<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
HARMON INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
1300 JEFFERSON COURT
BLUE SPRINGS, MISSOURI 64015
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AT 2:00 P.M. ON MAY 13, 1997
AT THE COUNTRY CLUB OF BLUE SPRINGS
1600 N. CIRCLE DRIVE
BLUE SPRINGS, MISSOURI
To the Holders of Common Stock of Harmon Industries, Inc.:
Notice is hereby given that the Annual Meeting of the Shareholders of Harmon
Industries, Inc. will be held for the following purposes:
1. To elect nine (9) members of the Board of Directors;
2. To approve the selection of KPMG Peat Marwick LLP, as Auditors for the
forthcoming fiscal year;
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only shareholders of record at the close of business on March 17, 1997, will
be entitled to notice of and to vote at the meeting and any adjournments
thereof. The transfer books of the Company will not be closed.
Shareholders who do not expect to attend the meeting in person are asked to
date, sign and return the proxy using the enclosed envelope which needs no
postage if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
Robert E. Harmon
Chairman
1300 Jefferson Court
Blue Springs, Missouri 64015
April 1, 1997
<PAGE>
[LOGO]
1300 JEFFERSON COURT
BLUE SPRINGS, MISSOURI 64015
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1997
SOLICITATION OF PROXIES
This Proxy Statement and the accompanying form of proxy are being mailed to
shareholders of Harmon Industries, Inc. (the "Company") commencing on April 1,
1997. The enclosed proxy is solicited by and on behalf of the Board of Directors
of the Company to be used at the Annual Meeting of Shareholders, which will be
held at the Country Club of Blue Springs, 1600 N. Circle Drive, Blue Springs,
Missouri on May 13, 1997 at 2:00 p.m. and at any adjournments thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting of Shareholders.
Any shareholder who executes and returns the enclosed proxy has the right to
revoke it, in writing, at any time before it is voted at the meeting.
The Company will bear the cost of solicitation of proxies. In addition to
the use of the mail, proxies may be solicited personally or by telephone or
facsimile by the directors or by a few executives or employees of the Company at
a nominal cost, and the Company may reimburse brokers and other persons holding
stock in their names or in the names of their nominees for their expenses in
sending proxy material to principals.
The Board of Directors of the Company has fixed the close of business on
March 17, 1997, as the record date for the determination of shareholders
entitled to notice of and to vote at the meeting. As of that date, the Company
had 6,836,208 shares of Common Stock outstanding and entitled to vote at the
meeting.
Each share of Common Stock entitles the shareholders to one vote for each
share held. All voting, unless otherwise specifically indicated, requires
approval by majority of the shares of stock represented in person or by proxy at
the meeting and voted on the matter in question. Abstentions and broker
non-votes will be treated as present at the meeting for purposes of determining
a quorum but are tabulated as if no vote was cast on the matter indicated.
Directors are elected by a plurality of the votes cast. Shareholders do not have
the right to accumulate votes in the election of directors. Votes withheld in
the election of directors are not tabulated as a vote for or against the person
or persons indicated. The selection of directors is determined in the order of
those nominees receiving the highest number of votes in favor of election until
the number of nominees to be elected in the election have been selected.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock of the
Company owned beneficially as of March 17, 1997 by each person who, as of that
date, to the best knowledge of management, was the beneficial owner of more than
5% of the outstanding shares or who is a named executive officer. Common Stock
is the only class of voting securities.
<TABLE>
<CAPTION>
PERCENT
TITLE NAME AND ADDRESS OF BENEFICIAL OF
OF CLASS BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
- ------------------ ------------------------------------------------- --------------- -------------
<C> <S> <C> <C>
Common Stock Mercantile Bancorporation Inc., 503,497 7%
as Trustee for the Company's ESOP
#1 Mercantile Center
St. Louis, MO 63101
Common Stock Wellington Management Company 458,600(3) 7%
75 State Street
Boston, Massachusetts 02109
Common Stock St. Denis J. Villere & Company 433,050(4) 6%
210 Baronne Street, Suite 808
New Orleans, LA 70112-1727
Common Stock Charles M. Foudree 43,300(5) 1%
Common Stock Lloyd T. Kaiser 28,915(6) --%
Common Stock Bjorn E. Olsson 44,000(7) 1%
Common Stock Raymond A. Rosewall 23,500(8) --%
Common Stock Gary E. Ryker 32,365(9) --%
Common Stock Beneficial ownership of all officers and 682,962 10%
directors as a group (23 in group)
</TABLE>
(1) All amounts of shares reflect sole voting and disposition power unless
otherwise indicated. The share amounts reflected in this column include
outstanding shareholdings, as well as unexercised ISOP option shares,
unexcercised LTIP option shares and unexercised director option shares (see
discussion under caption "Executive Compensation" herein). Shares allocated
under the Company's ESOP are not included since participants have no
disposition power and have only shared voting rights. Shares in the ESOP
allocated to Messrs. Foudree, Kaiser, Olsson, Rosewall and Ryker and all
officers and directors as a group were 5,241; 1,709; 1,754; -0-; 540 and
31,825 shares, respectively.
(2) Rounded to the nearest whole percentage. Percentages are calculated on
7,096,708 shares representing the total of 6,836,208 outstanding shares and
260,500 shares for unexercised director options, ISOP options and LTIP
options.
(3) Wellington Management Co. has shared voting power over 220,500 shares and
shared dispositive power over 458,600 shares.
(4) St. Denis J. Villere & Company has shared voting power and shared
dispositive power over 433,050 shares.
2
<PAGE>
(5) 25,500 shares are beneficially owned and held of record by M. Colleen
Foudree as trustee for the M. Colleen Foudree Trust with sole voting and
disposition power. 7,300 shares are held by the Charles M. Foudree Trust
with sole voting and disposition power. The remainder are held by Charles M.
Foudree and represent unexercised option shares.
(6) 16,415 shares are held by Lloyd T. Kaiser with sole voting and dispositive
power. The remainder represent unexercised option shares.
(7) 32,500 shares are held by Bjorn E. Olsson with sole voting and dispositive
power. The remainder represent unexercised options.
(8) Raymond A. Rosewall holds no shares directly with sole voting and
dispositive power. 23,500 shares represent unexercised option shares.
(9) 6,165 shares are owned by Gary E. Ryker, 1,000 shares are held in an IRA
account and 1,200 shares are held in a trust with sole voting and
dispositive power. 565 shares are held by his daughter for whom he disclaims
beneficial ownership. The remainder represent unexercised option shares.
Based on a review of reports on Forms 3, 4 and 5 and amendments to such
forms filed with the Company, the Company is aware of no late filings of such
forms by any person required to file such forms in connection with Section 16(a)
of the Securities Exchange Act of 1934, as amended. The Company is unaware of
any transactions in which there was a failure to file by a reporting person
under such Act.
ELECTION OF DIRECTORS
Nine directors are to be elected at the Annual Meeting of Shareholders for
one year or until their successors are elected and qualified. It is the
intention of the persons named in the accompanying form of proxy to vote for the
election of the nominees listed below. If, for any reason, any of the nominees
is unable or declines to serve, the proxies will be voted for the other persons
listed or for substitute nominees nominated by management. During fiscal 1996,
the Board of Directors held seven meetings. All of the directors nominated for
re-election herein attended greater than 75% of the meetings of both the Board
and the respective committees for which they were eligible to serve.
The Director Nomination and Compensation Committee proposes nominees for
Board positions and evaluates director compensation. The Committee consists of
Herbert M. Kohn (Chair), Bruce M. Flohr and Judith C. Whittaker. The Committee
met one time during 1996. The Committee will consider proposed director
candidates submitted by shareholders. Proposals for the 1998 election must be
received in writing prior to November 12, 1997.
The Audit Committee of the Board of Directors is composed of Judith C.
Whittaker (Chair), Thomas F. Eagleton, Herbert M. Kohn and Gerald E. Myers. The
Audit Committee reviews and monitors financial controls throughout the Company,
supervises the internal audit function and monitors the Company's relationship
with the external auditors. The committee met two times in 1996.
The Compensation Committee was composed of Rodney L. Gray (Chair), Donald V.
Rentz, Bruce M. Flohr and Douglass Wm. List during 1996. The Compensation
Committee is a standing committee of the Board of Directors and establishes
executive salary and bonus levels for the executive officers and the Presidents
of the Company's subsidiaries. During 1996, the Compensation Committee met four
times.
3
<PAGE>
DIRECTOR NOMINEES
<TABLE>
<CAPTION>
SERVED
PRINCIPAL CONTINUOUSLY STOCK
OCCUPATION FOR AS A DIRECTOR PERCENT OF OWNED
NAME OF NOMINEE AGE LAST FIVE YEARS SINCE CLASS(2) BENEFICIALLY(1)
- ------------------------ ----------- -------------------------------------- -------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Bruce M. Flohr 57 Since 1977, Chairman and President of 05/11/93 --% 5,000
RailTex, Inc.
Charles M. Foudree 52 Executive Vice President- 07/27/72 1% 43,300(3)
Finance of the Company since Sept.
1986. Treasurer of the Company since
1974. Secretary of the Company since
1982.
Rodney L. Gray 44 Since June 1993, Chairman and Chief 05/11/93 --% 6,000
Executive Officer of Enron
International, Inc.; prior to that,
Senior Vice-President-Finance and
Treasurer of Enron Corp. from October
1992 to June 1993; prior to that
Vice-President and Treasurer of Enron
Corp.
Robert E. Harmon 58 Chairman of the Board of the Company 10/02/61 4% 257,839(4)
since February 1975. Chief Executive
Officer of the Company from November
1969 to December 1994.
Herbert M. Kohn 58 Since June 1991, a partner in the law 09/01/85 --% 27,100
firm of Bryan Cave.
Douglass Wm. List 41 Since January 1988, President, List & 05/08/90 --% 6,000(5)
Company, Inc., a management consulting
firm based in Baltimore, Maryland.
Since December 1992, also President of
Railway Engineering Associates, Inc.,
having been Vice-President and General
Manager of that company since May
1988. Since January 1997, also Presi-
dent of Moorgate, Inc., an investment
advisory company.
Gerald E. Myers 55 Self-employed management consultant 05/03/88 1% 35,918(6)
since July 1989.
Bjorn E. Olsson 51 President and Chief Executive Officer 05/06/86 1% 44,000(7)
of the Company since January 1995;
President and Chief Operating Officer
of the Company from August 1990 to
December 1994.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SERVED
PRINCIPAL CONTINUOUSLY STOCK
OCCUPATION FOR AS A DIRECTOR PERCENT OF OWNED
NAME OF NOMINEE AGE LAST FIVE YEARS SINCE CLASS(2) BENEFICIALLY(1)
- ------------------------ ----------- -------------------------------------- -------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Judith C. Whittaker 58 Since January, 1997, Vice President, 05/11/93 --% 5,000
General Counsel/Secretary of Hallmark
Cards, Inc. Prior to that
Vice-President-Legal, of Hallmark
Cards, Incorporated.
</TABLE>
(1) All amounts of shares reflect sole voting and disposition power unless
otherwise indicated. The share amounts reflected in this column include
outstanding shareholdings, as well as unexercised ISOP option shares,
unexercised LTIP option shares and unexercised director option shares (see
discussion under caption "Executive Compensation" herein). Shares allocated
under the Company's ESOP are not included since participants have no
disposition power and shared voting rights. Shares in the ESOP allocated to
Messrs. Foudree and Olsson were 5,241 and 1,754 shares, respectively.
(2) Percentages shown are rounded to the nearest whole percentage. Percentages
are calculated on 7,096,708 shares representing the total of 6,836,208
outstanding shares and 260,500 shares for unexercised director options, ISOP
options and LTIP options.
(3) 25,500 shares are beneficially owned and held of record by M. Colleen
Foudree as trustee for the M. Colleen Foudree Trust with sole voting and
disposition power. 7,300 shares are held by the Charles M. Foudree Trust
with sole voting and disposition power. The remainder are held by Charles M.
Foudree and represent unexercised ISOP and LTIP director option shares.
(4) Does not include 6,500 shares owned by his wife for which Robert E. Harmon
disclaims beneficial ownership.
(5) Does not include 100 shares held by Moorgate Foundation Fund, LLC, for which
Mr. List disclaims beneficial ownership. Mr. List owns approximately 9% of
Moorgate Foundation Fund, LLC. Moorgate, Inc., an investment advisory
company, provides investment advisory services to Moorgate Foundation Fund,
LLC, and Mr. List is President of Moorgate, Inc.
(6) Includes 32,743 shares which are held in a living trust, 175 shares in an
IRA and the remainder represent unexercised options.
(7) 32,500 shares are held by Bjorn E. Olsson with sole voting and dispositive
power. The remainder represent unexercised options.
Ms. Whittaker serves as a director of MCI Communications Corporation, a
publicly-held company. Mr. Flohr serves as an officer and director of RailTex,
Inc., which is a publicly-held company. Mr. List is a director of Mark VII,
Inc., a publicly-held company. Mr. Gray is a director of Battlemountain Gold
Company, a publicly-held company. Mr. Foudree is a director of OTR Express,
Inc., a publicly-held company. Mr. Kohn is also a director of American Pad &
Paper Co., a company traded on the NYSE. None of the other director nominees
serves as a director of any other company with a class of stock registered
pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the
requirements of Section 15(d) of that Act or any company registered under the
Investment Company Act of 1940.
CERTAIN TRANSACTIONS.
Mr. Kohn is currently a partner of the Bryan Cave firm, which the Company
retains as legal counsel for certain matters.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION.
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries (determined as
of the end of the last fiscal year), to or on behalf of the Company's Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company or its subsidiaries (together hereafter referred to as
the "named executive officers") for the fiscal years ended December 31, 1996,
1995 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
---------------------------------------
OTHER ANNUAL
FISCAL SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(2) ($)(3) ($)
- ----------------------------------- ------ ------- ------- ------------
<S> <C> <C> <C> <C>
Bjorn E. Olsson 1996 298,274 218,791 --
President & CEO 1995 264,747 -0- --
1994 219,285 112,914 --
Charles M. Foudree 1996 176,568 109,895 --
Executive V.P. - Finance, 1995 163,281 -0- --
Secretary and Treasurer 1994 157,505 77,514 --
Lloyd T. Kaiser 1996 164,978 103,441 --
President, Harmon 1995 151,821 -0- --
Electronics, Inc. 1994 132,931 52,914 --
Gary E. Ryker 1996 152,856 101,437 --
V.P. - Marketing, Sales 1995 148,258 -0- --
and Support 1994 140,989 73,714 --
Raymond A. Rosewall 1996 172,651 81,145 --
V.P. - Mfg. Manufacturing 1995 -0- -0- --
1994 -0- -0- --
<CAPTION>
LONG TERM COMPENSATION
----------------------------------
AWARDS
------------------------ PAYOUTS
RESTRICTED -------
STOCK OPTIONS (# LTIP ALL OTHER
AWARD(S) OF SHS.) PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION ($) (4) ($) ($)(5)
- ----------------------------------- ---------- ----------- ------- ------------
<S> <C> <C> <C> <C>
Bjorn E. Olsson -- 3,500 -0- 47,028
President & CEO -- -0- -0- 44,339
-- 2,000 -0- 47,091
Charles M. Foudree -- 3,500 -0- 75,304
Executive V.P. - Finance, -- -0- -0- 70,470
Secretary and Treasurer -- 2,000 -0- 71,379
Lloyd T. Kaiser -- 3,500 -0- 20,693
President, Harmon -- -0- -0- 22,317
Electronics, Inc. -- -0- -0- 22,510
Gary E. Ryker -- 3,500 -0- 22,300
V.P. - Marketing, Sales -- -0- -0- 23,712
and Support -- -0- -0- 25,342
Raymond A. Rosewall -- 20,000 -0- 36,049
V.P. - Mfg. Manufacturing -- -0- -0- -0-
-- -0- -0- -0-
</TABLE>
(1) Includes no perquisites (i.e. auto allowance, club dues or aircraft use)
because in all instances these total less than $50,000 or 10% of the total
of annual salary and bonus reported for each named executive officer.
(2) Salary includes amounts deferred under the Company's 401(k) at the election
of the named executive officer.
(3) Bonus includes cash. (See discussion under the heading "Employment
Contracts" below.)
(4) Includes grants of options (to all named Executive Officers except Mr.
Rosewall) in the amount of 3,500 shares in early 1996 in lieu of the stock
bonus normally given for the prior year under the Company's 1990 Incentive
Stock Option Plan, as well as annual awards to Messrs. Olsson and Foudree of
options on 2,000 shares under the Company's non-qualified 1988 Director
Option Plan for 1994. In 1996, Mr. Rosewall received a grant of ISOP options
for 20,000 shares of which 7,400 were exercisable at December 31, 1996.
(5) Includes allocation of contributions to the Company's Deferred Compensation
Plan and to the Company's non-discriminatory Employee Stock Ownership Plan
(ESOP). The amounts included in this column representing allocation of the
contribution made in 1996 to the Company's ESOP for Messrs. Olsson, Foudree,
Kaiser, Ryker and Rosewall were $8,856; $8,856; $8,856; $8,679; and $-0-,
respectively. The balance shown for each in the column represented
allocation of contributions for such named executive officers to the
Company's Deferred Compensation Plan. (See discussion under the heading
"Pension Plan" below.)
6
<PAGE>
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
During 1996, all of the named executive officers received a grant of stock
options under the Company's 1990 Incentive Stock Option Plan. The Company has no
outstanding Stock Appreciation Rights (SARs). The following table contains
information concerning the grant of stock options under the Company's 1990
Incentive Stock Option Plan (which plan was replaced on May 14, 1996 by the
Company's 1996 Long-Term Incentive Plan) to the named executive officers (see
discussion below under "Compensation Committee Report--1996 Long-Term Incentive
Plan"):
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- -------------------------------------------------------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM(3)
GRANTED (1) EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME (# OF SHARES) FISCAL YEAR ($/SH) (2) DATE(1) 5% ($) 10% ($)
- ----------------------------------- ------------- ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Bjorn E. Olsson 3,500 3.8 14.25 2/2/01 $ 13,780 $ 30,449
Charles M. Foudree 3,500 3.8 14.25 2/2/01 $ 13,780 $ 30,449
Lloyd T. Kaiser 3,500 3.8 14.25 2/2/01 $ 13,780 $ 30,449
Gary E. Ryker 3,500 3.8 14.25 2/2/01 $ 13,780 $ 30,449
Raymond E. Rosewall 20,000(4) 21.5 13.50 1/1/03 $ 107,084 $ 248,516
</TABLE>
(1) Each of Messrs. Olsson, Foudree, Kaiser and Ryker received 3,500 shares
pursuant to an ISOP option grant in 1996 in lieu of the stock bonus for
1995. For a description of the terms of the options see "Compensation
Committee Report--Incentive Stock Option Plan" below.
(2) The exercise price equals the fair market value of the underlying shares on
the date of grant. ISOP options are exercisable immediately upon grant
unless delays are necessary to avoid the statutory limitations on grants
established under the Internal Revenue Code. ISOP options are exercisable
anytime during a five-year period from date of grant or the date on which
the option was first exercisable.
(3) These amounts represent certain assumed rates of appreciation only and may
have no correlation to current or future actual market conditions.
(4) During 1996, Mr. Rosewall received a grant of ISOP options for 20,000 shares
of which 7,400 were exercisable at December 31, 1996.
7
<PAGE>
OPTION EXERCISES AND HOLDINGS.
The following table provides, for the named executive officers, information
concerning the exercise of stock options during the last fiscal year and
unexercised options held as of the end of the last fiscal year for both the
Company's 1990 ISOP (numbers to the left of the semicolon) and the Company's
non-qualified 1988 Director Option Plan (numbers to the right of the semicolon):
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE (IN $) OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SHARES AT OPTIONS AT
12/31/96 12/31/96(2)(3)
NUMBER OF SHARES
ACQUIRED ON VALUE (IN $) ISOP; DIRECTOR ISOP; DIRECTOR
NAME EXERCISE REALIZED(1) OPTIONS OPTIONS
- --------------------------------------- ------------------ ------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Bjorn E. Olsson -0-;-0- -0-;-0- 6,000;2,000 24,000;1,750
Charles M. Foudree -0-;-0- -0-;-0- 5,000;2,000 22,265;1,750
Lloyd T. Kaiser 1,000;N/A 13,000;N/A 9,000;N/A 69,500;N/A
Gary E. Ryker 5,000;N/A 56,250;N/A 20,500;N/A 191,688;N/A
Raymond A. Rosewall -0-;N/A -0-;N/A 20,000;N/A (4) 102,500;N/A
</TABLE>
(1) Market price at exercise less exercise price.
(2) All outstanding options shown are currently exercisable. There are no SARs.
(3) Market price at December 31, 1996 ($18.625) less exercise price.
(4) During 1996, Mr. Rosewall received a grant of ISOP options for 20,000 shares
of which 7,400 were exercisable at December 31, 1996.
LONG-TERM INCENTIVE PLANS.
Under the 1996 Long-Term Incentive Plan (the "1996 Plan"), the Compensation
Committee may establish vesting criteria for the grant of options or other
permitted awards under the 1996 Plan. The Compensation Committee currently
anticipates that the primary awards vehicle under the plan will consist of
non-qualified options, with vesting over a four-year period from the date of
grant so that 20% of the grant amount will vest each year. There are no
performance-based criteria relating to the awards or vesting under the
contemplated plan in connection with the non-qualified option. The exercise
prices of such non-qualified options are determined by the Closing price for the
Company's stock on the date of grant. Under the 1996 Plan, the Compensation
Committee currently anticipates that grants to executive officers will be in the
amount of 3,500 option shares per year so that 700 shares will be vested as of
the date of grant and an additional 700 shares will vest over each of the
following four years from the date of grant. In addition, the Compensation
Committee anticipates granting non-qualified options to certain key employees of
the Company, which grants will be in the amount of 500 shares, with 100 shares
vested upon grant and 100 shares vesting in each of the four years following the
date of grant.
Under the 1996 Plan, on the last business day of May, commencing May 31,
1996 (or if later, on the date on which the person is first elected or begins to
serve as a non-employee director, other than by reason of termination of
employment) and, thereafter on the date of each annual meeting of shareholders
of the Company, each person who is a non-employee director after such meeting of
stockholders shall be granted a non-qualified option for 1,000 option shares of
the Common Stock of the Company. The option amount shall be prorated if such
non-employee director is first elected or begins to serve as a non-employee
director on a date other than the date of an annual meeting of stockholders.
8
<PAGE>
The exercise prices of such non-qualified options are determined by the Closing
price for the Company's stock on the date of grant. Options granted to
non-employee directors pursuant to the 1996 Plan will immediately vest and will
have a term of seven years for exercise.
During 1996, no awards of non-qualified option grants were made to the
executive officers of the Company under the 1996 Plan. On May 31, 1996, each of
the non-employee directors received a grant of non-qualified options, with an
exercise price of $17.00 per share. In June 1996, non-qualified options for
25,500 shares were issued to 51 key employees under the 1996 Plan. Terms of
these key employee options were as set forth above. The option exercise price of
the non-qualified options granted to key employees was $16.50 per share.
PENSION PLANS.
The Company has no defined benefit pension plans. The Company has a
non-qualified, unfunded deferred compensation plan and trust for officers and
certain key employees, providing for payments upon retirement, death or
disability. Under the plan, the employees receive retirement payments equal to a
portion of the average of the three highest consecutive years' compensation.
Upon retirement, these payments are to be made for the remainder of the
employee's life with a minimum payment of ten years' benefits to either the
employee or his beneficiary. The plan provides for reduced benefits upon early
retirement, disability or termination of employment. The amount of the deferred
compensation expense for all covered employees for 1996 was approximately
$492,260 and amounts allocated to the named executive officers are included in
the "All Other Compensation" column of the Summary Compensation Table.
The Company also has an Employee Stock Ownership Plan and Trust ("ESOP").
Employees, including officers of the Company who satisfy the ESOP's eligibility
criteria of hours and service are eligible to participate. Allocations are based
on the ratio of an eligible individual's salary (subject to current regulatory
caps) to the total salaries of all eligible persons. Standards for vesting are
based upon years of service with the Company in accordance with current
regulatory guidelines. Under the ESOP, the Company is not required to make any
contributions, other than matching 401K funds. However, the Company's current
intention is to contribute approximately 15% of the participating companies'
pre-tax earnings to the ESOP. The 15% contribution would include the funds
required to fulfill a portion of the companies' obligation to match a portion of
the employee's 401K contribution. The contribution to the ESOP for the years
ended December 31, 1994, 1995 and 1996 totalled $3,045,000, $2,785,000 and
$3,814,617, respectively, which amounts were paid in cash. The amount of
compensation included in the "All Other Compensation" column of the Summary
Compensation Table includes the amounts of respective annual contributions
allocated for the named executive officers as of March 31 of the preceding year.
CANCELLATION AND REGRANT OF OPTIONS.
During 1996, the Company did not cancel, regrant or reprice any outstanding
stock options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
Mr. Rodney L. Gray (Chairman), Mr. Douglass Wm. List, Mr. Bruce M. Flohr and
Mr. Donald V. Rentz served on the Compensation Committee of the Company for the
past fiscal year. None of the members of the Compensation Committee are officers
or employees of the Company. The Compensation Committee of the Company
establishes executive salary and bonus levels for the executive officers of the
Company and the Presidents of its subsidiaries.
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<PAGE>
The Company does not believe that any interlocks exist between members of
the Compensation Committee and any third party represented on the Board of
Directors or providing significant services to the Company.
EMPLOYMENT CONTRACTS.
Messrs. Olsson, Foudree, Kaiser, Ryker and Rosewall had employment contracts
with the Company as of December 31, 1996 which provides for the payment to such
officers of annual base salaries of $286,125, $172,023, $148,050, $144,758 and
$132,600, respectively. The employment contracts have a rolling 12-month term.
For the year ended December 31, 1995, these officers' contracts included an
annual cash bonus. Cash bonuses paid to the named executive officers for
calendar year 1996 under the cash bonus plan were $218,791, $109,895, $103,441,
$101,437 and $81,145, respectively. (See description below under "Compensation
Committee Report on Bonuses".)
During 1996, ISOP options for 3,500 shares were granted to each of eleven
executive officers effective February 27, 1996 at an exercise price of $14.25
per share in lieu of the 1995 stock bonus. The annual stock bonus to executive
officers was eliminated as of May 14, 1996 and was replaced by the 1996
Long-Term Incentive Plan. (See discussion in the Compensation Committee Report
under "Bonuses" below.)
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION.
RESPONSIBILITIES AND COMPOSITION OF THE COMMITTEE
The Compensation Committee is responsible for (i) establishing compensation
programs for executive officers of the Company and its subsidiaries designed to
attract, motivate and retain key executives responsible for the success of
Company as a whole; (ii) administering and maintaining such programs in a manner
that will benefit the long-term interests of the Company and its shareholders;
and (iii) determining the compensation of the Company's executive officers and
certain key employees. The Committee serves pursuant to a charter adopted by the
Board of Directors. The Committee is composed entirely of directors who have not
served as officers or employees of the Company within the past ten years.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Committee believes that the Company's executive officer compensation
should be determined according to a competitive framework and based on overall
financial results, individual contributions and teamwork that together help
build value for the Company's shareholders. Within this overall philosophy the
Committee addresses a number of specific objectives, including (i) a total
compensation program that takes into account compensation practices and
financial performance as compared to similar companies, (ii) annual bonus
programs that take into account the Company's overall performance relative to
corporate objectives established in advance by the Committee which help create
value for the Company's shareholders, (iii) alignment of the financial interests
of executive officers to those of shareholders by providing equity based
compensation through option grants and through mandatory minimum shareholding
requirements.
The Committee believes that the top management of the Company must operate
as a team and that the cause and effect relationship between the efforts of any
one individual and corporate performance is difficult to discern. Hence, in
general, the compensation of the executive team tends to track as a group with
the performance of the Company. The Committee does, however, make exceptional
decisions where exceptional circumstances exist. Furthermore, the Committee does
establish individual performance objectives and measure individual performance
against these objectives in an effort to ensure that all members of the top
management team are fulfilling the expectations set for them.
10
<PAGE>
COMPENSATION COMPONENTS AND PROCESS
There are three major components of the Company's executive officer
compensation: (i) base salary; (ii) annual bonuses and (iii) equity incentives
through ISOP and LTIP option grants and minimum shareholding requirements.
During 1996, the Committee utilized option grants under the Company's 1990
Incentive Stock Option Plan ("ISOP") and the Company's 1996 Long-Term Incentive
Plan ("LTIP"). Upon approval by the shareholders, the Committee replaced the
ISOP plan and the 1988 Director Option Plan with the Company's new 1996 Long
Term Incentive Plan (the "1996 Plan"). The Committee began use of this plan
during 1996. The 1996 Plan operates to cover both the executive officer group,
as well as a fairly extensive key employee group. Non-employee directors also
receive an automatic annual option grant covering 1,000 shares each year. (See
discussion above under Executive Compensation--Long-Term Incentive Plan).
The process utilized by the Committee in determining executive officer
compensation levels for all of these components is based on the Committee's
objective judgment and takes into account both qualitative and quantitative
factors. No predetermined weights are assigned to such factors with respect to
any compensation component. Recommendations for base salaries and awards for
each individual executive officer are established after evaluation of individual
performance factors (equally weighted) including the following: knowledge of job
responsibilities, relationship with others, working capacity, initiative,
character, leadership, adaptability, teamwork, administrative ability and
individual goal attainment. The evaluation by the Committee includes the degree
to which each individual has met individual performance objectives. These
performance objectives are believed to relate directly to the Company's
performance and are therefore related to shareholder value. Among the factors
considered by the Committee are the recommendation of the Chief Executive
Officer with respect to compensation of the Company's other key executive
officers. However, the Committee makes the final compensation decisions
concerning such officers.
Comparative information utilized by the Company relates to Peer Group (as
set forth below under the section herein dealing with the "Performance Graph").
In addition, the Committee reviews at least two other surveys of industry trade
groups with similarity to the Company's operations. The trade group survey data
sources are standard general indices constructed and provided by outside
vendors. The surveys consist of many more data points than the limited number of
companies in the peer performance stock group. In making compensation decisions,
the Committee also from time to time receives assessments and advice regarding
the compensation practices of the Company and others from independent
compensation consultants. During 1996, the Compensation Committee analyzed the
base salary and the total compensation (base salary plus annual incentives) of
the Company's executives as compared to median survey data and to comparative
companies in the rail supply industry, the electronic equipment manufacturing
industry and the greater Kansas City area.
In order to meet the objectives set out above, the Committee has designed
the executive compensation program to be consistent with the Company's overall
pay philosophy. Base salaries, the fixed regular periodic component of pay, are
conservatively established at levels comparable to base salaries for similar
positions at companies with similar levels of sales and overall financial
performance. Annual cash bonus and equity awards, which are directly linked to
the short-term financial performance of the Company as a whole, are designed to
provide better than competitive pay only for better than competitive financial
performance.
BASE SALARY.
On August 22, 1996, the Committee conducted a review of the performance and
compensation of the Company's executive officer group, including Bjorn E. Olsson
and the other named executive officers. This review included key accomplishments
of each officer, an evaluation of achievement of
11
<PAGE>
individual goals and objectives, and an assessment of their contributions to the
Company's performance. Based on this review and its assessment of competitive
compensation practices, the Committee recommended a general increase in base
salaries of 2% for certain executive officers and key employees (including some
of the named executive officers) effective September 1, 1996 and a second 2%
increase in base salaries contingent upon acceptable third and fourth quarter
performance scheduled to be effective January 1, 1997. In connection with these
adjustments, Mr. Olsson's base salary was increased by 5% effective September
1996 and by 2% effective January 1, 1997. At the Compensation Committee meeting
on December 12, 1996, the second phase of the base salary adjustments was
ratified and approved in light of third quarter results and projections for
fourth quarter results.
BONUSES.
The Company's cash bonus or Incentive Bonus Plan for its Executive Officer
Group includes not only the traditional ROCE measurement standard, but also
earnings growth as a critical indicator of financial health of the Company. The
objective of this Incentive Bonus Plan is to provide an additional incentive to
each officer of the Company to advance the interests of the Company and its
stockholders and create a more direct tie between annual performance and
increased shareholder values. The Committee believes that the cash bonus plan
encourages the creation of shareholder wealth by creating incentives both to
maximize operating profit for the Company and minimize capital employed.
Additionally, the cash bonus plan rewards efficiencies in production and
innovation in quality-based productivity techniques. The new executive cash
bonus plan is based on 70% weighting for ROCE and 30% weighting for earnings
growth. The formula for ROCE (Return on Capital Employed) is the sum of pretax
earnings plus net interest expense divided by the sum of average total assets
minus non-interest bearing liabilities. The new proposal establishes target base
bonus levels as a percentage of current base salary. Percentages are 35% for
executive vice presidents and 30% for other officers, with the exception of Mr.
Olsson, whose target base bonus is established at 45% of his base salary. For
1997, the base bonus levels of Messrs. Olsson, Foudree, Kaiser, Ryker and
Rosewall were $131,332; $61,412; $51,818; $50,665; and $40,576, respectively.
The actual bonus is calculated based on actual performance numbers for ROCE as
compared to budget and earnings growth based on primary earnings per share as
compared to an Earnings Growth Rate Target established by the Board of Directors
at 10% for fiscal 1997. The ROCE portion of the formula accounts for 70% of the
base bonus and is adjusted as follows based on the ratio of actual versus budget
ROCE: under 75% of budgeted ROCE--no bonus award; from 75% to 99% of budgeted
ROCE--pro-rated award; at 100% of budgeted ROCE--100% of potential ROCE bonus
and for each 1% above budgeted ROCE a $7,000 incremental increase for each
officer. The earnings growth factor is calculated on a comparison between
primary earnings per share for the fiscal year as compared to an annual Earnings
Growth Rate Target established by the Board of Directors. The growth rate target
for fiscal 1996 was 10%. The growth target for fiscal 1997 is 10%.
For 1996, budgeted ROCE was 24.0% and actual ROCE was 25.9%. Targeted
earnings growth was 10% and actual primary earnings growth was 34.7%. Amounts
payable under the cash bonus plan for 1996 to all participants totaled
$1,136,400 and the named executive officers, Messrs. Olsson, Foudree, Kaiser,
Ryker and Rosewall received the following amounts: $218,791, $109,895, $103,441,
$101,437 and $81,145, respectively.
INCENTIVE STOCK OPTION PLAN.
The Committee historically considered outstanding option holdings in
determining whether to grant additional options under the Company's 1990
Incentive Stock Option Plan to any individual. Each of the named executive
officers received no grant of options pursuant to the ISOP during 1996 except
for 3,500 option shares in lieu of their annual stock bonus. The exercise price
for shares granted under the ISOP are determined by the closing price for the
Company's stock on the date of grant.
12
<PAGE>
Options are exercisable immediately upon grant unless delays are necessary to
avoid the statutory limitations on grants established under the Internal Revenue
Code. The options are exercisable anytime during a five-year period from date of
grant or the date on which the option was first exercisable. Upon approval of
the 1996 Long-Term Incentive Plan by the Shareholders of the Company on May 14,
1996, the 1990 Incentive Stock Option Plan was replaced. No additional grants
are permitted under the 1990 ISOP, although outstanding options remain
exercisable in accordance with their terms.
LONG-TERM INCENTIVE PLANS.
On May 14, 1996, the shareholders of the Company approved the Company's 1996
Long Term Incentive Plan ("1996 Plan"), which plan became effective May 31,
1996. The purposes of the 1996 Plan are (i) to align the interests of the
Company's shareholders and recipients of awards under the 1996 Plan by
increasing the proprietary interests of such recipients in the Company's growth
and success, and (ii) to advance the interests of the Company by attracting and
retaining officers, other employees and non-employee directors. Upon adoption of
the 1996 Plan, it replaced both the Company's 1988 Non-Qualified Director Option
Plan and the Company's 1990 Qualified Incentive Stock Option Plan. Outstanding
options under both the 1988 Non-Qualified Director Option Plan and the 1990
Incentive Stock Option Plan remain valid although no new grants were permitted
under either plan after May 31, 1996.
Under the 1996 Plan, the Compensation Committee may establish vesting
criteria for the grant of options or other permitted awards under the 1996 Plan.
The Compensation Committee currently anticipates that the primary awards vehicle
under the plan will consist of non-qualified options, with vesting over a
four-year period from the date of grant so that 20% of the grant amount will
vest at grant and each of the four years thereafter. The exercise prices of such
non-qualified options are determined by the Closing price for the Company's
stock on the date of grant. Under the 1996 Plan, the Compensation Committee
currently anticipates that grants to executive officers will be in the amount of
3,500 option shares per year so that 700 shares will be vested as of the date of
each grant and an additional 700 shares of each grant will vest over each of the
following four years thereafter. In addition, the Compensation Committee
anticipates granting non-qualified options to certain key employees of the
Company, which grants will be in the amount of 500 shares, with 100 shares
vested upon each grant and 100 shares vesting in each of the following four
years following the date of such grant.
Under the 1996 Plan, on the last business day of May, commencing May 31,
1996 (or if later, on the date on which the person is first elected or begins to
serve as a non-employee director, other than by reason of termination of
employment) and, thereafter on the date of each annual meeting of shareholders
of the Company, each person who is a non-employee director after such meeting of
stockholders shall be granted a non-qualified option for 1,000 option shares of
the Common Stock of the Company. The option amount shall be prorated if such
non-employee director is first elected or begins to serve as a non-employee
director on a date other than the date of an annual meeting of stockholders.
Options granted to non-employee directors pursuant to the 1996 Plan will
immediately vest and will have a term of seven years for exercise.
During 1996, no awards of non-qualified option grants were made to the
executive officers of the Company under the 1996 Plan. On May 31, 1996, each of
the non-employee directors received a grant of non-qualified options, with an
exercise price of $17 per share. In June 1996, non-qualified options for 25,500
shares were issued to 51 key employees under the 1996 Plan. The option exercise
price of the non-qualified options granted to key employees was $16.50 per
share.
13
<PAGE>
MINIMUM STOCKHOLDING REQUIREMENT.
During 1996, the Compensation Committee, with the Board of Director's
approval, established a minimum stockholding requirements for Company stock
(exclusive of any unexercised option shares) in amounts equal to two times base
salary for the CEO, one-time base salary for the Executive Vice Presidents and
the President of the Company's then subsidiary, Harmon Electronics, Inc. and
one-half of base salary for all other members of the Executive Officer Group,
including Presidents of the other subsidiaries. For any person subject to the
minimum stockholding requirements who holds less than the minimum stockholding
requirement, the delinquency will result in up to one-third of that person's
annual cash bonus being utilized to purchase shares of the Company's stock in
the name of such individual. New officers will be given five years in which to
satisfy their minimum shareholding requirement before application of the bonus
withholding procedure.
Rodney L. Gray (Chair) Douglass Wm. List
Bruce M. Flohr Donald V. Rentz
PERFORMANCE GRAPH.
The Company has included in this proxy statement, a graph of five-year
shareholder returns on an indexed basis comparing the Company's common stock
performance to other broad market indices or an index of selected peer group
companies. The Board of Directors has approved a peer group of the Company and
ten other manufacturing and service companies in the railroad supply industry.
Revenues (on a 12-month trailing basis) for these companies range from $125.4
Million to $2,658.9 Million, as compared to $175.4 Million for the Company.
Total Assets for these companies range from $89.6 Million to $2,081.2 Million,
as compared to $94.7 Million for the Company. The peer group consists of the
following companies: Harsco Corporation; Trinity Industries, Inc.; The Timken
Companies; Morrison Knudsen Corporation; Varlen Corporation; Brenco,
Incorporated; L.B. Foster Company; Union Switch & Signal Corporation; ABC Rail
Products,Inc.; Wabash National Corporation and the Company. In addition, the
performance graph shows comparisons between the Company, the peer group and the
S&P Composite 500 Stock Index. Data points for the performance graph comparisons
are included in the Legend below. All indices have been weighted for market
capitalization. The following performance graph also sets forth the percentage
of cumulative total return for the last fiscal year and cumulative return since
January 1, 1991.
14
<PAGE>
TOTAL RETURN TO SHAREHOLDERS
Comparison of Five-Year Cumulative Total Return* Among the Company, Peer
Performance Group and S&P Composite 500 Index.
Comparison of 5 Year Cumulative Total Return
[CHART]
The reference points on the foregoing graph are as follows:
<TABLE>
<CAPTION>
DEC. 1991 DEC. 1992 DEC. 1993 DEC. 1994 DEC. 1995 DEC. 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Harmon Industries 100.00 234.10 448.80 383.50 312.80 373.20
Peer Group 100.00 128.78 174.54 171.52 184.24 216.14
S&P 500 100.00 107.70 118.20 119.80 164.80 203.20
</TABLE>
* Assumes that the value of the Company's common stock, Performance Peer Group
and S&P 500 Index were each $100 on December 31, 1991 and that all dividends
were reinvested.
DIRECTOR COMPENSATION
The Board of Directors' compensation package calls for annual fees of $8,000
plus travel expenses to and from the meetings for each director. Effective May
14, 1996, only non-employee directors are entitled to receive annual directors
fees. In addition, the directors who are not employees of the Company currently
receive $500 for each Board or separate committee meeting in which the director
participates by attending or through telephonic conference. In addition, each
chairperson of the respective committees of the Board of Directors currently
receives an annual payment of $500 for acting as chairperson of a committee. The
Director Nomination and Compensation Committee of the Board of Directors is
presently evaluating annual director's fees, as well as meeting fees and fees
for chair positions of the Board committees.
The package also grants each director an annual non-qualified option to
purchase 1,000 shares of the Company's Common Stock at a price equal to the
closing market price on the date of grant. The
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<PAGE>
non-qualified options are granted under and are governed by the Company's 1996
Long-Term Incentive Plan. These options are exercisable at any time during a
seven year period following the date of grant. On May 31, 1995, options for
2,000 shares were granted to each of the directors pursuant to the 1988 Director
Option Plan, which options expire May 31, 1997 and have an exercise price of
$17.75 per share. During 1996, none of these outstanding director options for
2,000 shares were exercised. On May 31, 1996, options for 1,000 shares were
granted to each of the Non-Employee Directors pursuant to the 1996 Long-Term
Incentive Plan. Such options have an exercise price of $17.00 per share, are
fully vested and are exercisable over a term of seven years. As of March 17,
1997, none of such options granted in 1996 have been exercised. See discussion
above under "Executive Compensation--Long-Term Incentive Plan" for a description
of the non-qualified LTIP options granted annually to the Non-Employee
Directors.
On December 8, 1994, the Board of Directors approved a compensation package
for Mr. Robert E. Harmon, in his capacity as Chairman of the Board effective
January 1, 1995. The Chairman of the Board is treated as a Non-Employee Director
for annual and director meeting fees. The defined duties of the Chairman include
the following: representing the Company at national trade association meetings;
assisting in lobbying efforts; assisting in overseas representation of the
Company; assisting the CEO in acquisitions; assisting in the development of
relationships with securities analysts and investors; assisting with sales and
promotional calls; providing advisory services to the CEO; and conducting all
Board meetings. The Chairman's annual fee, subject to review each year, was
approximately $79,332 for fiscal 1996 and will be $79,332 for fiscal 1997.
APPROVAL OF SELECTION OF AUDITORS
Management recommends voting to approve the selection of KPMG Peat Marwick
LLP, as Auditors for the Company for the 1997 fiscal year. This firm has served
continuously as Auditors for the Company since 1969.
A representative of KPMG Peat Marwick LLP will be present at the Annual
Meeting of Shareholders and will be available to make a statement, if he or she
desires to do so, and to answer appropriate questions asked by the shareholders.
SHAREHOLDER PROPOSALS-1998 MEETING
In the event any shareholder intends to present a proposal at the Annual
Meeting of Shareholders to be held in 1998, such proposal must be received by
the Company, in writing, on or before November 12, 1997, to be considered for
inclusion in the Company's next Proxy Statement. Shareholder proposals for
suggested nominees for director should be submitted to the Company's Director
Nomination and Compensation Committee on or before November 12, 1997.
OTHER MATTERS
Management is not aware of any other matters which may come before the
meeting. However, if any other matters properly come before the meeting, it is
the intention of the persons named in the accompanying form of proxy to vote the
proxy in accordance with their best judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
Robert E. Harmon
Chairman
April 1, 1997
16
<PAGE>
PROXY HARMON INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 13 1997
The undersigned holders of shares of Common Stock of Harmon Industries,
Inc. (the "Company") hereby appoint Robert E. Harmon and Charles M. Foudree,
and each of them, attorneys, agents and proxies of the undersigned with full
power of substitution and revocation to each of them, to vote all the shares
of Common Stock which the undersigned may be entitled to vote at the Annual
Meeting of Shareholders of the Company to be held at the Country Club of Blue
Springs, 1600 N. Circle Drive, Blue Springs, Missouri on Tuesday May 13,
1997, and at any adjournments of such meeting, with all powers which the
undersigned would possess if personally present.
1. Election of nine (9) Directors - Nominees: Bruce M. Flohr, Charles M.
Foudree, Rodney L. Gray, Robert E. Harmon, Herbert M. Kohn, Douglass
Wm. List, Gerald E. Myers, Bjorn E. Olsson, Judith C. Whittaker.
/ / FOR all Nomineees / / AUTHORITY WITHHELD from all Nominees
/ / FOR all Nominees, except vote(s) withheld for the following Nominee(s):
--------------------------------------------------------------------------
--------------------------------------------------------------------------
2. / / FOR / / AGAINST / / ABSTENTION Selection of KPMG Peat Marwick LLP
as auditors for the Company.
3. Upon such other business as may properly come before said meeting or any
adjournment or adjournments thereof.
(Please sign reverse side and return promptly)
<PAGE>
UNLESS OTHERWISE DIRECTED, THE MANAGEMENT PROXY COMMITTEE WILL VOTE FOR
THE ELECTION OF NINE (9) DIRECTORS AS LISTED IN THE PROXY STATEMENT AND FOR
THE SELECTION OF KPMG PEAT MARWICK LLP.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting and Proxy Statement of the Company dated April 1, 1997.
DATED_______________________________, 1997
__________________________________________
(Where stock is registered jointly in the
names of two or more persons, all should
sign. Signatures should correspond exactly
with the name or names on the stock
certificate. Executing partners, trustees,
guardians, etc., should so indicate when
signing.)
THIS PROXY IS SOLICITED BY THE
BOARD OF DIRECTORS
<PAGE>
INSTRUCTION CARD
HARMON INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 13 ,1997
INSTRUCTIONS TO: MERCANTILE INCORPORATION, INC., TRUSTEE OF THE HARMON
INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN AND
TRUST, FOR VOTING AT THE ANNUAL MEETING OF
SHAREHOLDERS OF HARMON INDUSTRIES, INC. ON MAY 13, 1997.
Please vote the shared held by you for my account as specified upon the
proposals listed below:
1. Election of (9) Directors - Nominees: Bruce M. Flohr, Charles M. Foudree,
Rodney L. Gray, Robert E. Harmon, Herbert M. Kohn, Douglass Wm. List,
Gerald E. Myers, Bjorn E. Olsson, Judith C. Whittaker.
/ / FOR all Nomineees / / AUTHORITY WITHHELD from all Nominees
/ / FOR all Nominees, except vote(s) withheld for the following Nominee(s):
--------------------------------------------------------------------------
--------------------------------------------------------------------------
2. / / FOR / / AGAINST / / ABSTENTION Selection of KPMG Peat Marwick LLP
as auditors for the Company.
3. Upon such other business as may properly come before said meeting or any
adjournment or adjournments thereof.
(Please signe reverse side and return promptly)
<PAGE>
UNLESS OTHERWISE DIRECTED, THE TRUSTEE WILL VOTE FOR THE ELECTION OF
NINE (9) DIRECTORS AS LISTED IN THE PROXY STATEMENT AND FOR THE SELECTION OF
KPMG PEAT MARWICK LLP.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting and Proxy Statement of the Company dated April 1, 1997
DATED_______________________________, 1997
__________________________________________
Participant's Signature
