<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:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
KAYDON CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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 6, 1996
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 24, 1996 at 10:00 a.m. for the following purposes:
(1) to elect a Board of Directors;
(2) to vote on a proposal to amend the Articles of Incorporation to
increase the authorized number of shares of common stock, $.10 par value,
from forty-eight million (48,000,000) to ninety-eight million (98,000,000);
and
(3) 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 23, 1996 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 24, 1996
---------------------
PROXY STATEMENT
---------------------
March 6, 1996
INTRODUCTION
The Annual Meeting of Shareholders of Kaydon Corporation ("Kaydon") will be
held on Wednesday, April 24, 1996, 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, the Electro-Tec Corporation Employee Retirement Benefit Plan and the
Seabee Corporation Pension and Retirement Savings 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
Gerald J. Breen (50)....... 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.
Brian P. Campbell (55)..... Mr. Campbell has been President of TriMas
Corporation since 1986. From 1974 to 1986 Mr.
Campbell held several executive positions at Masco
Corporation, including Vice President of Business
Development and Group President. He has been a
Director of Kaydon since September 1995.
Lawrence J. Cawley (61).... 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 (42)..... 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.
(63)....................... 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.
2
<PAGE> 5
DIRECTOR COMPENSATION AND BOARD COMMITTEES
During 1995, Kaydon's Board of Directors met six times for regular meetings
and once for a telephone conference call meeting. Each outside Director received
$2,000 for each attendance of the Board of Directors regular meeting and $300
for attendance at a telephone conference call 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 three 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
four times during the year. With the death of Mr. Norton Stevens, Gerald J.
Breen acted on behalf of the Committee in collaboration with the other
non-employee Directors in 1995.
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 23, 1996
are entitled to notice of and to vote at the Annual Meeting. At the close of
business on such date there were 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, 1995,
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>
</TABLE>
- ---------------
(1) These shares are owned by various individual and institutional investors for
which and 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, and 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 December 31, 1995.
<TABLE>
<CAPTION>
PERCENTAGE OF ISSUED
AMOUNT AND NATURE OF AND OUTSTANDING
BENEFICIAL OWNERSHIP OF COMMON STOCK ON
BOARD OF DIRECTORS COMMON STOCK DECEMBER 31, 1995
- ----------------------------------------------------- ----------------------- --------------------
<S> <C> <C>
Glenn W. Bailey...................................... 591,065(1) 3.6%
757 Third Ave.
New York, NY 10017
Gerald J. Breen...................................... 10,000(2) *
5200 Harvard Ave.
Cleveland, OH 44105
Brian P. Campbell.................................... 1,000(3) *
315 East Eisenhower Parkway
Ann Arbor, MI 48108
Lawrence J. Cawley................................... 206,111(4) 1.26%
19345 U.S. 19 North, Suite 500
Clearwater, FL 34624
Stephen K. Clough.................................... 112,246(5) *
19345 U.S. 19 North, Suite 500
Clearwater, FL 34624
John H.F. Haskell, Jr................................ 23,000(6) *
535 Madison Ave., 15th Floor
New York, NY 10022
OTHER EXECUTIVE OFFICERS
John F. Brocci....................................... 54,528(7) *
19345 U.S. 19 North, Suite 500
Clearwater, FL 34624
All officers and directors as a group, 7 persons..... 996,950 6.1%
</TABLE>
4
<PAGE> 7
- ---------------
* Less than one percent.
(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 1996.
(2) Included in these shares are 10,000 shares which are acquirable under the
Stock Option Plans in 1996.
(3)
(4) Included in these shares are 20,000 owned by Mrs. Cawley as to which Mr.
Cawley disclaims beneficial ownership, and 127,200 shares which are
acquirable under the Stock Option Plans in 1996.
(5) Included in these shares are 78,000 shares which are acquirable under the
Stock Option Plans in 1996.
(6) Included in these shares are 10,000 shares which are acquirable under the
Stock Option Plans in 1996.
(7) Included in these shares are 40,000 shares which are acquirable under the
Stock Option Plans in 1996.
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,............... 1995 $325,288 $500,000 0 0 0 0 0
Chairman and Chief 1994 $300,288 $337,500 0 0 15,000 0 0
Executive Officer 1993 $259,519 $176,800 0 0 30,000 0 0
Stephen K. Clough,................ 1995 $238,171 $400,000 0 0 0 0 0
President and Chief 1994 $223,961 $270,000 0 0 10,000 0 0
Operating Officer 1993 $192,615 $130,100 0 0 20,000 0 0
John F. Brocci,................... 1995 $112,249 $156,784 0 0 0 0 0
Vice President 1994 $105,961 $ 94,500 0 0 5,000 0 0
Administration 1993 $ 92,181 $ 46,500 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. 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. However, it has entered into change in control
compensation agreements with its executive officers, as described more fully
below, and has entered into a Supplemental Executive Retirement Plan ("SERP") as
described in the Pension Plan section of this Proxy.
CHANGE IN CONTROL COMPENSATION AGREEMENTS
Kaydon Corporation entered into Change-in-Control Compensation Agreements
dated October 23, 1995 with the three Executive Officers. The Change-in-Control
Compensation Agreements provide that in the event of (i) the termination by
Kaydon of the executive officer's employment within three years after a change
in control (as defined in the agreement) of the Company (except for reasons of
retirement, death, disability or cause), or (ii) the termination by the officer
within three years after a change in control of the Company for specified
reasons, such officer will be entitled to termination benefits. The permissible
reasons for the executive officer to terminate his employment and receive
termination benefits include a substantial reduction in his duties and
responsibilities, a reduction in his compensation or benefits package or the
transfer of the executive officer to a location requiring a change in his
residence or a material increase in the amount of travel normally required.
5
<PAGE> 8
The termination benefits to which the Executive Officer is entitled include
three times the executive's annual base salary at the time of termination,
payable in a lump sum payment and certain other benefits provided in the
agreement. None of the benefits would be affected or reduced if the officer were
to obtain new employment after his termination by Kaydon. The Change-in-Control
Compensation Agreements were approved by the Board as reasonable termination
compensation for the Executive Officers in order to encourage management to
remain with the Company and to continue to devote full attention to Kaydon's
business in the event of a threatened change in control of the Company.
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;
- 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 because Kaydon
competes for talent with a broader group of employers than just those in
its industry. For example, of the 122 employers participating in the Middle
Market Survey, only five 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, experience and job mastery, time in position and overall
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
6
<PAGE> 9
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 its 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).
The annual bonus pool for the MIC program for executive officers is
generated at the rate of $80,000 for each 1% improvement in Kaydon's EPS
over the prior year, after reflecting the management incentive compensation
annual pool as a cost in arriving at pre-tax income. 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 1995, Kaydon's EPS improved 21.9%. The
non-employee directors added to 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
predetermined specific goals are determined subjectively for each executive
officer by the Compensation Committee and approved by the Board of
Directors.
The total annual payout from Kaydon's Management Incentive
Compensation Program for all eligible operations and participants within
the Company 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 and each
employee stock option award requires approval by the Compensation
7
<PAGE> 10
Committee and the Board of Directors. In 1995, the Committee did not award
any employee stock option grants.
- 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 1995, Mr. Cawley's base salary was increased based on a
consideration of such measures as: Earnings Growth Rate (22.3%); Return
on Stockholders Equity (21.6%); Return on Total Capital Employed (20.6%)
and Earnings Per Share (increased 21.9%). However, no specific weighting
was attached to any single factor or other performance objectives, and
the final determination was based 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.
- Incentive Compensation
Mr. Cawley's incentive compensation is determined in the manner
described above. 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 1995 incentive
compensation award was increased by the Compensation Committee.
- Stock Options
In 1995 Mr. Cawley was not granted any employee stock options.
- Committee Policy Regarding Compliance with Section 162(m) of the
Code
The Committee will continue to consider and evaluate all the
Company's compensation programs in light of Section 162(m) of the 1993
Omnibus Budget Reconciliation Act and subsequent legislation and related
regulations. However, the Committee may determine to pay compensation
which is not deductible in certain circumstances. No executive officer
is expected to receive compensation which would be non-deductible under
Section 162(m) of the Internal Revenue Code.
COMPENSATION COMMITTEE:
Gerald J. Breen
Members Pro tem
John H. F. Haskell, Jr.
Glenn W. Bailey
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 ALTERNATIVE TO
INDIVIDUAL GRANTS VALUE AT ASSUMED (F) AND (G):
- ---------------------------------------------------------------------------- ANNUAL RATES OF GRANT DATE
(C) STOCK PRICE VALUE
(B) % OF TOTAL APPRECIATION FOR --------------
NUMBER OF OPTIONS/ OPTION TERM
SECURITIES SARS (D) ---------------- (H)
UNDERLYING GRANTED TO EXERCISE OR (E) GRANT DATE
(A) OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION (F) (G) PRESENT
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($) VALUE($)
- -------------------- ------------ ------------ ----------- ---------- ----- ------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lawrence J.
Cawley............ 0 0% 0 -- -- -- --
Stephen K. Clough... 0 0% 0 -- -- -- --
John F. Brocci...... 0 0% 0 -- -- -- --
</TABLE>
- ---------------
Kaydon does not have a Stock Appreciation Rights (SAR) Plan.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION/SAR VALUE
- --------------------------------------------------------------------------------------------------------
(D)
NUMBER OF (E)
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
(B) OPTIONS/SARS OPTIONS/SARS
SHARES (C) AT FY-END (#) AT FY-END ($)
ACQUIRED ON VALUE ------------- -------------
(A) EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------------- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Lawrence J. Cawley........................... 30,000 273,750 (E) 115,950 1,219,200
(U) 26,250 198,750
Stephen K. Clough............................ 20,000 220,000 (E) 70,500 738,000
(U) 17,500 132,500
John F. Brocci............................... 5,000 58,750 (E) 33,750 315,937
(U) 11,250 81,562
</TABLE>
- ---------------
Note: Kaydon stock closed at $30.375 on December 31, 1995.
9
<PAGE> 12
LONG-TERM INCENTIVE PLAN AWARDS TABLE
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------------------------------------
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE BASED PLANS
(B) (C) --------------------------------
NUMBER OF PERFORMANCE OR
SHARES, UNITS OTHER PERIOD UNTIL (D) (E) (F)
(A) OR OTHER RIGHTS MATURATION OR THRESHOLD TARGET ($ 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
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
KAYDON CORP, STANDARD & POORS 500 AND VALUE LINE MACHINERY INDEX
(PERFORMANCE RESULTS THROUGH 12/31/95)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD MACHINERY
(FISCAL YEAR COVERED) KAYDON S&P 500 INDEX
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 131.73 130.55 127.29
1992 141.82 140.72 141.27
1993 127.22 154.91 181.31
1994 149.79 157.39 173.92
1995 192.54 216.42 201.08
</TABLE>
- Assumes $100 Invested at the close of trading in December, 1990
in Kaydon Corporation common stock, Standard & Poors 500 and
Machinery group.
- Total Return Assumes Reinvestment of Dividends.
- Based Upon Fiscal Year Ending December 31, 1995.
- Industry Index Based On Value Line Machinery Index.
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............................. $ 3,198 $ 6,397 $ 9,595 $ 12,793 $ 15,992 $ 19,190
75,000............................. 5,173 10,347 15,520 20,693 25,867 31,040
100,000............................. 7,148 14,297 21,445 28,593 35,742 42,890
125,000............................. 9,123 18,247 27,370 36,493 45,617 54,740
150,000............................. 11,098 22,197 33,295 44,393 55,492 66,590
175,000............................. 13,073 26,147 39,220 52,293 65,367 78,440
200,000............................. 15,048 30,097 45,145 60,193 75,242 90,290
225,000............................. 17,023 34,047 51,070 68,093 85,117 102,140
250,000............................. 18,998 37,997 56,995 75,993 94,992 113,990
275,000............................. 20,973 41,947 62,920 83,893 104,867 125,840
300,000............................. 22,948 45,897 68,845 91,793 114,742 137,690
325,000............................. 24,923 49,847 74,770 99,693 124,617 149,540
350,000............................. 26,898 53,797 80,695 107,593 134,492 161,390
375,000............................. 28,873 57,747 86,620 115,493 144,367 173,240
400,000............................. 30,848 61,697 92,545 123,393 154,242 185,090
425,000............................. 32,823 65,647 98,470 131,293 164,117 196,940
450,000............................. 34,798 69,597 104,395 139,193 173,992 208,790
475,000............................. 36,773 73,547 110,320 147,093 183,867 220,640
500,000............................. 38,748 77,497 116,245 154,993 193,742 232,490
</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 credited 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 commissions), 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 1995 remuneration covered by the plan for each participant, therefore,
includes management incentive compensation (up to such 50% ceiling) paid during
1995 in respect of 1994 awards.
Federal regulations require that no more than $150,000 in compensation be
considered for the calculation of retirement benefits from the qualified plan in
1995. The maximum amount paid from a qualified defined benefit plan cannot
exceed $120,000 per year as of January 1, 1995. 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.
12
<PAGE> 15
For each of the following officers of Kaydon, the Years of Credited Service
under the Retirement Plan and the SERP, as of December 31, 1995, and the
remuneration received during 1995 covered by the Retirement Plan and the SERP
were, respectively, as follows: Mr. Cawley, 10 years and $485,288; Mr. Clough,
10 years and $355,669; Mr. Brocci, 7 years and $165,749.
AMENDMENT OF ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED SHARES
It is proposed that the shareholders approve a proposal to amend Article IV
of the Company's articles of incorporation to increase the total number of
authorized shares of common stock, $0.10 par value, from forty-eight million
(48,000,000) shares to ninety-eight million (98,000,000) shares. The total
number of authorized but unissued shares of preferred stock, $0.10 par value,
would remain at the present number of two million (2,000,000). The Company
currently has approximately sixteen million three-hundred sixty-nine thousand
four hundred eighty-four (16,369,484) shares of common stock, $0.10 par value,
as of December 31, 1995, issued and outstanding. This Amendment proposal has
been approved by the Board of Directors and requires the affirmative vote of a
majority of the outstanding shares of common stock.
In June, 1995, the Board of Directors implemented a Shareholder Rights
Plan. The Shareholder Rights Plan provides that in certain circumstances, Kaydon
will offer additional shares to certain shareholders at a discounted price. The
number of shares required to be offered under the Shareholder Rights Plan
depends on the market price of the stock. As of December 31, 1995, Kaydon had
approximately thirty million (30,000,000) shares of unissued authorized common
stock. In the event the Shareholder Rights Plan is triggered, the majority of
these shares would be used to satisfy the obligations of the Company under the
Plan.
Kaydon is not aware of any events that would trigger the effects of the
Shareholder Rights Plan. Nevertheless, the Company believes that it is desirable
to have a sufficient number of shares of Common Stock available, as the occasion
may arise, for possible future financing and acquisition transactions, stock
dividends, splits, stock issuances pursuant to employee benefit plans and other
proper Corporate purposes. It is intended that this increase in authorized
shares of common stock will provide greater flexibility for the issuance of such
shares for these purposes as may be deemed appropriate from time to time.
In the event shares are issued in a transaction other than a stock split or
stock dividend which inures to the benefit of each shareholder on a proportional
basis, the voting power of existing shareholders could be diluted as a result of
the additional shares being issued.
Further authorization for the issuance of the securities for any of the
reasons set forth above will not require a vote of the shareholders but will be
approved by the Board of Directors, unless such further action by the
shareholders is required by law or regulatory authorities.
It should be noted that in addition to the effects of the Rights Plan, the
availability of additional shares could render more difficult or discourage a
takeover attempt. For example, the issuance of additional common shares in a
public or private sale, merger or similar transaction would increase the number
of Kaydon's outstanding common shares and thereby could dilute the proportionate
interest of a party attempting to gain control of Kaydon. It should be noted
that the approval of the Amendment would make available more common shares which
could be used for such purposes. In connection with any issuance of shares of
common stock, the Board of Directors is required to determine that such issuance
would be in the best long-term and short-term interests of the Company, its
shareholders and its other constituencies.
The Board of Directors is presently unaware of any specific effort to
accumulate the shares of common stock of Kaydon Corporation.
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, 1995. A representative of
13
<PAGE> 16
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 1997 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, 1996. 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 6, 1996
PLEASE SIGN, DATE AND IMMEDIATELY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
ADDRESSED ENVELOPE.
14
<PAGE> 17
APPENDIX A
PROXY KAYDON CORPORATION
ANNUAL MEETING OF SHAREHOLDERS, APRIL 24, 1996
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 24, 1996 at 10:00 AM, Eastern time, and at any adjournment
thereof.
Your vote for the five directors may be indicated below. Gerald J. Breen,
Brian P. Campbell, Lawrence J. Cawley, Stephen K. Clough, and John H.F. Haskell,
Jr. 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. Proposal to Amend the Articles of Incorporation to increase the authorized
number of shares of common stock, $.10 par value, from forty-eight million
($48,000,000) to ninety-eight million ($98,000,000).
/ / FOR / / AGAINST / / ABSTAIN
3. 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: , 1996
-------------------
--------------------------------
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.
