SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[GOULDSPUMPSLOGO]
March 31, 1994
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 4, 1994
To the Stockholders of Goulds Pumps, Incorporated:
Please Take Notice that the Annual Meeting of the Stockholders of
Goulds Pumps, Incorporated will be held at the Holiday Inn,
Seneca Falls, New York (1/4 mile north of the intersection of NY
414 and US 20, midway between Seneca Falls and Waterloo, New
York) on Wednesday, May 4, 1994, at ten o'clock A.M., E.D.T., for
the following purposes:
1. To elect ten Directors.
2. To act on a proposal to approve the 1994 Incentive Plan to
Increase Stockholder Value.
3. To act on a proposal to approve the 1994 Incentive Plan for
Non-Employee Directors.
4. To ratify the appointment of Deloitte & Touche as independent
certified public accountants for 1994.
5. To transact such other business as may properly come before
the meeting or any adjournment thereof.
All of the above items are more fully described in the attached
Proxy Statement. Only holders of stock of record at the close of
business on March 8, 1994 will be entitled to notice of and to
vote at the meeting.
By Order of the Board of Directors
Eugene B. Bradshaw
Secretary
The Board of Directors will appreciate your marking, signing and
returning promptly the accompanying proxy card, no matter how
large or how small your holdings may be.
[LOGO]
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS, MAY 4, 1994
The accompanying form of proxy is solicited by the Board of
Directors for use at the Annual Meeting of Stockholders of Goulds
Pumps, Incorporated, 240 Fall Street, Seneca Falls, New York
13148 (Corporation or Company), to be held at the time and place
stated in the Notice of Meeting which accompanies this Proxy
Statement. Solicitation of proxies by mail is expected to
commence on March 31, 1994. The shares represented by the
proxies received prior to the vote will be voted FOR the election
of Directors as set forth herein (unless authority to vote is
withheld), FOR the approval of the 1994 Incentive Plan to
Increase Stockholder Value, FOR the approval of the 1994
Incentive Plan for Non-Employee Directors and FOR the
ratification of the appointment of Deloitte & Touche as
auditors for the year 1994, unless specific instructions to the
contrary are given or an abstention from voting is indicated by
the stockholder. The enclosed form of proxy is revocable at any
time prior to the exercise thereof.
The Company has one class of stock outstanding, its common stock,
and the holders of record at the close of business on March 8,
1994 are entitled to vote at the meeting. On the record date,
there were 21,173,269 shares of common stock outstanding, and
each share entitles the holder to one vote on each matter to come
before the meeting.
One-third of the outstanding shares will constitute a quorum at
the meeting. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum at
the meeting. Abstentions are counted as present in tabulations of
the votes cast on proposals presented to stockholders, whereas
broker non-votes are not counted as present. Accordingly,
abstentions will have the effect of a negative vote on the
proposals to approve the 1994 Incentive Plan to Increase
Stockholder Value and to approve the 1994 Incentive Plan for
Non-Employee Directors. Broker non-votes will have
no effect on the outcome of the votes on such proposals or on the
election of Directors.
ELECTION OF DIRECTORS
Ten Directors, constituting the entire Board, are to be elected
to hold office until the next Annual Meeting of Stockholders and
until their successors are elected and qualified. The vote of a
plurality of the shares present in person or by proxy and
entitled to vote is required for the election of Directors.
The names of, and certain information with respect to, the
persons nominated by the Board of Directors for election as
Directors follow. It is intended that shares represented by
proxies solicited by the Board of Directors will be voted for the
election of these nominees, unless otherwise indicated on the
proxy card. The Board of Directors believes that all of the
nominees will be available, willing and able to serve
as Directors, but if for any reason any nominee becomes
unavailable for election, discretionary authority may be
exercised to vote for substitutes proposed by the Board of
Directors. All of the nominees are presently serving as Directors
of the Corporation and were elected at the 1993 Annual Meeting.
DIRECTORS
STEPHEN V. ARDIA
Mr. Ardia, 52 years of age, a Director since 1984, has been
President and Chief Executive Officer of the Corporation since
1985. He is a member of Goulds Executive and Pension Committees.
He is a Director of Wheatley TXT Corp. and Blue Cross/Blue Shield
of Rochester, New York. Shares owned: Personally, 176,656
(includes exercisable options to purchase 142,248 shares).
WILLIAM R. FENOGLIO
Mr. Fenoglio, 54 years of age, a Director since 1988, was
President and Chief Executive Officer of Barnes Group, Inc.,
Bristol, Connecticut, from 1991 to 1993 and had been President
and Chief Operating Officer of that company since 1985. Barnes
Group, Inc. is a manufacturer of precision springs and components
for aerospace, automotive and other durable goods industries and
is a direct-to-user distributor of consumable replacement parts
and supplies for the maintenance and repair market. He
is a member of the Company's Audit, Compensation and Human
Resources Committees. He is a Director of Southern New England
Telecommunications Corp., and Southern New England Telephone
Company. Shares owned: Personally, 6,990 (includes exercisable
options to purchase 5,986 shares).
WILLIAM W. GOESSEL
Mr. Goessel, 66 years of age, a Director since 1976, retired in
1993 from Harnischfeger Industries, Inc., Milwaukee, Wisconsin, a
manufacturer of mining equipment, material handling systems and
paper making machines and a designer and integrator of automated
material handling systems, where he had been Chairman since 1992,
and Chairman and Chief Executive Officer since 1986. He is a
member of the Company's Compensation and Human Resources
Committees and the Committee on Directors. He is a Director of
Measurex Corporation and Twin Disc, Incorporated. Shares owned:
Personally, 7,804 (includes exercisable options to purchase 6,781
shares).
MELVIN HOWARD
Mr. Howard, 59 years of age, a Director since 1984, has been
Managing Director of Taurus Advisory Group, L.L.C., Stamford,
Connecticut, an investment advisory firm, since August 1993 and
had retired in 1990 from the Xerox Corporation, Stamford,
Connecticut, an international office equipment company, where he
had been Vice Chairman of the Board from 1986 to 1990. He is a
member of the Company's Human Resources, Audit and Pension
Committees. Shares owned: Personally, 7,881 (includes
exercisable options to purchase 6,781 shares).
BARBARA B. LUCAS
Ms. Lucas, 48 years of age, a Director since 1992, has been Vice
President-Public Affairs and Corporate Secretary of The Black &
Decker Corporation, Towson, Maryland, a global manufacturer of
power tools and home improvement products, since 1985. She is a
member of the Company's Human Resources and Compensation
Committees and the Committee on Directors. Shares owned:
Personally, 3,495 (includes exercisable options to purchase 2,486
shares).
THOMAS C. McDERMOTT
Mr. McDermott, 56 years of age, a Director since 1988, retired in
1993 from Bausch & Lomb, Incorporated, Rochester, New York, a
health care and optics company, where he had been President
and Chief Operating Officer since 1986. He is a member of the
Company's Human Resources, Compensation and Executive Committees.
He is a Director of A.T. Cross Company. Shares owned:
Personally, 7,381 (includes exercisable options to purchase 6,781
shares).
JAMES C. MILLER III
Mr. Miller, 51 years of age, a Director since 1990, is Counsellor
to Citizens for a Sound Economy, Washington, D.C., and from 1989
to 1993, had served as Chairman of that organizations Board of
Directors. Since 1988, he has also been John M. Olin
Distinguished Fellow at the Center for Study of Public Choice at
George Mason University in Fairfax, VA. He is Chairman and
President of Economic Impact Analysts, Inc., and a Director of
Ameribanc Investors Group, Washington Mutual Investors, Inc. and
The Union Corporation. He is a member of the Company's Human
Resources and Pension Committees and the Committee on Directors.
Shares owned: Personally, 6,138 (includes exercisable options to
purchase 5,137 shares).
PETER ODDLEIFSON
Mr. Oddleifson, 61 years of age, a Director since 1974, is a
Partner in the law firm of Harris Beach & Wilcox, Rochester, New
York, which firm has been and is currently engaged in performing
various legal services for the Corporation. He is a member of
the Company's Executive, Human Resources and Audit Committees.
He is a Director of Rochester Midland Corp. Shares owned:
Personally, 9,728 (includes exercisable options to purchase 6,781
shares).
ARTHUR M. RICHARDSON
Mr. Richardson, 67 years of age, a Director since 1980, has been
President of Richardson Capital Corporation, Rochester, New York,
an investment enterprise, since 1985. He is a member of the
Company's Executive, Compensation, Human Resources and Audit
Committees. He is a Director of Raymond Corporation, Rochester
Gas and Electric Corporation and Transmation, Inc. Shares owned:
Personally, 8,366 (includes exercisable options to purchase 6,781
shares); by immediate family, 216.
ROBERT L. TARNOW
Mr. Tarnow, 69 years of age, a Director since 1970, has been
Chairman of the Board since 1978, and served as Chief Executive
Officer from 1978 to 1983 and from 1984 to 1985. He retired as
an active employee of the Company in 1985. He is a member of the
Company's Executive and Human Resources Committees and the
Committee on Directors. He is a Director of Graham Corporation,
Bausch and Lomb, Incorporated and Raymond Corporation. Shares
owned: Personally 16,144 (includes exercisable options to
purchase 6,781 shares).
Unless otherwise indicated above, as to shares shown as owned
Personally, the Director named has sole voting and investment
power over such shares; as to shares listed as owned by immediate
family, voting and investment powers are deemed to be shared by
the named Director with members of his family. No nominee owns
in excess of 1% of the shares of the Company.
Additional Information Relating to the Board of Directors
Outside Directors are paid an annual retainer of $20,000 per
year. In addition, they are paid $1,000 per day for attendance at
each board meeting, $800 per day for attendance at each committee
meeting provided the committee meeting is held on other than a
regular board meeting date and $400 per day for attendance at
each committee meeting held on a regular board meeting date. The
Chairman of the Board is paid an additional retainer of $60,000
per year and is provided with a Company car. All committee
chairpersons are paid an additional retainer of $2,800 per year.
Employee directors do not receive any additional remuneration for
their services as a Director.
Each Director of the Company who is not otherwise an employee of
the Company or any subsidiary, on the fourth Wednesday of May
following the Directors election at the annual meeting of
stockholders has been automatically granted a non-qualified
option to purchase the Company's common stock pursuant to the
terms of the 1988 Stock Incentive Plan. The number of shares
subject to each such option is equal to (i) the average of all
compensation paid to non-employee Directors divided by (ii) the
fair market value per share of the Company's common stock on the
date of grant. Each incumbent non-employee Director received an
option for 1,320 shares on May 26, 1993, at an option price of
$23.62 per share.
It is intended that, beginning in 1994, non-statutory options to
purchase 1500 shares of the Company's common stock will be
granted annually to each non-employee Director pursuant to the
terms of the proposed 1994 Incentive Plan for Non-Employee
Directors, provided the Plan is approved by the Stockholders at
this meeting.
The Board of Directors held six (6) meetings during 1993, and all
of the Directors attended more than 75% of the aggregate of the
total number of Board meetings and the total number of meetings
held by all Committees of the Board on which they served.
AUDIT COMMITTEE AND COMMITTEE ON DIRECTORS
The Audit Committee of the Board of Directors recommends to the
Board of Directors the appointment of auditors, reviews the plan
and results of the audit performed by the auditors and the plan
and scope of the Corporations internal auditing procedures,
approves each professional service provided by the auditors,
considers the range of audit and non-audit fees, reviews the
adequacy of the Corporations internal accounting controls, and
directs and supervises investigations into the foregoing matters.
The Audit Committee held two (2) meetings during 1993.
The Board of Directors also has appointed a Committee on
Directors which recommends to the Board nominees for election as
Directors and considers the performance of incumbent Directors in
determining whether to nominate them to stand for re-election.
In addition, the Committee on Directors will consider nominees
recommended by stockholders and has established a procedure to
consider such nominees whereby stockholders shall submit written
recommendations of nominees for election to the Board of
Directors to the Secretary of the Corporation no later than the
December 10th immediately preceding the Annual Meeting of
Stockholders at which the election is to be held, accompanied by
the written consent of the recommended person to serve if elected
and his or her complete biographical data, particularly with
respect to business or other experience bearing upon such
persons qualifications. The Committee on Directors held 2
meetings during 1993.
PROPOSAL FOR APPROVAL OF THE 1994 INCENTIVE PLAN
TO INCREASE STOCKHOLDER VALUE
On February 18, 1994, the Board of Directors adopted the 1994
Incentive Plan to Increase Stockholder Value (the 1994 Incentive
Plan), subject to approval of the 1994 Incentive Plan by a
majority of the shares of common stock of the Company represented
in person or by proxy at the Annual Meeting.
This Plan supplements the 1988 Stock Incentive Plan and will
provide an additional pool of shares for options, as well as
stock appreciation rights, restricted stock and performance units
and/or shares, available for future grants. The purpose of the
1994 Incentive Plan is to promote the success of the Company and
advance its value by linking the personal interests of key
employees with those of Company stockholders, and by providing
key employees with an incentive for outstanding performance.
The following is a brief description of certain key provisions of
the 1994 Incentive Plan. It is intended only as a summary and is
qualified by reference to the entire text of the 1994 Incentive
Plan, which is appended hereto as Exhibit A.
Description of the Plan
Upon approval by the stockholders, the 1994 Incentive Plan will
become effective. The 1994 Incentive Plan will continue until
May 3, 2004, unless earlier terminated by the Board of Directors.
Under the terms of the 1994 Incentive Plan, up to 1,000,000
shares of the Company's common stock are subject to the grant of
options. It is intended that options granted under the 1994
Incentive Plan (Options) may constitute incentive stock options
(Incentive Options) or options that do not so qualify
(Nonstatutory Options), all as described below. The 1994
Incentive Plan also contains provisions for the granting of Stock
Appreciation Rights (Rights), Restricted Stock, and Performance
Units/Shares, all of which are described below. The 1994
Incentive Plan will be administered by the Compensation Committee
of the Board of Directors. The Compensation Committee will
select the employees to whom Incentive Options, Nonstatutory
Options, Rights, Restricted Stock and Performance Units/Shares
(collectively, Awards) are to be granted and the terms of each
Award. Persons eligible for Awards consist of managerial and
other key employees (including officers, whether or not they are
Directors) of the Company and its subsidiaries who hold positions
of significant responsibility or whose performance or potential
contribution, in the judgment of the Compensation Committee,
would benefit the future success of the Company. The class of
persons eligible for consideration for Awards currently consists
of approximately 125 employees, including all Executive Officers.
Under the Option provisions of the 1994 Incentive Plan,
participants will be eligible to receive Options to purchase
shares of the Company's common stock. The option price may not
be less than 100% of the fair market value of the shares as of
the close of business on the date of the grant. As of March 8,
1994, the fair market value of the Company's common stock was
$25.63. No Options may be exercisable after the expiration of
ten years from the date of the grant. An optionee cannot
transfer or assign an Option other than by will or in accordance
with the laws of descent and distribution.
Under Section 422 of the Internal Revenue Code, no federal income
tax consequences will be incurred by the Company or the optionee
at the time an Incentive Option is granted or exercised, except
that the difference between the option price and the value of the
stock on the date of exercise is included in the optionees income
at the time of exercise for the purposes of the alternative
minimum tax computation. When and if the stock received upon
exercise of an Incentive Option is sold, the optionee will
realize gain or loss equal to the difference between the selling
price of the stock and the price paid by the optionee for the
shares. If the stock has been held for at least two years from
the date the option was granted and one year from the date the
Option was exercised, such gain or loss will constitute capital
gain or loss. If such holding periods are not met, the spread
between the option price and the fair market value of the shares
on the exercise date constitutes ordinary income to the optionee
(with a corresponding deduction to the Company), and the optionee
will realize capital gain or loss equal to the difference between
the selling price of the stock and its fair market value on the
date of exercise.
With respect to Nonstatutory Options, no federal income tax
consequences are incurred by the Company or the optionee at the
time of the grant. At the time of exercise, the optionee will
recognize income in the amount of the difference between the
option price and the value of the stock on the date of exercise,
and the Company will be entitled to a corresponding deduction for
federal income tax purposes in an equal amount, upon compliance
with any requisite income tax withholding provisions.
Upon sale of the stock, the optionee will realize capital gain or
loss equal to the difference between the selling price of the
stock and its fair market value on the date of exercise.
Under the Rights provisions of the 1994 Incentive Plan,
participants will be eligible to receive Rights, either in tandem
with an Option or separately. A Right provides the recipient with
the value of the difference in the fair market value of the
Company's common stock from the date the Rights grant is made
until the recipient exercised the grant. At the time of exercise,
the recipient will recognize income in an amount equal to the
difference between the grant price and the value of the stock on
the date of exercise, and the Company will be entitled to a
corresponding deduction for federal income tax purposes in an
equal amount, upon compliance with any requisite income tax
withholding provisions.
Under the Restricted Stock provisions of the 1994 Incentive Plan,
participants will be eligible to receive grants of the Company's
common stock. The grant recipient achieves the ownership of
Restricted Stock by satisfying the restrictions designated by the
Compensation Committee. The recipient will have an election to
either recognize income in an amount equal to the value of the
stock in the year of the grant, or to defer the recognition of
income until any restriction constituting a substantial risk of
forfeiture within the meaning of the Internal Revenue Code, has
lapsed. In either case, the income recognized will be ordinary
income and the Company will be entitled to a corresponding
deduction for federal income tax purposes.
Under the Performance Unit/Share provisions of the 1994 Incentive
Plan, participants will be eligible to receive grants of
Performance Units and/or Performance Shares. The grant recipient
becomes entitled to receive the value of the Performance
Units/Shares in cash and/or common stock of the Company by
meeting the performance goals established by the Compensation
Committee within a specified performance period. The recipient
will recognize ordinary income in an amount equal to the value of
the cash and/or stock in the year it is received, and the Company
will be entitled to a corresponding deduction for federal income
tax purposes.
The 1994 Incentive Plan may be amended without Stockholder
approval to the extent permitted by applicable law. Currently,
regulations issued under Section 16 of the Securities Exchange
Act of 1934 would require Stockholder approval of any amendment
that would: materially increase the benefits accruing to
participants under the 1994 Incentive Plan; materially increase
the number of securities that may be issued under the 1994
Incentive Plan; or materially modify the requirements as to
eligibility for participation in the 1994 Incentive Plan.
Plan Benefits
The number of shares of common stock underlying Options, Rights
and Restricted Stock issued to any participant in any calendar
year is limited to 0.3% of the outstanding shares of common stock
for each type of Award, or 0.9% of the outstanding shares of
common stock in total. The number and value of Options received
in 1993 by certain Executive Officers under the 1988 Stock
Incentive Plan is described in the table entitled Option Grants
in Last Fiscal Year on page 13. All Executive Officers of the
Company as a group received Options with respect to 103,488
shares of common stock in 1993. The aggregate value of such
Options, using the Black-Scholes Model and the assumptions
described on page 13, was $677,290.
The Board of Directors recommends a vote FOR the approval of the
1994 Incentive Plan to Increase Stockholder Value, and proxies
solicited will be so voted unless stockholders specify a contrary
vote or abstain.
PROPOSAL FOR APPROVAL OF THE 1994 INCENTIVE PLAN
FOR NON-EMPLOYEE DIRECTORS
On February 18, 1994, the Board of Directors adopted the 1994
Incentive Plan for Non-Employee Directors (the 1994 Plan),
subject to approval of the 1994 Plan by a majority of the shares
of common stock of the Company represented in person or by proxy
at the Annual Meeting.
This Plan replaces the provisions of the 1988 Stock Incentive
Plan that provided for annual grants of Nonstatutory Options to
non-employee Directors and will provide an additional pool of
shares for future Nonstatutory Option grants. The purpose of the
1994 Plan is to increase the ownership interest in the Company of
non-employee Directors and to provide a further incentive to
serve as a Director of the Company.
The following is a brief description of certain key provisions of
the 1994 Plan. It is intended only as a summary and is qualified
by reference to the entire text of the 1994 Plan, which is
appended hereto as Exhibit B.
Description of the Plan
Upon approval by the stockholders, the 1994 Plan will become
effective. The 1994 Plan will continue until the later of May 3,
2004 or the day after the 2004 Annual Meeting of Stockholders,
unless earlier terminated.
Under the terms of the 1994 Plan, up to 175,000 shares of the
Company's common stock are subject to the grant of options.
Options granted under the 1994 Plan will be Nonstatutory Options.
Only Directors of the Company who are not employees of the
Company or any affiliate of the Company will be granted options
under the 1994 Plan. There are currently nine such Directors.
The 1994 Plan provides that, on the first stock trading day after
each Annual Meeting of Stockholders, beginning in 1994, each
non-employee Director will receive a Nonstatutory Option to
purchase 1,500 shares of the Company's common stock. The option
price will be 100% of the fair market value of the shares as of
the close of business on the date of the grant. As of March 8,
1994, the fair market value of the Company's common stock was
$25.63. The option will expire ten years after the date of the
grant. The optionee cannot transfer or assign the option other
than by will, in accordance with the laws of descent and
distribution, or pursuant to a qualified domestic relations
order.
No federal income tax consequences are incurred by the Company or
the optionee at the time of the grant. At the time of exercise,
the optionee will recognize income in the amount of the
difference between the option price and the value of the stock on
the date of exercise, and the Company will be entitled to a
corresponding deduction for federal income tax purposes in an
equal amount, upon compliance with any requisite income tax
withholding provisions. Upon sale of the stock, the optionee
will realize gain or loss equal to the difference between the
selling price of the stock and its fair market value on the date
of exercise.
The Board of Directors may not amend the provisions of the 1994
Plan regarding the amount of securities covered by Options
granted to Directors, the exercise price of Options, or the
timing of Option grants, more than once within any six-month
period, except to comply with changes in applicable law. Subject
to the foregoing, the 1994 Plan may be amended without
Stockholder approval to the extent permitted by applicable law.
Currently, regulations issued under Section 16 of the Securities
Exchange Act of 1934 would require Stockholder approval of any
amendment that would: materially increase the benefits accruing
to participants under the 1994 Plan; materially increase the
number of securities that may be issued under the 1994 Plan; or
materially modify the requirements as to eligibility for
participation in the 1994 Plan.
Plan Benefits
Based on the current size and composition of the Board of
Directors, the 1994 Plan will result in the issuance of Options
to purchase 13,500 shares of common stock to non-employee
Directors each year. The aggregate value of such Options, using
the Black-Scholes Model and the assumptions described on page 13,
would have been $88,309 in 1993.
The Board of Directors recommends a vote FOR the approval of the
1994 Incentive Plan for Non-Employee Directors, and proxies
solicited will be so voted unless stockholders specify a contrary
vote or abstain.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of December 31,
1993, with respect to the only persons or entities known to the
Company to be the beneficial owners of more than five percent of
the Company's common stock and, as of March 8, 1994, with respect
to beneficial ownership of the common stock by the Executive
Officers listed in the Summary Compensation Table on page 12 and
by all Executive Officers and Directors as a group.
Percent of
Name No. of Shares Class
The State Teachers Retirement Board 1,332,200(1) 6.3%
of Ohio
275 Broad Street
Columbus, Ohio
Thompson, Siegel & Walmsley, Inc. 1,324,491(2) 6.3%
5000 Monument Avenue
Richmond, Virginia
FMR Corp. 1,123,600(3) 5.3%
82 Devonshire Street
Boston, Massachusetts
Stephen V. Ardia 176,656(4) *
Frank J. Zonarich 49,194(5) *
John M. Morphy 38,691(6) *
Mary Ann Lambertsen 5,300(7) *
Eugene B. Bradshaw 21,730(8) *
All Directors and Executive 365,398(9) 1.7%
Officers (15 persons)
(1)The State Teachers Retirement Board of Ohio is an employee
benefit plan. It has sole voting power and sole dispositive
power with respect to 1,332,200 shares.
(2)Thompson, Siegel & Walmsley, Inc. is an investment advisor. It
has sole voting power with respect to 615,250 shares, shared
voting power with respect to 413,175 shares, sole dispositive
power with respect to 1,318,291 shares and shared dispositive
power with respect to 6,200 shares.
(3)FMR Corp. is a holding company. It has sole voting power with
respect to 244,100 shares and sole dispositive power with
respect to 1,123,600 shares.
(4)Includes exercisable options to purchase 142,248 shares.
(5)Includes exercisable options to purchase 40,560 shares.
(6)Includes exercisable options to purchase 33,799 shares.
(7)Includes exercisable options to purchase 4,263 shares.
(8)Includes exercisable options to purchase 16,763 shares.
(9)Includes exercisable options to purchase 304,024 shares.
*Less than 1.0%.
TRANSACTIONS WITH DIRECTORS AND OTHERS
The Corporation obtained legal services from the law firm of
Harris Beach & Wilcox, of which Mr. Oddleifson is a partner,
during the calendar year 1993.
APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has recommended that the appointment of
Deloitte & Touche as auditors for the year 1994 be ratified by
the stockholders. Deloitte & Touche and their predecessors have
served as auditors of the Corporation since 1908. Representatives
of Deloitte & Touche are expected to be present at the Annual
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.
The Board of Directors recommends a vote FOR the approval of
auditors, and proxies solicited will be so voted unless
stockholders specify a contrary vote or abstain.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors Compensation Committee (the Committee)
provides the following information about its charter, executive
compensation philosophy and program, and 1993 compensation-
related decisions.
The Compensation Committee was formed by the Board on April 28,
1993. Prior to that date, its duties were performed by the Human
Resources Committee of the Board. The Compensation Committee
approves the design of, assesses the effectiveness of, and
administers the executive compensation program and certain
benefit plans. The Committee administers the 1988 Stock Incentive
Plan and the Executive Incentive Plan, and in this capacity it
makes all stock option grants or cash bonus awards to Company
officers and other executives including executives named (named
executives) in the tables found herein. The Committee also
reviews and approves all salary arrangements and other
remuneration for executives, evaluates executive performance, and
considers related matters. The Committee, consisting of five
non-employee Directors who have no interlocking relationships as
defined by the Securities and Exchange Commission (SEC), met
twice during 1993. The Human Resources Committee, consisting of
all non-employee Directors, met twice regarding compensation
issues prior to the formation of the Compensation Committee.
The Overall Objectives of the Executive Compensation Program
The Committee is committed to implementing an executive
compensation program which supports the Company's mission and
facilitates the achievement of the Company's business strategies.
It is the intent that:
(1) the executive total compensation program should strengthen
the relationship between pay and performance by emphasizing
variable, at-risk compensation that is dependent upon the
achievement of success in meeting specified Company and
individual performance goals,
(2) the at-risk components of pay should be primarily
equity-based to encourage a close identification with the Company
and align executives interests with those of stockholders, and
(3) compensation opportunities should enhance the Company's
ability to attract, retain, and encourage the development of
exceptionally knowledgeable and experienced executives upon
whom, in large part, the successful operation and management of
the Company depends.
An Overview of Goulds Executive Compensation Plans and 1993
Committee Actions
The Committee annually evaluates Goulds Pumps financial
performance and executive compensation plans in the context of
comparator companies consisting of pump industry competitors and
a broader group of major durable goods manufacturers. Total
annual pay levels (base salary plus annual cash bonuses) reflect
Company financial performance, business unit financial
performance, and individual executive performance. Over time, and
with above average financial and individual performance, Goulds
Pumps targets its executive compensation to approximate the 60th
percentile of the executive compensation of the size-adjusted
comparator companies.
The companies chosen for the comparator group used for
compensation purposes generally are not the same companies which
comprise the industry peer group index in the performance graph
included on page 15 of this proxy statement. The Committee
believes that the Company's competitors for executive talent are
not necessarily the same companies that would be included in the
industry peer group index established for comparing stockholder
returns.
The key elements of the Company's executive compensation program
are base salary, annual cash bonuses, and long-term compensation.
These are addressed separately below. In determining each element
of compensation, the Committee considers all components of an
executives total compensation, including retirement plans,
insurance, and other benefits.
The Base Salary Plan is regularly reviewed by the Committee.
Executives base salaries are targeted at the 55th percentile of
comparator companies and are adjusted by the Committee to
recognize varying levels of responsibility, prior experience,
breadth of knowledge, internal equity, and external pay
practices.
The comparator companies are surveyed periodically to determine
specific compensation levels for similar executive positions.
Such a review was conducted in 1993 and base salary ranges were
adjusted accordingly. Salaries were reviewed in relation to
Company financial performance, individual executive performance
and the comparator companies compensation levels. Because Company
financial performance was lower than planned, salary increases
for each of the named executives, other than the CEO, were not
awarded until 16 months from their last merit increases; the
increases were at rates comparable to those provided at the
comparator companies adjusted for size. The CEO's base salary was
not adjusted in 1993.
The Annual Incentive Compensation Plan promotes the Company's
pay-for-performance philosophy through the Executive Incentive
Plan (EIP) which provides for annual cash bonuses based on
Company and business unit financial performance, and other
objectively determined performance measures. The annual bonus
opportunity allows the Company to communicate specific goals that
are of primary importance during the coming year and to motivate
executives to achieve these goals.
The EIP cash bonus opportunity is a percentage of base salary
that increases with level of responsibility, thereby increasing
the portion of compensation at risk. Annual cash bonus
opportunities are designed to be in line with competitive data
from the comparator companies. Company financial performance is
based on an earnings per share objective and business unit
financial performance is based on contribution to earnings. The
Committee believes these performance measures are contributing
determinants of stock price over time. Including the named
executives, there are approximately 80 key managers who
participate in the EIP. Receipt of cash incentive awards
under the EIP may be deferred to a subsequent date or retirement.
Company and business unit financial performance ranging from 85%
to 120% of budgeted financial performance will result in an EIP
cash bonus of 50% to a maximum of 150% of target cash bonus
opportunity. All participants have part of their award tied to
Company financial performance to reinforce the need for teamwork
and to focus attention on overall Company objectives. Part of
their award is also linked to business unit financial performance
when appropriate. For the named executives, 85% of the EIP payout
was tied to Company financial performance and 15% to the
achievement of other objectively determined performance measures.
A minimum threshold for Company financial performance must be
achieved for any portion of the EIP payout to occur. That
minimum was not met in 1993 and consequently no EIP bonus
payments were made to the named executives for 1993.
The 1988 Stock Incentive Plan, approved by stockholders in 1988,
is in keeping with the Company's commitment to provide total
compensation which favors at-risk components of pay and directly
links the interests of management with those of stockholders. It
is the Company's only long-term incentive vehicle and is designed
to provide competitive long-term incentive compensation
opportunities, to tie executive long-term financial gain to
increases in the Company's stock price, and to increase stock
ownership among key managers. In 1994 a broader long-term
incentive plan (the 1994 Incentive Plan to Increase Stockholder
Value) is being proposed to add flexibility in terms of incentive
vehicles available for grant.
Stock options are normally granted annually based on an
assessment of the comparator companies competitive data, past
grants made to executives, and current stock holdings of the
executives. The long-term incentive program targets its awards
at the median of the comparator companies. Stock options are
granted at an option price not less than the fair market value of
the Common Stock on the date of grant and will have value only if
the stock price appreciates from the date the options are
granted. The stock option grants vest at 25% per year for four
years to aid in the retention of executives and key managers. The
Option Grants in Last Fiscal Year table gives a summary of stock
option shares granted under the 1988 Stock Incentive Plan in
fiscal 1993 to the named executives.
Each executive is expected to reach a goal of Goulds Pumps stock
ownership in an amount equal to a multiple of his or her base
salary.
CEO Compensation
Mr. Ardia's base salary was not adjusted in 1993 because Company
financial performance was lower than planned.
The EIP cash bonus opportunity was conditioned on an earnings per
share financial performance objective. This Company financial
performance objective was not met in 1993, and Mr. Ardia did not
receive an EIP award. Mr. Ardia's total cash compensation in 1993
was less than in both 1991 and 1992.
In January, 1993, Mr. Ardia was awarded an option to purchase
56,165 shares of Goulds Pumps stock under the 1988 Stock
Incentive Plan. The grant was valued using the Black-Scholes
option pricing model and reflects a competitive long-term
incentive award based on compensation survey data for Chief
Executive Officers at the comparator companies. Mr. Ardia's past
grants and current stock holdings were reviewed in determining an
appropriate 1993 grant.
Mr. Ardia participates in other plans including the Supplemental
Executive Pension Plan, an executive life insurance plan called
the Executive Security Plan, and is eligible to participate in
all other exempt employee benefit plans except basic term life
insurance.
Company Response to Potential Limits to Deductibility of
Executive Pay
Since no employee is expected to reach the one million dollar
deductible compensation cap in 1994, the Committee has determined
that it is not in the Company's current interest to substantially
revise compensation programs in response to IRC Section 162(m).
The Committee will continue to evaluate the advisability of
amending or changing its compensation programs in this respect in
future years. Nevertheless, because compensation received
pursuant to stock option and stock appreciation right grants
under the 1994 Incentive Plan to Increase Stockholder Value may
be bunched in a single year (i.e., if options granted in several
years are exercised in a single year) and varies in amount
depending on the increase in value of the Company's common stock,
it is possible that an executive could exceed the one million
dollar cap by exercising several stock options and stock
appreciations rights in a single year. The Company has structured
the stock option and stock appreciation right provisions of the
1994 Incentive Plan to Increase Stockholder Value to comply with
the performance-based compensation exception to the limit imposed
by IRC Section 162(m) to prevent this occurrence.
Summary
The Committee believes the executive compensation program,
through the Committees administration of the component plans,
continues to ensure the Company's ability to attract, retain, and
motivate the executive resources required to maximize stockholder
value. The Committees competitive pay philosophy facilitates the
employment and retention of talented executives. The emphasis on
variable pay and the tie to both short-and long-term financial
results and stock performance, directly links compensation to
critical measures of Company performance. We believe these
elements, in combination, further the best interests of the
Company's stockholders.
Respectfully submitted,
The Compensation Committee
Thomas C. McDermott, Chairman
William R. Fenoglio Barbara B. Lucas
William W. Goessel Arthur M. Richardson
The Human Resources Committee
Arthur M. Richardson, Chairman Thomas C. McDermott
William R. Fenoglio James C. Miller III
William W. Goessel Peter Oddleifson
Melvin Howard Robert L. Tarnow
Barbara B. Lucas
Summary Compensation Table
Annual Compensation
Other
Annual
Name and Year Salary($) Bonus($) Compensation($)
Principal Position
Stephen V. Ardia 1993 $434,400 $ 0
President and CEO 1992 426,924 103,785
1991 386,052 177,777
Frank J. Zonarich 1993 216,419 0
Group Vice President 1992 209,001 65,208
Water Technologies 1991 195,492 66,370
John M. Morphy 1993 214,375 0
Group Vice President 1992(1) 192,869 45,671
Industrial Products 1991 174,498 61,874
Mary Ann Lambertsen 1993 159,542 0 $7,670(3)
Vice President 1992 154,500 32,012
Human Resources 1991(2) 13,654 5,000
Eugene B. Bradshaw 1993 155,917 0
Vice President 1992 151,500 31,391
Secretary and 1991 144,000 39,787
General Counsel
(1) Job change from CFO to Group Vice President in 1992.
(2) Date of hire 11-28-91.
(3) Relocation expense tax gross-up; a one time reimbursement.
Summary Compensation Table (cont'd.)
Long-Term Compensation
Restricted Securities All
Name and Stock Underlying LTIP Other
Principal Position Awards Options(#) Payouts Compensation
Stephen V. Ardia 56,165 $2,101(4)
President and CEO 55,700 2,101(4)
25,770
Frank J. Zonarich 14,990 3,372(4)
Group Vice President 15,100 3,372(4)
Water Technologies 11,817
John M. Morphy 14,848 1,564(4)
Group Vice President 13,500 1,564(4)
Industrial Products 10,259
Mary Ann Lambertsen 6,303 23,660(5)
Vice President 6,450 1,846(4)
Human Resources 0
Eugene B. Bradshaw 6,182 2,460(4)
Vice President 6,350 2,460(4)
Secretary and 5,610
General Counsel
(4) Executive Security Plan the economic benefit to the executive
for the death benefit provided through a split dollar life
insurance arrangement.
(5) Executive Security Plan $2,013; relocation expense
reimbursement $21,647.
Option Grants in Last Fiscal Year
Securities % of Total
Underlying Options Exercise
Options Granted to Price Expiration
Name Granted Employees Per Share Date
Stephen V. Ardia 56,165 24.05% $24.75 Jan 4, 2003
Frank J. Zonarich 14,990 6.42% 24.75 Jan 4, 2003
John M. Morphy 14,848 6.36% 24.75 Jan 4, 2003
Mary Ann Lambertsen 6,303 2.70% 24.75 Jan 4, 2003
Eugene B. Bradshaw 6,182 2.65% 24.75 Jan 4, 2003
Name Grant Date
Present Value(1)
Stephen V. Ardia $367,399
Frank J. Zonarich 98,056
John M. Morphy 97,127
Mary Ann Lambertsen 41,231
Eugene B. Bradshaw 40,439
(1)Black-Scholes Assumption Disclosure:
The estimated grant date present value reflected in the above
table is determined using the Black-Scholes Model. The
material assumptions and adjustments incorporated in the
Black-Scholes Model in estimating the value of the options
reflected in the above table include the following:
*An exercise price of the options ($24.75) equal to the fair
market value of the underlying stock on the date of grant;
*An interest rate (6.6%) that represents the interest rate on a
U.S. Treasury security with a maturity date corresponding to that
of the option term;
*Volatility (31.79%) calculated using daily stock prices for the
one-year period prior to the grant date;
*A dividend yield of 3.23%, representing the annualized dividends
paid with respect to a share of common stock as
of the date of grant; and
*A 24% reduction to reflect both the probability of forfeiture
due to termination prior to vesting and the probability
of a shortened option term due to termination of employment prior
to the option expiration date.
The ultimate values of the options will depend on the future
market price of Goulds Pumps stock, which cannot be forecast with
reasonable accuracy. The actual value, if any, an optionee will
realize upon exercise of an option will depend on the excess of
the market value of the Company's common stock over the exercise
price on the date the option is exercised.
Aggregate Option Exercises in Last Fiscal Year and Year-End
Option Values
Number of
Shares
Acquired on Value
Name Exercise(1) Realized ($)
Stephen V. Ardia 4,325 $35,681
Frank J. Zonarich 0 0
John M. Morphy 5,993 51,071
Mary Ann Lambertsen 0 0
Eugene B. Bradshaw 0 0
(1)Exercises as follows:
# Options Grant
Exercised Year
S. V. Ardia 4,325 1984
J. M. Morphy 4,960 1987
1,033 1988
(2)Stock price as of 12-31-93: $24.8750
Number of Securities
Underlying Unexercised Value of Unexercised
Options Held at In-the-Money Options Held
Fiscal Year-End at Fiscal Year-End (2)
Name Exercisable/Unexercisable Exercisable/Unexercisable
Stephen V. Ardia 108,148 117,184 $629,510 $186,333
Frank J. Zonarich 27,169 35,139 142,736 71,372
John M. Morphy 27,057 32,075 142,695 59,246
Mary Ann Lambertsen 1,613 11,140 2,621 8,649
Eugene B. Bradshaw 11,536 8,260 59,909 27,761
Pension Plans
The Company maintains a Retirement and Wage Continuation Plan and
a Supplemental Executive Pension Plan in which all of the
Executive Officers listed in the Summary Compensation Table on
page 12 are participants. Taken together, the two plans provide
participants with a monthly retirement benefit based on the
participants final average compensation and years of service. The
monthly benefits reduced by participants primary Social Security
benefit amount. The chart below shows the estimated monthly
benefit payable (prior to reduction for Social Security)
beginning at age 62 for the years of credited service and final
average compensation amounts shown.
Estimated Annual Pension Benefit
For Years of Credited Service(2)
Final Average
Compensation(1) 10 15 20 25 30
$150,000 $ 30,000 $ 45,000 $ 60,000 $ 75,000 $ 82,500
$250,000 $ 50,000 $ 75,000 $100,000 $125,000 $137,500
$350,000 $ 70,000 $105,000 $140,000 $175,000 $192,500
$450,000 $ 90,000 $135,000 $180,000 $225,000 $247,500
$550,000 $110,000 $165,000 $220,000 $275,000 $302,500
(1)Final Average Compensation is the sum of salary and bonus from
the Summary Compensation Table.
(2)Prior to adjustment for Social Security benefit.
Years of Credited Service used in determining benefits for the
Executive Officers are as follows through December 31, 1993:
Mr. Ardia, 23.6 years; Mr. Zonarich, 23.8 years; Mr. Morphy, 8.7
years; Ms. Lambertsen, 2.1 years and Mr. Bradshaw, 31.2 years.
Benefits are computed as straight-life annuity amounts which may
be paid in various forms.
Employment Contracts, Termination of Employment and Change-in
Control Arrangements
The Company has outstanding agreements with 9 individuals,
including those listed in the Summary Compensation Table on page
12, which agreements provide that the individuals will not, in
the event of the commencement of steps to effect a
Change-in-Control, voluntarily leave the employ of the
Corporation until a third person has terminated his or its
efforts to effect a Change-in-Control (defined generally as
acquisition of 20% or more of the outstanding voting shares or a
change in a majority of the Board of Directors) or until three
months after a Change-in-Control has occurred.
In the event of a termination of the individuals employment
within two years of a Change-in-Control, the executive is
entitled to three years compensation including bonus (payable on
a monthly basis), retirement benefits equal to the benefits he
would have received had he completed three additional years of
employment, continuation of all life, accident, health, savings
and other fringe benefit plans for three years, and relocation
assistance.
Goulds Pumps
Comparison of 5-Year Cumulative Total Return
vs. S&P 500 and Peer Group Indices
The following performance graph shall not be deemed incorporated
by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of
1933 or the Securities Exchange Act of 1934, except to the extent
that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such
Acts.
Comparison of Five-Year Cumulative Total Return
December 31, 1988 through December 31, 1993
Goulds Fortune
Date Pumps Industrial S&P
Farm Equipment
Industry
December 31, 1988 $100.00 $100.00 $100.00
December 31, 1989 98.3 119.07 131.59
December 31, 1990 109.28 100.16 127.49
December 31, 1991 137.62 105.57 166.17
December 31, 1992 150.63 118.87 178.81
December 31, 1993 157.21 168.33 196.75
Fortune Industrial and Farm Equipment Companies(1)
Tenneco
Caterpillar Inc.
Deere & Company
Black & Decker Corporation
Dresser Industries, Inc.
Ingersoll-Rand Company
Cummins Engine Company, Inc.
Baker Hughes Incorporated
Parker-Hannifin Corporation
Dover Corporation
York International Corporation
Trinova Corporation
The Timken Company
NACCO Industries Inc.
Harnischfeger Industries, Inc.
Crane Co.
Great American Management & Investment
Dresser-Rand Company
Tecumseh Products Company
Pentair, Inc.
Figgie International, Inc.
Outboard Marine Corporation(2)
Briggs & Stratton Corporation
Terex Corporation
IMO Industries Inc.
Nortek Inc.
Lincoln Electric Co.
Clark Equipment Company
Cincinnati Milacron Incorporated
Applied Materials, Inc.
Stewart & Stevenson Services, Inc.
The Toro Company
Giddings & Lewis, Inc.(2)
Joy Technologies Inc.
Am International
Kennametal Inc.
(1) Ranked by sales size.
(2) New to peer group list.
(3) Removed from prior year peer group list by virtue of no
longer being included in the Fortune Industrial and Farm
Equipment Companies published list:
Interlake
Blount
Pall
Goulds Pumps, Inc.
Federal-Mogul
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
All proposals by stockholders intended to be presented at the
next Annual Meeting of Stockholders (1995) must be received by
the Corporation by December 2, 1994, in order to be included in
the Corporations proxy statement and form of proxy for the 1995
Annual Meeting.
OTHER MATTERS AND SOLICITATION OF PROXIES
The Board of Directors does not know of any matters other than
those discussed herein which will be presented at the meeting.
However, if any matters properly come before the meeting, the
person or persons voting the enclosed proxy form intend to vote
in accordance with their best judgment on any such matters.
In addition to the solicitation of proxies by use of the mails,
the Company will utilize the services of some of its Executive
Officers and regular employees (who will receive no compensation
therefor in addition to their regular remuneration) to solicit
proxies personally and by telephone and telefax from brokerage
houses and other stockholders. The Company intends to request
banks and brokers who hold shares in their names or in custody,
or in the names of nominees for others, to forward copies of the
proxy material to those persons for whom they hold such shares
and to request authority for the execution of proxies. The
Company will reimburse such banks and brokers for their
out-of-pocket expenses incurred in connection therewith. The
Company has also retained the firm of D. F. King & Co., Inc. to
assist in obtaining proxies. That fee, in the amount of $10,000
plus reasonable expenses, as well as all other costs of
soliciting proxies, will be borne by the Company.
By Order of the Board of Directors
EUGENE B. BRADSHAW
Secretary
Seneca Falls, New York
March 31, 1994
A copy of the Annual Report of the Company on Form 10-K for its
most recent fiscal year, as filed with the Securities and
Exchange Commission, will be furnished upon request and without
charge to beneficial holders of the stock of the Company. Such
request must set forth a good faith representation that, as of
the record date for the Annual Meeting of Stockholders, the
person making the request was a beneficial owner of securities
entitled to vote at such meeting, and should be addressed to
Mr. Eugene B. Bradshaw, Secretary, Goulds Pumps, Inc., 240 Fall
Street, Seneca Falls, New York 13148. <PAGE>
EXHIBIT A
GOULDS PUMPS, INC.
1994 INCENTIVE PLAN TO INCREASE STOCKHOLDER VALUE
1. Establishment, Purpose, and Duration
(a) Establishment of the Plan
Goulds Pumps, Inc., a Delaware corporation (hereinafter referred
to as the Company), hereby establishes an incentive compensation
plan to be known as the Incentive Plan to Increase Stockholder
Value (hereinafter referred to as the Plan), as set forth in this
document. The Plan permits the grant of Nonstatutory Stock
Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Units, and Performance Shares.
The Effective Date of the Plan shall be the date the Plan is
ratified by an affirmative vote of a majority of Shares
represented at the meeting at which such vote is taken, and shall
remain in effect as provided in Section 1(c) herein.
(b) Purpose of the Plan
The purpose of the Goulds Pumps, Inc. Incentive Plan to Increase
Stockholder Value is to promote the success of the Company and
advance its value by linking the personal interests of
Participants with those of Company stockholders, and by providing
Participants with an incentive for outstanding performance.
(c) Duration of the Plan
The Plan was adopted by the Board on February 18, 1994, to be
effective upon the date it is approved by the stockholders of the
Company. The Plan shall remain in effect, subject to the right of
the Board of Directors to terminate the Plan pursuant to Section
13 herein, until all Shares subject to it shall have been
purchased or acquired according to the Plans provisions. However,
in no event may an Award be granted under the Plan on or after
May 3, 2004.
2. Definitions
Certain capitalized terms used in the Plan have the meanings set
forth in Section 2.
(a) Award or Awards means a grant of a Stock Option, Restricted
Stock, Stock Appreciation
Rights, Tandem Stock Appreciation Rights, Freestanding Stock
Appreciation Rights, Performance
Units, or Performance Shares under the Plan.
(b) Award Agreement means an agreement entered into by each
Participant and the Company,
setting forth the terms and provisions applicable to Awards
granted to Participants under this Plan.
(c) Beneficial Owner shall have the meaning ascribed to such term
in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
(d) Board means the Board of Directors of the Company.
(e) Cause means fraud, misappropriation or intentional material
damage to the property or business of the Company or commission
of a felony. Cause shall be determined in good faith by the
Committee.
(f) Code means the Internal Revenue Code of 1986, as amended.
(g) Committee means the committee appointed by the Board to
administer the Plan as provided in Section 3.
(h) Common Stock means the $1.00 par value common stock of the
Company or any security of the Company identified by the
Committee as having been issued in substitution, exchange or lieu
thereof.
(i) Company means Goulds Pumps, Inc., or any successor company.
(j) Disability means that because of an injury or sickness having
a duration of over one hundred and eighty (180) consecutive
calendar days the Participant is unable to perform any occupation
for which the Participant is qualified or may reasonably become
qualified by reason of education, training or experience, whether
or not a job involving such occupation is available within the
Company. Final determination of disability status as applied to
each case is at the sole discretion of the Committee.
(k) Employee means any individual who is an Employee on the
payroll of the Company or any Subsidiary with the exception of
employees covered by a collectively bargained agreement.
(l) Exchange Act means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute.
(m) Fair Market Value of a Share as of a specified date means the
price per share at which Shares were traded at the close of
business on such date as reported in the NASDAQ composite
transactions or, if no trading of Common Stock is reported for
that day, the next preceding day on which trading was reported.
(n) Freestanding SAR shall mean an Award granted under Section 8
of the Plan that is granted independently of any Options.
(o) Incentive Stock Option means any Stock Option granted
pursuant to the Plan that is intended to be and is specifically
designated as an Incentive Stock Option within the meaning of
Section 422 of the Code.
(p) Insider shall mean an Employee who is, on the relevant date,
an executive officer, director, or ten percent (10%) beneficial
owner of the Company, as defined under Section 16 of the Exchange
Act.
(q) Nonstatutory Stock Option means any Stock Option granted
pursuant to the provisions of the Plan that is not an Incentive
Stock Option.
(r) Optionee means an Employee who has received the grant of a
Stock Option.
(s) Participant means an Employee who is granted an Award under
the Plan.
(t) Performance Share means an Award granted to an Employee, as
described in Section 9 herein.
(u) Performance Unit means an Award granted to an Employee, as
described in Section 9 herein.
(v) Plan means the Goulds Pumps, Inc. 1994 Incentive Plan to
Increase Stockholder Value, as amended from time to time.
(w) Restricted Stock Award means an Award granted pursuant to the
provisions of Section 7 of the Plan. Restricted Stock means
Shares granted pursuant to Section 7 of the Plan. Restricted
Stock Agreement means the agreement between the Company and the
recipient of Restricted Stock that contains the terms, conditions
and restrictions pertaining to such Restricted Stock.
(x) Retirement shall have the meaning ascribed to such term in
the tax qualified retirement plans of the Company and/or the
Supplemental Executive Pension Plan.
(y) Rules means regulations and rules adopted from time to time
by the Committee.
(z) Share means one share of Common Stock, adjusted in accordance
with Section 10 (if applicable).
(aa) Stock Appreciation Right or SAR means an Award, granted
alone or in connection with a related Option pursuant to the
terms of Section 8 herein.
(ab) Stock Option or Option means the right to purchase Shares of
Common Stock at a set price and may include Incentive Stock
Options or Nonstatutory Stock Options granted pursuant to Section
6 of the Plan. Stock Option Agreement means the agreement between
the Company and the Optionee that contains the terms and
conditions pertaining to a Stock Option.
(ac) Subsidiary means any company or entity in which the Company
directly or indirectly controls fifty percent (50%) or more of
the total voting power of all classes of its stock having voting
power and which the Committee has designated as a Subsidiary for
purposes of the Plan.
(ad) Tandem SAR means an SAR that is granted in connection with a
related Option, the exercise of which shall require forfeiture of
the right to purchase a Share under the related Option (and when
a Share is purchased under the Option, the Tandem SAR shall
similarly be canceled).
(ae) Window Period means the period beginning on the third
business day following the date of public release of the
Company's quarterly sales and earnings information, and ending on
the twelfth business day following such date.
In addition, the terms Rule 16b-3 and Restriction Period have the
meanings set forth below in Sections 3(a) and 7(b) respectively.
3. Administration
(a) Composition of the Committee
The Plan shall be administered by a Committee appointed by the
Board, consisting of not less than a sufficient number of
disinterested members of the Board so as to qualify the Committee
to administer the Plan as contemplated by Rule 16b-3 promulgated
by the Securities and Exchange Commission pursuant to the
Exchange Act, or any successor or replacement rule adopted by the
Commission (Rule 16b-3). The Board may from time to time remove
members from, or add members to, the Committee. Vacancies on the
Committee, however caused, shall be filled by the Board. The
Board shall appoint one of the members of the Committee as
Chairman. The term disinterested members of the Board shall be
interpreted pursuant to Rule 16b-3. Initially, the Compensation
Committee of the Board shall serve as the Committee. The Board
may at any time replace the Compensation Committee with another
Committee. In the event that the Compensation Committee shall
cease to satisfy the requirements of Rule 16b-3, the Board shall
appoint another Committee that shall satisfy such requirements.
(b) Actions by the Committee
The Committee shall hold meetings at such times and places as it
may determine. Acts approved by a majority of the members of the
Committee present at a meeting at which a quorum is present, or
acts reduced to or approved in writing by the members of the
Committee, shall be the valid acts of the Committee.
(c) Powers of the Committee
The Committee shall have the authority to administer the Plan in
its sole discretion. To this end, the Committee is authorized to
construe and interpret the Plan, to promulgate, amend and rescind
Rules relating to the implementation of the Plan and to make all
other determinations necessary or advisable for the
administration of the Plan, including the selection of Employees
who shall be granted Awards, the number of Shares or Performance
Units/Shares to be subject to each Award, the Award price, if
any, the vesting or duration of Awards, the designation of Stock
Options as Incentive Stock Options or Nonstatutory Stock Options,
and other terms and conditions of Awards. Subject to the
requirements of applicable law, the Committee may designate
persons other than members of the Committee to carry out its
responsibilities and may prescribe such conditions and
limitations as it may deem appropriate, except that the Committee
may not delegate its authority with regard to the selection for
participation of or the granting of Awards to persons subject to
Section 16 of the Exchange Act. Any determination, decision or
action of the Committee in connection with the construction,
interpretation, administration or application of the Plan shall
be final, conclusive and binding upon all persons participating
in the Plan and any person validly claiming under or through
persons participating in the Plan.
(d) Liability of Committee Members
No member of the Board or the Committee will be liable for any
action or determination made in good faith by the Board or the
Committee with respect to the Plan or any Award under it.
4. Shares Subject to the Plan
(a) Shares Subject to the Plan
Subject to adjustment as provided in Section 10, the aggregate
number of Shares which shall be authorized for Awards granted by
the Committee under this Plan shall not exceed one million
(1,000,000) shares of Common Stock of the Company, which may be
treasury Shares reacquired by the Company or authorized and
unissued Shares or a combination of both. Shares which may be
granted as Restricted Stock Awards may not exceed thirty percent
(30%) of the total Share authorization under the Plan. Any Shares
subject to an Award under this Plan which shall expire or be
terminated for any reason shall be available for the granting of
Awards in that, or any succeeding year during the term of this
Plan, unless the Participant received a benefit of ownership
pursuant to such Award (as defined by the Securities and Exchange
Commission, pursuant to any rule or interpretation promulgated
under Section 16 of the Exchange Act).
(b) Accounting for Numbers of Shares
The following rules will apply for purposes of the determination
of the number of Shares available for grant under the Plan:
(i) While an Award is outstanding, it shall be counted against
the authorized pool of Shares, regardless of its vested status.
(ii) The grant of an Option or Restricted Stock shall reduce the
Shares available for grant under the Plan by the number of Shares
subject to such Award.
(iii) The grant of a Tandem SAR shall reduce the number of Shares
available for grant by the number of Shares subject to the
related Option (i.e., there is no double counting of Options and
their related Tandem SAR's).
(iv) The grant of a Freestanding SAR shall reduce the number of
Shares available for grant by the number of Freestanding SAR's
granted.
(v) The Committee shall in each case determine the appropriate
number of Shares to deduct from the authorized pool in connection
with the grant of Performance Units and/or Performance
Shares.
(vi) To the extent that an Award is settled in cash rather than
in Shares, the authorized Share pool shall be credited with the
appropriate number of Shares represented by the cash settlement
of the Award, as determined at the sole discretion of the
Committee (subject to limitation set forth in Section 4(b)(vii)
herein).
(vii) Lapsed Awards.If any Award granted under this Plan is
canceled, terminates, expires, or lapses for any reason (with the
exception of the termination of a Tandem SAR upon exercise of
the related Option, or the termination of a related Option upon
exercise of the corresponding Tandem SAR), any Shares subject to
such Award again shall be available for the grant of an Award
under the Plan. However, in the event that prior to the Awards
cancellation, termination, expiration, or lapse, the holder of
the Award at any time received one or more benefits of ownership
pursuant to such Award (as defined by the Securities and Exchange
Commission, pursuant to any rule or interpretation promulgated
under Section 16 of the Exchange Act), the Shares subject to
such Award shall not be made available for regrant under the
Plan.
(c) Source of Stock Issued Under the Plan
Common Stock issued under the Plan may be either authorized and
unissued Shares or issued Shares that have been reacquired by the
Company, as determined in the sole discretion of the Commit
tee. No fractional Shares of Common Stock shall be issued under
the Plan.
5. Persons Eligible for Awards
Persons eligible for Awards under the Plan shall consist of
managerial and other key Employees (including officers, whether
or not they are Directors) of the Company and its Subsidiaries
who hold positions of significant responsibility or whose
performance or potential contribution, in the judgment of the
Committee, would benefit the future success of the Company. A
Participant may receive more than one Award, including Awards of
the same type subject to the restrictions of the Plan.
6. Stock Options
Stock Options granted under the Plan may be in the form of
Incentive Stock Options or Nonstatutory Stock Options and shall
be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent
with the express provisions of the Plan, as the Committee in its
sole discretion shall deem desirable:
(a) Awards of Stock Options
Subject to the terms of the Plan, the Committee shall have
complete authority in its sole discretion to determine the
persons to whom and the time or times at which grants of Stock
Options will be made. The terms of each Stock Option shall be
set forth in a Stock Option Agreement, which shall contain such
provisions not inconsistent with the terms of the Plan,
including, without limitation, restrictions upon
the exercise of the Stock Option or restrictions on the
transferability of Shares issued upon the exercise
of a Stock Option, as the Committee shall deem advisable in its
sole discretion. Stock Options may be granted alone, in addition
to or in tandem with other Awards under the Plan.
(b) Number of Shares
Each Stock Option shall state the number of Shares to which it
pertains and shall provide for the adjustment thereof in
accordance with the provisions of Sections 4 and 10. No
fractional Shares will be issued pursuant to the exercise of a
Stock Option.
The Committee shall have complete discretion in determining the
number of Shares granted to each Participant and, consistent with
the provisions of the Plan, in determining the terms and
conditions pertaining to such Stock Options; provided, however,
that the maximum number of Shares which may be granted to any
single Participant during any one (1) year of the Plan is three
tenths of one percent (310 of 1%) of the total outstanding
Shares.
(c) Exercise Price
Each Stock Option shall state the price per share, determined by
the Committee in its sole discretion but which will be at least
equal to the Fair Market Value of a Share on the date of grant,
at which the Stock Option may be exercised.
(d) Method of Payment
A Stock Option may be exercised, in whole or in part, by giving
written notice of exercise to the Company specifying the number
of Shares to be purchased. Such notice shall be accompanied by
payment in full of the purchase price in cash or, if acceptable
to the Committee in its sole discretion, and in accordance with
its Rules, in Shares already owned by the Participant which have
been held for at least six (6) months. Shares shall be issued to
the Optionee upon payment in full either in cash or by an
exchange of Shares of Common Stock of the Company previously
owned by the Optionee for at least six (6) months prior to the
date of exercise, or a combination of both, in an amount or
having a combined value equal to the aggregate exercise price for
the Shares subject to the Option or portion thereof being
exercised. The value of the previously owned Shares of Common
Stock exchanged in full or partial payment for the Shares
purchased upon the exercise of an Option shall be equal to the
aggregate Fair Market Value, as defined in Section 2, of such
Shares on the date of the exercise of such Options. Payment may
also be made in any other form approved by the Committee,
consistent with applicable law, regulations and Rules.
(e) Term and Exercise of Stock Options; Nontransferability of
Stock Options
Each Stock Option shall state the time or times when it becomes
exercisable, which shall be determined by the Committee in its
sole discretion. No Stock Option shall be exercisable before six
(6) months have elapsed from the date it is granted (except in
the case of death or Disability) and no Incentive Stock Option
shall be exercisable after the expiration of ten (10) years from
the date it is granted. During the lifetime of the Optionee, the
Stock Option shall be exercisable only by the Optionee and shall
not be assignable or transferable. In the event of the Optionees
death, no Stock Option shall be transferable by the Optionee
otherwise than by will or the laws of descent and distribution.
(f) Termination of Employment
Each Stock Option Agreement shall set forth the extent to which
the Optionee shall have the right to exercise the Stock Option
following termination of the Optionees employment with the
Company and its Subsidiaries. Such provisions shall be determined
in the sole discretion of the Committee and shall be included in
the Award Agreement entered into with Participants, and need not
be uniform among all Stock Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination
of employment.
(g) Rights as a Stockholder
An Optionee or a transferee of an Optionee shall have no rights
as a stockholder with respect to any Shares covered by his or her
Stock Option until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities
or other property) or distributions or other rights for which the
record date is prior to the date such stock certificate is
issued, except as provided in Section 10.
(h) Dividend Equivalents on Stock Options
Employees holding Options may be granted, at no additional cost,
Dividend Equivalents based on the dividends declared on Shares on
record dates during the period between the grant date of an
Option and the date the Option is exercised, or an equivalent
period, as determined by the Committee. Such Dividend Equivalents
may be converted to additional Shares subject to the Option
(Dividend Equivalent Shares), or cash, or both, by such formula
and according to such terms and limitations as may be determined
by the Committee.
If granted, Dividend Equivalents shall be computed as of each
record date, with respect to: (i) the number of Shares subject to
the Option; and (ii) the number of Dividend Equivalent Shares
previously earned by the Employee which were not issued during
the period immediately prior to the dividend record date.
7. Restricted Stock
Restricted Stock Awards shall be subject to the following terms
and conditions and shall contain such additional terms and
conditions, not inconsistent with the express provisions of the
Plan, as the Committee in its sole discretion shall deem
desirable.
(a) Restricted Stock Awards
Subject to the provisions of the Plan, the Committee shall have
complete authority in its sole discretion to determine the
persons to whom, and the time or times at which, grants of
Restricted Stock will be made, the number of Shares of Restricted
Stock to be awarded, the price (if any) to be paid by the
recipient of Restricted Stock, the time or times within which
such Awards may be subject to forfeiture, and all other terms and
conditions of the Awards. The Committee may condition the grant
of Restricted Stock upon the attainment of specified performance
goals or such other factors as the Committee may determine, in
its sole discretion. Restricted Stock Awards may be granted
alone, in addition to or in tandem with other Awards under the
Plan.
The Committee shall have complete discretion in determining the
number of Shares of Restricted Stock granted to each Participant
and, consistent with the provisions of the Plan, in determining
the terms and conditions pertaining to such Restricted Stock
Awards; provided, however, that the maximum number of Shares of
Restricted Stock which may be granted to any single Participant
during any one (1) year of the Plan is three tenths of one
percent (3/10 of 1%) of the total outstanding Shares.
The terms of each Restricted Stock Award shall be set forth in a
Restricted Stock Agreement between the Company and the Employee,
which Agreement shall contain such provisions as the Committee
determines to be necessary or appropriate to carry out the intent
of the Plan with respect to such Award. Each Participant
receiving a Restricted Stock Award shall be issued a stock
certificate in respect of such Shares of Restricted Stock. Such
certificate shall be registered in the name of such Participant
and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Award. The
Committee shall require that stock certificates evidencing such
Shares be held by the Company until the restrictions thereon
shall have lapsed, and that, as a condition of any Restricted
Stock Award, the Participant shall have delivered to the Company
a stock power, endorsed in blank, relating to the stock covered
by such Award.
(b) Restrictions and Conditions
The Shares of Restricted Stock awarded pursuant to this Section 7
shall be subject to the following terms, conditions, and
restrictions:
(i) The terms, conditions and restrictions of Restricted Shares
must include continued employment with the Company for at least
six (6) months except in the case of death or Disability, and
may include other conditions and/or restrictions, such as the
attainment of certain performance objectives. The period of time
commencing with the date of such Award and ending on the date
on which all Shares of Restricted Stock in such Award either vest
or are forfeited shall be known as the Restriction Period. With
respect to the Restricted Stock during the Restriction Period the
Committee, in its sole discretion, may provide for the lapse of
any such term, condition or restriction in installments and may
accelerate or waive such term, condition or restriction in whole
or in part, based on service, performance and/or such other
factors or criteria as the Committee may determine in its sole
discretion. During the Restriction Period, the Participant shall
not be permitted to sell, transfer, pledge, assign or encumber
Shares of Restricted Stock awarded under the Plan.
(ii) Except as provided in this paragraph (ii) and paragraph (i)
above, the Participant shall have, with respect to the Shares of
Restricted Stock, all of the rights of a stockholder of the
Company, including the right to vote the Shares and the right to
receive any cash or stock dividends. The Committee, in its sole
discretion, as determined at the time of Award, may provide that
the payment of cash dividends shall or may be deferred. Any
deferred cash dividends may be reinvested as the Committee shall
determine in its sole discretion, including reinvestment in
additional Shares of Restricted Stock. Stock dividends issued
with respect to Restricted Stock shall be Restricted Stock and
will be subject to the same terms, conditions and restrictions
that apply to the shares with respect to which such dividends are
issued.
(iii) If and when the Restriction Period applicable to Shares of
Restricted Stock expires without a prior forfeiture of the
Restricted Stock, certificates for an appropriate number of
unrestricted Shares shall be delivered promptly to the
Participant, and the certificates for the Shares of Restricted
Stock shall be canceled.
(c) Income Tax Matters
For each Restricted Stock Award, the Employee may make a timely
election, under Section 83(b) of the Internal Revenue Code of
1986, as amended (the Code), to immediately recognize ordinary
income equal to the total Fair Market Value of all of the Award
Shares on the date of grant of the Award. Each Employee shall
deliver to the Company a copy of the document filed with the
Internal Revenue Service showing that he or she made such
election.
8. Stock Appreciation Rights
(a) Grant of Stock Appreciation Rights (SAR's)
Subject to the terms and conditions of the Plan, an SAR may be
granted to an Employee at any time and from time to time as shall
be determined by the Committee. The Committee may grant
Freestanding SAR's, Tandem SAR's, or any combination of these
forms of SAR's.
The Committee shall have complete discretion in determining the
number of SAR's granted to each Participant and, consistent with
the provisions of the Plan, in determining the terms and
conditions pertaining to such SAR's; provided, however, that the
maximum number of SAR's which may be granted to any single
Participant during any one (1) year of the Plan is three tenths
of one percent (3/10 of 1%) of the total outstanding Shares.
The grant price of a Freestanding SAR shall equal the Fair Market
Value of a Share on the date of grant of the SAR. The grant price
of Tandem SAR's shall equal the Option Price of the related
Option. In no event shall any SAR granted hereunder become
exercisable within the first six (6) months of its grant.
(b) Exercise of Tandem SAR's
Tandem SAR's may be exercised for all or part of the Shares
subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem
SAR may be exercised only with respect to the Shares for which
its related Option is then exercisable. Notwithstanding any
other provision of this Plan to the contrary, with respect to a
Tandem SAR granted in connection with an Incentive Stock Option:
(i) the Tandem SAR will expire no later than the expiration of
the underlying Incentive Stock Option;
(ii) the value of the payout with respect to the Tandem SAR may
be for no more than one hundred percent (100%) of the difference
between the Option Price of the underlying Incentive Stock Option
and the Fair Market Value of the Shares subject to the underlying
Incentive Stock Option at the time the Tandem SAR is exercised;
and
(iii) the Tandem SAR may be exercised only when the Fair Market
Value of the Shares subject to the Incentive Stock Option exceeds
the Option Price of the Incentive Stock Option.
(c) Exercise of Freestanding SAR's
Freestanding SAR's may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes upon
them.
(d) SAR Agreement
Each SAR grant shall be evidenced by an Award Agreement that
shall specify the grant price, the term of the SAR, and such
other provisions as the Committee shall determine.
(e) Term of SAR's
The term of an SAR granted under the Plan shall be determined by
the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.
(f) Payment of SAR Amount
Upon exercise of an SAR, a Participant shall be entitled to
receive payment from the Company in an amount determined by
multiplying:
(i) The difference between the Fair Market Value of a Share on
the date of exercise over the grant price; by
(ii) The number of Shares with respect to which the SAR is
exercised.
At the discretion of the Committee, the payment upon SAR exercise
may be in cash, in Shares of equivalent value, or in some
combination thereof.
(g) Rule 16b-3 Requirements
Notwithstanding any other provision of the Plan, the Committee
may impose such conditions on exercise of an SAR (including,
without limitation, the right of the Committee to limit the time
of exercise to specified periods) as may be required to satisfy
the requirements of Section 16 (or any successor rule) of the
Exchange Act.
For example, if the Participant is an Insider, the ability of the
Participant to exercise SAR's for cash will be limited to Window
Periods. However, if the Committee determines that the
Participant is not an Insider, or if the securities laws change
to permit greater freedom of exercise of SAR's, then the
Committee may permit exercise at any point in time, to the extent
the SAR's are otherwise exercisable under the Plan.
(h) Termination of Employment
Each SAR Award Agreement shall set forth the rights of the
Participant following termination of the Participants employment
with the Company and its Subsidiaries. Such provisions shall be
determined in the sole discretion of the Committee and shall be
included in the Award Agreement entered into with Participants,
and need not be uniform among all SAR's issued pursuant to the
Plan, and may reflect distinctions based on the reasons for
termination of employment.
(i) Nontransferability of SAR's
No SAR granted under the Plan may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution. Further, all
SAR's granted to a Participant under the Plan shall be
exercisable during his or her lifetime only by such Participant.
9. Performance Units and Performance Shares
(a) Grant of Performance Units/Shares
Subject to the terms of the Plan, Performance Units and
Performance Shares may be granted to eligible Employees at any
time and from time to time, as shall be determined by the
Committee. The Committee shall have complete discretion in
determining the number of Performance Units and Performance
Shares granted to each Participant.
(b) Value of Performance Units/Shares
Each Performance Unit shall have an initial value that is
established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair
Market Value of a Share on the date of grant. The Committee shall
set performance goals in its discretion which, depending on the
extent to which they are met, will determine the number and/or
value of Performance Units/Shares that will be paid out to the
Participants. The time period during which the performance goals
must be met shall be called a Performance Period. Performance
Periods shall, in all cases, exceed six (6) months in length.
(c) Earning of Performance Units/Shares
After the applicable Performance Period has ended, the holder of
Performance Units/Shares shall be entitled to receive payout on
the number of Performance Units/Shares earned by the Participant
over the Performance Period, to be determined as a function of
the extent to which the corresponding performance goals have been
achieved.
(d) Form and Timing of Payment of Performance Units/Shares
Payment of earned Performance Units/Shares shall be made in a
single lump sum, within forty-five (45) calendar days following
the close of the applicable Performance Period. The Committee, in
its sole discretion, may pay earned Performance Units/Shares in
the form of cash or in Shares (or in a combination thereof),
which have an aggregate Fair Market Value equal to the value of
the earned Performance Units/Shares at the close of the
applicable Performance Period.
Participants may elect to defer the receipt of Performance
Unit/Share payout upon such terms as
the Committee deems appropriate.
(e) Termination of Employment Due to Death, Disability,
Retirement, or Involuntary Termination Without Cause
In the event the employment of a Participant is terminated by
reason of death, Disability, Retirement, or involuntary
termination without Cause during a Performance Period, the
Participant shall receive a prorated payout of the Performance
Units/Shares. The prorated payout shall be determined by the
Committee, in its sole discretion, and shall be based upon the
length of time that the Participant held the Performance
Units/Shares during the Performance Period, and shall further be
adjusted based on the achievement of the preestablished
performance goals.
Payment of earned Performance Units/Shares shall be made at the
same time payments are made to Participants who did not terminate
employment during the applicable Performance Period.
(f) Termination of Employment for Other Reasons
In the event that a Participants employment terminates for any
reason other than those reasons set forth in Section 9 (e)
herein, all Performance Units/Shares shall be forfeited by the
Participant to the Company.
(g) Nontransferability
Performance Units/Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution. Further a
Participants rights under the Plan shall be exercisable during
the Participants lifetime only by the Participant or the
Participants legal representative.
10. Recapitalization
In the event of any change in capitalization of the Company, such
as a stock split, or a corporate transaction, such as any merger,
consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within
the definition of such term in Code Section 368), or any partial
or complete liquidation of the Company, such adjustment shall be
made in the number and class of Shares which may be delivered
under the Plan, and in the number and class of and/or price of
Shares subject to outstanding Awards granted under the Plan, as
may be determined to be appropriate and equitable by the
Committee, in its sole discretion, to prevent dilution or
enlargement of rights; provided, however, that the number of
Shares subject to any Award shall always be a whole number.
11. Change of Control
(a) Qualifying Event
The occurrence of a Change in Control of the Company, as that
term is defined herein, shall constitute a Qualifying Event for
purposes of the Plan. A Change in Control of the Company shall
mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as
amended (the Exchange Act), whether or not the Company is then
subject to such reporting requirement; provided, that, without
limitation, such a change in control shall be deemed to have
occurred if:
(i) the Company shall cease to be a publicly owned corporation
having at least 1,000 stock holders; or
(ii) any person (as defined in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the Beneficial Owner (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent (20%) or
more of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two (2) consecutive years (not
including any period prior to the adoption of this Plan) there
shall cease to be a majority of the Board comprised as follows:
individuals who at the beginning of such period constitute the
Board and any new Director(s) whose election by the Board or
nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (23) of the Directors
then still in office who either were Directors at the beginning
of the period or whose election or nomination for election was
previously so approved; or
(iv) the Committee determines that the sale of all or
substantially all of the Company's assets, a merger or other
business combination, a liquidation, or any combination of the
foregoing constitutes a Change of Control for purposes of this
Plan.
(b) Acceleration of Vesting
Notwithstanding any other provisions of this Plan and the terms
of each Award agreement, upon the occurrence of any Qualifying
Event all Awards granted under the Plan, then unexercised and
unexpired, shall be immediately vested, all restrictions on
Restricted Stock shall lapse, and in the case of Performance
Units and Performance Shares the payout shall be the greater of
targeted payout or based on actual performance projected to the
end of the Performance Period.
12. Securities Law Requirements
No Shares shall be issued and no Stock Options or SAR's shall
become exercisable pursuant to the Plan unless and until the
Company has determined that: (i) it and the Participant have
taken all actions required to register the Shares under the
Securities Act of 1933 or perfect an exemption from the
registration requirements thereof; (ii) any applicable listing
requirement of any stock exchange on which the Common Stock is
listed has been satisfied; and (iii) any other applicable
provision of state or Federal law has been satisfied.
13.Amendments of the Plan and Awards
(a) Plan Amendments
The Board may, insofar as permitted by law, from time to time,
suspend or discontinue the Plan or revise or amend it in any
respect whatsoever. However, unless the Board specifically
otherwise provides, any revision or amendment that would cause
the Plan to fail to comply with Rule 16b-3 or any other
requirement of applicable law or regulation if such amendment
were not approved by the holders of the Common Stock of the
Company shall not be effective unless and until the approval of
the holders of Common Stock of the Company is obtained.
(b) Rights of Participants
No amendment, suspension or termination of the Plan nor any
amendment, cancellation or modification of any Award outstanding
under it that would adversely affect the right of any Participant
in an Award previously granted under the Plan will be effective
without the written consent of the affected Participant.
14.General Provisions
(a) Application of Funds
The proceeds received by the Company from the sale of Common
Stock pursuant to the exercise of a Stock Option or the grant of
Restricted Stock will be used for general Company purposes.
(b) Employment Rights
Neither the Plan nor any Award granted under the Plan shall be
deemed to give any individual a right to remain employed by the
Company or a Subsidiary. The Company and its Subsidiaries reserve
the right to terminate the employment of any Employee at any time
and for any reason.
(c) Stockholders Rights
A Participant shall have no dividend rights, voting rights or
other rights as a stockholder with respect to any Shares covered
by his or her Award prior to the issuance of a stock certificate
for such Shares except as provided herein with respect to
Restricted Stock. No adjustment shall be made for cash dividends
or other rights for which the record date is prior to the date
when such certificate is issued.
(d) Creditors Rights
A holder of a Performance Share, Performance Unit, or SAR Award
shall have no rights other than those of a general creditor of
the Company. Performance Share, Performance Unit, or SAR Awards
shall represent unfunded and unsecured obligations of the
Company, subject to the terms and conditions of the applicable
Performance Share, Performance Unit, or SAR Award Agreements.
Notwithstanding the foregoing, the Committee is authorized to
arrange for the creation of one or more trusts to fund payments
of Performance Share, Performance Unit, or SAR Awards payable or
to become payable under the Plan. In such case the rights of
affected Participants shall be determined with reference to the
terms of the applicable trust agreement pursuant to which the
trust was created.
(e) No Obligation to Exercise Stock Option
The granting of a Stock Option shall impose no obligation upon
the Optionee to exercise such Stock Option.
(f) Deferral Elections
The Committee may permit a Participant to elect to defer his or
her receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of an
exercise, the satisfaction of any requirements or goals or lapse
of restrictions of an Award made under the Plan. If any such
election is permitted, the Committee shall establish Rules and
procedures for such payment deferrals, including the possible (i)
payment or crediting of reasonable interest on such deferred
amounts credited in cash and (ii) payment or crediting Dividend
Equivalents in respect of deferrals credited in units of Common
Stock.
(g) Withholding Taxes
(i) General To the extent required by applicable law, the
recipient of any payment or distribution under the Plan shall
make arrangements satisfactory to the Company for the
satisfaction of any withholding tax obligations that arise by
reason of such payment or distribution. The Company shall not be
required to make such payment or distribution until such
obligations are satisfied. The Company shall have the power and
the right to deduct or withhold, or require a Participant to
remit to the Company an amount sufficient to satisfy Federal,
state, local and foreign taxes (including the Participants FICA
obligation) required by law to be withheld with respect to any
taxable event arising or as a result of this Plan.
(ii) Stock Withholding With respect to withholding required
upon the exercise of Options, SAR's, upon the lapse of
restrictions on Restricted Stock, or upon any other taxable event
hereunder, Participants may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or in
part, by having the Company withhold Shares having a Fair Market
Value on the date the tax is to be determined equal to the
minimum statutory total tax which could be imposed on the
transaction. All elections shall be irrevocable, made in writing,
signed by the Participant, and elections by Insiders shall
additionally comply with the applicable requirement set forth as
follows in this Section 14(g)(ii)(a) and (b).
(a) Awards Having Exercise Timing Within Participants Discretion.
The Insider must either:
(i) Deliver written notice of the stock withholding election
to the Committee at least six (6) months prior to the date
specified by the Insider on which the exercise of the Award is to
occur; or
(ii) Make the stock withholding election in connection with an
exercise of an Award which occurs during a Window Period.
(b) Awards Having a Fixed Exercise/Payout Schedule Which is
Outside Insiders Control. The Insider must either:
(i) Deliver written notice of the stock withholding election
to the Committee at least six (6) months prior to the date on
which the taxable event (e.g., exercise or payout) relating to
the Award is scheduled to occur; or
(ii) Make the stock withholding election during a Window
Period which occurs prior to the scheduled taxable event relating
to the Award (for this purpose, an election may be made prior to
such a Window Period, provided that it becomes effective during a
Window Period occurring prior to the applicable taxable event).
(h) Other Company Benefit and Compensation Programs
Payments and other benefits received by a Participant under the
Plan shall not be deemed a part of a Participants regular,
recurring compensation for purposes of the termination indemnity
or severance pay law of any country, state or political
subdivision thereof and shall not be included in, nor have
any effect on, the determination of benefits under any other
Employee benefit plan or similar arrangement provided by the
Company or a Subsidiary unless expressly so provided by such
other plan or arrangement, or except where the Committee
expressly determines that inclusion of an Award or portion of an
Award is necessary to accurately reflect competitive compensation
practices or to recognize that an Award has been made in lieu of
a portion of competitive annual cash compensation. Awards
under the Plan may be in combination with or in tandem with, or
as alternatives to, grants, Awards or payments under any Company
or Subsidiary plans. The Plan notwithstanding, the Company or any
Subsidiary may adopt such other compensation programs and
additional compensation arrangements as it deems necessary to
attract, retain and reward Employees for their service with the
Company and its Subsidiaries.
(i) Costs of the Plan
The costs and expenses of administering the Plan shall be borne
by the Company.
(j) Participants Beneficiary
The Rules may provide that in the case of an Award that is not
forfeitable by its terms upon death of the Participant, the
Participant may designate a beneficiary with respect to such
Award in the event of death of a Participant. If such beneficiary
is the executor or administrator of the estate of the
Participant, any rights with respect to such Award may be
transferred to the person or persons or entity (including a
trust) entitled thereto by bequest of or inheritance from the
holder of such Award.
(k) Awards in Foreign Countries
The Committee shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or
desirable to comply with provisions of the laws of foreign
countries in which the Company or its Subsidiaries may operate to
assure the viability of the benefits of Awards made to
Participants employed in such countries and to meet the intent of
the Plan.
(l) Severability
The provisions of the Plan shall be deemed severable and the
validity or unenforceability of any provision shall not affect
the validity or enforceability of the other provisions hereof.
(m) Binding Effect of Plan
The Plan shall be binding upon and shall inure to the benefit of
the Company, its successors and assigns and the Company shall
require any successor or assign to expressly assume and agree to
perform the Plan in the same manner and to the same extent that
the Company would be required to perform it if no such succession
or assignment had taken place. The term the Company as used
herein shall include such successors and assigns. The term
successors and assigns as used herein shall mean a corporation or
other entity acquiring all or substantially all the assets and
business of the Company (including the Plan) whether by operation
of law or otherwise.
(n) No Waiver of Breach
No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of the Plan to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions of
conditions at the same or at any prior or subsequent time.
15. Approval of Stockholders
Adoption of the Plan shall be subject to approval by affirmative
vote of a majority of the Shares represented at the meeting at
which such vote is taken in accordance with applicable law.
EXHIBIT B
GOULDS PUMPS, INC.
1994 INCENTIVE PLAN
FOR NON-EMPLOYEE DIRECTORS
1. Purpose
The purpose of the 1994 Incentive Plan for Non-Employee Directors
(the Plan) of Goulds Pumps, Inc. (the Company) is to increase the
ownership interest in the Company of non-employee Directors whose
services are considered essential to the Company's continued
progress and to provide a further incentive to serve as a
Director of the Company.
2. Administration
The Plan shall be administered by a committee (the Committee)
appointed by the Board, consisting of not less than a sufficient
number of disinterested members of the Board so as to qualify the
Committee to administer the Plan as contemplated by Rule 16b-3
promulgated by the Securities and Exchange Commission pursuant to
the Exchange Act, or any successor or replacement rule adopted by
the Commission (Rule 16b-3). Subject to the provisions of the
Plan, the Committee shall be authorized to interpret the Plan, to
establish, amend, and rescind any rules and regulations relating
to the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan; provided, however,
that the Committee shall have no discretion with respect to the
eligibility or selection of Directors to receive options under
the Plan, the number of shares of stock subject to any such
options of the Plan, or the purchase price thereunder, the
vesting period, or the timing of option grants, and provided
further that the Committee shall not have the authority to take
any action which would result in the loss of eligibility of
awards granted under the Plan for the formula based exemption
under Rule 16b-3(c)(ii)(A) of the Securities Exchange Act of
1934. The determination of the Committee in the administration of
the Plan, as described herein, shall be final and conclusive and
binding upon all persons including, without limitation, the
Company, its Stockholders and persons granted options under the
Plan. The secretary of the Company shall be authorized to
implement the Plan in accordance with its terms and to take such
actions of a ministerial nature as shall be necessary to
effectuate the intent and purposes thereof.
3. Participation in the Plan
All Directors of the Company who are not employees of the Company
or any affiliate of the Company (Non-Employee Directors) shall
participate in the Plan.
4. Shares Subject to the Plan
Subject to adjustment as provided in Section 7, an aggregate of
one hundred seventy-five thousand (175,000) shares of Company
Common Stock (Stock) shall be available for issuance upon the
exercise of options granted under the Plan. The shares of Stock
deliverable upon the exercise of options may be made available
from authorized but unissued shares or shares reacquired by the
Company, including shares purchased in the open market or in
private transactions. If any option granted under the Plan
shall expire or terminate for any reason without having been
exercised in full, the shares subject to, but not delivered
under, such option shall again become available for the grant of
other options under the Plan. However, in the event that prior to
the option grants termination, expiration, or lapse, the holder
of the option grant at any time received one or more benefits of
ownership pursuant to such grant (as defined by the Securities
and Exchange Commission, pursuant to any rule or interpretation
promulgated under Section 16 of the Exchange Act), the shares
subject to such grant shall not be made available for regrant
under the Plan. No shares deliverable to the Company in full or
partial payment of the purchase price payable pursuant to
paragraph F of Section 6 shall become available for the grant
of other options under the Plan.
5. Non-Statutory Stock Options
All options granted under the Plan shall be non-statutory options
not intended to qualify under Section 422 of the Internal Revenue
Code of 1986, as amended.
6. Terms, Conditions, and Form of Options
Each option granted under this Plan shall be evidenced by a
written agreement in such form as the Committee shall from
time-to-time approve, which agreements shall comply with and be
subject to the following terms and conditions:
A. Option Grant Dates
During the time period beginning May 4, 1994 and ending the later
of the 2003 Annual Meeting of Stockholders or May 3, 2003, and
subject to the limitation on the number of shares subject to the
Plan, on the first stock trading day following each annual
meeting of the Company's Stockholders, each Non-Employee Director
shall be granted an option to purchase one thousand five hundred
(1,500) shares, effective as of each such day following the
annual Stockholders meeting. The first grant shall be made on the
first such trading day immediately following approval of the Plan
by the Stockholders at the 1994 Annual Meeting of Stockholders
(the 1994 Grant).
B. Purchase Price
The purchase price per share of Stock for which each option is
exercisable shall be one hundred percent (100%) of the fair
market value per share of Stock on the date the option is
granted, which shall be the closing per-share price of the Stock
based upon its consolidated trading as generally reported for
NASDAQ listed stocks.
C. Exercisability and Term of Options
Each option granted under the Plan will become exercisable in
total one (1) year after the date of grant of the option. Each
option granted under the Plan shall expire ten (10) years from
the date of the grant, and shall be subject to earlier
termination as hereinafter provided.
D. Termination of Service
In the event of the termination of service by the holder of any
option for reasons other than those set forth in paragraph E.
hereof, the then outstanding options of such holder may be
exercised within three (3) months after such termination only to
the extent that they were exercisable on the date of such
termination, or on their stated expiration date, whichever occurs
first.
E. Retirement, Disability or Death
In the event of termination of service by Reason of Retirement
(as defined in this Section E) or the total and permanent
disability of the holder of any option, each of the then
outstanding options of such holder will mature immediately and
become exercisable in accordance with paragraph C. above and the
holder may exercise the options at any time within three (3)
years after such retirement or disability but in no event after
the expiration date of the term of the option. For purposes of
this Plan, the term by Reason of Retirement shall mean mandatory
retirement pursuant to Board policy. In the event of the
death of the holder of any option, each of the then outstanding
options of such holder will immediately mature in full and become
exercisable by the holders legal representative at any time
within a period of one (1) year after death, but in no event
after the expiration date of the term of the option. However, if
the holder dies following termination of service on the Board by
reason of retirement or total and permanent disability, such
options shall only be exercisable for one (1) year after the
holders death or three (3) years after retirement or termination
for total and permanent disability, whichever is longer, or until
the expiration date of the term of the option, if earlier. For
purposes of this Plan, the term total and permanent disability
shall mean the inability to perform usual Board of Director
duties for the Company due to a medical condition that is
expected to last for one (1) year or more as certified by a
statement by a qualified outside physician; provided that no such
determination shall be made if the determination may cause the
Plan to fail to comply with the formula award exception for
grants of options to Directors, as set forth in Rule
16b-3(c)(ii)(A) of the Exchange Act.
F. Payment
Options may be exercised only upon written notice of exercise and
payment to the Company in full of the purchase price of the
shares to be delivered. Such payment shall be made in cash or in
Stock which has been held for six (6) months, or in a combination
of cash and Stock which has been held for six (6) months. The sum
of the cash and the fair market value of such Stock shall be at
least equal to the aggregate purchase price of the share to be
delivered.
7. Adjustment Upon Changes in Stock
If there shall be any change in the Stock subject to the Plan or
to any option granted thereunder through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split,
exchange of stock or other change in the corporate structure of
the Company, appropriate adjustments shall be made in the
aggregate number and kind of shares or other securities or
property subject to the Plan, and the number and kind of shares
or other securities or property subject to outstanding and to
subsequent option grants and in the purchase price of outstanding
options to reflect such changes; provided that no such adjustment
shall be made if the adjustment may cause the Plan to fail to
comply with the formula award exception for grants of options to
Directors, as set forth in Rule 16b-3(c)(ii)(A) of the Exchange
Act.
8. Options Non-Assignable and Non-Transferable
Each option and all rights thereunder shall be non-assignable and
non-transferable other than by will or the laws of descent and
distribution or pursuant to the requirements of a Qualified
Domestic Relations Order and shall be exercisable during the
holders lifetime only by the holder or the holders guardian or
legal representative.
9. Limitation of Rights
A. No Right to Continue as a Director
Neither the Plan, nor the granting of an option nor any other
action taken pursuant to the Plan, shall constitute or be
evidence of any agreement or understanding, express or implied,
that the Director has a right to continue as a Director for any
period of time, or at any particular rate of compensation.
B. No Stockholders Rights for Options
An optionee shall have no rights as a Stockholder with respect to
the shares covered by options granted hereunder until the date of
the issuance of a stock certificate therefore, and no adjustment
will be made for dividends or other rights for which the record
date is prior to the date such certificate is issued.
10. Effective Date and Duration of Plan
The Plan shall become effective immediately following approval by
the Stockholders at the May 4, 1994 Annual Meeting of
Stockholders. The period during which option grants shall be made
under the Plan shall terminate on the day following the later of
the 2003 Annual Meeting of Stockholders or May 3, 2003 (unless
the Plan is extended or terminated at an earlier date by
Stockholders) but such termination shall not affect the terms of
any then outstanding options.
11. Notice
Any written notice to the Company required by any of the
provisions of this Plan shall be addressed to the Secretary of
the Company and shall become effective when it is received.
12. Use of Proceeds
Proceeds from the sale of Stock pursuant to options granted under
the Plan shall constitute general funds of the Company.
13. Fractional Shares
No fractional shares of Stock shall be issued pursuant to options
granted hereunder, but in lieu thereof, the cash value of such
fraction shall be paid.
14. Change in Control
Notwithstanding the provisions of Section C herein, in the event
of a Change of Control (as defined in the Goulds Pumps, Inc. 1994
Incentive Plan to Increase Stockholder Value excluding the
qualifying event referenced in 11.(a)(iv)) during the term of one
or more options, each such option which is outstanding as of the
effective date of the Change of Control shall, effective as of
the effective date of such Change of Control, become exercisable
with respect to all unexercised Shares thereunder for the
remainder of its term.
15. Successors
All obligations of the Company under the Plan, with respect to
options granted hereunder, shall be binding on any successor to
the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or
assets of the Company.
16. Amendment, Modification, and Termination
Subject to the terms set forth in this Section 16, the Board may
terminate, amend, or modify the Plan at any time and from time to
time; provided, however, that the provisions set forth in the
Plan regarding the amount of securities to be awarded to
Directors, the price of securities awarded to Directors, and the
timing of grants of options to Directors, may not be amended more
than once within any six (6) month period, other than to comport
with changes in the Code, the Employee Retirement Income Security
Act of 1974 as amended from time to time, or the rules
thereunder.
17. Governing Law
The validity, construction, and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in
accordance with the laws of the State of New York.
