<PAGE> 1
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:
[S]
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/X/ Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FURON COMPANY
----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
FURON COMPANY
----------------------------------------------------------------------------
(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), or 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:
------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
<PAGE> 2
[FURON LOGO]
29982 Ivy Glenn Drive
Laguna Niguel, California 92677-2044
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON
JUNE 4, 1996
To the Shareholders of
Furon Company:
The Annual Meeting of the Shareholders of Furon Company, a California
corporation (the "Company"), will be held at The Center Club, 650 Town Center
Drive, Costa Mesa, California, on Tuesday, June 4, 1996, at 9:00 a.m., local
time, for the following purposes:
1. To elect three directors to the Board of Directors for a term of three
years. The nominees for election to the Board of Directors are named in
the attached Proxy Statement.
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending February 1, 1997.
3. To transact such other business as may come before the Annual Meeting
and at any adjournment thereof.
Shareholders of record at the close of business on April 15, 1996 will be
entitled to notice of and to vote at the Annual Meeting and at any adjournment
thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, THE
COMPANY URGES YOU TO ASSURE YOUR REPRESENTATION AT THE MEETING BY SIGNING AND
RETURNING THE ENCLOSED PROXY IN THE POSTAGE PREPAID ENVELOPE PROVIDED AS
PROMPTLY AS POSSIBLE. THE GIVING OF THE PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE
IN PERSON IF YOU ATTEND THE MEETING.
By Order of the Board of Directors
FURON COMPANY
/s/ Donald D. Bradley
General Counsel and Secretary
May 1, 1996
Laguna Niguel, California
<PAGE> 3
FURON COMPANY
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
JUNE 4, 1996
This Proxy Statement is furnished in connection with the solicitation of
the accompanying proxy by the Board of Directors of Furon Company, a California
corporation (the "Company"), for use at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at The Center Club, 650 Town Center Drive, Costa
Mesa, California, on Tuesday, June 4, 1996, at 9:00 a.m., local time. This proxy
solicitation material is being mailed to shareholders on or about May 1, 1996.
GENERAL INFORMATION
PROXY
All shares represented by each properly executed unrevoked proxy received
in time for the Annual Meeting will be voted in the manner specified therein.
Any shareholder has the power to revoke his or her proxy at any time before it
is voted. A proxy may be revoked by (i) delivering a written notice of
revocation to the Secretary of the Company, 29982 Ivy Glenn Drive, Laguna
Niguel, California 92677-2044, (ii) a subsequent proxy executed by the person
executing the prior proxy and presented to the Annual Meeting, or (iii)
attending the Annual Meeting and voting in person.
SOLICITATION OF PROXIES
The expenses of preparing and mailing the proxy materials will be paid by
the Company. In addition to the solicitation of proxies by mail, proxies may be
solicited by directors, officers and regular employees of the Company (who will
receive no additional compensation) by personal interviews, telephone and
telegraph. The Company has retained Beacon Hill Partners, Inc., for a fee of
$3,000, to assist in the solicitation and distribution of proxies to brokerage
houses and institutions. It is anticipated that banks, custodians, nominees and
fiduciaries will forward proxy solicitation materials to beneficial owners of
Common Stock and that such persons will be reimbursed by the Company for their
expenses incurred in this regard.
RECORD DATE AND VOTING RIGHTS
At the close of business on April 15, 1996, the record date with respect to
this solicitation (the "Record Date"), the Company had outstanding 8,961,065
shares of Common Stock. Only holders of Common Stock of record at the close of
business on the Record Date are entitled to notice of and to vote at the Annual
Meeting and at any adjournment thereof. Each share of Common Stock is entitled
to one vote.
Votes cast by proxy or in person at the Annual Meeting will be counted by
an election inspector appointed for the meeting. The election inspector will
treat shares represented by proxies that reflect abstentions as shares that are
present and entitled to vote for purposes of determining the outcome of any
matter submitted to the shareholders for a vote. Abstentions, however, do not
constitute a vote "for" or "against" any matter and thus will be disregarded in
the calculation of a plurality or of "votes cast."
The election inspector will treat shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees that the broker or nominee does not
have discretionary power to vote on a particular matter and as to which
instructions have not been received from the beneficial owners or
1
<PAGE> 4
persons entitled to vote) as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. However, for purposes of
determining the outcome of any matter as to which the broker has physically
indicated on the proxy that it does not have discretionary authority to vote,
those shares will be treated as not present and not entitled to vote with
respect to that matter (even though those shares are considered entitled to vote
for quorum purposes and may be entitled to vote on other matters). Any unmarked
proxies, including those submitted by brokers or nominees, will be voted as
indicated in the accompanying proxy card.
In the election of directors, shares present but not voting will be
disregarded (except for quorum purposes). For each share of Common Stock owned,
each shareholder is entitled to one vote for each of the offices of director to
be elected. The candidates receiving the highest number of votes will be elected
and votes withheld will have no legal effect.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 1996
concerning the beneficial ownership of the Company's Common Stock by (i) the
only person known by the Company to own beneficially more than five percent of
the outstanding shares of Common Stock, (ii) the Company's executive officers,
and (iii) all directors and executive officers of the Company as a group. Except
as otherwise indicated, beneficial ownership includes both voting and
dispositive or investment power.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
NAME AND ADDRESS -----------------------
OF BENEFICIAL OWNER NUMBER PERCENT
- --------------------------------------------------------------------- ------- -------
<S> <C> <C>
PRINCIPAL SHAREHOLDER:
David L. Babson & Company, Inc. ................................... 510,100(1) 5.7
One Memorial Drive
Suite 1100
Cambridge, Massachusetts 02142
EXECUTIVE OFFICERS:
J. Michael Hagan................................................... 302,937(2) 3.3
Terrence A. Noonan................................................. 114,434(2) 1.3
Monty A. Houdeshell................................................ 84,928(2) *
GROUP:
Directors and Executive Officers as a Group (10 persons)........... 971,767(2) 10.4
</TABLE>
- ---------------
* Less than one percent.
(1) Based upon information provided by David L. Babson & Company, Inc. (a
registered investment advisor), which has shared voting power with respect
to 184,100 of the shares shown as beneficially owned by it.
(2) Includes for Messrs. Hagan, Noonan, Houdeshell and the group, respectively,
210,949 shares, 90,764 shares, 79,625 shares and 381,338 shares subject to
stock options which are exercisable within 60 days and were granted under
the Company's 1982 Stock Incentive Plan; 787 shares, 725 shares, 712 shares
and 2,618 shares held under the Company's Employee Stock Ownership Plan; and
8,373 shares, 8,164 shares, 2,591 shares and 19,128 shares held under the
Company's Employees' Profit-Sharing-Retirement Plan. Included in the shares
beneficially owned by Messrs. Hagan and Noonan, respectively, are 82,828
shares held by Mr. Hagan and his spouse as Trustees of the Hagan Living
Trust and 13,855 shares held of record by Mr. Noonan and his wife, in each
case with shared voting and investment power.
2
<PAGE> 5
ITEM 1
ELECTION OF DIRECTORS
NOMINEES AND CONTINUING DIRECTORS
The term of office of the Class III directors of the Company's classified
Board of Directors expires at the Annual Meeting. The Board of Directors has
nominated the individuals designated below for election as Class III directors
at the Annual Meeting, each to serve for a three-year term expiring at the 1999
Annual Meeting of Shareholders and until his successor has been duly elected and
qualified. Each nominee presently serves as a Class III director of the Company.
Unless otherwise instructed, proxy holders will vote the proxies received by
them for the election of the Board's nominees. The proxies may be voted for a
substitute nominee or nominees in the event one or more of the Board's nominees
shall be unable to serve for any reason or be withdrawn from nomination, a
contingency not now anticipated.
Set forth below is certain information concerning each of the nominees, the
three Class I directors whose term of office expires at the 1997 Annual Meeting
of Shareholders and the three Class II directors whose term of office expires at
the 1998 Annual Meeting of Shareholders, including the number of shares of
Common Stock beneficially owned by each of them as of March 31, 1996. The only
directors who beneficially owned one percent or more of the outstanding shares
of Common Stock as of that date were Messrs. Churm (4.9%), Hagan (3.3%) and
Noonan (1.3%); for additional information concerning Messrs. Hagan's and
Noonan's beneficial ownership, see "General Information." The shares
beneficially owned by Messrs. Bright, Chase, Cvengros, Threshie and Ranck
include shares acquired by each of them, in lieu of their annual cash Board
retainer, under the Company's 1993 Non-Employee Directors' Stock Compensation
Plan described below. Except as otherwise indicated, beneficial ownership
includes both voting and investment power.
<TABLE>
<CAPTION>
SHARES
DIRECTOR BENEFICIALLY
NAME POSITION SINCE AGE OWNED
- -------------------------------------- ------------------------ -------- --- ------------
<S> <C> <C> <C> <C>
NOMINEES:
Class III
J. Michael Hagan................. Chairman of the Board 1980 56 302,937
Peter Churm...................... Chairman Emeritus 1963 70 442,386
William D. Cvengros**............ Director 1987 47 2,460
CONTINUING DIRECTORS:
Class I
Terrence A. Noonan............... Director and President 1991 58 114,434
R. David Threshie*............... Director 1990 64 9,710
Bruce E. Ranck*.................. Director 1994 47 3,192
Class II
Cochrane Chase*.................. Director 1979 64 8,760
H. David Bright**................ Director 1982 61 2,460
William C. Shepherd**............ Director 1995 57 500
</TABLE>
- ---------------
* Member of Audit Committee
** Member of Compensation Committee
3
<PAGE> 6
NOMINEES
Class III
J. MICHAEL HAGAN was elected Chairman of the Board of the Company in June
1991, having previously served as President from 1980 to June 1991 and as a Vice
President from 1975 to 1980. Mr. Hagan also is a director of Freedom
Communications, Inc. and Ameron, Inc.
PETER CHURM has rendered management consulting services to the Company
since his retirement on February 1, 1992. Mr. Churm was named Chairman Emeritus
of the Board of Directors in June 1991, having previously served as Chairman of
the Board of the Company from 1980 to June 1991 and as President from 1963 to
1980. Mr. Churm also is a director of CKE Restaurants, Inc. The shares of Common
Stock beneficially owned by Mr. Churm include 417,864 shares held of record by
Mr. Churm as Trustee of the Churm Community Property Trust and 394 shares held
for Mr. Churm's account under the Company's Employee Stock Ownership Plan.
WILLIAM D. CVENGROS has served as President, Chief Executive Officer and a
director of PIMCO Advisors L.P., a publicly traded investment management firm,
since November 1994. Previously, he served since 1990 as the Vice Chairman and
Chief Investment Officer of Pacific Mutual Life Insurance Company, a life
insurance and investment company. He joined Pacific Mutual in 1972, and was
elected Vice President in 1982, Senior Vice President in 1985 and Executive Vice
President in 1986.
CONTINUING DIRECTORS
Class I
TERRENCE A. NOONAN was elected President of the Company in June 1991,
having previously served as an Executive Vice President from 1989 to June 1991
and as a Vice President from May 1987, when he joined the Company, to 1989.
Prior to joining the Company, he served as a Group General Manager of Eaton
Corporation, a diversified manufacturing company.
R. DAVID THRESHIE has served since 1979 as Publisher and Chief Executive
Officer of the Orange County Register, a division of Freedom Communications,
Inc., an integrated communications company. The shares of Common Stock
beneficially owned by Mr. Threshie include 8,000 shares held of record by Mr.
Threshie as Trustee of the Threshie Family Trust, Part A.
BRUCE E. RANCK has served as a director since March 1990 and the President
and Chief Executive Officer since October 1995 of Browning-Ferris Industries,
Inc., a waste services provider ("BFI"). He had served as President and Chief
Operating Officer since November 1991 and Executive Vice President (Solid Waste
Operations -- North America) from October 1989 to November 1991, having
previously served as a Regional Vice President for more than five years. Mr.
Ranck also is a director or trustee of several educational and charitable
organizations.
Class II
COCHRANE CHASE currently is retired. Prior to his retirement in 1988, he
served for 21 years as Chairman of the Board of Cochrane Chase, Livingston &
Company, Inc., an advertising, marketing and public relations firm. The shares
of Common Stock beneficially owned by Mr. Chase include 7,050 shares held of
record by Mr. Chase and his wife as Trustees of the Cochrane and Janis Chase
Trust, with shared voting and investment power.
H. DAVID BRIGHT currently is retired. Prior to his retirement in 1989, he
served as Chairman of the Board of National Education Corporation, a training
and educational publishing company, from 1988 to 1989, and as President and
Chief Executive Officer from 1981 through 1988. Mr. Bright is a member of the
Board of Trustees of Marquette University.
WILLIAM C. SHEPHERD has been the Chairman of the Board since January 1996
and the President and Chief Executive Officer since January 1992 of Allergan,
Inc., a global provider of specialty
4
<PAGE> 7
therapeutic products. Mr. Shepherd joined Allergan in 1966, has served as a
director since 1984 and was President and Chief Operating Officer from 1984 to
1992. He also is a director of Ligand Pharmaceuticals Incorporated and Allergan
Ligand Retinoid Therapeutics, Inc., as well as the Orange County Performing Arts
Center, the National Children's Eye Care Foundation and the Pharmaceutical
Partners for Better Health Care. The shares of Common Stock beneficially owned
by Mr. Shepherd are held of record by Mr. Shepherd and his wife as Trustees of
the Shepherd Family Trust, with shared voting and investment power.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
During the fiscal year ended February 3, 1996, the Board of Directors met
five times. Each director attended at least 75% of all meetings of the Board and
the committees on which the director served. The only standing committees of the
Board of Directors are described below.
The Board's Audit Committee, which currently is comprised of Messrs. Ranck
(Chairman), Threshie and Chase, held three meetings during the last fiscal year.
The Audit Committee reviews the Company's financial reporting and internal
operating controls, its Annual Report on Form 10-K and the selection of the
Company's independent auditors. It also reviews with the independent auditors
the scope and results of the annual audit and the Company's reporting systems
and practices and makes recommendations to the Board of Directors with respect
to the foregoing.
The Board's Compensation Committee, which currently is comprised of Messrs.
Cvengros (Chairman), Bright and Shepherd, held three meetings during the last
fiscal year. The Compensation Committee reviews and recommends to the Board of
Directors the remuneration (including salary, bonus, retirement and other
benefits) to be paid or made available to officers and key employees, reviews
benefit programs available to all employees and administers certain of the
Company's employee benefit plans.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is paid $14,000 per
year, plus $1,000 for each Board meeting attended and $750 for each Committee
meeting attended. A Committee Chairman is paid an additional $2,600 per year.
In November 1993, the Board adopted the 1993 Non-Employee Directors' Stock
Compensation Plan ("Plan"). The Plan provides non-employee directors with the
opportunity to acquire Common Stock of the Company in lieu of their annual cash
retainer. Eligible directors make an election to receive their annual retainer
payable for the one-year term commencing on the date of the next Annual
Shareholders Meeting in (i) cash, (ii) restricted shares of the Company's Common
Stock, or (iii) hypothetical stock "units" which are converted to shares of the
Company's Common Stock upon distribution from the Plan following the director's
termination as a member of the Board or the expiration of some other fixed
period specified by the director, whichever occurs sooner. The number of
restricted shares or stock units which an eligible director receives is
determined by dividing the director's annual retainer by the fair market value
of the Company's Common Stock on the date of the Annual Shareholders Meeting,
and by then multiplying that number by 1.1. In effect, this provides an
incentive for participating directors to increase their ownership of the
Company's Common Stock by enabling them to obtain shares at a discount of 9.09%.
The shares acquired under the Plan are nonforfeitable, but are subject to
significant restrictions on transferability for five years from the date of
award, unless the director ceases to be a member of the Board. The Plan provides
that upon the occurrence of certain "events" described below under "Executive
Compensation -- Change in Control Agreements," the restrictions on
transferability applicable to shares issued under the Plan immediately lapse. As
of March 31, 1996, Messrs. Bright, Chase, Cvengros and Threshie each has
acquired 1,710 restricted shares, and Mr. Ranck has acquired 692 restricted
shares, under the Plan.
5
<PAGE> 8
Peter Churm, the Chairman Emeritus of the Board, has provided management
consulting services to the Company since his retirement on February 1, 1992. Mr.
Churm will be paid $76,800 for those services during the current fiscal year and
received $90,000 during the last fiscal year. Mr. Churm also is reimbursed for
business related expenses incurred in the performance of those services. As part
of this arrangement, the Company provides general medical insurance coverage for
Mr. Churm and his wife at a cost of approximately $800 per month and reimburses
them for any uninsured out-of-pocket medical expenses (which totaled $4,200
during the last fiscal year). This consulting arrangement is subject to the
annual review of the Compensation Committee and approval by the Board of
Directors. During the last fiscal year, the Company also reimbursed Mr. Churm
$15,200 to pay for certain personal tax consulting services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Chairman, J. Michael Hagan, serves as a member of the
Compensation Committee of Freedom Communications, Inc., a private, family owned,
integrated communications company. R. David Threshie, a director of the Company,
is an executive officer of Freedom Communications, Inc. Mr. Threshie has never
been a member of the Company's Compensation Committee.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors of
the Company is comprised of nonemployee independent directors, none of whom has
any interlocking or other relationships with the Company that would call into
question their independence as Committee members. The Compensation Committee
reviews, administers and monitors the Company's executive compensation plans,
policies and programs.
Executive Compensation Philosophy and Principles
The executive compensation philosophy of the Company is to link
compensation with enhancement of shareholder value, as measured by improvements
in Economic Value Added ("EVA"). According to empirical stock market research by
Stern Stewart & Co., the nationally recognized corporate financial advisory firm
that developed the measure ("Stern Stewart"), EVA(R) has a stronger correlation
with shareholder value than all other financial performance measures. As a
result, the Committee believes that the Company has aligned the financial
interests of the executive officers with those of the Company's shareholders.
The principles followed by the Committee to implement the executive
compensation philosophy are (i) to provide a cash compensation package
consisting of competitive base salary levels and incentive opportunities that
are linked to corresponding levels of performance as measured by EVA and (ii) to
grant stock option incentives which require increases in the Company's stock
price in order for executives to realize value and, thus, are tied to the
Company's long-term stock performance. The result is a total compensation
opportunity largely dependent upon the Company's performance. To measure the
effectiveness of the executive compensation program in achieving the foregoing
objectives, the Committee uses the services of Stern Stewart and Towers Perrin,
an internationally recognized compensation consulting firm (collectively, the
"Consultants"), which provide independent expertise and direction on these
matters.
As one of the factors in its consideration of compensation matters, the
Committee will continue to consider, to the extent determinable, the anticipated
tax consequences to the Company and its executive officers of the levels and
forms of executive compensation. The tax consequences of various levels and
forms of compensation, including tax deductibility to the Company, may depend
upon the timing of payment or vesting or exercise of previously granted rights.
In addition,
6
<PAGE> 9
interpretations of and changes in the tax laws and other factors beyond the
Committee's control also affect the tax consequences of executive compensation.
For these and other reasons, the Committee will not necessarily and in all
circumstances limit executive compensation to that level or those forms which
would be deductible to the Company for tax purposes. However, the Committee will
consider various alternatives for preserving the deductibility of executive
compensation to the extent reasonably practicable and consistent with its other
compensation objectives.
Executive Compensation Components
The Company's executive compensation is based on three principal
components, each of which is intended to support the overall compensation
philosophy. As a result, substantially more than 50% of the executive officer's
total compensation opportunity is at risk and contingent upon the performance of
the Company. The three principal components are:
-BASE SALARY. Base salary ranges are reviewed and established at the
beginning of each fiscal year. The Company participates in a broad based
compensation study conducted annually by Towers Perrin to ensure that base
salary ranges reflect competitive job market conditions for similar sized
companies in terms of sales, employees and related factors. (The study
covers several of the companies included in the Russell 2000 and some of
those in the Russell 2000: Producer Durables indices shown below under
"Performance Graph.") Adjustments to actual base salaries are made
subjectively pursuant to job performance and relationship to the midpoint
range (which is plus or minus 10% of the actual midpoint) of the salary
range for the salary grade corresponding to the position and level of
responsibilities. The Company's philosophy generally is to provide a base
salary that is within the midpoint range of the applicable salary grade.
-INCENTIVE COMPENSATION. The incentive compensation opportunity under the
Company's EVA incentive compensation plan (the "EVA Plan") contains
short-term and long-term components. These components are determined by
the achievement of continuous improvement in EVA in relation to
self-adjusting criteria that initially were established by the Committee
subjectively (consistent with the advice of the Consultants) in connection
with the implementation of the EVA Plan. Economic Value Added and the EVA
Plan are discussed in more detail below.
-STOCK OPTIONS. Executive officers are eligible to receive annual grants
of stock options, which since fiscal 1988 have been granted as
nonqualified stock options. The Company's policy is not to grant
restricted stock awards to its executive officers. The stock option awards
are intended to retain and motivate executive officers to improve
long-term stock market performance. Awards are granted at the fair market
value of the Company's Common Stock at the date of grant. Stock options
generally vest in equal installments over a four-year period and have a
ten-year term. The Company's policy is not to adjust award levels for
executive officers annually for fluctuations in the market price of the
Company's Common Stock. Rather, the number of shares subject to individual
awards was fixed for executive officers in fiscal 1992 at the midpoint of
Towers Perrin's 1990/1991 analysis of competitive compensation practices
of companies reflected in the salary survey referred to above. Adjustments
based on subjective criteria (other than market price) were permitted for
other than the Chief Executive Officer and the President until fiscal
1995.
Economic Value Added and the EVA Plan
The primary financial objective of the Company is to increase shareholder
value. To support that effort the Company uses a financial performance
measurement system called Economic Value Added. EVA is the internal measure of
operating and financial performance that, in the opinion of Stern Stewart and
the Company, best reflects the change in shareholder value. EVA can be more
specifically defined as the economic profit generated by the business, less a
charge for the use of
7
<PAGE> 10
capital. Economic profit is an after-tax measure of operating results which
differs from normal accounting profit as the consequence of certain adjustments
for non-economic charges. The capital charge (or cost of capital) is the
weighted average cost of (i) equity capital based upon a 30-year U.S. Treasury
Bond yield plus the product of the average equity risk premium and the business
risk index for the Company, and (ii) debt capital equal to the after-tax cost of
long-term debt.
EVA provides a framework within which management can make decisions that
will build long-term value for the Company and its shareholders rather than
focus on short-term results. The Committee takes the view that the financial
marketplace is a competition for scarce capital. Management of the Company is
charged with the task of putting that scarce capital to work efficiently to earn
the best possible returns. As long as the Company is investing in projects that
earn a rate of return higher than its cost of capital, then in accordance with
Stern Stewart's view of the fundamental forces which drive the capital markets,
investors will earn a return in excess of their required reward and the
Company's capital or stock should command a premium in the marketplace.
There are four key elements to the Company's incentive compensation
philosophy which are incorporated into the EVA Plan and are summarized below.
1. There is only one cash bonus plan, which uses the same measurement
system for both short-term and long-term bonuses to provide a more
substantial incentive for increasing shareholder value.
2. Long-range goals, resource allocation decisions, capital expenditures,
acquisitions and operating performance are all evaluated in terms of
EVA.
3. EVA targets are separated from the budgetary and strategic planning
processes and are set and revised according to a predetermined formula
which rewards long-term continuous improvement and penalizes negative
performance. Under the formula, the Company's target EVA performance
for a fiscal year will be 50% of the difference between the previous
year's target and actual EVA performance if the actual EVA performance
equals or exceeds the target or, if it does not, it will be the prior
year's target less an amount equal to 30% of the difference between
that target and the actual EVA performance.
4. The potential bonus has no ceiling on the upside and no floor on the
downside. Individual target incentive awards (also called "current
bonuses") under the EVA Plan represent up to 80% of the individual's
salary for the fiscal year. Bonuses earned in excess of target
incentive compensation are considered exceptional and are "banked
forward" (i.e., deferred) with their full payout contingent upon
continued successful performance. No interest is earned on the deferred
amount and the participant has no vested right to receive it. Negative
performance can eliminate these contingent amounts and create a
negative bank balance which will be offset against any future bank
payments.
The Company's incentive compensation has been determined using the concepts
of Economic Value Added since fiscal 1993. Following a review by the Consultants
of the EVA Plan's first year of operations, the Committee elected to make
certain modifications to the EVA Plan effective for fiscal 1994. Those
modifications increased the difficulty of receiving incentive compensation by
reducing the compensation paid for a given level of performance. In addition,
the current bonus portion payable in a fiscal year was reduced from 150% to 100%
of target incentive compensation, thereby increasing the long-term incentive
component.
The objectives underlying the EVA incentive compensation program are to
more closely link incentive awards to value added for shareholders, and to
provide a culture of performance and ownership among the Company's managers and
senior executives. This requires management to share some of the Company's
business risk with shareholders, provides the opportunity for the upside
potential that results from the creation of value and, as a result, helps
managers think like
8
<PAGE> 11
owners. Accordingly, the program rewards long-term continuous improvements in
shareholder value.
CEO Compensation
J. Michael Hagan, the Chief Executive Officer of the Company, received a
base salary of $360,000 in fiscal 1995. The Committee subjectively increased Mr.
Hagan's base salary to $375,000 for fiscal 1996, which was below the midpoint of
the annual market analysis of competitive compensation practices completed by
Towers Perrin.
For fiscal 1996, Mr. Hagan was paid a current bonus of $300,000 under the
EVA Plan for exceeding the target EVA performance by 54% and an additional
$9,000 was banked forward. In addition, he received a long-term bonus of
$219,824 that was distributed out of his EVA bank pursuant to the terms of the
EVA Plan.
Mr. Hagan was awarded 35,000 shares of nonqualified stock options during
fiscal 1996 at an exercise price of $19.375 per share, which was the price of
the Company's stock on the date of the grant. The options vest over four years
and have a term of ten years. This award is consistent with the Company's
fixed-share stock option policy discussed above.
William D. Cvengros (Chairman)
H. David Bright
William C. Shepherd
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation paid or accrued for the
fiscal year ended February 3, 1996 and the two prior fiscal years to the
Company's executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
AWARDS
----------------------
ANNUAL COMPENSATION SECURITIES PAYOUTS
--------------------------------- RESTRICTED UNDERLYING ---------
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
POSITION YEAR(A) ($)(B) ($)(B) ($)(C) ($)(D) (#) ($) ($)(E)
- ------------------------ -------- --------- --------- ------------ ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Michael Hagan 1996 $ 375,000 $ 300,000 $ 3,530 $0 35,000 $ 219,824 $5,856
Chairman of the Board & 1995 $ 360,000 $ 288,000 $ 4,361 $0 35,000 $ 143,746 $5,707
Chief Executive Officer 1994 $ 360,000 $ 288,000 $ 4,183 $0 35,000 $ 171,843 $6,190
Terrence A. Noonan 1996 $ 315,000 $ 220,500 $ 77,108 $0 21,000 $ 149,366 $5,874
President & Chief 1995 $ 291,000 $ 203,700 $ 68,942 $0 21,000 $ 92,500 $5,941
Operating Officer 1994 $ 280,000 $ 196,000 $ 68,209 $0 21,000 $ 108,958 $6,337
Monty A. Houdeshell 1996 $ 225,750 $ 135,450 $ 8,691 $0 9,000 $ 96,224 $5,950
Vice President & 1995 $ 215,000 $ 129,000 $ 43,280 $0 9,000 $ 61,028 $6,423
Chief Financial Officer 1994 $ 205,000 $ 123,000 $ 54,344 $0 12,000 $ 72,846 $6,093
</TABLE>
- ---------------
(A) Fiscal year ended on or about January 31.
(B) Amounts shown include cash compensation earned and received by the
executive officers, as well as amounts earned but deferred at their
election.
(C) The amounts shown in this column for Mr. Hagan represent tax
reimbursements. The amounts shown for Mr. Noonan for fiscal 1994, 1995, and
1996 include tax reimbursements ($1,854, $6,763, and $2,717, respectively)
and the estimated value ($48,223, $45,038, and $58,170, respectively) of a
relocation loan made to him in July 1992. The amounts shown for
9
<PAGE> 12
Mr. Houdeshell include (i) for fiscal 1994, 1995, and 1996, tax
reimbursements ($7,414, $6,986, and $8,691, respectively), (ii) for fiscal
1994, the estimated value ($22,389) of a relocation loan made to him in
June 1988 and (iii) for fiscal 1995, the value ($10,338) for federal income
tax purposes of the personal use of his Company automobile. Mr.
Houdeshell's fiscal 1994 and 1995 amounts and all of Mr. Noonan's amounts
also include the estimated value of certain other personal benefits
received during the respective fiscal years that were generally available
to executive officers, including amounts allocated for the use of Company
automobiles and reimbursements for certain expenses under the Company's
supplemental medical reimbursement plan. No information is presented
concerning the value of the personal benefits provided to Mr. Houdeshell in
fiscal 1996 or to Mr. Hagan during any of the fiscal years presented,
because such value does not exceed the lesser of $50,000 or ten percent of
the executive officer's salary and bonus for the fiscal year.
(D) There are no outstanding grants of restricted stock to any of the named
executive officers.
(E) Amounts shown represent Company contributions to defined contribution
plans.
STOCK OPTIONS
The following tables set forth information in respect of the individuals
named in the Summary Compensation Table concerning stock option grants and
exercises during fiscal 1996 and unexercised options held as of the end of that
fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR (A)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------
% OF GRANT DATE
NUMBER OF TOTAL VALUE
SECURITIES OPTIONS -----------
UNDERLYING GRANTED TO EXERCISE GRANT
OPTIONS EMPLOYEES OR BASE DATE
GRANTED IN FISCAL PRICE EXPIRATION PRESENT
NAME (#)(B) YEAR ($/SH)(C) DATE VALUE($)(D)
- --------------------------------- ---------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
J. Michael Hagan................. 35,000 29.7 $19.375 3/22/2005 $ 320,250
Terrence A. Noonan............... 21,000 17.8 $19.375 3/22/2005 $ 192,150
Monty A. Houdeshell.............. 9,000 7.6 $19.375 3/22/2005 $ 82,350
</TABLE>
- ---------------
(A) No SARs were granted to any of the named executive officers during the last
fiscal year.
(B) The options are exercisable in incremental amounts equal to 25% of the
underlying shares of Common Stock on each anniversary of the grant date,
with full vesting occurring on the fourth anniversary date. The options
were granted for a term of 10 years, subject to earlier termination in
certain events related to termination of employment. Under the terms of the
Company's 1982 Stock Incentive Plan, the Compensation Committee retains
discretion, subject to plan limits, to modify the terms of outstanding
options and to reprice the options.
(C) Subject to certain conditions, the exercise price may be paid by delivery of
already owned shares and the tax withholding obligations related to
exercise may be paid by offset of the underlying shares.
(D) These values were calculated using the Black-Scholes option pricing model.
The Black-Scholes model is a complicated mathematical formula which is
widely used and accepted for valuing traded stock options. The model is
premised on immediate exercisability and transferability of the options,
which is not the case for the Company's options granted to executive
officers. Therefore, the values shown are theoretical and are not intended
to reflect the actual values the recipients may eventually realize. Any
ultimate value will depend on the market value of the Company's stock at a
future date. In addition to the stock price at time of grant and the
exercise price, which are identical, and the ten-year term of each option
(with exercise
10
<PAGE> 13
assumed to occur at the end of such term), the following assumptions were
used to calculate the values shown: (i) expected dividend yield of 1.6%,
which is the average yield of the Company's Common Stock for the 36 months
prior to the grant date; (ii) expected stock price volatility of .324,
which is the volatility for the total shareholder return of the Company's
Common Stock for that period; and (iii) risk-free rate of return of 7.22%,
which is equal to the average yield on a blend of long and intermediate
term U.S. Government bonds for the twelve-month period prior to the grant
date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES(A)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE END(#)(D) FISCAL YEAR END($)(C)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#)(B) ($)(C) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Michael Hagan............ 15,900 $200,074 192,948 87,500 $ 1,251,938 $ 150,938
Terrence A. Noonan.......... -- -- 79,875 52,500 $ 451,656 $ 90,563
Monty A. Houdeshell......... -- -- 69,125 24,750 $ 416,813 $ 45,563
</TABLE>
- ---------------
(A) No information is presented concerning SARs because none has been granted by
the Company.
(B) The options covering these shares were granted to Mr. Hagan in March 1985 at
a per share exercise price of $8.1667, representing the then fair market
value of the underlying Common Stock.
(C) Calculated based upon the market value of the underlying Common Stock at the
exercise date ($20.75 per share) or fiscal year end ($19.00 per share), as
the case may be, minus the exercise price.
(D) The unexercisable options vest over the next four years, but will become
immediately vested in the event of the holder's retirement or death.
LONG-TERM INCENTIVE COMPENSATION
Under the EVA Plan described above under "Compensation Committee Report on
Executive Compensation," executive officers and other key employees are eligible
to receive certain long-term incentive compensation based upon the Company's EVA
performance. There is no limitation on the total incentive compensation that a
participant may earn for a fiscal year under the EVA Plan. However, a
participant is only eligible to receive his or her target bonus for a given
fiscal year; any balance is deferred. The deferred amount is accrued by the
Company and banked forward in an EVA incentive compensation bank ("Bank")
maintained for the participant for a possible future payment by the Company. No
interest is earned on the deferred amount and the participant has no vested
right to receive the deferred amount. Rather, the distribution and unconditional
vesting of the Bank are subject to future positive EVA performance.
At the end of each fiscal year for which performance is being measured
under the EVA Plan, a participant is eligible to receive a payment from the Bank
equal to one-third of (i) the participant's beginning Bank balance for the
fiscal year less (ii) any reductions to the Bank resulting from negative EVA
performance for the fiscal year. Negative Bank balances are carried forward to
be offset by any future additions to the Bank.
11
<PAGE> 14
The amounts of contingent incentive compensation awarded to the individuals
named in the Summary Compensation Table for fiscal 1996 that were banked forward
and accrued by the Company, their "LTIP Payouts" from the Bank which also are
shown in the Summary Compensation Table and their current Bank balances, are as
follows:
EVA PLAN BANK
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FEBRUARY 3, 1996
--------------------------------------------
BEGINNING LTIP AMOUNTS ENDING
NAME BALANCE PAYOUTS BANKED BALANCE
- ------------------------------------------------- --------- -------- ------- --------
<S> <C> <C> <C> <C>
J. Michael Hagan................................. $ 659,472 $219,824 $9,000 $448,648
Terrence A. Noonan............................... 448,099 149,366 6,615 305,348
Monty A. Houdeshell.............................. 288,673 96,224 4,063 196,512
</TABLE>
RETIREMENT PLAN
The following table shows the estimated annual benefit payable (rounded to
the nearest thousand and before giving effect to the benefit reductions
described below) upon retirement to participants in the Company's Supplemental
Executive Retirement Plan at the specified compensation and years-of-service
classifications.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
3-YEAR AVERAGE ------------------------------------
REMUNERATION* 5 10 15 OR MORE
- -------------------------------------------------------- -------- -------- ----------
<S> <C> <C> <C>
$300,000............................................... $ 50,000 $100,000 $ 150,000
350,000............................................... 58,000 117,000 175,000
400,000............................................... 67,000 133,000 200,000
450,000............................................... 75,000 150,000 225,000
500,000............................................... 83,000 167,000 250,000
550,000............................................... 92,000 183,000 275,000
600,000............................................... 100,000 200,000 300,000
650,000............................................... 108,000 217,000 325,000
700,000............................................... 117,000 233,000 350,000
750,000............................................... 125,000 250,000 375,000
800,000............................................... 133,000 267,000 400,000
850,000............................................... 142,000 283,000 425,000
900,000............................................... 150,000 300,000 450,000
950,000............................................... 158,000 317,000 475,000
</TABLE>
- ---------------
* Represents the average annual compensation paid for the three highest
compensation years during the five calendar years preceding retirement.
The compensation covered by the plan (which generally will not be the same
as the fiscal year compensation reported in the Summary Compensation Table) is
the aggregate calendar year earnings included in the participant's income for
federal tax purposes plus any compensation deferred by the participant, but
excluding any amounts associated with nonrecurring payments such as moving
expenses, long-term incentive plan payouts and stock option exercises. The
three-year average remuneration under the plan as of the end of the last
calendar year for J. Michael Hagan, Terrence A. Noonan and Monty A. Houdeshell
was $812,644, $579,435 and $384,122, respectively.
12
<PAGE> 15
The benefit is reduced by the Company-provided portion of the benefit
payable from the Company's Employees' Profit-Sharing-Retirement Plan, the
benefit payable from Social Security and any other benefit payable to the
participant from any tax-qualified retirement plan. Benefits become payable at
age 65 and are paid in an annuity over the life of the participant. If the
participant dies after retirement and leaves a surviving spouse, the surviving
spouse receives an annuity of 50% of the amount the participant was receiving.
If the participant dies before retirement and leaves a surviving spouse, the
surviving spouse receives as a death benefit an annuity of 50% of the annual
earnings of the participant immediately before death. A participant is not
vested in his or her benefit for the first five years of service, but then
becomes vested gradually between the sixth and fifteenth years of service, with
full vesting after fifteen years of service. The years of credited service
through February 3, 1996 for Messrs. Hagan, Noonan and Houdeshell are 28, 22 and
8 years, respectively.
PERFORMANCE GRAPH
The following graph compares the five-year cumulative total return on the
Company's Common Stock to the total returns on the Russell 2000 and the Russell
2000: Producer Durables. This comparison assumes in each case that $100 was
invested on January 31, 1991 and all dividends were reinvested. The Company's
fiscal year ends on or about January 31.
<TABLE>
<CAPTION>
RUSSELL 2000:
Measurement Period PRODUCER
(Fiscal Year Covered) FURON COMPANY RUSSELL 2000 DURABLES
<S> <C> <C> <C>
1991 100 100 100
1992 116.80 144.85 127.97
1993 133.03 164.01 125.74
1994 147.22 194.55 146.06
1995 200.28 182.87 135.77
1996 167.85 237.62 182.22
31-Mar-96 198.26 250.10 189.14
</TABLE>
CHANGE IN CONTROL AGREEMENTS
Each executive officer has a change in control agreement with the Company
that will remain in effect until the first anniversary date of the agreement
which is two and one-half years after the date that notice of termination is
given by either party. The agreements provide for the payments described below
if the executive officer's employment is terminated within six months before or
within two years following certain "events." The amounts are not payable,
however, if the termination of employment was due to retirement at or after age
65, death or disability, by the Company for cause, or by the executive officer
without good reason.
The "events" that trigger payments under the change in control agreements
include (1) approval by the shareholders of (a) the dissolution or liquidation
of the Company, (b) certain mergers, consolidations or reorganizations of the
Company or (c) certain sales or transfers of
13
<PAGE> 16
substantially all of the Company's business or assets, and (2) a "change in
control," which is deemed to include (a) the acquisition of 20% or 30% of the
outstanding voting securities of the Company by certain persons (other than the
executive officer acting individually or as part of a group or any employee
benefit or stock plan of the Company) and (b) certain changes in the membership
of the Board of Directors of the Company.
The payments under the change in control agreements are (1) a pro rata
share (based upon the portion of the fiscal year preceding the termination of
employment) of the average annual amount awarded to the executive officer under
the Company's incentive compensation plan over the preceding three years, plus
(2) two times the sum of (a) the executive officer's highest annual base salary
within the two years prior to termination of employment, and (b) the average
annual amount awarded under the Company's incentive compensation plan over the
preceding three years. In addition, an executive officer who is eligible for the
above cash payments is entitled to continued participation in the Company's
life, health, accident and disability insurance plans for up to two years
following termination of employment. Furthermore, in the event of termination
following an "event" for any reason other than by the Company for cause, the
executive officer is entitled to purchase his Company car at its then wholesale
value and to retain any existing club memberships upon reimbursement of the
membership costs to the Company, and no loan to such executive officer under the
Company's Employee Relocation Assistance Plan will be accelerated. Payments to
an executive officer under the change in control agreement will be limited so
that certain excise taxes specified in the Internal Revenue Code will not be
payable.
In the event of the occurrence of an "event" triggering cash payments under
the change in control agreements and assuming termination of employment on
February 3, 1996, the aggregate estimated cash payments to J. Michael Hagan,
Terrence A. Noonan and Monty A. Houdeshell would be $1,626,000, $1,202,200 and
$817,450, respectively.
ACCELERATION OF BENEFITS
The Company's Supplemental Executive Retirement Plan, 1982 and 1995 Stock
Incentive Plans and Economic Value Added (EVA) Incentive Compensation Plan all
provide for the vesting of certain benefits upon the happening of any of the
"events" described above under "Change in Control Agreements." If an "event"
occurs, then (1) all outstanding stock options, restricted stock and other
awards under the 1982 and 1995 Stock Incentive Plans become immediately vested,
(2) all benefits under the Supplemental Executive Retirement Plan are paid
immediately in a cash lump sum, with such benefits to be determined based upon
the greater of the employee's actual years of service (up to 15 years) or 10
years of service and (3) the Bank balance under the Economic Value Added (EVA)
Incentive Compensation Plan is immediately payable.
RELOCATION ARRANGEMENTS
The Company has outstanding loans to two of its executive officers which
were made to enable them to purchase their current residences in connection with
their relocations to the Company's headquarters in California. The Company
loaned Monty A. Houdeshell $325,000 in June 1988 and Terrence A. Noonan
approximately $700,000 in July 1992. Each of the loans is non-interest bearing
for the first six years of its twelve-year term and is secured by a second trust
deed on the residence. Mr. Houdeshell's loan now bears annual interest until
maturity at the same rate as is charged from time to time under the first trust
deed on the residence, which resulted in approximately $23,000 of accrued
interest for the fiscal year ended February 3, 1996. Mr. Noonan's loan will bear
interest for the final six years of its term at a rate based on the appreciation
rate of the property, with principal and interest due at maturity.
14
<PAGE> 17
ITEM 2
APPOINTMENT OF INDEPENDENT AUDITORS
In recognition of the important role of independent auditors, the Board of
Directors has determined that its selection of the independent auditors for the
Company should be submitted to the Company's shareholders for ratification. The
Board of Directors has appointed Ernst & Young LLP to serve as the Company's
independent auditors for the fiscal year ending February 1, 1997, subject to
ratification by the holders of a majority of the shares represented either in
person or by proxy at the Annual Meeting. In the event that the shareholders do
not approve Ernst & Young LLP as the independent auditors, the selection of
another independent auditor will be considered by the Board of Directors.
Ernst & Young LLP has served as the Company's independent auditors since
1973. A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting and will have the opportunity to respond to appropriate questions
and to make a statement if he or she desires.
ADDITIONAL INFORMATION
PROPOSALS OF SHAREHOLDERS
All proposals of shareholders intended to be presented at the Company's
1997 Annual Meeting of Shareholders must be received by the Secretary of the
Company at the address set forth under "General Information -- Proxy" on or
before January 1, 1997, if they are to be considered for possible inclusion in
the Company's proxy statement and form of proxy relating to the meeting.
SECTION 16 REPORTS
During the fiscal year ended February 3, 1996, a director (William C.
Shepherd) and an officer (Koichi Hosokawa) each inadvertently filed a report on
Form 4 late relating to a transaction in the Company's Common Stock. Mr.
Shepherd's transaction was the acquisition of 500 shares in August 1995, and Mr.
Hosokawa's transaction involved the withholding by the Company in April 1995 of
329 shares to offset the tax withholding applicable to the vesting of a
restricted stock award.
OTHER BUSINESS
The Board of Directors is unaware of any other business to be presented for
consideration at the Annual Meeting. If, however, other business should properly
come before the Annual Meeting, the proxies will be voted in accordance with the
best judgment of the proxy holders.
The Company's Annual Report for the fiscal year ended February 3, 1996,
which includes financial statements for the year, is enclosed.
By Order of the Board of Directors
FURON COMPANY
/s/ Donald D. Bradley
General Counsel and Secretary
May 1, 1996
Laguna Niguel, California
15
<PAGE> 18
[FURON LETTERHEAD]
May 1, 1996
Re: Voting Cards for Annual
Meeting of Shareholders
-----------------------
Dear Plan Participant:
Enclosed are Furon Company's proxy solicitation materials for this
year's Annual Meeting of Shareholders. Since you fall within two or more of the
categories listed below, we need to request a separate voting card for each
category that applies to you. In an effort to minimize costs and avoid
duplication in connection with the Annual Meeting, we have enclosed separate
voting cards for each of your categories rather than send you multiple sets of
materials. (For example, if you fall within category nos. 1 and 3, two cards
will be enclosed--a white proxy card and a buff confidential voting instructions
card. If categories 2 and 3 apply to you, two confidential voting instructions
cards will be enclosed--one light yellow and one buff. And so on.)
The possible categories and related voting cards are as follows:
Voting Card
-------------------------
Category Type Color
-------- ---- -----
1. Record Holder of Furon Proxy White
Common Stock as of
April 15, 1996.
2. Participant in the Furon Confidential Light
Company Employees' Voting Yellow
Profit-Sharing-Retirement Instructions
Plan (401(k) Plan) with
All or a Portion
or Your Account Invested
in Furon Common Stock
as of April 15, 1996.
3. Participant in the Furon Confidential Buff
Company Employee Stock Voting
Ownership Plan (ESOP) as of Instructions
April 15, 1996.
IN ORDER TO ASSURE THAT ALL OF THE SHARES WHICH YOU ARE ENTITLED TO
VOTE OR DIRECT THE VOTE AS OF APRIL 15, 1996 (THE RECORD DATE FOR THE ANNUAL
MEETING) ARE VOTED AT THE MEETING, PLEASE COMPLETE, SIGN AND DATE EACH CARD
ENCLOSED IN ACCORDANCE WITH THE INSTRUCTIONS PRINTED THEREON, AND PROMPTLY
RETURN ALL OF THE CARDS IN THE ENCLOSED ENVELOPE TO THE BANK OF NEW YORK, WHO
WILL TABULATE THE VOTES ON A CONFIDENTIAL BASIS.
Sincerely,
/s/ DONALD D. BRADLEY
-------------------------
Donald D. Bradley
General Counsel
and Secretary
<PAGE> 19
-----------
-----------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS *FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below /X/ for all nominees listed below /X/ /X/
Nominees Class III: J. Michael Hagan, Peter Churm and William D. Cvengros
*(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "For" and "Exceptions" boxes and write that
nominee's name in the space provided below.)
Exceptions _________________________________________________________________________________________________________________
2. Proposal for ratification of the appointment of 3. In accordance with the discretion of the proxy holders, to act
Ernst & Young LLP as the Company's independent upon such other matters as may properly come before the
auditors for the fiscal year ending February 1, 1997. meeting and at any adjournment thereof.
FOR /X/ AGAINST /X/ ABSTAIN /X/
Please check box /X/ if you plan to attend the Address Change
Annual Meeting. and/or Comments /X/
Dated __________________________________, 1996
______________________________________________
______________________________________________
Signature or Signatures of Shareholder(s)
(Your signature should conform to your name as
printed hereon. Co-owners should all sign).
Votes must be indicated
Please Sign, Date and Return This Card Promptly Using the Enclosed Envelope. (x) in Black or Blue Ink. /X/
</TABLE>
FURON COMPANY
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints J. Michael Hagan and Donald D. Bradley, and
each of them, proxies with full power of substitution, to vote all shares of
Common Stock of Furon Company (the "Company") held of record by the undersigned
as of April 15, 1996, the record date with respect to this solicitation, at the
Annual Meeting of Shareholders of the Company to be held at The Center Club,
650 Town Center Drive, Costa Mesa, California on Tuesday, June 4, 1996, at 9:00
a.m., local time, and at any adjournment thereof, upon the matters set forth on
the reverse side hereof, as more fully described in the accompanying proxy
statement.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSALS (1) AND (2) ON THE REVERSE SIDE HEREOF.
(Continued and to be signed on reverse side)
FURON COMPANY
P.O. BOX 11272
NEW YORK, N.Y. 10203-0272
<PAGE> 20
-----------
-----------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS *FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below /X/ for all nominees listed below /X/ /X/
Nominees Class III: J. Michael Hagan, Peter Churm and William D. Cvengros
*(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "For" and "Exceptions" boxes and write that
nominee's name in the space provided below.)
Exceptions _________________________________________________________________________________________________________________
2. Proposal for ratification of the appointment of
Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending February 1, 1997.
FOR /X/ AGAINST /X/ ABSTAIN /X/
Address Change
and/or Comments /X/
Dated _________________________________, 1996
_____________________________________________
Signature
Votes must be indicated
Please Sign, Date and Return This Card Promptly Using the Enclosed Envelope. (x) in Black or Blue Ink. /X/
</TABLE>
CONFIDENTIAL VOTING INSTRUCTIONS
TO: SOCIETY NATIONAL BANK, TRUSTEE ("TRUSTEE") UNDER THE
EMPLOYEE STOCK OWNERSHIP PLAN ("PLAN") OF FURON COMPANY ("COMPANY")
The undersigned, as a Participant in the Plan, is entitled to direct
the Trustee as to the voting of all shares of the Company's Common Stock
allocated to my account under the Plan as of April 15, 1996, the record date
for the Company's Annual Meeting of Shareholders to be held on June 4, 1996
("Annual Meeting"), as well as the portion of the unallocated shares of the
Company's Common Stock under the Plan, and the shares allocated to Participants
for which the Trustee does not receive timely and proper directions, as to
which I am entitled under the Plan to direct the Trustee as to the voting
thereof (collectively, the "Shares"). The undersigned hereby directs the
Trustee to vote (in person or by proxy) the Shares at the Annual Meeting and
any adjournment thereof as indicated on the reverse side hereof.
PLEASE SIGN AND DATE THIS INSTRUCTION CARD AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE. THE PROPERLY EXECUTED INSTRUCTION CARD MUST BE DELIVERED
TO THE ADDRESS SPECIFIED BELOW BY THE CLOSE OF BUSINESS ON MAY 31, 1996 TO
ENABLE THE TRUSTEE TO VOTE THE SHARES IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED PARTICIPANT. IF THIS INSTRUCTION CARD IS PROPERLY EXECUTED AND
TIMELY DELIVERED BUT NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR
PROPOSALS (1) AND (2) ON THE REVERSE SIDE HEREOF.
(Continued and to be signed on reverse side)
FURON COMPANY
P.O. BOX 11272
NEW YORK, N.Y. 10203-0272
<PAGE> 21
-----------
-----------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS *FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below /X/ for all nominees listed below /X/ /X/
Nominees Class III: J. Michael Hagan, Peter Churm and William D. Cvengros
*(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "For" and "Exceptions" boxes and write that
nominee's name in the space provided below.)
Exceptions _________________________________________________________________________________________________________________
2. Proposal for ratification of the appointment of 3. In accordance with the discretion of the proxy holders, to act
Ernst & Young LLP as the Company's independent upon such other matters as may properly come before the
auditors for the fiscal year ending February 1, 1997. meeting and at any adjournment thereof.
FOR /X/ AGAINST /X/ ABSTAIN /X/
Address Change
and/or Comments /X/
Dated _________________________________, 1996
_____________________________________________
Signature
Votes must be indicated
Please Sign, Date and Return This Card Promptly Using the Enclosed Envelope. (x) in Black or Blue Ink. /X/
</TABLE>
CONFIDENTIAL VOTING INSTRUCTIONS
TO: FIDELITY MANAGEMENT TRUST COMPANY, AS TRUSTEE UNDER THE
FURON COMPANY EMPLOYEES' PROFIT-SHARING-RETIREMENT PLAN
Under the provisions of the trust relating to the Furon Company
Employees' Profit-Sharing-Retirement Plan, Fidelity Management Trust Company
(FMT Co.), as Trustee, is required to request your confidential instructions as
to how your proportionate interest in the shares of Furon Company Common Stock
held under the Plan is to be voted at the Annual Meeting of Shareholders to be
held on Tuesday, June 4, 1996, and at any adjournment thereof. Your
instructions to FMT Co. will not be divulged or revealed to anyone at Furon
Company. You may indicate your instructions to FMT Co. by completing the
reverse side hereof, which is a reprint of the proxy card sent to all
shareholders.
THIS CARD WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS CARD WILL BE VOTED
FOR PROPOSALS (1) AND (2) ON THE REVERSE SIDE HEREOF.
(Continued and to be signed on reverse side)
FURON COMPANY
P.O. BOX 11272
NEW YORK, N.Y. 10203-0272
