<PAGE>
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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials (proxy card)
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
KUHLMAN CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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>
[LOGO]
KUHLMAN CORPORATION
3 SKIDAWAY VILLAGE SQUARE
SAVANNAH, GEORGIA 31411
March 22, 1996
DEAR STOCKHOLDER:
You are cordially invited to attend the annual meeting of stockholders of
Kuhlman Corporation ("Kuhlman") to be held at the Hyatt Regency Savannah, 2 West
Bay Street, Savannah, Georgia 31401 on April 25, 1996, at 9:30 a.m., local time
("Annual Meeting").
The Kuhlman Annual Meeting will be held for the following purposes: (i) to
elect three directors; (ii) to vote on a proposed amendment to the Kuhlman 1994
Stock Option Plan to increase the number of shares of Kuhlman's Common Stock
which may be issued thereunder; and (iii) to ratify the appointment of Arthur
Andersen LLP as independent auditors to conduct the annual examination of the
financial statements of Kuhlman and its subsidiaries for the current year.
Whether or not you plan to attend the Kuhlman Annual Meeting, please
complete, sign and date the accompanying proxy card and return it in the
enclosed prepaid envelope. You may revoke your proxy in the manner described in
the accompanying Proxy Statement at any time before it has been voted at the
Kuhlman Annual Meeting. If you attend the Kuhlman Annual Meeting, you may vote
in person even if you have previously returned your proxy card. Your prompt
cooperation will be greatly appreciated.
The 1995 Annual Report to stockholders of Kuhlman, including financial
statements, is furnished herewith.
Sincerely,
[SIGNATURE]
ROBERT S. JEPSON, JR.
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
<PAGE>
KUHLMAN CORPORATION
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders ("Annual
Meeting") of Kuhlman Corporation ("Kuhlman") will be held at the Hyatt Regency
Savannah, 2 West Bay Street, Savannah, Georgia 31401 on April 25, 1996, at 9:30
a.m., local time, for the following purposes:
1. To elect three directors;
2. To consider and vote on a proposal to amend the Kuhlman 1994 Stock
Option Plan to increase the number of shares of Kuhlman's Common Stock
which may be issued thereunder;
3. To ratify the appointment of Arthur Andersen LLP as the independent
auditors for Kuhlman and its subsidiaries for the current year; and
4. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on March 1, 1996 will
be entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors,
RICHARD A. WALKER
SECRETARY
Savannah, Georgia
March 22, 1996
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PLEASE DATE, SIGN AND RETURN YOUR KUHLMAN PROXY PROMPTLY IN THE ENCLOSED,
SELF-ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
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<PAGE>
KUHLMAN CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
------------------------
INTRODUCTION
This Proxy Statement is being furnished to the stockholders of Kuhlman
Corporation, a Delaware corporation ("Kuhlman"), in connection with the
solicitation of proxies on behalf of the Board of Directors of Kuhlman ("Board
of Directors") for use at the annual meeting of Kuhlman stockholders to be held
on April 25, 1996, and at any adjournment thereof ("Annual Meeting"). The
address of the principal executive offices of Kuhlman is 3 Skidaway Village
Square, Savannah, Georgia 31411.
The Annual Meeting has been called by the Board of Directors for the
following purposes: (i) to elect three directors; (ii) to vote on a proposal to
amend the Kuhlman 1994 Stock Option Plan to increase the number of shares of
common stock of Kuhlman, par value $1.00 per share ("Kuhlman Common Stock")
which may be issued thereunder, and (iii) to ratify the appointment of Arthur
Andersen LLP as Kuhlman's independent auditors for the current year ending
December 31, 1996. The Annual Meeting will be held on April 25, 1996, at 9:30
a.m., local time, at the Hyatt Regency Savannah, 2 West Bay Street, Savannah,
Georgia 31401. Only stockholders of record of Kuhlman Common Stock at the close
of business on March 1, 1996 will be entitled to notice of and to vote at the
Annual Meeting. Kuhlman had outstanding 13,194,151 shares of Kuhlman Common
Stock as of the close of business on March 1, 1996. There are no other voting
securities outstanding. Each stockholder is entitled to one vote per share for
the election of directors, as well as on each other proposal contained in the
notice of the Annual Meeting. If the accompanying proxy form is signed and
returned, the shares represented thereby will be voted in accordance with any
direction on the proxy form, or in the absence of a direction as to any
proposal, they will be voted FOR the proposal; and it is intended that they will
be voted for the nominees named herein, except to the extent authority to vote
is withheld. Stockholders may revoke their proxies at any time prior to the
voting thereof by giving written notice of such revocation to Kuhlman, by
executing and delivering a proxy bearing a later date or by attending the Annual
Meeting and voting in person.
The expenses of the solicitation of Kuhlman stockholders will be paid by
Kuhlman. In addition to the use of the mail, proxies may be solicited by
directors, officers, or regular employees of Kuhlman in person, by telegraph or
by telephone. Arrangements will also be made with brokerage firms and other
custodians, nominees and fiduciaries to forward solicitation material to the
beneficial owners of the shares of Kuhlman Common Stock held of record by such
persons, and Kuhlman will reimburse such brokerage firms, custodians, nominees
and fiduciaries for reasonable out-of-pocket expenses incurred by them in
connection therewith. Kuhlman has retained Georgeson & Company Inc. to assist in
the solicitation of proxies. The fee of such firm is estimated to be $7,000,
plus reimbursement for out-of-pocket costs and expenses.
The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the outstanding shares of Kuhlman Common Stock is necessary to
constitute a quorum under Delaware law and the Bylaws of Kuhlman. Votes cast by
proxy or in person at the meeting will be tabulated by election inspectors
appointed for the meeting and will determine whether or not a quorum is present.
The election inspectors will treat abstentions and "broker non-votes" (i.e.,
proxies of brokers who have limited authority to vote on specified proposals) as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum at the meeting.
A plurality of the votes cast for the election of directors will be required
to elect Kuhlman directors at the meeting. In the absence of an election
contest, withholding authority to vote and broker non-votes with respect to a
nominee will have no effect on the election of such nominee.
1
<PAGE>
Approval of the proposed amendment to the Kuhlman 1994 Stock Option Plan to
increase the number of shares of Kuhlman's Common Stock which may be issued
thereunder requires the affirmative vote of the holders of a majority of the
Kuhlman Common Stock present or represented by proxy and entitled to vote at the
Annual Meeting.
Kuhlman stockholders may mark the accompanying Kuhlman proxy to vote their
shares FOR or AGAINST or to ABSTAIN with respect to each proposal, except that
with respect to the election of directors, Kuhlman stockholders may either vote
FOR the nominees named herein or to WITHHOLD authority to vote for one or more
of such nominees. Abstentions (but not broker non-votes) will be considered
entitled to vote for purposes of the proposal to amend the Kuhlman 1994 Stock
Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT KUHLMAN STOCKHOLDERS VOTE "FOR"
APPROVAL OF EACH NOMINEE FOR ELECTION OF DIRECTORS AND OF EACH PROPOSAL
CONTAINED IN THE ACCOMPANYING NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
KUHLMAN.
The management of Kuhlman knows of no business other than that stated in
this Proxy Statement which will be presented for stockholder vote at the Annual
Meeting. If other business should properly come before such meeting, however,
the persons designated in the enclosed Kuhlman proxy will vote or refrain from
voting in respect thereof in accordance with the judgment of the persons voting
such proxies.
This Proxy Statement and the form of proxy for use at the Annual Meeting are
first being mailed to stockholders of Kuhlman on or about March 22, 1996.
THE DATE OF THIS PROXY STATEMENT IS MARCH 22, 1996.
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ELECTION OF KUHLMAN DIRECTORS
The Kuhlman Bylaws provide that the number of directors, as determined by
the Kuhlman Board of Directors, shall not be less than six nor more than eleven.
The Kuhlman Bylaws further provide that directors shall be divided into three
classes serving staggered three year terms, with each class to be as nearly
equal in number as possible.
The terms of Steve Cenko, Robert S. Jepson, Jr. and John L. Marcellus, Jr.
will expire at the Annual Meeting. The Board of Directors has nominated Messrs.
Cenko, Jepson and Marcellus for re-election as directors to serve until the 1999
annual meeting of stockholders.
The proposed nominees for election as directors have indicated that they are
willing to be elected and serve as such and it is intended that the persons
named in the accompanying form of proxy will vote for the election of such
nominees, assuming authority to vote is granted. If, as a result of
circumstances not now known or foreseen, any of such nominees shall be
unavailable or unwilling to serve as a director, the Board of Directors may
select a substitute nominee and in that event the proxies will vote for the
person so selected. If a substitute nominee is not so selected, the proxies will
vote for the election of the remaining nominees. Directors are elected by a
plurality of the votes cast at the meeting.
INFORMATION REGARDING KUHLMAN DIRECTORS, NOMINEES FOR
DIRECTORS OF KUHLMAN AND EXECUTIVE OFFICERS
The following information is furnished with respect to each person who is
currently a director of Kuhlman whose term of office will continue after the
Annual Meeting, as well as those persons who have been nominated for election as
a director, each of whom is currently a director of Kuhlman, and each person who
is an executive officer of Kuhlman:
<TABLE>
<CAPTION>
DIRECTOR
OF
KUHLMAN
NAME AGE SINCE POSITION
- ------------------------------------- --- ---------- --------------------------------------------------------
<S> <C> <C> <C>
Curtis G. Anderson 54 1993 President, Chief Operating Officer and Director of
Kuhlman (3)
William E. Burch 71 1993 Director of Kuhlman (1)
Steve Cenko 70 1987 Director of Kuhlman (2)(4)
Gary G. Dillon 61 1995 Chairman, President and Chief Executive Officer of
Schwitzer, Inc. and Director of Kuhlman (3)
Alexander W. Dreyfoos, Jr. 64 1993 Director of Kuhlman (1)
Robert S. Jepson, Jr. 53 1993 Chairman of the Board, Chief Executive Officer and
Director of Kuhlman (4)
William M. Kearns, Jr. 60 1993 Director of Kuhlman (3)
Robert D. Kilpatrick 72 1993 Director of Kuhlman (2)
John L. Marcellus, Jr. 73 1982 Director of Kuhlman (1)(4)
George J. Michel, Jr. 64 1985 Director of Kuhlman (3)
General H. Norman Schwarzkopf 61 1994 Director of Kuhlman (2)
</TABLE>
- ------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Finance Committee.
(4) Nominated for election as a director.
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The current term of Messrs. Cenko, Jepson and Marcellus expires in 1996; of
Messrs. Dillon, Kearns, Kilpatrick and Michel, in 1997; and of Messrs. Anderson,
Burch, Dreyfoos and General Schwarzkopf, in 1998.
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER OF
KUHLMAN
NAME AGE SINCE POSITION
- ----------------------- --- ---------- ----------------------------------------------------------------------
<S> <C> <C> <C>
Robert S. Jepson, Jr. 53 1993 Chairman of the Board and Chief Executive Officer
Curtis G. Anderson 54 1994 President and Chief Operating Officer
Gary G. Dillon 61 1995 Chairman, President and Chief Executive Officer of
Schwitzer, Inc.
Vernon J. Nagel 38 1993 Executive Vice President of Finance, Chief Financial Officer and
Treasurer
Richard A. Walker 44 1984 Executive Vice President, Chief Administrative Officer, General
Counsel and Secretary
John Zvolensky, Jr. 54 1995 President and Chief Executive Officer of Kuhlman Electric Corporation
</TABLE>
Mr. Anderson, who was elected President and Chief Operating Officer of
Kuhlman on April 26, 1994, and a director on September 8, 1993, founded and has
been, since 1986, Chairman of Anderson Capital Corporation, a private investment
company. Prior thereto, he spent 19 years in corporate and investment banking,
including 14 years with Citibank and five years with The First National Bank of
Chicago where he served as Executive Vice President, Head of Financial Products
Department.
Mr. Burch served as counsel to the law firm of Lukins & Annis in Spokane,
Washington from 1984 to 1993. From 1981 to 1984, he served as Vice Chairman and
from 1975 to 1981, as President and Chief Executive Officer of Fred S. James &
Co. (insurance brokers). He has been a consultant from 1982 to the present and
currently serves as a director of Atkinson.
Mr. Cenko has been a consultant from 1985 to the present. From 1980 to 1985
he served as President of Lamb Systems Group (engineering, manufacturing, and
marketing of machine tools) and as a director and Executive Vice President of
Lamb Technicon Corporation (holding company).
Mr. Dillon is Chairman, President and Chief Executive Officer of Schwitzer,
Inc. Mr. Dillon has served in his present capacity since June, 1991, having
served as President and Chief Executive Officer since April, 1989. Prior to
April, 1989 he served as President and Chief Executive Officer of Household
Manufacturing, Inc. Mr. Dillon is also a director of Household International,
Inc.
Mr. Dreyfoos is currently serving, and has served continuously since 1963,
as Chairman of the Board of Photo Electronics Corporation (investment
management).
Mr. Jepson, who was elected President and Chief Executive Officer of Kuhlman
on February 10, 1993, and Chairman of the Board on June 9, 1993, founded and was
Chairman and Chief Executive Officer of The Jepson Corporation from 1983 until
its sale in 1989. The Jepson Corporation was a diversified manufacturing company
listed on the New York Stock Exchange. Immediately preceding his election as
President and Chief Executive Officer of Kuhlman, Mr. Jepson was, and is
currently, Chairman and Chief Executive Officer of Jepson Associates, Inc., a
private investment company. Mr. Jepson currently serves as a director of The
Washington Water Power Company and Savannah Foods & Industries, Inc.
Mr. Kearns is currently President of W.M. Kearns & Co., Inc. (private
investment company). He was associated with Lehman Brothers (investment banking)
and its predecessor firms for more than 33 years. From 1992 to 1994 he was an
Advisory Director of Lehman Brothers and from 1969 through 1992 he was a
Managing Director of that firm. He also serves as a director of Selective
Insurance Group, Inc., Mountasia Entertainment International, Inc. and
Consolidated Delivery & Logistics, Inc.
Mr. Kilpatrick retired as Chairman of the Board and Chief Executive Officer
of CIGNA Corporation (insurance) in 1989 and 1988, respectively. He served in
various executive positions with CIGNA prior thereto. He currently serves as a
director of United Companies Financial Corporation.
4
<PAGE>
Mr. Marcellus retired as Chairman, President and Chief Executive Officer of
Oneida Ltd. (tableware manufacturing) in 1986. He currently serves as a director
of Southern Financial Federal Savings Bank.
Mr. Michel has been a private investor and consultant and Chairman of
Windstar International, Inc. (management consulting) from 1990 to the present.
Prior to 1990, he was Chairman of Stanadyne, Inc. (diversified manufacturer of
fabricated metal products) from 1985 to 1989, and Chief Executive Officer of the
same corporation from 1988 to 1989.
Mr. Nagel joined Kuhlman on April 5, 1993 and was elected Vice President of
Finance, Chief Financial Officer and Treasurer of Kuhlman on June 9, 1993 and
Executive Vice President of Finance on February 22, 1994. He was the Vice
President of Finance, Chief Financial Officer and Secretary of Stericycle, Inc.
(medical waste management) from 1990 until 1993. Prior thereto, Mr. Nagel served
as a Vice President of The Jepson Corporation from 1985 until 1990, including
Chief Financial Officer from 1989 until 1990 and Controller from 1986 until
1989.
General Schwarzkopf is currently active as an author, lecturer and TV
consultant. He retired in August 1991 as a Four-Star General in the U.S. Army
after having served as Commander in Chief, United States Central Command,
Department of Defense, and Commander of Operations Desert Shield and Desert
Storm. He currently serves as a director of Borg Warner Security Corporation,
The Washington Water Power Company and Remington Arms Company, Inc.
Mr. Walker has served as an Executive Vice President or similar position
with Kuhlman since 1991. From 1984 until 1991, Mr. Walker served as Vice
President, General Counsel and Secretary of Kuhlman. Prior thereto, Mr. Walker
was a partner in the law firm of Harness, Dickey & Pierce.
Mr. Zvolensky has served as President and Chief Executive Officer of Kuhlman
Electric Corporation since July 31, 1995. From July, 1994 until joining Kuhlman
Electric, he was General Manager and Chief Operating Officer of the Greater
Cleveland Growth Association (chamber of commerce for greater Cleveland). From
January, 1992 to September, 1993, he was President of WCI Cabinet Group
(manufacturer of kitchen and bath cabinets), a division of White Consolidated
Industries (diversified manufacturing company). From 1987 to 1991, Mr. Zvolensky
was President and Chief Executive Officer of Emerson Quiet Kool (manufacturer of
room air conditioners).
BOARD OF DIRECTORS AND COMMITTEES
Kuhlman currently has standing Audit, Compensation, and Finance Committees
of the Board of Directors, and Steve Cenko continues to advise the Board of
Directors with respect to, and recommend individuals as, nominees for director
of Kuhlman.
The members of the Audit Committee are William E. Burch, Chairman, Alexander
W. Dreyfoos, Jr. and John L. Marcellus, Jr. The Audit Committee, which met twice
during 1995, recommends the appointment, subject to approval by the Board of
Directors and ratification by the stockholders, of Kuhlman's independent
auditors. The Committee meets with representatives of Kuhlman's independent
auditors to review the scope and effectiveness of the auditing functions, makes
appropriate reports and recommendations to the Board of Directors, approves the
fees to be paid to the independent auditors and considers the effect of
non-audit services on the independence of the independent auditors.
The members of the Compensation Committee are Robert D. Kilpatrick,
Chairman, Steve Cenko and General H. Norman Schwarzkopf. The Committee, which
met three times during 1995, reviews and establishes all forms of compensation,
including periodic adjustments, for officers and certain other key employees of
Kuhlman. This Committee also administers the stock option and stock appreciation
rights plans of Kuhlman and grants options and stock appreciation rights
thereunder.
The Finance Committee is composed of George J. Michel, Jr., Chairman, Curtis
G. Anderson, Gary G. Dillon and William M. Kearns, Jr. This Committee, which did
not meet during 1995, provides advice to the officers of Kuhlman as to the
investment of funds held by Kuhlman and as to capitalization and the financial
resources needed by Kuhlman to meet its short-term and long-term needs. The
Committee also reviews the investment policies and performance of the employee
benefit plans of Kuhlman.
5
<PAGE>
Five meetings of the Board of Directors were held during 1995. Each director
attended at least seventy-five percent of the aggregate of the total number of
meetings of the Board of Directors of Kuhlman held in 1995 during the time that
the person served as a director and the total number of meetings held by all
committees of the Board on which they served during the periods that they served
in 1995.
A stockholder of Kuhlman may nominate persons for election to the Board of
Directors of Kuhlman if such stockholder submits such nomination, together with
certain related information required by Kuhlman's Bylaws, in writing to the
Secretary of Kuhlman not less than 60 days nor more than 90 days prior to the
first anniversary of the preceding year's annual meeting of stockholders;
provided, that in the event the date of the annual meeting is advanced by more
than 30 days or delayed by more than 60 days from such anniversary date, the
nomination must be submitted not earlier than the 90th day prior to such annual
meeting and not later than the 60th day prior to such annual meeting or the 10th
day following the date on which public announcement of the date of such meeting
is first made.
COMPENSATION OF DIRECTORS
Non-employee directors receive an annual retainer of $24,000 which covers
all Board of Directors meetings, Committee meetings and consulting services
(however, additional payments for financial advisory services rendered to
Kuhlman by an affiliate of Mr. Kearns will also be made. See "Information
Regarding Kuhlman Directors, Nominees for Directors of Kuhlman and Executive
Officers -- Related Transactions.") In addition, under Kuhlman's Non-Employee
Directors Stock Plan which was approved by stockholders in 1993, non-employee
directors receive annually a number of shares of Kuhlman's Common Stock equal to
an aggregate Fair Market Value of $24,000 concurrent with the meeting of the
Board of Directors held each year after the Annual Meeting of Stockholders. Fair
Market Value is defined as the closing price of Kuhlman Common Stock on the New
York Stock Exchange on the date of such directors' meeting or if there is no
such price published on such date, then the most recent preceding date on which
such price is published. Pursuant to such Plan, Messrs. Burch, Cenko, Dreyfoos,
Kearns, Kilpatrick, Marcellus, Michel and General Schwarzkopf each received
2,000 shares of Kuhlman Common Stock as of May 31, 1995.
All non-employee directors are reimbursed for travel and other expenses
related to attendance at meetings and receive term life insurance and accidental
death and disability coverage in the amount of $50,000. The cost to the
Corporation for this insurance coverage is $240 per year for each director.
During 1995, Kuhlman provided medical and dental insurance coverage to Messrs.
Burch, Dreyfoos, Kearns, Kilpatrick, Michel and General Schwarzkopf. The total
compensation, including insurance benefits, but excluding the stock referred to
above, paid to each non-employee director during 1995 was as follows: William E.
Burch --$35,074; Steve Cenko -- $24,399; Alexander W. Dreyfoos, Jr. -- $35,074;
William M. Kearns, Jr. -- $35,074; Robert D. Kilpatrick -- $35,074; John L.
Marcellus, Jr. -- $24,399; George J. Michel, Jr. -- $35,074; and General H.
Norman Schwarzkopf -- $35,074.
REPORT OF THE COMPENSATION COMMITTEE OF THE KUHLMAN BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION
Kuhlman's executive compensation program is administered by the Compensation
Committee of the Kuhlman Board of Directors. The Compensation Committee is
composed entirely of non-employee directors of Kuhlman.
OVERALL POLICY. The Compensation Committee determines the compensation of
the officers of Kuhlman, including the individuals named in the Summary
Compensation Table. The compensation of the corporation's Chief Executive
Officer is ratified by the Board of Directors. Kuhlman's compensation program
for officers is designed to be linked to corporate performance and to returns to
stockholders. To this end, Kuhlman has developed an overall compensation
strategy and specific compensation plans that tie a very significant portion of
executive compensation to Kuhlman's and the individual's success in meeting
specified performance objectives and to appreciation in Kuhlman's stock price.
In 1995, the specific performance objectives included reducing inventory,
reducing overhead costs by improving operating efficiencies, continued
implementation of an acquisition strategy, and continued implementation of new
business practices, policies and procedures. Subjective discretionary factors
were utilized in determining cash bonus awards, as well as other elements of
officer compensation. The overall objectives of this strategy are to attract and
retain the best possible executive talent, to motivate these executives to
achieve the objectives
6
<PAGE>
inherent in Kuhlman's business strategy, to link executive and stockholder
interests through equity-based plans, and finally to provide a compensation
package that recognizes individual contributions as well as overall business
results.
The key elements of Kuhlman's officer compensation program presently consist
of base salary, annual bonus, stock options and cash-only stock appreciation
rights (SARs). The Compensation Committee's policies with respect to each of
these elements, including the bases for the compensation awarded to Mr. Jepson,
Kuhlman's Chairman and Chief Executive Officer, are discussed below. In
addition, while the elements of compensation described below are considered
separately, the Compensation Committee takes into account the full compensation
package afforded by Kuhlman to the individual, including pension benefits,
severance plans, insurance and other benefits, as well as the programs described
below. The Compensation Committee retains the discretion to keep individual
items of compensation constant so long as total compensation fairly reflects
overall corporate performance and individual achievement.
BASE SALARIES. Base salaries for new officers are initially determined by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for executive
talent, including a comparison of average and median base salaries for similar
positions at other comparable companies. Companies believed to be comparable
include similarly-sized (based on expected annual revenues of Kuhlman) basic
manufacturing companies, other than so-called "high technology" manufacturing
companies, as well as holding companies with subsidiaries involved in
manufacturing.
Annual salary adjustments are determined by evaluating the performance of
Kuhlman and of each officer versus various performance objectives, and also take
into account new responsibilities and subjective discretionary factors. In the
case of officers with responsibility for a particular division or subsidiary (a
"Business Unit"), the financial results of that Business Unit are also
considered. The Compensation Committee, where appropriate, also considers
non-financial performance measures. These include increase in market share,
manufacturing efficiency gains, improvements in product quality and improvements
in relations with customers, suppliers and employees.
Mr. Jepson's base salary of $300,000 per year for 1995 was established in
1993 at the commencement of his employment. In arriving at the base salary
amount, the Compensation Committee took into account a comparison of median base
salaries for chief executive officers of comparable manufacturing companies, as
referred to above, and the assessment by the Compensation Committee of Mr.
Jepson's individual performance expected in 1993 and beyond. Mr. Jepson's base
salary was not changed in 1994 or 1995, but was increased effective January 1,
1996 to $450,000 per year to reflect the performance and increased
responsibilities of Mr. Jepson, as well as by reference to the competitive
marketplace including average and median base salaries and total cash
compensation (base salary plus bonus) for similar positions at other comparable
companies, as referred to above. The base salary of Mr. Anderson, Kuhlman's
President and Chief Operating Officer, was established at the commencement of
his employment in 1994 and was based on the same type of factors as those
described above for Mr. Jepson. The base salaries of Mr. Anderson and of Messrs.
Nagel and Walker were not increased in 1995. Mr. Dillon joined Kuhlman with a
base salary of $400,000 per year on May 31, 1995 upon the merger of a
wholly-owned subsidiary of Kuhlman with and into Schwitzer, Inc. Certain other
compensation arrangements between Mr. Dillon and Schwitzer U.S. Inc. are
described under "Executive Compensation - Executive Compensation and Severance
Agreements." The base salaries of each of Messrs. Anderson, Dillon, Nagel and
Walker were increased effective January 1, 1996 to $400,000, $420,000, $230,000,
and $230,000, per year, respectively, utilizing the same factors used in
determining Mr. Jepson's base salary increase referred to above.
ANNUAL BONUS. Kuhlman officers are eligible for an annual cash bonus. As in
the case of base salary, the Compensation Committee may consider individual
non-financial performance measures and subjective discretionary factors
including significant accomplishments and/or increased responsibilities,
leadership, and, where appropriate, Business Unit and line item performance
measures (such as reduction of inventory and reduction of overhead) in
determining bonuses. Based on these measures, in 1995 Mr. Jepson was awarded a
cash bonus of $300,000. The Compensation Committee believed that this bonus to
Mr. Jepson was justified in view of Mr. Jepson's leadership of Kuhlman in 1995,
which included improving Kuhlman's
7
<PAGE>
balance sheet and completing the acquisition of Schwitzer, Inc. Mr. Jepson's
bonus amount in 1995, as well as the bonuses received in 1995 by Messrs.
Anderson, Dillon, Nagel and Walker, were determined on a discretionary basis,
keeping in mind average and median total cash compensation levels at comparable
manufacturing companies, as referred to above. In the case of Mr. Dillon,
reference was also made to certain performance guidelines and plans used at
Schwitzer (see "Executive Compensation and Severance Agreements"). The
Compensation Committee believed that the bonuses paid to each of Messrs.
Anderson, Dillon, Nagel and Walker were justified based on each of said
executive's individual performance in 1995, including the assistance provided by
each of said executives to Mr. Jepson in the implementation of the foregoing
activities.
STOCK OPTIONS. Under Kuhlman's stock option plans, which were approved by
stockholders, stock options are granted to Kuhlman officers and other key
employees. Stock options are also designed to further align the interests of
officers with those of stockholders. The Compensation Committee sets guidelines
for the size of stock option awards based on factors similar to those used to
determine base salaries and annual bonuses, including general competitive
compensation practices regarding stock option awards. In the event of poor
corporate performance, the Compensation Committee can elect not to award
options. The Committee also considers grants in previous years. The grants in
1995 took into account the desire on the part of the Compensation Committee to
further align the officer's interests with those of Kuhlman stockholders. Stock
options are granted with an exercise price equal to the market price of Kuhlman
Common Stock on the date of grant. In 1995, Mr. Jepson and each of Messrs.
Anderson, Nagel and Walker received options to purchase shares of Kuhlman Common
Stock. In early 1995, Mr. Dillon received options to purchase shares of
Schwitzer, Inc. Common Stock, which options were, effective May 31, 1995, at the
completion of the merger of a wholly owned subsidiary of Kuhlman with and into
Schwitzer, Inc., converted into options to purchase shares of Kuhlman Common
Stock.
STOCK APPRECIATION RIGHTS. Under the Kuhlman Corporation 1994 Stock
Appreciation Rights Plan (the "SAR Plan") adopted by the Board of Directors in
1994, SARs may be granted to Kuhlman officers and other key employees. The SARs
are automatically exercised on the fifth anniversary of grant and pay in cash
the difference between the price of Kuhlman Common Stock on the date of exercise
versus the price of such stock on the date of grant of the SAR. The Compensation
Committee sets guidelines for the size of SAR grants based on factors similar to
those used for stock options. During 1995, no SAR grants were made.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Code, enacted in 1993 and effective for fiscal years beginning on or after
January 1, 1994, generally disallows a tax deduction to public companies for
compensation over $1 million paid to a corporation's chief executive officer and
four other most highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. Kuhlman currently intends to continue to review
the performance-based portion of the compensation of its executive officers in
view of this statute and regulations relating thereto.
CONCLUSION. Through the programs described above, a very significant
portion of Kuhlman's executive compensation is linked directly to corporate and
individual performance and stock price appreciation. In 1995, as in previous
years, a significant portion of Kuhlman officers' compensation consisted of
these variable performance-based elements. The Compensation Committee intends to
continue the policy of linking executive compensation to corporate performance
and returns to stockholders, recognizing that the fluctuations of a business
cycle may from time to time result in an imbalance for a particular period.
COMPENSATION COMMITTEE
Robert D. Kilpatrick, Chairman
Steve Cenko
General H. Norman Schwarzkopf
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth certain
information regarding compensation paid during each of Kuhlman's last three
fiscal years to its Chief Executive Officer, and the four most highly
compensated persons serving as executive officers of Kuhlman ("Named
Executives") at December 31, 1995 whose salary and bonus for fiscal year 1995
exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------
AWARDS
--------------------------
NUMBER OF
ANNUAL SECURITIES
COMPENSATION (1) RESTRICTED UNDERLYING
---------------------- OTHER ANNUAL STOCK OPTIONS/SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (2) AWARDS GRANTED (3) COMPENSATION (4)
- ------------------------------ --------- --------- ----------- ----------------- ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert S. Jepson, Jr. 1995 $ 300,000 $ 300,000 $ -- $ -- 100,000 $ 4,584
Chairman of the Board and 1994 300,000 -- -- -- 135,000 4,482
Chief Executive Officer 1993 267,045 300,000(5) -- -- 100,000 753,695(6)
Curtis G. Anderson (7) 1995 300,000 300,000 -- -- 50,000 5,970
President and Chief 1994 204,282 -- -- 500,000(8) 135,000 4,374
Operating Officer 1993 -- -- -- -- -- --
Gary G. Dillon (7) 1995 370,292 300,000 24,699 -- 9,615 1,489,444(9)
Chairman, President and 1994 -- -- -- -- -- --
Chief Executive Officer 1993 -- -- -- -- -- --
of Schwitzer, Inc.
Vernon J. Nagel (7) 1995 190,000 80,000 -- -- 20,000 4,847
Executive Vice President of 1994 180,000 10,000 2,301 -- 45,000 4,289
Finance, Chief Financial 1993 96,515 65,000 6,303 -- 25,000 2,311
Officer and Treasurer
Richard A. Walker 1995 190,000 80,000 -- -- 20,000 4,847
Executive Vice President, 1994 183,333 10,000 4,592 -- 30,000 4,526
Chief Administrative Officer, 1993 137,500 45,000 4,124 -- 10,000 3,707
General Counsel and Secretary
<FN>
- ------------------------------
</TABLE>
(1) The aggregate amount of perquisites and other personal benefits for any
named executive did not exceed $50,000 or 10% of the total of annual salary
and bonus for any such named executive, and is therefore not reflected in
the table.
(2) Represents amounts reimbursed during the referenced years for the payment of
taxes as to club fees and automobile allowance for Mr. Dillon and as to
relocation expenses for Messrs. Nagel and Walker.
(3) Represents the number of option shares granted under Kuhlman's stock option
plans and stock appreciation rights granted under the SAR Plan.
(4) The amounts shown in this column include the following:
(a) Company contributions to the Kuhlman Electric Corporation ("Kuhlman
Electric") Savings Maximizer Plan ("Savings Maximizer Plan"), and, in the
case of Mr. Dillon, to the Schwitzer U.S. Inc. Supplemental Tax Reduction
Investment Plan ("Supplemental TRIP") (See "Savings and Pension Plans"
below). The amount of the contribution to the Savings Maximizer Plan for
1995 was $0 for Mr. Jepson; $1,386 for Mr. Anderson; $1,386 for Mr.
Nagel; and $1,386 for Mr. Walker and the amount of the contribution to
the Supplemental TRIP for 1995 was $26,791 for Mr. Dillon.
(b) The dollar value of insurance premiums for group term life. The amount
of the payment for group term life insurance premiums for 1995 was $4,584
for Mr. Jepson; $4,584 for Mr. Anderson; $153 for Mr. Dillon; $3,461 for
Mr. Nagel; and $3,461 for Mr. Walker.
(5) This bonus was awarded to Mr. Jepson in the form of shares of Kuhlman
Common Stock.
(6) Includes 50,000 shares of Kuhlman Common Stock valued at $15.00 per share
or $750,000 in the aggregate issued to Mr. Jepson as a signing incentive at
the commencement of his employment by Kuhlman.
9
<PAGE>
(7) On April 26, 1994, Curtis G. Anderson was named as President and Chief
Operating Officer of Kuhlman. On May 31, 1995 Spinner Acquisition Corp.
("Spinner"), a Delaware corporation and a wholly owned subsidiary of
Kuhlman, was merged (the "Merger") with and into Schwitzer, Inc.
("Schwitzer") of which Mr. Dillon was the Chairman, President and Chief
Executive Officer, pursuant to an Agreement and Plan of Merger dated as of
February 25, 1995, among Kuhlman, Spinner, and Schwitzer (the "Agreement").
The Merger became effective upon the filing of a Certificate of Merger with
the Delaware Secretary of State on May 31, 1995 (the "Effective Time"). At
the Effective Time, and pursuant to the Agreement, each outstanding share
of common stock of Schwitzer, par value $.10 per share ("Schwitzer Common
Stock"), was converted into 0.9615 share of Kuhlman Common Stock (the
"Exchange Ratio"). The 1995 amounts for Mr. Dillon, who also serves as
Chairman, President and Chief Executive Officer of Schwitzer U.S. Inc.
("Schwitzer U.S."), which is the principal direct subsidiary of Schwitzer,
include amounts earned before the Effective Time of the Merger (May 31,
1995). In conjunction with the Merger, outstanding stock options under the
Schwitzer Long-Term Executive Incentive Compensation Plan (the "1989 Plan")
were converted into options to purchase Kuhlman Common Stock in accordance
with the Exchange Ratio. Options granted to Mr. Dillon reflect the number
of options granted to Mr. Dillon in the stated years after giving effect to
the terms of the Merger and application of the Exchange Ratio. Mr. Nagel
joined Kuhlman on April 5, 1993 and was elected Vice President of Finance,
Chief Financial Officer and Treasurer of Kuhlman on June 9, 1993 and
Executive Vice President of Finance on February 22, 1994.
(8) Consists of 28,169 shares of Kuhlman Common Stock valued at $17.75 per
share or approximately $500,000 in the aggregate on the date they were
issued to Mr. Anderson as a signing incentive at the commencement of his
employment by Kuhlman. Based on the $12.50 closing price for Kuhlman Common
Stock on the New York Stock Exchange on the last trading day of 1995, the
value of the 28,169 shares at the end of 1995 was $352,113. These shares
would have had to have been returned to Kuhlman in the event Mr. Anderson
left Kuhlman within one year from the time of the issuance. Dividends are
paid on such shares when and as paid on other shares of Kuhlman Common
Stock. Prior to being named as President and Chief Operating Officer of
Kuhlman, Mr. Anderson served as a non-employee director of Kuhlman and
received in 1994 total compensation of $12,672 for his services in that
capacity.
(9) Includes the payment of $1,462,500 to Mr. Dillon pursuant to the Dillon
Agreement as defined below (see "Executive Compensation and Severance
Benefits").
SAVINGS AND PENSION PLANS
KUHLMAN ELECTRIC CORPORATION SAVINGS MAXIMIZER PLAN. Under the Kuhlman
Electric Savings Maximizer Plan ("Savings Maximizer Plan"), participants
contribute through payroll deductions amounts that vary from 1% to 16% of their
compensation. Kuhlman or a participant's employer, as the case may be,
contributes to the Savings Maximizer Plan on behalf of each participant a
minimum amount equal to 15% of the participant's before-tax contributions, which
do not exceed 6% of the participant's compensation. Kuhlman Electric may also
make a discretionary matching annual contribution to the Savings Maximizer Plan,
which when made for plan years after January 1, 1995 is divided equally among
qualifying participants based on the number of calendar quarters during the plan
year that the participant made before-tax contributions. Each participant is
immediately vested in all contributions made on his or her behalf.
KUHLMAN ELECTRIC SALARIED EMPLOYEES' PENSION PLAN. The Salaried Employees'
Pension Plan maintained by Kuhlman Electric Corporation (the "Kuhlman Electric
Pension Plan") covers certain hourly and all salaried employees employed by
Kuhlman Electric, certain salaried employees employed by the TRANS-PAK Spring
Assembly Division of Emtec Products Corporation, and the salaried employees of
Kuhlman.
The Kuhlman Electric Pension Plan provides for an individual account for
each participant and for a benefit based upon the value of such account, subject
to the minimum benefit and grandfathering provisions described below. Commencing
in 1987, the accounts of participants are credited annually with an amount equal
to 3% of salary plus an additional 3% of salary in excess of one-quarter of the
maximum amount of wages subject to FICA taxes. Accounts also are credited with a
guaranteed rate of interest. The accumulated account may be converted to an
annuity at retirement. The account of each individual who was a participant
prior to January 1, 1987 was also credited with an amount equal to the value of
such participant's accrued benefit as of December 31, 1986 determined under the
defined benefit formula then in effect.
10
<PAGE>
A minimum pension of 1.2% of average compensation multiplied by credited
service (limited to 20 years) is payable if it would provide a larger benefit.
In addition, certain "grandfathering" provisions apply to avoid a loss of
benefits as a result of the transition to the revised benefit structure.
As of December 31, 1995, the estimated annual pension benefits payable upon
retirement at age 65 for certain of the individuals named in the Summary
Compensation Table are as follows: $21,574 for Mr. Jepson; $16,998 for Mr.
Anderson; $62,982 for Mr. Nagel; and $79,920 for Mr. Walker. These estimates are
based on the assumptions that the officer will remain in Kuhlman's employ until
age 65 without an increase in pensionable compensation, there is no increase in
the FICA wage base or the limitations on benefits imposed by the Internal
Revenue Code, the annual guaranteed rate of interest credited by the Kuhlman
Electric Pension Plan to a participant's account is 4.0% for 1996 and 5.0%
thereafter, and a 7.0% interest rate will be used when converting the officer's
projected account to an annuity.
SCHWITZER U.S. INC. TAX REDUCTION INVESTMENT PLAN FOR CERTAIN SALARIED AND
EXEMPT EMPLOYEES ("TRIP") AND SUPPLEMENTAL TAX REDUCTION INVESTMENT PLAN
("SUPPLEMENTAL TRIP"). The TRIP is a deferred savings plan for eligible U.S.
employees of Schwitzer U.S. With certain exceptions, an employee of at least 21
years of age with three months of service (three years of service if under age
21) may contribute into the TRIP, on a pre-tax and after-tax basis, up to 15% of
the participant's cash compensation (subject to a maximum annual pre-tax
contribution by a participant of $9,240 for 1995 as adjusted for cost of living
increases) and invest such contributions in Kuhlman Common Stock or in several
other equity or income funds. Each participant's own pre-tax contributions
(which are fully vested) are matched by employer contributions at 50% up to a
total of 3% of a participant's compensation. Employer matching contributions are
invested in Kuhlman Common Stock. A participant is always vested in his pre-tax
and after-tax contributions. A graduated vesting schedule provides for partial
vesting in matching contributions on the basis of years of service, with a
participant becoming fully vested in such employer matching contributions after
five years of employment. A participant also becomes fully vested in matching
contributions upon attaining age 65, retirement upon age 55 with 10 years of
service, disability or death. With certain exceptions, a participant's after-tax
contributions may be withdrawn, and employer matching contributions may be
withdrawn after five years of plan participation. A participant's pre-tax
contributions may not be withdrawn except for an immediate financial hardship,
or after attaining age 59 1/2. All contributions may be withdrawn upon
termination of employment. In addition, participants may obtain loans from their
TRIP accounts under certain circumstances.
Schwitzer U.S. has also established the Supplemental TRIP for those
participants in the TRIP who, as the result of certain restrictions imposed on
the TRIP under the Internal Revenue Code, are precluded from receiving from
Schwitzer U.S. the full amount of the employer matching contributions to which
such participants would otherwise be entitled. Schwitzer U.S. credits to an
account established for each participant under the Supplemental TRIP an amount
equal to the difference between 3% of the participant's annual compensation and
the amount of the matching contribution that Schwitzer U.S. was permitted to
make to the account of such participant under the TRIP. A participant in the
Supplemental TRIP becomes vested in the amounts credited to his or her account
in accordance with the vesting schedule applicable to the TRIP. Vested amounts
held in a participant's account under the Supplemental TRIP will be paid in a
lump sum to the participant or his or her spouse or designated beneficiary upon
termination of employment or at such time or in such other form or manner as the
Schwitzer U.S. Board of Directors in its sole discretion may determine.
THE SCHWITZER U.S. INC. PENSION PLAN FOR CERTAIN SALARIED AND EXEMPT
EMPLOYEES ("SCHWITZER PENSION PLAN"). The Schwitzer Pension Plan is a
non-contributory, defined benefit plan for certain salaried employees. The
amount of a participant's pension benefits depends primarily on years of
employment (up to 35 years), age at retirement, and average annual compensation
(salary plus certain bonuses, whether paid in cash or stock, and excluding
matching contributions to the TRIP or Supplemental TRIP, moving expense
reimbursements and automobile allowance) for the 60 successive highest-paid
months of the employee's last 120 months of employment. The plan is integrated
with Social Security to the extent allowed by law. Participants become vested in
their accrued pension benefits after five years of service. Payment of vested
pension benefits normally begins at age 65, but an early retirement benefit at
reduced levels may be paid if a
11
<PAGE>
participant is at least 55 years of age with 10 years of service. Benefits that
cannot be paid under the Schwitzer Pension Plan due to restrictions imposed
under the Internal Revenue Code will be paid under the Supplemental Schwitzer
Salaried Pension Plan ("Supplemental Pension Plan"). The following table
illustrates the amount of the plan's annual pension benefits on a straight-life
annuity basis (including amounts payable under the Supplemental Pension Plan,
where applicable) for eligible employees retiring at age 65. Offsets for Social
Security payments and other offsets provided for in the plan are not reflected
in this table.
SCHWITZER PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 100,000 $ 18,161 $ 24,214 $ 30,269 $ 36,322 $ 42,375
$ 200,000 $ 38,618 $ 51,489 $ 64,365 $ 77,236 $ 90,107
$ 300,000 $ 59,075 $ 78,765 $ 98,460 $ 118,150 $ 137,840
$ 400,000 $ 79,531 $ 106,039 $ 132,554 $ 159,062 $ 185,570
$ 500,000 $ 99,988 $ 133,314 $ 166,650 $ 199,976 $ 233,302
$ 600,000 $ 120,445 $ 160,589 $ 200,746 $ 240,890 $ 281,034
$ 700,000 $ 140,902 $ 187,869 $ 234,836 $ 281,803 $ 328,771
</TABLE>
For purposes of determining the benefit under the Schwitzer Pension Plan,
the amount of covered compensation for 1995 for Mr. Dillon is equal to the
salary reported for 1995 plus the bonus reported for 1995 in the Summary
Compensation Table. The years of service for purposes of the Schwitzer Pension
Plan is 17 years for Mr. Dillon. In calculating credited years of service under
the Schwitzer Pension Plan, years of service with Household prior to the spin
off of Schwitzer by Household International, Inc. in 1989 have been taken into
account.
EXECUTIVE COMPENSATION AND SEVERANCE AGREEMENTS. On February 22, 1994, the
Board of Directors of Kuhlman approved a severance policy applicable to certain
executive officers designated by the Compensation Committee of the Kuhlman Board
of Directors. The severance policy supersedes any existing severance
arrangements with individual officers of Kuhlman. The severance policy provides
that if an executive officer's employment with Kuhlman is terminated by Kuhlman
for any reason other than the conviction of a felony involving Kuhlman, the
executive's base salary will be continued for a period of up to twenty-four (24)
months after such termination. Such officer will also be entitled during the
same period to the continuation of certain benefits that such officer was
receiving at the time of termination, including, but not limited to, medical and
dental coverage, health and accident insurance, and disability and group life
insurance. No continuation of salary and benefits are payable under the
severance policy if an executive officer dies, retires, or voluntarily
terminates employment with Kuhlman. Furthermore, under the severance policy,
salary and benefits payable under such severance policy will terminate if an
executive officer performs services for a competitor of Kuhlman and will be
reduced or eliminated entirely if services are performed for a non-competitor.
The severance policy will be administered by the Compensation Committee of the
Board of Directors of Kuhlman. As of January 1, 1996, the highest monthly salary
for the purpose of determining the severance pay for the Chief Executive Officer
and the other three executives covered by the policy was as follows: Mr. Jepson
- -- $37,500; Mr. Anderson -- $33,333; Mr. Nagel -- $19,167; and Mr. Walker --
$19,167. In the event of a change of control of Kuhlman, the severance policy
would be modified by change of control agreements ("Control Agreements") entered
into as of February 20, 1996 between Kuhlman and each of the executive officers
referred to in this paragraph (Messrs. Jepson, Anderson, Nagel and Walker). The
Control Agreements are for an initial three year term and are automatically
renewable each year thereafter for an additional term of one year unless the
Board of Directors elects otherwise, and are designed to encourage the
continuity of management in view of the possibility of a change of control (as
defined in the Control Agreements). Under the Control Agreements, if a change of
control occurs, each executive would be entitled to receive, subject to the
right of the Board of Directors of Kuhlman to amend or waive any or all of
Kuhlman's payment obligations set forth in the Control Agreements at any time
before a change of control occurs, an aggregate amount equal to: (a) three times
the executive's current annual base salary, (b) three
12
<PAGE>
times the executive's highest annual cash bonus of the past three years, (c)
payment of the value of any stock options and SARs held by the officer as
determined under the Control Agreements, (d) an adjustment of the amount paid to
the executive pursuant to the Control Agreements to cover any liability on the
part of the executive for excise and income taxes, and (e) continuation of
benefits for three years under all of the benefit plans of Kuhlman in effect on
the date of the change of control.
Mr. Dillon and Schwitzer U.S. have been parties to an employment agreement
since 1989 which was last amended on February 25, 1995 (as so amended the
"Dillon Agreement"). The Dillon Agreement sets forth Mr. Dillon's entitlement to
an established annual salary (currently $420,000) as may be increased from time
to time by the Board of Directors of Schwitzer U.S., with the oversight of the
Kuhlman Compensation Committee, and to benefits under the Schwitzer U.S. benefit
plans, and establishes an annual bonus awarded under Schwitzer's Executive
Incentive Compensation Program ranging from 0% to 80% of his annual salary, with
a par rate equal to 50% of his annual salary, also with the oversight of the
Kuhlman Compensation Committee. Under the Dillon Agreement, Mr. Dillon is also
entitled to 1,500 performance units under Schwitzer's Performance Unit Plan for
the period from January 1, 1995 through December 31, 1997. Pursuant to the
Dillon Agreement, Schwitzer U.S. paid Mr. Dillon a lump sum cash payment in the
amount of three times his then annual salary and three times his then annual
bonus at par level at the Effective Time of the Merger. In addition, 75,000
phantom stock units awarded to Mr. Dillon on October 18, 1994 by Schwitzer were
converted into the right to receive an amount of cash equal to the value of
75,000 shares of Kuhlman Common Stock upon his termination of employment,
subject to forfeiture if Mr. Dillon's employment by Schwitzer U.S. is terminated
prior to October 18, 1997. Schwitzer U.S. may terminate Mr. Dillon's employment
at any time and Mr. Dillon may resign such employment at any time. Under the
Dillon Agreement, Mr. Dillon will receive all pension, profit sharing, deferred
compensation, medical and life insurance benefits under Schwitzer U.S.'s benefit
plans for a period ending on the earlier of (a) 18 months after Mr. Dillon's
termination or resignation or (b) his 65th birthday.
STOCK OPTION PLANS. Currently there are options outstanding under Kuhlman's
1983 Stock Option Plan ("1983 Plan"), 1986 Stock Option Plan ("1986 Plan"), 1989
Stock Option Plan ("1989 Plan") (formerly a Schwitzer plan) and 1994 Stock
Option Plan ("1994 Plan") approved by stockholders. The Plans provide for such
options to be granted to officers and other key executive employees of Kuhlman
and its subsidiaries at not less than 100% of the market value of Kuhlman Common
Stock (as defined in the Plans) at date of grant and with an expiration no later
than ten years from date of grant. Options may be granted currently under the
1994 Plan. No new options may be granted under the 1983 or 1986 Plans, but the
1983 Plan and 1986 Plan continue as to outstanding stock options. In conjunction
with the Merger, the outstanding stock options under the 1989 Plan were
converted into options to purchase Kuhlman Common Stock in accordance with the
Exchange Ratio, which were granted to officers and key employees of Schwitzer at
the market value of shares of Schwitzer Common Stock at the date of grant.
Subsequent to the Merger, no additional options have been or will be granted
under the 1989 Plan.
13
<PAGE>
OPTION/SAR GRANTS DURING 1995
The following table sets forth information on stock options and stock
appreciation rights granted during 1995 to the Named Executives.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED ANNUAL
NUMBER OF OPTIONS/SARS RATES OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR OPTION/
UNDERLYING EMPLOYEES OR BASE SAR TERM (2)
OPTIONS/SARS DURING PRICE EXPIRATION ------------------------
NAME GRANTED 1995 (1) PER SHARE DATE 5% 10%
- -------------------------- ------------- ------------- ----------- ----------- ---------- ------------
INDIVIDUAL GRANTS
----------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Jepson, Jr. 100,000(3) 28.6% $ 12.88 2/20/05 $ 811,440 $ 2,047,920
Curtis G. Anderson 50,000(3) 14.3% 12.88 2/20/05 405,720 1,023,960
Gary G. Dillon 9,615(4) 2.7% 8.45 2/3/05 51,185 129,182
Vernon J. Nagel 20,000(3) 5.7% 12.88 2/20/05 162,288 409,584
Richard A. Walker 20,000(3) 5.7% 12.88 2/20/05 162,288 409,584
</TABLE>
- ------------------------------
(1) Kuhlman granted options for an aggregate of 350,123 shares (including the
shares granted by Schwitzer under the 1989 Plan prior to the Merger, after
giving effect to the terms of the Merger and application of the Exchange
Ratio). The table does not include options for 50,000 shares to Mr.
Anderson, for 5,000 shares to Mr. Dillon, for 20,000 shares to Mr. Nagel,
and for 20,000 shares to Mr. Walker, which were granted in 1996 under the
Kuhlman 1994 Plan or options for 100,000 shares granted in 1996 under the
1994 Plan to Mr. Jepson, which shares are subject to the approval by
Stockholders of the amendment to the 1994 Plan to increase the number of
shares of Common Stock which may be issued thereunder.
(2) As required by rules of the Securities and Exchange Commission, potential
values stated are based on the prescribed assumption that Kuhlman Common
Stock will appreciate in value from the date of grant to the end of the
option or SAR term at the annualized rates of 5% and 10% (total appreciation
of 63% and 159%), respectively, and therefore are not intended to forecast
possible future appreciation, if any, in the price of Kuhlman Common Stock.
(3) These options were granted pursuant to the 1994 Plan which does not provide
for the grant of SARs. The exercise price may be paid by delivery of shares
of Kuhlman Common Stock already owned by the optionee. These options became
exercisable on December 1, 1995.
(4) These options were granted by Schwitzer pursuant to the 1989 Plan prior to
the effective date of the Merger and represent the number of options after
giving effect to the terms of the Merger and application of the Exchange
Ratio. These options become exercisable with respect to 25% of the shares
subject thereto beginning on each of the first, second, third and fourth
anniversaries of the date of grant.
AGGREGATED OPTION/SAR 1995 YEAR-END OPTION/SAR VALUES. The following table
sets forth the number and dollar value of options/SARs remaining unexercised at
December 31, 1995 held by the Named Executives.
AGGREGATED FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NO. OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED IN-
UNEXERCISED OPTIONS/SARS THE-MONEY OPTIONS/SARS AT
AT DECEMBER 31, 1995 DECEMBER 31, 1995
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert S. Jepson, Jr...................................... 300,000 35,000 $ 0 $ 0
Curtis G. Anderson........................................ 150,000 35,000 0 0
Gary G. Dillon (1)........................................ 155,848 26,200 839,049 106,394
Vernon J. Nagel........................................... 70,000 20,000 0 0
Richard A. Walker......................................... 111,330 20,000 173,745 0
</TABLE>
- ------------------------------
(1) These options were granted by Schwitzer pursuant to the 1989 Plan prior to
the effective date of the Merger and represent the number of options after
giving effect to the terms of the Merger and application of the Exchange
Ratio.
14
<PAGE>
FIVE-YEAR CUMULATIVE TOTAL STOCKHOLDER RETURN
The following indexed graph indicates Kuhlman's total return to its
stockholders for the past five years as compared to total return for the
Standard & Poor's 500 Composite Index and the Standard & Poor's Electrical
Equipment Index, assuming a common starting point of $100. Total stockholder
return for Kuhlman as well as for the Indexes are determined by adding (a) the
cumulative amount of dividends for a given year (assuming dividend reinvestment)
and (b) the difference between the share price at the beginning and at the end
of the year, the sum of which is then divided by the share price at the
beginning of such year. The stock price performance shown on the graph below is
not necessarily indicative of future price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
<S> <C> <C> <C>
Based on reinvestment of $100 beginning December 31,
1990
Kuhlman Corp. S&P 500-R- S&P-R- Electrical Equipment Index
Dec-90 $100 $100 $100
Dec-91 $158 $130 $133
Dec-92 $144 $140 $145
Dec-93 $180 $155 $175
Dec-94 $143 $157 $177
Dec-95 $155 $215 $249
SOURCE: GEORGESON & COMPANY INC.
</TABLE>
15
<PAGE>
RELATED TRANSACTIONS
Kuhlman entered into an agreement ("Kearns Agreement") dated as of August 1,
1994, with W.M. Kearns & Co., Inc., a corporation controlled by William M.
Kearns, Jr. ("Kearns & Co."), pursuant to which Kearns & Co. serves as a
non-exclusive financial advisor to Kuhlman on a part-time basis to assist
Kuhlman in developing corporate strategy and arranging acquisition, merger,
joint venture, investment or divestiture transactions for Kuhlman. Kearns & Co.
will give Kuhlman a "right of first refusal" on all such transactions of which
Kearns & Co. becomes aware which appear to fit Kuhlman's acquisition guidelines.
The Kearns Agreement has a term of two years and will expire on July 31, 1996,
unless extended by agreement of the parties. Kuhlman will pay Kearns & Co. each
month a cash advisory fee of $20,000 during the term of the Kearns Agreement and
will reimburse Kearns & Co. for reasonable out-of-pocket expenses directly
related to its activities under the Kearns Agreement in an amount not to exceed
$1,000 per month. In 1995, Kearns & Co. was paid $240,000 in cash advisory fees
and reimbursed for out-of-pocket expenses in the amount of approximately $3,660.
PRINCIPAL STOCKHOLDERS AND BENEFICIAL OWNERSHIP OF MANAGEMENT OF KUHLMAN
MANAGEMENT
The following table sets forth, as of March 1, 1996, the number of shares of
Kuhlman Common Stock beneficially owned by each director, each current executive
officer, including the Named Executives and all directors and executive officers
as a group as well as the number of shares and percent of class owned by such
persons.
<TABLE>
<CAPTION>
NUMBER OF SHARES
(1)(2) PERCENT OF CLASS (3)
---------------------- -----------------------
<S> <C> <C>
Curtis G. Anderson................................... 202,545 1.5%
William E. Burch..................................... 12,007 *
Steve Cenko.......................................... 19,007 *
Gary G. Dillon....................................... 244,546 1.8%
Alexander W. Dreyfoos, Jr. .......................... 14,485 *
Robert S. Jepson, Jr. ............................... 470,327 3.5%
William M. Kearns, Jr. .............................. 15,007 *
Robert D. Kilpatrick................................. 6,007(4) *
John L. Marcellus, Jr. .............................. 18,109 *
George J. Michel, Jr. ............................... 25,186(4) *
Vernon J. Nagel...................................... 72,324 *
H. Norman Schwarzkopf................................ 8,802 *
Richard A. Walker.................................... 108,590 *
John Zvolensky, Jr. ................................. 25,383(4) *
All Directors and Executive Officers as a Group (14
Persons)............................................ 1,242,325 8.8%
</TABLE>
- ------------------------
* Less than one percent
(1) Includes shares in Kuhlman Electric's Employees' Stock Purchase Plan,
Kuhlman's Dividend Reinvestment Plan, the Savings Maximizer Plan, and as of
December 31, 1995, in the TRIP.
(2) Includes shares which the following persons have the right to acquire upon
the exercise of stock options as of March 1, 1996 or at any time within 60
days thereafter: Curtis G. Anderson -- 150,000 shares; Gary G. Dillon --
167,143 shares; Steve Cenko -- 12,359 shares; Robert S. Jepson, Jr. --
300,000 shares; John L. Marcellus, Jr. -- 12,359 shares; George J. Michel,
Jr. -- 12,359 shares; Vernon J. Nagel -- 70,000 shares; Richard A. Walker --
107,582 shares; and John Zvolensky, Jr. -- 25,000 shares.
(3) Each respective individual's shares included in note (2) were deemed to be
outstanding as of March 1, 1996 for the purpose of computing the percentage
applicable to the person owning such shares but were not deemed to be
outstanding for the purpose of computing the percent of class owned by any
other person. The total number of shares included in note (2) were deemed to
be outstanding for the purpose of computing the percent of class for all
directors and executive officers as a group.
(4) These numbers exclude 6,100 shares owned by spouses where beneficial
ownership is disclaimed.
16
<PAGE>
SECTION 16(A) REPORTING DELINQUENCIES
Kuhlman's directors and executive officers are required to file reports of
ownership and changes in ownership of Kuhlman Common Stock with the Commission
and the New York Stock Exchange. William E. Burch, a director of Kuhlman, filed
one late report pertaining to the distribution of the assets (including Kuhlman
Common Stock) held in a trust, of which he was trustee, to the beneficiaries of
the trust in conjunction with the termination of that trust. Alexander W.
Dreyfoos, Jr., a director of Kuhlman, filed one late report pertaining to the
disposition of Kuhlman Common Stock held by a general partnership of which Mr.
Dreyfoos was a general partner.
CERTAIN BENEFICIAL OWNERS
The following table sets forth the only persons known by Kuhlman to own of
record or beneficially, as of March 1, 1996, five percent or more of the
outstanding Common Stock of Kuhlman.
<TABLE>
<CAPTION>
NAME OF PERSON NUMBER OF SHARES PERCENT OF CLASS
- -------------------------------------------------------------------- ----------------- -------------------
<S> <C> <C>
David L. Babson & Co., Inc. ........................................ 1,178,781(1) 8.9%
One Memorial Drive
Cambridge, Massachusetts 02142-1300
The Prudential Insurance Company of America ........................ 1,272,038(2) 9.6%
Prudential Plaza
Newark, New Jersey 07102-3777
</TABLE>
- ------------------------
(1) Based solely on information set forth in a Schedule 13G dated February 12,
1996 filed with the Commission.
(2) Based solely on information set forth in a Schedule 13G dated February 13,
1996 filed with the Commission.
PROPOSAL TO AMEND THE KUHLMAN 1994 STOCK OPTION PLAN
The Board of Directors of Kuhlman has adopted, subject to stockholder
approval, an amendment to the Kuhlman 1994 Stock Option Plan (the "1994 Plan"),
to increase the total number of shares of Kuhlman Common Stock that may be
issued upon the exercise of options granted under the 1994 Plan from 500,000 to
800,000. The 1994 Plan was previously approved by stockholders at the annual
meeting of stockholders of Kuhlman in May 1995. Grants have been made under the
1994 Plan in 1994, 1995 and 1996.
As of March 1, 1996, options are outstanding for 486,337 of the 500,000
shares of Kuhlman Common Stock reserved for issuance under the 1994 Plan. Thus,
of the total shares currently authorized for issuance pursuant to the 1994 Plan,
options for only 13,663 shares remain to be granted. In the opinion of the Board
of Directors, this number is insufficient for the future needs of Kuhlman. The
Board of Directors believes that stock option plans are important in attracting
and retaining employees of high caliber and outstanding capabilities, and
believes it is in the best interests of Kuhlman to increase the number of shares
of Kuhlman Common Stock that may be issued under the 1994 Plan rather than
initiating a new option plan.
The following is a summary of the principal provisions of the 1994 Plan as
currently in effect:
Under the 1994 Plan, Kuhlman may from time to time on or before July 28,
2004 grant to key employees (including officers, whether or not directors) of
Kuhlman or any of its subsidiaries options to purchase shares of Kuhlman Common
Stock. On March 1, 1996, there were approximately 200 persons eligible to
participate in the 1994 Plan. Options are granted on such other terms and at
such prices as determined pursuant to the 1994 Plan, and on such other terms and
conditions as determined by the Compensation Committee of the Board of Directors
that are not inconsistent with the 1994 Plan. The aggregate number of shares of
such stock on which options may be granted or which may be sold to all optionees
pursuant to the 1994 Plan shall not presently exceed 500,000 (800,000 if the
subject amendment is adopted); however, if an outstanding
17
<PAGE>
option under the 1994 Plan (or portion thereof) expires, or is cancelled,
surrendered, or terminated, the shares of Kuhlman Common Stock allocable to the
unexercised portion of such option may again be made subject to an option to be
granted under the 1994 Plan.
Under the 1994 Plan, options for no more than 100,000 shares of Kuhlman
Common Stock may be allocated to any one person in any year, and the aggregate
fair market value (as of the date an option is granted) of shares with respect
to which incentive stock options are exercisable for the first time by an
optionee during any calendar year under all incentive stock option plans of
Kuhlman, and any parent and subsidiary corporations of Kuhlman, may not exceed
$100,000. Options granted under the 1994 Plan may be either options which are
intended to be incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended ("incentive stock options"), or
options which are not intended to be incentive stock options ("non-qualified
options"). Options granted under the 1994 Plan will expire not more than ten
years from the date of the grant, and the purchase price per share to be
specified in each option will be not less than the fair market value of a share
of Kuhlman Common Stock on the date the option is granted or on the next
preceding day on which there were sales of Kuhlman Common Stock if no such sales
shall have been made on the date in question. Options granted under the 1994
Plan are not transferable other than by will or the laws of descent and
distribution, except that the Kuhlman Compensation Committee may, if certain
conditions have been satisfied, permit an optionee to transfer a non-qualified
option to members of the optionee's immediate family, including trusts for the
benefit of such family members and partnerships in which such family members are
the only partners.
Options may not be exercised by an optionee more than three months after
termination of employment, except that the optionee may exercise such options up
to twelve months after termination of employment that results from death or
permanent disability, but in no event may an option be exercised later than its
expiration date. Options granted to an optionee under the 1994 Plan will
immediately terminate and be null and void if the Kuhlman Compensation Committee
determines, either before or after such optionee's employment with Kuhlman is
terminated, that such optionee has engaged in fraud, dishonesty, conduct in
violation of Kuhlman policy or similar acts at any time while in the employ of
Kuhlman or any of its subsidiaries, or in an activity directly or indirectly in
competition with any business of Kuhlman or any of its subsidiaries, or in other
conduct detrimental to the best interests of Kuhlman or any of its subsidiaries.
The 1994 Plan provides that the Compensation Committee shall administer such
plan. The members of the Compensation Committee must be "disinterested persons"
within the meaning of Rule 16b-3 under the Exchange Act. The duties of such
committee include (i) determining the number of shares which may be purchased by
each optionee and (ii) determining whether incentive stock options or
non-qualified stock options are to be granted to an optionee. The Compensation
Committee may make such rules and regulations and establish such procedures for
the administration of the 1994 Plan as it deems appropriate. The Board of
Directors may amend the 1994 Plan without stockholder approval, except that any
amendment that would (i) materially increase the benefits accruing to
participants under the 1994 Plan, (ii) materially increase the number of shares
which may be issued under the 1994 Plan, or (iii) materially modify the
requirements as to eligibility for participation under the 1994 Plan, must be
approved by a vote of stockholders of Kuhlman.
Under present law, upon the grant and exercise of an incentive stock option,
an optionee will not recognize taxable income for federal income tax purposes.
However, the amount by which the fair market value of the shares at the time of
exercise exceeds the exercise price will be treated as an adjustment to taxable
income for alternative minimum tax purposes. If the optionee does not dispose of
the shares so acquired until more than one year after their receipt (and until
more than two years after the option was granted), gain or loss recognized on
the subsequent disposition of the shares will be treated as long-term capital
gain or loss. Such gain or loss is computed as the difference between the
exercise price and the sale price. If the shares are disposed of prior to those
times, the optionee will recognize compensation income taxable as ordinary
income for federal income tax purposes in an amount equal to the lesser of (i)
the excess of the fair market value of the shares on the date of exercise over
the exercise price or (ii) the amount of gain recognized if the disposition is a
taxable sale or exchange. To the extent individual optionees qualify for capital
gain treatment, neither Kuhlman nor its subsidiaries will be entitled to a
deduction for federal income
18
<PAGE>
tax purposes in connection with the grant or exercise of the option. In other
cases, Kuhlman or its subsidiaries will receive a federal income tax deduction
at the same time and in the same amount that the employee recognizes
compensation income taxable as ordinary income for federal income tax purposes.
Upon the grant of a non-qualified option, an optionee will not recognize
taxable income for federal income tax purposes. Upon the exercise of a
non-qualified option, the optionee will recognize compensation income taxable as
ordinary income in an amount equal to the excess of the fair market value of the
shares acquired, determined at the time of exercise, over the exercise price.
Kuhlman will be entitled to a federal income tax deduction to the extent the
employee recognizes compensation income taxable as ordinary income for federal
income tax purposes. Special rules govern the recognition of income by optionees
subject to Section 16(b) of the Exchange Act.
The Revenue Reconciliation Act of 1990 set a maximum tax rate on the net
capital gains of individuals, trusts and estates of 28%. Therefore, recognized
net long-term capital gains will be taxed at the lesser of (i) the highest
marginal tax rate applied to the individual's income for such taxable year or
(ii) 28%. Notwithstanding the foregoing capital gains treatment for incentive
stock options, as stated above, the amount by which the fair market value of the
shares at the time of exercise exceeds the exercise price will be treated as an
adjustment to taxable income for alternative minimum tax purposes. This
adjustment to taxable income may be significant to an optionee. The optionee may
be entitled to a credit against his or her regular tax liability in subsequent
years for the amount of alternative minimum tax liability incurred in the year
of exercise attributable to such adjustment. Moreover, solely for the purpose of
determining alternative minimum tax liability, the basis of the shares will be
increased by the amount of such adjustment.
OPTION GRANTS. On February 19, 1996, the Compensation Committee of the
Board of Directors granted options under the 1994 Plan for an aggregate of
200,000 shares (excluding those granted to Mr. Jepson described below) at an
option price of $14.13 per share. These included options for 50,000 shares to
Curtis G. Anderson; 5,000 shares to Gary G. Dillon; 20,000 shares to Vernon J.
Nagel; 20,000 shares to Richard A. Walker and options for 105,000 shares to all
other employees. On February 19, 1996, the Compensation Committee of the Board
of Directors also granted options under the 1994 Plan at an option price of
$14.13 per share for 100,000 shares to Robert S. Jepson, Jr. which are subject
to the approval by stockholders of the amendment to the 1994 Plan to increase
the number of shares of Common Stock which may be issued thereunder.
On March 14, 1996, the closing sale price of Kuhlman Common Stock of Kuhlman
on the New York Stock Exchange as reported in THE WALL STREET JOURNAL was
$14 7/8.
RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP BY KUHLMAN
Pursuant to a recommendation of the Audit Committee of the Board of
Directors, Arthur Andersen LLP has been re-appointed by the Board of Directors
to serve as the independent auditors for Kuhlman for the year ending December
31, 1996, subject to stockholder ratification at the Annual Meeting. A
representative of Arthur Anderson LLP will be present at the Annual Meeting,
will have the opportunity to make a statement if he desires to do so and will be
available to respond to appropriate questions by stockholders. If such
appointment is not ratified, the Board of Directors will appoint another firm as
Kuhlman's independent auditors for the year ending December 31, 1996.
19
<PAGE>
STOCKHOLDER PROPOSALS
Any proposal which a stockholder of Kuhlman intends to present at the 1997
Annual Meeting of Stockholders of Kuhlman must be received by Kuhlman at its
principal executive offices on or before November 25, 1996 to be eligible for
inclusion in Kuhlman's proxy statement and proxy form relating to such meeting.
By Order of the Board of Directors,
RICHARD A. WALKER
SECRETARY
A STOCKHOLDER MAY RECEIVE, WITHOUT CHARGE, A COPY OF THE CORPORATION'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 REQUIRED
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY WRITTEN REQUEST TO
RICHARD A. WALKER, EXECUTIVE VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER,
GENERAL COUNSEL AND SECRETARY, KUHLMAN CORPORATION, 3 SKIDAWAY VILLAGE SQUARE,
SAVANNAH, GEORGIA 31411.
20
<PAGE>
PROXY PROXY
KUHLMAN CORPORATION
PROXY FOR SHARES OF COMMON STOCK SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON APRIL 25, 1996
The undersigned hereby appoints Robert S. Jepson, Jr., Curtis G. Anderson,
Vernon J. Nagel and Richard A. Walker, and each of them, proxies with power of
substitution and revocation, acting by majority of those present and voting, or
if only one is present and voting then that one, to vote, as designated on the
reverse side hereof, all of the shares of stock of KUHLMAN CORPORATION which the
undersigned is entitled to vote, at the annual meeting of stockholders to be
held at the Hyatt Regency Savannah, 2 West Bay Street, Savannah, Georgia on
April 25, 1996 at 9:30 a.m. Savannah time, and at any adjournment thereof,
with all the powers the undersigned would possess if present.
PLEASE VOTE, SIGN AND DATE ON REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE. IF NO CHOICES
ARE INDICATED, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES LISTED UNDER
ITEM 1 AND FOR ITEMS 2 AND 3.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/
1. Election of Directors: Steve Cenko, For All
Robert S. Jepson, Jr. and John L. For Withheld Except
Marcellus, Jr. // // //
INSTRUCTION: to withhold authority
to vote for any individual nominee,
write that nominee's name in the
space provided below and mark the oval
"For All Except")
______________________________________
2. Adoption of Amendment to For Against Abstain
1994 Stock Option Plan. // // //
3. Ratification of the selection For Against Abstain
of Arthur Andersen LLP as // // //
independent auditors for
Kuhlman Corporation and its
subsidiaries for the year
ending December 31, 1996.
4. Upon any other matter that may
properly come before the meeting.
Dated _________________________________________________,1996
Signature _____________________________________________
Signature _____________________________________________
NOTE: Please sign exactly as name appears hereon. For joint
accounts, both owners should sign. When signing as executor,
administrator, attorney, trustee or guardian, etc. please
sign your full title.
