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.
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(Name of Registrant as Specified in Its Charter)
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(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:
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(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):
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(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.
----------------
Notice of 1998 Annual Meeting and Proxy Statement
----------------
Dear Stockholder:
The directors and officers of Hardinge Inc. are pleased to invite you to
attend the 1998 annual meeting of our stockholders, which will be held at the
Company's corporate headquarters, One Hardinge Drive, Elmira, New York, on
Tuesday, April 28, 1998, at 9:00 A.M.
At the meeting, we will (1) elect three Class I directors and one Class II
director 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
<PAGE>
HARDINGE INC.
One Hardinge Drive, Elmira, NY 14902
----------------
To the Stockholders of
Hardinge Inc.
----------------
NOTICE IS HEREBY GIVEN that the 1998 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 28, 1998, at 9:00 A.M., for
the following purposes:
(1) To elect to the Board of Directors three Class I directors and one
Class II director;
(2) To consider ratification of the appointment of Ernst & Young LLP as
Hardinge's independent public accountants for the fiscal year ending
December 31, 1998; 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 March 10, 1998 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 16, 1998
Elmira, New York
<PAGE>
HARDINGE INC.
One Hardinge Drive, Elmira, NY 14902
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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 28, 1998, 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 16, 1998. 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 March 10, 1998 are
entitled to receive notice of and to vote at the Annual Meeting. As of March
10, 1998, there were 6,536,719 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
<PAGE>
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. Nominees
Robert E. Agan, Richard J. Cole and E. Martin Gibson are Class I directors and
if elected at the Annual Meeting will serve a term of three years expiring at
the 2001 Annual Meeting or when their respective successors have been duly
elected and qualified. Nominee Albert W. Moore is a Class II director and if
elected at the Annual Meeting will serve a term of one year expiring at the
1999 Annual Meeting or when his successor has 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 NOMINEES.
<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>
Nominees for Class I Directors:
Robert E. Agan .......... Chairman of the Board and Chief Executive Officer Since 1980
(Age 59) of the Company since October, 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 66) management consulting firm; formerly, Division Expires 1998
Vice 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>
2
<PAGE>
<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>
E. Martin Gibson ............ Retired December 1994 as Chairman and Chief Since 1981
(Age 60) Executive Officer, Corning Lab Services, Inc., Expires 1998
provider of clinical and pharmaceutical laboratory
services, formerly a subsidiary of Corning
Incorporated, and as a Director, Corning
Incorporated, a specialty materials manufacturer.
Currently Director, Novacare, Inc., a provider of
healthcare services, and International Technology
Corp., a provider of environmental services;
Member and Chairman of the Company's
Compensation, Incentive Compensation and
Nominating Committees; Member of the
Company's Executive Committee.
Nominee for Class II Director:
Albert W. Moore ............. Retired January 31, 1998 as President, Association Since February 1998
(Age 63) for Manufacturing Technology, a trade association Expires 1998
representing the machine tool and related equipment
manufacturers of the United States.
Continuing in Service
Class II Directors:
J. Philip Hunter ............ Partner, Sayles, Evans, Brayton, Palmer & Tifft, a Since 1992
(Age 55) law firm; Secretary of the Company; Member of the Expires 1999
Company's Executive, Compensation, Audit and
Investment Committees.
Dr. Eve L. Menger ........... Director of Characterization Science and Service, Since 1995
(Age 55) Corning Incorporated which is currently engaged in Expires 1999
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.
Class III Directors:
John W. Bennett ............. Chairman of the Board and Chief Executive Officer Since 1993
(Age 64) and Director, Chemung Financial Corporation, a Expires 2000
bank 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 March 1994 as Senior Vice President-- Since 1984
(Age 63) Investment Services, Corning Incorporated; Member and Expires 2000
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; Since 1979
(Age 50) Member of the Company's Investment Committee. Expires 2000
</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 1998.
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 1, 1998 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.
<TABLE>
<CAPTION>
Name and Address Shares Owned and % of
of Beneficial Owner Nature of Beneficial Ownership Class
- -------------------------------------------------- -------------------------------- -----------
<S> <C> <C>
Chemung Canal Trust Company ..................... 752,507(1) 11.51%
1 Chemung Canal Plaza
Elmira, NY 14902
Hardinge Inc. Savings Plan ...................... 428,043(2) 6.55%
c/o Chemung Canal Trust Company, Trustee
1 Chemung Canal Plaza
Elmira, NY 14902
Douglas A. Greenlee ............................. 346,680(3) 5.30%
1720 Lakeside Drive
Champaign, IL 61821
Prudential Insurance Company of America ......... 330,200 5.05%
751 Broad Street
Newark, NJ 07102-3777
</TABLE>
- ------------
(1) Chemung Canal Trust Company ("CCTC") held 752,507 shares in various
fiduciary capacities. CCTC holds 629,287 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 516,570 shares, shared voting power with respect to 112,717
shares, sole investment power with respect to 352,935 shares and shared
investment power with respect to 112,717 shares. Said beneficial ownership
also includes 123,220 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 304,823 additional shares held as trustee of said Plan. (See
footnote 2 below.)
(2) 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 304,823 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 123,220 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.
(3) Sole beneficial owner of 39,172 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 35,542 shares are held with two others as attorneys-in-fact for another.
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is the number of shares of Common Stock of the Company
beneficially owned on February 1, 1998 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.
<TABLE>
<CAPTION>
Name and Address Shares Owned and % of
of Beneficial Owner Nature of Beneficial Ownership(1) Class
- ----------------------------------------------------- ----------------------------------- ----------
<S> <C> <C>
Robert E. Agan ...................................... 308,546(2) 4.72%
John W. Bennett ..................................... 4,879 *
Richard J. Cole ..................................... 5,073 *
J. Patrick Ervin .................................... 30,617 *
James L. Flynn ...................................... 6,658(3) *
E. Martin Gibson .................................... 9,428 *
Malcolm L. Gibson ................................... 227,702(4) 3.48%
Douglas A. Greenlee ................................. 346,680(5) 5.30%
J. Philip Hunter .................................... 6,163 *
J. Allan Krul ....................................... 75,468 1.15%
Dr. Eve L. Menger ................................... 3,627 *
Albert W. Moore ..................................... 300(6) *
All Executive Officers and Directors
as a Group (17 persons including the above) ......... 1,041,519(7) 15.93%
</TABLE>
*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 1, 1998.
Messrs. Bennett, Cole, Flynn, E.M. Gibson and Hunter and Dr. Menger each
held 1,000, 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 8,424, 488, 423, 1,057, 368 and 16,841 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 126,440 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.
(3) Includes 1,250 shares held by Mr. Flynn's spouse, as to which shares Mr.
Flynn disclaims beneficial ownership.
(4) Sole beneficial owner of 61,778 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.
(5) Sole beneficial owner of 39,172 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 35,542 shares are held with two others as attorneys-in-fact for another.
(6) Includes 300 shares held by Mr. Moore's spouse, as to which shares Mr. Moore
disclaims beneficial ownership.
(7) 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.
6
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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 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.
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 November 1996, the Committee determined the 1997 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 1997 cash bonuses was
subjective and not subject to specific criteria. Factors in determining cash
bonuses included a 12% sales increase, an increase of over 10% in net profit
(before a one-time charge), broadening of the product line reaching both
traditional and new markets, increasing manufacturing capacity outside the
United States, 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.
7
<PAGE>
During 1997 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
Report of the Incentive Compensation Committee:
Under the 1996 Incentive Stock Plan (the "Plan") shares of Common Stock
had been set aside for grants to key employees of restricted stock, stock
options 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 1997, Messrs. Agan, Krul and Gibson were awarded 20,000,
10,000 and 5,000, 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 to five 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 to five 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.
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 1997. 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 1998. During 1997 the
Company paid Sayles & Evans $439,610 for legal services. Robert E. Agan
participates in the deliberations of the Compensation and Incentive
Compensation Committees for the purpose of providing evaluations and
recommendations with respect to the compensation paid to officers other than
himself. However, Mr. Agan neither participates nor is otherwise involved in
the deliberations of the Compensation and Incentive Compensation Committees
with respect to his own compensation, and those deliberations are conducted by
the Compensation and Incentive Compensation Committees in executive session
without Mr. Agan present.
8
<PAGE>
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.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation(1) Compensation
--------------------------------- ------------------
Bonus
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 .................. 1997 $267,000 $315,000 -0- $540,000 $3,336
Chairman of the Board 1996 255,000 300,000 -0- 955,250 4,435
and Chief Executive Officer 1995 238,000 260,000 280,000 290,000 3,187
J. Allan Krul ................... 1997 200,000 185,000 -0- 270,000 2,215
President and Chief 1996 168,000 175,000 -0- 490,250 2,160
Operating Officer 1995 156,000 150,000 150,000 145,000 989
Malcolm L. Gibson ............... 1997 138,000 89,000 -0- 135,000 -0-
Executive Vice President 1996 132,000 85,000 -0- 277,750 932
and Chief Financial Officer 1995 125,000 75,000 100,000 145,000 1,299
J. Patrick Ervin ................ 1997 122,000 63,000 -0- -0- 1,525
Vice President-- 1996 112,000 60,000 -0- 172,650 1,712
Sales and Marketing 1995 94,000 57,000 25,000 72,500 1,519
Douglas A. Greenlee ............. 1997 118,000 63,000 -0- -0- 1,475
Vice President-- 1996 114,000 60,000 -0- 258,500 1,739
Business Development 1995 109,000 55,000 75,000 87,000 855
</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, 1997, Messrs. Agan, Krul, Gibson, Ervin and Greenlee held
98,000, 68,400, 45,250, 22,600 and 32,400, respectively, restricted shares
of Common Stock having an aggregate value on that date of $3,650,500,
$2,547,900, $1,685,562, $841,850, and $1,206,900, respectively, based upon
the closing price of the Company's Common Stock on December 31, 1997. 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 years 1996 and 1997, $1,982
and $1,120, respectively, 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 CRSP NASDAQ U.S.
market composite index and a group of seven peer issuers selected for their
presence in the machine tool industry. Said 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. 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, 1992. 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 Index, Peer Group
(Performance Results from 12/31/92 through 12/31/97)
[PERFORMANCE LINE GRAPH OMITTED]
December 31,
-----------------------------------------------------
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Hardinge Inc.(1) $100 110 135 254 267 381
NASDAQ Index(2) 100 115 112 159 195 240
Peer Group 100 108 89 109 91 122
- ------------
(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.
(2) The NASDAQ Index is the Total Return Index for the NASDAQ Stock Market
(U.S. Companies) published by the Center for Research in Security Prices
(CRSP).
10
<PAGE>
Pension Plan:
The Company maintains a non-contributory defined benefit Pension Plan for
all eligible domestic 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, Ervin and Greenlee would be $233,206,
$107,248, $102,422, $65,592 and $34,576, 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, Ervin and Greenlee (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 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 seven regularly scheduled meetings during the
year ended December 31, 1997. 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, Gibson 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.
11
<PAGE>
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 one meeting during 1997.
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, 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 was one
meeting of the Compensation Committee and one meeting of the Incentive
Compensation Committee during 1997.
The Chairman of the Investment Committee is Mr. Flynn. Other members
include Messrs. Cole, Greenlee, Hunter and Krul 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 three meetings of the Committee during 1997.
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
1997.
During 1997, 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, each director received 860 shares of
Common Stock and pursuant to the Company's 1996 Incentive Stock Plan, an option
to purchase 500 shares of Common Stock effective on the date of the Company's
Annual Meeting at its then fair market value. 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.
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 1999 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 16, 1998.
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
12
<PAGE>
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 1997
which was mailed to the stockholders beginning March 16, 1998.
A COPY OF HARDINGE INC.'S 1997 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 16, 1998.
13
<PAGE>
[HARDINGE LOGO]
THIS IS YOUR PROXY BALLOT FOR THE ANNUAL MEETING
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE AND RETURN THIS BALLOT
HARDINGE INC.
Proxy Solicited on Behalf of the Board of Directors
of Hardinge Inc. for the Annual Meeting
April 28, 1998
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 28, 1998 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 below.
You are encouraged to specify your choices by marking the appropriate
boxes, 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 property 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.
<TABLE>
<CAPTION>
<S> <C> <C>
The Board of Directors recommends a vote FOR Proposals 1 and 2. [x] Please mark your votes as in this example.
1. Proposal for election of three Class I Directors and one Class II Director.
Nominees: Class I-Robert E. Agan, Richard J. Cole and E. Martin Gibson Class II-Albert W. Moore
[_] FOR ALL NOMINEES [_] WITHHELD FROM ALL NOMINEES
[_]
- ----------------------------------------------------------------------------------------------------------------------------
FOR, except authority to vote WITHHELD from the above nominee(s) (write name(s) on line)
2. Proposal to ratify the appointment of Ernst & Young LLP as the Company's independent auditors for 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
</TABLE>
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
[HARDINGE LOGO] Hardinge Inc.
c/o Corporate Trust Services
Mail Drop 1090F5-4129
38 Fountain Square Plaza
Cincinnati, OH 45263-8855
---------------------------------
Name Appears
---------------------------------
fold and detach here
- --------------------------------------------------------------------------------
PLEASE DATE, SIGN AND MAIL THIS PROXY TODAY IN THE ENCLOSED ENVELOPE TO:
Fifth Third Bank, Corporate Trust Services, Mail Drop 1090F5-4129,38 Fountain
Square Plaza, Cincinnati, OH 45263-8855.
IF NO BOXES ARE MARKED, THIS PROXY WILL BE VOTED IN THE MANNER DESCRIBED ON
THE REVERSE SIDE.
[_] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW.
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.
- -------------------
Name Appears
------------------------- ----------------
- ------------------- Signature Date
------------------------- ----------------
Signature Date
