<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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
DRESSER INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
DRESSER INDUSTRIES, INC.
2001 ROSS AVENUE
DALLAS, TEXAS 75201
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 20, 1997
---------------------
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 20, 1997, at 10:00 a.m., for the
following purposes:
1. To elect twelve Directors to serve for the ensuing year or until their
successors are elected and qualified.
2. To transact any other business as properly may come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business January 27, 1997, 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 10, 1997
<PAGE>
DRESSER INDUSTRIES, INC.
2001 ROSS AVENUE
DALLAS, TEXAS 75201
FEBRUARY 10, 1997
------------------------
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 20, 1997, 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, 1997, is the record date for the
determination of shareholders entitled to notice of and to vote at the meeting.
At January 27, 1997, the Company had outstanding and entitled to vote at the
meeting 176,242,673 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.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The Company knows of no person or group, except the following named
institutional investment managers, believed to own beneficially more than 5% of
any class of the Company's stock entitled to be voted at this meeting.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF OWNERSHIP OF CLASS
- --------------------------------------------------------------- ------------------ -----------
<S> <C> <C>
FMR Corp. 22,218,136 (1) 12.15%
82 Devonshire Street
Boston, Massachusetts 02109
Barrow Hanley Mewhinney & Strauss, Inc. 9,504,200 (2) 5.21%
3232 McKinney Avenue, 15th Floor
Dallas, Texas 75204-2429
</TABLE>
- --------------------------
(1) Information obtained from Amendment No. 1 to the joint statement on Schedule
13G as of February 29, 1996 filed with the Securities and Exchange
Commission by FMR Corp., Edward C. Johnson 3d, Abigail P. Johnson, and
Fidelity Management & Research Company. Includes 20,686,640 shares of which
Fidelity Management & Research Company ("Fidelity"), a wholly owned
subsidiary of FMR Corp., is the beneficial owner as a result of acting as
investment adviser to varous investment companies registered under Section 8
of the Investment Company Act of 1940 (the "Funds"). Edward C. Johnson 3d,
Chairman of FMR Corp., and FMR Corp., through its control of Fidelity, and
the Funds each has sole power to dispose of such shares. Neither FMR Corp.
nor Mr. Johnson, has the sole power to vote or direct the voting of such
shares, which power resides with the Funds' Board of Trustees. Fidelity
carries out the voting of the shares under written guidelines established by
the Funds' Board of Trustees. Also includes 1,531,496 shares of which
Fidelity Management Trust Company ("FMTC"), a wholly owned subsidiary of FMR
Corp., is the beneficial owner as a result of serving as investment manager
of institutional account(s). Mr. Johnson and FMR Corp., through its control
of FMTC, has sole dispositive power over such shares and sole power to vote
or direct the voting of 1,093,709 of such shares, and no power to vote or
direct the voting of 437,787 of such shares.
(2) Information obtained from the statement on Schedule 13G as of February 9,
1996 filed with the Securities and Exchange Commission by Barrow Hanley
Mewhinney & Strauss, Inc. ("BHMS"). BHMS has sole power to dispose of all
such shares, sole power to vote or direct the voting of 1,086,800 of such
shares and shared power to vote or direct the voting of 8,417,400 of such
shares.
2
<PAGE>
The following table states the number of shares of Common Stock of the
Company owned by each current Director and nominee, each of the executive
officers named in the Summary Compensation Table, and by all Directors and
executive officers as a group as of January 3, 1997. The number of shares
beneficially owned by all Directors and executive officers as a group
represented less than 2% 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........................................... 279,881 (Note A)
Samuel B. Casey, Jr........................................... 1,321
Lawrence S. Eagleburger....................................... 1,455
Sylvia A. Earle............................................... 772
Rawles Fulgham................................................ 18,000
John Gavin.................................................... 10,395
Ray L. Hunt................................................... 102,409 (Note B)
J. Landis Martin.............................................. 100,507
John J. Murphy................................................ 472,496 (Note A)
Lionel H. Olmer............................................... 7,842
Jay A. Precourt............................................... 4,624
A. Jack Stanley............................................... 29,999 (Note A)
Bill D. St. John.............................................. 168,489 (Note A)
Donald C. Vaughn.............................................. 115,811 (Note A)
Richard W. Vieser............................................. 16,918
All Directors, Nominees and executive officers as a group (29
persons)..................................................... 2,377,012 (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 15, 1997, a total of 64,444,
68,464, 112,932 and 48,878 stock units were credited to the accounts of Messrs.
Bradford, Murphy, St. John and Vaughn, respectively, and 449,449 stock units
were credited to the accounts of all executive officers as a group.
NOTE A: Shares shown include stock options issued under the Company's 1982
Stock Option Plan and 1992 Stock Compensation Plan which are exercisable on or
within sixty days after January 3, 1997 to purchase a number of shares of the
Company's Common Stock which together with related
3
<PAGE>
Restricted Incentive Stock Awards under the 1989 Restricted Incentive Stock Plan
and 1992 Stock Compensation Plan total 216,497, 171,479, 29,999, 62,367 and
105,961 for Messrs. Bradford, Murphy, Stanley, St. John and Vaughn,
respectively, and 1,504,221 for all Directors and executive officers as a group.
Under the Rules of the Securities and Exchange Commission, such shares are
considered to be beneficially owned for the purpose of this Proxy Statement. For
the purpose of calculating percentage ownership, such shares were also
considered to be outstanding.
NOTE B: Shares shown include 33,688 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, 1997, owned of record 844,795 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, twelve 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 twelve nominees named below. All nominees
were previously elected by the shareholders except Mr. Vaughn, who was elected a
Director effective December 1, 1996 by the Board of Directors. Under the Board's
retirement policy for Directors, Messrs. John J. Murphy and Bill D. St. John,
formerly Chairman of the Board and Vice Chairman, respectively, who recently
became 65 years of age, retired as Directors upon their November 30, 1996
retirement as officers of the Company. 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 twelve nominees for Director receiving the affirmative vote of a
plurality of the shares present in person or represented by proxy at the meeting
and entitled to vote will be elected. Votes will be tabulated by inspectors of
election appointed by the Company's Board of Directors. Except for quorum
purposes, abstentions and votes withheld will have no legal effect.
4
<PAGE>
The following includes certain information concerning the nominees furnished
by them to the Company.
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE DURING PAST ELECTED
NAME (AGE) 5 YEARS AND OTHER INFORMATION DIRECTOR
- ------------------------------------- --------------------------------------------------------- -----------
<S> <C> <C>
William E. Bradford (62) Chairman of the Board of the Company since December 1996 1992
and Chief Executive Officer since November 1995,
President March 1992 - December 1996, Chief Operating
Officer, March 1992 - November 1995; President and Chief
Executive Officer of Dresser-Rand Company, Corning, New
York, 51% joint venture partnership, 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. (69) Director, Dixon Ticonderoga Company; Global Industrial 1983
Technologies Inc.; and Northbrook, Inc., a Division of
JMB, Inc.
Lawrence S. Eagleburger (66) Senior Foreign Policy Advisor, Baker, Donelson, Bearman & 1993
Caldwell, Washington, D.C., law firm, since January 1993;
United States Secretary of State, Department of State,
December 1992 - January 1993, Acting Secretary of State,
August 1992 - December 1992, Deputy Secretary of State,
February 1989 - August 1992; President, Kissinger
Associates, New York, New York, provider of strategic
consulting services to international companies, September
1984 - January 1989; Director, Jefferson Bankshares;
Phillips Petroleum Company; Stimsonite; Universal
Corporation; Corning Corp.; and COMSAT.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE DURING PAST ELECTED
NAME (AGE) 5 YEARS AND OTHER INFORMATION DIRECTOR
- ------------------------------------- --------------------------------------------------------- -----------
<S> <C> <C>
Sylvia A. Earle, Ph.D. (61) Founder and Director, Deep Ocean Engineering, Inc., San 1995
Leandro, California, designer and manufacturer of
underwater equipment, since 1981, President, Chief
Executive Officer and Chairman 1988-1990; President, Deep
Ocean Exploration and Research, Inc., Oakland,
California, a consulting firm, since 1992; Chairman, Sea
Change Trust, a nonprofit organization for scientific
research, Covington, Virginia, since 1994; Chief
Scientist, National Oceanic and Atmospheric
Administration, 1990-1992, Advisor to the Administrator,
1992-1993; Director, Oryx Energy Company.
Rawles Fulgham (69) Senior Advisor, Merrill Lynch & Co., Inc., Dallas, Texas, 1975
financial services, since September 1989; Director,
BancTec, Inc.; Global Industrial Technologies Inc.; and
NCH Corporation.
John A. Gavin (65) For more than five years, Chairman of the Board, 1986
President, and Chief Executive Officer, Gamma Services
International, Los Angeles, California, venture capital
and international consulting firm; Managing Director
(Latin America) Hicks, Muse, Tate & Furst, a private
investment firm, since 1995; Director, Atlantic Richfield
Company; Pinkerton's, Inc.; International Wire Holdings;
Hotchkis and Wiley, Mutual Funds; and Kap Resources
(Canadian).
Ray L. Hunt (53) For more than five years, Chairman of the Board and Chief 1984
Executive Officer, Hunt Oil Company, Dallas, Texas, oil
and gas exploration and development; 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, Electronic Data Systems
Corporation; PepsiCo, Inc.; Ergo Science Incorporated;
and Security Capital Group.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE DURING PAST ELECTED
NAME (AGE) 5 YEARS AND OTHER INFORMATION DIRECTOR
- ------------------------------------- --------------------------------------------------------- -----------
<S> <C> <C>
J. Landis Martin (51) For more than five years, President and Chief Executive 1994
Officer of NL Industries, Inc., Houston, Texas, a
manufacturer and marketer of titanium dioxide pigments
and specialty chemicals; Chairman of the Board and Chief
Executive Officer of Baroid Corporation (and its
predecessor), Houston, Texas, effective January 21, 1994,
a wholly owned subsidiary of the Company, August 1990 -
January 1994; for more than five years Chairman of
Titanium Metals Corporation, Denver, Colorado, an
integrated producer of titanium metals, Chief Executive
Officer since January 1995; Director, NL Industries,
Inc.; Titanium Metals Corporation; Tremont Corporation;
and Apartment Investment and Management Corporation (a
real estate investment trust).
Lionel H. Olmer (62) For more than five years, partner, Paul, Weiss, Rifkind, 1986
Wharton & Garrison, law firm, Washington, D.C.; Director,
SIPEX Corp.
Jay A. Precourt (59) For more than five years, Vice Chairman and Chief 1994
Executive Officer, and, since October 1996, President of
Tejas Gas Corporation, Houston, Texas, a natural gas
pipeline company; Director, Founders Funds, Inc.; Tejas
Gas Corporation; and the Timken Company.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE DURING PAST ELECTED
NAME (AGE) 5 YEARS AND OTHER INFORMATION DIRECTOR
- ------------------------------------- --------------------------------------------------------- -----------
<S> <C> <C>
Donald C. Vaughn (60) President and Chief Operating Officer of the Company 1996
since December 1996, Executive Vice President November
1995 - December 1996, Senior Vice President -- Operations
January 1992 - November 1995; Chairman, President and
Chief Executive Officer of M.W. Kellogg, Inc. June 1995 -
June 1996; Chairman and Chief Executive Officer of The
M.W. Kellogg Company September 1986 - June 1996,
President November 1983 - June 1995.
Richard W. Vieser (69) Director, Ceridian Corporation; Global Industrial 1989
Technologies Inc.; Sybron International; Varian
Associates, Inc.; and Berg Electronics & International
Wire Corp.
</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. Casey (Chairman), Eagleburger, Gavin,
Martin and Dr. Earle. The functions of the Committee, which held two meetings
during fiscal 1996, 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. Fulgham
(Chairman), Hunt, Olmer, Precourt and Vieser. The Committee, which held four
meetings during fiscal 1996, and acted on three occasions 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 staff, the
Incentive Stock Unit Plan for operating unit executives, the 1995 Executive
Incentive Compensation Plan and the Long Term Performance and Annual Incentive
Plans for Selected Employees of The M.W. Kellogg Company.
8
<PAGE>
The Executive Committee, consisting of Messrs. Bradford (Chairman), Fulgham,
Hunt and Vaughn, 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 did not meet during fiscal 1996.
The Nominating Committee, consisting of Messrs. Hunt (Chairman), Casey,
Fulgham, Gavin, and Vieser, searches for and recommends candidates for election
as 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 two meetings during
fiscal 1996 and acted on one occasion by unanimous written consent.
During fiscal 1996, there were eight meetings of the Board of Directors.
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 or she is a
member except Mr. Precourt. 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 1996, each Director of
the Company who was not an employee received an annual retainer equal to $31,000
for Board membership, $2,500 for each Committee membership, $1,000 for service
as Chairman of a Committee and $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 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 equivalent account. During fiscal 1996 Mr. Gavin
was paid $10,000 quarterly under an agreement pursuant to which he served as
chair of the Dresser Industries de Mexico Advisory Board. The agreement has been
extended through January 31, 1997.
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 during the period for which the award is
made. Directors may elect to defer awards otherwise payable under the Plan.
9
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Company's acquisition of 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 excise 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 $6.1 million and $9.1 million in
letters of credit under a bank facility which was established in connection with
certain insurance relationships of NL Industries, Inc. ("NL"), of which Mr.
Martin is a director and executive officer, and Tremont, respectively. NL and
Tremont are obligated to indemnify Dresser for any losses or expenses in respect
of these letters of credit.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
At the beginning of fiscal year 1996 the members of the Executive
Compensation Committee of the Company were Messrs. Casey (Chairman), Gavin,
Hunt, Martin and Vieser. Later Mr. Fulgham replaced Mr. Casey as Chairman, and
Messrs. Olmer and Precourt replaced Messrs. Gavin and Martin. Business entities
in which Mr. Hunt and certain members of his immediate family own substantial
interests have in the past fiscal year made purchases from the Company in the
ordinary course of business and on the same basis as transactions with other
customers of the Company. The Company anticipates that similar transactions are
likely to occur in the future.
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.
10
<PAGE>
INFORMATION ON INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has unanimously reappointed the firm
of Price Waterhouse LLP as independent accountants for the 1997 fiscal year. A
representative of Price Waterhouse LLP 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 LLP that he may
desire.
OTHER INFORMATION FURNISHED PURSUANT TO REGULATIONS
OF THE 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 1997 Annual Meeting of Shareholders of the
Company must be received no later than October 14, 1997, at the Company's
principal executive office, 2001 Ross Avenue, Dallas, Texas 75201, directed to
the attention of the Secretary.
EXECUTIVE COMPENSATION
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Executive Compensation Committee of the Board of Directors. The Committee is
comprised of five independent, non-employee directors. The Committee is
committed to a strong, positive link between business performance, strategic
goals, shareholder value, and total compensation programs.
11
<PAGE>
OVERALL EXECUTIVE COMPENSATION POLICY
Our compensation policy is designed to support the overall objective of
enhancing value for our shareholders by:
- Attracting, developing, rewarding, and retaining highly qualified and
productive individuals.
- Directly relating compensation to both Company and individual performance.
- Ensuring compensation levels that are externally competitive and
internally equitable.
- Encouraging executive stock ownership to enhance a mutuality of interest
with other shareholders.
The Committee considers all elements of compensation when determining
individual components of pay. The Committee relies in part on recommendations
from the Chairman of the Board regarding compensation levels for executive
officers excluding himself. Following is a description of the elements of
Dresser executive compensation and how each relates to the objectives and policy
outlined above.
BASE SALARY
The Committee reviews each executive officer's salary annually. In
determining appropriate salary levels, we consider level and scope of
responsibility, experience, a subjective evaluation of overall Company
performance, individual performance, internal equity, as well as pay practices
of other companies relating to executives of similar responsibility. No specific
weightings are assigned to these criteria.
By design, we strive to pay executives salaries in line with appropriate
competitive market levels. In defining the competitive market, we include
companies in the energy services industry as well as major equipment producers
with a median 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.
12
<PAGE>
We believe maximum performance can be encouraged through the use of
appropriate incentive programs. Incentive programs for executives are as
follows:
ANNUAL INCENTIVES
The annual incentive plan emphasizes a positive link between enhanced
shareholder value and incentive compensation. Incentive payments under the plan
are based solely on achievement of specified levels of Return on Equity (ROE).
The Committee believes incentive opportunities are commensurate with the
performance required to achieve increasingly higher levels of ROE. Performance
above a specified ROE threshold level is required before any incentives are
paid. For 1996, the level of ROE produced incentive payments to senior executive
officers amounting to not more than 88% of aggregate base salaries.
Because ROE is used to measure performance, we believe 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.
Bradford 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 Incentive Stock Awards. The
objective is to provide a competitive total long-term incentive opportunity,
utilizing the market survey data previously described.
STOCK OPTIONS
Stock options encourage and reward effective management that results in
long-term corporate financial success, as measured by stock price appreciation.
The Stock Option Program is compatible with shareholder interests and
encourages executives to maintain a long term equity interest. Target stock
option grant levels are established subjectively based on assessment of each
executive's scope of responsibilities and level within the organization. Stock
holdings of the executive group resulting from option exercises are considered
when determining the size of the current awards. Since January 1993, Dresser has
emphasized premium options. At time of grant, two-thirds of the stock options
have an exercise price greater than the fair market value at grant date. 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
13
<PAGE>
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. Under terms of the Program, the Committee has full and
sole authority to change the guidelines for grant of stock options at any time
subject only to the express provisions of the Program.
RESTRICTED INCENTIVE STOCK AWARDS
To further encourage executive officers to exercise stock options and hold
the stock following exercise, stock option grants to executive officers usually
are made in tandem with Restricted Incentive Stock Awards. Recipients of
Restricted Incentive Stock Awards are issued, upon exercise of the related
option, one share of restricted stock for every five-option shares exercised
which the Committee believes is an appropriate inducement for promoting enhanced
equity interest by executives. Provided the related option shares are held on
that date, restrictions on Restricted Incentive Stock lapse on the third
anniversary of the date of issue or, if earlier, upon termination of employment
by reason of death, disability or approved retirement. If the related option
shares are sold or otherwise transferred prior to lapse of restrictions, the
Restricted Incentive Stock is forfeited.
PERFORMANCE STOCK UNITS
This program is intended to reward executives when the Company attains
preset goals over a period of four years, thus encouraging and rewarding long
term planning and performance. Such awards are made every second year. The
objectives for the four-year periods ending October 31, 1997 and 1999 are to
achieve, an average of not less than 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, 1995, the
performance criteria was not met, therefore no payment was made. The next
opportunity for payout will be for the measurement period ending October 31,
1997.
RATIONALE FOR CEO COMPENSATION
Mr. Bradford was named Chief Executive Officer November 16, 1995. His
compensation package was 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
Incentive Stock Awards, and Performance Stock Units.
14
<PAGE>
Mr. Bradford's salary was increased $196,000 to $750,000 effective November
16, 1995, and is in the second quartile of the competitive market. The factors
which the Committee considered in determining Mr. Bradford's base salary for
fiscal 1996 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. Bradford for fiscal year 1996, determined as explained above, was
$660,000, which was equivalent to 88% of his base salary. Mr. Bradford's total
direct compensation (base salary plus bonus) is in the second quartile of the
competitive market for fiscal 1996.
In fiscal 1996, Mr. Bradford was granted options to purchase 32,233 shares
of common stock which is equivalent to the number of options exercised during
the previous year. Mr. Bradford also was granted options to purchase 150,000
shares of common stock upon being named Chief Executive Officer in November,
1995.
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 1996
fiscal year which began November 1, 1995. The Stock Option Program, the
Performance Stock Unit Program, and the 1995 Executive Incentive Compensation
Plan are believed to qualify as performance-based compensation under IRS rules.
The M.W. Kellogg Company Annual Incentive Plan and The M.W. Kellogg Company
Long-Term Performance Plan are based on performance measures of The M.W. Kellogg
Company but are not intended to qualify as performance-based under tax
regulations.
EXECUTIVE COMPENSATION COMMITTEE
<TABLE>
<S> <C>
Samuel B. Casey J. Landis Martin
John Gavin Richard W. Vieser
Ray L. Hunt
</TABLE>
The directors as listed above, were members of the Executive Compensation
Committee at the time the majority of substantive compensation decisions, as
described above, were made and do not necessarily reflect the composition of the
committee as of the end of the fiscal year.
The Board Compensation Committee Report on Executive Compensation shall not
be deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
15
<PAGE>
SUMMARY COMPENSATION TABLE
The following sets forth information concerning the compensation of the
Company's Chief Executive Officer and each of the other four most highly
compensated executive officers of the Company at the end of the last completed
fiscal year. No information is given as to any person for any fiscal year during
which such person was not an executive officer of the Company.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------- ------------------------------------
AWARDS PAYOUTS
OTHER ------------------------ ---------
ANNUAL RESTRICTED
COMPEN- STOCK SECURITIES LONG TERM ALL OTHER
NAME AND SATION AWARDS UNDERLYING INCENTIVE COMPEN-
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1) ($)(2) OPTIONS (#) PAYOUTS SATION ($)(4)
(A) (B) (C) (D) (E) (F) (G) (H) (I)
- --------------------------------- ---- ----------- ----------- ------- ---------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John J. Murphy, 1996 $998,000 $878,240 $-0- $801,850 166,783 $-0- $399,088
Retired Chairman 1995 998,000 568,860 -0- -0- 14,087 -0- 147,205
1994 960,000 787,200 -0- 37,680 22,062 -0- -0-
Bill D. St. John, 1996 561,333 501,600 -0- 437,973 90,100 -0- 239,403
Retired Vice 1995 537,000 310,080 -0- -0- 6,900 -0- 82,053
Chairman 1994 516,000 428,860 -0- 19,745 -0- -0- -0-
William E. Bradford, 1996 741,833 660,000 -0- -0- 182,233 -0- 320,739
Chairman and Chief 1995 546,000 315,780 -0- 148,235 7,000 -0- 87,948
Executive Officer 1994 522,000 434,600 -0- 31,938 -0- -0- -0-
Donald C. Vaughn, 1996 441,293 413,600 -0- -0- 34,100 -0- 30,890
President and Chief 1995 365,404 508,722(3) -0- -0- -0- -0- 9
Operating Officer 1994 349,115 517,868(3) -0- -0- -0- -0- 11
A. Jack Stanley, 1996 391,410(5) 458,187(3) -0- -0- 75,000 -0- 4,092
Vice President --
Operations
</TABLE>
- --------------------------
(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) Since 1989, Restricted Incentive Stock Awards have been coupled with most
stock option grants to officers of the Company. Recipients of Restricted
Incentive Stock Awards are issued, upon the exercise of the related option,
one share of Restricted Incentive Stock for every five option shares
exercised. Provided the related option shares are held on that date,
restrictions on Restricted Incentive Stock lapse on the third anniversary of
the date of issue or, if earlier, upon termination of employment by reason
of death, disability or approved retirement. If the related option shares
are sold or otherwise transferred prior to lapse of
16
<PAGE>
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 Composite
Transactions on October 31, 1996, the last trading day of the Company's
fiscal year) of the aggregate restricted stock holdings of the named
individuals were 34,542 ($1,135,568), 18,897 ($621,239) and 7,845 ($257,904)
for Messrs. Murphy, St. John and Bradford, respectively.
(3) Includes $254,361 and $258,934 for 1995 and 1994, respectively, for Mr.
Vaughn and $168,067 for 1996 for Mr. Stanley 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.
(4) Company contributions to qualified defined contribution retirement plans and
related liabilities to non-qualified plans.
(5) Includes $59,038 in accrued benefits which were paid in cash on Mr.
Stanley's promotion to Vice President.
17
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options under the
Company's 1992 Stock Compensation Plan to the named executive officers of the
Company during the fiscal year ended October 31, 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM (3)
OPTIONS EMPLOYEES IN EXERCISE OR BASE EXPIRATION ----------------------
NAME GRANTED (#)(1) FISCAL YEAR PRICE ($/SH)(2) DATE 5% 10%
(A) (B) (C) (D) (E) (F) (G)
- ------------------- --------------- --------------- ------------------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
J. J. Murphy....... 55,594 7.3 $ 23.875 1/17/2006 $ 836,203 $ 2,110,418
55,594 7.3 25.875 1/17/2006 725,015 1,999,230
55,595 7.3 27.875 1/17/2006 613,838 1,888,076
B. D. St. John..... 30,033 3.95 23.875 1/17/2006 451,734 1,140,090
30,033 3.95 25.875 1/17/2006 391,668 1,080,024
30,034 3.95 27.875 1/17/2006 331,613 1,019,992
W. E. Bradford..... 50,000 6.6 21.750 11/15/2005 685,125 1,729,125
50,000 6.6 23.750 11/15/2005 585,125 1,629,125
50,000 6.6 25.750 11/15/2005 485,125 1,529,125
10,744 1.4 23.875 1/17/2006 161,603 407,856
10,744 1.4 25.875 1/17/2006 140,115 386,368
10,745 1.4 27.875 1/17/2006 118,638 364,914
D. C. Vaughn....... 8,333 1.1 21.750 11/15/2005 114,183 288,176
8,333 1.1 23.750 11/15/2005 97,517 271,510
8,334 1.1 25.750 11/15/2005 80,861 254,875
3,033 0.4 23.875 1/17/2006 45,620 115,136
3,033 0.4 25.875 1/17/2006 39,554 109,070
3,034 0.4 27.875 1/17/2006 33,499 103,038
A. Jack Stanley.... 25,000 3.3 28.375 7/17/2006 446,906 1,127,906
25,000 3.3 30.375 7/17/2006 396,906 1,077,906
25,000 3.3 32.375 7/17/2006 346,906 1,027,906
</TABLE>
- --------------------------
(1) Stock options are shown at the price and in the sequence they first become
exercisable, respectively: July 18, 1996, January 18, 1997 and January 18,
1998 for Messrs. Murphy, St. John and Bradford; May 16, 1996, November 16,
1996 and November 16, 1997 for Messrs. Bradford and Vaughn; and January 18,
1997, July 18, 1997, and July 18, 1998 for Mr. Stanley. Terms of the Plan
allow acceleration of exercisability of stock options and lapse of
restrictions on Restricted Incentive Stock in circumstances described on
page 23.
18
<PAGE>
Unvested options previously granted to Messrs. Murphy and St. John were made
exercisable upon their retirement pursuant to terms of the Plan. Stock
Options granted were coupled with a total of 33,356, 15,000, 18,020, 36,446
and 6,820 Restricted Incentive Stock ("RIS") Awards to Messrs. Murphy,
Stanley, St. John, Bradford and Vaughn, respectively. Recipients of RIS
Awards will be issued, upon the exercise of the related option while
actively employed by the Company, one share of restricted stock for every
five option shares exercised. Provisions for lapse of restrictions are
described in Note 2 to the Summary Compensation Table. Guidelines currently
used by the Executive Compensation Committee for grant of subsequent options
are described beginning on page 13.
(2) Option grants in 1996 were made in approximately 3 equal installments. The
option price of the first installment of each grant is the average of the
high and low trading prices of the Company's Common Stock as shown by New
York Stock Exchange quotations on the date of grant, and the option price of
the second and third installments are, respectively, $2 and $4 higher than
that of the first installment.
(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 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 1996 was less than
0.42% 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 0.42% 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.
19
<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 UNEXERCISED
UNDERLYING UNEXERCISED IN- THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR AT FISCAL YEAR
SHARES ACQUIRED VALUE END (#) END ($)(1)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
(A) (B) (C) (D) (E)
- -------------------------- --------------- ----------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
J. J. Murphy.............. 166,783 $ 828,097 134,213/ $ 1,440,115/
115,885 726,890
B. D. St. John............ 90,308 436,067 37,498/ 367,005/
62,367 389,669
W. E. Bradford............ -0- -0- 125,952/ 1,455,520/
123,823 971,133
D. C. Vaughn.............. 9,100 31,850 76,973/ 984,122/
22,734 171,819
A. Jack Stanley........... -0- -0- 0/ 0/
75,000 187,500
</TABLE>
- ------------------------
(1) Values stated are based on the closing price of $32.875 per share of the
Company's Common Stock as listed in the New York Stock Exchange Composite
Transactions on October 31, 1996, the last trading day of the fiscal year.
20
<PAGE>
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
The following table describes Performance Stock Unit Awards under the
Dresser Industries, Inc. 1992 Stock Compensation Plan Performance Stock Unit
Program (the "Awards") to the named executive officers of Dresser.
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PAYOUTS UNDER
NON-STOCK
PRICE-BASED
PERFORMANCE OR OTHER PLANS
PERIOD UNTIL MATURATION ----------------
OR MAXIMUM DOLLAR
NAME PAYOUT (1) AMOUNT (1)
- ---- ------------------------- ----------------
<S> <C> <C>
J.J. Murphy.................................................... October 31, 1999 $ 828,000
B.D. St. John.................................................. October 31, 1999 477,900
W.E. Bradford.................................................. October 31, 1999 828,000
D.C. Vaughn.................................................... October 31, 1999 374,400
A.J. Stanley................................................... October 31, 1999 240,667
</TABLE>
- ------------------------
(1) In fiscal 1996, 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, 1999
including 34,750, 20,050, 34,750, 15,700 and 10,100 to Messrs. Murphy, St.
John, Bradford, Vaughn and Stanley, 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.
21
<PAGE>
DRESSER RETIREMENT PLANS
The estimated total annual retirement benefits payable under defined benefit
pension plans are set forth below. The chart illustrates benefits accrued to
October 31, 1996.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------------------------
REMUNERATION* 10 15 20 25 30 35
- ----------------------------- ---------- ---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$ 250,000.................... $ 38,750 $ 63,750 $ 88,750 $ 113,750 $ 138,750 $ 163,750
300,000.................... 46,500 76,500 106,500 136,500 166,500 196,500
450,000.................... 69,750 114,750 159,750 204,750 249,750 294,750
600,000.................... 93,000 153,000 213,000 273,000 333,000 393,000
750,000.................... 116,250 191,250 266,250 341,250 416,250 491,250
900,000.................... 139,500 229,500 319,500 409,500 499,500 589,500
1,050,000................... 162,750 267,750 372,750 477,750 582,750 687,750
1,200,000................... 186,000 306,000 426,000 546,000 666,000 786,000
1,350,000................... 209,250 344,250 479,250 614,250 749,250 884,250
1,500,000................... 232,500 382,500 532,500 682,500 832,500 982,500
1,800,000................... 279,000 459,000 639,000 819,000 999,000 1,179,000
1,900,000................... 294,500 484,500 674,500 864,500 1,054,500 1,244,500
2,000,000................... 310,000 510,000 710,000 910,000 1,110,000 1,310,000
2,100,000................... 325,500 535,500 745,500 955,500 1,165,500 1,375,500
2,200,000................... 341,000 561,000 781,000 1,001,000 1,221,000 1,441,000
2,300,000................... 356,500 586,500 816,500 1,046,500 1,276,500 1,506,500
</TABLE>
- ------------------------
* As of October 31, 1996, assuming attained age 65.
The gross amounts represented above include sums accrued under Dresser's
qualified and non-qualified defined benefit plans. However, amounts credited to
Dresser's qualified and non-qualified defined contribution plans will be paid
from those plans and thus represent deductions to the above gross amounts.
Likewise, applicable Social Security benefits, and "pension benefit equivalents"
credited under Dresser's deferred compensation plan, also represent deductions.
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 and Mr.
Stanley who are not participants in the Company's qualified defined benefit
plans) is excluded in determining benefits. Years of
22
<PAGE>
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 35
years, Mr. Bradford 33.25 years, Mr. Vaughn .958 years and Mr. Stanley .33
years. Benefits are computed as straight-life annuity amounts which may be paid
in various forms.
The covered compensation, years of credited service and estimated total
annual retirement benefits payable to Messrs. Vaughn and Stanley at age 65 under
defined benefit pension plans of a Company subsidiary are set forth below,
respectively. 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
OF
REMUNERATION SERVICE
- ------------ ---------
<S> <C>
$230,000..................................................................... $ 67,513
$161,600..................................................................... $ 20,870
</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.
23
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16 of the Securities and Exchange Act of 1934 requires Directors,
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.
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 1996 year all
filing requirements applicable to its officers and Directors were met except one
report on Form 4 of Mr. Ables, reflecting 8 transactions relating to the
cashless exercise of stock options under a Company benefit plan was filed late.
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 Global Industrial Technologies, Inc. (formerly 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.
24
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DRESSER S&P OIL & GAS (DRILLING S&P 500
INDUSTRIES INC & EQUIPMENT) - 500 INDEX
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 102.12 94.66 109.95
1993 118.39 99.96 126.39
1994 122.12 98.94 131.27
1995 123.76 103.15 165.98
1996 200.56 169.20 205.97
</TABLE>
Prepared by Standard & Poor's Compustat.
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 10, 1997
25
<PAGE>
--------------------------------
--------------------------------
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD
MARCH 20, 1997
AND
PROXY STATEMENT
[LOGO]
DRESSER INDUSTRIES, INC.
2001 ROSS AVENUE
DALLAS, TEXAS 75201
--------------------------------------
--------------------------------------
<PAGE>
DRESSER INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
WILLIAM E. BRADFORD AND DONALD C. VAUGHN, or either 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 Avenue, Dallas, Texas, on March 20,
1997 at 10:00 a.m., and to vote the number of shares which the undersigned would
be entitled to vote if personally present on all matters properly coming before
the meeting or any adjournment thereof. The proxies are authorized to vote in
their discretion upon such other business as may properly come before the
Meeting and any and all adjournments thereof.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATION, JUST SIGN THE
REVERSE SIDE; NO BOXES NEED TO BE CHECKED.
THIS PROXY WILL BE VOTED AS YOU DIRECT; IN THE ABSENCE OF SUCH DIRECTION, IT
WILL BE VOTED "FOR" ALL NOMINEES.
(over)
<PAGE>
DRESSER INDUSTRIES, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" DIRECTORS.
1. ELECTION OF DIRECTORS:
Nominees: W. Bradford, S. Casey, L. Eagleburger, S. Earle, R. Fulgham, J. Gavin,
R. Hunt, L. Martin, L. Olmer, J. Precourt, D. Vaughn and R. Vieser.
/ / FOR all nominees / / VOTE WITHHELD from all nominees
To withhold authority to vote for one or more individual nominees, write the
nominee name(s) on the line below.
- --------------------------------------------------------------------------------
DATED __________________ , 1997
_______________________________
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
