<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 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
Flow International Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FLOW INTERNATIONAL CORPORATION
---------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 29, 1996
To the Stockholders of Flow International Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of Flow
International Corporation, a Delaware Corporation, will be held on Thursday,
August 29, 1996, at 10:00 a.m., Pacific Daylight Time, at the Washington
Athletic Club, 1325 Sixth Avenue, Seattle, Washington 98111, for the following
purposes as described in the attached Proxy Statement:
1. To elect three directors to hold office for three-year terms ending at the
1999 Meeting of Stockholders or until their respective successors are
elected and qualified;
2. To approve an amendment to the 1987 Stock Option Plan for Nonemployee
Directors to increase the number of options granted annually to directors
from 5,000 to 10,000 and to increase the number of shares available for
grant under the Plan from 400,000 to 750,000; and
3. To transact such other business as may properly come before such meeting or
any adjournment thereof.
Pursuant to the By-Laws, the Board of Directors has fixed the close of
business on July 8, 1996, as the record date for determination of stockholders
of the Company entitled to receive notice of and to vote at the Annual Meeting.
So far as Management is aware, no business will properly come before the
Annual Meeting other than the matters set forth above.
IF YOU CANNOT BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO SIGN, DATE, AND
RETURN THE ENCLOSED PROXY CARD APPOINTING RONALD W. TARRANT, THOMAS A. CROSS AND
JOHN S. LENESS, AND EACH OF THEM, AS YOUR PROXIES.
John S. Leness
Secretary
KENT, WASHINGTON
July 22, 1996
IT IS IMPORTANT THAT YOUR STOCK BE VOTED
<PAGE>
FLOW INTERNATIONAL CORPORATION
23500 - 64TH AVENUE SOUTH
KENT, WASHINGTON 98032
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 29, 1996
------------------------
The following proxy statement is made in connection with solicitation by the
Board of Directors of Flow International Corporation (the "Company") of the
enclosed proxy for use at the Annual Meeting of Stockholders.
Shares presented by properly executed proxy in the accompanying form will be
voted at the meeting and, where instructions have been given by the stockholder,
will be voted in accordance with such instructions. AS STATED IN THE PROXY, IF
NO INSTRUCTIONS ARE GIVEN, THE STOCKHOLDER'S SHARES WILL BE VOTED ACCORDING TO
THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. The proxy may be revoked at any
time before its exercise by sending written notice of revocation to the
Secretary of the Company, or by signing and delivering a proxy which is dated
later, or, if the stockholder attends the meeting in person, by giving notice of
revocation to the meeting judge.
At the date of this statement, the only matters that Management intends to
present are the election of directors and the approval of an increase in the
1987 Stock Option Plan for Nonemployee Directors (the "1987 Plan"). If any other
matters are properly brought before the meeting, the enclosed proxy gives
discretionary authority to the persons named in such proxy to vote the shares in
their best judgment.
The 1996 Annual Report of the Company is enclosed herewith. The approximate
mailing date of this proxy material is July 22, 1996.
OUTSTANDING SECURITIES AND VOTING RIGHTS
The Company has only one class of capital stock outstanding entitled to be
voted at the Annual Meeting: Common Stock with voting rights. On July 8, 1996,
the record date for determining the stockholders entitled to vote at the Annual
Meeting, there were 14,537,727 shares of Common Stock outstanding and entitled
to vote.
The last sale on the record date of the Company's Common Stock, as reported
by NASDAQ, was $8.625 per share. Each share entitles the holder to one vote on
all matters presented for stockholder approval including one vote for each
director. There are no cumulative voting rights. Under Delaware law and the
Company's Certificate of Incorporation, the election of directors requires the
vote of the plurality of shares present in person or represented by proxy at the
meeting and entitled to vote. Accordingly, the indication of an abstention on a
proxy or the failure to vote either by proxy or in person will be treated as
neither a vote "for" nor "against" the election of any director. Each of the
other matters must be approved by the affirmative vote of the majority of shares
present in person or represented by proxy at the meeting and entitled to vote.
Abstention from voting will have the practical effect of voting against these
matters since it is one less vote for approval. Broker nonvotes, shares held by
brokers or nominees for the accounts of others as to which voting instructions
have not been given, will be treated as shares that are present for determining
a quorum. Brokers and nominees, under applicable law, may vote shares for which
no instructions have been given in their discretion in the election of
directors.
ELECTION OF DIRECTORS
(PROXY PROPOSAL NUMBER 1)
According to the Certificate of Incorporation, the Board of Directors shall
be composed of no less than five directors (except in the case of unfilled
vacancies) and no more than nine directors who, beginning with the 1984 election
of directors, were divided (as closely as possible) into three equal classes.
The By-Laws provide that the number of directors shall be nine. The Certificate
of Incorporation and the By-Laws also provide that outside directors are to be
represented as closely as possible in equal numbers among the three classes.
At the meeting three directors will be elected to serve for three-year
1
<PAGE>
terms expiring on the date of the 1999 Annual Meeting of Stockholders. Of the
remaining directors, three are serving terms that will not expire until the 1997
Annual Meeting of Stockholders and three are serving terms that will not expire
until the 1998 Annual Meeting of Stockholders. Each director elected will
continue in office until his or her successor has been elected, or until his or
her resignation or removal in the manner provided by the Certificate of
Incorporation and By-Laws of the Company.
The names of those persons nominated by the Board of Directors for the
position of director of the Company and the names of the directors of the
Company whose terms will continue after the Annual Meeting are listed below,
accompanied by brief biographies. Shares represented by a properly executed
proxy in the accompanying form will be voted for such nominees. Discretionary
authority is reserved to vote such shares in the best judgment of the persons
named in the proxy in the event that any person or persons other than the
nominees listed below are to be voted upon at the meeting due to the
unavailability of any nominee so listed.
There are no family relationships between any nominee, director, or
executive officer of the Company.
The affirmative vote of a plurality of the votes cast by stockholders
present in person or by proxy and entitled to vote at the meeting, a quorum
being present, is required to elect the nominees listed below.
The names of the nominees for directors and the continuing directors,
together with certain information regarding them, are as follows:
NOMINEES (FOR TERMS OF THREE YEARS):
KATHRYN L. MUNRO (age 48) is President of Bank of America Arizona and
Manager of the bank's Southwest Region retail and business banking network.
Prior to her Arizona appointment, Ms. Munro served as Executive Vice President
and Manager at Seafirst Bank in Seattle, Washington, where she held a variety of
senior management positions in both the commercial and retail areas of the bank.
She began her banking career in 1980. She currently serves as Chairman of the
board of directors for the Valley of the Sun United Way and the Arizona
Multibank. She also serves on the boards of University of Arizona Foundation,
COMPAS, Downtown Phoenix Partnership, the Heard Museum, the Valley of the Sun
YMCA, the Governor's Work Force Development Council and the Greater Phoenix
Quality of Life Steering Committee. Ms. Munro received a bachelor of science
degree from Auburn University and a master's in business administration from the
University of Washington.
SANDRA F. ROREM (age 55) is the Chief Executive Officer of Medalia
HealthCare, in Seattle, Washington, a primary care medical group of over 300
doctors in over forty clinics throughout Puget Sound. Prior to joining Medalia
in 1994, she served 17 years with the Seattle-based Sisters of Providence
Medical Center, where she held various positions, including Administrator of the
Physician Division and Associate Administrator of Clinics and Hospital Support
Services. She is also a member of the American College of Health Care
Executives, the American College of Medical Group Administrators, the Society of
Teachers of Family Medicine, and the Society of Ambulatory Care Professionals.
Ms. Rorem holds a master's in business administration from the University of
Washington where she is a Faculty Associate for the Department of Family
Medicine and Community Health.
DEAN D. THORNTON (age 67) retired from The Boeing Company in 1994 where he
had been executive vice president, a member of the executive council, and since
1985, President of Boeing Commercial Airplane Group. Mr. Thornton has served as
a director of the Company since 1993. Mr. Thornton joined Boeing in 1963 as
Assistant Treasurer and was elected Treasurer in 1966. He served in a variety of
executive assignments including Vice President of Finance, contracts and
international operations for the commercial airplane company and Vice President
- -General Manager of the 767 Division. Mr. Thornton serves on the board of
directors of Principal Financial Group of Des Moines, Iowa and is also a member
of the Board of Trustees of the Seattle Art Museum. Mr. Thornton received a B.S.
in business from the University of Idaho in 1952.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE
ELECTION OF THE ABOVE NOMINEES
FOR THE BOARD OF DIRECTORS
CONTINUING DIRECTORS:
RON D. BARBARO (age 64) was President of The Prudential Insurance Company of
America, responsible for world-wide operations, and he retired in 1993. Mr.
Barbaro was elected to the Board in 1995 for a term expiring with the 1998
Annual Meeting. He was responsible for Prudential's Canadian operation from 1985
to 1990. Mr. Barbaro serves on the boards of: The Thomson Corporation, Equifax,
Inc., The Prudential Life Insurance Company (Canada), The Prudential Insurance
Company
2
<PAGE>
of America Mutual Funds, Clairvest Group, Inc. and as Chairman of Canbra Foods
Limited.
DANIEL J. EVANS (age 70) has been Chairman of Daniel J. Evans Associates, a
consulting firm in Seattle, since 1989. Mr. Evans was appointed to the Company's
Board of Directors in 1991, and his current term expires with the 1997 Annual
Meeting. From 1965 through 1977 Mr. Evans was Governor of the State of
Washington. From 1977 through 1983, he was President of The Evergreen State
College. In 1983 he was appointed to the United States Senate to fill the seat
of the late Senator Henry M. Jackson and won a special election to serve the
remaining five years of the term. He did not seek a second term. Mr. Evans
chaired the National Academy of Sciences Commission on Policy Options for Global
Warming and is co-chair of the Washington Wildlife and Recreation Coalition. Mr.
Evans serves as director of Washington Mutual Bank, Burlington Northern Santa Fe
Inc., Tera Computer Company, Attachmate, Inc., and Puget Sound Power & Light
Co., and as trustee for The Evergreen State College Foundation. Mr. Evans also
serves on the Board of Regents of the University of Washington. Mr. Evans
received a B.S. in 1948, and an M.S. in 1949, in civil engineering from the
University of Washington.
ARLEN I. PRENTICE (age 58) is Co-Chairperson and Principal of Kibble &
Prentice, Inc., which provides insurance and financial consulting services. He
has served as a director of the Company since 1993 and his current term expires
with the 1998 Annual Meeting. He has been Chairman or President of Kibble &
Prentice for the past twenty-three years. Mr. Prentice serves as a director of
Northland Telecommunications Corporation; Western Drug Distributors, Inc.;
Starbucks Coffee Company and Percon, Inc.
DR. J. MICHAEL RIBAUDO (age 53) is the Chief Executive Officer and President
of Healthcare Dynamics Strategies, Ltd., which provides healthcare consulting
services to a wide variety of clients across the United States. Dr. Ribaudo was
elected to the Board in 1995 for a term expiring with the 1998 Annual Meeting.
He also serves as a consultant to HEALTHSOUTH, a provider of rehabilitation
services, which he joined in January of 1995 when Outpatient Surgery Center, a
chain of free-standing ambulatory surgery centers he founded in 1985, merged
with HEALTHSOUTH. He also serves as director of Foot Technology, the Mary
Institute and St. Louis County Day School. Dr. Ribaudo graduated from Louisiana
State University in 1963 and Louisiana State Medical School in 1967 and has had
post graduate training at Emory University, Washington University and New York
University.
KENNETH M. ROBERTS (age 49) is President and Chief Investment Officer of Ken
Roberts Investment Management, Inc., an investment advisory firm. Mr. Roberts is
also President and Chief Executive Officer of Ken Roberts Financial Services,
Inc. Mr. Roberts was appointed to the Company's Board of Directors in 1991 and
his current term expires with the 1997 Annual Meeting. Mr. Roberts was, until
November 1994, President and Chief Investment Officer of Ken Roberts Advisory
Group, an investment advisory firm and subsidiary of the Spokane, Washington,
office of Smith Barney Shearson, Inc. From 1981 to 1991, he was Vice President
of Shearson Asset Management and Foster & Marshall Management, investment
advisors, and President of Shearson Lehman Fundamental Value Fund, a registered
investment company. From 1987 to 1991, Mr. Roberts was also a director of
Shearson Lehman Fundamental Value Fund. Mr. Roberts received a B.A. from
Whitworth College in 1968 and an M.B.A. from the Harvard Graduate School of
Business in 1971.
RONALD W. TARRANT (age 59) assumed the position of President and Chief
Executive Officer in 1991. Mr. Tarrant succeeded Mr. Lloyd Andrews as Chairman
following the 1994 Annual Meeting of Stockholders. Mr. Tarrant was appointed to
the Board in 1991, and his current term expires with the 1997 Annual Meeting. He
came to the Company from Augat, Inc., a New York Stock Exchange listed company,
where, since 1987, he had been a corporate officer and Division Vice President
of the Augat Communications Division, a manufacturer of equipment for the cable
television and telecommunications industries. Mr. Tarrant was President of
Telzon, Inc., prior to Augat's purchase of Telzon in 1984, and President of the
subsidiary from 1984 to 1986. Mr. Tarrant received a B.A. from Asbury College in
1959.
RETIRING DIRECTOR:
JOHN S. CARGILL (age 42) is Vice Chairman of Cargill Detroit Corporation
("Cargill Detroit"). He was appointed Director following the acquisition of the
ASI Robotic Systems Division of Cargill Detroit in 1995, and his term expires
with the 1996 Annual Meeting. Mr. Cargill joined Cargill Detroit in 1972 and was
appointed Vice President of Manufacturing in 1983, and Vice Chairman in 1988. He
served as President of the ASI Robotic Systems Division from 1990 to 1995. Mr.
Cargill is also President of Coupling Design Corporation, a maker of couplings
for the oil industry.
3
<PAGE>
Mr. Cargill has served on the management committees of numerous organizations,
including the board of directors for Henry Ford Hospital in Detroit and on the
Government Relations Board for the National Machine Tool Builders' Association.
He is currently on the board of directors and the audit committee of The
National Center for Manufacturing Sciences (NCMS).
The Board of Directors held six meetings during the fiscal year ended April
30, 1996. All directors attended at least 75% of all Board and committee
meetings. The number of meetings of each Committee of the Board are described
below. All members of each Committee attended all meetings.
COMMITTEES OF THE
BOARD OF DIRECTORS
The Company has an Audit Committee, a Compensation and Plan Administrator
Committee, a Mergers and Acquisitions Committee and a Nominating Committee.
AUDIT COMMITTEE. The function of the Audit Committee is to monitor the
effectiveness of the audit effort and the Company's financial and accounting
organization and financial reporting and to select a firm of certified public
accountants whose duty it is to audit the books and accounts of the Company for
the fiscal year for which they are appointed. The members of the Audit Committee
are Dean D. Thornton, Kenneth M. Roberts, J. Michael Ribaudo and Daniel J.
Evans. The Audit Committee held three meetings in the fiscal year ended April
30, 1996.
COMPENSATION AND PLAN ADMINISTRATOR COMMITTEE. The function of the
Compensation and Plan Administrator Committee is to structure the Company's
executive compensation program, to set compensation guidelines for officers and
management of the Company and to review and approve compensation for the
Chairman and the Chief Executive Officer. The Committee also acts as
Administrator of the Company's stock option plans, determining the terms,
amounts and recipients of stock option grants. The members are Arlen I.
Prentice, Daniel J. Evans and Ron Barbaro. There were three meetings of the
Compensation Committee during the fiscal year ended April 30, 1996.
MERGERS AND ACQUISITIONS COMMITTEE. The function of the Mergers and
Acquisitions Committee is to review potential opportunities for acquisitions,
mergers or similar transactions. The members of the Mergers and Acquisitions
Committee are Kenneth M. Roberts, Ron Barbaro and Ronald W. Tarrant. There was
one meeting of the Mergers and Acquisitions Committee during the fiscal year
ended April 30, 1996.
NOMINATING COMMITTEE. The function of the Nominating Committee is to
recommend to the Board individuals to fill Board vacancies and to consider
issues of Board composition and organization. Ronald W. Tarrant, Ron Barbaro and
Arlen I. Prentice serve on the Nominating Committee. The Nominating Committee
met once during the fiscal year ended April 30, 1996.
The Company pays directors who are not employees of the Company an annual
retainer of $6,000, $1,000 for each Board and Committee meeting attended in
person or $500 for each Committee or telephonic meeting, up to a maximum of one
Board and one Committee fee per day, and $600 per day or $300 per half-day or
part thereof, for time spent on business of the Company at the request of the
Chairman of the Board of Directors, and reimburses them for related
out-of-pocket travel and other expenses. Committee chairmen are paid $750 per
Committee meeting in lieu of the regular $500 fee. Directors also receive grants
of options under the 1987 Plan. The Company has adopted a retirement policy
providing that directors will receive, following their retirement, annual
amounts equal to the annual retainer paid to them at the time of retirement, for
a period equal to the director's years of service on the Board, up to a maximum
of nine years.
4
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The executive officers of the Company are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- --------------------------------------------------
<S> <C> <C>
Janice L. Cannon 47 Executive Vice President, Corporate Services
Executive Vice President and Chief Operating
Thomas A. Cross 38 Officer
William A. Keadle 50 Executive Vice President, Access Products Group
John S. Leness 36 General Counsel and Corporate Secretary
Vice President of Finance, Treasurer and Interim
Stephen D. Reichenbach 34 Chief Financial Officer
Ronald W. Tarrant 59 Chairman, President and Chief Executive Officer
</TABLE>
Each executive officer of the Company is elected or appointed annually by
the Board of Directors.
JANICE L. CANNON joined the Company in August 1994 as Vice President of
Human Resources and was appointed Executive Vice President, Corporate Services
in 1996. Ms. Cannon headed a human resources consulting firm from 1990 to 1994,
serving clients that included Microsoft Corporation, Intel Corporation, Immunex
Corporation and Cell Therapeutics. Ms. Cannon served as Director of Operations
for the Arizona Asthma and Allergy Institute, in Phoenix, Arizona, from 1986 to
1990.
THOMAS A. CROSS joined the Company in June 1991 as Vice President of
Finance, Chief Financial Officer and Treasurer and became Chief Operating
Officer in January 1993. He had been Group Finance Director of Augat
Communications Group, a manufacturer of equipment for the cable television and
telecommunications industries and a wholly-owned subsidiary of Augat, Inc., a
New York Stock Exchange listed company, since 1986. Mr. Cross was Finance
Director of CIGNA Healthplan of Washington, a health maintenance organization,
in 1985-1986, and was Controller of Telzon Inc., the predecessor of Augat
Communications Group, from 1981 to 1985.
WILLIAM A. KEADLE joined the Company in February 1993 as Senior Vice
President, Construction Products and Services and was appointed Executive Vice
President in 1996. Mr. Keadle had been Vice President, Sales and Marketing for
Icom America, a manufacturer of electronics products, since February of 1991.
From 1981 to 1991, Mr. Keadle was with Bank and Office Interiors, a capital
equipment provider of specialty interiors, and was President for the last five
years.
JOHN S. LENESS joined the Company in June 1990 as its Corporate Counsel,
became General Counsel in December 1990, was appointed Assistant Secretary in
January 1991 and Secretary in February 1991. Prior to joining the Company, Mr.
Leness had been associated since 1986 with the Perkins Coie law firm.
STEPHEN D. REICHENBACH joined the Company in September 1992 when the Company
acquired Spider Staging Corporation, was appointed Treasurer in March 1993 and
Vice President of Finance in 1996.
Prior to joining the Company, Mr. Reichenbach had been associated since 1989
with Spider Staging Corporation as its Controller and had been with Ernst &
Whinney from 1985 to 1989.
RONALD W. TARRANT (Biographical information for Mr. Tarrant appears above).
5
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND OF PRINCIPAL STOCKHOLDERS
The following table sets forth information as of July 8, 1996, with respect
to each stockholder known by the Company to be the beneficial owner of more than
five percent (5%) of any class of voting securities of the Company, each
director, those executive officers listed in the Summary Compensation Table
below and all directors and executive officers of the Company as a group.
Currently, the Company's sole class of voting securities outstanding is Common
Stock. Except as noted below, each person has sole voting and investment powers
with respect to the shares shown. The address for each of the persons listed
below, is 23500 64th Avenue South, Kent, Washington 98032.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OUTSTANDING
NAME AND POSITION OF SHARES SHARES
- --------------------------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
Ron Barbaro, Director........................................................................ 9,000(1) *
John S. Cargill, Director.................................................................... 12,500(2) *
Thomas A. Cross, Executive Officer........................................................... 137,341(3) 0.9%
Daniel J. Evans, Director.................................................................... 64,000(4) *
William A. Keadle, Executive Officer......................................................... 35,443(5) *
John S. Leness, Executive Officer............................................................ 88,207(6)
Arlen I. Prentice, Director.................................................................. 69,896(7) *
J. Michael Ribaudo, Director................................................................. 129,874(1) 0.9%
Kenneth M. Roberts, Director................................................................. 89,000(4) *
Ronald W. Tarrant, Director.................................................................. 330,665(8) 2.2%
Dean D. Thornton, Director................................................................... 21,000(9) *
All directors and officers -- as a group (13 persons)........................................ 1,025,735(10) 6.9%
</TABLE>
- ------------------------
* Less than 1% beneficial ownership of Company Common Stock.
(1) Includes options exercisable within 60 days for 4,000 shares of Company
Common Stock.
(2) Does not include 445,000 shares owned by Cargill Detroit Corporation.
Includes options exercisable within 60 days for 9,000 shares of Company
Common Stock.
(3) Includes options exercisable within 60 days for 107,500 shares of Company
Common Stock.
(4) Includes options exercisable within 60 days for 40,000 shares of Company
Common Stock.
(5) Includes options exercisable within 60 days for 35,000 shares of Company
Common Stock.
(6) Includes options exercisable within 60 days for 76,000 shares of Company
Common Stock.
(7) Includes options exercisable within 60 days for 23,000 shares of Company
Common Stock.
(8) Includes options exercisable within 60 days for 305,000 shares of Company
Common Stock.
(9) Includes options exercisable within 60 days for 11,000 shares of Company
Common Stock.
(10) Includes options exercisable within 60 days for 666,000 shares of Company
Common Stock.
COMPLIANCE WITH SECTION 16 (A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock. Officers, directors and greater-than-ten percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. To the Company's knowledge, based solely
on review of the copies of such reports furnished to the Company and
representations that no other reports were required, during the fiscal year
ended April 30, 1996, all Section 16(a) filing requirements were complied with.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for the years ended April 30,
1996, 1995 and 1994, with respect to the Chief Executive Officer and each of the
four other highest paid executive officers of the Company whose aggregate cash
compensation in fiscal 1996 exceeded $100,000:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL ------------
COMPENSATION NUMBER OF
------------------ STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION*
- ----------------------------------- ---- -------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Ronald W. Tarrant ................. 1996 $324,712 $ 29,700 25,000 $ 13,680
Chairman, President 1995 285,582 140,300 10,000 12,022
and Chief Executive 1994 241,508 16,301 75,000 15,803
Officer
Thomas A. Cross ................... 1996 $178,267 $ 17,710 25,000 $ 12,469
Executive Vice President 1995 170,302 84,790 0 10,335
and Chief Operating 1994 143,853 9,710 45,000 11,622
Officer
William A. Keadle ................. 1996 $150,874 $ 13,464 25,000 $ 9,752
Senior Vice President 1995 144,019 55,236 0 8,265
of Sales 1994 137,010 9,248 12,500 6,596
Lee M. Andrews .................... 1996 $107,812 $ 8,470 0 $ 0
Vice President and 1995 95,090 32,030 5,000 750
Chief Financial Officer (1) 1994 -- -- -- --
John S. Leness .................... 1996 $ 99,986 $ 8,557 25,000 $ 7,241
General Counsel and 1995 98,050 40,337 11,000 3,116
Corporate Secretary 1994 78,000 12,015 15,000 2,700
</TABLE>
- ------------------------
* Includes company contributions to the 401(k) Plan and the Flow International
Corporation Executive Deferral Plan.
(1) Mr. Andrews served as Vice President and Chief Financial Officer from July
1994 until September 1995.
7
<PAGE>
OPTION GRANTS TABLE
FISCAL 1996
The following table sets forth certain information regarding options granted
to the Company's chief executive officer and each of the individuals named in
the Summary Compensation table during the fiscal year ended April 30, 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS --------------------------
- ----------------------------------------------------------------------------------
PERCENT OF VALUE AT ASSUMED ANNUAL
TOTAL RATES OF STOCK PRICE
OPTIONS APPRECIATION FOR OPTION
NUMBER GRANTED TO EXERCISE TERM (10 YEARS)
OF OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
- ------------------------------ ---------- ------------ --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
All Flow Stockholders * $233,369,957 $371,602,654
Ronald W. Tarrant............. 25,000 6.53% $8.25 5/1/05(1) 129,938 327,938
Thomas A. Cross............... 25,000 6.53 8.25 5/1/05(1) 129,938 327,938
William A. Keadle............. 25,000 6.53 8.25 5/1/05(1) 129,938 327,938
Lee M. Andrews 0 -- -- -- 0 0
John S. Leness 25,000 6.53 8.25 5/1/05(1) 129,938 327,938
</TABLE>
- ------------------------
* Based on a total value of the Company's outstanding common stock at April
30, 1996, of $143,268,910 million
(1) The options vest 50% annually.
AGGREGATED OPTION EXERCISES IN FISCAL 1996
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information regarding options
exercised during the year ended April 30, 1996, by the Company's Chief Executive
Officer and each of the individuals named in the Summary Compensation Table.
<TABLE>
<CAPTION>
TOTAL NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END AT FISCAL YEAR-END (1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald W. Tarrant............. 0 -- 315,000 15,000 $ 3,110,625 $148,125
Thomas A. Cross............... 20,000 $112,500 107,500 12,500 1,061,563 123,438
William A. Keadle............. 0 -- 35,000 12,500 345,625 123,438
Lee M. Andrews................ 0 -- 0 0 0 0
John S. Leness................ 0 -- 86,000 13,000 849,250 128,375
</TABLE>
- ------------------------
(1) Calculated using $9.875, the closing price of the Company's common stock as
reported by NASDAQ on April 30, 1996.
8
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation and Plan Administrator Committee has adopted the following
philosophy statement:
Flow International believes that the purpose of compensation is to
attract, motivate, and retain excellently performing employees throughout
the company. Furthermore, Flow also believes that pay programs, especially
those for top executives, should be designed in a manner that aligns
employee interests with those of the stockholders. In view of these two
beliefs, executive compensation programs at Flow International will be
designed to meet the following objectives:
- Base salaries will be targeted at the 75th percentile of competitive
practice based on the results of surveys.
- Bonus or incentive compensation will be based on individual, unit, and/or
total company performance. At least 50% of executive bonuses will be tied
directly to overall company results.
- Stock options will be granted, as appropriate, by the Board in accordance
with the current stock compensation plan.
- To more closely align executive interests with those of the stockholders,
executives will be required to achieve established stock ownership goals
in accordance with the Stock Ownership Plan.
- The administration of the compensation programs will be directed toward
ensuring that the executives are paid fairly and competitively while
maintaining a strong relationship between the overall performance of Flow
International and the level of compensation.
The Committee's decisions are presented to and are subject to final approval
by the Board of Directors. The Committee also believes that the shareholders'
interests will be best served if all employees of the Company are also
shareholders. The Company has implemented programs to grant options to all
employees so that they will become shareholders. In order to implement its
philosophy, the Committee has adopted an executive compensation program with the
following elements:
BASE SALARY. Consistent with the Committee's philosophy, base salaries for
fiscal 1997 were based on comparisons to salary levels at comparable companies
with the goal of setting levels at the seventy-fifth percentile. In its review,
the Committee relied on data compiled by the Company's Human Resources group and
outside survey data for each Company executive. Salary adjustments for
individual executives were made to bring compensation levels into line with such
comparable companies.
BONUS PROGRAM. The Committee believes that shareholder return in the short
term will be maximized by ensuring that the Company achieves good operating
results. The Committee has structured the Company's executive bonus program so
that annual bonuses are payable based on achievement of target levels for
operating income and return on managed assets (or cash, inventories and accounts
receivable), which the Committee believes are the best measures of the Company's
financial performance. For fiscal 1997, in order to align the Company's practice
with comparable practice, target bonus levels were established at 45% of base
salary for executive officers and 65% for the Chairman, President and Chief
Executive Officer. The bonuses payable will vary depending on the Company's
performance against the operating income and return on managed assets targets
established.
STOCK OPTIONS. In order to provide management with incentives to maximize
long-term shareholder returns, the Committee, as administrator of the Company's
stock option plans, grants stock options to management. The Committee believes
that such grants will encourage management to pursue long-term strategies that
will increase the price of the Company's shares. The grants are generally made
annually at the time of the Committee's annual review of executive compensation.
For fiscal 1997, the Committee made grants of options to executives that vest as
the Company's stock price appreciates, instead of vesting over time, as the
Committee had typically granted in prior years. The Committee established a
target of 15% for increases in the price of the Company's stock, and the options
granted vest in 20% increments as this target is met. The Committee believes
that this ensures that the executives receiving these options will only benefit
to the extent that shareholders achieve a return on their investment in the
Company.
STOCK OWNERSHIP. Because the Committee believes that executives who share
the same risks as the Company's stockholders will be more likely to manage the
Company to maximize stockholder value, the Committee implemented in fiscal 1994
and continued for fiscal 1997, for the Company's most senior officers, a plan
requiring stock ownership by each officer. The plan requires that executives
acquire and maintain minimum holdings of the
9
<PAGE>
Company's stock. The Committee intends that the plan encourage executives to
hold at least five percent of the Company's outstanding common stock. Stock
ownership goals have been established for each executive officer based on
individual responsibilities and salary level and range from 150,000 shares to
45,000 shares. Executives are given five years to reach their goals. The
Committee will reduce future stock option awards to those executives who fail to
meet their ownership goals.
The Committee specifically reviews the performance of the Chairman,
President and Chief Executive Officer in the course of its review of the
Company's executive compensation program. The Committee's evaluation of the
compensation for the President, Chairman and Chief Executive Officer is based
not only on the Company's financial performance during the fiscal year, but also
on achievement of long-term strategic goals. For fiscal 1997, the Committee made
a modest adjustment to the compensation of the Chairman, President and Chief
Executive Officer to make it comparable to other similar corporations. During
the course of the year the Committee monitors the Company's performance and
meets both with and without management to evaluate the Company's results.
The Board of Directors has also approved agreements with the Company's
senior executives that provide for continuation of their salaries in the event
their jobs are eliminated or their responsibilities materially reduced following
a change in control of the Company. The Board believes that this will ensure
that executives will evaluate any possible offers for the Company in an
objective manner consistent with the best interests of the Company's
shareholders.
In August of 1993, the Internal Revenue Code was amended to impose a
limitation on the deductibility of nonperformance based annual executive
compensation in excess of $1.0 million. The Compensation Committee presently
anticipates that the Company's executive compensation will either be below such
levels or will be structured to qualify as "performance based compensation"
which is exempt from such limitation.
This report is submitted by the members of the Compensation and Plan
Administrator Committee. This report shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, and shall not be deemed filed under
such acts.
COMPENSATION AND PLAN
ADMINISTRATOR COMMITTEE
Arlen I. Prentice -- CHAIRMAN
Daniel J. Evans
Ron Barbaro
COMPENSATION COMMITTEE MEMBERSHIP
The Compensation and Plan Administration Committee is composed of
independent outside directors, none of whom serve on boards of companies whose
boards include Company executives.
10
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total stockholder return
(assuming reinvestment of dividends) to the Company's stockholders during the
five-year period ending April 30, 1996, as well as overall stock market index
(NASDAQ) and for those peer group indices selected for each of the Company's
product lines (S & P Machine Tools, Dow Jones Factory Equipment and Dow Jones
Heavy Construction). The Company has paid no dividends on its Common Stock.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FLOW INTERNATIONAL NASDAQ STOCK DOW JONES
CORPORATION S&P SMALLCAP 600 MARKET - US S&P MACHINE TOOLS FACTORY EQUIPMENT
<S> <C> <C> <C> <C> <C>
4/91 100 100 100 100 100
4/92 178 120 121 159 130
4/93 227 141 139 169 140
4/94 204 162 155 162 145
4/95 298 171 180 160 143
4/96 351 232 257 162 153
<CAPTION>
DOW JONES
HEAVY CONSTRUCTION
<S> <C>
4/91 100
4/92 94
4/93 89
4/94 115
4/95 108
4/96 134
</TABLE>
11
<PAGE>
AMENDMENT OF THE 1987 STOCK OPTION PLAN
FOR NONEMPLOYEE DIRECTORS
(PROXY PROPOSAL NO. 2)
It has been the Company's practice to grant stock options to its nonemployee
Directors as a significant portion of their compensation for service on the
Board. These options have been granted pursuant to the 1987 Stock Option Plan
for Nonemployee Directors (the "1987 Plan"). The Board of Directors believes
that this links the compensation of Directors to the interests of the Company's
stockholders.
The cash compensation of directors has not been adjusted since 1994. For
fiscal 1997, the Board decided not to adjust Directors' cash compensation but,
in order to ensure that the Company can attract and retain directors having the
experience and expertise to further the Company's growth, decided to amend the
1987 Plan to increase the number of options granted annually to directors from
5,000 shares to 10,000 shares. In order to provide sufficient shares to
implement this change and to provide sufficient shares for options to be granted
to the new directors nominated for election at the 1996 Annual Meeting, the
Board of Directors also approved an amendment to the 1987 Plan increasing the
number of shares available for grant from 400,000 shares to 750,000 shares.
At the date of this Proxy Statement, there were options for 62,000 shares
available for grant under the 1987 Plan. There were options for 241,000 shares
outstanding under the 1987 Plan, or 1.6% of the shares outstanding as of the
record date. Should the amendments to the 1987 Plan not be approved, there are
only sufficient options available for the grants to the two newly elected
Directors and for the grant to the other nonemployee Directors in connection
with the 1996 Annual Meeting. Nonemployee directors are not eligible for stock
options under the Company's other stock option plans. Under the Company's other
stock option plans, which are intended to provide for the grant of stock options
to employees, there were options for 1,512,870 shares, or 10.2% of the shares
outstanding, as of the record date.
The affirmative vote of the stockholders of record of the majority of shares
of Common Stock present in person or by proxy and entitled to vote at the annual
meeting is necessary to approve Proposal No. 2 to amend the 1987 Stock Option
Plan for Nonemployee Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSAL NO. 2 TO AMEND THE
1987 STOCK OPTION PLAN
FOR NONEMPLOYEE DIRECTORS
GENERAL DESCRIPTION OF 1987 PLAN TERMS
The 1987 Plan provides for the automatic grant to each nonemployee Director
of nonqualified options for 10,000 shares of common stock upon initial election
or appointment to the Board and 5,000 shares of Common Stock annually thereafter
concurrent with the annual stockholder election of Directors. The proposed
amendment would increase the annual grant to 10,000 shares. All options are
granted at an exercise price equal to the fair market value of the Common Stock
at the time of the grant. The 1987 Plan is to be administered by the Board or
its Compensation Committee.
The initial grant vests 40% after one year and 20% each year thereafter and
is otherwise subject to the same terms as the annual grant. The options granted
annually are immediately exercisable, remain exercisable, until one year after
an optionee ceases to be a Director and expire no later than ten (10) years and
one (1) week from the date of grant. Unvested options vest in the event of a
change in control of the Company.
The options granted under the 1987 Plan do not qualify as incentive stock
options under the Internal Revenue Code of 1986, as amended (the "Code"). Since
options granted under the terms of the 1987 Plan are granted at the fair market
value of the Company's Common Stock at the time of grant, Directors receiving
grants of options under the 1987 Plan will not be deemed to receive any income
at the time options are granted and the Company will not be entitled to a tax
deduction at the time of grant. When any part of an option granted under the
1987 Plan is exercised, the optionee will be deemed to have received ordinary
income in an amount equal to the difference between the fair market value of the
Common Stock on the date of exercise and the option exercise price. The Company
will be entitled to a tax deduction in an amount equal to the amount of ordinary
income realized by the optionee. Upon a later sale by the optionee of the shares
acquired on exercise, the optionee will have short-term or long-term capital
gain or loss, as the case may be, in an amount equal to the difference between
the amount realized on such sale and the tax basis of the shares sold.
The Board of Directors may, subject to applicable securities laws, amend,
terminate or suspend the 1987 Plan, but may not, without the approval of
stockholders, increase the number of shares subject to the 1987 Plan, reduce the
option exercise
12
<PAGE>
price below full fair market value at the time of grant, increase the number of
shares for which options are to be granted annual to each nonemployee Director,
or change the timing with respect to which such options are granted.
INDEPENDENT ACCOUNTANTS
The firm of Price Waterhouse has examined the financial statements of the
Company since 1981. It is anticipated that representatives of Price Waterhouse
will be present at the Annual Meeting to answer stockholders' questions and will
have the opportunity to make a statement if they so desire.
FORM 10-K AND
FINANCIAL STATEMENTS
The Company's 1996 Annual Report has been mailed to you with this Proxy
Statement. The Annual Report contains the Consolidated Financial Statements of
the Company and its subsidiaries and accompanying notes as of April 30, 1996 and
1995 and the Report thereon by Price Waterhouse.
If any stockholder entitled to vote at this Annual Meeting wishes to receive
a copy of the Company's Annual Report or Form 10-K, the Company will furnish
that person, without charge, copies upon written request. Requests should be
addressed:
John S. Leness, Secretary
Flow International Corporation
23500 64th Avenue South
Kent, Washington 98032
STOCKHOLDER PROPOSALS
To be considered for presentation to the 1997 Annual Meeting of
Stockholders, a stockholder proposal must be received at the offices of the
Company, 23500 64th Avenue South, Kent, Washington 98032, not later than March
24, 1997.
SOLICITATION AND EXPENSES OF SOLICITATION
Proxies may be solicited by officers, directors and regular supervisory and
executive employees of the Company, none of whom will receive any additional
compensation for their services. Proxies may be solicited personally or by mail,
telephone, facsimile or messenger. The Company will also pay persons holding
shares of the Common Stock in their names or in the names of the nominees, but
not owning such shares beneficially, such as brokerage houses, banks and other
fiduciaries, for the expense of forwarding soliciting materials to their
principals. All of the costs of the solicitation of proxies will be paid by the
Company.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented to
the meeting. If any other business is properly brought before the meeting, it is
intended that proxies in the enclosed form will be voted in respect thereof in
accordance with the judgment of the persons voting the proxies.
Whether you intend to be present at this meeting or not, you are urged to
return your proxy promptly.
By order of the Board of Directors.
Ronald W. Tarrant
CHAIRMAN OF THE BOARD
13
<PAGE>
SOLICITED BY THE BOARD OF DIRECTORS
FLOW INTERNATIONAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
August 29, 1996
The undersigned hereby appoints Ronald W. Tarrant, Thomas A. Cross and
John S. Leness, and each or any of them, with power of substitution, proxies
for the undersigned and authorizes them to represent and vote, as designated,
all of the shares of stock of the Company which the undersigned may be
entitled to vote at the Annual Meeting of Stockholders to be held at the
Washington Athletic Club, 1325 Sixth Avenue, Seattle, Washington 98111, on
August 29, 1996, and at any adjournment of such meeting, for the following
purposes and with discretionary authority as to any other matters that may
properly come before the meeting, all in accordance with and as described in
the Notice and accompanying Proxy Statement.
If this Proxy is executed by you without indicating a choice regarding
the nominees for director or without indicating a choice regarding Proposal
2, it will be deemed to grant authority to vote FOR the nominees for director
and FOR Proposal 2.
IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE
^ FOLD AND DETACH HERE ^
<PAGE>
FLOW INTERNATIONAL CORPORATION
Please mark your votes as indicated in this example /X/
Vote FOR the nominees
listed below (except as WITHHOLD AUTHORITY to
marked to the contrary vote for the nominees
below). listed below.
PROPOSAL 1 - ELECTION OF / / / /
DIRECTORS
The Board of Directors
recommends a vote FOR the
nominees for Director.
Election of three Directors:
INSTRUCTIONS: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S
NAME.
NOMINEES for Three-Year Terms:
Kathryn L. Munro
Sandra F. Rorem
Dean D. Thornton
Vote FOR Vote AGAINST WITHHOLD AUTHORITY to
Proposal 2 Proposal 2 vote for Proposal 2
Proposal 2 - Approval of / / / / / /
Amendment to 1987 Stock Option
Plan for Nonemployee Directors
THIS PROXY IS SOLICITED BY MANAGEMENT. A majority of said proxies, including
any substitutes, or if only one of them be present then that one, may
exercise all powers granted hereunder at said meeting or any adjournment
thereof. This proxy revokes any proxy to vote such shares at such meeting or
any adjournment thereof heretofore given by the undersigned to anyone other
than those named above.
Signature must be that of him/herself. If shares are held jointly, each
shareholder named should sign. If the signer is a corporation, please sign
the full corporate name by duly authorized officer. If the signer is a
partnership, please sign partnership name by authorized person. Executors,
administrators, trustees, guardians, attorneys-in-fact, etc., should so
indicate when signing.
Signature(s) ___________________________________ Dated _________________, 1996
IMPORTANT-PLEASE INSERT
^ FOLD AND DETACH HERE ^
