Schedule 14A Information Statement
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
[ ] Confidential, for Use of the Commission Only [as permitted by
Rule 14a-6(e)(2)]
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11 or Sec. 240.14a-12
Raytech Corporation
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number or the Form or Schedule and the date of its filing.
1. Amount previously paid:
2. Form, Schedule or Registration No.:
3. Filing party:
4. Date Filed:
<PAGE>
RAYTECH CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
July 18, 1997
Notice is hereby given that an Annual Meeting of
Shareholders of Raytech Corporation will be held at the Ramada
Hotel, 780 Bridgeport Avenue, Shelton, Connecticut, on July 18,
1997 at 10:00 a.m. for the following purposes:
1. To elect three Class II Directors for full three-year
terms and until their respective successors are elected;
2. To amend the 1990 Non-Qualified Stock Option Plan to
authorize 500,000 additional shares of Common Stock
for grant;
3. To ratify the appointment of Coopers & Lybrand L.L.P. as
auditors for 1997;
4. To transact such other business as may properly be
brought before the meeting.
Only shareholders of record at the close of business on
May 30, 1997 are entitled to notice of and to vote at the Annual
Meeting of Shareholders or any adjournment or adjournments
thereof.
A proxy statement and proxy are enclosed herewith. If you
are unable to attend the meeting in person, you are urged to
sign, date and return the enclosed proxy promptly in the enclosed
addressed envelope which requires no postage if mailed within the
United States. If you attend the meeting in person, you may
withdraw your proxy and vote your shares. Any person giving a
proxy, whether in attendance and voting in person at the meeting
or not, has the right to revoke it at any time by written notice
provided to the Secretary of the Corporation prior to its being
exercised.
LeGrande L. Young
Secretary
Shelton, Connecticut
June 3, 1997
<PAGE>
RAYTECH CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
July 18, 1997
The accompanying proxy is solicited on behalf of the Board
of Directors of Raytech Corporation ("Raytech"), a Delaware
corporation, for use at the Annual Meeting of Shareholders to be
held at the Ramada Hotel, 780 Bridgeport Avenue, Shelton,
Connecticut, on July 18, 1997 at 10:00 a.m. for the following
purposes and as set forth in the accompanying Notice of Annual
Meeting of Shareholders:
1. To elect three Class II Directors for full three-year
terms and until their respective successors are
elected;
2. To amend the 1990 Non-Qualified Stock Option Plan to
authorize 500,000 additional shares of common stock
for grant;
3. To ratify the appointment of Coopers & Lybrand L.L.P.
as auditors for 1997;
4. To transact such other business as may properly be
brought before the meeting.
Shares can be voted only if the stockholder is present in
person or by proxy. Shares represented by properly executed
proxies received by Raytech will be voted at the Annual Meeting
in the manner specified therein or, if no specification is made,
will be voted for the election of Directors, for the amendment of
the 1990 Non-Qualified Stock Option Plan to authorize additional
shares of common stock for grant, and for the appointment of
Coopers & Lybrand L.L.P. as auditors for 1997. Execution of a
proxy will not in any way affect a shareholder's right to attend
the meeting and vote in person. Any person giving a proxy,
whether in attendance and voting in person at the meeting or not,
has the right to revoke it at any time by written notice provided
to the Secretary of the Corporation prior to its being exercised.
The representation in person or by proxy of a majority of
the outstanding shares entitled to vote thereat is necessary to
constitute a quorum at the meeting. Directors are elected by a
<PAGE>
plurality of the affirmative votes cast. A majority of the votes
cast at the meeting is required for the amendment of the 1990
Non-Qualified Stock Option Plan to authorize additional shares of
common stock for grant and for the appointment of Coopers &
Lybrand L.L.P. as auditors for 1997. Abstentions and "non-votes"
are counted as present in determining whether the quorum
requirement is satisfied. For purposes of determining whether a
proposal has received a majority vote, abstentions will be
included in the vote totals with the result that an abstention
has the same effect as a negative vote. Under applicable
Delaware law, "non-votes" will not be included in the vote totals
of proposals voted and, therefore, will have no effect on the
vote of that proposal. A "non-vote" occurs when a broker holding
shares for a beneficial owner votes on one proposal but does not
vote on another proposal because the broker does not have
discretionary voting power and has not received instructions from
the beneficial owner.
There were outstanding at the close of business on May 9,
1997 3,257,682 shares of Common Stock, par value $1.00 per share,
of Raytech ("Raytech Common Stock"), each share being entitled to
one vote on each matter presented at the Annual Meeting. Only
shareholders of record at the close of business on May 30, 1997
will be entitled to vote at the Annual Meeting.
The mailing address of the principal executive offices of
Raytech Corporation is Suite 512, One Corporate Drive, Shelton,
CT 06484. The approximate date on which this Proxy Statement and
the enclosed proxy are first being sent to shareholders is
June 3, 1997. By Delaware Corporation Law, the shareholders must
have notice of this Annual Meeting not less than 10 days prior to
nor more than 60 days prior to the meeting date.
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE AND DOCUMENTS ENCLOSED
This Proxy Statement incorporates by reference the following
document which has been filed by Raytech Corporation with the
Commission (File No. 1-9298) pursuant to the Securities Exchange
Act of 1934: Raytech Corporation's 1996 Annual Report on Form
10-K for the fiscal year-ended December 29, 1996. This Proxy
Statement is accompanied by copies of (i) Notice of Annual
Meeting of Shareholders and (ii) Raytech Corporation's 1996
Annual Report to Shareholders.
ELECTION OF DIRECTORS AND INFORMATION
CONCERNING DIRECTORS AND NOMINEES
The Certificate of Incorporation of Raytech Corporation
provides that the Board of Directors shall consist of not more
than nine and not less than three Directors, that the Directors
shall be divided into three classes, designated Class I, Class II
and Class III, as nearly equal in number as may be possible, and
<PAGE>
that each class of Directors shall be elected for a term of three
years. The term of office of the Class II Directors expires with
the forthcoming Annual Meeting and three Directors will be
elected as Class II Directors for full three-year terms and until
their successors are elected and qualified. Under Delaware law,
the election of a nominee as a Director requires the affirmative
vote of the holders of a plurality of the shares of Raytech
Common Stock represented at the meeting.
Set forth below are the names of three persons nominated by
the Board of Directors for election as Class II Directors and the
names of the other Class I and the Class III Directors, together
with their ages, principal occupations and business experience
during the last five years, present directorships, the year each
first became a Director and the number of shares of Raytech
Common Stock owned by each beneficially, directly or indirectly,
as of May 30, 1997. Except as otherwise indicated, the persons
listed have sole voting and investment power with respect to
shares beneficially owned by them. The nominees are presently
Directors and the nominees and Directors were elected Directors
at an Annual Meeting of Shareholders. If the nominees should be
unable to serve as a Director, the person or persons voting the
proxies will select another nominee in his place. Raytech
Corporation has no reason to believe that any nominee will be
unable or unwilling to serve if elected.
<PAGE>
<TABLE>
<CAPTION>
Shares of
Principal Occupation Common Stock
Business Experience Beneficially
During Last 5 Years First Owned
and Present Became Percent
Name Age Directorships Director Total of Class
<S> <C> <S> <C> <C> <C>
Class I (serving until the Annual Meeting of Shareholders in 1999)
Donald P. Miller 65 Retired, formerly 1986 7,818(a) .2%
President and Chief
Executive Officer of
Posi-Seal International,
Inc. until 1986; Director,
Information Management
Assoc., Inc.; Director,
Saab Financial Corp;
Director, Smart Games
Interactive, Inc.
Robert B. Sims 54 President and Chief 1986 7,818(a) .2%
Executive Officer of
Consulcor Corporation
since 1996; Prior
thereto, Senior Vice
President, Secretary
and General Counsel of
Summagraphics Corporation
Class II (currently serving and nominated to serve until the Annual Meeting of
Shareholders in 2000)
Robert M. Gordon 80 Retired, formerly 1986 9,318(a) .3%
President and Vice
Chairman of Raybestos-
Manhattan, Inc.
Dennis G. Heiner 53 Executive Vice 1986 7,818(a) .2%
President of Black &
Decker Corporation since
1989; President of
Black & Decker Security
Hardware Group; President
of Kwikset Corporation,
a Black & Decker Company,
since 1993; Director,
Shell Oil/Cal Resources,
Director, Franklin Quest
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares of
Principal Occupation Common Stock
Business Experience Beneficially
During Last 5 Years First Owned
and Present Became Percent
Name Age Directorships Director Total of Class
<S> <C> <S> <C> <C> <C>
Craig R. Smith 56 President and Chief 1986 151,206(b) 4.7%
Executive Officer of
Raytech Corporation
Class III (serving until the Annual Meeting of Shareholders in 1998)
Robert L. Bennett 59 Principal, Bennett, 1989 12,818(c) .4%
Fisher, Giuliano &
Gottsman, The Electronic
Publishing Group since
1993; Prior thereto,
President and CEO of
Mirror Systems, Inc.;
Director, Southern New
England Telecommunications,
Inc.
<FN>
(a) Total represents 7,818 shares which the named Director
holds the option to purchase within 60 days.
(b) Total includes 110,346 shares which Mr. Smith holds the
option to purchase within 60 days.
(c) Total represents 12,818 shares which Mr. Bennett holds
the option to purchase within 60 days.
</TABLE>
<PAGE>
Committees of the Board of Directors:
The Board of Directors has designated Executive, Audit,
Compensation and Nominating Committees. The Executive Committee
currently consists of the following Directors: Messrs. Gordon,
Miller and Smith.
The Audit Committee, which held two meetings during 1996,
currently consists of the following Directors: Messrs. Bennett,
Gordon, and Heiner. This Committee's principal responsibilities
are to recommend the engagement or discharge of independent
auditors to the Board; review with independent auditors the plan
and results of the audit engagement; approve services performed
by independent auditors; review the degree of independence of the
auditors; consider the range of audit and non-audit fees; and
review the results of Raytech Corporation's external audit
reports.
The Compensation Committee, which held one meeting during
1996, currently consists of the following Directors: Messrs.
Miller, Sims and Smith. This Committee's responsibilities are to
approve the remuneration for senior management whose base salary
is $75,000 or greater, to recommend compensation plans for
officers, and to grant and administer benefits under the various
employee benefit plans of Raytech Corporation and its
subsidiaries.
The Nominating Committee currently consists of the following
Directors: Messrs. Bennett, Heiner and Smith. This Committee
reviews and recommends to the Board of Directors nominees for
election as Directors at the Annual Meetings of Shareholders and
nominees to fill vacancies in the Board of Directors. Also, this
Committee will consider timely recommendations by shareholders
which should be submitted in writing to the Secretary of Raytech
Corporation and should include a statement as to the qualifica-
tions and willingness to serve on the Board of Directors of
recommended persons.
Meetings of the Board of Directors:
During 1996, there were five regular meetings and three
special meetings of the Raytech Board of Directors. Each
Director attended at least 75% of the meetings of the Board and
committees on which he served.
<PAGE>
Related Party Transactions:
(in thousands except share data)
During 1996 and other relevant periods of time, the
following related party transactions occurred involving Director
Craig R. Smith: In 1987, Raytech acquired certain assets and
assumed certain liabilities of the Wet Clutch and Brake Division
and acquired the stock of a German subsidiary from its then
wholly-owned subsidiary, Raymark. The purchases from Raymark and
subsequent transactions with Raymark took place as follows:
Wet Clutch and Brake Acquisition
The purchase price of $76,900 for the Wet Clutch and Brake
Division was initially comprised of $14,900 cash, $16,000 of
Raytech stock issuable in installments and $46,000 of notes.
The Raytech stock issuable to Raymark was due in six annual
installments beginning October 30, 1987. The first installment
was $10,000 and the remaining installments were $1,200 each. The
number of shares to be issued was determined by taking the
average closing price of Raytech stock for the five days prior to
the payment date. Accordingly, Raytech issued 1,365,188 and
311,688 shares of stock to Raymark as of November 1987 and 1988,
respectively. Pursuant to the 1987 Asset Purchase Agreement of
the Wet Clutch and Brake Division, Raymark could require Raytech
to repurchase or redeem any of the shares of its stock held by
Raymark at the then current market price. In June 1988, the
Company reached an agreement with Raymark for cash prepayments on
a portion of promissory notes due Raymark for the purchase of the
Wet Clutch and Brake Division in return for the elimination of
the redemption rights on 1,365,188 shares of Raytech stock then
held by Raymark. This cash prepayment of $4,500 was paid to
Raymark over an eighteen-month period, $2,100 during 1988, and
the remaining $2,400 in 1989. In November 1988, pursuant to the
said Asset Purchase Agreement, Raytech issued 311,688 shares of
Raytech stock to Raymark. Raymark exercised its option to
require the Company to repurchase these shares. Accordingly,
Raytech paid $1,200 to Raymark in return for 311,688 shares of
Company stock. The 1989 and 1990 installments of $1,200 were
paid in cash in lieu of stock at the request of Raymark. In
August 1991, the Company and Raymark amended the Asset Purchase
Agreement to require all future annual stock payments in cash in
lieu of the issuance of shares of Common Stock in annual
installments through November 1992. In December 1992, the Asset
Purchase Agreement was again amended providing for payment of the
1991 and 1992 payments to be completed in March 1993. Such
amendment also provided for a restructure of the remaining note.
<PAGE>
The German Acquisition
The purchase price of approximately $8,200 of the German
subsidiary (Raybestos Industrie-Produkte GmbH) was initially
comprised of a DM7.0 million note (approximately $4,300 at the
acquisition date) and of DM6.5 million (approximately $3,900 at
the acquisition date) of Raytech stock issuable in installments.
The Raytech stock issuable to Raymark was due in eight
installments commencing March 1987. The first installment was
DM1.25 million ($694 at the issuance date) and the remaining
installments were DM750 which are translated into dollars using
the exchange rate in effect when each payment becomes due. The
number of shares issuable was determined by the weighted average
closing price of Raytech stock for the five days prior to the
payment date. Accordingly, Raytech issued 72,038 and 63,565
shares of stock to Raymark as of March 1987 and 1988,
respectively. The 1989 installment of DM750 was paid in April
1989 in cash in lieu of stock at Raymark's request in the amount
of $396. Raytech issued 163,303 shares of stock to Raymark in
March 1990 in payment of the 1990 installment. In August 1991,
the Company and Raymark amended the Stock Purchase Agreement to
require the three remaining annual stock payments in cash in lieu
of the issuance of shares of Common Stock in annual installments
through April 1994. In December 1992, the Stock Purchase
Agreement was again amended providing for payment of the 1992
payments to be completed in March 1993. Payments due in 1993 and
1994 are suspended pending the purchased assets being free of all
Raymark-related liabilities as required.
The Raymark Divestiture - Raytech management has been
informed of the following with respect to ownership of Raymark:
In May 1988, the common stock of Raymark Corporation was
divested and sold to Asbestos Litigation Management, Inc.
("ALM"), a wholly-owned subsidiary of Litigation Control
Corporation ("LCC"). At the time of the said sale, LCC was
60% beneficially owned by Craig R. Smith, President and CEO
of Raytech (15% through his son, Bradley C. Smith).
In September 1988, LCC entered a tripartite agreement with
Celotex Corporation and Raymark for the purpose of sharing
asbestos litigation costs. Consideration paid by Raymark to
LCC was to assign $1,000 of its $33,530 note receivable due
in 1994 from Raytech pursuant to the aforementioned Wet
Clutch and Brake Division acquisition.
In October 1988, LCC repurchased 75% of its outstanding
stock consisting of all of the shares beneficially owned by
Craig R. Smith and Bradley C. Smith and another unrelated
shareholder for $750. Consideration paid to Craig R. Smith
and Bradley C. Smith was $450 and $150, respectively.
<PAGE>
Messrs. Smith and Smith were thereby completely divested of
any stock ownership in LCC.
In January 1989, LCC sold all of the outstanding stock of its
subsidiary, ALM, to Bradley C. Smith, the son of Craig R.
Smith, and another unrelated party for $17. Subsequently,
Bradley C. Smith purchased the balance of the stock of ALM
and is now the sole owner. In March 1996, 49% of the common
stock of Raymark Corporation was purchased by Craig R. Smith
from his son Bradley C. Smith for $7 in an agreement
containing an option to purchase the balance of the common
stock at a later date.
Other Matters
During 1989, Raytech incurred costs, including bankruptcy
related attorneys' fees and lender refinance charges, in the
amount of $1,558 subject to the indemnification clause of the
1987 agreement covering the purchase of assets of the Wet Clutch
and Brake Division. Pursuant to Raymark's request, Raytech
accepted 926,821 shares of Raytech stock in payment therefor.
During 1990, Raytech incurred similar costs in the amount of
$1,033 and was indemnified by a return of $364 or 177,570 shares
of Raytech stock held by Raymark, an offset against the April
1990 note payment due under the German acquisition of $521, and
then a subsequent return in February 1991 of an additional $148
or 74,826 shares of Raytech stock. Additionally, in January
1991, the Company incurred $750 of additional refinance charges,
which were also subject to the indemnification clause. Raytech
accepted Raymark's request to a reimbursement in the form of all
remaining shares of Raytech stock held by Raymark, which amounted
to $175 or 88,477 shares and then a reduction of $575 of future
stock obligations pursuant to the Wet Clutch and Brake and German
subsidiary acquisitions. Accordingly, in April 1991, $446 of
such credit was used to defray the April 1991 stock obligation
pursuant to the German subsidiary acquisition leaving a balance
of $132 to be applied toward the stock obligation due in November
1991 pursuant to the Wet Clutch and Brake acquisition. In July
1991, the Company and Raymark agreed that any future
reimbursement of indemnified costs by Raymark will be taken in
the form of a reduction of future stock obligations under the
Stock Purchase Agreement for the German subsidiary and any excess
to be taken as a reduction of the note due Raymark. In December
1992, the Company and Raymark amended the Asset Purchase
Agreement of the Wet Clutch and Brake Division. Under the terms
of the amendment, the note in the principal amount of $23,074
plus accrued interest in the amount of $17,543 was canceled and
replaced by an uncollateralized promissory note in the amount of
$40,617, bearing interest at the rate of 6% per annum and payable
in equal monthly installments of $650 commencing April 1993. The
principal portion of the monthly installments was to be paid into
an escrow pending clearance of all Raymark encumbrances and
<PAGE>
liabilities as provided by the Agreements. Payments due in 1991
and 1992 under the acquisition agreements as amended and deferred
by agreement, amounting to $1,875, including accrued interest,
were paid in monthly installments of $650 until paid in full in
March 1993 bearing interest at 6%. As agreed by the Company and
Raymark, 1993 and 1994 obligations under the German subsidiary
note were suspended pending the assets purchased from Raymark in
1987 being free of all Raymark related encumbrances and
liabilities. Also, costs incurred by the Company subject to the
indemnification clause of the 1987 agreements were to be applied
as a reduction of the note obligations. As agreed in April 1993,
the Company received 80,000 shares of its stock from Raymark
valued at $262 as a credit for reimbursement of costs incurred by
the Company under the indemnification clause. As of December
1994, the Company had incurred $253 of additional costs subject
to the indemnification clause which were applied as a reduction
of the note obligations pursuant to the agreement. As of May
1995, the Company had incurred $460 of additional costs subject
to the indemnification clause which was applied as a reduction of
the note obligations pursuant to the agreement. Also, in May
1995, the Company reclaimed the balance in the escrow and
suspended payment of the monthly installments as a result of the
Third Circuit Court of Appeals decision that jeopardizes the
assets purchased from Raymark in 1987 being free of all Raymark
related encumbrances and liabilities. Monthly installments were
resumed in February 1997. During 1996, the Company had incurred
$2,622 of additional costs subject to the indemnification clause
which were applied in February 1997 as a reduction of the note
obligations pursuant to the agreement.
In 1990 and 1991, Raytech Powertrain, Inc., a subsidiary of
the Company, and owner of all of the capital stock of Allomatic
Products Company ("APC"), sold approximately 45% of the capital
stock of APC to a group of investors, including Craig Smith, for
the purpose of partially financing APC's move from New York to
Indiana and for the further growth of its business.
Subsequently, all APC stock held by Craig Smith was transferred
to relatives and related companies, including Universal Friction
Composites, Inc., and accordingly, in the opinion of General
Counsel of the Company, remains 40% beneficially owned by him.
In March 1996, APC declared a cash dividend of $2.81 per share
payable in equal quarterly installments to shareholders of record
in March 1996. At the record date, Craig Smith beneficially
owned 41,904 shares of the outstanding shares of APC stock. The
first, second and third quarter installments of the declared
dividend were paid in 1996. The Company's Board of Directors
reviewed Craig Smith's beneficial ownership of the APC stock and
resulting payment of dividends at length and has recommended
continued disclosure of the related party transactions and
appointed the General Counsel of the Company to monitor and
report all such related party transactions in the future.
<PAGE>
In September 1993 and January 1994, Raytech Composites,
Inc., a wholly-owned subsidiary of the Company, borrowed $2,500
and $500 under the loan agreements with Raymark. The loans bear
interest at 6% per annum.
During 1996 and 1995, the Company purchased yarn from
Raymark amounting to $3,011 and $2,993, and at December 29, 1996
and December 31, 1995, the related payable amounted to $103 and
$239, respectively.
During 1993 and 1994, Raymark contracted with a subsidiary
of the Company to purchase certain equipment for $1,570 which
became excess as a result of the German consolidation. Payments
in full were made in kind with manufactured yarn through August
1994.
During 1988, the Company repurchased 200,000 shares of its
common stock from Echlin Inc. in exchange for approximately
$1,200 of credit on future product sales from the Company to
Echlin, which is pre-petition debt under the Company's bankruptcy
filing. As of December 29, 1996, Echlin's voting interest in the
Company is 16.9%.
In September 1996, Craig R. Smith entered into a consulting
agreement with Raymark for services regarding asbestos
litigation. Proceeds are to be paid to Raytech pursuant to the
terms of the agreement. During 1996, $13 was paid to Raytech in
the form of an offset against the note due Raymark.
DIRECTORS' COMPENSATION
Directors received a $17,000 per year meeting fee plus
$3,000 per year fee for one or more committee appointments in
1996. The Directors are paid the annual Director's meeting fee
or proportion thereof only for scheduled meetings attended. The
committee meeting fee is paid regardless of attendance. There is
no minimum attendance rule and any Director that misses all
meetings would receive no portion of the annual Director's
meeting fee.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of May 30, 1997, the
number and percentage of shares of stock for each person known by
Raytech to be the beneficial owner of 5% or more of the
outstanding shares of Raytech Common Stock and for all of Raytech
Corporation's Officers and Directors as a group. Except as
otherwise indicated, the persons listed have sole voting and
investment power with respect to shares beneficially owned by
them.
<PAGE>
Amount and Percent
Name and Address Nature of Beneficial of
of Beneficial Owner Ownership Class
Echlin Inc. 545,010 16.8%
100 Double Beach Road
Branford, CT 06405
FMR Corporation 270,800 8.4%
82 Devonshire Street
Boston, MA 02109
Universal Friction Company 175,203 5.4%
123 E. Stiegel Street
Manheim, PA 17545
All Directors and Officers as
a Group (9 persons) 335,988(a) 9.5%
(a) See "Election of Directors and Information Concerning
Directors and Nominees." Total includes 293,295 shares
with respect to which such Directors and Officers have the
option to purchase within 60 days.
<PAGE>
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially Owned
First Became Percent
Name Age Positions Held Officer Total of Class
<S> <C> <C> <S> <C> <C> <C>
Craig R. Smith 56 President and 1986 151,206(a) 4.7%
Chief Executive
Officer
Albert A. Canosa 51 Vice President 1986 46,361(b) 1.4%
of Administration,
Treasurer and Chief
Financial Officer
John J. Easton 52 Vice President, 1991 41,490(c) 1.3%
President of
Subsidiary, Raybestos
Products Company,
since 1987
LeGrande L. Young 61 Vice President, 1986 51,341(d) 1.6%
Secretary and
General Counsel
All Directors and Executive Officers as a group (9) 335,988(e) 9.5%
<FN>
(a) Total includes 110,346 shares which Mr. Smith holds the option to
purchase within 60 days.
(b) Total includes 46,361 shares which Mr. Canosa holds the option to
purchase within 60 days.
(c) Total includes 41,157 shares which Mr. Easton holds the option to
purchase within 60 days.
(d) Total includes 51,341 shares which Mr. Young holds the option to
purchase within 60 days.
(e) Total includes 293,295 shares which the Directors and Executive
Officers as a group hold the option to purchase within 60 days.
</TABLE>
<PAGE>
EXECUTIVE OFFICERS' COMPENSATION
Summary Compensation Table:
The following Summary Compensation Table identifies current, long-term
and stock-related compensation paid to the Chief Executive Officer and the
three most highly compensated executive officers for 1996 and two prior
years:
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards Payouts All Other
Name/ Salary Bonus Options LTIP Compensation
Position (1) Year ($) ($) # $ (2) ($) (3)
<S> <C> <C> <C> <C> <C> <C>
Craig R. Smith 1996 272,369 423,854 0 282,569 9,000
President and 1995 261,641 401,731 0 0 9,000
Chief Executive 1994 250,896 384,423 0 0 9,000
Officer
Albert A. Canosa 1996 149,582 171,087 0 152,078 8,983
Vice President of 1995 141,062 156,962 0 0 8,642
Administration, 1994 131,723 148,270 0 0 7,903
Treasurer and
Chief Financial
Officer
John J. Easton 1996 140,156 157,674 0 140,155 8,606
Vice President 1995 134,636 127,230 0 0 8,385
1994 131,919 145,498 0 0 7,760
LeGrande L. Young 1996 154,333 179,808 0 159,030 9,000
Vice President, 1995 148,254 152,758 0 0 8,930
Secretary and 1994 142,212 160,843 0 0 8,533
General Counsel
<FN>
(1) Registrant has only four executive officers, including the CEO.
(2) Payouts pursuant to the Strategic Plan Variable Compensation Program providing
awards for a three-year strategic planning period based upon earnings per share
achievements.
(3) The numbers stated for each year recite Registrant contributions to Messrs. Smith,
Canosa, Easton and Young under its defined contribution plan (401K) in the amounts of
$9,000, $8,983, $8,606 and $9,000, respectively, for 1996; $9,000, $8,642, $8,385,
and $8,930, respectively, for 1995; and $9,000, $7,903, $7,760 and $8,533,
respectively, for 1994.
</TABLE>
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Shares Unexercised In-the-Money
Acquired Options Options
on Value at 1/2/97 at 1/2/97
Exercise Realized Exercisable Exercisable
Name (#) ($) (#) ($)
<S> <C> <S> <C> <C> <C>
Craig R. Smith (CEO) -0- -0- 110,346 $166,774
Albert A. Canosa -0- -0- 46,361 $ 72,679
John J. Easton -0- -0- 41,157 $ 70,471
LeGrande L. Young -0- -0- 51,341 $ 78,048
</TABLE>
<PAGE>
Performance Graph
The following Performance Graph compares the Registrant's
cumulative total shareholder return on its common stock with
certain indexes and peer groups for a five-year period:
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG RAYTECH CORPORATION*, DOW JONES EQUITY INDEX**
AND DOW JONES AUTOMOTIVE PARTS
AND EQUIPMENT INDEX**
Dow Jones
Dow Jones Auto Parts and
Raytech Equity Equipment Index
1991 100 100 100
1992 119 105 126
1993 119 113 153
1994 166 111 128
1995 109 148 156
1996 152 182 172
* Total return assumes reinvestment of dividends.
** Based on closing index on the last trading day of the
calendar year.
Assumes $100 invested on December 29, 1991 in Raytech common
stock, Dow Jones Equity Index, and Dow Jones Automotive
Parts and Equipment Index.
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors of the
Registrant, consisting of three Directors, makes this report of
its compensation policies applicable to the executive officers
and the basis for the Chief Executive Officer's compensation for
the last completed fiscal year.
The compensation philosophy of the Compensation Committee is
based upon the premise that all salaried personnel should be
eligible to receive additional compensation for outstanding
contribution to the Corporation and consists of the following two
elements: a fixed base salary and a management incentive in
variable amounts in accordance with the levels of eligibility and
performance criteria. The objectives under this philosophy are
to maintain an equitable internal classification of positions by
grade, to maintain compensation opportunity equal to or greater
than the competition, to provide for aggregate compensation
related to performance achievement, to maintain an effective
system of salary planning and control and to provide executives
with the opportunity to earn additional compensation based on
achievement of certain goals for the Corporation and its
shareholders attributable to excellence in management.
To accomplish the compensation objectives, all salaried
positions, including the Chief Executive Officer, are graded to
reflect level of responsibility inherent in the position and
market value. The judgment takes into account the following
factors: organizational relationships, knowledge requirements,
impact potential on corporate profitability, scope of monetary
responsibility and managerial control and the areas of functional
responsibility requiring direction. The Compensation Committee
considers all such factors but places no relative weight on any
of the factors. Though the determination of executive
compensation is performed in an organized manner, using
documented criteria as referenced below, the Compensation
Committee retains full discretionary authority in establishing
executive compensation.
The base salary for executive officers is set in relation to
the base salary policy and practice of other bonus paying
employers in the metalworking/fabricating industry. The data
source for determining the base salary practice of bonus paying
employers is Project 777 - Management Compensation Services, a
division of Hewitt Associates. Other executive compensation
report services relied upon as cross-checks to the Project 777
are AMA - Top Management Compensation Report and Total
Compensation Data Base Middle Market CompBook. These data
sources were selected as models for executives' salaries based
upon the similarities of industry, operations and products to the
Company and the prestige of the sponsoring firms. Special
<PAGE>
surveys may be conducted if the Compensation Committee deems it
appropriate in its discretion but have not done so within the
last three years. The other bonus paying employers used in
establishing the base salary of executives are listed in the
Metal Working/Fabricating Industry Division of Project 777,
consisting of 35 companies only one of which was included in the
line-of-business index in the Performance Graph set forth above.
Of all industry groups of corporations set forth in Project 777,
the metalworking/fabricating group was determined by the
Compensation Committee to be the closest and most fitting in type
of operations, products and job responsibilities to the Company.
The base salaries of executive officers, including the Chief
Executive Officer, were low compared to the surveys listed.
Since this base salary tends to be lower than the salary policy
of non-bonus paying employers, comparable levels of total
compensation are achieved or exceeded only when the variable
element of compensation is added to the base. To strengthen the
executives commitment to improvement of the financial performance
of the Corporation, the amount available for distribution as
variable compensation in any year is determined by either the
return on equity or earnings before tax at the Board's
discretion. The formula necessitates that the Corporation
achieve a stipulated earnings before tax or return on equity goal
before variable compensation is paid. Payment of shareholder
dividends in the year variable compensation is earned is a
prerequisite to payment; provided, however, that such
compensation may be paid in any event if the Board finds that
unusual circumstances justify such payments.
In accordance with the philosophy recited above, the Board
stipulated earnings before tax goals in each of the fiscal years
1994, 1995 and 1996 based upon a Board approved Business Plan for
each year. The stipulated earnings before tax goals were
achieved for the years 1994, 1995 and 1996 resulting in variable
compensation or bonus to the executive officers, including the
Chief Executive Officer, as well as other key employees, in
amounts established in the variable compensation plan. Earnings
before tax are recited in the Registrant's 1996 Annual Report on
Form 10-K incorporated by reference herein. The total
compensation of the executive officers in the years in which
variable compensation or bonus was paid based on performance was
high compared to the Project 777 survey grouping referenced
above.
The bonus opportunities in the 1996 fiscal year for
executive officers and the Chief Executive Officer were therefore
based on the following factors:
(i) Each such position was graded in accordance with the
level of responsibility inherent in the position
including market value, organizational relationships,
knowledge requirements, impact on corporate
<PAGE>
profitability, scope of monetary responsibility, scope
of managerial control and areas of functional
responsibility, all as set forth in the established
compensation plan and was determined to be eligible for
participation in variable compensation.
(ii) The executive officers' positions all received a grade
providing for variable compensation eligibility of 75%
of each executive officer's base salary.
(iii) The Chief Executive Officer's position received a grade
providing for variable compensation eligibility of 100%
of the Chief Executive Officer's base salary.
(iv) The corporate earnings before tax goals stipulated by
the Board for 1996 were met and exceeded in the amount
of 150% resulting in a variable compensation
opportunity to each executive officer of 150% of 75% of
each such officer's base salary and resulting in
variable compensation opportunity to the Chief
Executive Officer of 150% of 100% of such officer's
base salary. Actual variable compensation awarded was
then determined by the evaluation of performance of
each officer to specific written objectives submitted
at the beginning of 1996.
In addition to the variable compensation opportunities based
upon achieving earnings before tax goals annually, the Variable
Compensation Plan provides for long-term variable compensation
opportunities for any three-year strategic planning period
determined by earnings before tax goals established at the Board's
discretion. Being part of the Variable Compensation Plan, the
strategic plan variable compensation program has an identical
philosophy to the annual variable compensation program recited
above. Additionally, the strategic plan variable compensation
program is designed to (i) provide shareholder returns comparable
to other high performance publicly traded companies; (ii)
strengthen key management commitment to improve the long-term
financial performance of the Corporation; (iii) provide key
management with a shareholder perspective; and (iv) focus key
employee resources on technology driven growth.
In accordance with the recited philosophy above, the Board
stipulated annual earnings before tax goals for the strategic
planning period beginning 1994 through 1996. The stipulated
earnings before tax goals were achieved for each of the years
1994, 1995 and 1996 resulting in long-term (three-year) variable
compensation payouts to the executive officers, including the
Chief Executive Officer, as well as other members of the strategic
planning teams, in amounts established in the variable
compensation plan. Each executive officer and the Chief Executive
Officer were eligible for 100% of base salary. Earnings before
<PAGE>
tax are recited in the Registrant's Annual Reports on Form 10-K
for the years referenced above. The maximum award is limited to
100% of eligibility.
Reiterating, the base salary of the Chief Executive Officer is
based upon comparable positions in the metalworking/fabrication
industry grouping of Project 777 and is low in comparison. The
variable or bonus portion of the Chief Executive Officer
compensation is subject to achievement of the earnings goals
referenced above and is high in comparison to total compensation
of other chief executive officers similarly positioned in Project
777. As stated, the achievement of the stipulated earnings before
tax goal was directly related to the variable compensation or
bonus received by the Chief Executive Officer in 1996 as well as
prior years, and the long-term variable compensation related to
strategic planning received in 1996.
The Registrant's contributions under the defined contribution
plan (401K) to the executive officers, including the Chief
Executive Officer, were made to all participants in the plan in
accordance with the operative provisions of said plan. Such
provisions, which apply to all participants, provide for a basic
Company contribution, a matching Company contribution and a
supplemental Company contribution. Only the supplemental Company
contribution is discretionary under the plan and if granted is
made to all participants.
The Registrant currently has not established any policy with
respect to qualifying compensation paid to executive officers
under Section 162(m) of the Internal Revenue Code. In the event
such a policy is established, it will be included in this
Compensation Committee Report on Executive Compensation.
The preceding Performance Graph compares the Registrant's
cumulative total shareholder return on its common stock with the
Dow Jones Equity Market Index and the Dow Jones Automotive
Equipment and Parts Industry. The Dow Jones Equity Market Index
was selected as a broad equity market index comparison in place
of Standard & Poor's 500 for the reasons that the Registrant is
not included in the Standard & Poor's 500 and such Index includes
companies that trade on the same exchange and some companies that
are of comparable market capitalization. The Dow Jones
Automotive Equipment and Parts Industry Index was selected in
lieu of a Registrant-constructed peer group index for the reasons
that difficulties were encountered in presenting the requisite
peer comparison due to a very limited peer group and such peers
essentially being privately held companies or subsidiaries or
divisions of larger publicly held companies which necessary data
to draw a comparison is not publicly available. Further, the Dow
<PAGE>
Jones Automotive Equipment and Parts Industry Index includes
companies that trade in the same industry and have similar market
capitalizations.
Compensation Committee
Donald P. Miller
Robert B. Sims
Craig R. Smith
AMENDMENT TO THE
1990 NON-QUALIFIED STOCK OPTION PLAN
The Board of Directors proposes an amendment to the Stock
Option Plan to increase the number of shares to be delivered upon
exercise of all options which may be granted under the Stock
Option Plan by 500,000 shares to an aggregate of 1,000,000
shares. Of the 500,000 shares that were available when the Stock
Option Plan was approved by the shareholders in 1991, 429,615
shares are currently outstanding under options granted with an
aggregate exercise price of $1,181,441, and options for 40,086
shares have been exercised. In addition, 126,461 shares are
currently outstanding in options granted under the expired 1980
Non-Qualified Stock Option Plan with an aggregate exercise price
of $469,709. The Board of Directors believes that the increased
authorization of shares available for grant is desirable in order
to carry out the Stock Option Plan's purpose of promoting the
interest of the Company and its stockholders by encouraging
officers, directors and other key employees of the Company and
its subsidiaries to invest in the Company's common stock and
thereby increase their proprietary interest in its business, to
use their best efforts to enhance the value of the Company's
common stock and to remain in the employ of the Company and
thereby increase their personal interest in its continued success
and progress.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors recommends Coopers & Lybrand L.L.P.
as the independent accountants for Raytech in 1997. This
recommendation is being presented to the shareholders for their
ratification at the Annual Meeting. If the appointment of
Coopers & Lybrand L.L.P. is not approved by the affirmative vote
of the holders of a majority of the shares of Raytech Common
Stock voted at the Annual Meeting, the matter of appointment of
independent auditors will be reconsidered by the Audit Committee
and the Board. Coopers & Lybrand L.L.P. served as the
independent accountants for Raytech in 1996. Representatives of
Coopers & Lybrand L.L.P. will attend the Annual Meeting with an
opportunity to make a statement if they desire to do so and will
be available to respond to questions.
<PAGE>
OTHER MATTERS
On March 10, 1989 Raytech Corporation filed a petition
seeking relief under Chapter 11 of Title 11, United States Code
in the United States Bankruptcy Court, District of Connecticut.
For more information, refer to Raytech's 1996 Annual Report to
Shareholders and its Annual Report on Form 10-K for the fiscal
year-ended December 29, 1996.
The Board of Directors knows of no matters other than those
mentioned in this Proxy Statement which will be presented at the
Annual Meeting. However, if any other matters do properly come
before the Annual Meeting, the person or persons voting the
proxies will vote upon them in their discretion and in accordance
with their best judgment.
DEADLINE FOR SUBMISSION OF SHAREHOLDER
PROPOSALS TO BE PRESENTED TO 1998 ANNUAL
MEETING OF SHAREHOLDERS
Any proposal intended to be presented by any shareholder for
action at the 1998 Annual Meeting of Shareholders of Raytech
Corporation must be received by the Secretary at Suite 512, One
Corporate Drive, Shelton, CT 06484, not later than January 15,
1998 in order for such proposal to be included in the Proxy
Statement and proxy relating to the 1998 Annual Meeting of
Shareholders. Nothing in this paragraph shall be deemed to
require Raytech Corporation to include in its Proxy Statement and
proxy relating to the 1998 Annual Meeting of Shareholders any
shareholder proposal which does not meet all of the requirements
for such inclusion established by the Securities and Exchange
Commission at that time in effect.
SOLICITATION OF PROXIES
Proxies will be solicited by mail and may also be solicited
by personal interview, telephone and telegram by Directors and
regular officers and employees of Raytech Corporation who will
not be additionally compensated therefor. In that connection,
Raytech Corporation will arrange for brokerage houses, nominees
and other custodians holding shares of Raytech Common Stock of
record to forward proxy soliciting material to the beneficial
owners of such shares, and will reimburse such record owners for
the reasonable out-of-pocket expenses incurred by them.
<PAGE>
ADDITIONAL INFORMATION AVAILABLE
Raytech Corporation files an Annual Report on Form 10-K with
the Securities and Exchange Commission. Stockholders may obtain
a copy of this report (without exhibits), without charge, by
writing to the Secretary at Suite 512, One Corporate Drive,
Shelton, CT 06484.
Raytech Corporation
LeGrande L. Young
Secretary
June 3, 1997
<PAGE>
Edgar Format Appendix
Pursuant to Rule 304(a) of Regulation S-T, following is a list of
all graphic or image information contained in the paper format
version of Raytech Corporation's 1997 Notice of Annual Meeting of
Stockholders, Proxy Statement and form of Proxy:
Page 17 contained a line graph, with the horizontal axis
labeled in years from December 1991 through December 1996,
and the verticle axis labeled in dollars from 0 to 400, in
increments of 50, on which such data contained in the table
on page 17 of the attached EDGAR format version of the Proxy
Statement is represented by three lines, labeled Raytech
Corporation, Dow Jones Equity Index and Dow Jones
Automotive Parts and Equipment Index, respectively.
The data represented in the graph and a key to the lines
contained in the graph, is set forth below the graph.
<PAGE>
RAYTECH CORPORATION
Proxy Solicited on Behalf of Board of Directors
The undersigned hereby appoints Craig R. Smith and
LeGrande L. Young or either of them with full power of
substitution proxies to vote at the Annual Meeting of Stock-
holders of Raytech Corporation (the "Company") to be held at the
Ramada Hotel, 780 Bridgeport Avenue, Shelton, Connecticut, on
July 18, 1997 at 10:00 a.m., local time, and at any adjournment
or adjournments thereof, hereby revoking any proxies heretofore
given, to vote all shares of common stock of the Company held or
owned by the undersigned as directed below, and in their dis-
cretion upon such other matters as may come before the meeting.
(To be Signed on Reverse Side.)
- -----------------------------------------------------------------
/ / Please mark your
votes as in this
example.
For All Withheld All
Nominees Nominees
1. Election Nominees:
of / / / / Robert M. Gordon
Directors Dennis G. Heiner
Craig R. Smith
For, except vote withheld from the
following nominee:
For Against Abstain
2. Amend the 1990 Stock Option Plan
to increase the number of shares
available for grant. / / / / / /
For Against Abstain
3. Ratify the appointment of Coopers
& Lybrand as auditors for 1997. / / / / / /
Signature(s) Date
Note: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give
full title as such.
