SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No: )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
General Signal Corporation
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
Notice of:
1996 Annual Meeting &
Proxy Statement
General
Signal
1996
<PAGE>
GS GENERAL SIGNAL
MICHAEL D. LOCKHART
Chairman and Chief Executive Officer
March 22, 1996
Dear Shareholder:
On behalf of the Board of Directors and management, I cordially invite you
to attend the Annual Meeting of Shareholders to be held on Thursday, April 18,
1996 at 10:00 A.M. at the Corporation's headquarters, One High Ridge Park,
Stamford, Connecticut 06904.
The Notice of Annual Meeting and Proxy Statement accompany this letter and
provide an outline of the business to be conducted at the meeting. Also, at the
meeting I will report on the progress of the Corporation during the past year
and answer shareholder questions.
It is important that your shares be represented at the Annual Meeting. If
you are unable to attend the meeting in person, I urge you to complete, date and
sign the enclosed proxy and promptly return it in the envelope provided. Your
vote is important.
Sincerely,
/s/ Michael D. Lockhart
<PAGE>
GENERAL SIGNAL CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 18, 1996
-------------------
The Annual Meeting of Shareholders of GENERAL SIGNAL CORPORATION (the
"Corporation") will be held at the Corporation's headquarters, One High Ridge
Park, Stamford, Connecticut 06904, on Thursday, April 18, 1996, at 10:00 A.M.
for the following purposes:
1. To elect seven directors;
2. To approve the General Signal Corporation 1996 Stock Incentive Plan as
described in the accompanying Proxy Statement and set forth in Exhibit A
thereto;
3. To approve the appointment of Ernst & Young LLP to serve as the
Corporation's independent auditors for the year 1996; and
4. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on March 7, 1996, will
be entitled to vote at the meeting. A copy of the Corporation's Annual Report to
Shareholders for the year 1995 has been provided to each shareholder of record.
By Order of the Board of Directors
/s/ Edgar J. Smith, Jr.
EDGAR J. SMITH, JR.
Vice President, General Counsel and
Secretary
March 22, 1996
-------------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE.
-------------------
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS PAGE
- ----------------- ----
VOTING PROCEDURES AND SECURITY OWNERSHIP.................................. 1
. Voting of Proxies..................................................... 1
. Confidential Voting................................................... 1
. Security Ownership of Certain Beneficial Holders...................... 2
. Security Ownership of Management...................................... 3
BOARD OF DIRECTORS........................................................ 5
. General Board Information............................................. 5
. Directors' Compensation............................................... 6
PROPOSAL 1--ELECTION OF DIRECTORS......................................... 7
EXECUTIVE COMPENSATION.................................................... 11
. SUMMARY COMPENSATION TABLE............................................ 12
. OPTION GRANTS TABLE................................................... 15
. OPTION EXERCISES AND YEAR-END VALUE TABLE............................. 17
. PENSION PLAN TABLE.................................................... 18
. PERFORMANCE GRAPH ON COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG GENERAL SIGNAL CORPORATION, THE S&P 500 INDEX AND THE S&P CAP
GOODS INDEX........................................................... 20
. REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION.......................................................... 21
PROPOSAL 2--APPROVAL OF THE GENERAL SIGNAL CORPORATION 1996 STOCK
INCENTIVE PLAN............................................................ 26
PROPOSAL 3--AUTHORIZATION OF APPOINTMENT OF INDEPENDENT AUDITORS.......... 31
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT......................... 32
OTHER MATTERS............................................................. 32
SHAREHOLDER PROPOSALS..................................................... 32
EXHIBIT A--GENERAL SIGNAL CORPORATION 1996 STOCK INCENTIVE PLAN........... A-1
<PAGE>
PROXY STATEMENT
GENERAL SIGNAL CORPORATION
ONE HIGH RIDGE PARK
P.O. BOX 10010
STAMFORD, CT 06904
VOTING PROCEDURES AND SECURITY OWNERSHIP
VOTING OF PROXIES
Your proxy in the form enclosed is solicited by the Board of Directors of
the Corporation for use at the Annual Meeting of Shareholders to be held on
April 18, 1996, and all valid proxies will be voted. Except to the extent that
contrary instructions are given by shareholders in the places provided for this
purpose in the proxy, it is the intention of the persons named in the proxy to
vote for the nominees for the Board of Directors, for the approval of the
General Signal Corporation 1996 Stock Incentive Plan and for the approval of the
appointment of Ernst & Young LLP as independent auditors. Proxies marked as
abstaining (including proxies containing broker non-votes) on any matter to be
acted upon by shareholders will be treated as present at the meeting for the
purpose of determining a quorum, but will not be counted as votes cast on such
matters. A proxy may be revoked at any time prior to its use. Such revocation
may be made in person at the Annual Meeting, by a notice in writing delivered to
the Secretary of the Corporation or by a proxy bearing a later date. Only
shareholders of record at the close of business on March 7, 1996 will be
entitled to vote at the Annual Meeting. There were 49,560,155 shares of Common
Stock issued and outstanding on the record date (excluding treasury shares),
each of which is entitled to one vote on each matter voted upon at the meeting.
This Proxy Statement and the enclosed form of proxy were first sent to
shareholders on or about March 22, 1996.
The expense of proxy solicitation will be borne by the Corporation.
Depending upon the response to the initial solicitation by mail, proxies may be
solicited in person or by telephone or telegraph by officers or regular
employees of the Corporation. D.F. King & Co., Inc., 77 Water Street, New York,
New York 10005, has been retained by the Corporation to assist in such
solicitation at a total estimated cost of $11,500.
CONFIDENTIAL VOTING
If a shareholder requests confidentiality on the proxy card or ballot, the
shareholder meeting proxies, ballots and voting tabulations that identify the
particular vote of the shareholder will be held permanently confidential except
as necessary to meet applicable legal requirements. The tabulators and
inspectors of election for the meeting are employees of First Chicago Trust
Company of New York and are, therefore, independent. The Corporation has an
agreement with the tabulators and inspectors of election requiring them to
comply with the Corporation's confidential voting policy.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table sets forth information based upon the Corporation's
records and Securities and Exchange Commission filings with respect to each
person known to be the beneficial owner of more than 5% of the Common Stock of
the Corporation as of December 31, 1995.
================================================================================
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
================================================================================
FMR Corp. 3,354,281 shares(1) 6.80%
82 Devonshire Street
Boston, MA 02109
College Retirement Equities Fund 3,112,300 shares(2) 6.31%
730 Third Avenue
New York, NY 10017-3206
Putnam Investments, Inc. 2,811,555 shares(3) 5.70%
One Post Office Square
Boston, MA 02109
SunTrust Banks, Inc. 2,486,202 shares(4) 5.04%
25 Park Place, N.E.
Atlanta, GA 30303
================================================================================
- ------------
Notes:
(1) FMR Corp. has sole voting power with respect to 170,725 shares and sole
dispositive power with respect to 3,354,281 shares.
(2) College Retirement Equities Fund has sole voting power and sole dispositive
power with respect to 3,112,300 shares.
(3) Certain Putnam investment managers (together with their parent corporations,
Putnam Investments, Inc. and Marsh & McLennan Companies, Inc.), are
considered "beneficial owners" in the aggregate of 2,811,555 shares, or
5.70% of shares outstanding, of the Company's voting common stock, which
shares were acquired for investment purposes by such investment managers for
certain of their advisory clients. They have shared voting power with
respect to 9,000 shares and shared dispositive power with respect to
2,811,555 shares.
(4) SunTrust Banks, Inc. has sole voting power with respect to 1,471,802 shares,
shared voting power with respect to 200 shares, sole dispositive power with
respect to 2,468,550 shares and shared dispositive power with respect to
13,752 shares.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows as of March 1, 1996 beneficial ownership of shares
of Common Stock of the Corporation and "stock units" with the value equivalent
to the value of the Common Stock (unless otherwise noted) by each director, each
executive officer named in the Summary Compensation Table and by all directors
and executive officers as a group. All directors and executive officers as a
group owned 2.18% of the outstanding Common Stock on that date.
================================================================================
SHARES STOCK
NAME OWNED(1) UNITS(2)
================================================================================
Ralph E. Bailey 5,206 --
Van C. Campbell 3,153(3) --
Edmund M. Carpenter 463,061 4,750
Ursula F. Fairbairn 500 474
George Falconer 30,093 267
Ronald E. Ferguson 2,523 7,344
Joel S. Friedman 182,154 --
John P. Horgan 10,421(3) --
Richard J. Kogan 1,000 --
Michael D. Lockhart 149,266(4) 3,634
Terence D. Martin 29,159(4) 3,156
Roland W. Schmitt 1,592(3) --
John R. Selby 5,281(3) --
Edgar J. Smith, Jr. 71,812(4) 686
All directors and executive officers as
a group (20 persons) 1,082,523(4)(5) 25,135
================================================================================
(Footnotes on next page)
3
<PAGE>
(Footnotes for preceding page)
- ------------
Notes:
(1) The figures shown include the interest of executive officers of the
Corporation in an aggregate of 55,983 shares of Common Stock held by the
trustee under the Corporation's Savings and Stock Ownership Plan (the
"Savings Plan") as of December 31, 1995 and include the following shares of
Common Stock which the persons listed have the right to acquire as of March
1, 1996 or within 60 days of that date through the exercise of stock
options: Michael D. Lockhart (36,000); Terence D. Martin (7,500); Edgar J.
Smith, Jr. (53,025); George Falconer (27,742); Edmund M. Carpenter
(393,384); Joel S. Friedman (175,783); and all directors and executive
officers as a group (773,195).
(2) For the executive officers, the "stock units" represent compensation
deferred and credited as "phantom stock units" under the Corporation's
Deferred Compensation Plan (see pages 24 and 25 for a description of this
Plan). For Ursula F. Fairbairn and Ronald E. Ferguson, the "stock units"
represent director fees deferred to their share-denominated accounts under
the Corporation's Deferred Compensation Plan for Directors (see page 6 for a
description of this Plan). Under both Plans, the value of the "stock units"
at the time of distribution will be the then market value of the
Corporation's Common Stock, but the deferred amounts will be paid in cash.
(3) Van C. Campbell, John P. Horgan, Roland W. Schmitt, and John R. Selby have
elected to defer all or part of their cash compensation as directors and to
receive in lieu thereof restricted stock under the Corporation's 1992 Stock
Incentive Plan (see page 6 for a description of this Plan as it applies to
non-employee directors). The figures shown include the shares of restricted
stock with respect to which the holders have sole voting power, but no
investment power, during the restricted period as follows: Mr. Campbell
(2,353); Mr. Horgan (2,421); Dr. Schmitt (592); and Mr. Selby (4,681).
(4) Includes shares of restricted stock held by: Michael D. Lockhart (99,000);
Terence D. Martin (10,000); Edgar J. Smith, Jr. (2,000); and five current
executive officers not named in the Summary Compensation Table (7,422) with
respect to which the holders have sole voting power, but no investment
power, during the restricted period.
(5) Includes 204 shares owned by the children of an executive officer not named
in the Summary Compensation Table with respect to which he does not disclaim
beneficial ownership.
4
<PAGE>
BOARD OF DIRECTORS
GENERAL BOARD INFORMATION
The Board of Directors currently numbers nine persons and is divided into
three classes with the directors in each class serving for a term of three
years. The term of office of one class of directors expires each year in
rotation so that one class is elected at each Annual Meeting for a full
three-year term. Directors elected by the Board to fill a vacancy (including a
vacancy created by an increase in the number of directors) may be elected only
for a term expiring at the next Annual Meeting.
Regularly scheduled meetings of the Board of Directors are currently held
seven times each year, and additional special meetings are called whenever
necessary. In 1995 there were eleven meetings of the Board. The Board's current
policy is to consider dividend action in March, June, September and December.
The Board of Directors has established an Audit Committee, an Employee
Benefits Committee, an Executive Committee, a Personnel and Compensation
Committee and a Committee on Directors. Except for Michael D. Lockhart, who
serves on the Executive Committee, the directors serving on these committees are
non-employee directors.
The members of the Audit Committee are John R. Selby (Chairman), Van C.
Campbell and Richard J. Kogan. This Committee discusses audit and financial
reporting matters with both management and the Corporation's independent
auditors. To ensure complete independence, the auditors meet with the Audit
Committee both with and without the presence of management representatives. The
Audit Committee met three times in 1995.
The members of the Employee Benefits Committee are John P. Horgan
(Chairman), Van C. Campbell, Ursula F. Fairbairn and Roland W. Schmitt. The
Employee Benefits Committee provides guidance to the Corporate Pension Board as
requested and reviews the actions of the Corporate Pension Board, which is an
internal committee having overall responsibility for benefits planning and
administration. The Employee Benefits Committee met four times in 1995.
The members of the Executive Committee are Ralph E. Bailey, Ronald E.
Ferguson, John P. Horgan and John R. Selby. The Executive Committee has the
authority to exercise in the interim periods between meetings of the Board of
Directors all of the rights, powers and duties of the Board of Directors, except
those that cannot lawfully be delegated. The Executive Committee met one time in
1995.
The members of the Personnel and Compensation Committee are Ronald E.
Ferguson (Chairman), Ralph E. Bailey, Ursula F. Fairbairn, John P. Horgan,
Richard J. Kogan and John R. Selby. The Personnel and Compensation Committee
assists the Board of Directors in overseeing the compensation of the executive
officers and, through liaison with the Board, administers the executive
compensation programs. The Personnel and Compensation Committee met six times in
1995.
The members of the Committee on Directors are Ralph E. Bailey (Chairman),
Ronald E. Ferguson, and Roland W. Schmitt. The responsibilities of the Committee
on Directors include making recommendations to the Board with regard to
Committee structure, compensation and benefits for directors, the qualifications
of directors and candidates for election as directors. In addition, the
5
<PAGE>
Committee on Directors is responsible for reviewing the performance and
succession of the Chief Executive Officer. The Committee on Directors
recommended that the Board nominate the seven persons whose names and
biographical summaries appear on succeeding pages for election as directors. The
Committee on Directors met one time in 1995.
Any shareholder entitled to vote at a meeting may nominate persons for
election as directors if written notice of such intent is delivered or mailed,
postage prepaid, and received by the Secretary of the Corporation at the
principal executive offices of the Corporation not less than 45 days nor more
than 60 days prior to such meeting. In the event less than 55 days prior public
disclosure of the meeting date is made to shareholders, or if the only public
disclosure of the meeting date is made by written notice, a shareholder's notice
must be received no later than the close of business on the tenth day following
the day such notice of the meeting date was mailed or public disclosure was
made. The shareholder notice must include the following information about the
proposed nominee: (a) name, age, and business and residence addresses; (b)
principal occupation or employment; (c) class and number of shares or securities
of the Corporation beneficially owned; and (d) any other information required to
be disclosed in solicitations of proxies pursuant to Regulation 14A of the
Securities Exchange Act of 1934, as amended, including the proposed nominee's
written consent to being named in the proxy and to serving if elected. The
notice must also include information on the shareholder making the nomination,
such as name and address as it appears on the Corporation's books and the class
and number of shares of the Corporation beneficially owned. The nomination of
any person not made in compliance with the foregoing procedures shall be
disregarded.
DIRECTORS' COMPENSATION
Employee directors receive no fees or compensation for services as members
of the Board of Directors. Directors who are not employees currently receive
fees consisting of an annual retainer of $20,000 for Board service and an annual
retainer of $3,000 for each Board Committee of which the director is Chairman.
In addition, each non-employee director receives an attendance fee of $1,200 for
each Board meeting attended, $1,000 for each Board Committee meeting attended
and reimbursement for expenses incurred in connection with such meetings.
Under the Corporation's 1992 Stock Incentive Plan, each non-employee
director may elect to defer all or part of his or her cash compensation as a
director and to receive in lieu thereof restricted stock subject to a five-year
restriction period. In consideration for foregoing cash compensation, the value
of the restricted shares is 10% greater than the amount of the director's cash
compensation elected to be deferred. Three current directors elected to defer
compensation for 1995 under this Plan.
The Corporation has a Deferred Compensation Plan for Directors which permits
the deferral, at the option of the director, of all or part of the compensation
received for services as a director. Compensation so deferred may be denominated
in dollar amounts or in units based on the value of shares of Common Stock of
the Corporation. Share-denominated accounts are credited with dividends when
paid, and dollar amounts bear interest based on the annual yield for long-term
U.S. government bonds. Deferred amounts become payable in cash in a lump sum in
an amount equal to the value of the cash or units then credited to the
director's account or in installments over such period and commencing at such
time as the director may elect. Two directors elected to defer compensation for
1995 under this Plan.
6
<PAGE>
The Corporation has a retirement plan for non-employee directors who retire
from the Board with one or more years of service as a non-employee director. The
annual benefits payable to a director for his or her lifetime on and after
reaching age 65 are equal to 10% of the annual Board retainer (exclusive of any
committee compensation) in effect at the time of such director's retirement for
each year of service as a non-employee director, to a maximum of 100%.
The Corporation pays the premiums on indemnity and liability insurance,
fiduciary insurance and business travel accident insurance policies which
provide coverage for the directors.
The directors are eligible to participate in the Corporation's Matching
Gifts Program. Under this program, a minimum of $25 up to a maximum of $5,000
per eligible educational institution or health and human service organization is
matched. The maximum permissible annual participation per director is $5,000.
The Corporation has a Director's Charitable Award Program funded by life
insurance policies on directors as part of its overall program of charitable
giving. Beginning at the death of a director, the Corporation will donate
$100,000 per year for ten years to the institutions recommended by the director.
To be eligible to receive a donation, a recommended institution must qualify to
receive tax-deductible donations under the Internal Revenue Code, be eligible to
receive matching gifts under the Corporation's Matching Gifts Program and be
approved by the Committee on Directors. During 1995, the Corporation paid an
aggregate amount of $358,825 in premiums for these policies. A director may not
personally benefit from any recommended donation or use a donation in
satisfaction of any currently outstanding or future pledge or obligation of the
director to the recommended institution. All directors are eligible to
participate in the program.
PROPOSAL 1--ELECTION OF DIRECTORS
At the meeting, seven directors are to be elected. Three directors will be
elected to hold office until the 1999 Annual Meeting of Shareholders, one
director will be elected to hold office until the 1998 Annual Meeting, and three
directors will be elected to hold office until the 1997 Annual Meeting. All of
the nominees are currently directors. C. Robert Kidder and Richard J. Kogan, who
have served as directors since 1992, resigned as directors in October, 1995 and
March, 1996, respectively. The Corporation thanks them for their contributions
to the development and success of the Corporation. There is no cumulative
voting, and directors will be elected by a plurality of the votes cast at the
Annual Meeting either in person or by proxy. The remaining directors of the
Corporation will continue to serve in accordance with their previous election.
Unless authority is withheld by the shareholders, it is the intention of the
persons named in the enclosed proxy to vote for the nominees listed and, in the
event any nominees are unable or decline to serve, to vote for the balance of
the nominees and for substitutes selected by the Board of Directors. The name,
principal occupation and other information concerning each director are set
forth on pages 8, 9 and 10.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE NOMINEES.
7
<PAGE>
NOMINEES FOR WHOM PROXIES
WILL BE VOTED
NOMINEES FOR DIRECTORS FOR
TERMS TO EXPIRE IN 1999
[PICTURE]
URSULA F. FAIRBAIRN
Director Since: 1995
Age: 53
Senior Vice President of Human Resources since 1990 of Union Pacific
Corporation. Previously IBM Director of Education and Management
Development of IBM Corporation from 1987 to 1990; and previously held
various other management positions, including Vice President Marketing
Operations, since joining IBM Corporation in 1966. Also a director of
Armstrong World Industries, Inc. and VF Corporation.
[PICTURE]
RONALD E. FERGUSON
Director Since: 1986
Age: 54
Chairman and Chief Executive Officer since 1987 and President of
General Re Corporation from 1983 to March 1, 1995; and previously
held various other management positions since joining General Re
Corporation/General Reinsurance Corporation in 1969. Also a director
of Colgate-Palmolive Company.
[PICTURE]
JOHN R. SELBY
Director Since: 1986
Age: 66
Former Chairman from 1986 to November 1993 and Chief Executive Officer
from 1971 to November 1993 of SPS Technologies, Inc. Previously
President and Chief Executive Officer of SPS Technologies, Inc. from
1971 to 1986; President of U.S. Motors Division of Emerson Electric
Company from 1969 to 1971; Vice President--Manufacturing of Emerson
Electric Company from 1968 to 1969; and Vice President--European
Operations of The Trane Company from 1966 to 1968. Also a director of
Berwind Industries, Inc.
8
<PAGE>
NOMINEE FOR DIRECTOR FOR
TERM TO EXPIRE IN 1998
[PICTURE]
H. KENT BOWEN
Director Since: March 1996
Age: 54
Professor of Technology and Operations Management, Harvard University,
Graduate School of Business Administration since July 1992 and was
appointed the William Barclay Harding Professor of Business
Administration in 1993. Previously, from 1970 to 1992, Mr. Bowen was a
member of the faculty of the Massachusetts Institute of Technology
("MIT"). He became a full professor in 1976, and received an endowed
professorship, the Ford Professor of Engineering, in 1981. At MIT, Mr.
Bowen directed the Materials Processing Center and co- founded the
Leaders for Manufacturing Program. Also a director of Ceramics Process
Systems Corporation.
NOMINEES FOR DIRECTORS FOR
TERMS TO EXPIRE IN 1997
[PICTURE]
RALPH E. BAILEY
Director Since: 1982
Age: 72
Chairman and Chief Executive Officer of American Bailey Corporation, a
private holding company, since April 1987. Former Chairman and Chief
Executive Officer of Conoco Inc. from 1979 to March 1987 and Vice
Chairman of E.I. du Pont de Nemours & Company from 1981 to March 1987.
Also a director of Rowan Companies, Inc., The Williams Companies, Inc.
and United Meridian Corporation.
[PICTURE]
JOHN P. HORGAN
Director Since: 1971
Age: 72
Private investor since 1971. Previously a General Partner of J. H.
Whitney & Co., a private investment company, and also served as a
director of the Corporation from 1960 to 1967. Also a director of DTX
Corporation.
9
<PAGE>
[PICTURE]
ROLAND W. SCHMITT
Director Since: 1987
Age: 72
President Emeritus since July 1993 and President of Rensselaer
Polytechnic Institute from March 1988 to July 1993. Previously Senior
Vice President-- Science and Technology of General Electric Company
from 1986 to February 1988, Senior Vice President for Corporate
Research and Development from 1982 to 1986, Vice President for
Corporate Research and Development from 1978 to 1982, and previously
held various other management positions since joining General Electric
Company in 1951. Also a member and former Chairman of the National
Science Board and former Councillor of the National Academy of
Engineering.
DIRECTORS WHOSE TERMS OF OFFICE
DO NOT EXPIRE AT THIS MEETING
CONTINUING DIRECTORS WHOSE
TERMS EXPIRE IN 1998
[PICTURE]
VAN C. CAMPBELL
Director Since: 1992
Age: 57
Vice Chairman for Finance and Administration since 1983 and a director
of Corning Incorporated. Previously Senior Vice President and General
Manager-- Consumer Products Division from 1981 to 1983, Senior Vice
President--Finance from 1980 to 1981, Vice President--Finance from 1975
to 1980, Vice President-- Treasurer from 1972 to 1975 and previously
held various management positions since joining Corning Incorporated in
1965. Also a director of Armstrong World Industries, Inc., Corning
International Corporation and Dow Corning Corporation.
[PICTURE]
MICHAEL D. LOCKHART
Director Since: 1994
Age: 46
Chairman and Chief Executive Officer since October 1995, President and
Chief Operating Officer and director of the Corporation from October
1994 to October 1995. Previously Vice President and General Manager
from 1992 to 1994 of Commercial Engines and Services, a business of
General Electric Company that manufactures and services commercial
aircraft engines; Vice President and General Manager of Transportation
Systems from 1989 to 1992; Vice President, Finance and Business
Development, GE Aircraft Engines from 1987 to 1989; and previously
held various other management positions since joining General Electric
Company in 1981. Previously a Vice President of The Boston Consulting
Group.
10
<PAGE>
EXECUTIVE COMPENSATION
The following disclosure and discussion of executive compensation is
intended to provide shareholders with an understanding of the Corporation's
executive compensation program and actions affecting the compensation of the
Chairman and Chief Executive Officer. Included are:
. the Summary Compensation Table;
. the Option Grants Table;
. the Option Exercises and Year-End Value Table;
. the Pension Plan Table;
. the Performance Graph on Comparison of Five-Year Cumulative Total Return
among General Signal Corporation, the S&P 500 Index and the S&P Cap Goods
Index; and
. the Report of the Personnel and Compensation Committee on Executive
Compensation.
11
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows compensation information for each individual who
served as the Corporation's chief executive officer during 1995 and the four
other highest paid executive officers for services in all capacities during
1995, 1994 and 1993.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
OTHER
ANNUAL RESTRICTED
TOTAL COMPEN- STOCK
NAME AND PRINCIPAL (SALARY & SATION AWARDS OPTION
POSITION YEAR SALARY ($) BONUS ($)(1) BONUS)($) ($) ($)(2) GRANTS (#)
<S> <C> <C> <C> <C> <C> <C> <C>
Michael D. Lockhart
1995 $ 610,000 $300,000 $ 910,000 -- $4,015,625 100,000(3)
Chairman of the Board and
1994 $ 150,000 $300,000 $ 450,000 -- -- 180,000(3)
Chief Executive Officer
1993 -- -- -- -- -- --
Terence D. Martin
1995 $ 373,731 $246,000 $ 619,731 -- $ 335,000 78,000(3)
Executive Vice President and
Chief
1994 -- -- -- -- -- --
Financial Officer
1993 -- -- -- -- -- --
Edgar J. Smith, Jr.
Vice President, General 1995 $ 212,000 $ 63,900 $ 275,900 -- -- 10,000(3)
10,428(4)
Counsel and Secretary
1994 $ 197,958 $106,000 $ 303,958 -- $ 95,625 9,000(3)
19,288(4)
1993 $ 188,569 $ 84,000 $ 272,569 -- -- 6,750(3)
Edmund M. Carpenter
Former Chairman of the 1995 $ 816,923(7) $328,403 $1,145,326 -- -- 100,000(3)
79,895(4)
Board and Chief Executive
Officer 1994 $ 776,923 $600,000 $1,376,923 -- -- 100,000(3)
74,024(4)
1993 $ 733,654 $450,000 $1,183,654 -- -- 87,500(3)
17,500(4)
George Falconer
Former Vice President, Human 1995 $ 190,058 $ 57,300 $ 247,358 -- -- 1,509(4)
Resources
1994 $ 181,058 $ 97,000 $ 278,058 -- $ 15,938 9,000(3)
2,241(4)
1993 $ 172,058 $ 76,000 $ 248,058 -- -- 6,750(3)
Joel S. Friedman
Former Senior Vice 1995 $ 341,692 $137,400 $ 449,092 -- -- 30,000(3)
President- 15,279(4)
Operations
1994 $ 321,769 $230,000 $ 551,769 -- -- 30,000(3)
21,673(4)
1993 $ 305,154 $181,000 $ 486,154 -- -- 27,500(3)
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL COMPENSATION
POSITION ($)
<S> <C> <C>
Michael D. Lockhart
$36,400(6)
Chairman of the Board and
--
Chief Executive Officer
--
Terence D. Martin
$12,615(6)
Executive Vice President and
Chief
--
Financial Officer
--
Edgar J. Smith, Jr.
Vice President, General $ 6,000(5)
$ 6,720(6)
Counsel and Secretary
$ 6,000(5)
$ 5,282(6)
$ 9,434(5)
$ 1,469(6)
Edmund M. Carpenter
Former Chairman of the $ 6,000(5)
$44,165(6)
Board and Chief Executive
Officer $ 6,000(5)
$43,077(6)
$ 9,434(5)
$ 8,077(6)
George Falconer
Former Vice President, Human $ 6,000(5)
$ 5,482(6)
Resources
$ 6,000(5)
$ 4,282(6)
$ 9,434(5)
$ 489(6)
Joel S. Friedman
Former Senior Vice $ 6,000(5)
President- $16,868(6)
Operations
$ 6,000(5)
$14,111(6)
$ 9,434(5)
$ 3,338(6)
</TABLE>
(Footnotes on next page)
12
<PAGE>
(Footnotes for preceding page)
- ------------
Notes:
(1) The bonus represents the amounts paid for services rendered during the
specified calendar year. Such payments are made in the first quarter of the
calendar year following the year in which the compensation was earned, i.e.,
the amount reported for 1995 reflects the amount earned for 1995 but paid in
1996. The amounts paid to Michael D. Lockhart and Terence D. Martin were the
guaranteed minimum bonuses pursuant to their employment agreements.
(2) The amounts listed represent the value of the restricted stock awarded to
Michael D. Lockhart on January 2, 1995; Terence D. Martin on February 2,
1995; Edgar J. Smith, Jr. on December 8, 1994; and George Falconer on
December 8, 1994; such amounts are based on the closing market values on
such dates.
During 1995, 1994 and 1993, an aggregate of 199,750 shares of restricted
stock was awarded to certain employees, including 125,000 shares to Mr.
Lockhart in connection with his employment; 10,000 shares to Mr. Martin;
3,000 shares to Mr. Smith; 500 shares to Mr. Falconer; and 52,550 shares to
five current executive officers not named in the Summary Compensation Table
and other employees (including former executive officers and employees). The
shares covered by the awards granted in 1995 vest at a certain rate over
three-, four- or five-year periods except for Mr. Lockhart's restricted
stock grant which vests based on certain Corporation performance criteria
and the lapse of time (26,000 shares on September 1, 1995; 18,000 shares on
September 1, 1996; 13,000 shares on September 1, 1999; and 68,000 shares on
March 25, 2014). The awards granted in 1994 vest at a rate of 33 1/3% per
year over a three-year period, and the awards granted in 1993 vest at a rate
of 20% per year over a five-year period. During the restricted period, the
holders of restricted stock have the right to vote the shares and to receive
any cash dividends. The aggregate number of restricted shares held and their
value as of December 31, 1995 were as follows: Mr. Lockhart, 99,000
shares/$3,205,125; Mr. Martin, 10,000 shares/$323,750; Mr. Smith, 2,000
shares/$64,750; Mr. Falconer, 334 shares/$10,813; and five current executive
officers not named in the Summary Compensation Table and other employees,
41,022 shares/$1,328,087. The figures in this footnote reflect the
two-for-one stock split on July 7, 1993.
The restricted stock agreements for the executive officers and certain other
corporate employees generally provide that immediately preceding a Change in
Control (as defined in such agreements), the unvested restricted stock will
be forfeited, and the holder will be paid cash equal to the product of the
number of shares of unvested restricted stock and the Change in Control
price. Payment on the unvested stock would be made on the vesting schedule
dates under the restricted stock agreements; provided, however, that any
remaining balance would vest and be paid out in full in the event of
Involuntary Termination, as defined in the agreements.
(3) During 1995, 1994 and 1993, an aggregate of 1,159,500 shares subject to
"new" stock options was granted to executive officers and other employees.
The "new" stock options granted in 1995, 1994 and 1993 are all exercisable
at a price equal to 100% of the fair market value on the date of grant (see
footnote (4) for the replacement options). All of these options are subject
to four- or five-year vesting schedules.
Pursuant to a separation agreement between Mr. Carpenter and the
Corporation, 75,000 of the 100,000 shares subject to the 1995 stock option
grant, 50,000 of the 100,000 shares subject to the 1994 stock option grant
and 21,875 of the 87,500 shares subject to the 1993 stock option grant were
cancelled because they became exercisable on and after January 1, 1997.
The Corporation has never repriced stock options, and the Corporation's
proposed 1996 Stock Incentive Plan prohibits the repricing of stock options.
The stock option agreements for the executive officers and certain other
corporate employees generally provide that immediately preceding a Change in
Control (as defined in such agreements), the stock options will be cancelled
and the optionee will be paid cash equal to the difference between the
option price and the Change in
(Footnotes continued on next page)
13
<PAGE>
(Footnotes continued from preceding page)
Control price. Payment for vested options would be made on the date of the
Change in Control. Payment for unvested options would be made on the vesting
schedule dates under the option agreements; provided, however, that any
unvested options would be paid out in full upon Involuntary Termination, as
defined in the agreements.
(4) During 1995, 1994 and 1993, an aggregate of 336,010 shares subject to
"replacement" stock options was granted to executive officers. For a
description of the "replacement" options, see footnote (3) on page 16.
(5) This represents the Corporation's matching contributions under the Savings
Plan which are invested in Common Stock of the Corporation. Under the
Savings Plan, eligible employees may save between 3% and 17% of their pay on
a combined before- and after-tax basis subject to varying limitations on
contributions to ensure compliance with the Internal Revenue Code of 1986,
as amended, (the "Code"). Eligible employees must elect to contribute a
minimum of 3% of pay to participate. The Corporation contributes an amount
equal to 3% of the pay of each employee who is actively participating in the
Savings Plan after completing one year of service. The 3% contribution rate
for the Corporation's contributions is increased to 4% if employee
before-tax contributions of at least 3% of pay are invested in the
investment fund under the Savings Plan primarily invested in shares of
Common Stock of the Corporation.
(6) This represents the Corporation's matching contributions under the
Corporation's Deferred Compensation Plan which are invested in "phantom
stock units" (see pages 24 and 25 for a description of this Plan).
(7) The amount listed includes $146,769 of severance pay under an agreement (see
page 19 for a description of the agreement).
14
<PAGE>
OPTION GRANTS TABLE
The following table shows the individual grants of options that were made in
1995 to each of the executive officers named in the Summary Compensation Table
and the potential value at stock price appreciation rates of 0%, 5% and 10% over
the term of the options. The potential value of all outstanding shares of Common
Stock held by the Corporation's shareholders as of December 31, 1995 at the same
appreciation rates is also shown. The 5% and 10% rates of appreciation are
required to be disclosed by the Securities and Exchange Commission and are not
intended to forecast possible future actual appreciation, if any, in the
Corporation's stock prices. The actual value of the stock options to the
executive officers will depend on the future price of the Corporation's Common
Stock. The stock options will have no value to the executive officers if the
price of the Corporation's Common Stock does not increase above the exercise
price of the option.
[CAPTION]
<TABLE>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#)(1) 1995 ($/SH) DATE 0%($) 5%($)
<S> <C> <C> <C> <C> <C> <C>
Michael D.
Lockhart 60,000(2) 9.9281% $ 38.2500 6/15/05 $ 0 $ 1,443,563
40,000(2) 6.6187% $ 32.2500 11/17/05 $ 811,414
Terence D. Martin 30,000(2) 4.9640% $ 33.5000 2/2/05 $ 0 $ 632,148
48,000(2) 7.9424% $ 38.2500 6/15/05 $ 1,154,850
Edgar J. Smith,
Jr. 10,000(2) 1.6546% $ 38.2500 6/15/05 $ 0 $ 240,594
5,460(3) .9034% $ 36.1300 10/19/99 $ 50,523
4,968(3) .8220% $ 36.1300 2/21/01 $ 61,254
George Falconer 1,509(3) .2496% $ 36.0000 10/20/98 $ 0 $ 10,570
Edmund M.
Carpenter 25,000(2)(4) 4.1367% $ 38.2500 10/19/00 $ 0 $ 285,034
22,018(3) 3.6432% $ 36.1300 10/20/98 $ 156,315
25,260(3) 4.1797% $ 37.8800 5/2/98 $ 9,529
17,138(3) 2.8358% $ 36.0000 10/20/98 $ 101,484
7,911(3) 1.3090% $ 36.0000 5/2/98 $ 39,356
7,568(3) 1.2522% $ 36.0000 10/19/99 $ 60,622
Joel S. Friedman 30,000(2) 4.9640% $ 38.2500 12/31/00 $ 0 $ 356,637
15,279(3) 2.5281% $ 36.0000 12/31/00 $ 181,427
All Shareholders N/A N/A N/A N/A $ 0 $ 1,004,998,380(5)
<CAPTION>
NAME 10% ($)
<S> <C>
Michael D.
Lockhart $ 3,658,416
$ 2,056,364
Terence D. Martin $ 1,602,051
$ 2,926,733
Edgar J. Smith,
Jr. $ 609,735
$ 110,701
$ 138,030
George Falconer $ 22,559
Edmund M.
Carpenter $ 635,589
$ 333,880
$ 313,812
$ 215,753
$ 81,935
$ 130,944
Joel S. Friedman $ 799,443
$ 409,881
All Shareholders $ 2,546,963,426(5)
</TABLE>
(Footnotes on next page)
15
<PAGE>
(Footnotes for preceding page)
- ------------
Notes:
(1) Options are exercisable at prices equal to 100% of the fair market value on
the date of grant.
(2) The "new" options granted in 1995 may be exercised during a period that
begins one year after the date of grant and ends ten years after the date of
grant and are subject to a four-year vesting schedule.
(3) Each of these represents a "replacement" ("reload") option which is an
option granted when an optionee exercises a stock option by surrendering
shares of Common Stock which the optionee already owns in payment of the
exercise price. The "replacement" option covers the number of shares
surrendered in the option exercise (including shares for applicable taxes)
and has an exercise price equal to the market price on the date of exercise
of the original option. The expiration date of the "replacement" option is
the same as the expiration date of the option that was exercised. The
"replacement" option becomes exercisable one year from the date the original
option was exercised; provided, however, that the "replacement" option will
be forfeited if the shares acquired on the exercise of the original option
are sold for cash prior to holding them for at least one year.
(4) Edmund M. Carpenter was originally granted a stock option for 100,000 shares
in 1995. However, pursuant to a separation agreement between Mr. Carpenter
and the Corporation, 75,000 of the 100,000 shares were cancelled because
they would have become exercisable on and after January 1, 1997.
Accordingly, the figures apply to the remaining 25,000 shares subject to
this option.
(5) These amounts represent the growth in total shareholder value for a ten-year
period at 5% and 10% annually, using a base price of $32.375 and 49,351,752
shares of Common Stock outstanding as of December 31, 1995 (excluding
treasury shares). The percentage relationship of the potential realizable
value for all the executive officers named in the Summary Compensation Table
to that of all shareholders is .56%.
16
<PAGE>
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table summarizes 1995 information relating to exercised and
unexercised options for each executive officer named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY OPTIONS
UNDERLYING UNEXERCISED AT DECEMBER 31, 1995 ($)
AGGREGATED OPTION EXERCISES OPTIONS HELD AT BASED ON $32.375 CLOSING
IN 1995 DECEMBER 31, 1995 PER SHARE STOCK PRICE (1)
SHARES ACQUIRED VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE
NAME ON EXERCISE (#) ($)(1) (#) (#) ($)
<S> <C> <C> <C> <C> <C>
Michael D. Lockhart -- -- 36,000 244,000 --
Terence D. Martin -- -- -- 78,000 --
Edgar J. Smith, Jr. 12,129 $ 120,231 34,597 38,554 $ 20,329
George Falconer 21,370 $ 230,513 18,233 19,635 $ 15,992
Edmund M. Carpenter 96,954 $1,147,144 311,366 211,770 $ 237,483
Joel S. Friedman 21,315 $ 254,928 136,504 105,529 $ 117,105
<CAPTION>
UNEXERCISABLE
NAME ($)
<S> <C> <C>
Michael D. Lockhart $ 5,000
Terence D. Martin --
Edgar J. Smith, Jr. $ 14,763
George Falconer $ 14,763
Edmund M. Carpenter $ 97,609
Joel S. Friedman $ 45,856
</TABLE>
- ------------
Note:
(1) Market value of shares of Common Stock at exercise or at December 31, 1995
minus the exercise price.
17
<PAGE>
PENSION PLAN TABLE
The following table shows the estimated annual retirement benefits payable
based on the formula under the Corporate Retirement Plan of General Signal
Corporation (the "Corporate Retirement Plan") and the Benefit Equalization Plan.
This table assumes the normal retirement age of 65 for specified earnings and
years of service, and that the employee will elect a straight-life annuity
rather than one of the various survivor options. The annual retirement benefits
payable under any alternative survivor option will be lower than the amounts
shown in the table.
As permitted by the Code and the Employee Retirement Income Security Act of
1974, as amended, to the extent that benefits must be reduced under the
Corporate Retirement Plan due to limitations prescribed under Sections
401(a)(17)and 415 of the Code, the Corporation is authorized to pay retirement
benefits out of the general funds of the Corporation under a non-qualified
Benefit Equalization Plan. Benefits are calculated to equal the reduction.
Amounts shown are the benefits based on the current Covered Compensation
amount of $25,800 applicable to 1995. Earnings covered by the Corporate
Retirement Plan and the Benefit Equalization Plan for the executive officers
named in the Summary Compensation Table correspond with the total (salary and
bonus) column shown in the Summary Compensation Table. Benefits for eligible
employees are computed under a formula integrated with Social Security based
upon years of service and average earnings during the five consecutive years of
highest earnings during the employee's service with the Corporation.
ESTIMATED ANNUAL RETIREMENT BENEFITS
AVERAGE TOTAL PROJECTED YEARS OF SERVICE
ANNUAL -------------------------------------------------------------------
EARNINGS 10 15 20 25 30 35
$ 200,000 28,710 45,565 62,420 79,275 96,130 111,130
400,000 58,710 93,065 127,420 161,775 196,130 226,130
600,000 88,710 140,565 192,420 244,275 296,130 341,130
800,000 118,710 188,065 257,420 326,775 396,130 456,130
1,000,000 148,710 235,565 322,420 409,275 496,130 571,130
1,200,000 178,710 283,065 387,420 491,775 596,130 686,130
1,400,000 208,710 330,565 452,420 574,275 696,130 801,130
1,600,000 238,710 378,065 517,420 656,775 796,130 916,130
- ------------
Note:
(1) As of December 31, 1995, the years of credited service for the executive
officers named in the Summary Compensation Table were as follows: 2.7 years
for Michael D. Lockhart; 2.5 years for Terence D. Martin; 35.9 years for
Edgar J. Smith, Jr; 25.7 years for George Falconer; 14.7 years for Edmund M.
Carpenter; and 27.1 years for Joel S. Friedman. The foregoing years of
credited service include additional years of service recognized under
employment agreements with Michael D. Lockhart (1.5 years for each year of
employment), Terence D. Martin (2.0 years for each year of employment),
Edmund M. Carpenter (7 additional years), Joel S. Friedman (4 additional
years), and, in the cases of Michael D. Lockhart and Edmund M. Carpenter,
pension benefits from their previous employers will be offset against the
pension benefits payable to them by the Corporation.
18
<PAGE>
The Corporation has a Change in Control Severance Pay Plan for executive
officers providing for a lump sum payment equal to thirty-six months of
compensation in the event of Involuntary Termination within two years after a
Change in Control as such terms are defined in the Plan. In addition, the
executive officers will continue to receive all benefits applicable to active
salaried employees for a period of thirty-six months following Involuntary
Termination. This Plan also covers certain other key employees but at different
levels of benefits than the foregoing.
The Corporation has an agreement with Michael D. Lockhart, who became
President and Chief Operating Officer of the Corporation and a member of the
Board of Directors on October 3, 1994. Subsequently, he became Chairman of the
Board and Chief Executive Officer on October 19, 1995. In connection with his
employment, the Corporation established an unfunded deferred compensation
account in the amount of $711,900 on January 2, 1995, designed to yield
$2,100,000 at age 62 (year 2011) calculated at a 7% rate. After seven years, 10%
of the principal will vest each year, and a full payment of the principal and
interest will be available at age 62. If Mr. Lockhart is involuntarily
terminated, other than for cause, prior to October 3, 1997 (three years from his
date of employment), he will be entitled to be treated as if he were an
"employee" until October 3, 1997 for purposes of salary, bonus, stock options
and restricted stock awards, pension and other employee benefits.
The Corporation has an agreement with George Falconer, who retired on
January 31, 1996, to provide certain consulting services for the Corporation
until January 31, 1997 for a fixed annual fee of $100,000 payable monthly plus
expenses. In addition, under such agreement his company automobile with a value
of $27,525 was transferred to him in February 1996.
Edmund M. Carpenter resigned as Chairman of the Board and Chief Executive
Officer of the Corporation on October 19, 1995. The separation agreement entered
into in connection with his resignation provides that the Corporation, until the
end of this year or, if earlier, his commencement of substantially full-time
employment, will continue his base salary of $830,000, and reimburse or pay
certain life insurance and health coverage premiums and certain office expenses.
Pursuant to such agreement, Mr. Carpenter also was paid in February 1996 his
1995 incentive compensation bonus prorated to October 19, 1995 of $328,403, and
his company automobile with a value of approximately $67,000 will be transferred
to him shortly. The Corporation agreed to supplement his pension benefits under
the Corporate Retirement Plan and the Benefit Equalization Plan as if his
employment with the Corporation continued until the end of this year when he
will reach 55. Such agreement also provides that his stock options will continue
to vest through the end of this year and be exercisable for the original terms,
but in no event later than October 19, 2000. Options that would have become
exercisable on and after January 1, 1997 were cancelled. The Corporation's
matching contributions under the Deferred Compensation Plan for deferrals made
prior to October 20, 1995 will continue to vest as if his employment had
continued until October 16, 1996.
The Corporation has an agreement with Joel S. Friedman, who relinquished his
position as Senior Vice President--Operations on December 31, 1995. Pursuant to
such agreement, following Mr. Friedman's early retirement on December 31, 1995,
he was paid a one-time lump sum of $110,000 in January 1996, and he will receive
a severance payment in the aggregate of $525,000 paid bi-weekly until June 30,
1997. If he is not employed full-time by June 30, 1997, he will continue to be
paid on a bi-weekly basis at the annual rate of $350,000 per year until the
earlier of: (a) the date he is employed full-time or (b) June 30, 1998. The
Corporation agreed to supplement his pension benefits by providing him the
additional pension benefits that he would have been entitled to receive under
the Corporate Retirement Plan and the Benefit Equalization Plan if he had
remained employed with the Corporation
19
<PAGE>
until December 1, 1999, by giving recognition to such additional age and service
credit. This supplement resulted in a lump sum payment to him in the amount of
$530,540 in February 1996. Under such agreement, the Corporation's matching
contributions under the Deferred Compensation Plan for deferrals made prior to
December 31, 1995 were paid to him, and his company automobile with a value of
$28,250 was transferred to him in March 1996.
PERFORMANCE GRAPH ON COMPARISON OF FIVE-YEAR
CUMULATIVE TOTAL RETURN AMONG
GENERAL SIGNAL CORPORATION, THE S&P 500 INDEX AND
THE S&P CAP GOODS INDEX
The following graph sets forth a five-year comparison of total cumulative
return for the Common Stock of the Corporation ("GSX"), the S&P 500 ("S&P 500")
Index and the S&P Cap Goods Index ("S&P CAP GOODS"). It assumes $100 invested on
December 31, 1990 in the Common Stock of the Corporation, the S&P 500 Index and
the S&P Cap Goods Index. Total return assumes the reinvestment of dividends
quarterly and a fiscal year ending December 31.
[GRAPH]
$250 --------------------------------------------------
225 -
200 -
175 -
150 -
125 -
100 -
75 -
50 - ------------------------------------------------
1990 1991 1992 1993 1994 1995
GSX $100 $145.41 $172.53 $199.83 $190.37 $198.90
S&P500 $100 $130.34 $140.25 $154.32 $156.42 $214.99
S&P CAP GOODS $100 $117.81 $120.67 $136.89 $147.32 $197.39
20
<PAGE>
REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
INTRODUCTION
The Personnel and Compensation Committee of the Board of Directors (the
"Committee") assists the Board of Directors in overseeing the compensation of
the executive officers and administers the executive compensation programs. The
Committee is composed of six independent, non-employee directors. The Committee
reviews the compensation of the executive officers and makes recommendations to
the Board of Directors with respect to the compensation of the Chairman and
Chief Executive Officer and the executive officers reporting to him. The
Committee meets in executive session to evaluate the performance of such
individuals and reports on that evaluation to the independent directors of the
Board. In addition, the Committee has available to it, and does employ, from
time to time, the services of an independent consultant on compensation and
benefit matters.
The Corporation's compensation philosophy is based on the belief that
compensation of its executive officers and key employees should be linked with
business strategy and operating performance. The total compensation program is
designed to attract, retain and reward employees and to provide an appropriate
linkage between executive compensation and the creation of shareholder value. To
achieve this linkage, executive salaries and incentive bonuses are paid on the
basis of the Corporation's performance.
In addition, the grant of stock options and restricted stock awards provide
an important incentive in building shareholders' wealth and aligning the
interests of employees and shareholders. In total, the combination of these
elements of compensation provides motivation for achieving short-term results,
as well as building and enhancing the long-term interests of the Corporation and
its shareholders.
INDEPENDENT COMPENSATION CONSULTANT REVIEW
The Committee periodically uses the services of an independent compensation
consultant to evaluate the Chief Executive Officer's total compensation package
and to measure competitive status of the Corporation's compensation programs.
The Committee's consultant periodically updates and reviews the total
compensation packages of the Chief Executive Officer and the executive officers
reporting to him and compares them with a group of peer companies.
The companies used for comparison represent organizations that, individually
and collectively, participate in the spectrum of industries in which the
Corporation is involved. The specific group is comprised of manufacturing
companies which are of similar size, structure, product offerings or location
and are participants in national compensation databases that permit compensation
comparisons on an ongoing basis. The individual companies are chosen by the
independent consultant after consultation with the Corporation's management and
members of the Committee. These companies are all represented in the S&P Cap
Goods Index with the only exception being certain organizations whose activities
the Committee believes are particularly relevant for comparison to the
Corporation.
After review of these and other compensation resources, the consultant
concluded, and the Committee and Board concurred, that the Corporation's
compensation package and processes were competitive and appropriate. Based on
this review, base salary recommendations for 1995 were developed.
21
<PAGE>
BASE SALARY
The Committee annually establishes base salaries for the Corporation's
senior executives by review of recommendations submitted by the Chief Executive
Officer and the Corporation's senior Human Resources executive. The Committee
approves or modifies, as it deems appropriate, the base salary plan developed by
the Human Resources staff. This plan is based on industry, peer group, and
national compensation surveys.
The Corporation maintains access to several national compensation databases
that are gathered, updated, and published annually by well known compensation
consulting firms. Most of the 109-company S&P Cap Goods Index, selected by the
Corporation as an index utilized to illustrate the comparisons in the five-year
cumulative total return performance graph shown on page 20, are included in one
or more of these national databases.
With the primary objective of creating and maintaining a compensation
program that attracts, retains and motivates the best executive talent
available, the Committee considers several sets of factors when determining base
salaries for the Corporation's senior executives. It first reviews the data
provided from the surveys to determine the general mid-range of salaries for
positions of similar responsibility in companies of like size, structure,
product offerings or location. From this basis the Committee considers the
perceived quality of the individual's performance as well as the complexity of
the position's individual responsibilities and accountabilities.
The attainment of the specific goal of planned earnings-per-share for the
prior year is the factor most heavily weighed for 1995 salary changes in the
cases of the Chief Executive Officer and his executive staff. In 1994, the
Corporation exceeded its earnings-per-share goal. The Corporation's net income
for 1994 was impacted by the planned divestiture of two businesses, the failed
bid for Reliance Electric Company which provided $50 million in termination
fees, fourth quarter charges of $46 million to benefit continuing operations and
four bolt-on acquisitions. The Committee also weighs the value of achievement of
subjective factors such as demonstrated management ability, initiative, and
contributions towards the Corporation's goal of leadership within the industries
in which it competes. Based on the foregoing factors, the Executive Officers
received individual increases. In addition, Mr. Lockhart's salary increase
reflected his promotion to Chairman and Chief Executive Officer in October 1995.
SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN AND THE INCENTIVE COMPENSATION PLAN
On April 20, 1995, the shareholders approved the General Signal Corporation
Senior Executive Incentive Compensation Plan (the "Plan") effective as of
January 1, 1995. Eligibility under this Plan is limited to the Chief Executive
Officer and any individuals employed by the Corporation at the end of any
calendar year who appear in the Summary Compensation Table of the Corporation's
Annual Proxy Statement to Shareholders for that year. It is intended that awards
under this Plan which are based solely on the achievement of financial
objectives will be treated as performance-based compensation within the meaning
of Section 162(m) of the Code, thereby qualifying for exclusion under the $1
million limitation on deductibility of executive compensation.
Under this Plan, each participant will be eligible to receive a share of an
incentive compensation pool; provided, however, that the Committee will have
full discretion to reduce or eliminate the share for any participant for any
plan year. The incentive compensation pool for any plan year will equal 5% of
operating earnings of the Corporation for that plan year, and it will be based
on reported operating
22
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earnings in the Corporation's financial statements included in the Corporation's
Annual Report to Shareholders. The financial statements will be prepared in
accordance with generally accepted accounting principles and will be audited by
the Corporation's external auditors. For purposes of this Plan, reported
operating earnings may be adjusted to exclude or include items of an unusual,
non-recurring or extraordinary nature as will be specifically defined by the
Committee prior to the end of the first quarter of the plan year. In the event
that the Committee pays out less than the amount of the incentive compensation
pool for any plan year, the amount which is not paid out may, at the Committee's
sole discretion, be added to the incentive compensation pool that is available
for any subsequent plan year or years. Each participant will be eligible to
receive a maximum award of 30% of the incentive compensation pool for the
applicable plan year.
By the end of the first quarter of each plan year, the Committee will
approve the amount of each participant's share of the incentive compensation
pool. Following each plan year, the Committee will certify the total amount of
the incentive compensation pool. In determining the amount to be paid to a
participant, the Committee will consider a number of performance factors based
on individual merit and on the level of achievement of the earnings-per-share
goal and the progress in carrying out the Corporation's objectives and
strategies. Awards under the Plan will be paid in cash as soon as practicable
after the plan year, except to the extent deferred pursuant to the Corporation's
Deferred Compensation Plan.
The incentive compensation pool for 1995 was $9.0 million, and the maximum
individual award was $2.7 million. The actual awards determined by the Committee
for 1995 under this Plan for participants were limited to the actual awards that
would have been determined under the Corporation's Incentive Compensation Plan.
Under the Corporation's Incentive Compensation Plan, key employees of the
Corporation annually may be awarded bonuses determined by the Committee.
Executive officers, unit presidents and virtually all senior staff managers
throughout the Corporation are eligible for participation in the Incentive
Compensation Plan.
The purpose of the Incentive Compensation Plan is to recognize employees of
the Corporation and its business units in significant positions who contribute
materially to the success of the business by their ability, ingenuity and
industry, and to reward such contributions. The Committee reviews the
administration of the overall Incentive Compensation Plan, sets target awards
and performance goals, and recommends to the Board of Directors the annual
awards for executive officers, including the Chairman. Utilizing information
from industry, peer group and national compensation surveys, each participant
has a competitive "target" percentage of total salary paid based on the
individual's salary grade level.
At the beginning of each year the Committee approves corporate goals that
provide the basis for the payment of awards. Business unit performance is
measured against goals for operating income, return on capital and cash flow,
while corporate performance is measured against earnings-per-share goals. The
combined achievement of business unit goals along with overall corporate
initiatives reflecting management's tactical overview during the year result in
the earnings-per-share of the Corporation. The bonuses awarded to the executive
officers reflect the results of individual unit and corporate performance goals
as well as the Committee's subjective judgment with respect to each individual's
contribution to the achievement of applicable goals.
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In 1995, most of the Corporation's continuing operating units achieved or
exceeded individual measurement goals. Some units received no award based on
their failure to attain their goals. Overall, the Corporation did not achieve
its earnings-per-share goal, and awards for corporate executives were formulated
on that basis. The Incentive Compensation Plan is among the strongest linkages
between individual performance and the earnings performance which drives
shareholder value over the short term.
STOCK OPTION/RESTRICTED STOCK
The program of granting stock options and restricted stock is intended to
create long-term incentives to increase shareholder value. The Committee grants
stock options annually to management personnel to align their interests with the
long-term interests of shareholders. The Committee also grants restricted stock
selectively to attract new management and to recognize important individual
contributions.
The Committee approved stock option grants to executive officers and Unit
Presidents in 1995. The level of grants to executives was determined in a manner
similar to the method used for development of base salary. Competitive data from
industry, peer group and national surveys of long-term incentive plans were
examined and implemented at the mid-range of positions of similar responsibility
in companies of like size, structure, product offerings or location.
In addition, the Committee has authorized a replacement ("reload") provision
for unexercised stock options to encourage the early exercise and holding of
stock option shares by executives subject to the ownership guidelines. Under
this feature, a replacement option is granted when an optionee exercises a stock
option by surrendering shares of Common Stock which the optionee already owns in
payment of the exercise price. The replacement option covers the number of
shares surrendered in the option exercise (including shares for applicable
taxes) and has an exercise price equal to the market price on the date of
exercise. The expiration date of the replacement option is the same as the
expiration date of the option that was exercised. The replacement option becomes
exercisable one year from the date the original option was exercised; provided,
however, that the replacement option will be forfeited if the shares acquired on
the exercise of the original option are sold for cash prior to holding them for
at least one year.
STOCK OWNERSHIP GUIDELINES
In 1993, the Committee established ownership guideline levels of the
Corporation's stock for executive officers and Unit Presidents. The guidelines
are calculated by reference to the value of the Corporation's shares as a
multiple of base salary: five times for the Chairman and Chief Executive
Officer, three times for Executive Vice Presidents and one or two times for
other senior executives. Individuals are expected to have progressed at least
halfway toward the goal within three years, and if the target is not reached in
five years, incentive compensation bonuses will be paid in restricted stock
until the ownership level is achieved. The shares held by an individual in the
Corporation's Savings Plan, in "phantom stock units" under the Deferred
Compensation Plan discussed below, or outright, will be included. However,
unexercised stock options will not be included in meeting the ownership goal.
The Deferred Compensation Plan was also established in 1993. It offers the
choice for executives subject to the ownership guidelines to defer certain
compensation on a pre-tax basis to make up benefits
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(including matching contributions) lost due to restrictions on the Savings Plan
imposed by the Code. The matching contributions will be forfeited in the event
the employee leaves the employ of the Corporation for any reason, other than
death or disability, prior to one year from the date such matching contributions
are allocated to the employee's account. The compensation deferred will be
credited in "phantom stock units" of the Corporation based on the value of
shares of Common Stock of the Corporation, except that at age 62 a participant
may convert all or part of the "phantom stock units" in this portion of the Plan
into a Fixed Income Balance (which is the investment equivalent of an investment
in the Fixed Income Fund under the Savings Plan).
The Deferred Compensation Plan also permits the deferral of all or part of
the incentive compensation bonuses into "phantom stock units" with the
Corporation contributing an amount equal to 10% of the deferral, also in
"phantom stock units", which deferral and 10% contribution will be forfeited in
the event the employee leaves the employ of the Corporation for any reason,
other than death or disability, prior to one year from the date of the deferral.
The value of the "phantom stock units" at the time of distribution is payable in
cash. The "phantom stock units" under both portions of this Plan are subject to
certain restrictions and count toward the ownership guidelines.
The Committee believes that the various stock incentive programs implemented
as vehicles for achieving meaningful executive stock ownership requirements
provide a primary means of relating the interests of executives to the interests
of shareholders. This results in substantial personal investment tied to the
performance of the Corporation's shares so that the linkage of executives to
shareholders is significant.
CORPORATE PERFORMANCE AND CEO COMPENSATION
Michael D. Lockhart's salary was $610,000 and his incentive compensation
bonus was $300,000 for a total of $910,000 for 1995, which were both determined
pursuant to his employment agreement. In connection with his promotion to
Chairman and Chief Executive Officer in October 1995, his annual base salary was
raised from $600,000 to $650,000. Edmund M. Carpenter's salary was $816,923
(including $146,769 of severance pay) and his incentive compensation bonus was
$328,403 for a total of $1,145,326 for 1995. The determination of Mr.
Carpenter's 1995 incentive compensation bonus was based on the level of
achievement of the earnings-per-share goal and the progress in carrying out the
Corporation's objectives and strategies. The incentive compensation levels of
the other executive officers were determined on the same principles.
The Corporation's net income for 1995 was impacted by the Corporation
recording before-tax charges of $20.1 million for the acquisition of Best Power
Technology and Data Switch Corporation and by recording after-tax charges of
$64.0 million for additional expected losses on the dispositions of the Leeds &
Northrup and Dynapower/Stratopower businesses.
INTERNAL REVENUE CODE SECTION 162(M)--IMPLICATIONS FOR EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1 million paid to any of
the executive officers named in the Summary Compensation Table. Qualifying
performance-based compensation is not subject to the deduction limit if certain
requirements are met. The Corporation's policy is to maximize the deductibility
of executive compensation so long as deductibility is compatible with the more
important objective of maintaining
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competitive and motivational total compensation based on performance. To this
end, on April 20, 1995, the shareholders approved a performance-based incentive
compensation plan for senior executives (see pages 22 and 23 for a description
of the General Signal Corporation Senior Executive Incentive Compensation Plan).
COMMITTEE CONCLUSION
The Committee believes that the caliber and motivation of the Corporation's
employees and the quality of their leadership determine the Corporation's
long-term performance. The Committee further believes that it is in the
shareholders' interests to compensate executives well when performance meets or
exceeds high standards set by the Board, so long as there is an appropriate
downside risk to compensation when performance falls short of such high
standards. The Committee believes that the Corporation's current compensation
program meets these requirements and is deserving of shareholders' support.
This report is respectfully submitted by the Committee, composed of:
Ronald E. Ferguson, Chairman
Ralph E. Bailey
Ursula F. Fairbairn
John P. Horgan
Richard J. Kogan
John R. Selby
PROPOSAL 2--APPROVAL OF
THE GENERAL SIGNAL CORPORATION
1996 STOCK INCENTIVE PLAN
INTRODUCTION
On March 21, 1996, the Board of Directors adopted, subject to shareholder
approval, the 1996 Stock Incentive Plan (the "1996 Plan") as a successor to the
Corporation's 1992 Stock Incentive Plan (the "1992 Plan") which will terminate
on April 22, 1997 except as to outstanding awards. The Board of Directors,
having considered the fact that there are insufficient shares of Common Stock
remaining of the 1,800,000 shares originally available under the 1992 Plan,
believes that the Corporation needs a plan to continue the stock option and
restricted stock program to remain competitive in total compensation, including
salaries, benefits and incentives, so as to maintain its ability to attract,
retain and reward employees. The 1996 Plan continues to provide for grants of
stock options and restricted stock to employees and additionally provides for
grants of performance shares and performance units to employees.
In addition, the 1996 Plan continues to provide an opportunity for
non-employee directors to increase their ownership in shares of the Corporation
by allowing non-employee directors to elect to defer all or a portion of their
annual director's cash compensation and to receive in lieu thereof restricted
stock.
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It is proposed that the aggregate number of shares of Common Stock available
for issuance under the 1996 Plan be 2,400,000 shares (subject to adjustment in
the event of certain changes in the capitalization of the Corporation). Such
shares, which would constitute approximately 4.84% of currently outstanding
shares, may be either authorized but unissued shares or issued shares reacquired
by the Corporation. The shares available for granting awards in any year shall
be increased by any shares represented by options or other awards granted under
the 1996 Plan or the Corporation's 1992 Stock Incentive Plan which have been
canceled, terminated, forfeited or expire unexercised for any reason.
The Board of Directors may amend or modify the 1996 Plan without shareholder
approval, except to increase the maximum number of shares which may be issued
under the 1996 Plan (other than in the case of adjustments to reflect future
stock dividends and other relevant capitalization changes), permit the granting
of options at less than 100% of fair market value at time of grant, change the
class of persons eligible to participate in the 1996 Plan or make any other
amendment for which shareholder approval is required pursuant to rules
promulgated by the Securities and Exchange Commission or required by the Code.
SUMMARY OF THE PLAN
The full text of the 1996 Plan is set forth in Exhibit A to this Proxy
Statement. The following summary of certain of its provisions is qualified in
its entirety by reference to the 1996 Plan.
OPTIONS, RESTRICTED STOCK, PERFORMANCE SHARES AND PERFORMANCE UNITS APPLICABLE
TO EMPLOYEES
A Committee consisting of a minimum of two directors ineligible to receive
awards applicable to employees (the "Committee") shall administer the portion of
the 1996 Plan with respect to options, restricted stock, performance shares and
performance units applicable to employees. The Board of Directors has authorized
the Personnel and Compensation Committee to serve as the Committee. Each option,
share of restricted stock, performance share and performance unit granted will
be evidenced by a written instrument containing such terms and conditions not
inconsistent with the 1996 Plan as the Committee may determine. No determination
has been made as to the persons to whom awards will be granted or the number of
shares or units that will be granted to any particular person.
The 1996 Plan expressly authorizes the Committee to provide in any option,
restricted stock, performance share or performance unit granted to an employee
that, in the event of a change in control of the Corporation (as defined by the
Committee), such option, restricted stock, performance share or performance unit
will be canceled (forfeited) on a date specified by the Committee and that the
employee will be entitled to receive in lieu thereof cash payments or shares
subject to such terms as to amount, vesting, and payout as the Committee may
prescribe. Alternatively, the Committee may provide for full vesting or
immediate exercisability of an award in the event of such a change in control
subject to such terms and conditions as the Committee may prescribe.
The 1996 Plan provides that the Corporation has the right to deduct from all
amounts paid in cash any taxes required by law to be withheld. In the case of
payments of awards in the form of Common Stock, the participant will be required
to pay to the Corporation the amount of any taxes required to be withheld with
respect to such Common Stock; or alternatively, the Corporation has the right to
retain, or sell without notice, a sufficient number of shares to cover the
amount required to be withheld.
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Stock Options
Options granted under the 1996 Plan may be either incentive stock options
("ISOs"), as defined in the Code, or non-qualified options, which do not meet
the requirements of ISOs. At the discretion of the Committee, options may be
granted to replace shares of the Corporation's Common Stock used as part or all
of the purchase price of other options under the 1996 Plan or any other stock
option plan of the Corporation. The maximum number of shares of Common Stock
with respect to which any option or options may be granted to any optionee in
any one taxable year of the Corporation shall not exceed 300,000 shares under
the 1996 Plan or any other stock option plan of the Corporation. Options shall
be at purchase prices not less than 100% of fair market value at time of grant.
The 1996 Plan prohibits the repricing of stock options. On March 11, 1996, the
closing price of the Corporation's Common Stock was $35.625 per share. Each
option will be exercisable on such date, during such period and for such number
of shares as determined by the Committee, but not for more than ten years from
the date of grant. After the death or termination of employment of an optionee,
the option will be exercisable within a limited period but not later than the
expiration date of the option.
In addition to the exercise of an option for cash, the 1996 Plan contains
two alternative methods of exercising options. First, an option holder may
deliver shares of Common Stock equal in value to the cash that would be required
to exercise an option. Under this method, an option holder exercising a stock
option may deliver an affidavit attesting to the ownership of the number of
shares required instead of delivering the shares. Second, the Corporation may
substitute compensation to an optionee in the form of cash or Common Stock in an
amount not to exceed the difference between the option price and the fair market
value of the shares under option at that time. Either method requires the
approval of the Committee. The Committee's present guideline under existing
stock option plans, which may be changed in the future, is that substitute
compensation is not available. However, the proper officers have been authorized
by the Committee to accept shares of Common Stock as the exercise price of an
option until such time as a contrary determination is made by the Committee.
Restricted Stock
Restricted stock may be granted under the 1996 Plan, and the lapse of
restrictions on restricted stock may be conditioned upon the attainment of
specific performance goals or such other factors as the Committee may determine.
In making an award of restricted stock, the Committee will determine what
restrictions shall apply and the period during which the stock is subject to
such restrictions. During the restriction period, the employee may not sell,
transfer, pledge or assign the restricted stock. The certificate evidencing the
restricted stock will remain in the possession of the Corporation until the
restrictions have lapsed.
Upon the termination of the employee's employment for any reason during the
restriction period, restricted stock will either vest or be subject to
forfeiture, in accordance with the terms and conditions of the award. During the
restriction period, the employee will have the right to vote the restricted
stock and to receive any cash dividends.
Performance Shares and Performance Units
Performance shares or performance unit awards may be granted under the 1996
Plan. The Committee will determine a performance period (the "Performance
Period") of one or more years and will determine the performance objectives for
grants of performance shares and performance units.
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Performance objectives may vary from participant to participant and shall be
based upon such performance criteria as the Committee may deem appropriate.
Performance Periods may overlap and participants may participate simultaneously
with respect to performance shares and performance units for which different
Performance Periods are prescribed.
At the beginning of a Performance Period, the Committee shall determine for
each participant or group of participants with respect to that Performance
Period the range of number of shares, if any, in the case of performance shares,
and the range of dollar values, if any, in the case of performance units, which
may be fixed or may vary in accordance with such performance or other criteria
specified by the Committee, which shall be paid to a participant as an award if
the relevant measure of performance of the Corporation for the Performance
Period is met.
If during the course of a Performance Period there should occur significant
events as determined by the Committee which the Committee expects to have a
substantial effect on a performance objective during such period, the Committee
may revise such objective. Except as otherwise determined by the Committee, at
the date of grant or thereafter, upon termination of employment during the
applicable Performance Period, performance shares and performance units for
which the Performance Period was prescribed will be forfeited.
Each performance share or performance unit may be paid in whole shares, or
cash, or a combination of shares and cash either as a lump sum payment or in
installments, all as the Committee shall determine at the time of grant of the
performance share or performance unit or otherwise, commencing as soon as
practicable after the end of the relevant Performance Period.
RESTRICTED STOCK APPLICABLE TO NON-EMPLOYEE DIRECTORS WITH RESPECT TO DIRECTORS'
FEES
The Secretary of the Corporation shall administer the portion of the 1996
Plan with respect to restricted stock applicable to non-employee directors.
Since the restricted stock is based on deferral elections by non-employee
directors, this function will be limited to matters of interpretation and
administrative oversight. Each non-employee director may elect to defer all or
part of his or her regular cash compensation as a director into restricted stock
subject to a five-year restriction period. In consideration for forgoing cash
compensation, the value of the restricted shares shall be 10% greater than the
amount of the director's cash compensation elected to be deferred.
Restricted stock which is issued under the 1996 Plan shall be represented by
a stock certificate in the name of the director. Such director is entitled to
vote the restricted stock, to receive any cash dividends and to exercise other
shareholder rights with respect to the restricted stock, except that (a) the
Corporation may retain custody of the stock certificate during the restriction
period and (b) the director may not sell, transfer, pledge or assign the stock
during the restriction period. The 1996 Plan specifies the circumstances under
which restrictions on the restricted stock will lapse. Such director may elect
in writing at least three months before the end of any restriction period
irrevocably to redefer restricted stock for additional five-year periods in
accordance with the terms of the 1996 Plan.
NEW PLAN BENEFITS UNDER THE 1996 PLAN
The Committee has made no determinations with respect to grants of options,
restricted stock, performance shares or performance units to officers and
employees under the 1996 Plan. Further, since
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the grant of stock options, restricted stock, performance shares or performance
units under the 1996 Plan is entirely within the Committee's discretion and
based upon the performance of the Corporation and each of the individual plan
participants, it is not possible to determine the amount of stock options,
restricted stock, performance shares or performance units that would have been
granted for the last completed fiscal year if the 1996 Plan had been in effect.
Under the 1996 Plan, each non-employee director may elect to defer all or part
of his or her cash compensation and receive a number of shares of restricted
stock equal to the amount of the deferral, and the amount so deferred will be
increased by 10% for purposes of determining the amount of restricted stock to
be credited to such director.
FEDERAL INCOME TAX CONSEQUENCES
The following summary is intended only as a general guide as to the Federal
income tax consequences under current law with respect to participation in the
1996 Plan and does not attempt to describe all possible federal or other tax
consequences of such participation. Furthermore, the tax consequences are
complex and subject to change, and a taxpayer's particular situation may be such
that some variation of the described rules is applicable.
Incentive Stock Options
No taxable income would be realized by the optionee upon the grant or
exercise of an incentive stock option. If there were no disposition of the
option shares until more than two years after the option is granted and more
than one year after the option is exercised, the gain or loss realized by the
optionee on the sale of such shares would be treated as long-term capital gain
or loss, and the Corporation would not be entitled to any income tax deduction
by reason of the grant or exercise of the option. If the option shares were
disposed of in a sale, exchange, gift or other "disqualifying disposition" prior
to the expiration of the two-years-from-grant/one-year-from-exercise holding
period, generally (a) the optionee would realize ordinary income in the year of
such disposition in an amount equal to the excess (if any) of the fair market
value of such shares at the time of exercise of the option over the option price
thereof (except that, if the disposition is a sale or exchange of the type on
which a loss, if sustained, would be recognized to such optionee, ordinary
income would be realized by such optionee in an amount equal to only the gain
realized on such sale or exchange if such gain is less than such excess) and
would realize capital gain on the balance of the gain, and (b) the Corporation
would be entitled to a deduction for such year in the amount of the ordinary
income so realized. Although the exercise of an incentive stock option would not
produce ordinary income to the optionee, it would produce an increase in the
optionee's alternative minimum taxable income.
Non-Qualified Options
No taxable income would be realized by the optionee upon the grant of a
non-qualified option. On exercise, the excess of the fair market value of the
shares at the time of exercise over the option price of such shares would be
treated as compensation. Any amounts treated as compensation (a) would be
taxable as ordinary income in the year of exercise, (b) would be subject to
withholding for Federal income tax purposes, and (c) generally would be an
allowable income tax deduction to the Corporation. The optionee's tax basis for
shares acquired upon exercise of a non-qualified option would be equal to the
option price paid for the shares plus any amounts treated as compensation. If an
optionee were to hold shares acquired pursuant to the exercise of a
non-qualified option for more than one year after the
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exercise of such option and then were to sell such shares for more than their
basis, the optionee would generally be entitled to long-term capital gain
treatment on the difference.
Restricted Stock, Stock Awards, Performance Share and Performance Unit
Awards
No income would be realized by a participant in connection with the grant
of a restricted stock, performance share or performance unit award. If payments
were made in cash, the participant would be required to include as ordinary
income the amount of cash awarded in the year in which paid. If such payments
were made in shares of Common Stock (or in the case of a restricted stock or
performance share award, generally when the restrictions lapse), the participant
would be required to include as ordinary income the fair market value of such
shares at the time of payment (or lapse of restrictions). The Corporation would
be entitled to a deduction for Federal income tax purposes equal to the amount
so included in such participant's income.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL TO APPROVE THE GENERAL
SIGNAL CORPORATION 1996 STOCK INCENTIVE PLAN WILL BE IN THE BEST OF INTERESTS OF
THE CORPORATION AND ITS SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL. A favorable vote of a majority of all the votes cast at the meeting in
person or by proxy is required for approval of the General Signal Corporation
1996 Stock Incentive Plan.
PROPOSAL 3--AUTHORIZATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors recommends that Ernst & Young LLP be appointed as
independent auditors for 1996. Submission of the selection to shareholders is
not required. The Board of Directors will reconsider the selection if it is not
approved by a majority of all the votes cast at the meeting in person or by
proxy.
Ernst & Young LLP has served as the Corporation's independent auditors since
1992. It is expected that representatives of Ernst & Young LLP will be present
at the Annual Meeting with the opportunity to make a statement, if they desire
to do so, and will be available to respond to appropriate questions.
During 1995, Ernst & Young LLP performed various professional services in
connection with its audit of the financial statements of the Corporation and its
consolidated subsidiaries, including assistance and consultation in connection
with filings with the Securities and Exchange Commission, audits of certain
employee benefit plan financial statements, attendance at Audit Committee
meetings and consultation in connection with various business, accounting and
tax matters.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF
THE PROPOSAL TO AUTHORIZE THE BOARD OF DIRECTORS TO APPOINT ERNST & YOUNG LLP TO
SERVE AS INDEPENDENT AUDITORS FOR 1996.
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COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's executive officers and directors and persons who own more than 10%
of a registered class of the Corporation's equity securities to file initial
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC") and the New York Stock Exchange. Such officers, directors and
stockholders are required by the SEC regulations to furnish the Corporation with
copies of all Section 16(a) forms they file. Based solely on a review of the
copies of such forms furnished to the Corporation and written representations
from the Corporation's executive officers and directors, all persons subject to
the reporting requirements of Section 16(a) filed the required reports on a
timely basis with the exception of Terence D. Martin, who inadvertently reported
two purchases of an aggregate of 7,000 shares of the Corporation's Common Stock
in August 1995 on September 27, 1995 instead of by September 10, 1995.
OTHER MATTERS
The management is not aware that any matters other than those set forth
herein will be presented for action at the Annual Meeting. However, if any other
matter should properly come before the meeting, the persons authorized by the
accompanying proxy will vote and act with respect thereto according to their
best judgment in the interest of the Corporation.
SHAREHOLDER PROPOSALS
In order for shareholder proposals for the 1997 Annual Meeting of
Shareholders to be eligible for inclusion in the Corporation's proxy statement,
they must be received by the Corporation at its principal office in Stamford,
Connecticut, no later than November 22, 1996.
March 22, 1996
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EXHIBIT A
GENERAL SIGNAL CORPORATION
1996 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this Plan is to offer as an additional incentive to the
officers and other designated employees most responsible for the growth and
success of General Signal Corporation (the "Corporation") the opportunity to
increase their proprietary interest in the Corporation under conditions which
will encourage their continued employment in the service of the Corporation. In
addition, this Plan provides an opportunity for non-employee directors to
increase their interest as shareholders of the Corporation, which serves to
align the interests of non-employee directors with other shareholders.
2. ADMINISTRATION
The portion of this Plan with respect to options, restricted stock,
performance shares and performance units applicable to employees shall be
administered by a Committee of not less than two (2) members appointed annually
by the Board of Directors. The Committee, which may but need not be the
Personnel and Compensation Committee, shall be composed of members of the Board
of Directors who are not eligible to receive awards applicable to employees
under this Plan. The Committee shall act by a majority vote or by a written
statement signed by a majority of the members. Subject to the express provisions
of this Plan, the Committee shall determine the individuals to whom, and the
time or times at which awards shall be granted, the number of shares or units to
be subject to each award and other terms and conditions thereof.
The portion of this Plan with respect to non-employee directors shall be
administered by the Secretary of the Corporation. Since the restricted stock is
based on deferral elections by non-employee directors, this function will be
limited to matters of interpretation and administrative oversight.
3. STOCK SUBJECT TO PLAN
The shares to be issued under this Plan shall be made available, at the
discretion of the Board of Directors or the Committee, either from the
authorized but unissued shares of Common Stock of the Corporation or from shares
of Common Stock reacquired by the Corporation, including shares purchased in the
open market.
Subject to adjustment as provided in the last paragraph of this Section 3:
(a) the aggregate number of shares of Common Stock reserved and available
for issuance under this Plan, subject to Section 3(b) below, shall be
2,400,000 shares; and
(b) the shares available for granting awards in any year shall be
increased by any shares represented by options or other awards
granted under this Plan or the Corporation's 1992 Stock Incentive
Plan which have been canceled, terminated, forfeited or expire
unexercised for any reason.
In the event that the number of outstanding shares of Common Stock of the
Corporation shall be changed by reason of split-ups or combinations of shares or
recapitalization or by reason of stock dividends or equity distributions, the
number of shares for which awards may thereafter be granted under this Plan in
the aggregate and to any single participant, the number of shares then subject
to awards theretofore granted under this Plan, and the price per share payable
upon exercise of such
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awards, shall be appropriately adjusted as determined by the Board of Directors
so as to reflect such change. Awards may also contain provisions for their
continuation or for other equitable adjustments after changes in shares of
Common Stock resulting from reorganization, sale, merger, consolidation or
similar occurrence. Options assumed in acquiring another company shall not count
against the shares available for granting awards under this Plan.
4. ELIGIBILITY AND PARTICIPATION
Awards of options, restricted stock, performance shares and performance
units applicable to employees may be granted only to officers and other
designated employees of the Corporation and of its subsidiaries, present and
future. A director of the Corporation who is not also an officer or other
employee of the Corporation or of one of its subsidiaries ("Eligible Director")
will be eligible only with respect to the provisions of this Plan concerning the
deferral of directors' fees into restricted stock.
5. STOCK OPTIONS
Grant
Subject to the provisions of this Plan, the Committee shall have sole and
complete authority to determine the persons to whom options shall be granted,
the number of shares to be covered by each option and the conditions and
limitations, if any, in addition to those set forth in this Section 5,
applicable to such options. At the discretion of the Committee, options may be
granted to replace shares of the Corporation's Common Stock used as part or all
of the purchase price of other options under this Plan or any other stock option
plan of the Corporation. Subject to adjustment as provided in the last paragraph
of Section 3, the maximum number of shares of Common Stock with respect to which
any option or options may be granted to any optionee in any one taxable year of
the Corporation shall not exceed 300,000 shares under this Plan or any other
stock option plan of the Corporation.
Option Prices
The purchase price of the Common Stock under each option shall be not less
than 100% of the fair market value of the stock on the date the option is
granted. Stock options shall not be repriced, i.e., there shall be no grant of
an option to an optionee in exchange for an optionee's agreement to cancellation
of a higher-priced stock option that was previously granted to such optionee.
The purchase price is to be paid in full upon the exercise of the option, and
payment shall be made in cash, or by check, bank draft or money order payable to
the order of the Corporation, or, with the approval of the Committee, by
delivering shares of Common Stock of the Corporation of equivalent fair market
value on the date the option is exercised. Fair market value shall be the
closing price on the New York Stock Exchange or, in the event that no sale shall
have taken place, the mean between the closing bid and asked prices.
If the Committee grants any incentive stock options, within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), the
aggregate fair market value, determined at the time such option is granted, of
the shares with respect to which such options are exercisable for the first time
by any one employee during any calendar year (under this Plan and any other plan
which is maintained by the Corporation or its subsidiaries and which provides
for the granting of such options) shall not exceed $100,000.
Form of Option
Options granted pursuant to this Plan to employees shall be evidenced by
Stock Option Agreements in such form as the Committee shall from time to time
adopt. Options may, but need not, be
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subject to such terms and conditions as will qualify their holders for special
Federal income tax treatment pursuant to any provision of the Code. Each option
granted under this Plan shall be exercisable on such date or dates and during
such period and for such number of shares as shall be determined pursuant to the
provisions of the Stock Option Agreement with respect to such option; provided,
however, that no option shall be exercised later than ten years from the date of
grant of the option. In any event, all options granted hereunder shall terminate
and expire upon the first to occur of the following events:
(a) the termination date specified in the option agreement;
(b) the date an optionee ceases to be employed by the Corporation or its
subsidiaries other than by reason of death or retirement; provided,
however, that the Committee may permit an additional period of up to one
(1) year to exercise an option from the date an optionee ceases to be
employed involuntarily by the Corporation or its subsidiaries; and
(c) the expiration of one (1) year from the date of an optionee's death if
his or her death occurs at a time when the optionee is in the employ of
the Corporation or a subsidiary.
After termination of employment for any reason, an optionee, or his or her
legal representative, may exercise, subject to the above time limitations, only
that portion of the option which the optionee has a right to exercise on such
date of termination unless the Stock Option Agreement specifically allows a
greater portion of the option to continue to become exercisable within such time
limitations.
The Committee may in its sole discretion include in any option granted
pursuant to this Section 5 a provision to the effect that, in the event of a
change in control of the Corporation (as such term may be defined by the
Committee), either of the following shall occur: (i) each outstanding option
shall be canceled at such time as the Committee shall specify, and in lieu
thereof the participant shall have a right to receive cash payments or shares in
such amounts and subject to such vesting and payout terms as the Committee may
prescribe, or (ii) each outstanding option shall become fully exercisable
subject to such terms and conditions as the Committee may prescribe.
Compensation in Lieu of Exercise
Upon written application of an optionee, the Corporation may, with the
approval of the Committee, substitute for the exercise of an option compensation
to the optionee not in excess of the difference between the option price and the
fair market value, determined in accordance with this Section 5, of the shares
covered by such written application as of the date thereof. Such compensation
may be in cash or shares of Common Stock of equivalent fair market value, or
both, as the Committee may determine. In the event compensation is substituted
pursuant to this Section 5 for the exercise, in whole or in part, of an option,
the option shall be reduced by the option shares for which such compensation is
substituted, and such shares shall again be available for awards under this
Plan. Notwithstanding anything to the contrary contained herein, for the purpose
of determining the difference between the option price and the fair market value
to optionees who request such substitution, such fair market value shall be
deemed to be the closing sale price of the Corporation's Common Stock on the New
York Stock Exchange on the date of such request or, with respect to requests
during the period beginning on the third business day following the date of
release by the Corporation of its quarterly financial results and ending on the
twelfth business day following the date of such release, such fair market value
shall be determined by the Committee but shall not exceed the highest closing
price or be less than the lowest closing price of the Corporation's Common Stock
on the New York Stock Exchange during such period.
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Non-Transferability of Option
No option granted under this Plan to any employee shall be transferable
otherwise than by will or the laws of descent and distribution, and an option
may be exercised during the lifetime of the holder thereof, only by such holder;
provided, however, that the Committee may permit limited transferability in
conformance with rules promulgated by the Securities and Exchange Commission.
6. RESTRICTED STOCK
Grant
Subject to the provisions of this Plan, the Committee shall have sole and
complete authority to determine the officers and other employees to whom, and
the time or times at which, grants of restricted stock will be made, the number
of shares to be awarded, the time or times within which such awards may be
subject to forfeiture, and all other terms and conditions of the awards.
Restricted stock awards granted pursuant to this Plan shall be evidenced by
a Restricted Stock Agreement in such form as the Committee shall from time to
time adopt. The Committee may condition the lapse of restrictions on restricted
stock upon continued employment and the attainment of specified performance
goals or such other factors as the Committee may determine, in its sole
discretion. The Committee must certify in writing prior to the lapse of
restrictions conditioned on attainment of performance goals that such
performance goals were in fact satisfied.
Restrictions and Conditions
The shares of restricted stock awarded pursuant to this Section 6 shall be
subject to the following restrictions and conditions:
(a) During a period set by the Committee commencing with the date of such
award (the "Restriction Period"), the participant shall not be permitted
to sell, transfer, pledge or assign shares of restricted stock awarded
under the Plan. Within these limits, the Committee, in its sole
discretion, may provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions in whole or
in part, based on service, performance and/or such other factors or
criteria as the Committee may determine; provided, however, that the
Restricted Stock Agreement may preclude discretion to accelerate or
waive restrictions.
(b) Except as provided in paragraph (a) above, the participant shall have,
with respect to the shares of restricted stock, all of the rights of a
shareholder of the Corporation, including the right to vote the shares,
and the right to receive any cash dividends;
(c) Upon termination of a participant's employment with the Corporation or
any subsidiary for any reason during the Restriction Period, shares
still subject to restriction will vest, or be forfeited, in accordance
with the terms and conditions established by the Committee in the
Restricted Stock Agreement; and
(d) If and when the Restriction Period expires without a prior forfeiture of
the restricted stock subject to such Restriction Period, certificates
for an appropriate number of unrestricted shares of stock shall be
delivered promptly to the participant, and the certificates for the
shares of restricted stock shall be canceled.
The Committee may in its sole discretion include in any restricted stock
award pursuant to this Section 6 a provision to the effect that, in the event of
a change in control of the Corporation (as such term may be defined by the
Committee), either of the following shall occur: (i) such restricted stock (to
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the extent not vested) shall be forfeited at such time as the Committee shall
specify, and in lieu thereof the participant shall have a right to receive cash
payments in such amounts and subject to such vesting and payout terms as the
Committee may prescribe, or (ii) the restrictions on such restricted stock shall
lapse subject to such terms and conditions as the Committee may prescribe.
7. PERFORMANCE SHARES AND PERFORMANCE UNITS
Grant
Subject to the provisions of this Plan, the Committee shall have sole and
complete authority to determine the officers and other employees to whom, and
the time or times at which, grants of performance shares or performance units
will be made, the number of shares or units to be awarded, the time or times
within which such awards may be subject to forfeiture, and all other terms and
conditions of the awards.
Performance shares or performance unit awards granted pursuant to this Plan
shall be evidenced by a Performance Share or Performance Unit Agreement in such
forms as the Committee shall from time to time adopt.
Performance Period
The Committee shall determine a performance period (the "Performance
Period") of one or more years and shall determine the performance objectives for
grants of performance shares and performance units. Performance objectives may
vary from participant to participant and shall be based upon such performance
criteria as the Committee may deem appropriate. Performance Periods may overlap
and participants may participate simultaneously with respect to performance
shares and performance units for which different Performance Periods are
prescribed.
Award Value
At the beginning of a Performance Period, the Committee shall determine for
each participant or group of participants with respect to that Performance
Period the range of number of shares, if any, in the case of performance shares,
and the range of dollar values, if any, in the case of performance units, which
may be fixed or may vary in accordance with such performance or other criteria
specified by the Committee, which shall be paid to a participant as an award if
the relevant measure of performance of the Corporation for the Performance
Period is met.
Significant Events
If during the course of a Performance Period there shall occur significant
events as determined by the Committee which the Committee expects to have a
substantial effect on a performance objective during such period, the Committee
may revise such objective; provided, however, that, if a Performance Share and
Performance Unit Agreement so provides, the Committee shall not have any
discretion to increase the amount of compensation payable under the award to the
extent such an increase would cause the award to lose its qualification as
performance-based compensation for purposes of Section 162(m)(4)(c) of the Code
and the regulations thereunder.
Forfeiture
Except as otherwise determined by the Committee, at the date of grant or
thereafter, upon termination of employment during the applicable Performance
Period, performance shares and performance units for which the Performance
Period was prescribed shall be forfeited; provided, however, that the Committee
may provide in any Performance Share or Performance Unit Agreement that
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restrictions or forfeiture conditions relating to performance shares and
performance units will be waived in whole or in part in the event of
terminations resulting from specified causes.
The Committee may in its sole discretion include in any performance share or
performance unit award pursuant to this Section 7 a provision to the effect
that, in the event of a change in control of the Corporation (as such term may
be defined by the Committee), either of the following shall occur: (i) such
performance share or performance unit (to the extent not vested) shall be
forfeited at such time as the Committee shall specify, and in lieu thereof the
participant shall have a right to receive cash payments or shares in such
amounts and subject to such vesting and payout terms as the Committee may
prescribe, or (ii) such performance share or performance unit (to the extent not
vested) shall vest subject to such terms and conditions as the Committee may
prescribe.
Non-transferability
Performance shares and performance units may not be sold, transferred,
pledged or assigned prior to payment and the lapse of any restrictions.
Payment
Each performance share or performance unit may be paid in whole shares, or
cash, or a combination of shares and cash either as a lump sum payment or in
installments, all as the Committee shall determine, at the time of grant of the
performance share or performance unit or otherwise, commencing as soon as
practicable after the end of the relevant Performance Period. The Committee must
certify in writing prior to payment that the performance goals and any other
material terms were in fact satisfied.
8. DIRECTORS' FEES
Deferral of Regular Cash Compensation into Restricted Stock
Each Eligible Director may elect to reduce all or part of the cash
compensation otherwise payable for services to be rendered by him or her as a
director (including the annual retainer and any fees payable for serving on the
Board or a Committee of the Board) and to receive in lieu thereof restricted
stock. Any such election shall be in writing and must be made at least six
months before the services are rendered giving rise to such compensation, and
may not be revoked or changed thereafter except as to compensation for services
rendered at least six months after any such election to revoke or change is made
in writing. In consideration for forgoing cash compensation, the amount so
deferred shall be increased by 10% for purposes of determining the amount of
restricted stock to be credited to such director.
If an Eligible Director so elects to defer, there shall be credited to such
director a number of shares of restricted stock equal to the amount of the
deferral (increased by 10% as described in the preceding sentence) divided by
the reported closing price of the stock on the New York Stock Exchange--
Composite Transactions on the last business day of the month in which the
compensation would have been paid in the absence of a deferral election.
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Restrictions and Forfeiture
Restricted stock issued under this Section shall have a restriction period
of five (5) years. Notwithstanding any other provision of this Section, such
restricted stock shall be subject to the following terms and conditions:
(a) Restricted stock shall be represented by a stock certificate registered
in the name of the holder. The holder shall have the right to enjoy all
shareholder rights during the restriction period (including the right to
vote the shares and the right to receive any cash dividends) with the
exception that:
(i) The holder may not sell, transfer, pledge or assign the stock
during the restriction period;
(ii) The Corporation may either issue shares subject to such
restrictive legends and/or stop transfer instructions as it deems
appropriate or provide for retention of custody of the stock during the
restriction period; and
(iii) A breach of the terms and conditions during the restriction
period shall cause a forfeiture of the restricted stock.
(b) All restrictions shall lapse and the holder of restricted stock shall be
entitled to the delivery of a stock certificate or certificates upon the
earliest of the following:
(i) Five (5) years from the date the applicable shares are credited
to such holder;
(ii) The date of the holder's death or disability;
(iii) The date the holder, after being nominated by the Board, is not
elected by the shareholders in an election for the Board;
(iv) The date on which the Board determines that the holder will not
be nominated for election to the Board; or
(v) The date on which the holder resigns from the Board in connection
with his or her entering into any governmental, diplomatic or other
service or employment, but only if, in the opinion of outside legal
counsel selected by the Corporation, the holder's continued service on
the Board would have created an inadvisable potential conflict of
interest.
(c) Restricted stock shall be entirely forfeited in the event that during a
restriction period the holder:
(i) Resigns (other than by reason of disability or pursuant to
subsection (b)(v) above) or is dismissed for cause from the Board during
his or her elected term; or
(ii) Refuses to stand for an election to the Board after having been
nominated by the Board.
For purposes of subsection (b) above, "disability" shall mean long term
disability as determined under rules and procedures that apply under the
Corporation's Long Term Disability Plan then in effect. For purposes of
subsection (c) above, a holder shall be considered to have been dismissed for
cause if and only if he or she is dismissed on account of any act of (a) fraud
or intentional misrepresentation, or (b) embezzlement, misappropriation, or
conversion of assets or opportunities of the Corporation or any direct or
indirect majority-owned subsidiary of the Corporation.
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The holder may elect in writing at least three months before the end of any
restriction period irrevocably to re-defer restricted stock for additional five
(5)-year periods subject to the above terms and conditions.
9. WITHHOLDING
The Corporation or any subsidiary shall have the right to deduct from all
amounts paid in cash hereunder any taxes required by law to be withheld
therefrom. In the case of payments of awards in the form of Common Stock, the
participant shall be required to pay to the Corporation or subsidiary the amount
of any taxes required to be withheld with respect to such Common Stock; in lieu
thereof, the Corporation or subsidiary shall have the right to retain, or sell
without notice, a sufficient number of shares to cover the amount required to be
withheld. The Committee may from time to time establish procedures with respect
to stock withholding consistent with applicable requirements of Rule 16b-3
promulgated by the Securities and Exchange Commission.
10. GOVERNING LAW
The validity, construction and effect of this Plan, any rules and
regulations relating to this Plan, and any awards under this Plan, shall be
determined in accordance with the laws of New York without giving effect to
principles of conflict of laws.
11. EFFECTIVE PERIOD OF PLAN
This Plan shall become effective upon the date of its approval by the
shareholders of the Corporation. Unless earlier terminated by the Board of
Directors, this Plan shall terminate on April 18, 2001; provided, however, that
any such termination shall not affect awards granted prior thereto.
12. AMENDMENT OF PLAN
The Board of Directors of the Corporation may from time to time make such
amendments of this Plan as it shall deem advisable; provided, however, that the
Board of Directors may not, without further approval of the holders of a
majority of all outstanding shares of the Corporation entitled to vote thereon,
(i) increase the maximum number of shares as to which awards may be granted
under this Plan (except as otherwise provided in Section 3), (ii) permit the
granting of options at less than 100% of fair market value at time of grant,
(iii) change the class of persons eligible to receive awards under this Plan, or
(iv) make any other amendment for which shareholder approval is required
pursuant to Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, or Section 422 of the
Code. No amendment of this Plan may, without the consent of the holder of an
existing award, adversely affect such holder's rights thereunder. In addition,
the provisions of this Plan applicable to non-employee directors may not be
amended more than once every six months other than to comport with changes in
the Code, the Employee Retirement Income Security Act of 1974, or the rules
thereunder.
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General Signal Corporation
One High Ridge Park
PO Box 10010
Stamford, Connecticut 06904
203-329-4100<PAGE>
GENERAL SIGNAL CORPORATION
ONE HIGH RIDGE PARK, P. O. BOX 10010, STAMFORD, CONNECTICUT 06904
PROXY/VOTING INSTRUCTION CARD
ANNUAL MEETING--April 18, 1996
This Proxy Is Solicited on Behalf of the Board of Directors
The undersigned shareholder hereby appoints MICHAEL D. LOCKHART, TERENCE
D. MARTIN and EDGAR J. SMITH, JR., and each of them, the proxies
and attorneys of the undersigned to vote all shares of Common Stock which
the undersigned is entitled to vote at the 1996 Annual Meeting of
Shareholders of General Signal Corporation, or any adjournment thereof,
upon the matters described in the accompanying Notice of Annual Meeting
and Proxy Statement, as set forth on the reverse hereof, and in their
discretion on such other business as may properly come before the meeting
or any adjournment. This proxy when properly executed will be voted in the
manner directed herein by the shareholder. If no direction is made, this
proxy will be voted FOR Proposals 1, 2 and 3.
For Participants in the General Signal Corporation Savings and Stock Ownership
Plan or the General Signal Limited Savings and Stock Ownership Plan (the
"Plans"): As to those shares of Common Stock, if any, that are held for me in
such Plans, I instruct the Trustee of the applicable Plan to sign a proxy for
me in substantially the form set forth above and on the reverse side. The
Trustee shall mark the proxy as I specify. Where I do not specify a choice,
my shares will be voted in the same proportion as the Trustee votes the shares
for which it receives instructions. Your voting instructions will be held in
strictest confidence.
(Continued, and to be dated and signed, on reverse side)
<PAGE>
The Board recommends a vote FOR Proposals 1, 2 and 3.
1. ELECTION OF DIRECTORS FOR WITHHELD
For except vote withheld from following nominee(s)
- ------------------------------
Nominees: Ralph E. Bailey, H. Kent Bowen, Ursula F. Fairbairn,
Ronald E. Ferguson, John P. Horgan, Roland W. Schmitt, John R. Selby
2. APPROVAL OF THE GENERAL SIGNAL CORPORATION 1996 STOCK INCENTIVE PLAN.
FOR / / AGAINST / / ABSTAIN / /
3. APPROVAL OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT
AUDITORS OF THE CORPORATION.
FOR / / AGAINST / / ABSTAIN / /
4. IN ACCORDANCE WITH THEIR DISCRETION ON ANY OTHER MATTERS OR PROPOSALS
WHICH MAY PROPERLY COME BEFORE THE MEETING.
Please check box if you want your voting instructions to be confidential
pursuant to the Corporation's confidential voting policy described in
the 1996 Proxy Statement. YES / / NO / /
/ / Please check box if you plan to attend Annual
Meeting.
- -------------------------------
Signature(s)
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as an attorney, executor, administrator, trustee or
guardian, please give full title as shown. Sign, date and return the Proxy
Card promptly using the enclosed envelope.
