<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box: / /
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Precision Castparts Corp.
-------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
<PAGE>
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
PRECISION CASTPARTS CORP.
4650 SW MACADAM, SUITE 440
PORTLAND, OREGON 97201
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AUGUST 16, 2000
------------------------
You are invited to attend the Annual Meeting of Shareholders of Precision
Castparts Corp. The meeting will be held on Wednesday, August 16, 2000, at
9:00 a.m. Pacific Time, in the Alder Creek Room of the Fifth Avenue Suites
Hotel, 506 SW Washington Street, Portland, Oregon. The Company will conduct the
following business:
1. Electing two directors to serve for three-year terms;
2. Ratifying the appointment of PricewaterhouseCoopers LLP as the Company's
auditors for fiscal year 2001; and
3. Conducting any other business that is properly raised before the
meeting.
Only shareholders of record at the close of business on June 23, 2000, will
be able to vote at the meeting.
Your vote is important. 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
July 5, 2000
<PAGE>
PRECISION CASTPARTS CORP.
4650 SW MACADAM, SUITE 440
PORTLAND, OREGON 97201
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
------------------------
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 2000 Annual Meeting of Shareholders, which will be held on
Wednesday, August 16, 2000, at 9:00 a.m. Pacific Time, in the Alder Creek Room
of the Fifth Avenue Suites Hotel, 506 SW Washington Street, Portland, Oregon.
The proxy may also be used at any adjournment of the meeting. You may submit
your proxy to us by mail using the enclosed proxy form. We are sending this
statement and the enclosed proxy form and voting instructions to you on or about
July 5, 2000.
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 1; (b) for the ratification of the
appointment described on page 11; 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 properly
complete your proxy but attend the meeting and choose to vote personally, 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 at the address
listed above prior to our exercise of the proxy at the Annual Meeting or any
adjourned meeting.
PROPOSAL 1: ELECTION OF DIRECTORS
WE RECOMMEND A VOTE "FOR" ALL NOMINEES
The Board of Directors consists of eight directors. 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. McCormick and Mr. Oechsle expire. Mr. McCormick and Mr. Oechsle are both
nominees for reelection. If elected, the terms of Mr. McCormick and Mr. Oechsle
will expire in 2003. If either of them becomes unavailable for election for any
reason, we will name a suitable substitute 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.
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE EXPIRES
------------------------------------------------------------ -------- --------
<S> <C> <C>
NOMINEES
William C. McCormick -- 66 1986 2000
Chairman and Chief Executive Officer of the Company.
Mr. McCormick is also a director of Merix Corporation.
Vernon E. Oechsle -- 57 1996 2000
Chairman and Chief Executive Officer of Quanex
Corporation, a manufacturer of steel bars, aluminum shapes
and steel tubes and pipes. Mr. Oechsle is also a director
of Quanex Corporation.
DIRECTORS WHOSE TERMS CONTINUE
Peter R. Bridenbaugh -- 59 1995 2001
Sole proprietor of P. Bridenbaugh, Inc., an organization
providing consulting services; until retiring in January
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 1993 to 1996, Executive Vice
President and Chief Technical Officer, Aluminum Co. of
America.
Dean T. DuCray -- 59 1996 2002
Retired; until April 1998, Vice President and Chief
Financial Officer of York International Corporation, a
manufacturer of heating, air conditioning, ventilation and
refrigeration equipment. Mr. DuCray is also a director of
Airxcel, Inc.
Don R. Graber -- 56 1995 2002
Chairman, President and Chief Executive Officer of Huffy
Corporation, a manufacturer of outdoor leisure equipment
and provider of retail services, since December 1997;
from 1996 to 1997, President and Chief Operating Officer
of Huffy Corporation; previously, President of Worldwide
Household Products Group, The Black & Decker Corporation.
Mr. Graber is also a director of Huffy Corporation.
Byron O. Pond, Jr. -- 63 1999 2002
Retired; until May 1998, Chief Executive Officer of Arvin
Industries, Inc., a manufacturer and supplier of
automotive parts. Mr. Pond also serves as the Chairman
Emeritus of Arvin Industries, Inc. and as a director of
Cooper Tire and Rubber Company, GSI Lumonics Inc. and
Intermet Corporation.
Steven G. Rothmeier -- 53 1994 2001
Chairman and Chief Executive Officer of Great Northern
Capital, a private investment and merchant banking firm,
since March 1993. Mr. Rothmeier is also a director of
GenCorp. Inc., E.W. Blanch Holdings, Inc., Department 56,
Inc., Waste Management, Inc. and Great Northern Asset
Management.
J. Frank Travis -- 64 1999 2001
Managing General Partner of Sivart Holdings, a limited
partnership engaged in investment and investment
management; from 1996 to 1999, Vice Chairman of
Ingersoll-Rand Co., a diversified manufacturing company;
from December 1993 to 1996, Executive Vice-President of
Ingersoll-Rand Co.
</TABLE>
If a quorum of shareholders is present at the meeting, the two nominees for
director who receive the greatest number of votes cast at the meeting will be
elected directors. We will treat abstentions and broker nonvotes as present but
not voting.
2
<PAGE>
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, without par value ("Common Stock") as of May 1, 2000 by the Chief
Executive Officer, by each of the other four most highly compensated executive
officers, by the directors and nominees, 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............................. 4,000(1) *
Mark Donegan..................................... 22,581(2) *
Dean T. DuCray................................... 3,400(3) *
Don R. Graber.................................... 10,000(4) *
William D. Larsson............................... 32,962(5) *
Armand F. Lauzon, Jr............................. 12,070(6) *
William C. McCormick............................. 140,167(7) *
Vernon E. Oechsle................................ 1,750(8) *
Byron O. Pond, Jr................................ 1,000 *
Steven G. Rothmeier.............................. 6,500(9) *
J. Frank Travis.................................. 1,000 *
Peter G. Waite................................... 55,339(10) *
All directors and executive officers as a group
(18 persons)................................... 331,120(11) *
</TABLE>
------------------------
* Less than 1 percent of the Company's outstanding shares of Common Stock.
( 1) Includes 2,500 shares subject to options that are exercisable or become
exercisable by Mr. Bridenbaugh within 60 days after May 1, 2000.
( 2) Includes 19,587 shares subject to options that are exercisable or become
exercisable by Mr. Donegan within 60 days after May 1, 2000.
( 3) Includes 400 shares held in trust for children of Mr. DuCray. Includes
1,500 shares subject to options that are exercisable or become exercisable
by Mr. DuCray within 60 days after May 1, 2000.
( 4) Includes 2,500 shares subject to options that are exercisable or become
exercisable by Mr. Graber within 60 days after May 1, 2000, and 3,500
shares held by Mrs. Graber.
( 5) Includes 29,698 shares subject to options that are exercisable or become
exercisable by Mr. Larsson within 60 days after May 1, 2000.
( 6) Includes 6,635 shares subject to options that are exercisable or become
exercisable by Mr. Lauzon within 60 days after May 1, 2000.
( 7) Includes 88,487 shares subject to options that are exercisable or become
exercisable by Mr. McCormick within 60 days after May 1, 2000.
( 8) Includes 750 shares subject to options that are exercisable or become
exercisable by Mr. Oechsle within 60 days after May 1, 2000.
( 9) Includes 4,000 shares subject to options that are exercisable or become
exercisable by Mr. Rothmeier within 60 days after May 1, 2000.
(10) Includes 4,875 shares owned by children of Mr. Waite, and 11,000 shares
owned by Mrs. Waite. Includes 37,657 shares subject to options that are
exercisable or become exercisable by Mr. Waite within 60 days after May 1,
2000.
(11) Includes 229,278 shares subject to options that are exercisable or become
exercisable within 60 days after May 1, 2000.
3
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "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 corporate executive officers of
the Company. The proposed compensation of the Chief Executive Officer 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.
The Company's compensation policies for corporate executive 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 2000, the Company did not engage the services of an independent
compensation consultant as it had done in fiscal 1998. Because the Company's
relative size, complexity, organizational structure and other business
characteristics are consistent with its status in fiscal 1998, the Committee
reviewed the report and recommendations of the independent consultant retained
in fiscal 1998 and adjusted for cost of living changes in the intervening year
and other objective data gathered by the Company.
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 general 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 in
order that the total compensation (base salary, cash bonus and stock options) of
the Company's executive officers is at or progresses toward the 75th percentile
of the comparator group of companies.
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.
SALARY. The Committee and the Board of Directors established base salaries
for the Company's executive officers in fiscal 2000 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 the comparator group of
companies identified in the consultant's report described above.
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 fiscal 2000
compensation levels of the executive officers as determined to be appropriate in
the circumstances and in furtherance of the Company's compensation policies.
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 2000, the Company's executive incentive
bonuses were determined pursuant to the Company's Executive Performance
Compensation Plan, which was approved by Shareholders at the 1997 Annual
Meeting. Under this plan, the Compensation Committee annually selects a
threshold parameter for the participating officers, consisting of one or
4
<PAGE>
more performance criteria for the Company. If the threshold parameter is not
achieved, no performance compensation award is paid for that year. The threshold
parameter was met for fiscal 2000.
If the threshold parameter is met, the exact amount of the cash bonus
payable to the executive officer is determined at the discretion of the
Compensation Committee with reference to pre-established performance criteria.
In fiscal 2000, the Compensation Committee adopted the performance criteria set
forth in four separate cash bonus plans which are applicable to the five named
executive officers of the Company. The Corporate Bonus Program is applicable to
Messrs. McCormick and Larsson, the PCC Structurals Executive Bonus Program and
the Wyman-Gordon Executive Bonus Program are each partially applicable to
Mr. Donegan due to a mid-year reassignment, the PCC Airfoils Executive Bonus
Program is applicable to Mr. Waite and partially applicable, along with the
Wyman-Gordon Executive Bonus Program, to Mr. Lauzon due to a mid-year
reassignment. In approving final bonuses for executive officers for fiscal 2000,
the Compensation Committee considered the degree to which each executive officer
had achieved the performance criteria applicable to him and exercised its
discretion in a manner that resulted in each executive officer's bonus award
equaling the amount determined under the applicable plan that correlated to the
achieved level of performance, except that Messrs. Larsson, Donegan, Lauzon and
Waite each also received special bonuses under the discretionary bonus
provisions of the bonus programs in which each was eligible to participate.
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 stock incentive plans, the Board
of Directors or the Compensation Committee may grant options to purchase Common
Stock of the Company to key employees of the Company and its subsidiaries. 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 sale price on the New York Stock
Exchange on the grant date). The number of shares granted to executive officers
was consistent with the Committee's general policy to consider individual
performance and the number of shares needed to reach or progress toward the 75th
percentile of total compensation. 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 2000, 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 industry identified in the consultant's fiscal 1998
comparator group of companies, adjusted as described above, 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
cash compensation (base salary and annual cash bonus), was set below the 75th
percentile of cash compensation paid to the Chief Executive Officer by the
comparator group of companies. The Chief Executive Officer's bonus for fiscal
2000 was determined under the Executive Performance Compensation Plan procedures
described under Cash Bonuses, above, based upon the level of achievement of
pre-established performance objectives for fiscal 2000. The annual stock option
grant to Mr. McCormick in fiscal 2000 was consistent with the Committee's
general policy, which considers individual performance and the number of shares
needed to reach or progress toward the 75th percentile of total compensation.
Additional information regarding the option grant is set forth below under
"Option Grants in Last Fiscal Year."
Steven G. Rothmeier, Chairman
Don R. Graber
Vernon E. Oechsle
5
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid to the Chief Executive
Officer and the other four most highly compensated executive officers 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
------------------------------------- ------------
OTHER ANNUAL NUMBER OF ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(3) OPTIONS(4) COMPENSATION(5)
--------------------------- -------- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
William C. McCormick ............. 2000 $731,250 $650,250 $ 53,338 143,375 $5,176
Chairman and Chief Executive 1999 668,750 580,000 152,740 117,359 3,240
Officer 1998 567,500 787,800 19,254 29,568 3,954
Peter G. Waite ................... 2000 371,250 700,000 71,370 29,999 6,946
Executive Vice President and 1999 340,750 589,158 26,786 7,969 3,513
President -- PCC Airfoils, Inc. 1998 324,000 609,444 16,716 12,000 3,090
Mark Donegan ..................... 2000 356,668 450,000 0 80,000 1,041
Executive Vice President and 1999 307,500 442,759 0 26,458 1,270
President -- Wyman-Gordon 1998 285,010 392,528 41,087 11,000 2,041
Company(6)
Armand F. Lauzon, Jr. ............ 2000 248,331 430,000 541 15,000 1,090
Senior Vice President and Vice 1999 182,499 417,557 0 4,348 901
President -- Castings of Wyman- 1998 172,503 343,625 0 4,000 876
Gordon Company(7)
William D. Larsson ............... 2000 293,750 275,000 7,334 49,637 1,992
Vice President and Chief 1999 266,250 205,000 7,104 23,389 2,010
Financial Officer 1998 233,750 283,660 19,115 10,000 2,014
</TABLE>
------------------------
(1) Includes compensation deferred at the election of the executive officers
under the Company's 401(k) Plan and Executive Deferred Compensation Plan.
Under the Company's 401(k) Plan, 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 Plan, but subject to limitations under the Internal
Revenue Code). Beginning in calendar year 1998, the Company makes a matching
contribution under the 401(k) Plan equal to 50 percent of participants'
elective contributions, including elective contributions up to 5 percent of
pay.
(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 figures shown represent earnings on amounts
deferred at the election of the named executive officer under the Prime Rate
Plus 2 percent option to the extent earnings exceeded 120 percent of the
applicable federal long-term rate. The figures shown also include amounts
reimbursed during the fiscal year for the payment of taxes.
(4) Represents shares of Common Stock issuable upon exercise of nonstatutory
stock options as described under STOCK OPTIONS in the Report of the
Compensation Committee on Executive Compensation.
(5) All amounts for named executive officers represent term life insurance
premiums paid by the Company.
(6) Prior to December 1999, Mr. Donegan held the position of Executive Vice
President and President -- PCC Structurals, Inc.
(7) Prior to December 1999, Mr. Lauzon was an officer of PCC Airfoils, Inc.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding stock options granted to
the named executive officers in fiscal 2000.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR SHARE DATE 5% 10%
---- ---------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William C. McCormick.............. 143,375 16.1 27.6875 11/04/09 2,496,502 6,326,662
Peter G. Waite.................... 29,999 3.4 27.6875 11/04/09 522,354 1,323,756
Mark Donegan...................... 80,000 9.0 27.6875 11/04/09 1,392,991 3,530,134
Armand F. Lauzon, Jr.............. 15,000 1.7 27.6875 11/04/09 261,186 661,900
William D. Larsson................ 49,637 5.6 27.6875 11/04/09 864,299 2,190,316
</TABLE>
------------------------
(1) Options are granted at an exercise price equal to fair market value at the
date of grant (the closing sale price on the New York Stock Exchange on the
grant date). Options become exercisable for 25 percent of the shares one
year after the date of grant and for 25 percent of the shares each year
thereafter. 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.
7
<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table indicates (i) stock options exercised by named executive
officers during fiscal 2000, 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, April 2, 2000, and (iii) the
value of "in-the-money" options at April 2, 2000.
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS HELD AT IN-THE-MONEY OPTIONS
ACQUIRED FISCAL YEAR-END AT FISCAL YEAR-END
ON VALUE (EXERCISABLE/ (EXERCISABLE/
NAME EXERCISE REALIZED(1) UNEXERCISABLE) UNEXERCISABLE)(2)
---- -------- ----------- --------------- --------------------
<S> <C> <C> <C> <C>
William C. McCormick.................. 0 0 88,487/253,738 $583,777/$4,553,472
Peter G. Waite........................ 0 0 37,657/44,475 587,838/1,418,435
Mark Donegan.......................... 3,548 48,968 19,587/108,343 52,256/2,267,256
Armand F. Lauzon, Jr.................. 1,700 33,160 6,635/20,929 54,741/470,054
William D. Larsson.................... 0 0 29,698/74,053 351,811/1,762,135
</TABLE>
------------------------
(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 in-the-money options equals the fair market value of
a share into which the option can be converted at April 2, 2000 (market
price $36.50), less exercise price, times the number of options outstanding.
8
<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 and
the S&P Diversified Manufacturing Index. The comparison assumes that $100 was
invested on March 31, 1995, in the Company's Common Stock and in each of the
foregoing indices and, in each case, assumes the reinvestment of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P DIVERSIFIED
<S> <C> <C> <C> <C>
FISCAL YEAR S&P 500 S&P Aerospace Manufacturing Precision Castparts Corp.
1995 $100 $100 $100 $100
1996 $132.10 $154.80 $116.53 $154.19
1997 $158.29 $180.08 $164.19 $197.59
1998 $234.27 $212.27 $207.19 $230.21
1999 $277.51 $151.06 $272.90 $157.41
2000 $327.30 $138.70 $343.37 $143.79
</TABLE>
MEASUREMENT PERIOD
(BY FISCAL YEAR)
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
S&P 500........................................ 100 132.10 158.29 234.27 277.51 327.30
S&P Aerospace.................................. 100 154.80 180.08 212.27 151.06 138.70
S&P Diversified Manufacturing.................. 100 116.53 164.19 207.19 272.90 343.37
Precision Castparts Corp....................... 100 154.19 197.59 230.21 157.41 143.79
</TABLE>
RETIREMENT PLANS
The Company and its subsidiaries maintain eight defined benefit pension
plans (the "retirement plans") including one plan covering the named executive
officers. All eligible domestic employees, including executive officers and
those directors who are full-time employees, receive benefits at retirement
under one of the retirement plans. The retirement plan that covers named
officers (the "Plan") is 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 the amount of the
Company's annual contribution 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
9
<PAGE>
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.
The Company maintains a Supplemental Executive Retirement Plan (the "SERP")
that provides supplemental retirement benefits to the named executive officers.
The SERP provides participating employees with a supplemental retirement benefit
upon normal retirement at age 65 with 20 or more years of service. The
supplemental retirement benefit is designed to pay a basic monthly benefit equal
to 60 percent of Final Average Pay (defined as the highest three calendar years
of compensation out of five consecutive years of covered employment, and
including all of any bonus and all of any deferred compensation) minus both the
amount of any benefit under the Plan and the Primary Social Security Benefit (as
defined in the Plan). For participants retiring with between 10 and 20 years of
service at age 65, the basic benefit under the SERP formula before offset is
reduced by 1/20 for each year less than 20. 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 20 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 20, minus
(c) both the amount of any benefit under the 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 named 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
Plan and SERP to named executive officers upon normal retirement (age 65) as of
April 2, 2000. The table assumes, for purposes of calculating the SERP portion
of the estimated annual benefit, that the executive officers receive an annual
bonus equal to their average targeted bonuses in each year used in computing the
three-year average salary at retirement. The target bonuses of the named
executive officers range between 85 percent and 100 percent of base salary.
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.
<TABLE>
<CAPTION>
HIGHEST THREE-YEAR BENEFIT YEARS AT RETIREMENT
AVERAGE EARNING FOR ---------------------------------------------------------------
RETIREMENT BENEFITS 10 15 20 25 30 35
------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 250,000....................... $ 59,000 $ 96,000 $134,000 $140,000 $146,000 $152,000
400,000....................... 104,000 164,000 224,000 234,000 244,000 254,000
550,000....................... 149,000 231,000 314,000 327,000 341,000 355,000
700,000....................... 194,000 299,000 404,000 421,000 439,000 456,000
850,000....................... 239,000 366,000 494,000 515,000 536,000 557,000
1,000,000...................... 284,000 434,000 584,000 609,000 634,000 659,000
1,150,000...................... 329,000 501,000 674,000 702,000 731,000 760,000
1,300,000...................... 374,000 569,000 764,000 796,000 829,000 861,000
1,450,000...................... 419,000 636,000 854,000 890,000 890,000 962,000
</TABLE>
Retirement benefits are computed on an actuarial basis. The following table
shows the number of credited years of service, for purposes of the benefit table
above, for the officers named in the Summary
10
<PAGE>
Compensation Table. The compensation covered by the retirement plans is
substantially equivalent to the sum of the salary and bonus amounts contained in
the Summary Compensation Table.
<TABLE>
<CAPTION>
CREDITED YEAR
NAME OF INDIVIDUAL OF SERVICE
------------------ -------------
<S> <C>
William C. McCormick........................................ 15
Peter G. Waite.............................................. 19
Mark Donegan................................................ 14
Armand F. Lauzon, Jr........................................ 8
William D. Larsson.......................................... 20
</TABLE>
SEVERANCE AGREEMENTS AND EMPLOYMENT 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: APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2
PricewaterhouseCoopers LLP audited the Company's financial statements for
the year ended April 2, 2000 and has been appointed to act as auditors of the
Company's financial statements for the fiscal year ending April 1, 2001. The
Board of Directors is submitting this selection for ratification by the
shareholders. Representatives of PricewaterhouseCoopers 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 23, 2000, consisted of 24,671,276 shares of Common 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 23, 2000, are entitled
to notice of and to vote at the meeting or any adjournment thereof. The Common
Stock does not have cumulative voting rights.
11
<PAGE>
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 in April 2000.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OWNED OUTSTANDING SHARES
------------------------------------ ------------ ------------------
<S> <C> <C>
Wellington Management Company............................... 1,757,800 7.17
75 State Street
Boston, MA 02109
AMVESCAP PLC................................................ 1,688,370 6.89
11 Devonshire Square
London EC 2M 4YR
State Farm Mutual Automobile Insurance Company.............. 1,533,531 6.24
One State Farm Plaza
Bloomington, IL 61710
Hartford Capital Appreciation HLS Fund, Inc................. 1,336,500 5.45
200 Hopmeadow Street
Simsbury, CT 06089
</TABLE>
BOARD COMPENSATION, ATTENDANCE AND COMMITTEES
In fiscal 2000, the Company's Board of Directors met in person four times
and via telephone conference call one time. The Company's directors, other than
full-time employees, are paid an annual retainer of $24,000, plus $1,500 for
each Board meeting attended, $1,000 for each telephonic board meeting attended
and $1,000 for each committee meeting attended. Nonemployee directors 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 "Nonemployee Director") is eligible to
receive options under 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 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 Nonemployee 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 1999 Annual Meeting of Shareholders,
Messrs. DuCray, Bridenbaugh, Graber, Oechsle and Rothmeier each were
automatically granted an option for 1,000 shares of Common Stock at an exercise
price of $38.50 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
compensation of corporate officers and the granting of stock options. See
"Report of the Compensation Committee on Executive Compensation" above. Its
members are Messrs. Rothmeier, Graber and Oechsle. The Nominating Committee
makes recommendations to the Board of Directors concerning nominees to the Board
of Directors. Its members are
12
<PAGE>
Messrs. Bridenbaugh, Pond and McCormick. 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. McCormick,
Rothmeier, Graber and Travis. 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, Travis and
Oechsle. The Environmental Committee meets with the Company's environmental
managers to monitor and advise on environmental matters concerning the Company.
The Environmental Committee is composed of Mr. Bridenbaugh and Mr. Pond. The
Compensation Committee met three times, the Audit Committee met three times and
the Environmental Committee met four times in fiscal 2000. The Nominating
Committee and the Executive Committee did not hold meetings separate from Board
meetings in fiscal 2000. Shareholders who wish to submit names to the Nominating
Committee for consideration at the 2001 Annual Meeting of Shareholders should do
so in writing between June 1, 2001, and June 26, 2001, 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.
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 April 2, 2000, 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 Mr. Graber made one late filing with respect to 1,000 shares of
common stock acquired.
ANNUAL REPORT
We have included a copy of the Company's 2000 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., Inc. to help with
annual meeting procedures and to solicit proxies for a fee of $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.
DISCRETIONARY AUTHORITY
While the Notice of Annual Meeting of Shareholders provides for transaction
of such other business as may properly come before the meeting, the Board of
Directors has no knowledge of any matters to be presented at the meeting other
than those referred to in this Proxy Statement. However, the enclosed proxy
gives discretionary authority in the event any other matters should be
presented.
13
<PAGE>
SHAREHOLDER PROPOSALS
Shareholders wishing to present proposals for action at an annual meeting
must do so in accordance with the Company's Bylaws. To be timely, a
shareholder's notice must be in writing, delivered to or mailed and received at
the principal executive office of the Company, not less than 50 days nor more
than 75 days prior to that year's annual meeting; provided, however, that in the
event less than 65 days' notice or prior public disclosure of the meeting is
given or made to shareholders, notice by the shareholder, to be timely, must be
received not later than the close of business on the 15th day following the date
on which such notice of the annual meeting was mailed or such public disclosure
was made, whichever first occurs. For purposes of the Company's 2001 annual
meeting, such notice, to be timely, must be received by the Company between
June 1, 2001 and June 26, 2001. For purposes of the 2001 annual meeting of
shareholders, if notice of any shareholder proposal to be raised at the meeting
is received by the Company between June 1, 2001 and June 26, 2001, proxy voting
on that proposal when and if raised at the annual meeting will be subject to the
discretionary voting of the designated proxy holders. In addition, SEC rules
require that any shareholder proposal that you wish to be considered for
inclusion in next year's annual meeting proxy material be received at our
principal office by March 7, 2001. 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
July 5, 2000
14
<PAGE>
PROXY
The undersigned, revoking all prior proxies, hereby appoints
William C. McCormick and William D. Larsson, and each of them, as proxies, with
full power of substitution, to vote on behalf of the undersigned at the Annual
Meeting of Shareholders of Precision Castparts Corp. (the "Company") to be held
on Wednesday, August 16, 2000, or at any adjournment thereof, all shares of the
undersigned in the Company. The proxies are instructed to vote as follows:
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as marked to contrary
below).
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.
Nominees: William C. McCormick
Vernon E. Oechsle
(To withhold your vote for any individual nominee, strike a line
through the nominee's name in the list above.)
2. PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
FOR _____ AGAINST _____ ABSTAIN _____
The shares represented by this proxy will be voted in accordance
with the instructions given.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF
DIRECTORS. The Board of Directors recommends a vote FOR each of
the nominees and FOR the Proposal.
UNLESS CONTRARY INSTRUCTIONS ARE GIVEN, THE SHARES WILL BE VOTED
FOR THE NOMINEES, FOR THE PROPOSAL AND ON ANY OTHER BUSINESS THAT
MAY PROPERLY COME BEFORE THE MEETING IN ACCORDANCE WITH THE
RECOMMENDATIONS OF MANAGEMENT.
Please sign exactly as your name appears on this card. Persons
signing as executor, administrator, trustee, custodian or in any
other official or representative capacity should sign their full
title.
Receipt is acknowledged of the notice and proxy statement relating
to this meeting.
[ ] Please check here if you plan to attend the meeting in person.
<PAGE>
Date , 2000 Signature(s)
--------------- ---------------------
---------------------
Please mark, date, sign and
return the proxy promptly.
