<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>
[X] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(e)(2))
[ ] 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
expectations
NOTICE OF
BF GOODRICH LOGO
1998
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 on the second floor of the John S. Knight Center, 77
East Mill Street, Akron, Ohio on April 20, 1998, 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 1998.
3. To amend the Certificate of Incorporation to increase the number of
authorized shares of the Company's Common Stock from 100 million to 200
million shares.
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 March 2, 1998 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. IF YOU ARE PLANNING TO ATTEND THE MEETING IN PERSON, PLEASE SO
INDICATE ON THE PROXY. 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 13, 1998 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 on the second floor of
the John S. Knight Center, 77 East Mill Street, Akron, Ohio on April 20, 1998.
Directions are printed on the inside back page of this proxy statement. IF YOU
ARE PLANNING TO ATTEND IN PERSON, PLEASE SO INDICATE ON THE PROXY.
All shareholders of record of Common Stock at the close of business on March
2, 1998 will be entitled to notice of and to vote at the meeting. There were
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 1997, 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 13, 1998. The principal
executive offices of the Company are located at 4020 Kinross Lakes Parkway,
Richfield, Ohio 44286-9368.
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 proposed amendment to
the Certificate of Incorporation requires approval by the affirmative vote of
the holders of a majority of 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, broker non-votes and failure to
vote have the same effect as a negative vote with respect to the amendment of
the Certificate of
2
<PAGE> 5
Incorporation but will have no effect on the election of directors, ratification
of the appointment of independent auditors and any other matter submitted to a
vote at this meeting.
PROPOSALS TO SHAREHOLDERS
1. ELECTION OF DIRECTORS
One of the purposes of the meeting is the election of thirteen Directors to
hold office until the next Annual Meeting of Shareholders in 1999 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 are now Directors and whose terms expire in
April 1998.
All nominees have indicated that they are willing and able to serve as
Directors if elected. Mr. Tobler will reach mandatory retirement age as an
employee on August 1, 1998, 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>
<C> <S>
JEANETTE GRASSELLI BROWN, age 69 -- Director since April 15,
JEANETTE GRASSELLI 1991.
BROWN PHOTO RETIRED DIRECTOR OF CORPORATE RESEARCH, BP AMERICA. Mrs.
Brown is a graduate of Ohio University, BS and Case Western
Reserve University, MS. She holds eight 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., 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, Inventure Place, 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 58 -- Director since December 4, 1995.
DAVID L. BURNER PHOTO CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT, THE
BFGOODRICH COMPANY. Mr. Burner received his BSC degree from
Ohio University. He joined The BFGoodrich Company in 1983 as
the 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 Octo-
ber 1993. He joined the Office of the Chairman in July 1994,
was elected President of the Company in December 1995, Chief
Executive Officer in December 1996 and Chairman in 1997. 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 Business Roundtable, The Greater
Cleveland Growth Association, The Ohio Business Roundtable
and is a Trustee of The Ohio University Foundation.
DIANE C. CREEL, age 49 -- Director since December 22, 1997.
DIANE C. CREEL PHOTO CHIEF EXECUTIVE OFFICER AND PRESIDENT, EARTH TECH, an
international consulting engineering firm headquartered in
Long Beach, California. Ms. Creel has served as Chief
Executive Officer and President of Earth Tech since January
1993. Prior thereto, she served as Chief Operating Officer
of Earth Tech since 1987 and Vice President since 1984.
Before joining Earth Tech, Ms. Creel was director of
business development and communications for CH2M Hill from
1978 - 1984. Prior to that, Ms. Creel was manager of
communications for Caudill Rowlett Scot, Houston, Texas from
1976 to 1978, and director of public relations for LBC&W,
Architects-Engineers-Planners, Columbia, South Carolina from
1971 - 1976. Ms. Creel currently serves on the Board of
Directors of Allegheny Teledyne, Inc., the Corporations and
Trusts which comprises the Fixed Income Fund of the American
Funds Group, Glendale Federal Bank and its holding
company,Golden State Bancorp Inc. She serves on the Board of
Advisors of the Enterpreneurial Studies Center at the
Anderson Graduate School of Management, UCLA and the Harvard
University Environmental Health Council.
</TABLE>
4
<PAGE> 7
NOMINEES FOR ELECTION
<TABLE>
<C> <S>
GEORGE A. DAVIDSON, JR., age 59 -- Director since April 15,
GEORGE A. DAVIDSON, 1991.
JR. PHOTO CHAIRMAN AND CHIEF EXECUTIVE OFFICER, 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 Consoli-
dated 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 a director 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.
JAMES J. GLASSER, age 63 -- 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, Chicago Music and
Dance Theatre, Lake Forest Hospital, Chicago Horticultural
Society, Northwestern Memorial Corporation, Voices for
Illinois Children and a Trustee of Better Government
Association, Chicago Zoological Society and the University
of Chicago and is Chairman of the Executive Committee of the
Chicago Community Trust.
JODIE K. GLORE, age 51 -- Director since September 15, 1997.
JODIE K. GLORE PHOTO PRESIDENT AND CHIEF OPERATING OFFICER, ROCKWELL AUTOMATION,
a leader in industrial automation and the largest business
of Rockwell International. Mr. Glore received his B.S. in
engineering from the United States Military Academy at West
Point, N.Y. and a M.S. in industrial and labor relations
from the University of Oregon. He joined Allen-Bradley, now
part of Rockwell Automation, in 1979 and held several
management positions in new product development and
marketing. In 1985 he left Allen-Bradley and joined Square D
Company and held various management positions, the most
recent being Corporate Vice President of Sales and
Marketing. In 1992 Mr. Glore rejoined Allen-Bradley as
Senior Vice President for the Automation Group. He was
appointed President of Allen-Bradley in 1994 and in 1995 he
assumed the additional title of Chief Operating Officer for
Rockwell Automation. In 1995 he was also elected Senior Vice
President of Rockwell International and a member of its
Corporate Strategy Committee. Mr. Glore is a director of
several non-profit organizations, but not a director of any
other public company.
</TABLE>
5
<PAGE> 8
NOMINEES FOR ELECTION
<TABLE>
<C> <S>
DOUGLAS E. OLESEN, age 59 -- Director since October 1, 1996.
DOUGLAS E. OLESEN PRESIDENT AND CHIEF EXECUTIVE OFFICER, BATTELLE MEMORIAL
PHOTO INSTITUTE, a 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
Energy Group, Inc. and its subsidiary, Columbia Gas-Ohio. He
is active in numerous community organizations.
RICHARD DE J. OSBORNE, age 63 -- Director since April 15,
RICHARD DE J. OSBORNE 1996.
PHOTO CHAIRMAN AND CHIEF EXECUTIVE OFFICER, 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 became Chairman and Chief
Executive Officer and relinquished the position of President
in 1998. 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 and
Schering-Plough Corporation. Mr. Osborne is a Director of
The Tinker Foundation.
ALFRED M. RANKIN, JR., age 56 -- Director since April 18,
ALFRED M. RANKIN, JR. 1988.
PHOTO CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, 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 a trustee of The Cleveland
Foundation, Cleveland Tomorrow, the Cleveland Museum of Art,
the Musical Arts Association and University Hospitals of
Cleveland.
</TABLE>
6
<PAGE> 9
NOMINEES FOR ELECTION
<TABLE>
<C> <S>
ROBERT H. RAU, age 61 -- Director since December 22, 1997.
ROBERT H. RAU PRESIDENT, AEROSTRUCTURES GROUP, BFGOODRICH AEROSPACE, THE
BFGOODRICH COMPANY. Mr. Rau received a B.A. in Business
Administration from Whittier College. Prior to the Company's
merger with Rohr, Inc. in December 1997, Mr. Rau was
President and Chief Executive Officer of Rohr, Inc. from
1993 -1997. Before joining Rohr, he was an Executive Vice
President of Parker Hannifin Corporation and, for the ten
years prior to 1993, had served as President of the Parker
Bertea Aerospace segment of Parker Hannifin. He joined
Parker Hannifin in 1969 and held positions in finance,
program management and general management. Mr. Rau has
extensive experience in the aerospace industry. Mr. Rau is a
member of the Board of Directors of Primtex Technologies,
Inc. In addition, Mr. Rau is a member of the Board of
Governors of the Aerospace Industries Association, a past
Chairman of the General Aviation Manufacturers Association
and a member of the Board of Trustees of Whittier College.
D. LEE TOBLER, age 64 -- 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 vice chairman of The University of Akron Board
of Trustees, President of the Ohio Ballet Board, Trustee of
Inventure Place, past Chairman and currently a trustee of
the Akron Regional Development Board.
JAMES R. WILSON, age 57 -- Director since December 22, 1997
JAMES R. WILSON PHOTO CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, THIOKOL CORPORATION, a leading producer of solid
propellant rocket motors and high performance fasteners used
in commercial aircraft and industrial applications. Thiokol
also owns 62 percent of Howmet International Inc., a
manufacturer of components for aircraft and industrial gas
turbine engines. Mr. Wilson holds a B.A. degree from the
College of Wooster and an M.B.A. degree from Harvard
University. Mr. Wilson assumed the position of Chairman of
Thiokol Corporation in October 1995 and the position of
President and Chief Executive Officer in October 1993. Mr.
Wilson joined Thiokol in July 1989 as Vice President and
Chief Financial Officer and was named Executive Vice
President in October 1992. Prior to joining Thiokol in 1989,
Mr. Wilson served as Chief Financial Officer for Circuit
City Stores from 1987 - 1988, and as Executive Vice
President and Chief Financial Officer for Fairchild
Industries, Inc. from 1982 - 1987. Earlier, he held various
financial management positions at Textron Inc. He is also a
director of Cooper Industries, Inc., First Security
Corporation, a director and Chairman of the Board of Howmet
International Inc., and a trustee of the College of Wooster,
Wooster, Ohio.
</TABLE>
7
<PAGE> 10
NOMINEES FOR ELECTION
<TABLE>
<C> <S>
A. THOMAS YOUNG, age 59 -- 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 Dial Corporation, Potomac
Electric Power Company, and Science Applications Infor-
mational Corp. 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
Joseph A. Pichler, a Director since 1988, and Ian M. Ross, a Director since
1983, will retire as of the 1998 Annual Meeting of Shareholders. Richard K.
Davidson, a Director since 1996, asked not to be considered for renomination.
Their 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 for the 1998 Annual Meeting such notice must be received between
January 21 and February 20, 1998. Effective after the 1998 Annual Meeting, such
notice will be generally not less than 90 nor more than 120 days prior to the
anniversary of the preceding year's annual meeting. 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, 1998.
<TABLE>
<CAPTION>
AMOUNT AS TO WHICH THERE IS
---------------------------
AMOUNT AND NATURE DIRECTORS' SOLE
OF BENEFICIAL PHANTOM PERCENT SOLE VOTING INVESTMENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) SHARES(3) OF CLASS(2) POWER POWER
- ------------------------ ----------------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Jeanette Grasselli Brown 2,000 4,868 * 2,000 2,000
David L. Burner 311,804 * 52,304 19,304
Diane C. Creel 56 * 56 56
George A. Davidson, Jr. 3,000 4,868 * 3,000 3,000
Richard K. Davidson 1,000 698 * 1,000 1,000
James J. Glasser 2,000 * 2,000 2,000
Jodie K. Glore 200 * 200 200
Jon V. Heider 189,694 * 66,694 43,694
Marshall O. Larsen 182,215 * 25,115 7,615
Douglas E. Olesen 887 698 * 887 887
Richard de J. Osborne 1,048 698 * 1,048(4) 1,048(4)
Joseph A. Pichler 1,600 1,367 * 1,600 1,600
Alfred M. Rankin, Jr. 1,000 1,367 * 1,000 1,000
Robert H. Rau 289,744 * 3,500(5) 3,500(5)
Ian M. Ross 1,000 * 1,000 1,000
D. Lee Tobler 192,897 * 42,333 16,333
James R. Wilson 2,592 * 2,592 2,592
A. Thomas Young 1,000 1,367 * 1,000 1,000
25 Directors and Officers 1,659,501 15,931 2.2% 330,157 170,557
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: D. L. Burner, 259,500 shares; R. H.
Rau, 219,100 shares; D. L. Tobler, 150,564 shares; M. O. Larsen, 157,100 shares;
J. V. Heider, 123,000 shares; and 25 Directors and Officers as a group,
1,262,200 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.
(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) Shared voting and investment power as to 64,799 shares.
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, 1997. 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>
Fidelity Management Trust Company, Trustee
82 Devonshire Street
Boston, MA 02109
The B.F.Goodrich Company Retirement 5,626,925 7.6%
Plus Savings Plan and other
Company plans(1)
</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.
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 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.
11
<PAGE> 14
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 among 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 believes that the middle of the salary
range for BFGoodrich executives should be at 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 25% below the midpoint to 25% above the midpoint.
INCENTIVE COMPENSATION
Incentive compensation is intended to motivate and retain qualified
individuals who have the opportunity to influence Company results significantly
and enhance shareholder value. The philosophy for incentive compensation plans
is to provide awards when financial objectives are achieved and provide reduced
or no awards when the objectives are not achieved. Incentive compensation
programs are divided into two types -- annual cash bonus and long-term incentive
compensation. Generally speaking, the higher an individual's level within the
Company, the greater the percentage of his or her potential total compensation
is represented by incentive compensation.
ANNUAL INCENTIVE COMPENSATION
An individual's annual cash bonus target is expressed as a percentage of his
or her salary range midpoint, with the percentages of salary midpoint increasing
with the level of the job. A total target incentive pool is created for the
corporate staff, for each major business segment and for designated groups or
divisions within each segment. For 1997 the total target incentive pools are
further divided into two different financial performance pools for the corporate
staff and for each of the operating segments. Incentive payments can range from
50% of the target amount when the threshold financial objective of the corporate
staff and major business segments is achieved, to a maximum of 150% of the
target when the
12
<PAGE> 15
maximum financial objective is achieved. In 1997, the threshold financial
objective for the corporate staff and for each of the operating segments ranged
from 75% to 82.5% of target and the maximum financial objective ranged from 110%
to 125% of target. No bonus will be paid if a minimum financial performance is
not achieved.
In 1997 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 the financial goals.
1997 RESULTS
The corporate staff achieved 113%, the Aerospace segment achieved 98% and the
Specialty Chemicals Segment achieved 93% of their respective 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. There were 65
participants on December 31, 1997, and they become vested in the Restricted
Shares. The Restricted Shares less the number of shares to satisfy applicable
withholding taxes were distributed to these individuals in January 1998. The
Restricted Shares actually received are restricted from further sale for an
additional two years.
The Committee established performance objectives over the three-year plan
cycle when it awarded the Performance Shares in 1995. The recipient only is
entitled to retain these shares at the end of the plan cycle if the threshold
performance standard is met. The number of shares to be received free of further
restrictions can range from 50% to 150% of the original Performance Share award
depending on the level of attainment of financial objectives. In late February,
1998, the Performance Shares actually earned, less the number of shares to
satisfy applicable withholding taxes, were distributed. Corporate Staff
Participants earned 148.5%, Aerospace segment participants earned 95.6% and
Specialty Chemical participants earned 146.5% of their target.
In the past the Committee only made awards once every three years. Beginning
in 1998, the Committee decided to make awards every year, based on overlapping
three-year performance cycles. Naturally, the annual awards are generally
one-third as large as they would have been if the awards continued to be made
only every three years.
Guidelines establish a target award of 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 Committee is no
longer awarding Restricted Shares.
The performance objectives for the 1995 awards for the senior corporate
executives and corporate staff employees were dependent upon the three-year
average total Company return on equity. The performance
13
<PAGE> 16
objectives for operating segment presidents at the time of the award were 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 1997, the Committee
granted stock options to 122 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. 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 1997 and all
existing awards under the Company's long-term incentive plans will be fully
deductible for Federal income tax purposes.
CHIEF EXECUTIVE OFFICER
In determining the base salary established for David L. Burner, the Chief
Executive Officer, the Compensation Committee took into account surveys of base
compensation of chief executive officers of other major industrial companies.
The Committee considered his leadership and key contributions to the overall
financial performance of the Company, and the Company's progress towards
achieving important strategic objectives.
Messrs. Burner and Ong (former Chief Executive Officer who relinquished that
position in December 1996 and retired July 1, 1997) 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
14
<PAGE> 17
established, based 60% on net income and 40% on return on equity. The threshold
objective for net income is 81% of the goal and the maximum is 110% of the goal.
The threshold objective for return on equity is 75% of the goal and the maximum
is 125% of the goal. The threshold results in an award of 50% of the target,
while the maximum award is 150% of the target. Attainment between the threshold
and the maximum goal results in a payment prorated on a straight line basis. For
1997 Mr. Burner received $650,389, or 113% of his target amount.
In 1997, Mr. Burner received options to purchase 49,000 shares. During 1995,
Mr. Ong was awarded 58,000 Performance Shares and 20,000 Restricted Shares,
while Mr. Burner was awarded 28,000 Performance Shares and 10,000 Restricted
Shares. Mr. Burner was not elected Chief Executive Officer until December, 1996.
The guidelines for awards for the Chief Executive Officer and the actual targets
are the same as for other corporate officers. The Committee used the same
factors to make these awards as it did in determining the other elements of Mr.
Burner's compensation.
The Compensation Committee determines awards for the Chief Executive Officer
based on the same survey data and considerations it utilizes in making awards
for other executives.
The Compensation Committee
James J. Glasser, Chairman
George A. Davidson, Jr., Vice
Chairman
Jeanette Grasselli Brown
Richard K. Davidson
Ian M. Ross
15
<PAGE> 18
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------- --------------------------------------------
AWARDS PAYOUTS
----------------------------- ------------
OTHER SECURITIES
NAME AND ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
PRINCIPAL COMPENSATION STOCK OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($) AWARDS($) SARS(#) ($)(1) ($)(2)
--------- ---- --------- -------- --- ---------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John D. Ong,(3) 1997 375,000 325,194 144,774 -0- 49,000 3,835,481 71,752
Chairman 1996 750,000 820,874 139,099 -0- 52,000 -0- 91,950
1995 750,000 782,496 100,892 443,750(1) 31,000 -0- 84,000
David L. Burner,(4) 1997 625,000 650,389 81,926 -0- 49,000 1,741,708 66,823
Chairman, President and 1996 487,500 487,046 62,511 -0- 52,000 -0- 48,750
Chief Executive Officer 1995 362,500 325,000 46,581 221,875(1) 13,000 -0- 34,650
Robert H. Rau(5) 1997 624,738 873,489 10,948 223,793(7) -0- -0- 2,245,500(8)
President, BFGoodrich 1996 593,077 436,500 29,974 214,940(7) -0- -0- 4,500
Aerospace Aerostructures 1995 540,000 132,300 18,550 -0- 149,100 -0- 4,500
Group
Marshall O. Larsen, 1997 345,000 308,000 46,610 -0- 24,000 638,579 40,300
Executive Vice 1996 300,000 325,000 41,284 -0- 56,000 -0- 27,900
President 1995 240,417 165,000 21,567 110,938(1) 14,400 -0- 45,245
and President,
BFGoodrich Aerospace
D. Lee Tobler, 1997 415,000 264,000 72,315 -0- 22,000 1,454,838 44,500
Executive Vice 1996 407,000 325,000 65,073 -0- 22,000 -0- 41,100
President and 1995 395,000 278,000 49,630 177,500(1) 13,000 -0- 31,050
Chief Financial
Officer
Jon V. Heider,(6) 1997 329,750 210,000 62,707 -0- 17,000 1,322,580 34,785
Executive Vice 1996 320,000 250,000 58,807 -0- 18,000 -0- 32,700
President and 1995 307,000 225,000 46,179 133,125(1) 10,000 -0- 28,620
General Counsel
</TABLE>
(1) Restricted Shares awarded in 1995 vested 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, 1997, 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 $3,232,125; D. L. Burner, 38,000 and $1,574,625; R. H. Rau: 0; M. O. Larsen,
20,000 and $828,750; D. L. Tobler, 30,000 and $1,243,125 and J. V. Heider,
26,000 and $1,077,375.
(2) Of the amounts shown, $9,500 or $9,600 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. Ong retired July 1, 1997.
(4) Mr. Burner was elected to the additional position of Chairman effective July
1, 1997.
(5) Mr. Rau is also President and Chief Executive Officer of Rohr, Inc., which
became a wholly-owned subsidiary of BFGoodrich on December 22, 1997.
Compensation prior to December 22, 1997 was paid by Rohr, Inc., as an
independent company.
(6) Mr. Heider resigned as General Counsel effective October 20, 1997.
16
<PAGE> 19
(7) Mr. Rau elected to receive a portion of his annual bonus from Rohr, Inc. in
restricted stock which vested in three yearly installments. All uninvested
shares became vested upon September 22, 1997, the date of the change in control
under the terms of the plan.
(8) $2,240,700 as a result of a change in control payment under an agreement
with Rohr, Inc. An additional $1,654,918 was paid as a tax gross-up to offset
exercise taxes due upon these types of payments under the Internal Revenue Code.
$4,800 represents the Company's contribution to a 401(k) plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
------------------------------------------------------- --------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION 0%
NAME (# OF SHARES) YEAR ($/SH) DATE ($) 5% ($) 10% ($)
---- ------------- ------------ ----------- ---------- --- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. D. Ong 49,000 6.3% $40.125 1/2/07 -0- $ 1,236,466 $ 3,133,501
D. L. Burner 49,000 6.3 40.125 1/2/07 -0- 1,236,466 3,133,501
R. H. Rau -0- -0- N/A N/A N/A N/A N/A
D. L. Tobler 22,000 2.7 40.125 1/2/07 -0- 555,148 1,406,878
M. O. Larsen 24,000 6.8 40.125 1/2/07 -0- 605,616 1,534,776
J. V. Heider 17,000 2.2 40.125 1/2/07 -0- 428,978 1,087,133
All Shareholders N/A N/A N/A N/A -0- 1,865,957,401 4,728,782,985
All Optionees 846,674 100 40.515 1/2/07 -0- 21,569,020 54,669,994
Optionee Gain
as % of all
Shareholder Gain N/A N/A N/A N/A N/A 1.2% 1.2%
</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".
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 73,678 1,100,085 305,582/-0- 4,547,987/-0-
D. L. Burner 6,000 75,921 195,600/-0- 2,342,335/-0-
R. H. Rau -0- -0- 219,100/-0- 5,023,079/-0-
D. L. Tobler 15,000 363,358 128,764/-0- 1,936,153/-0-
M. O. Larsen 1,000 13,156 114,080/4,320 1,119,269/86,804
J. V. Heider 8,000 95,352 123,000/-0- 1,889,186/-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 14,650 29,300 36,625 43,950 51,275 57,025
150,000 22,650 45,300 56,625 67,950 79,275 87,900
200,000 30,650 61,300 76,625 91,950 107,275 118,775
250,000 38,650 77,300 96,625 115,950 135,275 149,650
300,000 46,560 93,300 116,625 139,950 163,275 180,525
350,000 54,650 109,300 136,625 163,950 191,175 211,400
400,000 62,650 125,300 156,625 187,950 219,275 242,275
450,000 70,650 141,300 176,625 211,950 247,275 273,150
500,000 78,650 157,300 196,625 235,950 275,275 304,025
600,000 94,650 189,300 236,625 283,950 331,275 365,775
700,000 110,650 221,300 276,625 331,950 387,275 427,525
800,000 126,650 253,300 316,625 379,950 443,275 489,275
900,000 142,650 285,300 356,625 427,950 499,275 551,025
1,000,000 158,650 317,300 396,625 475,950 555,275 612,775
1,100,000 174,650 349,300 436,625 523,950 611,275 674,525
1,200,000 190,650 381,300 476,625 571,950 667,275 736,275
1,300,000 206,650 413,300 516,625 619,950 723,275 798,025
1,400,000 222,650 445,300 556,625 667,950 779,275 859,775
1,500,000 238,650 477,300 596,625 715,950 835,275 921,525
1,600,000 254,650 509,300 636,625 763,950 891,275 983,275
1,700,000 270,650 541,300 676,625 811,950 947,275 1,045,025
1,800,000 286,650 573,300 716,625 859,950 1,003,275 1,106,775
1,900,000 302,650 605,300 756,625 907,950 1,059,275 1,168,525
2,000,000 318,650 637,300 796,625 955,950 1,115,275 1,230,275
</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 1, 1998, final average earnings for the individuals
named in the Summary Compensation Table were as follows: J. D. Ong, $1,472,592;
D. L. Burner, $884,984; D. L. Tobler, $679,396; M. O. Larsen, $504,688; and J.
V. Heider, $528,688.
(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, 1998, 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, 36
years, 4 months; D. L. Burner, 18 years, 9 months; D. L. Tobler, 17 years, 1
month; M. O. Larsen, 22 years, 9 months; and J. V. Heider, 17 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, 1997, the accrued additional benefits per year were as
follows: D. L. Burner, $176,515; D. L. Tobler, $139,422; and J. V. Heider,
$112,157. 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.
(6) R. H. Rau does not participate in the Company's pension plan noted above.
See "Compensation Arrangements" for a description of Mr. Rau's compensation and
retirement benefits.
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 other than Messrs. Ong and
Rau. 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.
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, was 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. Mr. Heider resigned as
General Counsel effective October 20, 1997 and retired March 1, 1998. Mr. Heider
received a full payout of the Long-Term Incentive Plan early in 1998 and an
unreduced annual bonus for 1997.
20
<PAGE> 23
COMPENSATION ARRANGEMENTS
Under Mr. Rau's employment agreement with Rohr, Inc., upon the execution of
the merger agreement with BFGoodrich on September 22, 1997, he was entitled to a
payment of $2,240,700 plus $1,654,918 as a tax gross-up to offset taxes due upon
these types of payments under the Internal Revenue Code. He is also entitled to
a retirement benefit if he retires at age 62 of $464,400 per year. The amount
will be reduced by the amount of any retirement benefit he may receive from
Parker Hannifin, his former employer. The benefit will continue as a 100% joint
and survivor benefit for his and his wife's lifetime, with a guaranteed payment
to the survivor's estate for at least 10 years. The amount of the retirement
benefit will increase by $2,322 per year for each month Mr. Rau works beyond his
62nd birthday. BFGoodrich has agreed to continue Mr. Rau as President and Chief
Executive Officer of Rohr, Inc., which is now the Aerostructures Group of
BFGoodrich Aerospace, until December 31, 1998, when he will retire. His
compensation shall continue at the existing level of $640,200 per year with a
target annual bonus of $384,120. On February 16, 1998, he received a Long Term
Incentive Award of 12,700 Performance Shares. Based upon Mr. Rau's retirement on
December 31, 1998, he will only be entitled to a pro rata award of 1/3 the
amount earned. He will also be entitled to the continuation of certain other
benefits until age 65 which is consistent with Company practice for retiring
executives at this level. For the three year period beginning January 1, 1999
and continuing through December 31, 2001, Mr. Rau will serve as a consultant to
BFGoodrich at a fee of $28,000 per month. Mr. Rau will continue to be considered
for renomination to the Board of Directors in accordance with BFGoodrich Board's
policies, but Mr. Rau shall not be entitled to any additional compensation for
serving as a Director. Mr. Rau has agreed not to engage in any activity which
competes with BFGoodrich through December 31, 2001.
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<PAGE> 24
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, 1992 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 1992 through 1997. Past performance is not necessarily indicative
of future performance.
<TABLE>
<CAPTION>
The
Measurement Period BFGoodrich S&P 500 CHEMICALS
(Fiscal Year Covered) Company INDEX AEROSPACE/DEFENSE (SPECIALTY)
<S> <C> <C> <C> <C>
Dec92 100 100 100 100
Dec93 86.35 110.08 130.07 114.02
Dec94 97.76 111.53 140.69 99.54
Dec95 159.33 153.45 232.83 130.83
Dec96 195.00 188.68 311.43 134.19
Dec97 204.87 251.63 320.40 166.17
</TABLE>
22
<PAGE> 25
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 4 year cumulative percentage return
since 1994 for the Company and the three indices reflected in the graph above.
<TABLE>
<CAPTION>
The CHEMICALS
Measurement Period BFGoodrich S&P 500 AEROSPACE/DEFENSE- (SPECIALTY)-
(Fiscal Year Covered) Company INDEX 500 500
<S> <C> <C> <C> <C>
Dec94 97.76 111.53 140.69 99.54
Dec95 159.33 153.45 232.83 130.83
Dec96 195.00 188.68 311.43 134.19
Dec97 204.87 251.63 320.40 166.17
</TABLE>
BOARD OF DIRECTORS
COMPENSATION OF DIRECTORS
During 1997 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
23
<PAGE> 26
Committee attended. Effective January 1, 1998, each non-employee Director will
receive fixed compensation of $40,000 per year. One half of the fixed
compensation is deferred into a phantom BFGoodrich share account and is paid out
in shares of BFGoodrich stock following termination of service as a Director.
Dividends which would be earned on the phantom share account will be credited to
the account in additional phantom shares. Directors may elect to defer a portion
or all of the remaining fixed compensation into the phantom share account. The
Board believes that a portion of Director's compensation should be based on the
Company's Common Stock similar to executive compensation. This should more
closely align the financial interests of Directors with the financial interests
of shareholders. The Director's fixed compensation was last increased in 1995.
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 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
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, 1997, for a one-year
period, at a total premium cost of $459,000.
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<PAGE> 27
MEETINGS BY AND CERTAIN COMMITTEES OF THE COMPANY'S BOARD OF DIRECTORS
1. MEETINGS
The Company's Board of Directors held ten meetings in 1997. All Directors
attended more than 75% of the aggregate total number of meetings held in 1997 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, 1997):
AUDIT COMMITTEE -- Alfred M. Rankin, Jr., Chairman; Jeanette Grasselli Brown,
Vice Chairman; Diane C. Creel; George A. Davidson, Jr.; Jodie K. Glore; Douglas
E. Olesen; 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 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 1997.
COMMITTEE ON DIRECTORS -- Ian M. Ross, Chairman; James J. Glasser, Vice
Chairman; Richard de J. Osborne; 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. This information is
made available to the Committee on Directors to assist it in fulfilling its
duties in this area. Two meetings were held in 1997.
COMPENSATION COMMITTEE -- James J. Glasser, Chairman; George A. Davidson, Jr.,
Vice Chairman; Jeanette Grasselli Brown; Richard K. Davidson; Ian M. Ross and
James R. Wilson. 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;
25
<PAGE> 28
reviews and approves compensation for individuals holding the offices of
Executive Vice President or higher. Five meetings were held in 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Marshall O. Larsen, Executive Vice President and President, BFGoodrich
Aerospace, filed a Form 4, Change in Beneficial Ownership, 18 days late to
report the exercise of a stock option.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors on February 16, 1998 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
1998 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 auditors for
the most recently completed fiscal year, are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they desire to
do so, and will be available to respond to appropriate questions from
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFYING THIS APPOINTMENT.
3. AMENDMENT TO CERTIFICATE OF INCORPORATION
INCREASE AUTHORIZED COMMON STOCK
The Board of Directors has unanimously approved an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock of the par value of $5 per share (the "Common Stock") from
100,000,000 to 200,000,000. No change is proposed with respect to the 10,000,000
authorized shares of Series Preferred Stock.
As of December 31, 1997, 73,946,160 shares of Common Stock were issued (of
which 72,742,138 shares were outstanding and 1,204,022 shares were held in the
Company's treasury). In connection with the merger with Rohr, Inc. which was
approved by the shareholders on December 22, 1997, 18,588,004 shares were
issued. Furthermore, at December 31, 1997, 2,523,674 shares were reserved for
issuance in connection with outstanding options under the Rohr, Inc. stock
option plan and for conversion of two debt issues. In addition, 5,199,927 shares
were reserved for future issuance under various Company benefit plans. The
Company only has an aggregate of 19,534,261 shares of authorized but unissued
and treasury Common Stock available for other purposes.
The Board of Directors believes it is desirable to have the additional shares
of Common Stock that would be authorized by the proposed amendment available for
issuance in connection with possible future stock dividends or splits,
acquisitions of other companies or business properties, to raise additional
capital through sale of stock, financing transactions, employee benefit plans
and other proper corporate purposes. Having such additional authorized shares
available will give the Company greater flexibility by permitting such shares to
be issued without the expense and delay of a special meeting of shareholders.
Such a delay
26
<PAGE> 29
might deprive the Company of the flexibility the Board views as important in
facilitating the effective use of the Company's shares. The Board does not have
any present intention to issue any of the additional shares for any specific
purpose. The Board declared a stock dividend in the form of a two-for-one stock
split effective April 1, 1996.
While the Board of Directors does not consider this proposal to be or have the
effect of being an "anti-takeover" proposal, the issuance of additional shares
of Common Stock could be used to make a change in control of the Company more
difficult if the Board caused such shares to be issued to holders who might side
with the Board in opposing a takeover bid that the Board determines is not in
the best interests of the Company and its shareholders. In addition, the
availability of the additional shares might discourage an attempt by another
person or entity to acquire control of the Company through the acquisition of a
substantial number of shares of Common Stock, since the issuance of such shares
could dilute the stock ownership of such person or entity. Further, the
existence or issuance of such shares may make it more difficult or discourage
attempts to remove incumbent management. Wholly apart from this proposed
amendment, the Board could issue up to 7,598,327 shares of a series of preferred
stock with rights and preferences that might similarly impede or discourage
proposed mergers, tender offers or other attempts to gain control of the
Company. Furthermore, the Company's Certificate of Incorporation has
"anti-greenmail" and "fair price" provisions.
The additional shares of Common Stock would be issuable, in the discretion of
the Board of Directors, under circumstances the Board believes to be in the best
interests of the Company and without further action by the shareholders, unless
such action is required by the Company's Certificate of Incorporation or by
applicable law or the rules of the New York Stock Exchange of which the
Company's securities are listed.
The additional shares of Common Stock would become part of the existing class
of Common Stock, and the additional shares, when issued, would have the same
rights and privileges as the shares of Common Stock now issued. The holders of
Common Stock do not presently have pre-emptive rights to subscribe for any of
the Company's securities and will not have any such rights to subscribe for the
additional Common Stock proposed to be authorized.
The Company has no current plan or commitment to issue shares of Common Stock
other than reserved for specific purposes as noted above.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
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 for the 1998 Annual Meeting
such notice must be received between January 21 and February 20, 1998. Effective
after the 1998 Annual Meeting, such notice will be generally not less than 90
nor more than 120 days prior to the anniversary of the preceding year's annual
meeting. Such notice shall set forth as to each matter a brief description
thereof and the reasons for
27
<PAGE> 30
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 1999 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 13, 1998. The Company suggests
that all such proposals be sent by certified mail, return receipt requested.
Dated March 13, 1998 By Order of the Board of Directors
Nicholas J. Calise, Secretary
PLEASE DATE, SIGN AND MAIL YOUR PROXY
28
<PAGE> 31
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 (90)(1) days nor more than 90 (120)(1)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
(120th)(1) day prior to such annual meeting and not later than the close of
business on the later of the 60th (90th)(1) 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 not later
29
<PAGE> 32
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 (120th)(1) day prior to such special meeting and not later
than the close of business on the later of the 60th (90th)(1) 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.
- ---------------
(1) Effective after the 1998 Annual Meeting of Shareholders.
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<PAGE> 33
BF Goodrich Logo
- --------------------------------------------------------------------------------
DIRECTIONS TO THE
JOHN S. KNIGHT CENTER
77 E. MILL STREET, AKRON, OH 44308
<TABLE>
<S> <C>
OHIO TURNPIKE TO CENTER Exit the Turnpike at Exit 12
RT. 8 TO CENTER Rt. 8 South to Perkins St. exit
Right on Perkins St. to Union St.
Left on Union St. to Mill St.
Right on Mill St. then Right on Broadway
Turn Right into second parking lot
I-71 TO CENTER I-71 to I-76 East
Follow I-76 East to Exit 22A (Main/Broadway)
Take Broadway, turn Left
Follow Broadway to Mill St. (about 1 mile)
Cross Mill St. past Center (Center will be on your left)
Turn Right into second parking lot
I-77 TO CENTER I-77 to Exit 22A (Main/Downtown)
Take Broadway, turn Left
Follow Broadway to Mill St. (about 1 mile)
Cross Mill St. past Center (Center will be on your left)
Turn Right into second parking lot
</TABLE>
