<PAGE> 1
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SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
XXXXX
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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:
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<PAGE> 2
BFGOODRICH
- - --------------------------------------------------------------------------------
NOTICE OF
1995
ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
<PAGE> 3
THE BFGOODRICH COMPANY
3925 Embassy Parkway
Akron, Ohio 44333-1799
NOTICE TO SHAREHOLDERS
THE ANNUAL MEETING OF SHAREHOLDERS of The B.F.Goodrich Company, a New York
corporation, will be held in the Knickerbocker Suite, on the third floor of The
New York Helmsley Hotel, 212 East 42nd Street, New York, New York on April 17,
1995, at 10:30 A.M. for the following purposes:
1. To elect twelve Directors to hold office until the next Annual Meeting of
Shareholders and until their respective successors are elected and
qualified.
2. To consider and act upon a proposal to ratify the appointment of Ernst &
Young LLP as Independent Auditors for the Company for the year 1995.
3. To consider and act upon a management proposal to approve the Senior
Executive Management Incentive Plan.
4. To consider and act upon a shareholder proposal relating to Directors'
pension benefits.
5. To transact such other business as may properly come before the meeting.
Information with respect to the above matters is set forth in the Proxy
Statement which accompanies this Notice.
The Board of Directors has fixed February 27, 1995 as the record date for
determining shareholders entitled to notice of and to vote at the meeting. Only
holders of record at the close of business on that date shall be entitled to
notice of and to vote at the meeting or any adjournment thereof.
A proxy for use at the meeting in the form accompanying this Notice is hereby
solicited on behalf of the Board of Directors of the Company from holders of
Common Stock. IT IS IMPORTANT THAT THE PROXY BE RETURNED REGARDLESS OF THE
NUMBER OF SHARES OWNED. Shareholders may withdraw their proxies at the meeting
should they be present and desire to vote their shares in person, and they may
revoke their proxies for any reason at any time prior to the voting thereof.
IT IS IMPORTANT THAT EVERY SHAREHOLDER BE REPRESENTED AT THE MEETING
REGARDLESS OF THE NUMBER OF SHARES OWNED. TO MINIMIZE EXPENSE ASSOCIATED WITH
COLLECTING PROXIES, PLEASE EXECUTE AND RETURN YOUR PROXY PROMPTLY.
Dated March 2, 1995 By Order of the Board of Directors
Nicholas J. Calise, Secretary
<PAGE> 4
THE BFGOODRICH COMPANY
PROXY STATEMENT
THE ACCOMPANYING PROXY, WHICH MAY BE REVOKED BY THE SHAREHOLDER GIVING IT, IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. The Annual Meeting
of Shareholders of The B.F.Goodrich Company will be held in the Knickerbocker
Suite, on the third floor of The New York Helmsley Hotel, 212 East 42nd Street,
New York, New York on April 17, 1995. All shareholders of record of Common Stock
at the close of business on February 27, 1995 will be entitled to notice of and
to vote at the meeting. There were 25,499,944 shares outstanding on such date,
and each share is entitled to one vote. There are no cumulative voting rights.
All of the shares represented by proxies submitted by such shareholders, and not
revoked by them, will be voted on all matters presented for a vote. Proxies for
shares of Common Stock will also represent shares held under the Company's
Dividend Reinvestment Plan. Proxies will also be considered to be voting
instructions to the Plan Trustee with respect to shares held in accounts under
The B.F.Goodrich Company Retirement Plus Savings Plan and similar plans of
subsidiaries. If participants in any such plan also are shareholders of record
with the same account information, they will receive a single proxy which will
represent all shares. If the account information is different, then the
participants will receive separate proxies. Participants in other Company
employee benefit plans will receive separate proxies. The number printed on the
proxy card reflects the total number of shares represented by that proxy.
The expense of soliciting these proxies will be paid by the Company. In
addition to the use of the mails, proxies may be solicited personally, or by
telephone or by facsimile, by Officers, Directors, and employees of the Company.
The Company will reimburse brokers and others holding shares in their names, or
in the names of nominees, for their expenses in sending proxy material to the
beneficial owners of such shares and obtaining their proxies. The Company has
retained Morrow & Co., 909 Third Avenue, 20th Floor, New York, New York
10022-4799, to assist in the solicitation of proxies from shareholders,
including brokers, custodians, nominees, and fiduciaries, and will pay that firm
fees presently estimated at $10,000 for its services, plus the firm's expenses
and disbursements.
The Annual Report of the Company for 1994, including financial statements, is
being mailed with this proxy statement to each holder of record of the Company's
Common Stock. An additional copy will be furnished to any shareholder upon
request. The approximate date on which this proxy statement and the accompanying
proxy will first be mailed to shareholders is March 2, 1995. The principal
executive offices of the Company are located in Bath Township, Ohio with a
mailing address of 3925 Embassy Parkway, Akron, Ohio 44333-1799.
VOTE REQUIRED FOR APPROVAL
The twelve nominees for director receiving a plurality of the votes cast at
the meeting in person or by proxy shall be elected. All other matters to be
voted upon at the meeting, including the ratification of the appointment of
independent auditors, will be decided by a majority of the votes cast "for" or
"against" approval. Consequently, abstentions and broker non-votes will have no
effect on any matter submitted to a vote at this meeting.
PROPOSALS TO SHAREHOLDERS
1. ELECTION OF DIRECTORS
One of the purposes of the meeting is the election of twelve Directors to hold
office until the next Annual Meeting of Shareholders in 1996 and until their
respective successors are elected and qualified. It is intended that the
accompanying proxy will be voted for the election of the twelve nominees named
on the following pages, all of whom, except Mr. Young, are now Directors and
whose terms expire in April, 1995.
All nominees have indicated that they are willing and able to serve as
Directors if elected. If any nominee should be unable or unwilling to serve, the
proxies will be voted for the election of such person as may be designated by
the Board of Directors to replace such nominee.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THESE NOMINEES FOR
DIRECTOR.
2
<PAGE> 5
NOMINEES FOR ELECTION
JEANETTE GRASSELLI BROWN, age 66 -- Director since April
15, 1991.
DISTINGUISHED VISITING PROFESSOR AND DIRECTOR OF RESEARCH
ENHANCEMENT, OHIO UNIVERSITY. Mrs. Brown is a graduate of
Ohio University, BS, Case Western Reserve University, MS,
and Ohio University, Clarkson, and Michigan Technological
University, DSc (hon.). Mrs. Brown joined the Research
Department of Standard Oil Company of Ohio (now BP America)
in 1950. At her retirement in January, 1989 she was
Director of Corporate Research, Environmental and
Analytical Sciences. She has authored 9 books and over 70
publications in scientific journals. She is the editor of
the international journal Vibrational Spectroscopy. Mrs.
Brown is a director of AGA Gas, Inc., Diatrac Holdings,
Inc. and USX Corp. She is past Chair and currently a
member of the Board of Trustees of Ohio University and is
a member of the Board of Trustees of the Cleveland
Playhouse, Edison Biotechnology Center, Holden Arboretum,
and the Musical Arts Association. She is Chair of the
Board of Trustees of The Cleveland Scholarship Program,
Inc. She is past Chair of the U.S. Committee for the
International Union of Pure and Applied Chemistry, and
she serves on the White House Joint High Level Advisory
Panel on US/Japan Science and Technology Agreements.
GEORGE A. DAVIDSON, JR., age 56 -- Director since April 15,
1991.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF CONSOLIDATED
NATURAL GAS COMPANY, a natural gas holding company. Mr.
Davidson is a graduate of the University of Pittsburgh with
a degree in petroleum engineering. He has been associated
with Consolidated Natural Gas since 1966. He became Vice
Chairman of Consolidated Natural Gas in October 1985 and
served in that position until January 1987, when he assumed
the additional responsibility of Chief Operating Officer.
In May 1987 Mr. Davidson became Chairman and Chief
Executive Officer. Mr. Davidson is a director of
Consolidated Natural Gas Company and PNC Bank Corp. He
serves on the National Petroleum Council, the Allegheny
Conference on Community Development, the Pittsburgh
Foundation, is Vice Chairman of the American Gas
Association and Vice Chairman of the Pittsburgh Trust for
Cultural Resources. Mr. Davidson is a Trustee of the
University of Pittsburgh and is the Chairman Emeritus of
the Pittsburgh Civic Light Opera Board.
JAMES J. GLASSER, age 60 -- Director since April 15, 1985.
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF GATX
CORPORATION, a transportation, storage, leasing and
financial services company. Mr. Glasser holds a bachelor of
arts degree from Yale University and a doctor of
jurisprudence degree from Harvard Law School. He joined
GATX Corporation in 1961 and served in various executive
capacities becoming President in 1974 and Chairman of the
Board and Chief Executive Officer in 1978. He is a Director
of Bank of Montreal, GATX Corporation, Harris Bankcorp,
Inc., Harris Trust and Savings Bank, Mutual Trust Life
Insurance Co. and Stone Container Corporation. Mr. Glasser
is also a Director of the Chicago Association of Commerce
& Industry, Chicago Central Area Committee, Lake Forest
Hospital, National Merit Scholarship Corporation,
Northwestern Memorial Corporation, Voices for Illinois
Children and a Trustee of Better Government Association,
Chicago Zoological Society and the University of Chicago.
3
<PAGE> 6
NOMINEES FOR ELECTION
THOMAS H. O'LEARY, age 60 -- Director since April 18, 1988.
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, BURLINGTON
RESOURCES INC., an oil and gas exploration and production
company. Mr. O'Leary received an undergraduate degree from
Holy Cross College in 1954 and an MBA degree from Wharton
School of Finance in 1961. In 1982 Mr. O'Leary joined
Burlington Northern Inc. as Vice Chairman of the Board, in
1989 he became President and Chief Executive Officer of
Burlington Resources Inc., in 1990 he assumed the
additional title of Chairman and in 1992 he assumed his
present title. Mr. O'Leary is a Director of Burlington
Resources Inc. and The Kroger Co.
JOHN D. ONG, age 61 -- Director since June 18, 1973.
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, THE BFGOODRICH COMPANY. Mr. Ong received his B.A.
and M.A. degrees from Ohio State University and his LL.B.
degree from Harvard Law School. He joined The BFGoodrich
Company in 1961 as assistant counsel. Mr. Ong progressed
through a number of business positions. He was elected
Executive Vice President and a Director in June, 1973, Vice
Chairman of the Board in April, 1974, President in April,
1975, and became Chairman of the Board and Chief Executive
Officer on July 1, 1979. In July 1994 he assumed the
additional position of President. Mr. Ong is a Director of
Ameritech Corporation, ASARCO, Incorporated, Cooper
Industries, Inc., The Geon Company and The Kroger Co. In
addition, he is a senior member of The Conference Board and
a member of The Business Council and The Business
Roundtable and a Director of the Chemical Manufacturers
Association. Mr. Ong is also a Trustee of the University of
Chicago and Western Reserve Academy.
JOSEPH A. PICHLER, age 55 -- Director since September 1,
1988.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, THE KROGER CO., a
retail food company. Mr. Pichler is a magna cum laude
graduate of Notre Dame University and has an M.B.A. and a
Ph.D. from the University of Chicago. He joined Dillon
Companies, Inc. in 1980 and was elected President of Dillon
in 1982. He was elected to the Board of Directors of Kroger
when Dillon became part of Kroger in January, 1983. He was
elected President and Chief Operating Officer in October,
1986, Chief Executive Officer in June, 1990 and Chairman in
September, 1990. Mr. Pichler served for six years as Dean
of the School of Business at the University of Kansas.
Mr. Pichler is a director of The Kroger Co. He is a member
of the Board of Directors of Boys Hope and serves on the
Advisory Board of Tougaloo College in Tougaloo, Mississippi
and the Cincinnati Chapter of The Salvation Army. He is a
Board Member of the Cincinnati Opera and the Salvation Army
School for Officer Training.
4
<PAGE> 7
NOMINEES FOR ELECTION
ALFRED M. RANKIN, JR., age 53 -- Director since April 18,
1988.
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF NACCO
INDUSTRIES, INC., a holding company with interests in the
mining and marketing of lignite, manufacturing and
marketing of forklift trucks, and the manufacturing and
marketing of small household electric appliances. Mr.
Rankin holds a Bachelor of Arts degree in economics from
Yale University, and a juris doctor degree from the Yale
Law School. He joined NACCO Industries in February, 1989 as
President and Chief Operating Officer and became President
and Chief Executive Officer in May, 1991. He assumed the
additional title of Chairman in May 1994. Previously, Mr.
Rankin served in a number of management positions with
Eaton Corporation, with the most recent being Vice
Chairman and Chief Operating Officer from April, 1986 to
February, 1989. He is a director of NACCO Industries,
Inc., The Standard Products Company and The Vanguard
Group. He is Chairperson of the Distribution Committee of
The Cleveland Foundation. He is also a trustee of
Cleveland Tomorrow, the Cleveland Museum of Art, the
Musical Arts Association and University Hospitals of
Cleveland.
IAN M. ROSS, age 67 -- Director since March 1, 1983.
PRESIDENT EMERITUS OF AT&T BELL LABORATORIES, the research
and development subsidiary of AT&T. A native of Southport,
England, Dr. Ross received his B.A., M.A. and Ph.D. degrees
in electrical engineering from Cambridge University,
England. He joined AT&T Bell Laboratories in 1952 and has
held a number of positions with that corporation and its
affiliates. He was named President in 1979 and President
Emeritus in July, 1991. Dr. Ross is a director of Thomas &
Betts Corporation. He is also a member of the National
Science Board and the Board of Trustees of the Foundation
of the University of Medicine and Dentistry of New Jersey.
D. LEE TOBLER, age 61 -- Director since April 18, 1988.
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, THE
BFGOODRICH COMPANY. Mr. Tobler received a bachelor of arts
degree in finance and economics from Brigham Young
University in 1957 and a master in business administration
degree from Northwestern University in 1958. In 1981 Mr.
Tobler joined Zapata Corporation as Group Vice President,
Chief Administrative and Financial Officer, where he served
until he assumed his present position as of January 1,
1985. Mr. Tobler is not a director of any other public
company. Mr. Tobler is Chairman and Trustee of the Akron
Regional Development Board, and a Trustee of the Ohio
Ballet.
WILLIAM L. WALLACE, age 60 -- Director since April 16,
1990.
CHAIRMAN, LIQUID CARBONIC INC., a manufacturer and
distributor of compressed industrial gases and related
products. After graduating from the University of Toronto
in 1956 with a B.A.Sc. degree in Metallurgical Engineering,
Mr. Wallace joined Dofasco Inc. and held a number of
positions including Executive Vice President and Chief
Operating Officer in 1987; President and Chief Operating
Officer in 1990 and President and Chief Executive Officer
from 1991 to 1992. He joined Liquid Carbonic Inc. in
December 1992 to become Chairman. Mr. Wallace is a Director
of Liquid Carbonic Inc., Fuji Bank Canada, Woodbridge Foam
Corporation, the Art Gallery of Hamilton and the Canadian
Chamber of Commerce. He is a Governor of the YMCA and
Stratford Shakespearean Festival Foundation of Canada. He
is a past chair and current member of the Ontario Business
Advisory Council.
5
<PAGE> 8
JOHN L. WEINBERG, age 70 -- Director since May 15, 1962.
SENIOR CHAIRMAN, GOLDMAN, SACHS & CO., investment bankers.
Mr. Weinberg, born in New York, was graduated from
Princeton University and the Harvard Graduate School of
Business Administration. He served as an officer in the
United States Marine Corps from 1942 to 1946 and in 1951
and 1952. Mr. Weinberg has been associated with Goldman,
Sachs & Co. since 1950, became a Partner in that firm in
1956, Senior Partner and Co-Chairman of the Management
Committee in 1976, and Senior Partner and Chairman of the
Management Committee in 1984. On December 1, 1990, he
retired as a general partner and became Senior Chairman of
The Goldman Sachs Group, L.P. of which Goldman,
Sachs & Co. is its principal affiliate. Mr. Weinberg
assumed his current title in July, 1991. He is also a
Director of Capital Holding Corporation, Champion
International Corporation, E.I. duPont de Nemours and
Company, Knight-Ridder Inc., and The Seagram Company Ltd.
He is a member of the Board of Governors and member of the
Executive Committee of The New York Hospital -- Cornell
Medical Center, a member of the Council on Foreign
Relations, and a member of The Conference Board, The
Business Council and a Charter Trustee, Princeton
University.
A. THOMAS YOUNG, age 56 -- Nominee for Director.
PRESIDENT AND CHIEF OPERATING OFFICER, MARTIN MARIETTA
CORPORATION, an aerospace and defense company. Mr. Young is
a graduate of the University of Virginia with bachelor
degrees in aeronautical engineering and mechanical
engineering, and of the Massachusetts Institute of
Technology with a master's degree in management. Mr. Young
was with the National Aeronautics and Space Administration
from 1961 to 1982, serving in a number of management
positions including Mission Director of the Project Viking
Mars landing program and Director of the Goddard Space
Flight Center. In 1982 he joined Martin Marietta as Vice
President of Aerospace Research and Engineering, later
became Senior Vice President and President of Martin
Marietta Electronics & Missiles Group and Executive Vice
President. He assumed his current position in January
1990. Mr. Young is a director of Cooper Industries, Inc.,
Dial Corporation and Martin Marietta Corporation. He is a
director of the Virginia Engineering Foundation of the
University of Virginia's School of Engineering and Applied
Science. Mr. Young is also a Fellow of the American
Astronautical Society, the American Institute of
Aeronautics and Astronautics, Chairman of the Business
Committee for the Arts and a member of the National
Academy of Engineering.
6
<PAGE> 9
OTHER NOMINEES
Under provisions of the Company's By-Laws any shareholder of the Company
entitled to vote for the election of directors may make nominations for director
if such shareholder provides written notice to, and such notice is received by,
the Secretary of the Company generally not less than 60 nor more than 90 days
prior to the first anniversary of the preceding year's annual meeting.
Consequently such notice must be received between January 18 and February 17,
1995. Such notice shall give the name, age, principal occupation or employment
of each proposed nominee and a brief description of any arrangement or
understanding between such person and others pursuant to which he was selected
as a nominee, as well as any other information required by the proxy
regulations promulgated by the Securities and Exchange Commission. The
notice shall include the proposed nominee's written consent to serve as a
director if elected. The notice shall also provide (i) the name and address of
the shareholder proposing the nominee as well as any other shareholders believed
to be supporting such nominees, and (ii) the number of shares of each class of
stock of the Company owned by such shareholders. No person is eligible for
election as a director unless nominated in accordance with the procedures
contained in the By-Laws. See Appendix A for the full text of the relevant
section of the By-Laws. The Company has not received any notice of additional
nominees for director.
TRANSACTIONS WITH DIRECTORS
John L. Weinberg, a Director of the Company, is the Senior Chairman and a
retired general partner of Goldman, Sachs & Co., an investment banking firm that
regularly performs services for the Company such as acting as financial advisor
and serving as principal or agent for the Company in the purchase and sale of
securities.
7
<PAGE> 10
HOLDINGS OF COMPANY EQUITY SECURITIES BY DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
The table below sets forth information with respect to the number of shares of
the Company's Common Stock beneficially owned by Directors and Officers of the
Company as of January 31, 1995.
<CAPTION>
AMOUNT AS TO WHICH
THERE IS
AMOUNT AND ----------------------
NATURE OF PERCENT SOLE SOLE
BENEFICIAL OF VOTING INVESTMENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS POWER POWER
- - -------------------------- ---------------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Jeanette Grasselli Brown 1,000 Direct * 1,000 1,000
David L. Burner 65,486 Direct * 65,486 57,611
George A. Davidson, Jr. 1,500 Direct * 1,500 1,500
James J. Glasser 1,000 Direct * 1,000 1,000
Jon V. Heider 69,494 Direct * 69,494 61,994
John N. Lauer 96,037 Direct * 94,537 80,537
1,500 Indirect
Thomas H. O'Leary 200 Direct * 200 200
John D. Ong 288,134 Direct 1.1% 287,984 261,309
150 Indirect
Joseph A. Pichler 500 Direct * 500 500
Alfred M. Rankin, Jr. 500 Direct * 500 500
Ian M. Ross 500 Direct * 500 500
Wayne O. Smith 23,000 Direct * 23,000 23,000
D. Lee Tobler 102,425 Direct * 102,425 93,825
William L. Wallace 2,050 Indirect *
John L. Weinberg 1,000 Direct * 1,000 1,000
A. Thomas Young 500 Direct * 500 500
20 Directors and Officers 792,001 Direct 3.0% 792,001 717,926
as a Group 3,700 Indirect
<FN>
* Less than 1%.
(1) Includes the approximate number of shares credited to the individuals'
accounts in the Company's Retirement Plus Savings Plan and a similar subsidiary
plan as of January 31, 1995, the Company's matching portion of which is subject
to vesting requirements. Includes shares not presently owned by the individuals
but which are subject to Key Employees' Stock Options exercisable within sixty
days as follows: John D. Ong, 182,000 shares; J. N. Lauer, 75,000 shares; D. Lee
Tobler, 82,500 shares; and 20 Directors and Officers as a group, 571,800 shares.
Executive officers have voting power but no investment power with respect to
Performance Shares contingently awarded to them under the Company's Long-Term
Incentive Plan.
</TABLE>
8
<PAGE> 11
BENEFICIAL OWNERSHIP OF SECURITIES
<TABLE>
The table below sets forth information known to the Company with respect to
persons who are the beneficial owner of more than 5% of the Company's Common
Stock as of December 31, 1994. The shares are directly owned except that the
shares in the Company's benefit plans are held of record, but not beneficially,
by the Plan's Trustee.
<CAPTION>
NAME AND ADDRESS
OF BENEFICIAL OWNER AMOUNT PERCENT OF CLASS
------------------------------------------ ---------- ----------------
<S> <C> <C>
State Street Bank and Trust Company,
Trustee
225 Franklin Street
Boston, MA 02110
The B.F.Goodrich Company Retirement 2,423,497 9.4%
Plus Savings Plan and other
Company plans(1)
Other(2) 902,059 3.5
The Capital Group Companies, Inc.(3) 2,092,700 8.1
333 South Hope Street
Los Angeles, CA 90071
Manning & Napier Advisors, Inc.(4) 1,745,210 6.8
1100 Chase Square
Rochester, NY 14604
Equinox Capital Management, Inc.(5) 1,634,890 6.3
399 Park Avenue
New York, NY 10022
<FN>
(1) Participants have voting rights; Trustee is to vote shares for which it does
not receive any voting instructions in the same ratio as shares as to which
it does receive voting instructions.
(2) Has sole voting power as to 171,395 shares, shared voting power as to
594,843 shares, sole dispositive power as to 306,636 shares and shared
dispositive power as to 595,423 shares.
(3) Has sole voting power as to 381,900 shares and sole dispositive power as to
2,092,700 shares.
(4) Has sole voting power as to 1,682,035 shares and sole dispositive power as
to 1,745,210 shares.
(5) Has sole investment discretion as to all shares, sole voting power as to
741,760 shares and shared voting power as to 893,130 shares.
</TABLE>
COMPENSATION COMMITTEE REPORT
EXECUTIVE COMPENSATION PHILOSOPHY
The Compensation Committee and the Company are committed to the philosophy
that pay should be linked to Company performance so that the interests of
executives are aligned with the interests of shareholders. This philosophy is
supported by the following guiding principles for the Company's compensation
programs:
- A significant portion of pay will be dependent on the Company's annual
and long-term performance including creation of shareholder value.
9
<PAGE> 12
- To the degree possible, compensation programs will be designed to use
stock-based incentives in order to link shareholder and executive
interests and to encourage stock ownership by executives.
- A greater percentage of total compensation will be performance-based and
variable (versus fixed compensation) than competitive practices might
suggest.
- Total cash compensation is to be above the median and nearing the 75th
percentile of major industrial companies when the variable compensation
elements are earned and be substantially below the median when the
variable compensation elements are not earned. The Company intends to
provide total compensation commensurate with performance -- when there is
good performance, compensation levels will compare favorably with other
companies, and when performance is below expectations, compensation
levels will be below the average of other companies.
The Company's compensation program consists of three elements: annual base
salary, annual cash bonus incentive compensation and long-term incentives. To
assist it in performing its duties, the Committee meets periodically with
compensation consultants.
SURVEY DATA
The Compensation Committee establishes compensation programs, in part, on the
basis of competitive factors. It considers both broad-based surveys of large
industrial companies and industry-specific surveys. The principal broad-based
surveys relied upon include three nationally recognized surveys covering more
than 1,400 U.S. companies.
The principal industry-specific survey utilized is that of selected aerospace
and chemical companies, which the Committee has used for a number of years.
There is some overlap between the different survey groups. No separate survey
is constructed that includes only those companies comprising the different
indices used in the stock price performance graph, although some of those
companies are contained in the other surveys. The requirement for other
companies to be included in a performance graph was established by the
Securities and Exchange Commission many years after the Committee was
considering compensation data from other companies. The Committee believes it is
simpler to use a published industry index than to create its own index for
purposes of the performance graph. The same surveys are used in determining
competitive levels of base salary as well as various forms of incentive
compensation.
The Committee has established the target level for long-term incentive
compensation to be approximately 110% of the survey data median when the Company
achieves its financial goals. The Committee established guidelines for long-term
compensation to achieve this target range a number of years ago, and will
periodically reevaluate the guidelines. The long-term incentive guidelines used
in 1994 would result in long-term incentive compensation achieving approximately
85% of the median survey data if the Company achieved its financial goals.
BASE SALARY
The Company's base salary policy is intended to insure that compensation
practices are competitive within relevant industries and with major industrial
companies. The Compensation Committee's current view is that the middle of the
salary range for BFG executives should be at about the median base salary
10
<PAGE> 13
of comparable industrial companies. The Compensation Committee establishes the
annual base salary for Company officers at the level of executive vice president
or higher and approves salary midpoint levels and percentage increases in those
levels for other executive positions in the Company. The salary range for each
position is from 20% below the midpoint to 20% above the midpoint.
INCENTIVE COMPENSATION
Incentive compensation is intended to motivate and retain qualified
individuals who have the opportunity to influence Company results significantly
and enhance shareholder value. The philosophy for incentive compensation plans
is to provide awards when financial objectives are achieved and provide reduced
or no awards when the objectives are not achieved. Incentive compensation
programs are divided into two types -- annual cash bonus and long-term incentive
compensation. Generally speaking, the higher an individual's level within the
Company, the greater the percentage of his or her potential total compensation
is represented by incentive compensation.
ANNUAL INCENTIVE COMPENSATION
An individual's annual cash bonus target is expressed as a percentage of his
or her salary range midpoint, with the percentages of salary midpoint increasing
with the level of the job. A total target incentive pool is created for each
major business segment and for designated groups or divisions within each
segment. The total target incentive pools are further divided into financial
performance pools and pools based on performance against specific strategic and
operational objectives approved by the Compensation Committee. For 1994, the
financial pools were weighted at 80% and the strategic/operational pools were
weighted at 20% of the target. Incentive payments can range from 50% of the
target amount when the threshold financial objective (75% of target in 1994) is
achieved, to a maximum of 150% of the target when the maximum financial
objective (125% of target in 1994) is achieved. If a minimum financial
performance is not achieved, no bonus will be paid.
In 1994 corporate staff financial goals were based upon net income and return
on equity. Operating unit financial goals were based upon segment operating
income, operating income return on net capital employed (OIRONCE) and cash flow.
Individual awards are made based upon individual performance within a range
established with reference to achievement of financial and strategic goals.
1994 RESULTS
The corporate staff achieved 131% of their financial and strategic goals. The
operating segments achieved 99% and 111% of their respective goals. The actual
payout for the corporate staff averaged 115% of the target bonus and for the
operating segments averaged 90% of target.
The strategic goals for the corporate staff related to the implementation of
corporate plans, acquisitions and divestitures and improvement of corporate
organization. The strategic goals for the operating segments included specific
objectives relating to product development, productivity improvement, market
share and organizational goals.
LONG-TERM INCENTIVE COMPENSATION
Currently, long-term incentive compensation at the Company consists of a
performance-related plan based on a three-year measuring cycle and stock
options.
11
<PAGE> 14
In 1992, the Compensation Committee adopted the Long-Term Incentive Plan,
which is based on the Performance Share Plan and the Stock Option Plan, and made
awards of Restricted Stock and Performance Shares (as of December 31, 1994,
there were 48 participants). The participants who were still employed by the
Company on December 31, 1994, became vested in the Restricted Stock. At that
time, generally the individual received 50% of the shares awarded and the
remaining 50% were withheld to satisfy income tax withholding requirements. The
shares of Restricted Stock actually received are restricted from further sale
for an additional two years.
The Committee established performance objectives over the three-year plan
cycle when it awarded the Performance Shares in 1992. The recipient would only
be entitled to retain shares at the end of the plan cycle if the threshold
performance standard is met. The number of shares to be received free of further
restrictions could have ranged from 50% to 150% of the original Performance
Share award depending on the level of attainment of financial objectives.
Currently the Committee only makes awards once every three years. No awards
were made to existing participants in 1993 or 1994. Guidelines establish a range
of awards for Restricted Stock and Performance Shares depending upon the
individual's position level within the Company -- the higher the position level
the greater the award range. The determination of whether to make an award and
the amount of the award within the range is dependent upon the individual's past
performance and expectations of future performance.
The performance objectives for the 1992 awards for the senior corporate
executives and corporate staff employees were dependent upon the three-year
average total Company return on equity. The performance objectives for operating
segment and significant subsidiary presidents was based one-half on total
Company performance measured as an average return on equity and one-half related
to the operating segment or subsidiary performance expressed as average
operating income return on net capital employed (OIRONCE) for the three-year
period. Other participants within the operating segment and subsidiaries had
their awards based solely on the average OIRONCE for their respective segment or
subsidiary.
In 1993 the Committee eliminated the effect of an accounting change and
increased the Company return on equity goal for Performance Shares because the
Company adopted the Statement of Financial Accounting Standard No. 106 relating
to postretirement benefits other than pensions by electing to recognize a $286.5
million after tax charge in 1992. This action was not contemplated when the goal
was established. The Committee felt the upward adjustment was appropriate
because the adoption of the accounting standard significantly reduced the
Company's shareholders equity and as a result the same level of income would
have a higher percentage return on equity. The upward adjustment was to the
level that would have been established had the adoption been expected.
Corporate staff participants received 71% and operating segment participants
received between 0% and 108.7% of their Performance Share awards. The remaining
shares were forfeited to the Company. A sufficient number of shares were
withheld to satisfy income tax withholding requirements. The shares, which were
actually delivered to the individuals in February, 1995, are free from further
restrictions.
The Stock Option Plan is administered by the Compensation Committee. The Plan
provides that options may not be granted at less than 100% of fair market value.
The Committee has established a range of awards for individuals based upon their
position level within the Company -- the higher the position level, the greater
the award range. The actual award is dependent upon the individual's past
12
<PAGE> 15
performance and expectation of future performance. In 1994, the Committee
granted stock options to 157 executives.
With respect to the Executive Vice Presidents, the Committee considers the
recommendation of the Chief Executive Officer in determining the level of awards
of long-term incentive compensation. It also considers its own impression of the
individuals since the members have ample opportunity to observe their
performance. With respect to other executives who receive long-term incentive
compensation, the Committee makes the determination of the appropriate ranges of
awards, but generally considers the recommendation of management in making the
specific award within the established range. The Committee has available
information as to the level of past awards and individual stock ownership of the
executive officers. The factors considered in making the awards for the Chief
Executive Officer are discussed below.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
The Omnibus Budget Reconciliation Act of 1993 established a disallowance of
deductions for tax purposes for certain employee remuneration in excess of $1
million per year beginning in 1994. Under the Internal Revenue Service
regulations, the Company believes all awards under the Company's existing
long-term incentive plans (Stock Option Plan and Long-Term Incentive Plan) made
prior to the Annual Meeting of Shareholders in April 1997 will be exempt from
the non-deductibility provision of the law.
In 1994, the only compensation which may be subject to the law is base
compensation, which always will be subject to the non-deductibility provision,
and the Management Incentive Program. Incentive compensation can be exempt from
the limitation if it is subject to specified performance criteria and is
approved by shareholders. The Committee believed that it did not have adequate
time to evaluate the proposed regulations when they were issued and consider
alternative plan designs which would have complied with the proposed regulations
and still meet the goals of the Company's compensation philosophy in sufficient
time to submit the plan for shareholder approval for 1994. Mr. Ong is the only
individual who exceeded the non-deductibility limits in 1994.
The Compensation Committee believes the Company should attempt to comply with
the provisions of the law with respect to incentive compensation so that
incentive compensation which may be awarded for 1995 and later will be
deductible for tax purposes. Consequently the Committee recommended to the Board
of Directors and the Board of Directors approved the adoption of a new Senior
Executive Management Incentive Plan, subject to approval of the shareholders,
which is intended to meet the deductibility requirements. See Proposal Number 3,
Senior Executive Management Incentive Plan, for a description of its provisions.
CHIEF EXECUTIVE OFFICER
In determining the base salary established for John D. Ong, the Chief
Executive Officer, the Compensation Committee took into account surveys of base
compensation of chief executive officers of other major industrial companies. It
also considered Mr. Ong's leadership and key contributions to the overall
financial performance of the Company, and its progress towards achieving
important strategic objectives. Mr. Ong's salary midpoint is equal to the median
of the survey data while his actual salary is 105% of the median. Mr. Ong's
objectives were the same as the corporate staff objectives.
13
<PAGE> 16
With respect to the 1994 Management Incentive Program, Mr. Ong's award was
determined in the same manner as described above for all other corporate staff
participants. The Committee considered the achievement of the Company's
financial objectives as well as Mr. Ong's contribution to the implementation of
corporate plans, acquisitions and divestitures and improvement of the
organization. He received an award of $650,000, or 124.7% of his target award.
In 1994, Mr. Ong received options to purchase 17,500 shares, the same amount
of options he has received in the last six years. The same factors the Committee
used to evaluate Mr. Ong's base compensation were used to determine the number
of stock options to be awarded. As noted above, the Company's Long-Term
Incentive Plan is intended to make awards every three years. Since an award was
made to Mr. Ong in 1992, no award was made to him in 1993 and 1994. Mr. Ong
received a distribution of Restricted Stock and Performance Shares in the same
manner as other participants, as described above.
The Compensation Committee compares the total long-term incentive compensation
with total long-term incentive compensation from the survey data. The
Committee's target is to have total long-term incentive compensation equal 110%
of the median of the survey data when the Company achieves its financial
objectives. The guidelines for long-term incentive data are reviewed
periodically. In 1994, Mr. Ong's aggregate long-term incentive compensation
would have equaled approximately 90% of the median of the survey data if the
Company's financial goals were achieved.
The Compensation Committee
Ian M. Ross, Chairman
Alfred M. Rankin, Jr., Vice Chairman
George A. Davidson, Jr.
Thomas H. O'Leary
William L. Wallace
14
<PAGE> 17
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------- -----------------------------------------
AWARDS PAYOUTS
-------------------------- ------------
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL COMPENSATION RESTRICTED STOCK OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($) AWARDS($)(1) SARS(#) $(2) ($)(3)
- - ------------------ ----- ---------- --------- ------------ ---------------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John D. Ong, 1994 750,000 650,000 103,794 -0- 17,500 840,463 68,760
Chairman, 1993 737,000 643,500 106,835 -0- 17,500 -0- 51,314
President 1992 715,000 205,000 67,886 726,213 17,500 -0- 42,691
and Chief
Executive Officer
John N. Lauer,(4) 1994 505,050 300,000 61,315 -0- 12,500 441,088 46,794
President and 1993 487,000 443,500 66,014 -0- 12,500 -0- 36,883
Chief Operating 1992 462,000 140,000 44,866 381,500 12,000 -0- 27,593
Officer
D. Lee Tobler, 1994 379,000 245,000 43,591 -0- 8,000 270,954 31,524
Executive Vice 1993 361,000 237,900 42,858 -0- 8,000 -0- 26,760
President and 1992 350,000 85,000 26,631 234,350 8,000 -0- 19,339
Chief Financial
Officer
David L. Burner, 1994 325,000 215,000 33,862 -0- 6,000 124,073 30,000
Executive Vice 1993 285,000 175,000 32,115 -0- 5,000 -0- 25,663
President and 1992 255,000 160,000 20,479 126,000 5,000 -0- 24,600
President,
BFGoodrich
Aerospace
Jon V. Heider, 1994 295,917 170,000 44,747 -0- 5,000 236,297 23,911
Executive Vice 1993 283,167 166,700 38,503 -0- 5,000 -0- 19,518
President and 1992 274,000 50,000 24,929 120,000 5,000 -0- 16,440
General Counsel
Wayne O. Smith, 1994 225,000 190,000 8,040 -0- 5,000 -0- 212,500
Executive Vice 1993 -0- -0- -0- -0- -0- -0- -0-
President 1992 -0- -0- -0- -0- -0- -0- -0-
and President,
BFGoodrich
Specialty
Chemicals
<FN>
(1) Restricted Stock awarded in 1992 vested on December 31, 1994; provided,
however, 50% of the shares awarded may not be sold for an additional two-year
period. The remaining 50% of the shares were withheld to satisfy withholding tax
obligations. Mr. Lauer's shares are not subject to further restrictions. Mr.
Smith's Restricted Stock award will vest April 1, 1997. Dividends were paid on
these shares at the same rate as paid to all other shareholders. As of December
31, 1994, the number of shares of Restricted Stock and Performance Shares
contingently awarded under the Company's Long-Term Incentive Plan and the market
value of that number of shares, respectively, were as follows: J. D. Ong, 26,675
and $1,157,028; J. N. Lauer, 14,000 and $607,250; D. L. Tobler, 8,600 and
$373,025; D. L. Burner, 7,875 and $341,578; J. V. Heider, 7,500 and $325,313;
and W. O. Smith, 5,000 and $216,875.
(2) The Compensation Committee eliminated the effect of the adoption of
Statement of Financial Accounting Standard No. 106 relating to post retirement
benefits other than pensions and increased the return on equity goal for the
Performance Shares under the Long-Term Incentive Plan. The adoption of the
standard resulted in a $286.5 million after tax charge which reduced the
Company's shareholders equity, and as a result the same level of income would
produce a higher percentage return on equity.
15
<PAGE> 18
(3) Mr. Smith received a special hiring bonus of $212,500 in April 1994, in the
form of 5,000 shares of Restricted Stock, which shares will become fully vested
and free of restrictions if he remains in the employ of the Company until April
1, 1997. Of the remaining amounts, $9,000 represents the Company's contribution
to the Retirement Plus Savings Plan, a tax-qualified defined contribution plan,
and the balance represents Company contributions to a benefit restoration plan
with respect to amounts in excess of the amount permitted to be contributed
under the tax-qualified plan.
(4) Mr. Lauer resigned as President, Chief Operating Officer and a Director
effective July 18, 1994. Under the terms of a separation agreement, he continued
as an employee with full compensation and benefits through December 30, 1994 and
retired effective January 1, 1995. He will receive separation payments of
approximately $508,000 in 1995. During 1996 Mr. Lauer will receive separation
payments at the annualized rate of $507,000 until he commences new employment.
If his new employment has an annualized base salary of less than $507,000, he
will receive the difference between his new base salary and $507,000. Mr.
Lauer's pension benefits will be calculated as if he had eight years of service
with the Company. He will be eligible for retiree medical benefits and certain
executive benefits through 1996.
</TABLE>
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
ASSUMED
<CAPTION> ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
----------------------------------------------------- ------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION
NAME (# OF SHARES) YEAR ($/SH) DATE 0% ($) 5% ($) 10% ($)
- - ------------------- ------------- ------------ ----------- ---------- ------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. D. Ong 17,500 7.7% $ 40.00 1/2/04 -0- $440,300 $1,115,800
J. N. Lauer 12,500 5.5 40.00 1/2/04 -0- 314,500 797,000
D. L. Tobler 8,000 3.5 40.00 1/2/04 -0- 201,280 510,080
D. L. Burner 6,000 2.7 40.00 1/2/04 -0- 150,960 382,560
J. V. Heider 5,000 2.2 40.00 1/2/04 -0- 125,800 318,800
W. O. Smith 5,000 2.2 42.625 4/4/04 -0- 134,050 339,650
All Shareholders N/A N/A N/A N/A -0- 648,880,325 1,644,380,346
All Optionees 226,150 100 40.00 1/2/04 -0- 5,698,184 14,440,174
Optionee Gain
as % of all
Shareholder Gain N/A N/A N/A N/A N/A 0.9% 0.9%
</TABLE>
The dollar amounts under the potential realizable value column are the result
of calculations of assumed annual compound rates of appreciation over the
ten-year life of the options in accordance with the proxy regulations of the
Securities and Exchange Commission and are not intended to forecast possible
future appreciation, if any, of the Company's common stock. The actual value, if
any, an executive may realize will depend on the excess of the market price of
the shares over the exercise price on the date the option is exercised. The
Company did not use an alternative formula for a grant date valuation, as the
Company is not aware of any formula which will determine with reasonable
accuracy a present value based on future unknown or volatile factors. No stock
appreciation rights (SARs) were attached to these options. The options granted
to the named individuals were immediately exercisable and were granted with
limited stock appreciation rights which generally entitle the optionee to elect
to receive the appreciation on the option in cash for a 60 day period following
a "change in control", as defined under "Management Continuity Agreements".
16
<PAGE> 19
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END AT FY-END
(# OF SHARES) ($)
------------------ ------------------
SHARES ACQUIRED ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
- - ----------------------- -------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
J. D. Ong -0- -0- 151,000/-0- 206,720/-0-
J. N. Lauer -0- -0- 75,000/-0- 131,438/-0-
D. L. Tobler 5,000 76,250 69,500/-0- 162,875/-0-
D. L. Burner -0- -0- 39,600/-0- 61,569/-0-
J. V. Heider -0- -0- 38,000/-0- 57,188/-0-
W. O. Smith -0- -0- 5,000/-0- 3,750/-0-
</TABLE>
RETIREMENT PENSIONS
The Company has in effect a pension plan for salaried employees which provides
pensions payable at retirement to each eligible employee. The plan makes
available a pension which is paid from funds provided through contributions by
the Company and contributions by the employee, if any, made prior to 1972. The
plan is not available to Directors other than those who are employees. The
amount of an employee's pension depends on a number of factors including Final
Average Earnings ("FAE") and years of credited service to the Company. The
following chart shows the annual pension amounts currently available to
employees who retire with the combinations of FAE and years of credited service
shown in the chart, which should be read in conjunction with the notes following
the chart. As of January 1, 1989 the plan generally provides a benefit of 1.15%
of FAE times all years of pension credit plus 0.45% of FAE in excess of covered
compensation times years of pension credit up to 35 years. In addition employees
hired prior to January 1, 1990, will receive an additional pension credit of up
to 4 years up to a maximum of 24 years of pension credit. Benefits become vested
after 5 years of service.
17
<PAGE> 20
PENSION PLAN TABLE
<TABLE>
<CAPTION>
FINAL YEARS OF BENEFIT SERVICE
AVERAGE ------------------------------------------------------------------------
EARNINGS 10 20 25 30 35 40
- - ---------- -------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
100,000 14,834 29,667 37,084 44,501 51,918 57,668
150,000 22,834 45,667 57,084 68,501 79,918 88,542
200,000 30,834 61,667 77,084 92,501 107,918 119,418
250,000 38,834 77,667 97,084 116,501 135,918 150,293
300,000 46,834 93,667 117,084 140,501 163,918 181,168
350,000 54,834 109,667 137,084 164,501 191,918 212,043
400,000 62,834 125,667 157,084 188,501 219,918 242,917
450,000 70,834 141,667 177,084 212,501 247,918 273,793
500,000 78,834 157,667 197,084 236,501 275,918 304,668
600,000 94,834 189,667 237,084 284,501 331,918 366,418
700,000 110,834 221,667 277,084 332,501 387,918 428,168
800,000 126,834 253,667 317,084 380,501 443,918 489,918
900,000 142,834 285,667 357,084 428,501 499,918 551,668
1,000,000 158,834 317,667 397,084 476,501 555,918 613,418
1,100,000 174,834 349,667 437,084 524,501 611,918 675,168
1,200,000 190,834 381,667 477,084 572,501 667,918 736,918
1,300,000 206,834 413,667 517,084 620,501 723,918 798,668
1,400,000 222,834 445,667 557,084 668,501 779,918 860,418
1,500,000 238,834 477,667 597,084 716,501 835,918 922,168
1,600,000 254,834 509,667 637,084 764,501 891,918 983,918
1,700,000 270,834 541,667 677,084 812,501 947,918 1,045,668
1,800,000 286,834 573,667 717,084 860,501 1,003,918 1,107,418
</TABLE>
(1) The pension plan uses either a "final average earnings" formula or a
"service credit" formula to compute the amount of an employee's pension,
applying the formula which produces the higher amount. The above chart was
prepared using the FAE formula, since the service credit formula would produce
lower amounts than those shown. Under the FAE formula, a pension is based on the
highest four consecutive calendar years of an employees' earnings. Earnings
include salary, overtime pay, holiday pay, vacation pay and certain incentive
payments including annual cash bonuses, but excludes awards under long-term
incentive programs and the Company match in the Company savings plans. For the
named executive officers, only the amounts shown in the Summary Compensation
Table as Salary and Bonus under Annual Compensation constitute FAE. As of
December 31, 1994, final average earnings for the individuals named in the
Summary Compensation Table were as follows: J. D. Ong, $1,020,125; J. N. Lauer,
$617,138; D. L. Tobler, $472,475; D. L. Burner, $433,775; J. V. Heider,
$354,946; and W. O. Smith, $300,000.
(2) In computing the pension amounts shown, it was assumed that an employee
would retire at age 65 and elect to receive a five year certain and continuous
annuity under the pension plan and that the employee would not elect any of the
available "survivor options," which would result in a lower annual pension.
Pensions are not subject to any deduction for Social Security or any other
offset amounts.
(3) As of January 31, 1995, the six Executive Officers named in the cash
compensation table had the following credited years of service under the pension
plan (including, where appropriate, up to the 4 additional years): J. D. Ong, 33
years, 10 months; D. L. Tobler, 14 years, 1 month; J. N. Lauer, 8 years, 5
months; D. L. Burner, 15 years, 9 months; J. V. Heider, 14 years, 8 months; and
W. O. Smith, 10 months.
(4) Certain recently hired executives, including J. N. Lauer, D. L. Tobler, D.
L. Burner, J. V. Heider and W. O. Smith, became vested in benefits immediately
and earn an additional benefit equal to 1.6 percent for each of their first 15
years with the Company. As of December 31, 1994, the accrued additional benefits
per year were as follows: J. N. Lauer, $103,950; D. L. Tobler, $75,596; D. L.
Burner, $81,174; J. V. Heider, $60,104; and W. O. Smith, $2,540. These benefits
are payable under a non-qualified supplemental plan funded in part with life
insurance policies.
(5) Any benefits shown in the chart which exceed the level of benefits permitted
to be paid from a tax-qualified pension plan under the Internal Revenue Code are
payable under a non-qualified supplemental pension plan, funded in part with
life insurance policies.
18
<PAGE> 21
MANAGEMENT CONTINUITY AGREEMENTS
In 1984 the Company first entered into management continuity agreements (the
"Agreements") with certain employees, which now include all of the executive
officers named in the preceding compensation table. Presently there are 11
Agreements in effect. The purpose of the Agreements is to encourage the
individuals to carry out their duties in the event of the possibility of a
change in control of the Company. The Agreements are not ordinary employee
agreements and do not provide any assurance of continued employment unless there
is a "change in control." They generally provide for a two-year period of
employment commencing upon a change in control which generally is deemed to have
occurred if (i) any person becomes the beneficial owner of 20% or more of the
Common Stock or combined voting power of the Company's outstanding securities
(subject to certain exceptions), (ii) during any two-year period there generally
has been a change in the majority of the Directors of the Company, or (iii)
certain corporate reorganizations occur where the existing shareholders do not
retain at least 70% of the voting securities of the surviving entity. The
Agreements generally provide for the continuation of employment of the
individuals in the same positions and with the same responsibilities and
authorities that they possessed immediately prior to the change in control and
generally with the same benefits and level of compensation, including average
annual increases. The individuals have the right to terminate their employment
voluntarily during the 30 day period commencing one year following a change in
control for any reason and receive compensation. If the individual's employment
is terminated by the Company or its successor for reasons other than "cause" or
is terminated voluntarily by the individual for a "good reason" (in each case as
defined in the Agreements) the individual would be entitled to receive
compensation for up to three years at the individual's base salary rate in
effect at the time of the change in control, together with continuation of
employee benefits and incentive compensation payable each year equal to the
greater of that paid with respect to the most recent period prior to such
termination or the "target incentive amount" for the period in which the change
in control or termination occurs. The Agreements provide for a tax gross-up for
any excise tax due under the Internal Revenue Code for these types of
agreements.
19
<PAGE> 22
CUMULATIVE TOTAL SHAREHOLDER PERFORMANCE GRAPHS
Set forth below is a line graph showing the yearly percentage change in the
cumulative total shareholder return for the Company's common stock with the
similar returns for the Standard & Poor's 500 Stock Index, the Standard & Poor's
Chemicals Index, the Standard & Poor's Specialty Chemicals Index and the
Standard & Poor's Aerospace/Defense Index. Each of the returns is calculated
assuming the investment of $100 in each of the securities on December 31, 1989
and reinvestment of dividends into additional shares of the respective equity
securities when paid. The graph plots the respective values on the five single
days which are the last trading days of calendar years 1989 through 1994. Past
performance is not necessarily indicative of future performance.
<TABLE>
<CAPTION>
Measurement Period The BFGood- S&P 500 IN- AERO- CHEMICALS
(Fiscal Year Covered) rich Company DEX SPACE/DEFENSE CHEMICALS (SPECIALTY)
<S> <C> <C> <C> <C> <C>
1989 100.00 100.00 100.00 100.00 100.00
1990 95.96 96.89 104.39 84.91 96.10
1991 112.68 126.42 124.79 110.73 135.66
1992 137.41 136.05 131.28 121.25 143.72
1993 118.65 149.76 170.75 135.60 163.87
1994 134.32 151.74 184.70 156.98 143.06
</TABLE>
In 1993, the Company sold The Geon Company, which generally comprised its
polyvinyl chloride business. This completed a decade of change, during which
BFGoodrich divested its commodity type businesses and reinvested the proceeds in
its two specialty businesses, Aerospace and Specialty Chemicals. The past year,
1994, represents the first full year of operations under the Company's new
strategic focus. For the past several years, the Company used the Standard &
Poor's Aerospace/Defense and Chemicals Indices for peer group comparison
purposes. With the divestiture of The Geon Company, BFGoodrich believes it is
more appropriate to compare itself with specialty chemical companies instead of
commodity chemical companies. Consequently, the Company has included the
Standard & Poor's Specialty Chemicals Index and in future years will discontinue
the Standard & Poor's Chemicals Index, which generally consists of commodity
chemical companies. In 1994, The BFGoodrich
20
<PAGE> 23
Company outperformed what it considers to be the relevant comparison indices.
The chart below shows the 1994 percentage returns for the Company and the four
indices reflected in the graph above.
<TABLE>
<CAPTION>
COMPANY/INDEX 1994 RETURN
------------- -----------
<S> <C>
The BFGoodrich Company 13.21%
S&P 500 Index 1.32
Aerospace/Defense 8.17
Specialty Chemicals -12.70
Chemicals 15.77
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BOARD OF DIRECTORS
COMPENSATION OF DIRECTORS
During 1994 each non-employee Director of the Company received fixed
compensation for serving as a Director at the rate of $24,000 per year, plus
$600 for each Board and Board Committee meeting attended. Effective in 1995,
fixed compensation was increased to $26,000 per year and the meeting fee was
established at $1,000 for each Board and Board Committee meeting attended,
except that the chairperson of a Committee would receive $1,500 for each meeting
of that Committee attended. Director compensation was last changed in 1989. In
addition, upon retirement from the Board of Directors after reaching the age of
55 with at least 10 years of service as a Director, any non-employee Director,
and any employee Director who has also served as Chief Executive Officer and
continues as a Director following his or her retirement as an employee, would be
entitled to receive an annual amount equal to the fixed compensation level in
effect at the time of retirement. A retiring Director who has reached age 55 and
has served for at least 5 but less than 10 years would be entitled to a reduced
amount equal to 50% of the fixed compensation level in effect at retirement,
plus 10% of such compensation level for each additional year of service (rounded
to the nearest whole year) up to 10.
INSURANCE
As authorized by Section 726 of the Business Corporation Law of the State of
New York and the Company's By-Laws, the Company has purchased insurance
providing indemnification for the Company and its subsidiaries as well as their
directors and officers. The insurance coverage was written by Federal Insurance
Company and Reliance National Insurance Company, commencing June 19, 1994, for a
one-year period, at a total premium cost of $648,000.
MEETINGS BY AND CERTAIN COMMITTEES OF THE COMPANY'S BOARD OF DIRECTORS
1. MEETINGS
The Company's Board of Directors held eight meetings in 1994. All Directors
attended more than 75% of the aggregate total number of meetings held in 1994 by
the Board of Directors and the Committees of the Board of Directors on which
they served.
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2. CERTAIN COMMITTEES
The standing Committees of the Board of Directors are identified in the Annual
Report to Shareholders. They include the following (with membership as of
December 31, 1994):
AUDIT COMMITTEE -- James J. Glasser, Chairman; Jeanette Grasselli Brown, Vice
Chairman; George A. Davidson, Jr.; and Ian M. Ross. Function: Reviews with the
independent auditors and the General Auditor the scope of the audit and the
results of the audit examination by the independent auditors; considers and
recommends to the Board of Directors the selection of the independent auditors
for the next year; reviews with management and the independent auditors the
annual financial statements of the Company; reviews the system of internal
controls with the independent auditors, the General Auditor and other financial
officers and the General Counsel of the Company, and maintains open
communications with them; reviews periodically the quality and adequacy of the
Company's financial organization and personnel; reviews material pending legal
proceedings with the General Counsel and keeps abreast of changing areas of law
with potential impact on the Company; and reviews periodically and exercises
oversight with respect to the legal and ethical compliance policies of the
Company. Three meetings were held in 1994.
COMMITTEE ON DIRECTORS -- John L. Weinberg, Chairman; Ian M. Ross, Vice
Chairman; James J. Glasser; Thomas H. O'Leary; and Alfred M. Rankin, Jr.
Function: Recommends candidates for the Board of Directors of the Company;
reviews annually the tenure of each Director; and considers the size and
composition of the Board, the ratio of non-employee to employee Directors,
compensation and retirement of Directors, frequency and format of Board
meetings, Committee structure, service on Committees and management succession
planning. All candidates for Director of the Company are considered and selected
strictly on the basis of their ability to contribute to the deliberations of the
Board of Directors. Shareholders of the Company wishing to recommend candidates
for the Board may submit the names of such candidates, together with any desired
supporting information, to the Secretary of the Company, who maintains a file of
such names and information. This file is made available to the Committee on
Directors to assist it in fulfilling its duties in this area. Two meetings were
held in 1994.
COMPENSATION COMMITTEE -- Ian M. Ross, Chairman; Alfred M. Rankin, Jr., Vice
Chairman; George A. Davidson, Jr.; Thomas H. O'Leary and William L. Wallace.
Function: Reviews and recommends to the Board of Directors of the Company the
adoption or amendment of the various compensation and benefit plans and programs
maintained for the Officers and other key employees of the Company, including
any stock option or incentive compensation plans; reviews and approves specific
matters which are consistent with such plans and programs; reviews and approves
certain compensation and benefit arrangements for senior management; approves
the terms and conditions of awards under the Key Employees' Stock Option Plan
within the limits in the Plan; makes awards under the Stock Option Plan, the
Performance Share Plan and the Long-Term Incentive Plan; establishes the annual
merit salary increase budget for corporate staff executives; reviews and
approves compensation for individuals holding the offices of Executive Vice
President or higher. Eight meetings were held in 1994.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors on February 20, 1995 appointed the firm of Ernst &
Young LLP, subject to ratification by the shareholders at the Annual Meeting, to
audit the accounts of the Company with respect to its operations for the year
1995 and to perform such other services as may be required.
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Should this firm of auditors be unable to perform these services for any reason,
the Board of Directors will appoint other independent auditors to perform these
services.
Representatives of the firm of Ernst & Young LLP, the Company's principal
auditors for the most recently completed fiscal year, are expected to be present
at the Annual Meeting, will have the opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate questions from
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFYING THIS APPOINTMENT.
3. APPROVAL OF SENIOR EXECUTIVE MANAGEMENT INCENTIVE PLAN
The Compensation Committee of the Board of Directors has recommended, and the
Board of Directors has approved, the adoption of the Senior Executive Management
Incentive Plan (subject to shareholder approval).
Under the Omnibus Budget Reconciliation Act of 1993, the Internal Revenue Code
was amended to disallow a deduction for tax purposes for certain employee
remuneration in excess of $1 million per year. Incentive compensation can be
exempt from this limitation if it is subject to specified performance criteria
and is approved by shareholders. The Senior Executive Management Incentive Plan
is designed to meet the deductibility requirements of the Internal Revenue Code.
The Plan is not intended to provide additional compensation or benefits to its
participants. The Plan will replace the annual cash incentive bonus plan
presently provided to these participants, and will permit the deductibility of
payments. Participants in the Plan will not be eligible for participation in the
Management Incentive Program, the Company's regular annual cash bonus plan.
Awards under the Plan will be similar to the awards under the Management
Incentive Program, except that the Compensation Committee is not permitted to
have the same level of discretion under the Plan as is permitted under the
Management Incentive Program.
ELIGIBILITY
Participation will be limited to those senior executives whose compensation
may become subject to the non-deductibility provisions of the Internal Revenue
Code described above. The only individuals who are subject to the
non-deductibility provisions are those executive officers required to be named
in the Summary Compensation Table of the Proxy Statement. Generally, this
includes the Chief Executive Officer as well as the four other most highly
compensated executive officers.
The Compensation Committee will determine who will be a participant prior to
or within 90 days of the beginning of each year. The Committee anticipates only
designating senior executive officers who might earn more than $1 million in
base and annual cash incentive compensation in the year. Mr. Ong is the only
participant designated by the Compensation Committee for 1995. For calendar year
1995, he is the only executive officer who would earn in excess of $1 million in
base salary and annual cash bonus even if the maximum annual incentive
compensation is earned.
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AWARDS
Each year the Compensation Committee will establish a target level of
incentive opportunity, stated as a percentage of the salary midpoint of each
participant. In addition, a threshold and maximum award level will be
established. Threshold award level represents the minimum non-zero amount of
incentive award that would be paid to a participant if the minimum performance
level is attained. The maximum award level represents the maximum amount of
incentive award that may be paid to a participant for a plan year, even if the
maximum performance threshold is equalled or exceeded. Under no circumstances
will any participant be paid an award exceeding $1,500,000.
PERFORMANCE MEASURES
The Compensation Committee will establish performance goals based upon one or
more of the following performance measures: net income, pre-tax income,
consolidated operating income, segment operating income, return on equity,
operating income return on net capital employed, return on assets, and earnings
per share of common stock. The performance measures shall be calculated without
regard to any change in accounting standards adopted pursuant to the Financial
Accounting Standards Board which will affect a performance measure by ten
percent or more.
PERFORMANCE GOALS
The Committee will designate each year the incentive category and percentage
of salary midpoint for each participant to determine his or her incentive target
amount; the performance measures to be used for that year; a schedule of each
performance measure for establishing the threshold performance level; target
performance level; and the maximum performance level and the method of measuring
performance as a percentage of a participant's target incentive amounts; and the
relative weightings of the performance measures if more than one is designated.
PARTIAL PAYMENT
In the event of death, disability or early or normal retirement, incentive
awards will be paid pro rata based on the portion of the Plan Year the
participant was employed. A pro rata interim payment shall be required in the
event of a "change in control" as defined under "Management Continuity
Agreements".
PLAN ADMINISTRATION
The Plan will be administered by the Compensation Committee. The Committee is
empowered to set pre-established performance targets, measure the results and
determine the amounts payable according to the formula. The Committee must
certify that the performance goals and any other material terms were exceeded
prior to the payment of any bonus. While the Committee may not increase the
amounts payable under the formula, it retains discretionary authority to reduce
the amount of compensation that would otherwise be payable to participants if
the goals are attained.
PERIODIC REAPPROVAL BY SHAREHOLDERS
Under the proposed regulations promulgated by the Internal Revenue Service,
because the Compensation Committee has authority to vary the performance
measures used, the shareholders will have to
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reapprove the Plan every five years in order for payments to continue to be
excluded from the non-deductibility limitations of the Internal Revenue Code.
1995 AWARDS
The Compensation Committee has established performance goals in 1995 for Mr.
Ong based on net income from continuing operations and return on equity as
reported to shareholders for calendar year 1995. The Committee has established
relative weightings of 70% for net income and 30% for return on equity. Mr.
Ong's target bonus is 80% of his base salary midpoint, which would result in a
bonus payment to him of $544,100 if the target goal is achieved. The threshold
award for Mr. Ong is $272,100 if 75% of the performance goal is achieved and the
maximum award for Mr. Ong is $816,200 if 125% or more of the performance goal is
achieved. If less than the threshold amount of performance goal is achieved, no
award will be paid to Mr. Ong. Mr. Ong is not eligible to participate in the
Company's regular annual cash bonus program.
The text of the Plan is contained in Appendix B to this proxy statement, which
should be reviewed for a complete statement of the terms of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THIS PLAN.
4. SHAREHOLDER PROPOSAL
Mr. William Steiner of 4 Radcliff Drive, Great Neck, New York 11024, owning
100 shares of the Company's common stock, has advised the Company that he plans
to introduce the following proposal, which the Board of Directors opposes:
"RESOLVED, that the shareholders assembled in person and by proxy, recommend
(i) that all future non-employee directors not be granted pension benefits and
(ii) current non-employee directors voluntarily relinquish their pension
benefits."
The following statement was submitted in support of the proposal:
Aside from the usual reasons, presented in the past, regarding "double
dipping", that is outside (non-employee) directors who are in almost all cases
amply rewarded with their pension at their primary place of employment, and in
many instances serving as outside pensioned directors with other companies,
there are other more cogent reasons that render this policy as unacceptable.
Traditionally, pensions have been granted in both the private and public
sectors for long term service. The service component usually represents a
significant number of hours per week. The practice of offering pensions for
consultants is a rarity. Outside directors' service could logically fit the
definition of consultants and pensions for this type of service is an abuse of
the term.
But more importantly, outside directors, although retained by corporate
management, namely the C.E.O., are in reality representatives of shareholders.
Their purpose is to serve as an impartial group to which management is
accountable. Although outside directors are certainly entitled to compensation
for their time and expertise, pensions have the pernicious effect of
compromising their impartiality. In essence, pensions are management's grants to
outside directors to insure their unquestioning loyalty and acquiescence to
whatever policy management initiates, and at times, serving their own self
interests. Thus, pensions become another device to enhance and entrench
management's controls over
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corporate policies while being accountable only to themselves. As a founding
member of the Investors Rights Association of America I feel this practice
perpetuates a culture of corporate management "cronyism" that can easily be at
odds with shareholder and company interest.
A final note in rebuttal to management's contention that many companies offer
their outside directors pensions, so they can attract and retain persons of the
highest quality. Since there are also companies that do not offer their outside
directors pensions, can management demonstrate that those companies that offer
pensions have a better performance record then their non-pensioned peers? In
addition, do we have any evidence of a significant improvement in corporate
profitability with the advent of pensions for outside directors?
I urge your support, vote for this resolution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
The New York Business Corporation Law provides that the business of a
corporation shall be managed under the direction of its Board of Directors. It
is in the best interests of the Company and its shareholders to attract and
retain highly qualified individuals to serve as Directors. The nominees for
Directors have differing backgrounds, but each is a leader in his or her field.
The Company believes it is necessary as well as appropriate to provide a
competitive compensation package to attract and retain the quality of
individuals it wishes to have as members of its Board of Directors.
The Company routinely monitors competitive compensation practices for
directors at other large publicly held companies. One survey published by The
Conference Board indicates that more than 65% of manufacturing companies with
sales in excess of $1 billion provide pension benefits to directors. The Company
believes that the Directors' compensation, including pension benefits, is within
the middle range of compensation for other large manufacturing companies.
Compensation consists not only of current payments but also future payments.
Pensions are in essence a form of deferred compensation. Management believes
that having Directors eligible for pensions does not compromise their
impartiality, but rather enhances their desire to improve the long-term
performance of the Company, and aligns the Directors' interests with the
long-term interests of the shareholders.
The average Director attended 18 meetings last year. Each Director must
evaluate and comprehend the strategic plans for the Company as well as analyze
and make decisions on many complex matters affecting the Company. The Company
believes that total compensation should be based on the services performed and
the responsibilities assumed. It is not based on what other assets or income an
individual director may have or may receive.
OTHER MATTERS
The Board of Directors knows of no other matters which may properly be
presented to the meeting, but if other matters do properly come before the
meeting, it is intended that the persons named in the proxy will vote according
to their best judgment.
Under the Company's By-Laws shareholders entitled to vote at the meeting may
bring business before the annual meeting if such shareholder provides written
notice to, and such notice is received by, the Secretary of the Company
generally not less than 60 nor more than 90 days prior to the first anniversary
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of the preceding year's annual meeting. Consequently such notice must be
received between January 18 and February 17, 1995. Such notice shall set forth
as to each matter a brief description thereof and the reasons for conducting
such business at the annual meeting. The notice shall also provide (i) the name
and address of the shareholder proposing such business as well as any other
shareholders believed to be supporting such proposal, (ii) the number of shares
of each class of stock of the Company owned by such shareholders, and (iii) any
material interest of such shareholders in such proposal. See Appendix A for the
full text of the relevant section of the By-Laws. This notice requirement
applies to matters being brought before the meeting for a vote. Shareholders, of
course, may and are encouraged to ask appropriate questions at the annual
meeting without having to comply with the notice provisions.
SHAREHOLDERS PROPOSALS
Proposals of shareholders intended to be presented at the 1996 Annual Meeting
and which are intended to be included in the proxy statement must be received by
the Office of the Secretary, The BFGoodrich Company, 3925 Embassy Parkway,
Akron, Ohio 44333-1799 no later than November 3, 1995. The Company suggests that
all such proposals be sent by certified mail, return receipt requested.
Dated March 2, 1995 By Order of the Board of Directors
Nicholas J. Calise, Secretary
PLEASE DATE, SIGN AND MAIL YOUR PROXY
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APPENDIX A
BY-LAWS
ARTICLE I, SECTION 10
SECTION 10. (A) Annual Meetings of Shareholders. (1) Nominations of persons
for election to the Board of Directors of the Company and the proposal of
business to be considered by the shareholders may be made at an annual meeting
of shareholders (a) pursuant to the Company's notice of meeting, (b) by or at
the direction of the Board of Directors or (c) by any shareholder of the Company
who was a shareholder of record at the time of giving of notice provided for in
this By-Law, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this By-Law.
(2) For nominations or other business to be properly brought before an annual
meeting by a shareholder pursuant to clause (c) of paragraph (A) (1) of this
By-Law, the shareholder must have given timely notice thereof in writing to the
Secretary of the Company. To be timely, a shareholder's notice shall be
delivered to the Secretary at the principal executive offices of the Company not
less than 60 days nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced by more than 30 days or delayed by more
than 60 days from such anniversary date, notice by the shareholder to be timely
must be so delivered not earlier than the 90th day prior to such annual meeting
and not later than the close of business on the later of the 60th day prior to
such annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made. Such shareholder's
notice shall set forth (a) as to each person whom the shareholder proposes to
nominate for election or reelection as a director, the name, age, principal
occupations and employment during the past five years, name and principal
business of any corporation or other organization in which such occupations and
employment were carried on, a brief description of any arrangement or
understanding between such person and any other person(s) (naming such
person(s)) pursuant to which he was or is to be selected as a nominee, and the
written consent of such person(s) to serve as a director if elected; (b) as to
any other business that the shareholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such shareholder and the beneficial owner, if any, on whose
behalf the proposal is made; (c) as to the shareholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made (i)
the name and address of such shareholder, as they appear on the Company's books,
of such beneficial owner and any other shareholders believed by such shareholder
to be supporting such nominee(s) or other business and (ii) the class and number
of shares of the Company which are owned beneficially and of record by such
shareholder, such beneficial owner and any other shareholders believed by such
shareholder to be supporting such nominee(s) or other business.
(3) Notwithstanding anything in the second sentence of paragraph (A) (2) of
this By-Law to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the Company is increased and there is no
public announcement naming all of the nominees for Director or specifying the
size of the increased Board of Directors made by the Company at least 70 days
prior to the first anniversary of the preceding year's annual meeting, a
shareholder's notice required by this By-Law shall also be considered timely,
but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal executive
offices of the Company
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not later than the close of business on the 10th day following the day on which
such public announcement is first made by the Company.
(B) Special Meetings of Shareholders. Only such business shall be conducted at
a special meeting of shareholders as shall have been brought before the meeting
pursuant to the Company's notice of meeting. Nominations of persons for election
to the Board of Directors may be made at a special meeting of shareholders at
which directors are to be elected pursuant to the Company's notice of meeting
(a) by or at the direction of the Board of Directors or (b) provided that the
Board of Directors has determined that directors shall be elected at such
special meeting, by any shareholder of the Company who is a shareholder of
record at the time of giving of notice provided for in this By-Law, who shall be
entitled to vote at the meeting and who complies with the notice procedures set
forth in this By-Law. In the event the Company calls a special meeting of
shareholders for the purpose of electing one or more directors, any such
shareholder may nominate a person or persons (as the case may be), for election
to such position(s) as specified in the Company's notice of meeting, if the
shareholder's notice required by paragraph (A) (2) of this By-Law shall be
delivered to the Secretary at the principal executive offices of the Company not
earlier than the 90th day prior to such special meeting and not later than the
close of business on the later of the 60th day prior to such special meeting or
the 10th day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
(C) General. (1) Only such persons who are nominated in accordance with the
procedures set forth in this By-Law shall be eligible to serve as directors and
only such business shall be conducted at a meeting of shareholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this By-Law. The Chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in this By-Law and,
if any proposed nomination or business is not in compliance with this By-Law, to
declare that such defective proposal shall be disregarded.
(2) For purposes of this By-Law, "public announcement" shall mean disclosure
in a press release reported by the Dow Jones News Service, Associated Press or
comparable national news service or in a document publicly filed by the Company
with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(3) Notwithstanding the foregoing provisions of this By-Law, a shareholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in this
By-Law. Nothing in this By-Law shall be deemed to affect any rights of
shareholders to request inclusion of proposals in the Company's proxy statement
pursuant to Rule 14a-8 under the Exchange Act.
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APPENDIX B
THE B.F.GOODRICH COMPANY
SENIOR EXECUTIVE MANAGEMENT INCENTIVE PLAN
PURPOSE
The B.F.Goodrich Company Senior Executive Management Incentive Plan (the
"Plan") has been established to provide opportunities to certain senior
executives to receive incentive compensation as a reward for high levels of
personal performance above the ordinary performance standards compensated by
base salary, and for their contributions to strong performance to the Company.
The Plan, together with base compensation, is designed to provide above average
total cash compensation when all relevant performance objectives are achieved
and below average total cash compensation when such objectives are not achieved.
ELIGIBILITY
Participation in the Plan will be limited to those senior executives whose
compensation may become subject to the non-deductibility provisions of section
162(m) of the Internal Revenue Code of 1986, as amended, or any similar
successor provision (the "Code"). Participants will be selected prior to or
within 90 days of the beginning of each Plan Year by the Compensation Committee
of the Company's Board of Directors or a subcommittee of the Compensation
Committee consisting only of those members of that Committee who are "outside"
Directors as defined in regulations under the Code if any members of the
Compensation Committee are not "outside" Directors as defined (the "Committee").
INCENTIVE CATEGORIES
Each year the Committee will assign each Participant to an incentive category
based on organizational level and potential impact on important Company or
business unit results. The incentive categories define the target level of
incentive opportunity, stated as a percentage of salary midpoint as determined
by the Committee, that will be available to the Participant if the Company's
target performance levels are met for the Plan Year (the "Target Incentive
Amount").
MAXIMUM AND THRESHOLD AWARDS
Each Participant will be assigned maximum and threshold award levels. Maximum
award levels represent the maximum amount of incentive award that may be paid to
a Participant for a Plan Year. Threshold award levels represent the minimum
nonzero amount of incentive award that will be paid to a Participant.
Performance below the level for which a threshold-level award is paid will earn
no incentive payments.
Each Participant's maximum award level will be 150% of his or her Target
Incentive Amount. Each Participant's threshold award level will be 50% of his or
her Target Incentive Amount. Under no circumstances will any Participant be paid
an award exceeding $1,500,000.
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PERFORMANCE MEASURES
Performance measures that may be used under the Plan include Net Income,
Pretax Income, Consolidated Operating Income, Segment Operating Income, Return
on Equity, Operating Income Return on Net Capital Employed, Return on Assets,
and Earnings per Share of Common Stock of the Company for the Plan Year. The
performance measures shall be calculated without regard to any change in
accounting standards adopted pursuant to the Financial Accounting Standards
Board after the goal for a performance measure is adopted which will affect the
performance measure by 10 percent or more.
PARTIAL PLAN YEAR PARTICIPATION
Subject to the Change in Control provisions described below, incentive awards
to Participants who terminate during the plan year for reasons of death,
disability, or normal or early retirement will be calculated as specified above
and will be paid pro rata based on a fraction, the numerator of which is the
number of full and partial months of the Plan Year during which the Participant
was employed by the Company, and the denominator of which is the total number of
months in the Plan Year.
Subject to the Change in Control provisions described below, Participants who
terminate during a Plan Year for reasons other than death, disability, or normal
or early retirement will receive no incentive award payments for such Plan Year.
PERFORMANCE GOALS
The Committee will designate, prior to or within 90 days of the beginning of
each Plan Year:
- - - The incentive category and percentage of salary midpoint for each Participant
to determine his or her Target Incentive Amount:
- - - The performance measures to be used for the Plan Year;
- - - A schedule for each performance measure relating achievement levels for the
performance measure to incentive award levels as a percentage of Participants'
Target Incentive Amounts; and
- - - The relative weightings of the performance measures for the Plan Year.
PERFORMANCE CERTIFICATION
As soon as practicable following the end of each Plan Year, the Committee will
certify the Company's performance with respect to each performance measure used
in that Plan Year.
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AWARD CALCULATION AND PAYMENT
Individual incentive awards will be calculated and paid as soon as practicable
following the Committee's certification of performance for each Plan Year. The
amount of a Participant's incentive award to be paid based on each individual
performance measure will be calculated based on the following formula (the
"Formula").
Participant's X Participant's Incentive X Percentage of Target
salary range Category percentage Award to be paid for
midpoint achievement against
Performance Measure
X Relative weighting = Amount of Incentive
of award based on
Performance Measure Performance Measure
The incentive amounts to be paid to the Participant based on each performance
measure will be summed to arrive at the Participant's total incentive award
payment for the Plan Year.
PAYMENT UPON CHANGE IN CONTROL
Anything to the contrary notwithstanding, within five days following the
occurrence of a Change in Control, the Company shall pay to each participant an
interim lump-sum cash payment (the "Interim Payment") with respect to his or her
participation in the Plan. The amount of the Interim Payment shall equal the
product of (x) the number of months, including fractional months, that have
elapsed until the occurrence of the Change in Control in the calendar year in
which the Change of Control occurs and (y) one-twelfth of the greater of (i) the
amount most recently paid to each participant for a full calendar year under the
Plan or the Company's Management Incentive Program, or (ii) the Target Incentive
Amount for each participant in effect prior to the Change in Control for the
calendar year in which the Change in Control occurs, under the Plan. The Interim
Payment shall not reduce the obligation of the Company to make a final payment
under the terms of the Plan, but any Interim Payment made shall be offset
against any later payment required under the terms of the Plan for the calendar
year in which a Change in Control occurs. Notwithstanding the foregoing, in no
event shall any participant be required to refund to the Company, or have offset
against any other payment due any participant from or on behalf of the Company,
all or any portion of the Interim Payment.
For purposes of the Plan, a Change in Control shall mean
(i) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (A) the then
outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
the following acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Company (other than by exercise of a conversion
privilege), (B) any acquisition by the Company or any of its subsidiaries, (C)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or
32
<PAGE> 35
(D) any acquisition by any corporation with respect to which, following such
acquisition, more than 70% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such acquisition in substantially the same
proportions as their ownership, immediately prior to such acquisition, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be; or
(ii) During any period of two consecutive years, individuals who, as of the
beginning of such period, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the beginning of such
period whose election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act); or
(iii) Approval by the shareholders of the Company of a reorganization, merger
or consolidation, in each case, with respect to which all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger or consolidation, do not,
following such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 70% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be; or
(iv) Approval by the shareholders of the Company of (A) a complete liquidation
or dissolution of the Company or (B) a sale or other disposition of all or
substantially all of the assets of the Company, other than to a corporation,
with respect to which following such sale or other disposition, more than 70%
of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.
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<PAGE> 36
PLAN YEAR
The Plan Year shall be the fiscal year of the Company.
PLAN ADMINISTRATION
The Plan will be administered by the Committee. The Committee is empowered to
set preestablished performance targets, measure the results and determine the
amounts payable according to the Formula. While the Committee may not increase
the amounts payable under the Formula, it retains discretionary authority to
reduce the amount of compensation that would otherwise be payable to the
Participants if the goals are attained. The Committee is empowered to modify the
terms of the Plan from time to time to ensure that it complies with the
requirements of Code and any regulations issued thereunder.
34
<PAGE> 37
BFGOODRICH
- - --------------------------------------------------------------------------------
<PAGE> 38
March 2, 1995 [BFGoodrich logo]
To our Shareholders:
The Annual Meeting of Shareholders will be held in the Knickerbocker Suite, on
the third floor of The New York Helmsley Hotel, 212 East 42nd Street, New York,
New York on Monday, April 17, 1995, at 10:30 A.M.
The proxy statement contains information regarding the meeting, the nominees
for election to the Board of Directors, the proposal to ratify the appointment
of Ernst & Young LLP as independent auditors, the proposal to approve the
Senior Executive Management Incentive Plan and a shareholder proposal relating
to Directors' pension benefits. A report on the meeting will be included in the
first quarter report to shareholders.
It is important that your shares be represented at this meeting. Even if you
plan to attend, we encourage you to promptly sign, date and return your proxy
in the enclosed postage-paid envelope.
Sincerely,
/s/ John D. Ong
John D. Ong
Chairman of the Board
and Chief Executive Officer
PLEASE DETACH PROXY CARD HERE
\/ \/
- - -------------------------------------------------------------------------------
/ /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees /X/ WITHHOLD AUTHORITY to vote /X/ EXCEPTIONS* (as marked /X/
listed below for all nominees listed below to the contrary below)
</TABLE>
Jeanette Grasselli Brown, George A. Davidson, Jr., James J. Glasser, Thomas
H. O'Leary, John D. Ong, Joseph A. Pichler, Alfred M. Rankin, Jr., Ian M.
Ross, D. Lee Tobler, William L. Wallace, John L. Weinberg and A. Thomas
Young.
INSTRUCTION: To withhold authority to vote for any individual nominee mark
the "Exceptions" box and write that nominee's name on the space provided
below.
*EXCEPTIONS_______________________________________________________________
<TABLE>
<CAPTION>
2. Approval of Ernst & Young LLP as auditors. 3. Approval of the Senior Executive Management Incentive Plan.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR /X/ AGAINST /X/ ABSTAIN /X/ FOR /X/ AGAINST /X/ ABSTAIN /X/
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 4.
<TABLE>
<CAPTION>
4. Shareholder proposal relating to Directors' pension benefits.
<S> <C> <C> <C> <C> <C>
FOR /X/ AGAINST /X/ ABSTAIN /X/
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF DIRECTORS,
FOR PROPOSALS 2 AND 3 AND AGAINST PROPOSAL 4.
Change of Address and/or
Comments Mark Here /X/
<TABLE>
<S> <C>
Please sign exactly as name appears hereon, joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
Dated: _______________________________________________, 1995
------------------------------------------------------------
Signature
-------------------------------------------------------------
Signature
</TABLE>
<TABLE>
<S> <C> <C>
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY VOTES MUST BE INDICATED
USING THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK. /X/
</TABLE>
<PAGE> 39
THE BFGOODRICH COMPANY
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes John D. Ong and Nicholas J. Calise, or
either of them, with full power of substitution, to represent the undersigned
and to vote all Common Stock of THE BFGOODRICH COMPANY which the undersigned
would be entitled to vote at the Annual Meeting of Shareholders of the Company
to be held on April 17, 1995, and at any adjournment thereof, as indicated and
in their discretion upon other matters as may properly come before the meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES. SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3 AND AGAINST PROPOSAL 4.
This card also constitutes your voting instructions for any and all shares
held of record by The Bank of New York for your account in the Company's
Dividend Reinvestment Plan.
Please sign on the reverse side of this card and return it promptly in the
enclosed return envelope to The Bank of New York, Proxy Department, New York,
NY 10203-0029.
THE BFGOODRICH COMPANY
P.O. BOX 11029
NEW YORK, N.Y. 10203-0029
(Continued, and to be signed and dated, on reverse side.)
