<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ESTERLINE TECHNOLOGIES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Robert W. Stevenson
- --------------------------------------------------------------------------------
(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)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
ESTERLINE TECHNOLOGIES CORPORATION
10800 NE 8TH STREET
BELLEVUE, WASHINGTON 98004
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 6, 1996
---------------------
To the Shareholders of Esterline Technologies Corporation:
NOTICE IS HEREBY GIVEN that the 1996 ESTERLINE TECHNOLOGIES CORPORATION
annual meeting of shareholders will be held on Wednesday, March 6, 1996 at 10:00
a.m., at the Hyatt Regency Bellevue, 900 Bellevue Way, Bellevue, Washington for
the following purposes:
(1) to elect three directors of the Company to serve a term of three years;
(2) to ratify the selection of Deloitte & Touche LLP, as the Company's
independent auditors for the fiscal year 1996; and
(3) to transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on January 15, 1996,
as the record date for determination of shareholders entitled to notice of and
to vote at the meeting or any adjournment or postponement thereof.
Esterline Technologies Annual Report for the fiscal year 1995 is enclosed
for your convenience.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO ENSURE THAT YOUR SHARES WILL BE
REPRESENTED AT THE ANNUAL MEETING. 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
ROBERT W. STEVENSON
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER, SECRETARY,
AND TREASURER
January 16, 1996
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 6, 1996
---------------------
This proxy statement, which is first being mailed to shareholders on or
about January 24, 1996, 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 1996 annual meeting of
shareholders of the Company to be held on March 6, 1996, and at any adjournment
or postponement thereof. The Company's principal executive office is at 10800 NE
8th Street, Bellevue, Washington 98004.
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.
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 15, 1996,
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 annual meeting. At
the close of business on the record date there were outstanding and entitled to
vote 6,658,560 shares of Common Stock, which are entitled to one vote per share
held on all matters which properly come before the annual meeting. 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.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspectors of election appointed for the Annual Meeting. The inspectors of
election will determine whether or not a quorum is present at the Annual
Meeting. The inspectors of election will treat abstentions as shares of Common
Stock that are present and entitled to vote for purposes of determining the
presence of a quorum. Under certain circumstances, a broker or other nominee may
have discretionary authority to vote certain shares of Common Stock if
instructions have not been received from the beneficial owner or other person
entitled to vote. If a broker or other nominee indicates on the proxy that it
does not have instructions or discretionary authority to vote certain shares of
Common Stock on a particular matter, those shares will not be considered as
present for purposes of determining whether a quorum is present or whether a
matter has been approved.
1
<PAGE>
ELECTION OF DIRECTORS
Three directors are to be elected at the 1996 annual meeting of shareholders
to serve three-year terms expiring at the 1999 annual meeting or until their
successors are elected and qualified. The Board of Directors recommends a vote
FOR the three director nominees named below.
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 1996 annual meeting are E. John
Finn, Robert F. Goldhammer, and Jerome J. Meyer. All have been nominated for
re-election to serve for terms expiring at the 1999 annual meeting.
Information as to each nominee and each director whose term will continue
after the 1996 annual meeting is provided below. The three director nominees who
receive the greatest number of votes cast at the meeting by shareholders
entitled to vote, either in person or by proxy, shall be elected directors. 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. The Board of Directors knows of no reason why any of the nominees
will be unable or unwilling 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 the Board of Directors may recommend.
NOMINEES:
E. JOHN FINN
DIRECTOR AND CONSULTANT, DORR-OLIVER INCORPORATED. Age 64. Mr. Finn is the
retired Chairman and Partner of Dorr-Oliver Incorporated (a fluid/particle
treatment equipment manufacturer), having held such positions from 1988 to 1995,
and is a director of and consultant to Dorr-Oliver Incorporated. He is also a
director of Advanced Refractory Technologies and Stanley Technology Group, Inc.
and is on the Advisory Board of Bay Mills Ltd. He has been a director of the
Company since 1989.
ROBERT F. GOLDHAMMER
CHAIRMAN, IMCLONE SYSTEMS, INCORPORATED. Age 64. Mr. Goldhammer has been the
Chairman of ImClone Systems, Incorporated (a biotechnology company) since 1984.
Prior thereto, he was a partner at Rohammer Corporation from 1989 to 1991. He is
a director of EG&G, Inc. and a partner at Concord International Investments
Group L.P., and has been a director of the Company since 1974.
JEROME J. MEYER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, TEKTRONIX, INC. Age 57. Mr. Meyer has been
the Chairman and Chief Executive Officer of Tektronix, Inc. (an electronic
equipment manufacturer) since 1990 and was the President of Industrial Group of
Honeywell, Inc. from 1988 to 1990. He is a director of Portland General
Corporation and Standard Insurance Company. He has been a director of the
Company since 1992.
2
<PAGE>
CONTINUING DIRECTORS:
GILBERT W. ANDERSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER (RETIRED), PHYSIO-CONTROL CORPORATION. Age
67. Mr. Anderson is the retired President and Chief Executive Officer of
Physio-Control Corporation (a medical equipment manufacturer), having held such
positions from 1986 to 1991 and is a private investor. He is also a director of
Key Trust Company of the Northwest and SpaceLabs Medical. He has been a director
of the Company since 1991 and his term expires in 1997.
JOHN F. CLEARMAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER (RETIRED), NC MACHINERY CO. Age 58. Mr.
Clearman is the retired President and Chief Executive Officer of NC Machinery
Co. (a heavy machinery distributor), having held such positions from 1986
through 1994, and is the Vice Chairman of Metropolitan Bancorp. He has been a
director of the Company since 1989 and his term expires in 1998.
EDWIN I. COLODNY
CHAIRMAN AND CHIEF EXECUTIVE OFFICER (RETIRED), USAIR GROUP, INC. Age 69. Mr.
Colodny is the retired Chairman and Chief Executive Officer of USAir Group, Inc.
(an airline holding company), having held such positions from 1983 to 1991 and
Of Counsel at Paul, Hastings, Janofsky & Walker. Mr. Colodny is a director of
USAir Group, Inc., Lockheed Martin Corporation, Comsat, Inc. and Ascent
Entertainment Group, Inc.
He has been a director of the Company since 1992 and his term expires in 1998.
WENDELL P. HURLBUT
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ESTERLINE TECHNOLOGIES. Age 64.
Mr. Hurlbut has been Chairman, President and Chief Executive Officer of the
Company since January 1993. From February 1989 through December 1992, he was
President and Chief Executive Officer. From June 1988 to February 1989, he was
President and Chief Operating Officer. From November 1987 to June 1988, he was
Executive Vice President, Operations. Mr. Hurlbut is also a member of the Board
of Directors of the National Association of Manufacturers. He has been a
director of the Company since 1989 and his term expires in 1997.
PAUL G. SCHLOEMER
PRESIDENT AND CHIEF EXECUTIVE OFFICER (RETIRED), PARKER HANNIFIN
CORPORATION. Age 67. Mr. Schloemer is the retired President and Chief Executive
Officer of Parker Hannifin Corporation (a manufacturer of motion control
products), having held such positions from 1984 to 1993 and is a director of
Parker Hannifin Corporation, Rubbermaid Incorporated and AMP Incorporated. He
has been a director of the Company since 1993 and his term expires in 1998.
MALCOLM T. STAMPER
VICE CHAIRMAN (RETIRED), THE BOEING COMPANY. Age 70. Mr. Stamper is the retired
President and Vice Chairman of The Boeing Company (an aerospace company), having
held such positions from 1985 to 1992 and has been the Chairman, Chief Executive
Officer, and Publisher of Storytellers Ink since 1990. He is a director of
Chrysler Corporation and Whittaker Corp. He has been a director of the Company
since 1991 and his term expires in 1997.
3
<PAGE>
OTHER INFORMATION AS TO DIRECTORS
DIRECTOR COMPENSATION
The Company pays each non-employee director 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, and a fee of $200 for each telephonic meeting
in which they participate. The Company also pays non-employee committee chairmen
an annual fee of $5,000. In addition, the Company pays non-employee directors
additional compensation in the form of an annual issuance to each director of
$5,000 worth of fully-paid Company Common Stock and reimburses each such
director in cash for the payment of income taxes on this stock. This "gross up"
of income taxes 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. There were five meetings of the Board of
Directors during fiscal 1995.
BOARD COMMITTEES
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: (1) 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, (2) the accounting principles being
applied by the Company in financial reporting, (3) the activities of the
Company's internal auditors and the adequacy of internal accounting controls and
(4) such other related matters as it deems appropriate. In addition, during
1995, the board expanded the committee's responsibilities to allow the committee
to periodically review the Company's environmental compliance practices and
management system. The Audit Committee met five times during 1995.
THE COMPENSATION & STOCK OPTION COMMITTEE, currently consisting of Messrs.
Goldhammer (Chairman), Finn and Stamper, recommends the form and level of
compensation for officers of the Company. The Compensation & Stock Option
Committee has also been appointed by the Board of Directors to administer the
Company's stock option plans and incentive compensation plans. The Compensation
& Stock Option Committee met four times during 1995.
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 1995.
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 re-election to the Board of
Directors. Written proposals from shareholders for nominees for directors to be
elected at the 1997 annual meeting which are submitted to the Secretary of the
Company by September 14, 1996, 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 met once during fiscal 1995.
Each director, during fiscal 1995, attended at least 75% of the total number
of meetings of the Board of Directors and Board committees of which he was a
member.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of October 31, 1995, by (i) each
person or entity who is known by the Company to own beneficially more than 5% of
the Company's Common Stock, (ii) each of the Company's directors, (iii) each of
the Company's named executive officers, and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) SHARES (2) CLASS
- ---------------------------------------- ------------- ----------
<S> <C> <C>
The Prudential Insurance Company of America......................................................... 661,389(3) 9.9%
Prudential Plaza, Newark, NJ 07102
Merrill Lynch & Co., Inc............................................................................ 350,600(4) 5.3%
World Financial Center, North Tower,
250 Vesey Street, New York, NY 10281
Wendell P. Hurlbut.................................................................................. 186,821(5) 2.7%
Robert W. Stevenson................................................................................. 100,362(5)(6) 1.5%
Robert W. Cremin.................................................................................... 84,150(5)(6) 1.3%
Stephen R. Larson................................................................................... 62,500(5) *
Larry A. Kring...................................................................................... 50,200(5) *
E. John Finn........................................................................................ 18,344 *
Robert F. Goldhammer................................................................................ 11,094 *
John F. Clearman.................................................................................... 5,344 *
Gilbert W. Anderson................................................................................. 2,466 *
Edwin I. Colodny.................................................................................... 2,344 *
Jerome J. Meyer..................................................................................... 1,344 *
Paul G. Schloemer................................................................................... 1,344 *
Malcolm T. Stamper.................................................................................. 1,344 *
Directors, nominees and executive officers as a group (14 persons).................................. 531,407(5)(6) 7.5%
</TABLE>
- ------------------------
* Less than 1%
(1) Unless otherwise indicated, the business address of each of the shareholders
named in this table is Esterline Technologies Corporation, 10800 NE 8th
Street, Bellevue, Washington 98004.
(2) Unless otherwise indicated in the footnotes to this table, the person and
entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable.
(3) The holding shown is based on a Schedule 13G filed with the SEC on or about
April 10, 1995 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.
(4) The holding shown is based on an amended Schedule 13G jointly filed with the
SEC on or about February 14, 1995 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 to all of the shares, and sole
voting and dispositive power is reported with respect to none of these
shares.
(5) Includes shares subject to options granted under the Company's 1987 Stock
Option Plan which are exercisable currently or within 60 days of the date of
this proxy statement as follows: Mr. Cremin, 81,250 shares; Mr. Hurlbut,
147,500 shares; Mr. Kring, 45,000 shares; Mr. Larson, 62,500 shares; Mr.
Stevenson, 90,000 shares; and directors, nominees and executive officers as
a group, 430,000 shares.
(6) Includes shares held in the name of children as follows: Mr. Cremin, 300
shares and Mr. Stevenson, 3,400 shares.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes compensation paid or accrued during fiscal
years 1995, 1994 and 1993 for services in all capacities to the Company by the
persons who, at October 31, 1995, were the Chief Executive Officer and the four
other most highly compensated executive officers of the Company (collectively
the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
AWARDS
-----------
SECURITIES PAYOUTS
ANNUAL COMPENSATION UNDERLYING -----------
-------------------- OPTIONS LTIP ALL OTHER
SALARY BONUS GRANTED PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($) (1) ($) (2)
- ------------------------------- --------- --------- --------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wendell P. Hurlbut 1995 379,167 346,500 30,000 131,105 2,310
Chairman of the Board, 1994 350,000 358,750 30,000 -- 2,310
President and Chief Executive 1993 350,000 -- -- -- 2,249
Officer (3)
Robert W. Stevenson 1995 262,500 178,875 10,000 53,985 2,310
Executive Vice President, 1994 250,000 196,875 15,000 -- 2,310
Chief Financial Officer, 1993 250,000 -- -- -- 2,249
Secretary and Treasurer
Robert W. Cremin 1995 247,500 168,750 15,000 46,273 2,310
Senior Vice President and 1994 235,000 170,406 10,000 -- 2,310
Group Executive 1993 233,333 -- -- -- 2,249
Larry A. Kring 1995 222,500 135,000 10,000 42,416 2,310
Group Vice President (4) 1994 210,000 135,500 10,000 -- 2,310
1993 50,114 -- 75,000 -- 782
Stephen R. Larson 1995 208,333 126,000 10,000 42,416 2,310
Group Vice President 1994 198,167 130,000 10,000 -- 2,310
1993 185,833 -- -- -- 2,249
</TABLE>
- ------------------------
(1) Payouts pursuant to the Company's long-term incentive plan.
(2) Amounts contributed to or accrued by the Company for the Named Executive
Officer under the Company's 401(k) plan.
(3) Chairman of the Board, President and Chief Executive Officer since January
1993. Prior to that date, President and Chief Executive Officer of the
Company.
(4) Group Vice President since August 1993.
6
<PAGE>
OPTIONS GRANTED IN THE FISCAL YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
- -----------------------------------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS AT ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES FOR OPTION TERM (2)
GRANTEDS IN FISCAL EXERCISE --------------------------
NAME (#) YEAR PRICE ($/SH) EXPIRATION DATE 0% ($) 5% ($) 10% ($)
- ------------------- ---------- ---------- ------------ --------------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Wendell P. Hurlbut 30,000 29% 12.875 December, 2004 0 242,911 615,583
Robert W. Stevenson 10,000 10% 12.875 December, 2004 0 80,970 205,194
Robert W. Cremin 15,000 14% 12.875 December, 2004 0 121,455 307,792
Larry A. Kring 10,000 10% 12.875 December, 2004 0 80,970 205,194
Stephen R. Larson 10,000 10% 12.875 December, 2004 0 80,970 205,194
</TABLE>
- ------------------------
(1) The above grants were made in December 1994 pursuant to the Company's 1987
Stock Option Plan. The exercise price of the options is equal to the fair
market value of the common stock on the date of grant. The options vest at
the rate of twenty-five percent per year on each of the first four
anniversaries of the date of grant. In the event any person becomes the
beneficial owner of 30% or more of the Common Stock, including by means of a
tender offer, or upon approval by the Company's stockholders of a merger or
similar transaction providing for the exchange of more than 50% of the
Company's shares into cash, property or securities of a third party, all
options held by the Named Executive Officers under the 1987 Stock Option
Plan will become immediately exercisable.
(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
as specified by the Securities and Exchange Commission. These increases in
value are based on assumptions required under the rules of the Securities
and Exchange Commission and are not intended to forecast possible future
appreciation, if any, of the Company's stock price. 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 with
the Company.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED OCTOBER 31, 1995 AND FISCAL
YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED FISCAL YEAR END (#) (3) FISCAL YEAR END ($) (4)
ON EXERCISE VALUE REALIZED -------------------------- --------------------------
NAME (#) (1) ($) (2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wendell P. Hurlbut 100,000 1,306,250 113,750 71,250 1,542,344 884,531
Robert W. Stevenson 50,000 493,750 76,250 28,750 1,082,501 368,751
Robert W. Cremin 27,500 319,375 62,500 35,000 825,001 420,313
Larry A. Kring -- -- 40,000 55,000 592,500 773,750
Stephen R. Larson 20,000 187,500 46,250 28,750 581,406 354,219
</TABLE>
- ------------------------
(1) All of the shares were acquired under the cashless exercise procedure
provided for in the Company's 1987 Stock Option Plan. The plan provides for
payment of the exercise price of the options and federal taxes incurred upon
such exercise by the optionees through withholding of shares otherwise
issuable upon such exercise, valued at market on the date of exercise. The
net number of shares issued pursuant to such exercise was as follows: Mr.
Hurlbut, 35,927; Mr. Stevenson, 19,487; Mr. Cremin, 11,340; and Mr. Larson,
6,980.
(2) The value realized is the difference between the fair market value of the
underlying stock at the time of exercise and the aggregate exercise price of
the options.
(3) Exercisable/unexercisable amounts are as of October 31, 1995.
(4) Based on the closing price of the Common Stock on October 31, 1995 as
reported by the New York Stock Exchange ($23.125), less the exercise price,
multiplied by the number of in-the-money options held. There is no guarantee
that, if and when these options are exercised, they will have this value.
LONG-TERM INCENTIVE PLANS -- AWARDS IN THE FISCAL YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK
PERFORMANCE OR PRICE-BASED PLANS
NUMBER OF OTHER PERIOD ---------------------------------------
SHARES, UNITS UNTIL MATURATION TARGET
NAME OR OTHER RIGHTS OR PAYOUT THRESHOLD ($) ($) MAXIMUM ($)
- ------------------------ --------------- ---------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Wendell P. Hurlbut -- 1995-1998 68,750 275,000 550,000
Robert W. Stevenson -- 1995-1998 25,000 100,000 200,000
Robert W. Cremin -- 1995-1998 25,000 100,000 200,000
Larry A. Kring -- 1995-1998 22,500 90,000 180,000
Stephen R. Larson -- 1995-1998 22,500 90,000 180,000
</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 earnings per share and return on equity
performance over a period of four years relative to the performance of a
selected peer group of companies. No awards will be paid unless 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.)
8
<PAGE>
RETIREMENT BENEFITS
The Named Executive Officers are covered by a tax-qualified defined benefit
retirement plan (which covers substantially all U.S. employees of the Company)
and a Supplemental Executive Retire-
ment Plan ("SERP") which require an employee contribution of 1% of annual
compensation. Under the plans, benefits accrue until retirement, limited to 30
years of service, with normal retirement at age 65. Under the tax-qualified
defined benefit retirement plan 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 and
amounts realized upon exercise of stock options, less expected Social Security
benefits. The SERP provides benefits in excess of statutory limits and entitles
retirees to receive an annuity computed under a restricted version of the
five-year average compensation formula, which excludes amounts earned under the
long-term incentive compensation plan and amounts realized upon exercise of
stock options. The SERP provides that Mr. Hurlbut will receive retirement plan
service maximums upon retirement at age 65. At the Board of Directors'
discretion, such service maximums could be provided to Mr. Hurlbut should he
retire early. 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 the Named
Executive Officers is shown in the following table. The amounts shown are for
retirement at age 65. Benefits are integrated with Social Security based on the
career average Social Security wage base in effect in 1995. To the extent the
wage base is increased after 1995, the benefits payable under the retirement
plan would be lower than the amounts shown.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED 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
credited service for purposes of the retirement plan: Mr. Hurlbut, 21; Mr.
Stevenson 22; Mr. Cremin 18; Mr. Kring 2; and Mr. Larson 16.
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.
9
<PAGE>
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 awards under the
employee stock option plan.
SALARY:
The Committee determines the salary for key executive officers based upon
surveys of salaries for positions of comparable responsibility 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 award 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 1995 the Committee selected earnings per share as the sole performance
goal. Award amounts computed under the plan formula ranged from 45% to 90% of
base salary. No subjective adjustments were made in 1995.
10
<PAGE>
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 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 1995, awards to each participant were 185% of their respective targets.
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 1994 and 1995, 85,000
and 65,000 stock options were granted to officers, respectively.
CHIEF EXECUTIVE OFFICER (CEO) 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 up
to 125% of salary. Additionally, approximately 75% of salary is targeted to be
earned through annual gains from stock options. On January 1, 1995 and 1996, the
CEO's salary was increased to $385,000 and $405,000, respectively. Based on the
Company's strong performance in the fiscal year ended October 31, 1995, his
award under the 1995 annual incentive plan was $346,500 (90% of base salary),
and under the long-term incentive plan for performance at 185% of target was
$131,000 (34% of salary). In December 1994 and 1995, the Committee awarded the
CEO options to purchase 30,000 and 20,000 shares, respectively, 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
11
<PAGE>
COMMON STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total return to shareholders on
the Company's Common Stock during the years 1990 through 1995, with the
cumulative total return of the Standard & Poor's 500 Stock Index and the
Standard & Poor's High Technology Composite Index. The cumulative total return
on the Company's Common Stock and each index assumes the value of each
investment was $100 on October 31, 1990, and that all dividends were reinvested.
The measurement dates plotted above indicate the last trading date of each
fiscal year shown. The stock price performance shown in the graph is not
necessarily indicative of future price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ESTERLINE
TECHNOLOGIES S&P 500 STOCK INDEX S&P HIGH TECHNOLOGY COMPOSITE INDEX
<S> <C> <C> <C>
1990 100 100 100
1991 196 133.5 125.9
1992 166 146.8 127.1
1993 128 168.7 157.9
1994 211 175.2 191.7
1995 394 222 290
</TABLE>
SELECTION OF INDEPENDENT AUDITORS
The selection by the Board of Directors, on the recommendation of the Audit
Committee, of Deloitte & Touche LLP, Seattle, Washington, as independent
auditors to audit the financial statements of the Company for the fiscal year
ending October 31, 1996, is to be submitted to the meeting for ratification.
Said firm has audited the financial statements of the Company since 1987.
Representatives of Deloitte & Touche LLP present at the 1996 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 LLP 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 1997
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 LLP as independent auditors.
12
<PAGE>
COMPLIANCE WITH FORMS 3, 4 AND 5 REPORTING REQUIREMENTS
Based solely upon a review of Reports on Forms 3, 4 and 5 and any amendments
thereto furnished to the Company pursuant to Section 16 of the Securities
Exchange Act of 1934, as amended, and written representations from the executive
officers and directors that no other Reports were required, the Company believes
that all of such Reports were filed on a timely basis by executive officers and
directors during 1995.
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 FOR 1997
An eligible shareholder who wants to have a qualified proposal considered
for inclusion in the proxy statement for the 1997 annual meeting must notify the
Secretary of the Company. The proposal must be received at the Company's
executive office no later than September 14, 1996. A shareholder must have been
a registered or beneficial owner of at least one percent of the Company's
outstanding common stock or stock with a market value of $1,000 for at least one
year prior to submitting the proposal, and the shareholder must continue to own
such stock through the date on which the meeting is held.
By order of the Board of Directors
ROBERT W. STEVENSON
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER, SECRETARY
AND TREASURER
January 16, 1996
13
<PAGE>
/x/ Please mark
your votes
as in this
example.
(1) Election of the following Nominees as
Directors to serve a term of three years:
E. John Finn, Robert F. Goldhammer,
Jerome J. Meyer
FOR WITHHELD EXCEPT
/ / / / / /
INSTRUCTION: To withhold authority for any individual nominee,
print that nominee's name in the following space:
FOR WITHHELD ABSTAIN
(2) Ratification of Deloitte & Touche LLP as the / / / / / /
Company's independent auditors for fiscal
year 1996.
(3) In their discretion, the holders of this / / / / / /
proxy are authorized to vote upon such other
business as may properly come before the
meeting or any adjourment or postponement
thereof.
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.
Signature(s) Date
----------------------------------------------- ---------------
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.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
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 6, 1996, or at any adjournment thereof. The undersigned directs that this
proxy be voted as follows:
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
