<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
HUBBELL INCORPORATED
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
<PAGE> 2
[HUBBELL LOGO]
HUBBELL INCORPORATED
584 Derby Milford Road, Orange, Connecticut 06477-4024
- - --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 4, 1998
- - --------------------------------------------------------------------------------
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of
Hubbell Incorporated (the "Company") will be held at the Houndslake Country
Club, 1900 Houndslake Drive, Aiken, South Carolina 29803, on Monday, May 4, 1998
at 11:00 A.M. local time for the purpose of considering and acting upon the
following proposals:
1. Election of Directors of the Company for the ensuing year, to serve
until the next Annual Meeting of Shareholders of the Company and until
their respective successors may be elected and qualified.
The following persons have been designated by the Board of Directors
for nomination as Directors:
<TABLE>
<S> <C> <C>
E. Richard Brooks Malcolm Wallop Joel S. Hoffman
George W. Edwards, Jr. Daniel J. Meyer G. Jackson Ratcliffe
Andrew McNally IV Horace G. McDonell John A. Urquhart
</TABLE>
2. The ratification of the selection of independent accountants to
examine the annual financial statements for the Company for the year
1998.
3. An amendment to the Company's Restated Certificate of Incorporation
(the "Certificate") to permit the Company to engage in any lawful
business for which corporations may be formed under the laws of the
State of Connecticut.
4. An amendment to the Certificate to provide additional
indemnification to directors and officers of the Company and to permit
indemnification for employees and agents in certain circumstances.
5. Amendments to the Certificate to provide for various conforming
changes intended to update citations to the Connecticut General
Statutes, to provide flexibility with respect to locating the Company's
headquarters, and to ensure consistency of the language throughout the
Certificate.
6. A shareholder proposal on Board diversity.
<PAGE> 3
7. The transaction of such other business as may properly come before
the meeting and any adjournments thereof.
Accompanying this Notice of Annual Meeting is a form of proxy and a proxy
statement. Copies of the Company's Annual Report for the year ended December 31,
1997 have been mailed under separate cover to all shareholders.
- - --------------------------------------------------------------------------------
IMPORTANT: IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING.
THEREFORE, PLEASE FILL IN, DATE, AND SIGN THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE. NO STAMP IS NECESSARY IF MAILED IN THE UNITED
STATES.
- - --------------------------------------------------------------------------------
The Board of Directors has fixed the close of business on March 13, 1998 as
the record date for the determination of shareholders entitled to notice of and
to vote at such meeting and any adjournments thereof. The transfer books will
not be closed.
By order of the Board of Directors
RICHARD W. DAVIES
Vice President,
General Counsel and
Secretary
Dated: March 23, 1998
<PAGE> 4
HUBBELL INCORPORATED
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 4, 1998
------------------
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Hubbell Incorporated, a Connecticut corporation (the "Company"), to
be voted at its Annual Meeting of Shareholders to be held at the Houndslake
Country Club, 1900 Houndslake Drive, Aiken, South Carolina 29803, on Monday, May
4, 1998, and any adjournments thereof. Commencing on or about March 27, 1998,
copies of this Proxy Statement and the proxy form are being mailed to all
shareholders. Copies of the Company's Annual Report for 1997 have been mailed
under separate cover to all shareholders.
Any shareholder executing a proxy may revoke it at any time prior to its
use. The Company will treat any duly executed proxy as not revoked until it
receives a duly executed instrument revoking it, or a duly executed proxy
bearing a later date or, in the case of death or incapacity of the person
executing the same, written notice thereof. A proxy also may be revoked by
voting by ballot at the annual meeting.
VOTING RIGHTS AND SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The record date for the determination of shareholders entitled to vote at
the meeting is the close of business on March 13, 1998. On March 13, 1998, the
Company had outstanding 11,127,278 shares of Class A Common Stock, par value
$.01 per share, and 55,732,400 shares of Class B Common Stock, par value $.01
per share, and no other voting securities. Each share of Class A Common Stock is
entitled to twenty votes and each share of Class B Common Stock is entitled to
one vote. The vote required for each proposal to be acted upon at this meeting
is set forth in the description of that proposal.
The following table sets forth as of March 13, 1998, or such other date as
indicated in the table, each of the persons known to the Company to own
beneficially shares representing more than 5% of any class of the Company's
outstanding voting securities, with the percent of class stated therein being
based upon the outstanding shares on March 13, 1998.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL PERCENT
-------------- BENEFICIAL OWNER OWNERSHIP OF CLASS
<S> <C> <C> <C>
Class A Common Stock Andrew McNally IV, G. J. Ratcliffe, 2,734,240(1)(2)(4) 24.57%
and John A. Urquhart, as trustees
under a Trust Indenture dated
September 2, 1957 made by Louie E.
Roche (the "Roche Trust"), c/o
Hubbell Incorporated, 584 Derby
Milford Road, Orange, Connecticut
06477
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL PERCENT
-------------- BENEFICIAL OWNER OWNERSHIP OF CLASS
<S> <C> <C> <C>
Class A Common Stock Andrew McNally IV, G. J. Ratcliffe, 1,855,840(2)(3)(4) 16.68%
and John A. Urquhart, as trustees
under a Trust Indenture dated
August 23, 1957 made by Harvey
Hubbell (the "Hubbell Trust"), c/o
Hubbell Incorporated, 584 Derby
Milford Road, Orange, Connecticut
06477
Class B Common Stock Trustees of General Electric Pension 4,179,375(5) 7.50
Trust, General Electric Investment
Corporation and GE Investment
Management Incorporated
(collectively), 3003 Summer
Street, P.O. Box 7900,
Stamford, Connecticut 06904
Class B Common Stock T. Rowe Price Associates, Inc., 3,144,225(6) 5.64
100 E. Pratt Street,
Baltimore, Maryland 21202
</TABLE>
- - ---------------
(1) The beneficiaries of such trust are the issue of Harvey Hubbell and
their spouses.
(2) The Trust Indenture requires that, so long as no bank or trust company
is acting as a trustee, there shall be three individuals acting as trustees,
each of whom, so long as any securities of the Company are held by the trust,
must be an officer or Director of the Company. The Trust Indenture provides that
successor trustees are to be appointed by the trustees then in office. The
trustees have shared voting and investment power with respect to the securities
of the Company held in such trust.
(3) The beneficiaries of such trust are Virginia H. Leighton during her
life and thereafter the issue of Harvey Hubbell.
(4) In addition, Messrs. McNally, Ratcliffe, and Urquhart beneficially own
shares of the Company's Common Stock. Mr. Ratcliffe holds unexercised options
for the purchase of the Company's Class B Common Stock and is a Trustee of the
Harvey Hubbell Foundation which owns 106,304 shares of Class A Common Stock and
29,358 shares of Class B Common Stock. (See "Election of Directors" and table
captioned "Aggregated Options/SAR Exercises During 1997 Fiscal Year and Fiscal
Year-End Option/SAR Values".)
(5) The Company has received a copy of Schedule 13G as filed with the
Securities and Exchange Commission ("SEC") by the Trustees of General Electric
Pension Trust, General Electric Investment Corporation and GE Investment
Management Incorporated reporting ownership of these shares as of December 31,
1997. As reported in said Schedule 13G, the Trustees of General Electric Pension
Trust have shared voting and dispositive power for 1,872,556 of such shares,
General Electric Investment Corporation has sole voting and dispositive power
for 1,439,320 of such shares and shared voting and dispositive power for
1,872,556 of such shares, and GE Investment Management Incorporated has sole
voting and dispositive power for 867,499 of such shares.
2
<PAGE> 6
(6) The Company has received a copy of Schedule 13G as filed with the SEC
by T. Rowe Price Associates, Inc. ("Price Associates") reporting ownership of
these shares as of December 31, 1997. As reported in said Schedule 13G, Price
Associates has sole voting power for 534,913 of such shares and sole dispositive
power for 3,141,625 of such shares.
------------------
3
<PAGE> 7
The following table sets forth as of March 13, 1998, the equity securities
of the Company beneficially owned by each of the Directors and named executive
officers of the Company, and by all Directors and executive officers of the
Company as a group (14 persons):
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME TITLE OF CLASS OWNERSHIP(1)(2) CLASS
<S> <C> <C> <C>
E. Richard Brooks.................... Class A Common 600 0.01%
George W. Edwards, Jr. .............. Class A Common 1,000 0.01
Class B Common 156 --
Joel S. Hoffman...................... Class A Common 2,574 0.02
Class B Common 469 --
Horace G. McDonell................... Class A Common 1,000 0.01
Class B Common 272 --
Andrew McNally IV.................... Class A Common 4,590,080(3) 41.25
Class B Common 8,512 0.02
Daniel J. Meyer...................... Class B Common 726 --
G. Jackson Ratcliffe................. Class A Common 4,820,672(3)(4) 43.32
Class B Common 469,267(5) 0.84
John A. Urquhart..................... Class A Common 4,590,080(3) 41.25
Class B Common 3,226 0.01
Malcolm Wallop....................... Class B Common 100 --
Vincent R. Petrecca.................. Class A Common 95,476 0.86
Class B Common 273,732 0.49
Harry B. Rowell, Jr. ................ Class A Common 168,911(4) 1.52
Class B Common 287,903(5) 0.52
Thomas H. Pluff...................... Class A Common 1,735 0.02
Class B Common 75,837 0.14
Richard W. Davies.................... Class A Common 130,698(4) 1.17
Class B Common 101,191(5) 0.18
All Directors and executive officers
as a group......................... Class A Common 5,025,243(3)(4) 45.16
Class B Common 1,222,094(5) 2.19
</TABLE>
- - ---------------
(1) The figures in the table and notes thereto represent beneficial ownership
and sole voting and investment power except where indicated and include the
following shares obtainable within sixty days of March 13, 1998 by the
exercise of stock options pursuant to the Company's 1973 Stock Option Plan
for Key Employees (the "1973 Plan"): Mr. Ratcliffe -- 264,197 shares of
Class B Common, Mr. Petrecca -- 20,000 shares of Class A Common and 207,865
shares of Class B Common, Mr. Rowell -- 20,000 shares of Class A Common and
207,865 shares of Class B Common, Mr. Pluff -- 65,897 shares of Class B
Common, and Mr. Davies -- 48,110 shares of Class B Common; and all executive
officers as a group -- 46,000 shares of Class A Common Stock and 848,165
shares of Class B Common Stock.
4
<PAGE> 8
(2) Does not include share units (representing shares of Class A Common Stock
and Class B Common Stock) credited to and held under the Company's deferred
compensation program for Directors who are not employees of the Company, as
discussed below under "Compensation of Directors". As of March 13, 1998, the
following have been credited under the deferred compensation program: Mr.
Brooks -- 1,375 shares each of Class A and Class B Common Stock; Mr.
Edwards -- 4,327 shares each of Class A and Class B Common Stock; Mr.
Hoffman -- 6,642 shares each of Class A and Class B Common Stock; Mr.
McDonell -- 10,271 shares each of Class A and Class B Common Stock; Mr.
McNally -- 16,863 shares each of Class A and Class B Common Stock; Mr.
Meyer -- 3,568 shares each of Class A and Class B Common Stock; Mr.
Urquhart -- 570 shares each of Class A and Class B Common Stock; and Mr.
Wallop -- 334 shares each of Class A and Class B Common Stock.
(3) Includes 2,734,240 shares of Class A Common Stock owned by the Roche Trust
of which Messrs. McNally, Ratcliffe, and Urquhart are co-trustees and have
shared voting and investment power; and 1,855,840 shares of Class A Common
Stock owned by the Hubbell Trust of which Messrs. McNally, Ratcliffe, and
Urquhart are co-trustees and have shared voting and investment power.
(4) Includes 106,304 shares of Class A Common Stock held by the Harvey Hubbell
Foundation of which Messrs. Ratcliffe, Rowell and Davies are co-trustees and
have shared voting and investment power.
(5) Includes 29,358 shares of Class B Common Stock held by the Harvey Hubbell
Foundation of which Messrs. Ratcliffe, Rowell and Davies are co-trustees and
have shared voting and investment power.
ELECTION OF DIRECTORS
The Company's By-Laws provide that the Board of Directors shall consist of
not less than three nor more than eleven Directors who shall be elected annually
by the shareholders. The Board has fixed the number of Directors at nine, and
the following persons are proposed as Directors of the Company to hold office
until the next Annual Meeting of Shareholders and until their respective
successors have been duly elected and qualified. In the event that any of the
nominees for Directors should become unavailable, it is intended that the shares
represented by the proxies will be voted for such substitute nominees as may be
nominated by the Board of Directors, unless the number of Directors constituting
a full Board of Directors is reduced. Directors are elected by plurality vote.
Abstentions and broker non-votes will not be counted for the purposes of the
election of Directors.
<TABLE>
<CAPTION>
YEAR FIRST
AGE(1) PRINCIPAL OCCUPATION BECAME A
NAME ------ -------------------- DIRECTOR
<S> <C> <C> <C>
G. Jackson Ratcliffe........... 61 Chairman of the Board, President and Chief 1980
Executive Officer of the Company. Director of
Aquarion Company, Praxair, Inc. and Olin
Corporation.
E. Richard Brooks.............. 60 Chairman, President and Chief Executive 1993
Officer of Central and South West Corporation
(utility holding company).
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
YEAR FIRST
AGE(1) PRINCIPAL OCCUPATION BECAME A
NAME ------ -------------------- DIRECTOR
<S> <C> <C> <C>
George W. Edwards, Jr. ........ 58 Retired President and Chief Executive Officer 1990
of The Kansas City Southern Railway Company
(railroad). Chairman of the Board and a
Director of El Paso Electric Company and
Aquarion Company.
Joel S. Hoffman................ 59 Partner of Simpson Thacher and Bartlett, a New 1989
York City law firm.
Horace G. McDonell............. 69 Retired Chairman and Chief Executive Officer 1985
of The Perkin-Elmer Corporation (manufacturer
of diverse high technology products).
Director of Ethan Allen Inc.
Andrew McNally IV.............. 58 Retired Chairman and Chief Executive Officer 1980
of Rand McNally & Company (printing,
publishing and map-making). Director of Borg
Warner Security Corp., Mercury Finance,
Morgan Stanley Funds, and Zenith Electronics
Corp.
Daniel J. Meyer................ 61 Chairman of the Board, President and Chief 1989
Executive Officer of Cincinnati Milacron Inc.
(factory automation for metal working and
plastics processing). Director of Star Banc
Corporation and The E. W. Scripps Company.
John A. Urquhart............... 69 President of John A. Urquhart Associates 1991
(management consultant) and Vice Chairman and
a Director of Enron Corp. (natural gas
pipeline system). Director of Teco Energy,
Incorporated, a public utility holding
company, and its subsidiary, Tampa Electric
Company, Aquarion Company, The Weir Group
plc., Catalytica, Inc., and its subsidiary,
Catalytica Combustion Systems, Inc.
Malcolm Wallop................. 65 Chairman and President of Frontiers of Freedom 1995
Institute (non-profit foundation). Director
of El Paso Natural Gas Company.
</TABLE>
- - ---------------
(1) As of March 13, 1998.
Each of the individuals was elected as a Director by the shareholders of
the Company.
During the five years ended December 31, 1997, Messrs. Brooks, Hoffman,
Edwards, McDonell, McNally, Meyer, Ratcliffe and Urquhart have either been
retired or held the principal occupation set forth above opposite their names.
6
<PAGE> 10
Mr. Wallop has served as President of Frontiers of Freedom Foundation since
January 2, 1995. From 1976 until his retirement on January 1, 1995, he served as
a United States Senator from the State of Wyoming.
Messrs. Brooks, Hoffman, McDonell, Meyer, and Wallop serve as members of
the Audit Committee, with Mr. McDonell as Chairman. The Audit Committee, which
consists of Directors who are not employees of the Company, met two times in
1997. The Audit Committee recommends to the Board of Directors of the Company
the appointment of independent accountants to serve as auditors for the
following year, subject to ratification by the shareholders at the Annual
Meeting; meets periodically with the independent accountants, internal auditors,
and appropriate personnel responsible for the management of the Company and
subsidiary companies concerning the adequacy of internal controls and the
objectivity of the financial reporting of the Company; and reviews and approves
the scope of the audit and fees for audit and non-audit services performed by
the independent accountants. The independent accountants and the Company's
internal auditors each meet alone with the Audit Committee and have access at
any time to the Audit Committee.
Messrs. Edwards, Hoffman, McDonell, and Ratcliffe serve as members of the
Executive Committee, with Mr. Ratcliffe as Chairman. The Executive Committee,
which did not meet in 1997, exercises, during the intervals between the meetings
of the Board of Directors, all the powers of the Board of Directors in the
management of the business, properties and affairs of the Company, except
certain powers enumerated in the By-Laws of the Company.
Messrs. Edwards, McDonell, McNally, and Urquhart serve as members of the
Compensation Committee, with Mr. Edwards as Chairman. The Compensation
Committee, which met two times in 1997, is charged with the duties of
recommending to the Board of Directors the remuneration (salary plus additional
compensation and benefits) of the Chief Executive Officer and, after
consultation with him, the remuneration of all other corporate officers;
reviewing the remuneration for senior executives; approving stock option grants;
recommending (for approval) to the Board of Directors pension changes, and other
significant benefits or perquisites; reviewing the existing senior executive
resources of the Company and the plans for the development of qualified
candidates, and reporting to the Board of Directors annually; recommending to
the Board of Directors (for approval) changes proposed by the Chief Executive
Officer pertaining to organization structure or appointment of the Company's
officers; and conducting annually with the Chief Executive Officer an appraisal
of the performance of the Chief Executive Officer and reviewing the latter's
appraisal of the performance of the other members of the Company's key
management group.
Messrs. Brooks, McNally, Meyer, Ratcliffe, Urquhart, and Wallop serve as
members of the Finance Committee, with Mr. McNally as Chairman. The Finance
Committee, which met two times in 1997, recommends to the Board of Directors of
the Company proposals concerning long and short-term financing, material
divestments and acquisitions, cash and stock dividend policies, programs to
repurchase the Company's stock, stock splits, and other proposed changes in the
Company's capital structure; periodically reviews the Company's capital
expenditure policy and recommends changes to the Board of Directors, where
appropriate, and, when requested by the Board of Directors, reviews and makes
recommendations to the Board of Directors with respect to proposals concerning
major capital expenditures and leasing arrangements; reviews annually the
Company's insurance programs and their adequacy to protect against major losses
and liabilities; reviews and monitors the administration and asset management of
the Company's employee benefit plans, including the selection of investment and
other advisors, the allocation of assets between fixed income and
7
<PAGE> 11
equity, and the performance of plan investment managers; and reviews and
monitors the administration of the Company's cash and investment portfolios,
including the Company's investment guideline policies.
The Board of Directors does not have a nominating committee. This function
is performed by the Board of Directors as a whole. The Company's By-Laws contain
time limitations, procedures and requirements relating to shareholder
nominations of Directors. Any shareholder who intends to bring before the annual
meeting of shareholders any nomination for Director shall deliver not less than
fifty days prior to the date of the meeting written notice to the Secretary of
the Company setting forth specified information with respect to the shareholder
and additional information as would be required under SEC regulations for a
proxy statement used to solicit proxies for such nominee.
Five meetings of the Board of Directors of the Company were held during the
year ended December 31, 1997.
8
<PAGE> 12
EXECUTIVE COMPENSATION
CASH AND OTHER FORMS OF COMPENSATION
The following table sets forth the aggregate cash and other compensation
paid or accrued by the Company for services rendered in all capacities to the
Company and its subsidiaries to the Company's Chief Executive Officer and the
four other most highly compensated executive officers of the Company for the
three fiscal years ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG
TERM
COMPEN-
ANNUAL COMPENSATION SATION
----------------------------- -----------
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
COMPEN- OPTIONS/ COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) SATION SARS(2) SATION(3)
--------------------------- ---- ------ -------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
G.J. Ratcliffe..................... 1997 $650,000 $780,000 $17,201 120,000 $54,140
Chairman of the Board, President 1996 600,000 700,000 18,360 100,000 45,550
and Chief Executive Officer 1995 500,000 550,000 4,297 100,000 43,850
V. R. Petrecca..................... 1997 318,240 353,000 7,750 40,000 4,140
Executive Vice President 1996 306,000 336,000 5,455 40,000 3,450
1995 293,830 280,000 335 40,000 3,450
H. B. Rowell....................... 1997 312,000 370,000 9,788 50,000 4,140
Executive Vice President 1996 300,000 336,000 7,258 40,000 3,450
1995 287,410 270,000 1,805 40,000 3,450
T. H. Pluff........................ 1997 242,200 125,000 4,496 18,000 4,140
Group Vice President 1996 232,900 120,000 3,928 16,000 3,450
1995 223,910 100,000 3,655 16,000 3,450
R. W. Davies....................... 1997 208,000 95,000 5,857 12,000 4,140
Vice President, General Counsel 1996 200,000 90,000 5,927 12,000 3,450
and Secretary 1995 183,790 75,000 3,927 12,000 3,450
</TABLE>
- - ---------------
(1) Reflects bonus earned during fiscal year under the Company's incentive
compensation plans.
(2) Class B Common Stock; option grants for 1995 adjusted to reflect the 2-for-1
stock split in the form of a 100% stock dividend paid on August 9, 1996.
(3) Includes (a) premiums under the Company's supplemental medical plan which
provides for reimbursement of certain medical expenses not covered by the
Company's group insurance policy and (b) Director and Board committee fees
for Mr. Ratcliffe of $50,000 in 1997, $42,100 in 1996 and $40,400 in 1995.
9
<PAGE> 13
OPTIONS/SAR GRANTS DURING 1997 FISCAL YEAR
The following table provides information on option grants in fiscal 1997 to
the named executive officers of the Company.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------------- VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL
SECURITIES TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS/SARS EXERCISE APPRECIATION FOR
OPTIONS/ GRANTED TO OR BASE OPTION TERM
SARS EMPLOYEES PRICE EXPIRATION -----------------------
NAME GRANTED(1) IN FISCAL YEAR ($/SHARE) DATE 5%(2) 10%(2)
---- ---------- -------------- --------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
G. J. Ratcliffe..... 120,000 12.7% $47.125 12/08/07 $3,562,650 $8,991,450
V. R. Petrecca...... 40,000 4.2 47.125 12/08/07 1,187,550 2,997,150
H. B. Rowell........ 50,000 5.3 47.125 12/08/07 1,484,438 3,746,438
T. H. Pluff......... 18,000 1.9 47.125 12/08/07 534,398 1,348,718
R. W. Davies........ 12,000 1.3 47.125 12/08/07 356,265 899,145
</TABLE>
- - ---------------
(1) Non-qualified options to acquire shares of Class B Common Stock of the
Company were granted on December 9, 1997 at 100% of the fair market value of
the Class B Common Stock on the date of grant. No portion of the option is
exercisable before the third anniversary of the date of grant; on the third
anniversary of the date of grant the option becomes fully exercisable. The
exercise price of an option may be paid in cash or in shares of either the
Company's Class A Common Stock or Class B Common Stock, or a combination
thereof. The 1973 Plan provides for the acceleration of all options (other
than incentive stock options granted on or after January 1, 1987) in the
event of a "Change of Control" as defined in the 1973 Plan. In the event of
a Change of Control, participants who are officers, and other participants
who are designated by the Compensation Committee, would have the right to
surrender their then exercisable options, including those accelerated within
the thirty-day period following the Change of Control and to receive in cash
the amount by which the highest closing price within the sixty days
preceding the Change of Control of the common stock underlying the option
exceeds the option price for such common stock.
(2) The potential realizable value illustrates value that might be realized upon
exercise of the options immediately prior to the expiration of their
ten-year term, assuming the specified compounded rates of appreciation on
the Company's Class B Common Stock over the term of the options. These
numbers do not take into account provisions of the options providing for
cancellation of the option following termination of employment,
nontransferability, or the vesting provisions described in footnote (1)
above.
10
<PAGE> 14
AGGREGATED OPTIONS/SAR EXERCISES DURING 1997 FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information on stock option exercises in
fiscal 1997 by the named executive officers of the Company and the value of such
officers' unexercised stock options at December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
SHARES FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
G. J. Ratcliffe........... 0 $ -- 360,667 253,333 $8,000,782 $1,599,928
V. R. Petrecca............ 21,524(2) 721,466 266,154 93,333 6,894,129 622,468
H. B. Rowell.............. 0 -- 227,865 103,333 5,606,028 644,343
T. H. Pluff............... 17,100(3) 480,508 65,897 39,333 1,503,744 253,359
R. W. Davies.............. 30,529(4) 801,255 48,110 28,000 1,096,952 186,742
</TABLE>
- - ---------------
(1) Limited to in-the-money stock options.
(2) 8,000 shares Class A Common and 13,524 shares Class B Common Stock.
(3) 4,000 shares Class A Common and 13,100 shares Class B Common Stock.
(4) 17,000 shares Class A Common and 13,529 shares Class B Common Stock.
PENSION PLANS
The Company has in effect a non-contributory defined benefit retirement
plan for salaried employees ("Basic Plan") and a supplemental executive
retirement plan ("SERP") which is an unfunded plan. Pension benefits are earned
under both the Basic Plan and the SERP. The annual benefits under the Basic Plan
are calculated as 1.50% of final compensation per year of total Company service,
which includes both basic compensation and bonuses, reduced by 1.50% of primary
social security benefit per year of service. SERP benefits are calculated as 6%
of final total compensation (basic compensation and bonuses as reflected in the
Salary and Bonus columns under the Summary Compensation Table on page 9 hereof)
per year of SERP service up to a maximum of 60%, offset by benefits payable
under the Basic Plan. No SERP benefit is payable if a participant terminates
employment prior to age 55 with less than 10 years of SERP service. The
following table illustrates annual pension benefits pursuant to the SERP (which
is greater in each instance than benefits payable under the Basic Plan) under
the joint and survivor annuity form upon retirement at age 65 to executive
officers in the specified salary classifications:
<TABLE>
<CAPTION>
TOTAL PENSION (ON 3 HIGHEST IN LAST 10 YEARS)
- - --------------------------------------------- ANNUAL BENEFIT FOR YEARS OF SERVICE INDICATED(1)(2)
AVERAGE ANNUAL -----------------------------------------------------
COMPENSATION 5 YRS. 10 YRS. 15 YRS. 20 YRS.
-------------- ------ ------- ------- -------
<S> <C> <C> <C> <C>
$ 200,000 $ 60,000 $120,000 $120,000 $120,000
400,000 120,000 240,000 240,000 240,000
600,000 180,000 360,000 360,000 360,000
800,000 240,000 480,000 480,000 480,000
1,000,000 300,000 600,000 600,000 600,000
1,200,000 360,000 720,000 720,000 720,000
1,400,000 420,000 840,000 840,000 840,000
</TABLE>
11
<PAGE> 15
- - ---------------
(1) The estimated annual benefits are based upon the assumptions that the
individual will remain in the employ of the Company until age 65 and that
the plans will continue in their present form.
(2) Years of SERP Service at December 31, 1997:
<TABLE>
<CAPTION>
OFFICER SERVICE
------- -------
<S> <C>
Mr. Ratcliffe................................ 23
Mr. Petrecca................................. 13
Mr. Rowell................................... 18
Mr. Pluff.................................... 8
Mr. Davies................................... 15
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The total direct compensation package for the Company's executives is made
up of three elements: base salary, a short-term incentive program in the form of
a discretionary, performance-based bonus, and long-term incentive programs in
the form of (i) stock options and (ii) performance units.
Total direct compensation for the Chief Executive Officer and the four
highest paid executive officers is based on the performance of the Company. The
Compensation Committee also reviews compensation data provided by outside
consultants. This data is provided for each element of the total direct
compensation package for comparable positions within (i) companies in our
industry of similar size, and (ii) superior performing companies in general
industry of comparable size and complexity.
The Compensation Committee believes that the companies in our industry of
similar size, provides limited comparison data and the use of a broader
database, including companies from general industry, ensure more accurate
comparisons and results.
Base salaries are determined by competitive data and individual levels of
responsibility. Target levels for bonuses, stock options, and performance units
for each executive position are determined by competitive data; however, actual
bonuses paid and the number of stock options and performance units granted each
executive are based upon the achievement of Company financial plan goals which
include factors such as net sales, net income, and earnings per share.
In the past few years, the Company has adopted a more aggressive
incentive-pay-for-performance posture. During this period, the competitive
position, or emphasis, on base salaries has been lowered. Bonus and stock option
opportunities thereby represent a greater portion in the total direct
compensation package, enhancing the Company's goal of linking pay more directly
to financial performance.
While these comments are directed towards compensation for the Chief
Executive Officer and the four highest paid executive officers, the Compensation
Committee employs similar procedures to determine the compensation levels of
other executives as well.
12
<PAGE> 16
BASE SALARY
The Company defines its market competitive position for base salaries as
the 50th percentile. This represents a change over the years from a market
competitive position of the 60th percentile for base salaries. To determine the
salary for the Chief Executive Officer and the four highest paid executive
officers, the Compensation Committee reviewed projected 1998 salary data for
companies within our industry and superior performing companies of comparable
size and complexity. Based upon this data, base salaries were established to
approximate the 50th percentile for comparable positions in companies both
within our industry and superior performing companies from general industry.
BONUS
Bonuses are paid pursuant to the Company's short-term incentive
compensation and senior executive compensation plans. Under the incentive
compensation plan, 5% of the amount by which the Company's consolidated
earnings, as defined in the incentive compensation plan, for each fiscal year
exceeds 10% of the invested capital and long-term debt at the beginning of such
fiscal year is allocated to a bonus pool to be paid out to participating
employees, including the executive officers. Awards in varying amounts may be
made from the pool at the discretion of the Compensation Committee. Under the
senior executive plan, awards may be made based on performance goals including a
percentage of the bonus pool described above. Awards under the senior executive
plan may only be reduced by the Compensation Committee.
To establish target levels for executive officers' bonus awards, the
Compensation Committee uses data provided by outside consultants for comparable
positions at companies within our industry and companies from general industry
with comparable performance characteristics such as return on net sales and
return on equity.
In determining the 1997 bonus award for each executive officer, the
Compensation Committee's primary focus was the review of the 1997 business plan
(excluding the possibility of the effects of a corporate restructuring and any
associated charges) with regard to net sales, pre-tax profit, and earnings per
share, compared to actual results. The Compensation Committee recognized the
success the Company has had in achieving non-financial goals in the Company's
acquisition and restructuring programs, and in making strategic plan decisions,
which are expected to result in long-term growth and benefit the shareholders.
As noted, however, the Compensation Committee gave greater consideration to
short-term results, recognizing the Company had a strong business year in 1997
in net sales, pre-tax profit, and earnings per share, in each case exceeding
plan targets. As a result, the 1997 bonuses of the executive officers, including
the Chief Executive Officer, have increased over the prior year.
For 1997, the Compensation Committee had designated Mr. Ratcliffe as the
sole participant in the senior executive plan and established his objective
performance goal by designating a percentage of the incentive compensation plan
pool be paid to Mr. Ratcliffe. The Compensation Committee exercised its
discretion pursuant to the senior executive plan to award Mr. Ratcliffe a bonus
of $780,000 which represents an increase over the prior year, recognizing the
financial and non-financial goals achieved by the Company in 1997.
13
<PAGE> 17
STOCK OPTIONS
The Compensation Committee believes that the holding of Company stock
represents a unity of interest between executives and shareholders. In
determining target levels for stock option grants for each senior executive, the
Compensation Committee reviews data provided by an outside consultant. The data
provided is on comparable position pay levels at companies of comparable size in
financial performance and complexity. The actual number of stock option grants
for each executive officer is based upon the financial performance of the
Company, both in the short- and long-term. The Compensation Committee reviewed
1997 net sales, pre-tax profit and earnings per share. The Compensation
Committee also reviewed long-term strategic plans which will position the
Company for greater growth. In determining awards of stock option grants, the
Compensation Committee does not consider the executive officer's unexercised
stock option grants.
In considering levels of stock option grants for the five highest paid
executive officers, the primary focus was to link the executives' long-term
compensation to the success of the Company's long-term strategic plans. The
Compensation Committee recognized that the Company has been successful in
positioning itself for long-term growth which will benefit shareholders. The
Compensation Committee also recognized that certain strategic plan decisions
previously made have had a positive impact on 1997 financial performance in the
areas of net sales, pre-tax profit and earnings per share. As a result, the
number of shares awarded under the 1997 stock option grants to certain of the
executive officers increased over the prior year's level.
PERFORMANCE UNITS
This long-term incentive program is designed to link the common interests
of the Company's executives and shareholders in maximizing long-term shareholder
value. The performance units, which were awarded in December, 1996 in the
Company's Class B Common Stock, are based on earnings per share growth over the
three-year period commencing January 1, 1997 and ending December 31, 1999.
Participants may receive from 0 to 200 percent of the December, 1996 award grant
depending upon whether the average annual compounded earnings per share growth
is (a) below the 10% mark (no award), (b) 10% to 12.4% (100% of award), (c)
12.5% to 14.9% (150% of award), and (d) 15% and above (200% of award). The
performance unit awards were based upon the actual bonuses paid to the
participants for the year 1996 under the Company's incentive compensation and
senior executive incentive compensation plans, and converted into Class B Common
Stock performance units utilizing the conversion formula in the performance
plan.
GENERAL MATTERS
Code Section 162(m) limits to $1 million annually the amount that can be
deducted by a publicly held corporation for compensation paid to any of its top
five executives (as indicated in the Summary Compensation Table for that year),
unless the compensation in excess of $1 million is performance based or meets
certain other conditions. The Company has qualified the 1973 Plan as a
performance based plan with respect to grants of options made at fair market
value, and adopted the (1) senior executive incentive compensation plan and (2)
performance unit plan, payments under which are intended to qualify as
performance based compensation, but decided not to amend the Company's incentive
compensation plan.
14
<PAGE> 18
The Compensation Committee believes that the total direct compensation
package consisting of base salary, bonus, stock options and performance units,
is appropriate for the Company's executive officers and other executives, on the
basis of competitive practice, along with the Company's performance against
established short- and long-term financial performance goals.
Compensation Committee
George W. Edwards, Jr.,
Chairman
Horace G. McDonell
Andrew McNally IV
John A. Urquhart
CORPORATE PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Company's Class B Common Stock during the five fiscal years ended December 31,
1997 with a cumulative total return on the (i) Standard & Poor's 500 Composite
Stock Index ("S&P 500"), (ii) Standard & Poor's Electrical Equipment Index ("S&P
Electrical"), (iii) Standard & Poor's MidCap 400 ("S&P MidCap"), and (iv)
Hubbell Self-Constructed Peer Group Index ("HI Peer Group"). The S&P MidCap and
HI Peer Group will replace the S&P 500 and S&P Electrical, respectively, in the
performance graph in future proxy statements. The comparison assumes $100 was
invested on January 1, 1993 in the Company's Class B Common Stock and in each of
the foregoing indices and assumes reinvestment of dividends.
The S&P 500 and the S&P Electrical have been used as comparisons to the
Company's performance since the performance graph was first introduced in 1993.
The S&P 500 was originally selected because it was a published broad equity
market index used by many corporations as a comparator. However, the S&P 500
includes not only industrial corporations, but also includes financial
institutions, utilities, and transportations, a multitude of organizations many
of which have no relationship to the Company's businesses. Further, the Company
is not listed in the S&P 500. The S&P MidCap, consisting only of industrial
corporations including the Company, serves as a more valid base for comparing
total return to shareholders. The S&P Electrical was originally selected because
it was a published industry index that represented a reasonable peer group.
However, General Electric Company, currently weighted at over 70% of the total,
dominates this index, and most of its businesses, which include financial
services, materials, plastics, aircraft engines, major appliances and television
broadcasting, are significantly different from the Company's business segments.
The HI Peer Group consists of corporations whose businesses are more
representative of the Company's business segments and, therefore, serves as a
more valid base for comparing total return to shareholders. The corporations in
the HI Peer Group are: (a) AMP Incorporated, (b) Cooper Industries, Inc., (c)
Emerson Electric Co., (d) General Signal Corporation, and (e) Thomas & Betts
Corporation. The HI Peer Group has been weighted in accordance with each
corporation's market capitalization (closing stock price multiplied by the
number of shares outstanding) as of the beginning of each of the five years
covered by the performance graph. The weighted return for each year was
calculated by assuming the products obtained by multiplying (a) the percentage
that each corporation's market capitalization represents of the total market
capitalization for all corporations in the index for each such year by (b) the
total shareholder return for that corporation for such year.
15
<PAGE> 19
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG HUBBELL, S&P 500 COMPOSITE, S&P ELECTRICAL EQUIPMENT,
S&P MIDCAP 400 AND HI PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT
PERIOD
(FISCAL YEAR
COVERED) 100 100 100 100 100
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993 100 110 121 114 110
1994 102 111 122 110 113
1995 136 153 171 131 137
1996 184 188 232 173 160
1997 215 251 326 228 186
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has agreed to employ Mr. Ratcliffe for a three-year period and
Messrs. V.R. Petrecca and H.B. Rowell, Jr., for a two-year period at the
respective salaries (effective January 1, 1998) of $700,000, $330,000 and
$330,000 per annum. The Agreements are automatically extended on a daily basis
until notice of termination is given. The Company may increase their salary and
grant them bonuses (which they presently receive by participation in the
Company's incentive compensation plans described above). If their employment is
terminated (other than for cause), or if the Executive terminates his employment
for any of the reasons below, he is entitled to receive the present value
(discounted at 120% of the short term federal rate) of the amounts which would
be received over the remainder of the term of the Agreement if he received
during that period an annual amount equal to the sum of (i) his current base
salary and (ii) the average of the most recent bonuses that he received for the
three prior fiscal years of the Company. The reasons for which the Executive may
terminate his employment include: diminution in his authority (Mr. Ratcliffe),
reduction in his compensation level or failure to increase his compensation
commensurate with other senior executive officers, relocation or adverse
modification of his benefits under bonus, benefit or other similar plans or of
16
<PAGE> 20
fringe benefits. In the event of his disability or death during the term of the
Agreement he or his estate will be entitled to his per annum base salary for the
remainder of the term of the Agreement less certain offsets. In addition, in the
event of the Executive's discharge other than for cause or, if the Executive
terminates his employment for any of the reasons described above, Executive
would be entitled for the remainder of the employment term to (i) various
medical and health plans, (ii) death and accidental death benefits, (iii)
office, secretarial and other benefits afforded to senior executives and (iv)
continued participation in the SERP.
SEVERANCE POLICY AND CHANGE OF CONTROL PROVISIONS
The Company has a severance policy which covers corporate officers (other
than Messrs. Ratcliffe, Petrecca and Rowell) and other individuals. The policy
provides that if an eligible individual's employment is terminated (other than
for cause), or if the eligible individual terminates his employment for any of
the reasons noted below within three years after the occurrence of certain
"Change of Control" events, he is entitled to receive the present value
(discounted at 120% of the short term federal rate) of the severance amounts
provided under the policy. The formula in the case of corporate officers is
based upon eight weeks of base salary continuation for each full year of
service, subject to a minimum of 26 weeks and a maximum of 104 weeks, with the
formula amount reduced to 67% and 33% thereof, respectively, if termination
occurs in the second and third year following the Change of Control event. In
addition, upon such termination of employment, the eligible individual would be
entitled to (a) a bonus of no less than his target bonus for the year in which
the Change of Control occurs, pro rated for the number of months to such
termination, and (b) for the period the base salary would have been continued
even though paid as a lump sum (i) various medical and health plans, and (ii)
death and accidental death benefits. The reasons for which the eligible
individual may terminate his employment include: diminution in his authority,
reduction in his compensation level, relocation or adverse modification of his
benefits under bonus, benefit or similar plans.
The Company's 1973 Plan provides for the acceleration of all options (other
than incentive stock options granted on or after January 1, 1987) in the event
of a "Change of Control" as defined in the 1973 Plan. (See footnote (1) to the
table captioned "Options/SAR Grants During 1997 Fiscal Year.") The performance
plan provides for immediate vesting of the number of shares of Class B Common
Stock payable in respect of a performance unit award in the event a "Change of
Control" (as defined in the performance plan) occurs. The number of shares
vested shall be equal to the number of shares represented by the award
determined as if a compound growth rate had been achieved for the entire
three-year performance period equal to the actual compound growth rate for such
portion of the performance period prior to the date of the Change of Control
multiplied by a fraction, the numerator of which is the number of full and
partial months from the beginning of the performance period until the date of
the Change of Control, and the denominator of which is 36. In the event of a
Change of Control, and in the discretion of the Compensation Committee, payment
shall be in (a) cash equal to the product of the number of shares vested times
the highest price per share of the Class B Common Stock during the sixty days
preceding the Change of Control, (b) in shares of Class B Common Stock or (c) in
shares of such other entity into which shares of Class B Common Stock may have
been converted.
Certain provisions of the SERP do not take effect until the occurrence of
certain "Change of Control" events. Among others, provisions in the SERP
providing for (i) the suspension, reduction or termination of benefits in cases
of gross misconduct by a participant (as determined in the sole discretion of
the
17
<PAGE> 21
Compensation Committee); (ii) the forfeiture of benefits should a retired
participant engage in certain proscribed competitive activities; (iii) the
reduction in benefits upon the early retirement of a participant; and (iv) the
off-set of amounts which a participant may then owe the Company against amounts
then owing the participant under the SERP, are automatically deleted upon the
occurrence of a Change of Control event. In addition, neither a participant's
years of service with the Company (as calculated for the purpose of determining
eligibility for benefits under the SERP), nor benefits accrued under the SERP
prior to the Change of Control event, may be reduced after the occurrence of a
Change of Control event.
COMPENSATION OF DIRECTORS
Each Director receives $35,000 (plus an additional $3,000 for serving as a
committee chairman) per year compensation from the Company plus $1,500 for each
board and board committee meeting attended, together with the expenses, if any,
of such attendance. Directors also receive $1,500 for each rendition of
consulting services otherwise than as part of a board or committee meeting. No
such consulting services were rendered during 1997. The Company and eight
current Directors have entered into an agreement to defer receipt of all or a
portion of such fees pursuant to a deferred compensation agreement providing for
payment of the fees in stock units (each stock unit consisting of one share each
of the Company's Class A Common Stock and Class B Common Stock), subject to
certain terms and conditions, upon their termination of service as Directors of
the Company. Dividend equivalents are paid on the stock units and are converted
into additional stock units. Certain provisions of the deferred compensation
program do not take effect until the occurrence of certain "Change of Control"
events, as defined in the plan. After the occurrence of a Change of Control
event, the plan may not be amended without the prior written consent of an
affected participant and no termination of the plan shall have the effect of
reducing any benefits accrued under the plan prior to such termination. Further,
in the event of a Change of Control, any stock unit credited to a Director's
account shall be immediately converted into a right to receive cash and shall
thereafter be treated in all respects as part of such Director's cash account.
The Company also has a retirement plan for Directors who are not employees
or officers of the Company and who do not qualify to receive a retirement
benefit under any pension plan of the Company or its subsidiaries ("Eligible
Directors"). Under this plan, an Eligible Director retiring at or after age 70
with at least ten years of service as a Director is paid annually for life an
amount equal to (i) his regular active service annual base retainer (the "Annual
Retainer") in effect during the calendar year immediately preceding the year in
which the retiring Director was last elected, (ii) an additional 10% of the
Annual Retainer, and (iii) any additional amounts paid for service as Committee
Chairman. A retiring Eligible Director who had reached age 70 and had served for
at least five but less than ten years as a Director would be entitled to a
reduced amount equal to 50% of his Annual Retainer in effect during the calendar
year immediately preceding the year in which the retiring Director was last
elected, plus 10% of such Annual Retainer for each year of service beyond five
years up to a maximum of ten years. An Eligible Director who retires prior to
age 70 with five or more years of service as a Director receives a retirement
benefit commencing at age 70 calculated as described above on the basis of his
Annual Retainer in effect during the calendar year immediately preceding his
actual retirement date. The plan also provides that a Director who was a retiree
of the Company whether or not qualified for a retirement benefit under any
pension plan of the Company but who had at least five years of service as a
Director subsequent to such retirement is entitled to a retirement benefit under
the plan at a
18
<PAGE> 22
reduced amount equal to 25% of the Annual Retainer in effect during the calendar
year immediately preceding the year in which the retiring Director was last
elected. Benefits payable under this plan are not funded but are paid out of the
general funds of the Company. Director contributions to this plan are not
permitted. Certain provisions of the retirement plan do not take effect until
the occurrence of certain "Change of Control" events, as defined in the plan.
Among others, provisions in the plan providing for (i) the suspension, reduction
or termination of benefits in cases of gross misconduct by a participant (as
determined in the sole discretion of the Compensation Committee); and (ii) the
forfeiture of benefits should a retired participant engage in certain proscribed
competitive activities, are automatically deleted upon the occurrence of a
Change of Control event.
MATTERS RELATING TO DIRECTORS
Mr. Hoffman, a Director of the Company, is a partner in the law firm of
Simpson Thacher and Bartlett which rendered legal services to the Company during
the fiscal year ended December 31, 1997.
19
<PAGE> 23
RATIFICATION OF THE SELECTION OF AND
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The selection of independent accountants to examine the financial
statements of the Company made available or transmitted to shareholders and
filed with the SEC for the year 1998 is to be submitted to the meeting for
ratification or rejection. Price Waterhouse L.L.P., 300 Atlantic Street,
Stamford, Connecticut, has been selected by the Board of Directors of the
Company to examine such financial statements.
Price Waterhouse L.L.P. have been independent accountants of the Company
for many years. The Company has been advised that a representative of Price
Waterhouse L.L.P. will attend the Annual Meeting to respond to appropriate
questions and will be afforded the opportunity to make a statement if the
representative so desires. The fees paid in 1997 for professional services
provided by Price Waterhouse L.L.P. to the Company and its subsidiaries were
approximately $940,000.
If the proposal to ratify the selection of Price Waterhouse L.L.P. is not
approved by the shareholders, or if prior to the 1999 Annual Meeting, Price
Waterhouse L.L.P. declines to act or otherwise becomes incapable of acting, or
if its employment is discontinued by the Board of Directors, then the Board of
Directors will appoint other independent accountants whose employment for any
period subsequent to the 1999 Annual Meeting will be subject to ratification by
the shareholders at that meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE.
PROPOSED AMENDMENTS TO THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION
PROPOSALS (3), (4) AND (5)
GENERAL
At its meeting held on March 10, 1998, the Board of Directors of the
Company unanimously approved and recommended that the Company's shareholders
approve certain amendments to the Company's Restated Certificate of
Incorporation (the "Certificate"). The proposed amendments are contained in
three separate proposals. Shareholders are urged to consider carefully and
approve each proposal. Proposal (3) permits the Company to engage in any lawful
business for which corporations may be formed under the Connecticut Business
Corporation Act (the "CBCA"). Proposal (4) provides that the Company will
indemnify directors and officers to the fullest extent permitted by the CBCA and
authorizes the Company to determine, on a case by case basis, the extent of
indemnification that it will provide to employees and agents. Proposal (5)
provides for various conforming changes intended to update citations to the
Connecticut General Statutes, to provide flexibility with respect to locating
the Company's headquarters, and to ensure consistency of language throughout the
Certificate.
20
<PAGE> 24
These proposed amendments are designed (i) to clarify the flexibility of
the Company to engage in any legally permitted business, (ii) to provide
additional indemnification rights to directors and officers of the Company in an
effort to promote management stability and security, and to permit
indemnification of employees and agents in those circumstances deemed
appropriate, and (iii) to ensure compliance with the CBCA and make various
non-substantive modifications to the Certificate.
The text of the proposed amendments to the Company's Certificate is set
forth in Exhibit A to this Proxy Statement. The following description and
discussion of the proposed amendments is qualified in its entirety by reference
to such exhibit. Following the adoption of the proposed amendments, the Board of
Directors of the Company intends to adopt a restated Certificate that
incorporates those amendments approved by the shareholders.
Effective January 1, 1997, the CBCA updated the statutory framework for
stock corporations in Connecticut based on the Model Business Corporation Act
(the "MBCA"). In adopting the CBCA, Connecticut has followed the lead of a
number of states that have adopted corporation codes based on the MBCA. Despite
this new framework, the CBCA provides that certificates of incorporation of
corporations organized prior to January 1, 1997, such as the Company, will be
"grandfathered." In other words, a provision in the Company's Certificate that
was valid under the law in effect prior to January 1, 1997 will continue to be
valid regardless of any differences in the CBCA. The Company is not, therefore,
required to amend the Certificate to comply with the CBCA. However, certain
Proposals are recommended in order to modernize the Company's Certificate in
light of the enactment of the CBCA and to enable the Company to attract and
maintain a capable and stable management by entitling individuals serving as
directors and officers to certain indemnification rights.
The three Proposals are being presented separately, and if any one of the
Proposals is adopted by the shareholders, it will become effective, regardless
of whether the shareholders adopt the other Proposals.
THE BOARD OF DIRECTORS BELIEVES THAT ADOPTION OF PROPOSALS (3), (4) AND (5)
IS IN THE BEST INTERESTS OF ALL OF THE COMPANY'S SHAREHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ADOPTION OF THE PROPOSALS.
PROPOSAL (3) -- BUSINESS PURPOSE
GENERAL
Proposal (3) would amend the Company's Certificate to permit the Company to
engage in any lawful business permitted under the laws of the State of
Connecticut. Currently, the nature of the business to be transacted, and the
purposes to be promoted, by the Company are set forth in detail in the
Certificate, which generally authorizes the manufacture and sale of a broad
range of apparatus, devices and fixtures. Following modern corporate law
practice, the proposal would remove any deemed limitations on the Company's
business purposes other than those imposed by law.
21
<PAGE> 25
REASONS FOR THE AMENDMENT
The amendment on business purpose is designed to modernize the Certificate
to grant the Company the flexibility to engage in any business or activity
permitted under the laws of the State of Connecticut. The CBCA, like most modern
corporation laws, permits a corporation to engage in a broad variety of business
activities. By listing in the Certificate those businesses in which the Company
is currently engaged, the Company may risk omitting some business or activity
that would be in the Company's interest and that the Company would wish to
pursue. The proposed amendment would eliminate this risk.
DESCRIPTION OF THE AMENDMENT
The Certificate currently provides that the nature of the business to be
transacted, and the purposes to be promoted or carried out, by the Company are
to manufacture, buy, sell, own and deal in machinery, tools, machine screws,
electrical goods, supplies, apparatus, devices and fixtures of every character,
material and description. The Company is also expressly authorized to deal in
letters patent and related rights and licenses and to deal in real estate. The
Certificate also includes general authority to do all things necessary or
convenient for the prosecution of its business.
The proposed amendment would add the right of the Company to engage in any
lawful business permitted under the laws of the State of Connecticut. This would
provide the Company with the broadest business purpose permitted under the laws
of the State of Connecticut.
VOTE REQUIRED AND EFFECTIVE TIME
The affirmative vote of a majority of the votes cast by the holders of the
outstanding shares of the Class A Common Stock and Class B Common Stock, all
voting as a single class, is required to adopt the amendment included as part of
Proposal (3). Abstentions and broker non-votes will not be counted as votes
cast. The amendment, if adopted, will become effective as of the date and time
it is filed with the Office of the Secretary of the State of the State of
Connecticut.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE ADOPTION OF PROPOSAL (3).
PROPOSAL (4) -- INDEMNIFICATION AMENDMENT
GENERAL
In recent years, lawsuits and other proceedings (including claims by
shareholders on behalf of a corporation or "derivative
proceedings")("Proceedings") directed against or involving directors or officers
of publicly held corporations have become increasingly common. Such Proceedings
are typically extremely expensive whatever their outcome. Due to the
uncertainties inherent in any litigation and particularly since questions of
subjective business judgment are usually involved, it is often prudent for
corporations to settle Proceedings in which claims against a director or officer
are made. Settlement amounts, even if not material to the corporation involved
and minor compared to the amount claimed, often exceed the financial resources
of most individual defendants. Even in Proceedings in which a director or
officer is not named as a defendant,
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such an individual may incur substantial expenses and attorneys' fees if he
becomes involved in a Proceeding as a witness or otherwise.
Directors, potential candidates for director and officers must rely upon
protections offered by the corporations they serve. If these protections are not
adequate, such individuals may question whether the risks associated with the
Proceedings in which they may become involved exceed the benefit they may
realize from service to a corporation. The adequacy of a corporation's
protection of its directors and officers is measured, in part, by the relative
certainty that indemnification will be made promptly and without the need to
resort to additional time-consuming, and often costly, Proceedings.
Proposal (4) would amend the Company's Certificate (the "Indemnification
Amendment") generally to require the Company to indemnify its directors and
officers who are made parties to a Proceeding because they are or were directors
or officers of the Company against liability so long as the director or officer
satisfied a statutorily required standard of care. In addition, the
Indemnification Amendment would allow the Company to provide officers with
additional indemnification consistent with the CBCA. Finally, with respect to
indemnification of employees and agents, the Indemnification Amendment would
provide the Company with flexibility to determine such indemnification rights on
a case by case basis.
REASONS FOR THE INDEMNIFICATION AMENDMENT
Prior to the enactment of the CBCA, indemnification of directors, officers,
employees and agents was both mandatory and exclusive. The Connecticut Stock
Corporation Act (the "CSCA"), which was in effect prior to January 1, 1997,
required corporations to provide the indemnification it authorized, but no more
or less. In addition, the CSCA stated that no action to indemnify was valid
unless consistent therewith. The CBCA, by contrast, takes a permissive approach
to indemnification, allowing corporations to expand or limit indemnification in
their certificates of incorporation.
Generally, in the absence of a provision in its certificate of
incorporation, a corporation organized prior to January 1, 1997, such as the
Company, is required to indemnify its directors, officers, agents and employees
in a Proceeding if he (a) conducted himself in good faith and (b) reasonably
believed (i) when acting in his official capacity that the conduct was in the
corporation's best interests and (ii) in all other cases that the conduct was
not opposed to its best interests. For criminal cases, the director, officer,
employee or agent must also have had no reasonable cause to believe his conduct
was unlawful. Certain other conditions on the Company's indemnification are
discussed below.
The CBCA, however, permits a corporation to provide enhanced
indemnification rights by adding a provision to its certificate of incorporation
that would permit or require it to indemnify a director so long as his conduct
met the standards described below. Such indemnification may also be extended to
officers to the same extent as it is extended to directors. In addition, the
CBCA permits a corporation to provide even greater indemnification to officers,
employees and agents, so long as such indemnification is consistent with public
policy.
The Company's Certificate is proposed to be amended to provide such
enhanced indemnification rights and to expand the situations in which the
Company will indemnify its directors and officers in order to provide its
directors and officers with the greatest protection allowed by law. Such
enhanced protection is expected to assist the Company in attracting and
maintaining a capable and stable management. In addition, the
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Indemnification Amendment would provide the Company with greater flexibility
with respect to the indemnification of employees and agents who are not officers
and directors. The Indemnification Amendment would allow the Company to
determine the indemnification rights of such individuals on a case by case
basis, on such terms and conditions as may be established by the Board of
Directors.
In 1990 the Company's Certificate was amended to limit the personal
liability of a director to the Company and its shareholders for monetary damages
for breach of duty as a director, including negligence in the performance of
such duty, to the amount of compensation received by such director for serving
the Company during the year of the breach with the exception of the following.
The amendment did not limit the liability of a director where the breach (i)
involved a knowing and culpable violation of law by the director; (ii) enabled
the director or an "associate" (generally a related corporation, trust, etc.) to
receive an improper personal economic gain; (iii) showed a lack of good faith
and a conscious disregard for the director's duty to the Company under
circumstances in which the director was aware that his conduct or omission
created an unjustifiable risk of serious injury to the Company; (iv) constituted
a sustained and unexcused pattern of inattention that amounted to an abdication
of the director's duty to the Company; or (v) involved an illegal distribution
or improper loan to a director, officer or 5% shareholder. That amendment now
appearing as paragraph Seventh of the Certificate provides considerable
protection for the directors, but it does not for officers. The proposed
Indemnification Amendment would not only cover officers, but also would provide
for mandatory advancement of expenses to directors and officers so long as the
director or officer promises to repay the advance if it is later determined that
he is not entitled to indemnification by the Company. This gives directors added
protection by requiring an advance of expenses where the issue being litigated
is whether the director can claim the benefit in the particular circumstances of
paragraph Seventh of the Certificate.
DESCRIPTION OF THE INDEMNIFICATION AMENDMENT
The Indemnification Amendment, included as proposed Article Eighth of the
Company's Certificate, implements the enhanced indemnification protections
authorized by the CBCA. If Proposal (4) is adopted, the Indemnification
Amendment will replace, for directors, officers, employees and agents, the
mandatory indemnification requirements set forth in the CSCA.
Prior to the adoption of the CBCA, the CSCA set out the permissible scope
of indemnification by Connecticut corporations for directors, officers,
employees and agents (each an "eligible indemnitee"). Under the CSCA, an
eligible indemnitee could be indemnified only if (a) he was successful on the
merits of a Proceeding in respect of which indemnification was sought or (b) a
determination was made by a quorum of disinterested directors, by independent
legal counsel or by the shareholders that the eligible indemnitee (i) had acted
in good faith and in a manner reasonably believed to be in the best interests of
the corporation and (ii) with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful. Corporations were also
permitted to advance expenses to eligible indemnitees provided the indemnitee
agreed to repay such amount unless it were ultimately determined that the
individual was entitled to indemnification.
In the case of suits brought by the corporation or derivative actions, the
CSCA contained significant restrictions on the scope of indemnification. First,
the CSCA did not permit indemnification for amounts paid to the corporation, to
a plaintiff or to counsel for a plaintiff in settling or otherwise disposing of
a Proceeding, with or without court approval. Second, the CSCA did not permit
indemnification for expenses incurred in defending a Proceeding which is settled
or otherwise disposed of without court approval.
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The Indemnification Amendment requires the Company, to the fullest extent
permitted by the CBCA, to indemnify any person who is or was a director or
officer of the Company and permits it to provide additional indemnification to
officers, consistent with the CBCA. With respect to employees and agents of the
Company, the Indemnification Amendment permits the Board of Directors to
determine the terms and conditions of such indemnification. The Certificate does
not presently contain an express statement of the Company's authority to
indemnify such individuals.
The Indemnification Amendment is intended to implement for directors and
officers specific changes in the Connecticut law regarding indemnification that
were effected by the CBCA. In doing so, the Indemnification Amendment would
significantly broaden the rights of the Company's directors and officers to
indemnification. Under the Indemnification Amendment, the right to be
indemnified "to the fullest extent permitted by law" would mean that a director
would be indemnified against expenses and liabilities incurred in connection
with any Proceeding so long as his conduct did not (i) involve a knowing and
culpable violation of law by the director, (ii) enable the director or an
associate, as defined in Section 33-840 of the CBCA, to receive an improper
personal economic gain, (iii) show a lack of good faith and a conscious
disregard for the duty of the director to the Company under circumstances in
which the director was aware that his conduct or omission created an
unjustifiable risk of serious injury to the Company, (iv) constitute a sustained
and unexcused pattern of inattention that amounted to an abdication of the
director's duty to the Company, or (v) create liability under Section 33-757
(liability for unlawful distributions) of the CBCA. The Indemnification
Amendment would also afford such indemnification rights to officers of the
Company. the Indemnification Amendment will not provide for indemnification for
liabilities arising out of the federal securities laws. If future changes to
Connecticut law expand or contract the scope of permissible indemnification,
such changes would automatically expand or contract the scope of indemnification
provided under the proposed Indemnification Amendment.
In addition, the Indemnification Amendment would permit, but not require,
the Company to provide additional indemnification rights to officers of the
Company who are not also directors, or who are directors but are made a party to
a Proceeding solely in their capacity as officers, so long as such
indemnification is consistent with public policy. The Indemnification Amendment
also provides the Company with the flexibility to determine the level of
indemnification of employees and agents on terms and conditions established by
the Board of Directors from time to time, also consistent with public policy.
These indemnification rights may be evidenced by contract, bylaws or by
resolutions of the Board.
In addition to the authority granted to corporations to increase or
decrease the levels of indemnification, the CBCA has eliminated the distinction
drawn by the CSCA between the indemnification protections granted in connection
with derivative actions and those granted in connection with any other type of
Proceeding. By eliminating this distinction, the CBCA makes indemnification of
directors mandatory for all types of Proceedings (both derivative and
non-derivative) unless indemnification is prohibited by law. Indemnification in
connection with derivative actions is limited, however, to reasonable expenses
incurred in connection with such Proceedings.
Further, the Indemnification Amendment proposes to obligate the Company to
advance the expenses of a director or officer so long as the director or officer
promises to repay the advance if it is later determined that he is not entitled
to indemnification by the Company. The Board of Directors may establish
different policies regarding the advancement of expenses to employees and
agents. Pursuant to the CBCA, a director, officer,
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employee or agent may have his right to indemnification or to advancement of
expenses determined by a court. The CBCA does not limit the Company's power to
pay for or reimburse expenses incurred by any such individual in connection with
his appearance as a witness in a Proceeding at a time when he is not a party
thereto.
The CBCA, like the CSCA, continues to permit the Company to purchase
insurance to protect itself and any person eligible to be indemnified thereunder
against any liability or expense asserted against such person whether or not the
Company would be permitted to indemnify against such liability or expense.
The Indemnification Amendment further provides that its provisions shall
not be deemed exclusive of any other rights of indemnification which a person
seeking indemnity may have under any bylaw, agreement, vote of the shareholders
or disinterested directors or otherwise. If the Indemnification Amendment is
adopted by the shareholders, the rights of indemnification granted under the
Indemnification Amendment may not be limited in any way by a subsequent
amendment or repeal of proposed Article Eighth with respect to acts or omissions
that occur prior to the adoption of the amendment or repeal. The rights to
indemnification created under the Indemnification Amendment are treated as
contractual rights of the persons entitled to indemnification.
If Proposal (4) is adopted, the Indemnification Amendment shall govern the
indemnification protections granted to directors, officers, employees and agents
of the Company as to all Proceedings after the date that the Indemnification
Amendment is filed with the Secretary of the State.
The CBCA has not yet been subject to judicial review due to its recent
enactment. As a consequence, its validity is untested by Connecticut courts. The
outcome of any litigation challenging the applicability of the CBCA's provisions
regarding indemnification or the effects of the Indemnification Amendment cannot
be predicted with any certainty at this time. If Proposal (4) is adopted, the
Indemnification Amendment may cause the Company to indemnify directors and
officers in situations where the Company currently is under no obligation to do
so. Accordingly, if any such indemnification is made, the economic cost to the
Company is likely to be greater than the economic cost of its indemnity
obligations if the Indemnification Amendment were not adopted. The Company is
not aware of any known or anticipated Proceeding for which a claim for
indemnification may be made by a director or officer, under the Indemnification
Amendment.
VOTE REQUIRED AND EFFECTIVE TIME
The affirmative vote of a majority of the votes cast by the holders of the
outstanding shares of the Class A Common Stock and Class B Common Stock, all
voting as a single class, is required to adopt Proposal (4). Abstentions and
broker non-votes will not be counted as votes cast. The Indemnification
Amendment, if adopted, will become effective as of the date and time it is filed
with the Office of the Secretary of the State of the State of Connecticut.
The Board of Directors acknowledges that individual directors have a
significant personal interest in the outcome of the vote on Proposal (4) since
they would be the beneficiaries of the increased protections that Proposal (4)
authorizes. Moreover, any such personal benefit that the directors would derive
could potentially be at the shareholders' expense. Nevertheless, the Board
believes that the Indemnification Amendment is fair and in the best interests of
the Company and its shareholders and that they should enhance the Company's
ability to attract and retain qualified directors, officers, employees and
agents.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE ADOPTION OF PROPOSAL (4).
PROPOSAL (5) -- CONFORMING AMENDMENTS
GENERAL
Proposal (5) would amend the Company's Certificate (the "Conforming
Amendments") to generally (i) ensure consistent use of language throughout the
Certificate; (ii) delete and revise references to sections of the Connecticut
General Statutes that were repealed in connection with the enactment of the
CBCA; (iii) delete reference to the prior filing of a certificate of amendment;
(iv) add a provision clarifying the statutory references used in the
Certificate; and (v) add flexibility with respect to locating the Company's
headquarters.
REASONS FOR THE CONFORMING AMENDMENTS
The Conforming Amendments are designed to ensure that the terms contained
in the Certificate are consistent and to modernize the Certificate in light of
the enactment of the CBCA. In addition, the Conforming Amendments define the
statutory references used in the Certificate to include amendments to such
statutes, thus permitting the Certificate to evolve with any changes in such
statutes.
DESCRIPTION OF THE CONFORMING AMENDMENTS
Modernizing Reference to Location of Corporation. Paragraph Second states
that the corporation is located in the Town of Orange, County of New Haven in
the State of Connecticut. The Conforming Amendments modernizes this provision to
permit the Board of Directors to choose another place if this should ever be in
the best interest of the Company.
Updated Statutory References. In connection with the enactment of the
CBCA, the provisions of the Connecticut General Statutes governing Connecticut
stock corporations prior to such enactment were repealed. Accordingly, Proposal
(5) would delete any references to statutes that were repealed in connection
with the enactment of the CBCA and replace such references with statutory
references to the CBCA. For example, corrections are proposed to be made to
Article Seventh of the Certificate which limits the liability of the Company's
directors to the Company and the shareholders if such directors have complied
with a specified standard of care.
Prior Certificate Filing. Paragraph Seventh references the filing of a
certificate amending the Restated Certificate of Incorporation with respect to
the limitation on liability of directors to the corporation and its shareholders
for monetary damages. The Conforming Amendments delete this reference, because
the certificate has been filed.
References Provision. A new Paragraph Ninth is proposed to be added to the
Certificate to reference the provisions of the CBCA and any subsequent
amendments and successor sections thereto. This provision will eliminate the
need to amend the Certificate if any provision of the CBCA referenced therein is
subsequently amended or repealed or if it is placed in a different section of
the Connecticut General Statutes.
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The Conforming Amendments will modernize the Company's Certificate and make
it a more workable document for the administration of the Company. By updating
statutory references, the Conforming Amendments will guide management and others
to the proper statutes governing the Company and the Certificate. In addition,
the references provisions will ensure that the Company will avoid the expense of
amending the Certificate if statutory citations are later revised, repealed or
relocated.
VOTE REQUIRED AND EFFECTIVE TIME
The affirmative vote of a majority of the votes cast by holders of the
outstanding shares of the Class A Common Stock and Class B Common Stock, all
voting as a single class, is required to adopt the amendments included as part
of Proposal (5). Abstentions and broker non-votes will not be counted as votes
cast. The Conforming Amendments, if adopted, will become effective as of the
date and time they are filed with the Office of the Secretary of the State of
the State of Connecticut.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE ADOPTION OF PROPOSAL (5).
SHAREHOLDER PROPOSAL
The American Baptist Home Mission Society, an owner in street name of 200
shares of the Company's common stock, has notified the Company that it will
cause the following resolution to be presented at the Annual Meeting, and has
given the following reasons in support thereof:
BOARD INCLUSIVENESS
We believe the employee and board composition of major corporations should
reflect the people in the workforce and marketplace of the 21st century if our
company is going to remain competitive. Employees, customers and stockholders
make up a greater diversity of backgrounds than ever before. The report of the
Department of Labor's 1995 bi-partisan Glass Ceiling Commission, "Good For
Business: Making Full Use of the Nation's Human Capital," confirms diversity and
inclusiveness in the workplace has a positive impact on the bottomline. A report
of Standard and Poor 500 companies provided by Covenant Fund revealed
". . . firms that succeed in shattering their own glass ceiling racked up
stock-market records that were nearly 2 1/2 times better than
otherwise -- comparable companies."
In 1994 the Investor Responsibility Research Center reported inclusiveness
at senior management and board levels was only 9% of the fortune 500 companies
in a comparable workforce of 57% diversity. The Glass Ceiling Commission
reported that companies select from only half of the talent of our workforce.
Therefore we urge our corporation to enlarge its search for qualified board
members by casting a wider net. If we are to be prepared for the 21st century we
must learn how to compete in a growingly diverse global market place by
promoting and selecting the best people regardless of race, gender or physical
challenge. We believe the judgements and perspectives of a diverse board would
improve the quality of corporate decision-making.
Since the board is responsible for representing shareholder interests in
corporate meetings, a growing proportion of stockholders is now attaching value
to board inclusiveness. A 1994 Investor Responsibility
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Research Center survey revealed 37% of respondents cited board diversity as the
influencing factor for supporting votes.
The Teachers Insurance and Annuity Association and College Retirement
Equities Fund, the largest institutional investor in the United States, recently
issued a set of corporate governance guidelines including a call for "diversity
of directors by experience, sex, age and race."
Robert Campbell, CEO of Sun Oil, stated in the Wall Street Journal, August
12, 1996, "Often what a woman or minority person can bring to the board is some
perspective a company hasn't had before -- adding some modern day reality to the
deliberation process. Those perspectives are of great value, and often missing
from an all-white-male gathering. They can also be inspirational to the
company's diverse work force."
Be it resolved that shareholders request:
1. The nominating committee of the Board make a greater effort to find
qualified women and minority candidates for nomination to the Board.
2. The Board issue a statement publicly committing the company to a
policy of board inclusiveness with a program of steps to take and the time
line expected to move in that direction.
3. The Company issue a report by September 1997 at a reasonable
expense that includes a description of:
(a) efforts to encourage diversified representation on our board
(b) criteria for board qualification
(c) the process of selecting the board candidates
(d) the process of selecting the board committee members
MANAGEMENT'S STATEMENT IN OPPOSITION
Your Board of Directors opposes this proposal for the following reasons:
A similar resolution was proposed at the Annual Meeting held on May 5,
1997, at which 195,750,528 votes were cast against its adoption, representing
approximately 91.20% of the total votes cast for and against the proposal.
The Company offers equal employment opportunity to all persons without
regard to race, creed, color, sex, age, religion, national origin, physical or
mental disability, or veteran status, and abides by all applicable Federal and
State statutes and regulations related to equal employment practices. Consistent
with that policy, and in keeping with the expanding global nature of the
Company's operations, the Board recognizes that highly qualified and independent
Board members with diverse backgrounds and perspectives can enhance Company
performance. However, the principle criteria in selecting an individual for
board membership should be that individual's qualifications, experience, skills,
and the ability to contribute to the enhancement of shareholder value, without
regard to gender, minority, or other status. Accordingly, the Board would prefer
to achieve diversity over time, as vacancies occur, by acting in accordance with
the Company's policy of equal employment opportunity in selecting the most
qualified candidates, regardless of gender, minority or other status. In doing
so, the Board believes that it will become more diverse, which will enable it to
better reflect
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the composition of the Company's global workforce. Many years ago, the Company
embarked on transitioning to a more effective and efficient outside board of
directors, and identified various criteria that it believed would be
constructive in the representation of the shareholders, enhancing performance,
and maximizing value. This resulted in a Board consisting of seven to nine
members with the emphasis on highly successful, knowledgeable, broadly
experienced, forceful outside directors with a cross-section of disciplines to
properly relate to the shareholders' interests.
The shareholder proposal would require the Board of Directors to issue a
public statement committing the Company to a policy of board inclusiveness and
establishing a timetable for achieving same, and to issue by a deadline date a
report describing its efforts, criteria and process of achieving board
inclusiveness. Your Board of Directors does not believe this proposal would
enhance the current board selection process and, thus, would not serve
shareholder interests. Your Board of Directors believes that the shareholder
proposal is inappropriately restrictive, would unduly limit the Company in its
selection of directors, would involve cost without any commensurate benefit, and
would, therefore, be detrimental to the best interests of the Company and its
shareholders.
The affirmative vote of a majority of the votes cast by the holders of the
outstanding shares of Class A Common Stock and Class B Common Stock, all voting
as a single class, is required to approve the shareholder proposal. Abstentions
and broker non-votes will not be counted as votes cast.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"AGAINST" THIS SHAREHOLDER PROPOSAL.
GENERAL
The expense of this solicitation is to be borne by the Company. The Company
may also reimburse persons holding shares in their names or in the names of
their nominees for their expenses in sending proxies and proxy material to their
principals. The Company has retained D. F. King & Co., Inc. to assist in the
solicitation of proxies, at an estimated cost of $7,500, plus reasonable
expenses.
Unless otherwise directed, the persons named in the accompanying form of
proxy intend to vote all proxies received by them in favor of (i) the election
of the nominees to the Board named herein, (ii) the ratification of the
selection of independent accountants, and (iii) the amendments (proposals (3),
(4), and (5)) to the Company's Restated Certificate of Incorporation; and
against the shareholder proposal. All proxies will be voted as specified.
Management does not intend to present any business at the meeting other
than that set forth in the accompanying Notice of Annual Meeting, and it has no
information that others will do so. If other matters requiring the vote of the
shareholders properly come before the meeting and any adjournments thereof, it
is the intention of the persons named in the accompanying form of proxy to vote
the proxies held by them in accordance with their judgment on such matters.
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SHAREHOLDER PROPOSALS FOR THE
1999 ANNUAL MEETING
Shareholder proposals for inclusion in the proxy materials related to the
1999 Annual Meeting of Shareholders must be received by the Company no later
than December 4, 1998.
By Order of the Board of
Directors
HUBBELL
INCORPORATED
Orange, Connecticut
March 23, 1998
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EXHIBIT A TO PROXY STATEMENT
PROPOSED AMENDMENTS
TO RESTATED CERTIFICATE OF INCORPORATION
HUBBELL INCORPORATED
I. BUSINESS PURPOSE
RESOLVED, that Paragraph THIRD of the Restated Certificate of Incorporation
of the Company, as in effect immediately prior to the effective date of this
Certificate, is further restated and amended to read in its entirety as follows:
THIRD: That the nature of the business to be transacted, and the
purposes to be promoted or carried out, by said corporation are as follows:
To manufacture, buy, sell, own and deal in machinery, tools, machine
screws, electrical goods, supplies, apparatus, devices and fixtures of
every character, material and description, and to buy, sell, own, and deal
in letters patent and rights and licenses under letters patent, necessary
or convenient for the prosecution of its business, and to grant rights and
licenses to others under letters patent which may be owned by said
corporation, and to buy, sell, mortgage, own and deal in such real estate
as may be necessary or convenient for the prosecution of its business, and
to engage in any other lawful business permitted under the laws of the
State of Connecticut, and generally to do all things necessary or
convenient for the prosecution of its business, and the proper conduct and
management thereof.
II. INDEMNIFICATION
RESOLVED, that a new Paragraph EIGHTH be added to the end of the Restated
Certificate of Incorporation, as in effect immediately prior to the effective
date of this Certificate, to read in its entirety as follows:
EIGHTH The corporation shall, to the fullest extent permitted by law,
indemnify its Directors from and against any and all of the liabilities,
expenses and other matters referenced in or covered by the Connecticut
Business Corporation Act. In furtherance and not in limitation thereof, the
corporation shall indemnify each Director for liability, as defined in
subsection (5) of Section 33-770 of the Connecticut General Statutes, to
any person for any action taken, or any failure to take any action, as a
Director, except liability that (i) involved a knowing and culpable
violation of law by the Director, (ii) enabled the Director or an
associate, as defined in Section 33-840 of the Connecticut General
Statutes, to receive an improper personal economic gain, (iii) showed a
lack of good faith and conscious disregard for the duty of the Director to
the corporation under circumstances in which the Director was aware that
his conduct or omission created an unjustifiable risk of serious injury to
the corporation, (iv) constituted a sustained and unexcused pattern of
inattention that amounted to an abdication of the Director's duty to the
corporation, or (v) created liability under Section 33-757 of the
Connecticut General Statutes; provided that nothing in this sentence shall
affect the indemnification of or advance of expenses to a Director for
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any liability stemming from acts or omissions occurring prior to the
effective date of this Paragraph EIGHTH.
The corporation shall indemnify each officer of the corporation who is
not a Director, or who is a Director but is made a party to a proceeding in
his capacity solely as an officer, to the same extent as the corporation is
permitted to provide the same to a Director, and may indemnify such persons
to the extent permitted by Section 33-776 of the Connecticut General
Statutes.
The indemnification provided for herein shall not be deemed exclusive
of any other rights to which those indemnified may be entitled under any
bylaw, agreement, vote of shareholders or disinterested Directors or
otherwise, both as to action in such person's official capacity and as to
action in another capacity while holding such office, and shall continue as
to a person who has ceased to be a Director or officer and shall inure to
the benefit of the heirs, executors and administrators of such a person.
B. Expenses incurred by a Director or officer of the corporation in
defending a civil or criminal action, suit or proceeding shall be paid for
or reimbursed by the corporation to the fullest extent permitted by law in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Director or officer to
repay such amount if it shall be ultimately determined that such Director
or officer is not entitled to be indemnified by the corporation.
C. The corporation may indemnify and pay for or reimburse the expenses
of employees and agents not otherwise entitled to indemnification pursuant
to this Paragraph EIGHTH on such terms and conditions as may be established
by the Board of Directors.
D. No amendment to or repeal of this Paragraph EIGHTH shall apply to
or have any effect on the indemnification of any Director, officer,
employee or agent of the corporation for or with respect to any acts or
omissions of such Director, officer, employee or agent occurring prior to
such amendment or repeal, nor shall any such amendment or repeal apply to
or have any effect on the obligations of the corporation to pay for or
reimburse in advance expenses incurred by a Director, officer, employee or
agent of the corporation in defending any action, suit or proceeding
arising out of or with respect to any acts or omissions occurring prior to
such amendment or repeal.
III. CONFORMING AMENDMENTS
RESOLVED, that Paragraph SECOND of the Restated Certificate of
incorporation of the Company, as in effect immediately prior to the effective
date of this Certificate; is further restated and amended to read in its
entirety as follows:
SECOND: That said corporation shall be located in the Town of Orange,
County of New Haven, in the State of Connecticut, or any other place the
Board of Directors shall determine.
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RESOLVED, that the last sentence of Paragraph FOURTH D. of the Restated
Certificate of Incorporation of the Company, as in effect immediately prior to
the effective date of this Certificate, is further restated and amended to read
in its entirety as follows:
Before the issuance of shares of Preferred Stock any provision of
which is fixed by the Board of Directors as hereinbefore set forth, the
Board of Directors shall by its Resolution amend the Certificate of
Incorporation as required by Section 33-666 of the Connecticut General
Statues.
RESOLVED, that the first two sentences of Paragraph SEVENTH of the Restated
Certificate of Incorporation of the Company, as in effect immediately prior to
the effective date of this Certificate, are further restated and amended to read
in their entirety as follows:
The personal liability of any Director to the corporation or its
shareholders for monetary damages for breach of duty as a Director is
hereby limited to the amount of the compensation received by the Director
for serving the corporation during the year of the violation if such breach
did not (a) involve a knowing and culpable violation of law by the
Director, (b) enable the Director or an associate, as defined in Section
33-840 of the Connecticut General Statutes, to receive an improper personal
economic gain, (c) show a lack of good faith and a conscious disregard for
the duty of the Director to the corporation under circumstances in which
the Director was aware that his conduct or omission created an
unjustifiable risk of serious injury to the corporation, (d) constitute a
sustained and unexcused pattern of inattention that amounted to an
abdication of the Director's duty to the corporation, or (e) create
liability under Section 33-757 of the Connecticut General Statutes. This
provision shall not limit or preclude the liability of a Director for any
act or omission occurring prior to the date this provision becomes
effective.
RESOLVED, that a new Paragraph NINTH be added to the end of the Restated
Certificate of Incorporation, as in effect immediately prior to the effective
date of this Certificate, as a new Paragraph EIGHTH if the proposed Paragraph
EIGHTH set forth above regarding indemnification is not approved, such new
paragraph to read in its entirety as follows:
References in this Restated Certificate of Incorporation to sections
of the Connecticut General Statutes shall be deemed to include amendments
adopted from time to time to such sections and shall further be deemed to
include any successor sections thereto.
A-3
<PAGE> 38
HUBBELL INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 4, 1998
(FOR SHARES OF CLASS A COMMON STOCK)
PROXY
The undersigned hereby appoints each of G.J.RATCLIFFE and RICHARD W.DAVIES
as proxies of the undersigned, with full power of substitution, to vote the
shares of the undersigned in Hubbell Incorporated at the annual meeting of its
shareholders and any adjournment thereof upon the matters set forth in the
notice of meeting and Proxy Statement dated March 23, 1998 and upon all other
matters properly coming before said meeting or any adjournment thereof. THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS AND FOR PROPOSALS (2),
(3), (4) and (5) AND AGAINST PROPOSAL (6) UNLESS A CONTRARY SPECIFICATION IS
MADE, IN WHICH CASE IT WILL BE VOTED IN ACCORDANCE WITH SUCH SPECIFICATION.
PLEASE FILL IN, DATE AND SIGN ON THE REVERSE SIDE AND RETURN THIS PROXY IN
THE ACCOMPANYING ENVELOPE.
(Continued and to be signed on the other side.)
- - -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 39
Please mark
your votes /X/
as this
__________________
FOR SHARES OF CLASS A COMMON STOCK
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION PROPOSAL 2-Ratification of the FOR AGAINST ABSTAIN
OF ALL THE NOMINEES IN PROPOSAL 1, AND FOR PROPOSALS 2,3,4 and 5, selection of Price Waterhouse / / / / / /
AND AGAINST PROPOSAL 6. an independent accountants for
the year 1998.
PROPOSAL 1-ELECTION OF DIRECTORS G. RATCLIFFE, E. BROOKS,
G. EDWARDS, J. HOFFMAN, H. McDONELL, A. McNALLY IV, PROPOSAL 3-Amendment to Cert-
D. MEYER, J. URQUHART, M. WALLOP ificate to restate business / / / / / /
purpose.
FOR all nominees listed above,
(except as marked to the contrary below). PROPOSAL 4-Amendment to Cert-
/ / ificate to provide additional / / / / / /
indemnification.
WITHHOLD AUTHORITY
to vote for all nominees listed above. PROPOSAL 5-Amendment to Cert-
/ / ificate to provide for conforming / / / / / /
amendments.
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in the PROPOSAL 6-Shareholder Proposal / / / / / /
space provided below.) on Board Diversity.
________________________________________________________________
Signature(s) ____________________________________________________________________ Date _____________________
NOTE: Please sign exactly as your name or names appear hereon. Persons signing in
a representative capacity should indicate their capacity.
- - ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
<PAGE> 40
HUBBELL INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 4, 1998
(FOR SHARES OF CLASS B COMMON STOCK)
PROXY
The undersigned hereby appoints each of G.J.RATCLIFFE and RICHARD W.DAVIES
as proxies of the undersigned, with full power of substitution, to vote the
shares of the undersigned in Hubbell Incorporated at the annual meeting of its
shareholders and any adjournment thereof upon the matters set forth in the
notice of meeting and Proxy Statement dated March 23, 1998 and upon all other
matters properly coming before said meeting or any adjournment thereof. THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS AND FOR PROPOSALS (2),
(3), (4) and (5) AND AGAINST PROPOSAL (6) UNLESS A CONTRARY SPECIFICATION IS
MADE, IN WHICH CASE IT WILL BE VOTED IN ACCORDANCE WITH SUCH SPECIFICATION.
PLEASE FILL IN, DATE AND SIGN ON THE REVERSE SIDE AND RETURN THIS PROXY IN
THE ACCOMPANYING ENVELOPE.
(Continued and to be signed on the other side.)
- - -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 41
Please mark
your votes /X/
as this
__________________
FOR SHARES OF CLASS B COMMON STOCK
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION PROPOSAL 2-Ratification of the FOR AGAINST ABSTAIN
OF ALL THE NOMINEES IN PROPOSAL 1, AND FOR PROPOSALS 2,3,4 and 5, selection of Price Waterhouse / / / / / /
AND AGAINST PROPOSAL 6 an independent accountants for
the year 1998.
PROPOSAL 1-ELECTION OF DIRECTORS G. RATCLIFFE, E. BROOKS,
G. EDWARDS, J. HOFFMAN, H. McDONELL, A. McNALLY IV, PROPOSAL 3-Amendment to Cert-
D. MEYER, J. URQUHART, M. WALLOP ificate to restate business / / / / / /
purpose.
FOR all nominees listed above,
(except as marked to the contrary below). PROPOSAL 4-Amendment to Cert-
/ / ificate to provide additional / / / / / /
indemnification.
WITHHOLD AUTHORITY PROPOSAL 5-Amendment to Cert-
to vote for all nominees listed above. ificate to provide for conforming / / / / / /
/ / amendments.
(INSTRUCTION: To withhold authority to vote for any PROPOSAL 6-Shareholder Proposal / / / / / /
individual nominee, write that nominee's name in the on Board Diversity.
space provided below.)
________________________________________________________________
Signature(s) ____________________________________________________________________ Date _____________________
NOTE: Please sign exactly as your name or names appear hereon. Persons signing in
a representative capacity should indicate their capacity.
- - ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
