<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
BF Goodrich Logo
NOTICE OF
1999
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 19, 1999, at
10:30 A.M. to:
1. Elect eleven Directors to hold office until the next Annual Meeting of
Shareholders and until their respective successors are elected and
qualified.
2. Consider and act upon a proposal to ratify the appointment of Ernst & Young
LLP as Independent Auditors for the Company for the year 1999.
3. To reauthorize the Company's Stock Option Plan.
4. To transact such other business as may properly come before the meeting.
Information with respect to the above matters is contained in the Proxy
Statement attached to this Notice.
The Board of Directors has fixed March 1, 1999 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. 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 4, 1999 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 at 10:30 A.M. on April 19, 1999.
All shareholders of record of Common Stock at the close of business on March
1, 1999 will be entitled to notice of and to vote at the meeting. There were
74,428,972 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 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 1998, 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 4, 1999. The principal
executive offices of the Company are located at 4020 Kinross Lakes Parkway,
Richfield, Ohio 44286-9368.
VOTE REQUIRED FOR APPROVAL
The eleven 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 and reauthorization of the Stock Option Plan will be
decided by a majority of the votes cast "for" or "against" approval.
Consequently, abstentions, broker non-votes and failure to vote will have no
effect on the election of directors, ratification of the appointment of
independent auditors, adoption of the Stock Option Plan and any other 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 eleven Directors to hold
office until the next Annual Meeting of Shareholders in 2000 and until their
respective successors are elected and qualified. It is intended that the
accompanying proxy will be voted for the election of the eleven nominees named
on the following pages, all of whom are now Directors and whose terms expire in
April 1999.
All nominees have indicated that they are willing to serve as Directors if
elected. If any nominee should be unable or unwilling to serve, the proxies will
be voted for the election of such person as may be designated by the Board of
Directors to replace such nominee.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THESE NOMINEES FOR
DIRECTOR.
3
<PAGE> 6
NOMINEES FOR ELECTION
<TABLE>
<C> <S>
DAVID L. BURNER, age 59 -- 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. and Milacron 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 50 -- 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 a B.A. and M.A. from
the University of South Carolina. 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 of Capitol Management Corporation. 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.
GEORGE A. DAVIDSON, JR., age 60 -- 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 and the Allegheny Conference on Community Develop-
ment. Mr. Davidson is a director of the American Gas
Association, the Pittsburgh Foundation 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>
<C> <S>
JAMES J. GLASSER, age 64 -- 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 and Mutual Trust Life
Insurance Co. 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 52 -- Director since September 15, 1997.
JODIE K. GLORE PHOTO PRESIDENT AND CHIEF EXECUTIVE OFFICER OF IOMEGA CORPORATION, a designer, manufacturer and
marketer of smart portable data storage solutions for personal computers and other
markets. 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. Mr. Glore became President and Chief Executive Officer of Iomega
Corporation in October 1998. Previously, Mr. Glore held a number of executive positions
with Rockwell International Inc. 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 Iomega Corporation and several
non-profit organizations.
DOUGLAS E. OLESEN, age 60 -- Director since October 1, 1996.
DOUGLAS E. OLESEN PHOTO PRESIDENT AND CHIEF EXECUTIVE OFFICER, BATTELLE MEMORIAL INSTITUTE, a worldwide
technology organization, working 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.
</TABLE>
5
<PAGE> 8
NOMINEES FOR ELECTION
<TABLE>
<C> <S>
RICHARD DE J. OSBORNE PHOTO RICHARD DE J. OSBORNE, age 64 -- Director since April 15, 1996.
Chairman and Chief Executive Officer, ASARCO Incorporated, a leading pro-
ducer 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 in 1995 and relinquished
the position of President in 1998. Prior to joining ASARCO, 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 a Director of ASARCO and is
also Chairman of the Board (non executive) and a Director of Southern Peru Copper
Corporation and a Director of Birmingham Steel Corporation, NACCO Industries, Inc.,
Schering-Plough Corporation and The Tinker Foundation.
ALFRED M. RANKIN, JR. PHOTO ALFRED M. RANKIN, JR., age 57 -- Director since April 18, 1988.
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, NACCO INDUSTRIES, INC., an
operating 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 Cleveland Tomorrow, the Cleveland Museum of Art, the
Musical Arts Association and University Hospitals of Cleveland.
ROBERT H. RAU, age 62 -- Director since December 22, 1997.
ROBERT H. RAU PHOTO RETIRED 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 is a member of the Board
of Directors of HCC Industries, Inc., Primtex Technologies, Inc. and Willis Lease
Finance Corp. In addition, Mr. Rau is a past 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.
</TABLE>
6
<PAGE> 9
NOMINEES FOR ELECTION
<TABLE>
<C> <S>
JAMES R. WILSON, age 58 -- Director since December 22, 1997
JAMES R. WILSON PHOTO CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, CORDANT TECHNOLOGIES INC., formerly known as
Thiokol Corporation, a leading producer of solid propellant
rocket motors and high performance fasteners used in
commercial aircraft and industrial applications. Cordant
also owns 85 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.
A. THOMAS YOUNG, age 60 -- Director since April 17, 1995.
A. THOMAS YOUNG PHOTO 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 Potomac Electric Power Company,
and Science Applications Informational 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>
7
<PAGE> 10
ADDITIONAL DIRECTORS
The Company has entered into an agreement to merge with Coltec Industries Inc
which will result in Coltec becoming a wholly-owned subsidiary of the Company.
As provided in the merger agreement, the Company has elected John W. Guffey, Jr.
Chief Executive Officer of Coltec and David I. Margolis and William R. Holland,
two of the existing directors of Coltec, to become directors of BFGoodrich
effective with the merger with Coltec. A special meeting of shareholders will be
held to approve the issuance of the shares of the Company in connection with the
merger. A separate proxy statement in connection with this transaction will be
sent to the BFGoodrich shareholders. If the merger is consummated then these
directors will serve until the annual meeting of shareholders in 2000.
A description of the directors follows:
Directors whose election is contingent upon merger with Coltec Industries Inc:
<TABLE>
<C> <S>
JOHN W. GUFFEY, JR., age 61.
JOHN W. GUFFEY JR. CHAIRMAN AND CHIEF EXECUTIVE OFFICER, COLTEC INDUSTRIES INC,
PHOTO an aerospace and industrial products company. Mr. Guffey
received a bachelor of engineering degree from Youngstown
State University. He became President of Garlock Mechanical
Packaging Division of Coltec in 1985 and Group President in
1987. Mr. Guffey became President and Chief Operating
Officer of Coltec in 1991. He was named Chairman and Chief
Executive Officer in 1995. Mr. Guffey is a Director of
Coltec Industries, Gleason Corporation and is a Trustee of
the Manufacturers Alliance.
WILLIAM R. HOLLAND, age 60.
WILLIAM R. HOLLAND CHAIRMAN AND CHIEF EXECUTIVE OFFICER, UNITED DOMINION
PHOTO INDUSTRIES, a diversified manufacturing company. Mr. Holland
has bachelor of art and juris doctorate degrees from the
University of Denver. He joined United Dominion in 1973 as
Vice President and General Counsel. He has held various
executive positions and has served as Chairman and Chief
Executive Officer since 1987. Mr. Holland is a Director of
Coltec Industries Inc, J. A. Jones Construction Co. and
Lance Inc. He is a member of the Board of Commissioners of
Carolinas HealthCare System and a Trustee of the
Manufacturers Alliance.
DAVID I. MARGOLIS, age 69.
DAVID I. MARGOLIS RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER, COLTEC
PHOTO INDUSTRIES INC, an aerospace and industrial products
company. Mr. Margolis received a bachelor and master of
business administration degrees from the College of the City
of New York. Mr. Margolis joined Coltec in 1963 as Financial
Vice President and Treasurer. He held various executive
positions and became Chairman and Chief Executive Officer in
1985. Mr. Margolis retired in 1995. Mr. Margolis is a
Director of Burlington Industries, Coltec Industries Inc,
Fort Howard Corporation and OFFITBANK. He is also a member
of the Board of Overseers of New York University Stern
School of Business, Trustee of Presbyterian Hospital in the
City of New York and a member of the Council of Foreign
Relations.
</TABLE>
8
<PAGE> 11
RETIRING DIRECTORS
Jeanette Grasselli Brown, a Director since 1991, will retire as of the 1999
Annual Meeting of Shareholders. Her 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 90 nor more than 120 days
prior to the first anniversary of the preceding year's annual meeting.
Consequently for the 1999 Annual Meeting such notice must be received between
December 21, 1998 and January 20, 1999. The notice will provide the name, age,
principal occupation or employment of each proposed nominee and a brief
description of any arrangement or understanding between the nominee and others
relating to why he or she was selected as a nominee, in addition to 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, 1999.
<TABLE>
<CAPTION>
DIRECTORS' AMOUNT AS TO WHICH
DEFERRED THERE IS
AMOUNT AND COMPENSATION LONG TERM -------------------------
NATURE DIRECTORS' PLAN INCENTIVE PLAN SOLE
NAME OF OF BENEFICIAL PHANTOM PHANTOM PHANTOM PERCENT SOLE VOTING INVESTMENT
BENEFICIAL OWNER OWNERSHIP(1) SHARES(3)(4) SHARES(3)(4) SHARES(4)(5) OF CLASS(2) POWER POWER
---------------- ------------- ------------ ------------ -------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeanette Grasselli Brown 2,000 5,774 496 -- * 2,000 2,000
David L. Burner 298,664 -- -- 21,267 * 50,964 39,809
Diane C. Creel 206 773 496 -- * 206 206
George A. Davidson, Jr. 3,000 5,774 496 -- * 3,000 3,000
James J. Glasser 2,000 -- 496 -- * 2,000 2,000
Jodie K. Glore 200 773 694 -- * 200 200
Marshall O. Larsen 181,377 -- -- 13,048 * 27,277 14,498
Douglas E. Olesen 887 1,490 496 -- * 887 887
Richard de J. Osborne 1,076 1,490 496 -- * 1,076(6) 1,076(6)
David B. Price, Jr. 124,914 -- -- 12,123 * 39,114 39,064
Alfred M. Rankin, Jr. 1,000 2,177 496 -- * 1,000 1,000
Robert H. Rau 48,548 -- -- -- * 3,500(7) 3,500(7)
Les C. Vinney 87,767 -- -- 3,801 * 35,549 35,549
James R. Wilson 4,692 773 893 -- * 4,692 4,692
A. Thomas Young 1,000 2,177 893 -- * 1,000 1,000
19 Directors and
Officers 910,041 21,201 5,952 72,225 1.5% 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, 247,700 shares; R. H.
Rau, 219,100 shares; M. O. Larsen, 154,100 shares; D. B. Price, Jr., 85,800
shares; and L. C. Vinney, 52,218 shares; and Directors and Officers as a group,
913,364 shares. All ownership is direct, except Mr. Rau owns 44,176 and all
Officers and Directors own 45,176 shares indirectly.
(2) Does not include Directors' Phantom Shares or Directors' Deferred
Compensation Plan.
(3) Number of Phantom Shares awarded under Directors' Phantom Share Plan and
Deferred Compensation Plan, see "Board of Directors -- Compensation of
Directors".
(4) Phantom shares are not outstanding and there is no voting or investment
authority.
(5) Phantom shares credited under the Long Term Incentive Shares are subject to
achievement performance goals.
(6) Shared voting and investment power.
(7) Shared voting and investment power as to 44,176 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, 1998. 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 BFGoodrich Company Retirement 5,978,032 8.04%
Plus Savings Plan and other
Company plans(1)
Morgan Stanley Dean Witter & Co.(2) 4,352,663 5.85%
1585 Broadway
New York, NY 10036
</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 shared voting power as to 4,287,648 shares and shared 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.
- 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.
11
<PAGE> 14
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 preselected, national samples of companies developed
by compensation consultants, which the Committee has used for a number of years.
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.
12
<PAGE> 15
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 1998 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 maximum financial objective is achieved. In 1998, the threshold
financial objective for the corporate staff and for each of the operating
segments ranged from 91.3% to 92.5% of target and the maximum financial
objective ranged from 108.8% to 110% of target. No bonus will be paid if a
minimum financial performance is not achieved.
In 1998 corporate staff financial goals were based 60% upon earnings per share
and 40% return on equity. Operating segment financial goals were based 60% upon
segment net income and 40% upon segment return on equity. Individual awards are
made based upon individual performance within a range established with reference
to achievement of the financial goals.
1998 RESULTS
The corporate staff achieved 124%, the Aerospace segment achieved 150% and the
Performance Materials segment only achieved 40% of their respective goals. No
annual incentive compensation was paid to participants in the Performance
Materials segment. The Segment Presidents have one-half of their annual
incentive bonus related to their respective segment performance and one-half
related to total Company performance.
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 Stock Option Plan. There were 67 participants on December 31,
1998.
Currently, the Committee makes awards every year, based on overlapping
three-year performance cycles. At the beginning of each three-year cycle, the
Committee establishes the performance goals, which for the 1998-2000 awards was
Company return on equity. Grants are credited as phantom Performance Shares in a
book account for each participant. Each phantom Performance Share is equivalent
to one share of BFGoodrich common stock. Participants will be entitled to a
payout of shares at the end of each Plan cycle only if the threshold performance
standard is met. The number of shares to be received will range from 50% to 150%
of the total phantom Performance Share account (including shares credited
through dividend equivalents). Awards will be paid in actual BFGoodrich common
shares.
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
13
<PAGE> 16
whether to make an award is dependent upon the individual's past performance and
expectations of future performance.
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 1998, the Committee
granted stock options to 193 executives.
With respect to the Executive Vice Presidents, the Committee considers the
recommendation of the Chief Executive Officer in determining the level of awards
of long-term incentive compensation. It also considers its own impression of the
individuals since the members have ample opportunity to observe their
performance. With respect to other executives who receive long-term incentive
compensation, the Committee makes the determination of the appropriate awards,
but generally considers the recommendation of management in making the specific
award within the established guidelines. The Committee has available information
as to the level of past awards and individual stock ownership of the executive
officers. The Committee has 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 1998 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.
Mr. Burner and three Executive Vice Presidents 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 on the same
criteria as the Management Incentive Program. For 1998 Mr. Burner received
$584,110, or 99% of his target amount.
14
<PAGE> 17
In 1998, Mr. Burner received options to purchase 63,900 shares. During 1998,
Mr. Burner was awarded 20,700 Performance Shares under the 1998-2000 Long-Term
Incentive Plan. The guidelines for awards for the Chief Executive Officer and
the actual targets are the same as for other corporate officers. The Committee
used the same factors to make these awards as it did in determining the other
elements of Mr. Burner's compensation.
The Compensation Committee
George A. Davidson, Jr., Chairman
James J. Glasser, Vice Chairman
Jeanette Grasselli Brown
Jodie K. Glore
James R. Wilson
15
<PAGE> 18
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ----------------------
AWARDS PAYOUT
---------------------- ------------
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL COMPENSATION OPTIONS/ PAYOUT COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($) SARS(#) ($) ($)(1)
--------- ---- --------- -------- ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David L. Burner, 1998 700,000 584,110 30,496 63,900 -0- 81,023
Chairman, President and 1997 625,000 650,389 81,926 49,000 1,741,708 66,823
Chief Executive Officer 1996 487,500 487,046 62,511 52,000 -0- 48,750
Robert H. Rau(2) 1998 640,200 160,178 12,931 -0- -0- 113,060
President, BFGoodrich 1997 624,738 873,489 10,948 -0- -0- 2,245,500(4)
Aerospace Aerostructures Group 1996 593,077 436,500 29,974 -0- -0- 4,500
Marshall O. Larsen, 1998 405,000 381,394 34,444 38,700 -0- 42,780
Executive Vice President and 1997 345,000 308,000 46,610 24,000 638,579 40,300
President, BFGoodrich Aerospace 1996 300,000 325,000 41,284 56,000 -0- 27,900
David B. Price, Jr. 1998 370,000 140,807 27,743 35,800 -0- 22,020
Executive Vice President and 1997 172,500 157,000 21,264 50,000 326,192 949
President, BFGoodrich Performance 1996 -0- -0- -0- -0- -0- -0-
Materials
Les C. Vinney(3) 1998 275,833 187,736 17,341 11,600 -0- 26,616
Senior Vice President and 1997 248,333 138,500 38,187 10,400 982,717 23,300
Chief Financial Officer 1996 237,500 140,000 33,576 11,400 -0- 21,150
</TABLE>
(1) With respect to Messrs. Burner, Larsen and Vinney, $9,600 represents the
Company's contribution to the Retirement Plus Savings Plan, a tax-qualified
defined contribution plan, and the balance represents Company contributions to a
benefit restoration plan with respect to amounts in excess of the amount
permitted to be contributed under the tax-qualified plan. With respect to Mr.
Rau, the amount represents payment upon retirement for unused vacation.
(2) Mr. Rau was also President and Chief Executive Officer of Rohr, Inc., which
became a wholly-owned subsidiary of BFGoodrich on December 22, 1997.
Compensation prior to December 22, 1997 was paid by Rohr, Inc., as an
independent company.
(3) Mr. Vinney was Vice President and Treasurer until April 20, 1998 and Senior
Vice President -- Finance until July 15, 1998.
16
<PAGE> 19
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
------------------------------------------------------- --------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION 0%
NAME (# OF SHARES) YEAR ($/SH) DATE ($) 5% ($) 10% ($)
---- ------------- ------------ ----------- ---------- --- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
D. L. Burner 63,900 6.45% 41.4063 1/3/08 -0- 1,663,387 4,215,023
R. H. Rau -0- -0- N/A N/A N/A N/A N/A
M. O. Larsen 38,700 3.91 41.4063 1/3/08 -0- 1,007,404 2,552,761
D. B. Price, Jr. 35,800 3.61 41.4063 1/3/08 -0- 931,913 2,361,469
L. C. Vinney 11,600 1.17 41.4063 1/3/08 -0- 301,961 765,169
All Shareholders N/A N/A N/A N/A -0- 1,935,833,312 4,905,402,012
All Optionees 990,700 100 41.9183 1/3/09 -0- 26,107,939 66,157,515
Optionee Gain
as % of all
Shareholder Gain N/A N/A N/A N/A N/A 1.35 1.35
</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
certain "change in control" events, as defined under "Management Continuity
Agreements". The proposed merger with Coltec Industries Inc will not cause the
limited stock appreciation rights to become exercisable.
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>
D. L. Burner 11,800 286,200 247,000/0 1,202,173/0
R. H. Rau -0- -0- 219,100/0 3,708,479/0
M. O. Larsen 3,000 66,563 154,100/0 527,874/0
D. B. Price, Jr. -0- -0- 85,800/0 -0-
L. C. Vinney 4,092 106,392 48,798/3,420 272,506/3,634
</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") for the highest 48 consecutive months of an employee's
earnings 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
1999 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 $ 14,512 $ 29,025 $ 36,281 $ 43,537 $ 50,793 $ 56,543
150,000 $ 22,512 $ 45,025 $ 56,281 $ 67,537 $ 78,793 $ 87,418
200,000 $ 30,512 $ 61,025 $ 76,281 $ 91,537 $106,793 $ 118,293
250,000 $ 38,512 $ 77,025 $ 96,281 $115,537 $134,793 $ 149,168
300,000 $ 46,512 $ 93,025 $116,281 $139,537 $162,793 $ 180,043
350,000 $ 54,512 $109,025 $136,281 $163,537 $190,175 $ 210,918
400,000 $ 62,512 $125,025 $156,281 $187,537 $218,793 $ 241,793
450,000 $ 70,512 $141,025 $176,281 $211,537 $246,793 $ 272,668
500,000 $ 78,512 $157,025 $196,281 $235,537 $274,793 $ 303,543
600,000 $ 94,512 $189,025 $236,281 $283,537 $330,793 $ 365,293
700,000 $110,512 $221,025 $276,281 $331,537 $386,793 $ 427,043
800,000 $126,512 $253,025 $316,281 $379,537 $442,793 $ 488,793
900,000 $142,512 $285,025 $356,281 $427,537 $498,793 $ 550,543
1,000,000 $158,512 $317,025 $396,281 $475,537 $554,793 $ 612,293
1,100,000 $174,512 $349,025 $436,281 $523,537 $610,793 $ 674,043
1,200,000 $190,512 $381,025 $476,281 $571,537 $666,793 $ 735,793
1,300,000 $206,512 $413,025 $516,281 $619,537 $722,793 $ 797,543
1,400,000 $222,512 $445,025 $556,281 $667,537 $778,793 $ 859,293
1,500,000 $238,512 $477,025 $596,281 $715,537 $834,793 $ 921,043
1,600,000 $254,512 $509,025 $636,281 $763,537 $890,793 $ 982,793
1,700,000 $270,512 $541,025 $676,281 $811,537 $946,793 $1,044,543
</TABLE>
(1) Earnings include salary, certain incentive payments including annual cash
bonuses, but excludes awards under long-term incentive programs and the Company
match in the Company savings plans. For the named executive officers, only the
amounts shown in the Summary Compensation Table as Salary and Bonus under Annual
Compensation constitute FAE. As of December 31, 1998, final average earnings for
the individuals named in the Summary Compensation Table were as follows: D. L.
Burner, $963,109; M. O. Larsen, $546,354; D. B. Price, Jr., $466,333; and L. C.
Vinney, $372,434.
(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, 1999, 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): D. L. Burner,
19 years, 9 months; M. O. Larsen, 23 years, 11 months; D. B. Price Jr., 1 year,
7 months; and L. C. Vinney 7 years, 4 months.
(4) Certain recently hired executives, including D. L. Burner and D. B. Price
Jr., 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, 1998, the accrued additional benefits per year were as follows: D. L.
Burner, $231,146; and D. B. Price, Jr., $11,195. 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 include all of the executive
officers named in the preceding compensation table other than Mr. 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 (the "Window Period") 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 all benefits and perquisites 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. The approval by the Company's shareholders of the issuance
of BFGoodrich stock in connection with the proposed merger with Coltec
Industries Inc will constitute a change in control under the Agreements. Messrs.
Burner, Larsen, Price and 3 other officers have agreed to waive certain rights
under their agreements so the shareholder approval with respect to the Coltec
merger will not constitute a change in control.
COMPENSATION ARRANGEMENTS
Under Mr. Rau's employment agreement with Rohr, Inc., upon the execution of
the merger agreement with BFGoodrich 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. Mr. Rau retired effective January 1,
1999 and is entitled to a retirement benefit of $420,414 per year. The amount
was reduced by the amount of the retirement benefit he receives 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. 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 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.
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, 1993 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 1993 through 1998. Past performance is not necessarily indicative
of future performance.
CUMULATIVE TOTAL SHAREHOLDER GRAPH
<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>
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>
<TABLE>
<CAPTION>
1994/1998
COMPANY/INDEX CUMULATIVE RETURN
------------- -----------------
<S> <C>
The BFGoodrich Company 211.00
S&P 500 Index 293.91
Aerospace/Defense 188.83
Specialty Chemicals 124.11
</TABLE>
21
<PAGE> 24
BOARD OF DIRECTORS
COMPENSATION OF DIRECTORS
During 1998 each non-employee Director of the Company received fixed
compensation for serving as a Director at the rate of $40,000 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. 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.
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 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. The approval by the Company's shareholders of the issuance of
BFGoodrich stock in connection with the proposed merger with Coltec Industries
Inc will constitute a change in control. As a result Ms. Creel and Mr. Glore
will become vested in their phantom share account. 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.
22
<PAGE> 25
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 is part of a package which includes
employment practices, fiduciary and crime insurance coverage. The insurance
coverage was written by Federal Insurance Company, Reliance Insurance Company,
Royal Insurance Co. of America, Executive Risk Indemnity, Inc., Continental
Casualty Co. and Zurich Insurance Company, commencing June 19, 1998, for a
three-year period, at a total premium cost of $2,333,750.
MEETINGS BY AND CERTAIN COMMITTEES OF THE COMPANY'S BOARD OF DIRECTORS
1. MEETINGS
The Company's Board of Directors held eleven meetings in 1998. All Directors
attended more than 75% of the aggregate total number of meetings held in 1998 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, 1998):
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 Richard de J. Osborne. 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; reviews periodically and exercises oversight with respect to the
legal and ethical compliance policies of the Company; exercise oversight and
review compliance with respect to laws, regulations and policies concerning
environmental, health and safety matters; review periodically the organization,
quality and adequacy of staffing for such compliance; and review claims, demands
and administrative and legal proceedings regarding environmental, health and
safety matters. Three meetings were held in 1998.
COMMITTEE ON GOVERNANCE -- James J. Glasser, Chairman; Alfred M. Rankin, Jr.,
Vice Chairman; George A. Davidson and A. Thomas Young. 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,
23
<PAGE> 26
together with any desired supporting information, to the Secretary of the
Company. This information is made available to the Committee on Governance to
assist it in fulfilling its duties in this area. One meeting was held in 1998.
COMPENSATION COMMITTEE -- George A. Davidson, Jr., Chairman; James J. Glasser,
Vice Chairman; Jeanette Grasselli Brown; Jodie K. Glore 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; reviews and approves compensation for individuals
holding the offices of Executive Vice President or higher. Four meetings were
held in 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
All Directors and executive officers filed all reports required by Section
16(a) of the Securities and Exchange Act in a timely fashion.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors on February 15, 1999 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
1999 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. REAUTHORIZATION OF STOCK OPTION PLAN
STOCK OPTION PLAN
The Board of Directors is submitting a proposal for approval by the
shareholders to reauthorize the Company's existing Stock Option Plan, which was
last authorized in 1996. The current Stock Option Plan only has 26,964 shares
available for grant. The Board of Directors believes that the current plan has
been an important factor in attracting, keeping and motivating key employees,
and further believes that this type of incentive should continue to be offered
in the future. As a result, the Board proposes and recommends an amendment to
the current plan which, as amended (the "Plan"), is set forth in Appendix B to
this proxy
24
<PAGE> 27
statement. The Plan, which would allow stock options to be granted through April
19, 2004, is substantially similar to the current plan. The Plan gives broad
discretion to fashion awards to meet unique incentive requirements. Reference is
made to Appendix B for the specific provisions, which are summarized in the
following paragraphs.
The Plan makes 5,000,000 shares of the Company's common stock available for
grant. The plan is administered by the Compensation Committee of the Board of
Directors. The Committee shall consist of at least three members who shall not
be eligible to participate in the Plan.
Stock Options
The Committee may grant options to purchase the Company's common stock at not
less than fair market value. The Plan specifically prohibits the repricing of
options after they are granted, or the exchange or "swapping" of lower priced
options for higher priced options. The Committee is comprised solely of
independent directors.
The Plan provides for the grant of stock options which qualify as incentive
stock options under the Internal Revenue Code of 1986, as amended, as well as
stock options which do not qualify for such treatment. The Plan would also
permit the granting of other statutory stock options pursuant to any future
provisions of the Internal Revenue Code. The federal income tax treatment of
Incentive Stock Options is generally more favorable to optionees than the
treatment accorded other options. It is also less favorable to the Company
because the Company will generally not receive a tax deduction with respect to
Incentive Stock Options. (See "Federal Income Tax Treatment" below.) Under
current law, the maximum amount of Incentive Stock Options which may be granted
to an individual which are exercisable for the first time during any calendar
year may not exceed $100,000 in aggregate fair market value.
The Plan provides that, subject to certain limitations with respect to the
price and term of options and rights upon termination of employment, discussed
below, the Committee shall have the authority in its discretion to specify all
other terms and conditions. The Committee may, in its discretion, grant options
to purchase the Company's common stock to Officers and other salaried employees
of the Company or its subsidiaries (including Directors who are also Officers or
employees but not to Directors who are not employees of the Company). It may
also determine the term of each option, which may not exceed 10 years from the
date of the granting thereof, and may permit payment upon exercise to be made in
common stock of the Company owned by the optionee, valued at the fair market
value on the date of exercise, or other acceptable forms of consideration equal
in value to the option price. The Committee may place limitations on the
pyramiding of shares in payment of the option price.
Stock Appreciation Rights
The Plan also would authorize the Committee to grant stock appreciation rights
and/or limited stock appreciation rights in connection with any option granted
by the Committee. A stock appreciation right would, subject to the terms and
conditions set forth in the Plan, allow an employee to surrender the related
stock option and receive payment for the difference between the stock option
price and the price of the Company's common stock on the date on which the
appreciation right is exercised. Such payment may, in the sole discretion of the
Committee, be made in either stock or cash or in any combination thereof. A
limited stock appreciation right entitles the optionee to elect to receive the
appreciation on the option in cash for a 60-day period generally commencing
following a "change in control."
25
<PAGE> 28
Stock appreciation rights and limited stock appreciation rights may be granted
at the time of the granting of the related stock options or any time thereafter
during the term of the related stock options. The number of stock appreciation
rights and limited stock appreciation rights granted shall not exceed the number
of shares which may be purchased upon the exercise of the related options and
shall be exercisable only so long as related options are exercisable.
Although the Committee has authority to issue stock appreciation rights, as it
does under the existing plan, the Committee has not granted stock appreciation
rights since the Securities and Exchange Commission modified the rules relating
to the short swing profit liability provisions of the Securities Exchange Act of
1934 with respect to the exercise and sale of stock options by executive
officers in 1991. The Committee has no present intentions of granting stock
appreciation rights, although it does grant limited stock appreciation rights
exercisable under certain conditions to those employees who are subject to such
short swing profit liability provisions.
Performance Share Awards
The Committee may award performance shares which are contingent upon the
attainment of performance objectives. The Plan provides that the performance
objectives which may be used are Net Income, Pre-tax Income, Consolidated
Operating Income, Segment Operating Income, Return on Equity, Operating Income
Return on Net Capital Employed, Return on Assets, Cash Flow, Working Capital,
Share Appreciation, Total Shareholder Return and Earnings per Share of Common
Stock. The performance objectives will be calculated without regard to any
change in accounting standards adopted pursuant to the Financial Accounting
Standards Board which will affect a performance objective by ten percent or
more.
Restricted Share Awards
The Committee may award restricted shares which are subject to conditions
including continued employment with the Company. The maximum number of
restricted shares which may be awarded under the Plan is 250,000 shares.
Other Awards
The Plan permits the Committee to make other types of awards, including awards
which are based in whole or in part on the value of the Company's common stock,
in lieu of making awards in actual shares of stock. The Committee may permit
deferral of cash or stock based awards.
Miscellaneous
No individual may receive awards for more than 200,000 shares in any calendar
year.
The Plan authorizes the delegation of authority with respect to up to 10% of
the shares authorized under the Plan to the Chief Executive Officer of the
Company and other officers, but only with respect to participants who are not
subject to Section 16 of the Securities Exchange Act of 1934.
The Committee has discretion to make such provisions as it deems appropriate
with respect to the effect, if any, termination of employment will have on any
grants or awards under this or any prior stock option plan. Any shares in
respect of which awards have been forfeited, lapsed, expired, been canceled,
withheld to satisfy withholding tax obligations or otherwise been returned to
the Company shall again be
26
<PAGE> 29
available for awards under the Plan. However, upon surrender of a stock option
on exercise of the related appreciation right, the number of shares subject to
the surrendered option shall be charged against the maximum number of shares
issuable under the Plan and shall not be available for future awards.
The Committee may require that any Federal, state or local withholding tax
requirements be satisfied by withholding shares of common stock.
Options and any related appreciation rights and other awards granted under the
Plan shall not be transferable other than by will or the laws of descent and
distribution, or as the Committee approves.
If actual shares are awarded subject to performance objectives, continued
service, or other conditions, they may be registered in the participant's name
but held by the Company or be retained in book-entry form. In such event the
participant will be entitled to receive all dividends and other distributions
and shall have voting rights. Stock awards with respect to which the
restrictions are not removed shall be forfeited to the Company. Any award of
restricted shares which is conditioned upon continued employment shall be
conditional upon continued employment for a minimum period of two years and ten
months following the award, except in the case of death, disability or
retirement.
The Plan provides that in the event of a dissolution or liquidation of the
Company or a merger, consolidation, sale of all or substantially all of its
assets, or other corporate reorganization in which the Company is not the
surviving corporation or any merger in which the Company is the surviving
corporation but the holders of its common stock receive securities of another
corporation (collectively, a "Restructuring"), any outstanding options under the
Plan shall terminate, provided that each optionee has the right immediately
prior to such Restructuring to exercise any unexpired option and/or stock
appreciation right in whole or in part without regard to the exercise date
contained in such option. The number of shares available under the Plan and the
price at which shares may be purchased are subject to adjustment in the event of
any stock split, stock dividend, combination of shares, reorganization or other
change in the structure of the Company. The time within which options and/or
stock appreciation rights may be exercised in full shall be accelerated in the
event of a "change in control" which generally is deemed to have occurred if (i)
any person becomes the beneficial owner of 20% or more of the common stock or
combined voting power of the Company's outstanding securities (subject to
certain exceptions), (ii) during any two-year period there generally has been a
change in the majority of the Directors of the Company, or (iii) certain
corporate reorganizations occur where the existing shareholders do not retain at
least 70% of the voting securities of the surviving entity.
The Plan may be amended by the Board, except that no amendment shall be made
without the approval of shareholders which has the effect of increasing the
number of shares of stock subject to the Plan, but no amendment may adversely
affect any rights or obligations with respect to awards previously made. Unless
the time for granting awards shall be extended with the approval of
shareholders, no awards shall be granted under the Plan after April 19, 2004.
Federal Income Tax Treatment
The following is a summary of the current federal income tax consequences upon
the granting and exercise of stock options, stock appreciation rights, limited
stock appreciation rights and stock awards.
27
<PAGE> 30
(a) Incentive Stock Options. An employee who is granted an Incentive Stock
Option under the Plan will not be subject to federal income tax upon the grant
or exercise of the option. However, the exercise of an Incentive Stock Option is
a tax preference item and may be subject to the alternative minimum tax.
In the event of a sale of the shares received upon exercise of an Incentive
Stock Option after two years from the date of grant and after one year after the
date of exercise (the "Holding Period") any appreciation of the shares received
above the exercise price should be a capital gain. The highest rate applicable
to long term net capital gains is 20 percent. The Company would not be entitled
to a tax deduction with respect to the grant or exercise of an Incentive Stock
Option, or with respect to any disposition of such shares after the Holding
Period. However, if shares acquired pursuant to the exercise of an Incentive
Stock Option are sold by the employee before the end of the Holding Period, any
gain on the sale will be ordinary income for the taxable year in which the sale
occurs. Income will be realized only to the extent the amount received upon sale
exceeds the employee's adjusted basis for the stock. The Company will be
entitled to a tax deduction in the amount of the ordinary income realized by the
employee.
(b) Non-incentive Stock Options. An employee who is granted a stock option
under the Plan that is not an Incentive Stock Option will not be subject to
federal tax upon the grant of the option and the Company will not be entitled to
a tax deduction by reason of such grant. Upon exercise of a stock option under
the Plan that is not a statutory Incentive Stock Option, the excess of the fair
market value of the share on the exercise date over the option price will be
considered compensation taxable as ordinary income to the employee. The Company
may claim a tax deduction in the amount of the taxable compensation realized by
the employee.
(c) Stock and Limited Stock Appreciation Rights. Stock appreciation rights
will not result in taxable income to the recipient or a tax deduction for the
Company at the time of grant. The exercise of stock appreciation rights will
result in compensation taxable as ordinary income to the employee and a tax
deduction to the Company in the amount of any cash paid or the fair market value
of any shares issued or transferred.
(d) Stock Awards. Stock awards made without restrictions are subject to
federal tax to the recipient and are deductible to the Company. Stock awards
with restrictions will not be subject to federal tax upon grant and the Company
will not be entitled to a tax deduction upon grant. Upon lapse of restrictions,
the fair market value of shares free of restrictions will be considered
compensation taxable as ordinary income to the recipient and the Company may
claim a tax deduction at the same time in the same amount. Dividends paid on
shares subject to restrictions will be deemed compensation to the recipient and
deductible by the Company.
Estimate of Benefits
Currently, the Compensation Committee grants stock options on an annual basis,
with the number of options determined by dividing the fair market value of the
Company's common stock on the grant date into a specified percentage of each
optionee's salary midpoint, rounded to the next higher 100 shares. The
percentage of salary midpoint increases with the amount of the salary midpoint.
The next anticipated grant of options is January, 2000. The following table
shows anticipated stock option grants to the identified individuals and groups
if the awards were based on the fair market value of BFGoodrich common stock of
$34.09375 on February 26, 1999. The actual number of stock options granted will,
of course, depend on the fair market value on the date of grant. For future
grants, the Committee could modify its guidelines.
28
<PAGE> 31
NEW PLAN BENEFITS
STOCK OPTIONS
<TABLE>
<CAPTION>
NUMBER
NAME AND POSITION OF OPTIONS
----------------- ----------
<S> <C>
D. L. Burner................................................ 102,700
Chairman, President and Chief Executive Officer
R. H. Rau................................................... -0-
President, BFGoodrich Aerostructures Group
M. O. Larsen................................................ 49,300
Executive Vice President and President, BFGoodrich
Aerospace
D. B. Price, Jr............................................. 44,800
Executive Vice President and President, BFGoodrich
Performance Materials
L. C. Vinney................................................ 29,500
Senior Vice President and Chief Financial Officer
Executive Group............................................. 282,300
Non-Executive Director Group................................ -0-
Non-Executive Officer Employee Group........................ 1,096,289
</TABLE>
It is expected that the Compensation Committee will make awards of phantom
Performance Shares under the Company's Long Term Incentive Plan, which is based
on the Stock Option Plan to individuals at its meeting on April 19, 1999, if the
Stock Option Plan is reauthorized by the shareholders on that date.
Currently, the Committee makes awards every year, based on overlapping
three-year performance cycles. At the beginning of each three-year cycle the
Committee establishes the performance goals, which for the 1998-2000 awards was
Company return on equity. Grants are credited as phantom Performance Shares in a
book account for each participant. Each phantom Performance Share is equivalent
to one share of BFGoodrich common stock. Participants will be entitled to a
payout of shares at the end of each Plan cycle only if the threshold performance
standard is met. The number of shares to be received will range from 50% to 150%
of the total phantom Performance Share account (including shares credited
through dividend equivalents). Awards will be paid in actual BFGoodrich common
shares.
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 with the Company -- the higher
the position level the greater the percentage. The determination of whether to
make an award is dependent upon the individual's past performance and
expectations of future performance.
The following table sets forth the anticipated dollar value of the award
together with the number of shares to be awarded, if the awards were based on
the fair market value of BFGoodrich common stock of $34.09375 on February 26,
1999. The actual number of phantom Performance Shares to be awarded will, of
course, depend on the fair market value on the date of grant. For future awards
the Committee could modify its guidelines.
29
<PAGE> 32
LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
DOLLAR NUMBER
NAME AND POSITION VALUE($) OF UNITS
----------------- ---------- --------
<S> <C> <C>
D. L. Burner................................................ $1,181,250 34,700
Chairman, President and Chief Executive Officer
R. H. Rau................................................... -0- -0-
President, BFGoodrich Aerostructures Group
M. O. Larsen................................................ 552,000 16,200
Executive Vice President and President, BFGoodrich
Aerospace
D. B. Price, Jr............................................. 500,940 14,700
Executive Vice President and President, BFGoodrich
Performance Materials
L. C. Vinney................................................ 328,500 9,700
Senior Vice President and Chief Financial Officer
Executive Group............................................. 3,182,690 93,700
Non-Executive Director Group................................ -0-
Non-Executive Officer Employee Group........................ 6,901,688 202,500
</TABLE>
Dilution
As of February 26, 1999, there are 26,964 shares of the Company's Common stock
outstanding and there are options to purchase 5,285,539 shares of stock. If the
proposed merger with Coltec Industries Inc is consummated (a separate proxy
statement for a special meeting of shareholders' is being circulated), shares of
BFGoodrich stock will be exchanged for Coltec stock and outstanding Coltec stock
options will become exercisable for BFGoodrich stock. As a result, following the
merger, it is estimated that a total of 109,789,212 shares of common stock will
be outstanding and an aggregate of 8,335,299 shares will be subject to
outstanding options.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE REAUTHORIZATION OF THE
STOCK OPTION PLAN.
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 90 nor more than 120 days prior to the first anniversary
of the preceding year's annual meeting. Consequently for the 1999 Annual Meeting
such notice must have been received between December 21, 1998 and January 20,
1999. 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
30
<PAGE> 33
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 2000 Annual Meeting
and which are intended to be included in the proxy statement must be received by
the Office of the Secretary no later than November 5, 1999. The Company suggests
that all such proposals be sent by certified mail, return receipt requested.
The Company's current address is The BFGoodrich Company, 4020 Kinross Lakes
Parkway, Richfield, Ohio 44286-9368. If the proposed merger with Coltec
Industries Inc is completed it is anticipated the Company's new address will be
3 Coliseum Centre, 2550 West Tyvola Road, Charlotte, NC 28217.
Dated March 4, 1999 By Order of the Board of Directors
Nicholas J. Calise, Secretary
PLEASE DATE, SIGN AND MAIL YOUR PROXY
31
<PAGE> 34
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 90 days nor more than 120 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 120th day prior to such annual meeting
and not later than the close of business on the later of the 90th 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
32
<PAGE> 35
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 120th day prior to such special meeting and not later than the
close of business on the later of the 90th 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.
33
<PAGE> 36
APPENDIX B
PROPOSED STOCK OPTION PLAN
THE B.F.GOODRICH COMPANY
STOCK OPTION PLAN
(EFFECTIVE APRIL 19, 1999)
1. PURPOSE. The purpose of the Plan is to promote the interests of the
shareholders by providing stock-based incentives to selected employees to align
their interests with shareholders and to motivate them to put forth maximum
efforts toward the continued growth, profitability and success of the Company.
In furtherance of this objective, stock options, stock appreciation rights,
performance shares, restricted shares, phantom shares, common stock, and/or
other incentive awards may be granted in accordance with the provisions of this
Plan.
2. ADMINISTRATION. The Plan is to be administered by the Compensation
Committee or any successor committee (the "Committee") of the Board of Directors
of the Company. The Committee shall consist of at least three members who shall
not be eligible to participate in the Plan. The Committee shall have full power
and authority to construe, interpret and administer the Plan. All decisions,
actions or interpretations of the Committee shall be final, conclusive and
binding on all parties.
The Committee may delegate to the Chief Executive Officer and to other senior
officers of the Company the authority to make awards under the Plan with respect
to not more than ten percent of the shares authorized under the Plan, pursuant
to such conditions and limitations as the Committee may establish, except that
only the Committee may make awards to Participants who are subject to Section 16
of the Securities Exchange Act of 1934, as amended.
3. SHARES AVAILABLE FOR THE PLAN. An aggregate of 5,000,000 shares of common
stock of the Company shall be available for delivery pursuant to the provisions
of the Plan. Such shares may be either authorized but unissued shares or
treasury shares. Any shares awarded under the Plan which are not issued or
otherwise are returned to the Company, whether because awards have been
forfeited, lapsed, expired, been canceled, withheld to satisfy withholding tax
obligations or otherwise, shall again be available for other awards under the
Plan. However, upon surrender of a stock option or exercise of any related stock
appreciation right, the number of shares subject to the surrendered option shall
be charged against the maximum number of shares issuable under the Plan and
shall not be available for future awards.
4. LIMITATION ON AWARDS. No individual employee may receive awards under this
Plan with respect to more than 200,000 shares in any calendar year.
5. TERM. No awards may be made under this Plan after April 19, 2004.
6. ELIGIBILITY. Awards under the Plan may be made to any salaried, full-time
employee of the Company or any subsidiary corporation of which more than 50% of
the voting stock is owned by the Company. Directors who are not full-time
employees are not eligible to participate.
7. STOCK OPTIONS. The Committee may in its discretion from time to time grant
to eligible employees options to purchase, at a price not less than 100% of the
fair market value on the date of grant (the "option
34
<PAGE> 37
price"), common stock of the Company, subject to the conditions set forth in
this Plan. The Committee may not reduce the option price of any stock option
grant after it is made, except in connection with a Corporate Reorganization,
nor may the Committee agree to exchange a new lower priced option for an
outstanding higher priced option.
The Committee, at the time of granting to any employee an option to purchase
shares or any related stock appreciation right or limited stock appreciation
right under the Plan, shall fix the terms and conditions upon which such option
or appreciation right may be exercised, and may designate options incentive
stock options pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code") or any other statutory stock option that
may be permitted under the Internal Revenue Code from time to time, provided,
however that (i) the date on which such options and related appreciation rights
shall expire, if not exercised, may not be later than ten years after the date
of grant of the option, (ii) in the case of options designated as incentive
stock options, in accordance with provisions of the Internal Revenue Code and
(iii) in case of any other statutory stock option permitted under the Internal
Revenue Code, then in accordance with such provisions as in effect from time to
time.
Within the foregoing limitations, the Committee shall have the authority in
its discretion to specify all other terms and conditions, including but not
limited to provisions for the exercise of options in installments, the time
limits during which options may be exercised, and in lieu of payment in cash,
the exercise in whole or in part of options by tendering common stock of the
Company owned by the employee, valued at the fair market value on the date of
exercise or other acceptable forms of consideration equal in value to the option
price. The Committee may, in its discretion, issue rules or conditions with
respect to utilization of common stock for all or part of the option price,
including limitations on the pyramiding of shares.
8. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, grant
stock appreciation rights and limited stock appreciation rights (as hereinafter
described) in connection with any stock option, either at the time of grant of
such stock option or any time thereafter during the term of such stock option.
Except for the terms of this Plan with respect to limited stock appreciation
rights, each stock appreciation right shall be subject to the same terms and
conditions as the related stock option and shall be exercisable at such times
and to such extent as the Committee shall determine, but only so long as the
related option is exercisable. The number of stock appreciation rights or
limited stock appreciation rights shall be reduced not only by the number of
appreciation rights exercised but also by the number of shares purchased upon
the exercise of a related option. A related stock option shall cease to be
exercisable to the extent the stock appreciation rights or limited stock
appreciation rights are exercised. Upon surrender to the Company of the
unexercised related stock option, or any portion thereof, a stock appreciation
right shall entitle the optionee to receive from the Company in exchange
therefor (a) a payment in stock as determined below, or (b) to the extent
determined by the Committee, the cash equivalent of the fair market value of
such payment in stock on the exercise date had the employee been awarded a
payment in stock instead of cash, or any combination of stock and cash. The
number of shares which shall be issued pursuant to the exercise of stock
appreciation rights shall be determined by dividing (1) the total number of
stock appreciation rights being exercised multiplied by the amount by which the
fair market value of a share of common stock of the Company on the exercise date
exceeds the option price of the related option, by (2) the fair market value of
a share of common stock of the Company on the exercise date. No fractional
shares shall be issued.
The grant of limited stock appreciation rights will permit a grantee to
exercise such limited stock appreciation rights for cash during a sixty-day
period commencing on the date on which any of the events described in the
definition of Change in Control occurs. The amount of cash received upon the
exercise of
35
<PAGE> 38
any limited stock appreciation rights shall equal the excess, if any, of the
fair market value of a share of the Company's common stock on the date of
exercise of the limited stock appreciation rights, over the option price of the
stock option to which the limited stock appreciation rights relate.
9. PERFORMANCE SHARE AWARDS. The Committee may make awards in common stock or
phantom shares subject to conditions established by the Committee which may
include attainment of specific performance objectives ("Performance Share
Awards"). Performance Share Awards may include the awarding of additional shares
upon attainment of the specified performance objectives.
10. PERFORMANCE OBJECTIVES. Performance objectives that may be used under the
Plan include Net Income, Pretax Income, Consolidated Operating Income, Segment
Operating Income, Return on Equity, Operating Income Return on Net Capital
Employed, Return on Assets, Cash Flow, Working Capital, Share Appreciation,
Total Shareholder Return and Earnings Per Share of Common Stock of the Company
(the "Performance Objectives").
11. RESTRICTED SHARES. The Committee may make awards in common stock subject
to conditions, if any, established by the Committee which may include continued
service with the Company or its subsidiaries. Any award of Restricted Shares
which is conditioned upon continued employment shall be conditioned upon
continued employment for a minimum period of two years and ten months following
the award, except in the case of death, disability or retirement. The maximum
number of Restricted Shares that may be awarded under the plan shall be 250,000
shares.
12. OTHER AWARDS. The Committee may make awards authorized under this Plan in
units or phantom shares, the value of which is based, in whole or in part, on
the value of the Company's common stock, in lieu of making such awards in common
stock. The Committee may provide for the awards to be paid in cash, in the
Company's common stock, or in a combination of both cash and Company common
stock, under such terms and conditions as in its discretion it deems
appropriate.
13. DEFERRED AWARDS. The Committee may permit recipients of awards to elect to
defer receipt of such awards, either in cash or in Company common stock, under
such terms and conditions that the Committee may prescribe. The Committee may
authorize the Company to establish various trusts or make other arrangements
with respect to any deferred awards.
14. FAIR MARKET VALUE. For all purposes of this Plan the fair market value of
a share of stock shall be the mean of the high and low prices of the Company's
common stock on the relevant date as reported on the New York Stock Exchange --
Composite Transactions listing (or similar report), or, if no sale was made on
such date, then on the next preceding day on which such a sale was made.
15. TERMINATION OF EMPLOYMENT. The Committee may make such provisions as it,
in its sole discretion, may deem appropriate with respect to the effect, if any,
the termination of employment will have on any grants or awards under this or
any prior stock option plan.
16. ASSIGNABILITY. Options and any related appreciation rights and other
awards granted under this Plan shall not be transferable other than by will or
the laws of descent and distribution or by such other means as the Committee may
approve from time to time.
17. CORPORATE REORGANIZATION. The number and kind of shares authorized for
delivery under the Plan and the price at which shares may be purchased may be
adjusted appropriately in the event of any stock split, stock dividend,
combination of shares, merger, consolidation, reorganization, or other change in
the
36
<PAGE> 39
structure of the Company or the nature of the shares of the Company. The
determination of what adjustments, if any, are appropriate shall be made in the
discretion of the Board of Directors or the Committee.
In the event of a dissolution or liquidation of the Company or a merger,
consolidation, sale of all or substantially all of its assets, or other
corporate reorganization in which the Company is not the surviving corporation
or any merger in which the Company is the surviving corporation but the holders
of its common stock receive securities of another corporation, any outstanding
options hereunder shall terminate, provided that each optionee shall, in such
event, have the right immediately prior to such dissolution, liquidation,
merger, consolidation, sale of assets or reorganization in which the Company is
not the surviving corporation or any merger in which the Company is the
surviving corporation but the holders of its common stock receive securities of
another corporation, to exercise any unexpired option and/or stock appreciation
right in whole or in part without regard to the exercise date contained in such
option. Nothing herein contained shall prevent the assumption and continuation
of any outstanding option or the substitution of a new option by the surviving
corporation.
18. COMMITTEE'S DETERMINATION. The Committee's determinations under the Plan
including without limitation, determinations of the employees to receive awards
or grants, the form, amount and timing of such awards or grants, the terms and
provisions of such awards or grants and the agreements evidencing same, and the
establishment of Performance Objectives need not be uniform and may be made by
it selectively among employees who receive, or are eligible to receive awards or
grants under the Plan whether or not such employees are similarly situated. The
Committee may, with the consent of the Participant, modify any determination it
previously made.
19. LEAVE OF ABSENCE OR OTHER CHANGE IN EMPLOYMENT STATUS. The Committee shall
be entitled to make such rules, regulations and determinations as it deems
appropriate under the Plan in respect of any leave of absence taken by an
employee or any other change in employment status, such as a change from full
time employment to a consulting relationship, of an employee relative to any
grant or award. Without limiting the generality of the foregoing, the Committee
shall be entitled to determine (i) whether or not any such leave of absence or
other change in employment status shall constitute a termination of employment
within the meaning of the Plan and (ii) the impact, if any, of any such leave of
absence or other change in employment status on awards under the Plan
theretofore made to any employee who takes such leave of absence or otherwise
changes his or her employment status.
20. WITHHOLDING TAXES. The Committee or its designee shall have the right to
determine the amount of and require any Federal, state or local withholding tax
be satisfied by withholding shares of common stock or other amounts which would
otherwise be payable under the Plan.
21. RETENTION OF SHARES. If shares of common stock are awarded subject to
attainment of Performance Objectives, continued service with the Company or
other conditions, the shares may be registered in the employees' names when
initially awarded, but possession of certificates for the shares shall be
retained by the Secretary of the Company for the benefit of the employees, or
shares may be registered in book entry form only, in both cases subject to the
terms of this Plan and the conditions of the particular awards.
22. DIVIDENDS AND VOTING. The Committee may permit each participant to receive
or accrue dividends and other distributions made with respect to such awards
under such terms and conditions as in its discretion it deems appropriate. With
respect to shares actually issued, the Committee under such terms
37
<PAGE> 40
and conditions as in its discretion it deems appropriate, may permit the
participant to vote or execute proxies with respect to such registered shares.
23. FORFEITURE OF AWARDS. Any awards or parts thereof made under this plan
which are subject to Performance Objectives or other conditions which are not
satisfied, shall be forfeited, and any shares of common stock issued shall
revert to the Treasury of the Company.
24. CONTINUED EMPLOYMENT. Nothing in the Plan or in any agreement entered into
pursuant to the Plan shall confer upon any employee the right to continue in the
employment of the Company or affect any right which the Company may have to
terminate the employment of such employee.
25. CHANGE IN CONTROL. For purposes of the Plan, a Change in Control shall
mean:
(i) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (A) the then
outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
the following acquisitions shall not constitute a Change in Control: (A) any
acquisition directly from the Company (other than by exercise of a conversion
privilege), (B) any acquisition by the Company or any of its subsidiaries, (C)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (D) any acquisition by
any corporation with respect to which, following such acquisition, more than 70%
of, respectively, the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to such
acquisition in substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be; or
(ii) During any period of two consecutive years, individuals who, as of the
beginning of such period, constitute the Board (the "Incumbent Board"), cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the beginning of
such period whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or
(iii) approval by the shareholders of the Company of a reorganization, merger
or consolidation, in each case, with respect to which all or substantially all
of the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger or consolidation, do not,
following such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 70% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same propor-
38
<PAGE> 41
tions as their ownership, immediately prior to such reorganization, merger or
consolidation of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be; or
(iv) Approval by the shareholders of the Company of (A) a complete liquidation
or dissolution of the Company or (B) a sale or other disposition of all or
substantially all of the assets of the Company, other than to a corporation,
with respect to which following such sale or other disposition, more than 70%
of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be.
26. EFFECT OF CHANGE IN CONTROL. Options and any related appreciation rights
that are not then exercisable shall become immediately exercisable in the event
of a Change in Control. The Committee may make such provision with respect to
other awards under this Plan as it deems appropriate in its discretion.
27. COMPLIANCE WITH LAWS AND REGULATIONS. Notwithstanding any other provisions
of the Plan, the issuance or delivery of any shares may be postponed for such
period as may be required to comply with any applicable requirements of any
national securities exchange or any requirements under any other law or
regulation applicable to the issuance or delivery of such shares, and the
Company shall not be obligated to issue or deliver any such shares if the
issuance or delivery thereof shall constitute a violation of any provision of
any law or any regulation of any governmental authority, whether foreign or
domestic, or any national securities exchange.
28. AMENDMENT. The Board of Directors of the Company may alter or amend the
Plan, in whole or in part, from time to time, or terminate the Plan at any time,
provided however, that no amendment shall be made without the approval of the
shareholders which has the effect of increasing the number of shares subject to
this Plan (other than in connection with a Corporate Reorganization), but no
such action shall adversely affect any rights or obligations with respect to
awards previously made under the Plan.
39
<PAGE> 42
BF Goodrich Logo
BF Goodrich Logo
<PAGE> 43
[BF GOODRICH LOGO]
March 13, 1998
To our Shareholders:
The Annual Meeting of Shareholders will be held on the second floor of the John
S. Knight Center, 77 East Mill Street, Akron, Ohio on Monday, April 20, 1998, at
10:30 A.M.
The proxy statement contains information regarding the meeting, the nominees for
election to the Board of Directors, the proposal to ratify the appointment of
Ernst & Young LLP as independent auditors and the proposal to amend the
Certificate of Incorporation to increase the number of authorized shares. 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 21.
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.
If you plan to attend the meeting, please indicate this on the proxy card.
Sincerely,
/s/ David L. Burner
David L. Burner
Chairman and
Chief Executive Officer
Please Detach Proxy Card Here
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
1. ELECTION OF DIRECTORS FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] EXCEPTIONS* (as marked [ ]
listed below for all nominees listed below to the contrary below)
Jeanette Grassell Brown, David L. Burner, Diane C. Creel,
George A. Davidson, Jr., James J. Glasser, Jodie K. Glore,
Douglas E. Olesen, Richard de J. Osborne, Alfred M. Rankin, Jr.,
Robert H. Rau, D. Lee Toblar, James R. Wilson and A. Thomas Young
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
MARK THE "EXCEPTIONS" BOX AND AND WRITE THAT NOMINEE'S NAME ON THE SPACE
PROVIDED BELOW.
*EXCEPTIONS________________________________________________________________
<S> <C> <C> <C>
2. Approval of Ernst & Young LLP as auditors. FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of amendment to the Certificate of Incorporation to Increase
the number of authorized shares. FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Do you plan to attend the meeting? YES [ ] NO [ ]
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF DIRECTORS AND
FOR PROPOSALS 2 AND 3.
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:_________________________, 1998
____________________________________________
Signature
____________________________________________
Signature
____________________________________________
VOTES MUST BE INDICATED [ X ]
(X) IN BLACK OR BLUE INK.
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
<PAGE> 44
THE BFGOODRICH COMPANY
P R 0 X Y
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 20, 1998, and at any adjournment thereof, as
indicated and in their discretion upon other matters as may properly come before
the meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES. SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
This card also constitutes your voting Instructions for any and all
shares held of record by The Bank of New York for your account In the Company's
Dividend Reinvestment Plan.
Please sign on the reverse side of this card and return it promptly in
the enclosed return envelope to The Bank of New York, Proxy Department, New
York, NY 10203-0029.
THE BFGOODRICH COMPANY
P.O. BOX 11029
NEW YORK, N.Y. 10203-0020
(Continued, and to be signed and dated, on reverse side.)
