<PAGE> 1
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>
THE B.F.GOODRICH COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(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):
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
(5) Total fee paid:
Not Applicable
/ / 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:
Not Applicable
(2) Form, Schedule or Registration Statement No.:
Not Applicable
(3) Filing Party:
Not Applicable
(4) Date Filed:
Not Applicable
<PAGE> 2
BFGOODRICH
- --------------------------------------------------------------------------------
NOTICE OF
1996
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 15,
1996, at 10:30 A.M. for the following purposes:
1. To elect thirteen 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 1996.
3. To consider and act upon a management proposal to reauthorize the Company's
Stock Option Plan.
4. 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 26, 1996 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 February 29, 1996 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 15, 1996. All shareholders of record of Common Stock
at the close of business on February 26, 1996 will be entitled to notice of and
to vote at the meeting. There were 26,386,636 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.
On February 19, 1996, the Board of Directors declared a two-for-one stock
split ("Stock Split"), in the form of a stock dividend, to shareholders of
record on March 11, 1996, and payable on April 1, 1996. Since the record date
for the Annual Meeting is prior to the Stock Split, the shares voting at the
Annual Meeting will be before giving effect to the Stock Split. Furthermore, all
share ownership numbers in this proxy statement are prior to the Stock Split.
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 D. F. King & Co., Inc., 77 Water Street, New York, New York 10005-4495,
to assist in the solicitation of proxies from shareholders, including brokers,
custodians, nominees, and fiduciaries, and will pay that firm fees presently
estimated at $8,500 for its services, plus the firm's expenses and
disbursements.
The Annual Report of the Company for 1995, 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 February 29, 1996. 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 thirteen nominees for director receiving a plurality of the votes cast at
the meeting in person or by proxy shall be elected. The renewal of the Stock
Option Plan requires the affirmative vote of a majority of
2
<PAGE> 5
the outstanding shares. 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, other than the renewal of the Stock Option
Plan, where abstentions and non-votes have the same effect as a no vote.
PROPOSALS TO SHAREHOLDERS
1. ELECTION OF DIRECTORS
One of the purposes of the meeting is the election of thirteen Directors to
hold office until the next Annual Meeting of Shareholders in 1997 and until
their respective successors are elected and qualified. It is intended that the
accompanying proxy will be voted for the election of the thirteen nominees named
on the following pages, all of whom, except Mr. Osborne, are now Directors and
whose terms expire in April 1996.
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.
3
<PAGE> 6
NOMINEES FOR ELECTION
JEANETTE GRASSELLI BROWN, age 67 -- Director since April
15, 1991.
RETIRED DIRECTOR OF CORPORATE RESEARCH, BP AMERICA. Mrs.
Brown is a graduate of Ohio University, BS and Case Western
Reserve University, MS. She holds seven DSc (hon.) degrees.
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. Mrs.
Brown is a director of AGA Gas, Inc., BDM International,
Inc., Diatrac Holdings, Inc., McDonald & Co. Investments
and USX Corp. She is past Chair of the Board of Trustees of
Ohio University and was Distinguished Visiting Professor
and Director, Research Enhancement there from 1989-1995.
She was appointed to the Ohio Board of Regents in 1995. She
is a member of the Board of Trustees of the Cleveland
Playhouse, Holden Arboretum, and the Musical Arts
Association. She is Chair of the Board of Trustees of The
Cleveland Scholarship Programs 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.
DAVID L. BURNER, age 56 -- Director since December 4, 1995.
PRESIDENT OF THE BFGOODRICH COMPANY. Mr. Burner received
his BSC degree in accounting from Ohio University. He
joined The BFGoodrich Company in 1983 as a Financial Vice
President of the Engineered Products Group. Later that year
he became Vice President and General Manager of the
Off-Highway Braking Systems Division and in 1985 became an
Executive Vice President of the Aerospace and Defense
Division. In February 1987 Mr. Burner became President of
that Division which is now known as BFGoodrich Aerospace.
He was elected a Senior Vice President of the Company in
April 1990 and Executive Vice President in October 1993. He
joined the Office of the Chairman in July of 1994 and
assumed his present position in December 1995. Mr. Burner
began his career with Arthur Andersen & Co. Mr. Burner is a
member of the Board of Directors of Brush Wellman Inc. He
is also Chairman of The Ohio Aerospace Institute, a member
of the Board of Governors of the Aerospace Institute of
America, and the Board of Directors of the Akron Art
Museum, The Greater Cleveland Growth Association and the
National Aeronautic Association. He serves on the Advisory
Boards of the Salvation Army School for Officer Training
and the Cleveland Chapter of the Salvation Army.
GEORGE A. DAVIDSON, JR., age 57 -- 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 Chairman of the American Gas Association and
Vice Chairman of the Pittsburgh Cultural Trust. Mr.
Davidson is a Trustee of the University of Pittsburgh and
is the Chairman Emeritus of the Pittsburgh Civic Light
Opera Board.
<PAGE> 7
NOMINEES FOR ELECTION
JAMES J. GLASSER, age 61 -- Director since April 15, 1985.
CHAIRMAN OF THE BOARD 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 and is a member of the
Executive Committee of the Chicago Community Trust.
THOMAS H. O'LEARY, age 61 -- Director since April 18, 1988.
CHAIRMAN, 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. Mr.
O'Leary relinquished the title of Chief Executive Officer
in December 1995. Mr. O'Leary is a Director of Burlington
Resources Inc. and The Kroger Co.
JOHN D. ONG, age 62 -- Director since June 18, 1973.
CHAIRMAN OF THE BOARD 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. Mr. Ong is a Director of Ameritech Corporation,
ASARCO Incorporated, Cooper Industries, Inc., The Geon
Company, The Kroger Co. and TRW Inc. 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 the John S. and
James L. Knight Foundation, and Chairman of The Musical
Arts Association (Cleveland Orchestra).
<PAGE> 8
NOMINEES FOR ELECTION
RICHARD DE J. OSBORNE, age 61 -- Nominee for Director.
CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT OF ASARCO
INCORPORATED, a leading producer of nonferrous metals. Mr.
Osborne received an A.B. in economics from Princeton
University. He joined ASARCO in 1975 as Vice President of
Finance and Chief Financial Officer. He became an Executive
Vice President in 1977 and President in 1982. He assumed
his present position in 1985. Prior to that time, Mr.
Osborne had been an Executive Vice President of Finance and
Business Development at Fairchild Camera and Instrument
Corporation and held various executive positions in
finance, planning and management at IBM Corporation. Mr.
Osborne is also Chairman of the Board (non executive) and a
Director of Southern Peru Copper Corporation and a Director
of ASARCO Incorporated, Grupo Mexico, S.A. de C.V., M.I.M.
Holdings Limited and Shering-Plough Corporation. Mr.
Osborne is also a Trustee of The Tinker Foundation.
JOSEPH A. PICHLER, age 56 -- 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.
ALFRED M. RANKIN, JR., age 54 -- 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.
<PAGE> 9
NOMINEES FOR ELECTION
IAN M. ROSS, age 68 -- 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 62 -- 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 past Chairman and currently a
Trustee of the Akron Regional Development Board, and
Executive Vice President of the Ohio Ballet.
WILLIAM L. WALLACE, age 61 -- 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.
<PAGE> 10
NOMINEES FOR ELECTION
A. THOMAS YOUNG, age 57 -- Director since April 17, 1995.
RETIRED EXECUTIVE VICE PRESIDENT, LOCKHEED MARTIN
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 became President and Chief Operating Officer
in January 1990, Executive Vice President of Lockheed
Martin Corporation in March 1995 and retired in July of
that year. Mr. Young is a director of Cooper Industries,
Inc., Dial Corporation, Memotec Communications Inc.,
Potomac Electric Power Company, and Science Applications
Informational Corp. 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.
<PAGE> 11
RETIRING DIRECTORS
John L. Weinberg, a Director since 1962, will retire as of the 1996 Annual
Meeting of Shareholders. His wise counsel and able assistance will be missed.
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,
1996. 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. During 1995, Goldman, Sachs & Co. acted as co-managing underwriter
for the sale of $126,500,000 of Preferred Securities of BFGoodrich Capital, a
Delaware statutory business trust, and as agent for the sale of $25,000,000
medium term notes of the Company. As noted above, Mr. Weinberg will retire as of
the 1996 Annual Meeting of Shareholders.
9
<PAGE> 12
HOLDINGS OF COMPANY EQUITY SECURITIES BY DIRECTORS AND EXECUTIVE OFFICERS
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, 1996. Number of shares is prior to the Stock Split.
<TABLE>
<CAPTION>
AMOUNT AS TO WHICH
THERE IS
-----------------------
AMOUNT AND NATURE DIRECTORS' PERCENT SOLE SOLE
OF BENEFICIAL PHANTOM OF VOTING INVESTMENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) SHARES(2) CLASS(3) POWER POWER
- -------------------------- ----------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Jeanette Grasselli Brown 1,000 1,646 * 1,000 1,000
David L. Burner 122,399 * 46,099 25,786
George A. Davidson, Jr. 1,500 1,646 * 1,500 1,500
James J. Glasser 1,000 * 1,000 1,000
Jon V. Heider 101,032 * 44,032 27,767
Thomas H. O'Leary 200 * 200 200
John D. Ong 348,332 1.1% 172,682 124,064
150
Richard de J. Osborne 500(4) *
Joseph A. Pichler 700 * 700 700
Alfred M. Rankin, Jr. 500 * 500 500
Ian M. Ross 500 * 500 500
Wayne O. Smith 79,142 * 48,142 24,142
D. Lee Tobler 122,168 * 42,286 24,044
William L. Wallace 2,200 *
John L. Weinberg 1,000 * 1,000 1,000
A. Thomas Young 500 * 500 500
21 Directors and Officers 1,013,580 3.8% 464,992 291,818
as a Group
</TABLE>
* Less than 1%.
(1) Includes the approximate number of shares credited to the individuals'
accounts in the Company's Retirement Plus Savings Plan as of January 31, 1996,
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
stock options exercisable within sixty days as follows: J. D. Ong, 175,500
shares; D. L. Burner, 76,300 shares; D. L. Tobler, 79,882 shares; and 21
Directors and Officers as a group, 545,338 shares. Executive officers have
voting power but no investment power with respect to Performance Shares and
Restricted Shares contingently awarded to them under the Company's Long-Term
Incentive Plan. Includes indirect beneficial ownership of shares held by spouse
as follows: J. D. Ong, 150; W. L. Wallace, 2,200. All other ownership is direct.
(2) Number of shares awarded under Directors' Phantom Share Plan, see "Board of
Directors -- Compensation of Directors".
(3) Does not include Directors' Phantom Shares.
(4) As of February 23, 1996.
10
<PAGE> 13
BENEFICIAL OWNERSHIP OF SECURITIES
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, 1995. Number of shares is prior to the Stock Split. 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.
<TABLE>
<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 2,446,084 9.3%
Plus Savings Plan and other
Company plans(1.
Other(2. 597,775 2.3
Equinox Capital Management, Inc.(3) 1,760,390 6.7
399 Park Avenue
New York, NY 10022
</TABLE>
(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 223,322 shares, shared voting power as to
258,433 shares, sole dispositive power as to 338,542 shares and shared
dispositive power as to 259,213 shares.
(3) Has sole investment discretion as to all shares, sole voting power as to
858,760 shares and shared voting power as to 901,630 shares.
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.
- 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
11
<PAGE> 14
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.
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 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
12
<PAGE> 15
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 the
corporate staff, 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 1995, 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 (75-78% of target in 1995) is achieved, to a maximum of 150% of the
target when the maximum financial objective (125% of target in 1995) is
achieved. If a minimum financial performance is not achieved, no bonus will be
paid.
In 1995 corporate staff financial goals were based upon net income and return
on equity. Operating segment financial goals were based upon segment operating
income and operating income return on net capital employed (OIRONCE). Individual
awards are made based upon individual performance within a range established
with reference to achievement of financial and strategic goals.
1995 RESULTS
The corporate staff achieved 136% of their financial and strategic goals. The
operating segments achieved between 91% and 113% of their respective goals. The
actual payout for the corporate staff averaged 119% of the target bonus and for
the operating segments averaged 96% of target.
The strategic goals for the corporate staff related to the implementation of
corporate plans, acquisitions and divestitures and achievement of financial
objectives. The strategic goals for the operating segments included specific
objectives relating to product development, productivity improvement, market
share, cost structure 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.
The Compensation Committee adopted the Long-Term Incentive Plan in 1992, which
is based on the Performance Share Plan and the Stock Option Plan, and made
awards of Restricted Shares and Performance Shares in 1995 (as of December 31,
1995, there were 67 participants). The participants who are still employed by
the Company on December 31, 1997, will become vested in the Restricted Shares
and will receive the shares early in 1998, less the number of shares to satisfy
applicable withholding taxes. The Restricted Shares actually received will be
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 1995. The recipient only will be
entitled to retain shares at the end of the
13
<PAGE> 16
plan cycle if the threshold performance standard is met. The number of shares to
be received free of further restrictions will range from 50% to 150% of the
original Performance Share award depending on the level of attainment of
financial objectives, less the number of shares to satisfy applicable
withholding taxes.
Currently the Committee only makes awards once every three years. No awards
were made to existing participants in 1993 or 1994 and none are anticipated to
be made in 1996 or 1997. Guidelines establish a target award of Restricted
Shares and Performance Shares with the aggregate market value of the shares
awarded based upon a percentage of salary midpoint depending upon the
individual's position level within the Company -- the higher the position level
the greater the percentage. The determination of whether to make an award and
the amount of the award is dependent upon the individual's past performance and
expectations of future performance.
The performance objectives for the 1995 awards for the senior corporate
executives and corporate staff employees are dependent upon the three-year
average total Company return on equity. The performance objectives for operating
segment presidents at the time of the award is based one-half on total Company
performance measured as an average return on equity and one-half related to the
operating segment performance expressed as average operating income return on
net capital employed (OIRONCE) for the three-year period. Other participants
within the operating segments had their awards based solely on the average
OIRONCE for their respective segment.
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 target award for individuals based upon the
aggregate exercise price of the options granted as a percentage of salary
midpoint -- the higher the salary midpoint, the greater the percentage. The
actual award is dependent upon the individual's past performance and expectation
of future performance. In 1995, the Committee granted stock options to 145
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 awards,
but generally considers the recommendation of management in making the specific
award within the established guidelines. 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 addition, in 1995 the
shareholders approved the adoption of the Senior Executive Management
14
<PAGE> 17
Incentive Plan, which is designed to have awards under it be deductible for tax
purposes. Consequently, the Company believes all compensation will be fully
deductible for Federal income tax purposes.
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. The Committee determined to maintain Mr. Ong's
base salary at the same level established as of January 1, 1994 and to provide
all additional compensation through short and long-term incentive compensation.
Mr. Ong does not participate in the Management Incentive Program. Instead, he
participates in the Senior Executive Management Incentive Plan, which is
designed to meet the Federal income tax deductibility rules of the Internal
Revenue Code. As required by the Code, the plan requires that any award be based
upon an objective formula established at the beginning of the year. A target
award was established, based 70% on net income and 30% on return on equity. A
threshold objective equal to 75% of the goal would result in an award of 50% of
the target, while a maximum award equal to 150% of the target would result from
attainment of 125% of the goal. Attainment between the threshold and the maximum
goal results in a payment prorated on a straight line basis. For 1995 Mr. Ong
received $782,496 or 144% of his target amount.
In 1995, Mr. Ong received options to purchase 31,000 shares. During 1995, Mr.
Ong was awarded 29,000 Performance Shares and 10,000 Restricted Shares. The
guidelines for awards for the Chief Executive Officer and the actual targets are
the same as for other corporate officers. The Committee used the same factors to
make these awards as it did in determining the other elements of Mr. Ong's
compensation. As noted above, the Company's Long-Term Incentive Plan is intended
to make awards every three years. No award was made to Mr. Ong in 1993 or 1994,
and no award is expected to be made to him in 1996 or 1997.
The Compensation Committee compares the total long-term incentive compensation
with total long-term incentive compensation from the survey data. The
Committee's target is to have total long-term incentive compensation equal 110%
of the median of the survey data when the Company achieves its financial
objectives. The guidelines for long-term incentive data are reviewed
periodically.
The Compensation Committee
Ian M. Ross, Chairman
Alfred M. Rankin, Jr., Vice Chairman
George A. Davidson, Jr.
Thomas H. O'Leary
William L. Wallace
15
<PAGE> 18
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------------
ANNUAL COMPENSATION
------------------------------------- AWARDS PAYOUTS
-------------------------- ------------
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL COMPENSATION RESTRICTED STOCK OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($) AWARDS($)(1) SARS(#) ($)(1) ($)(2)
- ------------------ ----- ---------- --------- ------------ ---------------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John D. Ong, 1995 750,000 782,496 100,892 443,750 31,000 -0- 84,000
Chairman 1994 750,000 650,000 103,794 -0- 17,500 840,463 68,760
and Chief 1993 737,000 643,500 106,835 -0- 17,500 -0- 51,314
Executive Officer
David L. 1995 362,500 325,000 46,581 221,875 13,000 -0- 34,650
Burner(3),
President 1994 325,000 215,000 33,862 -0- 6,000 124,073 30,000
1993 285,000 175,000 32,115 -0- 5,000 -0- 25,663
D. Lee Tobler, 1995 395,000 278,000 49,630 177,500 13,000 -0- 31,050
Executive Vice 1994 379,000 245,000 43,591 -0- 8,000 270,954 31,524
President and 1993 361,000 237,900 42,858 -0- 8,000 -0- 26,760
Chief Financial
Officer
Wayne O. Smith, 1995 326,250 250,000 37,708 221,875 13,000 -0- 4,950
Executive Vice 1994 225,000 190,000 8,040 -0- 5,000 -0- 212,500
President 1993 -0- -0- -0- -0- -0- -0- -0-
and President,
BFGoodrich
Specialty
Chemicals
Jon V. Heider, 1995 307,000 225,000 46,179 133,125 10,000 -0- 28,620
Executive Vice 1994 295,917 170,000 44,747 -0- 5,000 236,297 23,911
President and 1993 283,167 166,700 38,503 -0- 5,000 -0- 19,518
General Counsel
</TABLE>
(1) Restricted Shares awarded in 1995 vest on January 1, 1998; provided,
however, the shares awarded (less shares withheld to satisfy withholding tax
requirements) may not be sold for an additional two-year period. Dividends were
paid on these shares at the same rate as paid to all other shareholders. As of
December 31, 1995, the number of Restricted Shares 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, 39,000
and $2,652,000; D. L. Burner, 19,000 and $1,292,000; D. L. Tobler, 15,000 and
$1,020,000; W. O. Smith, 24,000 and $1,632,000; and J. V. Heider, 13,000 and
$884,000. Number of shares is prior to the two-for-one Stock Split.
(2) Of the amounts shown, $9,000 ($4,950 in the case of Mr. Smith) represents
the Company's contribution to the Retirement Plus Savings Plan, a tax-qualified
defined contribution plan, and the balance represents Company contributions to a
benefit restoration plan with respect to amounts in excess of the amount
permitted to be contributed under the tax-qualified plan.
(3) Mr. Burner was Executive Vice President and President, BFGoodrich Aerospace
until December 4, 1995.
16
<PAGE> 19
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS/SARS ASSUMED
UNDERLYING GRANTED TO ANNUAL RATES OF STOCK PRICE
OPTIONS/SARS EMPLOYEES EXERCISE OR APPRECIATION FOR OPTION TERM
GRANTED IN FISCAL BASE PRICE EXPIRATION ------------------------------------
NAME (# OF SHARES) YEAR ($/SH) DATE 0% ($) 5% ($) 10% ($)
- ------------------- ------------- ------------ ----------- ---------- ------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. D. Ong 31,000 7.5% $ 43.5625 1/2/05 -0- $849,710 $2,152,330
D. L. Burner 13,000 3.1 43.5625 1/2/05 -0- 356,330 902,590
D. L. Tobler 13,000 3.1 43.5625 1/2/05 -0- 356,330 902,590
W. O. Smith 13,000 3.1 43.5625 1/2/05 -0- 356,330 902,590
J. V. Heider 10,000 2.4 43.5625 1/2/05 -0- 274,100 694,300
All Shareholders N/A N/A N/A N/A -0- 719,970,028 1,825,272,427
All Optionees 412,950 100 43.60 1/2/05- -0- 11,318,960 28,671,119
6/4/05
Optionee Gain
as % of all
Shareholder Gain N/A N/A N/A N/A N/A 1.6% 1.6%
</TABLE>
The dollar amounts under the potential realizable value column are the result
of calculations of assumed annual compound rates of appreciation over the
ten-year life of the options in accordance with the proxy regulations of the
Securities and Exchange Commission and are not intended to forecast possible
future appreciation, if any, of the Company's Common Stock. The actual value, if
any, an executive may realize will depend on the excess of the market price of
the shares over the exercise price on the date the option is exercised. The
Company did not use an alternative formula for a grant date valuation, as the
Company is not aware of any formula which will determine with reasonable
accuracy a present value based on future unknown or volatile factors. No stock
appreciation rights (SARs) were attached to these options. The options granted
to the named individuals were immediately exercisable and were granted with
limited stock appreciation rights which generally entitle the optionee to elect
to receive the appreciation on the option in cash for a 60 day period following
a "change in control", as defined under "Management Continuity Agreements".
Number of shares and exercise price are prior to the Stock Split.
17
<PAGE> 20
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
AT FY-END OPTIONS/SARS
(# OF SHARES) AT FY-END ($)
------------------ ------------------
SHARES ACQUIRED ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------- -------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
J. D. Ong 32,500 898,893 149,500/-0- 3,187,468/-0-
D. L. Burner 2,300 52,181 50,300/-0- 1,153,531/-0-
D. L. Tobler 13,618 229,327 68,882/-0- 1,529,770/-0-
W. O. Smith -0- -0- 18,000/-0- 443,437/-0-
J. V. Heider -0- -0- 48,000/-0- 1,075,187/-0-
</TABLE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCE OR UNDER NON-STOCK PRICE-BASED PLANS
SHARES, UNITS OTHER PERIOD ---------------------------------------------------
OR OTHER RIGHTS UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME (# OF SHARES) OR PAYOUT (# OF SHARES) (# OF SHARES) (# OF SHARES)
- -------------------- --------------- ----------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
J. D. Ong 29,000 12/31/97 14,500 29,000 43,500
D. L. Burner 14,000 12/31/97 7,000 14,000 21,000
D. L. Tobler 11,000 12/31/97 5,500 11,000 16,500
W. O. Smith 14,000 12/31/97 7,000 14,000 21,000
J. V. Heider 10,000 12/31/97 5,000 10,000 15,000
</TABLE>
Under the Company's Long-Term Incentive Plan, which is based upon the
Company's Stock Option Plan and Performance Share Plan awards of Performance
Shares were made to the named individuals in 1995. Additional awards are not
expected until 1998. For Messrs. Ong, Tobler and Heider the performance
objective is dependent upon achieving a specified level of average return on
equity for the three-year period. The performance objective for Messrs. Burner
and Smith is based one-half on total Company performance measured as a specified
level of average return on equity and one-half related to the Aerospace and
Specialty Chemicals segment performance, respectively, expressed as average
operating income return on net capital employed for the three-year period. The
target amount of shares will be earned if 100% of the targeted performance
objective is achieved. The threshold amount will be earned if 75% of the
targeted objective is achieved and the maximum award amount will be earned if
125% of the targeted objective is achieved. No shares will be earned if the
threshold objective is not achieved. Number of shares is prior to the Stock
Split.
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
18
<PAGE> 21
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.
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 14,759 29,518 36,898 44,277 51,657 57,407
150,000 22,759 45,518 56,898 68,277 79,657 88,282
200,000 30,759 61,518 76,898 92,277 107,657 119,157
250,000 38,759 77,518 96,898 116,277 135,657 150,032
300,000 46,759 93,518 116,898 140,277 163,657 180,907
350,000 54,759 109,518 136,898 164,277 191,657 211,782
400,000 62,759 125,518 156,898 188,277 219,657 242,657
450,000 70,759 141,518 176,898 212,277 247,657 273,532
500,000 78,759 157,518 196,898 236,277 275,657 304,407
600,000 94,759 189,518 236,898 284,277 331,657 366,157
700,000 110,759 221,518 276,898 332,277 387,657 427,907
800,000 126,759 253,518 316,898 380,277 443,657 489,657
900,000 142,759 285,518 356,898 428,277 499,657 551,407
1,000,000 158,759 317,518 396,898 476,277 555,657 613,157
1,100,000 174,759 349,518 436,898 524,277 611,657 674,907
1,200,000 190,759 381,518 476,898 572,277 667,657 736,657
1,300,000 206,759 413,518 516,898 620,277 723,657 798,407
1,400,000 222,759 445,518 556,898 668,277 779,657 860,157
1,500,000 238,759 477,518 596,898 716,277 835,657 921,907
1,600,000 254,759 509,518 636,898 764,277 891,657 983,657
1,700,000 270,759 541,518 676,898 812,277 947,657 1,045,407
1,800,000 286,759 573,518 716,898 860,277 1,003,657 1,107,157
1,900,000 302,759 605,518 756,898 908,277 1,059,657 1,168,907
2,000,000 318,759 637,518 796,898 956,277 1,115,657 1,230,657
</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 (for retirements after January 1, 1997,
the highest 48 consecutive months) of an employees' earnings. Earnings include
salary, 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, 1995, final average earnings for the
individuals named in the Summary Compensation Table were as follows: J. D. Ong,
$1,112,625; D. L. Burner, $483,125; D. L. Tobler, $472,475; W. O. Smith,
$444,749; and J. V. Heider, $386,696.
(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.
19
<PAGE> 22
(3) As of January 31, 1996, the five 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, 34
years, 10 months; D. L. Burner, 16 years, 9 months; D. L. Tobler, 15 years, 1
month; W. O. Smith, 1 year, 10 months; and J. V. Heider, 15 years, 8 months.
(4) Certain recently hired executives, including D. L. Burner, D. L. Tobler, W.
O. Smith and J. V. Heider, 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, 1995, the accrued additional benefits per year
were as follows: D. L. Burner, $98,139; D. L. Tobler, $90,328; W. O. Smith,
$11,860; and J. V. Heider, $71,652. 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.
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 12
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.
VOLUNTARY RETIREMENT PROGRAM
In 1995 the Company offered a Voluntary Retirement Program to corporate staff
employees who retired by January 1, 1997. Mr. Heider, who was eligible for the
program, expressed an interest in accepting it. The Company requested Mr. Heider
to delay his retirement until as late as early 1998. The Company has agreed to
provide an additional three years for age and years of service under the
Company's Retirement Plan as it did for other eligible employees who accepted
the program.
20
<PAGE> 23
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
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, 1990 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 1990 through 1995. 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 (SPECI ALTY)
<S> <C> <C> <C> <C>
Dec90 100.00 100.00 100.00 100.00
Dec91 117.42 130.47 119.54 141.17
Dec92 143.19 140.41 125.76 149.56
Dec93 123.64 154.56 163.58 170.53
Dec94 139.98 156.60 176.94 148.87
Dec95 228.15 215.45 292.81 195.67
</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. As a result,
1994 represents the first full year of operations under the Company's new
strategic focus. In 1994 and 1995, The BFGoodrich Company outperformed what it
considers to be the relevant comparison indices. The chart below shows the 2
year cumulative percentage return since 1994 for the Company and the three
indices reflected in the graph above.
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<TABLE>
<CAPTION>
Measurement Period The BFGood- S&P 500 IN- AERO- CHEMICALS
(Fiscal Year Covered) rich Company DEX SPACE/DEFENSE (SPECI ALTY)
<S> <C> <C> <C> <C>
Dec93 100.00 100.00 100.00 100.00
Dec94 113.21 101.32 108.17 87.30
Dec95 184.52 139.40 179.00 114.74
</TABLE>
<TABLE>
<CAPTION>
1994-1995 CULULATIVE
COMPANY/INDEX RETURN
--------------------
<S> <C>
The BFGoodrich Company 84.52%
S&P 500 Index 39.40
Aerospace/Defense 79.00
Specialty Chemicals 14.74
</TABLE>
BOARD OF DIRECTORS
COMPENSATION OF DIRECTORS
During 1995 each non-employee Director of the Company received fixed
compensation for serving as a Director at the rate of $26,000 per year, plus
$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. In September 1995, the Board of Directors replaced the
existing cash retirement plan for Directors with a new Directors' Phantom Share
Plan. Under the terms of the plan, outside Directors will receive annual grants
of phantom shares equal in value to the current annual cash retainer for up to
ten years. Dividend equivalents will accrue on all phantom shares credited to a
Director's account. All phantom shares become fully vested at the earlier of
five years from the date of grant, the Director's termination of Board service
after age 55, or upon a change in control of the Company as defined in the
Company's Stock Option Plan. Following termination of service as a Director, the
vested number of phantom shares will be paid to each Director in twelve monthly
installments. The value of
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<PAGE> 25
each phantom share is determined on the relevant date by the fair market value
of the Company's Common Stock. The former cash retirement plan provided upon
retirement from the Board of Directors after reaching the age of 55 with at
least ten 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 five but less than ten 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 ten. Transitional provisions have been provided
between the old cash retirement plan and the new Director's Phantom Share Plan.
Directors with more than ten years of service will continue to be eligible under
the old plan but will not receive any phantom shares under the new plan. Outside
Directors with at least five but less than ten years service will continue to be
eligible to receive benefits under the old plan with respect to their accrued
benefits and will receive annual grants of phantom shares through their tenth
year. Outside Directors with less than five years of service will receive no
benefits under the old plan, but received initial grants of phantom shares equal
to the current annual cash retainer times the number of completed years of
service and will thereafter receive annual grants of phantom shares up to an
aggregate of ten years. Retired Directors will continue to receive their
retirement benefits.
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, 1995, for a
one-year period, at a total premium cost of $459,000.
MEETINGS BY AND CERTAIN COMMITTEES OF THE COMPANY'S BOARD OF DIRECTORS
1. MEETINGS
The Company's Board of Directors held seven meetings in 1995. All Directors
attended more than 75% of the aggregate total number of meetings held in 1995 by
the Board of Directors and the Committees of the Board of Directors on which
they served.
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, 1995):
AUDIT COMMITTEE -- James J. Glasser, Chairman; Jeanette Grasselli Brown, Vice
Chairman; George A. Davidson, Jr.; and A. Thomas Young. 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
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<PAGE> 26
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 1995.
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. Four meetings were
held in 1995.
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 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. Four meetings were held in 1995.
SECTION 16(A) REPORTING DELINQUENCIES
D. Lee Tobler, Executive Vice President, Chief Financial Officer and Director,
filed one Form 4, Statement of Changes in Beneficial Ownership, 24 days late
during 1995 with respect to the sale of 1,000 shares of the Company's Common
Stock in a single transaction on August 15, 1995.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors on February 19, 1996 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
1996 and to perform such other services as may be required. 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
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<PAGE> 27
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. REAUTHORIZATION OF STOCK OPTION PLAN
STOCK OPTION PLAN
The Board of Directors is submitting a proposal for approval by the
shareholders to reauthorize the Company's existing Stock Option Plan which was
adopted in 1991. All awards have been made under the Company's 1991 Performance
Share Plan and it will not be renewed. The current Stock Option Plan will expire
on April 15, 1997. No new awards will be made under the existing Stock Option
Plan or Performance Share Plan. The Board of Directors believes that the current
plan has been an important factor in attracting, keeping and motivating key
employees, and further believes that this type of incentive should continue to
be offered in the future. As a result, the Board proposes and recommends an
amendment to the current plan which, as amended (the "Plan"), is set forth in
Appendix B to this proxy statement. The Plan, which would allow stock options to
be granted through April 15, 2001, is substantially similar to the current plan,
but provides additional flexibility to make awards to any salaried employee. The
Compensation Committee has no present intention of expanding the class of
employees who will receive awards. The Plan gives broad discretion to fashion
awards to meet unique incentive requirements. Reference is made to Appendix B
for the specific provisions, which are summarized in the following paragraphs.
STOCK OPTIONS
The Plan would authorize the Compensation Committee (the "Committee") of the
Board to grant options to purchase up to 3,200,000 shares of the Company's
Common Stock. On February 19, 1996, the Board of Directors declared a
two-for-one stock split ("Stock Split"), in the form of a stock dividend, to
shareholders of record on March 11, 1996 and payable on April 1, 1996. THE
3,200,000 SHARES AUTHORIZED BY THIS PLAN ARE AFTER THE STOCK SPLIT, AND WILL NOT
BE INCREASED BY THE STOCK SPLIT. In other words, the shares being authorized are
equivalent to 1,600,000 shares before the Stock Split.
Stock options may not be granted at less than fair market value. Although the
Committee has never done so, the Plan specifically prohibits the repricing of
options after they are granted, or the exchange or "swapping" of lower priced
options for higher priced options. The Committee is comprised solely of
independent directors.
The Plan specifically provides for the grant of stock options which qualify as
incentive stock options ("Incentive Stock Options") under the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code"), as well as stock options
which do not qualify for such treatment. The Plan would also permit the granting
of other statutory stock options pursuant to any future provisions of the
Internal Revenue Code. The federal income tax treatment of Incentive Stock
Options is generally more favorable to optionees than the treatment accorded
other options. It is also less favorable to the Company because the Company will
generally not receive a tax deduction with respect to Incentive Stock Options.
(See "Federal Income Tax Treatment" below.) The maximum amount of Incentive
Stock Options which may
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<PAGE> 28
be granted to an individual which are exercisable for the first time during any
calendar year may not exceed $100,000 in aggregate fair market value.
The Plan provides that, subject to certain limitations with respect to the
price and term of options and rights upon termination of employment, discussed
below, the Committee shall have the authority in its discretion to specify all
other terms and conditions. The Committee may, in its discretion, grant options
to purchase the Company's Common Stock to Officers and other salaried employees
of the Company or its subsidiaries (including Directors who are also Officers or
employees but not to Directors who are not employees of the Company) at an
option price of not less than 100% of the fair market value of such Common Stock
on the date of grant. It may also determine the term of each option, which may
not exceed 10 years from the date of the granting thereof, and may permit
payment upon exercise to be made in Common Stock of the Company owned by the
optionee, valued at the fair market value on the date of exercise, or other
acceptable forms of consideration equal in value to the option price. The
Committee may place limitations on the pyramiding of shares in payment of the
option price.
STOCK APPRECIATION RIGHTS
The Plan also would authorize the Committee to grant stock appreciation rights
and/or limited stock appreciation rights in connection with any option granted
by the Committee. A stock appreciation right would, subject to the terms and
conditions set forth in the Plan, allow an employee to surrender the related
stock option and receive payment for the difference between the stock option
price and the price of the Company's Common Stock on the date on which the
appreciation right is exercised. Such payment may, in the sole discretion of the
Committee, be made in either stock or cash or in any combination thereof. A
limited stock appreciation right entitles the optionee to elect to receive the
appreciation on the option in cash for a 60 day period generally commencing
following a "change in control."
Stock appreciation rights and limited stock appreciation rights may be granted
at the time of the granting of the related stock options or any time thereafter
during the term of the related stock options. The number of stock appreciation
rights and limited stock appreciation rights granted shall not exceed the number
of shares which may be purchased upon the exercise of the related options and
shall be exercisable only so long as related options are exercisable.
Although the Committee has authority to issue stock appreciation rights, as it
does under the existing plan, the Committee has not granted stock appreciation
rights since the Securities and Exchange Commission modified the rules relating
to the short swing profit liability provisions of the Securities Exchange Act of
1934 with respect to the exercise and sale of stock options by executive
officers in 1991. The Committee has no present intentions of granting stock
appreciation rights, although it does grant limited stock appreciation rights to
those employees who are subject to such short swing profit liability provisions.
PERFORMANCE SHARE AWARDS
The Committee may award performance shares which are contingent upon the
attainment of performance objectives. The Plan provides that the performance
objectives which may be used are generally the same as provided under the Senior
Executive Management Incentive Plan, which are Net Income, Pre-tax Income,
Consolidated Operating Income, Segment Operating Income, Return on Equity,
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<PAGE> 29
Operating Income Return on Net Capital Employed, Return on Assets, Cash Flow,
Working Capital and Earnings per Share of Common Stock. The performance
objectives will be calculated without regard to any change in accounting
standards adopted pursuant to the Financial Accounting Standards Board which
will affect a performance objective by ten percent or more.
RESTRICTED SHARE AWARDS
The Committee may award restricted shares which are subject to conditions
including continued employment with the Company. The maximum number of
restricted shares which may be awarded under the plan is 800,000 shares.
OTHER AWARDS
The Plan permits the Committee to make other types of awards, including awards
which are based in whole or in part on the value of the Company's common stock,
in lieu of making awards in actual shares of stock. The Committee may permit
deferral of cash-based awards.
MISCELLANEOUS
No individual may receive awards for more than 200,000 shares in any calendar
year.
Pursuant to the Plan, the Committee will consist of not less than three
directors who are not Officers or employees of the Company, who are not eligible
to participate in the Plan. The Plan also authorizes the delegation of authority
with respect to up to 10% of the shares authorized under the Plan to the Chief
Executive Officer of the Company and other officers, but only with respect to
participants who are not subject to Section 16 of the Securities Exchange Act of
1934.
Upon the termination of employment of any optionee for any reason, his or her
options and any related appreciation rights shall terminate at that time with
respect to all shares which were not then purchasable by him or her, provided
that the Committee has discretion, where the termination of employment is by
reason of death, disability or retirement to make such options and related
appreciation rights immediately exercisable or to continue to permit the options
to become exercisable in accordance with the terms of the original grant. Any
shares in respect of which awards have been forfeited, lapsed, expired, been
canceled, withheld to satisfy withholding tax obligations or otherwise been
returned to the Company shall again be available for awards under the Plan.
However, upon surrender of a stock option on exercise of the related
appreciation right, the number of shares subject to the surrendered option shall
be charged against the maximum number of shares issuable under the plan and
shall not be available for future awards.
The Committee may require that any Federal, state or local withholding tax
requirements be satisfied by withholding shares of Common Stock.
Options and any related appreciation rights and other awards granted under the
Plan shall not be transferable other than by will or the laws of descent and
distribution, and such options and any related appreciation rights shall be
exercisable during the employee's lifetime only by the employee or by his or her
guardian or legal representative.
If actual shares are awarded subject to performance objectives, continued
service, or other conditions, they may be registered in the participant's name
but held by the Company or be retained in book-entry
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<PAGE> 30
form. In such event the participant will be entitled to receive all dividends
and other distributions and shall have voting rights. Stock awards with respect
to which the restrictions are not removed shall be forfeited to the Company.
The Plan provides that in the event of a dissolution or liquidation of the
Company or a merger, consolidation, sale of all or substantially all of its
assets, or other corporate reorganization in which the Company is not the
surviving corporation or any merger in which the Company is the surviving
corporation but the holders of its Common Stock receive securities of another
corporation (collectively, a "Restructuring"), any outstanding options under the
Plan shall terminate, provided that each optionee has the right immediately
prior to such Restructuring to exercise any unexpired option and/or stock
appreciation right in whole or in part without regard to the exercise date
contained in such option. The number of shares available under the Plan and the
price at which shares may be purchased are subject to adjustment in the event of
any stock split, stock dividend, combination of shares, reorganization or other
change in the structure of the Company, provided, however, the number of shares
available under the Plan will not be adjusted to reflect the two-for-one Stock
Split approved by the Board of Directors on February 19, 1996. The time within
which options and/or stock appreciation rights may be exercised in full shall be
accelerated in the event of 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 Plan may be amended by the Board, except that no amendment shall be made
without the approval of shareholders which has the effect of increasing the
number of shares of stock subject to the Plan, or otherwise materially
increasing the benefits accruing to participants under the Plan adversely
affecting any rights or obligations with respect to awards previously made.
Unless the time for granting awards shall be extended with the approval of
shareholders, no awards shall be granted under the Plan after April 15, 2001.
FEDERAL INCOME TAX TREATMENT
The following is a summary of the current federal income tax consequences upon
the granting and exercise of stock options, stock appreciation rights, limited
stock appreciation rights and stock awards.
(a) INCENTIVE STOCK OPTIONS. An employee who is granted an Incentive Stock
Option under the Plan will not be subject to federal income tax upon the grant
or exercise of the option. However, the exercise of an Incentive Stock Option is
a tax preference item and may be subject to the alternate minimum tax.
In the event of a sale of the shares received upon exercise of an Incentive
Stock Option after two years from the date of grant and after one year after the
date of exercise (collectively, the "Holding Periods") any appreciation of the
shares received above the exercise price should be a capital gain. The highest
rate applicable to long term net capital gains is 28 percent. The Company would
not be entitled to a tax deduction with respect to the grant or exercise of an
Incentive Stock Option, or with respect to any disposition of such shares after
the Holding Periods. However, if shares acquired pursuant to the exercise of an
Incentive Stock Option are sold by the employee before the end of the Holding
Periods, any gain on the sale will be ordinary income for the taxable year in
which the sale occurs. Income will be
28
<PAGE> 31
realized only to the extent the amount received upon sale exceeds the employee's
adjusted basis for the stock. The Company will be entitled to a tax deduction in
the amount of the ordinary income realized by the employee.
(b) NON-INCENTIVE STOCK OPTIONS. An employee who is granted a stock option
under the Plan that is not an Incentive Stock Option will not be subject to
federal tax upon the grant of the option and the Company will not be entitled to
a tax deduction by reason of such grant. Upon exercise of a stock option under
the Plan that is not a statutory Incentive Stock Option, the excess of the fair
market value of the share on the exercise date over the option price will be
considered compensation taxable as ordinary income to the employee. The Company
may claim a tax deduction in the amount of the taxable compensation realized by
the employee.
(c) STOCK APPRECIATION RIGHTS. Stock appreciation rights will not result in
taxable income to the recipient or a tax deduction for the Company at the time
of grant. The exercise of stock appreciation rights will result in compensation
taxable as ordinary income to the employee and a tax deduction to the Company in
the amount of any cash paid or the fair market value of any shares issued or
transferred.
(d) LIMITED STOCK APPRECIATION RIGHTS. The grant of limited stock appreciation
rights will not result in taxable income to the recipient or a tax deduction for
the Company at the time of grant. The exercise of limited stock appreciation
rights will result in compensation taxable as ordinary income to the employee
and a tax deduction to the Company in the amount of any cash paid upon exercise.
(e) STOCK AWARDS. Stock awards made without restrictions are subject to
federal tax to the recipient and are deductible to the Company. Stock awards
with restrictions will not be subject to federal tax upon grant and the Company
will not be entitled to a tax deduction upon grant. Upon lapse of restrictions,
the fair market value of shares free of restrictions will be considered
compensation taxable as ordinary income to the recipient and the Company may
claim a tax deduction at the same time in the same amount. Dividends paid on
shares subject to restrictions will be deemed compensation to the recipient and
deductible by the Company.
ESTIMATE OF BENEFITS
The number of awards of stock options, appreciation rights, performance
shares, restricted shares and other awards that will be awarded to the Company's
Chief Executive Officer, the other four most highly compensated executive
officers and the other employees are not currently determinable. Information
regarding awards to the Company's named executive officers in 1995 is provided
on the Summary Compensation Table, Option/SAR Grants in Last Fiscal Year and
Long-Term Incentive Plans -- Awards in Last Fiscal Year tables. In addition, in
1995, 112,600 stock options, 37,500 restricted shares and 109,900 performance
shares were granted to all executive officers as a group; 412,950 stock options,
100,850 restricted shares and 283,100 performance shares were granted to all
employees. It is the current policy of the Compensation Committee to grant
awards of restricted shares and performance shares every three years. Awards
were made in 1995 and no awards are expected to be made to the same individuals
in 1996 or 1997. Stock options are generally awarded each year.
As described in the Compensation Committee Report, the Committee makes awards
based upon a percentage of an individual's salary midpoint. Consequently, as the
price of the Company's Common Stock increases, the number of options, restricted
shares and performance shares awarded would decrease. At the time of the 1995
stock option awards on January 3, 1995, the fair market value of the
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<PAGE> 32
Company's Common stock was $43.5625, and at the time of the restricted share and
performance share awards on February 20, 1995, the fair market value was
$44.375. The Company estimates that if the Company's Common Stock were $75 per
share, the awards would have been reduced by approximately 40 percent. The
closing price of the Company's Common Stock on February 22, 1996 was $75.125.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE REAUTHORIZATION OF THE
STOCK OPTION PLAN AMENDMENT.
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
of the preceding year's annual meeting. Consequently such notice must be
received between January 18 and February 17, 1996. 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 1997 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, 1996. The Company suggests that
all such proposals be sent by certified mail, return receipt requested.
Dated February 29, 1996 By Order of the Board of Directors
Nicholas J. Calise, Secretary
PLEASE DATE, SIGN AND MAIL YOUR PROXY
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<PAGE> 33
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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<PAGE> 34
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
STOCK OPTION PLAN
1. PURPOSE. The purpose of the Plan is to promote the interests of the
shareholders by providing stock-based incentives to selected employees to align
their interests with shareholders and to motivate them to put forth maximum
efforts toward the continued growth, profitability and success of the Company.
In furtherance of this objective, stock options, stock appreciation rights,
performance shares, restricted shares, common stock, and/or other incentive
awards may be granted in accordance with the provisions of this Plan.
2. ADMINISTRATION. The Plan is to be administered by the Compensation
Committee or any successor committee (the "Committee") of the Board of Directors
of the Company. The Committee shall consist of at least three members who shall
not be eligible to participate in the Plan. The Committee shall have full power
and authority to construe, interpret and administer the Plan. All decisions,
actions or interpretations of the Committee shall be final, conclusive and
binding on all parties.
The Committee may delegate to the Chief Executive Officer and to other senior
officers of the Company the authority to make awards under the Plan with respect
to not more than ten percent of the shares authorized under the Plan, pursuant
to such conditions and limitations as the Committee may establish, except that
only the Committee may make awards to Participants who are subject to Section 16
of the Securities Exchange Act of 1934.
3. SHARES AVAILABLE FOR THE PLAN. An aggregate of 3,200,000 shares of common
stock of the Company shall be available for delivery pursuant to the provisions
of the Plan. Such shares may be either authorized but unissued shares or
treasury shares. Any shares awarded under the Plan which are not issued or
otherwise are returned to the Company, whether because awards have been
forfeited, lapsed, expired, been canceled, withheld to satisfy withholding tax
obligations or otherwise, shall again be available for other awards under the
Plan. However, upon surrender of a stock option or exercise of any related stock
appreciation right, the number of shares subject to the surrendered option shall
be charged against the maximum number of shares issuable under the Plan and
shall not be available for future awards.
4. LIMITATION ON AWARDS. No individual employee may receive awards under this
Plan with respect to more than 200,000 shares in any calendar year.
5. TERM. No awards may be made under this Plan after April 15, 2001.
6. ELIGIBILITY. Awards under the Plan may be made to any salaried, full-time
employee of the Company or any subsidiary corporation of which more than 50% of
the voting stock is owned by the Company. Directors who are not full-time
employees are not eligible to participate.
7. STOCK OPTIONS. The Committee may in its discretion from time to time grant
to eligible employees options to purchase, at a price not less than 100% of the
fair market value on the date of
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grant (the "option price"), common stock of the Company, subject to the
conditions set forth in this Plan. The Committee may not reduce the option price
of any stock option grant after it is made, except in connection with a
Corporate Reorganization, nor may the Committee agree to exchange a new lower
priced option for an outstanding higher priced option.
The Committee, at the time of granting to any employee an option to purchase
shares or any related stock appreciation right or limited stock appreciation
right under the Plan, shall fix the terms and conditions upon which such option
or appreciation right may be exercised, and may designate options incentive
stock options pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code") or any other statutory stock option that
may be permitted under the Internal Revenue Code from time to time, provided,
however that (i) the date on which such options and related appreciation rights
shall expire, if not exercised, may not be later than ten years after the date
of grant of the option, (ii) in the case of options designated as incentive
stock options (as defined in Section 422 of the Internal Revenue Code), the
aggregate fair market value of stock optioned to an employee (determined at time
of grant) under this plan or any other plan of this Company and its subsidiaries
with respect to which incentive stock options are exercisable for the first time
by such employee during any calendar year shall be limited to $100,000 (unless
such Section 422 limit is revised, then in conformance with such revision) and
(iii) in case of any other statutory stock option permitted under the Internal
Revenue Code, then in accordance with such provisions as in effect from time to
time.
Within the foregoing limitations, the Committee shall have the authority in
its discretion to specify all other terms and conditions, including but not
limited to provisions for the exercise of options in installments, the time
limits during which options may be exercised, and in lieu of payment in cash,
the exercise in whole or in part of options by tendering common stock of the
Company owned by the employee, valued at the fair market value on the date of
exercise or other acceptable forms of consideration equal in value to the option
price. The Committee may, in its discretion, issue rules or conditions with
respect to utilization of common stock for all or part of the option price,
including limitations on the pyramiding of shares.
8. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, grant
stock appreciation rights and limited stock appreciation rights (as hereinafter
described) in connection with any stock option, either at the time of grant of
such stock option or any time thereafter during the term of such stock option.
Except for the terms of this Plan with respect to limited stock appreciation
rights, each stock appreciation right shall be subject to the same terms and
conditions as the related stock option and shall be exercisable at such times
and to such extent as the Committee shall determine, but only so long as the
related option is exercisable. The number of stock appreciation rights or
limited stock appreciation rights shall be reduced not only by the number of
appreciation rights exercised but also by the number of shares purchased upon
the exercise of a related option. A related stock option shall cease to be
exercisable to the extent the stock appreciation rights or limited stock
appreciation rights are exercised. Upon surrender to the Company of the
unexercised related stock option, or any portion thereof, a stock appreciation
right shall entitle the optionee to receive from the Company in exchange
therefor (a) a payment in stock as determined below, or (b) to the extent
determined by the Committee, the cash equivalent of the fair market value of
such payment in stock on the exercise date had the employee been awarded a
payment in stock instead of cash, or any combination of stock and cash. The
number of shares which shall be issued pursuant to the exercise of stock
appreciation rights
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shall be determined by dividing (1) the total number of stock appreciation
rights being exercised multiplied by the amount by which the fair market value
of a share of common stock of the Company on the exercise date exceeds the
option price of the related option, by (2) the fair market value of a share of
common stock of the Company on the exercise date. No fractional shares shall be
issued.
The grant of limited stock appreciation rights will permit a grantee to
exercise such limited stock appreciation rights for cash during a sixty-day
period commencing on the date on which any of the events described in the
definition of Change of Control occurs, each of which events shall hereinafter
be known as a "Change in Control Event." Notwithstanding the foregoing, however,
if the Change in Control Event occurs within six months after the date on which
limited stock appreciation rights were granted, then the sixty-day period during
which such limited stock appreciation rights may be exercised for cash shall
commence six months after the date on which the limited stock appreciation
rights were granted. The amount of cash received upon the exercise of any
limited stock appreciation rights under either of the preceding two sentences
shall equal the excess, if any, of the fair market value of a share of the
Company's common stock on the date of exercise of the limited stock appreciation
rights, over the option price of the stock option to which the limited stock
appreciation rights relate.
9. PERFORMANCE SHARE AWARDS. The Committee may make awards in common stock
subject to conditions established by the Committee which may include attainment
of specific performance objectives ("Performance Share Awards"). Performance
Share Awards may include the awarding of additional shares upon attainment of
the specified performance objectives.
10. PERFORMANCE OBJECTIVES. Performance objectives 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, Cash Flow, Working Capital and Earnings per Share of
Common Stock of the Company (the "Performance Objectives"). The Performance
Objectives 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 Objective is adopted which will affect the performance
measure by 10 percent or more.
11. RESTRICTED SHARES. The Committee may make awards in common stock subject
to conditions, if any, established by the Committee which may include continued
service with the Company or its subsidiaries. The maximum number of Restricted
Shares that may be awarded under the plan shall be 400,000 shares.
12. OTHER AWARDS. The Committee may make awards authorized under this Plan in
Units, the value of which is based, in whole or in part, on the value of the
Company's common stock, in lieu of making such awards in common stock. The
Committee may provide for the deferral of cash-based awards under such terms and
conditions as in its discretion it deems appropriate.
13. FAIR MARKET VALUE. For all purposes of this Plan the fair market value of
a share of stock shall be the mean of the high and low prices of the Company's
common stock on the relevant date as reported on the New York Stock
Exchange -- Composite Transactions listing (or similar report), or, if no sale
was made on such date, then on the next preceding day on which such a sale was
made.
14. TERMINATION OF EMPLOYMENT. Upon the termination of employment of any
employee for any reason, his or her options and any related appreciation rights
shall terminate at that time with
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respect to all shares which were not then purchasable by him or her, provided,
however, that if the termination of employment is by reason of death, disability
or retirement the Committee may in its sole discretion provide that such options
and related appreciation rights shall not terminate upon death, disability or
retirement and may become immediately exercisable or continue to become
exercisable in accordance with the terms of the original grant.
15. ASSIGNABILITY. Options and any related appreciation rights and other
awards granted under this Plan shall not be transferable other than by will or
the laws of descent and distribution or by such other means as the Committee may
approve from time to time.
16. CORPORATE REORGANIZATION. The number and kind of shares authorized for
delivery under the Plan and the price at which shares may be purchased may be
adjusted appropriately in the event of any stock split, stock dividend,
combination of shares, merger, consolidation, reorganization, or other change in
the structure of the Company or the nature of the shares of the Company. The
determination of what adjustments, if any, are appropriate shall be made in the
discretion of the Board of Directors or the Committee.
In the event of a dissolution or liquidation of the Company or a merger,
consolidation, sale of all or substantially all of its assets, or other
corporate reorganization in which the Company is not the surviving corporation
or any merger in which the Company is the surviving corporation but the holders
of its common stock receive securities of another corporation, any outstanding
options hereunder shall terminate, provided that each optionee shall, in such
event, have the right immediately prior to such dissolution, liquidation,
merger, consolidation, sale of assets or reorganization in which the Company is
not the surviving corporation or any merger in which the Company is the
surviving corporation but the holders of its common stock receive securities of
another corporation, to exercise any unexpired option and/or stock appreciation
right in whole or in part without regard to the exercise date contained in such
option. Nothing herein contained shall prevent the assumption and continuation
of any outstanding option or the substitution of a new option by the surviving
corporation.
17. COMMITTEE'S DETERMINATION. The Committee's determinations under the Plan
including without limitation, determinations of the employees to receive awards
or grants, the form, amount and timing of such awards or grants, the terms and
provisions of such awards or grants and the agreements evidencing same, and the
establishment of Performance Objectives need not be uniform and may be made by
it selectively among employees who receive, or are eligible to receive awards or
grants under the Plan whether or not such employees are similarly situated.
18. LEAVE OF ABSENCE OR OTHER CHANGE IN EMPLOYMENT STATUS. The Committee
shall be entitled to make such rules, regulations and determinations as it deems
appropriate under the Plan in respect of any leave of absence taken by an
employee or any other change in employment status, such as a change from full
time employment to a consulting relationship, of an employee relative to any
grant or award. Without limiting the generality of the foregoing, the Committee
shall be entitled to determine (i) whether or not any such leave of absence or
other change in employment status shall constitute a termination of employment
within the meaning of the Plan and (ii) the impact, if any, of any such leave of
absence or other change in employment status on awards under the Plan
theretofore made to any employee who takes such leave of absence or otherwise
changes his or her employment status.
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19. WITHHOLDING TAXES. The Committee shall have the right to require any
Federal, state or local withholding tax requirements to be satisfied by
withholding shares of common stock or other amounts which would otherwise be
payable under the Plan.
20. RETENTION OF SHARES. If shares of common stock are awarded subject to
attainment of Performance Objectives, continued service with the Company or
other conditions, the shares may be registered in the employees' names when
initially awarded, but possession of certificates for the shares shall be
retained by the Secretary of the Company for the benefit of the employees, or
shares may be registered in book entry form only, in both cases subject to the
terms of this Plan and the conditions of the particular awards. In either event,
each employee shall have the right to receive all dividends and other
distributions made with respect to such awards registered in his or her name and
shall have the right to vote or execute proxies with respect to such registered
shares.
21. FORFEITURE OF AWARDS. Any awards or parts thereof made under this plan
which are subject to Performance Objectives or other conditions which are not
satisfied, shall be forfeited, and any shares of common stock issued shall
revert to the Treasury of the Company.
22. CONTINUED EMPLOYMENT. Nothing in the Plan or in any agreement entered
into pursuant to the Plan shall confer upon any employee the right to continue
in the employment of the Company or affect any right which the Company may have
to terminate the employment of such employee.
23. CHANGE IN CONTROL. 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 (D) any acquisition by
any corporation with respect to which, following such acquisition, more than 70%
of, respectively, 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
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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 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.
24. EFFECT OF CHANGE IN CONTROL. Options and any related appreciation rights
that are not then exercisable shall become immediately exercisable in the event
of a Change in Control. The Committee may make such provision with respect to
other awards under this Plan as it deems appropriate in its discretion.
25. COMPLIANCE WITH LAWS AND REGULATIONS. Notwithstanding any other
provisions of the Plan, the issuance or delivery of any shares may be postponed
for such period as may be required to comply with any applicable requirements of
any national securities exchange or any requirements under any other law or
regulation applicable to the issuance or delivery of such shares, and the
Company shall not be obligated to issue or deliver any such shares if the
issuance or delivery thereof shall constitute a violation of any provision of
any law or any regulation of any governmental authority, whether foreign or
domestic, or any national securities exchange.
26. AMENDMENT. The Board of Directors of the Company may alter or amend the
Plan, in whole or in part, from time to time, or terminate the Plan at any time,
provided however, that no amendment shall be made without the approval of the
shareholders which has the effect of increasing the number of shares subject to
this Plan (other than in connection with a Corporate Reorganization), but no
such action shall adversely affect any rights or obligations with respect to
awards previously made under the Plan.
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BFGOODRICH
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<PAGE> 42
[BFGoodrich Logo]
February 29, 1996
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 15, 1996, 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 and the proposal to approve
reauthorization of the Stock Option Plan. To hear a recorded summary about
the Annual Meeting of Shareholders and voting results, please call our new
information service, Shareholder Direct, at 1-800-BFG-5987 on or after April
16.
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
<PAGE> 43
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<CAPTION>
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[ ]
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THE BOARD OF DIRECTORS RECOMENDS A VOTE FOR PROPOSALS 1,2, AND 3
<S> <C> <C> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees [ X ] WITHHOLD AUTHORITY to vote [ X ] EXECEPTIONS (as marked [ X ]
listed below for all nominees listed below to the contrary below)
Jeanette Grasselli Brown, David L Burner, George A. Davidson, Jr., James J. Glasser, Thomas H. O'Leary, John D. Ong, Richard
de J. Osborne, Joseph A. Pichler, Alfred M. Rankin, Jr., Ian M. Ross, D. Lee Tobler, William L. Wallace 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 _______________________________________________________________________________________________________________
2. Approval of Ernst & Young LLP as auditors. 3. Approval of the Reauthorization of Stock Option Plan.
FOR [ X ] AGAINST [ X ] ABSTAIN [ X ] FOR [ X ] AGAINST [ X ] ABSTAIN [ X ]
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION
IS MADE, THIS PROXY WILL VOTED FOR ELECTION OF DIRECTORS AND FOR PROPOSALS 2 AND 3. Change of Addresss and/or
Comments Mark Here [ X ]
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: ____________________________________________, 1996
_________________________________________________________
Signature
_________________________________________________________
Signature
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE VOTES MUST BE INDICATED
ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK. [ X ]
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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 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 15, 1996, 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.
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.)
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