<PAGE> 1
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:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
KAYDON CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
KAYDON CORPORATION
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------
Tampa, Florida
March 7, 1995
To Shareholders:
The Annual Meeting of Shareholders of Kaydon Corporation ("Kaydon") will be
held at Tampa Airport Marriott, Tampa International Airport, Tampa, Florida on
Wednesday, April 26, 1995 at 10:00 a.m. for the following purposes:
(1) to elect a Board of Directors;
(2) to transact such other business as may properly come before the
meeting and any adjournment thereof.
Shareholders of record at the close of business on February 27, 1995 are
entitled to notice of and to vote at the meeting.
JOHN F. BROCCI
Vice President Administration
Corporate Secretary
THE BOARD OF DIRECTORS SOLICITS THE EXECUTION AND IMMEDIATE RETURN OF THE
ACCOMPANYING PROXY.
You can help avoid the necessity and expense of sending a follow-up letter by
the prompt completion and return of the enclosed proxy whether or not you expect
to attend the Annual Meeting of Shareholders. For your convenience, there is
enclosed a self-addressed envelope requiring no postage if mailed in the United
States.
<PAGE> 3
KAYDON CORPORATION
ARBOR SHORELINE OFFICE PARK
19345 U.S. 19 NORTH, SUITE 500
CLEARWATER, FLORIDA 34624
---------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 26, 1995
---------------------
PROXY STATEMENT
---------------------
March 7, 1995
INTRODUCTION
The Annual Meeting of Shareholders of Kaydon Corporation ("Kaydon") will be
held on Wednesday, April 26, 1995, at the Tampa Airport Marriott, Tampa
International Airport, Tampa, Florida at 10:00 a.m. for the purposes set forth
in the accompanying notice. This statement is furnished in connection with the
solicitation by Kaydon's Board of Directors of proxies to be voted at such
meeting and at any and all adjournments thereof. Proxies properly executed, duly
returned and not revoked will be voted at the Annual Meeting (including
adjournments) in accordance with the specifications therein.
Participants in the Kaydon Corporation Employee Stock Ownership and Thrift
Plan and the Electro-Tec Corporation Employee Retirement Benefit Plan will
receive separate voting instruction cards covering the shares held for
participants in those Plans. Voting instruction cards must be returned or the
shares will not be voted by the trustee.
If a proxy in the accompanying form is executed and returned, it may
nevertheless be revoked at any time prior to the exercise thereof by executing
and returning a proxy bearing a later date, by giving notice of revocation to
the Secretary of Kaydon, or by attending the Annual Meeting and voting in
person.
At the Annual Meeting, holders of Kaydon's Common Stock shall have one vote
per share.
ELECTION OF DIRECTORS
The persons designated as proxies in the accompanying proxy have been
selected by the Board of Directors of Kaydon and have indicated that they intend
to vote all proxies received by them for the election of each of the following
nominees for the office of director of Kaydon, unless instructed otherwise, each
to serve until the Annual Meeting of Shareholders next succeeding their election
and until their successors have been duly elected and qualified.
The Directors shall be elected by a plurality of votes validly cast in
person or by proxy at any meeting at which a quorum is present. The presence in
person or by proxy of the holders of record of a majority of the shares entitled
to vote at a meeting of stockholders constitutes a quorum. Votes are counted at
the meeting by the Inspector of Elections. Abstentions will be counted as votes
for the election of all nominees as Directors. Broker non-votes will be voted
for the election of all nominees as Directors.
If for any reason any of the following nominees is not a candidate when the
election occurs, which is not anticipated, it is intended that the proxies will
be voted for the election of a substitute nominee if one is designated by the
Board of Directors.
<PAGE> 4
NAME AND AGE OF NOMINEES
Glenn W. Bailey (69)....... Mr. Bailey was the Chairman of the Board of Kaydon
Corporation from its organization in October 1983
until April 1987. He was the Chairman and President
of Bairnco from its organization in January 1981
through May 1990. Mr. Bailey has been Chairman of
Keene Corporation since 1967. He is also on the
Board of Directors of the Genlyte Group Inc.
Gerald J. Breen (49)....... Mr. Breen has been the owner, President and Chief
Executive Officer of Cuyam Corporation since 1986.
From 1983 to 1986, Mr. Breen was the President and
General Manager of Hendrickson International, and
was with Imperial Clevite, Inc. from 1972 to 1983,
his last position being that of Vice President,
Replacement Marketing. He has been a Director of
Kaydon since January 1992.
Lawrence J. Cawley (60).... Mr. Cawley has been Chairman of the Board and Chief
Executive Officer of Kaydon Corporation since
September 1989. From November 1987 to September
1989, he was President and Chief Executive Officer
of Kaydon. He served as Kaydon's President and
Chief Operating Officer from April 1987 to November
1987 and was President of the Bearing Division of
Kaydon from October 1985 to April 1987. Prior to
joining Kaydon, Mr. Cawley was President and
General Manager of Clevite, a division of Imperial
Clevite Corporation.
Stephen K. Clough (41)..... Mr. Clough has been President and Chief Operating
Officer of Kaydon Corporation and a member of
Kaydon's Board of Directors since September 1989.
Prior to that he was Vice President and General
Manager of Kaydon's Bearing Division from April
1987 to October 1989 and was Vice President of
Operations of the Automotive Division of Kaydon
from April 1986 to April 1987. Prior to joining
Kaydon, Mr. Clough was a Plant Manager in the
Engine Parts Division of Imperial Clevite
Corporation.
John H.F. Haskell, Jr.
(62)....................... Mr. Haskell has served as a Managing Director of
Dillon, Read & Co. Inc. since 1975. Mr. Haskell is
a member of the Board of Directors of Dillon, Read
& Co. Inc., and Chairman of the Supervisory Board
of Dillon, Read (France) Gestion, an indirect
subsidiary of Dillon, Read & Co. Inc. located in
France. Mr. Haskell is a Director of The Equitable
Companies Incorporated and The Equitable Life
Assurance Society of the United States. He is also
a member of the Council on Foreign Relations. He
has been a Director of Kaydon since December 1984.
Norton Stevens (64)........ Mr. Stevens is a private investor located in New
York City. From 1958-1985, he was Chairman and CEO
of Norlin Corporation and its predecessor companies
including the Ecuadorian Corporation, Limited in
Ecuador. He is a Director of the Inter-American
Foundation, the International Rescue Committee, and
is a member of The Council on Foreign Relations. He
has been a Director of Kaydon since December 1987.
2
<PAGE> 5
DIRECTOR COMPENSATION AND BOARD COMMITTEES
During 1994, Kaydon's Board of Directors met six times for regular
meetings. Each outside Director received $1,750 for each attendance of the Board
of Directors regular meeting. Each outside Director was paid $12,000 as a
retainer for the year, which amount is paid quarterly. During the year no
options for Kaydon stock were awarded to the outside Directors. Each Director
attended more than 75% of the aggregate of the total meetings of the Board of
Directors, and the total number of meetings held by all committees of the Board
of Directors on which the Directors served.
The Board of Directors has an Audit Committee and a Compensation Committee.
The principal responsibilities of the Audit Committee are to ensure for the
Board of Directors: (a) that generally accepted accounting principles are being
followed; and (b) that the total audit coverage of the Corporation and its
subsidiaries is satisfactory. The Audit Committee provides an open avenue of
communication between management and the external auditors and the Board of
Directors. The Committee reviews the nature of all services performed by the
external auditors, including the scope and extent of their audit, the results of
their audit, and their compensation. The Committee met two times during the
year. The members of the Committee are: John H.F. Haskell, Jr. and Glenn W.
Bailey.
The principal responsibilities of the Compensation Committee are to: (a)
review and advise management on broad compensation policies, incentive programs,
stock option and stock purchase plans, deferred compensation and retirement
plans; (b) approve and recommend to the Board of Directors base salaries, salary
increases and other benefits for elected officers; (c) take certain actions
required or permitted to be taken by the Board of Directors under the stock
option plan and incentive compensation plans of Kaydon; and (d) review
recommendations for major changes in compensation, benefit and retirement plans
which have application to significant numbers of Kaydon's total employees and
which require review or approval of the Board of Directors. The Committee met
three times during the year. The members of the Committee are Norton Stevens and
Gerald J. Breen.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
NUMBER OF SHARES OUTSTANDING, RECORD DATE AND LIST OF SHAREHOLDERS
Only shareholders of record at the close of business on February 27, 1995
are entitled to notice of and to vote at the Annual Meeting. At the close of
business on such date there were 16,674,159 shares of common stock of Kaydon
outstanding. A shareholders list will be available for examination by
shareholders at the Annual Meeting in accordance with Section 219 of the
Delaware Corporation Law.
3
<PAGE> 6
COMMON STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of December 31, 1994,
concerning the only persons known to Kaydon to be the beneficial owners of more
than 5% of Kaydon's issued and outstanding stock:
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS AMOUNT AND NATURE ISSUED AND OUTSTANDING
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) COMMON STOCK
------------------------------------------- -------------------------- ----------------------
<S> <C> <C>
Neuberger and Berman....................... 877,100 5.25%
605 Third Avenue
New York, NY 10158-3698
First Pacific Advisors, Inc................ 1,203,200 7.23%
11400 West Olympic Boulevard
Suite 1200
Los Angeles, CA 90064
</TABLE>
- - ---------------
(1) These shares are owned by various individual and institutional investors for
which Neuberger and Berman and First Pacific Advisors, Inc., respectively,
serve as investment advisors with power to direct investments and/or shared
power to vote the shares. For purposes of the reporting requirements of the
Securities Exchange Act of 1934 Neuberger and Berman and First Pacific
Advisors, Inc., are deemed to be beneficial owners of such shares; however,
each expressly disclaims that they are, in fact, the beneficial owners of
such shares.
The following table presents information regarding beneficial ownership of
Kaydon's common stock by each member of the Board of Directors and other
Executive Officers as of February 27, 1995.
<TABLE>
<CAPTION>
PERCENTAGE OF ISSUED
AMOUNT AND NATURE OF AND OUTSTANDING
BENEFICIAL OWNERSHIP OF COMMON STOCK ON
BOARD OF DIRECTORS COMMON STOCK FEBRUARY 27, 1995
- - ------------------------------------------------------ ------------------------ ---------------------
<S> <C> <C>
Glenn W. Bailey....................................... 591,065(1) 3.55%
230 Park Ave.
New York, NY 10169
Gerald J. Breen....................................... 7,500(2) .05%
5200 Harvard Ave.
Cleveland, OH 44105
Lawrence J. Cawley.................................... 204,013(3) 1.22%
19345 U.S. 19 North, Suite 500
Clearwater, FL 34624
Stephen K. Clough..................................... 116,530(4) .70%
19345 U.S. 19 North, Suite 500
Clearwater, FL 34624
John H.F. Haskell, Jr................................. 23,000(5) .14%
535 Madison Ave., 15th Floor
New York, NY 10022
Norton Stevens........................................ 8,200(6) .05%
866 Third Ave., 26th Floor
New York, NY 10022
<CAPTION>
OTHER EXECUTIVE OFFICERS
- - ------------------------------------------------------
<S> <C> <C>
John F. Brocci........................................ 44,342(7) .27%
19345 U.S. 19 North, Suite 500
Clearwater, FL 34624
All officers and directors as a group, 7 persons...... 994,650 5.97%
</TABLE>
4
<PAGE> 7
- - ---------------
Note: Common Stock amounts represented above have been adjusted to reflect the
stock split of April 30, 1992.
(1) Included in these shares are 10,000 owned by Mrs. Bailey as to which Mr.
Bailey disclaims beneficial ownership and 10,000 shares which are acquirable
under the Stock Option Plans in 1995.
(2) Included in these shares are 7,500 shares which are acquirable under the
Stock Option Plans in 1995.
(3) Included in these shares are 20,000 owned by Mrs. Cawley as to which Mr.
Cawley disclaims beneficial ownership, and 145,950 shares which are
acquirable under the Stock Option Plans in 1995.
(4) Included in these shares are 90,500 shares which are acquirable under the
Stock Option Plans in 1995.
(5) Included in these shares are 10,000 shares which are acquirable under the
Stock Option Plans in 1995.
(6) Included in these shares are 5,000 shares which are acquirable under the
Stock Option Plans in 1995.
(7) Included in these shares are 33,750 shares which are acquirable under the
Stock Option Plans in 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- ----------------------- -------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPEN- STOCK OPTIONS/ PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) SATION ($) AWARDS ($) SARS (#) ($) ($)
(A) (B) (C) (D) (E) (F) (G) (H) (I)
- - ------------------------- ---- -------- -------- ---------- ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence J. Cawley,...... 1994 $300,288 $337,500 0 0 15,000 0 0
Chairman and Chief 1993 $259,519 $176,800 0 0 30,000 0 0
Executive Officer 1992 $235,808 $147,500 0 0 0 0 0
Stephen K. Clough,....... 1994 $223,961 $270,000 0 0 10,000 0 0
President and Chief 1993 $192,615 $130,100 0 0 20,000 0 0
Operating Officer 1992 $177,115 $ 94,400 0 0 0 0 0
John F. Brocci,.......... 1994 $105,961 $ 94,500 0 0 5,000 0 0
Vice President 1993 $ 92,181 $ 46,500 0 0 10,000 0 0
Administration 1992 $ 84,631 $ 33,300 0 0 10,000 0 0
</TABLE>
- - ---------------
Column (C): Includes deferrals into the 401(k) plan.
Column (G): Reflects the number of Non-qualified Stock Options granted and
accounts for the stock split on April 30, 1992. Kaydon does not have
a Stock Appreciation Rights (SAR) Plan.
The Company has not entered into any employment contract with any of the
named Officers or Directors nor does it have any compensatory plan or
arrangement for said Officers or Directors.
REPORT OF THE KAYDON CORPORATION COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors is composed entirely
of independent outside directors. The Committee is responsible for establishing
and administering the Company's Executive Compensation program.
(A) COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company's compensation philosophy is designed to support the overall
objective of creating value for our shareholders through:
- Hiring, developing, rewarding and retaining talented and productive
employees;
5
<PAGE> 8
- Emphasizing pay-for-performance by having a significant portion of
cash compensation for senior executives at-risk through performance bonus
plans based upon financial, operating, strategic and growth objectives; and
- Providing equity-based incentives for selected employees to ensure
they are motivated over the long-term to respond to the Company's business
challenges and opportunities as owners, as well as employees.
(B) THE PROGRAM IN GENERAL
Kaydon Corporation's executive pay program is made up of the following
elements:
- Base Salary
Salaries of officers are listed in the Summary Compensation Table.
Each executive officer's performance and salary is reviewed annually by the
Compensation Committee. The following considerations are used in
determining the appropriate salary level: (a) the individual's sustained
performance and contribution to the company; (b) their experience and job
mastery; (c) their level of responsibility; (d) internal equity; and (e)
external pay practices.
The Base Pay component of annual compensation is based upon
competitive pay practices of other industrial companies of similar size for
persons in comparable positions. The Hewitt Associates Middle Market Index
and other national independent published surveys are used to establish
salary midpoints for comparable positions within Kaydon. Companies
participating in these surveys differ from those companies represented in
the comparator group in the Performance Graph on Page 11 because Kaydon
competes for talent with a broader group of employers than just those in
its industry. For example, of the 129 employers participating in the Middle
Market Survey, only four are also in the comparator group. Salary range
midpoints are generally set at the 50th percentile of the market. An
individual executive's base salary may be above or below the salary
midpoint depending on such variables as the individual's performance and
achievement, their experience and job mastery, time in position and their
contributions. The weight given these factors or other performance
objectives during the annual review in setting each executive officer's
base salary is determined subjectively by the Compensation Committee.
Kaydon believes that maximum performance can be encouraged through the
use of substantial annual incentive programs based upon attaining planned
operating and growth goals, with increased proportional rewards for
exceeding targets. Except for base pay, all other elements of executive
compensation are at risk.
- Annual Incentive Compensation Program
Kaydon believes in results. Its incentive compensation program is
designed to reward results.
Kaydon's Management Incentive Compensation (MIC) Program is a
combination of Management by Objectives (MBO) and profit sharing that
focuses the Corporation and Operating Units on performance objectives
relative to financial, operating and strategic business unit and corporate
growth goals which are considered fundamental to the future success of our
business(es) and which build shareholder value. Officers and certain other
salaried employees are eligible to participate.
Management's performance, and hence its rewards, are measured in such
stockholder terms as Earnings Per Share (EPS), Earnings Before Interest and
Taxes (EBIT), and Return On Capital Employed (ROCE).
At Kaydon's Corporate office, the annual bonus pool for the MIC
program for eligible employees is generated at the rate of $80,000 for each
1% improvement in Kaydon's EPS over the prior year. The non-employee
Directors may add to, or delete from, the formula generated pool up to
$250,000 at their discretion, based upon their subjective evaluation of
non-EPS performance factors. In 1994, Kaydon's
6
<PAGE> 9
EPS improved 16.9%. The non-employee directors neither added to, nor
deleted from, the formula generated pool. The actual award to executive
officers under this program is a function of the number of points each has
been awarded under the program multiplied by the dollar amount produced by
the Earnings Per Share formula described above. The points assigned to
executive officers and the comparison of performance to goals are
determined subjectively for each executive officer by the Compensation
Committee and approved by the Board of Directors.
At the various operating units, the annual bonus pool for the MIC
program for eligible employees is a formula measuring Return On Capital
Employed (ROCE) and Earnings Before Interest and Taxes (EBIT) which have a
minimum threshold achievement requirement of 80% of plan.
Total payout from the Annual Incentive Compensation Program is limited
to no more than 15% of Kaydon's pre-tax earnings.
All awards under this program are subject to review by the
Compensation Committee and approval of the Board of Directors.
- Employee Stock Options
Stock options encourage and reward effective management that results
in long-term corporate financial success as measured by stock price
appreciation. Stock options only have value if the price of Kaydon's stock
appreciates in value from the date the stock options are granted.
Stockholders of Kaydon also benefit from such stock price appreciation.
Kaydon's Employee Stock Option Plan has two components: incentive
stock options and non-qualified stock options. No incentive stock options
have been awarded since 1986. To encourage a longer-term perspective, the
options cannot be exercised immediately. Further, grants have not been made
at an option price less than the market value on the day of the grant.
Stock options may be awarded annually consistent with the Company's
objective to weight total compensation toward long-term equity interest for
managers and executive officers with greater opportunity for reward if
long-term performance is sustained.
The Employee Stock Option Plan is overseen by the Compensation
Committee (which consists of non-employee directors who are disinterested
persons under the Plan). The Plan terms are supplemented by administrative
guidelines and internal policies which govern the day-to-day workings of
the Plan. However, consideration for and/or the granting of any stock
option is within the subjective determination of the Committee. In 1994,
the Committee granted awards totalling 54,000 options based on
considerations such as performance, length of time since last grant, level
of accountability, contribution to the Company's growth, and the options
previously granted to the recipient. The Committee did not attach any
particular weight to any factor and the final grant, if any, was
subjectively determined by the Committee for each executive officer. Each
employee stock option award requires approval by the Compensation Committee
and the Board of Directors.
- CEO Compensation
Lawrence J. Cawley is Chairman and Chief Executive Officer. He has
been Chief Executive Officer since November, 1987.
- Base Salary
Mr. Cawley's base pay range and midpoint is established in the
manner described above.
Mr. Cawley's performance is reviewed annually by the Compensation
Committee. In 1994, Mr. Cawley's base salary was increased based on a
consideration of such measures as: Earnings Growth Rate (increased
12.7%); Return on Stockholders Equity (20%); Return on Total Capital
Employed (18.6%) and Earnings Per Share (increased 16.9%). However, no
specific weighting was attached to any single factor or other
performance objectives, and the final determination was based
7
<PAGE> 10
on the Committee's subjective judgment regarding his overall performance
and that of the Company.
Note: These measures exclude the cumulative effect of the adoption
of Statement of Financial Accounting Standards No. 112.
- Annual Incentive Compensation
Mr. Cawley's annual incentive compensation is determined in the
manner described above (percentage improvement of Earnings Per Share
over the prior year) under the Annual Incentive Compensation Program.
Mr. Cawley's actual award is a function of the number of points he has
been awarded under the program (his points were established in 1987 and
remain unchanged) multiplied by the dollar amount produced by the
program formula. Mr. Cawley's 1994 incentive compensation award was not
adjusted by the Compensation Committee.
- Stock Options
In 1994 Mr. Cawley was granted options for 15,000 shares of Kaydon
stock based on his performance, overall contributions to the Company,
length of time since his last grant and the options previously granted
Mr. Cawley. No particular weight was attached to any single factor and
the final determination was based on the Committee's subjective judgment
regarding Mr. Cawley's performance, overall contributions to the Company
and other factors.
- 162(m) Disclosure
No executive officer is expected to receive compensation which
would be non-deductible under Section 162(m) of the Internal Revenue
Code. Accordingly, the Compensation Committee has not considered any
revisions to its policies and programs in response to this provision.
COMPENSATION COMMITTEE:
Norton Stevens
Gerald J. Breen
8
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer, Director or member of the Compensation Committee of
the Company had any interlocking relationship which would require disclosure in
this Proxy Statement.
OPTION/SAR GRANTS TABLE
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- - ------------------------------------------------------------------------------------------------------------------
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF ALTERNATIVE TO
STOCK PRICE (F) AND (G):
APPRECIATION FOR GRANT DATE
INDIVIDUAL GRANTS OPTION TERM VALUE
- - ---------------------------------------------------------------------------- ---------------- --------------
(A) (B) (C) (D) (E) (F) (G) (H)
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($) VALUE($)
- - -------------------- ------------ ------------ ----------- ---------- ----- ------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lawrence J.
Cawley............ 15,000 28% 23.875 12/20/99 -- -- 8.29
Stephen K. Clough... 10,000 18% 23.875 12/20/99 -- -- 8.29
John F. Brocci...... 5,000 9% 23.875 12/20/99 -- -- 8.29
</TABLE>
- - ---------------
Note (1): In accordance with Securities and Exchange Commission rules, the
Black-Scholes option pricing model was chosen to estimate the grant
date present value of the options set forth in this table. The
Company's use of this model should not be construed as an endorsement
of its accuracy at valuing options. All stock option models require a
prediction about the future movement of the stock price.
The following assumptions were made for purposes of calculating Grant
Date Present Value:
(a) An option term of five (5) years which is the life of the grant.
(b) Expected volatility which is calculated using the daily closing
price of the stock for the six (6) months immediately preceding
the option grant.
(c) Dividend yield at $.44 per share which is the annualized dividend
paid to shareholders on the date of the grant.
(d) The risk-free rate of return is the average monthly U.S. Treasury
note with a maturity date corresponding to the option term (i.e.,
5 years).
(e) No adjustments for non-transferability or risk of forfeiture.
Note (2): The material terms of the option are as follows: 25% of the option is
exercisable one year from the date of the grant and an additional 25%
is exercisable each of the following three years. The right to
purchase is cumulative. Exercisability may be accelerated upon death,
disability, retirement, certain mergers or other corporate events, or
a change in control of Kaydon. The option price may be paid in stock
or cash, but income taxes must be paid in cash.
Note (3): Column (B) and (C) -- Kaydon does not have a Stock Appreciation Rights
(SAR) Plan.
Note (4): (a) Mr. Cawley received a single option grant of 15,000 shares for the
last fiscal year.
(b) Mr. Clough received a single option grant of 10,000 shares for the
last fiscal year.
(c) Mr. Brocci received a single option grant of 5,000 shares for the
last fiscal year.
9
<PAGE> 12
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION/SAR VALUE
- - --------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E)
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END (#) AT FY-END ($)
ACQUIRED ON VALUE ------------- -------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- - --------------------------------------------- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Lawrence J. Cawley........................... 10,000 62,500 (E) 110,400 565,913
(U) 61,800 159,263
Stephen K. Clough............................ 10,000 51,250 (E) 68,500 353,688
(U) 39,500 98,312
John F. Brocci............................... 2,500 14,062 (E) 27,500 108,750
(U) 17,500 16,250
</TABLE>
- - ---------------
Note: All values reflect two-for-one stock split on April 30, 1992. Kaydon stock
closed at $24.00 on 12/31/94.
LONG-TERM INCENTIVE PLAN AWARDS TABLE
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
- - --------------------------------------------------------------------------------------------------------------
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE BASED PLANS
--------------------------------
(A) (B) (C) (D) (E) (F)
NUMBER OF PERFORMANCE OR
SHARES, UNITS OTHER PERIOD UNTIL
OR OTHER RIGHTS MATURATION OR THRESHOLD TARGET ($ MAXIMUM
NAME (#) PAYOUT ($ OR #) OR #) ($ OR #)
- - --------------------------------------- --------------- ------------------ ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Lawrence J. Cawley..................... 0 0 0 0 0
Stephen K. Clough...................... 0 0 0 0 0
John F. Brocci......................... 0 0 0 0 0
</TABLE>
10
<PAGE> 13
COMPARATIVE FIVE-YEAR TOTAL RETURNS*
KAYDON CORPORATION, S&P 500 AND MACHINERY INDUSTRY
(PERFORMANCE RESULTS THROUGH 12/31/94)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD MACHINERY
(FISCAL YEAR COVERED) KAYDON S&P 500 INDEX
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 108.45 96.83 95.43
1991 142.97 126.41 122.73
1992 153.92 136.36 138.32
1993 138.08 150.00 182.58
1994 162.58 151.98 175.52
</TABLE>
- Assumes $100 Invested in Common Stock at the close of trading in
December, 1989.
- Total Return Assumes Reinvestment of Dividends.
- Based Upon Fiscal Year Ending December 31, 1994.
- Industry Index Based On Value Line Machinery Industry Index.
Source: Value Line, Inc.
11
<PAGE> 14
PENSION PLAN TABLE
The following table presents information regarding estimated annual
benefits payable as a straight life annuity upon retirement to persons in
specified remuneration and years of service classifications, under the present
plan formula. The benefits include the benefits payable under the Kaydon
Corporation Retirement Plan and benefits provided under the Supplemental
Executive Retirement Plan ("SERP").
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE AT RETIREMENT
AVERAGE ---------------------------------------------------------------
PAY 5 10 15 20 25 30 OR MORE
- - ------------------------------------- ------- ------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000............................. $ 3,245 $ 6,490 $ 9,735 $ 12,980 $ 16,225 $ 19,470
75,000............................. 5,220 10,440 15,660 20,880 26,100 31,430
100,000............................. 7,195 14,390 21,585 28,780 35,975 43,170
125,000............................. 9,170 18,340 27,510 36,680 45,850 55,020
150,000............................. 11,145 22,290 33,435 44,580 55,725 66,870
175,000............................. 13,120 26,240 39,360 52,480 65,600 78,720
200,000............................. 15,095 30,190 45,285 60,380 75,475 90,570
225,000............................. 17,070 34,140 51,210 68,280 85,350 102,420
250,000............................. 19,045 38,090 57,135 76,180 95,225 114,270
275,000............................. 21,020 42,040 63,060 84,080 105,100 126,120
300,000............................. 22,995 45,990 68,985 91,980 114,975 137,970
325,000............................. 24,970 49,940 74,910 99,880 124,850 149,820
350,000............................. 26,945 53,890 80,835 107,780 134,725 161,670
375,000............................. 28,920 57,840 86,760 115,680 144,600 173,520
400,000............................. 30,895 61,790 92,685 123,580 154,475 185,370
425,000............................. 32,870 65,740 98,610 131,480 164,350 197,220
450,000............................. 34,845 69,690 104,535 139,380 174,225 209,070
</TABLE>
The benefit illustrated above is calculated based on the following formula:
1.00% of final average pay plus .58% of final average pay in excess of covered
compensation times years of service to a maximum of 30 years.
Final average compensation is the average compensation for the three
highest consecutive calendar years during the ten most recent calendar years.
Remuneration covered by the plans in a particular year includes (1) that year's
salary (base pay, overtime, and commission), and (2) compensation received in
that year under the Management Incentive Compensation Plan in an amount up to
50% of the participant's base pay as of December 31 of the preceding calendar
year. The 1994 remuneration covered by the plan for each participant, therefore,
includes management incentive compensation (up to such 50% ceiling) paid during
1994 in respect of 1993 awards.
Federal regulations require that no more than $150,000 in compensation be
considered for the calculation of retirement benefits from the qualified plan
(Kaydon Corporation Retirement Plan) in 1994. The maximum amount paid from a
qualified defined benefit plan cannot exceed $118,800 as of January 1, 1994. The
benefit amounts under the Retirement Plan are not subject to any deduction for
Social Security benefits or other offset amounts.
The SERP is a nonqualified supplemental pension plan for designated
executive officers that provides increased benefits that would otherwise be
denied because of certain Internal Revenue Code limitations on qualified benefit
plans. Benefits under the SERP are not reduced for early commencement for
retirement at age 62 or later. The benefits provided under the SERP are not
subject to any deduction for Social Security benefits or other offset amounts
(other than the amounts received from the Retirement Plan).
12
<PAGE> 15
For each of the following officers of Kaydon, the credited Years of Service
under the Retirement Plan, as of December 31, 1994, and the remuneration
received during 1994 covered by the Retirement Plan and the SERP were,
respectively, as follows: Mr. Cawley, 9 years and $447,785; Mr. Clough, 9 years
and $334,461; Mr. Brocci, 6 years and $152,461.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of Kaydon has selected Arthur Andersen LLP,
independent public accountants, to audit Kaydon's consolidated financial
statements for the year ending December 31, 1994. A representative of Arthur
Andersen LLP will be present at the Annual Meeting of Shareholders with an
opportunity to make a statement, if desired, and will be available to respond to
appropriate questions from shareholders present.
PROPOSALS BY HOLDERS OF COMMON STOCK
Any proposal which a shareholder of Kaydon desires to have included in the
proxy relating to the 1996 Annual Meeting of Shareholders must be received by
Kaydon at its Corporate offices (sent to the attention of the Corporate
Secretary) no later than October 31, 1995. The Corporate offices of Kaydon are
located at 19345 U.S. 19 North, Suite 500, Clearwater, Florida 34624-3148.
EXPENSES AND OTHER MATTERS
EXPENSES OF SOLICITATION
Kaydon will pay the costs of preparing, assembling and mailing this proxy
statement and the material enclosed herewith. Kaydon has requested brokers,
nominees, fiduciaries and other custodians who hold shares of its common stock
in their names to solicit proxies from their clients who own such shares, and
Kaydon has agreed to reimburse them for their expenses in so doing.
In addition to the use of the mails, certain officers, directors and
regular employees of Kaydon, at no additional compensation, may request the
return of proxies by personal interview or by telephone or telegraph.
OTHER ITEMS OF BUSINESS
The management does not intend to present any further items of business to
the meeting, and knows of no such items which will or may be presented by
others. However, if any other matter properly comes before the meeting, the
persons named in the enclosed proxy form will vote thereon in such manner as
they may in their discretion determine.
John F. Brocci
Vice President Administration
Corporate Secretary
March 7, 1995
PLEASE SIGN, DATE AND IMMEDIATELY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
ADDRESSED ENVELOPE.
13
<PAGE> 16
APPENDIX A
PROXY KAYDON CORPORATION
ANNUAL MEETING OF SHAREHOLDERS, APRIL 26, 1995
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF KAYDON CORPORATION
The undersigned hereby appoints LAWRENCE J. CAWLEY and JOHN F. BROCCI, and
each of them, the proxies of the undersigned, with power of substitution in
each, to vote all stock of Kaydon Corporation that the undersigned is entitled
to vote at the Annual Meeting of Shareholders of such Corporation to be held at
Tampa Airport Marriott, Tampa International Airport, Tampa, Florida on
Wednesday, April 26, 1995 at 10:00 AM, Eastern time, and at any adjournment
thereof.
Your vote for the six directors may be indicated on the reverse side. Glenn
W. Bailey, Gerald J. Breen, Lawrence J. Cawley, Stephen K. Clough, John H.F.
Haskell, Jr. and Norton Stevens have been nominated for election as Directors.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO CONTRARY SPECIFICATION IS INDICATED, THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES
AS DIRECTORS. PLEASE MARK BOX OR /X/ .
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
1. Election of Directors:
<TABLE>
<S> <C> <C> <C> <C> <C>
/ / FOR all nominees (except as / / AUTHORITY WITHHELD for all. / / AUTHORITY WITHHELD for the following
listed to the contrary). only (write each nominee's name in
the space below)
</TABLE>
- - --------------------------------------------------------------------------------
Name(s)
(Continued and to be signed on the reverse side)
2. In their discretion, on other matters which properly come before the
meeting or any postponement or adjournment thereof.
You are urged to date, sign, and return promptly this proxy in the envelope
provided. It is important for you to be represented at the Meeting. The
execution of this proxy will not affect your right to vote in person if you are
present at the Meeting and wish to so vote.
Dated: , 1995
-----------------
---------------------------
Signature
-----------------------------
Signature if held jointly
IMPORTANT: Please sign
exactly as your name or names
appear hereon. If signing as
an attorney, executor,
administrator, trustee,
guardian, or in some other
representative capacity, or
as officer of a corporation,
please indicate your capacity
or full title. For joint
accounts, all tenants should
sign.
