<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PALL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
PALL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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 transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
PALL CORPORATION
2200 NORTHERN BOULEVARD
EAST HILLS, NEW YORK 11548
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 17, 1994
------------------
To the Holders of Common Stock:
PLEASE TAKE NOTICE that the annual meeting of shareholders of Pall
Corporation, a New York corporation (the "Company"), will be held at The Garden
City Hotel, 45 Seventh Street, Garden City, New York 11530, on Thursday,
November 17, 1994 at 2:30 P.M. for the following purposes:
(1) to elect four directors for a three-year term, one director for a
two-year term and one director for a one-year term; and
(2) to transact such other business as may properly come before the
meeting.
The close of business on October 14, 1994 has been fixed as the record
date; only shareholders of record at that time are entitled to notice of and to
vote at the meeting.
Peter Schwartzman,
Secretary
October 17, 1994
<PAGE> 3
PALL CORPORATION
2200 NORTHERN BOULEVARD
EAST HILLS, NEW YORK 11548
October 17, 1994
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Pall
Corporation, a New York corporation (the "Company"), for use at the annual
meeting of shareholders to be held on Thursday, November 17, 1994, at 2:30 P.M.
at The Garden City Hotel, 45 Seventh Street, Garden City, New York 11530 and any
adjournments thereof (the "meeting"). Shareholders are requested to date and
execute the enclosed proxy and return it in the enclosed postage-paid return
envelope, whether or not they plan to attend the meeting. Shareholders who
attend the meeting may if they wish revoke their proxies and vote their shares
in person.
The approximate date on which this proxy statement and the enclosed proxy
will be sent to shareholders is October 17, 1994. The cost of the solicitation
of proxies in the accompanying form (estimated not to exceed $175,000) will be
borne by the Company. The solicitation is to be made primarily by mail, but will
be supplemented by telephone calls and personal solicitation by full-time
regular employees of the Company, who will not be specially compensated
therefor, and by the firm of Georgeson & Company Inc., which has been retained
for this purpose by the Company and which is to be paid the sum of $7,500 as a
fee for its services, plus disbursements, such fee and estimated disbursements
being included in the total cost estimate given above.
VOTING
The shares represented by each properly signed and returned proxy will be
voted in accordance with the instructions thereon. In the event that the voting
instructions are omitted on any such proxy, the shares represented by such proxy
will be voted for the election as directors of the nominees proposed herein. The
Board of Directors is not aware of any other matters to be presented for action
at the meeting, but in the event that other matters are properly brought before
the meeting, shares represented by such proxies will be voted in accordance with
the judgment of the persons named as proxies. Shareholders have the right to
revoke their proxies at any time before a vote is taken, by notifying the
Corporate Secretary of the Company in writing at the address given above. In
addition, a shareholder may revoke a proxy (1) by executing a new proxy bearing
a later date, provided the new proxy is received by Wachovia Bank of North
Carolina, N.A. (which will have a representative present at the meeting) before
the vote, (2) by attending the meeting and voting in person, or (3) by any other
method available to shareholders by law.
The close of business on October 14, 1994 has been fixed as the record date
for the meeting, and only shareholders of record at that time will be entitled
to vote. The only capital stock of the Company outstanding is Common Stock, par
value $.10 per share (the "Common Stock"). There were 115,322,619 shares of
Common Stock outstanding and entitled to vote on the record date. Each
shareholder is entitled to one vote for each share held.
ELECTION OF DIRECTORS
Six directors are to be elected at the meeting -- four for a three-year
term, one for a two-year term and one for a one-year term. The Nominating
Committee of the Board of Directors has nominated Eric Krasnoff, David B. Pall,
Chesterfield F. Seibert and James D. Watson for three-year terms, Ulric Haynes,
Jr. for a two-year term and Derek T.D. Williams for a one-year term. All of the
nominees are presently directors of the Company with the exception of Mr.
Williams. The Board of Directors recommends that shares represented by the
enclosed proxy be voted for the election of Messrs. Haynes, Krasnoff, Pall,
Seibert, Watson and Williams. In the event that any of the nominees should
become unavailable before the meeting, it is intended that all properly executed
and returned proxies will be voted for such substitute candidate as may be
nominated by the Nominating Committee.
<PAGE> 4
Directors will be elected by a plurality of the votes properly cast (in
person or by proxy) at the meeting. Thus, shareholders who do not vote, or who
withhold their vote from one or more nominees and do not vote for another
person, will not affect the outcome of the election provided that a quorum is
present at the meeting. A broker who is the record owner of shares of Common
Stock beneficially owned by a customer will have discretionary authority to vote
such shares if the broker has not received voting instructions from the
beneficial owner by the tenth day before the meeting provided that this proxy
statement has been transmitted to the beneficial owner at least 15 days before
the meeting.
Information with respect to the nominees and each other present director of
the Company whose term will continue after the meeting is set forth below. The
principal occupation of each director and nominee during at least the past five
years is shown in the fourth column and the notes thereto.
<TABLE>
<CAPTION>
SERVICE
POSITIONS AS PRESENT
AND OFFICES DIRECTOR TERM
NAME AGE WITH THE COMPANY PRINCIPAL OCCUPATION SINCE EXPIRES
----------------------------- ------- ------
<S> <C> <C> <C> <C> <C>
Abraham Appel.............. 79 Director** President, Appel Consultants, 1969 1996
Inc., consultants on
financing and foreign
trade, Toronto, Canada
Ulric Haynes, Jr.*......... 63 Director** Dean of the School of July 1994
Business, Hofstra 1994
University, since August
1991; prior thereto, from
April 1989, Senior Vice
President, Drake Beam
Morin, Inc., management
consultants, New York,
N.Y.(a)
Jeremy Hayward-Surry....... 51 President, Treasurer and Officer of the Company(b) 1993 1996
Chief Financial
Officer and Director**
Abraham Krasnoff........... 74 Chairman Emeritus and (c) 1951 1995
Director
Eric Krasnoff*............. 42 Chairman and Chief Officer of the Company(d) April 1994
Executive Officer and 1994
Director**
Edwin W. Martin, Jr. ...... 63 Director** President until September 1993 1996
1994, and thereafter
President Emeritus, of the
National Center for
Disability Services,
Albertson, N.Y.
David B. Pall*............. 80 Founder Chairman and (e) 1946 1994
Director**
Chesterfield F. Seibert*... 69 Director** (f) 1971 1994
Heywood Shelley............ 67 Director Attorney(g) 1990 1995
Alan B. Slifka............. 65 Director** Managing Partner, Alan B. 1964 1995
Slifka & Company/ Halcyon
Partnership, financial
asset management, New York,
N.Y.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
SERVICE
POSITIONS AS PRESENT
AND OFFICES DIRECTOR TERM
NAME AGE WITH THE COMPANY PRINCIPAL OCCUPATION SINCE EXPIRES
---- --- ---------------- -------------------- -------- -------
<S> <C> <C> <C> <C> <C>
James D. Watson*........... 66 Director** Director until January 1994, 1988 1994
and thereafter President,
of the Cold Spring Harbor
Laboratory, a biomedical
research institution
specializing in genetics,
Cold Spring Harbor, N.Y.(h)
Derek T.D. Williams*....... 62 Executive Vice President Officer of the Company(i) -- --
and Chief Operating
Officer
</TABLE>
- ---------------
* Nominee for election at the meeting.
** Mr. Appel is a member of the Audit, Compensation, Nominating and Stock
Option Committees of the Board of Directors. Ambassador Haynes is a member of
the Compensation Committee. Messrs. E. Krasnoff and Hayward-Surry and Dr. Pall
are members of the Executive Committee. Dr. Martin is a member of the Nominating
Committee. Mr. Seibert is a member of the Audit, Compensation and Nominating
Committees. Mr. Slifka is a member of the Stock Option Committee. Dr. Watson is
a member of the Audit and Stock Option Committees.
(a) Ambassador Haynes, who was the U.S. Ambassador to Algeria in 1977-1981,
is also a director of Marine Midland Bank, N.A., Hemmeter Enterprises, Inc. and
Harrah's Jazz Co., Inc.
(b) Mr. Hayward-Surry was elected President on July 11, 1994, continuing as
Treasurer and Chief Financial Officer. Mr. Hayward-Surry had been elected
Executive Vice President, Treasurer and Chief Financial Officer in November
1992; prior thereto, he had been Senior Vice President and Controller from July
1989.
(c) Abraham Krasnoff was Chief Executive Officer of the Company until
November 1989. Thereafter, he continued as an officer of the Company (Chairman)
until July 31, 1992, when he retired as an officer, following which he served as
Chairman of the Board until November 1992 and as a consultant to the Company
until January 31, 1993. Abraham Krasnoff is the father of Eric Krasnoff (see (d)
below).
(d) Eric Krasnoff was elected Chairman and Chief Executive Officer on July
11, 1994, succeeding Maurice G. Hardy who had died the previous day after a long
illness. Prior thereto, Mr. Krasnoff had been President and Chief Operating
Officer since October 7, 1993, the date on which the Company announced that Mr.
Hardy was ill. Before his election as President, Mr. Krasnoff was an Executive
Vice President from November 1991 and a Group Vice President from July 1989.
(e) Until July 31, 1992, Dr. Pall's principal occupation was as a senior
officer of the Company; since that date, his principal occupation has been as
senior scientist of the Company under a Consulting Agreement described below.
(f) Mr. Seibert was retired until February 1994 at which time he became
Chief Executive Officer of Marietta Corporation, a manufacturer of amenities for
the hotel industry and a packager for cosmetic manufacturers. Mr. Seibert has
been a director of Marietta Corporation for many years and became Chairman of
the Board in January 1992.
(g) Mr. Shelley is a member of the firm of Carter, Ledyard & Milburn, New
York, N.Y., which firm acts as legal counsel to the Company.
(h) Dr. Watson is also a director of Diagnostic Products Corporation.
(i) Mr. Williams, who was elected an Executive Vice President in November
1991, was designated as Chief Operating Officer in July 1994. Prior to becoming
an Executive Vice President, Mr. Williams had been a Group Vice President from
July 1989.
3
<PAGE> 6
HIS FELLOW DIRECTORS NOTE WITH GREAT SORROW THE DEATH OF MAURICE G. HARDY,
CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE COMPANY, ON JULY 10, 1994. MR. HARDY
MADE A SIGNIFICANT CONTRIBUTION TO PALL'S GROWTH AND SUCCESS DURING MORE THAN
THIRTY YEARS OF SERVICE.
------------------------
The Board of Directors of the Company met seven times during fiscal 1994,
including three meetings by conference telephone. The Executive Committee of the
Board is authorized to act on most Board matters during the intervals between
meetings of the full Board. The Executive Committee met 20 times during fiscal
1994.
The Audit Committee met twice during fiscal 1994. The duties and
responsibilities of the Audit Committee include, among other things, review of
the Company's financial statements, the consideration of the nature and scope of
the work to be performed by the Company's independent auditors, oversight of the
results of such work, the receipt from such auditors of their letters to
management which evaluate (as part of their annual audit of the Company's
financial statements) the internal control systems of the Company, discussion
with representatives of management of particular areas of the Company's
operations, and meeting with the Company's internal audit managers to review
their plans and to discuss internal audit reports.
The Compensation Committee has the power and duty to fix the compensation
of officers of the Company from time to time and to authorize and approve the
making of employment contracts between the Company and its officers. The
Compensation Committee met once in fiscal 1994 and in addition took certain
actions by unanimous written consent.
The Nominating Committee has the power and duty to develop policy on the
size and composition of the Board of Directors and criteria for director
nomination, to establish procedures for the nomination process, to identify and
recommend candidates for election to the Board, and to evaluate the
participation and contribution of incumbent Board members. The Nominating
Committee met twice in fiscal 1994.
The Stock Option Committee administers the Company's Stock Option Plans
including the selection of the persons, within the eligible class, to whom
options are to be granted. The Stock Option Committee met twice during fiscal
1994 and in addition took certain actions by unanimous written consent.
During fiscal 1994 each presently incumbent director attended more than 75%
of the aggregate number of meetings of the Board and of the Board committee or
committees on which he served.
For serving on the Board of Directors, each director of the Company who is
not also an employee of the Company is paid $1,500 a month plus $1,500 for each
meeting of the Board and Board committees which he attends (other than meetings
by conference telephone); directors who are employees receive no additional
compensation.
During fiscal 1994 the Company paid compensation to Dr. Pall in the amount
of $300,500 under a Consulting Agreement which became effective following his
retirement as a full-time officer of the Company on July 31, 1992. By the terms
of the Consulting Agreement, Dr. Pall agrees to perform consulting services for
the Company for not less than 30 hours a week and the Company agrees to pay for
such services at the rate of $1,500 a day. This Agreement remains in effect
indefinitely until terminated by either party on six months notice. During the
term of the Consulting Agreement, Dr. Pall is entitled to receive, at the
Company's expense, private office space and furnishings, secretarial services, a
Company car and appropriate laboratory space and equipment and, on request,
automobile transportation and personal accounting services.
The Company and its officers and directors are insured under an insurance
policy dated August 1, 1994 with Federal Insurance Company with respect
primarily to liability arising from the performance by officers and directors of
their corporate duties. The policy also includes certain other coverage and the
Company pays the premium, which is at present $190,578 per year.
4
<PAGE> 7
COMPENSATION AND OTHER BENEFITS OF SENIOR MANAGEMENT
The following table sets forth information concerning the total
compensation during the Company's last three fiscal years of those persons who
served as Chief Executive Officer at any time during the fiscal year ended July
30, 1994 and the four other executive officers who had the highest individual
aggregates of salary and bonus during fiscal 1994. These six persons are
hereinafter referred to collectively as the "Named Executive Officers".
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
----------------------------------- UNDER-
NAME AND FISCAL OTHER ANNUAL LYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(#) COMPENSATION(1)
- -------------------------------- ------ -------- -------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Maurice G. Hardy................ 1994 $454,220 $328,446 160,000 $324,207
Chairman and 1993 441,012 382,225 $68,972(2) 0 50,806
Chief Executive Officer -- 1992 400,920 386,327 106,666 51,245
died July 10, 1994
Eric Krasnoff................... 1994 289,241 231,855 160,000 30,282
Chairman and Chief 1993 249,288 151,243 0 19,897
Executive Officer effective 1992 237,380 160,113 33,332 17,341
July 11, 1994; prior thereto,
President and Chief Operating
Officer
Jeremy Hayward-Surry............ 1994 204,568 133,552 100,000 20,258
President, Treasurer and 1993 190,008 115,278 0 19,914
Chief Financial Officer 1992 158,496 106,906 33,332 16,442
effective July 11, 1994; prior
thereto, Executive Vice
President, Treasurer and Chief
Financial Officer
Samuel Wortham.................. 1994 189,644 95,907 35,000 14,344
Group Vice President 1993 164,008 101,406 0 11,959
1992 137,176 92,525 20,000 9,188
Joseph Campolong................ 1994 186,784 94,550 35,000 17,307
Group Vice President 1993 181,324 110,009 0 14,090
1992 175,188 118,164 19,999 12,351
Nicholas Nickolaus.............. 1994 178,828 90,523 30,000 17,860
Senior Vice President 1993 173,628 105,340 0 20,194
1992 167,752 113,149 19,999 16,523
</TABLE>
- ---------------
(1) Includes amounts reportable to the Internal Revenue Service as imputed
interest with respect to interest-free loans made by the Company for the payment
of the exercise price of options under the Company's Stock Option Plans. See
Indebtedness of Officers and Directors under Stock Option Plans below. Such
- ---------------------------------------------------------------
amounts in fiscal 1994 were as follows: Mr. Hardy -- $6,344; Mr.
Krasnoff -- $7,155; Mr. Hayward-Surry -- $5,124; Mr. Wortham -- $1,513; Mr.
Campolong -- $4,781; and Mr. Nickolaus -- $5,830. Also includes contributions to
the Company's Profit-Sharing Plan and Supplementary Profit-Sharing Plan, which
contributions for fiscal 1994 were as follows: Mr. Hardy -- $46,309; Mr.
Krasnoff -- $23,127; Mr. Hayward-Surry -- $15,134; Mr. Wortham -- $12,831; Mr.
Campolong -- $12,526; and Mr. Nickolaus -- $12,030. The amount of "All other
compensation" for Mr. Hardy in fiscal 1994 also includes the Special Bonus of
$271,554 payable to his designated beneficiary by reason of his death during
fiscal 1994. See Contracts with Named Executive Officers below.
---------------------------------------
(footnotes continued)
5
<PAGE> 8
(2) Includes (i) $35,726 for the cost of air transportation for Mr. Hardy's
wife when accompanying him on certain business trips to the United Kingdom (Mr.
Hardy changed his place of residence from the United Kingdom to the United
States in 1989 at the Company's request), and (ii) $20,146 for the services of a
Company employee who assisted in maintaining a boat owned by Mr. Hardy which was
used to some extent for Company business but primarily for Mr. Hardy's personal
use.
OPTIONS
The following tables set forth information concerning grants of stock
options to and exercise of stock options by the Named Executive Officers during
fiscal 1994, and the number and value of unexercised options held by each of
them at July 30, 1994.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
---------------------------------------------------------------------- ASSUMED
NUMBER % OF TOTAL ANNUAL RATES OF STOCK
OF OPTIONS PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES IN OPTION TERM
OPTIONS FISCAL EXERCISE EXPIRATION ----------------------
NAME GRANTED(1) YEAR PRICE(2) DATE 5% 10%
---- ---------- ------------ -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Maurice G. Hardy.................. 160,000 5.1% $18.50 (1) -- --
Eric Krasnoff..................... 100,000 3.2 18.50 12/17/98 $511,100 $1,129,400
60,000 1.9 15.25 7/11/99 252,780 558,600
Jeremy Hayward-Surry.............. 50,000 1.6 18.50 12/17/98 255,550 564,700
50,000 1.6 15.25 7/11/99 210,650 465,500
Samuel Wortham.................... 35,000 1.1 18.50 12/17/98 178,885 395,290
Joseph Campolong.................. 35,000 1.1 18.50 12/17/98 178,885 395,290
Nicholas Nickolaus................ 30,000 0.9 18.50 12/17/98 153,330 338,820
</TABLE>ble>
- -------------
(1) The options in this table become exercisable in four cumulative
installments on each of the first through fourth anniversary dates of the date
of grant, except the option granted to Mr. Nickolaus, which becomes exercisable
in two cumulative installments on each of the first and second anniversary dates
of the date of grant. Mr. Hardy's option, which similarly was to have vested in
two installments, was not exercisable on the date of his death (July 10, 1994)
and accordingly terminated in its entirety on that date.
(2) Fair market value of a share of the Company's Common Stock on the date
of grant.
6
<PAGE> 9
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END AT FISCAL YEAR-END(2)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Maurice G. Hardy........... -- -- 95,783 -- -- --
Eric Krasnoff.............. 30,000 $292,500 22,450 170,883 -- $30,000
Jeremy Hayward-Surry....... 7,500 73,125 22,449 110,883 -- 25,000
Samuel Wortham............. 15,000 100,313 9,117 45,883 -- --
Joseph Campolong........... 24,154 149,453 9,116 45,883 -- --
Nicholas Nickolaus......... 15,000 146,250 9,116 40,883 -- --
</TABLE>
- ---------------
(1) Value realized is the aggregate market value, on the date of exercise,
of the shares acquired less the aggregate exercise price paid for such shares.
(2) Value of unexercised options is the difference between the aggregate
market value of the underlying shares (based on the closing price on July 29,
1994, which was $15.75 per share) and the aggregate exercise price for such
shares.
CONTRACTS WITH NAMED EXECUTIVE OFFICERS
The Company has employment contracts with Eric Krasnoff, Jeremy
Hayward-Surry and Samuel Wortham. These contracts provide for minimum annual
salaries, adjusted annually for changes in the consumer price index. The minimum
annual salaries payable for fiscal 1995 are as follows: Mr. Krasnoff --
$410,000; Mr. Hayward-Surry -- $280,000; and Mr. Wortham -- $191,600. These
contracts also provide for incentive bonuses determined by a formula under which
a bonus equal in amount to a percentage of base salary becomes payable if the
Company's after-tax consolidated net income exceeds a certain percentage (the
"Bonus Threshold") of average shareholders' equity (as defined); the bonus
increases to reflect increases in net income up to a maximum bonus payable when
after-tax consolidated net income equals or exceeds a certain percentage (the
"Maximum Bonus Percentage") of average shareholders' equity. For fiscal 1995,
the Bonus Threshold is 12.5% of average equity and the Maximum Bonus Percentage
is 19% of average equity. For fiscal years after fiscal 1995, the Compensation
Committee of the Board of Directors will determine the Bonus Threshold and the
Maximum Bonus Percentage, consistent in each case with expected results based
upon the Company's normal projection procedures, or based on sound statistical
or trend data, and the determination of such percentages by the Committee will
be conclusive and binding on the officers. The maximum bonus payable is 100% of
base salary for Mr. Krasnoff, 75% of base salary for Mr. Hayward-Surry and 70%
of base salary for Mr. Wortham.
Each of these employment contracts is for a term of employment which will
continue until terminated by either party on not less than two years notice
except that the effective date of termination cannot be earlier than March 31,
1999 as to Mr. Krasnoff and July 31, 1999 as to Mr. Hayward-Surry. Under each of
the three employment contracts described above, in the event of a change of
control of the Company, the officer has the right to terminate his employment
effective immediately or effective on a date specified in his notice of
termination that is not more than one year from the date of giving of such
notice. Upon any such termination, the officer would be entitled to his salary
and bonus compensation prorated to the effective date of termination.
The Company had an employment contract with Mr. Hardy. Upon termination of
that contract by Mr. Hardy's death, certain amounts became payable to his estate
or designated beneficiaries. One of such payments was a "Special Bonus" in the
amount of the difference between $600,000 and the regular incentive bonus
compensation payable to Mr. Hardy under the contract with respect to the final
year of the "Term of Employment" under the contract; the amount of this Special
Bonus was $271,554. The other post-termination payment under the employment
contract is an "Annual Contract Pension" which became payable for the period
beginning August 1, 1994 and ending May 23, 2005 (the 75th anniversary of Mr.
Hardy's birth). Pursuant to the contract, the amount of this Annual Contract
Pension is the difference between 60% of Mr. Hardy's "Final Pay" (as defined)
and the amount payable under the Pall Corporation Pension Plan.
7
<PAGE> 10
During the 12 months ending July 31, 1995, the amount payable monthly to Mr.
Hardy's estate as the Annual Contract Pension will be $46,349. Thereafter, the
amount payable monthly will be $42,494, plus or minus an annual adjustment for
changes in the consumer price index.
Messrs. Nickolaus and Campolong retired on July 31, 1994 and September 30,
1994, respectively, and consulting agreements between the Company and each of
them went into effect upon their retirement. The agreement with Mr. Nickolaus is
for a one-year term ending July 31, 1995 and provides for up to 120 days of
consulting services at $1,200 a day up to a maximum amount of $143,000. The
agreement with Mr. Campolong is for a term ending June 30, 1995 and provides for
up to 50 days of consulting services and for aggregate compensation of $105,500
for the nine-month term, irrespective of the number of days of consulting
services in fact rendered.
PENSION PLANS
The Pall Corporation Pension Plan (the "Pension Plan") is a qualified
defined benefit plan under the Internal Revenue Code (the "Code"). Benefits
under the Pension Plan are determined pursuant to the Plan's benefit formula
under which, in general, for each fiscal year of credited service, a participant
accrues a benefit equal to 1% of the participant's covered compensation for that
fiscal year, plus .5% of the excess of the participant's covered compensation
for that fiscal year over the Social Security Wage Base for that year ($57,600
in fiscal 1994). Covered compensation under the Pension Plan is total
compensation, including bonuses and overtime but excluding stock options and
contributions to all benefit programs. For fiscal 1994, the maximum amount of
any participant's covered compensation which could be taken into account under
the Pension Plan for the purpose of computing that participant's benefits was
limited by the Code to $235,840.
Under the Company's Supplementary Pension Plan (which is not a qualified
plan under the Code), additional pension benefits are provided to certain
persons, including the six Named Executive Officers. The Supplementary Pension
Plan provides lifetime pension payments which, when added to primary Social
Security benefits and payments from the Pension Plan and the Pall (U.K.) Pension
Fund, will on an annual basis equal 50% of a participant's "Final Average
Compensation", which is defined as the average of the three highest of a
participant's last five years of compensation (in the case of Mr. Hardy, the two
highest of the last ten years of compensation). If a participant vested under
the Supplementary Pension Plan dies before retirement, his surviving spouse
receives a lifetime pension equal to 50% of the straight-life-annuity pension
which the participant would have been entitled to receive upon retirement.
Currently, Final Average Compensation (based on fiscal years through fiscal
1994) for the three Named Executive Officers remaining in office is as follows:
Mr. Krasnoff -- $439,707; Mr. Hayward-Surry -- $302,936; and Mr.
Wortham -- $260,222. Effective August 1, 1994, Mr. Hardy's widow commenced
receiving survivor's benefits under the Pension Plan and the Supplementary
Pension Plan in the aggregate amount of approximately $19,000 per month, and Mr.
Nickolaus commenced receiving retirement benefits under the two Plans in the
aggregate amount of approximately $10,000 per month. Effective December 1, 1995,
upon his attaining 60 years of age, Mr. Campolong will commence receiving
retirement benefits under the two Plans in the aggregate amount of approximately
$9,900 per month.
BENEFITS PROTECTION TRUST
The Company has established a Benefits Protection Trust to which it makes
voluntary contributions to fund the Company's obligations under the
Supplementary Pension Plan and the Supplementary Profit-Sharing Plan (see
Committee Report on Executive Compensation) and the Company's obligations to pay
- ------------------------------------------
the "Annual Contract Pensions" provided for under the employment agreements
formerly in effect with Mr. Hardy, Dr. Pall and Abraham Krasnoff. In the event
of a "change in control" of the Company (as defined in the trust agreement), the
trust fund must thereafter be used to satisfy the abovementioned obligations.
INDEBTEDNESS OF OFFICERS AND DIRECTORS UNDER STOCK OPTION PLANS
As permitted by the Company's Stock Option Plans, optionees may elect to
pay the purchase price of the Common Stock purchased upon their exercise of
options granted under those Plans in installments and thereby become indebted to
the Company. The following table sets forth certain information with respect to
all executive officers and directors who were indebted to the Company under the
Stock Option Plans in an amount in excess of $60,000 at any time from August 1,
1993, the start of the Company's most recently
8
<PAGE> 11
completed fiscal year, to August 31, 1994. The second column of the table shows
the largest principal amount of indebtedness outstanding during that period by
each of such officers and directors, and the last column shows the principal
amount outstanding as of August 31, 1994. All of the indebtedness shown in the
table is non-interest-bearing and payable on demand.
<TABLE>
<CAPTION>
AMOUNT OF
STOCK OPTION LOAN
----------------------
NAME LARGEST 8/31/94
--------------------------------------------------------------- --------- ---------
<S> <C> <C>
Joseph Campolong............................................... $ 255,101 $ 255,101
Peter Cope..................................................... 60,750 60,750
Robert Festa................................................... 138,047 138,047
Maurice G. Hardy............................................... 152,500 152,500
Jeremy Hayward-Surry........................................... 191,953 191,953
Eric Krasnoff.................................................. 298,125 298,125
Nicholas Nickolaus............................................. 289,219 149,063
Nicholas Renzi................................................. 273,281 273,281
Peter Schwartzman.............................................. 83,160 83,160
Robert Simkins................................................. 121,845 121,845
Donald Stevens................................................. 81,708 81,708
Derek T.D. Williams............................................ 129,609 129,609
Stanley Wernick................................................ 376,000 278,783
Samuel Wortham................................................. 126,094 126,094
</TABLE>
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation program for executive officers consists of four
parts:
1. base salary;
2. annual incentive bonuses;
3. stock options; and
4. supplementary profit-sharing and pension plans.
The program is based on the Company's overall philosophy of providing a
balanced, competitive total compensation package. It is believed that such a
program enables the Company to attract and retain highly qualified professionals
and to reward sustained corporate performance, with the attendant benefit to
shareholders.
Base Salary
The Company maintains a conservative policy on base salaries. Overall, base
salaries are targeted at the median, or 50th percentile, of those paid by
comparable technology companies and durable goods manufacturing companies of
similar size (hereinafter referred to as the "market" or "marketplace").
In the spring of 1993, the Company retained the services of The Wyatt
Company, an independent executive compensation consultant ("Wyatt"), to evaluate
the salaries of the Company's worldwide executive and administrative personnel,
including 14 executive officers (ten U.S.-based and four overseas officers). The
Company and Wyatt agreed to utilize published compensation survey data in
assessing compensation competitiveness relative to the marketplace. Wyatt
determined the marketplace by extracting data cuts from four broad-based surveys
conducted by Wyatt and three other executive compensation consulting firms.
These surveys provide data specific to companies in high technology industries
such as the aerospace (including military), electronic communications and
biomedical fields, as well as information on a broader group of durable goods
manufacturers. Regression analysis was used to arrive at compensation levels for
different executive positions in a company with annual revenues comparable to
the Company's revenues. The Wyatt report, based on data as of June 1993,
indicated that the Company was paying base salaries that were overall
approximately 4% above the marketplace median for domestic positions and
approximately 6% above the marketplace median for overseas positions.
9
<PAGE> 12
Employment contracts with executive officers call for a minimum annual
increase in base salary equal to the percentage increase in the consumer price
index. Subject to this minimum mandatory increase, the Compensation Committee
adjusted base salaries for fiscal 1994, as it does each year, to reflect
individual performance for the past year, internal relationships and marketplace
practices as shown by the Wyatt report.
Maurice G. Hardy, the Chairman and Chief Executive Officer of the Company,
died on July 10, 1994, after a long illness. By the terms of an Employment
Agreement with the Company, Mr. Hardy (or his designated beneficiary in the
event of his death) was entitled to receive a payment from the Company
(denominated a "Special Bonus") with respect to the last fiscal year of his
employment by the Company. By reason of Mr. Hardy's death, this Special Bonus
became payable with respect to fiscal 1994. The amount of this Special Bonus
(which by the terms of the Employment Agreement depended on the amount of Mr.
Hardy's incentive bonus for the fiscal year) was $271,554. See Contracts with
Named Executive Officers above. --------------
- ------------------------
On July 11, 1994, the Company's Board of Directors promoted Eric Krasnoff
from President and Chief Operating Officer to Chairman and Chief Executive
Officer, and promoted Jeremy Hayward-Surry from Executive Vice President and
Treasurer to President and Treasurer. On the same day, the Compensation
Committee met to consider adjustments to the fiscal 1994 compensation of Messrs.
Krasnoff and Hayward-Surry in recognition of the additional executive
responsibilities which they had assumed during the previous six or seven months
by reason of Mr. Hardy's illness. In the light of their increased duties and
services, the Committee granted Messrs. Krasnoff and Hayward-Surry special
bonuses of $75,000 and $30,000, respectively, for fiscal 1994.
Annual Incentive Bonuses
The principal method by which current cash compensation of executive
officers is tied to the Company's current financial performance is the Incentive
Bonus Plan. Bonus awards under the Incentive Bonus Plan are determined by the
Compensation Committee in consultation with senior management, based on the
Company's performance. The principal measure of performance is after-tax
consolidated net income as a percentage of average shareholders' equity, i.e.,
return on equity or "R.O.E.". For the purpose of the Incentive Bonus Plan,
R.O.E. for fiscal 1994 was determined by utilizing the fixed amount of
$3,744,000 as the equity adjustment from foreign currency translation.
The Incentive Bonus Plan is sensitive to performance in that no awards are
earned if R.O.E. is below a specified percentage. Under the bonus formula in
effect for fiscal 1994, no bonus would be payable unless R.O.E. for fiscal 1994
exceeded 12.5% (the "Bonus Threshold") and the maximum bonus would be payable if
R.O.E. equalled or exceeded 19% (the "Maximum Bonus Percentage"). If R.O.E. were
more than 12.5% but less than 19%, the bonus would increase pro rata from zero
at R.O.E. of 12.5% to the maximum bonus (100% of base salary for Mr. Hardy and
70% of base salary for most other U.S.-based executive officers) at R.O.E. of
19%. If R.O.E. were 15.75% -- the mid-point between the Bonus Threshold and the
Maximum Bonus Percentage -- a "target" bonus of 50% of base salary for the chief
executive officer and 35% of base salary for most other U.S.-based executive
officers would be payable. The employment arrangements for fiscal 1994 with the
Company's four executive officers based outside the U.S. provided for "target"
bonuses equal to 12.5% of base salary and maximum bonuses equal to 25% of base
salary.
Each year, the Bonus Threshold and the Maximum Bonus Percentage are
reviewed and set for the Incentive Bonus Plan by the Compensation Committee.
These levels have always been aggressively set and require above-average
performance before any award payments are earned. For example, median R.O.E.
available for companies in the survey sources used by Wyatt ranged from 11% to
12%, the higher of which percentages is below the 12.5% minimum R.O.E. required
for any payment under the Company's Incentive Bonus Plan. Additionally, among
companies comprising the Fortune 500 Index issued in April 1994, median return
on equity as computed by Fortune was 9.4%, and the 75th percentile return on
-------
equity was 15.8%. The Company was ranked 149th out of the 500 on the basis of
R.O.E., which represents better than 70th percentile performance.
10
<PAGE> 13
In the judgment of the Compensation Committee, the minimum and maximum
levels of R.O.E. which the Committee fixed for fiscal 1994 represented
aggressive goals. Additionally, the Committee was satisfied that bonus awards
resulting from achievement of these goals would be in line with marketplace
practices and would be fair to both the Company's executive officers and its
shareholders.
The Incentive Bonus Plan formula is structured so that the target bonus
award in any given year would result in total cash compensation (base salary
plus annual bonus) which approximates the marketplace median. In recent years,
due to the Company's strong financial performance, actual awards made under the
bonus formula have been above target bonus levels. Awards for fiscal 1994, which
resulted from R.O.E. of 17.2%, equalled approximately 145% of the target bonus
awards, i.e., 72% of base salary for Mr. Hardy, as chief executive officer, and
51% of base salary for most other U.S.-based executive officers.
Stock Options
The Company's stock option grant program, under plans approved by
shareholders, is administered by the Stock Option Committee of the Board of
Directors, which is separate from the Compensation Committee. For fiscal 1994,
one director (Abraham Appel) served on both Committees, Abraham Krasnoff and
Chesterfield Seibert were the other members of the Compensation Committee, and
Alan Slifka and Dr. James Watson were the other members of the Stock Option
Committee. This report is issued over the names of these five directors who
served on one or both of these Committees but the involvement of each director
in this report is limited to the portions thereof relating to the Committee or
Committees on which such director served.
The Stock Option Plans, although not exclusively for the benefit of
executive officers (about 500 employees of the Company are eligible to
participate), are intended to complement the Incentive Bonus Plan. It is
believed that stock option grants provide executive officers with opportunities
for capital accumulation, promote long-term executive retention and, by
fostering in executive officers a proprietary perspective in the Company, align
their interests with those of the Company's shareholders.
The Stock Option Committee may, in its discretion, grant options to
purchase shares of Common Stock of the Company to any officer or other employee
who, in the judgment of the Committee, is in a position to contribute
significantly to the Company's success. The Stock Option Committee does not
utilize a precise formula in determining the size of option grants to executive
officers. The Committee, guided by recommendations by the chief executive
officer, fixes grant levels which it deems appropriate for each level of
executive officers (e.g., group vice president, executive vice president, etc.).
Grants are made at an option price of 100% of the fair market value of the
Common Stock on the date of grant.
Stock option grants are not made automatically each year. Historically,
option grants have been made at intervals of not less than two years and
sometimes at intervals of as long as five years. Option grants were made to all
executive officers (as well as lower level officers and other employees) in
April 1992 (fiscal 1992). No grants were made to executive officers in fiscal
1993 with the exception of three grants of 10,000 shares each to reflect
promotions and increased duties of three executive officers (none of whom is
among the six Named Executive Officers).
In accordance with its historical practice, the Stock Option Committee
would not normally have made across-the-board option grants in calendar 1993.
However, in mid-1993 the Financial Accounting Standards Board (the FASB) issued
an exposure draft under which, if adopted, the Company would have been required
to make a charge to income (initially in a footnote to the financial statements)
with respect to option grants made after December 31, 1993. In light of this
proposal, the Company accelerated its next round of option grants to December
1993. These grants to executive officers in December 1993 (fiscal 1994) were in
the following respective amounts: 160,000 shares to Mr. Hardy, as Chairman and
Chief Executive Officer; 100,000 shares to Eric Krasnoff, as President and Chief
Operating Officer; 50,000 shares to each of two Executive Vice Presidents;
35,000 shares to each of six Group Vice Presidents; 30,000 shares to each of
three Senior Vice Presidents and 15,000 shares to the Secretary.
The following additional fiscal 1994 grants were made on July 11, 1994, to
reflect promotions and increased duties resulting from Mr. Hardy's death: 60,000
shares to Eric Krasnoff, as Chairman and Chief Executive Officer (the
160,000-share option granted to Mr. Hardy in December 1993 having terminated
upon his death); 50,000 shares to the President and Treasurer; 30,000 shares to
the Executive Vice President and
11
<PAGE> 14
Chief Operating Officer; and 15,000 shares to each of two new Senior Vice
Presidents. On July 19, 1994, an option to purchase 15,000 shares was granted to
an executive officer promoted to Executive Vice President.
In view of the Company's policy of not granting options to executive
officers each year, the significance of option grants is better understood by
taking an average over a period of years. During the five-year period from the
beginning of fiscal 1990 to the end of fiscal 1994, the average per annum option
grants to all executive officers as a group were for 289,464 shares,
representing about one-quarter of one percent (0.25%) of the shares of Common
Stock outstanding at the end of fiscal 1994.
Supplementary Profit-Sharing and Pension Plans
The Company, in addition to providing tax-qualified profit-sharing and
pension plans for its U.S. employees including executive officers, also
maintains non-qualified supplementary plans covering executive officers. The
Supplementary Profit-Sharing Plan provides an annual benefit with respect to
annual cash compensation in excess of the maximum compensation that, under the
Internal Revenue Code, can be taken into account for the qualified
Profit-Sharing Plan. An executive officer's annual benefit under the
Supplementary Profit-Sharing Plan is the product of (1) such excess annual
earnings and (2) the ratio, for the year, of the Company's aggregate
contributions under the qualified Profit-Sharing Plan to the aggregate
compensation (as limited by the Code) of all qualified Profit-Sharing Plan
participants. Also, the Supplementary Profit-Sharing Plan credits each
participant with earnings on his or her account balance based on the amount of
the earnings that would have been generated had his or her account balance been
invested in the Fidelity Asset Manager fund. The purpose of the Supplementary
Profit-Sharing Plan is to provide to executive officers affected by the
limitations under the qualified Profit-Sharing Plan a capital accumulation, on a
percentage of compensation basis, equal to that provided to other employees of
the Company. The Company's annual contributions to the Profit-Sharing Plan and
the Supplementary Profit-Sharing Plan for the benefit of the Named Executive
Officers are included in the column "All other compensation" in the Summary
Compensation Table above.
The Supplementary Pension Plan provides lifetime pension payments which,
when added to the primary Social Security benefit and payments from the Pall
Corporation Pension Plan (the qualified plan) and the Pall (U.K.) Pension Fund,
will on an annual basis equal 50% of the executive's "Final Average
Compensation," as defined under the Supplementary Plan (see Pension Plans
--------------
above). The purpose of this non-qualified plan is to assure the executive of a
specified level of retirement benefit over and above what would be payable under
the qualified plan.
Discussion of Fiscal 1994 Compensation of the Chief Executive Officers
Maurice G. Hardy was Chairman and Chief Executive Officer of the Company
until his death on July 10, 1994. Mr. Hardy's base salary and incentive bonus
were payable for the full fiscal year because he died during the last month of
the fiscal year and his Employment Agreement provided for payment of
compensation calculated to the end of the month in which his employment
terminated. Mr. Hardy's base salary for fiscal 1994 was $454,220, which
approximated the June 1993 market median rate for chief executive officers as
determined by Wyatt. Mr. Hardy's incentive bonus for fiscal 1994 (which became
payable to his designated beneficiary upon his death) was $328,446, which
resulted from above-market-average performance for the fiscal year. The fiscal
1994 bonus equalled approximately 72% of Mr. Hardy's base salary, and resulted
from R.O.E. (net income as a percentage of average shareholders' equity) of
17.2%. Following Mr. Hardy's death, his designated beneficiary also received
payment of a Special Bonus of $271,554 payable pursuant to Mr. Hardy's
Employment Agreement as described above in this Report under the caption Base
Salary. In fiscal 1994, the Company granted Mr. Hardy options to purchase
160,000 shares of Common Stock; these options terminated upon his death.
Eric Krasnoff, who became Chairman and Chief Executive Officer of the
Company on July 11, 1994, was paid base compensation for fiscal 1994 of
$364,241, which includes (i) the $75,000 special bonus described above in this
Report under the caption Base Salary and (ii) $32,474 of additional compensation
-----------
paid to him as a result of a salary increase in October 1993 when he was
promoted to the position of President and Chief Operating Officer. Mr.
Krasnoff's base salary had been adjusted in October 1993 to $296,000 per annum,
which was equal to the market median rate for chief operating officers as then
determined by Wyatt.
12
<PAGE> 15
Mr. Krasnoff's incentive bonus for fiscal 1994 was $156,855, or 54% of his base
salary. (The $75,000 special bonus referred to above was not deemed part of Mr.
Krasnoff's base salary for the purpose of determining the amount of his
incentive bonus.) In fiscal 1994, the Company granted Mr. Krasnoff options to
purchase 160,000 shares of Common Stock, including the special grant of 60,000
shares upon his promotion to chief executive officer in July 1994 (Mr. Hardy's
December 1993 options to purchase 160,000 shares having terminated upon his
death).
The factors and criteria upon which the chief executive officers'
compensation was based, including the relationship of the Company's performance
to their compensation for fiscal 1994, are set forth in the preceding sections
of this Committee Report and are applicable to the total compensation package of
the chief executive officers as well as other executive officers.
Policy Regarding $1,000,000 Limit on Deductible Compensation
The Omnibus Budget Reconciliation Act of 1993 limits the deductibility for
federal income tax purposes of executive compensation paid by public companies
to their senior officers. Under Section 162(m) of the Internal Revenue Code as
amended by the 1993 law, subject to certain transition rules the Company would
not be able to deduct compensation of a Named Executive Officer (generally the
chief executive officer and the four other highest paid executive officers) in
excess of $1,000,000 for any fiscal year except to the extent that the
compensation in excess of that amount meets the statutory definition of
"performance-based compensation". Nondeductibility would result in additional
tax cost to the Company.
In light of the 1993 tax legislation, the Company tailored its 1993 Stock
Option Plan, approved by shareholders at last year's annual meeting, so that
gains on options granted thereunder would meet the statutory definition of
"performance-based compensation". Accordingly, such gains would not be included
in compensation subject to the $1,000,000 limit on deductibility.
The Company has not deemed it necessary to take any other steps in response
to the 1993 tax law provision because under the Company's normal compensation
policies and practices, it is unlikely that any Named Executive Officer's
compensation will exceed the $1,000,000 deductibility limitation in fiscal 1995.
For example, even if the Chief Executive Officer were to achieve his maximum
incentive bonus of 100% of base salary in fiscal 1995 (which would require a
return on equity of not less than 19%), his total compensation (excluding any
gains on stock options) would nonetheless be less than $1,000,000.
Summary
The Compensation Committee believes that the total compensation for fiscal
1994 to Mr. Hardy, Mr. Krasnoff and the other executive officers of the Company
was fair both to them and to the Company and its shareholders. The Committee
bases this conclusion on the following factors:
1. target compensation levels approximate the marketplace median and
rise above that level only when Company performance warrants, and therefore
fixed compensation costs have been relatively low;
2. the use of stock options has been judicious;
3. the compensation program, while conservative, has enabled the
Company to retain and attract top executive talent; and
4. financial performance and shareholder returns have been good,
therefore justifying total cash compensation (base salary plus incentive
bonus) above market median levels.
Respectfully submitted,
Abraham Appel
Abraham Krasnoff
Chesterfield F. Seibert
Alan B. Slifka
James D. Watson
13
<PAGE> 16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The directors of the Company who served as members of the Board's
Compensation Committee and Stock Option Committee with respect to fiscal 1994
compensation are named above. Mr. Seibert, a member of the Compensation
Committee, is a former officer of the Company, having retired as an executive
vice president in 1980. Abraham Krasnoff, a member of the Compensation
Committee, is a former chief executive officer of the Company and is Eric
Krasnoff's father; Abraham Krasnoff retired as an officer in 1992.
PERFORMANCE GRAPH
The following graph compares the annual change in the cumulative total
return on the Company's Common Stock during the Company's last five fiscal years
with the annual change in the cumulative total return of the Standard and Poor's
Composite-500 Index and the Standard & Poor's Manufacturing-Diversified
Industries Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
MEASUREMENT PERIOD PALL S&P MANU-
(FISCAL YEAR COVERED) CORPORATION S&P 500 FACTURING
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 101.29 106.50 109.34
1991 174.11 120.09 115.49
1992 195.94 135.45 120.56
1993 161.70 147.27 136.82
1994 155.11 154.26 159.16
</TABLE>
* Assumes that the value of the investment in the Company's Common Stock and the
two S&P indices was $100 on July 29, 1989 (the last day of the Company's 1989
fiscal year), and that all dividends were reinvested.
14
<PAGE> 17
BENEFICIAL OWNERSHIP OF COMMON STOCK
The Common Stock is the only class of equity securities of the Company
outstanding. The following table sets forth information as of the close of
business on the record date for the meeting with respect to beneficial ownership
of Common Stock by (a) the only shareholder who, to the Company's knowledge, is
the beneficial owner of more than 5% of the outstanding Common Stock; (b) each
current director of the Company and nominee for election at the meeting; (c)
each Named Executive Officer (other than Mr. Hardy) included in the Summary
Compensation Table above, and (d) all current directors and executive officers
of the Company as a group. In each case, except as otherwise indicated in the
footnotes to the table, the shares shown in the second column are owned directly
by the individual or group named in the first column and such individual or
group has sole voting and dispositive power with respect to the shares shown.
For purposes of this table, beneficial ownership is determined in accordance
with the federal securities laws and regulations; inclusion in the table of
shares not owned directly by the named officer or director does not constitute
an admission by him that such shares are beneficially owned by him for any other
purpose.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER OWNED* OF CLASS
----------------------------------------------------- ------------------ --------
<S> <C> <C>
FMR Corp. and affiliates............................. 9,066,901(a) 7.9%
Abraham Appel........................................ 5,634,001(b) 4.9
Joseph Campolong..................................... 172,995(c) 0.1
Ulric Haynes, Jr. ................................... 0 --
Jeremy Hayward-Surry................................. 43,165(d) --
Abraham Krasnoff..................................... 280,433(d)(e) 0.2
Eric Krasnoff........................................ 90,122(f) 0.1
Edwin W. Martin, Jr. ................................ 5,300 --
Nicholas Nickolaus................................... 106,557(g) 0.1
David B. Pall........................................ 714,647(h) 0.6
Henry Petronis....................................... 440,215 0.4
Chesterfield F. Seibert.............................. 87,772 0.1
Heywood Shelley...................................... 21,500(d) --
Alan B. Slifka....................................... 29,996 --
James D. Watson...................................... 23,600(i) --
Derek T.D. Williams.................................. 56,574 --
Samuel Wortham....................................... 24,385 --
23 Current Directors and Executive Officers of the
Company as a Group................................. 7,979,777(j) 6.9
</TABLE>
- ---------------
* Includes shares covered by stock options exercisable within 60 days of
the record date as follows: Mr. Campolong -- 9,117 shares; Mr.
Hayward-Surry -- 22,449 shares; Mr. A. Krasnoff -- 33,333 shares; Mr. E.
Krasnoff -- 22,450 shares; Dr. Martin -- 5,000 shares; Mr. Nickolaus -- 9,117
shares; Dr. Pall -- 22,450 shares; Mr. Petronis -- 20,000 shares; Mr.
Seibert -- 20,000 shares; Mr. Shelley -- 20,000 shares; Dr. Watson -- 23,000
shares; Mr. Williams -- 16,666 shares; Mr. Wortham -- 9,117 shares; and the 23
current directors and executive officers of the Company as a group -- 373,131
shares (including 95,783 shares underlying options held by the Estate of Maurice
G. Hardy -- see note (d) below).
(a) The information as to the beneficial ownership of Common Stock by FMR
Corp., certain of its wholly-owned subsidiaries and affiliated investment
companies and its Chairman Edward C. Johnson 3d, was obtained from its
Compliance Department, which advised that (i) FMR Corp. (through its
wholly-owned subsidiary Fidelity Management & Research Company) and certain
investment companies for which Fidelity Management & Research Company acts as
investment advisor ("Fidelity Funds") together have sole dispositive power, but
no voting power, with respect to an aggregate of 9,008,494 shares of Common
Stock held by a number of Fidelity Funds, no one of which holds more than 5% of
the outstanding shares of
15
<PAGE> 18
Common Stock, and (ii) Fidelity Management Trust Company, a wholly-owned
subsidiary of FMR Corp., has sole voting and dispositive power with respect to
58,407 shares of Common Stock held in institutional investment accounts at
Fidelity Management Trust Company.
(b) These shares are held of record by Canmont Investment Corp. which is
wholly-owned by Mr. Appel and members of his immediate family and as to which
Mr. Appel has sole voting and dispositive power.
(c) Includes 24,154 shares owned by Mr. Campolong's wife and as to which
Mr. Campolong disclaims voting or dispositive power.
(d) Does not include 270,583 shares beneficially owned by the Estate of
Maurice G. Hardy (including 95,783 shares issuable upon exercise of stock
options). Messrs. Hayward-Surry, A. Krasnoff and Shelley are the executors of
Mr. Hardy's will and in that capacity they have sole voting and dispositive
power with respect to the shares owned by the Estate.
(e) Includes 247,100 shares owned by Mr. Krasnoff's wife and as to which
Mr. Krasnoff disclaims voting or dispositive power.
(f) Includes 7,970 shares owned by Mr. Krasnoff's wife and 19,779 shares
owned by two trusts established for the benefit of his children and as to which
Mr. Krasnoff disclaims voting or dispositive power.
(g) Includes 26,554 shares owned by Mr. Nickolaus' wife and as to which Mr.
Nickolaus disclaims voting or dispositive power.
(h) Includes 27,769 shares owned by Dr. Pall's wife and as to which Dr.
Pall disclaims voting or dispositive power.
(i) Includes 300 shares owned by Dr. Watson's son and as to which Dr.
Watson disclaims voting or dispositive power.
(j) Includes the 270,583 shares beneficially owned by the Estate of Maurice
G. Hardy (see note (d) above) and 357,339 shares owned by spouses and other
close relatives and as to which the directors and executive officers in the
group disclaim beneficial ownership.
------------------------
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
and the rules thereunder of the Securities and Exchange Commission (the
"Commission") require the Company's directors and certain of its officers to
file reports of their ownership and changes in ownership of Common Stock with
the Commission. Personnel of the Company generally prepare these reports on the
basis of information obtained from each director and officer. Based on such
information, the Company believes that all reports required by Section 16(a) of
the Exchange Act to be filed by its directors and officers during the fiscal
year ended July 30, 1994 were filed on time except as follows: (1) John Miller,
a Senior Vice President of the Company, did not timely file one report for a
disposition of Common Stock by gift; (2) Heywood Shelley, a director of the
Company, did not timely file one report for a sale of Common Stock made by his
wife in response to a tender offer made by the Company to holders of less than
100 shares; (3) Gerhard Weich, a Group Vice President of the Company, did not
timely file one report for two sales of Common Stock; and (4) Henry Petronis, a
director of the Company whose term will expire at the meeting, did not timely
file one report for two dispositions of Common Stock by gift and the
constructive disposition, by reason of the death of his wife, of his pecuniary
interest in the shares of Common Stock which she owned. All of the foregoing
transactions in Common Stock, although not reported timely, have been duly
reported. In his report Mr. Petronis also disclosed his recent discovery that he
owns 1,132 more shares of Common Stock than, through clerical error, had been
previously reported.
16
<PAGE> 19
INFORMATION CONCERNING INDEPENDENT AUDITORS
KPMG Peat Marwick LLP ("Peat Marwick") acted as the Company's independent
auditors for the fiscal year ended July 30, 1994 and has been selected to act in
that capacity in fiscal 1995. It is anticipated that representatives of Peat
Marwick will be present at the meeting to respond to appropriate questions and
will have an opportunity, if they desire, to make a statement.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended July 30, 1994 is
being furnished concurrently with this proxy statement to shareholders of record
at the record date for the meeting. Additional copies of the Annual Report may
be obtained upon request to the Corporate Secretary of the Company at the
address shown on the first page of this proxy statement.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy statement
and form of proxy for the 1995 annual meeting of shareholders, any shareholder
proposal must be received by the Company prior to June 19, 1995.
October 17, 1994
17
<PAGE> 20
P
R
O
X
Y
PALL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS, NOVEMBER 17, 1994
The undersigned hereby appoints DAVID B. PALL, ERIC KRASNOFF and JEREMY
HAYWARD-SURRY, and each of them, with full power of substitution, proxies of
the undersigned to vote all shares of the Common Stock of Pall Corporation (the
"Company") which the undersigned would be entitled to vote if present at, and
to act for the undersigned at, the annual meeting of shareholders of the
Company to be held on Thursday, November 17, 1994, at 2:30 P.M., and at any
adjournment thereof, on the matters indicated on the reverse side hereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY AND, WHEN
PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS SPECIFIED
ON THE REVERSE SIDE. IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR NAMED ON THE REVERSE SIDE
HEREOF (OR FOR A SUBSTITUTE NOMINEE IF ANY OF THOSE NAMED SHOULD BECOME
UNAVAILABLE). ON ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE
MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE JUDGMENT OF THE
PERSONS NAMED ABOVE AS PROXIES.
(Continued, and to be signed, on the other side)
<PAGE> 21
1. Election of Directors:
ULRIC HAYNES, JR., ERIC KRASNOFF, DAVID B. PALL,
CHESTERFIELD F. SEIBERT, JAMES D. WATSON AND
DEREK T.D. WILLIAMS
/ / FOR ALL / / WITHHOLD ALL / / FOR ALL EXCEPT
If you wish to withhold authority for any particular nominee(s), mark the "For
All Except" box and print the name(s) of such nominee(s) below.
_______________________________________________________________________________
2. The transaction of such other business as may properly come before the
meeting or any adjournment thereof.
SIGNATURE(S):__________________________________________________________
__________________________________________________________
DATE:____________________________________________________________, 1994
The signer(s) hereby revoke(s) all proxies heretofore given by the
signer(s) to vote at said meeting or any adjournment thereof.
NOTE: Please sign exactly as your name appears hereon. Joint owners should
each sign. When signing as attorney-in-fact, executor, administrator,
trustee, guardian or corporate officer, please give full title as such.
