<PAGE>
PRECISION CASTPARTS CORP.
4650 SW Macadam, Suite 440
Portland, Oregon 97201
___________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AUGUST 6, 1997
___________
You are invited to attend the Annual Meeting of
Shareholders of Precision Castparts Corp. The meeting will
be held on August 6, 1997 at 2:00 p.m., Pacific Time, in
the Intermediate Theater of the Portland Center for the
Performing Arts, 1111 SW Broadway, Portland, Oregon. The
Company will conduct the following business:
(1) electing three directors who will serve for
three years;
(2) approving the 1998 Employee Stock Purchase
Plan;
(3) approving the Executive Performance
Compensation Plan;
(4) amending the 1987 Non-Employee Directors'
Stock Option Plan;
(5) ratifying the appointment of Price
Waterhouse LLP as the Company's auditors for
fiscal 1998; and
(6) conducting any other business that you or
other shareholders have properly raised before,
or during an adjournment of, the meeting.
Only shareholders of record at the close of business
on June 6, 1997, will be able to vote at the meeting.
Shareholders present in person or through a proxy may
periodically adjourn the meeting.
Your vote is important. Whether you plan to attend
the meeting or not, please sign, date and return your
proxy card to us in the return envelope as soon as
possible. IF YOU PLAN TO ATTEND THE MEETING, PLEASE MARK
THE APPROPRIATE BOX ON THE PROXY CARD SO WE CAN PREPARE AN
ACCURATE ADMISSION LIST. If you attend the meeting and
prefer to vote in person, you will be able to do so.
By Order of the Board of Directors
Ruth A. Beyer
Secretary
Portland, Oregon
June 25, 1997
</Page>
<PAGE>
PRECISION CASTPARTS CORP.
4650 SW Macadam, Suite 440
Portland, Oregon 97201
___________
PROXY STATEMENT
___________
The Board of Directors of Precision Castparts Corp.
(the "Company") solicits your proxy in the form enclosed
with this proxy statement. The proxy will be used at the
1997 Annual Meeting of Shareholders which will be held in
the Intermediate Theater of the Portland Center for the
Performing Arts, 1111 SW Broadway, Portland, Oregon on
Wednesday, August 6, 1997 at 2:00 p.m., Pacific Time. The
proxy may also be used at any adjournment of the meeting.
We are sending this statement and the enclosed proxy form
to you on or about June 25, 1997.
If you have properly completed your proxy and have
not revoked it prior to the Annual Meeting, we will vote
your shares according to your instructions on the proxy.
If you do not provide any instructions, we will vote your
shares: (a) for the nominees listed on page 2; (b) for the
approval of the proposals described on pages 12 through
20; and (c) in accordance with the recommendations of the
Company's management on other business that properly comes
before the meeting or matters incident to the conduct of
the meeting. If you sign and date the enclosed proxy but
attend the meeting and choose to personally vote, our
ability to exercise the proxy will be suspended. You may
revoke the proxy by notifying Ruth Beyer, the Secretary of
the Company, in writing prior to our exercise of the proxy
at the Annual Meeting or any adjourned meeting.
Page 1
</Page>
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors Recommends a Vote "For" All Nominees
The Board of Directors currently consists of seven
directors and one vacant director position created by the
resignation of Mr. Sangrey in March 1997. As required by
the Company's Bylaws, the Board of Directors is divided
into three classes. The term of office for one of the
classes expires each year. This year, the terms of
Mr. William C. McCormick and Mr. Vernon E. Oechsle expire.
Both are nominees for reelection. Mr. Steven C. Riedel,
President and Chief Operating Officer of the Company, is a
nominee for election to fill the vacant position. If
elected, the directors' terms will expire in 2000. If any
of them become unavailable for election for any reason, we
will name a suitable substitute or substitutes as
authorized by your proxy.
The following table provides the name, age, principal
occupation and other directorships of each nominee and
continuing director, the year in which he became a
director of the Company and the year in which his term
expires. Except as otherwise noted, each has held his
principal occupation for at least five years.
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Term
and Other Directorships Since Expires
____________________________________________ ________ ______
Nominees
<S> <C> <C>
William C. McCormick - 63 1986 1997
Chairman of the Company since October 1994;
Chief Executive Officer of the Company since
August 1991; from 1985-97, President of the
Company; from 1985-91, Chief Operating
Officer of the Company
Vernon E. Oechsle - 54 1996 1997
President and Chief Executive Officer
of Quanex Corporation, a manufacturer
of steel bars, aluminum shapes and steel
tubes and pipes; previously Executive
Vice President and Chief Operating Officer
of the automotive sector of AlliedSignal, Inc.
Steven C. Riedel - 50 N/A N/A
President and Chief Operating Officer of
the Company since May 14, 1997; formerly
Vice President and General Manager of the
Latin America operations of GE Appliances,
a division of General Electric Company
Page 2
</Page>
<PAGE>
Directors Whose Terms Continue
Peter R. Bridenbaugh - 57 1995 1998
Executive Vice President - Automotive,
Aluminum Co. of America, an integrated
producer of aluminum and other products
for the packaging, aerospace, automotive,
building and construction, and commercial
and industrial markets; from 1994-1996,
Executive Vice President and Chief
Technical Officer, Aluminum Co. of America;
from 1991-1994, Executive Vice
President - Science and Technology,
Engineering, Environment, Safety & Health,
Aluminum Co. of America
Steven G. Rothmeier - 50 1994 1998
Chairman and Chief Executive Officer
of Great Northern Capital, a private
investment and merchant banking firm,
since March 1993; formerly President
of IAI Capital Group; Director of
Honeywell, Inc., E.W. Blanch Holdings,
Inc., Department 56, Inc., and Waste
Management, Inc.
Dean T. DuCray - 56 1996 1999
Vice President and Chief Financial
Officer of York International
Corporation, a manufacturer of
heating, air conditioning, ventilation
and refrigeration equipment, since 1987
Don R. Graber - 53 1995 1999
President and Chief Operating Officer
of Huffy Corporation, a manufacturer
of outdoor leisure equipment and
services, since July 1996; from 1994
to 1996, President of Worldwide Household
Products Group, The Black & Decker
Corporation; from 1992 to 1994,
President of Black & Decker
International Group;
Roy M. Marvin - 66 1967 1999
Retired; Through May 1996, Vice
President-Administration and
Secretary of the Company
</TABLE>
Page 3
</Page>
<PAGE>
If a quorum is present at the meeting, directors will
be elected by a plurality of the votes cast by the
shareholders entitled to vote. We will treat abstentions
and broker non-votes as shares present but not voting.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table, which was prepared on the basis
of information furnished by the persons described, shows
ownership of the Company's Common Stock as of May 1, 1997
by the Chief Executive Officer, by each of the other four
most highly compensated executive officers, by the
directors and by the directors and executive officers of
the Company as a group:
<TABLE>
<CAPTION>
Percent of
Number of Shares Outstanding
Name Beneficially Owned Shares
____ __________________ ___________
<S> <C> <C>
Peter R. Bridenbaugh 750 (1) *
Mark Donegan 0 *
Dean T. DuCray 1,400 (2) *
Don R. Graber 5,250 (3) *
William D. Larsson 28,147 (4) *
Roy M. Marvin 31,021 (5) *
William C. McCormick 101,346 (6) *
Vernon E. Oechsle 1,000 *
John M. Prosser 2,637 (7) *
Steven C. Riedel 0 *
Steven G. Rothmeier 2,500 (8) *
Peter G. Waite 53,489 (9) *
All directors and executive
officers as a group
(14 persons) 237,745 (10) 1.0
</TABLE>
[FN]
__________
(*) Less than one percent of the Company's outstanding
shares of Common Stock.
(1) Includes 250 shares subject to options that are
exercisable or become exercisable by Mr. Bridenbaugh
within 60 days after May 1, 1997.
(2) Includes 400 shares held in trust for children of
Mr. DuCray.
Page 4
</Page>
<PAGE>
(3) Includes 250 shares subject to options that are
exercisable or become exercisable by Mr. Graber
within 60 days after May 1, 1997.
(4) Includes 25,647 shares subject to options that are
exercisable or become exercisable by Mr. Larsson
within 60 days after May 1, 1997.
(5) All shares held jointly with Mrs. Marvin.
(6) Includes 54,386 shares subject to options that are
exercisable or become exercisable by Mr. McCormick
within 60 days after May 1, 1997.
(7) Includes 1,637 shares subject to options that are
exercisable or become exercisable by Mr. Prosser
within 60 days after May 1, 1997.
(8) Includes 1,000 shares subject to options that are
exercisable or become exercisable by Mr. Rothmeier
within 60 days after May 1, 1997.
(9) Includes 4,875 shares owned by children of Mr. Waite,
187 shares held jointly with Mrs. Waite and 5,000
shares owned by Mrs. Waite. Includes 43,216 shares
subject to options that are exercisable or become
exercisable by Mr. Waite within 60 days after May 1,
1997.
(10) Includes 134,665 shares subject to options that are
exercisable or become exercisable within 60 days
after May 1, 1997.
COMPENSATION OF EXECUTIVE OFFICERS
Report of the Compensation Committee on Executive
Compensation
The Compensation Committee of the Board of Directors
("Committee") is composed of three non-employee directors.
Pursuant to authority delegated by the Board, the
Committee initially determines the compensation to be paid
to the Chief Executive Officer and to each of the other
executive officers of the Company. The proposed officer
compensation schedule is then submitted to the Board of
Directors for approval. Directors who are also officers of
the Company do not participate in the board action. The
Committee also is responsible for developing and making
recommendations to the Board with respect to the Company's
executive compensation policies.
Page 5
</Page>
<PAGE>
The Company's compensation policies for officers
(including the named executive officers) are designed to
compensate the Company's executives fairly and to provide
incentives for the executives to manage the Company's
businesses effectively for the benefit of its
shareholders. In fiscal 1997, the Company retained the
services of an independent consultant with special
expertise in compensation matters to assist the Committee
and the Board of Directors in the design and monitoring of
compensation arrangements that are fair and competitive
for the executives and consistent with the objectives of
the shareholders.
The key objectives of the Company's executive
compensation policies are to attract and retain key
executives who are important to the long-term success of
the Company, and to provide incentives for these
executives to achieve high levels of job performance and
enhancement of shareholder value. The Company seeks to
achieve these objectives by paying its executives a
competitive level of base compensation for companies of
similar size and industry, and by providing its executives
an opportunity for further reward for outstanding
performance in both the short term and the long term. It
is the current policy of the Committee to set base
salaries conservatively and to emphasize opportunities for
performance-based rewards through annual cash bonuses and
stock option grants.
Section 162(m) of the Internal Revenue Code of 1986
limits to $1,000,000 per person the amount that the
Company may deduct for compensation paid to any of its
most highly compensated officers in any year. The levels
of salary, bonus and other compensation paid by the
Company do not exceed this level, except that the total
compensation of Mr. McCormick for services performed in
fiscal 1997 exceeded this level by $89,000. In order to
minimize the potential for lost tax deductibility of
executive compensation of the Company's executive officers
in future years, the Committee has recommended the
adoption of the Executive Performance Compensation Plan.
See "Proposal 3: Executive Performance Compensation Plan".
Executive Officer Compensation Program. The
Company's executive officer compensation program is
comprised of three elements: base salary, annual cash
bonus and long-term incentive compensation in the form of
stock option grants.
Page 6
</Page>
<PAGE>
Salary. The Committee and the Board of Directors
established base salaries for the Company's executive
officers in fiscal 1997 after taking into account
individual experience, job responsibility and individual
performance during the prior year. These factors are not
assigned a specific weight in establishing individual base
salaries. The Committee also considered the Company's
executive officers' salaries relative to salary
information from a comparator group consisting of sixteen
companies. The comparator group was selected by the
compensation consultant with recommendations of the
Company, and included companies of similar size,
complexity and management structure as the Company.
Industry classifications, growth trends and other business
characteristics were also considered in selecting the
comparator group.
After considering the information on individual
performance and the comparative information provided by
the compensation consultant, the Committee and the Board
of Directors made specific adjustments to the 1996
compensation levels of the executive officers as
determined to be appropriate in the circumstances and in
furtherance of the Company's compensation policies. Base
salaries paid to the Company's executive officers in
fiscal 1997 were generally below the 50th percentile of
the salaries of the comparator companies considered by the
Committee in the 1997 survey.
Cash Bonuses. The purpose of the cash bonus
component of the compensation program is to provide a
direct financial incentive in the form of cash bonuses to
executives and other employees to achieve predetermined
Division and Company performance objectives. For fiscal
1997, the Company maintained five separate cash bonus
plans that included executive officers of the Company: the
Corporate Executive Bonus Program (in which
Messrs. McCormick and Larsson participated), the PCC
Structurals Executive Bonus Program (in which Mr. Donegan
participated), the PCC Airfoils Executive Bonus Program
(in which Mr. Waite participated), the PCC Flow
Technologies Executive Bonus Program (in which Mr. Watson
participated), and the PCC Specialty Products Executive
Bonus Program (in which Mr. Prosser participated). No
executive officer participated in more than one bonus
plan; however, the Corporate Executive Bonus Plan allows
for special awards to non-participants, including
Messrs. Donegan, Waite, Watson and Prosser, under
circumstances approved by the Compensation Committee.
Page 7
</Page>
<PAGE>
Under the 1997 Corporate Executive Bonus Program, the
Compensation Committee established at the beginning of the
1997 fiscal year threshold, midpoint and 100 percent of
potential bonus amounts for each executive officer,
expressed as a percentage of the executive officer's base
salary. One hundred percent of potential bonus amounts
under the Corporate Executive Bonus Program in fiscal 1997
ranged from 90 percent to 100 percent of base salary.
Larger bonuses could be paid for performance in excess of
the 100 percent of potential objectives. Performance under
the Corporate Executive Bonus Program is measured based on
four performance elements: earnings per share, operating
working capital per sales dollar, gross margin percent and
return on equity. An actual return on equity of at least
10 percent is required before an initial bonus is awarded.
Assuming a 10 percent return on equity is achieved, actual
financial results of the Company are measured for each
performance element using a point system and translated to
a "bonus factor" percentage. The bonus factor is applied
to the participant's 100 percent of potential bonus
percent under the plan, and the product is multiplied by
eligible compensation to determine the initial bonus
amount. The final bonus amount paid to an eligible
executive officer is determined by the Committee, which
has discretion to increase or decrease the formula-derived
initial bonus amount to reflect either a major unexpected
change in operations or an unusual adjustment during the
fiscal year, or to reflect individual performance.
Bonuses under the 1997 PCC Structurals, PCC Airfoils,
PCC Flow Technologies and PCC Specialty Products Executive
Bonus Programs are formula-derived. The principle factor
included in each division's formula is the respective
division's operating profit. Other factors, such as return
on assets, operating working capital per sales dollar and
quality improvements were selectively included in the
formulas based on predetermined objectives of the
division. The formulas also consider the 100 percent of
potential award percentage established by the Committee
for the executive officers who participated in the PCC
Structurals, PCC Airfoils, PCC Flow Technologies and PCC
Specialty Products Executive Bonus Programs, which ranged
from 40 percent to 95 percent of base salary for fiscal
1997. As with the Corporate Executive Bonus Program, the
initial bonus award under the PCC Structurals, PCC
Airfoils, PCC Flow Technologies and PCC Specialty Products
Executive Bonus Programs may be increased or decreased to
reflect either a major unexpected change in operations or
Page 8
</Page>
<PAGE>
an unusual adjustment during the fiscal year, or to
reflect individual performance.
Fiscal 1997 bonus awards to executive officers were
formula-derived, and no discretionary awards were approved
by the Committee under its discretionary power, except
with respect to Mr. Donegan and Mr. Larsson, for whom
special awards were made under the Corporate Executive
Bonus Program to reflect individual performance.
Stock Options. Under the Company's compensation
policy, stock options are the primary vehicle for
rewarding long-term achievement of Company goals. The
objectives of the program are to align employee and
shareholder long-term interests by creating a strong and
direct link between compensation and increases in share
value. Under the Company's 1994 Stock Incentive Plan, the
Board of Directors or the Committee may grant options to
purchase Common Stock of the Company to key employees of
the Company and its subsidiaries. Approximately 170
persons, including all of the Company's executive
officers, currently participate in the 1994 Stock
Incentive Plan. The Board of Directors makes annual grants
of nonstatutory options to acquire the Company's Common
Stock at an exercise price equal to the fair market value
of the shares on the date of grant (the closing price on
the grant date as shown on the New York Stock Exchange
Composite Transactions Listing, as published in The Wall
Street Journal). The number of shares subject to option
grants to executive officers is normally determined by
formula, on a basis intended to match the reward potential
of the participant's current 100 percent bonus opportunity
level (the percent of base salary described under Cash
Bonuses, above), if the underlying share price doubles
over the five-year period following the date of grant.
Assuming a current stock price of $50, an employee with a
bonus opportunity level of $125,000 would receive an
option to purchase 2,500 shares ($125,000 divided by the
$50 gain achieved by a doubling of stock value to $100).
The options vest in 25 percent increments over the four-
year period following grant. All nonstatutory stock
options granted to date become fully exercisable upon a
change in control of the Company.
Chief Executive Officer Compensation. The Committee
determined the Chief Executive Officer's compensation for
fiscal 1997, with the final approval of the Board of
Directors. The Chief Executive Officer's base salary was
determined based upon a review of the salaries of chief
executive officers for companies of comparable size and
Page 9
</Page>
<PAGE>
industry identified in the consultant's 1997 comparator
group and upon a review of the Chief Executive Officer's
performance. In keeping with the compensation policies
described above, which emphasize both short-term and long-
term performance rewards rather than base salary only, the
Chief Executive Officer's base salary, in conjunction with
the targeted annual bonus award, was set to approximate
the 75th percentile of total compensation paid by the
comparator companies reviewed by the Committee. The Chief
Executive Officer's bonus for fiscal 1997 was determined
under the Corporate Executive Bonus Program formula
described under Cash Bonuses, above, based upon the level
of achievement of Company performance objectives for
fiscal 1997, and was not increased or decreased under the
Committee's discretionary powers. The annual option grant
to Mr. McCormick in fiscal 1997 was determined under the
formula described under the heading "Stock Options". In
addition, in May 1996 the Committee granted to
Mr. McCormick an option to purchase 20,000 shares of
Common Stock at an exercise price of $41.94 per share in
recognition of his individual performance. Additional
information regarding the option grant is set forth below
under "Option Grants in Last Fiscal Year."
Steven G. Rothmeier, Chairman
Peter R. Bridenbaugh
Don R. Graber
Summary Compensation Table
The following table sets forth compensation paid to
the Chief Executive Officer and the other five most highly
compensated executive officers of the Company for services in
all capacities to the Company and its subsidiaries during each
of the last three fiscal years.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation(1) Awards
__________________________________ __________
Name and Other Number All
Principal Annual Of Other
Position Year Salary Bonus (2) Compensation (3) Options (4)Compensation(5)
___________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
William C. McCormick 1997 $491,265 $573,306 $72,086 30,243 $ 7,345
Chairman, President 1996 431,466 427,151 58,053 11,831 6,622
and Chief Executive 1995 388,334 313,386 1,031 16,612 4,633
Officer
Peter G. Waite 1997 308,750 563,161 86,855 10,000 3,157
Executive Vice 1996 293,130 504,038 57,543 7,761 1,742
President - Airfoils 1995 274,167 372,456 659 11,213 1,267
Mark Donegan 1997 257,509 242,143 0 12,000 848
Executive Vice 1996 226,254 200,018 0 5,887 321
President - 1995 204,167 91,680 0 8,306 39,016
Structurals
William D. Larsson 1997 206,256 244,569 24,187 7,500 1,878
Vice President and 1996 188,128 167,622 882 4,690 986
Chief Financial 1995 173,125 125,689 0 6,689 418
Officer
J. Jack Watson (6) 1997 172,572 88,162 0 0 2,520
Executive Vice President and
President - PCC Flow
Technologies, Inc.
John M. Prosser 1997 195,000 41,219 0 2,943 2,700
Executive Vice 1996 181,250 49,419 0 6,549 2,700
President and
President - PCC
Specialty Products, Inc.
</TABLE>
Page 10
</Page>
<PAGE>
[FN]
__________
(1) Includes compensation deferred at the election
of the executive officers under the Company's
401(k) plans or under the Company's Executive
Deferred Compensation Plan. Under the Company's
401(k) plans, officers and other employees of
the Company may elect to defer a percentage of
their eligible compensation (such percentage to
be selected by the participant from a range
established by the administrator of the plans,
but subject to limitations under the Internal
Revenue Code). The Company made matching
contributions to the plans in which Mr. Prosser
and Mr. Watson had elected to participate.
(2) These amounts are cash awards under the bonus
plans described under Cash Bonuses in the Report
of the Compensation Committee on Executive
Compensation.
(3) Under the Company's Executive Deferred
Compensation Plan, a participant may elect to
defer salary and/or bonus on an unsecured basis
and may select one of three performance
options: S&P 500 Index, Company Common Stock, or
Prime Rate Plus 2 percent. The figure shown
represents earnings on amounts deferred at the
election of the named executive officer to the
extent earnings exceeded 120 percent of the
applicable federal long-term rate and amounts
reimbursed during the fiscal year for the
payment of taxes.
(4) Represents shares of Common Stock issuable upon
exercise of nonstatutory stock options granted
under the Company's 1994 Stock Incentive Plan
described under Stock Options in the Report of
the Compensation Committee on Executive
Compensation. Mr. Watson's options expired upon
his retirement on January 31, 1997.
(5) All amounts for named executive officers in 1996
and 1997 represent term life insurance premiums
paid by the Company.
(6) Retired January 31, 1997.
Page 11
</Page>
<PAGE>
Option Grants in Last Fiscal Year
The following table provides information regarding
stock options granted to executive officers in fiscal
1997.
<TABLE>
<CAPTION>
Individual Grants
___________________________________________ Potential
Percent of Realizable Value at
Number of Total Assumed Annual
Securities Options Rates of Stock Price
Underlying Granted to Exercise Appreciation
Options Employees in Price Expiration for Option
Name Granted (1) Year per Share Date 5% 10%
__________________________________________________________________________
____________
<S> <C> <C> <C> <C> <C> <C>
William C. McCormick 20,000 12.1 $41.94 05/15/06 $527,400 $1,336,800
10,243 46.38 10/31/06 298,788 757,060
Peter G. Waite 10,000 4.0 46.38 10/31/06 291,700 739,100
Mark Donegan 12,000 4.8 46.38 10/31/06 350,040 886,920
William D. Larsson 7,500 3.0 46.38 10/31/06 218,775 554,325
John M. Prosser 2,943 1.2 46.38 10/31/06 85,847 217,517
J. Jack Watson 3,701 1.5 46.38 N/A (3) N/A N/A
</TABLE>
[FN]
__________
1 Options are granted at an exercise price equal to fair
market value at the date of grant (the closing price on
the grant date as shown on the New York Stock Exchange
Composite Transactions Listing, as published in The
Wall Street Journal). Options become exercisable to the
extent of 25 percent of the shares one year after the
date of grant and to the extent of 25 percent of the
shares each year thereafter. Under the terms of the
Company's 1994 Stock Incentive Plan, each of the
options is subject to accelerated vesting in the event
of a change in control of the Company. Each of the
options is subject to early termination in the event of
termination of employment. Each option terminates 12
months following death, disability or retirement at
normal retirement age or bona fide early retirement and
six months after termination of employment for any
other reason.
(2) In accordance with rules of the Securities and Exchange
Commission, these amounts are the hypothetical gains or
"option spreads" that would exist for the respective
options based on assumed rates of annual compound stock
price appreciation of five percent and ten percent from
the date the options were granted over the full option
term and do not represent the Company's estimate or
projection of the future stock price.
(3) Mr. Watson retired on January 31, 1997. All of his
options were unvested at the time of his retirement and
cannot be exercised.
Page 12
</Page>
<PAGE>
Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values
The following table indicates (i) stock options
exercised by executive officers during fiscal 1997,
including the value realized on the date of exercise,
(ii) the number of shares subject to exercisable and
unexercisable stock options as of the Company's fiscal year-
end, March 30, 1997, and (iii) the value of "in-the-money"
options at March 30, 1997.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options Held Options
Acquired Value at Fiscal Year-End at Fiscal Year-End
on Realized (Exercisable/ (Exercisable/
Name Exercise (1) Unexercisable) Unexercisable) (2)
____________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
William C. McCormick 0 $ 0 54,386/51,923 $1,856,738/802,210
Peter G. Waite 0 0 43,216/24,618 1,407,545/425,645
Mark Donegan 0 0 8,099/22,499 257,305/327,810
William D. Larsson 9,889 200,335 25,647/16,209 880,718/261,289
John M. Prosser 0 0 1,637/7,855 31,692/111,698
</TABLE>
[FN]
___________
(1) Value realized equals fair market value of the
stock on the date of exercise, less the exercise
price, times the number of shares acquired.
Taxes must be paid by the individual on the
value realized.
(2) Value of unexercised options equals the fair
market value of a share into which the option
can be converted at March 27, 1997 (market price
$52.00), less exercise price, times the number
of options outstanding.
Page 13
</Page>
<PAGE>
Return to Shareholders Performance Graph
The following line graph provides a comparison
of the annual percentage change in the Company's
cumulative total shareholder return on its Common
Stock to the cumulative total return of the S&P 500
Index, the S&P Aerospace Index, the S&P Diversified
Manufacturing Index, and a comparator group of
aerospace companies selected by the Company. The
comparison assumes that $100 was invested on
March 31, 1992 in the Company's Common Stock and in
each of the foregoing indices and, in each case,
assumes the reinvestment of dividends.
The following is a description of graphic material
omitted from the current filing:
Graph title: PRECISION CASTPARTS CORP.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL
RETURN
Type of Graph: Line Graph
X-Axis Information: Years from left to right 1992, 1993,
1994, 1995, 1996, 1997
Y-Axis Information: Dollars from bottom to top 0, 50,
100, 150, 200, 250, 300, 350.
Specific Data Points:
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(by fiscal year)
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
S&P 500 100 115 117 135 179 214
S&P Aerospace 100 113 148 178 275 320
S & P Diversified
Manufacturing (1) 100 108 127 147 208 262
Aerospace Comparator
Group (2) 100 72 73 81 143 177
Precision Castparts Corp. 100 84 124 146 225 288
</TABLE>
Page 14
</Page>
<PAGE>
[FN]
__________
(1) The S&P Diversified Manufacturing Index is
substituted for the Aerospace Comparator Group with
the 1997 Proxy Statement. Both indexes are presented
for comparative purposes in this transitional year.
Due to the Company's growth and diversification
resulting from acquisitions completed during fiscal
1997, the Company believes that the Aerospace
Comparator Group companies are no longer a
representative peer group, and that the S&P 500 Index
and the S&P Aerospace Index, in conjunction with the
S&P Diversified Manufacturing Index, provides a more
meaningful base for comparing the Company's stock
performance.
(2) The Aerospace Comparator Group consists of Hexcel
Corporation; Rohr Inc.; Sequa Corporation; SPS
Technologies, Inc. and Wyman-Gordon Company. The
Aerospace Comparator Group is supplied by the Company
on a voluntary basis and is in addition to required
performance disclosure.
Retirement Plans
The Company and its subsidiaries maintain two
retirement plans. All eligible domestic employees,
including officers and those directors who are full-time
employees, receive benefits at retirement under one of the
retirement plans. The retirement plan that covers officers
other than Mr. Prosser (the "Plan") and the retirement
plan that covers Mr. Prosser (the "SPD Plan") are based on
average monthly salary in the five consecutive years of
highest compensation (exclusive of bonuses) and length of
service with the Company. Employees do not contribute to
the Plan, and do contribute a percentage of salary to the
SPD Plan (collectively the "Retirement Plans"). The amount
of the Company's annual contribution to these plans is
based on an actuarial determination. The Plan provides
that a participant's accrued benefit will become 100
percent vested upon the occurrence of a change in control
of the Company and provides for disposition to
participants of any surplus assets in the Plan upon
termination of the Plan following a change in control of
the Company.
Page 15
</Page>
<PAGE>
The Company maintains a Supplemental Executive
Retirement Plan (the "SERP") to provide supplemental
retirement benefits to certain key employees selected by
the Compensation Committee. The SERP provides
participating employees with a supplemental retirement
benefit upon normal retirement at age 65 with 25 years of
service. The supplemental retirement benefit is designed
to pay a basic monthly benefit equal to 55 percent of
Final Average Pay (as defined in the Retirement Plans, but
including one-half of any bonus and all of any deferred
compensation) minus both the amount of any benefit under
the Retirement Plans (and any other employer-financed
benefit under another applicable tax qualified retirement
plan) and the Primary Social Security Benefit (as defined
in the Retirement Plans). For participants retiring with
less than 25 years of service at age 65, the basic benefit
under the SERP formula before offset is reduced by 1/25
for each year less than 25. There is a provision for an
actuarially reduced early retirement benefit at or after
age 55 with at least 10 years of service. For participants
retiring with more than 25 years of service at age 65, the
benefit is (a) the basic benefit before offset, plus
(b) 0.5 percent of Final Average Pay times years of
service over 25, minus (c) both the amount of any benefit
under the Retirement Plans (and other applicable plan) and
the Primary Social Security Benefit. Service and pay can
continue to accrue if retirement is deferred past age 65,
but there is no actuarial increase for deferred start of
benefits after age 65. The SERP provides for lump-sum
payment of an accelerated vested benefit in the event of
termination of employment following a change in control of
the Company. Each of the executive officers of the Company
has been designated as a participant in the SERP.
The following table shows the estimated annual
benefits payable under the Company's Retirement Plans and
SERP to employees upon normal retirement (age 65) as of
March 30, 1997. The table assumes, for purposes of
calculating the SERP portion of the estimated annual
benefit, that the employee receives an annual bonus equal
to 45 percent of salary in each year used in computing the
five-year average salary at retirement. Individual
variations in bonus awards will result in adjustments to
the SERP component of the estimated annual benefit. The
amounts listed are net of an actuarially determined offset
for estimated Social Security benefits.
Page 16
</Page>
<PAGE>
<TABLE>
<CAPTION>
Highest
Five-Year
Average
Salary at ESTIMATED ANNUAL RETIREMENT BENEFITS
Retirement Credited Years of Service at Retirement
__________________________________________________________________________
__
10 15 20 25 30 35
__________________________________________________________________________
__
<S> <C> <C> <C> <C> <C> <C>
$190,000 $ 40,669 $ 60,896 $ 86,498 $112,101 $117,919 $123,738
250,000 51,463 85,181 118,838 152,526 160,182 167,838
310,000 67,633 109,406 151,178 192,951 202,444 211,938
370,000 83,803 133,661 183,518 233,376 244,707 256,038
430,000 99,973 157,916 215,858 273,801 286,969 300,138
490,000 116,143 182,171 248,198 314,226 329,232 344,238
550,000 132,313 206,426 280,538 354,651 371,494 388,338
610,000 148,483 230,681 312,878 395,076 413,757 432,438
</TABLE>
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</Page>
<PAGE>
Benefits payable under the Retirement Plan are computed on
an actuarial basis. The following table shows the number of credited
years of service and the fiscal 1997 salaries, for purposes of the
benefit table above, for the five officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Credited Years Fiscal 1997
Name of Individual of Service Salary
___________________________________________________________
<S> <C> <C>
William C. McCormick 12 $491,265
Peter G. Waite 16 308,750
Mark Donegan 11 257,509
William D. Larsson 17 206,256
John M. Prosser 9 195,500
</TABLE>
Severance Agreements
The Company's senior executives are parties to severance
agreements with the Company. The agreements generally
provide for the payment upon termination of the executive's
employment by the Company without cause or by the employee
for "good reason" (as defined in the severance agreement)
within two years following a change in control of the
Company of an amount equal to three times that employee's
annual salary and bonus (on an after excise-tax basis), a
lump- sum pension payment based upon three additional years
of service and three years of continued coverage under life,
accident and health plans. Each executive is obligated under
the severance agreement to remain in the employ of the
Company for a period of 270 days following a "potential
change in control" (as defined in the severance agreement).
Messrs. McCormick, Waite, Donegan and Larsson have each
entered into a severance agreement.
PROPOSAL 2: TO ADOPT THE 1998
EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors Recommends a Vote "For" Proposal 2
The Board of Directors believes that ownership of
shares of its Common Stock by the Company's employees, and
by the employees of its subsidiaries, is desirable as an
incentive to better performance and improvement of profits,
and as a means by which employees may share in the Company's
growth and success. The Company's 1998 Employee Stock
Purchase Plan (the "Purchase Plan") will provide a
convenient means for employees of the Company and its
subsidiaries to purchase the Company's stock. The Plan is
the successor to the 1993 Employee Stock Purchase Plan,
which expires by its terms on December 31, 1997.
Page 18
</Page>
<PAGE>
Description of the Purchase Plan
The following summary of the Purchase Plan is qualified
in its entirety by reference to the full text of the
Purchase Plan attached to this proxy statement as Exhibit A.
Eligibility
With certain exceptions, all full-time employees of the
Company and all full-time employees of any domestic or
foreign subsidiary corporation of the Company that is
designated by the Board of Directors as a participant in the
Purchase Plan (a "Participating Subsidiary") are eligible to
participate in the Purchase Plan. However, no person is
eligible to participate in the Purchase Plan if he or she
possesses at least 5 percent of the voting power of the
Company's Common Stock. A full-time employee is one who is
an employee of the Company or of any Participating
Subsidiary on the date an option is granted pursuant to the
Purchase Plan, excluding, however, any employee whose
customary employment is fewer than 20 hours per week, or
whose customary employment is for not more than five months
per calendar year, or who is a collective bargaining unit
employee whose collective bargaining unit has rejected
participation in the Purchase Plan on behalf of employees in
that unit. An employee shall be treated as employed
continuously for all purposes of the Purchase Plan during
any period not exceeding 90 days during which he or she is
on sick, military or other bona fide leave of absence,
including layoff.
Option Grants
As of a specific date during the first month of each
calendar year, the Board of Directors may make an option
grant under the Purchase Plan to all, but not fewer than
all, eligible employees. The specific grant date selected by
the Board of Directors is referred to as the Grant Date.
Options granted pursuant to the Purchase Plan in any
year shall give each eligible employee the right to purchase
in that calendar year a number of shares of Common Stock
having on the Grant Date a fair market value of 10 percent
of the employee's straight-time annual wage or annual base
salary, but not more than 2,000 shares in any case. For
example, an employee who is an eligible employee on the
Grant Date and whose pay rate on the Grant Date is $25,000
per year would be entitled to purchase shares on the
Purchase Date (defined below) worth up to $2,500 on the
Grant Date (10 percent of straight-time wage or base salary)
but not more than 2,000 shares.
Page 19
</Page>
<PAGE>
Option Terms
The option price for all options granted under the
Purchase Plan will be specified by the Board of Directors at
the time the grant is made, but may not be lower than the
lesser of (i) 85 percent of the fair market value of a share
of Common Stock on the Grant Date or (ii) 85 percent of the
fair market value of a share of Common Stock on the Purchase
Date. Unless otherwise determined by the Board of Directors,
the fair market value of a share of Common Stock is equal to
the closing price of a share of Common Stock on such date as
shown on the New York Stock Exchange Composite Transactions
Listing, as published in The Wall Street Journal. In the
event that the Common Stock is no longer listed on the New
York Stock Exchange, or the price is no longer shown on the
New York Stock Exchange Composite Transactions Listing, then
the Board of Directors or the Committee (defined below)
shall substitute a comparable source of closing price
information.
An employee may participate in the Purchase Plan with
respect to all or a portion of the shares covered by the
option by submitting to the Company, on a form supplied by
the Company, a subscription and payroll deduction
authorization. The payroll deduction authorization will
authorize the employing corporation to deduct a specific
amount from each of the employee's regular paychecks
beginning with the payroll period after which the payroll
deduction authorization was submitted and continuing until
the last payroll period before the Purchase Date or until
the employee amends or terminates the payroll deduction
authorization. The employee may not specify a payroll
deduction amount that is less than one percent or greater
than 10 percent of the gross amount of the employee's
straight-time wage or base salary for each payroll period.
After an employee has begun participating in the Purchase
Plan by initiating payroll deductions, the employee may
change the authorized payroll deduction percentage at each
pay period, and the change will be effective in the next
payroll period. An employee may suspend the deduction at any
time, and the suspension will be effective in the next
payroll period after the deduction is suspended. Accumulated
deductions will be refunded, without interest, within 30
days upon written request. After suspension, deduction may
be resumed, but not until at least one month after the
deduction was suspended. No monetary consideration is paid
to the Company upon the granting of options.
Shares subject to the options, to the extent of
exercise of the options by eligible employees, shall be
purchased on December 31 of the year in which the Grant Date
occurs (the "Purchase Date") or on certain earlier Special
Purchase Dates (defined below). To the extent options
Page 20
</Page>
<PAGE>
granted under the Purchase Plan are not exercised by the
Purchase Date, the options shall expire and be of no further
force or effect.
Except as specifically provided in the Purchase Plan,
no shares may be purchased unless the purchaser is employed
by the Company or a Participating Subsidiary on the Purchase
Date and shall have been so employed continuously since the
Grant Date. If the employee's employment by the Company or a
Participating Subsidiary is terminated by death, any shares
available for purchase by the employee may be purchased on
the Purchase Date. To the extent shares available for
purchase by a deceased employee are not purchased on the
Purchase Date, all further rights to purchase shares
pursuant to the option granted on the Grant Date shall cease
and terminate. If the employee's employment by the Company
or a Participating Subsidiary is terminated by retirement on
or before September 30, in the year in which the Grant Date
occurs, any shares available for purchase by the employee
may be purchased on the last business day of the second full
calendar month after the month in which the employee's
retirement date occurs (the "Special Purchase Date"). To the
extent shares available for purchase by an employee retiring
on or before September 30, in the year in which the Grant
Date occurs, are not purchased on the Special Purchase Date,
all further rights to purchase shares pursuant to the
Purchase Plan shall cease and terminate, and accumulated
deductions will be refunded. If an employee's employment by
the Company or a Participating Subsidiary is terminated by
retirement after September 30, in the year in which the
Grant Date occurs, any shares available for purchase by the
employee may be purchased on the Purchase Date. To the
extent shares available for purchase by an employee retiring
after September 30, in the year in which the Grant Date
occurs, are not purchased on the Purchase Date, all further
rights to purchase shares pursuant to the Purchase Plan
shall cease and terminate.
Rights to purchase shares under the Purchase Plan shall
not be transferable or assignable by the employee except by
will or by the laws of descent and distribution of the state
or country of the employee's domicile at the time of death
and shall be exercisable during the employee's lifetime only
by the employee.
All amounts withheld from an employee's pay pursuant to
the Purchase Plan shall be credited to an account
established for the employee (the "employee's account"). No
interest will be paid on the account. The total amount
credited to an employee's account on the Purchase Date, or
the Special Purchase Date, if applicable, will be used to
purchase full and fractional shares under the Purchase Plan,
subject to the applicable limits on available shares. If the
total amount in any employee's account, or the aggregate of
Page 21
</Page>
<PAGE>
all employees' accounts, would purchase shares in excess of
the applicable limits, the excess will be refunded to the
employees affected by the limits. Upon the purchase of
shares under the Purchase Plan, the number of shares
available under the Purchase Plan for future option grants
will be reduced by the number of shares purchased.
Shares Reserved For Issuance
The Company has reserved 1,000,000 shares of its Common
Stock for issuance under the Purchase Plan. The number of
shares issuable under the Plan is subject to adjustment in
the event of stock dividends, stock splits, combinations of
shares, recapitalizations or other changes in outstanding
Common Stock. Any adjustment will be made by the Board of
Directors, whose determination will be conclusive. The 1993
Employee Stock Purchase Plan currently has 2,250,000 shares
of Common Stock reserved for issuance thereunder. It is
estimated that at least 2,150,000 of these shares will
remain unused when that Plan expires, and will return to
unreserved status. Therefore, the shares to be reserved for
use under the Purchase Plan will not result in any net
increase in total shares reserved for use under the
Company's employee stock purchase plans.
Duration and Amendment
The Purchase Plan shall terminate when all of the
shares reserved for purposes thereof have been purchased, or
on December 31, 2007, whichever is earlier, provided that
the Board of Directors of the Company in its sole discretion
may at any time terminate the Purchase Plan without any
obligation on account of such termination, except that such
termination shall not affect outstanding rights to purchase
shares.
The Board of Directors may from time to time amend the
Purchase Plan in any and all respects, except that without
the affirmative vote of the holders of a majority of the
shares of the Company voting on the amendment at a validly
held meeting of shareholders, the Board of Directors may not
(a) increase the number of shares reserved for the Purchase
Plan (except for adjustments in the event of stock
dividends, stock splits, combinations of shares,
recapitalizations, or other changes in the outstanding
Common Stock), (b) extend the term of the Purchase Plan,
(c) decrease the purchase price of shares offered pursuant
to the Purchase Plan, (d) materially increase benefits
accruing to employees under the Purchase Plan, or
(e) materially modify eligibility requirements under the
Purchase Plan.
Page 22
</Page>
<PAGE>
Administration
The Purchase Plan shall be administered by the Employee
Stock Purchase Plan Committee (the "Committee"), which shall
consist of three or more employees appointed by the Board of
Directors of the Company. The Board of Directors may at any
time remove any member of the Committee, with or without
cause, fill vacancies and appoint new members of the
Committee. The Committee shall have authority to promulgate
rules and regulations for the operation of the Purchase
Plan, to adopt forms for use in connection with the Purchase
Plan, to decide any question of interpretation of the
Purchase Plan or rights arising under the Purchase Plan and
generally to supervise the administration of the Purchase
Plan. The Committee may consult with counsel for the Company
on any matter arising under the Purchase Plan. All
determinations and decisions of the Committee shall be
conclusive. No member of the Committee shall receive any
compensation for serving as a member of the Committee.
Tax Consequences
The following is a summary of the United States federal
income tax consequences that generally will arise with
respect to participation in the Purchase Plan and with
respect to the sale of Common Stock acquired under the
Purchase Plan. The Purchase Plan is intended to qualify as
an "employee purchase plan" within the meaning of
Section 423 of the Internal Revenue Code of 1986. Under the
Internal Revenue Code of 1986, employees are not taxed on
income or gain with respect to the Purchase Plan either at
the Grant Date or at the Purchase Date. If an employee
disposes of the shares purchased under the Purchase Plan
more than two years after the Grant Date, the employee will
be required to report as ordinary compensation income for
the taxable year of disposition an amount equal to the
lesser of (1) the excess of the fair market value of the
shares at the time of disposition over the purchase price or
(2) 15 percent of the fair market value of the shares on the
Grant Date. Any gain on the disposition in excess of the
amount treated as ordinary compensation income will be
capital gain. In the case of such a disposition, the Company
will not be entitled to any deduction from income.
If an employee disposes of shares purchased under the
Purchase Plan within two years after the Grant Date, the
employee will be required to report the excess of the fair
market value of the shares on the Purchase Date over the
purchase price as ordinary compensation income for the year
of disposition. Any difference between the fair market value
of the shares on the Purchase Date and the disposition price
will be capital gain or loss, either short-term or long-term
depending upon the employee's holding period for the shares.
Page 23
</Page>
<PAGE>
In the event of a disposition within two years after the
Grant Date, the Company will be entitled to a deduction from
income in the year of such disposition equal to the amount
that the employee is required to report as ordinary
compensation income.
Recommendation by the Board
The Board of Directors recommends a vote FOR this
Proposal Number 2. If a majority of the shares entitled to
vote is present at the meeting, the proposal will be adopted
if more shares are cast for the proposal than are cast
against the proposal. Abstentions and broker non-votes are
counted for purposes of determining whether a majority of
the shares entitled to vote is present at the meeting, but
are not counted and have no effect on the results of the
vote.
PROPOSAL 3: TO ADOPT THE
EXECUTIVE PERFORMANCE COMPENSATION PLAN
The Board of Directors Recommends a Vote "For" Proposal 3
The Board of Directors recommends that the shareholders
approve the adoption of the proposed Precision Castparts
Corp. Executive Performance Compensation Plan (the
"Performance Plan"). The sole purpose for instituting the
Performance Plan is to assure the current federal income tax
deductibility of annual incentive compensation earned by the
executive officers of the Company, while making minimal
changes to the processes the Company has used in the past to
award annual cash bonuses. The complete text of the
Performance Plan is set forth in Exhibit B to this proxy
statement, and shareholders are urged to review the plan
together with the following information, which is qualified
in its entirety by referring to Exhibit B.
General
Section 162(m) of the Internal Revenue Code provides
that, effective for tax years beginning on or after
January 1, 1994, a publicly owned corporation, subject to
certain exceptions, may not deduct compensation in excess of
$1 million per year paid to such corporation's chief
executive officer and its four other most highly paid
executive officers. One of the exceptions is for
performance-based compensation paid under a
shareholder-approved plan that satisfies certain conditions
of Section 162(m). The Performance Plan will provide
incentive compensation awards to certain of the Company's
officers, as identified by the Compensation Committee of the
Page 24
</Page>
<PAGE>
Board of Directors of the Company, on the basis of selected
performance measures to qualify the awards as
performance-based and, therefore, fully tax deductible under
Section 162(m).
Description of the Executive Performance Compensation Plan
Eligibility
The persons eligible to participate in the plan are the
officers of the Company designated each year by the
Compensation Committee. The officer group designated for
fiscal 1998 consists of seven officers.
Threshold Parameter
Each year the Compensation Committee will select a
threshold parameter for each officer, which will consist of
one or more performance criteria for the Company or any
subsidiary, division or other unit of the Company and an
objectively determinable performance level for each
criterion which is to be achieved. The performance criteria
may be any of the following: net income, operating income,
gross margins, earnings per share, revenues, market share,
cash flow, generation of free cash, working capital,
retained earnings, stock price, total stockholder return,
operating expense ratios, return on sales, return on equity,
return on capital, return on assets, return on investments,
inventory turns, comparative performance of one or more of
the above criteria to the performance of other corporations,
or any of the above criteria before the effect of
acquisitions, divestitures, accounting changes, or
restructuring or other special charges (as determined by the
Compensation Committee at the time of establishing the
threshold parameter). If the threshold parameter is not
achieved, no performance compensation award ("bonus") will
be paid for that year.
Bonus Amount
The amount of bonus to be awarded to each participant
if the threshold parameter is achieved is $1.5 million,
provided that the Compensation Committee, in its sole
discretion, may cancel or reduce the amount of any bonus.
The Compensation Committee intends to exercise its negative
discretion by establishing additional conditions and terms
for determining the actual amount of bonus to be awarded,
including the achievement of other financial, strategic or
individual goals, which may be objective or subjective, as
it deems appropriate. The maximum bonus amount of
$1.5 million has been set above the Company's historical and
Page 25
</Page>
<PAGE>
presently anticipated bonus levels for executive officers,
because the 162(m) regulations allow only "negative
discretion" in respect of this type of plan, and the
Compensation Committee wants flexibility to recognize
exceptional performance when warranted.
Administration
The Performance Plan will be administered by the
Compensation Committee, which will have the sole authority
to interpret any provision of the Performance Plan.
1998 Target Awards
At the beginning of the 1998 fiscal year, the
Compensation Committee established performance targets and
target awards under the Performance Plan for the officers
for fiscal 1998. As in prior years under the Company's
annual executive bonus programs, target awards for fiscal
1998 are based on the achievement of certain pre-established
performance criteria. The principal criteria, depending on
each officer's job responsibilities, are division operating
profits or earnings per share. Other pre-determined
performance criteria, such as return on assets, operating
working capital per sales dollar, sales growth, quality
improvements and economic value added (EVA) improvements,
are also established on a selective basis for each officer
and are considered in determining target awards for fiscal
1998. The actual amounts to be paid under the Performance
Plan cannot be determined at this time, as such amounts are
dependent upon the Company's performance for the current
fiscal year. However, since the Performance Plan is a
continuation of the Company's annual executive bonus
programs, shareholders may assume that if the Performance
Plan had been in effect for fiscal 1997, the actual bonus
compensation received by the named officers, as shown in the
Summary Compensation Table on page 7, would approximate the
bonus awards received under the Performance Plan. All
officers as a group, including the named officers, received
bonus compensation for fiscal 1997 of $1,987,910.
Termination
The Board of Directors of the Company may terminate the
Performance Plan at any time. In the event the shareholders
fail to approve the Performance Plan at the Annual Meeting,
the Performance Plan will automatically terminate.
Directors' Recommendation
The Board of Directors recommends a vote FOR this
Proposal Number 3. If a majority of the shares entitled to
vote is present at the meeting, the proposal will be adopted
if more shares are cast for the proposal than are cast
against it. Abstentions and broker non-votes are counted for
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</Page>
<PAGE>
purposes of determining whether a majority of the shares
entitled to vote is present at the meeting, but are not
counted and have no effect on the results of the vote. If
the proposed Performance Plan is not approved, the
Compensation Committee, since incentive compensation is
considered to be an integral part of the Company's executive
compensation program, may consider the implementation of
some other incentive compensation program irrespective of
whether any amount paid under such program would be
deductible under Section 162(m).
PROPOSAL 4: TO AMEND THE 1987
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
The Board of Directors Recommends a Vote "For" Proposal 4
The Board of Directors believes that the Company's
ability to grant options to purchase Common Stock to
non-employee directors enhances the Company's ability to
attract and retain the best available candidates for the
Board of Directors and provides an incentive for persons
serving as directors to exert their best efforts on the
Company's behalf. The Company's 1987 Non-Employee Directors'
Stock Option Plan (the "Directors' Plan") will expire
August 4, 1997. Consequently, the Compensation Committee has
approved, and the Board has ratified, the amendment of the
Directors' Plan to extend the term for an additional
five years. The Compensation Committee has also approved,
and the Board has also ratified, technical amendments to the
Directors' Plan which include: (i) increasing the number of
shares reserved for issuance under the Directors' Plan from
100,000 to 150,000 to reflect past adjustments made in
accordance with paragraph 8 of the Directors' Plan, and
(ii) changing the method of determining the exercise price
of the options to reflect the listing of the Company's
Common Stock on the New York Stock Exchange.
Although shareholder approval is not required by law
for the adoption of the Directors' Plan, because directors
will be eligible to receive shares of the Company's Common
Stock through the exercise of stock options under the
Directors' Plan, and because shareholder approval is
necessary in order to list additional shares of Common Stock
under the Directors' Plan, with the New York Stock Exchange,
the Board of Directors has referred this proposal to the
shareholders for approval. An aggregate of 150,000 shares of
Common Stock, less shares issued with respect to options
that have been exercised to date, have been reserved for
issuance under the Directors' Plan. After giving effect to
adjustments for stock dividends and after deduction of
shares with respect to which options have previously been
granted, an aggregate of 83,500 shares of Common Stock
remain available for grant under the Directors' Plan. No
additional shares are sought to be authorized for use under
the Directors' Plan.
Page 27
</Page>
<PAGE>
Description of the Directors' Plan
The following summary of the Directors' Plan is
qualified in its entirety by reference to the full text of
the Directors' Plan attached to this proxy statement as
Exhibit C.
Eligibility
Any director who is not an employee of the Company or
any of its subsidiaries and has not, within two years, been
an employee of the Company or any of its subsidiaries (a
"Non-Employee Director") is eligible to receive options
under the Directors' Plan.
Non-Discretionary Annual Option Grants
On the date of each annual meeting of shareholders,
each new Non-Employee Director is automatically granted an
option to purchase 1,000 shares of Common Stock at the time
of his or her initial election to the Board. Each Non-
Employee Director who is reelected at such meeting or who
continues in office, serving a term for which such director
was previously elected, also is automatically granted an
option to purchase 1,000 shares of Common Stock. If the
amendment to the Directors' Plan is approved by the
shareholders and all directors standing for reelection are
reelected, Messrs. Oechsle, Bridenbaugh, Rothmeier, DuCray
and Graber will each be automatically granted an option for
1,000 shares of Common Stock on the date of the annual
meeting.
Option Terms
The option price for all options granted under the
Directors' Plan is the fair market value of the Common Stock
on the date the option is granted. No monetary consideration
is paid to the Company upon the granting of options. All
options have a ten year term from the date of grant. Each
option becomes exercisable for 25 percent of the number of
shares covered by the option at the end of each of the first
four years of the option term. Options may be exercised only
while the optionee is a director of the Company, within one
month after the date the optionee terminates as a director,
or within one year after the death, disability or retirement
under the Company's policy requiring retirement of directors
of the optionee. Options become fully exercisable upon
normal retirement or in the event a director does not stand
for reelection because a Change in Control (as defined in
the Directors' Plan) of the Company has occurred. During the
optionee's lifetime, an option is exercisable only by the
optionee. Options are not transferable except upon the death
of the optionee.
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</Page>
<PAGE>
At the date of exercise, the optionee may pay the full
option price in cash or in shares of Common Stock previously
acquired by the optionee valued at fair market value. The
use of previously acquired shares to pay the option price
enables the optionee to avoid the need to fund the entire
purchase with cash. Upon exercise of an option, the number
of shares subject to the option and the number of shares
available under the Directors' Plan for future option grants
are reduced by the number of shares with respect to which
the option is exercised.
Duration
The Directors' Plan will be in effect until options
have been granted and exercised with respect to all shares
available for the Directors' Plan. However, no option can be
granted under the Directors' Plan after August 4, 2002. The
Board of Directors may terminate the Directors' Plan at any
time, except with respect to options already outstanding.
Administration
The Board of Directors is responsible for the general
administration and interpretation of the Directors' Plan. No
director may participate in any decision relating
exclusively to an option granted to the director.
Limited Stock Appreciation Rights
A limited stock appreciation right (a "Limited Right")
is granted in conjunction with each option. Upon the
exercise of a Limited Right, the participant receives
payment from the Company in an amount determined by
multiplying: (i) the difference between (a) the highest per
share price of the Company's Common Stock paid in a
transaction constituting a Change in Control or the average
per share price on the New York Stock Exchange during the
30-day period ending on the date immediately preceding the
Change in Control and (b) the exercise price, times (ii) the
number of shares with respect to which the Limited Right is
exercised. Thus, a Limited Right will have value only if the
Company's Common Stock appreciates in value after the date
of grant.
If six months have elapsed since the date of grant of
the option, the Limited Rights are exercisable during a
90-day period beginning on the first day following a Change
in Control. Limited Rights are subject to the same maximum
time limits as are applicable to options granted under the
Directors' Plan.
Page 29
</Page>
<PAGE>
Tax Consequences
The following discussion is intended to provide an
overview of the U.S. federal income tax laws which are
generally applicable to options granted under the Directors'
Plan as of the date of this proxy statement. Persons or
entities in differing circumstances may have different tax
consequences, and the tax laws may change in the future.
This discussion is not to be construed as tax advice.
Options under the Directors' Plan will be treated as
nonstatutory stock options for federal income tax purposes.
Under current federal income tax law, no income is realized
by the grantee of a nonstatutory option until the option is
exercised. At the time of exercise of the nonstatutory
option, the optionee will realize ordinary income, and the
Company will be entitled to a deduction, in the amount by
which the market value of the shares subject to the option
at the time of exercise exceeds the exercise price. Upon
sale of the shares acquired upon the exercise of a
nonstatutory option, the excess of the amount realized from
the sale over the market value of the shares on the date of
exercise will constitute long-term capital gain if the
shares have been held for the required holding period.
Recommendation by the Board
The Board of Directors recommends a vote FOR this
Proposal Number 4. If holders of a majority of the shares of
Common Stock vote on the proposal, the proposal will be
adopted if a majority of the votes cast are cast for the
proposal. Abstentions have the same effect as "no" votes in
determining whether the proposal is adopted. Broker
non-votes are not counted as voted on the proposal and
therefore have no effect on the results of the vote.
PROPOSAL 5: APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS
The Board of Directors Recommends a Vote "For" Proposal 5
On May 14, 1997, Price Waterhouse LLP was appointed to
act as auditors of the Company's financial statements for
the fiscal year ending March 29, 1998. To be effective, the
appointment must be ratified by the shareholders.
Representatives of Price Waterhouse will be at the meeting,
will be able to make a statement if they wish and will be
available to answer your questions.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Company's outstanding voting securities at the
close of business on June 6, 1997, consisted of 24,103,387
shares of common stock, without par value (the "Common
Page 30
</Page>
<PAGE>
Stock"), each of which is entitled to one vote on all
matters to be presented at the meeting. Only shareholders of
record at the close of business on June 6, 1997, are
entitled to notice of and to vote at the meeting or any
adjournment thereof. The Common Stock does not have
cumulative voting rights.
The following table shows information about each person
known to the Company to be the beneficial owner of more than
five percent of the Company's outstanding Common Stock on
May 1, 1997, based on information contained in a Form 13G
filed by the shareholder.
<TABLE>
<CAPTION>
Number Percent
of of
Shares Outstanding
Name and Address of Beneficial Owner Owned Shares
____________________________________ _______ ___________
<S> <C> <C>
Wellington Management Company 2,622,095 10.9
75 State Street
Boston, MA 02109
State Farm Mutual
Automobile Insurance Company 1,531,100 6.4
One State Farm Plaza
Bloomington, IL 61710
</TABLE>
BOARD COMPENSATION, ATTENDANCE AND COMMITTEES
In fiscal 1997, the Company's Board of Directors met in
person four times and once via telephone conference call.
The Company's directors, other than full-time employees, are
paid $20,000 per year plus $1,500 for each Board meeting
attended, $750 for each telephonic board meeting attended
and $1,000 for each committee meeting attended. Directors
who are not employees of the Company are also eligible to
receive a per diem of up to $1,000 in the event the director
is requested to perform additional service beyond that
normally expected of directors. Each director attended at
least 75 percent of the aggregate number of meetings of the
Board of Directors and the committees of which he was a
member.
Any director who is not an employee of the Company and
has not, within two years, been an employee of the Company
(a "Non-Employee Director") will be eligible to receive
options under the proposed amendment to the 1987
Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"). The option price for all options granted under the
Directors' Plan will be the fair market value of the Common
Stock on the date the option is granted. On the date of each
annual meeting of shareholders, each new Nonemployee
Page 31
</Page>
<PAGE>
Director will automatically be granted an option to purchase
1,000 shares of Common Stock at the time of his or her
initial election to the Board. Each Non-Employee Director
who is re-elected at such meeting or who continues in
office, serving a term for which such director was
previously elected, will also automatically be granted an
option to purchase 1,000 shares of Common Stock. On the date
of the 1996 Annual Meeting of Shareholders, Messrs. DuCray,
Bridenbaugh, Graber, Rothmeier and Sangrey each were
automatically granted an option for 1,000 shares of Common
Stock at an exercise price of $35.25 per share under the
Directors' Plan. All options have a 10-year term from the
date of grant. Each option becomes exercisable for 25
percent of the number of shares covered by the option at the
end of each of the first four years of the option term.
Options may be exercised only while the optionee is a
director of the Company, within one month after the date the
optionee terminates service as a director or within one year
after the optionee's death, disability or retirement under
the Company's policy requiring retirement of directors.
Options become fully exercisable upon normal retirement or
in the event a director resigns or is removed within 12
months of a change in control of the Company.
The Board of Directors has five standing committees.
The Compensation Committee makes recommendations to the
Board of Directors concerning officers' compensation and the
granting of stock options. See "Report of the Compensation
Committee on Executive Compensation," above. Its members are
Messrs. Bridenbaugh, Graber and Rothmeier. The Nominating
Committee makes recommendations to the Board of Directors
concerning nominees to the Board of Directors. Its members
are Messrs. DuCray, McCormick and Rothmeier. The Executive
Committee has authority to exercise the power of the Board
of Directors, with certain exceptions, between meetings of
the Board of Directors. Its members are Messrs. Bridenbaugh,
Graber, McCormick and Rothmeier. The Audit Committee meets
with management, internal auditors and the Company's
independent public accountants, who have access to the Audit
Committee with and without the presence of management
representatives. The Audit Committee is composed of
Messrs. DuCray, Graber and Oechsle. The Environmental
Committee meets quarterly with the Company's Environmental
Affairs Manager to monitor and advise on environmental
matters concerning the Company. The Environmental Committee
is composed of Mr. Marvin. The Compensation Committee met
three times separate from Board meetings, the Audit
Committee met two times and the Environmental Committee met
three times in fiscal 1997. The Nominating Committee and the
Executive Committee did not hold meetings separate from
Board meetings in fiscal 1997. Shareholders who wish to
submit names to the Nominating Committee for consideration
should do so in writing between May 22, 1998, and June 16,
Page 32
</Page>
<PAGE>
1998, addressed to the Nominating Committee, c/o Corporate
Secretary, Precision Castparts Corp., 4650 SW Macadam,
Suite 440, Portland, Oregon 97201, setting forth (a) as to
each nominee whom the shareholder proposes to nominate for
election or reelection as a director, (i) the name, age,
business address and residence address of the nominee,
(ii) the principal occupation or employment of the nominee,
(iii) the class and number of shares of capital stock of the
Company beneficially owned by the nominee and (iv) any other
information concerning the nominee that would be required,
under the rules of the Securities and Exchange Commission,
in a proxy statement soliciting proxies for the election of
such nominee; and (b) as to the shareholder giving the
notice, (i) the name and record address of the shareholder
and (ii) the class and number of shares of capital stock of
the Company beneficially owned by the shareholder.
Certain Transactions
Upon Mr. Marvin's retirement as Vice
President-Administration and Secretary of the Company in
May 1996, the Company entered into a consulting arrangement
with Mr. Marvin pursuant to which Mr. Marvin provided advice
and counsel to the Company on matters including transition
of certain of his former responsibilities and special
projects. This arrangement concluded in December 1996.
Mr. Marvin's compensation under this arrangement was $8,333
per month, plus automobile mileage and membership dues.
In April 1997, Mr. Steven C. Riedel commenced
employment with the Company as President and Chief Operating
Officer. Mr. Riedel is also a nominee for director. The
terms of Mr. Riedel's employment include the following, in
addition to receipt of the Company's standard employee
benefits: Mr. Riedel will receive a base salary of $375,000
per year, a signing bonus payable in the amounts of
$500,000, $400,000 and $300,000 on the first, second and
third anniversary of the commencement of employment,
respectively, and reimbursement for the cost of relocation
to Portland, Oregon. Upon commencement of employment he was
granted an option to purchase 40,000 shares of common stock
of the Company at an exercise price equal to the fair market
value at the date of grant. Mr. Riedel is also entitled to
participate in the Company's Executive Performance
Compensation Plan, will be eligible for future increases in
base compensation based on merit, and is eligible to receive
additional option grants at the discretion of the Board of
Directors or the Committee. Mr. Riedel's terms of employment
provide that if he voluntarily resigns or is terminated for
cause by the Company during his first three years of
employment, any unpaid portion of the signing bonus will be
forfeited. If his employment is terminated for other reasons
Page 33
</Page>
<PAGE>
during the first two years, he will be entitled to receive
an amount equal to the first two years signing bonus plus
six months of base salary.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's executive officers and directors, as
well as persons who own more than 10 percent of the
Company's Common Stock, to file initial reports of ownership
and reports of changes in ownership of Common Stock of the
Company with the Securities and Exchange Commission. To the
Company's knowledge, based solely on reports and other
information submitted by executive officers and directors,
the Company believes that during the year ended March 31,
1997, each of its executive officers, directors and persons
who own more than 10 percent of the Company's Common Stock
complied with all applicable Section 16(a) filing
requirements, except that each of Messrs. David Norris,
Istvan Vamos and Vernon Oechsle were late in filing their
Initial Report of Beneficial Ownership on Form 3 and Mr. Don
Graber was late in filing a Statement of Changes in
Beneficial Ownership on Form 4.
ANNUAL REPORT
We have included a copy of the Company's 1997 Annual
Report with this statement.
METHOD AND COST OF SOLICITATION
The Company will pay the cost of soliciting proxies. In
addition to soliciting proxies by mail, the Company's
employees may request the return of proxies in person or by
telephone. We have hired Morrow & Co. to help solicit
proxies. Morrow & Co.'s services cost $5,500. Brokers and
persons holding shares for the benefit of others may incur
expenses in forwarding proxies and accompanying materials
and in obtaining permission from beneficial owners of stock
to execute proxies. On request, we will reimburse those
expenses.
OTHER BUSINESS/DISCRETIONARY AUTHORITY
We do not intend to present any business for action at
the meeting other than the business discussed above. We do
not know of any matters that others may present. If any
other matter is properly presented at the meeting, your
submission of a valid proxy means that you intend to vote in
accordance with our recommendations.
Page 34
</Page>
<PAGE>
SHAREHOLDER PROPOSALS
If you have a proposal that you wish to be considered
for inclusion in next year's proxy material, we must receive
your proposal at our principal office by February 25, 1998.
Our mailing address is 4650 SW Macadam, Suite 440, Portland,
Oregon 97201.
Whether you plan to attend the meeting or not, please
sign the enclosed proxy form and return it to us in the
enclosed stamped, return envelope.
Ruth A. Beyer
Secretary
Portland, Oregon
June 25, 1997
Page 35
</Page>
<PAGE>
EXHIBIT A
PROPOSED
PRECISION CASTPARTS CORP.
1998 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose of the Plan. Precision Castparts Corp. (the
"Company") believes that ownership of shares of its common stock
by its employees, and by the employees of its subsidiaries, is
desirable as an incentive to better performance and improvement
of profits, and as a means by which employees may share in the
Company's growth and success. The purpose of the Precision
Castparts Corp. 1998 Employee Stock Purchase Plan (the "Plan") is
to provide a convenient means for employees of the Company and
its subsidiaries to purchase the Company's stock.
2. Shares Reserved for the Plan. There are 1,000,000 shares of
the Company's authorized but unissued Common Stock (the "Common
Stock"), reserved for the Plan. The number of shares reserved is
subject to adjustment in the event of stock dividends, stock
splits, combinations of shares, recapitalizations or other
changes in the outstanding Common Stock. The determination of
whether an adjustment shall be made and the manner of any
adjustment shall be made by the Board of Directors of the Company
(the "Board of Directors") without any further approval from the
shareholders, which determination shall be conclusive.
3. Administration of the Plan. The Plan shall be administered
by the Employee Stock Purchase Plan Committee (the "Committee"),
which shall consist of three or more employees appointed by the
Board of Directors. The Board of Directors may at any time remove
any member of the Committee, with or without cause, fill
vacancies and appoint new members of the Committee. The Committee
shall have authority to promulgate rules and regulations for the
operation of the Plan, to adopt forms for use in connection with
the Plan, to decide any question of interpretation of the Plan or
rights arising under the Plan and generally to supervise the
administration of the Plan. The Committee may consult with
counsel for the Company on any matter arising under the Plan. All
determinations and decisions of the Committee shall be
conclusive. No member of the Committee shall receive any
compensation for serving as a member of the Committee.
4. Eligible Employees. Except as provided below, all full-time
employees of the Company and all full-time employees of any
domestic or foreign subsidiary corporation of the Company that is
designated by the Board of Directors as a participant in the Plan
(a "Participating Subsidiary") are eligible to participate in the
Plan. Any employee who, after receiving an option pursuant to the
Plan, would own or be deemed under section 425(d) of the Internal
Revenue Code of 1986, as amended (IRC) to own stock (including
stock that may be purchased under any outstanding options)
possessing five percent or more of the total combined voting
Page A-1
</Page>
<PAGE>
power or value of all classes of stock of the Company or, if
applicable, its parent or subsidiaries, shall be ineligible to
participate in the Plan. A full- time employee is one who is an
employee of the Company or of any Participating Subsidiary on the
date an option is granted pursuant to the Plan, excluding,
however, any employee whose customary employment is fewer than 20
hours per week or whose customary employment is for not more than
five months per calendar year or who is a collective bargaining
unit employee whose collective bargaining unit has rejected
participation in the Plan on behalf of employees in that unit.
Such rejection shall be effective until revoked by written notice
to the Company. An employee shall be treated as employed
continuously for all purposes of the Plan during any period not
exceeding 90 days during which he or she is on sick, military or
other bona fide leave of absence, including layoff.
5. Participation in the Plan. As of a specific date during the
first month of each calendar year, the Board of Directors may
make an option grant under the Plan to all, but not fewer than
all, eligible employees. The specific grant date selected by the
Board of Directors is referred to as the Offer Date. Shares
subject to the options, to the extent of exercise of the options
by eligible employees, shall be purchased on December 31 of the
year in which the Offer Date occurs (the "Purchase Date") or the
earlier Special Purchase Dates (as defined below) specified under
Section 12(c) with respect to certain retirees. To the extent
options granted under the Plan are not exercised by the Purchase
Date, the options shall expire and be of no further force or
effect.
Options granted pursuant to the Plan in any year shall give
each eligible employee the right to purchase in that calendar
year a number of shares of Common Stock having on the date of
grant (the "Grant Date") a fair market value of 10 percent of the
employee's straight-time annual wage or annual base salary, but
not more than 2,000 shares in any case. For example, an employee
who is an eligible employee on the Grant Date and whose pay rate
on the Grant Date is $25,000 per year would be entitled to
purchase shares on the Purchase Date worth up to $2,500 on the
Grant Date (10 percent of straight-time wage or base salary) but
not more than 2,000 shares.
No options may be granted pursuant to the Plan that would
allow an employee's right to purchase shares under all stock
purchase plans of the Company and its subsidiaries, to which IRC
section 423 applies, to accrue at a rate that exceeds $25,000 of
fair market value of shares (determined on the Grant Date) for
the calendar year in which the Grant Date occurs. For this
purpose, the right to purchase shares pursuant to an option
accrues on the Purchase Date or Special Purchase Date for certain
retirees, if applicable.
Page A-2
</Page>
<PAGE>
An employee may participate in the Plan with respect to all
or a portion of the shares covered by the option by submitting to
the Company, on a form supplied by the Company, a subscription
and payroll deduction authorization. The payroll deduction
authorization will authorize the employing corporation to deduct
a specific amount from each of the employee's regular paychecks
beginning with the payroll period after which the payroll
deduction authorization was submitted and continuing until the
last payroll period before the Purchase Date or until the
employee amends or terminates the payroll deduction
authorization. The employee may not specify a payroll deduction
amount that is less than 1 percent or greater than 10 percent of
the gross amount of the employee's straight-time wage or base
salary for each payroll period. After an employee has begun
participating in the Plan by initiating payroll deductions, the
employee may change the authorized payroll deduction percentage
at each pay period, and the change will be effective in the next
payroll period. An employee may suspend the deduction at any
time, and the suspension will be effective in the next payroll
period after the deduction is suspended. Accumulated deductions
will be refunded, without interest, within 30 days upon written
request. After suspension, deduction may be resumed, but not
until at least one month after the deduction was suspended. If an
employee's employment with the Company is terminated before the
Purchase Date, other than on account of death or retirement,
accumulated payroll deductions will be refunded, without
interest, within 30 days. On termination due to death or
retirement, the retiree or representative of the estate of the
deceased employee, if applicable, may elect to have the
accumulated payroll deductions refunded as described above.
Otherwise, the accumulated amount will be used to purchase shares
as described below.
6. Purchase of Shares. All amounts withheld from an employee's
pay pursuant to Section 5 shall be credited to an account
established for the employee under the Plan (the "employee's
account"). No interest will be paid on the accounts. The total
amount credited to an employee's account on the Purchase Date, or
the Special Purchase Date described below for certain retired
participants, if applicable, will be used to purchase full and
fractional shares under the Plan, subject to the applicable
limits on available shares. If the total amount in any employee's
account, or the aggregate of all employees' accounts, would
purchase shares in excess of the applicable limits, the excess
will be refunded to the employees affected by the limits.
7. Purchase Price. The price at which a share of Common Stock
may be purchased pursuant to the Plan shall be specified by the
Board of Directors at the time of option grant, but shall not be
less than the lower of (i) 85 percent of the fair market value of
a share of Common Stock for the Grant Date, or (ii) 85 percent of
the fair market value of a share of Common Stock for the Purchase
Date. Unless otherwise specified by the Board of Directors, the
fair market value of a share of Common Stock shall be the Closing
Page A-3
</Page>
<PAGE>
Price of a share of Common Stock as shown on the New York Stock
Exchange Composite Transactions Listing for such date, as
published in The Wall Street Journal. In the event that the
Common Stock is no longer listed on the New York Stock Exchange
or the price is no longer shown on the New York Stock Exchange
Composite Transactions Listing, then the Board of Directors or
the Committee shall substitute a comparable source of closing
price information.
8. Delivery and Custody of Shares. Full and fractional shares
determined as of the Purchase Date will be credited to each
employee's account within 30 days after the Purchase Date. Shares
purchased by employees pursuant to the Plan shall be held by the
Bank of New York or a successor custodian approved by the Board
of Directors (the "Custodian"). By appropriate instructions to
the Custodian on forms to be provided for the purpose, an
employee may obtain transfer into the employee's own name of all
or part of the whole shares held by the Custodian for the
employee's account, and delivery of those shares to the employee.
Any fractional shares held by the Custodian for the employee's
account will be settled for cash. Upon an employee's written
request to the Custodian, all or part of the employee's full and
fractional shares credited to an employee's account shall be sold
by the Custodian's discount brokerage company in accordance with
the twice-weekly or other established schedule for sale of such
shares. The employee shall pay the brokerage company's charge for
such sale.
9. Records and Statements. The Company shall keep records of
payroll deductions during the year and transmit the records to
the Custodian after the Purchase Date. Each employee shall
receive a quarterly statement within 30 days after the end of
each quarter which shows the share value and activity in the
employee's account. Participants will be furnished such other
reports and statements, and at such intervals, as the Board of
Directors shall determine from time to time.
10. Expenses of the Plan. The Company will pay all expenses,
except brokerage fees on sales of shares, incident to operation
of the Plan, including costs of record keeping, accounting fees,
legal fees, commissions and issue or transfer taxes on purchases
pursuant to the Plan.
11. Rights Not Transferable. Rights to purchase shares under
this Plan shall not be transferable or assignable by the employee
except by will or by the laws of descent and distribution of the
state or country of the employee's domicile at the time of death
and shall be exercisable during the employee's lifetime only by
the employee.
Page A-4
</Page>
<PAGE>
12. Limitations on Rights to Purchase Shares.
(a) Except as provided in Sections 12(b) and 12(c) of the
Plan, no shares may be purchased under the Plan unless the
purchaser is employed by the Company or a Participating
Subsidiary on the Purchase Date and shall have been so employed
continuously since the Grant Date.
(b) If the employee's employment by the Company or a
Participating Subsidiary is terminated by death, any shares
available for purchase by the employee may be purchased on the
Purchase Date. To the extent shares available for purchase by a
deceased employee are not purchased on the Purchase Date, all
further rights to purchase shares pursuant to the offering shall
cease and terminate.
(c) If the employee's employment by the Company or a
Participating Subsidiary is terminated by retirement on or before
September 30, in the year in which the Grant Date occurs, any
shares available for purchase by the employee may be purchased on
the last business day of the second full calendar month after the
month in which the employee's retirement date occurs (the
"Special Purchase Date"). To the extent shares available for
purchase by an employee retiring on or before September 30, in
the year in which the Grant Date occurs, are not purchased on the
Special Purchase Date, all further rights to purchase shares
pursuant to the offering shall cease and terminate, and
accumulated deductions will be refunded.
If an employee's employment by the Company or a
Participating Subsidiary is terminated by retirement after
September 30, in the year in which the Grant Date occurs, any
shares available for purchase by the employee may be purchased on
the Purchase Date. To the extent shares available for purchase by
an employee retiring after September 30, in the year in which the
Grant Date occurs are not purchased on the Purchase Date, all
further rights to purchase shares pursuant to the offering shall
cease and terminate.
For purposes of this provision, retirement means termination
of employment on or after the normal retirement date under the
Precision Castparts Corp. Retirement Plan (age 65 at January 1,
1998).
13. Dividends and Other Distributions. Dividends and other
distributions, if any, on shares held by the Custodian shall be
paid to the Custodian and held by it for the account of the
respective employees entitled to them. Cash dividends or
distributions paid to the Custodian shall be reinvested in
Company shares in proportion to the number of shares held in the
employees' accounts. Dividends and other distributions, if any,
on shares held directly by employees shall be issued currently to
the employees entitled to them.
Page A-5
</Page>
<PAGE>
14. Voting and Shareholder Communications. In connection with
voting on any matter submitted to the shareholders of the
Company, the Custodian shall vote the shares it holds for each
employee's account in accordance with instructions from the
employee or, if requested by an employee, shall furnish to the
employee a proxy authorizing the employee to vote the shares.
Copies of all general communications to shareholders of the
Company shall be sent to employees participating in the Plan.
Share voting shall apply to shares held in accounts beginning in
the calendar year after the Purchase Date.
15. Responsibility. Neither the Company, its Board of
Directors, any Participating Subsidiary, nor any officer or
employee of any of them shall be liable to any employee under the
Plan for any mistake of judgment or for any omission or wrongful
act unless resulting from willful misconduct or intentional
misfeasance.
16. Conditions and Approvals. The obligations of the Company
under the Plan shall be subject to compliance with all applicable
state and federal laws and regulations, the rules of any stock
exchange on which the Company's securities may be listed, and the
approval of federal and state authorities or agencies with
jurisdiction in the matter. The Company shall use its best
efforts to comply with such laws, regulations, and rules and to
obtain required approvals.
17. Amendment of the Plan. The Board of Directors may from time
to time amend the Plan in any and all respects, except that
without the affirmative vote of the holders of a majority of the
shares of the Company voting on the amendment at a validly held
meeting of shareholders, the Board of Directors may not
(a) increase the number of shares reserved for the Plan (except
for adjustments in the event of stock dividends, stock splits,
combinations of shares, recapitalizations, or other changes in
the outstanding Common Stock), (b) extend the term of the Plan,
(c) decrease the purchase price of shares offered pursuant to the
Plan, (d) materially increase benefits accruing to employees
under the Plan, or (e) materially modify eligibility requirements
under the Plan.
18. Termination of the Plan. The Plan shall terminate when all
of the shares reserved for purposes of the Plan have been
purchased, or December 31, 2007, whichever is earlier, provided
that the Board of Directors in its sole discretion may at any
time terminate the Plan without any obligation on account of such
termination, except that such termination shall not affect
outstanding rights to purchase shares. With the consent of the
shareholders, additional Common Stock may be reserved for the
Plan or the Plan may be readopted. Notwithstanding anything in
the Plan to the contrary, in the event of a change in control of
the Company, if the Board of Directors determines that the
operation or administration of the Plan could prevent
participating employees from obtaining the benefit of the timely
Page A-6
</Page>
<PAGE>
exercise of their options under the Plan, the Plan may be
terminated in any manner deemed by the Board of Directors to
provide equitable treatment to participating employees. Equitable
treatment may include, but is not limited to, (i) the setting by
the Board of Directors of an interim purchase date or (ii) the
payment to each participating employee of the amount of
contributions standing to such participating employee's account
as of the date of the change in control, plus, except in the case
of a participating employee who is subject to Section 16(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), an additional amount equal to the product of (A) the
number of full shares of Common Stock that could have been
purchased for the participating employee immediately prior to the
change in control with the contributions standing to such
participating employee's account as of the date of the change in
control at the purchase price (determined under Section 7) as of
the Grant Date (the "Purchase Price") and (B) the excess, if any,
of the highest price paid per share of Common Stock in connection
with the change in control of the Company over the Purchase
Price.
For purposes of the Plan, a "change in control" of the
Company shall have occurred if:
(a) any "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act (other than the Company, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or
indirectly, by the shareholders of the Company in substantially
the same proportions as their ownership of stock of the Company),
is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
the Company representing more than 20 percent of the combined
voting power of the Company's then outstanding securities;
(b) during any period of two consecutive years (not
including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the
Board of Directors, and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (a), (c) or
(d) of this section) whose election by the Board of Directors or
nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning
of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at
least a majority thereof;
(c) the shareholders of the Company approve a merger
or consolidation of the Company with any other company, other
than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
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or by being converted into voting securities of the surviving
entity) more than 50 percent of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or
(2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which
no "person" (as hereinabove defined) acquires more than 20
percent of the combined voting power of the Company's then
outstanding securities; or
(d) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets.
19. Tax Withholding. Each participant who has purchased shares
under the Plan shall immediately upon notification of the amount
due, if any, pay to the Company in cash amounts necessary to
satisfy any applicable federal, state and local tax withholding
determined by the Company to be required. If the Company
determines that additional withholding is required beyond any
amount deposited at the time of purchase, the participant shall
pay such amount to the Company on demand. If the participant
fails to pay the amount demanded, the Company may withhold that
amount from other amounts payable by the Company to the
participant, including salary, subject to applicable law.
20. Effective Date. This Plan shall become effective January 1,
1998 (the "Effective Date") provided that it shall not become
effective until it has been approved by the affirmative vote of
the holders of a majority of the shares of the Company.
Adopted: May 14, 1997.
Company PRECISION CASTPARTS CORP.
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EXHIBIT B
PROPOSED
PRECISION CASTPARTS CORP.
EXECUTIVE PERFORMANCE COMPENSATION PLAN
1. Establishment and Duration. Precision Castparts Corp. (the
"Company") hereby establishes the Precision Castparts Corp.
Executive Performance Compensation Plan (the "Plan") with the
intent of qualifying compensation paid under the Plan as
"performance-based compensation" within the meaning of Section
162(m) of the Internal Revenue Code of 1986 and the regulations
promulgated thereunder. The Plan is effective as of March 31,
1997, and shall remain in effect until the Company's Annual
Meeting of Shareholders in 2002 or until earlier terminated by
the Board of Directors of the Company; provided, however, that if
the shareholders do not approve the Plan at the Company's Annual
Meeting of Shareholders in 1997, the Plan shall automatically
terminate.
2. Administration. The Plan shall be administered by the
Compensation Committee (the "Committee") of the Board of
Directors of the Company, which shall be comprised solely of two
or more "outside directors" as defined in regulations promulgated
under Section 162(m) of the Internal Revenue Code of 1986. The
Committee may adopt guidelines to implement and administer the
Plan.
3. Eligible Participants. Not later than the 90th day after the
commencement of each fiscal year of the Company, the Committee
shall identify, by written resolution, the officers of the
Company who will participate in the Plan for such year and be
eligible to receive awards under the Plan (the "Performance
Compensation Awards"). Such identification may specify Plan
participants by name or by office or title.
4. Threshold Parameter.
(a) With respect to each fiscal year of the Company, the
Performance Compensation Award of an officer participating in the
Plan shall be dependent upon the achievement of the threshold
parameter for the year established in writing by the Committee
for that officer not later than the 90th day after the
commencement of the fiscal year.
(b) The threshold parameter applicable to a participating
officer for any fiscal year shall be established in writing by
the Committee and shall consist of an objectively determinable
level of performance of the Company or any subsidiary, division
or other unit of the Company based on one or more of the
following criteria: net income, operating income, gross margins,
earnings per share, revenues, market share, cash flow, generation
of free cash, working capital, retained earnings, stock price,
total stockholder return, operating expense ratios, return on
sales, return on equity, return on capital, return on assets,
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return on investments, inventory turns, comparative performance
of one or more of the above criteria to the performance of other
corporations, or any of the above criteria before the effect of
acquisitions, divestitures, accounting changes, or restructuring
or other special charges (as determined by the Committee at the
time of establishing the threshold parameter).
5. Compensation Awards. No Performance Compensation Award will
be paid under the Plan unless the threshold parameter as
determined by the Committee is achieved.
6. Amount of Performance Compensation Award. If the threshold
parameter for a year is achieved, the amount of the Performance
Compensation Award earned by each participating officer with
respect to such year shall be $1,500,000; provided, however, that
the Committee, in its sole discretion, may cancel or reduce the
amount of such award based on such criteria as the Committee in
its sole discretion shall determine. The Committee may establish
in advance criteria in addition to the threshold parameter that
it intends to or agrees to apply in exercising its discretion to
cancel or reduce an award. The Committee may in its discretion at
any time prior to the payment of an award modify or waive any of
such additional criteria, but may not modify or waive the
threshold parameter.
7. Confirmation. Prior to the payment of any Performance
Compensation Award, the Committee shall certify in writing that
the threshold parameter has been satisfied and shall otherwise
determine any reduction in the amount of the award.
8. Termination of Employment. With respect to any person who
during a fiscal year was a participant in the Plan, but who as of
the end of such fiscal year is no longer an officer or employee
of the Company, the determination as to whether a Performance
Compensation Award will be paid to such person for such year
shall be at the sole discretion of the Committee, but in no case
shall a Performance Compensation Award be paid with respect to a
fiscal year unless the threshold parameter for that year is
achieved.
9. Employment Rights. Nothing in the Plan or any award pursuant
to the Plan shall confer upon any employee any right to be
continued in the employment of the Company or any subsidiary or
interfere in any way with the right of the Company or any
subsidiary by whom such employee is employed to terminate such
employee's employment at any time, for any reason, with or
without cause, or to decrease such employee's compensation or
benefits.
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EXHIBIT C
PROPOSED AMENDED
PRECISION CASTPARTS CORP.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN (1)
Precision Castparts Corp., an Oregon corporation (the
"Company"), recognizes that its continuing success depends upon
the initiative, ability and significant contributions of
non-employee directors. The Company believes that by affording
such non-employee directors the opportunity to purchase shares in
the common stock of the Company (the "Common Stock"), it will
enhance its ability to attract and retain such non-employee
directors and will provide an incentive for them to exert their
best efforts on its behalf.
The following plan (the "Plan") is therefore adopted:
1. Shares Subject to Option.
1.1 Options granted under the Plan shall be for authorized
but unissued or reacquired Common Stock of the Company.
1.2 Options may be granted under paragraph 5 for a total of
not more than 150,000 (2) [100,000](3) shares of Common Stock,
subject to adjustment under paragraph 8. Shares subject to
options that are terminated or expire without being exercised
shall be added to the shares remaining for future options.
2. Effective Date; Duration.
The Plan shall be effective August 5, 1987 and continue
until August 4, 2002 (2) [1997] (3), or until options have been
granted covering all of the available shares, whichever is
earlier, unless sooner terminated by the Company. Expiration or
termination of the Plan shall not affect outstanding options.
3. Eligibility; Non-Employee Directors.
Options may be granted under the Plan only to persons who
are or have been elected as Non-Employee Directors of the
Company. A "Non-Employee Director" is a director who is not
otherwise an employee of the Company or any of its subsidiaries
and has not been an employee of the Company or any of its
subsidiaries within two years of any date as of which a
determination of eligibility is made.
4. Administration.
4.1 The Plan shall be administered in accordance with the
express provisions of the Plan by the Board of Directors of the
Company (the "Board of Directors") with the advice of a
compensation committee appointed by the Board of Directors (the
"Committee"). The Board of Directors may delegate any of its
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administrative duties to one or more agents and may retain
advisors to assist it.
4.2 The Board of Directors shall have general
responsibility to interpret and administer the Plan and shall
have authority to adopt such rules and to make such other
determinations not inconsistent with the Plan deemed necessary
for the administration of the Plan. Any decision of the Board of
Directors shall be final and bind all parties.
4.3 No director or Committee member shall participate in
the decision of any question relating exclusively to an option
granted to the director or member.
5. Option Grants.
On the date of each annual meeting of shareholders of the
Company beginning with the annual meeting held in 1987 ("Grant
Dates"), each Non-Employee Director elected at the annual meeting
or whose term continues after such meeting shall be automatically
granted an option to purchase 1,000 shares of Common Stock. If
the number of shares available for grant is insufficient to make
all automatic grants required on any Grant Date, the number of
shares for which options are granted to each Non-Employee
Director shall be proportionately reduced.
6. Terms of Options.
Each option granted under the Plan shall have the following
provisions:
6.1 Price. The exercise price of the option shall be THE
CLOSING PRICE OF A SHARE OF COMMON STOCK ON THE GRANT DATE AS
SHOWN ON THE NEW YORK STOCK EXCHANGE COMPOSITE TRANSACTIONS
LISTING, AS PUBLISHED IN THE WALL STREET JOURNAL. IN THE EVENT
THAT THE COMMON STOCK IS NO LONGER LISTED ON THE NEW YORK STOCK
EXCHANGE OR THE PRICE IS NO LONGER SHOWN ON THE NEW YORK STOCK
EXCHANGE COMPOSITE TRANSACTIONS LISTING, THEN THE BOARD OF
DIRECTORS OR THE COMMITTEE SHALL SUBSTITUTE A COMPARABLE SOURCE
OF CLOSING PRICE INFORMATION [THE MEAN OF THE CLOSING BID AND
ASKED PRICES FOR THE COMMON STOCK REPORTED ON THE GRANT DATE IN
THE NASDAQ NATIONAL MARKET SYSTEM. IF THE COMMON STOCK IS NO
LONGER QUOTED IN THE NASDAQ NATIONAL MARKET SYSTEM, THE EXERCISE
PRICE SHALL BE EQUAL TO THE FAIR MARKET VALUE OF THE COMMON STOCK
DETERMINED IN A REASONABLE MANNER SPECIFIED BY THE BOARD OF
DIRECTORS].
6.2 Term. The term of the option shall be 10 years from
the Grant Date.
6.3 Time of Exercise; Option Year.
6.3.1 Until it expires or is terminated and except as
provided in 6.3.2 and 6.3.3, the option may be exercised from
time to time to purchase shares up to the following limits:
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<PAGE>
Years After Percent
Grant Date Exercisable
__________ __________
Less than 1 0
1 to 2 25
2 to 3 50
3 to 4 75
over 4 100
6.3.2 On death the exercise limit will be at least 50
percent.
6.3.3 If a director ceases to be a director by reason
of retirement at normal retirement date or does not stand for
reelection because of board policies relating to age, or a change
in control of the Company shall have occurred, all options
granted hereunder will be 100 percent exercisable. A "change in
control" shall have occurred if:
(a) any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (other than the Company, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the company in substantially
the same proportions as their ownership of stock of the Company),
is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
the Company representing more than 20 percent of the combined
voting power of the Company's then outstanding securities;
(b) during any period of two consecutive years
(not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board of Directors, and any new director (other
than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in
clause (a), (c) or (d) of this Section) whose election by the
Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds ( 23)
of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to
constitute at least a majority thereof;
(c) the stockholders of the Company approve a
merger or consolidation of the Company with any other company,
other than (1) a merger or consolidation which would result in
the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 50 percent of the combined voting
power of the voting securities of the company or such surviving
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<PAGE>
entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 20 percent of the combined voting power of the
Company's then outstanding securities; or
(d) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially
all of the Company's assets.
6.3.4 The table in 6.3.1 is based on an Option Year.
An Option Year is a 12-month period starting on the Grant Date or
an anniversary of that date.
6.4 Continuation as Director.
6.4.1 If an optionee ceases to be a director for any
reason, an Option Reference Date will be established. Any portion
of the option that is not exercisable on the Option Reference
Date will lapse. The Option Reference Date will be fixed as
follows:
(a) If the termination is by death or disability,
the first day of the next Option Year will be the Option
Reference Date.
(b) In all other cases, the optionee's last day
as a director will be the Option Reference Date.
6.4.2 Any portion of the option that is exercisable on
the Option Reference Date may be exercised up to the earlier of
the last day of the term of the option or a date fixed as
follows:
(a) If the termination is by death or disability,
or by retirement under the Company's policy requiring retirement
of directors, one year after the last day as a director.
(b) In all other cases, one month after the
Option Reference Date.
6.5 Payment of Exercise Price. At the time of exercise of
an option, the full exercise price must be paid in cash or by
delivery of Common Stock valued at fair market value, which shall
be the CLOSING PRICE OF A SHARE OF COMMON STOCK AS SHOWN ON THE
NEW YORK STOCK EXCHANGE COMPOSITE TRANSACTIONS LISTING, AS
PUBLISHED IN THE WALL STREET JOURNAL, [MEAN OF THE CLOSING BID
AND ASKED PRICES FOR THE COMMON STOCK REPORTED ON THE NASDAQ
NATIONAL MARKET SYSTEM] on the trading day immediately preceding
the date of exercise or such other price as would be determined
by the method used under 6.1.
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<PAGE>
6.6 Nonassignability. The option may not be assigned or
transferred except on death, by will or operation of law. The
option may be exercised only by the optionee or by a successor or
representative after death.
7. Option Agreement.
Each option shall be evidenced by a stock option agreement
which shall set forth the number of shares for which the option
was granted, the provisions called for in paragraph 6 relating to
the option, and such other terms and conditions consistent with
the Plan as the Board of Directors shall determine from time to
time.
8. Changes in Capital Structure.
If any change is made in the outstanding Common Stock
without the Company's receiving any consideration, such as a
stock split, reverse stock split, stock dividend, or combination
or reclassification of the Common Stock, corresponding changes
shall be made in the number of shares remaining available for
option under paragraph 1 and in any outstanding options without
any further approval of the shareholders. The number of shares
for which automatic grants are made under paragraph 5 shall not
be adjusted. Fractional shares shall be disregarded. Any
adjustment required hereunder shall be made by the Board of
Directors whose determination shall be conclusive.
9. Limited Stock Appreciation Rights.
Concurrently with the grant of an option under the Plan (or,
in respect of options granted prior to the time that this Section
9 becomes effective, at the time that this Section 9 is approved
by the shareholders of the Company) the recipient of the option
(the "Related Options") shall be automatically granted a limited
stock appreciation right (a "limited right") with respect to the
Related Option granted pursuant to the Plan. A limited right
shall be exercisable to the same extent and upon the same terms
and conditions as the Related Option but may be exercised only
during a Limited Exercise Period which commences on or after the
expiration of six months following the date of grant of such
limited right. The term "Limited Exercise Period" shall mean any
90 day period beginning on the first day following a Change in
Control as defined in Section 6.3.3 above.
Upon any exercise of a limited right, the holder thereof
shall be entitled, with respect to each share covered by the
Related Option, to an amount in cash equal to the excess, if any,
of (1) the highest per share price paid for shares of stock of
the Company (or the equivalent value in the case of a transaction
described in Section 6.3.3(d) hereof) in the transaction
constituting the Change in Control, or, in the case of a Change
in Control described in Section 6.3.3(b) hereof which does not
occur in connection with a transaction described in Sections
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6.3.3(a)(b)(c)(d) hereof, the average trading price of shares of
Stock of the Company on the New York Stock Exchange, such other
national securities exchange on which such shares are admitted to
trade or the National Association of Securities Dealers Automated
Quotation System if such shares are admitted for quotation
thereon, during the 30 day period ending on the date immediately
preceding the Change in Control, over (2) the exercise price per
share of the Related Option.
Upon any exercise of a limited right, the Related Option
shall be canceled to the extent of such exercise. Upon any
exercise of an option, the limited right granted with respect
thereto shall be canceled to the extent of such exercise. The
provisions of this Section 9 are intended to meet the applicable
requirements of Rule 16b-3 promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended, and all
interpretations of this Section shall be made in a manner
consistent with and so as to comply with the requirements of such
Rule.
Notwithstanding anything in this Section 9 to the contrary,
no limited stock appreciation rights may be granted, and all
limited stock appreciation rights then outstanding shall expire,
upon the adoption by the Securities and Exchange Commission of a
final rule or regulation to the effect that the exercise of an
option under the Plan will be exempt from the application of
Section 16(b) of the Exchange Act.
10. Amendment or Termination of the Plan.
10.1 The Board of Directors may amend or terminate this
Plan at any time subject to 10.2.
10.2 Unless the amendment is approved by the shareholders,
no amendment shall be made to the Plan that would (a) increase
the total number of shares available for option grants under
paragraph 1 or the number of shares for which automatic grants
are made under paragraph 5, (b) increase the term for which
options are granted, (c) change the formula for determining the
exercise price of options to provide a lower exercise price,
(d) modify the requirements for eligibility under the Plan, or
(e) materially increase the benefits accruing under the Plan.
11. Shareholder Approval.
This Plan shall terminate unless at the 1987 Annual Meeting
of Shareholders, at which a quorum is present, more votes are
cast for approval of the Plan than are cast against approval of
the Plan.
[FN]
___________
(1) Material all capitalized is proposed new material; material
in brackets and capitalized is material proposed to be
deleted.
(2) Number is proposed new material.
(3) Number is proposed to be deleted.
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