<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 GORMAN-RUPP COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ROBERT E. KIRKENDALL, SECRETARY AND ASSISTANT TREASURER
(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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE GORMAN-RUPP COMPANY
MANSFIELD, OHIO
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------
The Annual Meeting of the shareholders of The Gorman-Rupp Company will be
held at the Company's Training Center, 270 West 6th Street, Mansfield, Ohio, on
Thursday, April 22, 1999 at 10:00 a.m., Eastern Daylight Time, for the purpose
of considering and acting upon:
1. A proposal to fix the number of Directors of the Company at eight and to
elect eight Directors to hold office until the next annual meeting of
shareholders and until their successors are elected;
2. A proposal to ratify the appointment by the Board of Directors of Ernst
& Young LLP as independent public accountants for the Company during the
year ending December 31, 1999; and
3. Such other business as may properly come before the Meeting or any
adjournment or adjournments thereof.
Holders of Common Shares of record at the close of business on March 10,
1999 are the only shareholders entitled to notice of and to vote at the Meeting.
PLEASE PROMPTLY EXECUTE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE (WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES), REGARDLESS
OF WHETHER YOU PLAN TO ATTEND THE MEETING.
By Order of the Board of Directors
ROBERT E. KIRKENDALL
Secretary and Assistant Treasurer
March 19, 1999
<PAGE> 3
PROXY STATEMENT
MARCH 19, 1999
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished to shareholders of The Gorman-Rupp
Company in connection with the solicitation by the Board of Directors of the
Company of proxies for use at the Annual Meeting of the shareholders to be held
at the Company's Training Center, 270 West 6th Street, Mansfield, Ohio, at 10:00
a.m., Eastern Daylight Time, on Thursday, April 22, 1999. Holders of Common
Shares of record at the close of business on March 10, 1999 are the only
shareholders entitled to notice of and to vote at the Meeting.
A shareholder, without affecting any vote previously taken, may revoke his
proxy by the execution and delivery to the Company of a later proxy with respect
to the same shares, or by giving notice to the Company in writing or in open
meeting. The presence at the Meeting of the person appointing a proxy does not
in and of itself revoke the appointment.
OUTSTANDING SHARES AND VOTING RIGHTS
As of March 10, 1999, the record date for the determination of persons
entitled to vote at the Meeting, there were 8,572,016 Common Shares outstanding.
Each Common Share is entitled to one vote.
The mailing address of the principal executive offices of the Company is
305 Bowman Street, Mansfield, Ohio 44903. This Proxy Statement and accompanying
proxy are being mailed to shareholders on or about March 19, 1999.
If notice in writing is given by any shareholder to the President, a Vice
President or the Secretary of the Company, not less than 48 hours before the
time fixed for the holding of the Meeting, that such shareholder desires that
the voting for the election of Directors be cumulative, and if announcement of
the giving of such notice is made upon the convening of the Meeting by the
Chairman or Secretary or by or on behalf of the shareholder giving such notice,
each shareholder shall have the right to cumulate such voting power as he
possesses at such election. Under cumulative voting, a shareholder controls
voting power equal to the number of votes which he otherwise would have been
entitled to cast multiplied by the number of Directors to be elected. All of
such votes may be cast for a single nominee or may be distributed among any two
or more nominees as he may desire. If cumulative voting is invoked, and unless
contrary instructions are given by a shareholder who signs a proxy, all votes
represented by such proxy will be divided evenly among the candidates nominated
by the Board of Directors, except that if so voting should for any reason not be
effective to elect all of the nominees
3
<PAGE> 4
named in this Proxy Statement, then such votes will be cast so as to maximize
the number of the Board of Directors' nominees elected to the Board.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
All Directors will be elected to hold office until the next annual meeting
of shareholders and until their successors are elected and qualified. It is
intended that proxies received will be voted in favor of fixing the number of
Directors at eight and for the election of the nominees named below. Each of the
nominees, except Mr. Walston, is presently a Director of the Company. Dr. Lake
and Mr. Watson have been selected as nominees at the request of the Rupp family
interests. Mr. Jeffrey S. Gorman is the son of Mr. James C. Gorman.
In the event that any of the nominees should become unavailable, which the
Board of Directors does not anticipate, it is intended that the proxies will be
voted in favor of fixing the number of Directors at a lesser number or for a
substitute nominee or nominees designated by the Board of Directors, in the
discretion of the persons appointed as proxy holders. The proxies may be voted
cumulatively for less than the entire number of nominees if any situation arises
which, in the opinion of the proxy holders, makes such action necessary or
desirable.
Based upon information received from the respective nominees as of February
1, 1999, the following information is furnished with respect to each person
nominated for election as a Director.
<TABLE>
<CAPTION>
SHARES OWNED
DIRECTOR BENEFICIALLY PERCENT OF
NAME, AGE AND CONTINUOUSLY AT FEB. 1, OUTSTANDING
PRINCIPAL OCCUPATION(1) SINCE 1999(2) SHARES
----------------------- ------------ ------------ -----------
<S> <C> <C> <C>
James C. Gorman 1946 715,189(3) 8.33%
Chairman of the Company.
Chief Executive Officer
(1968-1996).
Age: 74
William A. Calhoun 1969 4,769 *
Retired. Formerly Senior Partner;
Calhoun, Kademenous & Heichel Co.,
L.P.A.; Mansfield, Ohio (Attorneys).
Age: 84
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
SHARES OWNED
DIRECTOR BENEFICIALLY PERCENT OF
NAME, AGE AND CONTINUOUSLY AT FEB. 1, OUTSTANDING
PRINCIPAL OCCUPATION(1) SINCE 1999(2) SHARES
----------------------- ------------ ------------ -----------
<S> <C> <C> <C>
Jeffrey S. Gorman 1989 400,826(4) 4.67%
President and Chief Executive Officer of
the Company; General Manager of the
Company's Mansfield Division. Senior
Vice President (1996-1998); Vice
President (1991-1996).
Age: 46
Thomas E. Hoaglin 1993(5) 3,250(6) *
Chairman and Chief Executive
Officer, Banc One Services
Corporation (1997-1999).
Chairman and Chief Executive
Officer, Banc One Ohio
Corporation (1993-1997).
Age: 49
Dr. Peter B. Lake 1975 11,194(7) *
President, SRI Quality System
Registrar, Inc. (Wexford, Penn-
sylvania).
Age: 56
W. Wayne Walston -- 400(8)
Vice President-External Affairs, Sprint
Corporation/North Central;
Mansfield, Ohio
(Telecommunications).
Age: 56
John A. Walter 1989 3,870(9) *
Retired May 1, 1998. Formerly Presi-
dent (beginning 1989) and Chief Ex-
ecutive Officer (beginning 1996) of the
Company. Chief Operating
Officer (1993-1996).
Age: 65
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
SHARES OWNED
DIRECTOR BENEFICIALLY PERCENT OF
NAME, AGE AND CONTINUOUSLY AT FEB. 1, OUTSTANDING
PRINCIPAL OCCUPATION(1) SINCE 1999(2) SHARES
----------------------- ------------ ------------ -----------
<S> <C> <C> <C>
James R. Watson 1989 1,016(10) *
Director of Digital Services, Argus
Images, Inc.; Owner of Print's Appeal;
Mansfield, Ohio (Digital Printing and
Design).
Age: 51
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares.
(1) Except as otherwise indicated, there has been no change in occupation during
the past five years.
(2) Reported in accordance with the beneficial ownership rules of the Securities
and Exchange Commission under which a person is deemed to be the beneficial
owner of a security if he has or shares voting power or investment power in
respect of such security. Accordingly, the amounts shown in the table do not
purport to represent beneficial ownership for any purpose other than
compliance with the Commission's reporting requirements. Voting power or
investment power with respect to shares reflected in the table are not
shared with others except as otherwise indicated.
(3) Includes 230,250 shares owned by Mr. Gorman's wife and 73,810 shares held in
a trust of which Mr. Gorman is a co-trustee. Mr. Gorman has a beneficial
interest in 54,472 of the shares held in the trust, considers that he shares
the voting and investment power with respect to all of the foregoing shares,
but otherwise disclaims any beneficial interest therein. The amount shown in
the table excludes 839,331 shares beneficially owned by members of Mr.
Gorman's immediate family and 230,892 shares held in trusts of which he and
members of his family have beneficial interests. (54,472 of these trust
shares are the same shares described above.) Mr. Gorman disclaims beneficial
ownership of all of the shares referred to in this note (3).
(4) Includes 26,286 shares owned by Mr. Gorman's wife and 85,464 shares owned by
his minor children. Mr. Gorman considers that he shares the voting and
investment power with respect to all of the foregoing shares, but otherwise
disclaims any beneficial interest therein. The amount shown in the table
excludes 38,281 shares held in a trust in which Mr. Gorman has a beneficial
interest. Mr. Gorman disclaims beneficial ownership of all of the shares
referred to in this note (4).
(5) Mr. Hoaglin also served as a Director of the Company from 1986 to 1989.
6
<PAGE> 7
(6) Includes 900 shares as to which Mrs. Hoaglin shares voting and investment
power.
(7) Includes 4,200 shares owned by Mrs. Lake as to which Dr. Lake shares voting
and investment power.
(8) The amount shown in the table excludes 250 shares held in a trust of which
Mrs. Walston is trustee and 150 shares owned by Mr. Walston's adult
children. Mr. Walston disclaims beneficial ownership of all of the shares
referred to in this note (8).
(9) The amount shown in the table excludes 8,124 shares held in a trust of which
Mrs. Walter is trustee. Mr. Walter disclaims beneficial ownership of all of
the shares referred to in this note (9).
(10) The amount shown in the table excludes 789 shares owned by Mr. Watson's
adult son. Mr. Watson disclaims beneficial ownership of all of the shares
referred to in this note (10).
BOARD OF DIRECTORS AND DIRECTORS' COMMITTEES
During 1998, a total of five regularly scheduled meetings of the Board of
Directors and a total of six meetings of all standing Directors' Committees were
held. All Directors attended at least 75% of the aggregate of the total number
of meetings held by the Board of Directors and of the total number of meetings
held by the respective committees on which they served.
The Board of Directors has four committees: (1) an Audit Committee, whose
present members are Peter B. Lake (Chairman), William A. Calhoun and James R.
Watson; (2) a Salary Committee, whose present members are Thomas E. Hoaglin
(Chairman), Peter B. Lake and John A. Walter; (3) a Pension Committee, whose
present members are James R. Watson (Chairman), Peter B. Lake and William A.
Calhoun; and (4) a Nominating Committee, whose present members are William A.
Calhoun (Chairman), Thomas E. Hoaglin and John A. Walter.
The Audit Committee held two meetings in 1998. Its principal functions
included reviewing the arrangement and scope of the audit, considering comments
made by the independent accountants with respect to the need to improve internal
controls, considering corrective action taken by management, reviewing internal
accounting procedures and controls with the Company's financial and accounting
staff, and reviewing non-audit services provided by the independent accountants.
The Salary Committee held one meeting during 1998. Its principal function
was to determine the salaries of the elected officers of the Company, subject to
approval by the Board of Directors.
The Pension Committee held two meetings in 1998. Its principal function was
to monitor and assist in the investment of the assets connected with the
Company's pension plan.
7
<PAGE> 8
The Nominating Committee held one meeting during 1998. Its principal
function was to identify, evaluate and recommend individuals for nomination as
new members of the Board of Directors.
The Nominating Committee has adopted procedures by which to consider
suggestions from shareholders for Director nominees. Any shareholder wishing to
propose a candidate should deliver a typewritten or legible hand written
communication to the Company's Corporate Secretary. The submission should
provide detailed business and personal biographical data about the candidate,
and include a brief analysis explaining why the individual is well-qualified to
become a Director nominee. All recommendations will be acknowledged by the
Corporate Secretary and promptly referred to the Nominating Committee for
evaluation.
Directors who are employees of the Company do not receive any compensation
for service as Directors. Each Non-Employee Director received a fee for each of
the Board of Directors meetings attended. The fee was $2,000 for meetings held
during 1998. No fees were paid, however, for attendance at committee meetings.
Effective May 22, 1997, the Board of Directors adopted a Non-Employee Directors'
Compensation Plan. Under the Plan, as additional compensation for regular
services to be performed as a Director, an automatic award of 500 Common Shares
(from the Company's treasury) will be made on each July 1 (through 2006) to each
Non-Employee Director then serving on the Board. The award of 500 Common Shares
made on July 1, 1998 had a market value of $9,125.
SHAREHOLDINGS BY EXECUTIVE OFFICERS*
<TABLE>
<CAPTION>
SHARED VOTING
SHARES OWNED AND
NAME AND PRINCIPAL POSITION BENEFICIALLY INVESTMENT POWER
--------------------------- ------------ ----------------
<S> <C> <C>
Kenneth E. Dudley 2,527 2,527
Treasurer
Robert E. Kirkendall 8,279 -0-
Secretary and
Assistant Treasurer
</TABLE>
- ---------------
*The table sets forth information received from the executive officers as
of February 1, 1999, and all amounts represent less than 1% of the outstanding
shares. The shareholdings of Messrs. J. C. Gorman, J. S. Gorman and J. A. Walter
are included under the caption "Election of Directors".
The Company and National City Bank (Cleveland, Ohio), as administrator of
the Company's Employee Stock Purchase Plan and as agent of the Company's
Dividend Reinvestment Service (the
8
<PAGE> 9
"Plans"), entered into a Distribution Agreement dated as of October 1, 1997 to
establish a procedure to sell certain Common Shares held in the Company's
treasury to the Plans. On October 23, 1997, the Securities and Exchange
Commission declared effective a registration statement filed by the Company in
respect of the Distribution Agreement. The registration statement, among other
things, permits the Company for a two-year period (ending October 28, 1999,
unless extended) to sell up to 100,000 Common Shares held in its treasury to the
Plans at a per share price equal to the average of the high and low sales prices
of Common Shares on the American Stock Exchange on the nearest trading date
before the date of sale. The Company will receive all of the proceeds from the
sale of the registered Common Shares and will use such proceeds for working
capital purposes. A number of the executive officers are participants in the
Plans. National City Bank acts as the transfer agent and registrar for the
Common Shares.
PRINCIPAL SHAREHOLDERS
The following table sets forth information pertaining to the beneficial
ownership of the Company's Common Shares as of February 1, 1999 by James C.
Gorman and as of December 31, 1998 by each other person known to the Company to
own beneficially more than five percent of the outstanding Common Shares.
<TABLE>
<CAPTION>
NUMBER PERCENT OF
OF SHARES OUTSTANDING
NAME AND ADDRESS TYPE OF OWNERSHIP OWNED SHARES
---------------- ----------------- --------- -----------
<S> <C> <C> <C>
James C. Gorman Sole voting and investment power 411,129 4.79%
305 Bowman Street Shared voting and investment power 304,060 3.54%
Mansfield, Ohio 44903
---------- -----
TOTAL 715,189 8.33%
Bank One Corporation As trustee with sole voting power 436,787 5.09%
One First National Plaza As trustee with sole investment 352,077 4.10%
power
Chicago, Illinois As trustee with shared voting -0- --
power
60670 As trustee with shared investment 84,710 .98%
power
---------- -----
TOTAL 436,787(1)(2) 5.09%
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
NUMBER PERCENT OF
OF SHARES OUTSTANDING
NAME AND ADDRESS TYPE OF OWNERSHIP OWNED SHARES
---------------- ----------------- --------- -----------
<S> <C> <C> <C>
Pioneering Management As investment adviser with sole 513,457 5.98%
Corporation voting power
60 State Street As investment adviser with sole 513,457 5.98%
Boston, Massachusetts investment power
02109 As investment adviser with shared -0- --
voting power
As investment adviser with shared -0- --
investment power
---------- -----
TOTAL 513,457(1) 5.98%
All Directors and Executive 1,157,494(3) 13.48%
Officers as a group
(10 persons)
</TABLE>
- ---------------
(1) This figure represents the aggregate amount of Common Shares beneficially
owned. Of the aggregate amount, however, some shares are subject to sole
voting power but shared or no investment power, and some shares are subject
to sole investment power but shared or no voting power. Consequently, the
sum of this column does not equal the aggregate amount shown.
(2) The Company, the fiduciary of the Company's Individual Profit Sharing
Retirement Plan and Bank One Trust Company, N.A., Mansfield, Ohio (as
trustee) entered into a Distribution Agreement dated as of December 1, 1997
to establish a procedure to sell certain Common Shares held in trust to the
Plan. On March 2, 1998, the Securities and Exchange Commission declared
effective a registration statement filed by the Company on behalf of Bank
One Trust Company, N.A., Mansfield, Ohio (as trustee) in respect of the
Distribution Agreement. The registration statement, among other things,
permits Bank One Trust Company, N.A., Mansfield, Ohio (as trustee) for a
three-year period (ending March 2, 2001, unless extended) to sell up to
100,000 Common Shares to the Plan at a per share price equal to the average
of the mean between the high and low sales prices of the Common Shares on
the American Stock Exchange on the nearest trading dates before and after
the date of sale. The Company will receive none of the proceeds from the
sale of the registered Common Shares.
Banc One Corporation owns all of the outstanding capital stock of Bank One
Trust Company, N.A., Mansfield, Ohio, the selling shareholder, and Bank One
Trust Company, N.A., Columbus, Ohio, the fiduciary of the Plan. The Company
also utilizes various commercial banking services of Bank One N.A.,
Mansfield, Ohio, another affiliate of Banc One Corporation.
(3) Includes 429,756 shares as to which voting and investment power are shared.
10
<PAGE> 11
EXECUTIVE COMPENSATION
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended December 31, 1998, 1997 and 1996 of those persons who were, at December
31, 1998, (i) the chief executive officer and (ii) the other four most highly
compensated executive officers of the Company (the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM ALL OTHER
ANNUAL COMPENSATION(1)(2) COMPENSATION COMPENSATION(3)
---------------------------------- -------------------- ---------------
STOCK LONG-TERM
OPTIONS/ INCENTIVE
YEAR SALARY BONUS OTHER SARS PAYOUTS
NAME AND PRINCIPAL POSITION ---- ------ ----- ----- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeffrey S. Gorman............... 1998 $150,000 $83,000 $1,456 -0- -0- $1,280
President and Chief Executive 1997 128,333 62,000 1,356 -0- -0- 1,267
Officer (effective May 1,
1998); 1996 122,000 58,000 1,356 -0- -0- 1,267
Senior Vice President (until
May 1, 1998); General Manager,
Mansfield Division
James C. Gorman................. 1998 120,000 21,000 156 -0- -0- 565
Chairman 1997 160,000 40,000 156 -0- -0- 640
1996 160,000 40,000 156 -0- -0- 801
Kenneth E. Dudley............... 1998 102,667 34,000 1,464 -0- -0- 1,105
Treasurer 1997 98,667 31,350 1,464 -0- -0- 1,022
1996 95,000 27,400 1,464 -0- -0- 950
Robert E. Kirkendall............ 1998.. 91,833 28,000 1,381 -0- -0- 833
Secretary and 1997 88,333 24,800 1,381 -0- -0- 687
Assistant Treasurer 1996 84,500 21,700 1,381 -0- -0- 645
John A. Walter.................. 1998 87,966 45,125 68 -0- -0- 364
President and Chief 1997 179,667 90,250 1,204 -0- -0- 960
Executive Officer 1996 168,167 79,000 1,404 -0- -0- 1,425
(retired May 1, 1998)
</TABLE>
- ---------------
(1) The Company sponsors The Gorman-Rupp Company Individual Profit Sharing
Retirement Plan ("401(k) Plan"). Substantially all the employees of the
Company, including the executive officers and the employees of Patterson
Pump Company (a wholly owned subsidiary), are eligible to participate in the
401(k) Plan. Each participant in the 401(k) Plan may make before-tax
contributions to the Plan of up to 10% of compensation, but not in excess of
the maximum annual amount permitted by the Internal Revenue Code. The
maximum annual amount for each of 1998 and 1999 is $10,000. Before-tax
contributions made to the 401(k) Plan qualify for deferred tax
11
<PAGE> 12
treatment under Section 401(k) of the Code. The Company makes matching
contributions on a monthly basis for each participant who is an employee on
the last day of the month equal to 20% of the first 4% of the participant's
before-tax contributions made during the month. The participant's before-tax
contributions and the Company's matching contributions are nonforfeitable,
but are subject to special nondiscrimination tests imposed by the Code. If
the tests are not satisfied, contributions by or for highly compensated
employees are reduced. Each participant (or the beneficiary of a deceased
participant) receives the full amount allocated to a participant's account
upon any termination of the participant's employment. During 1998, a total
of $1,463,310, consisting of both participant before-tax contributions and
Company matching contributions, was allocated to participants' accounts
under the 401(k) Plan, including an aggregate amount of $35,793 to the
accounts of the executive officers which is included in the compensation
shown in the table. The amounts allocated during 1998 to the accounts of the
executive officers named in the table are as follows: Mr. Walter ($4,008);
Mr. J. C. Gorman ($3,388); Mr. J. S. Gorman ($10,880); Mr. Dudley ($10,774);
and Mr. Kirkendall ($6,743).
(2) The pension plan in which the Company's executive officers participate is a
defined benefit plan covering substantially all employees of the Company and
Patterson Pump Company; and the amounts of contributions or accruals
applicable to the individual participants therein cannot be readily
calculated. The aggregate contributions made to such plan for the benefit of
the Company's executive officers amount to approximately 3% of the total
contributions made on behalf of all participants covered by the plan.
In general, a participant's monthly benefit under the pension plan is
determined by multiplying 1.1% of his final average monthly compensation by
the number of his credited years and months of service. A participant's
final average monthly compensation is one-twelfth of the average annual
compensation of the participant for the last 10 years of the participant's
employment with the Company (or Patterson Pump Company) or, if less than 10,
for his actual years of such employment. The compensation covered by the
pension plan for 1998 is identical to the compensation set forth in the
table, except that the plan does not cover profit-sharing bonuses or amounts
labeled "other" in the table received by any executive officer, as well as,
effective as of November 1, 1994 (and adjusted for 1999), any compensation
in excess of $160,000. However, compensation covered by the pension plan
does include any before-tax contributions made by the participant to the
401(k) Plan. The benefit amounts applicable to each individual participant
are not subject to any deduction for Social Security benefits or other
offset amounts.
12
<PAGE> 13
As of November 1, 1998, the executive officers had the following number of
credited full years of service under the Company's pension plan: Mr.
Walter-38; Mr. J.C. Gorman-49; Mr. J.S. Gorman-20; Mr. Dudley-42; and Mr.
Kirkendall-20. As of November 1, 1998, the estimated annual benefits payable
at age 65 upon retirement to Messrs. Walter, Gorman, Gorman, Dudley and
Kirkendall are $63,139, $82,143, $24,728, $40,471 and $17,028, respectively.
Mr. J.C. Gorman is age 74 and is active as an officer of the Company. As
required by law, because he is over age 70 1/2, he receives payments from
the pension plan. Those payments totaled $73,224 in 1998.
(3) Amounts contributed by the Company on behalf of the named executives to the
401(k) Plan.
PENSION AND RETIREMENT BENEFITS
The following table shows the estimated annual benefits under the Company's
pension plan which would have been payable to employees in various compensation
classifications upon retirement in 1998 at age 65 after selected periods of
service.
<TABLE>
<CAPTION>
FINAL AVERAGE
ANNUAL PAY
AT AGE 65* 10 YEARS 20 YEARS 30 YEARS 40 YEARS
------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 25,000 $ 2,750 $ 5,500 $ 8,250 $11,000
50,000 5,500 11,000 16,500 22,000
75,000 8,250 16,500 24,750 33,000
100,000 11,000 22,000 33,000 44,000
125,000 13,750 27,500 41,250 55,000
150,000 16,500 33,000 49,500 66,000
</TABLE>
- ---------------
*Effective as of November 1, 1994 (and adjusted for 1999), compensation in
excess of $160,000 is not taken into account under the pension plan.
13
<PAGE> 14
SALARY COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Under the supervision of the Salary Committee of the Board of Directors,
the Company has developed compensation policies which seek to enhance the
profitability of the Company, and thus shareholder value, by aligning closely
the financial interests of the Company's senior managers with those of its
shareholders. In addition to these goals, annual base salaries are generally set
somewhat below competitive levels so that the Company relies to a large degree
on annual incentive compensation to retain corporate officers and other key
employees of outstanding abilities and to motivate them to perform to the full
extent of their abilities. The incentive compensation is closely tied to
corporate, business unit and individual performance in a manner that encourages
a long and continuing focus on building profitability and shareholder value.
Based on evaluation of these factors, the Committee believes that the
senior management of the Company is dedicated to achieving improvements in
long-term financial performance and that the compensation policies the Committee
administers have contributed to achieving this management focus.
Compensation for each of the Named Officers, as well as other senior
executives, consists of a base salary and annual incentive compensation or
profit sharing. The base salaries are fixed at levels somewhat below the
competitive amounts paid to senior managers with comparable qualifications,
experience and responsibilities at other companies engaged in the same or
similar businesses as the Company. The annual incentive compensation is more
closely tied to the Company's success in achieving significant financial and
non-financial performance goals. The Committee considers the total compensation
of each of the Named Officers and the other senior executives in establishing
the elements of compensation.
In the early part of each fiscal year, the Committee reviews with the Chief
Executive Officer and approves, with modifications considered appropriate, an
annual salary for the Company's senior executives (other than the Chief
Executive Officer). Salaries are developed under the ultimate direction of the
Chief Executive Officer based upon industry and national surveys and performance
judgments as to the past and expected future contributions of the individual
senior executives. The Committee independently reviews and fixes the base salary
of the Chief Executive Officer based on similar competitive compensation data
and the Committee's assessment of his past performance and its expectation as to
his future contributions in leading the Company and its businesses.
At the beginning of each year, performance objectives for purposes of
determining annual profit sharing are established for each business unit based
upon operating earnings. At the end of each year, performance against these
objectives is determined by an arithmetic calculation. In determining the profit
sharing in 1998 for other eligible employees, including the Named Officers, the
Committee reviews with the Chief Executive Officer executive management's
recommendations based on
14
<PAGE> 15
individual performance. The results of these evaluations are considered by the
Salary Committee and the Board of Directors when determining the amounts to be
awarded as profit sharing (which appear as "Bonus" in the Summary Compensation
Table on page 11).
The Committee believes that its past awards of performance have
successfully focused the Company's senior management on building continued
profitability and shareholder value.
The foregoing report has been furnished by members of the Salary Committee.
<TABLE>
<S> <C> <C>
/s/ DR. PETER B. LAKE /s/ THOMAS E. HOAGLIN /s/ JOHN A. WALTER
- ------------------------------- ------------------------------- -------------------------------
Dr. Peter B. Lake Thomas E. Hoaglin John A. Walter
Chairman
</TABLE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Shares against
the cumulative total return of the American Stock Exchange Market Value Index
and a Peer Group Index for the period of five fiscal years commencing January 1,
1994 and ending December 31, 1998. The issuers in the Peer Group Index were
selected on a line-of-business basis by reference to SIC Code 3561--Pumps and
Pumping Equipment. The Peer Group Index is composed of the following issuers:
Ampco-Pittsburgh Corp., Flowserve Corp., Graco Inc., Haskel International, Inc.,
Idex Corp., Met-Pro Corp., Robbins & Myers Inc., Roper Industries Inc. and
Sundstrand Corp., in addition to the Company.
15
<PAGE> 16
COMPARISON OF 5-YEAR CUMULATIVE
TOTAL RETURN
AMONG THE GORMAN-RUPP COMPANY,
AMEX MARKET INDEX
AND PEER GROUP INDEX
<TABLE>
<CAPTION>
THE GORMAN-RUPP CO. PEER-GROUP INDEX AMEX MARKET INDEX
------------------- ---------------- -----------------
<S> <C> <C> <C>
'1993' 100.00 100.00 100.00
'1994' 106.12 94.25 88.33
'1995' 95.20 120.86 113.86
'1996' 86.93 148.09 120.15
'1997' 139.23 198.70 144.57
'1998' 114.02 171.17 142.61
</TABLE>
- ASSUMES $100 INVESTED ON JAN. 1, 1994
- ASSUMES DIVIDEND REINVESTED
- FISCAL YEAR ENDING DEC. 31, 1998
16
<PAGE> 17
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL NO. 2)
A proposal will be presented at the Meeting to ratify the appointment by
the Board of Directors of Ernst & Young LLP as independent public accountants
for the Company during the year ending December 31, 1999. Representatives of
Ernst & Young LLP are expected to be present at the Meeting and will have an
opportunity to make a statement if they so desire and are expected to be
available to respond to appropriate questions. Although such ratification is not
required by law, the Board of Directors believes that shareholders should be
given this opportunity to express their views on the subject. While not binding
on the Board of Directors, the failure of the shareholders to ratify the
appointment of Ernst & Young LLP as the Company's independent public accountants
would be considered by the Directors in determining whether to continue the
engagement of Ernst & Young LLP.
THE DIRECTORS RECOMMEND A VOTE FOR PROPOSAL NO. 2 TO RATIFY THE APPOINTMENT
OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
GENERAL INFORMATION
The Company's 1998 annual report to shareholders, including financial
statements, is being mailed concurrently with this Proxy Statement to all
shareholders of the Company.
The cost of soliciting proxies will be paid by the Company. In addition to
the use of the mails, proxies may be solicited personally or by telephone or
telecopy by a few officers or regular employees of the Company. No separate
compensation will be paid for the solicitation of proxies, although the Company
may reimburse brokers and other persons holding Common Shares in their names or
in the names of nominees for their expenses in sending proxy material to the
beneficial owners of such Common Shares.
Any proposal by a shareholder intended to be presented at the 2000 annual
meeting of shareholders must be received by the Company for inclusion in the
proxy statement and form of proxy of the Company relating to such meeting on or
before November 19, 1999.
17
<PAGE> 18
OTHER BUSINESS
Financial and other reports will be submitted to the Meeting, but it is not
intended that any action will be taken in respect thereof. The Board of
Directors is not aware of any matters other than those referred to in this Proxy
Statement which might be brought before the Meeting for action, but if any such
other matters should arise, it is intended that the persons appointed as proxy
holders will vote or act thereon in accordance with their own judgment.
You are urged to date, sign and return your proxy promptly. For your
convenience, enclosed is a self-addressed return envelope requiring no postage
if mailed in the United States.
By Order of the Board of Directors
ROBERT E. KIRKENDALL
Secretary and Assistant Treasurer
March 19, 1999
18
<PAGE> 19
THE GORMAN-RUPP COMPANY
305 Bowman Street - Mansfield, Ohio 44903
-----------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints James C. Gorman, Robert E.
Kirkendall and Jeffrey S. Gorman as Proxies, each with the power to
appoint his substitute, and hereby authorizes them to represent and
to vote all of The Gorman-Rupp Company Common Shares held of record
on March 10, 1999 by the undersigned at the Annual Meeting of the
shareholders to be held on April 22, 1999, or at any adjournment
thereof, as follows:
THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR PROPOSAL NO. 1.
<TABLE>
<S> <C> <C> <C>
NOMINEES FOR 1. ELECTION OF DIRECTORS
DIRECTORS: Fixing the number of Directors at 8 and electing WITHHOLD
JAMES C. GORMAN all nominees listed (except as marked to the contrary AUTHORITY
WILLIAM A. CALHOUN below) to vote for all
JEFFREY S. GORMAN (INSTRUCTION: To withhold authority FOR nominees listed
THOMAS E. HOAGLIN to vote for any individual nominee, write his name below.) [ ] [ ]
DR. PETER B. LAKE
W. WAYNE WALSTON
JOHN A. WALTER
JAMES R. WATSON
</TABLE>
--------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR PROPOSAL NO. 2.
<TABLE>
<S> <C> <C> <C>
2. RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP as FOR AGAINST ABSTAIN
independent public accountants [ ] [ ] [ ]
</TABLE>
(Sign and date on other side)
(Continued from other side)
PROXY 3. In their discretion, the Proxies are authorized to vote upon such
COMMON other business as may properly come before the Meeting.
SHARES
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED SHAREHOLDER; IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
Please sign exactly as your name appears below. If signing as
---------------------------------------- attorney, executor,
administrator, trustee or
guardian, please give full
title as such; and if
signing for a corporation,
please give your title.
When shares are in the
names of more than one
person, each should sign.
Date:_______________ , 1999
---------------------------
---------------------------
Signature of Shareholder(s)
[ ] Please check this box if you plan to attend the Meeting.
