<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] No fee required.
[ ] 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
BF Goodrich Logo
- --------------------------------------------------------------------------------
NOTICE OF
1997
ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
<PAGE> 3
THE BFGOODRICH COMPANY BF GOODRICH LOGO
4020 Kinross Lakes Parkway
Richfield, Ohio 44286-9368
NOTICE TO SHAREHOLDERS
THE ANNUAL MEETING OF SHAREHOLDERS of The B.F.Goodrich Company, a New York
corporation, will be held in the Versailles Suite on the second floor of The St.
Regis Hotel, Two East 55th Street, New York, New York on April 21, 1997, at
10:30 A.M. for the following purposes:
1. To elect fourteen 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 1997.
3. 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 March 3, 1997 as the record date for
determining shareholders entitled to notice of and to vote at the meeting. Only
holders of record at the close of business on that date shall be entitled to
notice of and to vote at the meeting or any adjournment thereof.
A proxy for use at the meeting in the form accompanying this Notice is hereby
solicited on behalf of the Board of Directors of the Company from holders of
Common Stock. IT IS IMPORTANT THAT THE PROXY BE RETURNED REGARDLESS OF THE
NUMBER OF SHARES OWNED. Shareholders may withdraw their proxies at the meeting
should they be present and desire to vote their shares in person, and they may
revoke their proxies for any reason at any time prior to the voting thereof.
IT IS IMPORTANT THAT EVERY SHAREHOLDER BE REPRESENTED AT THE MEETING
REGARDLESS OF THE NUMBER OF SHARES OWNED. TO MINIMIZE EXPENSE ASSOCIATED WITH
COLLECTING PROXIES, PLEASE EXECUTE AND RETURN YOUR PROXY PROMPTLY.
Dated March 7, 1997 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 Versailles Suite
on the second floor of The St. Regis Hotel, Two East 55th Street, New York, New
York on April 21, 1997. All shareholders of record of Common Stock at the close
of business on March 3, 1997 will be entitled to notice of and to vote at the
meeting. There were 53,878,857 shares outstanding on such date, and each share
is entitled to one vote. There are no cumulative voting rights. All of the
shares represented by proxies submitted by such shareholders, and not revoked by
them, will be voted on all matters presented for a vote. Proxies for shares of
Common Stock will also represent shares held under the Company's Dividend
Reinvestment Plan. Proxies will also be considered to be voting instructions to
the Plan Trustee with respect to shares held in accounts under The B.F.Goodrich
Company Retirement Plus Savings Plan and similar plans of subsidiaries. If
participants in any such plan also are shareholders of record with the same
account information, they will receive a single proxy which will represent all
shares. If the account information is different, then the participants will
receive separate proxies. Participants in other Company employee benefit plans
will receive separate proxies. The number printed on the proxy card reflects the
total number of shares represented by that proxy.
The expense of soliciting these proxies will be paid by the Company. In
addition to the use of the mails, proxies may be solicited personally, or by
telephone or by facsimile, by Officers, Directors, and employees of the Company.
The Company will reimburse brokers and others holding shares in their names, or
in the names of nominees, for their expenses in sending proxy material to the
beneficial owners of such shares and obtaining their proxies. The Company has
retained 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 1996, including financial statements, is
being mailed with this proxy statement to each holder of record of the Company's
Common Stock. An additional copy will be furnished to any shareholder upon
request. The approximate date on which this proxy statement and the accompanying
proxy will first be mailed to shareholders is March 7, 1997. The principal
executive offices of the Company are located at 4020 Kinross Lakes Parkway,
Richfield, Ohio 44286-9368.
VOTE REQUIRED FOR APPROVAL
The fourteen nominees for director receiving a plurality of the votes cast at
the meeting in person or by proxy shall be elected. All other matters to be
voted upon at the meeting, including the ratification of the appointment of
independent auditors, will be decided by a majority of the votes cast "for" or
"against" approval. Consequently, abstentions and broker non-votes will have no
effect on any matter submitted to a vote at this meeting.
2
<PAGE> 5
PROPOSALS TO SHAREHOLDERS
1. ELECTION OF DIRECTORS
One of the purposes of the meeting is the election of fourteen Directors to
hold office until the next Annual Meeting of Shareholders in 1998 and until
their respective successors are elected and qualified. It is intended that the
accompanying proxy will be voted for the election of the fourteen nominees named
on the following pages, all of whom are now Directors and whose terms expire in
April 1997.
All nominees have indicated that they are willing and able to serve as
Directors if elected. Mr. Ong has announced his retirement as of July 1, 1997,
at which time he is expected to resign as a Director. 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
<TABLE>
<S> <C>
JEANETTE GRASSELLI BROWN, age 68 -- Director since April 15, 1991.
JEANETTE GRASSELLI RETIRED DIRECTOR OF CORPORATE RESEARCH, BP AMERICA. Mrs. Brown is a
BROWN PHOTO 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 Great Lakes Science Center, 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 57 -- Director since December 4, 1995.
DAVID L. BURNER PHOTO PRESIDENT AND CHIEF EXECUTIVE OFFICER, 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 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
1994, was elected President of the Company in December 1995 and assumed
the additional title of Chief Executive Officer in December 1996. 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, the Board of Directors
of the Akron Art Museum, The Greater Cleveland Growth Association and
is a Trustee of The Ohio University Foundation. He serves on the
Advisory Board of the Salvation Army of Greater Cleveland.
GEORGE A. DAVIDSON, JR., age 58 -- Director since April 15, 1991.
GEORGE A. DAVIDSON, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, CONSOLIDATED NATURAL GAS COMPANY,
JR. PHOTO 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 past Chairman of the
American Gas Association and Chairman of the Board 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.
</TABLE>
4
<PAGE> 7
NOMINEES FOR ELECTION
<TABLE>
<S> <C>
RICHARD K. DAVIDSON, age 55 -- Director since October 1, 1996.
RICHARD K. DAVIDSON CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, UNION PACIFIC
PHOTO CORPORATION, a transportation company with interests in the railroad
and trucking industries. Mr. Davidson received his B.A. degree from
Washburn University in Kansas and completed the Advanced Management
Program at Harvard University. He launched his railroad career with the
Missouri Pacific Railroad in 1960. In 1982 Mr. Davidson became part of
Union Pacific Railroad when the Missouri Pacific merged with Union
Pacific. He became Vice President-Operations in 1986 and Executive Vice
President three years later. In August of 1991 Mr. Davidson became
President and Chief Executive Officer and six weeks later was elected
Chairman and Chief Executive Officer of Union Pacific Railroad. In
1994, he became President and a member of the Board of Directors of
Union Pacific Corporation, Chief Operating Officer in November of 1995
and remains Chairman and Chief Executive Officer of Union Pacific
Railroad. Mr. Davidson became Chairman and Chief Executive Officer of
Union Pacific Corporation on January 1, 1997. Currently he serves as a
member of the Board of CALEnergy Company, Inc.
JAMES J. GLASSER, age 62 -- Director since April 15, 1985.
JAMES J.GLASSER PHOTO CHAIRMAN EMERITUS, 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, Chairman of
the Board and Chief Executive Officer in 1978, and Chairman Emeritus in
April 1996. He is a Director of 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 62 -- Director since April 18, 1988.
THOMAS H. O'LEARY CHAIRMAN, BURLINGTON RESOURCES INC., an oil and gas exploration and
PHOTO 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.
</TABLE>
5
<PAGE> 8
NOMINEES FOR ELECTION
<TABLE>
<S> <C>
DOUGLAS E. OLESEN, age 58 -- Director since October 1, 1996.
DOUGLAS E. OLESEN PRESIDENT AND CHIEF EXECUTIVE OFFICER, BATTELLE MEMORIAL INSTITUTE, a
PHOTO research and development organization for government and industry. Dr.
Olesen earned his B.S., M.S. and Ph.D. degrees in Civil Engineering at
the University of Washington. In 1963 Dr. Olesen joined Boeing Aircraft
Company as a Research Engineer and assisted in developing and testing
closed life-support systems for long-term space missions. He joined
Battelle Memorial Institute, Northwest Labs, in Richland, Washington in
1967 and served in a series of management positions. Dr. Olesen was
named Vice President and Director of the Northwest Division in 1979. In
1984 he became Executive Vice President and Chief Operating Officer of
the Battelle Memorial Institute in Columbus, Ohio. Three years later he
was elected President and Chief Executive Officer. Currently he serves
as a Director of Columbia Gas Systems, Inc. and its subsidiary,
Columbia Gas-Ohio. He is active in numerous community organizations and
is also a former President of the International Technology Institute.
JOHN D. ONG, age 63 -- Director since June 18, 1973.
JOHN D. ONG PHOTO CHAIRMAN OF THE BOARD, 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. He relinquished the title of Chief Executive Officer in
December 1996. 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. 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).
RICHARD DE J. OSBORNE, age 62 -- Director since April 15, 1996.
RICHARD DE J. OSBORNE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ASARCO INCORPORATED, a
PHOTO 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. and Schering-Plough Corporation. Mr. Osborne
is a Trustee of The Tinker Foundation.
</TABLE>
6
<PAGE> 9
NOMINEES FOR ELECTION
<TABLE>
<S> <C>
JOSEPH A. PICHLER, age 57 -- Director since September 1, 1988.
JOSEPH A. PICHLER CHAIRMAN AND CHIEF EXECUTIVE OFFICER, THE KROGER CO., a retail food
PHOTO 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. and
Cincinnati Milacron, Inc. He 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 Salvation Army School for
Officer Training.
ALFRED M. RANKIN, JR., age 55 -- Director since April 18, 1988.
ALFRED M. RANKIN, JR. CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, NACCO INDUSTRIES,
PHOTO 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 a trustee of The Cleveland Foundation, Cleveland Tomorrow,
the Cleveland Museum of Art, the Musical Arts Association and
University Hospitals of Cleveland.
IAN M. ROSS, age 69 -- Director since March 1, 1983.
IAN M. ROSS PHOTO PRESIDENT EMERITUS, 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 NACCO
Industries, Inc. and 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.
</TABLE>
7
<PAGE> 10
NOMINEES FOR ELECTION
<TABLE>
<S> <C>
D. LEE TOBLER, age 63 -- Director since April 18, 1988.
D. LEE TOBLER PHOTO 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, The
University of Akron, Inventure Place and Executive Vice President of
the Ohio Ballet.
A. THOMAS YOUNG, age 58 -- Director since April 17, 1995.
A. THOMAS YOUNG 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 Executive Committee of the Business
Committee for the Arts and a member of the National Academy of
Engineering.
</TABLE>
8
<PAGE> 11
RETIRING DIRECTORS
William L. Wallace, a Director since 1990, will retire as of the 1997 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 17 and February 17,
1997. 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.
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, 1997.
<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)(2) SHARES(3) CLASS(2) POWER POWER
- -------------------------- ----------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Jeanette Grasselli Brown 2,000 4,061 * 2,000 2,000
David L. Burner 256,868 * 55,268 17,268
George A. Davidson, Jr. 3,000 4,061 * 3,000 3,000
Richard K. Davidson 1,000 * 1,000 1,000
James J. Glasser 2,000 * 2,000 2,000
Jon V. Heider 194,046 * 67,496 41,496
Marshall O. Larsen 140,933 * 26,853 6,853
Thomas H. O'Leary 400 651 * 400 400
Douglas E. Olesen 450(5) * 450(5) 450(5)
John D. Ong 630,463 1.1% 277,653 199,653
Richard de J. Osborne 1,014 * 1,014(4) 1,014(4)
Joseph A. Pichler 1,600 651 * 1,600 1,600
Alfred M. Rankin, Jr. 1,000 651 * 1,000 1,000
Ian M. Ross 1,000 * 1,000 1,000
Wayne O. Smith 97,379 * 45,379 7,379
D. Lee Tobler 188,122 * 44,358 14,358
William L. Wallace 4,700 651 * -0- -0-
A. Thomas Young 1,000 651 * 1,000 1,000
22 Directors and Officers 1,810,726 11,377 3.3% 636,472 341,672
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, 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, 352,810 shares; D. L.
Burner, 201,600 shares; D. L. Tobler, 143,764 shares; M. O. Larsen, 114,080; W.
O. Smith, 52,000; J. V. Heider, 126,550; and 22 Directors and Officers as a
group, 1,169,554 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. All ownership is
direct, except for W. L. Wallace who owns 4,700 shares indirectly.
(2) Does not include Directors' Phantom Shares.
(3) Number of shares awarded under Directors' Phantom Share Plan, see "Board of
Directors -- Compensation of Directors".
(4) Shared voting and investment power.
(5) As of February 4, 1997.
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, 1996. 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 5,362,042 10.0%
Plus Savings Plan and other
Company plans(1)
Other(2) 1,112,387 2.1
Massachusetts Financial Services 3,068,280 5.7
Company(3)
500 Boylston Street
Boston, MA 02116
Equinox Capital Management, Inc.(4) 2,772,780 5.2
590 Madison 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 487,993 shares, shared voting power as to
416,894 shares, sole dispositive power as to 694,333 shares and shared
dispositive power as to 418,054 shares.
(3) Has sole voting power as to 2,984,280 shares and sole dispositive power as
to all shares.
(4) Has sole voting power as to 1,465,620 shares, shared voting power as to
1,307,160 shares and sole dispositive power as to all 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.
11
<PAGE> 14
- Total cash compensation is to be above the median and nearing the 75th
percentile of major industrial companies when the variable compensation
elements are earned and be substantially below the median when the variable
compensation elements are not earned. The Company intends to provide total
compensation commensurate with performance -- when there is good
performance, compensation levels will compare favorably with other
companies, and when performance is below expectations, compensation levels
will be below the average of other companies.
The Company's compensation program consists of three elements: annual base
salary, annual cash bonus incentive compensation and long-term incentives. To
assist it in performing its duties, the Committee meets periodically with
compensation consultants.
SURVEY DATA
The Compensation Committee establishes compensation programs, in part, on the
basis of competitive factors. It considers both broad-based surveys of large
industrial companies and industry-specific surveys. The principal broad-based
surveys relied upon include three nationally recognized surveys covering more
than 1,400 U.S. companies.
The principal industry-specific survey utilized is that of selected aerospace
and chemical companies, which the Committee has used for a number of years.
There is some overlap between the different survey groups. No separate survey is
constructed that includes only those companies comprising the different indices
used in the stock price performance graph, although some of those companies are
contained in the other surveys. The 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 divided into two types -- annual cash bonus and long-term incentive
compensation. Generally speaking,
12
<PAGE> 15
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 1996, the financial pools were weighted between 80% and 85% and
the strategic/operational pools were weighted between 15% and 20% of the target.
Incentive payments can range from 50% of the target amount when the threshold
financial objective of the corporate staff and major business segments (75%-92%
of target in 1996) is achieved, to a maximum of 150% of the target when the
maximum financial objective (110%-125% of target in 1996) is achieved. If a
minimum financial performance is not achieved, no bonus will be paid.
In 1996 corporate staff financial goals were based upon net income and return
on equity. Operating segment financial goals were based upon segment operating
income and working capital as a percent of sales. Individual awards are made
based upon individual performance within a range established with reference to
achievement of financial and strategic goals.
1996 RESULTS
The corporate staff achieved 142% of their financial and strategic goals. The
operating segments achieved between 97% and 139% of their respective goals. The
actual payout for the corporate staff averaged 124% of the target bonus and for
the operating segments averaged 97% of target.
The strategic goals for the corporate staff related to the implementation of
corporate plans, resolution of litigation, 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, acquisitions and strategic alliances,
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,
1996, 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 achievement of
financial objectives, less the number of shares to satisfy applicable
withholding taxes.
Currently the Committee only makes awards once every three years. 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
and that options may not be repriced. 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 1996 the Committee
granted stock options to 125 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 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. During 1996 the Committee endorsed a management recommendation
establishing stock ownership guidelines for participants in the Long-Term
Incentive Plan at a multiple of their base salary. The multiple varies from
between .75 to 4 times salary, with the multiple increasing with one's level
within the Company. Individuals are given five years to achieve the target
ownership levels. 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 compensation to be earned in 1996 and all
existing awards under the Company's long-term incentive plans will be fully
deductible for Federal income tax purposes.
14
<PAGE> 17
CHIEF EXECUTIVE OFFICER
In determining the base salary established for John D. Ong, the Chief
Executive Officer until December 2, 1996, and for David L. Burner, the Chief
Executive Officer since that date, the Compensation Committee took into account
surveys of base compensation of chief executive officers of other major
industrial companies. With respect to Messrs. Ong and Burner, the Committee
considered their leadership and key contributions to the overall financial
performance of the Company, and the Company's 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.
In December 1996, the Committee increased Mr. Burner's base salary to reflect
the added responsibilities he assumed as Chief Executive Officer.
Messrs. Ong and Burner do not participate in the Management Incentive Program.
Instead, they participate 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 60% on net income and 40% 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
1996 Messrs. Ong and Burner received $820,874 and $487,046 respectively, or 146%
of their target amounts.
In 1996, Messrs. Ong and Burner each received options to purchase 52,000
shares. (All share numbers have been adjusted to reflect the two-for-one stock
split on April 1, 1996.) Of this amount the Committee awarded options to
purchase 20,000 shares to Mr. Burner due to the increased responsibilities he
assumed as President of the Company in December, 1995. During 1995, Messrs. Ong
and Burner were awarded 58,000 and 28,000 Performance Shares and 20,000 and
10,000 shares of Restricted Stock respectively. The guidelines for awards for
the Chief Executive Officer and the actual targets are the same as for other
corporate officers. The Committee used the same factors to make these awards as
it did in determining the other elements of Messrs. Ong's and Burner's
compensation. Currently the Committee only makes awards every three years. Mr.
Ong has announced his intention to retire from the Company on July 1, 1997.
The Compensation Committee compares the total long-term incentive compensation
with total long-term incentive compensation from the survey data. The
Committee's target is to have total long-term incentive compensation equal 110%
of the median of the survey data when the Company achieves its financial
objectives. The guidelines for long-term incentive data are reviewed
periodically.
The Compensation Committee
James J. Glasser, Chairman
William L. Wallace, Vice Chairman
Jeanette Grasselli Brown
George A. Davidson, Jr.
Richard K. Davidson
Ian M. Ross
15
<PAGE> 18
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------------
ANNUAL COMPENSATION
------------------------------------- AWARDS PAYOUTS
-------------------------- ------------
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL COMPENSATION RESTRICTED STOCK OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($) AWARDS($)(1) SARS(#) ($)(1) ($)(2)
- ------------------ ----- ---------- --------- ------------ ---------------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John D. Ong,(3) 1996 750,000 820,874 139,099 -0- 52,000 -0- 91,950
Chairman 1995 750,000 782,496 100,892 443,750 31,000 -0- 84,000
and Chief 1994 750,000 650,000 103,794 -0- 17,500 840,463 68,760
Executive Officer
David L. 1996 487,500 487,046 62,511 -0- 52,000 -0- 48,750
Burner,(3)
President and 1995 362,500 325,000 46,581 221,875 13,000 -0- 34,650
Chief
Executive Officer 1994 325,000 215,000 33,862 -0- 6,000 124,073 30,000
D. Lee Tobler, 1996 407,000 325,000 65,073 -0- 22,000 -0- 41,100
Executive Vice 1995 395,000 278,000 49,630 177,500 13,000 -0- 31,050
President and 1994 379,000 245,000 43,591 -0- 8,000 270,954 31,524
Chief Financial
Officer
Marshall O. 1996 300,000 325,000 41,284 -0- 56,000 -0- 27,900
Larsen,
Executive Vice 1995 240,417 165,000 21,567 110,938 14,400 -0- 45,245
President 1994 205,000 97,000 13,299 -0- 6,600 -0- 17,400
and President,
BFGoodrich
Aerospace
Wayne O. Smith,(4) 1996 348,000 250,000 68,614 -0- 26,000 -0- 35,880
Executive Vice 1995 326,250 250,000 37,708 221,875 13,000 -0- 4,950
President 1994 225,000 190,000 8,040 -0- 5,000 -0- 212,500
and President,
BFGoodrich
Specialty
Chemicals
Jon V. Heider, 1996 320,000 250,000 58,807 -0- 18,000 -0- 32,700
Executive Vice 1995 307,000 225,000 46,179 133,125 10,000 -0- 28,620
President and 1994 295,917 170,000 44,747 -0- 5,000 236,297 23,911
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, 1996, 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, 78,000
and $3,159,000; D. L. Burner, 38,000 and $1,539,000; D. L. Tobler, 30,000 and
$1,215,000; M. O. Larsen, 20,000 and $810,000; W. O. Smith, 38,000 and
$1,539,000; and J. V. Heider, 26,000 and $1,053,000.
(2) Of the amounts shown, $9,000 represents the Company's contribution to the
Retirement Plus Savings Plan, a tax-qualified defined contribution plan, and the
balance represents Company contributions to a benefit restoration plan with
respect to amounts in excess of the amount permitted to be contributed under the
tax-qualified plan.
(3) On December 2, 1996, Mr. Burner was elected Chief Executive Officer,
replacing Mr. Ong in that position.
(4) Mr. Smith resigned as Executive Vice President and President of BFGoodrich
Specialty Chemicals effective November 1, 1996. Under the terms of a separation
agreement, he continued as an employee with full compensation and benefits
through December 31,
16
<PAGE> 19
1996. In addition, Mr. Smith will continue to receive his base compensation and
certain benefits through April 30, 1998. He does not have sufficient years of
service to be entitled to a pension benefit under the Company's qualified
retirement plan, but Mr. Smith will be entitled to a supplemental executive
retirement benefit of $76,838 per year commencing at age 65 from a non-qualified
plan. Pursuant to an agreement made when hired, he will also be entitled to
retiree medical benefits.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
----------------------------------------------------- --------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION
NAME (# OF SHARES) YEAR ($/SH) DATE 0% ($) 5% ($) 10% ($)
- ----------------- ------------- ------------ ----------- ---------- ------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. D. Ong 52,000 6.3% $ 34.375 1/2/06 -0- $1,124,149 $2,848,815
D. L. Burner 52,000 6.3 34.375 1/2/06 -0- 1,124,149 2,848,815
D. L. Tobler 22,000 2.7 34.375 1/2/06 -0- 475,602 1,205,268
M. O. Larsen 56,000 6.8 34.375 1/2/06 -0- 1,210,622 3,067,954
W. O. Smith 26,000 3.1 34.375 1/2/06 -0- 44,688 89,375
J. V. Heider 18,000 2.2 34.375 1/2/06 -0- 389,129 986,128
All Shareholders N/A N/A N/A N/A -0- 1,163,438,309 2,947,843,000
All Optionees 825,400 100 34.4021 1/2/06- -0- 17,861,656 45,255,103
6/4/06
Optionee Gain
as % of all
Shareholder Gain N/A N/A N/A N/A N/A 1.5% 1.5%
</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 20,740 312,889 330,260/-0- 5,098,056/-0-
D. L. Burner -0- -0- 152,600/-0- 2,119,535/-0-
D. L. Tobler 38,000 636,498 121,764/-0- 2,034,804/-0-
M. O. Larsen -0- -0- 84,059/11,341 825,548/215,106
W. O. Smith 10,000 231,875 52,000/-0- 642,686/-0-
J. V. Heider -0- -0- 114,000/-0- 1,805,310/-0-
</TABLE>
RETIREMENT PENSIONS
The Company has in effect a pension plan for salaried employees which provides
pensions payable at retirement to each eligible employee. The plan makes
available a pension which is paid from funds provided through contributions by
the Company and contributions by the employee, if any, made prior to 1972. The
plan is not available to Directors other than those who are employees. The
amount of an employee's pension depends on a number of factors including Final
Average Earnings ("FAE") and years of credited service to the Company. The
following chart shows the annual pension amounts currently available to
employees who retire with the combinations of FAE and years of credited service
shown in the chart, which should be read in conjunction with the notes following
the chart. As of January 1, 1989 the plan generally provides a benefit of 1.15%
of FAE times all years of pension credit plus 0.45% of FAE in excess of covered
compensation times years of pension credit up to 35 years. In addition employees
hired prior to January 1, 1990, will receive an additional pension credit of up
to 4 years up to a maximum of 24 years of pension credit. Benefits become vested
after 5 years of service.
18
<PAGE> 21
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 14,681 29,363 36,703 44,044 51,385 57,135
150,000 22,681 45,363 56,703 68,044 79,385 88,010
200,000 30,681 61,363 76,703 92,044 107,385 118,885
250,000 38,681 77,363 96,703 116,044 135,385 149,760
300,000 46,681 93,363 116,703 140,044 163,385 180,635
350,000 54,681 109,363 136,703 164,044 191,385 211,510
400,000 62,681 125,363 156,703 188,044 219,385 242,385
450,000 70,681 141,363 176,703 212,044 247,385 273,260
500,000 78,681 157,363 196,703 236,044 275,385 304,135
600,000 94,681 189,363 236,703 284,044 331,385 365,885
700,000 110,681 221,363 276,703 332,044 387,385 427,635
800,000 126,681 253,363 316,703 380,044 443,385 489,385
900,000 142,681 285,363 356,703 428,044 499,385 551,135
1,000,000 158,681 317,363 396,703 476,044 555,385 612,885
1,100,000 174,681 349,363 436,703 524,044 611,385 674,635
1,200,000 190,681 381,363 476,703 572,044 667,385 736,385
1,300,000 206,681 413,363 516,703 620,044 723,385 798,135
1,400,000 222,681 445,363 556,703 668,044 779,385 859,885
1,500,000 238,681 477,363 596,703 716,044 835,385 921,635
1,600,000 254,681 509,363 636,703 764,044 891,385 983,385
1,700,000 270,681 541,363 676,703 812,044 947,385 1,045,135
1,800,000 286,681 573,363 716,703 860,044 1,003,385 1,106,885
1,900,000 302,681 605,363 756,703 908,044 1,059,385 1,168,635
2,000,000 318,681 637,363 796,703 956,044 1,115,385 1,230,385
</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 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 March 31, 1997, final average earnings for the individuals
named in the Summary Compensation Table were as follows: J. D. Ong, $1,472,294;
D. L. Burner, $680,144; D. L. Tobler, $658,892; M. O. Larsen, $407,010; W. O.
Smith, $502,212; and J. V. Heider, $505,981.
(2) In computing the pension amounts shown, it was assumed that an employee
would retire at age 65 and elect to receive a five year certain and continuous
annuity under the pension plan and that the employee would not elect any of the
available "survivor options," which would result in a lower annual pension.
Pensions are not subject to any deduction for Social Security or any other
offset amounts.
(3) As of January 31, 1997, the six Executive Officers named in the cash
compensation table had the following credited years of service under the pension
plan (including, where appropriate, up to the 4 additional years): J. D. Ong, 35
years, 10 months; D. L. Burner, 17 years, 9 months; D. L. Tobler, 16 years, 1
month; M. O. Larsen, 21 years, 9 months; W. O. Smith, 2 years, 9 months; and J.
V. Heider, 16 years, 8 months.
(4) Certain recently hired executives, including D. L. Burner, D. L. Tobler 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, 1996, the accrued additional benefits per year were as
follows: D. L. Burner, $127,920; D. L. Tobler, $114,619; and J. V. Heider,
$109,067. 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.
19
<PAGE> 22
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 10
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.
RETIREMENT ARRANGEMENTS
The Board of Directors has agreed to certain arrangements for Mr. Ong
following his retirement on July 1, 1997 after more than 36 years of service
with the Company. Mr. Ong will receive a full payout under the Long-Term
Incentive Plan. If the payout were prorated for his service during the
three-year plan period, he would have received a pro-rata award equal to 5/6 of
the full award. Mr. Ong's participation in the 1997 Senior Executive Management
Incentive Program, the Company's annual cash bonus program for certain senior
executive officers, will be prorated (50%) in accordance with the plan. Similar
to past Company practices with respect to retiring chief executive officers, the
Company will provide office space and secretarial support as well as continue
certain other benefits generally until Mr. Ong's 70th birthday.
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. 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. The Company has agreed
that Mr. Heider's last day of work will be October 15, 1997, and that with
accrued and deferred vacation Mr. Heider will retire March 1, 1998. Mr. Heider
will be eligible for a full payout of the Long-Term Incentive Plan early in 1998
and be eligible for an unreduced annual bonus for 1997.
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, 1991 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 1991 through 1996. Past performance is not necessarily indicative
of future performance.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD THE BFGOOD- AERO- CHEMICALS
(FISCAL YEAR COVERED) RICH COMPANY S&P 500 INDEX SPACE/DEFENSE (SPECIALTY)
<S> <C> <C> <C> <C>
Dec91 100 100 100 100
Dec92 121.94 107.62 105.20 105.94
Dec93 105.30 118.46 136.83 120.79
Dec94 119.21 120.03 148.01 105.45
Dec95 194.30 165.13 244.94 138.60
Dec96 237.79 203.05 327.64 142.16
</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. The chart below shows the 3 year cumulative percentage return
since 1994 for the Company and the three indices reflected in the graph above.
21
<PAGE> 24
<TABLE>
<CAPTION>
AERO-
MEASUREMENT PERIOD THE BFGOOD- S&P 500 IN- SPACE/DEFENSE- CHEMICALS
(FISCAL YEAR COVERED) RICH COMPANY DEX 500 (SPECIALTY)- 500
<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
Dec96 225.83 171.40 239.44 117.69
</TABLE>
<TABLE>
<CAPTION>
1994-1996 CUMULATIVE
COMPANY/INDEX RETURN
--------------------
<S> <C>
The BFGoodrich Company 125.8%
S&P 500 Index 71.4
Aerospace/Defense 139.4
Specialty Chemicals 17.7
</TABLE>
BOARD OF DIRECTORS
COMPENSATION OF DIRECTORS
During 1996 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
22
<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 Directors' Phantom Share Plan
based on a Director's years of service as of September 1995. 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
through the date of the adoption of the Directors' Phantom Share Plan 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 Insurance Company, commencing June 19, 1996, 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 1996. All Directors
attended more than 75% of the aggregate total number of meetings held in 1996 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, 1996):
AUDIT COMMITTEE -- Alfred M. Rankin, Jr., Chairman; Jeanette Grasselli Brown,
Vice Chairman; George A. Davidson, Jr.; Douglas E. Olesen; William L. Wallace;
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
23
<PAGE> 26
controls with the independent auditors, the General Auditor and other financial
officers and the General Counsel of the Company, and maintains open
communications with them; reviews periodically the quality and adequacy of the
Company's financial organization and personnel; reviews material pending legal
proceedings with the General Counsel and keeps abreast of changing areas of law
with potential impact on the Company; and reviews periodically and exercises
oversight with respect to the legal and ethical compliance policies of the
Company. Three meetings were held in 1996.
COMMITTEE ON DIRECTORS -- Ian M. Ross, Chairman; James J. Glasser, Vice
Chairman; Thomas H. O'Leary; Joseph A. Pichler 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. Five meetings were
held in 1996.
COMPENSATION COMMITTEE -- James J. Glasser, Chairman; William L. Wallace, Vice
Chairman; Jeanette Grasselli Brown; George A. Davidson, Jr.; Richard K. Davidson
and Ian M. Ross. 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,
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. Five
meetings were held in 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Richard de J. Osborne, Chairman and Chief Executive Officer of ASARCO
Incorporated, was elected to the Board of Directors of the Company on April 15,
1996. From January 1, 1996 to April 24, 1996, John D. Ong, then Chairman and
Chief Executive Officer of the Company, was a director and served as a member of
the Organization and Compensation Committee of ASARCO Incorporated, although the
last meeting of that committee that Mr. Ong attended was in February, 1996. Mr.
Osborne has never served as a member of the Compensation Committee of the
Company. Mr. Ong has announced his retirement from The BFGoodrich Company as of
July 1, 1997, at which time he is expected to resign as a Director of the
Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
John D. Ong, Chairman and Chief Executive Officer at the time in question,
failed to disclose in his original Form 5, Annual Statement of Change in
Beneficial Ownership for 1995, that his wife had made a charitable donation of
150 shares of the Company's stock owned by her and in which Mr. Ong disclaimed
any beneficial interest.
24
<PAGE> 27
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors on February 17, 1997 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
1997 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 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.
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 17 and February 17, 1997. 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.
The Company has not received any notice of additional business to be presented
at the meeting. 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 1998 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, 4020 Kinross Lakes Parkway,
Richfield, Ohio 44286-9368 no later than November 1, 1997. The Company suggests
that all such proposals be sent by certified mail, return receipt requested.
Dated March 7, 1997 By Order of the Board of Directors
Nicholas J. Calise, Secretary
PLEASE DATE, SIGN AND MAIL YOUR PROXY
25
<PAGE> 28
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
26
<PAGE> 29
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.
27
<PAGE> 30
BF Goodrich Logo
- --------------------------------------------------------------------------------
<PAGE> 31
[BFGOODRICH LOGO]
March 7, 1997
To our Shareholders:
The Annual Meeting of Shareholders will be held in the Versailles Suite on the
second floor of The St. Regis Hotel, Two East 55th Street, New York, New York on
Monday, April 21, 1997, at 10:30 A.M.
The proxy statement contains information regarding the meeting, the nominees for
election to the Board of Directors and the proposal to ratify the appointment of
Ernst & Young LLP as independent auditors. 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 22.
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,
David L. Burner
President and Chief Executive Officer
PLEASE DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
<TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees [X] WITHHOLD AUTHORITY to vote [X] EXCEPTIONS* (as marked [X]
listed below for all nominees listed below to the contrary below)
Jeanette Grasselli Brown, David L. Burner, George A. Davidson, Jr., Richard K.
Davidson, James J. Glasser, Thomas H. O'Leary, Douglas E. Olesen, John D. Ong,
Richard de J. Osborne, Joseph A. Pichler, Alfred M. Rankin, Jr., Ian M. Ross,
D. Lee Tobler, and A. Thomas Young.
INSTRUCTIONS: 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. FOR [X] AGAINST [X] ABSTAIN [X]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF DIRECTORS AND
FOR PROPOSAL 2.
Change of Address and/or
Comments Mark Here [ ]
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: , 1997
-------------------------
------------------------------------
Signature
------------------------------------
Signature
Sign, Date and Return VOTES MUST BE INDICATED
the Proxy Card Promptly (X) IN BLACK OR BLUE INK. [X]
Using the Enclosed Envelope.
</TABLE>
<PAGE> 32
THE BFGOODRICH COMPANY
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes David L. Burner and Nicholas J. Calise,
or either of them, with full power of substitution, to represent the undersigned
and to vote all Common Stock of THE BFGOODRICH COMPANY which the undersigned
would be entitled to vote at the Annual Meeting of Shareholders of the Company
to be held on April 21, 1997, 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 AND 2.
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.)
