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 Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Hardinge 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] $125 per Exchange Act Rules 0-11(c)(I)(ii), 14-a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $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 (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:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[HARDINGE LOGO]
HARDINGE INC.
CORPORATE HEADQUARTERS AND MANUFACTURING FACILITY
Elmira, NY
---------------
Notice of 1997 Annual Meeting and Proxy Statement
---------------
Dear Stockholder:
The directors and officers of Hardinge are pleased to invite you to attend
the 1997 annual meeting of our stockholders, which will be held at the
Company's corporate headquarters, One Hardinge Drive, Elmira, New York, on
Tuesday, April 22, 1997, at 9:00 A.M.
At the meeting, we will (1) elect one Class I director, three Class II
directors and three Class III directors and (2) vote on a proposal to ratify
the appointment of Ernst & Young LLP as Hardinge's independent public
accountants, each as described in the formal notice of the meeting and Proxy
Statement appearing on the following pages. We also will report on the
progress of Hardinge and comment on matters of current interest. Stockholders
will have an opportunity to comment or ask questions.
Your vote is important. Whether or not you expect to attend the meeting
and regardless of the number of shares you own, please be sure to fill in,
sign and return the enclosed proxy. A prompt return of your proxy will be
appreciated.
Sincerely,
/s/ Robert E. Agan
Robert E. Agan
Chairman of the Board
and Chief Executive Officer
Corporate Headquarters--One Hardinge Drive, Elmira, NY 14902-1507
Telephone: (607) 734-2281
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HARDINGE INC.
Corporate Headquarters and Manufacturing Facility
Elmira, NY
-------------
To the Stockholders of
Hardinge Inc.
-------------
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of the Stockholders of
HARDINGE INC. will be held at the Company's corporate headquarters, One
Hardinge Drive, Elmira, New York, on Tuesday, April 22, 1997, at 9:00 A.M.,
for the following purposes:
(1) To elect to the Board of Directors one Class I director, three Class
II directors and three Class III directors;
(2) To consider ratification of the appointment of Ernst & Young LLP as
Hardinge's independent public accountants for the fiscal year ending
December 31, 1997; and
(3) To consider and transact such other business as may properly come
before the meeting or any adjournment thereof.
The close of business on February 21, 1997 has been fixed as the record date
for the determination of the stockholders entitled to notice of and to vote at
the meeting.
By Order of the Board of Directors,
J. PHILIP HUNTER,
Secretary
Dated: March 11, 1997
Elmira, New York
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[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
HARDINGE INC.
Corporate Headquarters and Manufacturing Facility
Elmira, NY
----------
PROXY STATEMENT
----------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors for use at the Annual Meeting of
Stockholders (the "Annual Meeting") of Hardinge Inc. (the "Company") to be
held on Tuesday, April 22, 1997, at 9:00 A.M., at the Company's corporate
headquarters, One Hardinge Drive, Elmira, New York. This Proxy Statement and
the accompanying Proxy and Notice of Annual Meeting of Stockholders are being
mailed to stockholders on or about March 11, 1997. A stockholder granting a
proxy has the right to revoke it by filing with the Secretary of the Company
prior to the time such proxy is voted a duly executed proxy bearing a later
date, by attending the Annual Meeting and voting in person, or by otherwise
notifying the Secretary of the Company in writing of such stockholder's
intention to revoke such proxy prior to the time such proxy is voted.
If the enclosed proxy card is returned properly signed, the shares
represented will be voted in accordance with your directions. You can specify
your choices by marking the appropriate boxes. If your proxy card is signed
and returned without specifying choices, the shares will be voted as
recommended by the directors. Abstentions are voted neither "for" nor
"against," but are counted in the determination of a quorum. If you wish to
give your proxy to someone other than those individuals designated on the
enclosed proxy card, all three names appearing on the proxy card must be
crossed out and the name of another person or persons inserted. The signed
card must be presented at the meeting by the person or persons representing
you.
As a matter of policy, proxies, ballots and voting tabulations that
identify individual shareholders are kept private by the Company. Such
documents are available for examination only by the inspectors of election
and certain personnel associated with processing proxy cards and tabulating
the vote. The vote of any shareholder is not disclosed except as may be
necessary to meet legal requirements.
Shares allocated to the accounts of participants in the Hardinge Inc.
Savings Plan may be voted through separate participant direction cards that
have been mailed to participants in the Plan along with this Proxy Statement.
If a participant also owns shares outside this plan, the participant must
return both the proxy card and the participant direction card. The trustee of
this Plan will vote the number of shares allocated to a participant's account
or accounts under such plan in accordance with the directions on the
participant direction card. Shares for which the trustee receives no
instructions will be voted by the trustee in the same proportion as shares
for which voting instructions have been received.
Only stockholders of record at the close of business on February 21, 1997
are entitled to receive notice of and to vote at the Annual Meeting. As of
February 21, 1997, there were 6,499,338 shares of Common Stock outstanding
and entitled to vote. Each share of Common Stock is entitled to one vote.
There are no cumulative voting rights. Nominees for director will be elected
by a plurality of votes cast at the Annual Meeting by holders of Common Stock
present in person or by proxy and entitled to vote on such election. Any
other matter requires the affirmative vote of a majority of the votes cast at
the meeting, except as otherwise provided in the Certificate or By-laws. Only
shares affirmatively voted in favor of a nominee will be counted toward the
achievement of a plurality. Votes withheld (including broker non-votes) and
abstentions are counted as present for the purpose of determining a quorum
but are not counted as votes cast.
1
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ACTION TO BE TAKEN UNDER THE PROXY
It is proposed that at the Annual Meeting action will be taken on the
matters set forth in the accompanying Notice of Annual Meeting of
Stockholders and described in this Proxy Statement. The Board of Directors
does not know of any other business to be brought before the Annual Meeting,
but it is intended that, as to any such other business, a vote may be cast
pursuant to the proxies granted in the form of the enclosed proxy card in
accordance with the judgment of the person or persons acting thereunder; and
should any herein-named nominee for the office of director become unable to
accept nomination or election, which is not anticipated, it is intended that
the persons acting under such proxies will vote for the election in the stead
of such nominee of such other person as the Board of Directors may recommend.
NOMINEES FOR ELECTION AS DIRECTORS
The Company's Board of Directors is divided into three classes. Nominee E.
Martin Gibson is a Class I director and if elected at the Annual Meeting will
serve a term of one year expiring at the 1998 Annual Meeting or when his
successor has been duly elected and qualified. Nominees J. Philip Hunter, J.
Allan Krul and Eve L. Menger are Class II directors and if elected at the
Annual Meeting will serve a term of two years expiring at the 1999 Annual
Meeting or when their respective successors have been duly elected and
qualified. Nominees John W. Bennett, James L. Flynn and Douglas A. Greenlee
are Class III directors and if elected at the Annual Meeting will serve a
term of three years expiring at the 2000 Annual Meeting of Stockholders or
when their successors have been duly elected and qualified.
The following table sets forth with respect to each nominee for director
and each director continuing in office such person's length of service as a
director, age, principal occupation during the past five years, other
positions such person holds with the Company, if any, and any other
directorships such person holds in companies with securities registered
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMIEES.
<TABLE>
<CAPTION>
Principal Occupations During Past 5 Years; Length of Service
Other Positions Held with the Company; as Director and
Name and Age Other Directorships of Publicly Traded Companies Expiration of Term
----------------------- ------------------------------------------------- --------------------
<S> <C> <C>
Nominee for Class I Director:
E. Martin Gibson ......... Retired December 1994 as Chairman and Chief Executive Since 1981
(Age 59) Officer, Corning Lab Services, Inc., provider of Expires 1997
clinical laboratory services, formerly a
subsidiary of Corning Incorporated, and as a
Director, Corning Incorporated. Until December 31,
1996 Corning Incorporated was engaged in the
specialty materials, communications, healthcare
services and consumer products businesses.
Currently Director, Novacare, Inc., a provider of
healthcare services; Chairman of the Board of
Directors, International Technology Corp., a
provider of environmental services; Member and
Chairman of the Company's Compensation, Incentive
Compensation and Nominating Committees.
Nominees for Class II Directors:
J. Philip Hunter ......... Partner, Sayles, Evans, Brayton, Palmer & Tifft, a Since 1992
(Age 54) law firm; Secretary of the Company; Member of the Expires 1997
Company's Executive, Compensation, Audit and
Investment Committees.
2
<PAGE>
Principal Occupations During Past 5 Years; Length of Service
Other Positions Held with the Company; as Director and
Name and Age Other Directorships of Publicly Traded Companies Expiration of Term
----------------------- ------------------------------------------------- --------------------
J. Allan Krul ............ President and Chief Operating Officer since October Since 1996
(Age 54) 22, 1996; prior to said date, Executive Vice President Expires 1997
and Chief Operating Officer of the Company.
Dr. Eve L. Menger......... Director of Characterization Science and Service, Since 1995
(Age 54) Corning Incorporated which is currently engaged in Expires 1997
the specialty materials, communications and consumer
products businesses; formerly, Vice Provost for
University-Industry Relations and Professor of
Chemistry, University of Virginia; Member of the
Company's Audit and Investment Committees.
Nominees for Class III Directors:
John W. Bennett............ Chairman of the Board and Chief Executive Officer and Since 1993
(Age 63) Director, Chemung Financial Corporation, a bank Expires 1997
holding company and its wholly-owned subsidiary,
Chemung Canal Trust Company; Member of the Company's
Executive, Audit and Nominating Committees.
James L. Flynn............. Retired since March 1994. Prior to that date, Since 1984
(Age 62) Senior Vice President--Investment Services, Corning Expires 1997
Incorporated; Member and Chairman of the Company's
Executive and Investment Committees; Member of the
Company's Audit and Nominating Committees.
Douglas A. Greenlee ....... Vice President of the Company since 1993; Secretary Since 1979
(Age 49) of the Company in 1992; Member of the Company's Expires 1997
Investment Committee.
Continuing in Service
Class I Directors:
Robert E. Agan............. Chairman of the Board and Chief Executive Officer of Since 1980
(Age 58) the Company since October 22, 1996; prior to said Expires 1998
date, Chairman of the Board, President and Chief
Executive Officer of the Company; Director, Chemung
Financial Corporation; Member of the Company's
Executive and Nominating Committees.
Richard J. Cole............ Vice President, Meritus Consulting Services, LLC, a Since 1991
(Age 65) management consulting firm; formerly, Division Vice Expires 1998
President, IBM Corporation, a manufacturer of
information equipment; Member and Chairman of the
Company's Audit Committee; Member of the Company's
Executive, Compensation, Incentive Compensation and
Investment Committees.
</TABLE>
3
<PAGE>
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors is seeking stockholder ratification of the
appointment of Ernst & Young LLP as its independent auditors for 1997.
The Audit Committee of the Board of Directors has reviewed and evaluated
all criteria it considered relevant in assessing the performance of Ernst &
Young LLP, such as the quality of its audit work, its knowledge of the
industry and the Company's affairs, the availability of its professional
advice on a timely basis and the reasonableness of its fees. Based upon such
review and evaluation, the engagement of Ernst & Young LLP as independent
auditors has been approved by the Board of Directors upon the recommendation
of the Audit Committee. If stockholders do not ratify the appointment of
Ernst & Young LLP, the appointment of independent auditors will be
reconsidered by the Audit Committee and the Board of Directors. Even if the
appointment is ratified, the Audit Committee in its discretion may
nevertheless recommend to the Board of Directors another firm of independent
auditors at any time during the year if the Audit Committee determines such a
change would be in the best interests of the stockholders and the Company.
Ernst & Young LLP has audited the Company's financial statements annually
since 1984. A representative of Ernst & Young LLP is expected to attend the
Annual Meeting, and will have the opportunity to make a statement if such
representative desires to do so and will be able to respond to appropriate
questions from stockholders.
Vote Required
The affirmative vote of a majority of the votes cast at the Annual Meeting
is required for ratification of the appointment of Ernst & Young LLP.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP.
4
<PAGE>
Security Ownership of Certain Beneficial Owners
The only persons who, to the knowledge of the management of the Company,
owned beneficially on February 21, 1997 more than 5% of the Common Stock of
the Company are set forth below. Unless otherwise indicated, each of the
persons named below has sole voting and investment power with respect to the
shares listed.
Name and Address Shares Owned and % of
of Beneficial Owner Nature of Beneficial Ownership Class
------------------- ------------------------------ ------
Robert E. Agan ................. 370,874(1) 5.71%
309 Holley Road
Elmira, NY 14905
Chemung Canal Trust Company .... 790,429(2) 12.16%
1 Chemung Canal Plaza
Elmira, NY 14902
Hardinge Inc. Savings Plan ..... 430,347(3) 6.62%
c/o Chemung Canal Trust Company, Trustee
1 Chemung Canal Plaza
Elmira, NY 14902
Douglas A. Greenlee ............ 349,781(4) 5.38%
205 Kennedy Drive
Horseheads, NY 14845
- ------------
(1) Sole beneficial owner of 188,768 shares of Common Stock and sole trustee
of trusts for the benefit of his children holding 16,182 shares of Common
Stock with sole voting and dispositive powers; shares as co-trustee of a
trust under the Company's Pension Plan voting and dispositive powers with
respect to 165,924 shares.
(2) Chemung Canal Trust Company ("CCTC") held 790,429 shares in various
fiduciary capacities. CCTC holds 660,412 shares of Common Stock for
various parties in personal trusts, agency and custodial accounts,
pension accounts, estates and guardianships, with respect to which shares
CCTC has sole voting power as to 530,585 shares, shared voting power with
respect to 129,827 shares, sole investment power with respect to 403,852
shares and shared investment power with respect to 129,827 shares. Said
beneficial ownership also includes 130,017 shares held by CCTC as trustee
of the Company's Savings Plan as to which CCTC shares voting and
dispositive powers, but does not include 300,330 additional shares held
as trustee of said Plan. (See footnote 3 below.)
(3) Includes all shares of Common Stock held by Chemung Canal Trust Company
as the Trustee of the Hardinge Inc. Savings Plan. The participants in
said Plan may instruct the Trustee as to the voting of 300,330 of such
shares. If no instructions are received, the Trustee votes the shares in
the same proportion as it votes all of the shares for which instructions
are received. The power to dispose of said shares is restricted by the
provisions of the Plan. With respect to 130,017 shares held by Chemung
Canal Trust Company as trustee of said Savings Plan, the trustee has the
power to vote and dispose of said shares, except that it is required in
the event of a tender offer or of any corporate action requiring a
greater than majority vote of stockholders to act in accordance with
instructions received from Plan participants.
(4) Sole beneficial owner of 36,073 shares of Common Stock, shares with two
others, as co-trustee of a trust for the benefit of himself and seven
others, voting and dispositive powers as to 271,966 shares of Common
Stock, and 41,742 shares are held with two others as attorneys-in-fact
for another. Not included are 200,871 shares of Common Stock held in
trust by Chemung Canal Trust Company (see footnote 2 above) as trustee
for the benefit of himself and seven others, nor 12,000 shares of Common
Stock held in trust by Chemung Canal Trust Company under which trust Mr.
Greenlee is a contingent remainderman.
5
<PAGE>
Security Ownership of Management
Set forth below is the number of shares of Common Stock of the Company
beneficially owned on February 21, 1997 by the directors and nominees for
directors, by the Executive Officers listed in the Summary Compensation Table
and by all directors and Executive Officers of the Company as a group. Unless
otherwise indicated, each of the persons named below, and directors and
officers as a group, has sole voting and investment power with respect to the
shares listed.
Name of Shares Owned and Nature of % of
Beneficial Owner Beneficial Owner Ownership(1) Class
---------------- ----------------------------- -----
Robert E. Agan ..................... 370,874(2) 5.71%
John W. Bennett ................... 3,519 *
Richard J. Cole ................... 3,469 *
J. Patrick Ervin .................. 28,179 *
James L. Flynn .................... 6,908 *
E. Martin Gibson .................. 10,557 *
Malcolm L. Gibson ................. 227,598(3) 3.50%
Douglas A. Greenlee ............... 349,781(4) 5.38%
J. Philip Hunter .................. 4,682 *
J. Allan Krul ..................... 98,506 1.52%
Dr. Eve L. Menger ................. 2,221 *
All Executive Officers and Directors as a
Group (16 persons including the above) 1,109,114(5) 17.07%
*Less than one percent of the Company's outstanding shares of Common Stock.
- ------------
(1) Includes shares which may be purchased pursuant to stock options held by
directors that were exercisable within 60 days as of February 21, 1997.
Messrs. Bennett, Cole, Flynn, E.M. Gibson and Hunter and Dr. Menger held
500, 500, 2,355, 4,575, 500 and 500, respectively, of such options to
purchase shares of Common Stock. Also includes all shares held by the
Trustee of the Hardinge Inc. Savings Plan allocated to members of the
group who have sole voting power with respect to said shares. The Trustee
holds for the benefit of Messrs. Agan, Ervin, M.L. Gibson, Greenlee and
Krul and all Executive Officers as a group 7,912, 410, 1,819, 958, 4,517
and 17,190 shares, respectively. Also includes shares subject to
forfeiture and restrictions on transfer granted pursuant to the Company's
1993 and 1996 Incentive Stock Plans.
(2) Sole beneficial owner of 188,768 shares of Common Stock and sole trustee
of trusts for the benefit of his children holding 16,182 shares of Common
Stock with sole voting and dispositive powers; shares as co-trustee of a
trust under the Company's Pension Plan voting and dispositive powers with
respect to 165,924 shares. See "Security Ownership of Certain Beneficial
Owners" above.
(3) Sole beneficial owner of 61,674 shares of Common Stock and shares as
trustee with Robert E. Agan (see footnote 2 above) voting and dispositive
powers as to 165,924 shares of Common Stock as trustees under the
Company's Pension Plan.
(4) Sole beneficial owner of 36,073 shares of Common Stock, shares with two
others, as co-trustee of a trust for the benefit of himself and seven
others, voting and dispositive powers as to 271,966 shares of Common
Stock, and 41,742 shares are held with two others as attorneys-in-fact
for another. Not included are 200,871 shares of Common Stock held in
trust by Chemung Canal Trust Company as trustee for the benefit of
himself and seven others, nor 12,000 shares of Common Stock held in trust
by Chemung Canal Trust Company under which trust Mr. Greenlee is a
contingent remainderman. See "Security Ownership of Certain Beneficial
Owners" above.
(5) Includes 165,924 shares of Common Stock owned by the Company's Pension
Plan as to which Messrs. Agan and M.L. Gibson share, as trustees, voting
and dispositive powers.
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of the
Company's Common Stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of
6
<PAGE>
the Company. Certain officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. To the Company's knowledge,
based solely on review of the copies of such reports furnished to the Company
and its representatives and certain representations that no other reports
were required, all persons subject to these reporting requirements filed the
required reports on a timely basis, except initial filings by Joseph T.
Colvin, J. Patrick Ervin and Daniel Soroka who inadvertently filed late
because they did not receive timely information about their Section 16
responsibilities upon being elected Vice Presidents of the Company on October
22, 1996.
COMPENSATION OF EXECUTIVE OFFICERS
Report of the Compensation Committees on Executive Compensation:
The Company's annual compensation policies applicable to executive
officers are administered by the Compensation Committee (the "Committee") of
the Board of Directors, all of which Committee members are non- employee
directors. The compensation policies are designed to attract, motivate and
retain qualified individuals required to manage the Company to meet its
short- and long-term objectives and thereby increase stockholder value.
Significant emphasis is also placed on encouraging executive officers to
build their holdings of the Company's stock to align their goals with those
of the stockholders. The Company's program on executive compensation consists
of three primary components--base salary, annual incentive bonuses and
long-term incentives under incentive stock plans. The Committee recommends to
the Board of Directors the salaries and incentive bonuses of executive
officers and the Incentive Compensation Committee administers the incentive
stock plans. The Committees consider total individual performance and the
overall financial and other significant conditions of the Company in making
their compensation recommendations. Each of the three components of executive
compensation is reviewed for competitiveness and reasonableness in relation
to a group of companies the Committee deems comparable.
Base Salary:
In October 1995, the Committee determined the 1996 base salaries set forth
in this proxy statement. At that time the Committee considered the financial
performance of the Company as a whole and the contribution of each of the
executive officers. The Committee reviewed salaries recommended by Mr. Robert
E. Agan for executive officers other than himself, together with a survey of
executive salaries for other domestic machine tool manufacturers. Mr. Agan's
salary and other compensation were determined out of his presence. Consistent
with the Committee's emphasis on incentive-based compensation, modest
percentage increases in base salaries were granted.
Incentive Bonuses:
The Committee administers the Company's incentive cash bonus program which
provides flexibility to the Committee from year to year to meet the
ever-changing business environment, provides competitive profit-focused cash
incentives for the corporate officers and allows the Chief Executive Officer
to establish specific individual objectives for all officers other than
himself, the achievement of which is rewarded by year-end cash bonuses if the
Company is sufficiently profitable. The Committee's determination of 1996
cash bonuses was subjective and not subject to specific criteria. Factors in
determining cash bonuses included a 22% sales increase, an increase of 16.5%
in net profit, the very successful integration of Kellenberger AG and a
significant increase in sales and productivity at Kellenberger, maintaining
reliability and quality throughout the Company, continued emphasis on total
quality management and pursuit of acquisitions to increase the longer-term
strength of the Company and introduction of high quality and updated product
with continued customer satisfaction.
During 1996 the Compensation Committee had not yet developed a policy in
order to qualify any compensation to the five highest-paid executive officers
in excess of $1 Million per year for federal tax deductibility pursuant to
Section 162(m) of the Internal Revenue Code of 1986, as amended. The
Compensation Committee intends to balance the interests of the Company in
maintaining flexible incentive plans and the manner and extent to which the
Company benefits from the compensation package paid to any executive officer
against the possible loss of a tax deduction when taxable compensation for
any of the five highest-paid executive officers exceeds $1 Million per year.
E. Martin Gibson, Chairman J. Philip Hunter
Richard J. Cole
7
<PAGE>
Report of the Incentive Compensation Committee:
Under the 1993 Incentive Stock Plan (the "Plan") shares of Common Stock
had been set aside for grants to key employees of restricted stock and
performance share awards. Under the Plan, restricted stock grants were
selected by the Committee for award to key executives with a view to
increasing executive ownership of Company stock to encourage their focus on
long-term corporate results and to link a substantial portion of executive
pay and financial incentive to increases in stockholder value. Individual
grant awards are based upon an executive's responsibilities and role in
increasing stockholder value and the Committee's evaluation of individual
performance based upon qualitative and quantitative measurements. No
consideration is given to the number of shares currently directly or
indirectly owned. Restrictions on shares awarded lapse upon passage of time
as established by the Committee on the date of the award, if said shares are
not earlier forfeited. Under this Plan for the year 1996, Messrs. Agan, Krul,
Gibson, Greenlee and Ervin were awarded 37,000, 19,000, 11,000, 6,000 and
2,600, respectively, restricted shares of Common Stock subject to forfeiture
and restrictions on transfer. Total unconditional vesting will occur only
upon the completion of from three (3) to eight (8) years of continuous
service (as specified at the time of grant) or, if earlier, upon death,
retirement after age 60, retirement prior to age 60 for reasons of total and
permanent disability or retirement for other medical or health reasons which
render an employee unable to perform his duties and responsibilities or
termination in other limited circumstances. Partial vesting will occur if the
employee is terminated during a period from one (1) to eight (8) years (as
specified at the time of grant) for reasons other than gross deviation from
duties and responsibilities. The Plan provides that the possibility of
forfeiture shall lapse in its entirety and the Company shall deliver to the
employee or his personal representative, free of any restrictions,
certificates representing the shares of Restricted Stock in the event of a
termination of the employee's employment with the Company or a subsidiary
within four years following a change of control as defined in the agreements
entered into pursuant to the Plan.
Under the 1996 Incentive Stock Plan (the "1996 Plan") adopted by
stockholders at the 1996 Annual Meeting, shares of Common Stock have been set
aside for grants to key employees of stock options, restricted stock and
performance share awards. Under the Plan during 1996, the Committee awarded a
total of 24,000 restricted shares to six corporate Vice Presidents including
4,000 shares to each of Messrs. Greenlee and Ervin. Said restricted shares
granted to Messrs. Greenlee and Ervin contained restrictions similar to the
restrictions described above with respect to the 1993 Incentive Stock Plan.
E. Martin Gibson, Chairman Richard J. Cole
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Gibson, Cole and Hunter served as members of the Compensation
Committee during 1996. Mr. Hunter is the Secretary of the Company and Mr.
Hunter and Mr. Agan's son, Steven E. Agan, are partners with the law firm of
Sayles, Evans, Brayton, Palmer & Tifft ("Sayles & Evans"). Sayles & Evans has
acted as regular outside legal counsel to the Company since 1956 and the
Company expects to continue to use such services in 1997. During 1996 the
Company paid Sayles & Evans $322,165 for legal services.
Executive Compensation:
The following table sets forth information with respect to compensation
paid by the Company for periods during the last three years to the Chairman
of the Board and Chief Executive Officer and the four other most highly
compensated executive officers as measured by salary and bonus.
8
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation(1)
----------------------------------
Long-Term
Bonus Compensation
----------------------- ----------------
Name and Restricted Stock All Other
Principal Position Year Salary Cash Stock Awards(2) Compensation(3)
------------------ ---- ------ ---- ----- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Agan ............... 1996 $255,000 $300,000 $ -0- $955,250 $4,435
Chairman of the Board 1995 238,000 260,000 280,000 290,000 3,187
and Chief Executive Officer 1994 225,000 150,000 -0- 375,000 591
J. Allan Krul ................ 1996 168,000 175,000 -0- 490,250 2,160
President and Chief 1995 156,000 150,000 150,000 145,000 989
Operating Officer 1994 142,000 85,000 -0- 200,000 419
Malcolm L. Gibson ........... 1996 132,000 85,000 -0- 277,750 932
Executive Vice President 1995 125,000 75,000 100,000 145,000 1,299
and Chief Financial 1994 117,000 42,000 -0- -0- 571
Officer
Douglas A. Greenlee .......... 1996 114,000 60,000 -0- 258,500 1,739
Vice President-- 1995 109,000 55,000 75,000 87,000 855
Business Development 1994 104,000 36,000 -0- -0- 306
J. Patrick Ervin ............. 1996 112,000 60,000 -0- 172,650 1,712
Vice President-- 1995 94,000 57,000 25,000 72,500 1,519
Sales and Marketing 1994 85,000 36,000 -0- -0- 524
</TABLE>
- -------------
(1) Any perquisites or other personal benefits received from the Company by
any of the named executives were substantially less than the reporting
thresholds for "other annual compensation" established by the Securities
and Exchange Commission (the lesser of $50,000 or 10% of the individual's
cash compensation).
(2) As of December 31, 1996, Messrs. Agan, Krul, Gibson, Greenlee and Ervin
held 78,000, 71,400, 40,250, 32,400 and 26,700, respectively, restricted
shares of Common Stock having an aggregate value on that date of
$2,076,750, $1,901,025, $1,071,656, $862,650, and $710,887, respectively,
based upon the closing price of the Company's Common Stock on December
31, 1996. The restrictions on these shares lapse on a scheduled time
basis, or earlier, upon death and other conditions as provided in
restricted stock agreements with said persons. The officers are entitled
to vote said shares and to receive any and all dividends paid on the
stock.
(3) Represents Company contributions to the Hardinge Inc. Savings Plan for
each named executive officer and for Mr. Agan for the year 1996, $1,982
reimbursement for taxes paid by Mr. Agan with respect to certain
perquisites provided to him.
9
<PAGE>
Performance Graph:
The graph below compares the five-year cumulative total return for
Hardinge Inc. Common Stock with the comparable returns for the Nasdaq
National Market Composite Index and two groups of peer issuers selected on an
industry basis. Cumulative total return represents the change in stock price
and the amount of dividends received during the indicated period, assuming
reinvestment of dividends. The graph assumes an investment of $100 on
December 31, 1991. The stock performance shown in the graph is included in
response to SEC requirements and is not intended to forecast or to be
indicative of future performance.
COMPARATIVE FIVE-YEAR TOTAL RETURNS
Hardinge Inc. Nasdaq Composite, Old Peer Group,New Peer Group
(Performance Results from 12/31/91 through 12/31/96)
[FIGURES FOR LINE CHART]
1991 1992 1993 1994 1995 1996
Hardinge Inc.(1) $100 116 128 157 293 309
NASDAQ - Composite 100 116 134 131 185 227
Old Peer Group(2) 100 157 164 125 150 161
New Peer Group(2) 100 147 158 131 160 133
- -------------
(1) Prior to the Company's May, 1995 public offering and listing on NASDAQ,
Hardinge's Common Stock was traded in a local, over-the-counter market in
small amounts and on an irregular basis. The Company was aware that
transfers took place, but often was without knowledge of whether the
transfer was a sale, was without consideration or was for
re-registration. Valuation of the Common Stock was made from time to time
for tax and other purposes and some of said valuations were known to the
Company. For example, the Common Stock was valued quarterly by Crestar
Securities Corporation ("Crestar") retained by the Company during
1992-1994 for purposes of Employee Stock Ownership Plan administration.
The Company had itself, based on its knowledge of all of the foregoing,
valued its Common Stock for internal purposes. Also, First Albany
Corporation had supplied the Company with quarterly data of actual trades
known to it. The historic Company price data used to create the graph
above for comparison to outside indices was based on said Crestar
appraisals which were higher than said trading data received from First
Albany Corporation. Because the Company was not quoted on the Nasdaq
National Market or any securities exchange during the years 1992-1994,
the usefulness of the comparison of the performance of the Common Stock
of the Company to these indices for said years should be carefully
considered.
10
<PAGE>
(2) The "Old Peer Group" is that used in the Company's proxy statement last
year and consists of the following issuers: Boston Digital Corporation,
Bridgeport Machines, Inc., Crystallume Inc., Electronic Designs, Inc.,
Giddings & Lewis, Inc., Greenfield Industries, Inc., Hurco Companies
Inc., International Systems & Technologies Inc., Lincoln Electric Co.,
MET Coil Systems Corp., Newcor, Inc., Plasma Therm Corp., Productivity
Technologies Corp., Schmitt Industries, Inc., Stocker & Yale, Inc.,
Sudbury Inc., and Thermadyne Holdings Corp. Collectively, this group of
issuers has been referred to as "Nasdaq-Metalcutting," an index of
companies listed on the Nasdaq National Market with a "metal cutting
machine" SIC code obtained from the Center for Research in Security
Prices, University of Chicago, Chicago, Illinois. The "New Peer Group"
includes Boston Digital Corporation, Bridgeport Machines, Inc.,
Cincinnati Millicron, Inc., Giddings & Lewis, Inc., Gleason Corporation,
Hurco Companies Inc., and Monarch Machine Tool Company. The Company is
including the new peer group in the performance graph in order to compare
the Company's performance relative to that of seven domestic
publicly-held companies chosen for their presence in the machine tool
industry. The returns of each company in the peer groups have been
weighted according to the respective issuer's stock market capitalization
at the beginning of each period for which a return is indicated.
Pension Plan:
The Company maintains a non-contributory defined benefit Pension Plan for
all employees. Normal retirement is at age 65; however, retirement before age
65 can be selected under certain conditions. Annual pensions are computed on
the basis of adjusted career average compensation, excluding bonuses. The
adjusted career average compensation formula is the sum of (a) for service
prior to December 1, 1993, 1.25% of the annual compensation rate as of
December 1, 1993, times the number of years of service prior to December 1,
1993, plus (b) 1.5% of compensation on or after December 1, 1993. Pension
amounts are not subject to reductions for Social Security benefits or offset
amounts but are subject to federal law limitations on pensions payable under
tax qualified plans.
The Company also maintains a non-qualified, unfunded benefit plan called
the Executive Supplemental Pension Plan ("Supplemental Plan") currently
covering Messrs. Agan, Krul and M.L. Gibson. The annual benefits under the
Supplemental Plan are determined on the basis of the average of the three
highest years base salary of the final five years of employment plus cash
bonuses (limited each year to 50% of said year's base salary) times 1.25% for
each year of service, except that in the case of Mr. Krul, the percentages
are 1.5% of each of his first five years of service, 2.0% of each of the next
ten years and 2.2% for each additional year, contingent on Mr. Krul's
continued employment with the Company until age 62 terminable by the Company
upon the occurrence of certain stated events. A minimum benefit is provided
under the Supplemental Plan for all covered executives equal to 1.2 times the
benefit earned under the qualified Pension Plan. Benefits under the
Supplemental Plan are reduced by benefits payable under the Pension Plan.
If the Executive Officers remain continuously employed at current
compensation levels until retirement at the normal retirement age of 65, the
estimated annual pension amounts payable under the Pension and Supplemental
Plans for Messrs. Agan, Krul, Gibson, Greenlee and Ervin would be $222,725,
$90,088, $97,969, $33,646 and $61,728, respectively. Pensions described are
straight-life annuity amounts not reduced by joint and survivorship
provisions which are available to all retirees through reductions in pensions
otherwise payable.
Employment Agreements:
The Company has entered into written employment contracts with Messrs.
Agan, Krul, Gibson, Greenlee and Ervin (the "officers"). The term of each
employment agreement is two years, with automatic, successive one-year
extensions unless either party provides the other with 60 days' prior notice
of termination. In the case of a change of control (as such term is defined
in the employment agreements), the term of each officer's employment
agreement will be automatically extended for a period of two years following
the date of the change of control. Officers' bonuses shall be determined in
accordance with an annual bonus policy.
If an officer is terminated without cause, or resigns for good reason (as
such term is defined in the employment agreements), such officer will be
entitled to continued payment of his base salary for the greater of six
months or the remainder of the current term with the exception of Messrs.
Agan and Krul's agreements, which provide for a minimum of twelve months of
base salary in this situation. If an officer is terminated without cause or
resigns for good reason (as such term is defined in the employment
agreements) on or after a change of control, or resigns
11
<PAGE>
for any reason at any time six months or more following a change of control,
such officer will be entitled (i) to receive a lump sum cash payment equal to
one and one-half times the sum of his base salary in effect immediately prior
to his termination or resignation (or as in effect immediately prior to the
change of control, if higher) and his average annual bonus for the three
years preceding the change of control, and (ii) to participate, at the
Company's expense, in the Company's welfare benefit plans for a period of
three years following his resignation or termination. Such lump sum cash
payments shall be subject to reduction to the extent necessary to prevent any
amounts or benefits due from being deemed "excess parachute payments" within
the meaning of Section 280G of the Code.
COMPENSATION OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors held nine regularly scheduled meetings during the
year ended December 31, 1996. The Board has standing Executive, Audit,
Nominating, Compensation, Incentive Compensation and Investment Committees.
The Chairman of the Executive Committee is Mr. Flynn. Other members are
Messrs. Agan, Bennett, Cole and Hunter. During the interim between regular
Board meetings, the Executive Committee possesses and may exercise certain
powers of the Board in the management and direction of the Company. The
Executive Committee did not meet during the year.
The Chairman of the Audit Committee is Mr. Cole. Other members are Messrs.
Bennett, Flynn and Hunter and Dr. Menger. The functions of the Audit
Committee are to recommend engagement of independent accountants, review the
arrangement and scope of the audit, review the activities and consider any
comments made by the independent auditors with respect to any weaknesses in
internal controls and consideration given, or the corrective action taken, by
management. During the year, there was one Audit Committee meeting.
The Chairman of the Nominating Committee is Mr. Gibson. Other members are
Messrs. Agan, Bennett and Flynn. The Committee selects and recommends to the
Board nominees for election to the Board and also selects and recommends to
the Board nominees for election as officers of the Company. The Committee
will consider written recommendations by stockholders for election to the
Board, if such recommendations are received by the Chairman of the Nominating
Committee or to the Chairman of the Board of Directors, at its main office,
One Hardinge Drive, Elmira, NY 14902. The Committee held three meetings
during 1996.
The Chairman of the Compensation and Incentive Compensation Committees is
Mr. Gibson. Other members of the Compensation Committee include Messrs. Cole
and Hunter and the Incentive Compensation Committee has one other member in
addition to Mr. Gibson, Mr. Cole. The Compensation Committee reviews and
recommends to the Board bonuses paid to employees, and salaries and bonuses
of officers. The Incentive Compensation Committee administers the Company's
1996 Incentive Stock Plan and grants stock options and restricted stock
awards thereunder. There were two meetings of the Compensation Committee and
one meeting of the Incentive Compensation Committee during 1996.
The Chairman of the Investment Committee is Mr. Flynn. Other members
include Messrs. Cole, Greenlee and Hunter and Dr. Menger. The Committee
reviews the investments and performance of the Trustee of the Pension and
Savings Plans, fixes desirable goals and consults with the Trustee thereon.
There were two meetings of the Committee during 1996.
All members of the Board attended at least 75% of the aggregate number of
Board meetings and meetings of committees of which they are members held
during 1996, except that Dr. Menger attended 58% of said Board and Committee
meetings.
During 1996, the members of the Board who are not full-time employees of
the Company were paid an annual fee of $5,000 and $800 for each Board and
Committee meeting attended. In addition, in March each director received 860
shares of Common Stock. There is a Deferred Directors Fee Plan that allows a
director at his election to defer receiving up to 100% of his fees payable in
cash until the later of separation or age 70.
12
<PAGE>
CERTAIN TRANSACTIONS
The Company in the normal course of business has retained the Chemung
Canal Trust Company, of which Mr. Agan is a director and Mr. Bennett is
Chairman of the Board/Chief Executive Officer and director, for various
banking services and as Trustee of the Company's Pension and Savings Plans.
The Company expects to do so during the current year.
See "Compensation Committee Interlocks and Insider Participation."
STOCKHOLDERS' PROPOSALS
Any stockholder proposal intended to be presented at the 1998 Annual
Meeting and included in the Company's Proxy Statement and Proxy relating to
that meeting must be received by the Company at One Hardinge Drive, Elmira,
NY 14902, Attention: The Secretary, not later than November 11, 1997.
OTHER MATTERS
The Board of Directors knows of no business other than that set forth
above to be transacted at the meeting, but if other matters requiring a vote
of the stockholders arise, the persons designated as proxies will vote the
shares of common stock represented by the proxies in accordance with their
judgment on such matters. The cost of soliciting proxies will be borne by the
Company. In addition to solicitations by mail, some of the directors,
officers and regular employees of the Company may conduct additional
solicitations by telephone and personal interviews without remuneration. The
Company may also request nominees, brokerage houses, custodians and
fiduciaries to forward soliciting material to beneficial owners of stock held
of record and will reimburse such persons for any reasonable expense.
The Company has purchased insurance from Federal Insurance Company
providing for reimbursement of directors and officers of the Company and its
subsidiary companies for costs and expenses incurred by them in actions
brought against them in connection with their actions as directors or
officers, including actions as fiduciaries under the Employee Retirement
Income Security Act of 1974. The insurance coverage, which expires on January
27, 1999, costs $112,645 on an annual basis, which will be paid by the
Company.
Financial statements for the Company and its consolidated subsidiaries are
included in Hardinge Inc.'s Annual Report to stockholders for the year 1996
which was mailed to the stockholders beginning March 11, 1997.
A COPY OF HARDINGE INC.'S 1996 ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE WITHOUT CHARGE TO THOSE
STOCKHOLDERS WHO WOULD LIKE MORE DETAILED INFORMATION CONCERNING HARDINGE. TO
OBTAIN A COPY, PLEASE WRITE TO: MALCOLM L. GIBSON, EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER, HARDINGE INC., ONE HARDINGE DRIVE, ELMIRA, NY
14902.
By Order of the Board of Directors,
J. PHILIP HUNTER
Secretary
Dated: March 11, 1997.
13
<PAGE>
HARDINGE INC.
Proxy Solicited on Behalf of the Board of Directors
of Hardinge Inc. for the Annual Meeting
April 22, 1997
The undersigned hereby constitutes and appoints Robert E. Agan, James L.
Flynn and E. Martin Gibson, and each of them his or her true and lawful agents
and proxies with full power of substitution in each, to represent the
undersigned at the Annual Meeting of Stockholders of Hardinge Inc. (the
"Company") to be held at the Company's corporate headquarters, One Hardinge
Drive, Elmira, New York, on Tuesday, April 22, 1997 at 9:00 a.m., local time,
and at any adjournments or postponements thereof, with all powers the
undersigned would possess, if then and there personally present, on all matters
properly coming before said Annual Meeting, including but not limited to the
matters set forth on the reverse side.
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. Your proxy cannot be
voted unless you sign, date and return this card.
This proxy when properly executed will be voted in the manner directed herein
and will be voted in the discretion of the proxies upon such other matters as
may properly come before the Annual Meeting. If no direction is made, this proxy
will be voted FOR proposals 1 and 2.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
<TABLE>
<CAPTION>
Please mark your
A [X] votes as in
this example.
<S> <C> <C> <C>
WITHHELD The Board of Directors recommends a vote FOR Proposals 1 and 2.
FOR ALL FROM ALL
NOMINEES NOMINESS Nominees: Class I
Directors E. Martin Gibson
recommend a Class II
vote "For" [_] [_] J. Philip Hunter
J. Allan Krul
1. Proposal for election of one Class I Director, Dr. Eve L. Menger
three Class II Directors and three Class III
Class III Directors. John W. Bennett
James L. Flynn
FOR, except authority to vote WITHHELD from the Douglas A. Greenlee
nominee(s) listed below (write name(s) on the line below)
- ------------------------------------------------
</TABLE>
Directors recommend a vote "For"
2. Proposal to ratify the appointment FOR AGAINST ABSTAIN
of Ernst & Young LLP as the
Company's independent auditors
for 1997. [_] [_} [_]
MARK HERE FOR
ADDRESS CHANGE
AND NOTE AT LEFT [_]
PLEASE DATE, SIGN AND MAIL THIS PROXY TODAY IN THE ENCLOSED
ENVELOPE TO: American Stock Transfer & Trust Company,
40 Wall Street, 46th Floor, New York, New York 10208-0438.
IF NO BOXES ARE MARKED, THIS PROXY WILL BE VOTED IN THE
MANNER DESCRIBED ON THE REVERSE SIDE.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Signature _______________________________ Date ____________ _________________________________________ Date ____________
SIGNATURE IF HELD JOINTLY
</TABLE>
NOTE: Please sign exactly as name appears herein. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
