participant. Each grant of a Restricted Incentive Stock Award shall entitle the
Participant to receive, for every five shares of such nonqualified or incentive
stock options granted to such Participant, one share of Stock upon exercise of
the underlying nonqualified or incentive stock options. As to Restricted
Incentive Stock Awards granted on or after August 1, 1993, related Restricted
Stock shall be issued only if at the time of exercise such Participant is
actively employed by the Company, a Subsidiary or an Affiliated Company and is
not Disabled. The Committee shall grant Restricted Incentive Stock Awards to
optionees in order to encourage them to hold shares of Stock following exercise
of Stock Options. Each Restricted Incentive Stock Award shall contain the
following terms, conditions and restrictions and such additional terms,
conditions and restrictions as may be determined by the Committee, provided,
however, that no Restricted Incentive Stock Award shall be subject to additional
terms, conditions and restrictions which are more favorable to a Participant
than the terms, conditions and restrictions set forth elsewhere in this Program.
(a) ISSUANCE OF RESTRICTED INCENTIVE STOCK. Restricted Incentive Stock
shall be issued as follows:
(i) Provided that the Company shall receive written acceptance by the
Participant of the Restrictions and other terms and conditions
described in the Program on the date of exercise of a Stock Option,
and provided that as to Restricted Incentive Stock Awards granted on
or after August 1, 1993, the Participant is actively employed on
such date of exercise and is not Disabled, a Participant shall be
issued, pursuant to a Restricted Incentive Stock Award, one share of
Restricted Stock for every five Option Shares.
(ii) The Company, at the direction of the Committee, shall hold
certificates evidencing shares of stock granted pursuant to a
Restricted Incentive Stock Award and the related Option shares, or
alternatively, deliver the certificates to the Participant."
38
<PAGE>
AMENDMENT NO. 2 TO
THE DRESSER INDUSTRIES, INC.
1992 STOCK COMPENSATION PLAN
1. The following sentences are added to the second paragraph of "Name and
General Purpose of Plan."
"A Participant may be granted multiple awards under the Plan but no
individual may be granted during any fiscal year awards which would
result in the individual receiving more than 500,000 shares under the
Plan. Solely for the purposes of determining whether this maximum is met,
a Performance Stock Unit shall be treated as entitling the holder thereof
to one share of the Company's common stock."
2. The fourth paragraph of "Name and General Purpose of the Plan" is amended to
read as follows:
"The Plan may be terminated or amended at any time by the Board of
Directors of the Company, except as otherwise provided in the Programs
that are a part of this Plan, provided, however, that unless the
stockholders of the Company shall have first approved thereof, no
amendment of the Plan shall be effective which would increase the maximum
number of shares of the Company's common stock which may be delivered
under the Plan or to any individual, except to the extent specifically
provided herein for certain changes in corporate structure, extend the
maximum period during which awards may be granted under the Plan, change
the Objective pursuant to which Performance Stock Units are earned, or
modify the requirements as to eligibility for participation in the Plan."
3. Part B, Section 4 is amended by restating the introductory paragraph as
follows:
"The Committee may grant Restricted Incentive Stock Awards to Eligible
Employees with respect to nonqualified stock options or incentive stock
options granted to them by the Company under Part A. Stock Option Program
of the Plan ("Stock Options"). From the date of such grant the Eligible
Employee shall be a Participant. Each grant of a Restricted Incentive
Stock Award shall entitle the Participant to receive, for every five
shares of such nonqualified or incentive stock options granted to such
Participant, one share of Stock upon exercise of the underlying
nonqualified or incentive stock options. As to Restricted Incentive Stock
Awards granted on or after August 1, 1993, related Restricted Stock shall
be issued only if at the time of exercise such Participant is actively
employed by the Company, a Subsidiary or an Affiliated Company and is not
Disabled. The Committee shall grant Restricted Incentive Stock Awards to
optionees in
39
<PAGE>
order to encourage them to hold shares of Stock following exercise of
Stock Options. Each Restricted Incentive Stock Award shall contain the
following terms, conditions and restrictions and such additional terms,
conditions and restrictions as may be determined by the Committee,
provided, however, that no Restricted Incentive Stock Award shall be
subject to additional terms, conditions and restrictions which are more
favorable to a Participant than the terms, conditions and restrictions
set forth elsewhere in this Program.
4. Part B, Section 4 is amended by inserting a new subsection (m) as
follows:
(m) PLEDGES OF RELATED OPTION SHARES. Notwithstanding anything to the
contrary contained in this Section 4, Participants shall be entitled to
pledge related Option Shares as security for a loan the proceeds of which
are used exclusively to fund the exercise of Option Shares and any such
pledge shall be disregarded in construing provisions of this Section.
5. Part C, Section 3(a) is restated as follows:
"Not later than 90 days after the beginning of each even-numbered fiscal
year, the Committee will establish the Objective for the Award Cycle
beginning with such year and select Officers and key employees to
participate in such Award Cycle and the number of Stock Units to be
granted to each. The Objective will be a readily determinable goal for
performance of the Company over the Award Cycle to be measured at the
completion of such Award Cycle (e.g., average annual return on
investment, earnings per share, earnings before taxes or other criterion
or combination thereof). The Objective may, but need not, be different in
amount or character from one Award Cycle to another. The payment of
Awards granted under this Program will be made only upon certification by
the Committee of the attainment by the Company, over a four year period,
of the Objective.
40
<PAGE>
EXHIBIT B
1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
1. PURPOSE.
The principal purposes of the Dresser Industries, Inc. 1995 Executive
Incentive Compensation Plan (the "Plan") are to provide incentives and rewards
to officers and key employees of Dresser Industries, Inc. ("Dresser"), who have
significant responsibility for the success and growth of Dresser and to assist
Dresser in attracting, motivating and retaining key employees on a competitive
basis.
2. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Executive Compensation Committee of
the Board of Directors of Dresser (the "Committee"). The Committee shall be
appointed by the Board of Directors and shall consist of two or more outside,
disinterested members of the Board.
The Committee shall have all the powers vested in it by the terms of this
Plan, such powers to include authority (within the limitations described herein)
to select the persons to be granted awards under the Plan, to determine the time
when awards will be granted, to determine whether objectives and conditions for
earning awards have been met, to determine whether awards will be paid at the
end of the award period or deferred, and determine whether an award or payment
of an award should be reduced or eliminated.
The Committee shall have full power and authority to administer and
interpret the Plan and to adopt such rules, regulations, agreements, guidelines
and instruments for the administration of the Plan and for the conduct of its
business as the Committee deems necessary or advisable. The Committee's
interpretations of the Plan, and all actions taken and determinations made by
the Committee pursuant to the powers vested in it hereunder, shall be conclusive
and binding on all parties concerned, including Dresser, its shareholders and
any person receiving an award under the Plan.
3. ELIGIBILITY.
Executive officers of Dresser will be granted awards under the Plan. The
Committee, in its discretion, may also grant awards to other key employees.
4. AWARDS.
(a) TYPES OF AWARDS. Executive officers of Dresser shall be granted annual
incentive awards under this Plan in November of each year, provided, however,
that if an individual
41
<PAGE>
becomes an executive officer during a year that individual shall be granted an
incentive award for that year upon his or her becoming an executive officer. The
Committee may, in its discretion, grant annual incentive awards to other key
employees.
(b) PERFORMANCE TARGETS. The Committee has established return on equity
targets which must be met in order for an award to be earned under this Plan.
These targets will not be amended without shareholder approval.
(c) PAYMENT OF AWARDS. Awards will be payable in cash each year upon
certification by the Committee that Dresser achieved the specified performance
target for the preceding year. No payment will be made if the minimum return on
equity target is not met.
(d) NEGATIVE DISCRETION. Notwithstanding the attainment by Dresser of the
specified return on equity targets, the Committee has the discretion, by
participant, to reduce some or all of an award that would be otherwise paid.
(e) MAXIMUM AWARDS. No participant may receive more than a maximum of $2.5
million under the Plan in any calendar year.
5. MISCELLANEOUS PROVISIONS.
(a) GUIDELINES. The Committee shall adopt from time to time written
policies for its implementation of the Plan.
(b) WITHHOLDING TAXES. Dresser shall have the right to deduct from all
awards hereunder paid in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such awards.
(c) NO RIGHTS TO AWARDS. Except as set forth herein, no employee or other
person shall have any claim or right to be granted an award under the Plan.
Neither the Plan nor any action taken hereunder shall be construed as giving any
employee any right to be retained in the employ of Dresser or any of its
subsidiaries, divisions or affiliates.
(d) COSTS AND EXPENSES. The cost and expenses of administering the Plan
shall be borne by Dresser and not charged to any award nor to any employee
receiving an award.
(e) FUNDING OF PLAN. The Plan shall be unfunded. Dresser shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any award under the Plan.
42
<PAGE>
6. EFFECTIVE DATE, AMENDMENTS AND TERMINATION.
(a) EFFECTIVE DATE. If approved by Dresser's shareholders, the Plan shall
become effective for the 1995 fiscal year.
(b) AMENDMENTS. The Committee may at any time terminate or from time to
time amend the Plan in whole or in part, but no such action shall adversely
affect any rights or obligations with respect to any awards theretofore made
under the Plan.
Unless the shareholders of Dresser shall have first approved thereof, no
amendment of the Plan shall be effective which would increase the maximum amount
which can be paid to any one participant under the Plan, which would change the
specified performance goal for payment of awards or which would modify the
requirements as to eligibility for participation in the Plan.
(c) TERMINATION. No awards shall be made under the Plan after December 31,
2005.
43
<PAGE>
--------------------------------
--------------------------------
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD
MARCH 16, 1995
AND
PROXY STATEMENT
[LOGO]
DRESSER INDUSTRIES, INC.
2001 ROSS AVENUE
DALLAS, TEXAS 75201
--------------------------------
--------------------------------
<PAGE>
[NOMINEE PROXY CARD]
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 16, 1995 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
<TABLE>
<S> <C><C> <C><C>
(1) ELECTION OF DIRECTORS:
/ / FOR all nominees (except as indicated below) / / WITHHOLD AUTHORITY to vote for all nominees
</TABLE>
Nominees: W. Bradford, S. Casey, L. Eagleburger, S. Earle, R. Fulgham, J. Gavin,
R. Hunt, L. Martin, J. Murphy, L. Olmer, J. Precourt, B. St. John and R. Vieser.
To withhold authority for any one or more individual nominees, write that
nominee name(s) on the line below.
__________________________________________________
(2) AMENDMENTS TO THE STOCK COMPENSATION PLAN:
/ / FOR / / AGAINST / / ABSTAIN
(3) THE EXECUTIVE INCENTIVE COMPENSATION PLAN
/ / FOR / / AGAINST / / ABSTAIN
(over)
<PAGE>
DRESSER INDUSTRIES, INC.
(CONTINUED FROM OTHER SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 4.
(4) SHAREHOLDER PROPOSAL ON SOUTH AFRICA
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY WILL BE VOTED AS YOU DIRECT; IN THE ABSENCE OF SUCH DIRECTION, IT
WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3, AND "AGAINST" PROPOSAL 4.
DATED _____________________ , 1995
__________________________________
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
<PAGE>
[RECORD SHAREHOLDER PROXY CARD]
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 16, 1995 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
BELOW; NO BOXES NEED TO BE CHECKED.
__________________________________________________
DATED _____________________ , 1995
__________________________________
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
<PAGE>
DRESSER INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(CONTINUED FROM OTHER SIDE)
THIS PROXY WILL BE VOTED AS YOU DIRECT; IN THE ABSENCE OF SUCH DIRECTION, IT
WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3, AND "AGAINST" PROPOSAL 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
<TABLE>
<S> <C><C> <C><C>
(1) ELECTION OF DIRECTORS:
/ / FOR all nominees (except as indicated below) / / WITHHOLD AUTHORITY to vote for all nominees
</TABLE>
Nominees: W. Bradford, S. Casey, L. Eagleburger, S. Earle, R. Fulgham, J. Gavin,
R. Hunt, L. Martin, J. Murphy, L. Olmer, J. Precourt, B. St. John and R. Vieser.
To withhold authority for any one or more individual nominees, write that
nominee name(s) on the line below.
__________________________________________________
(2) AMENDMENTS TO THE STOCK COMPENSATION PLAN:
/ / FOR / / AGAINST / / ABSTAIN
(3) THE EXECUTIVE INCENTIVE COMPENSATION PLAN
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 4.
(4) SHAREHOLDER PROPOSAL ON SOUTH AFRICA
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
[UNEXCHANGED BAROID SHAREHOLDER PROXY CARD]
DRESSER INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
1. Election of Directors--
Nominees: W. Bradford, S. Casey, L. Eagleburger, S. Earle, R. Fulgham, J.
Gavin, R. Hunt, L. Martin, J. Murphy, L. Olmer, J. Precourt, B. St. John
and R. Vieser.
(INSTRUCTION: To withhold authority to vote for any individual nominee
write that nominee's name in the space provided)
For All
For Withheld Except nominees(s) written below
/ / / / / /
----------------------------------------
2. Amendments to the Stock Compensation Plan
For Against Abstain
/ / / / / /
3. The Executive Incentive Compensation Plan
For Against Abstain
/ / / / / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 4.
4. Shareholder Proposal on South Africa
For Against Abstain
/ / / / / /
THIS PROXY WILL BE VOTED AS YOU DIRECT; IN THE ABSENCE OF SUCH DIRECTION, IT
WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3 AND "AGAINST" PROPOSAL 4.
Dated ________________________, 1995
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Signature
Please sign as your name or names appear on the reverse side. For joint
accounts, each owner should sign. When signing as executor, administrator,
attorney, trustee or guardian, etc., please give your full title.
<PAGE>
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 16, 1995 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.
<PAGE>
[NL EMPLOYEE SAVINGS PLAN PROXY CARD]
CONFIDENTIAL PROXY VOTING INSTRUCTION CARD
DRESSER INDUSTRIES, INC.
VOTING INSTRUCTIONS FOR PROXY SOLICTED
ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
MARCH 16, 1995
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 OF THE SHARES OF COMMON STOCK ("COMMON STOCK") OF
DRESSER INDUSTRIES, INC. ("DRESSER") CREDITED TO THE PLAN ACCOUNT OF THE
UNDERSIGNED ON JANUARY 27, 1995 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 16, 1995 AT 10:00 A.M. (LOCAL TIME), AND ANY
ADJOURNMENT OR POSTPONEMENT THEREOF.
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.
Please fold at perforation before detaching
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Please mark your choices /X/ in blue or black ink.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
This proxy will be voted as you direct; in the absence of such direction, / /FOR all nominees / /WITHHOLD
it will not be voted by the Trustee. listed below AUTHORITY
(except as marked to to vote for all
The Board of Directors recommends a vote "FOR" Proposals 1, 2 and 3. the contrary below) nominees listed
below.
1. ELECTION OF DIRECTORS:
Nominees: W. Bradford, S. Casey, L. Eagleburger, S. Earle, R. Fulgham,
J. Gavin, R. Hunt, I. Martin, J. Murphy, L. Olmer, J. Precourt,
B. St. John and R. Vieser
<CAPTION>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S
NAME ON THE SPACE PROVIDED BELOW.)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. AMENDMENTS TO THE STOCK COMPENSATION PLAN: / / / / / /
3. THE EXECUTIVE INCENTIVE COMPENSATION PLAN / / / / / /
The Board of Directors recommends a vote "AGAINST" Proposal 4.
4. SHAREHOLDER PROPOSAL ON SOUTH AFRICA. / / / / / /
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------
- -Signature of Stockholder--------------------- Date ----------
- -Signature of Stockholder--------------------- Date ----------
Please sign as name appears hereon. Joint owners each should
sign. When signing as attorney, trustee, administrator,
executor, etc., please indicate your full title as such. If
a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
/ / NL
PLEASE MARK, SIGN, DATE, AND PROMPTLY RETURN THIS PROXY USING THE ENCLOSED ENVELOPE.
</TABLE>
<PAGE>
[BAROID EMPLOYEE SAVINGS PLAN PROXY CARD]
CONFIDENTIAL PROXY VOTING INSTRUCTION CARD
DRESSER INDUSTRIES, INC.
VOTING INSTRUCTIONS FOR PROXY SOLICTED
ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
MARCH 16, 1995
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 27, 1995 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 16, 1995 AT 10:00 A.M. (LOCAL TIME), AND ANY
ADJOURNMENT OR POSTPONEMENT THEREOF.
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 PROPOSALS 1, 2 AND 3, AND
AGAINST PROPOSAL 4.
Please fold at perforation before detaching
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Please mark your choices /X/ in blue or black ink.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
This proxy will be voted as you direct; in the absence of such direction, / /FOR all nominees / /WITHHOLD
it will be voted "FOR" Proposals 1, 2 and 3, and "AGAINST" Proposal 4. listed below AUTHORITY
(except as marked to to vote for all
The Board of Directors recommends a vote "FOR" Proposals 1, 2 and 3. the contrary below) nominees listed
below.
1. ELECTION OF DIRECTORS:
Nominees: W. Bradford, S. Casey, L. Eagleburger, S. Earle, R. Fulgham,
J. Gavin, R. Hunt, I. Martin, J. Murphy, L. Olmer, J. Precourt,
B. St. John and R. Vieser
<CAPTION>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S
NAME ON THE SPACE PROVIDED BELOW.)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. AMENDMENTS TO THE STOCK COMPENSATION PLAN: / / / / / /
3. THE EXECUTIVE INCENTIVE COMPENSATION PLAN / / / / / /
The Board of Directors recommends a vote "AGAINST" Proposal 4.
4. SHAREHOLDER PROPOSAL ON SOUTH AFRICA. / / / / / /
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------
- -Signature of Stockholder--------------------- Date ----------
- -Signature of Stockholder--------------------- Date ----------
Please sign as name appears hereon. Joint owners each should
sign. When signing as attorney, trustee, administrator,
executor, etc., please indicate your full title as such. If
a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
/ / BAROID
PLEASE MARK, SIGN, DATE, AND PROMPTLY RETURN THIS PROXY USING THE ENCLOSED ENVELOPE.
</TABLE>
