<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
[_] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Lydall, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Lydall, Inc.
------------------------------------------------------------------------
(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:
Notes:
<PAGE>
[LOGO OF LYDALL, INC. APPEARS HERE]
Notice of Annual Meeting, to be held May 10, 1995
Proxy Statement
<PAGE>
LEONARD R. JASKOL
Chairman, President and Chief
Executive Officer
One Colonial Road
P.O. Box 151
Manchester, Connecticut 06045-0151
(203) 646-1233
[LOGO OF LYDALL, INC. APPEARS HERE]
April 6, 1995
Dear Lydall Stockholders:
I am pleased to enclose Lydall's Annual Report describing the Company's
operations and results for the past year. We hope you find it to be an
informative summary of major developments during 1994.
I appreciate your continuing interest in Lydall and invite you to attend the
Company's Annual Meeting to be held on Wednesday, May 10, 1995 at 11:00 a.m. at
The Hartford Club located at 46 Prospect Street in Hartford, Connecticut. For
your convenience, Lydall will validate for stockholders' parking at the parking
garage adjacent to The Hartford Club. It is an underground garage entered by a
driveway to the right of The Hartford Club.
The following pages contain the formal notice of the Annual Meeting and the
Proxy Statement. PLEASE BE SURE TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY TO ENSURE THAT YOUR SHARES WILL BE VOTED.
Sincerely,
/S/ LEONARD R. JASKOL
<PAGE>
LYDALL, INC.
- - - --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING To Be Held May 10, 1995
To: The Owners of Common Stock
The Annual Meeting of Stockholders of Lydall, Inc. will be held at The
Hartford Club, 46 Prospect Street, Hartford, Connecticut, on Wednesday, May 10,
1995, at 11:00 a.m. E.D.T. for the following purposes:
1. To consider and vote upon a proposal to amend the Certificate of
Incorporation to increase the number of authorized shares of Common Stock.
2. To elect 11 Directors to serve for one-year terms until the 1995 Annual
Meeting to be held in 1996.
3. To transact any other business which may properly come before the meeting.
The Board of Directors urges you to complete, date and sign the accompanying
proxy and return it promptly in the enclosed envelope. All stockholders are
cordially invited to attend the meeting, and your right to vote in person will
not be affected if you mail your proxy.
YOUR VOTE IS IMPORTANT
Sincerely,
Manchester, CT Mary Adamowicz
April 6, 1995 General Counsel and Secretary
<PAGE>
LYDALL, INC.
- - - --------------------------------------------------------------------------------
PROXY STATEMENT
GENERAL
This Proxy Statement of Lydall, Inc. ("Lydall" or the "Company"), a Delaware
corporation, is being mailed or otherwise furnished to stockholders on or about
April 6, 1995 in connection with the solicitation by the Board of Directors of
Lydall of proxies to be voted at the Annual Meeting of Stockholders. The Annual
Meeting will be held on Wednesday, May 10, 1995 at 11:00 a.m. at The Hartford
Club located at 46 Prospect Street in Hartford, Connecticut.
Enclosed with this Proxy Statement and Notice of Annual Meeting is a proxy
card on which the Board of Directors requests that you vote in favor of: a) the
proposed amendment of the Certificate of Incorporation to increase the number
of authorized shares of Common Stock and b) the election of all nominees for
Directors of the Company to serve for terms of one year until the Annual
Meeting in 1996. We would appreciate the return of your completed proxy card AS
SOON AS POSSIBLE for use at the Annual Meeting or at any adjournments of the
Annual Meeting. Properly executed proxies received by Lydall's Secretary before
the meeting will be voted as directed unless revoked. A proxy may be revoked at
any time before it is exercised by a) notifying Lydall's Secretary in writing,
b) delivering a proxy with a later date or c) by attending the meeting and
voting in person. Unless you indicate on your proxy otherwise, shares properly
represented by proxies signed and returned to the Company will be voted "FOR"
approval of the proposed amendment to the Certificate of Incorporation and
"FOR" the nominees for the Board of Directors named in the proxy.
Under the applicable provisions of the Company's By-laws, the presence,
either in person or by proxy, of the holders of a majority of the voting power
of the issued and outstanding stock is necessary to constitute a quorum for the
transaction of business at the Annual Meeting. Approval of the proposed
amendment to the Certificate of Incorporation requires the affirmative vote of
the holders of at least two-thirds (66 2/3%) of the outstanding shares of
Common Stock entitled to vote at the Annual Meeting. The election of directors
requires the affirmative vote of the holders of a majority of the shares
present in person or represented by proxy at the Annual Meeting and entitled to
vote on the matter. For purposes of determining the number of affirmative votes
cast with respect to any matter submitted to stockholders, only those votes
cast "For" the matter are included. Abstentions will be treated as shares
present and entitled to vote for purposes of determining the presence of a
quorum but will not be considered as votes cast in determining whether a matter
has been approved by stockholders. Abstentions, therefore, will have the same
effect as a negative vote. If a broker or other holder of record or nominee
indicates on a proxy that it does not have authority as to certain shares to
vote on a particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter. As a result, these so-called
"broker non-votes" will have the same effect as a negative vote with respect to
the proposed amendment to the Certificate of Incorporation, but will have no
effect on the outcome of the voting with respect to the election of directors.
All costs of solicitation of proxies will be borne by the Company. Lydall has
engaged the services of the outside proxy solicitation firm of Morrow &
Company, Inc. in the interests of increasing the number of shares represented
at the meeting. The anticipated cost of the engagement is approximately $3,500.
The contract provides for consultation regarding the written solicitation
materials as well as the actual solicitation of proxies. Other costs
anticipated are those ordinarily incurred in connection with the preparation
and mailing of proxy material. In addition to solicitations by mail and the
outside soliciting firm, the Company's Directors, officers and other employees,
without additional remuneration, may solicit proxies by telephone and personal
interviews.
<PAGE>
Only holders of record of Lydall's common stock, par value $.10 per share
("Common Stock"), at the close of business on March 13, 1995 are entitled to
vote at the meeting. On that date there were shares of Common Stock
outstanding, the holders of which are entitled to one vote per share.
PROPOSAL 1: AMENDMENT OF THE CERTIFICATE OF INCORPORATION
- - - --------------------------------------------------------------------------------
The Company's Board of Directors has unanimously adopted, subject to the
approval of the stockholders at the Annual Meeting, an amendment to Article 4
of the Company's Restated Certificate of Incorporation ("Certificate") to
increase the authorized number of shares of Common Stock of the Company from
15,000,000 to 30,000,000. The complete text of Article 4 as proposed to be
amended is as follows:
Article 4. The designation of each class of stock, the authorized
number of shares of each such class, and the par value of each share
thereof, are as follows:
<TABLE>
---------------------------------------------
<CAPTION>
Authorized Number
Designation of Shares Par Value
---------------------------------------------
<S> <C> <C>
Common Stock 30,000,000 $ .10
Preferred Stock 500,000 $1.00
---------------------------------------------
</TABLE>
As of March 13, 1995, an aggregate of shares of Common Stock were issued
and outstanding and an additional shares were reserved for issuance under
the Company's stock-based benefit plans, leaving an aggregate of 3,340,598
shares that are unissued, unreserved and available for future issuance.
The Board of Directors considers it desirable to increase by 15,000,000
shares the number of shares of Common Stock that the Company is authorized to
issue for several general corporate purposes including, among others, (i)
issuance to raise additional capital; (ii) use in connection with acquisitions
if the Company should desire to expand or diversify its business; (iii) stock
dividends, stock splits and other stock distributions to stockholders; and (iv)
issuance in connection with future transactions of a currently undetermined
nature. The Company has no current plans, agreements, or arrangements regarding
the issuance of any additional shares of Common Stock.
If the Certificate is adopted, the Company would be permitted to issue the
authorized shares without further stockholder approval, except to the extent
otherwise required by law or by the rules of any securities exchange on which
the Common Stock is listed at the time. The New York Stock Exchange, on which
the Company's Common Stock is now listed, currently requires stockholder
approval as a prerequisite to listing shares in certain instances, including
acquisition transactions where the issuance could increase the number of
outstanding shares by 20 percent or more. No holders of any class of stock of
the Company currently are entitled as a matter of right to any preemptive or
subscription rights with respect to any shares of the Company's capital stock,
and that would not be affected by the adoption of the proposed Certificate.
Stockholders are advised that the availability of additional shares of Common
Stock, under certain circumstances, could enable the Board to render more
difficult or discourage an attempt to gain control of the Company. For example,
the issuance of shares of Common Stock in a public or private sale, merger or
similar transaction would increase the number of the Company's outstanding
shares, thereby diluting the interest of a party seeking to take over the
Company. The Company's management is not aware of any effort to acquire control
of the Company; however, and the increase in authorized shares that would be
effected by the adoption of the proposed Certificate is not being proposed in
response to any such effort.
2
<PAGE>
VOTE REQUIRED FOR ADOPTION
In order to be adopted, the proposed Certificate must be approved by the
affirmative votes of at least two-thirds (66 2/3%) of the outstanding shares of
Common Stock entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE
FOR PROPOSAL 1
PROPOSAL 2: ELECTION OF LYDALL DIRECTORS
- - - --------------------------------------------------------------------------------
The Board of Directors has nominated Messrs. Lee A. Asseo, Paul S.
Buddenhagen, Samuel P. Cooley, W. Leslie Duffy, Leonard R. Jaskol, William P.
Lyons, Joel Schiavone, Roger M. Widmann and Albert E. Wolf to serve as
Directors of the Company for a term of one year until the 1995 Annual Meeting
to be held in 1996.
Also, management has proposed and the Board of Directors has unanimously
voted to nominate two different senior management officers, William J. Rankin
and Carole F. Butenas for election as Directors to serve for one-year terms,
until the 1995 Annual Meeting to be held in 1996. The addition of these two
senior managers to the Board of Directors marks the continuation of the
Company's program to include senior management participation at the Board
level. At the end of the one-year term, these two individuals are expected to
be replaced by two other senior managers. This rotation of senior managers on
the Board will be on a continuing basis. The Company feels that this program
has been beneficial because it allows outside Directors to work with and
observe the skills of the Company's managers, and it provides the Board with
valuable input regarding the details of the operation of the Company. The
Company has no intention of further expanding management participation on the
Board. The Company intends to maintain its Board with a majority of outside
Directors.
Under the current Certificate of Incorporation, the Board of Directors is
empowered to establish the number of directorships between 3 and 15. The Board
of Directors has currently fixed the number of directorships at 12. There
remains one vacancy. The Board of Directors is actively seeking a candidate to
fill the vacancy.
Additional nominations for Directors may be made from the floor by
stockholders who attend the meeting, including nominations for persons to fill
the present Board vacancy. It is the intention of the Proxy Committee of the
Board of Directors to vote only for the Director nominees described on pages 5
through 7 of this Proxy Statement. Proxies cannot be voted for a greater number
of persons than the number of nominees named.
All nominees have indicated that they are willing and able to serve as
Directors if elected. If any of such nominees should become unable or unwilling
to serve, the Proxy Committee intends to vote for the replacement or
replacements nominated by the Company's management.
VOTE REQUIRED FOR ADOPTION
In order to be elected, the nominees must be approved by the affirmative
votes of a majority of the shares of Common Stock represented, and entitled to
vote, at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE
FOR THE ELECTION OF NOMINEES REFERRED TO IN THIS SECTION.
3
<PAGE>
BOARD OF DIRECTORS
Nominees for election at the 1995 Annual Meeting to serve for a term of one
year, until 1996:
LEE A. ASSEO, 57, has been Chairman of the Board and Chief Executive Officer
of The Whiting Company, a manufacturer of synthetic fibers for the brush
industry, since 1983. Mr. Asseo has been a Lydall Director since 1985. During
1994, Mr. Asseo served as Chairman of the Nominating Committee and as a member
of the Compensation and Stock Option Committee.
PAUL S. BUDDENHAGEN, 48, has been Vice President of Mercer Management
Consulting, Inc., formerly Temple, Barker & Sloane, Inc., and head of its
acquisition and valuation practice since 1988. Mercer Management Consulting,
Inc. is a financial services and consulting firm headquartered in Boston,
Massachusetts. From 1986 to 1988, Mr. Buddenhagen was President of TBS Capital,
an investment management and investment banking subsidiary of the former
Temple, Barker & Sloane, Inc. Prior to 1986, he also served as a senior
consultant in Temple, Barker & Sloane Inc.'s Corporate Planning and Development
Group. A Lydall Director since 1989, Mr. Buddenhagen served as Chairman of the
Executive Committee and a member of the Nominating Committee during 1994.
SAMUEL P. COOLEY, 63, is a retired Executive Vice President and Senior Credit
Approval Officer of Shawmut Bank Connecticut, N.A., which he joined in 1955,
and a position from which he retired in 1993. He has been a Lydall Director
since 1966. During 1994, he served as Chairman of the Audit Committee and as a
member of the Pension Committee.
W. LESLIE DUFFY, 55, is a partner in the law firm of Cahill Gordon & Reindel.
He has been with that firm since 1965. He has been a Lydall Director since
1992. During 1994, Mr. Duffy served as Chairman of the Pension Committee and a
member of the Development Committee.
LEONARD R. JASKOL, 58, was elected Chairman of the Board on October 9, 1991.
He also serves as President and Chief Executive Officer of Lydall, positions he
has held since July 1, 1988. He has been a Lydall Director since May 25, 1988.
Prior to July 1, 1988, Mr. Jaskol had been a Vice President of Lydall and Group
President of its Fiber Materials Group since 1977. Mr. Jaskol joined Lydall in
1973 as Vice President--Industrial Products of Lydall's Composite Materials
Division, formerly the Colonial Fiber Division. In 1976, Mr. Jaskol was
appointed Vice President--Division Manager of the Composite Materials Division,
and in 1977 he was named President of that division and Group Executive of
Lydall's Fiber Materials Group. Mr. Jaskol serves as a Director of Rogers
Corporation and Eastern Enterprises. During 1994, Mr. Jaskol served as Chairman
of the Development Committee and as a member of the Executive and Nominating
Committees.
WILLIAM P. LYONS, 53, has been Chairman of JVL Corp., a generic drug
manufacturer, since 1992. Mr. Lyons has also been President of William P. Lyons
& Co., Inc., an investment banking and financial consulting firm since 1975. He
was also Chairman and Chief Executive Officer of Duro-Test Corporation from
1988 to 1991. From 1973 through 1989, Mr. Lyons was a faculty member of Yale
University Schools of Management and Law. A Lydall Director since 1983, Mr.
Lyons is also a Director of DeSoto, Inc., Video Lottery Technologies, Inc. and
Holmes Protection Group, Inc. During 1994, Mr. Lyons served as a member of the
Pension Committee and a member of the Audit Committee.
JOEL SCHIAVONE, 58, has been Chief Executive Officer of The Schiavone
Corporation, a diversified holding company, since 1981, and a Lydall Director
since 1983. During 1994, Mr. Schiavone served as a member of the Executive
Committee.
4
<PAGE>
ROGER M. WIDMANN, 55, is Senior Managing Director, Corporate Finance, of
Chemical Securities, Inc. He joined Chemical Bank in May 1986. Prior to that,
he had been a founder and Managing Director of First Reserve Corporation, an
energy investment and finance firm, since 1981. In addition, Mr. Widmann serves
as a Director of Enterra Corp. Mr. Widmann has been a Lydall Director since
1974. During 1994, Mr. Widmann served as Chairman of the Compensation and Stock
Option Committee and as a member of the Development Committee.
ALBERT E. WOLF, 65, is Chairman of the Board and a Director of Checkpoint
Systems, Inc., which manufactures and markets electronic security systems. Mr.
Wolf has held his present position with Checkpoint since 1972. He has been a
Lydall Director since 1977. During 1994, Mr. Wolf served as a member of the
Compensation and Stock Option Committee and as a member of the Audit Committee.
- - - --------------------------------------------------------------------------------
NOMINEES FROM SENIOR MANAGEMENT:
CAROLE F. BUTENAS, 52, is the Vice President, Communications of Lydall, Inc.
a position she has held since 1992. From 1977 to 1992, Ms. Butenas was Manager
of Corporate Relations, and also during that period, from 1985 to 1992, she
served as Corporate Secretary of Lydall. She joined the Company in 1974 as
Executive Secretary to the President.
WILLIAM J. RANKIN, 41, is the President of Logistics Management, Inc., a
Lydall subsidiary, and the Lydall & Foulds Division, positions he has held
since 1992. Mr. Rankin joined Lydall in 1984 as Director of Operations of
Lydall Express, Inc. From 1988 to 1992, he was Director of National Sales of
Lydall's Composite Materials Division and in 1989 he became the General Manager
of Lydall Express, Inc.
ACTIVITIES OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors held five meetings during 1994. All Directors attended
at least 80 percent of the meetings of the Board, with the exception of Mr.
Duffy who attended 60 percent of the meetings. All Directors attended 100
percent of any committees on which they served.
The Company's Board of Directors has six standing committees: Audit,
Development, Compensation and Stock Option, Pension, Nominating and Executive.
The Audit Committee considers and reviews all matters connected with internal
and external audit reports, the external auditors' management report, and
similar matters. The Development Committee reviews management proposals for
possible mergers and acquisitions and approves investments made in connection
with the Company's development program. The Compensation and Stock Option
Committee (i) reviews the executive compensation of officers of the Company at
the division president level and above; (ii) approves various employment
contracts with officers; (iii) approves nonqualified deferred compensation
arrangements with Directors and officers of the Company upon recommendation of
the Company's officers; and (iv) approves the granting of restricted stock
awards, stock options and stock bonus awards to key employees pursuant to the
Lydall, Inc. 1992 Stock Incentive Compensation Plan. The Pension Committee
makes recommendations concerning the pension and profit sharing plans of the
Company during intervals between Directors' meetings. The Nominating Committee
recommends persons to be nominated as Directors and considers nominees
recommended by stockholders. See "Deadline for Submission of Stockholder
Proposals". The Executive Committee acts on behalf of the Board of Directors in
the interval between its meetings on all matters other than those specifically
assigned by the Board of Directors to its other committees.
During 1994, the Audit Committee held one meeting; the Development Committee
held no meetings; the Compensation and Stock Option Committee held one meeting
and acted by unanimous written consent on three occasions; the Pension
Committee held no meetings and acted by unanimous written consent on three
occasions; the Nominating Committee held one meeting; and the Executive
Committee held no meetings.
5
<PAGE>
During 1994, Directors who were not employees of the Company or otherwise
compensated by the Company were paid a retainer of $3,000 per quarter, $1,000
for each meeting of the Board of Directors attended, and $500 for any committee
meeting held on a day other than the day on which a Board meeting was held. In
addition, the 1992 Stock Incentive Compensation Plan provides for the automatic
grant of nonqualified stock options covering 4,500 (as adjusted for the 1993
stock split) shares of Common Stock to each person serving as a Director on May
7, 1996, May 7, 1999 and May 7, 2002. In addition, new Directors receive an
automatic grant of nonqualified options covering 4,500 (as adjusted for the
1993 stock split) shares of Common Stock upon joining the Board. This provision
allows outside Directors to serve on the Compensation and Stock Option
Committee as disinterested persons under the regulations promulgated under
Section 16 of the Securities Exchange Act of 1934.
Since 1991, the Company has maintained a deferred compensation plan for
outside Directors and the Chairman. Under this plan, those Directors will
receive a lump-sum cash payment upon the later of their retirement as a
Director or their attaining 62 years of age. For each of those Directors, the
total amount of the payment will be equal to $3,000 multiplied by the number of
full or partial calendar years of service as a Director completed prior to
January 1, 1991, plus $6,000 for each full or partial calendar year of service
as a Director completed after December 31, 1990. Benefits attributable to
service as a Director after December 31, 1990 will vest and accrue immediately,
provided the Director has held such position for at least five years. Benefits
attributable to service as a Director prior to January 1, 1991 will vest
immediately and accrue over a seven-year period unless a Director is at least
62 years of age, in which case the benefits automatically will become fully
vested. Benefits also will vest and accrue fully and become payable immediately
upon a change in control of the Company.
From 1984 through 1992, the Company maintained the Lydall, Inc. 1984 Outside
Directors Warrant Plan (the "Warrant Plan"). The Warrant Plan provided for the
grant of warrants to purchase shares of Common Stock to outside Directors. It
was terminated by the Board of Directors on May 13, 1992 because no remaining
shares were available under the Warrant Plan to be awarded, and because the
1992 Stock Incentive Compensation Plan provides for automatic option grants to
Directors of the Company.
As of March 1, 1995, there was an aggregate of 15,165 authorized but unissued
shares of the Company's Common Stock reserved for issuance under the Warrant
Plan upon exercise of the warrants, all of which shares are subject to
outstanding warrants. The only activity in 1994 was an exercise of warrants for
4,468 shares by Director Wolf at an exercise price of $2.937 per share.
Directors Cooley, Widmann and Wolf are the only directors who have warrants
outstanding. Each of them hold warrants for 5,055 shares at an exercise price
of $3.709 per share.
TRANSACTIONS WITH DIRECTORS
The Company maintains a $5 million line of credit with Chemical Bank. Roger
M. Widmann, a Director of the Company, is Senior Managing Director, Corporate
Finance, of Chemical Securities, Inc., an affiliate of Chemical Bank. The line
of credit is renewed annually and is scheduled to expire on September 30, 1995
unless renewed for an additional one-year period. Outstanding borrowings bear
interest at the prime rate. The Company has never utilized any portion of this
credit facility.
During 1994, Mercer Management Consulting, Inc., of which Director Paul S.
Buddenhagen is Vice President, was engaged by several subsidiaries of Lydall to
consult in connection with strategic planning and market research issues. A
total of $240,695 was paid to Mercer Management Consulting, Inc. in 1994 in
connection with such services.
During 1994, Cahill Gordon & Reindel, of which Director W. Leslie Duffy is a
partner, was engaged by the Company as special counsel for limited matters.
6
<PAGE>
SECURITIES OWNERSHIP OF DIRECTORS, CERTAIN EXECUTIVE OFFICERS
AND 5 PERCENT BENEFICIAL OWNERS
The following table lists, to the Company's knowledge, the ownership of
Common Stock and the nature of such ownership for each Director and nominee for
Director, for each executive officer named in the Summary Compensation Table,
for each Division President, for all executive officers and Directors of Lydall
as a group and for each person who owns in excess of 5 percent of the
outstanding shares of Common Stock. Unless otherwise noted, each holder has
sole voting and dispositive power with respect to the shares listed. All
information is given as of March 1, 1995.
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------
Amount and Nature of Percent
Name Beneficial Ownership of Class
- - - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Lee A. Asseo 7,500 Direct
Director 9,000 (Exercisable under 1982
Stock Incentive
Compensation Plan)
1,125 (Exercisable under 1992
Stock Incentive
Compensation Plan)
------
17,625 *
======
Paul S. Buddenhagen 15,000 Direct
Director 9,000 (Exercisable under 1982
Stock Incentive
Compensation Plan)
1,125 (Exercisable under 1992
Stock Incentive
Compensation Plan)
------
25,125 *
======
Carole F. Butenas 22,027 Direct
Vice President--Communications, 2,250 (Exercisable under 1982
Nominee for Director Stock Incentive
Compensation Plan)
2,376 (Exercisable under 1992
Stock Incentive
Compensation Plan)
8,305 (Allocated under Lydall
Profit Sharing Plan) (1)
------
34,958 *
======
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
- - - ------------------------------------------------------------------------
Amount and Nature of Percent
Name Beneficial Ownership of Class
- - - ------------------------------------------------------------------------
<S> <C> <C> <C>
James P. Carolan 54,330 Direct
Division President, 4,091 Indirect (Spouse)
Director 45,251 (Exercisable under 1982
Stock Incentive
Compensation Plan)
3,750 (Exercisable under 1992
Stock Incentive
Compensation Plan)
10,308 (Allocated under Lydall
Profit Sharing Plan) (1)
-------
117,730 1.4
=======
Samuel P. Cooley 1,500 Direct
Director 5,055 (Exercisable under
Warrant Plan)
9,000 (Exercisable under 1982
Stock Incentive
Compensation Plan)
1,125 (Exercisable under 1992
Stock Incentive
Compensation Plan)
-------
16,680 *
=======
W. Leslie Duffy 0 Direct
Director 3,375 (Exercisable under 1982
Stock Incentive
Compensation Plan)
1,125 (Exercisable under 1992
Stock Incentive
Compensation Plan)
-------
4,500 *
=======
Alan J. Gnann 67,251 Direct
Vice President-- 6,750 (Exercisable under 1982
Corporate Development Stock Incentive
Compensation Plan)
3,296 (Exercisable under 1992
Stock Incentive
Compensation Plan)
5,945 (Allocated under Lydall
Profit Sharing Plan) (1)
-------
83,242 1.0
=======
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name Beneficial Ownership of Class
- - - ----------------------------------------------------------------------------
<S> <C> <C> <C>
John E. Hanley 30,375 Direct
Vice President--Finance 54 Indirect (spouse)
& Treasurer 21,450 (Exercisable under 1982
Stock Incentive
Compensation Plan)
5,067 (Exercisable under 1992
Stock Incentive
Compensation Plan)
5,819 (Allocated under Lydall
Profit Sharing Plan) (1)
-------
62,765 *
=======
Leonard R. Jaskol 241,129 Direct
Chairman of the Board 116,267 (Exercisable under 1982
Chief Executive Officer Stock Incentive
Compensation Plan)
1,125 (Exercisable under 1992
Stock Incentive
Compensation Plan)
29,162 (Allocated under Lydall
Profit Sharing Plan) (1)
-------
387,683 4.5
=======
Raymond J. Lanzi 136,503 Direct
Division President 16,597 (Allocated under Lydall
Profit Sharing Plan) (1)
-------
153,100 1.8
=======
William P. Lyons 11,577 Direct
Director 1,125 (Exercisable under 1992
Stock Incentive
Compensation Plan)
-------
12,702 *
=======
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name Beneficial Ownership of Class
- - - -------------------------------------------------------------------------------
<S> <C> <C> <C>
William J. Rankin 1,631 Direct
Division President, 15,830 (Exercisable under 1982
Nominee for Director Stock Incentive
Compensation Plan)
7,931 (Exercisable under 1992
Stock Incentive
Compensation Plan)
4,366 (Allocated under Lydall
Profit Sharing Plan) (1)
-------
29,758 *
=======
Joel Schiavone 1,500 Direct
Director (As a director, officer
and stockholder of The
Schiavone Corporation)
764 Indirect (Spouse)
9,000 (Exercisable under 1982
Stock Incentive
Compensation Plan)
1,125 (Exercisable under 1992
Stock Incentive
Compensation Plan)
-------
12,389 *
=======
Christopher R. Skomorowski 26,743 Direct
Division President, 8,850 (Exercisable under 1982
Director Stock Incentive
Compensation Plan)
5,238 (Exercisable under 1992
Stock Incentive
Compensation Plan)
7,642 (Allocated under Lydall
Profit Sharing Plan) (1)
-------
48,473 *
=======
Elliott F. Whitely 82,101 Direct
Division President 33,150 (Exercisable under 1982
Stock Incentive
Compensation Plan)
3,185 (Exercisable under 1992
Stock Incentive
Compensation Plan)
15,665 (Allocated under Lydall
Profit Sharing Plan) (1)
-------
134,101 1.6
=======
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name Beneficial Ownership of Class
- - - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Roger M. Widmann 22,263 Direct
Director 225 Indirect (Spouse)
5,055 (Exercisable under
Warrant Plan)
9,000 (Exercisable under 1982
Stock Incentive
Compensation Plan)
1,125 (Exercisable under 1992
Stock Incentive
Compensation Plan)
---------
37,668 *
=========
Albert E. Wolf 2,716 Direct
Director 3,000 Indirect (Spouse)
5,055 (Exercisable under
Warrant Plan)
9,000 (Exercisable under 1982
Stock Incentive
Compensation Plan)
1,125 (Exercisable under 1992
Stock Incentive
Compensation Plan)
---------
20,896 *
=========
Lydall Profit Sharing 603,956 (1) 7.0
Plan
c/o CoreStates Bank NA
1500 Market Street
P.O. Box 13839
Philadelphia, PA 19101-
13839
Scudder, Stevens & 470,900 (2) 5.5
Clark, Inc.
345 Park Avenue
New York, NY 10154
All Directors and 1,218,680 (3) 14.1
Executive Officers as a
Group
(19 persons)
</TABLE>
- - - --------------------------------------------------------------------------------
* Indicates that the Director/Officer owns less than 1 percent of the
outstanding shares of Common Stock.
(1) Shares also listed as beneficially owned by the Lydall Profit Sharing Plan
which has the sole power to dispose of the shares. Voting power with
respect to the shares is exercised by the participating employee.
(2) As reported in Schedule 13G filed with the Securities and Exchange
Commission on February 3, 1995.
(3) Of the 1,218,680 shares, 15,165 are exercisable under the Warrant Plan,
308,298 are exercisable under the 1982 Stock Incentive Compensation Plan,
and 42,968 are exercisable under the 1992 Stock Incentive Compensation
Plan.
11
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION AND STOCK OPTION COMMITTEE REPORT TO STOCKHOLDERS
Based on a management proposal, the Compensation and Stock Option Committee
(the "Committee") approves the compensation levels of Lydall's executives at
the division president level and above, subject to ratification by the Board of
Directors. The Committee also administers the Company's Individual Performance
Plan, or cash bonus program, and the Lydall, Inc. Stock Incentive Compensation
Plans as approved by stockholders. Each of the three members of the Committee
is a nonemployee Director. All decisions by the Committee relating to the
compensation of the Company's senior executives are reviewed by the full Board
except for decisions about awards under the Company's stock-based compensation
plans which must be made solely by the Committee in order for the grants or
awards under such plans to satisfy applicable requirements of the federal
securities laws.
The Committee is guided by the following principles in determining the
compensation levels of Messrs. Carolan, Whitely and Gnann and the Chief
Executive Officer, Mr. Leonard R. Jaskol. Mr. Hanley's Compensation level is
determined by the Chief Executive Officer using the same guiding principles.
PHILOSOPHY
Lydall, Inc. ties its executive compensation to the long-term goals and
strategy of the Company which is to build a strong, profitable business and to
protect and grow stockholder value. Lydall's incentive compensation plans are
directly based on Company performance, progress made toward long-term goals
and, in turn, on the value received and reasonably anticipated by stockholders.
The Committee's executive compensation policies are designed to provide
competitive levels of compensation that are closely integrated with the
Company's annual and long-term performance goals. Lydall's goal is to achieve
above-average, consistent corporate performance and it recognizes individual
initiative and achievements that lead to the accomplishment of that goal. The
Company seeks to attract and retain the highest qualified executives and seeks
to ensure its compensation levels are competitive.
Senior executives' compensation packages are intended to be consistent with
those of executives in comparable positions with diversified manufacturers
similar in size to Lydall. Because Lydall directly ties a large portion of its
executive compensation to corporate performance however, executives may be paid
more in a particular year of good results and less in a year of disappointing
results.
The Committee believes that stock ownership by management serves to align
management's and stockholders' interests. The Company's stock-based incentive
plans are an important component of its executive compensation and are intended
to retain and motivate executives to improve the long-term operating results
and growth of the Company. The Committee believes that there is a direct
correlation between the accomplishment of these objectives and the value of
Lydall's Common Stock.
ELEMENTS OF COMPENSATION
The following describes each of the three components of Lydall's executive
compensation packages.
Base Salary. Base salary is compared with the competitive median for
diversified manufacturers of similar size, as determined by independently
published compensation surveys.
Salaries for executives are reviewed by the Committee annually and are
determined at that time based on the Committee's agreement that the
individual's contribution to the Company has increased or decreased relative to
operating performance and that competitive pay levels have changed.
12
<PAGE>
Mr. Jaskol's base salary was approved at the October 1993 Board Meeting to be
effective January 1, 1994 through 1995. Mr. Jaskol's salary will be reviewed at
the end of 1995. In determining Mr. Jaskol's compensation, the Committee
considers pay levels among Chief Executive Officers of diversified
manufacturers similar in size to Lydall as well as the Board's agreement on Mr.
Jaskol's contributions to the successful operating performance and financial
management of the Company over the past several years. The Committee measures
Mr. Jaskol's contributions by the Company's long-term earnings growth, balance
sheet strength, management development, and new product opportunities. A
similar process is followed for Messrs. Carolan, Whitely, Gnann and Hanley.
Salary levels for all of these senior officers except Mr. Hanley were set at
the end of 1993 for the two years 1994 and 1995. Mr. Hanley's salary level was
set by Mr. Jaskol at the end of 1994 for 1995. All salaries will be reviewed at
the end of 1995.
Individual Performance Awards. The bonus portion of Lydall's executive
compensation is a key component of its management's total compensation
packages. Individual Performance Award agreements (IPAs) are based on earnings-
per-share targets and the accomplishment of individually defined milestones.
Threshold, superior, and outstanding earnings-per-share targets are determined
by the Committee at the beginning of each year. Individual milestones are also
established annually.
Companywide, the amounts for individual awards range from 5 percent to 75
percent of base salary. The senior executives named in the Summary Compensation
Table, excluding Mr. Jaskol, are eligible to receive a bonus of up to 62.5
percent of their base salaries.
In 1994, Mr. Jaskol was eligible to receive a bonus of up to 75 percent of
his base salary provided that Lydall's performance reached or surpassed the
outstanding target levels. Mr. Gnann and Mr. Hanley were eligible to receive a
bonus of up to 62.5 percent of their base salaries provided that Lydall's
performance reached or surpassed the outstanding target levels. These levels
were attained in 1994 and thus, Mr. Jaskol, Mr. Gnann and Mr. Hanley each
received his maximum bonus for the year.
Individual performance awards, or bonuses, for all division presidents are
based two-thirds on personal milestones relating to the results of their
division together with each division's contribution to the overall results of
the Company, and one-third on corporate earnings-per-share targets. Mr. Carolan
and Mr. Whitely's bonuses were based on this formula for 1994. Not all of the
divisions met 1994's performance targets, and thus, individual bonuses varied
for the year.
Stock Option Awards. The Committee has determined certain appropriate levels
of ownership for Lydall's senior executives and has granted stock options
towards achieving those predetermined levels. These targets are based on
comparison studies of executive stock ownership in other public companies
similar in size to Lydall. Outstanding historical performance by an individual
is additionally recognized through larger than normal option grants. In
addition to the senior executives named in the Summary Compensation Table, a
large number of Lydall's managers participate in the Company's stock option
program.
Stock options are granted at the prevailing market price and will only have
value if the Company's stock price increases. Generally, grants vest over four
years; individuals must be employed by the Company at the time of vesting in
order to exercise the options.
Mr. Jaskol received option grants covering 12,000 shares of Lydall, Inc.
Common Stock in 1994. He now holds options covering a total of 149,000 shares
of Common Stock, 117,392 of which were vested as of the record date for the
1995 Annual Meeting. Mr. Jaskol's option holdings are reviewed annually to
ensure that his relative stock ownership in the Company adequately reflects his
contributions to maximizing stockholder value for the long term. Option awards
to Mr. Jaskol are also tied to his level of base salary and to the long-term
performance of the Company.
13
<PAGE>
In 1994, Mr. Carolan received an option grant covering 6,000 shares of Common
Stock plus an additional option grant covering 4,500 shares of Common Stock
which he received upon becoming a new member of Lydall's Board of Directors
during the year; Mr. Whitely received option grants covering 6,000 shares of
Common Stock; Mr. Gnann received option grants covering 5,000 shares of Common
Stock; and Mr. Hanley received option grants covering 6,000 shares of Common
Stock.
LIMITATION ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the
Internal Revenue Code of 1986, as amended. Section 162(m) generally denies a
publicly held corporation, such as the Company, a federal income tax deduction
for compensation in excess of $1 million per year paid or accrued for each of
its chief executive officer and four other most highly compensated executive
officers. Certain "performance based" compensation is not subject to the
limitation on deductibility provided that certain stockholder approval and
independent director requirements are met. Final regulations have not yet been
adopted under this new Internal Revenue Code provision.
Because of the fact that the compensation paid to each of the Company's
executive officers has not exceeded $1 million per year, the Committee does not
believe that the new limitation on deductibility of executive compensation is
currently material to the Company. The Committee will continue to review the
situation in light of the final regulations and future events with the
objective of achieving deductibility to the extent appropriate.
COMPENSATION AND STOCK OPTION
COMMITTEE
Roger M. Widmann, Chairman
Lee A. Asseo and Albert E. Wolf
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the Compensation and Stock Option Committee members, Roger M.
Widmann, Lee A. Asseo, and Albert E. Wolf, have interlocking relationships with
the Company and all are outside directors.
14
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
shares over the past five years with the cumulative total return on shares of
companies comprising the Standard & Poor's Industrials Index and the Russell
2000 Index. Cumulative total return is measured assuming an initial investment
of $100 and the reinvestment of dividends.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG LYDALL, INC., S&P INDUSTRIALS INDEX AND RUSSELL 2000 INDEX
<CAPTION>
Cumulative Total Return
1989 1990 1991 1992 1993 1994
-------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lydall Inc 100 80 157 190 204 311
S&P Industrials 100 99 130 137 149 155
RUSSELL 2000 100 80 117 139 166 163
</TABLE>
15
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows the compensation either paid or allocated by the
Company for the past three years through December 31, 1994 to the Chief
Executive Officer of the Company and each of the four other most highly
compensated executive officers of the Company.
- - - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long-Term Compensation
------------------------
Annual Compensation Awards Payouts
------------------------ -------- ---------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
Other Re- Under- All
Name Annual stricted lying LTIP Other
and Compen- Stock Options/ Pay- Compen-
Principal Salary Bonus sation Awards SARs out sation
Position Year ($) ($) ($)/(1)/ ($) (#)/(2)/ ($) ($)/(3)/
- - - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
L.R. Jaskol............. 1994 400,000 300,000 35,319 0 12,000/0 0 53,499
CEO & 1993 350,000 262,500 12,224 0 16,500/0 0 28,573
Chairman of the Board 1992 350,000 262,500 14,512 0 15,000/0 0 30,914
J.P. Carolan............ 1994 200,000 125,000 71,776 0 10,500/0 0 68,488/(4)/
Division 1993 170,000 106,250 0 0 13,500/0 0 31,211/(5)/
President 1992 170,000 106,250 873 0 9,000/0 0 34,924/(5)/
E.F. Whitely............ 1994 200,000 125,000 5,640 0 6,000/0 0 20,954/(6)/
Division 1993 164,000 102,500 0 0 17,000/0 0 15,208/(6)/
President 1992 164,000 74,648 873 0 9,000/0 0 16,791/(6)/
A.J. Gnann.............. 1994 180,000 112,500 3,984 0 5,000/0 0 16,337
V. President 1993 164,000 34,167 0 0 10,500/0 0 14,150
Development 1992 164,000 34,167 796 0 9,000/0 0 14,766
J.E. Hanley............. 1994 150,000 93,750 2,301 0 6,000/0 0 13,844
V.President 1993 130,000 81,250 0 0 20,000/0 0 11,993
Finance 1992 110,000 66,550 440 0 9,000/0 0 10,170
- - - --------------------------------------------------------------------------------------------
</TABLE>
/(1)/ None of the named executive officers received perquisite and other
personal benefits in excess of the lesser of $50,000 or 10 percent of his
total annual salary and bonus.
/(2)/ Share amounts prior to the 1993 stock split have been restated to reflect
the three-for-two stock split distributed September 15, 1993.
/(3)/ The items reported in column (i) include amounts paid on behalf of the
named individuals by the Company for:
Defined contribution plans (401(k) Plan & ESOP):
L.R. Jaskol 1994 ($10,500), 1993 ($16,509), 1992 ($16,020); J.P.
Carolan 1994 ($7,711), 1993 ($13,217), 1992 ($13,077); E.F. Whitely
1994 ($10,500), 1993 ($12,917), 1992 ($12,777); A.J. Gnann 1994
($10,500), 1993 ($12,171), 1992 ($11,779); J.E. Hanley 1994 ($10,500),
1993 ($10,439), 1992 ($8,473).
The Employee Stock Purchase Plan:
L.R. Jaskol 1994 ($400), 1993 ($400), 1992 ($400); J.P. Carolan 1994
($400), 1993 ($400), 1992 ($400); E.F. Whitely 1994 ($400), 1993
($400), 1992 ($400); A.J. Gnann 1994 ($400), 1993 ($400), 1992 ($400);
J.E. Hanley 1994 ($400), 1993 ($400), 1992 ($400);
Life Insurance premiums:
L.R. Jaskol 1994 ($31,892), 1993 ($11,664), 1992 ($14,494); J.P.
Carolan 1994 ($6,399), 1993 ($1,654), 1992 ($3,352); E.F. Whitely 1994
($5,892), 1993 ($1,579), 1992 ($3,302); A.J. Gnann 1994 ($2,775), 1993
($1,579), 1992 ($2,587); J.E. Hanley 1994 ($1,095), 1993 ($1,154), 1992
($1,297);
Long-Term Disability premiums:
L.R. Jaskol 1994 ($10,707); J.P. Carolan 1994 ($3,978); E.F. Whitely
1994 ($3,850); A.J. Gnann 1994 ($2,662), J.E. Hanley 1994 ($1,849).
/(4)/ $50,000 is attributed to forgiveness of a bridge loan provided to Mr.
Carolan to reimburse him when he was required by the Company to relocate
from France. This loan is described in more detail below in this Proxy
Statement.
/(5)/ In 1993 and 1992, Mr. Carolan, received compensation for foreign exchange
rate losses of $15,940 and $18,095, respectively, while employed as
President of Lydall International, Inc. in France.
/(6)/ In 1994, 1993 and 1992, Mr. Whitely received a nonsmoking bonus of $312 in
accordance with the policy for his location.
16
<PAGE>
PLAN DESCRIPTIONS
While not required by the Securities and Exchange Commission rules in every
case, the Company believes a brief description of each compensation plan will
enable stockholders to understand better the information presented in the
tables.
DEFINED BENEFIT PENSION PLAN
The Company provides a noncontributory, "career average" defined benefit
pension plan (the "Pension Plan") to most salaried employees of Lydall. The
Pension Plan provides that benefits, in the amount of 2 percent of the
participant's annual eligible earnings, (subject to limitations imposed by the
Internal Revenue Code) will accrue annually. The Pension Plan benefits are not
determined primarily by final or average final compensation. The Company pays
the entire cost of the Pension Plan which is administered by a committee
appointed by the Board of Directors.
A participant's compensation for purposes of determining pension benefits is
the participant's W-2 compensation (less bonus and other similar compensation
payments) plus pretax employee contributions to the pretax plans of Lydall,
Inc.
The normal retirement age under the Pension Plan is 65 and actuarially
reduced benefits are available at age 55 if the participant has ten years of
service. Messrs. Jaskol, Carolan, Whitely, Gnann and Hanley are expected to
receive annual benefits upon retirement at normal retirement age (assuming
salary increases of 4 percent per year for Mr. Jaskol and 5 percent per year
for the others) in the amounts of $80,178, $61,187, $87,051, $112,820, and
$159,705, respectively. The aforementioned amounts are not subject to any
further reductions for Social Security benefits or for any other offset
amounts.
SALARIED PROFIT SHARING PLAN
The Company has a noncontributory profit sharing plan (the "Profit Sharing
Plan") covering most salaried employees and full-time hourly employees at
certain Lydall locations. The Board of Directors has discretionary authority to
determine the amount of contributions (if any) to be made each year by the
Company. Each employee receives a percentage of his or her W-2 compensation, as
determined by the Board of Directors, (subject to the limitations imposed by
the Internal Revenue Code) less bonus and other similar compensation payments
plus employee pretax contributions. Contributions are made either in shares of
Common Stock or in cash. If cash, the trustee of the Profit Sharing Plan uses
it to purchase Common Stock, so that the Profit Sharing Plan is invested
primarily in Lydall Common Stock. The Profit Sharing Plan provides that an
employee's Profit Sharing Plan account shall be distributed to an employee who
terminates employment with a vested benefit, or who retires at normal
retirement age.
STOCK INCENTIVE PLAN
The Company maintains the Lydall, Inc. 1992 Stock Incentive Compensation Plan
(the "1992 Plan"), which expires on May 12, 2002. The 1992 Plan presently
authorizes an aggregate of 790,000 shares of Common Stock for issuance under
the terms of incentive awards that may be granted to Directors, officers and
other key employees of the Company. Incentive awards granted under the 1992
Plan may take the form of nonqualified stock options, incentive stock options,
restricted stock awards, or stock bonus awards.
17
<PAGE>
STOCK OPTION TABLES
The following table provides information regarding stock options granted to
the named executive officers during 1994. In addition, in accordance with
Securities Exchange Commission rules, the values assigned to each reported
option are shown using gains based on assumed rates of annual compound stock
price appreciation of 5 percent and 10 percent from the date the options were
granted over the full option term.
In assessing these values, it should be kept in mind that no matter what
theoretical value is placed on a stock option on the date of grant, its
ultimate value will be dependent on the market value of the Company's stock at
a future date, and that value will depend on the efforts of such executives to
foster the future success of the Company for the benefit of not only the
executives, but all stockholders.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- - - -----------------------------------------------------------------------------------------
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term/(*)/
- - - ------------------------------------------------------------------- ---------------------
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees Base Price Expiration
Name Granted (#) in Fiscal Year ($/Sh) Date 5%($) 10%($)
- - - -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
L.R. Jaskol 12,000/(1)//0 10.2/0 $33.500 12/7/04 252,840 640,680
J.P. Carolan 4,500/(2)//0 $27.625 5/10/04 78,210 198,135
6,000/(1)//0 $33.500 12/7/04 126,420 320,340
-------------
10,500 /0 8.9/0
E.F. Whitely 6,000/(1)//0 5.1/0 $33.500 12/7/04 126,420 320,340
A.J. Gnann 5,000/(1)//0 4.2/0 $33.500 12/7/04 105,350 266,950
J.E. Hanley 6,000/(1)//0 5.1/0 $33.500 12/7/04 126,420 320,340
- - - -----------------------------------------------------------------------------------------
</TABLE>
/(*)/ These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on the future performance of the Common Stock and overall stock
market conditions.
/(1)/ Exercisable 25% 12/8/95; 50% 12/8/96; 75% 12/8/97; 100% 12/8/98
/(2)/ Exercisable 25% 5/11/95; 50% 5/11/96; 75% 5/11/97; 100% 5/11/98
The following table shows stock option exercises by the named officers
during 1994, including the aggregate value of gains on the date of exercise.
In addition, this table includes the number of shares covered by both
exercisable and nonexercisable stock options as of December 31, 1994. Also
reported are the values for "in-the-money" options which represent the
positive spread between the exercise price of any such existing stock options
and the year-end price of Common Stock.
18
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
- - - ----------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Value of
Securities Under- Unexercised
lying Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End(#) FY-End($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise(#) Value Realized($) Unexercisable Unexercisable
- - - ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
L.R. Jaskol 6,000 171,060 173,159/23,841 4,708,773/319,075
J.P. Carolan 15,445 456,122 89,575/23,120 2,431,197/293,360
E.F. Whitely 8,421 247,636 89,219/23,349 2,328,023/342,929
A.J. Gnann 9,837 200,842 24,490/16,610 517,657/257,963
J.E. Hanley 900 24,980 46,682/23,691 1,154,075/333,439
- - - ----------------------------------------------------------------------------------
</TABLE>
INDIVIDUAL PERFORMANCE AWARD PLAN
Lydall's Individual Performance Award Plan provides individual cash awards
for improvement in annual operating results. The performance award plan is
administered by the Stock Option and Compensation Committee of the Board of
Directors. Performance awards depend upon individual performance and
achievement of specified objectives. Individual awards, which may vary from 5
to 75 percent of base salary, are paid during the first quarter of the
following year. Amounts earned in 1994, whether paid to or deferred by the
persons included in the Summary Compensation Table, are included in the amounts
shown in such Table.
STOCK PURCHASE PLAN
The Lydall Employee Stock Purchase Plan (the "Stock Purchase Plan") gives
certain full-time, nonunion and union (if negotiated) Lydall employees the
opportunity to purchase Common Stock through regular payroll deductions. Lydall
contributes 33 1/3 percent of each employee's contribution up to $100 a month.
Purchases are made on the open market by a brokerage firm.
401(K) PLAN
Lydall's 401(k) Plan is available to certain full-time, nonunion employees
with at least six months of service and certain union employees as negotiated.
In accordance with Section 401(k) of the Internal Revenue Code, the 401(k) Plan
provides participants with the option to reduce their gross income for federal
income tax purposes to the extent of their pretax contributions. Generally,
participants may contribute up to 10 percent of their total compensation on a
pretax basis (subject to limitations imposed by the Internal Revenue Code).
Lydall matches dollar for dollar the nonunion employees' pretax contributions
up to 2 percent of each employee's annual compensation. Lydall's matching
contribution is immediately fully vested.
OTHER EMPLOYEE BENEFIT PLANS REMUNERATION
Lydall provides group life insurance of two to five times salary, and
Accidental Death & Dismemberment Insurance for all eligible salaried employees.
With respect to all executive officers named in the Summary Compensation Table
and certain other officers of the Company, such life insurance coverage,
consists of an individual Universal Life Policy which is owned by the covered
individual. With respect to Mr. Jaskol, the only senior officer eligible for
insurance coverage of five times his salary, a portion of this coverage is in
the form of an individual whole life policy owned by him.
19
<PAGE>
Lydall provides under a group plan long term disability coverage of 60
percent of base salary to all eligible salaried employees. The Company provides
all executive officers named in the Summary Compensation Table and certain
other officers of the Company with long term disability coverage equal to their
base salary.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company has a supplemental retirement plan intended to provide retirement
benefits, supplementing those provided under other Company-related retirement
plans to certain officers and key employees. All of the officers named in the
compensation table are participants. Upon retirement and for a period of up to
fifteen years, a participant is entitled to receive a monthly retirement
benefit. That benefit is equal to the lesser of (i) 60 percent of the
participant's final average pay less the participant's benefits (attributable
to Company contributions) under all of the Company's qualified plans or (ii) an
amount equal to the sum each year of the excess benefits for such participant
under each plan attributable to the participant's compensation in excess of the
limitation imposed by the Internal Revenue Code.
The participant is deemed vested in the supplemental benefits when they have
attained age 55 and the sum of their age and service equal or exceed 70. Mr.
Jaskol is the only participant named in the compensation table who is fully
vested. Messrs. Jaskol, Carolan, Whitely and Gnann are expected to receive
annual benefits upon retirement at normal retirement age in the amount of
$189,769, $55,509, $28,572 and $53,068 respectively.
TRANSACTIONS WITH MANAGEMENT
The Company currently has outstanding two loans to Leonard R. Jaskol, both of
which were made to facilitate his acquisition of a greater equity stake in the
Company. Mr. Jaskol is Chairman of the Board, President and Chief Executive
Officer of the Company. The first such loan is scheduled to mature on January
1, 1996, or whenever Mr. Jaskol terminates his employment, whichever is sooner.
The loan is an unsecured term loan that is currently bearing interest at the
rate of 7.05 percent. During 1994, the highest unpaid principal balance of this
loan was $24,340, which also was the unpaid principal balance as of March 10,
1995. The other loan is for $150,000, bearing interest at 7.05 percent per
annum on the unpaid balance of the note and maturing on January 1, 1996. The
note is secured by 18,276 shares of Lydall Common Stock owned by Mr. Jaskol.
During the period from January 1, 1994 through December 31, 1994, the highest
unpaid principal balance of this loan was $150,000, which also was the unpaid
principal balance as of March 10, 1995. The Company grosses up Mr. Jaskol's
salary to reimburse him for the amount of the interest due and payable under
the loans, as well as the additional taxes incurred by Mr. Jaskol as a result
of the interest reimbursement.
The Company currently has outstanding one loan to Division President James P.
Carolan. The loan was made to advance him the equity in his home in France,
when he was required to relocate to the United States by the Company, to be
used in purchasing a replacement home in the United States. The loan is for
$33,719 and bears no interest, as it is a temporary bridge loan until the home
in France is sold. The Company also made a separate temporary bridge loan to
Mr. Carolan in the amount of $50,000 bearing no interest for the purpose of
reimbursing Mr. Carolan for construction costs necessary to put his home in
France in habitable and marketable condition. During 1994 this loan was
forgiven by the Company and Mr. Carolan was made whole from a tax perspective,
because the value of the home in France has declined below the mortgage value,
resulting in a loss to Mr. Carolan of his equity. The Company forgave the loan
in order to make Mr. Carolan whole, because it was the Company's decision to
require Mr. Carolan to relocate to the United States and incur expenses he
would not otherwise have incurred.
20
<PAGE>
The Company has entered into agreements with (i) Mr. Jaskol; (ii) each of the
Division Presidents of the Company, including those named in the Summary
Compensation Table; (iii) Vice President Corporate Development Alan J. Gnann,
(iv) Vice President--Finance and Treasurer John E. Hanley; (v) Vice President
Communications Carole F. Butenas, (vi) General Counsel and Secretary Mary
Adamowicz and (vii) Manager of Human Resources and Employee Benefits Mona G.
Estey. The agreements are intended to provide for continuity of management in
the event of a change in control of the Company. The agreements generally
provide for the continued employment of each such executive officer in the
event that he or she is forced to resign or is otherwise replaced (unless he or
she resigns or is replaced for "cause," as defined in the agreements) after a
change in control of the Company. Certain of the agreements also provide for
the continued employment of certain executive officers in the event of
termination before a change in control. The agreements define a change in
control of the Company to mean (a) an acquisition of the Company by means of a
merger or consolidation or purchase of substantially all of its assets if
incident thereto the composition of the Company's Board of Directors changes
with the result that a majority of the Board consists of new members or the
Company's stockholders receive cash or other consideration in exchange for
their Lydall stockholdings, (b) the acquisition of 25 percent or more of the
outstanding shares of Common Stock by an entity or a person who was not an
officer or a Director of the Company on the dates of the respective agreements
or (c) the election or appointment to the Board of any director(s), where that
appointment or election was not approved by a vote of at least a majority of
the directors then in office. Mr. Jaskol's agreement, as amended, is dated
March 1, 1995, and the Vice President--Finance and Treasurer's and each of the
Division President's agreements are dated November 4, 1990, except Mr.
Skomorowski's which is dated February 26, 1992, and Mr. Rankin's, Ms. Butenas',
Ms. Adamowicz' and Ms. Estey's which are dated March 1995.
The period during which the Company would be obligated to continue to employ
the covered executives is defined in the agreements as the "Employment Period."
During the Employment Period, each covered executive would be entitled to
receive an annual salary equal to one-third of the aggregate of the base salary
and bonuses he or she received during the three years prior to the Employment
Period. With respect to Mr. Jaskol, the Company would be obligated to pay such
amount to him for a period of two years if he is forced to resign or is
otherwise replaced prior to a change in control of the Company or three years
if he resigns (including a voluntary resignation) or is otherwise replaced
following a change in control of the Company. With respect to each of the
Division Presidents, the Vice President--Corporate Development and the Vice
President--Finance and Treasurer, the period during which the Company would be
obligated to pay such amount would be one year if forced resignation or
replacement occurs prior to a change in control and two years if forced
resignation or other replacement occurs following a change in control. With
respect to Ms. Butenas, Ms. Adamowicz and Ms. Estey the period during which the
Company would be obligated to pay such amount would be one year if termination
occurs within one year following a change of control. Each of the agreements
provides that the covered executive officers will not be entitled to any
benefits after their normal retirement date.
APPOINTMENT OF AUDITORS
The Board of Directors approved, upon recommendation of the Audit Committee,
Coopers & Lybrand, LLP as independent accountants to the Company for the year
ended December 31, 1994. It is expected that the Board of Directors will
appoint Coopers & Lybrand, LLP as the Company's independent accountants for the
current year. Representatives of Coopers & Lybrand, LLP will be present at the
Annual Meeting and will be available to respond to questions.
OTHER MATTERS
The Board of Directors does not know of other matters which may come before
the meeting. However, if other matters are properly presented at the meeting,
it is the intention of the proxy committee to vote or otherwise to act in
accordance with their judgment on such matters.
21
<PAGE>
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposals or recommendations for Directors by stockholders which are to
be presented at the Annual Meeting to be held in May, 1996 must be received by
the Company by December 7, 1995 in order to be included in the Proxy Statement
and on the proxy card relating to the 1996 Annual Meeting.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1994 WILL BE PROVIDED
WITHOUT CHARGE, UPON REQUEST. REQUESTS MAY BE DIRECTED TO: CAROLE F. BUTENAS,
VICE PRESIDENT-- COMMUNICATIONS, LYDALL, INC., P.O. BOX 151, MANCHESTER,
CONNECTICUT 06045-0151.
22
<PAGE>
PROXY
LYDALL, INC.
The undersigned hereby appoints Samuel P. Cooley, Leonard R. Jaskol
and Roger M. Widmann, or any one of them, with full power of substitution,
as attorneys and proxies, to vote all shares of stock of Lydall, Inc. which
the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at The Hartford Club, 46 Prospect
Street, Hartford, Connecticut on May 10, 1995 at 11:00 a.m. E.D.T. and at
any adjournments thereof. The undersigned hereby acknowledges receipt of
the Notice of Annual Meeting and the Proxy Statement dated April 6, 1995
and instructs its attorneys and proxies to vote as set forth on this Proxy.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(To be Signed on Reverse Side)
<PAGE>
++ +
[X] Please mark your + +
votes as in this + + +
example.
FOR WITHHELD NOMINEES: Lee A. Asseo
1. ELECTION [_] [_] Paul S. Buddenhagen
OF Carole F. Butenes
DIRECTORS Samuel P. Cooley
W. Leslie Duffy
FOR, EXCEPT Vote withheld from Leonard R. Jaskol
the following nominee(s) William P. Lyons
William J. Rankin
______________________________ Joel Schiavone
Roger M. Widmann
Albert E. Wolf
FOR AGAINST ABSTAIN
2. APPROVAL OF THE AMENDMENT TO [_] [_] [_]
THE CERTIFICATE OF INCORPORATION
3. In their discretion, such other business as may properly come before
the meeting.
The shares represented by this Proxy will be voted as specified. IF NO
CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED IN FAVOR OF THE SPECIFIED
NOMINEES AND FOR THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION. THIS
PROXY CARD MUST BE PROPERLY COMPLETED, SIGNED, DATED AND RETURNED IN ORDER
TO HAVE YOUR SHARES VOTED.
PLEASE NOTE ANY CHANGE OF ADDRESS.
SIGNATURE ________________________ DATE _________
SIGNATURE ________________________ DATE _________
NOTE: Please sign exactly as name appears above. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee,
etc., indicate title. If the signer is a corporation, sign in the
corporate name by a duly authorized officer.
