<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant / /
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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1Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[LOGO] BWIP HOLDING, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 1994
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of BWIP
Holding, Inc. will be held at the Hyatt Regency Hotel, 200 South Pine Avenue,
Long Beach, California, on Tuesday, May 10, 1994 at 1:30 p.m. (Pacific Daylight
Saving Time), for the following purposes:
1. To elect eight directors to serve for the ensuing year;
2. To ratify the appointment of Price Waterhouse as independent auditors
for fiscal year 1994;
3. To consider and act upon a proposal to amend the Company's Second
Restated Certificate of Incorporation to change the Company's corporate
name to "BW/IP, Inc.";
4. To consider and act upon a proposal to amend the Company's Second
Restated Certificate of Incorporation to effect a recapitalization of
the Company to provide for a single class of common stock;
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The close of business on March 29, 1994, has been fixed by the Board of
Directors as the record date for determining the stockholders entitled to notice
of, and to vote at, the Annual Meeting.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to attend the Annual Meeting, you may ensure your representation by
completing, signing, dating and promptly returning the enclosed proxy card. A
return envelope, which requires no postage if mailed in the United States, has
been provided for your use. If you attend the Annual Meeting and inform the
Secretary of BWIP Holding, Inc. in writing that you wish to vote your shares in
person, your proxy will not be used.
By Order of the Board of Directors
JOHN D. HANNESSON
Secretary
Long Beach, California
April 11, 1994
<PAGE> 3
BWIP HOLDING, INC.
200 OCEANGATE BOULEVARD, SUITE 900
LONG BEACH, CALIFORNIA 90802
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 10, 1994
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of BWIP Holding, Inc. (the "Company") of
proxies for use at the Annual Meeting of Stockholders (the "Annual Meeting") to
be held at the Hyatt Regency Hotel, 200 South Pine Avenue, Long Beach,
California, on Tuesday, May 10, 1994 at 1:30 p.m., and at any adjournment
thereof, for the purposes set forth in the accompanying Notice of Annual Meeting
of Stockholders. This Proxy Statement and the accompanying proxy card are first
being mailed on or about April 11, 1994 to all stockholders of the Company.
Only holders of record of the Company's Class A Common Stock, par value
$.01 per share (the "Common Stock"), at the close of business on March 29, 1994
will be entitled to vote at the Annual Meeting. As of that date, there were
24,275,000 shares of Common Stock outstanding. Each share of Common Stock
entitles the holder to one vote. In accordance with Section 216(1) of the
General Corporation Law of the State of Delaware (the "DGCL") and Section 1.04
of the Company's Bylaws, a majority of the outstanding shares of Common Stock,
present in person or represented by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting. Under applicable Delaware law,
abstentions and broker non-votes will be treated as shares that are present and
entitled to vote for the purpose of determining the presence of a quorum. There
is no cumulative voting. There are no other voting securities of the Company
outstanding. The 175,000 shares of Common Stock held in the Company's treasury
will not be voted.
If the accompanying proxy card is properly signed and returned to the
Company prior to the Annual Meeting and not revoked, it will be voted in
accordance with the instructions contained therein. If no instructions are
given, the persons designated as proxies in the accompanying proxy card will
vote FOR the election as Directors of those persons named below and FOR all
other proposals set forth herein.
The Board of Directors is not currently aware of any matters other than
those referred to herein that will come before the Annual Meeting. If any other
matter should be presented at the Annual Meeting for action, the persons named
in the accompanying proxy card will vote the proxy in their own discretion.
You may revoke your proxy at any time before it is actually voted at the
Annual Meeting by delivering written notice of revocation to the Secretary of
the Company, by submitting a subsequently dated proxy or by attending the Annual
Meeting and requesting in writing that the proxy be withdrawn. Attendance at the
Annual Meeting will not, in itself, constitute revocation of the proxy.
The expense of preparing, printing and mailing proxy materials to the
Company's stockholders will be borne by the Company. The Company has engaged
Corporate Investor Communications, Inc. to assist in the solicitation of proxies
from stockholders at a fee of approximately $4,000 plus reimbursement of
reasonable out-of-pocket expenses. In addition, proxies may be solicited
personally or by telephone by officers or employees of the Company, none of whom
will receive additional compensation therefor. The Company will also reimburse
brokerage houses and other nominees for their reasonable expenses in forwarding
proxy materials to beneficial owners of the Common Stock.
If a stockholder is a participant in the BW/IP International, Inc. Capital
Accumulation Plan (the "CAP") and shares of Common Stock have been allocated to
such person's account in the CAP, the proxy also serves as voting instructions
to the trustee of the CAP. The trustee will vote both allocated shares of Common
Stock for which it has not received direction and unallocated shares held by it
in the same proportion as directed shares are voted.
<PAGE> 4
BENEFICIAL OWNERSHIP OF COMMON STOCK
OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS
The following table furnishes certain information as of March 15, 1994 as
to the shares of Common Stock beneficially owned by each director and nominee
for director of the Company, by the Chief Executive Officer and the four other
most highly compensated executive officers (collectively, the "Named Executive
Officers") and by all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OWNERSHIP OF CLASS
---------------------------------------------------------------- ---------- --------
<S> <C> <C>
Peter C. Valli.................................................. 236,948 1.0%
Eugene P. Cross................................................. 180,968 (1)
Alvin L. Dubrow................................................. 253,497 1.0%
James J. Gavin, Jr. ............................................ -- --
George D. Leal.................................................. 500 (1)
H. Jack Meany................................................... 50,000 (1)
James S. Pignatelli............................................. -- --
William C. Rusnack.............................................. 1,000 (1)
Ronald W. Hoppel................................................ 253,317 1.0%
Richard R. Testwuide............................................ 253,150 1.0%
All executive officers and directors as a group (14 persons).... 1,414,430 5.8%
</TABLE>
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(1) Less than 1%.
OWNERSHIP OF COMMON STOCK BY SIGNIFICANT STOCKHOLDERS
The following table furnishes certain information as to each person known
to the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND BUSINESS ADDRESS OWNERSHIP OF CLASS
---------------------------------------------------------------- ---------- --------
<S> <C> <C>
Ark Asset Management Co., Inc. ................................. 1,449,350 (1) 6.0%
One New York Plaza
New York, New York 10004
Government of Singapore Investment
Corporation Pte. Ltd.......................................... 2,026,000 (2) 8.3%
Government of Singapore......................................... 1,477,700 (2)
Monetary Authority of Singapore................................. 548,300 (2)
250 North Bridge Road #33-00
Raffles City Tower
Singapore 0607
Pioneering Management Corporation............................... 2,013,300 (3) 8.3%
60 State Street
Boston, Massachusetts 02114
RCM Capital Management.......................................... 1,245,700 (4) 5.1%
RCM Limited L.P.
RCM General Corporation
Four Embarcadero Center
Suite 2900
San Francisco, California 94111
</TABLE>
- ---------------
(1) This figure is based on information set forth in a Schedule 13G, dated
February 7, 1994, filed by Ark Asset Management Co., Inc. ("Ark") with the
Securities and Exchange Commission (the "SEC"), which states that Ark has
sole power to dispose or direct the disposition of 1,398,850 of such shares
and that Ark has the sole power to vote or direct the vote of 1,088,850 of
such shares.
2
<PAGE> 5
(2) This figure is based on information set forth in a Schedule 13D, dated
February 14, 1994, filed by Government of Singapore Investment Corporation
Pte. Ltd. ("Investment Corporation") with the SEC on behalf of itself, the
Government of Singapore ("Government") and the Monetary Authority of
Singapore ("Monetary Authority"), which states that Investment Corporation
has shared power to dispose or direct the disposition and to vote or direct
the vote of all of such shares, that Government has shared power to dispose
or direct the disposition and to vote or direct the vote of 1,477,700 of
such shares, and that Monetary Authority has shared power to dispose or
direct the disposition and to vote or direct the vote of 548,300 of such
shares.
(3) This figure is based on information set forth in a Schedule 13G, dated
February 11, 1994, filed by Pioneering Management Corporation ("Pioneering")
with the SEC, which states that Pioneering has sole power to dispose or
direct the disposition of 225,000 of such shares and shared power to dispose
or direct the disposition of 1,788,300 of such shares and that Pioneering
has the sole power to vote or direct the vote of all such shares.
(4) This figure is based on information set forth in a Schedule 13G, dated
February 10, 1994, filed by RCM Capital Management, RCM Limited L.P. and RCM
General Corporation (together "RCM") with the SEC, which states that RCM has
sole power to dispose or direct the disposition of such shares and sole
power to vote or direct the vote of 1,189,100 of such shares.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and officers and persons who own more than ten
percent of the Common Stock (collectively, the "Reporting Persons"), to file
certain reports ("Section 16 Reports") with the SEC with respect to their
beneficial ownership of shares of Common Stock. The Reporting Persons are also
required to furnish the Company with copies of all Section 16 Reports they file.
Based solely on a review of copies of Section 16 Reports furnished to the
Company by the Reporting Persons and written representations by directors and
officers of the Company, the Company believes that all Section 16(a) filing
requirements applicable to the Reporting Persons during and with respect to 1993
were complied with on a timely basis, except that Peter C. Valli, Chief
Executive Officer, in February 1994 filed a Form 5 reporting a change in the
trustee for a charitable remainder trust pursuant to the terms of which Mr.
Valli had served as sole trustee and exercised sole investment discretion with
respect to assets held by the trust (which included 40,000 shares of Common
Stock). On March 19, 1993 an independent third party trustee was appointed, who
now exercises sole investment discretion with respect to such assets. The change
in trustees should have been reported on a Form 4 with respect to transactions
in Common Stock occurring during the month of March 1993.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
GENERAL INFORMATION
As set by the Board of Directors pursuant to the Bylaws of the Company, the
authorized number of Directors to be elected is eight. Directors will hold
office from the time of their election until the next annual meeting of
stockholders of the Company and until their successors are duly elected and
qualify, or until their earlier resignation or removal. All nominees also serve
as members of the Board of Directors of the Company's subsidiary, BW/IP
International, Inc. ("BW/IP") and were elected to the Board of Directors at the
last meeting of stockholders in May 1993.
The Board of Directors has no reason to believe that any of the nominees
will not serve if elected, but if any of them should become unavailable to serve
as a director, and if the Board designates a substitute nominee, the persons
named in the accompanying proxy card will vote for the substitute nominee
designated by the Board.
3
<PAGE> 6
INFORMATION CONCERNING NOMINEES
Peter C. Valli, age 67 Director of the Company since 1987 and of BW/IP since
1984
Mr. Valli became Chairman of the Board and Chief Executive Officer of the
Company and BW/IP in 1987. He served as President of the Company from 1987 to
1991. He served as President of BW/IP from 1984 to 1991 and has served as a
director of BW/IP since 1984. From 1972 to 1987 he also served as Vice President
of Borg-Warner Corporation, BW/IP's predecessor parent ("Borg-Warner"),
principally in conjunction with his affiliation with BW/IP. Mr. Valli is
affiliated with a family of investment funds registered under the Investment
Company Act of 1940 (none of which own shares of Common Stock), including The
Bond Fund of America, Inc. and Capital World Bond Fund, Inc., for which he
serves as a director, and American Funds Income Series, American Funds
Tax-Exempt Series II, American High-Income Trust, The Cash Management Trust of
America, Intermediate Bond Fund of America, The Tax-Exempt Bond Fund of America,
Inc., The Tax-Exempt Money Fund of America and The U.S. Treasury Money Fund of
America, for which he serves as a trustee.
Committee Membership: Executive (Chairman)
Eugene P. Cross, age 58 Director of the Company and BW/IP since 1993
Mr. Cross has been Executive Vice President -- Finance and Chief Financial
Officer of the Company and BW/IP since March 5, 1993, prior to which he had been
Vice President -- Finance of the Company since 1987 and Vice
President -- Finance of BW/IP since 1975.
Alvin L. Dubrow, age 61 Director of the Company and BW/IP since 1993
Mr. Dubrow became President and Chief Operating Officer of the Company and
BW/IP in 1991. He served as Vice President of the Company from 1987 to 1991,
Vice President of BW/IP from 1984 to 1991 and Vice President -- General Manager
of the Pump Division from 1982 to 1991.
James J. Gavin, Jr., age 71 Director of the Company and BW/IP since 1987
Mr. Gavin was Vice Chairman of Borg-Warner and President of its Protective
Services Group from 1985 to 1987 and Senior Vice President -- Finance of
Borg-Warner from 1975 to 1985. Mr. Gavin currently is a director of Service
Corporation International, Stepan Company and Huntco, Inc. and is a trustee of
Benchmark Funds.
Committee Membership: Audit (Chairman), Executive.
George D. Leal, age 60 Director of the Company and BW/IP since 1993
Mr. Leal has been Chairman of the Board and Chief Executive Officer of
Dames & Moore, a worldwide consulting engineering firm, since 1981. He served as
President of Dames & Moore from 1981 to 1993.
Committee Membership: Compensation and Benefits.
H. Jack Meany, age 71 Director of the Company and BW/IP since 1987
Mr. Meany was President and Chief Executive Officer of NI Industries, Inc.
from 1975 to 1988, a director of NI Industries, Inc. from 1972 to 1988 and its
Chairman of the Board from 1981 to 1988. He is currently a director of Farr
Company, Electronic Scales International, Inc. and APS, Inc.
Committee Membership: Compensation and Benefits (Chairman), Executive.
James S. Pignatelli, age 50 Director of the Company and BW/IP since 1993
Mr. Pignatelli is a consultant to SCEcorp, a public utility company, and
the retired President and Chief Executive Officer of Mission Energy Company, an
independent power company and a subsidiary of SCEcorp., positions he held from
1988 to 1993. From 1975 to 1987, Mr. Pignatelli was employed by SCEcorp, holding
4
<PAGE> 7
various positions in the company including Manager of Taxes, Assistant Treasurer
and Director of Revenue Requirements. Mr. Pignatelli is currently a director of
Texas Power Corporation.
Committee Membership: Audit.
William C. Rusnack, age 49 Director of the Company and BW/IP since 1993
Mr. Rusnack has been Senior Vice President of ARCO (an integrated petroleum
company) since July 1990, and President of ARCO Products Company since June
1993. He was President of ARCO Transportation Company, from 1990 to 1993, Vice
President of Atlantic Richfield from 1987 to 1990 and Senior Vice President of
ARCO Oil & Gas Company from 1985 to 1987. Mr. Rusnack also serves as director of
the Lyondell Petrochemical Company.
Committee Membership: Compensation and Benefits.
In accordance with Section 216(3) of the DGCL and Section 2.03 of the
Company's Bylaws, the affirmative vote of a plurality of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting is
required for the election of Directors. Under applicable Delaware law, withheld
votes on any nominee or nominees, abstentions from voting on the election of
Directors and broker non-votes will have no effect on the outcome of the vote on
this proposal.
SHARES REPRESENTED BY THE ACCOMPANYING PROXY CARD WILL BE VOTED FOR THE
ELECTION OF THE ABOVE NOMINEES UNLESS AUTHORITY TO VOTE FOR ONE OR MORE NOMINEES
IS WITHHELD. STOCKHOLDERS MAY WITHHOLD AUTHORITY TO VOTE FOR THE ENTIRE SLATE AS
NOMINATED OR, BY WRITING THE NAME OF ONE OR MORE NOMINEES IN THE SPACE PROVIDED
IN THE PROXY CARD, WITHHOLD THE AUTHORITY TO VOTE FOR SUCH NOMINEE OR NOMINEES.
COMMITTEES AND MEETINGS OF THE BOARD
The composition of the Board of Directors of each of the Company and BW/IP
is identical. The Board of Directors of the Company held four regularly
scheduled or special meetings during the fiscal year ended December 31, 1993
(the "Fiscal Year"), and the Board of Directors of BW/IP held four such
meetings. Each Board of Directors has three standing committees: an Executive
Committee, an Audit Committee and a Compensation and Benefits Committee. While
the composition and responsibilities of the standing committees of the two
Boards are identical, the level of activity of the corresponding committees of
each Board varies depending on the matters being considered.
Executive Committee. The Executive Committee of each Board has authority,
with certain exceptions, during the intervals between the meetings of the Board
of Directors, to take all actions that may be taken by its respective full Board
of Directors in the management of the property, affairs and business of the
Company or BW/IP, as the case may be. The Executive Committee of the Company's
Board did not meet during the Fiscal Year, while the corresponding committee of
BW/IP's Board met three times during the Fiscal Year.
Audit Committee. The Audit Committee of each Board reviews and approves
the scope and results of any outside audit of the Company or BW/IP, as the case
may be, and the fees therefor, and reviews, considers and acts upon all matters
concerning auditing and accounting matters and the selection of outside auditors
for the Company or BW/IP, as the case may be. The Audit Committee of the
Company's Board met two times during the Fiscal Year, while the corresponding
committee of BW/IP's Board did not meet during the Fiscal Year.
Compensation and Benefits Committee. The Compensation and Benefits
Committee of each Board reviews, considers and acts upon matters of salary and
other compensation and benefits of all officers and other employees of the
Company or BW/IP, as the case may be, as well as acts upon all matters
concerning, and exercises such authority as is delegated to it under the
provisions of, any benefit, retirement or pension plan. The Compensation and
Benefits Committee of the Company's Board met one time during the Fiscal Year,
while the corresponding committee of BW/IP's Board met four times during the
Fiscal Year.
5
<PAGE> 8
Each current member of the Board of Directors of the Company nominated for
election attended at least 75% of the aggregate of the total number of meetings
of the Board of Directors of the Company and of the committees of such Board on
which he served during the Fiscal Year.
COMPENSATION OF DIRECTORS
Each director of the Company and BW/IP, other than any director employed by
the Company or BW/IP is entitled to receive an annual retainer of $12,000 plus a
fee of $1,000 for each Board meeting attended and $1,000 for each committee
meeting attended that is not held concurrently with a Board meeting, plus all
reasonable travel and other expenses of attending such meetings.
As part of its overall program to promote charitable giving, the Company
has established the Non-Employee Directors' Charitable Gift Plan pursuant to
which the Company purchased life insurance policies on non-employee directors.
Eligibility is based on length of service as a non-employee director, with a
minimum of two years of vesting service required after the March 1993 adoption
of this plan by the Board of Directors, and full benefits vesting after five
years of service. Upon the death of an individual non-employee director, the
Company will donate up to $1 million to one or more qualifying charitable
organizations recommended by the individual director and subsequently be
reimbursed by life insurance proceeds. Individual directors derive no financial
benefit from this program since all charitable deductions accrue solely to the
Company. The program results in only nominal cost to the Company over time.
Participants in this program are Messrs. Gavin, Leal, Meany, Pignatelli, and
Rusnack.
Pursuant to the BWIP Holding, Inc. Non-Employee Directors' Stock Option
Plan (the "Directors' Plan"), each non-employee director who is reelected or who
is continuing as a member of the Board of Directors shall be granted, as of the
date of each year's annual meeting of the Company's stockholders, a non-
qualified option ("Option") to purchase 2,000 shares of Common Stock, while each
new non-employee director upon initial election as a member of the Board is
granted an option to purchase 5,000 shares of Common Stock.
The following table summarizes for all non-employee directors of the
Company Options granted in fiscal year 1993 under the Directors' Plan:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------
OPTIONS EXERCISE EXPIRATION
NAME GRANTED(1) PRICE/SHARE(2) DATE
------------------------------------------------ ---------- -------------- ----------
<S> <C> <C> <C>
James J. Gavin.................................. 5,000 $23.56 5/18/03
George D. Leal.................................. 5,000 23.56 5/18/03
H. Jack Meany................................... 5,000 23.56 5/18/03
James S. Pignatelli............................. 5,000 23.56 5/18/03
William C. Rusnack.............................. 5,000 23.56 5/18/03
</TABLE>
- ---------------
(1) All Options were granted on May 18, 1993, the date of the last annual
meeting of the Company's stockholders and the date on which the Directors'
Plan was adopted. No Options are exercisable until the director has served a
one-year term as a member of the Board of Directors. Fifty percent of the
total number of shares of Common Stock covered in the Option will be
exercisable beginning with the first anniversary date of the grant and the
remaining fifty percent shall be exercisable on the second anniversary date
of the grant. Payment of the exercise price may be made in cash, Common
Stock or a combination of both.
(2) The exercise price for shares under the Options is the mean of the high and
low prices for the Common Stock as reported on the NASDAQ National Market
System on the date of grant.
6
<PAGE> 9
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
The report of the Compensation and Benefits Committee (the "Committee")
deals with compensation paid by BW/IP to persons who serve concurrently as
officers of the Company and BW/IP, and who receive all of their compensation
from BW/IP. The Committee is comprised of three independent non-employee
directors: Mr. George D. Leal and Mr. William C. Rusnack, both of whom have
served as members of the Committee since their March 5, 1993 election to the
Board of Directors, and Mr. H. Jack Meany, who has served on the Committee since
1987, and was elected its Chairman in March, 1993.
Under the supervision of the Committee, the Company has developed and
implemented compensation policies and programs designed to increase the
profitability of the Company, and thus stockholder value, by aligning the
financial interests of the Company's executives and managers with those of the
stockholders.
The strategy of the executive compensation program is to relate
compensation to business objectives and performance, and to enable the Company
to attract, retain and reward executives who contribute to the success of the
Company. This is consistent with the compensation principles applicable to all
employees:
- The Company pays competitively.
It is committed to a company wide pay program which attracts, retains and
motivates the skilled people necessary to operate its businesses and to
provide fair compensation within the constraints of a competitive
environment. To ensure that pay is competitive, comparisons are made of
its pay practices with other successful manufacturing companies and the
information is used as a major component in setting its pay formulas and
schedules.
- The Company pays for relative sustained performance.
Executives' and managers' earnings are based on corporate performance,
division and business unit performance, and individual performance.
Corporate, division and business unit performances are evaluated by
reviewing the extent to which strategic and operating plan goals are met.
Individual performance is measured against annually set non-financial
goals which support other business objectives.
Chief Executive Officer Compensation
The Committee believes that the compensation of the Company's chief
executive officer (the "CEO") should be substantially influenced by Company
performance. Therefore, although there is necessarily some subjectivity in
setting the CEO's salary, major elements of the compensation package are
directly tied to Company and individual performance. The Committee establishes
the CEO's base salary after considering the median salary of CEOs from survey
data in a broad-based group of bonus-paying manufacturing companies gathered by
outside consultants specializing in executive compensation. Some of these
companies are included in the Standard & Poor's Manufacturing Diversified
Industrials Index shown on the performance graph.
The CEO is a participant in the Company's Management Incentive Plan (the
"MIP"), and as such, his annual short-term bonus is established as a function of
important objective financial targets and strategic non-financial goals. In 1993
the financial target was based on net earnings of the Company and non-financial
goals including objectives such as management succession planning. These
financial and non-financial goals are revised annually by the Committee
depending on current performance factors deemed necessary or appropriate to
achieve the Company's goals. The 1993 target bonus was established such that
when added to the CEO's base salary, the total would approximate the comparable
industry third quartile of total cash compensation paid. The actual bonus
payment is directly related to the Company's financial performance and to the
CEO's degree of fulfillment of his non-financial goals. In March 1994 the CEO
was paid a cash bonus of $120,000, representing a substantial decrease in bonus
from the prior year because the Company's earnings in 1993 were lower than
required to pay an equal or greater bonus.
7
<PAGE> 10
The Long Term Incentive Plan (the "LTIP") for the CEO is also tied directly
to objective measures of performance with emphasis on long-term results. The
1993 award under the LTIP contains two elements -- non-qualified stock options
and performance units. In 1993 Mr. Valli was granted 26,000 options at the March
4, 1993 market price. These options will be vested in March 1996. Mr. Valli was
concurrently granted 1620 performance units payable in cash or stock in March
1996 based on a matrix of compounded Company sales and net income growth over
the three-year performance period 1993 through 1995. Each unit is worth $100 at
target levels of performance, and can pay as much as $200 at maximum pay out, or
can pay nothing at all if certain threshold levels of performance are not met.
Payments for performance between the minimum and maximum is paid on a
proportionate basis. For 1994, stock option and performance unit awards and
specific performance targets have been established in similar fashion.
The purpose of the LTIP is to provide an incentive for future performance
and encourage the officers and other covered employees to own stock and increase
their proprietary interest in the Company. Its two components are intended to
provided a balance of incentives between the performance unit aspect which
rewards the achievement of purely objective financial goals which their job
performance can influence, and stock options, which reward performance related
to increased stockholder value. The relative size of the awards, proportionate
to base salary, is highest for the CEO, whose position has the greatest impact
on the Company's performance, and decreases in steps for other officers and
employees. The number of options previously granted was not considered in
determining 1993 awards.
Other Officer Compensation
The Committee has adopted similar policies with respect to compensation of
the other executive officers of the Company. Using salary data supplied by
outside consultants, it establishes base salaries that are within the median
range of salaries for persons holding similarly responsible positions at other
comparably sized manufacturing companies. In addition, in establishing the base
salaries of executive officers, the Committee considers factors such as relative
company performance and the individual's performance and future potential.
The Committee's policy regarding other elements of the compensation package
for other executive officers is similar to the CEO's. Under the MIP, the bonus
paid at target levels of performance, when added to base salary, will pay total
cash compensation approximately at the third quartile total cash compensation
for officers of similar responsibility at comparable sized manufacturing
companies. However, the financial goals vary among the covered executive
officers depending upon their responsibilities. For officers with Company-wide
staff responsibilities, the goals are the same as the CEO's (net income), while
for those with operating responsibilities which are company-wide or division
specific, the goals pertain to Company-wide or specific division-related
operating income and other measures, plus a portion related to Company net
income. All officers have specifically established non-financial goals which are
determined each year by the CEO. As was the case for the CEO, 1993 bonuses for
other executive officers were substantially less than in the prior year.
The LTIP applies to all executive officers other than the CEO much like the
MIP in that, depending on the officer's position, the financial performance
measures for the performance unit awards are based either entirely on
Company-wide sales and net income growth over a three-year period, or on a
combination of Company-wide and division goals. The stock option element of the
LTIP operates for other officers exactly as it does for the CEO, and is believed
to create an effective incentive to increase value for stockholders.
The Company has studied the $1 million cap on the deductibility of
compensation, but does not anticipate the need to deal with this issue in the
near term because the current compensation of the Company's executive officers
does not currently approach and is not expected to approach $1 million in the
next few years.
H. Jack Meany, Chairman
George D. Leal
William C. Rusnack
Compensation and Benefits Committee
8
<PAGE> 11
PERFORMANCE GRAPH FOR COMMON STOCK
The following graph compares the Company's cumulative total return on the
Common Stock with the Standard & Poor's 500 Stock Index and the Standard &
Poor's Manufacturing Diversified Industrials Index. The graph assumes that $100
was invested on May 24, 1991 (the date the Common Stock was registered under the
Exchange Act) in each of the Common Stock, the Standard & Poor's 500 Stock Index
and the Standard & Poor's Manufacturing Diversified Industrials Index and that
all dividends were reinvested. The historical stock price performance of the
Common Stock shown on the following graph is not necessarily indicative of
future price performance.
TOTAL STOCKHOLDER RETURNS
<TABLE>
<CAPTION>
S & P MAN-
MEASUREMENT PERIOD UFACTURING
(FISCAL YEAR COVERED) BWIP HOLDING S & P 500 (DIVER. IND.)
<S> <C> <C> <C>
MAY 24, 1991 100 100 100
DEC. 31, 1991 155 110 90
DEC. 31, 1992 212 120 105
DEC. 31, 1993 177 129 125
</TABLE>
9
<PAGE> 12
SUMMARY COMPENSATION TABLE
The following table summarizes the total compensation of the Named
Executive Officers for fiscal year 1993, as well as the total compensation paid
to each such individual for the Company's two previous fiscal years in all
capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
NAME AND ---------------------------- OTHER ANNUAL (NUMBER OF SHARES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2)(3) SUBJECT TO OPTIONS) COMPENSATION(2)(4)
- -------------------------- ---- -------- -------- ------------------ -------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Peter C. Valli............ 1993 $390,000 $120,000 $2,306 26,000 $12,391
Chairman & Chief 1992 370,000 265,000 569 22,500 11,120
Executive Officer 1991 346,007 320,000 -0-
Alvin L. Dubrow........... 1993 267,000 75,000 1,929 15,000 3,450
President, Chief 1992 250,000 150,000 740 13,000 3,506
Operating Officer 1991 229,003 175,000 -0-
and Director
Eugene P. Cross........... 1993 190,000 55,000 1,865 7,000 2,249
Executive Vice 1992 180,000 100,000 1,806 6,100 2,340
President -- Finance, 1991 171,000 115,000 -0-
Chief Financial Officer
and Director
Ronald W. Hoppel.......... 1993 211,000 55,000 1,685 8,000 2,732
Vice
President -- General 1992 200,000 110,000 1,435 6,900 2,637
Manager Pump Division 1991 183,083 125,000 -0-
Richard R. Testwuide...... 1993 188,000 55,000 1,679 7,000 2,249
Vice
President -- General 1992 180,000 95,000 1,641 6,100 1,768
Manager Seal Division 1991 171,833 110,000 -0-
</TABLE>
- ---------------
(1) These amounts are the cash awards to the named individuals under BW/IP
Management Incentive Plans. Amounts shown for performance in 1993, 1992 and
1991 were paid by March 15 of the calendar year following the year for which
bonuses were awarded.
(2) In accordance with the transitional provisions applicable to the revised
rules on executive officer and director compensation disclosure adopted by
the SEC, amounts of Other Annual Compensation and All Other Compensation are
excluded for the Company's 1991 fiscal year.
(3) Reflects amount reimbursed for the payment of taxes ("gross-up").
(4) Includes amounts contributed or accrued for the fiscal year under the CAP,
and for Mr. Valli a corporate paid life insurance premium in the amount of
$10,468 in 1993 and $7,618 in 1992.
10
<PAGE> 13
OPTION GRANTS
The following table summarizes for the Named Executive Officers options to
acquire shares of the Common Stock granted in fiscal year 1993 under the LTIP.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------
PERCENTAGE OF POTENTIAL REALIZABLE VALUE
TOTAL OPTIONS AT ASSUMED ANNUAL RATES
GRANTED TO OF STOCK PRICE APPRECIATION
EMPLOYEES IN FOR OPTION TERM(1)
OPTIONS FISCAL YEAR EXERCISE EXPIRATION ----------------------------------
NAME GRANTED(2) 1993 PRICE/SHARE DATE 0% 5% 10%
- -------------------------- ---------- -------------- ----------- ---------- ---- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Peter C. Valli............ 26,000 21.5% $ 26.50 3/4/03 0 $ 433,420 $ 1,097,980
Alvin L. Dubrow........... 15,000 12.4 26.50 3/4/03 0 250,050 633,450
Eugene P. Cross........... 7,000 5.8 26.50 3/4/03 0 116,690 295,610
Ronald W. Hoppel.......... 8,000 6.6 26.50 3/4/03 0 133,360 337,840
Richard R. Testwuide...... 7,000 5.8 26.50 3/4/03 0 116,690 295,610
All Stockholders.......... N/A N/A N/A N/A 0 404,664,250 1,025,133,250
All Optionees............. 121,000 100.0 26.50 3/4/03 0 2,017,070(3) 5,109,830(3)
Optionee Gain as a % of
All Stockholders'
Gain.................... N/A N/A N/A N/A N/A .5% .5%
</TABLE>
- ---------------
(1) Based upon the $26.50 per share market price on the date of grant and an
annual appreciation of such market price through the expiration date of such
options at the stated rates. These amounts represent assumed rates of
appreciation only and may not necessarily be achieved. Actual gains, if any,
are dependent on the future performance of the Common Stock, as well the
continued employment of the Named Executive Officers through the vesting
period. The potential realizable values indicated have not taken into
account amounts required to be paid as income tax under the Internal Revenue
Code of 1986, as amended (the "Code"), and any applicable state laws.
(2) BW/IP granted stock options to purchase shares of the Common Stock pursuant
to the LTIP on March 4, 1993. Unless otherwise determined by the
Compensation and Benefits Committee, a stock option may be exercised
commencing three years after the date of grant in one or more installments.
A stock option may only be exercised upon full payment of the option price.
(3) No gain to the optionees is possible without an increase in stock price
appreciation, which will benefit all stockholders commensurately.
OPTION VALUES
The following table sets forth the number and the dollar value of
unexercised options to purchase Common Stock held by the Named Executive
Officers at December 31, 1993. No options were exercised by these individuals
during 1993.
AGGREGATED LAST FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT FISCAL
OPTIONS AT FISCAL YEAR END(#) YEAR-END($)
NAME EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE(1)(2)
- ------------------------------------------ ----------------------------- --------------------------------
<S> <C> <C>
Peter C. Valli............................ 48,500 0
Alvin L. Dubrow........................... 28,000 0
Eugene R. Cross........................... 13,100 0
Ronald W. Hoppel.......................... 14,900 0
Richard R. Testwuide...................... 13,100 0
</TABLE>
- ---------------
(1) No outstanding options are exercisable.
(2) Based on the last reported sale price per share of the Common Stock as
quoted through the NASDAQ National Market System on December 31, 1993
($25 1/4).
11
<PAGE> 14
LTIP AWARDS
The following table summarizes the performance unit awards made in fiscal
year 1993 to the Named Executive Officers under the LTIP.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF PERFORMANCE OR NON-STOCK PRICE-BASED PLAN
SHARES, UNITS OTHER PERIOD -----------------------------------
OR OTHER UNTIL MATURATION BELOW
NAME RIGHTS(1) OR PAYOUT THRESHOLD TARGET MAXIMUM
- ------------------------------ ------------- ---------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Peter C. Valli................ 1,620 3 years $0.00 $162,000 $324,000
Alvin L. Dubrow............... 940 3 years 0.00 94,000 188,000
Eugene P. Cross............... 440 3 years 0.00 44,000 88,000
Ronald W. Hoppel.............. 500 3 years 0.00 50,000 100,000
Richard R. Testwuide.......... 450 3 years 0.00 45,000 90,000
</TABLE>
- ---------------
(1) Performance units have a contingent value of $100 per unit, payable in 3
years if certain performance targets relevant to the Company's business
objectives and set by the Committee are met. Each unit can pay as much as
$200 upon achieving specific maximum levels, or can pay nothing at all if
certain threshold levels of performance are not met.
OTHER PLANS AND ARRANGEMENTS
Retirement Benefits. The following table indicates the estimated maximum
annual retirement benefit that persons in specified compensation and years of
service classifications would be entitled to receive under the BW/IP
International, Inc. Retirement Plan (the "BW/IP RP") and the Supplemental
Executive Retirement Plan (the "SERP") on a straight-life annuity basis before
any deduction for social security benefits as if retirement had occurred on
December 31, 1993 at age 65 after the indicated years of credited service and as
if average annual earnings for the highest five consecutive years in the ten
years preceding retirement equaled the amounts indicated. The table does not
reflect limitations imposed by the Code.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE
ANNUAL -------------------------------------------------------------------------
EARNINGS 15 20 25 30 35 40
- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $ 28,467 $ 37,956 $ 47,444 $ 56,933 $ 60,058 $ 63,183
150,000 34,467 45,956 57,444 68,933 72,683 76,433
175,000 40,467 53,956 67,444 80,933 85,308 89,683
200,000 46,467 61,956 77,444 92,933 97,933 102,933
225,000 52,467 69,956 87,444 104,933 110,558 116,183
250,000 58,467 77,956 97,444 116,933 123,183 129,433
275,000 64,467 85,956 107,444 128,933 135,808 142,683
300,000 70,467 93,956 117,444 140,933 148,433 155,933
350,000 82,467 109,956 137,444 164,933 173,683 182,433
400,000 94,467 125,956 157,444 188,933 198,933 208,933
450,000 106,467 141,956 177,444 212,933 224,183 235,433
500,000 118,467 157,956 197,444 236,933 249,433 261,933
550,000 130,467 173,956 217,444 260,933 274,683 288,433
600,000 142,467 189,956 237,444 284,933 299,933 314,933
650,000 154,467 205,956 257,444 308,933 325,183 341,433
700,000 166,467 221,956 277,444 332,933 350,433 367,933
750,000 178,467 237,956 297,444 356,933 375,683 394,433
800,000 190,467 253,956 317,444 380,933 400,933 420,933
</TABLE>
12
<PAGE> 15
Eligible BW/IP U.S. salaried and certain hourly employees participate in
the BW/IP RP, which provides retirement benefits based on an employee's years of
service and earnings with Borg-Warner, BW/IP and its subsidiaries and such
employee's average annual earnings (subject to a maximum of $200,000 annually,
as adjusted by the Internal Revenue Service for cost of living increases after
1989) for the highest consecutive five years of the ten years preceding
retirement. Participants are covered in the BW/IP RP for all wages, salary and
bonuses, and up to 50% of an employee's award under the 1981 Borg-Warner
Contingent Compensation Plan through 1987.
As of December 31, 1993, the credited years of service for each Named
Executive Officer are: Mr. Valli, 33 years; Mr. Dubrow, 25 years; Mr. Cross, 24
years; Mr. Hoppel, 29 years; and Mr. Testwuide, 21 years.
Employment Agreement. BW/IP's employment agreement, as amended, with Mr.
Valli provides for his continued employment with BW/IP as its Chairman of the
Board and Chief Executive Officer until January 31, 1995 at an annual base
salary of at least $260,000 plus an incentive bonus of up to 100% of his base
salary, an automobile, certain club dues and other benefits.
If Mr. Valli's employment is terminated by Mr. Valli for Good Reason (as
defined in the employment agreement) or by the Company other than for Cause (as
defined in the employment agreement), the agreement provides that the Company
will pay him his then-effective base salary for the remainder of the term of the
agreement, plus, in each such year, the greater of Mr. Valli's most recent
annual bonus award and an amount determined by reference to his base salary and
bonuses received during the most recent three years and will continue certain
benefits for Mr. Valli during such term. The amounts payable to Mr. Valli after
termination for the reasons described above are subject to reduction if Mr.
Valli chooses to secure employment after his termination.
Transitional Income Programs. On December 16, 1993, the Company adopted a
transitional income program (the "Program"). All the executive officers of the
Company, except Mr. Valli, are eligible to participate in the Program. The
Program provides for compensation and benefits in the event such officer's
employment is terminated within two years following a Change in Control (as
defined in the Program) of the Company or BW/IP. Each of six covered officers
will receive a lump sum payment equal to two times the greater of base salary
(i) at January 1, 1994 or (ii) at the end of the month immediately prior to the
Change in Control, plus two times the greater of (i) the most recent bonus or
(ii) an average bonus based on such officer's bonus as a percent of salary for
the preceding three years, and certain other benefits. Under a similar program,
two other officers would receive benefits equal to 50% of the amount determined
as indicated above. The amounts payable under the Program are not subject to
reduction for amounts earned by the officer following termination. In addition,
the Program provides that if any amount payable under the Program is deemed to
be an "excess parachute payment" under section 280G(b) of the Code, which
generally would limit deductibility of such payment by the Company for federal
income tax purposes, then the amount payable under the Program shall be limited
to an amount that would not cause such limitation on the deduction.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The stockholders are asked to ratify the appointment by the Board of
Directors of Price Waterhouse as the Company's independent auditors for the 1994
fiscal year. Price Waterhouse, a certified public accounting firm, has served as
the Company's independent auditors since March 5, 1993. On that date, the Board
of Directors of the Company approved the engagement of Price Waterhouse as its
independent auditors to audit the Company's financial statements for the fiscal
year ending December 31, 1993 to replace the firm of Coopers & Lybrand who were
terminated as principal accountant of the Company effective March 8, 1993. The
appointment of Price Waterhouse was ratified by the stockholders at their last
meeting in May 1993. Coopers & Lybrand, a certified public accounting firm, had
served as the Company's independent auditors since 1987. The Audit Committee of
the Board of Directors recommended the change in the Company's principal
accountant on March 4, 1993.
13
<PAGE> 16
The reports of Coopers & Lybrand on the Company's financial statements for
the five most recent fiscal years preceding Coopers & Lybrand's dismissal did
not contain an adverse opinion or a disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting principles. In
connection with the audits of the Company's financial statements for each of the
five most recent fiscal years preceding Coopers & Lybrand's dismissal, there
were no disagreements with Coopers & Lybrand on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures which, if not resolved to the satisfaction of Coopers & Lybrand,
would have caused Coopers & Lybrand to make reference to the matter in their
reports.
During the Company's five most recent fiscal years and the subsequent
interim period preceding Coopers & Lybrand's dismissal, there were no
"reportable events" (as such term is defined in Item 304(a)(1)(v) of Regulation
S-K as promulgated by the SEC).
During the five fiscal years prior to the engagement of Price Waterhouse as
its new principal accountant, neither the Company nor anyone acting on its
behalf consulted with Price Waterhouse regarding (a) the application of
accounting principles to a specified transaction or (b) the type of audit
opinion that might be rendered on the Company's financial statements.
Representatives of Price Waterhouse are expected to be present at the
Annual Meeting to respond to appropriate questions and to make such statements
as they may desire.
Ratification of the appointment of Price Waterhouse as the Company's
independent auditors for the 1994 fiscal year requires the affirmative vote of a
majority of the shares of Common Stock present or represented at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICE WATERHOUSE AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
1994 FISCAL YEAR AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
PROPOSALS NOS. 3 AND 4
AMENDMENTS TO AND RESTATEMENT
OF CERTIFICATE OF INCORPORATION
On February 25, 1994, the Board of Directors unanimously approved and
recommended for submission to the stockholders amendments to and a restatement
of the Company's Second Restated Certificate of Incorporation (the "Certificate
of Incorporation") to (a) change the corporate name of the Company from "BWIP
Holding, Inc." to "BW/IP, Inc." (the "Name Change") and (b) effect a
recapitalization (the "Recapitalization") of the Company whereby the Company's
two-class common stock structure would be converted into a one-class common
stock structure such that (i) the Company's Class B Common Stock would be
eliminated, (ii) the remaining class of the Company's common stock would be
redesignated simply "Common Stock" and (iii) the authorized capital stock of the
Company would be reduced from 90,000,000 shares of all classes of stock to
50,000,000 shares of all classes of stock.
Each of the Name Change and the Recapitalization will be presented
separately for approval by the stockholders. If both of the proposed amendments
to the Certificate of Incorporation are approved at the Annual Meeting, the
Company intends to effectuate such amendments by amending and restating the
Certificate of Incorporation to read substantially in the form of the Third
Restated Certificate of Incorporation (the "Restated Certificate") set forth in
Appendix A to this Proxy Statement. If either of the proposed amendments is not
approved at the Annual Meeting, the Company will revise the Restated Certificate
appropriately to reflect only that amendment which is approved. Notwithstanding
the authorization of the proposed amendments and restatement by the
stockholders, the Board of Directors may abandon such proposed amendments and
restatement without further action by the stockholders. The discussions of the
Name Change and the Recapitalization that follow should be read in conjunction
with, and are subject to, the specific provisions contained in the official text
of the Restated Certificate.
14
<PAGE> 17
PROPOSAL REGARDING THE NAME CHANGE
The Company's current corporate name is "BWIP Holding, Inc." The Name
Change, if approved by the stockholders, will result in a change of the
Company's corporate name to "BW/IP, Inc."
If approved, the Name Change will be deemed effective upon the filing of
the Restated Certificate (or of an appropriate amendment to the Certificate of
Incorporation) with the Secretary of State of the State of Delaware. It is
anticipated that such filing will occur on the date of the Annual Meeting or as
soon thereafter as is reasonably practicable.
The Name Change is intended to reflect more accurately the Company's
on-going strategy to focus on the pumping business. The Company, through its
subsidiaries, has been and continues to be a worldwide supplier of advanced
technology pump, seal and fluid control equipment and services. Since holding
companies frequently pursue strategies of owning and controlling a variety of
diversified businesses under a single corporate umbrella, the Board of Directors
believes removing "Holding" from the Company's corporate name will eliminate any
confusion in this regard. Further, the Board of Directors believes that changing
the Company's name to include the "BW/IP" designation will more closely identify
the Company with its subsidiaries, which generally operate in their various
markets under the "BW/IP" name. Accordingly, the Board of Directors considers
the Name Change to be in the best interests of the Company and its stockholders.
In accordance with Section 242(b)(1) of the DGCL, the proposed amendment to
the Certificate of Incorporation to effect the Name Change requires the
affirmative vote of a majority of the outstanding shares of Common Stock. Under
applicable Delaware law, abstentions and broker non-votes will not be voted for
or against approval of the Name Change but will have the same effect as a
negative vote since a majority of the outstanding shares of Common Stock is
required to approve the Name Change.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE PROPOSED AMENDMENT TO
THE CERTIFICATE OF INCORPORATION TO EFFECT THE NAME CHANGE AND YOUR PROXY WILL
BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
PROPOSAL REGARDING THE RECAPITALIZATION
The Certificate of Incorporation presently authorizes the issuance of up to
90,000,000 shares of capital stock divided into (a) two classes of common stock,
Class A Common Stock, par value $.01 per share, and Class B Common Stock, par
value $.01 per share, and (b) preferred stock. There are 40,000,000 authorized
shares of Class A Common Stock, of which 24,275,000 shares were outstanding as
of the record date, and 40,000,000 authorized shares of Class B Common Stock, of
which no shares are outstanding. There are 10,000,000 authorized shares of
preferred stock, of which 250,000 shares have been designated as Junior
Participating Cumulative Preferred Stock, par value $.01 per share, and reserved
for issuance pursuant to the Rights Agreement, dated as of July 26, 1993,
between the Company and Bank One, Indianapolis, NA, as Rights Agent. There are
no shares of any series of the preferred stock presently outstanding. Except as
outlined in the following paragraph, the Class A Common Stock and the Class B
Common Stock are identical in all respects.
Each share of Class A Common Stock is entitled to one vote per share on all
matters submitted to the stockholders of the Company for their approval, while
the Class B Common Stock has no voting rights (other than as provided by law).
The Class A Common Stock is quoted through the NASDAQ National Market System,
but the Class B Common Stock is not listed on any securities exchange nor quoted
through the NASDAQ National Market System. Shares of Class A Common Stock are
exchangeable at the option of the holder thereof for an equivalent number of
shares of Class B Common Stock, but only if the holder of such shares and its
affiliates would otherwise own a greater quantity of Class A Common Stock than
is permitted under the Bank Holding Company Act of 1956, as amended (together
with all regulations thereunder, the "Bank Holding Laws"). Shares of Class B
Common Stock may be converted at the option of the holder thereof into Class A
Common Stock unless such conversion would result in the holder of such shares
and its affiliates owning a greater quantity of Class A Common Stock than
permitted under the Bank Holding Laws.
15
<PAGE> 18
As set forth in the Restated Certificate, the authorized capital stock of
the Company would be amended to authorize, in the aggregate, 50,000,000 shares
divided into (a) 40,000,000 shares of Common Stock, par value $.01 per share
(the "New Common Stock"), and (b) 10,000,000 shares of preferred stock. Although
the ability to create and issue preferred stock, or any series thereof, will be
continued in the Restated Certificate, no series of preferred stock is being
created in connection with the Recapitalization. The only effects of the
Recapitalization would be (i) the elimination of the Class B Common Stock, (ii)
a change in the name of the remaining class of common stock from "Class A Common
Stock" to simply "Common Stock," (iii) the elimination of the Class A Common
Stock's conversion feature (which would be rendered unnecessary by the
elimination of the Class B Common Stock) and (iv) a reduction in the number of
shares of all classes of capital stock the Company would be authorized to issue.
Upon the filing of the Restated Certificate, each share of the Class A Common
Stock automatically will be reclassified, changed and converted into one share
of the New Common Stock. Other than as discussed above, the New Common Stock
will continue to have the same preferences, rights, powers and qualifications as
the Class A Common Stock, including one vote for each share of New Common Stock
held by a stockholder. Stockholders will not suffer any dilution of their
current percentage ownership of the Company and the New Common Stock will
continue to be quoted through the NASDAQ National Market System.
If approved, the Recapitalization will be deemed effective upon the filing
of the Restated Certificate (or of an appropriate amendment to the Certificate
of Incorporation) with the Secretary of State of the State of Delaware. It is
anticipated that such filing will occur on the date of the Annual Meeting or as
soon thereafter as is reasonably practicable.
The Recapitalization is being proposed since the circumstances that gave
rise to the need for the Class B Common Stock no longer exist. The Class B
Common Stock was authorized in 1987 when the Company was organized by an
investor group to effect a management leveraged buyout of the businesses of
BW/IP and certain related Borg-Warner subsidiaries and assets. At the time, the
Company's largest stockholder (the "Former Stockholder") was a limited
partnership whose limited partners included one or more bank affiliates that
were subject to legal restrictions under the Bank Holding Laws on their ability,
directly or indirectly, to own, control or have power to vote more than 5% of
the voting stock of the Company. The Class B Common Stock was intended to meet
the needs of such bank affiliates, who might inadvertently hold a greater number
of shares of Class A Common Stock than otherwise permitted in the event the
Former Stockholder distributed its shares of Class A Common Stock to its limited
partners. As a result of a secondary public offering of Common Stock in November
1992, the Former Stockholder no longer owns any shares of Common Stock.
In accordance with Section 242(b)(1) of the DGCL, the proposed amendment to
the Certificate of Incorporation to effect the Recapitalization requires the
affirmative vote of a majority of the outstanding shares of Common Stock. Under
applicable Delaware law, abstentions and broker non-votes will not be voted for
or against approval of the Recapitalization but will have the same effect as a
negative vote since a majority of the outstanding shares of Common Stock is
required to approve the Recapitalization.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE PROPOSED AMENDMENT TO
THE CERTIFICATE OF INCORPORATION TO EFFECT THE RECAPITALIZATION AND YOUR PROXY
WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
SURRENDER AND EXCHANGE OF STOCK CERTIFICATES
If either or both of the Name Change and the Recapitalization are approved,
as promptly as is reasonably practicable after the effectiveness thereof as
indicated above, Bank One, Indianapolis, NA, the Company's transfer agent (the
"Transfer Agent"), will mail to each record holder of a stock certificate
representing shares of Common Stock outstanding immediately prior to the
effectiveness of the Name Change and the Recapitalization (or of either, as the
case may be), instructions and transmittal materials for effecting the surrender
of stock certificates representing shares of Common Stock (the "Old
Certificates") in exchange for replacement certificates representing shares, as
the case may be, of (a) Common Stock (or New Common Stock, as the case may be)
under the Company's new corporate name or (b) New Common Stock (the "New
Certificates"). STOCKHOLDERS ARE REQUESTED NOT TO SURRENDER OLD CERTIFICATES FOR
EXCHANGE UNTIL THEY RECEIVE SUCH TRANSMITTAL MATERIALS FROM THE
16
<PAGE> 19
TRANSFER AGENT. If either or both of the Name Change and the Recapitalization
are approved, all stockholders will have the option of surrendering their Old
Certificates. Upon such surrender, each record holder will be entitled to
receive a New Certificate representing the same number of shares of Common Stock
(or New Common Stock, as the case may be) as were represented by such holder's
Old Certificate. Until surrendered, each Old Certificate will continue to
represent for all purposes the number of shares of Common Stock (or New Common
Stock, as the case may be) to which that holder is entitled, as determined by
the Transfer Agent's records.
If any New Certificate is to be issued in a name or number of shares other
than that in which or in respect of which the surrendered Old Certificate is
registered, it will be a condition to such issuance that the person requesting
such issuance deliver to the Transfer Agent all documents necessary to evidence
and effect such transfer (with signature guarantees) and pay to the Transfer
Agent any transfer or other taxes required by reason thereof or establish to the
Transfer Agent's satisfaction that such taxes have been paid or are not
applicable.
ANNUAL REPORT
The Company's 1993 Annual Report to Stockholders, containing audited
financial statements for the year ended December 31, 1993, is being mailed to
all stockholders of record with this Proxy Statement.
PROPOSALS BY STOCKHOLDERS
Proposals by stockholders intended to be presented at the 1995 Annual
Meeting of Stockholders must be received by the Secretary of the Company no
later than December 12, 1994 to be included in the Company's proxy, notice of
meeting and proxy statement relating to such meeting.
17
<PAGE> 20
APPENDIX A
THIRD RESTATED
CERTIFICATE OF INCORPORATION
OF
BW/IP, INC.
1. The name of the Corporation is BW/IP, INC.
The dates of filing of the Corporation's original Certificate of
Incorporation, the Corporation's Restated Certificate of Incorporation and the
Corporation's Second Restated Certificate of Incorporation with the Secretary of
State of the State of Delaware were March 12, 1987, April 27, 1987 and May 17,
1991, respectively.
2. The name of the Corporation was changed to BWIP ACQUISITION CORPORATION
on March 20, 1987, then changed to BWIP HOLDING, INC. on April 27, 1987 and then
further changed to BW/IP, INC. on , 1994.
3. This Third Restated Certificate of Incorporation restates, integrates
and further amends the provisions of the Second Restated Certificate of
Incorporation of the Corporation by changing the authorized capital stock of the
Corporation.
4. The text of the Third Restated Certificate of Incorporation as amended
or supplemented heretofore is further amended hereby to read as herein set forth
in full:
FIRST: The name of the Corporation is BW/IP, INC.
SECOND: The Corporation's registered office in the State of Delaware
is at 30 The Green, in the City of Dover, County of Kent. The name of the
registered agent at such address is The Corporation Trust Company.
THIRD: The nature of the business of the Corporation and its purpose
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 50 million shares, consisting
of 40 million shares of Common Stock, par value $.01 per share (the "Common
Stock"), and 10 million shares of preferred stock, par value $.01 per share
(the "Preferred Stock").
(a) Rights and Privileges of the Common Stock. All shares of
Common Stock will be identical and will entitle the holders thereof to
the same rights and privileges.
(b) Rights and Privileges of the Preferred Stock. The Preferred
Stock may be issued, from time to time, in one or more series as
authorized by the Board of Directors. Prior to issuance of a series, the
Board of Directors by resolution shall designate that series to
distinguish it from other series and classes of stock of the
Corporation, shall specify the number of shares to be included in the
series, and shall fix the terms, rights, restrictions and qualifications
of the shares of the series, including any preferences, voting powers,
dividend rights and redemption, sinking fund and conversion rights.
Subject to the express terms of any other series of Preferred Stock
outstanding at the time, the Board of Directors may increase or decrease
the number of shares or alter the designation or classify or reclassify
any unissued shares of a particular series of Preferred Stock by fixing
or altering in any one or more respects from time to time before issuing
the shares any terms, rights, restrictions and qualifications of the
shares.
A-1
<PAGE> 21
FIFTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation and for the
purpose of creating, defining, limiting and regulating the powers of the
Corporation and its directors and stockholders:
(a) The number of directors of the Corporation shall be fixed and
may be altered from time to time in the manner provided in the By-Laws,
and vacancies in the Board of Directors and newly created directorships
resulting from any increase in the authorized number of directors may be
filled, and directors may be removed, as provided in the By-Laws.
(b) The election of directors may be conducted in any manner
approved by the stockholders at the time when the election is held and
need not be by ballot.
(c) All corporate powers and authority of the Corporation (except
as at the time otherwise provided by law, by this Third Restated
Certificate of Incorporation or by the By-Laws) shall be vested in and
exercised by the Board of Directors.
(d) No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of his
or her fiduciary duty as a director, provided that nothing contained in
this Third Restated Certificate of Incorporation shall eliminate or
limit the liability of a director (i) for any breach of the director's
duty of loyalty to this Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct
or a knowing violation of the law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware or (iv) for any
transaction from which the director derives an improper personal
benefit.
(e) The Board of Directors shall have the power without the assent
or vote of the stockholders to adopt, amend, alter or repeal the By-Laws
of the Corporation, except to the extent that the By-Laws of this Third
Restated Certificate of Incorporation otherwise provide.
SIXTH: The Corporation reserves the right to amend or repeal any
provision contained in this Third Restated Certificate of Incorporation in
the manner now or hereafter prescribed by the laws of the State of
Delaware, and all rights herein conferred upon stockholders or directors
are granted subject to this reservation.
5. The provisions of the Corporation's Certificate of Designation of Junior
Participating Cumulative Preferred Stock, par value $.01 per share, filed with
the Secretary of State of the State of Delaware on July 27, 1993 shall
specifically survive the restatement, integration and amendment effected by this
Third Restated Certificate of Incorporation and are hereby incorporated by
reference and made a part of this Third Restated Certificate of Incorporation as
if set out herein at length, mutatis mutandis.
6. This Third Restated Certificate of Incorporation was duly adopted by the
Board of Directors in accordance with Sections 242 and 245 of the General
Corporation Law of the State of Delaware.
A-2
<PAGE> 22
BWIP HOLDING, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 10, 1994
The undersigned hereby appoints John D. Hannesson, John M. Nanos and M. J.
Young, and each or any of them, as proxies of the undersigned, with full power
of substitution, to represent the undersigned and to vote all shares of the
Class A Common Stock of BWIP Holding, Inc. which the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held on May 10, 1994 at 1:30
p.m. at the Hyatt Regency Long Beach Hotel, 200 South Pine Avenue, Long Beach,
California, and at any adjournment thereof, upon the matters listed below and,
in their discretion, upon such other matters as may properly come before the
meeting. The undersigned hereby revokes all proxies heretofore given by the
undersigned to vote at the meeting or any adjournment thereof. The proxies
appointed hereby may act by a majority of said proxies present at the meeting
(or if only one is present, by that one).
The Board of Directors recommends a vote FOR proposals 1, 2, 3 and 4.
1. Election of Directors
<TABLE>
<S> <C>
/ / FOR Eugene P. Cross, Alvin L. Dubrow, James J. Gavin, Jr., George D. Leal, / / WITHHOLDING AUTHORITY
H. Jack Meany, James S. Pignatelli, William C. Rusnack, and Peter C. Valli to vote for all nominees listed
(except as marked to the contrary below)
</TABLE>
(INSTRUCTION: To withhold authority to vote for one or more nominees, print each
such nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. Ratification of appointment of Price Waterhouse as independent auditors.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to amend the Second Restated Certificate of Incorporation to change
the corporate name.
/ / FOR / / AGAINST / / ABSTAIN
4. Proposal to amend the Second Restated Certificate of Incorporation to effect
a recapitalization for a single class of common stock.
/ / FOR / / AGAINST / / ABSTAIN
(Continued and to be signed on reverse side)
<PAGE> 23
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON
THE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. WHEN PROPERLY EXECUTED,
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2, 3 AND 4. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
Receipt of the Notice of Annual Meeting of Stockholders and the Proxy Statement
furnished therewith is hereby acknowledged.
Dated , 1994
----------------------------------
(Signature)
----------------------------------
(Signature)
Please sign exactly as name
appears hereon. Joint owners
should each sign. When signing as
attorney, executor, administrator,
trustee or guardian, give full
title as such. If a corporation,
Please sign in full corporate name
by duly authorized officer. If a
partnership, please sign in full
partnership name by duly
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
