<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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THIOKOL CORPORATION
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
<PAGE>
[LOGO OF THIOKOL APPEARS HERE]
SEPTEMBER 12, 1997
Dear Stockholder:
We invite you to the Annual Meeting of Stockholders of Thiokol Corporation,
which will be held on Thursday, October 23, 1997, at the Marriott Hotel, 75
South West Temple, Salt Lake City, Utah, commencing at 10:00 a.m. local time.
Information about the matters to be voted upon at the meeting is in the
enclosed formal Notice of Meeting and Proxy Statement.
It is important that your shares be represented at this meeting whether or
not you personally plan to attend. Please sign, date, and return your proxy
promptly in the enclosed envelope. This will not limit your right to vote in
person or attend the meeting.
The Company's Annual Report for the fiscal year ended June 30, 1997, is
being distributed to stockholders along with this proxy statement.
[SIGNATURE OF JAMES R. WILSON APPEARS HERE]
Chairman of the Board,
President and Chief
Executive Officer
<PAGE>
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
THURSDAY, OCTOBER 23, 1997
To the Stockholders:
The Annual Meeting of Stockholders of Thiokol Corporation (the "Company")
will be held on Thursday, October 23, 1997, at the Marriott Hotel, 75 South
West Temple, Salt Lake City, Utah, at 10:00 a.m. local time, to consider and
vote upon:
1. Election of two directors (see page 2);
2. Ratification of appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending June 30, 1998 (see page
19); and
3. Any other business that may properly come before the meeting.
The close of business on September 2, 1997, has been fixed as the record
date for the meeting. All stockholders of record on that date are entitled to
be present and vote at the meeting.
Attendance at the Annual Meeting will be limited to stockholders of record,
beneficial owners of Company common stock entitled to vote at the meeting
having evidence of ownership, the authorized representative (one only) of an
absent stockholder, and invited guests of management. Any person claiming to
be an authorized representative of a stockholder must, upon request, produce
written evidence of such authorization.
The meeting will be conducted pursuant to the Company's By-Laws and rules of
order prescribed by the chairman of the meeting.
September 12, 1997
By Order of the Board of Directors,
Edwin M. North
Secretary
<PAGE>
THIOKOL CORPORATION
2475 WASHINGTON BOULEVARD
OGDEN, UTAH 84401-2398
PROXY STATEMENT
September 12, 1997
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Company's Board of Directors of proxies for use at its Annual Meeting of
Stockholders to be held on Thursday, October 23, 1997, and at any adjournment
thereof (the "1997 Annual Meeting").
Shares represented in person or by properly executed and unrevoked proxies
received in proper form in time for the 1997 Annual Meeting will be voted.
Shares will be voted in accordance with stockholders' instructions in the
accompanying proxy. If any such proxy contains no instructions, the shares
will be voted in accordance with the directors' recommendations, which are
noted herein. Any proxy given may be revoked at any time before it is voted at
the meeting.
On September 2, 1997, the record date for the 1997 Annual Meeting, there
were 18,284,884 shares of $1.00 par value common stock outstanding, each
entitled to one vote, and there is no cumulative voting. The Company has no
other class of equity securities outstanding.
Pursuant to the By-Laws of the Company, three Judges of Election have been
elected by the Board of Directors to serve at the 1997 Annual Meeting. In the
event any judge so elected shall not be present at the meeting, that judge
shall be replaced with a judge by the Board of Directors in advance of the
meeting or by the chairman of the meeting in advance of any voting at such
meeting. The owners of a majority of the outstanding shares entitled to vote
are required for a quorum for the transaction of business at the 1997 Annual
Meeting. Under Delaware corporation law abstentions, withheld votes and broker
no-votes (i.e., shares held by a broker or nominee which are represented at
the meeting, but with respect to which such broker or nominee is not empowered
to vote on a particular proposal or proposals) will be considered part of the
quorum. Directors will be elected by a plurality of the votes cast at the 1997
Annual Meeting, which means that abstentions, withheld votes, and broker no-
votes will not affect the election of the candidates. All other proposals,
including the ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors, require the favorable vote of the holders of a
majority of the shares present and entitled to vote at the 1997 Annual Meeting
to pass. Therefore, abstentions as to particular proposals will have the same
effect as votes against such proposals and broker no-votes will not be counted
as votes for or against the proposal, and will not be included in counting the
number of votes necessary for approval of the proposal. For a ten day period
prior to the date of the 1997 Annual Meeting, a list of stockholders entitled
to vote will be open for examination during normal business hours at the
Company's principal offices, 2475 Washington Blvd., Ogden, Utah and may be
examined by any stockholder for any purpose germane to the meeting. The
approximate mailing date of the Proxy Statement and Proxy to stockholders is
September 12, 1997.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers, and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of the Company's common stock of whom they have knowledge, and will
reimburse them for their expenses in so doing. Certain directors, officers,
and other employees of the
1
<PAGE>
Company, not specifically employed for the purpose, may solicit proxies,
without additional remuneration therefor, by personal interview, mail,
telephone, or telegraph. In addition, the Company has retained D. F. King &
Co., Inc. to assist in the solicitation for a fee of $5,000 plus expenses.
1. ELECTION OF DIRECTORS
The Board of Directors is currently comprised of eleven directors. By
resolution, in accordance with the By-Laws of the Company, the Board of
Directors' membership was increased from ten to eleven directors effective
June 19, 1997. Dr. D. Larry Moore was elected by the Board to fill the vacancy
created by the expansion of the Board's membership and to serve in the class
of Directors for which term of office expires at the 1997 Annual Meeting. The
Company's Restated Certificate of Incorporation and By-Laws provide for the
Board to be divided into three classes. Each class serves for a term of three
years. At the 1997 Annual Meeting, Michael P. C. Carns and D. Larry Moore will
stand for election as nominees for directors for a term to expire at the 2000
Annual Meeting.
L. Dennis Kozlowski and James M. Ringler will not stand for re-election.
Subsequent to the Annual Meeting of Stockholders, by resolution of the Board
in accordance with the By-Laws of the Company, the Board will be reduced to
nine members.
The following table shows the class in which each nominee for director and
each director continuing in office serves and the year in which the term of
office for each such class expires.
BOARD OF DIRECTORS
YEAR TERM OF OFFICE EXPIRES
AT THE OCTOBER ANNUAL MEETING
<TABLE>
<CAPTION>
1997 1998 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
NOMINEES FOR DIRECTOR
Michael P. C. Carns ----------------------------------------
D. Larry Moore } ----------------------------------------
DIRECTORS CONTINUING IN OFFICE
Neil A. Armstrong
Charles S. Locke ----------------------------
William O. Studeman } ----------------------------
Donald C. Trauscht
Edsel D. Dunford ----------------
U. Edwin Garrison } ----------------
James R. Wilson
</TABLE>
The nominees for election as directors at the 1997 Annual Meeting for the
above described terms are listed on the following pages. If any nominee should
become unavailable, an event the Board of Directors does not anticipate, it is
intended that such shares will be voted for such substitute nominee as may be
selected by the Board of Directors, or the Board may reduce the number of
directors. All nominees are presently serving as directors and have consented
to being named herein and to serve if elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
2
<PAGE>
BOARD MEETING ATTENDANCE AND COMPENSATION OF DIRECTORS
The Company's Board of Directors met six times during fiscal year 1997.
Except for James M. Ringler, all incumbent directors were present for 75
percent or more of the total meetings of the Board while they were Board
members.
Directors who are employees of the Company receive no compensation for their
service as directors. Mr. James R. Wilson is the only employee serving as a
director. Other directors are paid an annual retainer of $30,000 plus a fee of
$1,000 and travel expenses for each Board meeting attended. Mr. Edsel D.
Dunford provides consulting services to the Company and serves as one of three
Company directors on the Blade Acquisition Corp. Board of Directors, the
holding company for Howmet Corporation. Thiokol Holding Company, a wholly
owned subsidiary of the Company, is beneficial owner of 49 percent of Blade
Acquisition Corp. common stock. Mr. Dunford receives a $50,000 annual retainer
paid quarterly by the Company for serving as a Blade director, plus out-of-
pocket expenses.
The Company maintains a Deferred Fees Plan where non-employee directors may
elect to have payment of part or all of their directors' compensation deferred
until such time as they cease to be a director. The Plan permits directors the
option of electing the deferral of their directors' fees into a cash or
phantom stock credit account. Amounts credited to the cash account are
credited with increments (similar to interest), and amounts credited to the
phantom stock account are credited with amounts reflecting the change in the
price of the Company's common stock and payment of dividends. All
distributions of a director's cash or phantom stock account are made only in
cash. Edsel D. Dunford, Charles S. Locke, D. Larry Moore and James M. Ringler
participate in the Plan's cash account. Two retired directors with an interest
in the Plan are receiving benefits.
U. Edwin Garrison, the retired Chairman of the Board and Chief Executive
Officer of the Company, receives the director's fees paid to non-officer
directors. Mr. Garrison, as a retired employee of the Company, participates in
the Pension Plan and Excess Plan and receives the benefits described on page
12.
3
<PAGE>
NOMINEES FOR DIRECTORS
THREE-YEAR TERM EXPIRING AT THE 2000 ANNUAL MEETING
[PHOTO OF MICHAEL P.C. CARNS, age 60, was elected a director of the
MICHAEL Company in January 1995. General Carns retired as Vice Chief of
P.C. CARNS Staff of the United States Air Force in 1994 with 36 years of
APPEARS distinguished military service. General Carns is a director of
HERE] Woodward Clyde Group, an international consulting group, and a
member of the Board of Trustees of the Monterey Institute of
International Studies. He holds a Bachelor of Science degree
from the United States Air Force Academy and a Masters of
Business Administration degree from Harvard University.
[PHOTO OF D. LARRY MOORE, age 61, was elected a director of the Company
D. LARRY in June 1997. He is the retired President and Chief Operating
MOORE Officer of Honeywell, Inc., an electronic automation and control
APPEARS systems manufacturer, a position he held from April 1993 to June
HERE] 1997. Joining Honeywell in 1986, he served in various executive
positions including Executive Vice President and Chief Operating
Officer 1990 to 1993. Dr. Moore is a director of Geon Company,
Honeywell, Inc., Reynolds Metals Company, and Rohr Inc. Dr.
Moore holds a Ph.D. in Economics from Arizona State University
and a Bachelor of Science degree and Masters in Business
Administration from the University of Arizona.
DIRECTORS CONTINUING IN OFFICE
THREE-YEAR TERM EXPIRING AT THE 1999 ANNUAL MEETING
[PHOTO OF NEIL A. ARMSTRONG, age 67, became a director of the Company in
NEIL A. October 1989. He has served as Chairman of AIL Systems, Inc.,
ARMSTRONG subsidiary of Eaton Corporation, an electronics and systems
APPEARS company with sales primarily to the Federal Government. He is a
HERE] director of CINergy, Inc., Cincinnati Milacron Inc., Eaton
Corporation, RMI Titanium Co., and USX Corporation. He holds a
Bachelor of Science degree in Aeronautical Engineering from
Purdue University and a Master of Science degree in Aerospace
Engineering from the University of Southern California.
[PHOTO OF CHARLES S. LOCKE, age 68, is the retired Chairman of the Board
CHARLES S. and Chief Executive Officer of Morton International, Inc., a
LOCKE manufacturer and marketer of specialty chemicals, automotive
APPEARS inflatable restraint systems, and salt. He served as Chairman of
HERE] the Board and Chief Executive Officer of the Company from 1980
to 1989. Since then, he has continued as a non-employee director
of the Company. He is a director of Avon Products, Inc.; NICOR,
Inc. and its subsidiary, Northern Illinois Gas Company; and
Whitman Corporation. Mr. Locke holds Bachelor of Business
Administration and Master of Science degrees from the University
of Mississippi.
4
<PAGE>
[PHOTO OF WILLIAM O. STUDEMAN, age 57, was elected a director of the
WILLIAM O. Company in January 1996. Admiral Studeman retired from the Navy
STUDEMAN in 1995 after a distinguished 33 year career including serving
APPEARS as Deputy Director of Central Intelligence from 1992 until his
HERE] retirement. Admiral Studeman is the Vice President and Deputy
General Manager, TRW Systems Integration Group and a director of
Premenos Technology Corporation. He holds a Bachelor of Arts
degree from the University of the South and a Masters of Arts
from George Washington University.
[PHOTO OF DONALD C. TRAUSCHT, age 63, was elected a director of the
DONALD C. Company in August 1993. He is the retired Chairman of the Board
TRAUSCHT and Chief Executive Officer of Borg-Warner Security Corporation,
APPEARS a supplier of security services and is Chairman of B W Capital
HERE] Corporation, a private interest company. He served as the
Chairman of the Board, President and Chief Executive Officer of
Borg-Warner Security Corporation from 1993 to 1995; Chairman and
President, Borg-Warner Corporation from 1990 to 1992; and as
Vice President Finance and Strategic from 1987 to 1990. He is a
director of Borg-Warner Automotive, Inc., Baker Hughes
Incorporated, Blue Bird Corporation, IMO Industries, Inc., and
ESCO Electronics Corporation. Mr. Trauscht holds a Bachelor of
Science degree from St. Mary's College and a Master of Business
Administration degree from the University of Chicago.
THREE-YEAR TERM EXPIRING AT THE 1998 ANNUAL MEETING
[PHOTO OF EDSEL D. DUNFORD, age 62, was elected a director of the
EDSEL D. Company in January 1995. He served as President and Chief
DUNFORD Operating Officer of TRW, Inc. from 1991 until his retirement in
APPEARS December 1994. He served as Executive Vice President and General
HERE] Manager of TRW Space and Defense Business from 1987 to 1991. Mr.
Dunford is a director of Cooper Tire & Rubber Company; Blade
Acquisition Corp., the holding company for Howmet Corporation;
and is a trustee at the University of California, Los Angeles.
Mr. Dunford holds a Bachelor of Science degree from the
University of Washington and a Masters of Engineering degree
from the University of California at Los Angeles.
[PHOTO OF U. EDWIN GARRISON, age 69, retired as Chairman of the Board
U. EDWIN October 1995 and retired as Chief Executive Officer of the
GARRISON Company in June 1993 with 39 years of service. He served as
APPEARS Chairman of the Board and Chief Executive Officer from July 1992
HERE] to June 1993; Chairman of the Board, President and Chief
Executive Officer from July 1991 to July 1992; and as President
and Chief Executive Officer from July 1989 to June 1991. He has
served as director of the Company since July 1989. Mr. Garrison
is a director of Questar Corporation. He holds a Bachelor of
Science degree in Mechanical Engineering from Mississippi State
University.
5
<PAGE>
[PHOTO OF JAMES R. WILSON, age 56, has served as Chairman of the Board,
JAMES R. President and Chief Executive Officer since October 1995 and
WILSON President and Chief Executive Officer from October 1993 to
APPEARS October 1995. He has served as a director of the Company since
HERE] October 1993. He joined the Company in 1989 as Vice President
and Chief Financial Officer and became Executive Vice President
and Chief Financial Officer in 1992. Mr. Wilson is a director of
Cooper Industries Inc., Rohr, Inc., First Security Corporation,
Blade Acquisition Corp., and Howmet Corporation, and member of
the Board of Trustees of the College of Wooster. He holds a
Bachelors degree from the College of Wooster and a Masters of
Business Administration from Harvard University.
COMMITTEES OF THE BOARD
There are four standing committees of the Company's Board of Directors:
Audit, Compensation, Nominating, and Executive.
The Audit Committee recommends to the Board the independent auditors to be
selected to audit the Company's annual financial statements and reviews the
fees charged for such audits and for any special assignments given the
auditors. The Committee reviews the annual audit and its scope, including the
independent auditors' comment letter and management's responses; possible
violations of the Company's business ethics and conflict of interest policies;
any major accounting changes made or contemplated; and the effectiveness and
efficiency of the Company's internal audit program. In addition, the Committee
confirms that no restrictions have been imposed by Company personnel on the
scope of the independent auditors and the internal auditors' examinations.
Members of this Committee are Messrs. Donald C. Trauscht (Chairman), Michael
P.C. Carns, Neil A. Armstrong, L. Dennis Kozlowski, and William O. Studeman.
The Committee met four times in fiscal year 1997.
All Committee members attended 75 percent or more of the Committee meetings
while a member of the Committee.
The Compensation Committee annually reviews and reports to the Board on the
investment performance of the fund managers of the Company's retirement plans
and makes recommendations to the Board with respect to the creation and
amendment of compensation, retirement, and other benefit plans of the Company
and its subsidiaries. The Committee also reviews and approves compensation
actions for the Chairman of the Board and Chief Executive Officer, Executive
Officers and other key employees. The Committee administers the Company's
executive bonus programs and the stock option and awards plans. Members of the
Committee are Messrs. Charles S. Locke (Chairman), Edsel D. Dunford, D. Larry
Moore, James M. Ringler, and L. Dennis Kozlowski. The Committee met two times
and took action by written unanimous consent two times in fiscal year 1997.
Except for James M. Ringler, all members attended 75 percent or more of the
Committee meetings while a member of the Committee. The Committee's report on
Executive Compensation is set forth below.
The Nominating Committee reviews the size and composition of the Board,
evaluates individuals for potential membership on the Board, makes
recommendations to the Board of individuals to fill vacancies or new
positions, makes recommendations to the Board of individuals to be proposed to
stockholders for election to the Board at annual meetings of stockholders, and
makes recommendations to the Board regarding Committee structures and
responsibilities. Members of the Committee are Messrs. James M. Ringler
(Chairman), Edsel D. Dunford, D. Larry Moore, Charles S. Locke, and U. Edwin
Garrison. The Committee had one meeting in fiscal year 1997. All Committee
members attended 75 percent or more of the Committee meetings while a member
of the Committee.
6
<PAGE>
The Executive Committee may exercise all of the powers and authority of the
Company's Board, except that the Committee does not have the power to amend
the Company's By-Laws or Certificate of Incorporation (except to fix the
designations, preferences, and other terms of any of its preferred stock);
authorize the issuance of stock; declare dividends; adopt an agreement of
merger or consolidation; adopt a certificate of ownership and merger under
Delaware law; or recommend to Company stockholders the sale, lease, or
exchange of all or substantially all of its property and assets, a dissolution
of the Company or a revocation of a dissolution. Members of this Committee are
Messrs. James R. Wilson (Chairman), U. Edwin Garrison, and Charles S. Locke.
The Committee took action by written unanimous consent once in fiscal year
1997.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information as of August 29, 1997, with
respect to the shares of the Company's common stock which are held by persons
known to the Company to be beneficial owners of more than five percent of such
stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF NATURE PERCENT OF
OF BENEFICIAL OWNERS OF BENEFICIAL OWNERSHIP(/1/) CLASS
-------------------- ---------------------------------------- ----------
<S> <C> <C> <C>
FMR Corp................... Aggregate Amount: 1,423,580 7.8
82 Devonshire Street Sole Voting Power:(/2/) 138,680
Boston, Massachusetts 02109 Sole Dispositive Power: 1,423,580 7.8
GSB Investment Management
Company................... Aggregate Amount: 1,153,164 6.3
301 Commons Sole Voting Power: 388,858 2.1
Suite 1501 Sole Dispositive Power: 823,721 4.5
Ft. Worth, Texas 76102 Shared Dispositive Power:(/2/) 63,025
</TABLE>
- --------
(/1/) As reported on Schedule 13G or provided by the stockholder.
(/2/) Less than 1%.
The following table shows the Company's common stock beneficially owned as
of September 12, 1997, by each director and nominee for director and each of
the Executive Officers named in the table on page 9, and the aggregate number
of such shares beneficially owned by all directors and Executive Officers of
the Company as a group (as used in this Proxy Statement the term "Executive
Officer" means all officers of the Company designated as Executive Officers by
the Board of Directors). Each named person and member of the group has sole
voting and investment power with respect to the shares shown.
7
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
NAME OWNED(/1/)
---- ------------
<S> <C>
Neil A. Armstrong................................................. 1,100
Michael P.C. Carns................................................ 200
Richard L. Corbin................................................. 35,239
Edsel D. Dunford.................................................. 6,000
U. Edwin Garrison................................................. 81,772
L. Dennis Kozlowski............................................... 1,000
Joseph A. Lombardo................................................ 66,284
Charles S. Locke.................................................. 2,562
James E. McNulty.................................................. 50,118
D. Larry Moore ................................................... 0
James M. Ringler.................................................. 1,000
William O. Studeman............................................... 200
Donald C. Trauscht................................................ 400
James R. Wilson................................................... 165,268
Bruce M. Zorich................................................... 9,500
All directors, nominees and Executive Officers as a group
(22 persons, including those named).............................. 526,061
</TABLE>
- --------
(/1/) Including shares which may be acquired presently or within 60 days upon
exercise of stock options: Messrs. Corbin 32,100; Garrison 44,000;
Lombardo 63,200; McNulty 45,000; Wilson 155,650; Zorich 9,500; and all
directors, nominees, and Executive Officers as a group 413,355 shares.
No individual's beneficial holdings total more than one percent of the
outstanding shares; the holdings of the group represent 2.8 percent of the
outstanding shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge based on review of copies of such reports
furnished to the Company and written representations, all Forms 3, 4, and 5
required by Section 16(a) of the Securities Exchange Act of 1934 have been
timely filed with respect to the most recently concluded fiscal year.
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The Summary Compensation Table sets forth the compensation for the three
fiscal years ended June 30, 1997, 1996 and 1995, both long-term and short-
term, for services in all capacities earned by those individuals who were as
of June 30, 1997, (i) the Chief Executive Officer, and (ii) the other four
most highly compensated Executive Officers of the Company and subsidiaries.
8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- -----------------------
AWARDS PAYOUTS
---------- ------------
SECURITIES
UNDERLYING
NAME AND OTHER ANNUAL OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(/1/) COMPENSATION(/2/) SARS # PAYOUTS(/3/) COMPENSATION(/4/)
- ------------------------------------- ---- -------- ---------- ----------------- ---------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
James R. Wilson 1997 $540,000 $583,000 $ 0 35,000 $850,000 $4,800
Chairman of the Board, 1996 500,000 330,860 0 35,000 283,271 4,750
President and Chief Executive Officer 1995 425,000 467,500 0 30,000 266,030 4,458
Richard L. Corbin.................... 1997 235,000 209,250 0 7,500 336,000 4,650
Senior Vice President 1996 225,000 124,454 0 7,600 0 4,725
and Chief Financial Officer 1995 210,000 189,000 0 5,000 0 6,300
James E. McNulty..................... 1997 225,000 198,450 324,884 7,500 274,000 4,770
Executive Vice 1996 207,000 102,000 0 6,700 178,072 4,680
President Human 1995 191,900 153,520 0 7,500 167,061 4,686
Resources and
Administration
Joseph A. Lombardo................... 1997 240,000 130,388 0 7,500 238,736 4,573
Vice President and 1996 230,000 127,266 0 7,600 227,180 4,300
General Manager, 1995 215,000 175,988 0 9,500 111,000 4,159
Space Operations
Bruce M. Zorich(/5/)................. 1997 200,000 180,000 0 3,000 0 0
Vice President 1996 41,666 0 0 6,500 0 0
Fastening Systems 1995 0 0 0 0 0 0
President, Huck International, Inc.
</TABLE>
- --------
(/1/) Bonuses accrued under the Company's Key Executive Bonus Plan are paid
after the fiscal year in which they are accrued.
(/2/) Amount paid to Mr. McNulty represents Supplemental Cash Payment pursuant
to stock options granted prior to fiscal year 1992.
(/3/) The fiscal year 1997 LTIP payouts were made in August 1997 from the
Company's Key Executive Long-Term Incentive Plan for the Plan period July
1, 1994, through June 30, 1997. The fiscal year 1996 and fiscal year 1997
LTIP payouts were made, respectively, with regard to the three-year Plan
periods ended June 30, 1996, and June 30, 1995. Mr. Zorich participates
in the Plan, but will not be eligible for Plan benefits prior to
completion of the three-year Plan period ending June 30, 1999. LTIP
payments are made 50 percent in cash and 50 percent Company common stock
valued at market on the date of the end of the Plan period. Messrs.
Wilson, Lombardo, and McNulty received 2,399, 835, and 1,381 shares
respectively in 1995; Messrs. Wilson, Lombardo, and McNulty, received
1,872, 1,052, and 1,215 shares respectively in 1996; and Messrs. Wilson,
Corbin Lombardo, and McNulty received 3,774, 1,539, 1,097, and 1,040
Shares respectively in 1997.
(/4/) The amounts are the Company's matching contributions on behalf of each
named individual who made salary deferrals under the Company's Employee
Savings and Investment Plan, a 401(k) plan. Amounts deferred are included
in Salary compensation.
(/5/) Mr. Zorich was elected an Executive Officer in October 1996.
STOCK OPTION GRANTS IN FISCAL YEAR 1997
The table below shows the Company's stock option grants in fiscal year 1997
to the named Executive Officers. The 1989 Stock Awards Plan and 1996 Stock
Awards Plan, pursuant to which these grants were made, authorizes the
Compensation Committee to grant stock options, stock appreciation rights,
shares of restricted stock and other awards valued by reference to the
Company's common stock.
9
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS(/1/) TERM(/2/)
--------------------------------------- -----------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE OR
UNDERLYING GRANTED TO BASE PRICE
OPTIONS/SARS EMPLOYEES IN PER EXPIRATION
NAME GRANTED (#) FISCAL YEAR SHARE DATE 0% 5% 10%
---- ------------ ------------ ----------- ---------- --- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
James R. Wilson......... 35,000(/3/) 23.7 $38.625 8/15/2006 $ 0 $851,655 $2,149,955
Richard L. Corbin....... 7,500(/3/) 5.0 38.625 8/15/2006 0 182,497 460,597
Joseph A. Lombardo...... 7,500(/3/) 5.0 38.625 8/15/2006 0 182,497 460,597
James E. McNulty........ 7,500(/3/) 5.0 38.625 8/15/2006 0 182,497 460,597
Bruce M. Zorich......... 3,000 2.0 38.625 8/15/2006 0 72,999 184,239
</TABLE>
- --------
(/1/) All stock option grants are issued at market value on the date of grant.
Issued options are exercisable one year after the date of grant and have
a ten year term. Options lapse three months after the date of termination
of employment except for retirement, death, or disability. For Executive
Officers named in the table and other key employees, the stock option
grants prior to October 1993 contain limited stock appreciation rights
exercisable immediately only upon the change of control of the Company as
defined on page 13 under the section Termination of Employment and Change
of Control Agreements. Options issued to Executive Officers and certain
key employees prior to June 1992 contain supplemental cash payments (tax
gross-up payments) provisions. No stock option grants awarded subsequent
to June 1992 by the Compensation Committee contain supplemental cash
payments. James E. McNulty has 2,500 options eligible for tax gross-up.
(/2/) No gain will be realized by an optionee without an increase in the price
of the Company's common stock which will correspondingly increase the
value of the common stock outstanding held by all stockholders. A 5
percent and a 10 percent gain over the ten year option period would
increase the total value of the Company's outstanding common stock by
$446.5 million and $1,126.9 million respectively. There can be no
assurance that the gains shown in the table will be realized since any
gain is dependent on the performance of the Company's common stock price
which is attributed to many factors including but not limited to Company
performance and stock market conditions. The value of the realized gains
shown in this table is provided solely for illustrative purposes in
compliance with rules promulgated by the Securities and Exchange
Commission.
(/3/) Options were granted from the 1996 Stock Awards Plan.
STOCK OPTIONS EXERCISED DURING FISCAL YEAR 1997
The following table presents information regarding the exercise during
fiscal year 1997 of options held by the named Executive Officers on June 30,
1997 to purchase shares of the Company's common stock and the value of
unexercised stock options.
10
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FY-
AT FY-END END(/1/)
(#) ($)
------------- -------------
SHARES ACQUIRED VALUE(/2/) EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
James R. Wilson....... 0 $ 0 155,650/0 $6,322,734/0
Richard L. Corbin..... 0 0 32,100/0 1,284,375/0
Joseph A. Lombardo.... 0 0 63,200/0 2,982,144/0
James E. McNulty...... 9,700 391,031 45,000/0 1,981,968/0
Bruce M. Zorich....... 0 0 9,500/0 278,156/0
</TABLE>
- --------
(/1/) Value is calculated based on the closing New York Stock Exchange price of
the Company's common stock as of June 30, 1997, minus the option exercise
price.
(/2/) Value is calculated based on the average of the high and low New York
Stock Exchange price on the day on which the option was exercised minus
the option exercise price.
LONG-TERM COMPENSATION
The following table sets forth information concerning the named Executive
Officers participating in the Company's Key Executive Long-Term Incentive Plan
for fiscal year 1997 for the three-year Plan period beginning July 1, 1996,
and ending June 30, 1999.
LONG-TERM INCENTIVE PLAN
AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE -
PERFORMANCES OR BASED PLANS(/1/)
OTHER PERIOD ---------------------------
UNTIL MATURATION $ $ $
NAME OR PAYOUT THRESHOLD TARGET MAXIMUM
- ---- ---------------- --------- ------- ---------
<S> <C> <C> <C> <C>
James R. Wilson.................... 3 Years 135,000 540,000 1,080,000
Richard L. Corbin.................. 3 Years 47,000 188,000 376,000
Joseph A. Lombardo................. 3 Years 48,000 240,000 384,000
James E. McNulty................... 3 Years 42,187 168,750 337,500
Bruce M. Zorich.................... 3 Years 37,500 150,000 300,000
</TABLE>
- --------
(/1/) Awards under the Company's Executive Long-Term Incentive Plan are based
on attainment of predetermined earnings per share goals and return on
capital for Executive Officers who are not also operating unit heads. For
Executive Officers and other key employees who are also operating unit
managers participating in the Plan, awards are based on attainment of
predetermined goals, including pretax profit and return on total
investment goals. The Plan provides that bonus payments be paid in a
combination of cash and stock. The stock is valued at market value on
June 30. Estimated Future Payouts are for the fiscal year 1997 Plan
Period.
11
<PAGE>
The Plan provides a target bonus opportunity based on a percentage of each
participant's base annual compensation determined by the participant's salary
grade. The opportunity ranges from 60 percent of base annual compensation for
the lowest salary grade covered by the Plan to 100 percent of base annual
compensation for the highest salary grade covered by the Plan. The amount of
the bonus award paid will vary from 25 percent of the target bonus opportunity
being paid if the threshold bonus opportunity goals are achieved; 100 percent
of the target bonus opportunity if the target bonus goals are achieved; and a
maximum bonus of 200 percent of the target bonus opportunity if the maximum
bonus targets are achieved.
RETIREMENT PLAN
The Company maintains a defined benefit Pension Plan for non-bargaining unit
employees and funds its entire cost. The following table shows the estimated
annual benefits payable upon retirement (including amounts attributable to the
defined benefit excess plan) for the specified compensation and years of
service.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- ------------ -------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 56,853 $ 78,054 $ 99,256 $120,457 $ 141,658 $ 156,458
400,000 $117,003 $160,504 $204,006 $247,507 $ 291,008 $ 320,608
600,000 $177,153 $242,954 $308,756 $374,557 $ 440,358 $ 484,758
800,000 $237,303 $325,404 $413,506 $501,607 $ 589,708 $ 648,908
1,000,000 $297,453 $407,854 $518,256 $628,657 $ 739,058 $ 813,058
1,500,000 $447,828 $613,979 $780,131 $946,282 $1,112,433 $1,223,433
</TABLE>
As of June 30, 1997, the named Executive Officers had the following credit
service for determining pension benefits: James R. Wilson, 8 years; Richard L.
Corbin, 3 years; Joseph A. Lombardo, 8 years; and James E. McNulty, 8 years.
Except for Bruce M. Zorich, all of the Executive Officers named in the
Summary Compensation Table participate in the Plan. Pension benefits are based
on the average earnings for the highest five consecutive years of the final
ten years of service. Compensation included in the final average earnings for
pension benefit computation includes base annual salary and annual bonuses but
excludes payments from the Company's Executive Long-Term Incentive Plan and
all other annual compensation shown in the Summary Compensation Table.
Unreduced pension benefits are calculated pursuant to the Plan's benefit
formula as a straight life annuity payable at age 67. Executive Officers of
the Company retire at age 65. Benefits may be payable in the form of a joint
and survivor or a ten-year certain option. Also, Messrs. Wilson, Corbin,
Lombardo, and McNulty participate in an unfunded survivors income benefit plan
which provides benefits to a surviving spouse of approximately 50 percent of a
participant's base pay at death and continues until the participant would have
attained age 65.
Because the Pension Plan is subject to the benefit and compensation limits
under the Internal Revenue Code of 1986 (the "Code"), the Company has
established an unfunded Excess Benefit Plan that provides for payment of
amounts that would have been paid to employees under the pension formula
absent the benefit limitations of the Code.
12
<PAGE>
The Company also maintains a Supplemental Executive Retirement Plan ("SERP")
designed to provide unfunded supplemental retirement benefits to certain
Executive Officers and key employees of the Company. The SERP is designed to
provide such selected employees a benefit at retirement equal to 60 percent of
the participant's average five highest consecutive years of compensation
during the last ten years. Plan benefits are offset by amounts the participant
receives from the Company's Retirement Plan, Excess Benefit Plan, and any
pension benefits received from other employer plans including military
pensions. A reduced early retirement benefit is available only at the
discretion of the Chairman of the Board or President. The SERP provides
accelerated benefit accrual, vesting, and payment in the event of death and a
change of control of the Company as defined by the Board of Directors. Messrs.
Wilson, Lombardo, Corbin, and McNulty participate in the SERP.
The Company may fund and secure all or a part of the Excess Benefit Plan and
SERP benefits through the use of a "Rabbi" Trust meeting the Code
requirements. All such funding is subject to the claims of the Company's
creditors.
Bruce M. Zorich participates in the Huck International, Inc. Personal
Retirement Account Plan ("PRA"), a cash balance plan, providing benefits based
on age and salary. Mr. Zorich's estimated annual retirement benefit at age 65
is $37,875.
Mr. Zorich also participates in the Huck International, Inc., Supplemental
Executive Retirement Plan ("SERP") which is designed to provide supplemental
benefits in addition to the PRA benefits. Mr. Zorich's estimated SERP benefits
payable in the form of a lump sum at age 65 is $189,474.
TERMINATION OF
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
The Company has entered into change of control employment agreements with
Messrs. Wilson, Corbin, Lombardo, McNulty, and Zorich and with certain other
key employees. These agreements are intended to provide for continuity of
employment in the event of a change of control as defined by the agreements,
including the following events: (i) acquisition by any person of 20 percent or
more of the voting securities of the Company; (ii) changes of the "incumbent
Board" as defined in the agreements; (iii) reorganization, merger, or
consolidation of the Company; or (iv) liquidation or sale of the Company. Each
of the agreements requires continued employment of the executive following a
change of control on a basis equivalent to his employment immediately before
such change. In the event that during the three-year period following a change
of control, the executive terminates his employment for "good reason" (as
defined in the agreements) or for any reason during the 30-day period
commencing one year after the change of control or the Company terminates the
executive's employment "without cause" (as defined in the agreements), the
executive would be entitled to receive a lump sum payment equal to three times
the sum of the executive's salary, average long-term bonus, and highest annual
bonus plus service and earnings credits under any Company retirement plan
which would have been earned during the employment period and the continuance
of fringe benefits during the three years after such termination. The
agreements provide that payments from the Company which (a) constitute
"parachute payments" as defined in Section 280G of the Code and (b) would
subject the executive to the 20 percent excise tax (the "Excise Tax")
contained in Section 4999 of the Code, will be "grossed up" by an additional
payment in an amount defined by the agreements which takes into account the
Excise Tax, tax penalties, and interest, as the case may be, with respect to
any such "parachute payments." The amounts of such parachute payments,
pursuant to the terms described above, are
13
<PAGE>
only determinable with specificity on the date such payment obligations, if
any, are triggered. With respect to the salary, annual bonuses, and long-term
bonuses shown in the Summary Compensation Table, the estimated benefits payable
under the foregoing agreements for Messrs. Wilson, Corbin, McNulty, Lombardo,
and Zorich are $9.4, $3.4, $3.4, $4.6, and $2.1 million respectively.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Policy
The Committee's Compensation Policy is designed to provide a competitive
compensation program to attract, retain, motivate, and reward talented
individuals as Executive Officers and as key employees of the Company. The
compensation program is administered by the Committee. The Committee's policies
are implemented by the Company's compensation and benefits staff under the
direction of the Executive Vice President of Human Resources and
Administration. The components of the program include base annual salary, short
and long-term incentives, benefits, and perquisites. Compensation grades,
ranges, and midpoints adopted by the Committee are set based upon nationally
recognized compensation surveys: (i) the Hewitt Management Compensation Survey
777 consisting of 319 companies, (ii) Towers Perrin Compensation Data Bank
consisting of 507 companies, and (iii) the Summit (AIA) survey of 51 aerospace
companies. The Committee also considers the compensation of peer group
companies listed in the Standard & Poor's Aerospace/Defense Index. Base
salaries are set to correspond approximately with the mean of salaries offered
for like positions by comparable companies. Short and long-term incentives are
designed to provide above average total compensation when performance of the
Company or an operating unit exceeds targets set by the Committee. Annual
incentives are related to the Company and operating unit performance and
individual achievement of qualitative individual and strategic goals. Long-term
incentives are designed to balance management focus between short and long-term
goals and to provide capital accumulation linked to Company or operating unit
performance. The total compensation program is designed to reflect the overall
level of the Company's or operating unit's financial performance and
achievement of strategic goals. Total compensation will vary from year to year
depending on the actual performance achieved against the predetermined goals
set both financially and qualitatively.
The executive pay structure consisting of fourteen salary grades has been
compressed to seven salary grades and the spread between the maximum and
minimum ranges from the salary mid-points widened. This change reflects the
trend in compensation design practices towards a flatter pay structure with
wider salary ranges.
The Key Executive Bonus Plan, an annual bonus plan, was amended effective
July 1, 1997, providing uniformity in the minimum and maximum Target Bonus
opportunities and the Key Executive Long-Term Incentive Plan, a three year
long-term incentive plan, was amended to conform Target Bonus opportunities to
the new salary grades.
Reflecting the Committee's objective of tying a larger portion of executive
compensation to the performance of the Company's common stock, the Committee
adopted stock ownership guidelines. The stock ownership guidelines for the
Chief Executive Officer are three times base annual salary to be achieved over
five years and for Executive Officers directly reporting to the Chief Executive
Officer, two times base salary achieved over five years.
14
<PAGE>
The Key Executive Long-Term Incentive Bonus Plan was also amended effective
July 1, 1997, to provide that 50% of the Target Bonus opportunity, ranging
from 65% to 100% of base annual compensation, be awarded 50% in cash and 50%
in shares of the Company common stock. The number of shares of Company common
stock awarded at the beginning of each three year Plan period is valued at the
market value on July 1. The number of shares awarded the participant at the
end of the three year Plan period is based on achievement of the level of
earnings and return on investment targets as set by the Committee at the
beginning of the Plan period.
The Committee amended the stock option grant procedures. Beginning with the
fiscal year 1998 grants, stock option grants vest over a three year period,
one-third each year, compared to the current one year vesting period.
The principal elements of the compensation program administered by the
Committee under the Compensation Policy for the Chief Executive Officer; the
Executive Officers, including the Chief Executive Officer; and other key
employees are as follows:
Base Annual Salary
Base annual salaries are set against one of seven established salary grades
reflecting the position, duties, and level of responsibilities of each
Executive Officer, including the Chief Executive Officer, and each other key
employee.
Annual Bonus Program
The Key Executive Bonus Plan provides annual cash incentive opportunities to
Executive Officers and other key employees selected by the Committee. Each
bonus award is based upon the Company or respective operating unit achieving
predetermined earnings goals and the attainment of individual qualitative
strategic goals relative to the participant's position, duties, and
responsibilities with the Company ("Target Bonus Goals"). The Board of
Directors sets the Company's earnings goals effective the beginning of the
fiscal year. Subject to Committee review and approval, the Chief Executive
Officer sets the earnings and strategic goals for operating unit participants.
The Plan permits Committee discretion in adjusting incentives for Plan
participants (as well as penalties for non-achievement) of certain
predetermined qualitative strategic, operating, and financial goals not
necessarily tied to earnings of the Company ("Strategic Goals").
The Plan also permits the Committee to designate employees including
Executive Officers as Special Participants to receive discretionary bonus
payments made by the Committee in recognition of outstanding achievements or
accomplishments. During the fiscal year, two Executive Officers received
discretionary bonus payments as Special Participants.
Annual bonuses accrued for fiscal year 1997 reflect the level of earnings
achieved for Corporate or operating unit Plan participants, and achievement of
strategic goals. All Executive Officers, including the Chief Executive
Officer, named in the Summary Compensation Table earned bonuses from the Plan.
Long-Term Incentive Plan
The Key Executive Long-Term Incentive Plan is designed as a long-term
incentive program for Executive Officers and other key employees in a position
to substantially influence the performance of the Company. The Plan authorizes
payment of incentive bonuses based on achievement of financial
15
<PAGE>
goals for the Company and its operating units predetermined by the Committee
at the beginning of each three year Plan period. For Executive Officers,
including the Chief Executive Officer, who are not operating unit managers,
the financial goals are based on earnings per share growth and return on total
capital of the Company. For each operating unit manager of the Company, the
financial goals are growth in operating profits and return on total investment
at that unit. Messrs. Wilson, Corbin, Lombardo, and McNulty have earned
bonuses from the Plan. Bruce M. Zorich will be eligible for a bonus payment,
if earned, for the plan period ending June 30, 1999.
Stock Options
The Committee has determined that providing stock based compensation awards
to Executive Officers and other key employees who are in a position to impact
the future performance of the Company is an integral part of the compensation
package. The Company's 1989 and 1996 Stock Awards Plans approved by
shareholders, authorize the Committee to grant stock options, stock
appreciation rights, shares of restricted stock, and other stock awards. The
number of shares granted to an individual is based on Committee established
guidelines relating to the recipient's position, salary grade, and stock
price.
Perquisites
The Committee reviews annually the Executive Officers', including the Chief
Executive Officer's, perquisites to determine if they are competitive and
reflect the usual and customary industry practices based on compensation
survey data.
Determination of the Chief Executive Officer's Compensation
The fiscal year 1997 compensation for Mr. James R. Wilson, Chairman of the
Board, President and Chief Executive Officer, consists of a base annual
salary, an annual bonus, long-term incentive bonus, stock option grant,
employee benefits provided to salaried employees as a group, and perquisites
that are usual and customary for the position.
The Committee has determined Mr. Wilson's salary grade, salary range, and
midpoint based on his position as Chairman of the Board, President and Chief
Executive Officer using the salary data described above. The size of the
Company; the aerospace, defense, and fastening systems industries and the
markets the Company serves; as well as Mr. Wilson's participation on the Board
of Directors of Howmet in which the Company maintains a 49 percent equity
ownership with call option for 100 percent equity ownership, were considered
by the Committee in setting Mr. Wilson's salary level for fiscal year 1997.
Mr. Wilson's base annual salary was correspondingly increased from $540,000 to
$575,000 effective October 1, 1997, as the result of such review.
Pursuant to the terms of the Key Executive Bonus Plan for fiscal year 1997,
Mr. Wilson received an annual bonus award of $583,000 or 200 percent of his
Target Bonus Opportunity (the maximum bonus award under the Plan). The payment
reflects the achievement of the maximum earnings per share goal and
subjectively measured qualitative goals under the Plan as reviewed by the
Committee.
Mr. Wilson's fiscal year 1997 Key Executive Long-Term Incentive Plan bonus
plan payment of $850,000 represents the achievement of earnings per share and
return on capital financial goals exceeding the target goals established at
the beginning of the three year plan period beginning July 1, 1994. This bonus
payment is paid 50 percent in cash and 50 percent in Company common stock
based on the market price on June 30, 1997.
16
<PAGE>
Mr. Wilson's compensation and the compensation of the other named Executive
Officers in the Summary Compensation Table reflect the financial performance
of the Company and its operating units and accomplishments achieved as the
result of strategic actions taken to reposition the Company in commercial
markets and make the Company less dependent on federally funded defense and
aerospace programs. Since the beginning of the five year performance period
beginning July 1, 1992, and ending June 30, 1997, total shareholder value
including the assumed reinvestment of dividends, has increased approximately
487 percent compared to the Standard & Poor's 500 Index of approximately 246
percent.
1993 Tax Act Compensation Limits
Section 162(m) of the Code adopted under the 1993 tax law changes, restricts
the tax deductibility for certain non-formula performance based executive
compensation exceeding $1 million. Messrs. Wilson's and McNulty's compensation
exceeds the $1 million compensation limit for fiscal year 1997. To the extent
that such compensation in excess of the $1 million dollar limit does not meet
the performance base compensation requirements, the Company may not receive
the benefit of a corresponding tax deduction. The Committee has determined
that retaining the flexibility of discretion in determining all or part of the
criteria for Executive Officer incentive compensation awards outweighs the tax
benefit of the corresponding tax deduction that might otherwise have been
received for such compensation meeting Internal Revenue Code requirements.
COMPENSATION COMMITTEE
Charles S. Locke, Chairman
Edsel D. Dunford
L. Dennis Kozlowski
D. Larry Moore
James M. Ringler
The report of the Compensation Committee and the following stock performance
graph are not deemed to be "soliciting material" or to be "filed" with the SEC
or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), except to the
extent the Company specifically requests that such information be treated as
soliciting material or specifically incorporates it by reference into any
filing under the Securities Act of 1933, as amended, or the Exchange Act.
17
<PAGE>
PERFORMANCE GRAPH
The following graph presents a comparison of the cumulative stockholder
return reflected by dollars on the common stock of the Company for the five
year period beginning July 1, 1992, and ending June 30, 1997, as measured
against (i) the Standard & Poor's 500 Stock Index and (ii) the Standard &
Poor's Aerospace and Defense Index.
The returns shown assume that $100 was invested in Thiokol Corporation common
stock starting on July 1, 1992. The returns shown also assume that all
dividends paid during the five year period were reinvested.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
6/92 6/93 6/94 6/95 6/96 6/97
------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Thiokol Corporation................. $100.00 140.28 158.91 204.29 271.49 487.46
Standard & Poor's 500 Index......... $100.00 113.61 115.31 145.13 182.94 246.18
Standard & Poor's Aerospace/Defense
Index.............................. $100.00 129.53 154.87 214.68 294.85 374.99
</TABLE>
18
<PAGE>
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation by the Audit Committee, the Board of Directors has
appointed Ernst & Young LLP ("Ernst & Young") as its independent auditors for
the fiscal year ending June 30, 1998. At the Board's direction, the
appointment of Ernst & Young is being presented to the stockholders for
ratification at the 1997 meeting. While ratification is not required by law or
the Company's Certificate of Incorporation or By-Laws, the Board believes that
such ratification is desirable. In the event this appointment is not ratified
by stockholders, the Board will consider that fact when it appoints
independent auditors for the next fiscal year.
Ernst & Young was the Company's independent auditors for fiscal year 1997
and for all prior years since 1969. Audit services provided to the Company by
Ernst & Young during fiscal year 1997 consisted of examination of the
financial statements of the Company and its subsidiaries for that year and the
preparation of various related reports, as well as services relating to
filings with the Securities and Exchange Commission, and pension, savings, and
welfare plan audits.
Representatives of Ernst & Young are expected to be present at the 1997
Annual Meeting with the opportunity to make a statement if they so desire and
to be available to respond to appropriate questions relating to that firm's
examination of the Company's financial statements for fiscal year 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG.
DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the 1997 Annual Meeting any
matters other than those disclosed in the notice of the meeting. Should any
matter requiring a vote of stockholders be properly brought before the meeting
by or at the direction of the Board of Directors, the proxies in the enclosed
form confer upon the person or persons entitled to vote the shares represented
by such proxies discretionary authority to vote such shares in respect of any
such matter in accordance with their best judgment.
For business to be properly brought before an annual stockholders' meeting
by a stockholder, advance written notice in accordance with the By-Laws of the
Company must be received by the Corporate Secretary of the Company at its
principal executive offices.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholder proposals intended for the proxy statement for the 1998 Annual
Stockholders' Meeting must be received by the Corporate Secretary of the
Company at its principal executive offices no later than May 17, 1998.
19
<PAGE>
ANNUAL REPORT AND FORM 10-K
The Company will provide, without charge, upon written request from any
person solicited herein, a copy of the Thiokol Corporation Annual Report and
Form 10-K filed with the Securities and Exchange Commission. Requests should
be directed to the Manager, Investor Relations, Thiokol Corporation, 2475
Washington Blvd., Ogden, Utah 84401-2398.
By Order of the Board of Directors,
Edwin M. North
Secretary
Ogden, Utah
September 12, 1997
20
