<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
(SECTION 240.14A-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
ESTERLINE TECHNOLOGIES CORPORATION
(Name of Registrant as Specified in its Charter)
Robert W. Stevenson
Executive Vice President and Secretary
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
not applicable
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
not applicable
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:1
not applicable
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
not applicable
------------------------------------------------------------------------
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
ESTERLINE TECHNOLOGIES CORPORATION
10800 N.E. 8TH STREET
BELLEVUE, WASHINGTON 98004
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 8, 1995
------------------------
NOTICE IS HEREBY GIVEN that the 1995 ESTERLINE TECHNOLOGIES CORPORATION annual
meeting of shareholders will be held on Wednesday, March 8, 1995, at 10:00 a.m.,
at the Hyatt Regency Bellevue, 900 Bellevue Way, Bellevue, Washington for the
following purposes:
(1) to elect three directors;
(2) to consider and approve a proposal to amend the Company's 1987 Stock
Option Plan authorizing the issuance of options to purchase an
additional 275,000 shares of the Company's Common Stock, and
increasing the maximum number of shares available for grant to any
individual key employee as described in the accompanying Proxy
Statement;
(3) to consider and approve a proposal establishing a compensation plan
for non-employee directors authorizing additional compensation in
the form of the annual issuance to each director of up to $5,000
worth of fully-paid Company Common Stock, provided the aggregate
number of shares issued to all directors under this plan shall not
exceed 50,000 shares of the Company's Common Stock as described in
the accompanying Proxy Statement;
(4) to ratify the selection of independent auditors; and
(5) to transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on January 9, 1995, as
the record date for determination of shareholders entitled to notice of and to
vote at the meeting.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE. HOLDERS OF A MAJORITY OF THE OUTSTANDING
SHARES MUST BE PRESENT EITHER IN PERSON OR BY PROXY FOR THE MEETING TO BE HELD.
IF YOU ATTEND THE MEETING AND VOTE YOUR SHARES PERSONALLY, ANY PREVIOUS PROXIES
WILL BE REVOKED.
By order of the Board of Directors
[Facsimile Signature]
ROBERT W. STEVENSON
Executive Vice President and Secretary
January 10, 1995
<PAGE> 3
PROXY STATEMENT
This proxy statement, which is first being mailed to shareholders on or about
January 13, 1995, has been prepared in connection with the solicitation by the
Board of Directors of Esterline Technologies Corporation (the "Company") of
proxies in the accompanying form to be voted at the 1995 annual meeting of
shareholders of the Company to be held on March 8, 1995, and at any adjournment
thereof. The Company's principal executive office is at 10800 N.E. 8th Street,
Bellevue, Washington 98004.
Any proxy given pursuant to the solicitation may be revoked at any time prior to
being voted. A proxy may be revoked by the record holder or other person
entitled to vote (a) by attendance in person at the meeting and voting the
shares, (b) by executing another proxy dated as of a later date, or (c) by
written notification to the Secretary of the Company, at its address set forth
on the notice of the meeting, if received prior to the meeting date. All shares
represented by valid proxies will be voted at the meeting. Proxies will be voted
in accordance with the specification made therein or, in the absence of
specification, in accordance with the provisions of the proxy.
The Board of Directors has fixed the close of business on January 9, 1995, as
the record date for determination of holders of common stock of the Company (the
"Common Stock") entitled to notice of and to vote at the meeting. At the close
of business on that date there were outstanding and entitled to vote 6,516,975
shares of Common Stock, which are entitled to one vote per share. The presence
in person or by proxy of the holders of record of a majority of the outstanding
shares of Common Stock entitled to vote is required to constitute a quorum for
the transaction of business at the meeting. Abstentions and broker non-votes
will be considered represented at the meeting for the purpose of determining a
quorum. The Common Stock is listed for trading on the New York Stock Exchange.
ELECTION OF DIRECTORS
Three directors are to be elected at the 1995 annual meeting of shareholders to
serve three-year terms expiring at the 1998 annual meeting or until their
successors are elected and qualified.
Directors of the Company are normally elected for three-year terms which are
staggered such that one-third of the directors are elected each year. The
current directors whose terms expire at the 1995 annual meeting are John F.
Clearman, Edwin I. Colodny and Paul G. Schloemer. All have been nominated for
reelection to serve for terms expiring at the 1998 annual meeting.
Information as to each nominee and each director whose term will continue after
the 1995 annual meeting is provided below. The directors shall be elected by a
plurality of the votes represented in person or by proxy at the meeting. In the
election of directors, any action other than a vote for the nominee will have
the practical effect of voting against the nominee. Unless otherwise instructed,
it is the intention of the persons named in the accompanying proxy to vote
shares represented by properly executed proxies for the three nominees named
below. Management knows of no reason why any of the nominees will be unable or
refuse to serve. If any nominee becomes unavailable to serve, it is intended
that the persons named as proxies will vote for the election of such other
persons, if any, as management may recommend.
1
<PAGE> 4
<TABLE>
<CAPTION>
TERM TO EXPIRE
PRINCIPAL OCCUPATION AND OTHER AT THE ANNUAL DIRECTOR
NAME AND AGE DIRECTORSHIPS MEETING IN SINCE
- ---------------------------- ------------------------------------------- -------------- --------
<S> <C> <C> <C>
NOMINEES:
John F. Clearman, 57........ Retired President and Chief Executive 1998 1989
Officer, NC Machinery Co. (heavy machinery
distributor) having held such position from
1986 through 1993; director, Metropolitan
Bancorp.
Edwin I. Colodny, 68........ Retired Chairman, USAir Group, Inc., having 1998 1992
held such position from 1990 to 1992; of
Counsel, Paul, Hastings, Janofsky and
Walker; prior thereto for more than five
years, President and Chief Executive
Officer, USAir Group, Inc.; director, USAir
Group, Inc., Martin Marietta Corporation
and COMSAT.
Paul G. Schloemer, 66....... Retired President and Chief Executive 1998 1993
Officer, Parker Hannifin Corporation
(manufacturer of motion control products),
having held such position from 1984 to
1993; director, Parker Hannifin
Corporation, Rubbermaid Incorporated and
AMP Incorporated.
CONTINUING DIRECTORS:
Gilbert W. Anderson, 66..... Retired President and Chief Executive 1997 1991
Officer, Physio-Control Corporation
(medical equipment manufacturer), having
held such position from 1986 to 1991;
director, Key Trust of Northwest and Optex
Biomedical, Inc. (medical device company).
E. John Finn, 63............ Chairman and Partner, Dorr-Oliver 1996 1989
Incorporated (fluid/particle treatment
equipment manufacturer) since 1988;
director, Advanced Refractory Technologies.
Robert F. Goldhammer, 63.... Partner, Concord International Investments 1996 1974
Group L.P. since 1991; Partner, Rohammer
Corporation (private investment company)
from 1989 to 1991; director, EG&G, Inc. and
Imclone Systems, Inc. (biotechnology
company).
Wendell P. Hurlbut, 63...... Chairman, President and Chief Executive 1997 1989
Officer of the Company since 1993;
President and Chief Executive Officer of
the Company from 1989 through 1992.
Jerome J. Meyer, 56......... Chairman and Chief Executive Officer, 1996 1992
Tektronix, Inc. (electronic equipment
manufacturer) since 1990; President,
Industrial Group of Honeywell, Inc. from
1988 to 1990; director, Portland General
Corporation (electric utility).
Malcolm T. Stamper, 69...... Chairman, Storytellers, Inc. (publisher of 1997 1991
children's books) since 1990; Retired
President and Vice Chairman, The Boeing
Company, having held such position from
1985 to 1990; director, Chrysler
Corporation, Nordstrom, Inc. and Whittaker
Corp. (aerospace/communications).
</TABLE>
2
<PAGE> 5
OTHER INFORMATION AS TO DIRECTORS
The following describes all forms of director compensation and remuneration.
Each non-employee director receives an annual retainer fee of $20,000 for
services on the Board and all committees thereof; a fee of $1,000 for each
special meeting attended; a fee of $200 for each telephonic meeting in which
they participate; and a fee of $1,000 per day for Company-requested consulting
services. Non-employee committee chairmen also receive an annual fee of $5,000.
In addition, subject to shareholder approval of the proposed Non-Employee
Directors' Stock Compensation Plan, non-employee directors will receive
additional compensation in the form of the annual issuance to each director of
up to $5,000 worth of fully-paid Company Common Stock and will receive
additional cash to offset federal income taxes. This "gross-up" is approximately
$3,300 at current rates. Employees of the Company serving on the Board and
committees thereof receive no additional compensation for such service.
Directors are reimbursed for necessary travel and living expenses for their
attendance at Board meetings or committees thereof and when performing
Company-requested consulting services. There were five meetings of the Board of
Directors during fiscal 1994.
Committees of the Board of Directors are as follows:
The Audit Committee, currently consisting of Messrs. Clearman (Chairman),
Anderson, Colodny, Meyer and Schloemer, recommends to the Board the
independent auditors to be selected to audit the Company's annual financial
statements and reviews the fees charged for audits and for any non-audit
assignments. This Committee also reviews the scope and results of the
annual audit by the independent auditors, any recommendations of the
independent auditors resulting therefrom and management's response thereto,
the accounting principles being applied by the Company in financial
reporting, the activities of the Company's internal auditors, the adequacy
of internal accounting controls and such other related matters as it deems
appropriate. The Audit Committee met five times during 1994.
The Compensation & Stock Option Committee, currently consisting of Messrs.
Goldhammer (Chairman), Finn and Stamper, recommends salaries for officers
of the Company and administers the Company's incentive compensation plans.
The Compensation & Stock Option Committee has also been appointed by the
Board of Directors to administer the Company's stock option plans. The
Compensation & Stock Option Committee met three times during 1994.
The Executive Committee, currently consisting of Messrs. Hurlbut
(Chairman), Finn, Goldhammer and Stamper, reviews situations that might, at
some future time, become items for consideration of the entire Board of
Directors, and acts on behalf of the entire Board of Directors between its
meetings. The Executive Committee met once during fiscal 1994.
The Nominating Committee, currently consisting of Messrs. Stamper
(Chairman), Colodny and Finn, recommends individuals to be presented to the
shareholders of the Company for election or reelection to the Board of
Directors. Written proposals from shareholders for nominees for directors
to be elected at the 1996 annual meeting which are submitted to the
Secretary of the Company by September 8, 1995, and which contain sufficient
background information concerning the nominee to enable a proper judgment
to be made as to his or her qualifications will be considered by the
Nominating Committee. The Nominating Committee had no meetings in fiscal
1994.
Each director, during fiscal 1994, attended at least 75% of the total number of
meetings of the Board of Directors and Board committees of which he was a
member.
3
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of January 9, 1995, the only persons known to the Company to be beneficial
owners of more than 5% of its outstanding shares of Common Stock were as
follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
--------------------------------------------- ---------------- ----------------
<S> <C> <C>
Dimensional Fund Advisors Inc. .............. 452,100(1) 6.9%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Merrill Lynch & Co., Inc. ................... 350,600(2) 5.4%
World Financial Center, North Tower
250 Vesey Street
New York, NY 10281
New England Investment Companies, L.P. ...... 485,300(3) 7.4%
(formerly Reich & Tang, L.P.)
100 Park Avenue
New York, NY 10017
The Prudential Insurance Company of
America.................................... 467,700(4) 7.2%
Prudential Plaza
Newark, NJ 07102
</TABLE>
- ---------------
(1) The holding shown is based on an amended Schedule 13G filed with the SEC on
or about February 9, 1994 by Dimensional Fund Advisors Inc., a registered
investment advisor. Based on the information in such filing, sole voting
power is reported with respect to 402,000 shares, sole dispositive power is
reported with respect to 452,100 shares, and shared voting and dispositive
power is reported with respect to none of the shares.
(2) The holding shown is based on an amended Schedule 13G jointly filed with the
SEC on or about February 14, 1994 by Merrill Lynch & Co., Inc., a holding
company, Merrill Lynch Group, Inc., a holding company, Princeton Services,
Inc., a holding company, Fund Asset Management, L.P., a registered
investment advisor, and Merrill Lynch Phoenix Fund, Inc., a registered
investment company. All parties to the joint filing disclaim beneficial
ownership of these shares. Based on the information in such filing, shared
voting and dispositive power is reported with respect to all of the shares.
(3) The holding shown is based on a Schedule 13G filed with the SEC on or about
February 15, 1994 by New England Investment Companies, L.P., a registered
investment advisor. Based on the information in such filing, sole voting and
dispositive power is reported with respect to 96,400 shares, shared voting
power is reported with respect to 384,900 shares, and shared dispositive
power is reported with respect to 388,900 shares.
(4) The holding shown is based on a Schedule 13G filed with the SEC on or about
January 31, 1994 by The Prudential Insurance Company of America, an
insurance company, a registered broker-dealer and a registered investment
advisor that disclaims beneficial ownership of these shares. Based on the
information in such filing, shared voting and dispositive power is reported
with respect to all of the shares.
As of January 9, 1995, the amount and nature of beneficial ownership of shares
of Common Stock by each director and nominee, each of the executive officers
named in the Summary Compensation Table, and all directors, nominees and
executive officers as a group was as follows:
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES(1) PERCENT OF CLASS
--------------------------------------------- ------------------- ----------------
<S> <C> <C>
Gilbert W. Anderson.......................... 3,122 *
John F. Clearman............................. 5,000 *
Edwin I. Colodny............................. 2,000 *
Robert W. Cremin............................. 93,000(2) 1.4%
E. John Finn................................. 18,000 *
Robert F. Goldhammer......................... 10,750 *
Wendell P. Hurlbut........................... 253,071(2) 3.9%
</TABLE>
4
<PAGE> 7
BENEFICIAL OWNERSHIP (CONTINUED)
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES(1) PERCENT OF CLASS
--------------------------------------------- ------------------- ----------------
<S> <C> <C>
Larry A. Kring............................... 26,450(2) *
Stephen R. Larson............................ 61,250(2) *
Jerome J. Meyer.............................. 1,000 *
Paul G. Schloemer............................ 1,000 *
Malcolm T. Stamper........................... 1,000 *
Robert W. Stevenson.......................... 136,612(2) 2.1%
Directors, nominees and executive officers as
a group (14 persons)....................... 617,255(2) 9.5%
</TABLE>
- ---------------
* None or less than 1%.
(1) Each person (or spouse, where applicable) has sole voting and investment
power.
(2) Includes options for shares granted under the Company's stock option plan
which are exercisable currently or within 60 days of the date of this proxy
statement as follows: Mr. Cremin, 90,000 shares; Mr. Hurlbut, 213,750
shares; Mr. Kring, 21,250 shares; Mr. Larson, 61,250 shares; Mr. Stevenson,
126,250 shares; and directors, nominees and executive officers as a group,
517,500 shares.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation paid or
accrued during fiscal years 1994, 1993 and 1992 for services in all capacities
to the Company by the persons who, at October 31, 1994, were the Chief Executive
Officer and the four other most highly compensated executive officers of the
Company (collectively the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------
AWARDS
------------
NUMBER OF
SECURITIES
ANNUAL COMPENSATION UNDERLYING PAYOUTS ALL OTHER
------------------------ OPTIONS ----------- COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) GRANTED (#) LTIP ($)(1) ($)(2)
- --------------------------------- ----- ----------- --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Wendell P. Hurlbut 1994 350,000 358,750 30,000 -- 2,310
Chairman of the Board,
President 1993 350,000 -- -- -- 2,249
and Chief Executive Officer(3) 1992 330,000 142,996 75,000 127,359 2,182
Robert W. Stevenson 1994 250,000 196,875 15,000 -- 2,310
Executive Vice President and 1993 250,000 -- -- -- 2,249
Chief Financial Officer, 1992 250,000 90,275 30,000 55,179 2,182
Secretary and Treasurer
Robert W. Cremin 1994 235,000 170,406 10,000 -- 2,310
Senior Vice President and 1993 233,333 -- -- -- 2,249
Group Executive 1992 222,500 73,123 50,000 46,318 2,182
Larry A. Kring 1994 210,000 135,500 10,000 -- 2,310
Group Vice President(4) 1993 50,114 -- 75,000 -- 782
Stephen R. Larson 1994 198,167 130,000 10,000 -- 2,310
Group Vice President 1993 185,833 -- -- -- 2,249
1992 166,667 49,110 45,000 47,491 2,182
</TABLE>
- ---------------
(1) Long-term incentive plan.
(2) Amounts contributed to or accrued by the Company for the Named Executive
Officer under the Company voluntary savings 401(k) plan.
(3) Chairman of the Board, President and Chief Executive Officer since January
1993. Prior to that date, President and Chief Executive Officer of the
Company.
(4) Group Vice President since August 1993.
5
<PAGE> 8
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS(1) REALIZED
- --------------------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OPTION TERM(2)
GRANTED IN FISCAL PRICE -----------------
NAME (#) YEAR ($/SH) EXPIRATION DATE 5% ($) 10% ($)
- -------------------------------- ---------- ----------- -------- --------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Wendell P. Hurlbut.............. 30,000 25% 7.375 December, 2003 139,388 351,788
Robert W. Stevenson............. 15,000 13% 7.375 December, 2003 69,694 175,894
Robert W. Cremin................ 10,000 8% 7.375 December, 2003 46,463 117,263
Larry A. Kring.................. 10,000 8% 7.375 December, 2003 46,463 117,263
Stephen R. Larson............... 10,000 8% 7.375 December, 2003 46,463 117,263
</TABLE>
- ---------------
(1) The above grants were made in December 1993 pursuant to the Company's 1987
Stock Option Plan (see Amendment to the Company's 1987 Stock Option Plan,
below, for a description).
(2) The potential realizable value is based on the assumption that the stock
price for the Common Stock appreciates at the annual rate shown (compounded
annually) from the date of grant until the end of the ten year option term.
Actual realizable value, if any, on stock option exercises is dependent on
the future performance of the Common Stock as well as the option holder's
continued employment through the vesting period.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR END (#) FISCAL YEAR END ($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wendell P. Hurlbut......... -- -- 187,500 67,500 698,438 192,188
Robert W. Stevenson........ -- -- 115,000 30,000 454,375 91,875
Robert W. Cremin........... -- -- 75,000 35,000 246,875 78,125
Larry A. Kring............. -- -- 18,750 66,250 75,000 275,000
Stephen R. Larson.......... -- -- 47,500 37,500 119,688 92,188
</TABLE>
- ---------------
(1) Based on the closing price of the Common Stock on October 31, 1994 as
reported by the New York Stock Exchange ($12.375), less the exercise price,
multiplied by the number of in-the-money options held. There is no guarantee
that, if and when these options are exercised, they will have this value.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OTHER PERIOD NON-STOCK PRICE-BASED PLANS
SHARES, UNITS UNTIL MATURATION ----------------------------------------
NAME OR OTHER RIGHTS OR PAYOUT THRESHOLD ($) TARGET ($) MAXIMUM ($)
- ------------------------------- --------------- ---------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Wendell P. Hurlbut............. -- 1994-1997 53,125 212,500 425,000
Robert W. Stevenson............ -- 1994-1997 21,875 87,500 175,000
Robert W. Cremin............... -- 1994-1997 18,750 75,000 150,000
Larry A. Kring................. -- 1994-1997 17,188 68,750 137,500
Stephen R. Larson.............. -- 1994-1997 17,188 68,750 137,500
</TABLE>
The above awards were made pursuant to the Company's long-term incentive
compensation plan. Under this plan, payments are made either in cash or Common
Stock, based on the Company's performance over a period of four years relative
to the performance of a selected peer group of companies. No awards will be paid
unless
6
<PAGE> 9
performance meets certain minimum standards. Partial payments are made based on
performance through years two and three, with final awards paid after the fourth
year of each cycle. (See Compensation Committee Report, below.)
RETIREMENT BENEFITS
The Named Executive Officers are covered by a defined benefit retirement plan
which requires an employee contribution of 1% of annual compensation. Under the
plan, benefits accrue until retirement, limited to 30 years of service, with
normal retirement at age 65. Retirees are entitled to receive an annuity
computed under a five-year average compensation formula, which includes salary,
amounts earned under annual and long-term incentive compensation plans (as shown
in the Summary Compensation Table) or realized upon exercise of stock options,
and is net of Social Security offset amounts. The retirees may select either a
life annuity or one of several forms of payment with an equivalent actuarial
value.
The approximate annual annuity payable upon retirement to employees in higher
salary classifications is shown in the following table. The amounts shown are
for retirement at age 65, and integration with Social Security is based on the
career average Social Security wage base in effect in 1994. To the extent the
wage base is increased after 1994, the benefits payable under the retirement
plan would be lower than the amounts shown. To the extent benefits cannot be
provided under the retirement plan due to the limitations of section 415 of the
Internal Revenue Code of 1986, as amended (the "Code") (currently maximum annual
benefit of $118,800 and maximum covered compensation of $150,000), such benefits
will be provided to executive officers by a non-qualified supplemental benefit
plan as discussed below.
<TABLE>
<CAPTION>
YEARS OF SERVICE AT RETIREMENT
AVERAGE ------------------------------------------------------------
COMPENSATION 10 15 20 25 30
- ------------------------------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000........................... $ 13,800 $ 20,700 $ 27,600 $ 34,500 $ 41,400
250,000............................ 37,800 56,700 75,600 94,500 113,400
400,000............................ 61,800 92,700 123,600 154,500 185,400
550,000............................ 85,800 128,700 171,600 214,500 257,400
700,000............................ 109,800 164,700 219,600 274,500 329,400
850,000............................ 133,800 200,700 267,600 334,500 401,400
</TABLE>
The Named Executive Officers currently have the following completed years of
service for purposes of the retirement plan: Mr. Hurlbut, 20; Mr. Stevenson 21;
Mr. Cremin 17; Mr. Kring 1; and Mr. Larson 15.
The Named Executive Officers are also covered by a Supplemental Executive
Retirement Plan (the "SERP"), which is a non-qualified retirement plan
established to provide supplemental retirement benefits in excess of statutory
limits, up to full benefits as would otherwise be provided under the existing
retirement plan. However, SERP benefits are to be computed based on a five-year
average compensation formula which excludes amounts earned under the long-term
incentive compensation plan or realized upon exercise of stock options.
Additionally, the SERP will provide retirement plan service maximums to Mr.
Hurlbut at age 65. At the Board of Directors' discretion, the SERP could provide
such service maximums should Mr. Hurlbut retire early.
TERMINATION AGREEMENTS
The Company has entered into termination protection agreements with the Named
Executive Officers which are designed to induce them to remain in the employ of
the Company or any successor company in the event of certain changes in
ownership or control by assuring compensation benefits if an officer is
terminated "Without Cause" or resigns for "Good Reason," as defined in the
agreements. In the event of such termination within two years after a change in
ownership or control, the agreements provide for lump sum payments equal to
twice the average compensation received during the prior two years, payment of
certain legal fees and expenses associated with the termination, and insurance
benefits for the remainder of the initial two-year period or until other
full-time employment is accepted.
7
<PAGE> 10
COMPENSATION COMMITTEE REPORT
EXECUTIVE COMPENSATION PRINCIPLES
The Compensation & Stock Option Committee (the "Committee") is responsible for
administering the compensation program for the executive officers of the
Company. The Committee is composed exclusively of independent, non-employee
directors who are not eligible to participate in any of the executive
compensation programs.
The Company's executive compensation practices are based on principles designed
to align executive compensation with Company objectives, business strategy,
management initiatives and financial performance. In applying these principles
the Committee has established a program to:
- Support a performance-oriented environment that rewards performance not
only with respect to the Company's annual results but also Company
performance as compared to that of longer-term industry performance
levels.
- Reward executives for long-term strategic management and the enhancement
of shareholder values.
- Attract and retain key executives critical to the success of the Company.
EXECUTIVE COMPENSATION PROGRAM
Each executive's total compensation consists of both cash and equity-based
compensation. The cash portion consists of salary, an annual incentive plan and
a long-term incentive plan. The equity portion consists of the employee stock
option plan.
SALARY:
The Committee determines the salary for key executive officers based upon
surveys of salaries for comparable responsibilities taking into account
competitive norms and the experience of the person being considered. Subsequent
salary changes are based upon individual performance or changes in
responsibilities.
ANNUAL INCENTIVE PLAN:
At the beginning of the fiscal year, the Committee establishes a target award
amount for each executive (stated as a percentage of the executive's base
salary) and performance measurement goals for the year. The amount calculated
pursuant to the plan formula can range from 0% to 150% of each executive's
target award amount.
After award amounts are computed under the plan formulae, the Committee may, at
its discretion, adjust the actual amount paid to each executive upward or
downward by as much as 25% of the greater of the executive's computed award or
the executive's target award amount. The ability of the Committee to make
subjective adjustments to award amounts was added during 1994 to reflect the
Committee's concern that the performance of the Company measured against the
goals established at the beginning of the year may not fully reflect the
achievements of the management. No award may exceed 112.5% of the executive's
base salary.
For 1994 the Committee selected earnings per share as the sole performance goal.
Award amounts computed under the plan formula ranged from 41% to 83% of base
salary, and actual awards, after subjective adjustments, ranged from 48% to 103%
of base salary. The Committee and the Board believe that discretionary
adjustments were appropriate in 1994 to reward the executive team members for
recent strategic decisions and performance which should favorably impact
long-term shareholder value.
LONG-TERM INCENTIVE PLAN:
Under the long-term incentive compensation plan the Committee establishes a new
four-year cycle each year and reviews and approves the target participation
level of executive officers for each new cycle. The plan ties actual payouts to
performance of the Company (measured by return on equity, and growth in earnings
per share) relative to the performance of a selected peer group of companies
which, in the aggregate, are intended
8
<PAGE> 11
to reflect the diversified manufacturing activities of the Company and the
markets in which its products are sold. The plan requires minimum performance
levels and sets maximum payouts. Based on cumulative performance for each
four-year cycle, partial awards are paid after the second and third years of
each cycle, with final awards paid after the fourth year of each cycle. In 1994
the Committee amended the plan to establish discretionary authority to adjust
actual payments under the plan upward or downward by as much as 25% of the
greater of the executive's computed award or the executive's target award amount
and has retained additional discretion to determine if awards are paid in cash
or in shares of the Company's common stock. In 1994 no payments under the
long-term incentive compensation plan were made.
STOCK OPTION PLAN:
The portion of the long-term incentives provided from stock options contemplates
that the Company's assessment of the annual future gain potential of an
executive's previously granted stock options should be approximately equal to
the targeted annual payment from the long-term incentive compensation plan. The
Committee periodically reviews each executive's situation in this light and
grants additional options if deemed needed. In December 1993, 100,000 stock
options were granted to officers. In December 1994, 85,000 stock options were
granted to officers and the Committee recommended that authorization for options
on 275,000 additional shares be added to the Company's stock option plans; both
1994 actions are subject to shareholder approval.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee believes the CEO's compensation should be structured
so that the payouts from the annual incentive plan and the long-term incentive
compensation plan relate closely to the Company's income and has followed a
policy of providing the CEO a compensation package for target Company
performance which, in addition to base salary, would pay cash incentives of 125%
of salary. Additionally, approximately 75% of salary is targeted to be earned
through annual gains from stock options. In 1994 the CEO's salary was not
changed and the CEO received an award of 103% of base salary under the annual
incentive plan. It consisted of 83% of base salary calculated under the plan
formula plus a discretionary increase of 24% of the award based on the CEO's
recent actions to implement certain strategic decisions which have enhanced
long-term shareholder value. No award was paid under the long-term incentive
plan. In December 1993, the Committee awarded the CEO options to purchase 30,000
shares of Common Stock at fair market value on the date of grant, in light of
its stated goal for the CEO's level of stock compensation. In December 1994,
subject to shareholder approval as described in the previous paragraph, the
Committee awarded the CEO options to purchase an additional 30,000 shares of
Common Stock at fair market value on the date of grant.
Annually the Committee separately reviews the CEO's salary and participation
levels in both the annual incentive plan and long-term incentives.
Respectfully submitted,
ROBERT F. GOLDHAMMER, CHAIRMAN
E. JOHN FINN
MALCOLM T. STAMPER
9
<PAGE> 12
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total return to shareholders on the
Company's Common Stock with the cumulative total return of the Standard & Poors
500 Stock Index and the Standard & Poors High Technology Composite Index.
<TABLE>
<CAPTION>
S&P High
Measurement Period Esterline S&P 500 Stock Technology
(Fiscal Year Covered) Technologies Index Composite Index
<S> <C> <C> <C>
1989 100 100 100
1990 46 92.5 87.8
1991 90 123.5 110.5
1992 76 135.8 111.6
1993 59 156 138.6
1994 97 162.1 168.3
</TABLE>
The cumulative total return on the Company's Common Stock and each index assumes
the value of each investment was $100 on October 31, 1989, and that all
dividends were reinvested. The measurement dates plotted above indicate the last
trading date of each fiscal year shown.
ADOPTION OF THE
NON-EMPLOYEE DIRECTORS' STOCK COMPENSATION PLAN
On December 6, 1994, the Board of Directors adopted the Non-Employee Directors'
Stock Compensation Plan (the "Directors' Plan"), subject to the approval of the
shareholders. A copy of the Plan is attached as Exhibit A.
VOTE REQUIRED
The affirmative vote of the holders of the majority of shares of the Common
Stock present, in person, or represented by proxy and entitled to vote at the
annual meeting will be required for the approval of the Directors' Plan. An
abstention from voting will have the practical effect of a vote against the
adoption of the Directors' Plan. Broker non-votes will have no impact on the
outcome of the vote. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF THE PROPOSED DIRECTORS' PLAN. Unless otherwise instructed, it is
the intention of the persons named in the accompanying form of proxy to vote
shares represented by properly executed proxies in favor of the proposed
amendment to the Directors' Plan.
DESCRIPTION OF THE DIRECTORS' PLAN
The Directors' Plan provides for the award (an "Award") of shares of Common
Stock to compensate non-employee directors of the Company.
Subject to approval of the Directors' Plan by the shareholders of the Company,
normally on the first business day following each annual meeting of shareholders
at which directors are elected (commencing with the 1995 annual meeting), each
person who is then a non-employee director of the Company shall receive an Award
of shares of the Company's authorized but unissued, or reacquired, Common Stock
with an aggregate fair market
10
<PAGE> 13
value of $5,000. Each Award shall consist of that number of shares determined by
dividing $5,000 by the price per share at which the Company's Common Stock last
traded on the New York Stock Exchange on the date of such annual meeting of
shareholders. In addition, pursuant to the terms of the Directors' Plan, each
non-employee director will receive additional cash to offset federal income
taxes. This "gross-up" is approximately $3,300 at current rates. Awards of a
maximum of 50,000 shares of Common Stock in the aggregate may be granted
pursuant to the Directors' Plan, subject to certain adjustments for
reclassifications, reorganizations and similar corporate transactions.
Shares of Common Stock granted under the Directors' Plan may not be transferred,
assigned or pledged in any matter (whether by operation of law or otherwise) for
at least six months from the date of an Award, other than by will or applicable
laws of descent and distribution or pursuant to a qualified domestic relations
order.
Subject to approval of the Directors' Plan by the shareholders of the Company,
the Plan shall become effective as of the date it is approved by the Board and
Awards may be granted in accordance with the Directors' Plan until the earlier
of the date on which the Directors' Plan is terminated by the Company or no
further shares are available for grant thereunder.
The Company may, at any time, modify, amend or terminate the Directors' Plan,
including, without limitation, such modifications or amendments as are necessary
to maintain compliance with applicable statutes, rules or regulations; provided
that the approval of the holders of a majority of the Company's outstanding
shares of voting capital stock represented at a meeting at which a quorum is
present is required for any amendment that will permit the granting of Awards to
a class of persons other than those currently eligible or that would cause the
Directors' Plan to no longer comply with Rule 16b-3 under the Securities
Exchange Act of 1934, as amended. In addition, the Directors' Plan may not be
amended more than once every six months, other than to comport changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended, or the
rules thereunder.
Subject to shareholder approval of the Directors' Plan, it is intended that
Awards will be made on March 9, 1995 to the following persons (assuming such
persons continue to be directors of the Company): John F. Clearman, Edwin I.
Colodny, Paul G. Schloemer, Gilbert W. Anderson, E. John Finn, Robert F.
Goldhammer, Jerome J. Meyer and Malcolm T. Stamper.
11
<PAGE> 14
AMENDMENT TO THE COMPANY'S 1987 STOCK OPTION PLAN
At the 1995 annual meeting, the shareholders of the Company will be asked to
approve an amendment to the Company's 1987 Stock Option Plan ("The Plan"),
which, if approved, will provide for an increase in the number of shares of
Common Stock authorized for issuance pursuant to The Plan from 1,050,000 to
1,325,000, and increase the maximum number of shares available for grant to any
key individual employee from 300,000 to 350,000. The purpose of the amendment is
to provide a sufficient pool of shares and a sufficient limit per individual to
provide adequate incentive to selected officers and other key employees of the
Company and its subsidiaries (approximately 30 persons) to promote the business
of the Company, and to encourage such persons to accept or continue employment
with the Company.
On December 6, 1994, subject to shareholder approval of the proposed amendment
to The Plan, the Board of Directors granted options to the Named Executive
Officers and all current executive officers as a group to acquire an additional
85,000 shares, as follows:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING OPTIONS
NAME GRANTED (#)
---- ------------------
<S> <C>
Wendell P. Hurlbut.................................. 30,000
Robert W. Stevenson................................. 10,000
Robert W. Cremin.................................... 15,000
Larry A. Kring...................................... 10,000
Stephen R. Larson................................... 10,000
All current executive officers as a group
(6 persons)....................................... 85,000
</TABLE>
The exercise price of the above options was fixed at $12.875, the closing price
of the Common Stock on the date of grant as reported by the New York Stock
Exchange. On January 9, 1995, the closing price of the Common Stock was $14.375.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote at the annual
meeting will be required for approval of the proposed amendment to The Plan. An
abstention from voting will have the practical effect of a vote against the
amendment to The Plan. Broker non-votes will have no impact on the outcome of
the vote. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL
OF THE PROPOSED AMENDMENT TO THE PLAN. Unless otherwise instructed, it is the
intention of the persons named in the accompanying form of proxy to vote shares
represented by properly executed proxies in favor of the proposed amendment to
The Plan.
DESCRIPTION OF THE PLAN
Options granted under The Plan must have an exercise price at least equal to the
fair market value at the time of grant, and the duration of an option may not
exceed 10 years. Options granted under The Plan are exercisable only by the
option holder during his/her lifetime and are not transferable except by will or
the laws of descent and distribution. All rights to exercise vested options
terminate not more than three months after the option holder's employment
terminates for any reason other than death, disability, or, in the case of a
corporate officer, retirement.
Upon termination due to death or disability of any option holder or retirement
in the case of a corporate officer, a vested option terminates on the earlier of
three years following such termination of employment or the expiration date of
the option. The Plan provides for the termination of all options which have not
yet become vested upon the termination of an option holder's employment for any
reason.
12
<PAGE> 15
Options granted under The Plan shall be exercisable at such time or times,
whether or not in installments, as the Compensations & Stock Option Committee
shall prescribe at the time the option is granted. All options granted under The
Plan shall become immediately exercisable upon the approval by the Board of
Directors of a sale(s) or other disposition(s) aggregating, during any
twelve-month period, 30% or more of the equity book value of the Company as
measured at the month end immediately preceding the first such sale or
disposition. In addition, The Plan provides that vesting of options granted to
executive officers shall accelerate and become immediately exercisable upon the
occurrence of certain events, including the acquisition by certain persons of
30% or more of the Company's voting shares or upon the approval by the
shareholders of any merger or other business combination providing for the
conversion or exchange of more than 50% of the outstanding shares of the
Company's stock into cash, securities or property of a third party.
Option holders may elect to pay the exercise price of an option in cash, by
delivering to the Company shares of Common Stock previously held or by having
withheld from the number of shares received as a result of the exercise an
amount of shares in each case with a value equal to the exercise price of the
option. Option holders may also use a similar procedure to pay the amount
necessary to meet tax withholding requirements.
The Plan is administered by the Compensation & Stock Option Committee, which is
authorized, subject to the provisions of The Plan, to interpret it, to adopt,
amend and rescind rules and regulations relating to it, and to make all other
determinations necessary or advisable for its administration. The Compensation &
Stock Option Committee has sole discretion to direct the grant of options, to
determine the number of shares and the fair market value of the shares to be
covered by each option and to determine the vesting schedule of each option.
FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTIONS
The following description addresses the federal income tax consequences of The
Plan, a non-qualified stock option plan. Although the Company believes the
following statements are correct based on existing provisions of the Code and
the legislative history and administrative and judicial interpretations thereof,
no assurance can be given that changes will not occur which would modify such
statements. Also, such statements are intended only to provide basic
information. Each option plan participant should consult his or her own tax
advisor concerning tax consequences of the grant, exercise or surrender of an
option because individual financial and federal tax situations may vary, and
state and local tax considerations may be significant.
No taxable income is recognized by holders of non-qualified options upon the
grant of options. However, upon exercise, the optionee must recognize taxable
ordinary income in an amount equal to the difference between fair market value
of the shares on the date of exercise and the option price. Thus, the optionee
will have to pay taxes at the time a non-qualified option is exercised even if
the shares received upon exercise are not sold until a later taxable year. The
fair market value of the shares on the date of exercise then becomes the tax
basis of the shares. Capital gain or loss will generally be realized on the
difference between the amount realized on sale and the basis of the shares. This
capital gain or loss will be short-term or long-term depending upon how long the
shares were held by the optionee prior to sale. Different tax consequences may
result when an optionee is considered an insider under Section 16(b) of the
Securities Exchange Act of 1934.
The Company will be entitled to a deduction at the same time and in the same
amount as the ordinary taxable income recognized by each option holder, provided
the compensation paid is reasonable and otherwise deductible under the Code, and
federal income tax withholding obligations are satisfied.
SELECTION OF INDEPENDENT AUDITORS
The selection by the Board of Directors, on the recommendation of the Audit
Committee, of Deloitte & Touche, Seattle, Washington, as independent auditors to
audit the financial statements of the Company for the fiscal year ending October
31, 1995, is to be submitted to the meeting for ratification. Said firm has
audited the financial statements of the Company since 1987.
13
<PAGE> 16
Representatives of Deloitte & Touche will be present at the 1995 annual meeting,
will be given the opportunity to make a statement if they wish to do so, and
will be available to respond to appropriate questions.
The Company is not obligated by law or its Certificate of Incorporation or
Bylaws to seek ratification of the directors' selection of auditors but does so
as a matter of corporate policy. If the selection of auditors is not ratified by
shareholders, the Board may continue to use Deloitte & Touche as auditors or
select new auditors if in the opinion of the Board such a change would be in the
best interest of the Company and its shareholders; any such change would not be
expected to be submitted to shareholders for ratification prior to the 1996
annual meeting.
The affirmative vote of a majority of the votes cast by shareholders present in
person or by proxy and entitled to vote at the meeting is required to ratify the
appointment of Deloitte & Touche as independent auditors.
OTHER MATTERS
As of the date of this proxy statement the only matters which management intends
to present at the meeting are those set forth in the notice of meeting and in
this proxy statement. Management knows of no other matters which may come before
the meeting. However, if any other matters properly come before the meeting, it
is intended that proxies in the accompanying form will be voted in respect
thereof in accordance with the judgment of the person or persons voting as
proxies.
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the proxy statement for the 1996 annual
meeting must be received at the Company's principal executive office not later
than September 8, 1995.
COST OF SOLICITATION
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, officers and employees of the Company may solicit the
return of proxies by telephone, telegram, messenger or personal interview
without additional compensation. Arrangements may also be made with brokerage
houses and other custodians, nominees and fiduciaries to send proxies and proxy
material to their principals, and the Company may reimburse such persons for
their expenses in so doing. In addition, the Company has engaged D. F. King &
Co., Inc. to provide proxy solicitation services for a fee of approximately
$5,000, plus reasonable expenses.
By order of the Board of Directors
[FACSIMILE SIGNATURE]
ROBERT W. STEVENSON
Executive Vice President and Secretary
January 10, 1995
14
<PAGE> 17
EXHIBIT A
ESTERLINE TECHNOLOGIES CORPORATION
NON-EMPLOYEE DIRECTORS' STOCK COMPENSATION PLAN
This Non-Employee Directors' Stock Compensation Plan (the "Plan") provides for
the award (each an "Award" and collectively the "Awards") of shares of Common
Stock, $.20 par value (the "Common Stock"), of Esterline Technologies
Corporation, a Delaware corporation (the "Company").
1. PURPOSE.
The purpose of this Plan is to compensate non-employee directors of the Company.
2. ELIGIBILITY.
Persons eligible to receive options under this Plan shall be directors of the
Company who are not otherwise employed by the Company or any Related Corporation
(the "Non-Employee Directors" or "Non-Employee Director").
As used in this Plan, the term "Related Corporation," when referring to a
subsidiary corporation, shall mean any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if, at the time an
Award is granted, each of the corporations other than the last corporation in
the unbroken chain owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock of one of the other
corporations in such chain. When referring to a parent corporation, the term
"Related Corporation" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, at the time an Award
is awarded, each of the corporations other than the Company owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock of one of the other corporations in such chain.
3. STOCK.
Subject to approval of the Plan by shareholders of the Company, on the first
business day following each annual meeting of shareholders of the Company at
which directors of the Company are elected (commencing with the Annual Meeting
of Shareholders of the Company held in fiscal 1995), each person who is then a
Non-Employee Director of the Company shall be awarded shares of the Company's
authorized but unissued, or reacquired, Common Stock with an aggregate Fair
Market Value of $5,000. Each Award shall consist of that number of shares of
Common Stock determined by dividing $5,000 by the price per share at which the
Company's Common Stock last traded on the New York Stock Exchange on the date of
such annual meeting of shareholders. Awards of a maximum of 50,000 shares of
Common Stock in the aggregate may be granted pursuant to the Plan, subject to
adjustment as set forth in Section 4(c) hereof.
4. TERMS AND CONDITIONS OF AWARDS.
(a) Transfer of Award.
The shares of Common Stock awarded under this Plan and the rights and privileges
conferred by this Plan may not be transferred, assigned or pledged in any manner
(whether by operation of law or otherwise) for at least six months from the date
of an Award, other than by will or by applicable laws of descent and
distribution or pursuant to a qualified domestic relations order, as defined by
the Internal Revenue Code of 1986, as amended (the "Code"), or the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the rules and
regulations thereunder, and shall not be subject to execution, attachment or
similar process. Any attempt to transfer, assign, pledge or otherwise dispose of
any such shares or of any right or privilege conferred by this Plan contrary to
the provisions hereof, or any attempt to sell, levy or any attachment or similar
process upon the rights and privileges conferred by this Plan will be null and
void.
A-1
<PAGE> 18
(b) Securities Regulation; "Gross-Up" Payments; Tax Withholding.
(1) Shares of Common Stock shall not be issued with respect to an Award unless
the issuance and delivery of such shares shall comply with all relevant
provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), the rules and regulations
thereunder (including, without limitation, Rule 16b-3 under the Exchange Act)
and the requirements of any stock exchange upon which such shares may then be
listed, and such issuance shall be further subject to the approval of counsel
for the Company with respect to such compliance, including the availability of
an exemption from registration for the issuance of such shares. The inability of
the Company to obtain from any regulatory body the authority deemed by the
Company to be necessary for the lawful issuance of any shares under this Plan,
or the unavailability of an exemption from registration for the issuance of any
shares under this Plan, shall relieve the Company of any liability with respect
to the non-issuance of such shares.
As a condition to the issuance of such shares, the Company may require a
Non-Employee Director to represent and warrant in writing at the time of such
issuance that the shares will be held only for investment and without any
then-present intention to sell or distribute such shares. At the option of the
Company, a stop-transfer order against such shares may be placed on the stock
books and records of the Company, and a legend indicating that the shares may
not be pledged, sold or otherwise transferred unless an opinion of counsel is
provided stating that such transfer is not in violation of any applicable law or
regulation, may be stamped on the certificates representing such shares in order
to assure an exemption from registration. The Company also may require such
other documentation as may from time to time be necessary to comply with federal
and state securities laws. THE COMPANY HAS NO OBLIGATION TO UNDERTAKE
REGISTRATION OF THE SHARES OF COMMON STOCK ISSUABLE UNDER THIS PLAN.
(2) In connection with each Award, the Company shall pay Non-Employee Directors
cash or immediately available funds representing the federal income tax
liabilities which might be imposed upon such Non-Employee Directors with respect
to such Awards, computed as follows: $5,000 divided by (1 minus the maximum
federal income tax rate for individuals per Section 1 of the Code).
(3) As a condition to the issuance of any shares of Common Stock awarded under
this Plan, each Non-Employee Director shall make such arrangements as the
Company may require for the satisfaction of any federal, state or local
withholding tax obligations that may arise in connection with such issuance.
(4) The issuance, transfer or delivery of certificates representing shares of
Common Stock awarded under this Plan may be delayed, at the discretion of the
Board, until the Company is satisfied that the applicable requirements of the
federal and state securities laws and the withholding provisions of the Code
have been met.
(c) Significant Transactions; Adjustments.
(1) If (i) the Company shall at any time be involved in a transaction described
in Section 424(a) of the Code (or any successor provision) or any "corporate
transaction" described in the regulations thereunder; (ii) the Company shall
declare a dividend payable in, or shall subdivide or combine, its Common Stock
or (iii) any other event with substantially the same effect shall occur, the
number of shares of Common Stock available under Section 3 of this Plan shall
automatically be increased or decreased, as the case may be, proportionately,
without further action on the part of the Company or the Company's shareholders.
(2) The grant of shares of Common Stock under this Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge,
consolidate or dissolve, to liquidate or to sell or transfer all or any part of
its business or assets.
A-2
<PAGE> 19
5. EFFECTIVE DATE; TERM.
Subject to approval of this Plan by shareholders of the Company, this Plan shall
be effective as of the date it is approved by the Board and Awards may be
granted in accordance with this Plan until the earlier of the following: (1) the
Plan is terminated by the Company or (2) no further shares are available for
grant hereunder. If there are insufficient shares available to satisfy in full
the number of shares of Common Stock to be included in each Award pursuant to
Section 3, then the remaining number of shares available for award hereunder
shall be awarded to the Non-Employee Directors on a pro rata basis.
6. AMENDMENT OF PLAN.
The Company may, at any time, modify, amend or terminate this Plan and Options
granted under this Plan, including, without limitation, such modifications or
amendments as are necessary to maintain compliance with applicable statutes,
rules or regulations; provided, that: (i) the approval of the holders of a
majority of the Company's outstanding shares of voting capital stock represented
at a meeting at which a quorum is present is required for any amendment that
will permit Awards to a class of persons other than those currently eligible to
receive Awards under this Plan or that would cause this Plan to no longer comply
with Rule 16b-3 under the Exchange Act, as amended, or any successor rule or
other regulatory requirements; and (ii) this Plan shall not be amended more than
once every six (6) months, other than to comport with changes in the Code,
ERISA, or the rules thereunder.
A-3
<PAGE> 20
[X]
Please mark
your votes
as in this
example.
________________
COMMON
(1) Election of the following Nominees as Directors:
John F. Clearman, Edwin I. Colodny, Paul G. Schloerner.
FOR WITHHELD EXCEPT
[ ] [ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name in the following space:
____________________________________________________________________________
(2) Approval of an amendment to the Company's 1987 Stock Option Plan
authorizing the issuance of options to purchase an additional 275,000 shares of
the Company's Common Stock and increasing the maximum shares available for
grant to any individual key employee, as described in the accompanying Proxy
Statement.
FOR WITHHELD ABSTAIN
[ ] [ ] [ ]
(3) Approval of a compensation plan for non-employee directors authorizing
additional compensation in the form of the annual issuance to each director of
up to $5,000 worth of fully-paid Company Common Stock, provided the aggregate
number of shares issued to all directors under this plan shall not exceed
50,000 shares of the Company's Common Stock, as described in the accompanying
Proxy Statement.
FOR WITHHELD ABSTAIN
[ ] [ ] [ ]
(4) Ratification of Deloitte & Touche as the Company's independent auditors.
FOR WITHHELD ABSTAIN
[ ] [ ] [ ]
(5) In their discretion, the holders of this proxy are authorized to vote upon
such other business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed on
this proxy card. Management recommends a vote FOR all nominees designated on
this proxy card and FOR each of the proposals referred to hereon; if no
specification is made, a vote FOR all of said nominees and FOR approval of all
of said proposals will be entered.
The undersigned hereby revokes any proxy or proxies heretofore given for such
shares and ratifies all that said proxies or their substitutes may lawfully do
by virtue hereof.
Dated: __________________________, 1995
_______________________________________
Signature
_______________________________________
Signature
Please sign exactly as name appears on this proxy. If stock is held jointly,
each owner should sign. Persons signing in a representative capacity should
give their title.
PLEASE PROMPTLY DATE, SIGN AND RETURN THIS PROXY CARD.
<PAGE> 21
ESTERLINE TECHNOLOGIES CORPORATION
This Proxy is Solicited on Behalf of The Board of Directors
The undersigned hereby appoints Wendell P. Hurlbut and Robert W. Stevenson and
each of them as proxies, each with full power of substitution, to represent and
vote for and on behalf of the undersigned, the number of shares of common stock
of Esterline Technologies Corporation that the undersigned would be entitled to
vote if personally present at the annual meeting of shareholders to be held on
March 8, 1995, or at any adjournment thereof. The undersigned directs that this
proxy be voted as follows:
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
