SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Goulds Pumps Incorporated
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(Name of Registrant as Specified In Its Charter)
same
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11(1).
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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4) Date Filed:
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[GOULDS PUMPS LOGO] GOULDS PUMPS, INCORPORATED
March 24, 1997
-----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 1997
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To the Stockholders of GOULDS PUMPS, Incorporated:
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) on Wednesday, May 7, 1997, at ten o'clock a.m.
for the following items of business:
1. Election of Directors;
2. Ratification of the appointment of Deloitte & Touche LLP as
independent auditors for 1997; and
3. Such other business as may properly come before the meeting or
any adjournment thereof.
These matters are described more fully in the attached Proxy Statement.
Stockholders of record at the close of business on March 10, 1997 are entitled
to notice of and to vote at the meeting.
By Order of the Board of Directors
MICHAEL T. TOMAINO
Secretary
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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.
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<PAGE>
[GOULDS PUMPS LOGO] GOULDS PUMPS, INCORPORATED
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS, MAY 7, 1997
The accompanying proxy is solicited by the Board of Directors for use at
the Annual Meeting of Stockholders of Goulds Pumps, Incorporated (the
"Company"), 300 WillowBrook Office Park, Fairport, New York 14450-4285, to be
held at the time and place stated in the Notice of Meeting which accompanies
this Proxy Statement. Proxy materials are first being mailed on or about March
24, 1997. The shares represented by properly completed proxies received prior to
the vote will be voted FOR the election as Directors of the nominees named
herein and FOR ratifying the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the year ending December 31, 1997, unless
specific instructions to the contrary are given or an abstention from voting is
indicated by the stockholder. The proxy may be revoked at any time before it is
exercised.
On March 10, 1997, the record date, there were 21,376,093 shares of Common
Stock outstanding, each of which entitles the holder to one vote on each matter
to come before the meeting. One-third of the outstanding shares, present in
person or by proxy, will constitute a quorum at the meeting. Abstentions and
broker non-votes are counted for purposes of determining whether a quorum is
present. A plurality vote is required for the election of Directors.
Accordingly, abstentions and broker non-votes will not affect the outcome of the
election of Directors.
ELECTION OF DIRECTORS
Eight 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 names of, and certain information about, the
persons nominated by the Board of Directors for election as Directors follow.
The Board of Directors believes that all of the nominees will be available and
able to serve as Directors, but if for any reason any nominee becomes
unavailable for election, the persons named in the proxies may exercise
discretionary authority to vote for substitutes proposed by the Board of
Directors. All eight of the nominees are presently serving as Directors of the
Company. Seven of the nominees were elected at the 1996 Annual Meeting and one
of the nominees, Mr. Jerry H. Ballengee, was elected a Director by the Board in
December of 1996.
<PAGE>
DIRECTORS
JERRY H. BALLENGEE
Mr. Ballengee, 59, a Director since 1996, has been a Director, and
President and Chief Operating Officer of Union Camp Corporation, Wayne, New
Jersey, a manufacturer of paper and paper products, since 1994. From 1988 to
1994, he was a Director and Executive Vice President of Union Camp Corporation.
He is a Director of United Cities Gas Company.
WILLIAM W. GOESSEL
Mr. Goessel, 69, 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. From 1986 to 1992 he was Chairman and Chief Executive Officer of
Harnischfeger Industries, Inc. He is a member of the Human Resources Committee
and the Committee on Directors. He is a Director of Measurex Corporation.
DAVID P. GRUBER
Mr. Gruber, 55, a Director since 1995, has been a Director, and President
and Chief Executive Officer of Wyman-Gordon Company, North Grafton,
Massachusetts, an aerospace and industrial manufacturing company, since 1994. He
was a Director, and President and Chief Operating Officer of Wyman-Gordon since
1991. He is a member of the Audit Committee and the Committee on Directors.
MELVIN HOWARD
Mr. Howard, 62, a Director since 1984, has been President of Sector
Management, Inc., Westport, Connecticut, an investment firm, since 1993. He
retired in 1990 from Xerox Corporation, Stamford, Connecticut, where he had been
Vice Chairman of the Board from 1986 to 1990. He is a member of the Audit and
Pension Committees.
BARBARA B. LUCAS
Ms. Lucas, 51, a Director since 1992, has been Senior Vice President-Public
Affairs and Corporate Secretary of The Black & Decker Corporation, Towson,
Maryland, a global manufacturer and marketer of power tools and home improvement
products, since 1996. From 1985 to 1996, she was Vice President-Public Affairs
and Corporate Secretary of The Black & Decker Corporation. She is a member of
the Human Resources Committee and the Committee on Directors. She is a Director
of Provident Bankshares Corporation.
THOMAS C. McDERMOTT
Mr. McDermott, 60, a Director since 1988, has been Chairman of the Board of
Directors since 1995 and Chief Executive Officer and President since 1994. He
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
from 1986 to 1993. He is a member of the Executive and Pension Committees. He is
a Director of A.T. Cross Company and Thomas & Betts Corporation.
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<PAGE>
JAMES C. MILLER III
Mr. Miller, 54, a Director since 1990, is counselor to Citizens for a Sound
Economy, Washington, D.C., and from 1989 to 1993 had served as Chairman of that
organization's Board of Directors. Since 1988, he has also been the John M. Olin
Distinguished Fellow at the Center for Study of Public Choice at George Mason
University, Fairfax, Virginia. He is a member of the Pension Committee and the
Committee on Directors. He is a Director of Atlantic Coast Airlines, Washington
Mutual Investors, Inc. and The Union Corporation.
PETER ODDLEIFSON
Mr. Oddleifson, 64, a Director since 1974, is a partner in the law firm of
Harris, Beach & Wilcox, LLP, Rochester, New York, which firm has been and is
currently engaged in performing various legal services for the Company. He is a
member of the Executive and Audit Committees. He is a Director of Rochester
Midland Corporation.
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The Board of Directors recommends a vote "FOR" the election as Directors of
the nominees listed above.
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Directors Not Standing for Re-election
ARTHUR M. RICHARDSON
Mr. Richardson, 70, 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 Executive, Human Resources and Audit Committees. He is a
director of The Raymond Corporation, Rochester Gas & Electric Corporation and
Transmation, Inc. Mr. Richardson is retiring from the Board of Directors of the
Company on May 7, 1997 and is therefore not standing for re-election.
Additional Information Relating to the Board of Directors
Non-employee Directors are paid an annual retainer of $20,000 per year. In
December of 1996, the Directors approved a plan whereby, beginning in 1997,
one-half of this annual retainer would be paid in Company stock until the
Director meets the Company's stock ownership goals for non-employee Directors,
which is five times the annual retainer amount. In addition, non-employee
Directors are paid $1,000 per day for attendance at Board meetings, $800 for
attendance at each committee meeting that is not held in conjunction with a
Board meeting and $400 for attendance at each committee meeting that is held in
conjunction with a Board meeting. Committee chairs are paid an additional
retainer of $2,800 per year. Employee directors do not receive any additional
remuneration for their services as Directors.
Each non-employee Director of the Company receives, on the first stock
trading day following each Annual Meeting of Stockholders, an option to purchase
1,500 shares of the Company's Common Stock at the closing price per share as
reported on the NASDAQ on that date.
Non-employee Directors are participants in the Retirement Plan for
Non-Employee Directors, which became effective on June 21, 1994. A Director who
retires with a minimum of ten years of
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service is entitled to receive an annual retirement benefit equaling his or her
final annual retainer, for a term equal to the period of service. Plan benefits
vest 50% after five years of service and an additional 10% for each year of
service from six through ten.
The Board of Directors held five meetings during 1996. All of the Directors
attended more than 75% of the meetings of the Board and committees on which they
served in 1996.
AUDIT COMMITTEE AND COMMITTEE ON DIRECTORS
The Audit Committee recommends to the Board of Directors the appointment of
independent auditors, reviews the plan and results of the audit performed by the
auditors and the plan and scope of the Company's internal audit procedures,
approves professional services provided by the auditors, considers the range of
audit and non-audit fees, reviews the adequacy of the Company's internal
accounting controls and directs and supervises investigations into these
matters. The Audit Committee held two meetings during 1996.
The Committee on Directors 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. The Committee on Directors
will consider nominees recommended by stockholders and has established a
procedure to consider such nominees. Under the procedure, stockholders shall
submit written recommendations of nominees for election to the Board of
Directors to the Secretary of the Company no later than December 10 preceding
the next Annual Meeting of Stockholders at which the election is to be held.
Stockholder recommendations must be 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 person's qualifications. The Committee on Directors held one meeting during
1996.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 14, 1997, certain
information regarding stock ownership by beneficial owners of more than five
percent of the Company's Common Stock (based on reports filed by them with the
Securities and Exchange Commission (SEC)) and, as of March 10, 1997, by
Directors and the executive officers listed in the Summary Compensation Table on
page 13 [pages 16 and 17 of EDGAR version], and by all Directors and executive
officers as a group, each of whom has sole voting and investment power, except
as indicated.
<TABLE>
<CAPTION>
Percent of
Name No. of Shares Class
- ---------------------------------------------------------- ------------------- ------------
<S> <C> <C>
Mario J. Gabelli ....................................... 3,464,432(1) 16.2%
c/o Gabelli Funds, Inc.
One Corporate Center
Rye, New York
The State Teachers Retirement Board of Ohio ............ 1,688,200(2) 7.9%
275 Broad Street
Columbus, Ohio
Jerry H. Ballengee .................................... -- *
William W. Goessel .................................... 13,304(3) *
David P. Gruber ....................................... 2,935(4) *
Melvin Howard .......................................... 13,881(5) *
Barbara B. Lucas ....................................... 8,536(6) *
Thomas C. McDermott .................................... 107,907(7) *
James C. Miller III .................................... 14,138(8) *
Peter Oddleifson ....................................... 14,228(9) *
Arthur M. Richardson ................................. 12,866(10) *
Eric L. Steenburgh .................................... 7,885(11) *
Frank J. Zonarich ....................................... 58,998(12) *
John P. Murphy ....................................... 26,785(13) *
Michael T. Tomaino .................................... 5,412(14) *
John J. Scanlon ....................................... 29,739(15) *
All Directors and Executive Officers (18 persons) ...... 347,538(16) 1.6%
</TABLE>
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(1) Sole voting power with respect to 3,326,932 shares and sole dispositive
power with respect to 3,464,432 shares.
(2) Sole voting power and sole dispositive power with respect to 1,688,200
shares.
(3) Includes exercisable options to purchase 11,281 shares.
(4) Includes exercisable options to purchase 1,500 shares.
(5) Includes exercisable options to purchase 11,281 shares.
(6) Includes exercisable options to purchase 6,986 shares.
(7) Sole voting power only with respect to 10,000 shares. Includes exercisable
options to purchase 90,648 shares.
(8) Includes exercisable options to purchase 9,637 shares.
(9) Includes exercisable options to purchase 11,281 shares.
(10) Includes exercisable options to purchase 11,281 shares. Not standing for
re-election as a Director.
(11) Includes exercisable options to purchase 6,850 shares.
(12) Includes exercisable options to purchase 53,277 shares. Resigned, December,
1996.
(13) Includes exercisable options to purchase 24,473 shares.
(14) Includes exercisable options to purchase 2,600 shares.
(15) Includes exercisable options to purchase 27,190 shares.
(16) Includes exercisable options to purchase 288,591 shares.
* Less than 1.0% of outstanding shares.
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HUMAN RESOURCES COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Board of Directors' Human Resources Committee (the "Committee")
provides the following information about its charter, executive compensation
philosophy and program, and 1996 compensation-related decisions.
The Human Resources Committee is responsible for all compensation-related
decisions of the Company. As such, it 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, the 1994
Incentive Plan to Increase Stockholder Value and the Executive Incentive Plan,
and in this capacity it approves all stock option grants or cash bonus awards to
officers and other executives including executives named in the Summary
Compensation Table found on page 13 [pages 16 and 17 of EDGAR version] (the
"named executives"). The Committee also reviews and approves all executive
salary arrangements and other remuneration, evaluates executive performance, and
considers related matters. The Committee, which consists of three non-employee
Directors, met ten (10) times during 1996.
The 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 specified Company and
individual performance goals;
(2) some of the at-risk components of pay should be equity-based to
encourage a close identification with the Company and align executives'
interests with those of stockholders; and
(3) the executive compensation program 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.
Overview of Executive Compensation Plans and 1996 Committee Actions
The Committee evaluates the Company's financial performance and executive
compensation plans annually in the context of publicly traded comparator
companies consisting of pump industry competitors and a broader group of major
durable goods manufacturers. Total annual cash payments (base salary plus annual
cash bonuses) reflect Company financial performance, business unit financial
performance, and individual executive performance against previously established
goals and objec-
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tives. In 1996, the Committee decided to reduce targeted total cash compensation
from the 60th to the 50th percentile of the total cash compensation of the
comparator companies adjusted for size. This change reflects, in part, the
Committee's desire that a larger percentage of the total compensation package be
comprised of Company stock and other non-cash performance-based components.
The number of companies in the comparator group used for compensation
purposes is larger than the number of companies which comprise the industry peer
group index in the Performance Graph included in this Proxy Statement on pages
11 and 12. The Committee believes that the Company's competitors for executive
talent are greater in number than the companies included in the industry peer
group.
The key elements of the Company's executive compensation program are base
salary, annual cash bonuses, stock options and restricted stock grants vesting
upon achievement of long-term Company performance goals. These are addressed
separately below. In determining each element of compensation, the Committee
considers all components of compensation, including retirement plans, insurance
and other benefits.
The Base Salary structure is regularly reviewed by the Committee. The
target for salary range midpoints is the 50th percentile of comparator
companies. The base salary range midpoints are designed to recognize varying
levels of responsibility, experience and breadth of knowledge required, and
internal equity. The comparator companies are surveyed periodically to determine
specific compensation levels for similar executive positions. Such a review was
conducted in 1996 and base salary range midpoints were adjusted accordingly.
The Committee reviewed executive base salaries in 1996 and increases were
awarded or withheld based on Company financial performance in general,
individual executive performance and the comparator companies' compensation
levels. The salaries remain within the defined salary ranges and the named
executives' base pay generally falls within five percentage points of the 50th
percentile of the comparator company salary data.
The Executive Incentive Plan ("EIP"), which provides for annual cash
bonuses based on Company, business unit and individual performance, promotes the
Company's pay-for-performance philosophy. 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 at target are designed to
be slightly higher than the 50th percentile of comparator companies in order to
reflect the Committee's intention to place a greater percentage of executive
compensation at risk.
For 1996, the Company financial performance used to determine EIP payouts
for corporate staff was based on earnings per share (50%), sales (30%) and
return on assets (20%). The Committee
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believes these performance measures are contributing determinants of stock price
over time. The business units' performance used to determine EIP payouts was
based on sales, operating earnings, gross margin, inventory turns, and meeting
quarterly performance objectives. All of the named executives have a minimum of
25% of their award tied to Company financial performance to reinforce the need
for teamwork and to focus attention on overall Company objectives. The named
executives who are heads of business units also have a majority of their award
linked to business unit financial performance.
Target cash bonus opportunities for the named executives range from 35% to
60% of base salary. Depending on performance results, the EIP cash bonus can
vary from 50% to 150% of target cash bonus opportunity. A minimum threshold of
Company or business unit financial performance must be achieved for any portion
of the EIP payout to occur. In general, performance in 1996 was above target
goals and, accordingly, bonus payments were above target payment levels.
Including the named executives, there are approximately 110 key managers
who participated in the EIP in 1996. Receipt of cash incentive awards under the
EIP may be deferred to a subsequent date or retirement.
The 1988 Stock Incentive Plan, approved by stockholders in 1988, and the
1994 Incentive Plan to Increase Stockholder Value, approved by stockholders in
1994, are in keeping with the Company's commitment to provide total compensation
which favors at-risk components of pay and closely links the interests of
management with those of stockholders. These are the Company's only long-term
incentive vehicles and they are 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 Company stock
ownership among key managers.
Stock options are normally granted annually based on an assessment of the
performance and potential of executives, past grants made to executives, and
current Company stock holdings of the executives. The stock option program
targets its awards at the 60th percentile of similar awards at 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 named executives will next be considered for an
option award in June 1997. The Option Grants in Last Fiscal Year table on page
14 gives a summary of stock options granted in 1996 to the named executives
under the 1988 Stock Incentive Plan and the 1994 Incentive Plan to Increase
Stockholder Value.
Under the 1994 Incentive Plan to Increase Stockholder Value,
performance-based restricted stock awards were made in 1995 to key executives
subject to the Company's ability to achieve pre-established levels of Company
performance over a three-year period. The value of the awards will
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vary based on the degree to which Company Earnings Per Share ("EPS") goals are
attained over the three-year cycle. The EPS goal is reflective of stockholder
value creation. All earned awards are paid in Company stock. During the
performance period, dividends on the performance-based shares are paid in stock.
The stock paid as a result of the performance achievement, and that paid as
dividends, must be held by the executive until termination from the Company,
further aligning executives' interests with those of stockholders.
In determining the size of performance-based share awards, the Committee
considers existing stock option grants, competitive practices, and the level of
responsibility of each executive. Grant sizes were at competitive levels in
comparison to similar programs at the comparator companies.
Compensation for the Chief Executive Officer
The CEO's compensation package is consistent with the spirit and objectives
of the Company's executive compensation program.
Mr. McDermott's base salary was increased $40,000 to $540,000 and his EIP
target cash bonus opportunity was increased five percentage points to 60% of
base salary effective January 1, 1996. His actual bonus payment was greater than
the target cash bonus opportunity because the Company's financial performance in
1996 exceeded target goals.
The stock option grants given to Mr. McDermott in June 1996 are disclosed
in the table on page 14 [page 20 of EDGAR version]. The grant made in 1996 is
within competitive norms for the CEO position and at the medium level in
comparison to the comparator companies.
Under the 1994 Incentive Plan to Increase Stockholder Value, Mr. McDermott
received a performance-based restricted stock award in 1995 subject to the
Company's ability to achieve pre-established levels of Company performance over
a three-year period. The value of his award will vary based on the degree to
which Company EPS goals are attained over the three-year cycle. The EPS goal is
reflective of stockholder value creation. All earned awards are paid in Company
stock. During the performance period, dividends on the performance-based shares
are paid in stock, further aligning Mr. McDermott's interests with those of
stockholders.
Effective July 1, 1996 the Company entered into an agreement with Mr.
McDermott to secure his strong leadership of the Company for at least the next
five years. The material details of this agreement are set forth on page 12
[page 15 of EDGAR version] of this Proxy Statement. Under the agreement, Mr.
McDermott was granted 10,000 shares of restricted common stock of the Company,
pursuant to the 1994 Incentive Plan to Increase Stockholder Value, as of July 1,
1996. The restrictions on these shares lapse three years after the date of
grant. This restricted stock grant, and the other terms of the agreement, are
within competitive norms for the CEO position in comparision to the comparator
companies.
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Company Response to Potential Limits to Deductibility of Executive Pay
Due to the minimal 1996 impact of any employee income in excess of the
annual one million dollar limit for deductibility under Section 162(m) of the
Internal Revenue Code of 1986 as amended (the "Code"), the Committee has
determined that it is not in the Company's current interest to undertake the
substantial revisions to compensation programs that would be necessary to
respond to the Code. The Committee will continue to evaluate the advisability of
changing its compensation programs in this respect in future years.
Summary
The Committee believes the executive compensation program, through the
Committee's administration of the component plans and structures, continues to
ensure the Company's ability to attract, retain, and motivate the executive
resources required to enhance stockholder value. The Committee's competitive
base 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 Human Resources Committee
Arthur M. Richardson, Chairman
William W. Goessel
Barbara B. Lucas
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Comparison of Five 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 1991 through December 1996
[Line Chart]
[Plot Points Shown Below]
Goulds Pumps Peer Group S&P 500
12/91 100.00 100.00 100.00
12/92 109.45 108.82 107.61
12/93 114.23 152.44 118.41
12/94 102.97 153.53 120.01
12/95 122.12 195.82 164.95
12/96 115.98 244.14 202.73
Assumes $100 is invested on December 31, 1991 in Goulds Pumps, Incorporated
common stock, the S&P 500 Index, and peer group common stock. Cumulative total
return assumes reinvestment of dividends.
Fortune
Industrial &
Farm Equipment
Industry--
Date Goulds Pumps Peer Group S&P 500
- ----------------------- --------------- ----------------- ---------
December 1991...... $100.00 $100.00 $100.00
December 1992...... $109.45 $108.82 $107.61
December 1993...... $114.23 $152.44 $118.41
December 1994...... $102.97 $153.53 $120.01
December 1995...... $122.12 $195.82 $164.95
December 1996...... $115.98 $244.14 $202.73
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<TABLE>
<CAPTION>
Fortune Industrial and Farm Equipment Companies (1)(3)
<S> <C> <C>
Caterpillar Inc. York International Corporation Tecumseh Products Company
Deere & Company Baker Hughes Incorporated Cincinnati Milacron Inc.
Ingersoll-Rand Company Harnischfeger Industries, Inc. Briggs & Stratton Corporation
Dresser Industries, Inc. The Timken Company Stewart & Stevenson Services, Inc.
The Black & Decker Corporation Western Atlas International Inc. The Lincoln Electric Company
Cummins Engine Company, Inc. NACCO Industries, Inc. Terex Corporation
American Standard Cos. (2) AGCO Corporation Kennametal Inc.
Case Corporation (2) Detroit Diesel Corporation The Toro Company
Dover Corporation TRINOVA Corporation Teleflex Incorporated
Parker-Hannifin Corporation Crane Co.
</TABLE>
- ----------
(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:
Pentair, Inc.
Outboard Marine Corporation
Actava Group, Inc.
IMO Industries Inc.
Figgie International, Inc.
Employment Agreements and Policies
In December of 1996, Mr. Frank J. Zonarich, who is identified on the
Summary Compensation Table on page 13 [pages 16 and 17 of EDGAR version],
resigned. In connection with his resignation, he will receive the compensation
indicated on the Summary Compensation Table.
Effective July 1, 1996, Thomas C. McDermott entered into an employment
agreement with the Company (the "Agreement") for services to be rendered through
June 30, 2001. The Agreement provides that Mr. McDermott will serve as Chairman,
Chief Executive Officer and President during the first three years of the
Agreement and as Chairman for the remaining two years.
The other principal provisions of the Agreement specify an annual salary of
$540,000 with yearly salary reviews by the Board of Directors; an annual
incentive award opportunity under the Executive Incentive Plan of 60% of base
salary; and an annual award of 10,000 Restricted Shares of Common Stock of the
Company, on which the restrictions lapse three years from the grant date. Stock
options will be granted by the Board each year commensurate with performance and
position under existing and/or future stock incentive plans of the Company.
The Company has outstanding agreements with the other named executives
listed in the Summary Compensation Table on page 13 [pages 16 and 17 of EDGAR
version], which provide that the named executives will not, in the event of the
commencement of steps to effect a Change-of-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), voluntarily leave the employ of the Company
until a third person has terminated efforts to effect a Change-of-Control or
until three months after a Change-of-Control has occurred.
In the event of a qualifying termination of the named executive's
employment within three years of a Change-of-Control, he or she is entitled to
three years' compensation including bonus, retirement
12
<PAGE>
benefits equal to the benefits he or she would have received had he or she
completed three additional years of employment, continuation of all life,
accident, health, savings and other fringe benefit plans for three years, and
relocation assistance. In addition, these named executives are covered by a non-
Change-of-Control severance policy equal to one year's base salary.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
---------------------------------------
Other
Annual
Name and Principal Position Year Salary Bonus(a) Compensation
- -------------------------------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Thomas C. McDermott 1996 $540,000 $425,200 $ --
Chairman, CEO & President 1995 500,000 227,000 --
1994(e) 255,769 140,672 --
Eric L. Steenburgh 1996 306,250 166,800 33,047(f)
Senior Vice President and 1995(h) 84,231 21,000 --
President--Industrial Products
Frank J. Zonarich 1996 247,000 100,000 --
(resigned December, 1996) 1995 239,417 86,500 --
Vice President 1994 227,350 67,827 --
John P. Murphy 1996 209,167 108,800 --
Vice President--Finance and 1995 191,458 55,000 --
Chief Financial Officer 1994 183,125 50,100 --
Michael T. Tomaino 1996 184,167 82,300 --
Vice President, General 1995(l) 88,154 31,000 --
Counsel and Secretary
John J. Scanlon 1996 162,917 61,700 --
Vice President--Worldwide 1995 147,533 40,000 --
Commercial Strategies
and President--Asia Pacific
</TABLE>
<TABLE>
<CAPTION>
Long-Term Compensation
- -------------------------------- ---------------------------------------
Restricted Securities All
Stock Underlying LTIP Other
Name and Principal Position Awards(b) Options(#) Payouts Compensation
- -------------------------------- ------------ ------------ --------- --------------
<S> <C> <C> <C> <C>
Thomas C. McDermott $251,250(c) 82,100 $ -- $ 6,072(d)
Chairman, CEO & President -- 111,600 -- 7,018
-- 76,500 -- 205,284
Eric L. Steenburgh -- 25,000 -- 221,060(g)
Senior Vice President and -- 27,400 -- --
President--Industrial Products
Frank J. Zonarich -- 17,100 -- 248,812(i)
(resigned December, 1996) -- 28,500 -- 1,812
Vice President -- 14,915 -- 2,332
John P. Murphy -- 17,000 -- 2,302(j)
Vice President--Finance and -- 26,100 -- 2,302
Chief Financial Officer -- 12,663 -- 3,701
Michael T. Tomaino -- 10,700 -- 523(k)
Vice President, General -- 10,400 -- --
Counsel and Secretary
John J. Scanlon -- 7,900 -- 2,893(m)
Vice President--Worldwide -- 12,400 -- 2,893
Commercial Strategies
and President--Asia Pacific
</TABLE>
- ----------
(a) Includes amounts paid or deferred in the year following for services
rendered in the year indicated.
(b) Restricted Performance Shares outstanding, valued as of 12-31-96, are: Mr.
McDermott, 9,524 shares valued at $218,457; Mr. Steenburgh, 4,355 shares
valued at $99,893; Mr. Murphy, 2,857 shares valued at $65,532; Mr. Tomaino,
2,743 shares valued at $62,918; Mr. Scanlon, 2,438 shares valued at
$55,922.
(c) The restricted stock award reported in this column for Mr. McDermott was
granted on 07-01-96 at a share price of 25.125. Dividends are paid to all
holders of restricted stock.
(d) Includes premiums paid on the executive's behalf for a life insurance
policy provided by the Executive Security Plan--$6,072.
(e) Hired 06-94.
(f) Relocation expense tax gross-up; a one time reimbursement.
(g) Includes premiums paid on the executive's behalf for Basic Term Life
Insurance--$1,121; relocation expense reimbursement--$219,939.
(h) Hired 09-95.
(i) Includes premiums paid on the executive's behalf for a life insurance
policy provided by the Executive Security Plan--$1,812; transitional and
consulting payments in connection with Mr. Zonarich's
resignation--$247,000.
(j) Includes premiums paid on the executive's behalf for a life insurance
policy provided by the Executive Security Plan--$2,302.
(k) Includes premiums paid on the executive's behalf for Basic Term Life
Insurance--$523.
(l) Hired 07-95.
(m) Includes premiums paid on the executive's behalf for a life insurance
policy provided by the Executive Security Plan--$2,893.
13
<PAGE>
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
% of Total
Number of Options Grant
Securities Granted to Exercise Date
Underlying Employees Price Expiration Present
Name Options Granted in Fiscal Year Per Share($) Date Value($)(a)
- ---------------------------- ------------------ ----------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Thomas C. McDermott ...... 82,100 21.36% 25.250 Jun 21, 2006 468,791
Eric L. Steenburgh ...... 25,000 6.50% 25.250 Jun 21, 2006 142,750
Frank J. Zonarich ......... 17,100 4.45% 25.250 Jun 21, 2006 97,641
John P. Murphy ............ 17,000 4.42% 25.250 Jun 21, 2006 97,070
Michael T. Tomaino ...... 10,700 2.78% 25.250 Jun 21, 2006 61,097
John J. Scanlon ......... 7,900 2.06% 25.250 Jun 21, 2006 45,109
</TABLE>
- ----------
(a) 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 on the options of $25.25 equal to the fair market value
of the underlying stock on the date of grant;
* An interest rate (6.9%) that represents the interest rate on a U.S.
Treasury security with a maturity date corresponding to that of the option
term;
* Volatility factor of .227 calculated using daily stock prices for the
one-year period prior to the grant date;
* Dividends at the rate of $.80 per share representing the annualized
dividends paid with respect to a share of common stock as of the date of
grant;
* Reduction of approximately 9.6% to reflect the probability of forfeiture
due to termination prior to vesting, and approximately 16.9% to reflect the
probability of a shortened option term due to termination of employment
prior to the option expiration date;
* An option term of ten years.
The ultimate values of the options will depend on the future market price
of Goulds Pumps' stock, which cannot be forecast with reasonable accuracy. The
actual value, if any, an optionee will realize upon exercise of an option will
depend on the excess of the market value of the Company's common stock on the
date the option is exercised over the exercise price.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
<TABLE>
<CAPTION>
Number of Securities Underlying
Unexercised Options Held
At Fiscal Year End
Number of --------------------------------------
Shares
Acquired Value
Name on Exercise Realized($) Exercisable(#) Unexercisable(#)
- ---------------------------- ----------- ----------- -------------- ----------------
<S> <C> <C> <C> <C>
Thomas C. McDermott ...... 0 0 71,598 203,300
Eric L. Steenburgh ...... 0 0 6,850 45,550
Frank J. Zonarich ......... 0 0 40,926 49,679
John P. Murphy ............ 0 0 16,607 44,156
Michael T. Tomaino ...... 0 0 2,600 18,500
John J. Scanlon ......... 0 0 23,166 20,065
</TABLE>
<TABLE>
<CAPTION>
Value of Unexercised
In-The-Money Options Held
At Fiscal Year End
-----------------------------------
Name Exercisable($) Unexercisable($)
- -------------------------- --------------- -----------------
<S> <C> <C>
Thomas C. McDermott .... 136,849 210,431
Eric L. Steenburgh .... 0 0
Frank J. Zonarich ....... 10,148 30,445
John P. Murphy .......... 9,677 29,030
Michael T. Tomaino .... 3,250 9,750
John J. Scanlon ....... 50,619 13,266
</TABLE>
14
<PAGE>
Pension Plan Table (1)
<TABLE>
<CAPTION>
Years of Service
----------------------------------------------------------------------------------------------
Final Average
Compensation(2) 5 10 15 20 25 30 35
- ------------------ ----------- ----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$200,000 ......... $ 20,000 $ 40,000 $ 60,000 $ 80,000 $100,000 $110,000 $120,000
$300,000 ......... $ 30,000 $ 60,000 $ 90,000 $120,000 $150,000 $165,000 $180,000
$400,000 ......... $ 40,000 $ 80,000 $120,000 $160,000 $200,000 $220,000 $240,000
$500,000 ......... $ 50,000 $100,000 $150,000 $200,000 $250,000 $275,000 $300,000
$600,000 ......... $ 60,000 $120,000 $180,000 $240,000 $300,000 $330,000 $360,000
$700,000 ......... $ 70,000 $140,000 $210,000 $280,000 $350,000 $385,000 $420,000
$800,000 ......... $ 80,000 $160,000 $240,000 $320,000 $400,000 $440,000 $480,000
$900,000 ......... $ 90,000 $180,000 $270,000 $360,000 $450,000 $495,000 $540,000
$1,000,000 ...... $100,000 $200,000 $300,000 $400,000 $500,000 $550,000 $600,000
$1,100,000 ...... $110,000 $220,000 $330,000 $440,000 $550,000 $605,000 $660,000
$1,200,000 ...... $120,000 $240,000 $360,000 $480,000 $600,000 $660,000 $720,000
</TABLE>
- ----------
(1) Estimated annual pension plan benefits shown are prior to adjustment for
Social Security benefits.
(2) Final Average Compensation is the sum of salary and bonus from the Summary
Compensation Table.
The Company maintains a Pension Plan and a Supplemental Executive Pension
Plan in which all of the officers named in the Summary Compensation Table on
page 13 [pages 16 and 17 of EDGAR version] are participants. Taken together, the
two plans provide participants with a monthly retirement benefit based on the
participant's final average compensation and years of service. The monthly
benefit is reduced by one-half the participant's primary Social Security benefit
amount. The chart above shows the estimated benefit (stated in annual amounts)
payable (prior to reduction for Social Security) beginning at age 62 for the
years of credited service and final average compensation amounts shown.
Years of Credited Service used in determining benefits for the named
executives are as follows through December 31, 1996:
Mr. McDermott, 2.5 years; Mr. Steenburgh, 1.3 years; Mr. Zonarich, 26.8; Mr.
Murphy, 3.3 years; Mr. Tomaino, 1.4 years; Mr. Scanlon, 37.8 years. Benefits are
computed as straight-life annuity amounts, which may be paid in various forms.
15
<PAGE>
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has recommended that the appointment of Deloitte &
Touche LLP as independent auditors for the year ending December 31, 1997 be
ratified by the stockholders. Deloitte & Touche LLP and their predecessors have
served as auditors of the Company since 1908. Representatives of Deloitte &
Touche LLP 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 ratification of the
appointment of auditors.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
All proposals by stockholders intended to be presented at the next Annual
Meeting of Stockholders must be received by the Company by November 25, 1997 in
order to be considered for inclusion in the Company's Proxy Statement for the
1998 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 will vote on them in accordance with their best judgment.
All costs of soliciting proxies will be borne by the Company. In addition
to soliciting proxies by use of the mails, some of the officers and regular
employees of the Company (without extra compensation) may solicit proxies
personally and by telephone and telefax. In addition, the Company will reimburse
the reasonable expenses incurred by banks and brokers who hold shares in their
names or in custody, or in the names of nominees for others, in forwarding
copies of the proxy material to those persons for whom they hold such shares.
The Company will pay the firm of D.F. King & Co., Inc. a fee of $7,000 plus
expenses for soliciting proxies.
By Order of the Board of Directors
MICHAEL T. TOMAINO
Secretary
Fairport, New York
March 24, 1997
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 without charge to stockholders upon request addressed to Michael T.
Tomaino, Secretary, Goulds Pumps, Incorporated, 300 WillowBrook Office Park,
Fairport, New York 14450-4285.
16
<PAGE>
[LOGO OF GOULDS PUMPS, INCORPORATED]
March 24, 1997
Dear Goulds Stockholder:
On behalf of the Board of Directors and management, you are cordially
invited to attend the 1997 Annual Meeting of Stockholders on Wednesday, May 7,
1997 at 10:00 a.m. at the Holiday Inn, Seneca Falls, New York.
At the meeting, I will report on the progress of the Company during the
past year and answer your questions. In addition, stockholders will consider
and act upon the matters described in the accompanying Notice of Annual Meeting
and Proxy Statement.
It is important that your interests be represented at the meeting.
Regardless of your plans for attending the meeting, please complete and mail
your proxy card in the enclosed return envelope.
Very truly yours,
/s/ Thomas C. McDermott
Thomas C. McDermott
Chairman, Chief Executive Officer
and President
Detach Proxy Card Here
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
[ ]
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees [X] WITHHOLD AUTHORITY to vote [X] *EXCEPTIONS [X]
listed below for all nominees listed below.
Nominees: Jerry H. Ballengee, William W. Goessel, David P. Gruber, Melvin Howard, Barbara B. Lucas, Thomas C. McDermott,
James C. Miller III, Peter Oddleifson
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's name
in the space provided below.)
*Exceptions ____________________________________________________________________________________________________________________
2. Proposal to ratify the appointment of Deloitte & Touche LLP as independent
auditors for 1997.
FOR [X] AGAINST [X] ABSTAIN [X] Change of Address and/or [X]
Comments Mark Here.
When signing as attorney, executor, administrator, trustee or guardian,
give title as such. If the signer is a corporation, sign in the corporate name
of duly authorized officer.
Dated: __________________________________, 1997
_______________________________________________
Signature
_______________________________________________
Signature
Votes MUST be indicated
Please mark, sign, date and return this proxy card using the enclosed envelope. (x) in Black or Blue ink. [X]
</TABLE>
<PAGE>
GOULDS PUMPS, INCORPORATED
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 7, 1997
I(We) hereby appoint Thomas C. McDermott and Michael T. Tomaino, or either
of them, as Proxies, with full power of substitution, to represent me (us) and
to vote all my/(our) stock in Goulds Pumps, Incorporated, on all matters
which may come before the 1997 Annual Meeting of Stockholders of the Company
and any adjournments thereof. Said Proxies are directed to vote as hereafter
indicated.
Proxies will vote in accordance with their judgment in connection with the
transaction of such other business as may properly come before the meeting or
any adjournment thereof.
This Proxy, when properly executed, will be voted in the manner directed
hereon. If no direction is made, it will be voted "FOR" all proposals.
(Continued and to be signed on the other side)
GOULDS PUMPS, INCORPORATED
P.O. BOX 11303
NEW YORK, N.Y. 10203-0303
