<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 3, 1999
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of
Hubbell Incorporated (the "Company") will be held at the Four Points By
Sheraton, 900 Prices Fork Road, Blacksburg, Virginia 24060, on Monday, May 3,
1999 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:
E. Richard Brooks Malcolm Wallop Joel S. Hoffman
George W. Edwards, Jr. Daniel J. Meyer G. Jackson Ratcliffe
Andrew McNally IV John A. Urquhart
2. The ratification of the selection of independent accountants to
examine the annual financial statements for the Company for the year
1999.
3. Approval of the Company's 1973 Stock Option Plan for Key Employees,
as amended (the "1973 Plan").
4. A shareholder proposal on Board diversity.
5. The transaction of such other business as may properly come before
the meeting and any adjournments thereof.
<PAGE> 3
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,
1998 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 12, 1999 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 22, 1999
<PAGE> 4
HUBBELL INCORPORATED
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 3, 1999
------------------
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 Four Points By
Sheraton, 900 Prices Fork Road, Blacksburg, Virginia 24060, on Monday, May 3,
1999, and any adjournments thereof. Commencing on or about March 29, 1999,
copies of this Proxy Statement and the proxy form are being mailed to all
shareholders. Copies of the Company's Annual Report for 1998 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 12, 1999. On March 12, 1999, the
Company had outstanding 10,672,883 shares of Class A Common Stock, par value
$.01 per share, and 54,548,500 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 12, 1999, 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 12, 1999.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
TITLE OF CLASS 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) 25.62%
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
NAME AND ADDRESS OF BENEFICIAL PERCENT
TITLE OF CLASS 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) 17.39%
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 4,296,502(5) 7.88
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., 3,053,454(6) 5.60
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 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 1998 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,
1998. As reported in said Schedule 13G, the Trustees of General Electric Pension
Trust have shared voting and dispositive power for 1,776,202 of such shares,
General Electric Investment Corporation has sole voting and dispositive power
for 1,448,263 of such shares and shared voting and dispositive power for
1,776,202 of such shares, and GE Investment Management Incorporated has sole
voting and dispositive power for 1,072,037 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, 1998. As reported in said Schedule 13G, Price
Associates has sole voting power for 367,400 of such shares and sole dispositive
power for 3,052,254 of such shares.
------------------
3
<PAGE> 7
The following table sets forth as of March 12, 1999, 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 (15 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 2,654 0.02
Class B Common 484 --
Horace G. McDonell(6)................ Class A Common 1,000 0.01
Class B Common 272 --
Andrew McNally IV.................... Class A Common 4,590,080(3) 43.01
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) 45.17
Class B Common 502,594(5) 0.92
John A. Urquhart..................... Class A Common 4,590,080(3) 43.01
Class B Common 3,226 0.01
Malcolm Wallop....................... Class B Common 100 --
Harry B. Rowell, Jr. ................ Class A Common 168,911(4) 1.58
Class B Common 301,237(5) 0.55
Vincent R. Petrecca(7)............... Class A Common 81,737 0.77
Class B Common 286,208 0.52
Timothy H. Powers.................... -- -- --
Thomas H. Pluff...................... Class A Common 1,735 0.02
Class B Common 81,170 0.15
All Directors and executive officers
as a group......................... Class A Common 5,011,584(3)(4) 46.96
Class B Common 1,293,912(5) 2.37
</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 12, 1999 by the
exercise of stock options pursuant to the Company's 1973 Plan: Mr.
Ratcliffe -- 297,530 shares of Class B Common, Mr. Rowell -- 20,000 shares
of Class A Common and 221,199 shares of Class B Common, Mr.
Petrecca -- 216,889 shares of Class B Common, and Mr. Pluff -- 71,230 shares
of Class B Common; and all executive officers as a group -- 26,000 shares of
Class A Common Stock and 916,522 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 12, 1999, the
following have been credited under the deferred compensation program: Mr.
Brooks -- 1,712 shares each of Class A and Class B Common Stock; Mr.
Edwards -- 5,082 shares each of Class A and Class B Common Stock; Mr.
Hoffman -- 7,419 shares each of Class A and Class B Common Stock; Mr.
McDonell -- 11,212 shares each of Class A and Class B Common Stock; Mr.
McNally -- 17,984 shares each of Class A and Class B Common Stock; Mr.
Meyer -- 4,270 shares each of Class A and Class B Common Stock; Mr.
Urquhart -- 732 shares each of Class A and Class B Common Stock; and Mr.
Wallop -- 639 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 another executive officer
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 another executive officer
are co-trustees and have shared voting and investment power.
(6) Not standing for reelection.
(7) Due to a Company oversight, a Form 4 filing under Section 16(a) of the
Securities Exchange Act of 1934 for Mr. Petrecca reflecting the exercise of
stock options in November, 1998, was filed late.
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 eight, 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. Mr. McDonell is retiring as a Director of the Company
after serving the Company's shareholders in that capacity since 1985.
<TABLE>
<CAPTION>
YEAR FIRST
BECAME A
NAME AGE(1) PRINCIPAL OCCUPATION DIRECTOR
- ---- ------ -------------------- ----------
<S> <C> <C> <C>
G. Jackson Ratcliffe........... 62 Chairman of the Board, President and Chief 1980
Executive Officer of the Company. Director of
Aquarion Company, Praxair, Inc., Olin
Corporation and Sunoco, Inc.
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
YEAR FIRST
BECAME A
NAME AGE(1) PRINCIPAL OCCUPATION DIRECTOR
- ---- ------ -------------------- ----------
<S> <C> <C> <C>
E. Richard Brooks.............. 61 Chairman, President and Chief Executive 1993
Officer of Central and South West Corporation
(utility holding company).
George W. Edwards, Jr. ........ 59 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................ 60 Partner of Simpson Thacher and Bartlett, a New 1989
York City law firm.
Horace G. McDonell............. 70 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.............. 59 Retired Chairman and Chief Executive Officer 1980
of Rand McNally & Company (printing,
publishing and map-making). Principal of
Hammond, Kennedy, Whitney & Company, Inc. (a
leverage buy-out firm); and a director of
Borg Warner Security Corp., Mercury Finance,
Morgan Stanley Funds, and Zenith Electronics
Corp.
Daniel J. Meyer................ 62 Chairman of the Board, President and Chief 1989
Executive Officer of Milacron Inc. (plastics
processing systems and services and metal
cutting process products and services).
Director of Firstar Corporation and The E.
W. Scripps Company.
John A. Urquhart............... 70 President of John A. Urquhart Associates 1991
(management consultant) and Senior Advisor to
the 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.
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
YEAR FIRST
BECAME A
NAME AGE(1) PRINCIPAL OCCUPATION DIRECTOR
- ---- ------ -------------------- ----------
<S> <C> <C> <C>
Malcolm Wallop................. 66 Chairman and President of Frontiers of Freedom 1995
Institute (non-profit foundation). Director
of El Paso Natural Gas Company.
</TABLE>
- ---------------
(1) As of March 12, 1999.
Each of the individuals was elected as a Director by the shareholders of
the Company.
During the five years ended December 31, 1998, 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.
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
1998. 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 met once in 1998, 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 1998, 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
7
<PAGE> 11
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 1998, 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 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, 1998.
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, 1998.
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 SATION(2)
--------------------------- ---- ------ -------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
G.J. Ratcliffe..................... 1998 $700,000 $780,000 $20,242 132,000 $55,640
Chairman of the Board, President 1997 650,000 780,000 17,201 120,000 54,140
and Chief Executive Officer 1996 600,000 700,000 18,360 100,000 45,550
H. B. Rowell....................... 1998 347,500 370,000 11,895 70,000 4,140
Executive Vice President and 1997 312,000 370,000 9,788 50,000 4,140
Chief Operating Officer 1996 300,000 336,000 7,258 40,000 3,450
V. R. Petrecca..................... 1998 330,000 50,000 6,578 -0- 4,140
Executive Vice President 1997 318,240 353,000 7,750 40,000 4,140
1996 306,000 336,000 5,455 40,000 3,450
T. H. Powers(3).................... 1998 106,692 247,000 -0- 40,000 -0-
Senior Vice President and 1997 -- -- -- -- --
Chief Financial Officer 1996 -- -- -- -- --
T. H. Pluff........................ 1998 251,900 75,000 4,318 18,000 4,140
Group Vice President 1997 242,200 125,000 4,496 18,000 4,140
1996 232,900 120,000 3,928 16,000 3,450
</TABLE>
- ---------------
(1) Reflects bonus earned during fiscal year under the Company's incentive
compensation plans.
(2) 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 $51,500 in 1998, $50,000 in 1997 and $42,100 in 1996.
(3) Joined the Company on September 21, 1998; bonus represents negotiated amount
in connection with Mr. Powers joining the Company.
9
<PAGE> 13
OPTIONS/SAR GRANTS DURING 1998 FISCAL YEAR
The following table provides information on option grants in fiscal 1998 to
the named executive officers of the Company.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------------- VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL
SECURITIES TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS/SARS EXERCISE APPRECIATION FOR
OPTIONS/ GRANTED TO OR BASE OPTION TERM
SARS EMPLOYEES PRICE EXPIRATION -----------------------
NAME GRANTED(1) IN FISCAL YEAR ($/SHARE) DATE 5%(2) 10%(2)
---- ---------- -------------- --------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
G. J. Ratcliffe..... 132,000 11.7% $39.344 12/07/08 $3,271,847 $8,257,519
H. B. Rowell........ 70,000 6.2 39.344 12/07/08 1,735,070 4,378,987
V. R. Petrecca...... -0- -- -- -- -0- -0-
T. H. Powers........ 40,000 3.5 39.344 12/07/08 991,469 2,502,279
T. H. Pluff......... 18,000 1.6 39.344 12/07/08 446,161 1,126,025
</TABLE>
- ---------------
(1) Non-qualified options to acquire shares of Class B Common Stock of the
Company were granted on December 8, 1998 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 1998 FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information on stock option exercises in
fiscal 1998 by the named executive officers of the Company and the value of such
officers' unexercised stock options at December 31, 1998.
<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........ 96,470(2) $2,595,317 297,530 352,000 $2,885,956 $0
H. B. Rowell........... 0 -- 241,199 160,000 3,152,487 0
V. R. Petrecca......... 62,596(3) 1,929,552 216,889 80,000 2,639,940 0
T. H. Powers........... 0 -- 0 40,000 0 0
T. H. Pluff............ 0 -- 71,230 52,000 789,946 0
</TABLE>
- ---------------
(1) Limited to in-the-money stock options.
(2) Class B Common Stock.
(3) 50,000 shares Class A Common and 12,596 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, 1998:
<TABLE>
<CAPTION>
OFFICER SERVICE
------- -------
<S> <C>
Mr. Ratcliffe................................ 24
Mr. Rowell................................... 19
Mr. Petrecca................................. 14
Mr. Powers................................... 0
Mr. Pluff.................................... 9
</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 1999 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 1998 bonus award for each executive officer, the
Compensation Committee's primary focus was the review of the 1998 business plan
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. While exceeding prior year financial results in difficult market
conditions, the Company fell short in achieving 1998 financial goals. As a
result, the 1998 bonuses of certain of the executive officers, including the
Chief Executive Officer, did not increase, or are down from the prior year.
For 1998, 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 or an amount equal to that awarded the prior year.
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
13
<PAGE> 17
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 1998 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. As a
result, the number of shares awarded under the 1998 stock option grants to
certain of the executive officers, including the Chief Executive Officer,
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.
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
14
<PAGE> 18
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 (prepared by Research Data Group, Inc. for use in this
proxy statement) compares the cumulative total stockholder return on the
Company's Class B Common Stock during the five fiscal years ended December 31,
1998 with a cumulative total return on the (i) Standard & Poor's MidCap 400
("S&P MidCap"), (ii) Original Hubbell Self-Constructed Peer Group Index
("Original HI Peer Group"), and (iii) Current Hubbell Self-Constructed Peer
Group Index ("Current HI Peer Group"). The comparison assumes $100 was invested
on January 1, 1994 in the Company's Class B Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends.
The Original HI Peer Group consisted of corporations whose businesses were
representative of the Company's business segments and, therefore, served as a
base for comparing total return to shareholders. The corporations in the
Original HI Peer Group were: (a) AMP Incorporated, (b) Cooper Industries, Inc.,
(c) Emerson Electric Co., (d) General Signal Corporation, and (e) Thomas & Betts
Corporation. As a result of the acquisition of General Signal Corporation by SPX
Corporation in October, 1998, and the pending acquisition of AMP Incorporated by
Tyco International Ltd., these two corporations have been deleted and the
following additions have been made to the Original HI Peer Group: (a) National
Service Industries, Inc. and (b) Woodhead Industries, Inc. Accordingly, the
companies that comprise the Current HI Peer Group are (a) Cooper Industries,
Inc., (b) Emerson Electric Co., (c) Thomas & Betts Corporation, (d) National
Service Industries, Inc., and (e) Woodhead Industries, Inc. The HI Peer Groups
have 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
Original HI Peer Group includes General Signal Corporation for the five year
period through September 30, 1998; for the December, 1998 data point, the
General Signal Corporation portion of the peer group was distributed among the
remaining four members of the peer group, weighted according to their market
cap. 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 MIDCAP 400, ORIGINAL HI PEER GROUP
AND CURRENT HI PEER GROUP
<TABLE>
<CAPTION>
ORIGINAL HI PEER CURRENT HI PEER
HUBBELL INCORPORATED S&P MIDCAP 400 GROUP GROUP
-------------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
100.00 100.00 100.00 100.00
'1994' 101.00 96.00 102.00 98.00
'1995' 136.00 126.00 124.00 126.00
'1996' 184.00 150.00 145.00 152.00
'1997' 215.00 199.00 169.00 182.00
'1998' 170.00 228.00 186.00 190.00
</TABLE>
EMPLOYMENT AGREEMENTS
The Company had 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, 1999) of $700,000, $330,000 and
$400,000 per annum. The Agreements are automatically extended on a daily basis
until notice of termination is given (in 1998, the Company gave notice under the
Agreements to Messrs. Ratcliffe and Petrecca that their employment agreements
would terminate on May 15, 2001 and May 15, 2000, respectively). 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
16
<PAGE> 20
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 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 1998 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.
17
<PAGE> 21
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 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 1998. 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
18
<PAGE> 22
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 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, 1998.
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 1999 is to be submitted to the meeting for
ratification or rejection. PricewaterhouseCoopers LLP, 300 Atlantic Street,
Stamford, Connecticut, has been selected by the Board of Directors of the
Company to examine such financial statements.
PricewaterhouseCoopers LLP have been independent accountants of the Company
for many years. The Company has been advised that a representative of
PricewaterhouseCoopers LLP 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 1998 for professional
services provided by PricewaterhouseCoopers LLP to the Company and its
subsidiaries were approximately $1,115,000.
If the proposal to ratify the selection of PricewaterhouseCoopers LLP is
not approved by the shareholders, or if prior to the 2000 Annual Meeting,
PricewaterhouseCoopers LLP 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 2000 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 PRICEWATERHOUSECOOPERS LLP.
PROPOSAL TO APPROVE THE COMPANY'S
1973 STOCK OPTION PLAN, AS AMENDED
At its meeting held on March 8, 1999, the Board of Directors of the Company
approved and recommended that the Company's shareholders approve an amendment to
the 1973 Plan to increase by 2,600,000 shares of Class B Common Stock the number
of authorized but unissued shares of the Company set aside for issuance as
needed in the continued operation of the 1973 Plan. This amendment is deemed
advisable by management in order to provide a sufficient number of shares for
future grants. The 1973 Plan, as amended, is being presented to the shareholders
for approval. The following is a description of the principal provisions of the
1973 Plan.
Increase in Number of Shares Issuable Under the Plan. The 1973 Plan
provides for the issuance of a maximum of 3,600,000 shares of Class A Common
Stock and 12,545,670 shares of Class B Common Stock. As of March 12, 1999, there
were available for grant pursuant to the 1973 Plan options to purchase 1,381,487
shares of Class B Common Stock. In order to have a sufficient number of shares
of Class B Common Stock available for grants of future options, the proposed
amendment would increase the maximum number of shares which may be issued to
15,145,670 shares of Class B Common Stock.
Plan Administration. The 1973 Plan is administered by the Compensation
Committee consisting of at least two or more members of the Board of Directors
who are each "non-employee directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Act"). Subject to the express provisions
of the 1973 Plan, the Compensation Committee has the authority to interpret the
1973 Plan, to prescribe, amend and rescind rules and regulations relating to it,
to determine the terms and provisions of the respective option agreements and to
make all other determinations necessary or advisable for the administra-
20
<PAGE> 24
tion of the 1973 Plan. The Compensation Committee shall contain at least two
"outside directors" as defined in Section 162(m) of the Code.
Amendment and Termination. The Board of Directors of the Company may at
any time amend, suspend or terminate the 1973 Plan, except that no amendment
which would increase the maximum number of shares which may be issued shall be
effective unless, within twelve months before or after the Board of Directors
adopts such amendment, it is approved by the shareholders. No amendment,
suspension or termination of the 1973 Plan shall, without the consent of the
participant, terminate, or adversely affect the participant's rights under, any
outstanding option.
Eligibility. The Compensation Committee determines the particular
employees within the general class of officers and key employees to whom options
shall be granted. Options may not be granted to any Director who is not an
officer or employee or to any member of the Compensation Committee. No incentive
stock option may be granted to persons who would beneficially own, after the
grant, more than 10% of the voting power of all shares of stock of the Company
unless at the time any such option is granted the option price is not less than
110% of the fair market value of the underlying stock at the date of grant, and
such option expires no more than five years from the date of grant. The number
of shares of stock which may be issued under options granted under the 1973 Plan
to any one individual in any fiscal year shall not exceed 300,000 shares,
subject to adjustment as provided in the 1973 Plan.
Option Features. The option price of the stock subject to the 1973 Plan
shall not be less than 100% of the fair market value of the underlying shares on
the date of grant. Options may expire not more than ten years after the date of
grant. Unless otherwise restricted as specified in the option grant delivered to
the participant, the participant is permitted to exercise any option with
respect to both Class A Common Stock and Class B Common Stock in any proportion
as such participant may determine.
The 1973 Plan provides that options are exercisable immediately or in such
installments as the Compensation Committee may prescribe. The Compensation
Committee also is empowered, in its sole discretion, to accelerate the
exercisability of any option at any time.
With respect to incentive stock options granted after December 31, 1986,
the aggregate fair market value (determined at the time the option is granted)
of the stock with respect to which incentive stock options are exercisable for
the first time by a participant during any calendar year (under all such plans
of the individual's employer corporation and its parent and subsidiary
corporations) shall not exceed $100,000.
Unless otherwise determined by the Compensation Committee, no option is
transferable except by will or by the laws of descent and distribution, or may
be exercised during the optionee's life by anyone other than the optionee.
In the event of a participant's termination of employment, including the
sale of a subsidiary employing a participant (for any reason other than death,
retirement with the consent of the Company or permanent disability), a
participant's option expires on the earlier of the expiration date specified in
the option or three months from the date of termination of employment. In the
event of a participant's retirement with the consent of the Company, options
continue to mature in the normal manner and are exercisable until the later of
the date three years after the date of retirement or, in the event that the
participant should die during such three-year period, are exercisable until the
date twelve months after death; but in no event later than the end
21
<PAGE> 25
of the option exercise period specified in the option. In the case of retirement
due to permanent disability, a participant's options are exercisable, to the
extent exercisable at the date of such retirement, until the date twelve months
after the date of such retirement or, in the event that the participant should
die during such twelve-period, such participant's options are exercisable until
the date twelve months after death; but in no event later than the end of the
option exercise period specified in the option. If a participant's employment
terminates by reason of death, such participant's options would become
exercisable, to the extent exercisable on the date of death, until the date
twelve months after death; but in no event later than the end of the option
exercise period specified in the option.
Payment for stock must be made in full at the time that an option or any
part thereof is exercised and no stock is issued until full payment therefor is
made. Payment may be made in cash or by delivery to the Company of shares of
either Class A Common Stock or Class B Common Stock or a combination thereof. A
participant may satisfy, pursuant to such rules as may be prescribed by the
Compensation Committee, any income tax withholding obligation that may be
imposed in connection with the exercise of an option by the retention of shares
by the Company, or the return to the Company of shares, in each case equal in
fair market value to the amount of all or any portion of the withholding
obligation. With the consent of the Compensation Committee, a participant may
elect to have the Company retain a number of shares otherwise issuable on
exercise of an option, or to deliver shares, in each case equal in fair market
value to the amount of all of any portion of the participant's federal, state
and local income tax obligation resulting from such exercise determined at the
participant's maximum marginal tax rates.
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. (See footnote (1) to the table
captioned "Options/SAR Grants During 1998 Fiscal Year.")
Federal Income Tax Consequences. The grant of an incentive stock option
would have no immediate tax consequences to the Company or to the optionee. A
holder of shares pursuant to the exercise of an incentive stock option would
realize no taxable income at the time of exercise (although the exercise may
cause an adjustment to alternative minimum taxable income). If the holder held
his shares for at least two years from the date of grant and at least one year
from the date of exercise, he would realize taxable long-term capital gain or
long-term capital loss upon a subsequent sale of the shares at a price different
from the option price. In the event that the optionee satisfies the holding
period requirement described above, no deduction would be allowed to the Company
for federal income tax purposes in connection with the grant or exercise of the
option or the sale of shares acquired pursuant to such exercise.
If, however, the optionee disposes of the shares within the period
described above (a "disqualifying disposition"), the optionee will generally
recognize ordinary income (and the Company will be entitled to a deduction) at
the time of disposition equal to the excess over the exercise price of the
lesser of (a) the fair market value of the shares acquired on the date of
exercise, or (b) the amount realized upon the disposition. Any excess of the
amount realized upon such disposition over the fair market value at the date of
exercise will be short-term or long-term capital gain, depending on the holding
period.
The grant of a stock option other than an incentive stock option (a
"non-qualified stock option") would have no immediate tax consequences to the
Company or to the optionee. Upon the exercise of such option the optionee will
be treated as receiving compensation taxable as ordinary income in an amount
equal to the
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excess of the fair market value of the shares at the time of exercise by the
optionee over the option price. This excess will also constitute wages subject
to the withholding of income tax. The amount treated as compensation taxable as
ordinary income may be claimed as a deduction by the Company at the same time as
the optionee is treated as realizing compensation.
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 (provided that holders of shares representing a
majority of the votes entitled to be cast actually cast votes) is required to
adopt the 1973 Plan, as amended. Abstentions and broker non-votes will not
affect the voting results although they will have the practical effect of
reducing the likelihood that shares representing a majority of the votes
entitled to be cast will in fact be cast.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE 1973 PLAN, AS AMENDED.
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. The shareholder proposal is
being co-filed by the Sally S. Venerable Charitable Remainder Trust, an owner in
street name of 1,000 shares of the Company's common stock.
BOARD INCLUSIVENESS
Employees, customers, and stockholders reflect a greater diversity of
backgrounds than ever before. We believe that the board composition of major
corporations should reflect the people in the workforce and marketplace of the
Twenty-first Century if our company is going to remain competitive.
The Department of Labor's 1995 Glass Ceiling Commission reported ("Good for
Business: Making Full Use of the Nation's Human Capital") that diversity and
inclusiveness in the workplace positively impact the bottom line. A Covenant
Fund report of S&P 500 companies revealed that ". . . firms that succeed in
shattering their own glass ceiling racked up stock-market records that were
nearly 2.5 times better than otherwise-comparable companies."
The Investor Responsibility Research Center (IRRC) reports that in 1996,
representation at senior management levels was only at 12 percent for the over
39,000 companies required to submit the EEO-1 Report. The Glass Ceiling
Commission reported that companies select from only half of the available talent
within the U.S. workforce.
If we are to be prepared for the 21st Century, we must learn how to
compete in an increasingly diverse global marketplace, by promoting and
selecting the best qualified people regardless of race, gender or physical
challenge. Sun Oil's CEO Robert Campbell stated (Wall Street Journal, 8/12/96):
"Often what a woman or minority person can bring to the board is some
perspective a company has not 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 workforce."
We believe that the judgement and perspectives of a more diverse board will
improve the quality of corporate decision-making. A growing proportion of
stockholders is attaching value to board inclusiveness,
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since the board is responsible for representing shareholder interests. The
Teachers Insurance and Annuity Association and College Retirement Equities Fund,
the largest U.S. institutional investor, recently issued a set of corporate
governance guidelines which included a call for "diversity of directors by
experience, sex, age, and race."
We therefore, urge our company to enlarge its search for qualified board
members.
RESOLVED: Shareholders request that
1. The Company make available to shareholders, at reasonable expense, a
report four months from the date of the annual meeting, which includes
a description of:
-- Efforts to encourage diversified representation on the board;
-- Criteria for board qualification;
-- The process of selecting board nominees, and board committee
members;
-- A public statement committing the company to a policy of board
inclusiveness, with a program of steps to be taken and the time line
expected to move in that direction.
2. The Board Nominating Committee make a greater effort to locate
qualified women and persons of color as candidates for nomination to
the board.
MANAGEMENT'S STATEMENT IN OPPOSITION
Your Board of Directors opposes this proposal for the following reasons:
A similar resolution was proposed at the Annual Meetings held on May 5,
1997 and May 4, 1998, at which 195,750,528 votes and 196,263,797 votes,
respectively, were cast against its adoption, representing approximately 91.20%
(in 1997) and 90.44% (in 1998) 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 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.
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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) approval of the Company's 1973
Plan, as amended; 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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<PAGE> 29
SHAREHOLDER PROPOSALS FOR THE
2000 ANNUAL MEETING
Shareholder proposals for inclusion in the proxy materials related to the
2000 Annual Meeting of Shareholders must be received by the Company no later
than December 1, 1999. Any shareholder proposal not intended to be included in
the proxy materials related to the 2000 Annual Meeting of Shareholders must be
received by the Company no later than February 21, 2000 or else management of
the Company will retain discretion to vote proxies received for that meeting in
their discretion with respect to such proposal.
By Order of the Board of
Directors
HUBBELL
INCORPORATED
Orange, Connecticut
March 22, 1999
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<PAGE> 30
HUBBELL INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 3, 1999
(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 22, 1999 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) and
(3), AND AGAINST PROPOSAL (4) 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> 31
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 FOR AGAINST ABSTAIN
OF ALL THE NOMINEES IN PROPOSAL 1, AND FOR PROPOSALS 2 AND 3, the selection of / / / / / /
AND AGAINST PROPOSAL 4 PricewaterhouseCoopers
as independent accountants
PROPOSAL 1-ELECTION OF DIRECTORS G. RATCLIFFE, E. BROOKS, for the year 1999.
G. EDWARDS, J. HOFFMAN, A. McNALLY IV, D. MEYER, J. URQUHART,
M. WALLOP PROPOSAL 3-Approval of the
Company's 1973 Stock Option / / / / / /
FOR all nominees listed above, Plan, as amended.
(except as marked to the contrary below).
/ / PROPOSAL 4-Shareholder Proposal
on Board Diversity. / / / / / /
WITHHOLD AUTHORITY
to vote for all nominees listed above.
/ /
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in the
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>
<PAGE> 32
HUBBELL INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 3, 1999
(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 22, 1999 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)
and (3), AND AGAINST PROPOSAL (4) 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> 33
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 FOR AGAINST ABSTAIN
OF ALL THE NOMINEES IN PROPOSAL 1, AND FOR PROPOSALS 2 and 3, the selection of / / / / / /
AND AGAINST PROPOSAL 4 PricewaterhouseCoopers
as independent accountants
for the year 1999.
PROPOSAL 1-ELECTION OF DIRECTORS G. RATCLIFFE, E. BROOKS,
G. EDWARDS, J. HOFFMAN, A. McNALLY IV, D. MEYER, J. URQUHART, PROPOSAL 3-Approval of the
M. WALLOP Company's 1973 Stock Option / / / / / /
Plan, as amended.
FOR all nominees listed above,
(except as marked to the contrary below). PROPOSAL 4-Shareholder Proposal
/ / on Board Diversity. / / / / / /
WITHHOLD AUTHORITY
to vote for all nominees listed above.
/ /
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in the
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>
