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:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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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[Hardinge Logo]
HARDINGE INC.
----------------
Notice of 1999 Annual Meeting and Proxy Statement
----------------
Dear Stockholder:
The directors and officers of Hardinge Inc. are pleased to invite you to
attend the 1999 annual meeting of our stockholders, which will be held at the
Company's corporate headquarters, One Hardinge Drive, Elmira, New York, on
Tuesday, April 27, 1999, at 10:00 A.M.
At the meeting, we will (1) elect three Class II 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, President
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 1999 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 27, 1999, at 10:00 A.M.,
for the following purposes:
(1) To elect to the Board of Directors three Class II 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, 1999; 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 9, 1999 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 15, 1999
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 27, 1999, at 10:00 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 15, 1999. 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 9, 1999 are
entitled to receive notice of and to vote at the Annual Meeting. As of March 9,
1999, there were 9,837,683 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
Daniel J. Burke, J. Philip Hunter and Albert W. Moore are Class II directors
and if elected at the Annual Meeting will serve a term of three years expiring
at the 2002 Annual Meeting or when their respective 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 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 II Directors:
Daniel J. Burke .......... President and Chief Executive Officer, Since August
(Age 58) Swift Glass Co., Inc., a fabricator 1, 1998
of glass component parts. Expires 1999
J. Philip Hunter ......... Partner, Sayles, Evans, Brayton, Palmer Since 1992
(Age 56) & Tifft, a law firm; Secretary of the Expires 1999
Company; Member of the Company's Executive,
Compensation, Audit and Investment Committees.
Albert W. Moore .......... Retired since January 1998. Prior to Since 1998
(Age 64) that date, President, Association for Expires 1999
Manufacturing Technology, a trade association
representing the machine tool and related equipment
manufacturers of the United States; Director,
Gardner Publications, Inc., a leading publisher of
business magazines for the metalworking industry;
Member of the Company's Executive and
Investment Committees.
Continuing in Service:
Class I Directors:
Robert E. Agan ........... Chairman of the Board, President and Since 1980
(Age 60) Chief Executive Officer of the Company; Expires 2001
Director, Chemung Financial Corporation;
Member of the Company's Executive and
Nominating 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>
Richard J. Cole ............. President and Chief Operating Officer, Since 1991
(Age 67) Meritus Consulting Services, LLC, a Expires 2001
management consulting firm; formerly Division
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.
E. Martin Gibson ............ Retired December 1994 as Chairman and Since 1981
(Age 61) Chief Executive Officer, Corning Lab Expires 2001
Services, Inc., 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,
International Technology Corp., a provider of
environmental services, and Pharmerica Inc., an
institutional pharmacy company; Member and
Chairman of the Company's Compensation,
Incentive Compensation and Nominating
Committees; Member of the Company's Executive
Committee.
Class III Directors:
John W. Bennett ............. Retired since June 1998. Prior to that Since 1993
(Age 65) date, Chairman of the Board and Chief Expires 2000
Executive Officer, Chemung Financial Corporation,
a bank holding company and its wholly-owned
subsidiary, Chemung Canal Trust Company;
Director, Chemung Financial Corporation; Member
of the Company's Executive, Audit and Nominating
Committees.
James L. Flynn .............. Retired since March 1994. Prior to that Since 1984
(Age 64) date, Senior Vice President--Investment Expires 2000
Services, Corning 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 Since 1979
(Age 51) 1993; Member of the Company's Expires 2000
Investment Committee.
</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 1999.
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, 1999 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 ......................... 855,114(1) 8.68%
1 Chemung Canal Plaza
Elmira, NY 14902
Hardinge Inc. Savings Plan .......................... 655,185(2) 6.65%
c/o State Street Bank and Trust Company, Trustee
One International Place
Boston, MA 02110
Douglas A. Greenlee ................................. 520,108(3) 5.28%
1210 West Water Street
Elmira, NY 14905
The Prudential Insurance Company of America ......... 513,625 5.21%
751 Broad Street
Newark, NJ 07102-3777
</TABLE>
- ------------
(1) Chemung Canal Trust Company ("CCTC") held 855,114 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 had sole voting power as to 701,529 shares, shared voting power with
respect to 153,585 shares, sole investment power with respect to 467,347
shares and shared investment power with respect to 153,585 shares.
(2) Includes all shares of Common Stock held by State Street Bank and 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 490,951 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 164,234 shares held by State
Street Bank and 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. Does not
include 51,500 shares of common stock held by State Street Bank and Trust
Company acting in various other fiduciary capacities.
(3) Sole beneficial owner of 58,846 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 407,949 shares of Common
Stock, and 53,313 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, 1999 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 of Shares Owned and % of
Beneficial Owner Nature of Beneficial Ownership(1) Class
- ------------------------------------------------------ ----------------------------------- ---------
<S> <C> <C>
Robert E. Agan ...................................... 462,811(2) 4.7%
John W. Bennett ..................................... 9,358 *
Daniel J. Burke ..................................... 300(3) *
Richard J. Cole ..................................... 9,830 *
J. Patrick Ervin .................................... 59,211 *
James L. Flynn ...................................... 8,579(4) *
E. Martin Gibson .................................... 16,182 *
Malcolm L. Gibson ................................... 317,106(5) 3.22%
Douglas A. Greenlee ................................. 520,108(6) 5.28%
J. Philip Hunter .................................... 11,324 *
Albert W. Moore ..................................... 2,490(7) *
Richard L. Simons ................................... 74,888 *
All Executive Officers and Directors
as a Group (17 persons including the above) ......... 1,480,768(8) 15.04%
*Less than one percent of the Company's outstanding shares of Common Stock.
</TABLE>
- ------------
(1) Includes shares which may be purchased pursuant to stock options held by
directors that were exercisable within 60 days as of February 1, 1999.
Messrs. Bennett, Cole, Flynn, E.M. Gibson and Hunter each held 2,250, and
Mr. Moore 750, 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, Simons and Greenlee and all Executive Officers as a group
13,141, 813, 646, 764, 1,674 and 26,509 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 189,655 shares of Common Stock and sole trustee of
trusts for the benefit of his children holding 24,270 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 248,886 shares.
(3) Includes 150 shares held by Mr. Burke's spouse, as to which Mr. Burke
disclaims beneficial ownership.
(4) Includes 1,875 shares held by Mr. Flynn's spouse, as to which shares Mr.
Flynn disclaims beneficial ownership.
(5) Sole beneficial owner of 68,220 shares of Common Stock and shares as
trustee with Robert E. Agan (see footnote 2 above) voting and dispositive
powers as to 248,886 shares of Common Stock as trustees under the
Company's Pension Plan.
(6) Sole beneficial owner of 58,846 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 407,949 shares of Common
Stock, and 53,313 shares are held with two others as attorneys-in-fact for
another.
(7) Includes 450 shares held by Mr. Moore's spouse, as to which shares Mr.Moore
disclaims beneficial ownership.
(8) Includes 248,886 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 1997, the Committee determined the 1998 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 1998 cash bonuses was
subjective and not subject to specific criteria. Factors in determining cash
bonuses included an over 5% sales increase, an increase of approximately 9% in
net profit (before one-time charges), broadening of the product line reaching
both traditional and new markets, increasing manufacturing capacity outside the
United States, ongoing improvement in productivity efficiencies, 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 1998 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
7
<PAGE>
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 1998, Messrs. Agan, Ervin, Gibson, Greenlee and Simons were
awarded 45,500, 14,000, 6,000, 4,500 and 7,500, respectively, restricted shares
of Common Stock (adjusted for the May 1998 three-for-two stock split) subject
to forfeiture and restrictions on transfer. Total unconditional vesting will
occur only upon the completion of from three to eight 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 1998. 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 1999. During 1998 the
Company paid Sayles & Evans $280,110 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.
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, President 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>
Long Term
Annual Compensation(1) Compensation
------------------------- ------------------
Name and Restricted Stock All Other
Principal Position Year Salary Bonus Awards(2) Compensation(3)
- ----------------------------- ------ ----------- ----------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
Robert E. Agan .............. 1998 $280,000 $330,000 $1,144,250 $16,230
Chairman of the Board, 1997 267,000 315,000 540,000 3,336
President and Chief 1996 255,000 300,000 955,250 4,435
Executive Officer
Malcolm L. Gibson ........... 1998 143,000 89,000 149,000 -0-
Executive Vice President 1997 138,000 89,000 135,000 -0-
and Chief Financial Officer 1996 132,000 85,000 277,750 932
J. Patrick Ervin ............ 1998 133,636 90,000 362,000 1,671
Executive Vice President -- 1997 122,000 63,000 -0- 1,525
Operations 1996 112,000 60,000 172,650 1,712
Richard L. Simons ........... 1998 114,000 83,000 186,250 1,425
Vice President -- 1997 107,000 69,000 -0- 1,200
Finance 1996 87,000 65,000 258,500 250
Douglas A. Greenlee ......... 1998 122,000 63,000 111,750 1,525
Vice President -- 1997 118,000 63,000 -0- 1,475
Business Development 1996 114,000 60,000 258,500 1,739
</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, 1998, Messrs. Agan, Gibson, Ervin, Simons and Greenlee
held 161,750, 30,550, 47,900, 52,800 and 53,100, respectively, restricted
shares of Common Stock having an aggregate value on that date of
$2,982,265, $563,265, $883,156, $973,500, and $979,031, respectively,
based upon the closing price of the Company's Common Stock on December 31,
1998. 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 1998, 1997 and
1996, $14,105, $1,120 and $1,982, respectively, reimbursement for taxes
paid by Mr. Agan with respect to certain perquisites provided to him.
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<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 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, 1993. 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, Peer Group
(Performance Results from 12/31/93 through 12/31/98)
[PERFORMANCE CHART]
Hardinge Inc. NASDAQ Peer Group
------------- ------ ----------
1993 100 100 100
1994 123 98 83
1995 228 138 101
1996 240 170 84
1997 343 208 113
1998 262 293 83
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Hardinge Inc.(1) $100 123 228 240 343 262
NASDAQ-Composite 100 98 138 170 208 293
Peer Group 100 83 101 84 113 83
</TABLE>
- ------------
(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 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 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>
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 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. 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, Gibson, Ervin, Simons and Greenlee would be $244,561,
$106,133, $69,835, $57,908 and $35,446, 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, Gibson, Ervin, Simons 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 Mr. Agan's
agreement, which provides 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 five regularly scheduled meetings during the
year ended December 31, 1998. 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, Hunter and Moore. 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. 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 1998.
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 were two
meetings of the Compensation Committee and two meetings of the Incentive
Compensation Committee during 1998.
The Chairman of the Investment Committee is Mr. Flynn. Other members
include Messrs. Cole, Greenlee, Hunter and Moore. 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 four
meetings of the Committee during 1998.
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
1998.
During 1998, 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 1,290 shares of
Common Stock (as adjusted for the May 1998 three-for-two stock split) and
pursuant to the Company's 1996 Incentive Stock Plan, an option to purchase 750
shares of Common Stock (as so adjusted) 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 Messrs. Agan and Bennett are directors and Mr.
Bennett was Chairman of the Board/Chief Executive Officer until his retirement
effective June 30, 1998, 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 year 2000 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 15, 1999.
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 solic-
12
<PAGE>
iting 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, 2001, costs
$102,524 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 1998
which was mailed to the stockholders beginning March 15, 1999.
A COPY OF HARDINGE INC.'S 1998 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: RICHARD L. SIMONS, SENIOR 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 15, 1999.
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 27, 1999
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 27, 1999 at 10:00 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 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.
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 II Directors.
Nominees: Daniel J. Burke, J. Philip Hunter and 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 1999.
| | FOR | | AGAINST | | ABSTAIN
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
[HARDINGE LOGO]
Hardinge Inc.
c/o Corporate Trust Services
Mail Drop 10AT66-4129
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:
Corporate Election Services, P.O. Box 535800, Pittsburgh, PA 15253.
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.
-------------------------------------- -------
Signature Date
Name Appears
-------------------------------------- -------
Signature Date
