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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.24a-12
FERRO CORPORATION
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FERRO CORPORATION
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(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:
(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:(1)
(4) Proposed maximum aggregate value of transaction:
/ / 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:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
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FERRO CORPORATION
1000 LAKESIDE AVENUE
CLEVELAND, OHIO 44114
March 20, 1995
DEAR SHAREHOLDERS:
You are cordially invited to attend the annual meeting of shareholders of
Ferro Corporation which will be held on Friday, April 28, 1995, in the
Auditorium at One Cleveland Center, 1375 E. 9th Street, Cleveland, Ohio. The
meeting will begin at 10:00 A.M., Cleveland time, but we hope that you will be
able to join the officers and directors at 9:30 A.M. for coffee and informal
conversation. The matters to be considered are described in the following pages
and include information concerning each director and each nominee for director.
The items proposed for action by the shareholders at the meeting are the
election of directors, adoption of the 1995 Performance Share Plan, approval of
an amendment to the Employee Stock Option Plan, the designation of auditors and
such other business, if any, as may properly come before the meeting. In
addition, the officers will give current reports on the status of the business
of Ferro.
Shareholders of record at the close of business on February 28, 1995 are
entitled to vote at the meeting.
It is important to your interests that all shareholders participate in the
affairs of Ferro regardless of the number of shares owned. Accordingly, we urge
you promptly to fill out, sign and return the enclosed proxy even if you plan to
attend the meeting. You have the option to revoke it at any time prior to the
meeting, or to vote your shares personally on request if you attend the meeting.
Very truly yours,
ALBERT C. BERSTICKER, President
and Chief Executive Officer
<PAGE> 3
PROXY STATEMENT
ELECTION OF DIRECTORS
The Board of Directors of Ferro presently consists of thirteen members,
divided into three classes. The directors in each class are elected for terms of
three years so that at each annual meeting the term of office of one class of
directors expires. The terms of office of three directors of Ferro will expire
on the day of the 1995 annual meeting, upon election of successors.
Proxies solicited hereunder granting authority to vote on the election of
directors will be voted for the election of Albert C. Bersticker, Paul S.
Brentlinger and A. James Freeman to serve for three year terms and until their
successors are elected, provided, however, that if the election of directors is
by cumulative voting (see page 28 of this Proxy Statement) the persons appointed
by the accompanying proxy intend to cumulate the votes represented by proxies
they receive and distribute such votes in accordance with their best judgment.
All of the candidates for election as directors are directors whose present
terms of office will expire at the meeting.
In June of 1994, Sandra Harden Austin was elected to the Board of Directors
to fill the vacancy created by the retirement of Robert M. Ginn in January of
1994. Ms. Austin's term of office will expire on the day of the 1996 annual
meeting. Kevin O'Donnell, whose term expires at the 1995 annual meeting, will
retire as a member of the Board of Directors, after 18 years of service as a
director, pursuant to Ferro's mandatory retirement age policy for directors. The
size of the Board will be reduced to twelve at that time. Paul B. Campbell
resigned as a member of the Board of Directors on December 19, 1994.
If any nominee is not available at the time of the election, proxies will
be voted for a substitute. However, Ferro has no reason to believe that any of
the nominees will not be available.
Information is set forth below regarding the principal occupation and the
number of shares of Ferro Stock owned on February 28, 1995 by each nominee and
each of the other directors who will continue in office after the meeting.
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NOMINEES FOR ELECTION
ALBERT C. BERSTICKER, age 60, President and
Chief Executive Officer of Ferro. Mr. Bersticker
began his career as a Research Engineer with
Ferro in 1958. Following various assignments
with the International Division, he became Plant
Manager of the Company's Spanish affiliate and
was named Managing Director of Ferro Spain in
1969. Returning to the United States in 1973,
Mr. Bersticker was named Assistant to the Group
Vice President -- International Operations. In
1974 he was appointed Group Vice President --
International; was named Executive Vice
President, Operations in 1976; was named
Executive Vice President and Chief Operating
Officer in 1986; was named President in 1988 and
was named Chief Executive Officer in 1991. Mr.
Bersticker is also a Director of Centerior
Energy Corporation (electric utility holding
company), KeyCorp (bank holding company),
Oglebay Norton Company (minerals and shipping)
and Brush Wellman Inc. (manufacturer of
beryllium alloy parts).
DIRECTOR SINCE 1978
Common Shares owned 263,642(1) Nominee for
term expiring in 1998
ESOP Convertible Preferred
Shares beneficially owned 1,898
PAUL S. BRENTLINGER, age 67, a General Partner of
Morgenthaler Ventures, a venture capital
partnership which invests in and provides
management advisory services to emerging growth
companies. Mr. Brentlinger joined Harris
Corporation (manufacturer of advanced information
processing, communication and microelectronics
products) in 1951 and, after serving in various
assignments, was named Vice President --
Corporate Development in 1969; Vice President --
Finance in 1975 and Senior Vice President --
Finance in 1982. He retired from Harris
Corporation and joined Morgenthaler in 1984. He
is a Director of Allegheny Ludlum Corporation
(manufacturer of specialty metals).
Common Shares owned 4,900(1) Nominee for term
expiring in 1998
DIRECTOR SINCE 1984
A. JAMES FREEMAN, age 66, Retired Vice Chairman
and Chief Executive Officer of Lord Corporation
(manufacturer of bonded rubber specialty products
for the automotive industry, adhesives and
chemical coatings). Mr. Freeman began his career
with General Mills. In 1960 he joined Lord
Corporation as Manager of the Development
Department. He was appointed Corporate Group Vice
President in 1970, Executive Vice President in
1975, President in 1982 and Vice Chairman and
Chief Executive Officer in 1991. He retired in
1994. Mr. Freeman is also a Director of Lord, PNC
Bank, N.A., Eriez Magnetics (manufacturer of
magnetic devices), EFCO, Inc. (manufacturer of
forming presses), Keypro Inc. (medical peer
review organization) and a member of the Advisory
Board of Liberty Mutual Insurance Company.
Common Shares owned 10,743(1) Nominee for term
expiring in 1998
DIRECTOR SINCE 1986
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DIRECTORS WHOSE TERMS OF OFFICE
WILL CONTINUE AFTER THE MEETING
SANDRA HARDEN AUSTIN, age 47, President of
Caremark Clinical Management Services, a division
of Caremark, Inc. which provides home care
services. Between 1981 and 1988, Ms. Austin was
employed by the Huron Road Hospital in Cleveland,
and during that time served as the Director of
Planning, Vice President and President. In 1988,
she was appointed Senior Vice President and
General Manager of the Medical/Surgical and
Psychiatry Management Centers of University
Hospitals of Cleveland and served in that
capacity until 1990. Ms. Austin was named the
Executive Vice President and Chief Operating
Officer of The University of Chicago Hospitals in
1990 and served in that capacity until 1994, at
which time she assumed her present position. Ms.
Austin also serves as a director of National City
Corporation and South Shore Bank (bank holding
companies).
Common Shares owned 100 Term expires 1996
DIRECTOR SINCE 1994
GLENN R. BROWN, age 64, Retired Senior Vice
President and Director Standard Oil Company (now
BP America). Dr. Brown joined The Standard Oil
Company (Ohio) in 1953 as an Engineer in the
Chemical and Physical Research Department. After
ten years of research experience, he undertook
assignments in managerial roles in operations
research, management systems, and chemical
operations, including Manager of all research
activities for Standard Oil and later, Vice
President for Research and Engineering. In 1979,
Dr. Brown was elected a Senior Vice President of
Standard Oil in charge of the technology, patent
and license, strategic planning, and business
operating groups. He also served as a director of
Standard Oil from 1981 until his retirement in
1986. Following his retirement from Standard Oil,
Dr. Brown served at Case Western Reserve
University as Director of Strategic Planning,
Dean of the Colleges and from 1990-1993 as Vice
Provost for Corporate Research and Technology
Transfer. He is also a Director of Nordson
Corporation (manufacturer of industrial
application equipment).
Common Shares owned 450 Term expires 1997
DIRECTOR SINCE 1988
WERNER F. BUSH, age 55, Executive Vice President
and Chief Operating Officer of Ferro. Mr. Bush
joined Ferro in 1964 as a Research Engineer. He
was appointed Refractory Division Manager of
Ferro Mexico in 1966; was named Operations
Manager of Ferro France in 1970; was named
Operations Manager of Ferro Brazil in 1971; and
in 1975 was named President of Ferro Brazil. Mr.
Bush returned to Cleveland in 1981 when he was
named Vice President -- International for Latin
America, Canada, Australia and South Africa.
Subsequently, he was named Group Vice
President -- International in 1985; Group Vice
President -- Coatings, Colors and Electronic
Materials in 1988; and Senior Vice
President -- Coatings, Colors and Ceramics in
1991. Mr. Bush assumed his present position in
1993. He is also a member of the Board of
Directors of National City Bank.
Common Shares owned 77,416(1) Term expires 1996
ESOP Convertible Preferred Shares beneficially
owned 1,834
DIRECTOR SINCE 1993
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DIRECTORS WHOSE TERMS OF OFFICE
WILL CONTINUE AFTER THE MEETING
WILLIAM E. BUTLER, age 63, Chairman of the Board
and Chief Executive Officer, Eaton Corporation
(engineered products for automotive, industrial,
commercial and military markets). Mr. Butler has
been an Eaton employee since 1957, serving as
President and Chief Executive Officer prior to
his election as Chairman in 1991. Mr. Butler is a
director of Eaton Corporation, Bearings, Inc.
(bearings distributor), Pitney Bowes Inc.
(manufacturer of mailing, copying and voice
processing systems), Zurn Industries, Inc.
(manufacturer of environmental quality control
and energy conversion systems and leisure
products) and Goodyear Tire & Rubber Company.
Common Shares owned 600 Term expires 1997
DIRECTOR SINCE 1992
JOHN C. MORLEY, age 63, President and Chief
Executive Officer of Reliance Electric Company
(manufacturer of industrial motors and controls,
mechanical power transmission products and
specialty telecommunication systems and
products). Mr. Morley began his career with Exxon
Corporation in 1958 and served as President of
Exxon Chemical Company, USA and Senior Vice
President of Exxon USA before joining Reliance in
1980 as President and Chief Executive Officer. In
December, 1986, Mr. Morley led an investor group
in the leveraged acquisition of Reliance Electric
Company from Exxon. In January of 1995, Rockwell
International Corporation acquired Reliance
Electric Company. Mr. Morley serves as a Director
of Reliance Electric Company, AMP Incorporated
(manufacturer of electrical and electronic
components) and KeyCorp (bank holding company).
Common Shares owned 1,100 Term expires 1997
DIRECTOR SINCE 1987
HECTOR R. ORTINO, age 52, Executive Vice
President and Chief Financial -- Administrative
Officer of Ferro. He began his career as
Treasurer of Ferro Argentina in 1971 and
subsequently became Financial Director in 1973.
In 1976, Mr. Ortino was promoted to Managing
Director of operations in Argentina. Mr. Ortino
was named Managing Director of Ferro Mexico in
1982. In 1983, he was appointed Assistant to the
Executive Vice President -- Finance and
relocated to Cleveland. He was named Vice
President -- Finance in 1984; Vice President --
Finance and Chief Financial Officer in 1987, and
Senior Vice President and Chief Financial
Officer in 1991. Mr. Ortino assumed his present
position in 1993. Prior to joining Ferro, Mr.
Ortino served as Treasurer of Columbia
Broadcasting Systems, Argentina and Assistant to
the Treasurer of Pfizer, Inc., Argentina. Mr.
Ortino is also a director of Defiance, Inc.
(manufacturer of automotive parts) and Mutual
Investment Corporation Limited (holding company
of the Bunge Group).
DIRECTOR SINCE 1993
Common Shares owned 69,894(1) Term expires 1997
ESOP Convertible Preferred Shares beneficially
owned 1,894
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DIRECTORS WHOSE TERMS OF OFFICE
WILL CONTINUE AFTER THE MEETING
ADOLPH POSNICK, age 68, retired Chairman and
Chief Executive Officer of Ferro. Mr. Posnick
joined Ferro in 1947 as a Research Engineer.
Following assignments with the International
Division, he became technical director of Ferro
Enamel S.A., a Brazilian subsidiary, in 1950 and
was named Managing Director of that Company in
1956. Mr. Posnick was on special assignment in
Europe during 1964 as Assistant to the Vice
President -- International and returned to the
United States in 1965 as Vice President --
International Operations. He was named Group Vice
President in 1968, Senior Vice President --
Operations in 1974, Executive Vice President in
1975, President and Chief Executive Officer in
1976 and was named Chairman in 1988. Mr. Posnick
retired in 1991. Mr. Posnick is also a Director
of First Union Management, Inc. (commercial real
estate management) and CIMCO Inc. (plastics
manufacturer).
Common Shares owned 173,879(1) Term expires 1996
DIRECTOR SINCE 1976
REX A. SEBASTIAN, age 65, Private Investor. Mr.
Sebastian began his career with Procter and
Gamble. In 1955, he joined Cummins Engine
Company, Inc. where he held several positions
including Vice-President -- International and
Managing Director of Cummins Engine Company,
Ltd., in Scotland. In 1966, Mr. Sebastian joined
Dresser Industries, Inc. (energy and
industrial-related products and services) as Vice
President -- International Operations and was
named Vice President -- Operations in 1971. In
1975, he was named Senior Vice President --
Operations, a position he held until his
retirement in 1985. Mr. Sebastian is a member of
the Board of Directors of Texas Commerce Bank,
National Association, Phoenix Resource Companies,
Inc. (oil and gas exploration and production,
essentially in Egypt) and Hallwood Energy
Corporation (oil and gas exploration and
production).
Common Shares owned 4,500 Term expires 1996
DIRECTOR SINCE 1986
DENNIS W. SULLIVAN, age 56, Executive Vice
President and President, Industrial and
Automotive, of Parker-Hannifin Corporation
(manufacturer of fluid power products). Mr.
Sullivan began his career with Parker-Hannifin
Corporation in 1960 as a Sales Engineer, and
after serving in various assignments, was named
Group Vice President in 1972; President of the
Fluid Connectors Group in 1976; Corporate Vice
President in 1978; President of the Fluidpower
Group in 1979; President of the Industrial Sector
in 1980; and he assumed his present position in
1981. Mr. Sullivan is also a Director of
Parker-Hannifin and KeyCorp (bank holding
company).
Common Shares owned 1,750 Term expires 1996
DIRECTOR SINCE 1992
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(1) The shares reported as owned by Messrs. Bersticker, Brentlinger, Freeman,
Ortino and Posnick include shares that they do not own of record but of
which they are beneficial owners. An individual is deemed to be the
beneficial owner of shares as to which he exercises or influences voting
power or investment power. The number of shares (included in those reported
above) as to which Messrs. Bersticker, Brentlinger, Freeman, Ortino and
Posnick are not owners of record but as to which they exercise or influence
voting control or investment decisions are as follows: Mr. Bersticker --
2,287 shares, Mr. Brentlinger -- 150 shares, Mr. Freeman -- 2,000 shares,
Mr. Ortino -- 927 shares and Mr. Posnick -- 13,272 shares. The number of
shares reported above for Messrs. Bersticker, Bush and Ortino include
20,969, 9,560 and 8,783 shares, respectively, issued to them under the
Performance Share Plan which are subject to risk of forfeiture based upon
the terms of that plan. The number of shares which may be acquired by
Messrs. Bersticker, Bush and Ortino pursuant to exercisable stock options as
of May 1, 1995 are as follows: Mr. Bersticker -- 135,000 shares; Mr. Bush --
50,250 shares and Mr. Ortino -- 43,875 shares (included in the number of
shares reported above).
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS
Based on information supplied by them as of February 28, 1995, no
individual director beneficially owns as much as 1% of the outstanding Common
Stock, and all directors and officers of Ferro as a group beneficially own
846,140 shares of Ferro Common Stock, representing approximately 3% of its
outstanding shares and 16,777 shares of Series A ESOP Convertible Preferred
Stock, representing approximately 1.0% of the outstanding shares of that series.
Included in the number of shares beneficially owned by officers and directors as
a group are 344,292 shares of Common Stock which could be acquired through
exercisable stock options as of May 1, 1995 and 81,531 shares issued under the
Ferro Performance Share Plan which are subject to the risk of forfeiture under
the terms of that Plan. The beneficial ownership of Messrs. Bersticker, Bush and
Ortino are set forth below their biographies on pages 2, 3 and 4 of this Proxy
Statement. Mr. Fisher beneficially owns 64,500 shares of Common Stock and 1,905
shares of ESOP Convertible Preferred Stock. Mr. Carragher beneficially owns
36,508 shares of Common Stock and 1,826 shares of ESOP Convertible Preferred
Stock. Mr. Oudersluys beneficially owns 38,848 shares of Common Stock and 1,897
shares of ESOP Convertible Preferred Stock. The shares reported for Messrs.
Fisher, Carragher and Oudersluys include 30,500; 18,000; and 22,875 shares which
may be acquired through exercisable stock options as of May 1, 1995 and 6,633;
5,965; and 5,262 shares issued under the Performance Share Plan which are
subject to risk of forfeiture based upon the terms of that plan.
The following table sets forth information concerning each person known by
Ferro to be the beneficial owner of more than 5% of its outstanding Common Stock
or stock convertible into Common Stock.
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<TABLE>
<CAPTION>
AMOUNT AND PERCENT
NAME AND ADDRESS NATURE OF BENEFICIAL OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
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<S> <C> <C>
FMR Corporation................................ 3,631,900(1) 13.0%
82 Devonshire Road
Boston, Massachusetts 02109
Prudential Insurance Company of America........ 1,811,750(2) 6.5%
Prudential Plaza
Newark, New Jersey 07102-3777
Mario J. Gabelli and related entities.......... 1,793,950(3) 6.5%
One Corporate Center
Rye, New York 10017
Mitchell Hutchins Institutional Investors...... 1,593,700(4) 5.7%
1285 Avenue of the Americas
New York, New York 10019
National City Bank, Trustee.................... 1,407,498(5) 100%
under the Ferro Corporation
Savings and Stock Ownership Plan
1900 East 9th Street
Cleveland, Ohio 44114
<FN>
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(1) Information regarding share ownership was obtained from Schedule 13G filed
February 13, 1995 by FMR Corporation.
(2) Information regarding share ownership was obtained from Schedule 13G filed
January 31, 1995 by Prudential Insurance Company of America.
(3) Information regarding share ownership was obtained from Schedule 13D filed
January 31, 1995 by The Gabelli Group, Inc. Mario J. Gabelli is deemed to be
the beneficial owner of all entities jointly filing such Schedule 13D.
(4) Information regarding share ownership was obtained from Schedule 13G filed
February 14, 1995 by Mitchell Hutchins Institutional Investors.
(5) The beneficial owners of the Savings and Stock Ownership Plan are
participating employees of the Company. The 1,407,498 shares of Convertible
Preferred Stock are convertible into 2,438,490 shares of Common Stock,
representing approximately 8.8% of the outstanding Common Stock. The
Preferred Stock is nontransferable and, upon distribution of an account
balance to a plan participant, such participant receives Common Stock
issuable upon conversion of the Preferred Stock or cash payable upon
redemption of the Preferred Stock. Each share of Preferred Stock carries one
vote, voting together with the Common Stock on most matters. The Trustee
votes in accordance with the instructions of plan participants.
</TABLE>
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Section 16(a) of the Securities Exchange Act of 1934 requires Ferro's
officers and directors, and persons who own more than ten percent of a
registered class of Ferro's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than ten-percent shareholders are required by SEC
regulation to furnish Ferro with copies of all Section 16(a) forms they file.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to Ferro during 1994 and Forms 5 and amendments thereto furnished to
Ferro with respect to 1994, no director, officer, beneficial owner of more than
10% of its outstanding Common Stock or stock convertible into Common Stock or
any other person subject to Section 16 of the Exchange Act, failed to file on a
timely basis during 1994 or prior fiscal years any reports required by Section
16(a) of the Exchange Act, except that Mr. Sullivan was one month late in filing
a Form 4 with respect to a purchase of Common Stock.
CERTAIN MATTERS PERTAINING TO THE BOARD OF DIRECTORS
During 1994, the Board held eight regularly scheduled monthly meetings and
committees of the Board met from time to time upon call of the Chief Executive
Officer (or in the case of the Audit Committee, upon call of its Chairman).
During 1994, each director attended at least 75% of the aggregate of the total
number of meetings of the Board and the committees on which he or she served.
Each director who is not an employee of Ferro is paid an annual retainer
fee of $15,000. In addition, directors (other than employee directors) are paid
an attendance fee of $1,500 for meetings of the Board and $1,000 for meetings of
its committees. The Chairman of the Audit Committee and the Chairman of
Compensation and Organization Committee are each paid an additional annual
retainer of $2,000. The directors have the right to defer their fees into a
Ferro Common Stock account. Amounts so deferred will be invested in Ferro Common
Stock, together with dividends thereon which will be reinvested in Ferro Common
Stock. The deferred account will be distributed after retirement of the
director.
The Audit Committee of the Board of Directors engages in the functions
usual to an audit committee of a publicly held corporation, including
recommendations as to the engagement of independent accountants; review with the
independent accountants of the proposed scope of and plans for annual audits and
review of audit results; review of the adequacy of internal financial controls
and internal audit functions; and review of any problems identified by either
the internal or external audit functions.
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During 1994, the Audit Committee met twice. Messrs. Brown, Brentlinger and
O'Donnell are the current members of the Audit Committee, with Mr. Brentlinger
serving as Chairman.
The Compensation and Organization Committee considers and formulates
recommendations with respect to the compensation of Ferro's officers and
performs delegated functions with respect to the Stock Option Plan, the
Performance Share Plan and the Incentive Compensation Plan. Included among its
functions is the review of recommendations (including written recommendations
made by any shareholder) as to new members of the Board of Directors.
Shareholder recommendations for members of the Board of Directors should be
submitted in writing to the Secretary of Ferro. During 1994, the Committee met
twice. A report of the Compensation and Organization Committee is set forth on
pages 14 through 18 of this Proxy Statement.
APPROVAL OF THE 1995 PERFORMANCE SHARE PLAN
Ferro has maintained a Performance Share Plan since 1982. Most recently an
Amended and Restated Performance Share Plan was approved by shareholders in
1991.
Changes in federal income tax laws regarding deductibility of executive
compensation made it desirable to restudy the Performance Share Plan.
Specifically, if aggregate compensation to certain executives exceeds $1 million
in any calendar year, the excess over $1 million is not deductible by the
employing company, in calculating its United States federal income tax. Certain
types of performance based compensation are not included in compensation paid,
for such income tax calculations, if appropriate conditions, including
shareholder approval, are met.
The Performance Share Plan as heretofore in effect, although approved by
Ferro shareholders, did not meet the standards set forth in this new tax law.
There was noncompliance with the new tax law standards in two respects in that
the plan, as heretofore approved by shareholders (1) did not set forth the
performance goals, and instead such performance goals were established by the
Compensation and Organization Committee at the time of Performance Share Awards,
and (2) did not set forth the maximum number of shares that a single participant
can receive over a given period of time.
Upon review of the Performance Share Plan to meet the new tax law standards
for deductibility of payments, the Company also decided to update the plan in
other respects as well. The 1995 Performance Share Plan ("Plan"), as adopted by
the Board
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of Directors, subject to shareholder approval, is set forth in Exhibit A to this
Proxy Statement. Such Exhibit highlights the differences between the 1995 Plan
and the Performance Share Plan as heretofore in effect. Set forth below are
summaries of the changes and other material terms of the Plan. Capitalized terms
used in the summaries which are not defined shall have the meaning given them in
the Plan.
SUMMARY OF CHANGES
The principal changes in the Plan, as compared to the Performance Share
Plan as previously in effect, are:
1. For the purposes of complying with tax law changes:
a. Setting forth the standards applicable to performance goals, the
establishment thereof, and the degree of attainment thereof;
b. Setting forth the maximum award levels to any individual
participant (30,000 shares per award year); and
c. Clarifying that all authority with respect to the Plan shall reside
with a committee of "disinterested directors", and not with the Board of
Directors.
2. For the purpose of updating the Plan in other respects:
a. Specific recognition that shares of Common Stock may be issued at
the commencement of the Performance Period, subject to risk of forfeiture;
b. Provision that in the case of persons who are parties to executive
employment agreements, vesting of Performance Shares shall continue during
the Contract Term of the Employment Agreement, unless employment was
terminated by the Company for Cause or by the executive without Good
Reason;
c. Establishing 750,000 shares of Common Stock as shares available
under the Plan, plus shares remaining available for issuance under the
Performance Share Plan as previously in effect and plus any shares canceled
or forfeited under the Performance Share Plan as previously in effect; and
d. Terminating the authority to grant awards in the future under the
Performance Share Plan as previously in effect.
SUMMARY OF THE 1995 PLAN
The purpose of the Plan is to promote the long-term financial interests of
the Company by attracting and retaining executive personnel possessing
outstanding ability and motivating such personnel by means of performance
related incentives to
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achieve long-range goals. The shares to be issued under the Plan will be shares
of Common Stock. On February 28, 1995, the closing price of Common Stock on the
New York Stock Exchange was $25.625.
The Plan provides for the award, pursuant to written agreements, of
"Performance Shares" to Plan participants. Participants in the Plan are officers
or other key executives of the Company or any subsidiary or affiliate of the
Company selected by the committee to participate in the Plan. The Plan permits
the Company to adopt a practice of bi-annual grants rather than annual grants in
which event grant levels will be double the normal annual grant. Performance
Shares are interests which will be converted into a specific number of shares of
Common Stock at the end of the Performance Period if established Performance
Targets are met, or are shares of Common Stock, which are subject to the risk of
forfeiture, depending upon the degree of achievement of Performance Targets
during the Performance Period. Performance Targets may be established in terms
of Return on Equity, Operating Income as a Return on Net Assets, Operating
Income as a Return on Average Assets Employed, Operating Income Growth Rate, Net
Income Growth Rate, or various combinations of the foregoing. If the Performance
Target has not been fully met at the end of the Performance Period, conversion
or nonforfeiture will occur only to the extent, if any, provided at the time of
the award of such Performance Shares, for the conversion or nonforfeiture of a
portion of Performance Shares based on partial attainment of the Performance
Target and under such circumstances the balance of any Performance Shares, or
forfeitable shares of Common Stock, for such Performance Period will be
forfeited.
If a participant ceases to be employed by the Company or one of its
subsidiaries because of the participant's death, disability or retirement
pursuant to the applicable established retirement policies, the participant will
be eligible to receive a pro-rata proportion of the Performance Shares awarded,
or a pro-rata portion of the Common Stock awarded shall become non-forfeitable,
following the end of the Performance Period and the determination of the degree
of achievement of the applicable Performance Targets. The pro-rata share shall
be measured by a fraction of which the numerator is the portion of the
Performance Period during which the Participant's employment continued and the
denominator is the Performance Period. Except as otherwise provided in the case
of a "change of control" (see discussion below) or in the case of participants
who have executive employment agreements with the Company, if a participant
ceases to be employed by either the Company or one of its subsidiaries for any
reason other than death, disability or retirement pursuant to the applicable
established retirement policies, then the participant will forfeit all Per-
11
<PAGE> 14
formance Shares and Common Stock awarded to him other than those Performance
Shares or Common Stock applicable to Performance Periods which have been
completed at the time of such cessation of employment. In the case of those
participants who are parties to executive employment agreements with the
Company, employment is deemed to have continued through the end of the contract
term provided for in the employment agreement unless terminated by the Company
for cause or by the participant without good reason as determined under the
terms of the employment agreement. Currently, there are 10 officers and 38 key
executives who are participants in the Plan.
In the event of a "change in control" of the Company, each participant in
the Plan shall be entitled to receive a pro-rata proportion of the shares of
Common Stock and cash which would have been issued to such participant at the
end of the Performance Period, or if applicable, a pro-rata portion of the
Common Stock shall become nonforfeitable. The pro-rata proportion shall be
measured by a fraction of which the numerator is the portion of the Performance
Period prior to such change in control and the denominator is the Performance
Period. In lieu of issuing shares of Common Stock of the Company upon conversion
of Performance Shares, the Company shall make payment to the participants in
cash based on the "fair market value of the Common Stock," as defined in the
Plan, that would have been issued under the Plan.
The Board of Directors may terminate the Plan at any time. No Performance
Shares will be awarded under the Plan after December 31, 2004. The Board of
Directors may also amend the Plan provided that no change may be made which
would impair the rights of any participant to whom an award of Performance
Shares has been made without the consent of such participant. The Board may
amend the Plan to permit assignment, encumbrance and transfer of the rights and
interests of participants if and to the extent that such amendment would not
produce adverse consequences under tax or securities laws. Moreover, the Board
of Directors may not, without the approval of the shareholders, make any
amendment which would materially increase the benefits accruing to participants
under the Plan, materially increase the aggregate number of shares which may be
issued (other than an increase reflecting a change in the capitalization of the
Company) or change the class of employees eligible to participate in the Plan.
AWARDS UNDER THE PLAN
The compensation disclosure provisions contained in this Proxy Statement
reflect the award experience of the Company under the Performance Share Plan as
previ-
12
<PAGE> 15
ously in effect. The changes effected in the 1995 Plan are not expected to
materially modify in the future the award experience under the Performance Share
Plan.
RECOMMENDATION AND VOTE
The affirmative vote of a majority of the shares present and voting at the
meeting on this issue is necessary for the adoption of the 1995 Performance
Share Plan.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PLAN.
AMENDMENT TO THE STOCK OPTION PLAN
At its January 27, 1995 meeting, the Board of Directors, subject to the
approval of the shareholders, adopted an amendment to the Ferro Employee Stock
Option Plan ("Stock Option Plan") in response to recent amendments to the
federal tax laws.
DESCRIPTION OF AMENDMENT
The principal purpose of the amendment is to establish a maximum limit on
the number of shares awarded to any individual during any consecutive eleven
month period. The Stock Option Plan previously contained no limit on the number
of shares of Common Stock for which stock options may be granted to any
individual participant. The proposed amendment establishes a limit of 100,000
shares for which options may be granted to an eligible employee or officer
during any period of eleven consecutive months. The Stock Option Plan has been
amended to add the following sentence at the end of Section 4 of the Stock
Option Plan:
The maximum number of options granted to any single
executive during any period of eleven consecutive
months shall not exceed options for 100,000 shares,
subject to adjustment in accordance with Section 2
of the Plan.
PURPOSE OF THE AMENDMENT
As indicated under the discussion of the Performance Share Plan (pages 9
through 13 of this Proxy Statement), recent changes in federal income tax laws
impair the deductibility to the employer corporation of executive compensation
over $1 million under certain circumstances. However, performance based
compensation is excluded from such computation. Stock option plans are treated
as performance based compensation if applicable requirements of the Internal
Revenue Code are met.
13
<PAGE> 16
Ferro's Stock Option Plan meets such requirements in all respects except for the
absence, prior to amendment, of a limitation on award levels to any individual
participant. The amendment to the Stock Option Plan has been adopted by the
Board of Directors, and is submitted to the Shareholders for their approval, in
order to preserve the deductibility rights of the Company.
RECOMMENDATION AND VOTE
The affirmative vote of a majority of the shares present and voting at the
meeting on this issue is necessary for approval of the amendment to the Stock
Option Plan.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE STOCK OPTION PLAN.
DESIGNATION OF AUDITORS
Unless otherwise indicated, the accompanying proxy will be voted in favor
of ratifying the selection of KPMG Peat Marwick LLP to audit the books and
accounts of Ferro for the current year ending December 31, 1995. KPMG Peat
Marwick LLP have been acting as the auditors of Ferro for many years. On
recommendation of the Audit Committee, the Board of Directors has appointed such
firm to continue as Ferro's auditors for the current year, subject to the
approval thereof by the shareholders.
Representatives of KPMG Peat Marwick LLP will be at the annual meeting of
shareholders, will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.
INFORMATION CONCERNING EXECUTIVE OFFICERS
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
The principal components of senior executive officer compensation at Ferro,
and the role of the Compensation and Organization Committee of the Board of
Directors as to each component in 1994, were as follows:
1. Annual salary level recommended by the Committee and adopted by the
Board.
2. Annual Incentive Compensation Plan (a cash bonus plan) under which
achievement is measured primarily by achievement of mathematical targets,
and, to a lesser extent, by non-mathematical determinations. The Committee
adopts
14
<PAGE> 17
such a plan each year, including the placement of senior executives in the
plan, determination of the applicable percentage of salary to be used for
bonus measurement, and determination of the mathematical targets by which
the level of bonus achievement will be measured. The Committee approves the
actual non-mathematical bonus awards to senior executive officers other
than the Chief Executive Officer.
3. Performance Share Plan (a long term incentive plan) under which
shares of common stock are issued, subject to risk of forfeiture, based
upon the degree of achievement of Performance Targets during the
Performance Period. The Committee determines the Performance Targets which
will be applicable to determine the degree of vesting, or the degree of
forfeiture, of Performance Shares.
4. The Committee makes recommendations to a Special Committee of the
Board, consisting of all Board members other than those who participate, or
have participated, in the applicable plans, for the award of Performance
Shares under the Performance Share Plan and the award of Stock Options
under the Stock Option Plan. (Commencing with the year 1995, full authority
with respect to these matters has been delegated to the Committee.) With
respect to non-mathematical bonus matters, the Committee makes a
recommendation to the Board, in the case of the Chief Executive Officer, of
non-mathematical performance goals for the year ahead, and of the actual
discretionary bonus award for the completed year.
For several years TPF&C, a Towers Perrin Company, has served as executive
compensation consultants to Ferro. The TPF&C advice is based on a variety of
competitive data maintained by, or available to, TPF&C. From these data banks
TPF&C derives standards for compensation levels at Ferro, based upon competitive
levels in the market place. These competitive levels are averages derived from
multiple salary surveys, and therefore, in effect, they are averages of
averages.
Applying this data to Ferro, and to Mr. Bersticker, Ferro's Chief Executive
Officer, the Committee recommended (and the Board approved), for 1994:
1. A salary level of $530,000, which is in the third quartile of
competitive market salary data as reported by TPF&C;
2. An annual incentive plan cash bonus target amount equal to 55% of
salary (a 5% increase over the prior year). Eighty-two percent of such cash
bonus target amount is based upon the degree of achievement of mathematical
targets, with the target bonus achieved if the Company earns a 15% return
on equity (a 1%
15
<PAGE> 18
reduction from the prior year), 200% of target bonus achieved if the
Company earns a 19% return on equity, and no mathematical bonus achieved if
return on equity is less than 10% (a 1% increase over the prior year).
Eighteen percent of target bonus amount is based upon non-mathematical
factors. Such annual incentive target amounts reflect competitive levels of
other companies in the market place as reported by TPF&C.
3. An award of options for 30,000 shares under the Ferro Stock Option
Plan.
4. A performance share award of 6,400 shares.
The stock option award level and the performance share award level reflect
competitive levels of long term incentive programs of companies in the market
place as reported by TPF&C.
The future value of stock option awards will, of course, be a function of
the market value for Ferro stock in the future. The future value of Performance
Shares awards will be a function both of the future market value of Ferro stock
and of the degree of achievement of the Performance Targets by which the degree
of vesting, or the degree of forfeiture, of such Performance Shares is measured.
In recommending Mr. Bersticker's non-mathematical (personal performance)
level of bonus achievement, the Committee considered the degree of achievement
of specific objectives that had been agreed upon for Mr. Bersticker at the
beginning of 1994. The determination of the actual award was made in January,
1995. The award was fixed at approximately 90% of target, or $47,700.
The recommendations of the Committee represented satisfaction with the
manner in which Mr. Bersticker has performed his responsibilities as Chief
Executive Officer and his maturity, leadership, judgment and experience in the
business of Ferro. The recommendations and actions of the Committee relied
heavily upon the advice of TPF&C as to competitive standards of compensation in
the market place. TPF&C advises the Company as to competitive levels of salary
(fixed annual compensation), short term incentive compensation (Ferro's annual
cash bonus plan) and long term incentive compensation (Ferro's Stock Option and
Performance Share Plans). The Committee's policy is to attain competitive levels
of executive compensation in each of these areas (salary, short term incentive
and long term incentive).
Mr. Bersticker strongly advocates, and the Committee concurs, that a
substantial portion of executive compensation should be variable, based upon
performance of the Company and results achieved by each member of management.
Application of this
16
<PAGE> 19
principle has resulted in salary levels for senior executive officers in the
third quartile of competitive market data as reported by TPF&C, with major
emphasis upon variable compensation.
Because Ferro profits did not reach target levels of profitability
performance, executive bonuses in 1994 were lower than 1993 levels. Unless
profits significantly improve, realization of values by the senior executives
under the Performance Share Plan will also be significantly below values
reflected at the time of awards, because non-achievement of Performance Targets
will result in significant forfeiture of Performance Shares previously awarded.
In making its determinations and recommendations with respect to Messrs.
Bush, Fisher, Ortino and Oudersluys, the Committee considered and discussed
those same materials and information that were considered with respect to Mr.
Bersticker, as well as the advice and recommendations of Mr. Bersticker as to
such individuals. The Committee also considered its evaluation of the individual
performance of those individuals. In the case of Messrs. Bush, Fisher, and
Oudersluys who have direct responsibilities with respect to Company operations,
their levels of achievement under the Cash Bonus Plan and Performance Share Plan
are materially impacted by the performance of those specific operations which
are in their respective areas of responsibility. The Committee recommended, and
the Board approved a promotional increase in the salary level of Mr. Oudersluys
effective June 1, 1994 reflecting his assumption of new responsibilities. No
discretionary determinations were made with respect to Mr. Carragher during the
year, since his compensation rights were determined under an agreement entered
into with him in 1993.
During 1994 the percentage achievement of the mathematical portion of bonus
was: Mr. Bersticker, 47.4%; Mr. Bush, 44.8%; Mr. Ortino, 47.4%; Mr. Fisher,
59.3%; and Mr. Oudersluys, 97.2%.
In 1993, the Internal Revenue Code was amended to add Section 162(m), which
generally provides that certain compensation in excess of $1 million per year
paid to a company's chief executive officer and any of its four highest paid
executive officers is no longer deductible to the company unless the
compensation qualifies for an exception. Section 162(m) provides an exception
for performance based compensation if certain procedural requirements, including
shareholder approval of the material terms of the performance goals, are
satisfied. Although none of Ferro's executive officers were paid compensation in
excess of $1 million in 1994, the Committee has determined to qualify the
Company's Performance Share Plan and Employee Stock Option Plan under the
Section 162(m) exception in order to preserve the tax
17
<PAGE> 20
deductibility to the Company of compensation paid to executives under these
plans in the future. Accordingly, as part of this Proxy Statement, the Company
is recommending the ratification of the 1995 Performance Share Plan and approval
of an amendment to Ferro's Employee Stock Option Plan. The specific changes made
to both plans for the purpose of complying with Section 162(m) are discussed on
pages 9 through 14 of this Proxy Statement.
W. E. Butler, J. C. Morley, D. W. Sullivan
18
<PAGE> 21
<TABLE>
PERFORMANCE COMPARED TO CERTAIN STANDARDS
The chart set forth below compares Ferro's cumulative total shareholder
return for the five years ended December 31, 1994 to (a) that of the Standard &
Poor's 500 Index and (b) that of a designated group of companies deemed to have
a peer group relationship to Ferro. In all cases, the information is presented
on a dividend reinvested basis.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FERRO CORPORATION, S&P 500 INDEX AND S&P SPECIALTY CHEMICALS INDEX(1)
<CAPTION>
MEASUREMENT PERIOD FERRO CORPO- S&P SPECIALTY
(FISCAL YEAR COVERED) RATION S&P 500 INDEX CHEMICALS INDEX
<S> <C> <C> <C>
1989 100.0 100.0 100.0
1990 72.0 96.9 95.7
1991 155.6 126.3 126.2
1992 169.4 135.9 143.9
1993 203.2 149.5 164.1
1994 154.5 151.5 143.1
<FN>
Note:
(1) Assumes $100 invested on December 31, 1989 in Ferro Common Stock, S&P 500
Index and S&P Specialty Chemicals Index.
</TABLE>
19
<PAGE> 22
<TABLE>
SUMMARY COMPENSATION TABLE
The following table shows on an accrual basis the elements of compensation
paid or awarded during each of the three years ended December 31, 1994 to the
Chief Executive Officer, each of the other four highest paid executive officers
of Ferro who continue to serve as officers and Frank A. Carragher. Mr. Carragher
ceased to be an executive officer of the Company on March 31, 1994 when he
stepped down as Senior Vice President, Chemicals and Polymers.
Mr. Carragher's 1994 compensation was determined under an agreement entered
into with him in 1993, which superseded the executive employment agreement to
which he was previously a party.
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
AWARDS
--------------------------
ANNUAL COMPENSATION PERFORMANCE ALL OTHER
- ------------------------------------------------------------- SHARE PLAN OPTIONS COMPEN-
NAME AND SALARY BONUS AWARD(1) (NO. OF SATION
PRINCIPAL POSITION YEAR ($) ($) ($) SHARES)(2) ($)(3)
- ---------------------------- ----- -------- -------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
A.C. Bersticker 1994 530,000 160,749 217,600 30,000 22,435
President and Chief 1993 490,000 224,719 0 30,000 19,597
Executive Officer 1992 450,000 317,800 417,693 30,000 17,215
W.F. Bush 1994 350,000 82,852 98,600 15,000 17,991
Executive Vice President 1993 290,666 102,816 0 9,000 15,545
and Chief Operating 1992 240,000 146,519 190,942 9,000 12,747
Officer
H.R. Ortino 1994 300,000 76,770 98,600 15,000 31,050
Executive Vice President 1993 251,334 96,692 0 9,000 23,264
and Chief Financial -- 1992 212,000 124,553 168,666 9,000 18,829
Administrative Officer
J.F. Fisher 1994 228,000 54,279 68,000 8,000 13,370
Senior Vice President -- 1993 202,002 67,233 0 6,000 14,268
Powder Coatings, Specialty 1992 167,000 98,860 132,828 6,000 11,871
Ceramics & Electronic
Materials
R.C. Oudersluys 1994 170,419 58,837 37,400 3,000 16,041
Vice President, Inorganic 1993 138,000 69,338 0 3,000 12,648
Coatings & Colorants 1992 125,000 63,911 119,325 3,000 12,530
F.A.Carragher 1994 233,200 0 0 0 14,477
Senior Vice President -- 1993 236,000 30,156 0 9,000 14,787
Chemicals and Polymers 1992 215,000 47,020 171,017 9,000 15,850
<FN>
- ---------------
Notes:
(1) The values reported are based upon the number of Performance Shares awarded,
valued at the market price of the Common Stock on the date of the award.
Such reported values are based upon achievement of target levels of
performance by Ferro during the performance period. Realization of such
values will be a function of Ferro's performance during the performance
periods. The performance period is three years. No Performance Shares were
awarded in 1993 pursuant to Ferro's then practice of granting awards every
other year, instead of annually. Prior to the 1995 awards, Performance
Shares issued to
</TABLE>
20
<PAGE> 23
executive officers did not carry dividend rights until the expiration of the
performance period. Performance is measured in relation to standards tied to
return on average common equity, net income growth, return on average assets
employed and operating income growth. If Ferro's performance exceeds target
levels, the number of shares can increase by up to 25%. At December 31,
1994, the persons listed above hold the following number of Performance
Shares, valued at the value of the underlying shares at December 31, 1994,
applicable to performance periods not yet completed: Mr. Bersticker, 15,842
shares, valued at $378,228; Mr. Bush, 7,973 shares, valued at $190,355; Mr.
Ortino, 7,296 shares, valued at $174,192; Mr. Fisher, 5,550 shares, valued
at $132,506; Mr. Oudersluys, 2,919 shares, valued at $69,691; and Mr.
Carragher, 2,983 shares, valued at $71,219. Such values are also based upon
achievement of target levels of performance by Ferro during the performance
period and realization of values will be a function of Ferro's performance
during the performance period.
(2) Stock Option grants were awarded on the following dates:
January 24, 1992
January 22, 1993
January 28, 1994
(3) In the year ended December 31, 1994, All Other Compensation includes company
matching payments under the Ferro ESOP, as follows: Mr. Bersticker, $5,940,
Mr. Bush, $5,775, Mr. Ortino, $5,940, Mr. Fisher, $5,775, Mr. Oudersluys,
$5,940 and Mr. Carragher, $5,775; personal use of leased automobiles, as
follows: Mr. Bersticker, $3,644, Mr. Bush, $3,041, Mr. Ortino, $5,895, Mr.
Fisher, $3,682, Mr. Oudersluys, $3,777 and Mr. Carragher, $4,249; taxable
portion of benefits under health, hospitalization, life insurance and
pension programs, as follows: Mr. Bersticker, $9,126, Mr. Bush, $5,850, Mr.
Ortino, $6,513, Mr. Fisher, $2,037, Mr. Oudersluys, $3,390 and Mr.
Carragher, $4,452; individual tax services, as follows: Mr. Bersticker,
$3,725, Mr. Bush, $3,325, Mr. Ortino, $7,000, Mr. Fisher, $1,875 and Mr.
Oudersluys, $2,850; and in the case of Mr. Ortino, home leave benefits of
$5,702.
21
<PAGE> 24
<TABLE>
STOCK OPTION GRANTS, EXERCISES AND YEAR END VALUES
The following table sets forth information regarding grants of stock
options to each of the continuing five highest paid executive officers of Ferro
and Mr. Carragher under Ferro's stock option plan during the fiscal year ended
December 31, 1994. The exercisability of the stock options vests at the rate of
25% per year. In the case of death, retirement, disability or change of control,
the options become 100% exercisable.
OPTION GRANTS IN 1994
<CAPTION>
% OF
TOTAL
OPTIONS
GRANTED GRANT DATE
TO PRESENT
OPTIONS EMPLOYEES EXERCISE EXPIRATION VALUE(1)
NAME GRANTED IN 1994 PRICE DATE $
- ------------------------- ------- --------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C>
A.C. Bersticker
President and Chief
Executive Officer........ 30,000 14.9% $34.00 1/28/2004 $406,500
W.F. Bush
Executive Vice President
and Chief Operating
Officer.................. 15,000 7.4% $34.00 1/28/2004 $203,250
H.R. Ortino
Executive Vice President
and Chief Financial --
Administrative Officer... 15,000 7.4% $34.00 1/28/2004 $203,250
J.F. Fisher
Senior Vice President,
Powder Coatings,
Specialty Ceramics &
Electronic Materials..... 8,000 4.0% $34.00 1/28/2004 $108,400
R.C. Oudersluys
Vice President, Inorganic
Coatings & Colorants..... 3,000 1.5% $34.00 1/28/2004 $ 40,650
F.A. Carragher
Senior Vice President,
Chemicals and Polymers... 0 0% $ 0 N/A $ 0
</TABLE>
22
<PAGE> 25
[FN]
- -----------
Note:
(1) The grant date present value has been calculated using the Black-Scholes
method of option valuation. The model assumes the following: (a) an option
term of ten years; (b) an interest rate that represents the interest rate on
a U.S. Treasury bond with a maturity date corresponding to the ten year
option term; (c) volatility calculated using quarter-end stock prices for
the past five years (20 quarters) prior to grant date; and (d) the stock's
annualized dividend yield also over the past five years (20 quarters).
<TABLE>
The following table shows information regarding stock option exercises
during 1994 and information regarding options held at year end.
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, DECEMBER 31,
SHARES 1994 1994(1)
ACQUIRED ------------- -------------
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- --------------------------------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C>
A.C. Bersticker None N/A 112,500/ $1,076,423/
President and Chief Executive 67,500 $0
Officer
W.F. Bush None N/A 42,000/ $ 390,162/
Executive Vice President and 26,250 $0
Chief Operating Officer
H.R. Ortino None N/A 35,625/ $ 290,279/
Executive Vice President and 26,250 $0
Chief Financial --
Administrative Officer
J.F. Fisher None N/A 25,500/ $ 223,943/
Senior Vice President, Powder 15,500 $0
Coatings, Specialty Ceramics &
Electronic Materials
R.C. Oudersluys None N/A 21,375/ $ 236,555/
Vice President, Inorganic 6,000 $1,781
Coatings & Colorants
F.A. Carragher 11,625 $222,302 13,500/ $ 71,179/
Senior Vice President, 11,250 $0
Chemicals and Polymers
<FN>
- ---------------
Note:
(1) Value of unexercised in-the-money options is based on Ferro's NYSE closing
common stock price on December 31, 1994, of $23.875.
</TABLE>
23
<PAGE> 26
<TABLE>
PERFORMANCE SHARE PLAN AWARDS
The following table sets forth information relating to Performance Share
Plan ("Plan") awards to each of the continuing five highest paid executive
officers of Ferro and Mr. Carragher. The Plan has a three year performance cycle
ending on December 31, 1996. A condition to vesting includes the continued
employment of the Plan participant to the end of the Performance Period.
However, in the case of death, disability or retirement, there is a pro rata
payment at the end of the Performance Period based upon the portion of the
Performance Period during which employment continued. Also, in the case of a
change of control, a pro rata portion of the award is paid at the time of the
change of control based upon the portion of the performance period that expired
prior to the change of control.
PERFORMANCE SHARE PLAN AWARDS IN 1994
<CAPTION>
ESTIMATED FUTURE SHARE PAYOUTS
-------------------------------------------
NUMBER OF
NAME SHARES(A) THRESHOLD(B) TARGET(C) MAXIMUM(D)
- --------------------------------- --------- ------------ ----------- ----------
(IN SHARES)
<S> <C> <C> <C> <C>
A.C. Bersticker 6,400 1,600 6,400 8,000
President and Chief Executive
Officer
W.F. Bush 2,900 725 2,900 3,625
Executive Vice President and
Chief Operating Officer
H.R. Ortino 2,900 725 2,900 3,625
Executive Vice President and
Chief Financial --
Administrative Officer
J.F. Fisher 2,000 500 2,000 2,500
Senior Vice President, Powder
Coatings, Specialty Ceramics &
Electronic Materials
R.C. Oudersluys 1,100 275 1,100 1,375
Vice President, Inorganic
Coatings & Colorants
F.A. Carragher 0 0 0 0
Senior Vice President,
Chemicals and Polymers
- ---------------
<FN>
Notes:
(a) The Plan has a three year performance cycle ending December 31, 1996.
Performance measurements are based on a matrix that is a function of return
on average common equity (target -- 15%) and net income growth
(target -- 12%) for Messrs. Bersticker, Fisher and Ortino. For Messrs. Bush,
Ouder-
</TABLE>
24
<PAGE> 27
sluys and Carragher the performance factors are a function of return on
average assets employed and operating income growth for the operations in
their respective groups.
(b) Threshold is 25% of Award.
(c) Target is 100% of Award.
(d) Maximum is 125% of Award.
RETIREMENT PLAN
Ferro maintains a non-contributory defined benefit retirement program for
eligible salaried employees, including officers. In general, as applied to the
senior officer group of Ferro the retirement program provides a monthly pension
at age 65 payable for life with a guarantee of 120 monthly payments. The monthly
retirement benefit payable to a participating employee who retires on or after
age 65 with 30 or more years of service is 50% of the monthly average of the
participant's covered compensation during the five consecutive calendar years in
which his covered compensation was the highest, reduced by 50% of his primary
Social Security benefit. If the participating employee has less than 30 years of
service, the monthly pension net benefit is reduced proportionately. Generally,
for purposes of the retirement program, covered compensation means basic salary
plus bonus plus values earned under the Performance Share Plan. Section 415 of
the Internal Revenue Code limits the annual benefits payable from the Ferro
Qualified Retirement Plan (to $118,800 per year for 1994). In addition, the
amount of covered compensation used to compute the Retirement Plan benefit is
limited by the Internal Revenue Code. In response to such limitations, Ferro has
adopted an Excess Benefits Plan. The Excess Benefits Plan will pay retirement
program benefits to participants in the Ferro Qualified Retirement Plan in
excess of those payable from the Qualified Plan. The following table shows
estimated annual benefits payable upon retirement under both the Retirement Plan
and the Excess Benefits Plan to persons with the specified years of service and
whose average annual covered compensation during the five consecutive calendar
years in which their covered compensation was the highest would be as indicated.
As of December 31, 1994, Messrs. Bersticker, Bush, Ortino, Fisher and Oudersluys
had 36, 30, 23, 35, and
25
<PAGE> 28
16 years of service, respectively. Mr. Carragher had 14 years of service as of
December 31, 1993.
<TABLE>
<CAPTION>
YEARS OF SERVICE AT AGE 65
ASSUMED RETIREMENT IN 1994
COVERED ------------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- --------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 46,559 $ 62,079 $ 77,598 $ 93,118 $ 93,118
300,000 71,559 95,412 119,265 143,118 143,118
400,000 96,559 128,745 160,932 193,118 193,118
500,000 121,559 162,079 202,598 243,118 243,118
600,000 146,559 195,412 244,265 293,118 293,118
700,000 171,559 228,745 285,932 343,118 343,118
800,000 196,559 262,079 327,598 393,118 393,118
900,000 221,559 295,412 369,265 443,118 443,118
1,000,000 245,559 328,745 410,932 493,118 493,118
</TABLE>
- ---------------
The five year average covered compensation for the individuals listed in
the Summary Compensation Table was: Mr. Bersticker, $812,087; Mr. Bush,
$447,790; Mr. Ortino, $385,362; Mr. Fisher, $286,135; and Mr. Oudersluys,
$230,321. See page 27 of this Proxy Statement for a description of an agreement
entered into with Mr. Carragher in 1993 pertaining to his retirement in 1994.
EXECUTIVE EMPLOYMENT AGREEMENTS
Ferro is a party to executive employment agreements (the "Executive
Employment Agreements") with 11 of its officers, including each of the
individuals (except Mr. Carragher) named in the summary compensation table on
page 20 of this Proxy Statement. The purpose of the Executive Employment
Agreements is to reinforce and encourage the continued attention and dedication
of these officers to their assigned duties without distraction in the face of
(i) solicitations by other employers and (ii) the potentially disturbing
circumstances arising from the possibility of a change in control of Ferro. To
that end, the Executive Employment Agreements obligate Ferro to provide certain
severance benefits, described below, to any of these officers whose employment
is terminated under certain circumstances.
Benefits are payable under the Executive Employment Agreements if the
officer's employment is terminated for reasons other than for cause, disability,
death or normal retirement or if the officer terminates his employment for "Good
Reason."
26
<PAGE> 29
Good Reason will exist if Ferro fails to honor any of its obligations or
responsibilities under certain designated sections of the Executive Employment
Agreement. Benefits are also payable if a successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of Ferro fails to expressly assume the Executive
Employment Agreements. The principal benefits to be provided to the officers
under the Executive Employment Agreements are (i) a lump sum severance payment
equal to a full year's compensation (base salary and incentive compensation)
multiplied by three in the cases of Messrs. Bersticker, Bush and Ortino and
multiplied by two in the case of the other officers with whom Executive
Employment Agreements were made, (ii) a lump sum calculated to approximate the
present value of the additional retirement benefits to which the officer would
have become entitled had he remained in the employment of Ferro for the same
number of years used in computing the lump sum severance payment, (iii)
continued participation in Ferro's employee benefit programs such as group life,
health and medical insurance coverage for the same number of years used in
computing the lump sum severance payment, and (iv) a cash payment in an amount
to reimburse on an after tax basis that portion of any excise tax attributable
to payments or benefits required to be made to the executive.
As security for its payment of the benefits provided for in the Executive
Employment Agreements, Ferro has established, in accordance with its obligation
under the Executive Employment Agreements, an escrow account at National City
Bank and deposited into that escrow account a percentage of the amount which
would be payable to each of the officers under the Executive Employment
Agreements. No officer has a right to receive any amount in the escrow account
until Ferro has defaulted in its obligations to that officer under the Executive
Employment Agreement to which he is a party. Interest earned on the escrow
account is paid to the Company.
In 1993, Ferro entered into an agreement with Mr. Carragher which provides
for his compensation as a consultant to the Company after he stepped down as
Senior Vice President, Chemicals and Polymers in March of 1994. This agreement
supersedes his executive employment agreement and a prior agreement with him
providing for supplemental retirement benefits. Under the 1993 agreement, Mr.
Carragher will be entitled to continued participation in certain employee
benefit plans and will be paid an aggregate of $660,800 for the period of April
1, 1994 through February 4, 1997 in return for his services as a consultant. Mr.
Carragher will be deemed to have retired as of March 31, 1994 with respect to
his rights under the Performance Share Plan and will be deemed to have retired
as of February 4, 1997 with respect to his rights under the stock option plan.
As a result of this agreement, Mr. Carragher's prior service with
27
<PAGE> 30
the Company, and a supplemental pension agreement entered into with Mr.
Carragher on August 25, 1988, Mr. Carragher will be eligible, as of March 1,
1997, to participate in the Ferro Salaried Retiree Medical Program and will be
entitled to receive a pension of approximately $9,270 per month.
SHAREHOLDER PROPOSALS FOR THE 1995 ANNUAL MEETING
Any shareholder who intends to present a proposal at the 1996 annual
meeting and who wishes to have the proposal included in Ferro's proxy statement
and form of proxy for that meeting must deliver the proposal to Ferro not later
than November 20, 1995.
MISCELLANEOUS
The accompanying proxy is solicited by the Board of Directors of Ferro and
will be voted in accordance with the instructions thereon if it is returned duly
executed and is not revoked. A shareholder may revoke his proxy without
affecting any vote previously taken, by giving notice to the Company in writing
or in open meeting.
Ferro will bear the cost of preparing and mailing this statement, with the
accompanying proxy and other instruments. Ferro will also pay the standard
charges and expenses of brokerage houses, or other nominees or fiduciaries, for
forwarding such instruments to and obtaining proxies from securities holders and
beneficiaries for whose account they hold registered title to shares of the
Company. In addition to using the mails, directors, officers and other employees
of Ferro, acting on its behalf, may also solicit proxies, and Georgeson & Co.,
New York, New York, has been retained, at an estimated cost of $10,000 plus
expenses, to aid in the solicitation of proxies from brokers, institutional
holders and individuals who own a large number of shares. Proxies may be
solicited personally, by telephone, or by telegram.
The record date for determination of shareholders entitled to vote at the
1995 annual meeting is February 28, 1995. On that date the outstanding voting
securities of Ferro were 27,878,900 shares of Common Stock, having a par value
of $1 each and 1,404,974 shares of Series A ESOP Convertible Preferred Stock.
Each share has one vote and the Common Stock and the Series A ESOP Convertible
Preferred Stock vote together as a single class.
Under the General Corporation Law of Ohio, if notice in writing is given by
any shareholder to the President or any Vice President or the Secretary of
Ferro, not less than forty-eight hours before the time fixed for holding the
meeting, that the
28
<PAGE> 31
shareholder desires that the voting for election of directors shall be
cumulative, and if an announcement of the giving of such notice is made upon the
convening of the meeting, each shareholder will have cumulative voting rights.
Cumulative voting means that each shareholder is entitled to that number of
votes equal to the number of shares that he owns multiplied by the number of
directors to be elected. Each shareholder may cast all of his votes for a single
nominee or may distribute his votes among as many nominees as he sees fit. As
indicated on page 1 of this Proxy Statement, if the election of directors is by
cumulative voting the persons appointed by the accompanying proxy intend to
cumulate the votes represented by the proxies they receive and distribute such
votes in accordance with their best judgment. Those nominees receiving the
largest number of votes for the director positions to be filled will be elected
to those positions. Abstentions will be deemed to be present for the purpose of
determining a quorum for the meeting, but will be deemed not voting on the
issues or matters as to which the abstention is applicable.
So far as the management is aware, no matters other than those outlined in
this Proxy Statement will be presented to the meeting for action on the part of
the shareholders. If any other matters are properly brought before the meeting,
it is the intention of the persons named in the accompanying proxy to vote
thereon the shares to which the proxy relates, in accordance with their best
judgment.
FERRO CORPORATION
P. B. CAMPBELL, Secretary
March 20, 1995
29
<PAGE> 32
EXHIBIT A
FERRO CORPORATION
AMENDED AND RESTATED 1995 PERFORMANCE SHARE PLAN
(4/26/91)
(AS AMENDED 10/25/91)
1. Purpose. The purpose of the 1995 Ferro Corporation Performance Share
Plan is to promote the long-term financial interests and growth of the
Corporation, by (i) attracting and retaining executive personnel possessing
outstanding ability; (ii) motivating executive personnel, by means of
performance-related incentives, to achieve long-range performance goals; (iii)
providing incentive compensation opportunities competitive with those of other
major corporations; and (iv) furthering the identity of interests of
Participants with those of the stockholders of Ferro Corporation through
opportunities for increased stock ownership in the Corporation.
2. Definitions. The following definitions are applicable to this Plan:
(a) "Committee" means the committee of the Board of Directors referred to
in Section 4.
(b) "Common Stock" means shares of the Corporation as specified in Section
7.
(c) "Corporation" means Ferro Corporation.
(d) "Equity" means with respect to any fiscal year the average
stockholders' equity of the Corporation (less any portion thereof attributable
to preferred stock), as determined by the Corporation's Independent Auditors.
(e) "Growth Rate" shall mean the growth rate determined by measuring the
specific performance being measured during the first year of the Performance
Period as compared to such performance during the fiscal year immediately
preceding the commencement of the Performance Period; the growth rate determined
by measuring such performance during the second year of the Performance Period
as compared to such performance during the first year of the Performance Period;
the growth rate determined by measuring such performance during the third year
of the Performance Period as compared to such performance during the second year
of the Performance Period; and continuing the foregoing procedure for each year
of the Performance Period; and then calculating a simple arithmetic average of
the individual year growth rates as calculated above to determine the applicable
growth rate for the Performance Period.
A-1
<PAGE> 33
(f) "Independent Auditors" means with respect to any fiscal year the
independent public accountants appointed by the Board of Directors of the
Corporation to audit the consolidated financial statements of the Corporation on
behalf of the Shareholders and the Board of Directors of the Corporation.
(g) "Net Income" means with respect to any fiscal year the consolidated net
income of the Corporation for such year after provision for all costs and
expenses including the expenses incurred by the Plan, and federal, state, local
and foreign income taxes, and provision for dividends on preferred stock; all as
determined by the Corporation and audited by the Corporation's Independent
Auditors.
(h) "Operating Income" means operating income of the applicable business
unit or units of the Corporation adjusted, if appropriate, to exclude the effect
of extraordinary items, as determined by the internal accounting records of the
Corporation prepared in the ordinary course of its business.
(id) "Participant" means an officer or other key executive of the
Corporation or of any subsidiary or affiliate of the Corporation, selected by
the Committee to participate in this Plan.
(je) "Performance Period" refers to the period during which the Performance
Target is measured.
(kf) "Performance Shares" means interests in this Plan which will be
represented by or converted into shares of Common Stock or cash or a combination
of Common Stock and cash, and distributed to Participants or, in the case of
shares of Common Stock, become non-forfeitable, after the end of the Performance
Period based upon the level of achievement of the Performance Targets.
(lg) "Performance Targets" means pre-determined goals established by the
Committee. The Performance Targets determine the extent to which Performance
Shares are converted into Common Stock and cash, or the extent to which Common
Stock previously issued hereunder shall be forfeited.
(m) "Plan" means the 1995 Ferro Corporation Performance Share Plan, as
amended and restated on April 26, 1991 and as the same may be thereafter amended
from time to time.
(n) "Return on Average Assets Employed" means the return on average assets
employed by the applicable business unit or units of the Corporation as
determined by the internal accounting records of the Corporation prepared in the
ordinary course of its business.
A-2
<PAGE> 34
(o) "Return on Equity" means with respect to any fiscal year Net Income for
the year divided by Equity.
(p) "Return on Net Assets" means the return on average assets employed, net
of average liabilities outstanding, by and of the applicable business unit or
units of the Corporation as determined by the internal accounting records of the
Corporation prepared in the ordinary course of its business.
(q) "Value of Common Stock" means the average closing price per share of
the Common Stock on the New York Stock Exchange for each day such shares are
traded during the first ten (10) calendar days of December.
(r) "1991 Plan" means the Amended and Restated Performance Share Plan of
the Corporation heretofore in effect.
3. Operation of Plan. The Committee will authorize an award of a specific
number of Performance Shares to each Participant as of the first day of each
Performance Period. Performance Targets will be established at the beginning of
each Performance Period. If at the end of the Performance Period the Performance
Target is fully met, Performance Shares granted hereunder will be converted into
shares of Common Stock and cash, or Common Stock issued hereunder will in part
become non-forfeitable and in part be repurchased by the Company, all in the
manner determined by the Committee and set forth in the applicable Performance
Share Award Agreement. If the Performance Target has not been fully met,
conversion, or non-forfeiture, will occur only to the extent, if any, provided
at the time of the award of Performance Shares, for the partial attainment of
the Performance Target, and the balance of the Performance Shares for such
Performance Period will be forfeited.
Performance Targets may be established in terms of Return on Equity,
Operating Income as a Return on Net Assets, Operating Income as a Return on
Average Assets Employed, Operating Income Growth Rate and Net Income Growth
Rate, or various combinations of the foregoing.
The award level shall be calculated as a percentage of salary by applying
such percentage to the Participant's salary and dividing such resulting number
by the Value of Common Stock during the fiscal year prior to the commencement of
the applicable Performance Period.
The maximum payout with respect to any award made for any Performance
Period commencing on or after January 1, 1995 shall be 125% of the Target Level
set with respect to the award, and the maximum payout for any Performance Period
A-3
<PAGE> 35
(doubled if bi-annual grants are utilized) with respect to any Participant shall
be 30,000 shares, or a combination of shares and cash equal to the dollar
equivalent thereof, subject to adjustment as provided in Section 8 hereof.
The Committee shall have the authority to make adjustments by reason of
special matters, such as acquisitions or special charges.
Extraordinary items, and the effect of extraordinary items, shall be
excluded, in the determination of standards used for the measurement of
Performance Targets, and the degree of achievement thereof, if and to the extent
so determined by the Committee.
The Corporation may adopt a practice of bi-annual grants, rather than
annual grants in which event the grant levels shall be double the normal annual
grant levels.
The standards reflected above are intended to preserve to the Committee
some degree of flexibility in responding to economic and competitive conditions,
individual situations, and the evaluation of individual performance and the
economic potential and business plans of various units of the Corporation.
4. Administration. Except to the extent the Board of Directors reserves to
itself the authority with respect thereto, tThis Plan shall be administered
under the supervision of a committee (herein called the "Committee") composed of
not less than three directors of the Corporation appointed by the Board of
Directors. The members of the Committee shall each be "disinterested persons"
within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or any successor rule or statute. not,
pursuant to the exercise of discretion, be eligible, and shall not have been so
eligible for a period of at least one year prior to their appointment, to
participate in this Plan or to have been selected to participate in any other
plan of the Corporation or any affiliate (as defined under the Securities
Exchange Act of 1934) of the Corporation entitling the participants therein to
acquire stock, stock options or stock appreciation rights of the Corporation or
any affiliate of the Corporation.
5. Participation. The Committee will select Participants from time to time
from those employees of the Corporation and its subsidiaries and affiliates who,
in the opinion of the Committee, have the capacity for contributing in a
substantial measure to the successful performance of the Corporation.
6. Terms and Conditions of Performance Share Awards. All Performance
Shares awarded under the Plan shall be subject to the following terms and
conditions
A-4
<PAGE> 36
and to such other terms and conditions not inconsistent with the Plan as shall
be prescribed by the Committee:
(a) If a Participant ceases to be an employee of the Corporation, its
subsidiaries or affiliates (for reasons other than death, disability or
retirement pursuant to an established retirement plan or policy of the
Corporation, subsidiaries or affiliates), Performance Shares and Common Stock
awarded to the Participant other than those applicable to Performance Periods
which have been completed at the time of such cessation of employment, shall be
forfeited except (i) as otherwise provided herein in the case of a Change of
Control and (ii) in the case of those Participants who are parties to Employment
Agreements with the Corporation, for the purposes of this Plan, employment shall
be deemed to have continued through the end of the Contract Term provided for in
such Employment Agreements unless terminated by the Corporation for Cause or by
the Participants without Good Reason, all as determined under the terms of such
Employment Agreements.
(b) If a Participant ceases to be an employee of the Corporation, its
subsidiaries or affiliates due to death, disability or retirement pursuant to a
retirement plan or policy of the Corporation, the subsidiary or affiliate, he
will be eligible to receive a pro-rata proportion of the Performance Shares
awarded or, if applicable, a pro-rata portion of the Common Stock awarded shall
become non-forfeitable, following the end of the Performance Period and the
determination of the degree of achievement of the applicable Performance
Targets, such pro-rata proportion or portion to be measured by a fraction of
which the numerator is the portion of the Performance Period during which the
Participant's employment continued and the denominator is the Performance
Period.
(c) In the case of a "Change in Control" of the Corporation all previously
established Performance Targets will be conclusively deemed to have been met.
For purposes hereof, a "Change in Control" of the Corporation shall mean a
Change in Control of the Corporation of a nature that would be required to be
reported (assuming such event has not been "previously reported") in response to
Item 6(e) of schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided that, without
limitation, a Change In Control shall be deemed to have occurred at such time as
(i) any "person" within the meaning of section 14(d) of the Exchange Act, is or
becomes the beneficial owner, directly or indirectly, of securities of the
Corporation representing 50% or more of the combined voting power of the
Corporation's then outstanding securities, or (ii) during any period of two
consecutive years, individuals who at the beginning of
A-5
<PAGE> 37
such period constitute the Board of Directors of the Corporation cease for any
reason to constitute at least a majority thereof unless the election, or the
nomination for election by the Corporation's shareholders, of each new director
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period.
In the event of a Change of Control of the Corporation:
(i) Participants shall be entitled to receive a pro-rata proportion of
the shares of Common Stock and cash which would have been issued or
delivered to them at the end of the Performance Period or, if applicable, a
pro-rata portion of the Common Stock shall be come non-forfeitable,
(recognizing that the Performance Targets are conclusively deemed to have
been met by reason of the Change of Control of the Corporation), such
pro-rata proportion or portion to be measured by a fraction of which the
numerator is the portion of the Performance Period prior to such Change of
Control of the Corporation, and the denominator is the Performance Period;
(ii) In lieu of issuing shares of Common Stock of the Corporation upon
such conversion of Performance Shares, the Corporation shall make payment
to the Participants in cash based on the fair market value of the Common
Stock that would have been issued under paragraph (i) above (but for this
paragraph (ii)), or, if applicable, Common Stock which has become
non-forfeitable under paragraph (i) above shall be repurchased by the
Corporation at the fair market value of the Common Stock;
(iii) The "fair market value of the Common Stock" for this purpose
shall be the higher of (x) the closing price on the New York Stock Exchange
for Ferro Corporation Common Stock on the date such Cchange of Ccontrol of
the Corporation occurs or (y) the highest price per share of Ferro
Corporation Common Stock actually paid in connection with such Change of
Control:
(iv) Cash payments to Participants shall be due and payable, and shall
be paid by the Corporation, immediately upon the occurrence of such Change
of Control of the Corporation; provided, however, no such payment shall be
due and payable with respect to any Performance Share award prior to the
expiration of seven months from the date of grant of such award; and
(v) After the payment provided for in (iv) above the Participants
shall have no further rights under awards of Performance Shares outstanding
at the time of such Change of Control of the Corporation.
A-6
<PAGE> 38
(d) At the time of an award of Performance Shares the Participant shall
enter into a Performance Share Award Agreement with the Corporation in a form
specified by the Committee, agreeing to the terms and conditions of the award
and other such matters as the Committee shall in its sole discretion determine.
7. Shares Subject to the Plan. The shares to be awardedissued under the
Plan shall be shares of Common Stock and may be authorized but unissued shares
or issued shares reacquired and held as treasury shares as the Committee may
from time to time determine. Subject to adjustment in the number and kind of
shares as provided in Section 8 hereof and, subject to the immediately following
sentence of this Section, the number of shares of Common Stock reserved for
awards under the Plan shall be equal to the number of shares remaining available
for issuance under the 1991 Plan at the time of adoption of this Plan by the
close of business on the day immediately preceding the 1991 Annual Meeting of
Shareholders of the Corporation increased by 500,000(i) 750,000 shares and (ii)
by the number of Performance Shares outstanding under the 1991 Plan, if any,
which are canceled or forfeited under the terms of the 1991 Plan.
The maximum number of shares which shall be available for new awards under
the Plan at any particular time shall be the maximum number obtained by
subtracting from the total number of shares reserved under the Plan the sum of
(a) the number of shares of Common Stock represented by Performance Share
awards outstanding under the Plan for unexpired Performance Periods, plus
(b) the number of shares of Common Stock represented by potentially
forfeitable Common Stock issued with respect to Performance Share awards
outstanding under the Plan for unexpired Performance Periods, plus
(c) the number of shares of Common Stock previously issued under the Plan
upon conversion of Performance Shares or which have become non-forfeitable under
the Plan, plus
(d) the number of Performance Shares under the Plan which settled by the
payment of cash, plus
(e) the number of shares of Common Stock previously issued under the Plan
which have been repurchased by the Corporation pursuant to the terms and
requirements of the Plan or a Performance Share Award Agreement;
with all of the foregoing (a) through (e) to be interpreted to avoid counting
the same shares twice.
A-7
<PAGE> 39
8. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding shares of Common Stock by reason of any reorganization,
recapitalization, stock split, stock dividend, combination or exchange of
shares, merger, consolidation or any change in the corporate structure or shares
of the Corporation, the maximum aggregate number and class of shares as to which
awards may be granted under the Plan and the shares issuable pursuant to then
outstanding Performance Shares shall be appropriately adjusted by the Committee,
whose determination shall be final.
In the event the Corporation shall at any time when a Performance Share
award is outstanding make an Extraordinary Distribution (as hereinafter defined)
in respect of Common Stock or effect a Pro-Rata Repurchase of Common Stock (as
hereinafter defined), the Committee shall consider the economic impact of the
Extraordinary Distribution or Pro-Rata Repurchase on Participants and make such
adjustments as it deems equitable under the circumstances. The determination of
the Committee shall, subject to revision by the Board of Directors of the
Corporation, be final and binding upon all Participants.
As used herein, the term "Extraordinary Distribution" means any dividend or
other distribution of:
(a) cash, where the aggregate amount of such cash dividend or
distribution together with the amount of all cash dividends and
distributions made during the preceding twelve months, when combined with
the aggregate amount of all Pro Rata Repurchases (for this purpose,
including only that portion of the aggregate purchase price of such Pro
Rata Repurchases which is in excess of the Ffair Mmarket Vvalue of the
Common Stock repurchased during such twelve month period), exceeds ten
percent (10%) of the aggregate Ffair Mmarket Vvalue of all shares of Common
Stock outstanding on the record date for determining the shareholders
entitled to receive such Extraordinary Distribution, or
(b) any shares of capital stock of the Corporation (other than shares
of Common Stock), other securities of the Corporation, evidences of
indebtedness of the Corporation or any other person or any other property
(including shares of any Subsidiary of the Corporation), or any combination
thereof.
As used herein "Pro Rata Repurchase" means any purchase of shares of Common
Stock by the Corporation or any Subsidiary thereof, pursuant to any tender offer
or exchange offer subject to section 13(e) of the Exchange Act or any successor
provision of law, or pursuant to any other offer available to substantially all
holders
A-8
<PAGE> 40
of Common Stock; provided, however, that no purchase of shares of the
Corporation or any Ssubsidiary thereof made in open market transactions shall be
deemed a Pro Rata Repurchase.
9. Assignment and Transfer. The rights and interests of a Participant
under the Plan may not be assigned, encumbered or transferred except, in the
event of the death of a Participant, by will or the laws of descent and
distribution; provided, however, that the Board of Directors of the Corporation
is specifically authorized to amend the Plan to permit assignment, encumbrance
and transfer if and to the extent that such amendment would not produce adverse
consequences under tax or securities laws.
10. Employee Rights Under the Plan. No employee or other person shall have
any claim or right to be granted Performance Shares under the Plan. Neither the
Plan nor any action taken thereunder shall be construed as giving any employee
any right to be retained in the employ of the Corporation.
Unless the Performance Share Award Agreement specifies otherwise, a
Participant shall forfeit all rights under any such Agreement if (i) in the
opinion of the Committee, the Participant, without the written consent of the
Corporation, engages directly or indirectly in any manner or capacity as
principal, agent, partner, officer, director, employee, or otherwise, in any
business or activity competitive with the business conducted by the Corporation
or any subsidiary; or (ii) the Participant performs any act or engages in any
activity which in the opinion of the Committee is inimical to the best interests
of the Corporation.
11. Settlement by Subsidiaries. Settlement of Performance Share awards
held by employees of subsidiaries shall be made by and at the expense of such
subsidiary.
12. Amendment or Termination. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time, but
(except as provided in Section 8 hereof) no amendment shall be made without
approval of the stockholders of the Corporation which shall (a) materially
increase the total number of shares which may be awarded under the Plan or- (b)
materially change the class of employees eligible to participate in the Plan or
(c) withdraw the direction of the administration of the Plan from the Board of
Directors of the Corporation (or any committee of such Board to which the Board
has delegated authority and responsibility under the Plan); provided that no
such amendment, suspension or termination shall impair the rights of any
Participant without his consent, in respect to any Performance Shares
theretofore awarded pursuant to the Plan.
A-9
<PAGE> 41
13. Effective Date and Term of the Plan. The Plan was initially adopted as
of January 1, 199582 and was approved amended and restated by action of the
Shareholders of the Corporation on April 286, 19951. No Performance Shares shall
be awarded under the Plan after December 31, 20041.
14. Termination of Grants under the 1991 Plan. Following approval of this
Plan by the Shareholders of the Corporation, no further grants of performance
shares shall be made under the 1991 Plan.
A-10
<PAGE> 42
FERRO CORPORATION THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Ferro Corporation hereby appoints A. C.
Bersticker, H. R. Ortino, and P. B. Campbell, the Proxies of the undersigned to
vote the shares of the undersigned at the 1995 annual meeting of shareholders of
said Corporation and any adjournment thereof upon the following:
THE BOARD OF DIRECTORS RECOMMENDS VOTES BE CAST FOR PROPOSALS 1, 2, 3 AND 4.
(1) ELECTION OF DIRECTORS: Albert C. Bersticker, Paul S. Brentlinger and A.
James Freeman for terms expiring in 1998.
/ / FOR all nominees (except as marked to the contrary)
/ / WITHHOLD AUTHORITY to vote for all nominees
(INSTRUCTION: If you wish to withhold authority to vote for any
individual nominee, strike a line through the
nominee's name in the list above.)
(2) PROPOSAL TO APPROVE THE 1995 PERFORMANCE SHARE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
(3) PROPOSAL TO ADOPT AN AMENDMENT TO THE EMPLOYEE STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
(4) RATIFICATION OF THE DESIGNATION OF KPMG PEAT MARWICK LLP AS INDEPENDENT
AUDITORS.
/ / FOR / / AGAINST / / ABSTAIN
(5) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
(Continued, and to be signed on other side)
PROXY NO. (Continued from other side) SHARES
IF NO INSTRUCTION IS INDICATED, AUTHORITY IS GRANTED TO CAST THE VOTE OF THE
UNDERSIGNED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR AND FOR PROPOSALS 2, 3
AND 4.
Dated................., 1995
............................
Signature
............................
Signature if held jointly
NOTICE: When signing as
attorney, executor,
administrator, trustee or
guardian, please give your
full title as such. A proxy
given by a corporation
should be signed in the
corporate name by the
chairman of its board of
directors, its president,
vice president, secretary,
or treasurer.
----------------------------------------------
| PLEASE MARK, SIGN, DATE AND RETURN THE PROXY |
| CARD PROMPTLY USING THE ENCLOSED ENVELOPE. |
----------------------------------------------
Proxy Card
<PAGE> 43
FERRO CORPORATION THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: NATIONAL CITY BANK, CLEVELAND, OHIO
TRUSTEE UNDER THE FERRO CORPORATION SAVINGS AND STOCK OWNERSHIP PLAN
I hereby direct that the voting rights pertaining to shares of stock of
Ferro Corporation held by you, as Trustee, and allocated to my account shall be
exercised at the 1995 annual meeting of shareholders of said Corporation and any
adjournment thereof to vote:
THE BOARD OF DIRECTORS RECOMMENDS VOTES BE CAST FOR PROPOSALS 1, 2, 3 AND 4.
(1) ELECTION OF DIRECTORS: Albert C. Bersticker, Paul S. Brentlinger and A.
James Freeman for terms expiring in 1998.
/ / FOR all nominees (except as marked to the contrary)
/ / WITHHOLD AUTHORITY to vote for all nominees
(INSTRUCTION: If you wish to withhold authority to vote for any
individual nominee, strike a line through the
nominee's name in the list above.)
(2) PROPOSAL TO APPROVE THE 1995 PERFORMANCE SHARE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
(3) PROPOSAL TO ADOPT AN AMENDMENT TO THE EMPLOYEE STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
(4) RATIFICATION OF THE DESIGNATION OF KPMG PEAT MARWICK LLP AS INDEPENDENT
AUDITORS.
/ / FOR / / AGAINST / / ABSTAIN
(Continued, and to be signed on other side)
(Continued from other side)
(5) In its discretion, the Trustee is authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
IF NO INSTRUCTION IS INDICATED, AUTHORITY IS GRANTED TO CAST THE VOTE OF THE
UNDERSIGNED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR AND FOR PROPOSALS 2, 3
AND 4. THE TRUSTEE IS ALSO DIRECTED TO VOTE THE UNDERSIGNED'S PRORATA PORTION OF
ALL OF THE TRUSTEE'S UNALLOCATED AND/OR UNVOTED SHARES IN THE SAME MANNER AS THE
UNDERSIGNED HAS DIRECTED ON THE REVERSE SIDE HEREOF.
Dated................., 1995
............................
Signature
NOTICE: When signing as
attorney, executor,
administrator, trustee or
guardian, please give your
full title as such.
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| PLEASE MARK, SIGN, DATE AND RETURN THE PROXY |
| CARD PROMPTLY USING THE ENCLOSED ENVELOPE. |
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Proxy Card
<PAGE> 44
To: Securities and Exchange Commission
From: Ferro Corporation
Subject: Memorandum of Differences between the EDGAR filing and the printed
Proxy Statement.
A picture of each director appears next to his or her biography on pages 2
through 5 and including page 5.
