<PAGE> 1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A-101)
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 Rule 14a-11(c) or Rule 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: ...........................................................
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--------------------------------------------------------------------------------
<PAGE> 2
GRAHAM CORPORATION
20 FLORENCE AVENUE
BATAVIA, NEW YORK 14020
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 27, 2000
------------------------------
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, July 27, 2000 at 11:00 a.m. for
the following purposes:
1. To elect three directors, two to hold office until the Annual Meeting of
Stockholders in 2003 and one to hold office until the Annual Meeting of
Stockholders in 2002;
2. To vote upon a proposal to approve the Long-Term Stock Ownership Plan of
Graham Corporation;
3. To ratify the appointment of Deloitte & Touche LLP as Graham's
independent accountant for the fiscal year ending March 31, 2001; and
4. To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on June 16, 2000 are
entitled to notice of and to vote at the Annual Meeting. Stockholders who do not
expect to be present at the meeting should fill in, sign and date the enclosed
Proxy Card and mail it promptly in the enclosed return envelope. No postage is
required for mailing in the United States.
By Order of the Board of Directors
/s/ ALVARO CADENA
ALVARO CADENA
President & Chief Executive Officer
June 30, 2000
<PAGE> 3
GRAHAM CORPORATION
20 FLORENCE AVENUE
BATAVIA, NEW YORK 14020
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF STOCKHOLDERS
JULY 27, 2000
------------------------------
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, July 27, 2000 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 June 30, 2000.
RECORD DATE AND SHARES OUTSTANDING
On the record date for the meeting, June 16, 2000, there were 1,504,472
shares of Graham's common stock outstanding. Stockholders of record on June 16,
2000 will be entitled to one vote for each share held on the record date.
PROXY CARDS AND VOTING
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, FOR approval of the Long-Term Stock Ownership Plan of Graham
Corporation 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 Bylaws, directors are
elected by a plurality of the votes cast at the Annual Meeting. The vote
required for approval of any other matter before the Annual Meeting is a
majority of shares present in person or by proxy, and entitled to vote on the
matter. Under Delaware law, the total votes received, including abstentions and
votes by brokers holding shares in "street name" or other fiduciary capacity on
"routine" matters, are counted in determining the presence of a quorum at the
Annual Meeting. With respect to the election of directors, votes may be cast for
or withheld from voting with respect to any or all nominees. Votes that are
withheld will have no effect on the election of directors. Abstentions may be
specified on all proposals other than the election of directors and will be
counted as present for purposes of the matter with respect to which the
abstention is noted. Therefore, under the Company's Certificate of Incorporation
and Bylaws and under Delaware law, assuming the presence of a quorum at the
Annual Meeting, non-votes by brokers will have no effect on any proposal to be
acted upon at the Annual Meeting. However, abstentions would have the effect of
"no" votes with respect to ratifying the appointment of auditors and approving
the Long-Term Stock Ownership Plan.
REVOCABILITY OF PROXIES
The presence of a stockholder at this Annual Meeting will not automatically
revoke the 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 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.
INTEREST OF CERTAIN PERSONS IN ITEMS PROPOSED FOR ACTION
Each of Graham's directors and executive officers has acquired or may in
the future acquire, from Graham, common stock of Graham pursuant to the
Long-Term Stock Ownership Plan of Graham Corporation that is being presented for
stockholder approval at the 2000 Annual Meeting. All such acquisitions are
contingent on Graham's receipt of stockholder approval for the Long-Term Stock
Ownership Plan. Accordingly, each director and executive officer of Graham may
be deemed to have a personal interest in the proposal to approve the Long-Term
Stock Ownership Plan included in this Proxy Statement as Proposal Two.
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 June 16, 2000, 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>
Helen H. Berkeley(1) 113,674(2) 6.8%
Dimensional Fund Advisors, Inc.(3) 114,750 7.6%
Employee Stock Ownership Plan of Graham Corporation(1,4) 117,399 7.8%
</TABLE>
---------------
(1) Address: c/o Graham Corporation, 20 Florence Avenue, Batavia, New York
14020.
(2) Includes 4,650 shares which Mrs. Berkeley may acquire within 60 days upon
exercise of stock options.
(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 114,750 shares of Graham
Corporation stock as of December 31, 1999, 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, all of
which Dimensional Fund Advisors, Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such 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 June 16, 2000, 111,382 shares were allocated to participants
and 6,017 shares were unallocated.
2
<PAGE> 5
PROPOSAL ONE
ELECTION OF THREE DIRECTORS
At the Annual Meeting two directors will be elected to hold office until
the 2003 Annual Meeting and one director will be elected to hold office until
the 2002 Annual Meeting, each to hold office after his term until the election
and qualification of his successor. Unless otherwise instructed as provided on
the accompanying Proxy Card, the persons named therein will vote the shares
represented by the proxies received by them for the nominees shown below,
reserving, however, discretion to vote for the election of any substitute
nominated by the Nominating Committee of the Board of Directors in the event the
nominees are unable or unwilling to serve.
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
PRINCIPAL YEARS OWNED
OCCUPATION CURRENT SERVED BENEFICIALLY, PERCENT OF
FOR LAST TERM AS A AS OF OUTSTANDING
NAME AGE FIVE YEARS(1) EXPIRES DIRECTOR(2) JUNE 16, 2000 SHARES
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alvaro Cadena (for 3 56 President and Chief 2000 7 35,306(3) 2.1%
year term) Executive Officer of
Graham; previously Chief
Operating Officer
Helen H. Berkeley(4) 69 Private Investor 2000 2 113,674 6.8%
(for 3 year term)
H. Russel Lemcke (for 2 60 President, H. Russel 2000 4 20,350(5) 1.2%
year term) Lemcke Group, Inc.
</TABLE>
DIRECTORS WITH TERMS CONTINUING
AFTER THE 2000 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) JUNE 16, 2000 SHARES
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerald D. Bidlack(6) 64 President, Griffin 2001 15 27,250(7) 1.6%
Automation, Inc.
Philip S. Hill 78 Partner, Hill, Ullman & 2001 32 14,000(7) *
Erwin, Attorneys
Cornelius S. Van Rees 71 Retired partner in 2002 31 10,050(7) *
Thacher Proffitt & Wood,
Attorneys
</TABLE>
---------------
* Less than 1% of the outstanding shares of common stock.
(1) In addition, Mr. Bidlack serves on the boards of Bush Industries, Inc. and
Erdle Perforating Company and is a trustee of Keuka College; 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) Includes 20,515 shares that may be acquired within 60 days by exercising
stock options and 1,580 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.
(4) Refer to Footnote 2 on page 2.
(5) Includes 10,350 shares which may be acquired within 60 days upon exercise of
stock options.
(6) Chairman of the Board of Graham.
(7) Includes 9,000 shares which may be acquired within 60 days upon exercise of
stock options.
3
<PAGE> 6
BOARD MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended March 31, 2000, the Board of Directors of
Graham held a total of five meetings. Graham's Board of Directors has five
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 Directors Bidlack (Chairman), Cadena, Hill and Van Rees. The
Executive Committee of Graham held four meetings during the most recent fiscal
year, one of which was by telephone conference.
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 Directors Hill (Chairman), Berkeley, Bidlack, Lemcke and
Van Rees. The Audit Committee of Graham held one meeting during the most recent
fiscal year.
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 1995 Incentive Plan to Increase Shareholder Value and
(subject to approval of such plan by Graham's stockholders at the 2000 Annual
Meeting) the Long-Term Stock Ownership Plan of Graham Corporation. The members
of the Compensation Committee are Directors Lemcke (Chairman), Berkeley,
Bidlack, Hill and Van Rees. The Compensation Committee of Graham held four
meetings during the most recent fiscal year.
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 Directors Van Rees
(Chairman), Bidlack and Hill. The Employee Benefits Committee of Graham held one
meeting in the most recent fiscal year.
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 of record entitled to vote in the election of directors at any
annual meeting 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 sixty days
in advance of the annual meeting if the meeting is to be held within thirty (30)
days preceding the anniversary of the previous year's annual meeting, or ninety
(90) days in advance of the annual meeting if it is to be held on or after the
anniversary of the previous year's annual meeting. For an annual meeting of
stockholders held at a time other than within this time period, or for a special
meeting of stockholders for the election of directors, notice must be submitted
no later than the close of business on the tenth (10th) day following the date
on which notice of such meeting is first given to stockholders. Notice must set
forth any nominee's name,
4
<PAGE> 7
age, business and residence addresses, principal occupation or employment, the
nominee's written consent to serve as a director and information that would be
required to be included in a proxy statement filed pursuant to applicable rules
of the U.S. Securities and Exchange Commission. The stockholder giving the
notice must state in it his or her own name and address, the class and number of
shares owned of record and the dates of acquiring such shares. The stockholder
also must describe all arrangements or understandings between the stockholder
and nominee and any other person or persons (naming such person or persons)
pursuant to which the nominations are to be made by the stockholder, and
identify any person employed, retained, or to be compensated by the stockholder
submitting the nomination or by the person nominated, or any person acting on
his or her behalf to make solicitations or recommendations to stockholders for
the purpose of assisting in the election of such director, and briefly describe
the terms of such employment, retainer or arrangement for compensation.
The Nominating Committee held one meeting in the most recent fiscal year.
The members of the Nominating Committee are Directors Van Rees (Chairman),
Bidlack, Cadena and Hill.
MEETING ATTENDANCE
A total of sixteen meetings of the Board of Directors of Graham and of the
Committees of the Board were held on eight dates during the most recent fiscal
year and all directors attended all meetings of the Board and of Committees of
which they were members.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Director H. Russel Lemcke is President of the H. Russel Lemcke Group Inc.,
which the Company engaged to assist it in evaluating various options in
fulfillment of its strategic plan. Pursuant to this engagement, which ran from
May 1999 through May 2000, the Company paid to Mr. Lemcke a retainer of $2,500
per month and reimbursed him for out of pocket expenses. In the event that the
Company were to acquire another business entity as a result of such assistance,
Mr. Lemcke would be paid a fee of $100,000 plus 1% of the purchase price of the
acquired entity.
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 $10,000 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 fee is paid for each other
meeting. Each non-employee director who serves on the Executive Committee also
receives an annual fee of $10,000 for such service. The Chairman of the Board
receives an additional $10,000 annual fee and committee chairmen receive an
additional $2,000 per annum for each committee chairmanship they hold.
Non-employee directors participate in the Graham Corporation Outside
Directors' Long Term Incentive Plan ("LTIP"). Under the LTIP, for the first five
fiscal years in which Graham Corporation produces consolidated net income of at
least $500,000, starting with 1996 for Directors in office at that time and
starting with election to the Board for new directors, 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, at the
option of the Company, 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 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 at its closing price on the American Stock Exchange on the date of
each grant, subject to availability in the Incentive Plan of unissued options
reserved for directors.
5
<PAGE> 8
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 June 16, 2000 and their beneficial ownership of Graham Common Stock.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
SHARES
OWNED
BENEFICIALLY
AS OF PERCENT OF
YEARS OF JUNE 16, OUTSTANDING
NAME AGE PRINCIPAL OCCUPATION SERVICE 2000(1) SHARES
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alvaro Cadena 56 President & Chief Executive 31 35,306(2) 2.1%
Officer
Joseph P. Gorman 57 Vice President--Sales 31 14,618(3) *
J. Ronald Hansen 52 Vice President--Finance & 7 15,494(4) *
Administration and Chief
Financial Officer
James R. Lines 39 Vice President--Marketing 16 11,831(5) *
Stephen P. Northrup 48 Vice President--Engineering 26 11,980(6) *
William A. Smith, Jr. 45 Vice President and General 7 14,906(7) *
Counsel
All directors and executive 289,459(8) 17.8%
officers as a group (11
persons)
</TABLE>
---------------
* Less than 1% of the outstanding shares of common stock.
(1) 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.
(2) Refer to Footnote 3 on page 3.
(3) Includes 13,407 shares that may be acquired within 60 days by exercising
stock options and 1,211 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.
(4) Includes 10,707 shares that may be acquired within 60 days by exercising
stock options and 872 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.
(5) Includes 10,707 shares that may be acquired within 60 days by exercising
stock options and 1,030 shares held by the ESOP Trustee and allocated to Mr.
Lines's account as to which Mr. Lines has sole voting power but no
investment power except in limited circumstances.
(6) Includes 10,707 shares that may be acquired within 60 days by exercising
stock options and 1,273 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.
(7) Includes 12,707 shares that may be acquired within 60 days by exercising
stock options and 949 shares held by the ESOP Trustee and allocated to Mr.
Smith's account as to which Mr. Smith has sole voting power but no
investment power except in limited circumstances.
(8) Includes 120,750 shares which members of the group may acquire within 60
days upon exercise of stock options and 6,915 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.
6
<PAGE> 9
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's directors, certain of its officers, and any persons holding
more than ten percent of the Company's common stock are required to file reports
of their ownership of the Company's common stock with the Securities and
Exchange Commission (the "SEC"). Based solely on a review of Forms 3, 4 and 5
and amendments thereto furnished to the Company during its most recent fiscal
year, the Company believes that all such reports required to be filed were filed
in a timely manner.
COMPENSATION OF EXECUTIVE OFFICERS
The table on the next page (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 who were serving as executive
officers at March 31, 2000 ("Named Executive Officers"). Graham did not pay to
any of the Named Executive Officers in any time period included in the table
compensation required to be disclosed in columns (d), (e), (f) or (h) of the
Summary Compensation Table pursuant to Item 402 of SEC Regulation S-K.
Consequently, those columns have been omitted.
7
<PAGE> 10
SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
(c) (g)
(a) (b) SECURITIES (i)
NAME AND FISCAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($)(1) OPTIONS/SARS (#) COMPENSATION($)(2,3,4,5)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alvaro Cadena(6) 1999-00 215,010 7,015 24,165
President & Chief 1998-99 286,939 6,000 22,678
Executive Officer 1997-98 287,690 7,500 18,837
J. Ronald Hansen 1999-00 134,451 3,507 10,238
Vice President--Finance & 1998-99 166,690 3,000 16,302
Administration and 1997-98 186,924 4,200 13,942
Chief Financial Officer
Robert C. Moscicki(7) 1999-00 126,235 1,170 17,472
Vice President-- 1998-99 156,276 3,000 18,206
Manufacturing 1997-98 161,458 4,200 24,743
Stephen P. Northrup 1999-00 126,235 3,507 8,681
Vice President-- 1998-99 155,747 3,000 17,244
Engineering 1997-98 174,511 4,200 15,141
William A. Smith, Jr. 1999-00 126,922 3,507 7,980
Vice President and 1998-99 157,355 3,000 14,158
General Counsel 1997-98 176,360 4,200 12,134
</TABLE>
---------------
(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. 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. Cadena in each of FY 1997-98 and FY 1998-99
$10,924 and in FY 1999-00, $13,375; for Mr. Hansen in each of FY 1997-98 and
FY 1998-99, $7,144 and in FY 1999-00, $7,718; for Mr. Smith in each of FY
1997-98 and FY 1998-99, $5,000 and in FY 1999-00, $5,558; for Mr. Moscicki
in each of FY 1997-98, FY 1998-99 and FY 1999-00, $8,200; for Mr. Northrup
in each of FY 1997-98 and FY 1998-99, $5,729 and in FY 1999-00, $6,286.
(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.
Cadena's account for FY 1997-98, $2,113, for FY 1998-99, $8,050 and for FY
1999-00, $1,400; to Mr. Hansen's account for FY 1997-98, $4,465, for FY
1998-99, $8,050 and for FY 1999-00, $1,400; to Mr. Smith's account for FY
1997-98, $4,801, for FY 1998-99, $8,050 and for FY 1999-00, $1,322; to Mr.
Moscicki's account for FY 1997-98, $6,455, for FY 1998-99, $6,090 and for FY
1999-00, $1,325; to Mr. Northrup's account for FY 1997-98, $4,722, for FY
1998-99, $8,050 and for FY 1999-00, $1,308.
(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. Cadena shares worth $2,333 for FY 1997-98, $1,108
for FY 1998-99 and $1,120 for FY 1999-00; to Mr. Hansen shares worth $2,333
for FY 1997-98, $1,108 for FY 1998-99 and $1,120 for FY 1999-00; to Mr.
Smith shares worth $2,333 for FY 1997-98, $1,108 for FY 1998-99 and $1,100
for FY 1999-00; to Mr. Moscicki shares worth $1,967 for FY 1997-98, $1,108
for 1998-99 and $1,100 for FY 1999-00; to Mr. Northrup shares worth $2,333
for FY 1997-98, $1,108 for FY 1998-99 and $1,087 for FY 1999-00.
(5) Includes for Mr. Cadena payment in lieu of vacation of $2,596 in FY 1997-98
and $3,106 in FY 1998-99 and a long-term service award of $8,270 in FY
1999-00 . Includes for Mr. Moscicki in FY 1997-98, $1,250 under the Company
incentive program for Professional Engineering licensing and a $1,558
payment in lieu of vacation; in FY 1997-98, $7,601 for a long-term service
award and a $520 payment in lieu of vacation; and in FY 1999-00, $1,250 for
Professional Engineering licensing and payment of $5,597 in lieu of
vacation. Includes for Mr. Northrup in FY 1998-99, $2,357 for a long-term
service award.
8
<PAGE> 11
(6) Mr. Cadena became Chief Executive Officer on April 1, 1998. Previously he
served as President and Chief Operating Officer.
(7) Mr. Moscicki retired at the end of Fiscal Year 1999-00.
STOCK OPTIONS
The following table indicates the total number of stock options granted to
each Named Executive Officer during the last fiscal year.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
(a) (b) (c) (d) (e) (f) (g)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#)(1) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alvaro Cadena 7,015 23.9% 7.75 10/28/09 34,191 86,646
J. Ronald Hansen 3,507 11.9% 7.75 10/28/09 17,093 43,317
Robert C. Moscicki 1,170 4.0% 7.75 10/28/09 5,703 14,451
Stephen P. Northrup 3,507 11.9% 7.75 10/28/09 17,093 43,317
William A. Smith, Jr. 3,507 11.9% 7.75 10/28/09 17,093 43,317
</TABLE>
---------------
(1) All are currently vested, non-qualified stock options.
The following table indicates the total number of exercisable and
unexercisable stock options held by each Named Executive Officer on March 31,
2000, the last day of the fiscal year. No executive officer exercised stock
options in the last fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alvaro Cadena -0- -0- 20,515/-0- -0-/-0-
J. Ronald Hansen -0- -0- 10,707/-0- -0-/-0-
Robert C. Moscicki -0- -0- 8,370/-0- -0-/-0-
Stephen P. Northrup -0- -0- 10,707/-0- -0-/-0-
William A. Smith, Jr. -0- -0- 12,707/-0- -0-/-0-
</TABLE>
---------------
(1) Based on the closing price of Graham common stock on March 31, 2000, which
was $7.00.
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 U.S. Retirement Plan
takes income into account for future benefits on a calendar year basis. The
portion of FY 1999-00 compensation that is taken into account by the U.S.
Retirement Plan for the purpose of calculating future pension benefits is as
follows: for Mr. Cadena, $160,000; for Mr. Hansen, $134,451; for Mr. Smith,
$126,922; for Mr. Moscicki, $126,235; for Mr. Northrup, $126,235.
9
<PAGE> 12
The approximate years of creditable service as of June 16, 2000 of each of
the individuals named in the Summary Compensation Table who is eligible to
participate in the U.S. Retirement Plan are: Mr. Cadena, 31 years; Mr. Hansen, 7
years; Mr. Smith, 7 years; Mr. Moscicki, 42 years; and Mr. Northrup, 26 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 whose
non-contingent compensation exceeded $160,000 in 1999, or will exceed $170,000
in 2000, are eligible to participate in the Supplemental Plan. Currently Mr.
Cadena is the only eligible participant. The Supplemental Plan takes income into
account for future benefits on a calendar year basis. The amount of 1999
compensation taken into account by the Supplemental Plan for the purpose of
calculating future benefits for Mr. Cadena was $55,010.
The Pension Table sets forth straight life annuity amounts without regard
to reduction for Social Security benefits; benefits listed in the Table are
subject to a deduction of 50% of the eligible employee's estimated primary
Social Security benefit.
PENSION TABLE
--------------------------------------------------------------------------------
YEARS OF SERVICE
<TABLE>
<CAPTION>
REMUNERATION($) 15 20 25 30/35
-----------------------------------------------------------
<S> <C> <C> <C> <C>
100,000 25,000 33,333 41,670 50,000
125,000 31,250 41,662 52,088 62,500
150,000 37,500 49,995 62,505 75,000
160,000 40,000 53,333 66,667 80,000
175,000(1) 43,750 58,328 72,922 87,500
260,000(1) 65,000 86,667 108,334 130,000
</TABLE>
---------------
(1) For the U.S. Retirement Plan, with respect to 1999, $160,000 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
1999, only non-contingent compensation over $160,000 was used as the basis
for determining benefits.
EMPLOYMENT CONTRACTS
The Named Executive Officers each have employment contracts with Graham for
one 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.
SENIOR EXECUTIVE SEVERANCE AGREEMENTS
Graham has entered into Senior Executive Severance Agreements with certain
of its officers. 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 ended March 31, 2000 were Directors Berkeley, Bidlack, Hill, Lemcke 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.
10
<PAGE> 13
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.
For Fiscal Year 2000 -- 2001 the Committee increased the non-contingent
salaries of Graham's Chief Executive Officer and of its other executive officers
by 3%, as part of a general increase for all employees at the same percentage.
Traditionally, Graham's non-contingent salaries for the CEO and executive
officers have been set below the mid-range of competitive levels. Such
compensation for the CEO and executive officers remains 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 during the past fiscal year
relied in part on guidance from a 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.
In its decision to make no increase in CEO or other executive
non-contingent salary beyond the general increase for all employees, the
Committee considered principally the desirability of the Company refraining from
avoidable increases in costs during the current difficult market conditions.
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 Corporation 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.
Stock options were granted to the CEO and other executive officers in
October 1999. No stock appreciation rights or other forms of equity compensation
were granted. These stock option grants were made pursuant to the 1989 Stock
Option and Appreciation Rights Plan of Graham Corporation for the purpose of
further increasing incentives for the Company's officers to increase shareholder
value.
This report is furnished by the members of Graham's Compensation Committee:
H. Russel Lemcke, Chairman
Helen H. Berkeley
Jerald D. Bidlack
Philip S. Hill
Cornelius S. Van Rees
11
<PAGE> 14
PROPOSAL TWO
APPROVAL OF THE LONG-TERM STOCK OWNERSHIP PLAN
OF GRAHAM CORPORATION
The Board of Directors of Graham has adopted the Long-Term Stock Ownership
Plan of Graham Corporation ("Stock Ownership Plan") subject to approval by the
stockholders of Graham. The Stock Ownership Plan will not take effect, and no
transactions under the Stock Ownership Plan will be effective, unless such
approval is obtained. The principal provisions of the Stock Ownership Plan are
summarized below. The full text of the Stock Ownership Plan is set forth as
Appendix A to this Proxy Statement, to which reference is made, and the summary
provided below is qualified in its entirety by such reference.
The affirmative vote of a majority of the votes eligible to be cast by the
holders of shares of Graham common stock present, in person or by proxy, and
entitled to vote at the Annual Meeting is required to approve the Stock
Ownership Plan.
Such vote is necessary under the rules of the American Stock Exchange to
preserve Graham's eligibility to list its common stock for trading on such
exchange. If the vote is not obtained, the Plan will be rescinded.
PURPOSE OF THE PLAN
The purpose of the Stock Ownership Plan is to promote the growth and
profitability of Graham Corporation and to provide certain officers and
directors of Graham Corporation with an incentive to achieve corporate
objectives, to attract and retain certain officers and directors of outstanding
competence and to encourage such officers and directors to increase their equity
interest in Graham Corporation.
DESCRIPTION OF THE PLAN
As provided by the terms of the Stock Ownership Plan, 160,000 shares of
Graham common stock (equal to approximately 10% of the total number of
outstanding shares of Graham common stock) may be purchased under the Stock
Ownership Plan by Eligible Individuals (as hereinafter defined). The fair market
value of the total number of shares reserved under the plan is $1,280,000, based
on the closing price of the Company's common stock on June 16, 2000, which was
$8.00 per share. Persons eligible to participate include the officers and non-
employee directors of Graham and its wholly-owned subsidiaries (the "Eligible
Individuals"). The Stock Ownership Plan will be administered by the Compensation
Committee of the Board of Directors (the "Committee"). There are 14 Eligible
Individuals, which includes 5 non-employee directors.
The Committee may conduct an Offering to Eligible Individuals at any time
and from time to time, specifying the applicable Offering Period, the type and
character of the Shares being offered for purchase during the Offering Period,
the maximum number of Shares available for purchase during the Offering Period
by the Eligible Individual, the unit purchase price for such Shares, any minimum
number of Shares that must be purchased as a condition of participation in the
Offering and the terms and conditions of payment, and such other information as
the Committee may determine. Acceptance shall, upon expiration of the Offering
Period, be deemed an irrevocable commitment to purchase, and to pay for, the
Shares purchased. The Committee may determine the number and type of Shares to
be offered to each Eligible Individual, the purchase price (if any) therefor,
the method of payment of the purchase price (including any financing to be
offered by the Company) and the other terms and conditions thereof, which may,
but need not be, uniform as to all Offerings or as to all Eligible Individuals
within the same Offering. From and after the date on which Shares are
transferred to an Eligible Individual on the stock transfer records of the
Company, such Eligible Individual shall have the same dividend, voting and other
rights with the respect to such Shares as are accorded to other owners of Shares
who are similarly situated.
The Board of Directors may amend or terminate the Stock Ownership Plan at
any time; provided, however, that in the event that any provision of the Plan is
in any way inconsistent with any provision of the documents and instruments
governing the Offering and Acceptance or Failure to Accept Shares under the
Plan, such documents and instruments governing the Offering and Acceptance or
Failure to Accept Shares under the Plan shall take precedence.
12
<PAGE> 15
NEW PLAN BENEFITS
LONG-TERM STOCK OWNERSHIP PLAN OF GRAHAM CORPORATION
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DOLLAR NUMBER OF SHARES
NAME/POSITION VALUE ($)(1) PURCHASED
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alvaro Cadena -- 25,000
President & Chief Executive Officer
Director/Nominee
J. Ronald Hansen -- 16,000
Vice President--Finance & Administration
and Chief Financial Officer
Stephen P. Northrup -- 16,000
Vice President--Engineering
William A. Smith, Jr. 16,000
Vice President and General Counsel
All Executive Officers as a Group -- 89,000
(6 persons)
All Non-Executive Officers as a Group -- -0-
(none)
H. Russel Lemcke -- 8,000
Director/Nominee
Helen H. Berkeley -- -0-
Director/Nominee
All Non-Employee Directors as a Group -- 28,800
(4 persons)
</TABLE>
---------------
(1) All shares purchased on April 4, 2000 were acquired at a price equal to the
fair market value of the Company's Common Stock on the date of grant.
Shares were purchased by certain eligible participants on April 4, 2000.
These purchases are subject to approval of the Stock Ownership Plan by the
Company's stockholders. All such purchases were at a price of $7.25 per share,
which was the purchase price stated by the Board and the Committee in making the
offering and which was the closing market price of the Company's Common Stock on
April 4, 2000. Each such purchase was made pursuant to a Subscription Agreement.
The Subscription Agreement, uniform for all Participants except with regard to
the number of shares subscribed for and, therefore, the aggregate purchase
price, provides that each Participant has paid adequate consideration for the
shares of Common Stock under the Plan ("Shares") in the form of cash, equal to
the par value of the Shares, with a note representing the balance due on the
Shares ("Notes"). The Subscription Agreement also states that eighteen (18)
months after purchase of the Shares, a Participant is entitled to sell 50% of
his Shares and that the Participant agrees to hold the remainder of the Shares
until such time as he terminates employment with the Company and/or is no longer
a member of the Board. The Note provides that a Participant will pay off the
balance of the Note in thirty-two (32) equal consecutive quarterly installments
beginning at the end of the quarter two years from the date of issuance, or June
30, 2002. The interest on the Note will be imputed at the applicable federal
rate established by the Internal Revenue Service. Shares will remain in the
custody of the Company until the note is paid in full, unless the Participant
sells his Shares (when and to the extent permitted). The Note provides that
until the Note is paid in full, any Shares sold will be sold through a broker
who will forward any proceeds, less expenses, to the Company to pay off all or a
portion of the Note. The Note also contains provisions which grant a security
interest to the Company in the Shares and any proceeds from the sale of the
Shares. If a Participant ceases to be an officer or director any time after
eighteen (18) months after purchase, the Participant may sell all or a portion
of his Shares. However, because the Subscription Agreement states that no
Participant may sell any Shares prior to eighteen (18) months after purchase, if
a Participant ceases to be an officer or director prior to eighteen (18) months
after purchase, such Participant has the discretion to retain or sell all or a
portion of his Shares only if the Company waives its rights under that provision
in the Subscription Agreement.
The granting of rights to purchase Shares under the Plan has no tax
consequences for the Eligible Individual or the Company. To the extent that the
purchase price for Shares acquired under the Plan is not less than the fair
market value of the Shares on the acquisition date, there are also no tax
consequences for the Eligible Individual or the Company associated with the
acquisition. Upon acquisition, the Eligible Individual acquires a capital asset
with a cost basis equal to the acquisition price and, upon disposition, any gain
or loss relative to the cost basis will be treated as long term or short term
capital gain to the Eligible Individual, depending on the length of time that
13
<PAGE> 16
has elapsed between the date and the date of disposition. The Company will not
be eligible for any tax deduction in respect of the offering or sale of Shares
pursuant to the Plan under these circumstances. To the extent that the purchase
price for Shares acquired under the Plan is less than the fair market value of
the Shares on the acquisition date, the Eligible Individual will recognize
ordinary income, and the Company may be eligible for a federal tax deduction,
equal to the excess of the fair market value of the Shares acquired over the
acquisition price. Upon acquisition, the Eligible Individual acquires a capital
asset with a cost basis equal to the acquisition price plus the amount included
in ordinary income at acquisition and, upon disposition, any gain or loss
relative to the cost basis will be treated as long term or short term capital
gain to the Eligible Individual, depending on the length of time that has
elapsed between the date and the date of disposition. The Company will not be
eligible for any tax deduction in respect of the disposition of Shares under
these circumstances. Each Eligible Individual may be required to include in his
ordinary income, and the Company may be eligible for a federal tax deduction in
relation to, amounts of imputed interest on Notes.
THE BOARD BELIEVES THAT APPROVAL OF THE LONG-TERM STOCK OWNERSHIP PLAN IS
IN THE BEST INTERESTS OF GRAHAM AND ITS STOCKHOLDERS AND RECOMMENDS THAT
STOCKHOLDERS VOTE FOR APPROVAL OF THE LONG-TERM STOCK OWNERSHIP PLAN. PROXIES
SOLICITED WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY A CONTRARY CHOICE OR
ABSTAIN.
14
<PAGE> 17
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 March 31, 1995 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>
<S> <C> <C>
Graham Corporation Peer Group
31-March-95 100.00 100.00
31-March-96 142.50 132.35
31-March-97 210.00 116.01
31-March-98 244.69 165.95
31-March-99 120.00 84.04
31-March-00 105.00 72.00
<S> <C>
Amex Market Value Index
31-March-95 100.00
31-March-96 122.90
31-March-97 120.51
31-March-98 168.00
31-March-99 166.70
31-March-00 239.60
</TABLE>
---------------
(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, Flowserve Corp.
(formerly Duriron Co., Inc.), Paul Mueller Co., and Selas Corp. of America.
15
<PAGE> 18
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 fiscal year
ending March 31, 2001. 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
FOR NEXT YEAR'S ANNUAL MEETING
Any stockholder wishing to have a proposal considered for inclusion in next
year's Proxy Statement should send such proposal in writing to the Secretary of
Graham at 20 Florence Avenue, Batavia, New York 14020 on or before March 2,
2001. Any such proposal must comply with Rule 14a-8 promulgated by the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended. Any stockholder who intends to propose any other matter to be
acted upon at the 2001 Annual Meeting of Shareholders must inform the Company no
later than May 26, 2001. If notice is not provided by that date, the persons
named on the Company's Proxy for the 2001 Annual Meeting will be allowed to
exercise their discretion to vote upon any such proposal without the matter
having been discussed in the Proxy Statement for the 2001 Annual Meeting.
ANNUAL REPORT
A copy of the Annual Report of Graham containing financial statements for
the fiscal year ended March 31, 2000, 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
/s/ ALVARO CADENA
ALVARO CADENA
President & Chief Executive Officer
16
<PAGE> 19
APPENDIX A
LONG-TERM STOCK OWNERSHIP PLAN
OF
GRAHAM CORPORATION
------------------------
Effective as of April 1, 2000
<PAGE> 20
LONG-TERM STOCK OWNERSHIP PLAN
OF GRAHAM CORPORATION
<TABLE>
<S> <C> <C>
ARTICLE I
PURPOSE
SECTION 1.1 GENERAL PURPOSE OF THE PLAN................................. A-1
ARTICLE II
DEFINITIONS
SECTION 2.1 BOARD....................................................... A-1
SECTION 2.2 CODE........................................................ A-1
SECTION 2.3 COMPANY..................................................... A-1
SECTION 2.4 EFFECTIVE DATE.............................................. A-1
SECTION 2.5 ELIGIBLE INDIVIDUAL......................................... A-1
SECTION 2.6 EMPLOYER.................................................... A-1
SECTION 2.7 OFFERING.................................................... A-1
SECTION 2.8 OFFERING PERIOD............................................. A-1
SECTION 2.9 PLAN........................................................ A-1
SECTION 2.10 PLAN ADMINISTRATOR.......................................... A-1
SECTION 2.11 SHARES...................................................... A-1
ARTICLE III
ADMINISTRATION
SECTION 3.1 PLAN ADMINISTRATOR'S POWERS AND RESPONSIBILITIES............ A-1
SECTION 3.2 PROTECTION OF PLAN ADMINISTRATOR............................ A-2
ARTICLE IV
OFFERINGS
SECTION 4.1 AVAILABLE SHARES............................................ A-2
SECTION 4.2 TERMS OF OFFERING........................................... A-2
SECTION 4.3 ACCEPTANCE.................................................. A-2
SECTION 4.4 FAILURE TO ACCEPT........................................... A-2
SECTION 4.5 REVOCABILITY................................................ A-3
ARTICLE V
AMENDMENT AND TERMINATION
SECTION 5.1 TERMINATION................................................. A-3
SECTION 5.2 AMENDMENT................................................... A-3
SECTION 5.3 ADJUSTMENTS IN THE EVENT OF A BUSINESS REORGANIZATION....... A-3
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 STATUS AS AN EMPLOYEE BENEFIT PLAN.......................... A-3
SECTION 6.2 NO RIGHT TO CONTINUED EMPLOYMENT............................ A-4
SECTION 6.3 CONSTRUCTION OF LANGUAGE.................................... A-4
SECTION 6.4 GOVERNING LAW............................................... A-4
SECTION 6.5 HEADINGS.................................................... A-4
SECTION 6.6 NON-ALIENATION OF BENEFITS.................................. A-4
SECTION 6.7 NOTICES..................................................... A-4
SECTION 6.8 SHAREHOLDER APPROVAL........................................ A-4
</TABLE>
<PAGE> 21
LONG-TERM STOCK OWNERSHIP PLAN
OF GRAHAM CORPORATION
ARTICLE I
PURPOSE
SECTION 1.1 GENERAL PURPOSE OF THE PLAN.
The purpose of the Plan is to promote the growth and profitability of
Graham Corporation and to provide certain officers and directors of Graham
Corporation with an incentive to achieve corporate objectives, to attract and
retain certain officers and directors of outstanding competence and to provide
such officers and directors with an equity interest in Graham Corporation.
ARTICLE II
DEFINITIONS
The following definitions shall apply for the purposes of this Plan, unless
a different meaning is plainly indicated by the context:
SECTION 2.1 BOARD means the Board of Directors of Graham Corporation.
SECTION 2.2 CODE means the Internal Revenue Code of 1986 (including the
corresponding provisions of any succeeding law).
SECTION 2.3 COMPANY means Graham Corporation, a Delaware corporation.
SECTION 2.4 EFFECTIVE DATE means April 1, 2000, subject to the approval of
the shareholders of the Company.
SECTION 2.5 ELIGIBLE INDIVIDUAL means on any date any person who is an
officer or director of the Company and has provided services to the Employer in
such capacity for a period of not less than 90 days ending on such date.
SECTION 2.6 EMPLOYER means Graham Corporation, a Delaware Corporation.
SECTION 2.7 OFFERING means an offering of Shares to Eligible Individuals
under this Plan.
SECTION 2.8 OFFERING PERIOD means, with respect to an Offering, the period
during which Eligible Individuals may decide whether to acquire Shares offered
during the Offering.
SECTION 2.9 PLAN means the Long-Term Stock Ownership Plan of Graham
Corporation, as amended from time to time.
SECTION 2.10 PLAN ADMINISTRATOR means Graham Corporation or any person or
entity designated by Graham Corporation to perform the functions assigned the
responsibilities of that office under the Plan.
SECTION 2.11 SHARES means shares of common stock, par value $.10, of Graham
Corporation.
ARTICLE III
ADMINISTRATION
SECTION 3.1 PLAN ADMINISTRATOR'S POWERS AND RESPONSIBILITIES.
Subject to the terms and conditions of the Plan and (to the extent that
Graham Corporation is not serving as the Plan Administrator) such limitations as
may be imposed by the Board, the Plan Administrator shall be responsible for the
overall management and administration of the Plan and shall have such authority
as shall be necessary or appropriate in order to carry out its responsibilities,
including, without limitation, the authority:
(a) to interpret and construe the Plan, and to determine all questions
that may arise under the Plan as to eligibility for participation in the
Plan;
(b) to determine the frequency, timing and duration of Offerings and
Offering Period and the type and number of Shares to be offered;
(c) to determine the number and type of Shares to be offered to each
Eligible Individual, the purchase price (if any) therefor, the method of
payment of the purchase price (including any financing to be offered by
A-1
<PAGE> 22
the Company) and the other terms and conditions thereof, which may, but
need not be uniform as to all Offerings or as to all Eligible Individuals
within the same Offering; and
(d) to adopt rules and regulations and to prescribe forms for the
operation and administration of the Plan; and
(e) to take any other action not inconsistent with the provisions of
the Plan that it may deem necessary or appropriate to carry out the
purposes of the Plan.
All actions of the Plan Administrator taken or omitted to be taken pursuant to
authority granted under this Plan shall be conclusive and binding on all parties
in the absence of a final determination by the highest court of competent
jurisdiction, from which no appeal may be taken, that in acting or omitting to
act the Plan Administrator has been arbitrary and capricious.
SECTION 3.2 PROTECTION OF PLAN ADMINISTRATOR.
The Employer, to the extent it is not serving as Plan Administrator and to
the maximum extent permitted under applicable law, shall protect and indemnify
the Plan Administrator against, and hold him, if a person, or its members, if
the Board of Directors of the Company or a Committee of the Board serves as Plan
Administrator, harmless from, any cost, expense or liability (including but not
limited to reasonable attorneys' fees) which he may incur or to which he may be
exposed as a consequence of his service as Plan Administrator.
ARTICLE IV
OFFERINGS
SECTION 4.1 AVAILABLE SHARES.
The maximum number of Shares which may be sold pursuant to the Plan shall
be 160,000 (subject to adjustment as provided in section 5.3). In the event that
any Shares sold pursuant to the Plan shall be repurchased by or otherwise
returned to the Company, such shall again be available for sale pursuant to the
Plan.
SECTION 4.2 TERMS OF OFFERING.
At any time and from time to time, the Plan Administrator may conduct an
Offering to Eligible Individuals. An Offering shall be made by notice to each
Eligible Individual, in such form and manner as the Plan Administrator shall
prescribe, which notice shall specify the applicable Offering Period, the type
and character of the Shares being offered for purchase during the Offering
Period, the maximum number of Shares available for purchase during the Offering
Period by the Eligible Individual, the unit purchase price for such Shares, any
minimum number of Shares that must be purchased as a condition of participation
in the Offering and the terms and conditions of payment, and such other
information as the Plan Administrator may determine.
SECTION 4.3 ACCEPTANCE.
(a) An Eligible Individual who wishes to purchase Shares in an Offering
shall give notice of such acceptance upon or prior to the expiration of the
applicable Offering Period in such form and manner as the Plan Administrator
shall prescribe and such acceptance shall, upon the expiration of the Offering
Period, be deemed an irrevocable commitment to purchase, and to pay for, the
Shares purchased, pursuant to such acceptance. A notice of acceptance shall not
be deemed given until actually received by the Plan Administrator.
(b) As soon as practicable after the close of an Offering Period, the
Committee shall take such action as is necessary to cause the issuance of a
stock certificate evidencing each Eligible Individual's ownership of Shares
purchased by him in the Offering in accordance with the terms of the Offering.
No such Eligible Individual shall have any right to vote or to receive
dividends, nor have any other rights with respect to the Shares, prior to the
date as of which such Shares are transferred to him on the stock transfer
records of the Company, and no adjustments shall be made for any dividends or
other rights for which the record date is prior to the date as of which such
transfer is effected, except as may be required under section 5.3. From and
after the date as of which such Shares are transferred to him on the stock
transfer records of the Company, the Eligible Individual shall have the same
dividend, voting and other rights with the respect to such Shares as are
accorded to other owners of Shares who are similarly situated.
SECTION 4.4 FAILURE TO ACCEPT.
An Eligible Individual who fails for any reason to accept, in whole or in
part, an offer to purchase Shares offered to him in an Offering (whether by
affirmative declination, failure to provide notice of acceptance, the
A-2
<PAGE> 23
giving of a defective notice, or the giving of a notice of acceptance with
respect to less than the maximum amount of Shares offered) shall, upon the
expiration of the relevant Offering Period, forfeit his right and opportunity to
purchase any and all Shares as to which a proper notice of acceptance has not be
given.
SECTION 4.5 REVOCABILITY.
An Offering of Shares under the Plan, and any acceptance given with respect
thereto, shall remain revocable for any reason or no reason at all times during
the applicable Offering Period and shall be irrevocable upon the expiration of
the Offering Period. If, by virtue or termination of employment or service, a
person who was an Eligible Individual at the commencement of an Offering Period
is not an Eligible Individual at the expiration of the Offering Period, the
Offering made to such person and any acceptance thereof shall be deemed to have
been revoked unless the Administrator and such person mutually agree otherwise.
ARTICLE V
AMENDMENT AND TERMINATION
SECTION 5.1 TERMINATION.
The Board may suspend or terminate the Plan in whole or in part at any time
by giving written notice of such suspension or termination to the Plan
Administrator.
SECTION 5.2 AMENDMENT.
The Board may amend or revise the Plan in whole or in part at any time. In
the event that any provision of the Plan is in any way inconsistent with any
provision of the documents and instruments governing the Offering and Acceptance
or Failure to Accept Shares under the Plan, such documents and instruments
governing the Offering and Acceptance or Failure to Accept Shares under the Plan
shall take precedence.
SECTION 5.3 ADJUSTMENTS IN THE EVENT OF A BUSINESS REORGANIZATION.
(a) In the event of any merger, consolidation, or other business
reorganization in which the Company is the surviving entity, and in the event of
any stock split, stock dividend or other event generally affecting the number of
Shares held by each person who is then a holder of record of Shares, the number
of Shares available for sale under the Plan and the number of Shares offered for
purchase to each Eligible Individual during a pending Offering shall be adjusted
to account for such event. Such adjustment shall be effected by multiplying such
number of Shares by an amount equal to the number of Shares that would be owned
after such event by a person who, immediately prior to such event, was the
holder of record of one Share, and the purchase price of the Shares shall be
adjusted by dividing the Exercise Price by such number of Shares; provided,
however, that the Plan Administrator may, in its discretion, establish another
appropriate method of adjustment.
(b) In the event of any merger, consolidation, or other business
reorganization in which the Company is not the surviving entity, any Offering
for which the Offering Period has not expired may be revoked without the sale of
any Shares and without any liability to any Eligible Individual. In the absence
of revocation, the Plan Administrator may, at any time during the Offering
Period but prior to the consummation of such merger, consolidation or other
business reorganization, direct that all, but not less than all Shares offered
for purchase, be converted into rights to purchase at the same consideration per
Share being offered to holders of Shares in such merger, consolidation or other
business reorganization.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 STATUS AS AN EMPLOYEE BENEFIT PLAN.
This Plan is not intended to satisfy the requirements for qualification
under section 401(a) of the Code or to satisfy the definitional requirements for
an "employee benefit plan" under section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended. It is intended to be a non-qualified incentive
compensation program that is exempt from the regulatory requirements of the
Employee Retirement Income Security Act of 1974, as amended. The Plan shall be
construed and administered so as to effectuate this intent.
A-3
<PAGE> 24
SECTION 6.2 NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the establishment of the Plan nor any provisions of the Plan nor
any action of the Board or the Plan Administrator with respect to the Plan shall
be held or construed to confer upon any Eligible Individual any right to
continue in the service of the Employer. The Employer reserves the right to
dismiss, discharge or remove any Eligible Individual or otherwise deal with any
Eligible Individual to the same extent as though the Plan had not been adopted.
SECTION 6.3 CONSTRUCTION OF LANGUAGE.
Whenever appropriate in the Plan, words used in the singular may be read in
the plural, words used in the plural may be read in the singular, and words
importing the masculine gender may be read as referring equally to the feminine
or the neuter. Any reference to an Article or section number shall refer to an
Article or section of this Plan unless otherwise indicated.
SECTION 6.4 GOVERNING LAW.
The Plan shall be construed and enforced in accordance with the laws of the
State of New York applicable to contracts entered into between parties who are
citizens and residents of the State of New York and performed wholly within the
State of New York.
SECTION 6.5 HEADINGS.
The headings of Articles and sections are included solely for convenience
of reference. If there is any conflict between such headings and the text of the
Plan, the text shall control.
SECTION 6.6 NON-ALIENATION OF BENEFITS.
The right to receive a benefit under the Plan shall not be subject in any
manner to anticipation, alienation or assignment, nor shall such right be liable
for or subject to debts, contracts, liabilities, engagements or torts.
SECTION 6.7 NOTICES.
Except as expressly provided to the contrary herein, any communication
required or permitted to be given under the Plan, including any notice,
direction, designation, comment, instruction, objection or waiver, shall be in
writing and shall be deemed to have been given at such time as it is personally
delivered or 5 days after mailing if mailed, postage prepaid, by registered or
certified mail, return receipt requested, addressed to such party at the address
listed below, or at such other address as one such party may by written notice
specify to the other:
(a) If to the Plan Administrator, in care of Graham Corporation at its
principal place of business in the United States, to the attention of its
Corporate Secretary.
(b) If to an Eligible Individual, to the Eligible Individual's address
as shown in the Employer's records.
SECTION 6.8 SHAREHOLDER APPROVAL.
This Plan shall not be effective unless approved by an affirmative vote of
a majority of the shareholders of the Company represented, in person or by
proxy, at a duly called meeting of shareholders of the Company and voting on a
proposal to approve the Plan.
A-4
<PAGE> 25
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<PAGE> 26
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<PAGE> 27
GRAHAM CORPORATION
20 FLORENCE AVENUE
BATAVIA, NEW YORK 14020
www.grahamcorp.com
<PAGE> 28
Employee Benefits Committee
June 30, 2000
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 2000 Annual Meeting of
Stockholders scheduled to be held on July 27, 2000 ("Annual Meeting").
The ESOP Trust and the ISP Trust provide that in casting their
votes at the 2000 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 June 16, 2000 and the Company Stock Fund of the
ISP ("Company Stock Fund") as of June 16, 2000.
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 the Burke Group, which maintains the records for these plans.
The Instruction Card lets you give instructions for each matter expected to
be presented for stockholder action at the Annual Meeting. The Committee
expects the Burke Group 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 2000 Annual Meeting.
How your voting instructions count 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 June 16, 2000:
(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 June 16, 2000 to
<PAGE> 29
-2-
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 June 16, 2000. If you do not
file the Instruction Card by July 16, 2000, you will be deemed to have
instructed the ESOP Trustee to ABSTAIN as to all proposals.
(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 July 16, 2000, 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 June 16,
2000.
If You Had an Interest in the Company Stock Fund as of June 16,
2000:
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 June 16, 2000. 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 June
16, 2000. For purposes of the ISP, if you do not file the Instruction Card
by July 14, 2000, 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 2000 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 2000 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
<PAGE> 30
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 JULY 27, 2000
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 June 16, 2000 (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 July 27, 2000 at 11:00 a.m., or at any adjournment thereof.
As to the nominee and the proposals listed on the reverse side hereof and
as more particularly described in the Corporation's Proxy Statement dated June
30, 2000, 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 June 30, 2000.
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 the Burke Group
by July 14, 2000.
PLEASE MARK, SIGN AND DATE THIS VOTING INSTRUCTION CARD
ON THE REVERSE SIDE AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 31
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" PROPOSALS 2 AND 3.
<TABLE>
<CAPTION>
<S> <C> <C>
--------------------------- -------------------------- PLEASE MARK YOUR CHOICE LIKE THIS:
ESOP COMMON (as of 6/16/00) ISP COMMON (as of 6/16/00) [X] IN BLUE OR BLACK INK.
</TABLE>
================================================================================
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF NOMINEES AND
"FOR" PROPOSALS 2 AND 3.
================================================================================
1. Election of Directors
FOR A THREE-YEAR TERM FOR WITHHOLD
Helen H. Berkeley [ ] [ ]
Alvaro Cadena [ ] [ ]
FOR A TWO-YEAR TERM
H. Russel Lemcke [ ] [ ]
2. Approval of the Long-Term Stock Ownership Plan of Graham Corporation.
FOR AGAINST ABSTAIN*
[ ] [ ] [ ]
3. Ratification of the appointment of Deloitte & Touche LLP as independent
accountants for the period April 1, 2000, through March 31, 2001.
FOR AGAINST ABSTAIN*
[ ] [ ] [ ]
--------------------------------------------------------------------------------
4. 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 June 30, 2000, 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.
<PAGE> 32
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 JULY 27, 2000
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 June 16, 2000
(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 July 27, 2000 at 11:00 a.m., or at any
adjournment thereof.
As to the nominee and the proposals listed on the reverse side hereof and
as more particularly described in the Corporation's Proxy Statement dated June
30,2000, 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 June 30, 2000.
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 the Burke Group by July 14, 2000.
PLEASE MARK, SIGN AND DATE THIS VOTING INSTRUCTION CARD
ON THE REVERSE SIDE AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 33
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" PROPOSALS 2 AND 3.
--------------------------- PLEASE MARK YOUR CHOICE LIKE THIS:
ESOP COMMON (as of 6/16/00) [X] IN BLUE OR BLACK INK.
================================================================================
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF NOMINEES AND
"FOR" PROPOSALS 2 AND 3.
--------------------------------------------------------------------------------
1. Election of Directors
FOR A THREE-YEAR TERM FOR WITHHOLD
Helen H. Berkeley [ ] [ ]
Alvaro Cadena [ ] [ ]
FOR A TWO-YEAR TERM
H. Russel Lemcke [ ] [ ]
2. Approval of the Long-Term Stock Ownership Plan of Graham Corporation.
FOR AGAINST ABSTAIN*
[ ] [ ] [ ]
3. Ratification of the appointment of Deloitte & Touche LLP as independent
accountants for the period April 1, 2000, through March 31, 2001.
FOR AGAINST ABSTAIN*
[ ] [ ] [ ]
--------------------------------------------------------------------------------
4. 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 June 30, 2000, 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.
<PAGE> 34
PROXY 2000
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, July 27, 2000 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:
1. Election of Directors
FOR WITHHOLD
Helen H. Berkeley [ ] [ ]
to serve until 2003
Alvaro Cadena [ ] [ ]
to serve until 2003
H. Russel Lemcke [ ] [ ]
to serve until 2002
2. Approval of the Long-Term Stock Ownership Plan
of Graham Corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of the appointment of
Deloitte & Touche LLP as independent accountants
for the fiscal year ending March 31, 2001.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. In their discretion, to vote upon all other matters
as may be properly brought before the meeting.
<PAGE> 35
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES, FOR THE APPROVAL OF
THE LONG-TERM STOCK OWNERSHIP PLAN OF GRAHAM CORPORATION AND FOR RATIFICATION OF
THE APPOINTMENT OF INDEPENDENT AUDITORS.
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, FOR THE APPROVAL OF THE
LONG-TERM STOCK OWNERSHIP PLAN OF GRAHAM CORPORATION AND FOR RATIFICATION OF THE
APPOINTMENT OF AUDITORS.
Date: ___________________________ , 2000 ___________________________________
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.
____________________________________
(Signature or Signatures)
[ ] To help our preparation for the meeting, please check here if you plan
to attend.
