<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
LUFKIN INDUSTRIES, INC.
------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
C. JAMES HALEY, JR.
------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $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:*
(4) Proposed maximum aggregate value of transaction:
*Set forth the amount on which the filing fee is calculated and state how it
was determined.
[_] 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>
LUFKIN INDUSTRIES, INC.
LUFKIN, TEXAS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 1996
TO THE SHAREHOLDERS OF LUFKIN INDUSTRIES, INC.
Notice is hereby given that the Annual Meeting of the Shareholders of Lufkin
Industries, Inc., a Texas corporation, will be held at the Lufkin Civic Center,
601 North Second, Lufkin, Texas, on the 15th day of May, 1996, at 9:00 a.m.
Lufkin Time, for the following purposes:
1. To elect four directors to the Company's board to serve until the annual
shareholders' meeting held in 1999 or until their successors have been
elected and qualified.
2. To appoint Arthur Andersen LLP, independent certified public
accountants, as the Company's auditors for the year 1996.
3. To approve the Company's 1996 Nonemployee Directors Stock Option Plan.
4. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only shareholders of record at the close of business on March 29, 1996, are
entitled to notice of and to vote at the meeting.
You are kindly requested to mark, sign, date and return the enclosed Proxy
promptly, regardless of whether you expect to attend the meeting, in order to
ensure a quorum. If you are present at the meeting, and wish to do so, you may
revoke the Proxy and vote in person.
It is sincerely hoped that it will be possible for you to personally attend
the meeting.
C. JAMES HALEY, JR.
Secretary
April 5, 1996
<PAGE>
LUFKIN INDUSTRIES, INC.
P.O. BOX 849
601 SOUTH RAGUET
LUFKIN, TEXAS 75902
PROXY STATEMENT
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The accompanying proxy is solicited by the Board of Directors of Lufkin
Industries, Inc. (the "Company") for use at the Annual Meeting of Shareholders
to be held on May 15, 1996, and any adjournments thereof. The annual meeting
will be held at 9:00 a.m. Lufkin Time, at the Lufkin Civic Center, 601 North
Second, Lufkin, Texas. When such proxy is properly executed and returned, the
shares it represents will be voted at the meeting in accordance with the
directions noted thereon; or if no direction is indicated, it will be voted in
favor of the proposals set forth in the notice attached hereto. Any shareholder
giving a proxy has the power to revoke it by oral or written notice to the
Secretary of the Company at any time before it is voted.
A shareholder entitled to vote for the election of directors can withhold
authority to vote for all nominees for directors or can withhold authority to
vote for certain nominees for directors. Abstentions from either the proposal
to elect directors, the proposal to approve the appointment of independent
certified public accountants or the proposal to approve the 1996 Nonemployee
Directors Stock Option Plan are treated as votes against the particular
proposal. Broker non-votes on any of such matters are treated as shares as to
which voting power has been withheld by the beneficial holders of those shares
and, therefore, as shares not entitled to vote on the proposal as to which
there is the broker non-vote.
The cost of solicitation of these proxies will be borne by the Company. In
addition to solicitation by mail, certain directors, officers, and regular
employees of the Company may solicit proxies by telephone and personal
interview.
The approximate date on which this Proxy Statement will first be sent to
shareholders is April 5, 1996.
- --------------------------------------------------------------------------------
VOTING SECURITIES
- --------------------------------------------------------------------------------
At the close of business on March 29, 1996, which is the record date for the
determination of shareholders of the Company entitled to receive notice of and
to vote at the annual meeting or any adjournments thereof, the Company had
outstanding 6,751,383 shares of common stock, $1.00 par value (the "Common
Stock"). Each share of Common Stock is entitled to one vote upon each of the
matters to be voted on at the meeting.
Quest Advisory Corp. is the beneficial owner of 427,272 shares of the
Company's Common Stock and Quest Management Company is the beneficial owner of
13,800 shares of the Company's Common Stock. Together these two related
entities own beneficially 6.5% of the Company's Common Stock.
<PAGE>
- --------------------------------------------------------------------------------
PROPOSAL 1. ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Board of Directors has nominated and urges you to vote FOR the election
of the four directors who have been nominated to serve a three-year term of
office in the 1999 class of directors. Proxies solicited hereby will be so
voted unless shareholders specify otherwise in their proxies. The affirmative
vote of the holders of a majority of the Common Stock present in person or by
proxy at the meeting and entitled to vote is required for approval of this
Proposal.
The Company's Fourth Restated Articles of Incorporation (the "Articles")
divide the Board of Directors, with respect to terms of office, into three
classes, designated as Class I, Class II and Class III. Each class of directors
is to be elected to serve a three-year term and is to consist of, as nearly as
possible, one-third of the members of the entire Board. In accordance with the
Company's Bylaws, the Company's Board of Directors is currently fixed at 11
members.
The term of office of each of the Class II Directors expires at the time of
the 1996 Annual Meeting of Shareholders, or as soon thereafter as their
successors are elected or qualified. Mr. Jalenak, Mr. King, Mr. Smith and Mr.
Trout have been nominated to serve an additional three-year term as Class II
Directors. Each of the nominees has consented to be named in this Proxy
Statement and to serve as a director, if elected.
It is intended that the proxies solicited hereby will be voted FOR the
election of the nominees for director listed below, unless authority to do so
has been withheld. If, at the time of the 1996 Annual Meeting of Shareholders,
any of the nominees should be unable or decline to serve, the discretionary
authority provided in the proxy will be used to vote for a substitute or
substitutes designated by the Board of Directors. The Board of Directors has no
reason to believe that any substitute nominee or nominees will be required.
DIRECTORS AND NOMINEES FOR DIRECTOR
The nominees for Class II Directors, if elected, whose term of office as
directors will expire in 1999, and certain additional information with respect
to each of them, are as follows:
L. R. Jalenak, Jr., formerly Chairman of the Board of Cleo Inc., a Gibson
Greetings Company, is a director of Perrigo Company and Dyersburg Corp. He
also serves as an Independent Trustee for First Funds (a family of mutual
funds). Age 65. Mr. Jalenak has been a director since 1990 and also serves
on the Compensation Committee and Audit Committee.
Henry H. King, President of Henry H. King & Associates. Age 63. Mr. King
has been a director since 1990 and also serves on the Executive Committee
and the Compensation Committee.
Douglas V. Smith, President, Chief Executive Officer and Chairman of the
Board of the Company. Age 53. Mr. Smith was elected President and Chief
Executive Officer of the Company in January 1993 and Chairman of the Board
in May 1995. He was also elected as a director in January 1993. He
previously served as Vice President--Worldwide Manufacturing for Cooper Oil
Tool Division of Cooper Industries (Houston, Texas).
W. W. Trout, Jr., retired Vice President of the Company. Age 64. Mr.
Trout has been a director of the Company since 1968.
2
<PAGE>
The Class III Directors, whose present term of office as directors will
continue after the meeting and expire in 1997, and certain additional
information with respect to each of them, are as follows:
Simon W. Henderson, III, manager of his own investments. Age 62. Mr.
Henderson has been a director of the Company since 1971 and currently
serves as a member of the Compensation Committee, the Executive Committee
and the Nominating Committee.
Melvin E. Kurth, Jr., manager of his own investments. Age 65. Mr. Kurth
has been a director of the Company since 1968 and currently serves as a
member of the Audit Committee and the Nominating Committee.
W. T. Little, a management consultant. Age 62. Mr. Little has been a
self-employed management consultant for the last five years. He became a
director of the Company in 1968.
The Class I Directors, whose present term of office as directors will
continue after the meeting and expire in 1998, and certain additional
information with respect to each of them, are as follows:
Bob H. O'Neal, President, Chief Executive Officer and a Director of
Stewart & Stevenson Services, Inc. Age 61. Mr. O'Neal became a director in
1992 and currently serves on the Compensation Committee and the Nominating
Committee. In May 1995, an indictment was returned by a Federal Grand Jury
accusing Stewart & Stevenson Services, Inc., a former consultant and four
of its employees, including Mr. O'Neal, of one count of major fraud
against the United States, four counts of false statements and one count of
conspiracy to commit major fraud, make false statements and interfere with
the administration of a foreign military sale.
Frank B. Stevenson, formerly Chairman of the Board, President and Chief
Executive Officer of the Company. Age 68. He became a director of the
Company in 1983 and currently serves on the Audit Committee.
H. J. Trout, Jr., manager of his own investments since 1990. Age 51. Mr.
Trout has been a director of the Company since 1980 and serves as a member
of the Executive Committee and the Nominating Committee.
Thomas E. Wiener, attorney. Age 55. Mr. Wiener became a director of the
Company in 1987 and currently serves on the Audit Committee and the
Executive Committee.
Mr. W. W. Trout, Jr., is the first cousin of H. J. Trout, Jr.
3
<PAGE>
The following table reflects the beneficial ownership of the Company's Common
Stock as of December 31, 1995, with respect to (i) each person who is known by
the Company to own beneficially more than 5% of the outstanding shares of the
Company's Common Stock; (ii) the directors and nominees for director; (iii)
each executive officer named in the Summary Compensation Table; and (iv) the
Company's directors and officers as a group.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF SHARES OWNED PERCENT
BENEFICIAL OWNER BENEFICIALLY OF CLASS
---------------- ------------ --------
<S> <C> <C>
Quest Advisory Corp./1/
Quest Management Company/1/ ........................... 441,072 6.5
James W. Barber(2)..................................... 6,900 *
John F. Glick(2)....................................... 1,750 *
Simon W. Henderson, III................................ 86,033 1.3
L. R. Jalenak, Jr. .................................... 1,400 *
Henry H. King.......................................... 2,128 *
Melvin E. Kurth, Jr. .................................. 112,740 1.7
W. T. Little........................................... 101,916 1.5
Bob H. O'Neal.......................................... 500 *
Ernest G. Pittman(2)................................... 9,950 *
Scott H. Semlinger(2).................................. 13,270 *
Douglas V. Smith(2).................................... 56,000 *
Frank B. Stevenson..................................... 4,150 *
H. J. Trout, Jr. ...................................... 320,984 4.7
W. W. Trout, Jr. ...................................... 24,949 *
Thomas E. Wiener....................................... 69,836 1.0
Directors and officers as a group(2)................... 857,691 12.4
</TABLE>
- --------
* Indicates ownership of less than one percent of the outstanding shares of
Common Stock of the Company.
1. Pursuant to a Schedule 13G filed with the Company, Quest Advisory Corp. and
Quest Management Company may be deemed to be controlled by Charles M. Royce.
Quest Advisory Corp. has sole voting power and sole dispositive power with
respect to 427,272 shares and Quest Management Company has sole voting power
and sole dispositive power with respect to 13,800 shares.
2. Includes shares subject to presently exercisable options.
Each director and nominee for director listed above possessed sole voting and
investment powers as to all the shares listed as being beneficially owned by
such person, except Melvin E. Kurth, Jr. who has a limited term interest in the
income of 26,712 of the listed shares which are held in trust for the benefit
of himself and his sons, W. T. Little who shares voting and investment powers
as to 48,000 of the listed shares, H. J. Trout, Jr. who has a remainder
interest as to 272,980 of the listed shares which are held in a trust for his
mother for which he is trustee and Thomas E. Wiener who shares voting and
dispositive powers as to 48,864 of the listed shares.
The Board of Directors has a standing Audit Committee. The Audit Committee is
currently comprised of Messrs. L. R. Jalenak, Jr., M. E. Kurth, Jr., F.B.
Stevenson and T. E. Wiener. The Audit Committee's functions include making
recommendations concerning the engagement of independent auditors, reviewing
with the independent auditors the plan and results of the auditing engagement,
reviewing the scope and results of the Company's procedures for internal
auditing, reviewing professional services provided by the
4
<PAGE>
independent auditors, reviewing the independence of the independent auditors,
considering the range of audit and nonaudit fees and reviewing the adequacy of
the Company's internal accounting controls.
The Board of Directors also has a standing Compensation Committee which is
currently comprised of Messrs. S. W. Henderson, III, L. R. Jalenak, Jr., H. H.
King and B. H. O'Neal. The functions performed by the Compensation Committee
include: reviewing executive salary and bonus structure; reviewing the
Company's stock option plan (and making grants thereunder); setting bonus
goals; and approving salary and bonus awards to key executives.
The Board of Directors also has a standing Nominating Committee which is
currently comprised of Messrs. M. E. Kurth, S. W. Henderson III, B. H. O'Neal
and H. J. Trout, Jr.
During 1995, the Audit Committee had two meetings; the Compensation Committee
had four meetings; the Executive Committee had one meeting and the Board of
Directors had four meetings. During 1995 each continuing member of the Board of
Directors attended 75% or more of the meetings of the Board of Directors and
the committees of which he was a member.
During 1995, the directors received $850 for each meeting of the Board of
Directors or committee meeting that they attended in addition to a quarterly
payment of $2,250.
Each director and officer of the Company filed on a timely basis all reports
required pursuant to Section 16 of the Securities Exchange Act of 1934, except
Messrs. James W. Barber, John F. Finney, Jr., John F. Glick, C. James Haley,
Jr., James R. Partridge, Michael A. Penn, Ernest G. Pittman, and Scott H.
Semlinger filed one late Form 4 with respect to the grant of employee stock
options.
5
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of Lufkin Industries,
Inc. (the "Committee") is pleased to present the 1995 report on executive
compensation. This Committee report documents the components of the Company's
executive officer compensation program and describes the basis on which the
compensation program determinations were made by the Committee with respect to
the executive officers of the Company, including the executive officers that
are named in the compensation tables. The Committee meets regularly and is
comprised entirely of nonemployee directors. The duty of the Committee is to
review compensation levels of members of management, as well as administer the
Company's various incentive plans including its annual bonus plan and its stock
option plan. The Committee reviews with the Board of Directors in detail all
aspects of compensation for all of the Company's senior officers.
The Committee has retained the services of a national compensation consulting
firm, to assist the Committee in connection with the performance of its various
duties. Such firm provides advice to the Committee with respect to how
compensation paid by the Company to its senior officers compares to
compensation paid by other companies. Members of the Committee also review
compensation surveys provided the by the consulting firm and others.
EXECUTIVE COMPENSATION PROGRAM PHILOSOPHY
The design of the Company's executive compensation program is based on three
fundamental principles. First, compensation must support the concept of pay for
performance, that is, compensation awards are directly related to the financial
results of the Company, to increasing shareholders value, and to individual
contributions and accomplishments. As a result, much of an executive officer's
compensation is "at risk" with annual bonus compensation, at target levels,
amounting to approximately 35% of total cash compensation.
The second principle of the program is that it should offer compensation
opportunities competitive with those provided by other comparable industrial
companies. It is essential that the Company be able to retain and reward its
executives who are critical to the long-term success of the Company's
diversified and complex businesses.
The final principle is that the compensation program must provide a direct
link between the long-term interests of the executives and the shareholders.
Through the use of stock-based incentives, the Committee focuses the attention
of executives on managing the Company from the perspective of an owner with an
equity stake.
COMPENSATION PLAN COMPONENTS
Base Salary. The Committee established base salary levels for the Company's
executive officers that are generally comparable to similar executive positions
in companies of similar size and complexity as the Company. The Company obtains
comparative salary information from published market surveys and from a
national compensation consulting firm. The comparative data is from industrial
companies of a comparable size in revenue. The Company's salaries are
moderately below the competitive market at the fiftieth percentile in these
comparisons. The Committee approves all salary changes for the Company's
officers and bases individual salary changes on a combination of factors such
as the performance of the executive, salary level relative to the competitive
market, the salary increase budget for the Company and the recommendation of
the Chief Executive Officer. In accordance with its review process, the
Committee approved base salary increases for those officers whose salary level
and individual performance warranted an adjustment. Base salary increases
approved for those officers in 1995 averaged 3.8%.
6
<PAGE>
Incentive Compensation. The Company's performance, or that of a division or
business unit, as the case may be, for purposes of compensation decisions is
measured under the annual bonus plan against goals established at the start of
the year by the Committee. In each instance, the goals consisted in most part
of making budgeted sales and expense levels, as well as subjective individual
performance goals. Such goals were generally met in 1995.
Chief Executive Officer Compensation. Mr. Smith's base salary for 1995 was
$255,000 and his annual bonus was $100,000. These amounts were determined by
the Compensation Committee as a part of a three year employment contract that
began on January 1, 1995 and will expire on December 31, 1998. Factors that
influenced the Committee's recommendation to amend the CEO contract were the
Company's improved operating results and the reorganizational plans that were
successfully implemented. The Committee believes that the contract is
competitive and that the employment contract is critical to attract and retain
the best qualified executives.
Stock Options. During 1995, the Committee also made stock option grants to
the CEO and to each of the senior officers of the Company. Each of those
officers received stock options which were based on his responsibilities and
relative position in the Company. In 1995, 37,700 shares of stock options were
granted to the Company's officers which compares to 33,000 shares granted to
officers in 1994. The Committee's policy is to make stock option grants
annually and for the purpose of tying a portion of the employees compensation
to the long-term performance of the Company's Common Stock. By making such
grants, the Committee feels that these grants help senior officers' interests
coincide with those of the shareholders.
No member of the Committee is a former or current officer or employee of the
Company or any of its subsidiaries. The following members of the Compensation
Committee have delivered the foregoing report.
H. H. King, Chairman
S. W. Henderson, III
L. R. Jalenak, Jr.
B. H. O'Neal
The foregoing report and the performance graph and related description
included in this proxy statement shall not be deemed to be filed with the
Securities and Exchange Commission except to the extent the Company
specifically incorporates such items by reference into a filing under the
Securities Act of 1933 or Securities Exchange Act of 1934.
7
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
common stock to the NASDAQ Market Value Index and to the Media General Oilfield
Services Index (which includes the Company) for the last five years. The graph
assumes that the value of the investment in the Company's common stock and each
index was $100 at December 31, 1990.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1990 1991 1992 1993 1994 1995
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Lufkin Industries, Inc. .......... 100 105.50 83.71 77.92 84.03 106.04
NASDAQ Market Value Index......... 100 95.50 95.16 111.08 99.30 146.77
Media General Oilfield Services
Index............................ 100 128.38 129.64 155.50 163.26 211.77
</TABLE>
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the Chief
Executive Officer and the four most highly compensated executive officers of
the Company as to whom the total annual salary and bonus for the year ended
December 31, 1995, exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
- ----------------------------------------------- ------------
STOCK
NAME AND PRINCIPAL OPTIONS ALL OTHER
POSITION YEAR SALARY BONUS(1) (SHARES) COMPENSATION(2)
------------------ ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Douglas V. Smith........ 1995 $255,000 $100,000 15,000 $13,786
President and 1994 225,000 50,000 -- 12,590
Chief Executive Officer 1993 213,121 50,000 50,000 9,590
John F. Glick........... 1995 140,811 47,650 3,500 6,453
Vice President
James W. Barber......... 1995 118,545 54,000 3,500 7,481
Vice President 1994 95,153 45,000 4,000 5,404
Scott H. Semlinger...... 1995 124,008 31,255 3,500 6,381
Vice President 1994 113,136 17,000 4,000 5,926
1993 108,514 22,500 5,000 5,193
E.G. Pittman............ 1995 109,500 40,310 2,800 5,078
Vice President 1994 103,597 -- 4,000 5,725
1993 97,962 20,000 5,000 4,744
</TABLE>
- --------
(1) Annual bonus amounts are earned and accrued during the years indicated, and
paid in the first quarter of the following year.
(2) The All Other Compensation consists of the Company's contribution to the
Thrift Plan.
9
<PAGE>
STOCK OPTION PLANS
The Company has a stock option plan (the "Plan"), pursuant to which options
to purchase shares of the Company's stock are outstanding or available for
future grants. The purpose of the Plan is to advance the best interests of the
Company by providing those persons who have substantial responsibility for the
management and growth of the Company with additional incentive by increasing
their proprietary interest in the success of the Company. All options for stock
are granted by the Compensation Committee.
The following table shows, as to the Chief Executive Officer and the four
most highly compensated executive officers of the Company, information about
option grants in the last year. The Company does not grant any Stock
Appreciation Rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
OF ASSUMED ANNUAL
RATES OF STOCK
PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
- ---------------------------------------------------------------------------- -----------------
PERCENTAGE
OF TOTAL
OPTIONS
OPTIONS GRANTED TO
GRANTED EMPLOYEES EXERCISE PRICE EXPIRATION
NAME (SHARES)(1)(2) IN 1995 (PER SHARE)(3) DATE 5% 10%
---- -------------- ---------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Douglas V. Smith........ 15,000 15% $19.00 5/16/2005 $179,235 $454,217
John F. Glick........... 3,500 4 20.00 11/13/2005 44,023 111,562
James H. Barber......... 3,500 4 20.00 11/13/2005 44,023 111,562
Scott H. Semlinger...... 3,500 4 20.00 11/13/2005 44,023 111,562
E.G. Pittman............ 2,800 3 20.00 11/13/2005 35,218 89,250
</TABLE>
- --------
(1) Options granted are exercisable starting 12 months after the grant date,
with 25% of the shares becoming exercisable at that time and with an
additional 25% of the option shares becoming exercisable on each successive
anniversary date, with full vesting occurring on the fourth anniversary
date.
(2) The options were granted for a term of 10 years subject to earlier
termination in certain events related to termination of employment.
(3) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares or by offset of the underlying
shares, subject to certain conditions.
10
<PAGE>
The following table shows aggregate option exercises in the last fiscal year
of which there were none and the year-end option values for the Chief Executive
Officer and the four most highly compensated executive officers. The Company
does not grant any Stock Appreciation Rights.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1995 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS AT
SHARES 1995 (SHARES) DECEMBER 31, 1995
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas V. Smith........ -0- -0- 50,000 15,000 256,250 54,375
John F. Glick........... -0- -0- 1,750 8,750 7,000 30,188
James H. Barber......... -0- -0- 6,500 9,000 16,938 34,501
Scott H. Semlinger...... -0- -0- 13,165 10,250 29,094 38,969
E.G. Pittman............ -0- -0- 8,550 9,050 21,406 34,569
</TABLE>
RETIREMENT PLAN
Since the amount contributed each year by the Company to its Retirement Plan
for Salaried Employees is determined on an actuarial basis, it is not possible
to allocate the Company's contributions among the individuals shown in the
table above. During 1995, the Company did not make a contribution to the plan.
The plan is a defined benefit plan which provides benefits to salaried
employees based on an employee's years of service and covered compensation.
Covered compensation consists of Salary, Bonus and All Other Compensation as
set forth in the Summary Compensation Table on page 9 of this Proxy Statement.
The benefits are based on the average of the highest five consecutive years of
covered compensation received during the last ten years of service. Benefits
are estimated on straight-life annuity computations and do reflect offsets for
primary Social Security benefits. The following table shows the annual benefits
payable upon retirement at age 65 for various compensation and years of
credited service combinations under the Company's retirement plan. Payment of
the specified retirement benefits is contingent upon continuation of the plan
in its present form until the employee retires. Directors who are not, or who
have not been, employees of the Company will not receive benefits under the
plan. The years of credited service for the persons named in the Summary
Compensation Table are: Mr. Smith, three years; Mr. Glick, one year; Mr.
Barber, six years; Mr. Semlinger, 20 years and Mr. Pittman, 40 years.
<TABLE>
<CAPTION>
AVERAGE ANNUAL ESTIMATED ANNUAL BENEFITS
COMPENSATION UPON RETIREMENT
FOR HIGHEST -----------------------------------------------------------
FIVE YEARS 25 YEARS 30 YEARS 35 YEARS
DURING 15 YEARS 20 YEARS OF OF OF 40 YEARS
LAST TEN YEARS OF SERVICE OF SERVICE SERVICE SERVICE SERVICE OF SERVICE
-------------- ---------- ---------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
$125,000...... $32,369 $ 43,827 $ 55,286 $ 66,744 $ 66,744 $ 66,744
150,000...... 39,244 52,994 66,744 80,494 80,494 80,494
175,000...... 46,119 62,161 78,202 94,244 94,244 94,244
200,000...... 52,994 71,327 89,661 107,994 107,994 107,994
225,000...... 59,869 80,494 101,119 121,744 121,744 121,744
250,000...... 66,744 89,661 112,577 135,494 135,494 135,494
300,000...... 80,494 107,994 135,494 162,994 162,994 162,994
</TABLE>
11
<PAGE>
EMPLOYMENT CONTRACT AND CHANGE IN CONTROL ARRANGEMENT
The Company has entered into an employment agreement with Mr. Smith through
December 31, 1998, with a minimum annual salary of $255,000 and with a minimum
bonus payment of $60,000 and maximum payment of $191,250, based on the
Company's earnings per share, subject to review annually by the Compensation
Committee. The Company has also entered into a severance agreement with Mr.
Smith that provides for severance benefits to be paid to him following a change
in control of the Company (as defined) or a termination of his employment.
Maximum severance benefits at December 31, 1995, would be approximately
$315,000 including salary and bonus payments through December 31, 1996. A
termination following a change in control of the Company would cause the amount
of such benefits to be tripled.
- --------------------------------------------------------------------------------
PROPOSAL 2: APPROVAL OF AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors proposes the appointment of the firm of Arthur
Andersen LLP as the Company's auditors for the year ending December 31, 1996.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting of Shareholders and will have an opportunity to make a statement if
they desire to do so and to respond to appropriate questions from those
attending such meeting. Arthur Andersen LLP has served as auditors for the
Company since 1958. Their appointment as auditors for the year ended December
31, 1995 was approved by the shareholders at the last annual meeting on May 17,
1995.
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PROPOSAL 3: APPROVAL OF 1996 NONEMPLOYEE DIRECTORS STOCK OPTION PLAN
- --------------------------------------------------------------------------------
General. In November 1995, the Board of Directors of the Company adopted,
subject to the approval of the shareholders of the Company, the Lufkin
Industries, Inc. Nonemployee Directors 1996 Stock Option Plan (the "Plan"). The
Board urges you to vote for approval of the Plan. Proxies solicited hereby will
be so voted unless shareholders specify otherwise in their proxies. The
affirmative vote of a majority of the outstanding shares of Common Stock is
required for approval of this Proposal. The purpose of the Plan is to advance
the best interests of the Company by providing the Nonemployee Directors with
additional incentive to serve the Company by increasing their proprietary
interest in the success of the Company. In addition, the Plan is intended to
enhance the ability of the Company to attract and retain individuals of
superior managerial ability and to motivate such individuals to exert their
best efforts towards future progress and profitability of the Company. The
terms of the Plan are described below and the Plan is set forth in its entirety
as Appendix A hereto.
The Plan provides for the grant of stock options (the "Options") to purchase
5,000 shares of the Company's Common Stock (the "Common Stock") to each person
who is a Nonemployee Director following the annual meeting of shareholders of
the Company on May 15, 1996, at an option price equal to the closing sale price
per share, as reported on the NASDAQ National Market on such date. Upon the
election of any new Nonemployee Director, such person will also receive Options
to purchase 5,000 shares of Common Stock. The Plan further provides for the
grant of Options to purchase 1,000 shares of the Company's Common Stock to each
person who is a Nonemployee Director following each annual meeting thereafter,
for so long as the Plan is in effect and shares are available for the Grant of
Options thereunder, at an option price equal to the closing sale price per
share on that date as reported on the NASDAQ National Market. Subject to
approval by the shareholders of the Plan, the maximum number of shares of
Common Stock as to which Options may be granted under the Plan is 150,000
shares in the aggregate, subject to certain adjustments to prevent dilution.
12
<PAGE>
The Plan is administered by the Board of Directors of the Company. All
questions of interpretation and application of the Plan, or as to Options
granted thereunder, are subject to the determination by the Board of Directors,
which determination is final and binding.
Each option will be exercisable immediately on the date of grant. The term of
each Option granted under the Plan shall be exercisable for a term of ten years
from the date of grant, except that (i) in the event an optionee gives notice
of his resignation from the Board of Directors before the expiration of the
Option, the Option shall terminate three months after the effective date of
such resignation; (ii) in the event an optionee gives notice that he does not
intend to stand for reelection or is given notice that he will be asked to
retire from the Board of Directors, then the Option shall become exercisable
with respect to all shares subject thereto, and the Option shall terminate on
the earlier of one year from the effective date of his retirement from the
Board or the date of expiration of the Option; (iii) in the event of the death
or disability of an optionee while a member of the Board of Directors, then the
Option shall become exercisable with respect to all shares subject thereto and
the Option shall terminate on the earlier of one year from the date of such
death or disability or the date of expiration of the Option.
The Board of Directors may modify, revise or terminate the Plan at any time
and from time to time; provided, however, that without the further approval of
the shareholders of the Company, the Board of Directors may not (a) change the
aggregate number of shares which may be issued under Options pursuant to the
provisions of this Plan; (b) reduce the Option Price permitted for the Options;
or (c) extend the term during which an Option may be exercised or the terminate
date of this Plan unless, in each such case, the Board of Directors of the
Company shall have obtained an opinion of legal counsel to the effect that
shareholder approval of the amendment is not required (i) by law, (ii) by the
rules and regulations of, or any agreement with, the NASDAQ National Market or
(iii) to make available to the optionee with respect to any option granted
under this Plan, the benefits of Rule 16b-3 of the Rules and Regulations under
the Securities Exchange Act of 1934 (the "1934 Act"), or any similar or
successor rule. In addition, the Plan may not be amended more than once every
six months with respect to the plan provisions referred to in
Rule 16b-3(c)(2)(ii)(A) of the Rules and Regulations under the 1934 Act other
than to comport with changes in the Code, the Employee Retirement Income
Security Act, or the rules thereunder. Unless the term of the Plan is extended
or earlier terminated, the Plan will terminate on May 15, 2006.
Federal Income Taxes. As a general rule, no income will be recognized by a
director upon the grant of an Option. Upon the exercise of an Option, the
optionee will be treated as receiving compensation income in an amount equal to
the excess of the fair market value of the shares at the time of exercise over
the option price paid for the shares, and the Company may claim a deduction for
compensation paid in the same amount and at the same time as compensation is
taxable to the optionee, provided the Company makes the proper tax withholding
with respect to the exercise by an employee. Upon a subsequent disposition of
the shares, any difference between the fair market value of the shares at the
time of exercise and the amount realized on the disposition would be eligible
for treatment as long-term capital gain or loss if the shares were held for
more than twelve months.
13
<PAGE>
- --------------------------------------------------------------------------------
PROPOSALS OF SHAREHOLDERS
- --------------------------------------------------------------------------------
A proposal of a shareholder intended to be presented at the next annual
meeting must be received at the Company's principal executive offices no later
than December 1, 1996 if the shareholder making the proposal desires such
proposal to be considered for inclusion in the Company's proxy statement and
form of proxy relating to such meeting. The Company has also adopted Bylaw
provisions which require that nominations of persons for election to the Board
of Directors and the proposal of business by shareholders at an annual meeting
of shareholders must fulfill certain requirements which include the requirement
that notice of such nominations or proposals must be delivered to the Secretary
of the Company not less than 60 days nor more than 90 days prior to the
anniversary of the prior annual meeting. In order to be timely for next year's
annual meeting such notice must be delivered between February 14, 1997 and
March 16, 1997.
- --------------------------------------------------------------------------------
ADDITIONAL FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
Shareholders may obtain additional financial information for the year ended
December 31, 1995 from the Company's Form 10-K Report filed with the Securities
and Exchange Commission. A copy of the Form 10-K Report may be obtained without
charge by written request to the Secretary, Lufkin Industries, Inc., P.O. Box
849, Lufkin, Texas 75902.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors has at this time no knowledge of any matters to be
brought before the meeting other than those referred to above. However, if any
other matters properly come before the meeting, it is the intention of the
persons named in the accompanying proxy to vote said proxy in accordance with
their best judgment on such matters.
By Order of the Board of Directors
C. JAMES HALEY, JR.
Secretary
April 5, 1996
14
<PAGE>
EXHIBIT A
LUFKIN INDUSTRIES, INC.
1996 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
1.PURPOSE.
This 1996 Nonemployee Directors' Stock Option Plan (this "Plan") of Lufkin
Industries, Inc., a Texas corporation (the "Company"), is adopted, subject to
shareholder approval to the extent required by Section 15 hereof, for the
benefit of the directors of the Company, who at the time of their service are
not employees of the Company or any of its subsidiaries ("Nonemployee
Directors"), and is intended to advance the interests of the Company by
providing the Nonemployee Directors with additional incentive to serve the
Company by increasing their proprietary interest in the success of the Company.
2.ADMINISTRATION.
This Plan shall be administered by the Board of Directors of the Company. All
questions of interpretation and application of this Plan, or as to options
granted hereunder (the "Options"), shall be subject to the determination by the
Board of Directors, which determination shall be final and binding.
Notwithstanding the above, the selection of Nonemployee Directors to whom
Options are to be granted, the number of shares subject to any Option, the
exercise price of any Option shall be as hereinafter provided and the Board of
Directors shall have no discretion as to such matter.
3.OPTION SHARES.
The stock subject to the Options and other provisions of this Plan shall be
shares of the Company's Common Stock, $1.00 par value per share (or such other
par value as may be designated by act of the Company's shareholders, the
"Common Stock"). The total amount of the Common Stock with respect to which
Options may be granted shall not exceed 150,000 shares in the aggregate;
provided, that the class and aggregate number of shares which may be subject to
the Options granted hereunder shall be subject to adjustment in accordance with
the provisions of Section 12 hereof. Such shares may be treasury shares or
authorized but unissued shares.
If any outstanding Option for any reason shall expire or terminate by reason
of the death of the optionee, the surrender of any such Option, or any other
cause, the shares of Common Stock allocable to the unexercised portion of such
Option may again be subject to an Option under this Plan.
4.GRANT OF OPTIONS.
Subject to the provisions of Section 5 hereof, there shall be granted to each
person who is a Non-employee Director following the annual meeting of
shareholders of the Company on May 15, 1996, an Option to purchase 5,000 shares
of the Common Stock at an Option Price equal to the closing sale price per
share, as reported on the NASDAQ National Market on such date.
For so long as this Plan is in effect and shares are available for the grant
of Options hereunder, each person who shall become a Nonemployee Director after
the May 15, 1996 annual meeting of shareholders
<PAGE>
shall be granted, on the date of his initial election, an Option to purchase
5,000 shares of Common Stock at an Option Price equal to the closing sale price
of a share of Common Stock on that date as reported on the NASDAQ National
Market.
In addition, for so long as this Plan is in effect and shares are available
for the grant of options hereunder, each Nonemployee Director shall be granted
at each annual meeting an option to purchase 1,000 shares of Common Stock, at
an Option Price equal to the closing sale price of a share of Common Stock on
that date as reported on the NASDAQ National Market.
In any case, if no sale of the Common Stock was reported on the grant date,
then the fair market value shall mean the closing sale price of a share of the
Common Stock as of the first preceding date for which such prices were
reported; and provided further that if the Common Stock is no longer traded on
the NASDAQ National Market, the Board of Directors may provide for another
means for determining the fair market value of a share of Common Stock on the
date of grant.
5.DURATION OF OPTIONS.
Subject to the vesting provisions of Section 6 hereof, each Option granted
under this Plan shall be exercisable for a term of ten years from the date of
grant, subject to earlier termination as provided in Section 9 hereof.
6.AMOUNT EXERCISABLE.
Each Option will be exercisable immediately on the date of grant.
7.EXERCISE OF OPTIONS.
An optionee may exercise such optionee's Options by delivering to the Company
a written notice stating (i) that such optionee wishes to exercise such Option
on the date such notice is so delivered, (ii) the number of shares of stock
with respect to which such Option is to be exercised and (iii) the address to
which the certificate representing such shares of stock be mailed. To be
effective, such written notice shall be accompanied by payment of the Option
Price of each of such shares of stock, together with the amount of any required
withholding tax.
As promptly as practicable after the receipt by the Company of (i) such
written notice from the optionee, (ii) payment of the Option Price of the
shares of stock with respect to which such Option is to be exercised and (iii)
payment of an amount necessary to satisfy any withholding tax liability that
may result from the exercise of such Option, a certificate representing the
number of shares of stock with respect to which such Option has been so
exercised, such certificate to be registered in the name of such optionee,
shall be delivered to such optionee, provided that such delivery shall be
considered to have been made when such certificate shall have been mailed,
postage prepaid, to such optionee at the address specified for such purpose in
such written notice from the optionee to the Company.
8.TRANSFERABILITY OF OPTIONS.
Options shall not be transferable by the optionee otherwise than by will or
under the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986, as amended
(the "Code"), and shall be exercisable, during his lifetime, only by the
optionee.
2
<PAGE>
9.TERMINATION OF SERVICE, DEATH AND CHANGE IN CONTROL.
In the event an optionee gives notice of his resignation from the Board of
Directors before the expiration of the Option, the Option shall terminate three
months after the effective date of such resignation.
In the event an optionee gives notice that he does not intend to stand for
reelection or is given notice that he will be asked to retire from the Board of
Directors, then, notwithstanding Article 6 hereof, the Option shall become
exercisable with respect to all shares subject thereto, and the Option shall
terminate on the earlier of one year from the effective date of his retirement
from the Board or the date of expiration of the Option.
In the event of the death or disability of an optionee while a member of the
Board of Directors, then, notwithstanding Article 6 hereof, the Option shall
become exercisable with respect to all shares subject thereto and the Option
shall terminate on the earlier of one year from the date of such death or
disability or the date of expiration of the Option.
10.REQUIREMENTS OF LAW.
The Company shall not be required to sell or issue any shares under any
Option if the issuance of such shares shall constitute a violation by the
optionee or the Company of any provisions of any law or regulation of any
government authority. Each Option granted under this Plan shall be subject to
the requirements that, if at any time the Board of Directors of the Company
shall determine that the listing, registration or qualification of the shares
subject thereto upon any securities exchange or under any state or federal law
or the United States or of any other country or governmental division thereof,
or the consent or approval of any governmental regulatory body, or investment
or other representations, are necessary or desirable in connection with the
issue or purchase of shares subject thereto, no such Option may be exercised in
whole or in part unless such listing, registration, qualification, consent,
approval or representation shall have been effected or obtained free of any
conditions not acceptable to the Board of Directors.
The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act of 1933 (as now in
effect or as hereafter amended) and, if any shares are so registered, the
Company may remove any legend on certificates representing such shares. The
Company shall not be obligated to take any other affirmative action to cause
the exercise of an Option or the issuance of shares pursuant thereto to comply
with any law or regulation of any governmental authority.
11.NO RIGHTS AS SHAREHOLDER.
No optionee shall have rights as a shareholder with respect to shares covered
by his Option until the date of issuance of a stock certificate for such
shares; and, except as otherwise provided in Section 12 hereof, no adjustment
for dividends, or otherwise, shall be made if the record date therefor is prior
to the date of issuance of such certificate.
12.CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.
The existence of outstanding Options shall not affect in any manner the right
of the Company (i) to make any change in the Company's capital structure or its
business, (ii) to effect any merger or consolidation of the Company, (iii) to
issue any bonds, debentures or other evidences of indebtedness, (iv) to issue
any
3
<PAGE>
preferred stock or any other securities affecting the Common Stock or the
rights of the holders thereof, (v) to cause the dissolution of the Company or
any sale or transfer of all or any part of the assets or business of the
Company, or (vi) to take any other corporate action or proceeding, whether of a
similar character or otherwise.
If the Company shall effect a reclassification of shares of Common Stock, the
payment of a stock dividend to holders of shares of Common Stock, or some other
increase or reduction in the number of shares of Common Stock outstanding
without receiving compensation therefor in money, services or property, then
(i) the number, class and per share price of shares of Common Stock issuable
upon the exercise of any outstanding Option shall be appropriately adjusted so
that the optionee to whom such Option was granted shall be entitled upon the
exercise of such Option to receive, for the same aggregate consideration, the
same number and class of shares that such optionee would have received had such
optionee exercised such Option immediately prior to the occurrence of the event
requiring such adjustment and (ii) the aggregate number of shares of Common
Stock, and the class thereof, that may be issued upon the exercise of Options
that are not at the time outstanding shall be adjusted by substituting for such
number and class that number and class of shares that would have been received
by the holder of record of an equal number of outstanding shares of Common
Stock as the result of the occurrence of the event requiring such adjustment.
After a merger of one or more corporations into the Company, or after a
consolidation of the Company and one or more corporations under circumstances
in which the Company is the surviving corporation, each holder of an
outstanding Option shall be entitled upon the exercise of such Option to
receive (subject to any required action by shareholders), in lieu of the number
of shares of Common Stock issuable upon the exercise of such Option, the number
and class of shares or other securities to which such holder would have been
entitled pursuant to the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, such holder had been the
holder of record of a number of shares of Common Stock equal to the number of
shares of Common Stock issuable upon the exercise of such Option.
If the Company is merged into or consolidated with another corporation under
circumstances in which the Company is not the surviving corporation, or if the
Company dissolves, (i) subject to the provisions of clause (iii) of this
grammatical paragraph, after the effective date of such merger or
consolidation, as the case may be, each holder of any outstanding Option shall
be entitled upon the exercise of such Option to receive, in lieu of shares of
Common Stock, such shares or other securities as the holders of shares of
Common Stock received pursuant to the terms of such merger or consolidation;
(ii) the Board of Directors of the Company, in its discretion, may waive any
limitations set forth in or imposed pursuant to Section 6 hereof so that all
outstanding Options shall be exercisable in full from and after a date at least
10 days prior to the effective date of such merger, consolidation or
dissolution, as the case may be; and (iii) all outstanding Options may be
canceled by the Board of Directors as of the effective date of such merger,
consolidation or dissolution, provided that (x) notice of such cancellation
shall be given to each holder of an outstanding Option and (y) such holder
shall have the right to exercise such Option in full (without regard to any
limitations set forth in or imposed pursuant to Section 6 hereof) during the
30-day period immediately preceding the effective date of such merger,
consolidation or dissolution.
Except as in this Paragraph 12 expressly provided, the issue by the Company
of shares of any class, or securities convertible into shares of any class, for
money or services or property, either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor or upon conversion of shares or
obligations of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number, class or Option Price of any shares issuable upon the
exercise of any outstanding Option.
4
<PAGE>
13.AMENDMENT OR TERMINATION OF PLAN.
The Board of Directors may modify, revise or terminate this Plan at any time
and from time to time; provided, however, that without the further approval of
the shareholders of the Company, the Board of Directors may not (a) change the
aggregate number of shares which may be issued under Options pursuant to the
provisions of this Plan; (b) reduce the Option Price permitted for the Options;
or (c) extend the term during which an Option may be exercised or the
termination date of this Plan unless, in each such case, the Board of Directors
of the Company shall have obtained an opinion of legal counsel to the effect
that shareholder approval of the amendment is not required (i) by law, (ii) by
the rules and regulations of, or any agreement with, the NASDAQ National Market
or (iii) to make available to the optionee with respect to any option granted
under this Plan, the benefits of Rule 16b-3 of the Rules and Regulations under
the Securities Exchange Act of 1934 (the "1934 Act"), or any similar or
successor rule. In addition, this Plan may not be amended more than once every
six months with respect to the plan provisions referred to in
Rule 16b-3(c)(2)(ii)(A) of the Rules and Regulations under the 1934 Act other
than to comport with changes in the Code, the Employee Retirement Income
Security Act, or the rules thereunder.
14.WRITTEN AGREEMENT.
Each Option granted hereunder shall be embodied in a written option
agreement, which shall be subject to the terms and conditions prescribed above,
and shall be signed by the optionee and by the appropriate office of the
Company for and in the name and on behalf of the Company. Such an option
agreement shall contain such other provisions as the Committee in its
discretion shall deem advisable.
15.EFFECTIVE DATE OF PLAN.
This Plan shall become effective and shall be deemed to have been adopted on
May 15, 1996, if on that date it shall have been approved by the shareholders
of the Company. No Option shall be granted pursuant to this Plan on or after
May 15, 2006.
5
<PAGE>
[X] Please
mark
your
votes as
in this
example.
SHARES IN YOUR NAME
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
1 Election of Directors
For, except vote
withheld from the
following
nominees(s):
--------------------
2 To approve the appointment of Arthur Andersen LLP as the independent auditors
of the Company for the year 1996.
3 To approve the Lufkin Industries, Inc. 1996 Nonemployee Directors' Stock
Option Plan.
SIGNATURE(S) DATE
------------------------------- ------
SIGNATURE(S) DATE
------------------------------- ------
NOTE: (Please sign exactly as name
appears hereon. When signing as
attorney, executor, administrator,
trustee or guardian, etc., please give
full title as such. For joint accounts,
each joint owner should sign.)
- --------------------------------------------------------------------------------
P
R
O
X
Y
LUFKIN INDUSTRIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints DOUGLAS V. SMITH and C. J.
HALEY, JR., and each or either of them, lawful attorneys and proxies of the
undersigned, with full power of substitution, for and in the name, place and
stead of the undersigned, to attend the annual meeting of shareholders of
LUFKIN INDUSTRIES, INC., (herein the "Company") to be held at the Lufkin Civic
Center, 601 North Second, Lufkin, Texas, at 9:00 a.m., Lufkin Time, on the 15th
day of May, 1996, and any adjournment(s) thereof, with all powers the
undersigned would possess if personally present and to vote thereat, as
provided below, the number of shares the undersigned would be entitled to vote
if personally present.
Election of Directors
L.R. Jalenak, Henry H. King, Douglas, V., Smith, W.W. Trout
In accordance with their discretion, said attorneys and proxies are
authorized to vote upon such other business as may properly come before such
meeting or any adjournments thereof.
Every properly signed proxy will be voted in accordance with the
specification made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3. All prior proxies are hereby revoked.
This proxy will also be voted in accordance with the discretion of the
proxies or proxy on any other business. Receipt is hereby acknowledged of the
Notice of Annual Meeting and Proxy Statement of the Company dated April 5,
1996.
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SEE REVERSE
SIDE
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