<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
GRAHAM 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] No fee required.
[ ] 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> 2
GRAHAM CORPORATION
20 FLORENCE AVENUE
BATAVIA, NEW YORK 14020
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 8, 1997
------------------------------
The Annual Meeting of Stockholders (the "Annual Meeting") of Graham
Corporation ("Graham") will be held at the Industrial Management Council, 930
East Avenue, Rochester, New York on Thursday, May 8, 1997 at 11:00 a.m. for the
following purposes:
1. To elect three directors to hold office until the Annual Meeting of
Stockholders in 2000;
2. To ratify the appointment of Deloitte & Touche as Graham's independent
accountants for the period January 1, 1997 through March 31, 1997 and
for the fiscal year ending March 31, 1998; and
3. To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 21, 1997 are
entitled to notice of, and to vote at, the Annual Meeting.
A complete list of stockholders entitled to be present and to vote at the
Annual Meeting will be open for examination by any stockholder, for any purpose
germane to the Annual Meeting, for a period of ten days prior to the Annual
Meeting, during ordinary business hours, at Graham's offices at 20 Florence
Avenue, Batavia, New York 14020.
You are cordially invited to attend the Annual Meeting, but, whether you
plan to attend the meeting or not, please date and sign the enclosed Proxy Card
and mail it promptly in the enclosed return envelope. No postage is required for
mailing in the United States. If you do attend, you may, of course, vote in
person.
By Order of the Board of Directors
CORNELIUS S. VAN REES
Secretary
March 27, 1997
<PAGE> 3
GRAHAM CORPORATION
20 FLORENCE AVENUE
BATAVIA, NEW YORK 14020
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 1997
------------------------------
GENERAL INFORMATION
GENERAL
This Proxy Statement and accompanying Proxy Card are furnished in
connection with the solicitation by the Board of Directors of Graham Corporation
("Graham" or the "Company") of proxies for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the Industrial Management
Council, 930 East Avenue, Rochester, New York on Thursday, May 8, 1997 at 11:00
a.m., and at any adjournment thereof, for the purposes set forth in the
preceding Notice of Annual Meeting of Stockholders. The approximate date of the
initial mailing of this Proxy Statement is March 27, 1997.
RECORD DATE AND VOTING
At the close of business on March 21, 1997 there were 1,587,655 shares of
Graham's common stock outstanding. Stockholders of record at the close of
business on March 21, 1997 are entitled to notice of, and to vote at, the Annual
Meeting and at any adjournment or adjournments thereof. The holder of each share
of Graham's common stock outstanding at the close of business on March 21, 1997
will be entitled to one vote for each share held of record at the close of
business on March 21, 1997 on each matter properly submitted at the Annual
Meeting and at any adjournment thereof. The minimum vote required for election
of a nominee for director is a plurality of the votes cast by the holders of
shares entitled to vote at the meeting.
PROXY CARDS
If Graham receives the enclosed Proxy Card, properly executed, in time to
be voted at the Annual Meeting, the shares represented thereby will be voted in
accordance with the instructions marked thereon. Executed Proxy Cards with no
instructions marked thereon will be voted FOR each of the nominees for election
as directors (or FOR any substitute nominated by the Board of Directors in the
event any nominee is unable or unwilling to serve) and FOR the ratification of
appointment of auditors set forth in the preceding Notice of Annual Meeting.
Under the Company's Certificate of Incorporation and By-laws, unless otherwise
required by law, matters such as the ratification of independent auditors of the
Company and all other matters other than the election of directors shall be
determined by a majority of the votes eligible to be cast by the holders of
outstanding shares of the Company's common stock present and entitled to vote at
the Annual Meeting ("Eligible Votes"), without regard to broker non-votes. Any
proxies marked "ABSTAIN" will not be treated as an affirmative or negative vote,
but will be used to determine the number which constitutes a majority of
Eligible Votes.
REVOCABILITY OF PROXIES
The presence of a stockholder at this Annual Meeting will not automatically
revoke such stockholder's proxy. However, a stockholder may revoke a Proxy at
any time prior to its exercise by (1) delivering to the Secretary of Graham a
written notice of revocation prior to the Annual Meeting, (2) delivering to the
Secretary of Graham a duly executed Proxy bearing a later date, or (3) attending
this Annual Meeting, filing a written notice of revocation with the Secretary of
the Annual Meeting, and voting in person.
1
<PAGE> 4
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers and employees of
Graham and its subsidiaries may solicit proxies for this Annual Meeting from the
stockholders of Graham personally or by telephone or telegram without additional
remuneration therefor. Graham will also provide persons holding shares in their
names or in the names of nominees, which in either case are beneficially owned
by others, proxy material for transmittal to such beneficial owners and will
reimburse such record owners for their expenses in doing so. The cost of
soliciting proxies for the Annual Meeting will be borne by Graham. No funds will
be paid to any professional solicitor in connection with this Annual Meeting.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as to the beneficial ownership
of Graham's common stock of each person or group who, as of March 21, 1997, to
the knowledge of Graham based on reports filed with the Securities and Exchange
Commission, beneficially owned more than 5% of Graham's outstanding common
stock.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AMOUNT PERCENT OF
NAME AND ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED SHARES
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Frederick D. Berkeley(1) 236,547(2) 14.7%
Dimensional Fund Advisors, Inc.(3) 113,150 7.1%
Employee Stock Ownership Plan of Graham Corporation(1,4) 131,150 8.3%
All directors and executive officers as a group (12 persons) 362,896(5) 21.2%
</TABLE>
- ---------------
(1) Address: c/o Graham Corporation, 20 Florence Avenue, Batavia, New York
14020.
(2) Includes 23,250 shares which Mr. Berkeley may acquire within 60 days upon
exercise of stock options and 1,421 shares held by Chase Bank as trustee for
the Employee Stock Ownership Plan Trust ("ESOP Trustee") and allocated to
Mr. Berkeley's account as to which Mr. Berkeley has sole voting power but no
dispositive power except in limited circumstances. Excluded from Mr.
Berkeley's shareholdings as described in this table are shares of Graham's
common stock held by the ESOP Trustee and not allocated to any individual's
account, as to which Mr. Berkeley shares voting power and limited
dispositive power with all other ESOP participants.
(3) Address: 1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401.
Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 113,150 shares of Graham
stock as of December 31, 1996, all of which shares are held in portfolios of
DFA Investment Dimensions Group, Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, for all of which
Dimensional Fund Advisors, Inc. serves as investment manager. Dimensional
has sole dispositive power with respect to all of these shares and sole
voting power with respect to 73,750 of such shares; it has no voting power
with respect to the remaining shares. Dimensional disclaims beneficial
ownership of all 113,150 shares.
(4) The Employee Benefits Committee consisting of members of the Board of
Directors administers the ESOP. An unrelated corporate trustee for the ESOP
("ESOP Trustee") has been appointed by the Board of Directors. The Employee
Benefits Committee instructs the ESOP Trustee regarding investment of funds
contributed to the ESOP. Each member of the Employee Benefits Committee
disclaims beneficial ownership of the shares of Common Stock held in the
ESOP. The ESOP Trustee must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees. Unallocated
shares held in the suspense account will be voted by the ESOP Trustee in a
manner calculated to most accurately reflect the instructions it has
received from participants regarding the allocated stock, provided such
instructions do not conflict with the ESOP Trustee's fiduciary obligations
under ERISA. At March 21, 1997, 86,934 shares were allocated to participants
and 44,247 shares were unallocated.
(5) Includes 126,340 shares which members of the group may acquire within 60
days upon exercise of stock options and 5,643 shares allocated to executive
officers under the Company's Employee Stock Ownership Plan ("ESOP"), as to
which such officers may exercise voting power, but not dispositive power,
except in limited circumstances. Also includes unallocated shares held by
the ESOP Trustee over which directors who are members of the Company's
Employee Benefits Committee have dispositive power.
2
<PAGE> 5
PROPOSAL ONE
ELECTION OF DIRECTORS
At the Annual Meeting three directors will be elected, each to hold office
until the 2000 Annual Meeting and thereafter until the election and
qualification of his successor. There are no arrangements or understandings
between the Company and any director or nominee pursuant to which such person
was elected or nominated to be a director of the Company.
The following table sets forth information with respect to the nominees and
those directors whose terms will continue after the Annual Meeting.
NOMINEES:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES
YEARS OWNED
CURRENT SERVED BENEFICIALLY, PERCENT OF
PRINCIPAL TERM AS A AS OF OUTSTANDING
NAME AGE OCCUPATION(1) EXPIRES DIRECTOR(2) MARCH 21, 1997 SHARES
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frederick D. Berkeley 68 Chairman, President 1997 42 236,547 14.7%
and Chief Executive
Officer of Graham(3)
Alvaro Cadena 53 President and Chief 1997 4 18,908(4) 1.2%
Operating Officer,
Graham Manufacturing
Co., Inc. ("GMC");
Vice President of
Graham
H. Russel Lemcke 57 President, H. Russel 1997 1 14,500(5) *
Lemcke Group, Inc.
</TABLE>
DIRECTORS WITH TERMS CONTINUING
AFTER THE 1997 ANNUAL MEETING:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES
YEARS OWNED
CURRENT SERVED BENEFICIALLY, PERCENT OF
PRINCIPAL TERM AS A AS OF OUTSTANDING
NAME AGE OCCUPATION(1) EXPIRES DIRECTOR(2) MARCH 21, 1997 SHARES
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerald D.
Bidlack 61 President, Griffin 1998 12 12,750(6) *
Automation, Inc.;
previously Vice
Chairman, Moog Inc.
and President,
International Group
Philip S. Partner, Hill,
Hill(7) 75 Ullman 1998 29 10,500(6) *
& Erwin, Attorneys
Robert L. Tarnow 72 Former Chairman of 1999 16 10,800(6) *
Goulds Pumps, Inc.
Cornelius S. Of Counsel to
Van Rees 67 Thacher 1999 28 11,550(6) *
Proffitt & Wood,
Attorneys;
previously
partner in Thacher
Proffitt & Wood
<FN>
- ---------------
* Less than 1% of the outstanding shares of common stock.
3
<PAGE> 6
(1) In addition, Mr. Bidlack serves on the board of Bush Industries, Inc. and
Mr. Lemcke serves on the board of Rochester Midland Corporation.
(2) Includes the number of years served as director of Graham Manufacturing Co.,
Inc., the predecessor of Graham.
(3) Refer to Footnote 2 on page 2.
(4) Includes 14,700 shares that may be acquired within 60 days by exercising
stock options and 1,115 shares held by the ESOP Trustee and allocated to Mr.
Cadena's account as to which Mr. Cadena has sole voting power but no
dispositive power except in limited circumstances.
(5) Includes 4,500 shares which may be acquired within 60 days upon exercise of
stock options.
(6) Includes 10,500 shares which may be acquired within 60 days upon exercise of
stock options.
(7) Messrs. Berkeley and Hill are brothers-in-law.
</TABLE>
4
<PAGE> 7
BOARD MEETINGS AND COMMITTEES OF THE BOARD
During 1996, the Board of Directors of Graham held a total of four
meetings. Graham's Board of Directors has six committees, as follows:
1. EXECUTIVE COMMITTEE
Between meetings of the Board of Directors, the Executive Committee has all
of the powers of the Board to manage and direct all the business and affairs of
Graham, so far as such may be legally delegated and except as may be limited
from time to time by resolution of the Board. The members of the Executive
Committee are Messrs. Berkeley (Chairman), Hill and Van Rees. The Executive
Committee of Graham held four meetings during 1996.
2. AUDIT COMMITTEE
It is the duty of the Audit Committee to recommend the auditors for
Graham's annual audit to the full Board of Directors, to meet and discuss
directly with Graham's auditors their audit work and related matters and to
carry out such investigations and make such reports to the Board of Directors
with respect both to the external and internal auditing procedures and affairs
of Graham as the Audit Committee deems necessary or advisable. The members of
the Audit Committee are Messrs. Hill (Chairman), Bidlack, Lemcke, Tarnow and Van
Rees. The Audit Committee of Graham held one meeting during 1996.
3. COMPENSATION COMMITTEE
The Compensation Committee has authority to (a) review and determine
annually salaries, bonuses and other forms of compensation paid to the Company's
executive officers and management; (b) select recipients of awards of incentive
stock options and non-qualified stock options, establish the number of shares
and other terms applicable to such awards, and construe the provisions of and
generally administer the 1989 Stock Option and Appreciation Rights Plan and the
1995 Incentive Plan to Increase Shareholder Value. The members of the
Compensation Committee are Messrs. Bidlack (Chairman), Hill, Lemcke, Tarnow and
Van Rees. The Compensation Committee of Graham held two meetings during 1996.
4. EMPLOYEE BENEFITS COMMITTEE
The Employee Benefits Committee reviews the performance of the Plan
Administrator of Graham's Retirement Income Plan, Incentive Savings Plan, Group
Hospitalization Plan, Medical Plan, Major Medical Plan, Life Insurance Plan,
Long-Term Disability Plan, Employee Stock Ownership Plan and any other employee
benefit plan maintained by Graham for which a named fiduciary is designated. The
Committee reviews and reports to the Board on the performance of the Incentive
Savings Plan trustee and the Retirement Income Plan trustee in investing,
managing and controlling plan assets. It has authority to establish a funding
policy and method consistent with the objectives of the Retirement Income Plan,
to recommend changes in the plans, changes in any plan trustee or administrator,
and subject to the further action of the Board, to amend any of the plans, other
than the Retirement Income Plan, the Incentive Savings Plan and the Employee
Stock Ownership Plan.
The members of the Employee Benefits Committee are Messrs. Berkeley
(Chairman), Hill and Van Rees. The Employee Benefits Committee of Graham held
two meetings in 1996.
5. NOMINATING COMMITTEE
The Nominating Committee has authority to review the qualifications of,
interview and nominate candidates for election to the Board of Directors.
Stockholders may recommend individuals for consideration by the Nominating
Committee as potential nominees by making any such recommendation in writing to
the Secretary of the Company, at the Company's address, no later than February 1
preceding any year's Annual Meeting of Stockholders. The Nominating Committee
held one meeting in 1996.
The members of the Nominating Committee are Messrs. Van Rees (Chairman),
Berkeley and Hill.
5
<PAGE> 8
6. SUCCESSION COMMITTEE
Graham's Board of Directors established a Succession Committee in October
1996. The function of the Succession Committee is to review the needs of the
Company with respect to the office of CEO and other offices as may be desirable
and to make recommendations in this regard at an appropriate time in order to
provide for orderly succession. The Succession Committee held one meeting in
1996.
The members of the Succession Committee are Messrs. Van Rees (Chairman),
Berkeley, Bidlack, Hill, Lemcke and Tarnow.
MEETING ATTENDANCE
A total of fifteen meetings of the Board of Directors of Graham and of the
Committees of the Board were held on ten dates during 1996 and all directors but
one attended all meetings of the Board and of Committees of which they were
members. One director was absent from one Board meeting.
DIRECTORS' FEES
No director who is an employee of Graham or a Graham subsidiary receives
any remuneration for services as a director.
Non-employee directors receive an annual fee of $8,000 for service on the
Board. They also receive a fee of $1,000 for each meeting attended of the Board
or of any Committee of the Board except that, if the meeting is held by
telephone conference call or by unanimous written consent, a $500 fee is paid,
and if the Board and/or one or more Committees meet on the same day, a full
meeting fee is paid for one meeting and one-half the normal fee is paid for each
other meeting. Each of the two non-employee directors who are members of the
Executive Committee also received an annual fee of $8,000 for such service.
Each director not residing within 50 miles of the place of any meeting is
entitled to receive reimbursement for reasonable expenses incurred in attending
a meeting.
Non-employee directors participate in the Graham Corporation Outside
Directors' Long Term Incentive Plan ("LTIP"). Under the LTIP, for every fiscal
year starting with 1996 in which Graham produces consolidated net income of at
least $500,000, each non-employee director will be credited with Share
Equivalent Units (SEUs). Each SEU is valued at the market value of 1 share of
Graham Common Stock on the last day of trading of the first quarter following a
fiscal year for which SEUs are to be credited. The number of SEUs to be credited
is determined by dividing the value of 1 SEU into an amount equal to the basic
annual Director's fee. Upon termination of a Director's service on the Board,
but not before, SEUs will be redeemable for either: (a) a commensurate number of
shares of Graham Common Stock; or (b) subject to the consent of the Company, the
cash value of a commensurate number of shares of Graham Common Stock as of the
termination of service date.
Pursuant to the 1989 Stock Option and Appreciation Rights Plan of Graham
Corporation ("Option Plan"), each non-employee director of Graham is granted an
option to purchase 6,000 shares of Graham's common stock upon becoming a member
of the Board of Directors.
Pursuant to the 1995 Graham Corporation Incentive Plan to Increase
Shareholder Value ("Incentive Plan"), each non-employee director of Graham is
granted, annually for four years, an option to purchase 2,250 shares of Graham's
common stock.
6
<PAGE> 9
EXECUTIVE OFFICERS
The following table sets forth information regarding Named Executive
Officers of Graham identified on the Summary Compensation Table on page 8 herein
as of March 21, 1997 and their beneficial ownership of Graham Common Stock.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
SHARES OWNED
BENEFICIALLY
AS OF PERCENT OF
YEARS OF MARCH 21, OUTSTANDING
NAME AGE PRINCIPAL OCCUPATION SINCE 1992 SERVICE 1997(6) SHARES
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Frederick D. Berkeley 68 Chairman, President and Chief 46 236,547(1) 14.7%
Executive Officer
Alvaro Cadena 53 President & Chief Operating 27 18,908(2) 1.2%
Officer of GMC; Vice President of
Graham
J. Ronald Hansen 49 Vice President-Finance and 4 7,799(3) *
Administration and Chief Financial
Officer; previously Vice
President-Finance and Chief Financial
Officer of Al Tech Specialty Steel
Corporation
Joseph P. Gorman 54 Vice President-Sales of GMC 27 12,030(4) *
Stephen P. Northrup 45 Vice President-Engineering of 23 11,313(5) *
GMC; previously Vice President-
Operations of GMC
<FN>
- ---------------
* Less than 1% of the outstanding shares of common stock.
(1) Refer to Footnote 2 on page 2.
(2) Includes 14,700 shares that may be acquired within 60 days by exercising
stock options and 1,115 shares held by the ESOP Trustee and allocated to Mr.
Cadena's account as to which Mr. Cadena has sole voting power but no
investment power except in limited circumstances.
(3) Includes 7,090 shares that may be acquired within 60 days by exercising
stock options and 409 shares held by the ESOP Trustee and allocated to Mr.
Hansen's account as to which Mr. Hansen has sole voting power but no
investment power except in limited circumstances.
(4) Includes 10,500 shares that may be acquired within 60 days by exercising
stock options and 746 shares held by the ESOP Trustee and allocated to Mr.
Gorman's account as to which Mr. Gorman has sole voting power but no
investment power except in limited circumstances.
(5) Includes 10,500 shares that may be acquired within 60 days by exercising
stock options and 813 shares held by the ESOP Trustee and allocated to Mr.
Northrup's account as to which Mr. Northrup has sole voting power but no
investment power except in limited circumstances.
(6) Excluded from the shareholdings reported in this table are shares of common
stock held by the ESOP Trustee and not allocated to any individual's
account, as to which each person in the table shares voting power and
limited investment power with all other ESOP participants.
</TABLE>
7
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
The following table (the "Summary Compensation Table") sets forth the
annual compensation for services to Graham in all capacities for the past three
years for Graham's Chief Executive Officer and the four most highly compensated
executive officers other than the CEO, whose total salary and bonus exceeded
$100,000 and who were serving as executive officers at December 31, 1996 ("Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION
NAME
AND SECURITIES
PRINCIPAL SALARY UNDERLYING ALL OTHER
POSITION YEAR ($)(1) OPTIONS/SARS (#) COMPENSATION($)(2,3,4)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frederick D. Berkeley 1996 366,265 -0- 72,750
Chairman, President and 1995 284,153 4,700 94,420(5)
Chief Executive Officer 1994 192,760 -0- 68,245
Alvaro Cadena 1996 236,635 -0- 21,974
President & Chief Operating 1995 186,461 3,200 17,309
Officer of GMC; Vice President 1994 134,285 -0- 14,751(6)
of Graham
J. Ronald Hansen 1996 167,793 -0- 19,290
Vice President-Finance & 1995 141,812 2,200 12,992
Administration and Chief 1994 99,757 -0- 9,218
Financial Officer of Graham
Joseph P. Gorman 1996 155,915 -0- 19,165
Vice President-Sales of GMC 1995 118,345 2,200 13,936
1994 92,898 -0- 10,514
Stephen P. Northrup 1996 158,593 -0- 15,917
Vice President-Engineering 1995 120,528 2,200 10,756
of GMC 1994 92,830 -0- 7,260
<FN>
- ---------------
(1) Includes payment of contingent salary amounts which are deferred to the
following fiscal year and are payable only upon attainment of predetermined
performance goals. Figures for 1994 do not include any contingent salary
amounts. The figures shown also include amounts (if any) deferred by the
named individual pursuant to section 401(k) of the Internal Revenue Code and
deferred contingent salary. Amounts deferred under section 401(k) of the
Internal Revenue Code are deposited in the named individual's 401(k) account
for investment and payment according to the terms of Graham's Incentive
Savings Plan.
(2) Includes premiums paid on insurance policies on each of the Named Executive
Officers as follows: for Mr. Berkeley in each of 1994 and 1995, $67,000 and
in 1996, $61,700; for Mr. Cadena in each of 1994, 1995 and 1996, $10,924;
for Mr. Hansen in each of 1994, 1995 and 1996, $8,240; for Mr. Gorman in
each of 1994, 1995 and 1996, $9,600; for Mr. Northrup in each of 1994, 1995
and 1996, $6,346.
(3) Includes amounts paid to the 401(k) accounts of the Named Executive Officers
pursuant to the Graham Corporation Incentive Savings Plan as follows: to Mr.
Berkeley's account for 1995, $5,130 and for 1996, $9,500; to Mr. Cadena's
account for 1995, $4,763 and for 1996, $9,500; to Mr. Hansen's account for
1995, $3,539 and for 1996, $9,500; to Mr. Gorman's account for 1995, $3,233
and for 1996, $8,196; to Mr. Northrup's account for 1995, $3,292 and for
1996, $8,174.
(4) Includes amounts representing the value of shares allocated pursuant to
Graham's ESOP to each Named Executive Officer's account maintained under the
ESOP as follows: to Mr. Berkeley shares worth $1,245 for 1994, $1,748 for
1995 and $1,550 for 1996; to Mr. Cadena shares worth $1,245 for 1994, $1,622
for 1995 and $1,550 for 1996; to Mr. Hansen shares worth $978 for 1994,
$1,213 for 1995 and $1,550 for 1996; to Mr. Gorman shares worth $914 for
1994, $1,103 for 1995 and $1,369 for 1996; and to Mr. Northrup shares worth
$914 for 1994, $1,118 for 1995 and $1,397 for 1996.
(5) Includes $19,392 paid as a 45-year long-term service award.
(6) Includes $2,582 paid as a 25-year long-term service award.
</TABLE>
8
<PAGE> 11
STOCK OPTIONS
No stock options or stock appreciation rights were granted to any named
executive officer in 1996.
The following table indicates the total number of exercisable and
unexercisable stock options held by each executive officer listed below on
December 31, 1996, the last day of fiscal year 1996.
AGGREGATED OPTION/SAR EXERCISES IN 1996 AND
YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
12/31/96 (#) 12/31/96 ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frederick D. Berkeley -0- -0- 23,250/-0- $18,131/-0-
Alvaro Cadena -0- -0- 14,700/-0- $11,756/-0-
J. Ronald Hansen 673 $4,459 7,090/2,400 $10,119/$3,101
Joseph P. Gorman -0- -0- 10,500/-0- $8,288/-0-
Stephen P. Northrup -0- -0- 10,500/-0- $8,288/-0-
</TABLE>
PENSION PLANS
The Retirement Income Plan of Graham Corporation is a defined benefit
pension plan for the benefit of eligible domestic employees of Graham and its
United States subsidiaries ("U.S. Retirement Plan"). The portion of 1996
compensation shown in the Summary Compensation Table that is taken into account
by the U.S. Retirement Plan for the purpose of calculating future pension
benefits is as follows: for Mr. Berkeley, $150,000; for Mr. Cadena, $150,000;
for Mr. Hansen, $117,250; for Mr. Gorman, $107,744; and for Mr. Northrup,
$109,595.
The approximate years of creditable service as of December 31, 1996 of each
of the individuals named in the Summary Compensation Table who is eligible to
participate in the U.S. Retirement Plan are: Mr. Berkeley, 46 years; Mr. Cadena,
27 years; Mr. Hansen, 4 years; Mr. Gorman, 27 years; and Mr. Northrup, 23 years.
In addition to the U.S. Retirement Plan, the Company maintains a
Supplemental Executive Retirement Plan (the "Supplemental Plan") which is
intended to provide eligible participants and their surviving spouses and
beneficiaries with the amount of Employer-provided retirement benefits that the
U.S. Retirement Plan would provide but for the limitation on compensation that
may be recognized under tax-qualified plans imposed by Section 401(a)(17) of the
Internal Revenue Code and the limitations on benefits imposed by Sections 415(b)
and (e) of the Internal Revenue Code. Officers of the Company the non-contingent
portion of whose compensation exceeded $150,000 in 1996, or will exceed $160,000
in 1997, are eligible to participate in the Supplemental Plan. Currently Mr.
Berkeley is the only eligible participant. The amount of 1996 compensation taken
into account by the Supplemental Plan for the purpose of calculating future
benefits for Mr. Berkeley was $72,000.
The Pension Table sets forth straight life annuity amounts without regard
to reduction for Social Security benefits; benefits listed in the Table are
subject to a deduction of 50% of the eligible employee's estimated primary
Social Security benefit.
<TABLE>
<CAPTION>
PENSION TABLE
- -------------------------------------------------------------------------------------------------------------------------
YEARS OF SERVICE
REMUNERATION ($) 15 20 25 30 35
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
100,000 25,000 33,333 41,670 50,000 50,000
125,000 31,250 41,662 52,088 62,500 62,500
150,000 37,500 49,995 62,505 75,000 75,000
175,000(1) 43,750 58,328 72,922 87,500 87,500
270,000(1) 67,500 89,995 112,505 135,000 135,000
<FN>
- ---------------
(1) For the U.S. Retirement Plan, with respect to 1996, $150,000 was the maximum
amount of compensation that could be used as the basis for determining
benefits under applicable law. For the Supplemental Plan, with respect to
1996, only non-contingent compensation over $150,000 was used as the basis
for determining benefits.
</TABLE>
9
<PAGE> 12
EMPLOYMENT CONTRACTS
The Named Executive Officers each have employment contracts with Graham for
three-year terms renewable by mutual consent for additional periods. The
contracts each have termination provisions which, in certain circumstances,
would entitle each of them to a payment equal to twelve months' salary
(non-contingent salary only) upon termination of employment. In some cases, a
portion of an individual's compensation may be payable after termination of
employment, depending on contract terms. During 1996, Mr. Berkeley accrued
interest on deferred compensation payable after termination of employment. At
December 31, 1996, the amount of deferred compensation payable to Mr. Berkeley
after termination of employment totaled $188,266 and the amount payable to Mr.
Gorman after termination of employment totaled $125,700.
SENIOR EXECUTIVE SEVERANCE AGREEMENTS
Graham has entered into Senior Executive Severance Agreements with certain
of its officers. Among them are Messrs. Berkeley, Cadena and Hansen. These
agreements, as amended to date, provide that in the event a third person effects
a change in control of Graham (defined generally as an acquisition of 25% or
more of the outstanding voting shares, or a change in the majority of the Board
of Directors as the result of any tender offer or business combination),
termination of the individual's employment within two years of such a change of
control entitles the executive to one dollar less than three years' compensation
including bonuses, payable either in installments over a period not to exceed
three years or as a lump sum.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of Graham's Compensation Committee who served during the fiscal
year ending December 31, 1996 were Directors Bidlack, Hill, Lemcke, Tarnow and
Van Rees. Director Cornelius S. Van Rees is Secretary of Graham but receives no
compensation for his service as Secretary; Mr. Van Rees participated in the
Board's deliberations regarding compensation of all compensated officers of
Graham. During fiscal year 1996, Mr. Van Rees was Of Counsel to the law firm
Thacher Proffitt & Wood, which provided legal services to Graham in 1996. Mr.
Berkeley and Mr. Hill are brothers-in-law.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The duty of Graham's Compensation Committee is to establish levels of cash
compensation and forms and amounts of non-cash compensation for the executive
officers of Graham Corporation and subsidiaries. The guiding principles of the
Committee are:
- to provide a reasonable level of compensation sufficient to attract
and retain executive personnel best suited by training, ability, and
other relevant criteria for the management requirements of the
Company;
- to balance base compensation (non-contingent) and incentive
compensation (contingent upon performance) for the purpose of
motivating executive personnel;
- to determine the extent and method of aligning the financial
interest of the Company's executive personnel with the interest of
the Company's stockholders in the appreciation of their investment.
The Chief Executive Officer's compensation consists of two components:
contingent and non-contingent salary. The contingent portion is linked directly
to the quantitative performance of the Company; specifically, to attainment of
predetermined targets for net income and for return on capital employed.
Contingent salary is not payable with respect to any fiscal year unless both
targets are attained. In addition, of the contingent salary that may be payable
with respect to a fiscal year, 20% is payable only upon determination by the
Compensation Committee that the CEO has accomplished certain goals specified by
the Committee for the CEO prior to the beginning of the fiscal year. Such goals
can be quantitative, or require successful completion of certain projects, or
can consist of both. Contingent salary as it applies to the CEO and also the
other Named Executive Officers is described in more detail below.
The CEO's non-contingent compensation is based on the Committee's
evaluation of the salary needed to retain the CEO, its evaluation of his success
in assembling, retaining and managing the senior officers of the Company and its
evaluation of the CEO's experience and strategic vision for the Company. In
addition, in making salary determinations for the CEO, the Committee considers
the factors described below with respect to setting compensation levels for all
of the Named Executive Officers.
10
<PAGE> 13
In recognition of the Company's improved financial performance, the
Committee in 1996 increased the non-contingent salary of Graham's Chief
Executive Officer by 10% and of its other executive officers by 5%. This step
followed three consecutive years of no increase in non-contingent salary for the
CEO and other executive officers.
Traditionally, Graham's non-contingent salaries for the CEO and executive
officers have been set somewhat below the mid-range of competitive levels. Even
after the increases made in 1996, such compensation for the CEO and executive
officers remains substantially below the median compensation levels for
similarly situated executive officers of comparably-sized companies in the
industry and region. Non-cash compensation, in the form of stock options, is
nominal as compared to such other companies.
Decisions regarding executive compensation made in 1996 relied in part on
guidance from a 1996 report prepared by an independent consulting firm reviewing
and comparing compensation levels of senior management personnel in
manufacturing industries in western New York. As it has in the past, the
Committee considered information as to compensation levels for officers and
senior managers of comparable scope and responsibility in an industry group of
comparably sized companies selected by Graham management. This industry group
included several of the companies in the peer group referred to in the
Performance Graph on page 12 of this proxy statement ("Performance Graph Peer
Group"). However, the Committee accorded no greater weight to compensation data
for Performance Graph Peer Group companies than to data for any other companies
in the industry group.
In addition to taking into account such factors as the Company's improved
financial performance and improved plant productivity in the last two years, the
Committee considered the need for the Company to offer compensation within a
competitive range, the need to attract management-level recruits to the Batavia,
New York area and to retain them, as well as management's commitment to the
long-term success of the Company.
In the interest of linking corporate performance to officer compensation
while maintaining competitive overall nominal salary rates, a portion of the
annual salary for each Named Executive Officer is contingent. The contingent
portion is payable, on a deferred basis, only following the end of each fiscal
year, and payment is subject to attainment of performance-based goals for the
year by Graham and by each Named Executive Officer individually. Under this
arrangement, a target performance-based amount for each eligible officer,
representing a percentage of non-contingent salary, is recommended to the
Committee annually by the CEO; a target performance-based amount for the CEO is
determined by the Committee. The actual amount of performance-based pay earned,
if any, depends upon the degree of attainment of goals established by the
Committee for each year in the following areas: corporate and subsidiary return
on capital employed and an individual performance goal for each officer. These
determinations were based on the Committee's review of pertinent data with
reference to literature in the field and to industry practices for comparably
sized companies and expectations of attainable results under existing market
conditions.
No stock appreciation rights, stock options or other forms of equity
compensation were granted in 1996.
This report is furnished by the members of Graham's Compensation Committee:
Jerald D. Bidlack, Chairman
Philip S. Hill
H. Russel Lemcke
Robert L. Tarnow
Cornelius S. Van Rees
11
<PAGE> 14
COMPARATIVE PERFORMANCE BY THE COMPANY
This section provides a comparison of the cumulative total stockholder
return on the Company's Common Stock with the cumulative total stockholder
return of (i) a broad equity market index and (ii) a published industry index or
peer group over five years. The following chart compares the Common Stock of
Graham with (i) the American Stock Exchange Market Value Index (the "AMEX
Index") and (ii) a group of public companies, each of which shares a
Standardized Industrial Classification code ("SIC Code") with Graham and each of
which either competes with Graham as to one or more product lines or one or more
market segments ("Selected Peer Group Manufacturers"). The chart assumes an
investment of $100 on December 31, 1991 in each of the Common Stock, the stocks
comprising the AMEX Index and the stocks of the Selected Peer Group
Manufacturers.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG GRAHAM CORPORATION COMMON
STOCK, AMEX MARKET VALUE INDEX AND SELECTED PEER GROUP MANUFACTURERS(1,2,3)
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN
Measurement Period Amex Market
(Fiscal Year Covered) Graham Corp Peer Group Value Index
<S> <C> <C> <C>
31-Dec-91 100 100 100
31-Dec-92 110 107 101
31-Dec-93 85 106 121
31-Dec-94 81 117 110
31-Dec-95 119 155 139
31-Dec-96 106 199 148
<FN>
- ---------------
(1) The total return for each of the Company's Common Stock, the Index and the
Selected Peer Group Manufacturers assumes the reinvestment of dividends.
(2) The AMEX Index tracks the aggregate price performance of equity securities
of companies traded on the American Stock Exchange. The Company's Common
Stock is traded on the AMEX.
(3) The Selected Peer Group Manufacturers consists of the following
manufacturing companies: American Precision Industries, Duriron Co., Inc.,
Paul Mueller Co., and Selas Corp. of America.
</TABLE>
12
<PAGE> 15
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed, subject to ratification by the
stockholders, Deloitte & Touche LLP as auditors of Graham for the period from
January 1, 1997 through March 31, 1997 and for the fiscal year ending March 31,
1998. The appointment was made upon the recommendation and approval of the Audit
Committee. The Board of Directors recommends that the stockholders vote "FOR"
such ratification.
A representative of Deloitte & Touche LLP is expected to attend the meeting
and be available to answer appropriate questions and will have an opportunity to
make a statement if he so desires.
OTHER MATTERS
Management does not intend to bring any business before the Meeting other
than those matters set forth in the preceding Notice of Annual Meeting of
Stockholders. Management knows of no other matters to be brought before the
Meeting. However, if any other matters should properly come before the Annual
Meeting, or at any adjournment thereof, it is the intention of the persons named
in the accompanying form of Proxy, as the Proxies for the shares represented
thereby, to vote on such matters as they, in their discretion, may determine.
STOCKHOLDER PROPOSALS
Any stockholder wishing to have a proposal considered for inclusion in
Graham's Proxy Statement and form of Proxy relating to the 1998 Annual Meeting
of Stockholders must, in addition to satisfying other applicable requirements,
set forth such proposal in writing and file it with the Secretary of Graham on
or before February 28, 1998.
ANNUAL REPORT
A copy of the Annual Report of Graham containing financial statements for
the year ended December 31, 1996, prepared in conformity with generally accepted
accounting principles, accompanies this Proxy Statement.
A copy of Graham's Annual Report on form 10-K is available upon request to
the Company.
The executive offices of Graham are located at 20 Florence Avenue, Batavia,
New York 14020.
By Order of the Board of Directors
Cornelius S. Van Rees
Secretary
13
<PAGE> 16
GRAHAM CORPORATION
20 FLORENCE AVENUE
BATAVIA, NEW YORK 14020
http://www.grahamcorp.com
<PAGE> 17
[GRAHAM CORPORATION LOGO AND LETTERHEAD]
Employee Benefits Committee
April 8, 1997
Dear Plan Accountholder:
The Employee Stock Ownership Plan of Graham Corporation ("ESOP") and
the Incentive Savings Plan of Graham Corporation ("ISP") have related trusts
(the "ESOP Trust" and the "ISP Trust," respectively) which own common stock of
Graham Corporation ("Graham"). Chase Bank, as trustee of the ESOP ("ESOP
Trustee") and Manufacturers and Traders Trust Company, as trustee of the ISP
("ISP Trustee") are stockholders of Graham and may vote on matters presented for
stockholder action at Graham's 1997 Annual Meeting of Stockholders scheduled to
be held on May 8, 1997 ("Annual Meeting").
The ESOP Trust and the ISP Trust provide that in casting their votes at
the 1997 Annual Meeting, the ESOP Trustee and the ISP Trustee are to follow
directions given by Graham's Employee Benefits Committee ("Committee"). The
Committee in turn follows instructions provided by participants, former
participants and beneficiaries of deceased former participants with respect to
the Graham common stock allocated to their accounts in the ESOP as of March 21,
1997 and the Company Stock Fund of the ISP ("Company Stock Fund") as of March
21, 1997.
The records for the ESOP and the ISP indicate that you are among the
individuals who may give voting instructions. You may give your instructions by
completing and signing the enclosed Confidential Voting Instruction Card
("Instruction Card") and returning it in the envelope provided to William M.
Mercer, Inc. The Instruction Card lets you give instructions for each matter
expected to be presented for stockholder action at the Annual Meeting. The
Committee expects William M. Mercer, Inc. to tabulate the instructions given on
a confidential basis and to provide the Committee with only the final results of
the tabulation. The final results will be used in directing the ESOP Trustee and
the ISP Trustee.
The voting of the common stock held by the ESOP Trust and the ISP Trust
is subject to legal requirements under the Employee Retirement Income Security
Act of 1974, as amended. The Committee, in consultation with its legal advisors,
considers these requirements in establishing voting instruction procedures and
directing the ESOP Trustee and the ISP Trustee how to vote. The remainder of
this letter describes the voting procedures which the Committee expects to
follow for the 1997 Annual Meeting.
How your voting instructions counts depends on whether it was
anticipated that the matter being voted upon would be presented for stockholder
action at the Annual Meeting; whether you had an interest in the ESOP Trust or
the Company Stock Fund on the proper date; and how large your interest was, as
follows:
ANTICIPATED PROPOSALS
If Graham Common Stock Was Allocated to Your Account Under the ESOP
Trust as of March 21, 1997:
(a) ALLOCATED COMMON STOCK. In general, the ESOP Trustee will be
directed to vote the number of shares of Graham common stock (if any) held by
the ESOP Trust and allocated as of March 21, 1997 to your individual account
under the ESOP according to the instructions specified on the reverse side of
the Instruction Card. The Instruction Card shows the number of shares of Graham
common stock allocated to your individual account under the ESOP Trust as of
March 21, 1997. If you do not file the Instruction Card by April 25, 1997 you
will be deemed to have instructed the ESOP Trustee to ABSTAIN as to all
proposals.
<PAGE> 18
-2-
GRAHAM CORPORATION
(b) UNALLOCATED COMMON STOCK. The ESOP Trust holds certain shares of
Graham common stock that are not allocated to any individual's account. In
general, the ESOP Trustee will be directed to vote the Graham common stock held
by the ESOP Trust and not allocated to any individual's account by casting votes
FOR or AGAINST each proposal identified on the reverse side of the Instruction
Card, in the same proportions as instructions to cast votes FOR or AGAINST such
proposal are given with respect to allocated Graham common stock. For purposes
of the ESOP, if you do not file the Instruction Card by April 25, 1997 or if you
ABSTAIN as to a proposal, your instructions will not count in voting unallocated
Graham common stock. Each individual's instructions are weighted according to
the number of shares of Graham common stock allocated to all individuals'
accounts as of March 21, 1997.
If You Had an Interest in the Company Stock Fund as of March 21, 1997:
In general, the ISP Trustee will be directed to vote the Graham common
stock held by the Company Stock Fund by casting votes FOR and AGAINST each
proposal specified on the reverse side of the Instruction Card in the same
proportions as instructions to cast votes FOR and AGAINST such proposal are
given by the individuals who are entitled, under the ISP, to give instructions.
The instructions given by each individual are weighted according to the value of
his respective interest in the Company Stock Fund as of March 21, 1997. The
Instruction Card shows the approximate number of shares of Graham common stock
(if any) -- and thus the approximate number of votes -- represented by your
interest in the Company Stock Fund as of March 21, 1997. For purposes of the
ISP, if you do not file the Instruction Card by April 25, 1997 or if you ABSTAIN
as to a proposal, your instructions will not count.
UNANTICIPATED PROPOSALS
It is possible, although very unlikely, that proposals other than those
specified on the Instruction Card will be presented for stockholder action at
the 1997 Annual Meeting. If this should happen, the ESOP Trustee and the ISP
Trustee will be instructed to vote upon such matters in their discretion, or to
cause such matters to be voted upon in the discretion of the individuals named
in any proxies executed by them.
Your interest in the ESOP Trust or in the ISP Trust offers you the
opportunity to participate, as do Graham's stockholders, in decisions that
affect Graham's future, and we encourage you to take advantage of it. To help
you decide how to complete the Instruction Card, enclosed is a copy of the Proxy
Statement that is being furnished to all holders of Graham common stock in
connection with the 1997 Annual Meeting. Please complete, sign and return your
Instruction Card today. Your instructions are important regardless of the size
of your interest in the ESOP Trust or in the Company Stock Fund.
If you have questions regarding the terms of the ESOP or the ISP, or
how to complete the Instruction Card, please call J. Ronald Hansen, Vice
President-Finance & Administration at (716) 343-2216.
Sincerely,
EMPLOYEE BENEFITS COMMITTEE
OF GRAHAM CORPORATION
Enclosure
NOTE: THE ENCLOSED CERTIFICATE INDICATES THE NUMBER OF SHARES AWARDED
TO YOU IN 1996, NOT YOUR TOTAL SHARES WHICH ARE SHOWN ON THE LABEL
OF THE ENCLOSED VOTING INSTRUCTION CARD.
<PAGE> 19
GRAHAM CORPORATION CONFIDENTIAL VOTING INSTRUCTION
THIS INSTRUCTION IS SOLICITED BY THE EMPLOYEE BENEFITS COMMITTEE
OF GRAHAM CORPORATION
AS A NAMED FIDUCIARY FOR EACH OF THE
EMPLOYEE STOCK OWNERSHIP PLAN OF GRAHAM CORPORATION
AND THE
INCENTIVE SAVINGS PLAN OF GRAHAM CORPORATION
(TOGETHER, THE "PLANS")
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 8, 1997
The undersigned Participant, Former Participant or Beneficiary
of a deceased Former Participant in one or both of the Plans (the "Instructor")
hereby provides the voting instructions hereinafter specified to the Employee
Benefits Committee of Graham Corporation (the "Committee"), which instructions
shall be taken into account in directing the respective Trustees of the Plans to
vote, in person, by limited or general power of attorney, or by proxy, the
shares and fractional shares of common stock (the "Shares") of Graham
Corporation (the "Corporation") which are held by the respective Trustees of the
Plans, in their capacities as Trustees, as of March 21, 1997 (the "Record Date")
at the Annual Meeting of Stockholders of the Corporation (the "Annual Meeting")
to be held at the Industrial Management Council, 930 East Avenue, Rochester, New
York on May 8, 1997 at 11:00 a.m., or at any adjournment thereof.
As to the nominees and the proposals listed on the reverse
side hereof and as more particularly described in the Corporation's Proxy
Statement dated March 27, 1997, the Committee will give voting directions to the
Trustees of the Plans. Such directions will reflect the voting instructions
filed by the Instructor on this Confidential Voting Instruction, in the manner
described in the accompanying letter from the Committee dated April 8, 1997.
As to other matters which may properly come before the Annual
Meeting, the Trustees will be instructed to vote upon such matters in its
discretion, or cause such matters to be voted upon in the discretion of the
individuals named in any proxies executed by it.
The instructions set forth on the reverse side hereof will be
taken into account as described above in directing the respective Trustees of
the Plans how to vote the Shares of the Corporation held by them as of the
Record Date in their capacities as Trustees, provided this card is received by
William M. Mercer, Inc. by April 25, 1997.
PLEASE MARK, SIGN AND DATE THIS VOTING INSTRUCTION CARD ON THE REVERSE SIDE
AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 20
IF THIS VOTING INSTRUCTION IS SIGNED BUT NO DIRECTION IS GIVEN, THIS VOTING
INSTRUCTION CARD WILL BE DEEMED TO INSTRUCT VOTES "FOR" THE ELECTION OF THE
NOMINEES AND "FOR" PROPOSAL 2.
<TABLE>
<CAPTION>
<S> <C> <C>
- -------------------------- -------------------------
ESOP COMMON (as of 3/21/97) ISP COMMON (as of 3/21/97) PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK.
====================================================================================================================================
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF NOMINEES AND "FOR" PROPOSAL 2.
- ------------------------------------------------------------------------------------------------------------------------------------
1. Election of Directors 2. Ratification of the appointment of Deloitte & Touche LLP as independent
accountants for the period January 1, 1997 through March 31, 1997 and the
fiscal year ending March 31, 1998.
FOR WITHHOLD
FOR AGAINST ABSTAIN*
Frederick D. Berkeley [ ] [ ]
[ ] [ ] [ ]
Alvaro Cadena [ ] [ ]
H. Russel Lemcke [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
3. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Annual Meeting
or any adjournment thereof.
====================================================================================================================================
- - The undersigned hereby instructs the Committee to direct the Trustee of the Plan
| | to vote in accordance with the voting instructions indicated above and hereby
acknowledges receipt of the letter from the Committee dated April 8, 1997, a
Notice of Annual Meeting of Stockholders of Graham Corporation and a Proxy
Statement for the Annual Meeting.
Date
--------------------------------------------------------------------------------
Signature
--------------------------------------------------------------------------------
Signature
--------------------------------------------------------------------------------
| |
- - Please sign exactly as your name appears on this instruction. Each owner of
shares held jointly must sign this voting instruction. If signing as attorney,
executor, administrator, trustee or guardian, please include your full title.
Corporate proxies must be signed by an authorized officer.
* For purposes of the unallocated Shares held by the Employee Stock Ownership
Plan, abstention is equivalent to not voting.
</TABLE>
<PAGE> 21
GRAHAM CORPORATION CONFIDENTIAL VOTING INSTRUCTION
THIS INSTRUCTION IS SOLICITED BY THE EMPLOYEE BENEFITS COMMITTEE
OF GRAHAM CORPORATION
AS A NAMED FIDUCIARY FOR THE
EMPLOYEE STOCK OWNERSHIP PLAN OF GRAHAM CORPORATION ("PLAN")
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 8, 1997
The undersigned Participant, Former Participant or Beneficiary
of a deceased Former Participant in the Plan (the "Instructor") hereby provides
the voting instructions hereinafter specified to the Employee Benefits Committee
of Graham Corporation (the "Committee"), which instructions shall be taken into
account in directing the Trustee of the Plan to vote, in person, by limited or
general power of attorney, or by proxy, the shares and fractional shares of
common stock (the "Shares") of Graham Corporation (the "Corporation") which are
held by the Trustee of the Plan, in its capacity as Trustee, as of March 21,
1997 (the "Record Date") at the Annual Meeting of Stockholders of the
Corporation (the "Annual Meeting") to be held at the Industrial Management
Council, 930 East Avenue, Rochester, New York on May 8, 1997 at 11:00 a.m., or
at any adjournment thereof.
As to the nominees and the proposals listed on the reverse
side hereof and as more particularly described in the Corporation's Proxy
Statement dated March 27, 1997, the Committee will give voting directions to the
Trustee of the Plan. Such directions will reflect the voting instructions filed
by the Instructor on this Confidential Voting Instruction, in the manner
described in the accompanying letter from the Committee dated April 8, 1997.
As to other matters which may properly come before the Annual
Meeting, the Trustee will be instructed to vote upon such matters in its
discretion, or cause such matters to be voted upon in the discretion of the
individuals named in any proxies executed by it.
The instructions set forth on the reverse side hereof will be
taken into account as described above in directing the Trustee of the Plan how
to vote the Shares of the Corporation held by it as of the Record Date in its
capacity as Trustee, provided this card is received by William M.
Mercer, Inc. by April 25, 1997.
PLEASE MARK, SIGN AND DATE THIS VOTING INSTRUCTION CARD ON THE
REVERSE SIDE AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 22
IF THIS VOTING INSTRUCTION IS SIGNED BUT NO DIRECTION IS GIVEN, THIS VOTING
INSTRUCTION CARD WILL BE DEEMED TO INSTRUCT VOTES "FOR" THE ELECTION OF THE
NOMINEES AND "FOR" PROPOSAL 2.
<TABLE>
<CAPTION>
<S> <C>
- ---------------------------
ESOP COMMON (as of 3/21/97) PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK.
====================================================================================================================================
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF NOMINEES AND "FOR" PROPOSAL 2.
- ------------------------------------------------------------------------------------------------------------------------------------
1. Election of Directors 2. Ratification of the appointment of Deloitte & Touche LLP as independent
accountants for the period January 1, 1997 through March 31, 1997 and for
the fiscal year ending March 31, 1998.
FOR WITHHOLD
FOR AGAINST ABSTAIN*
Frederick D. Berkeley [ ] [ ]
[ ] [ ] [ ]
Alvaro Cadena [ ] [ ]
H. Russel Lemcke [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
3. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Annual Meeting
or any adjournment thereof.
====================================================================================================================================
- - The undersigned hereby instructs the Committee to direct the Trustee of the Plan to
| | vote in accordance with the voting instructions indicated above and hereby
acknowledges receipt of the letter from the Committee dated April 8, 1997, a
Notice of Annual Meeting of Stockholders of Graham Corporation and a Proxy
Statement for the Annual Meeting.
Date
----------------------------------------------------------------------------------
Signature
----------------------------------------------------------------------------------
Signature
----------------------------------------------------------------------------------
| |
- - Please sign exactly as your name appears on this instruction. Each owner of shares
held jointly must sign this voting instruction. If signing as attorney, executor,
administrator, trustee or guardian, please include your full title. Corporate
proxies must be signed by an authorized officer.
* For purposes of the unallocated Shares held by the Employee Stock Ownership
Plan, abstention is equivalent to not voting.
</TABLE>
<PAGE> 23
EMPLOYEE STOCK OWNERSHIP PLAN
OF
GRAHAM CORPORATION
AN EMPLOYEE BENEFIT PLAN FOR EMPLOYEES OF GRAHAM CORPORATION
AND ITS AFFILIATES
This Certifies that
is the beneficial owner of
fully paid and non-assessable Shares, par value $.10 per share,
of the COMMON STOCK of
GRAHAM CORPORATION
A CORPORATION INCORPORATED UNDER THE LAWS OF THE
STATE OF DELAWARE
Issued in the name of the individual for the year 1996 and held for the named
individual's benefit by Chase Bank, as Trustee of the Employee Stock Ownership
Plan of Graham Corporation.
As of December 31, 1996
Cornelius S. Van Rees Frederick D. Berkeley, III
Secretary President
This Certificate is not a Certificate of Stock issued by Graham Corporation. A
Certificate of Stock representing the Shares described herein has been issued to
the Trustee. This Certificate and the interest in Shares represented hereby may
not be transferred or assigned by the named individual.
<PAGE> 24
P R O X Y 1 9 9 7
GRAHAM CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jerald D. Bidlack and
Philip S. Hill, or either of them, each with power of
substitution, as proxies to attend the Annual Meeting of
Stockholders of Graham Corporation to be held at the
Industrial Management Council, 930 East Avenue, Rochester,
New York on Thursday, May 8, 1997 at 11:00 a.m., and any
adjournment thereof, and to vote in accordance with the
following instructions the number of shares the undersigned
would be entitled to vote if personally present at such
meeting.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 25
[CAPTION]
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES AND FOR RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
FOR WITHHOLD
1. ELECTION OF DIRECTORS FROM THE / / / /
NOMINEES LISTED BELOW:
FREDERICK D. BERKELEY to serve until 2000
ALVARO CADENA to serve until 2000
H. RUSSEL LEMCKE to serve until 2000
FOR AGAINST ABSTAIN
2. Ratification of the appointment of Deloitte / / / / / /
& Touche LLP as independent accountants for
the period January 1, 1997 through March 31,
1997 and for the fiscal year ending
March 31, 1998.
3. In their discretion, to vote upon all other
matters as may be properly brought before the meeting.
This Proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. If no direction is
made, this Proxy will be voted FOR the election of the nominees and FOR ratification of the appointment of auditors.
Date: , 1997
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(Signature or Signatures)
Please sign exactly as name(s) appears on this proxy and
return it promptly whether you plan to attend the meeting or
not. If you do attend, you may, of course, vote in person.
The space below may be used for any questions or comments
you may have.
/ / To help our preparation for the meeting, please check
here if you plan to attend.
FOLD AND DETACH HERE
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