<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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
BW/IP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $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 transaction applies:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO BW/IP, INC.] BW/IP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of BW/IP, Inc.
will be held at The Long Beach Hilton Hotel, Two World Trade Center, Long
Beach, California, on Tuesday, May 16, 1995, at 11:00 a.m. (Pacific Daylight
Savings Time), for the following purposes:
1. To elect seven directors to serve for the ensuing year;
2. To ratify the appointment of Price Waterhouse as independent auditors
for fiscal year 1995;
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The close of business on April 4, 1995, 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 BW/IP, 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, 1995
<PAGE>
BW/IP, INC.
200 OCEANGATE BOULEVARD, SUITE 900
LONG BEACH, CALIFORNIA 90802
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 16, 1995
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of BW/IP, Inc. (the "Company") of proxies for
use at the Annual Meeting of Stockholders (the "Annual Meeting") to be held at
The Long Beach Hilton Hotel, Two World Trade Center, Long Beach, California, on
Tuesday, May 16, 1995, at 11:00 a.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, 1995, to all stockholders of the Company.
Only holders of record of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), at the close of business on April 4, 1995, 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 the other proposal
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. In addition to the use of
the mails, 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 shares of 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>
BENEFICIAL OWNERSHIP OF COMMON STOCK
OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS
The following table furnishes certain information as of February 28, 1995 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........................................... 237,174 1.0%
Eugene P. Cross.......................................... 151,188 (1)
Alvin L. Dubrow.......................................... 253,710 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......................................... 253,554 1.0%
Richard R. Testwuide..................................... 253,382 1.0%
All executive officers and directors as a group
(14 persons)............................................ 1,385,764 5.7%
</TABLE>
- --------
(1) Less than 1%
OWNERSHIP OF COMMON STOCK BY SIGNIFICANT STOCKHOLDERS
The following table furnishes certain information as of December 31, 1994, 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......................... 1,463,650(1) 6.0%
One New York Plaza
New York, New York 10004
Government of Singapore Investment.................... 2,026,000(2) 8.3%
Corporation Pte. Ltd.
Government of Singapore
Monetary Authority of Singapore
250 North Bridge Road #33-00
Raffles City Tower
Singapore 0607
Pioneering Management Corporation..................... 2,014,800(3) 8.3%
60 State Street
Boston, Massachusetts 02114
Thompson, Siegel & Walmsley, Inc. .................... 1,233,060(4) 5.1%
5000 Monument Avenue
Richmond, Virginia 23230
</TABLE>
2
<PAGE>
- --------
(1) This figure is based on information set forth in a Schedule 13G, dated
February 3, 1995, 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 1,405,850 of such shares
and that Ark has the sole power to vote or direct the vote of 1,111,450 of
such shares.
(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
January 18, 1995, filed by Pioneering Management Corporation ("Pioneering")
with the SEC, which states that Pioneering has sole power to dispose or
direct the disposition of 216,000 of such shares and shared power to
dispose or direct the disposition of 1,798,800 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 13, 1995, filed by Thompson, Siegel & Walmsley, Inc. ("Thompson
Siegel") with the SEC, which states that Thompson Siegel has sole power to
dispose or direct the disposition of 1,227,560 of such shares and shared
power to dispose or direct the disposition of 5,500 of such shares and that
Thompson Siegel has sole power to vote or direct the vote of 611,060 of
such shares and shared power to vote or direct the vote of 428,550 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
1994 were complied with on a timely basis.
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 seven. 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 1994.
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>
INFORMATION CONCERNING NOMINEES
Peter C. Valli, age 68 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 and President of the Company and BW/IP in 1995. 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 The American
Funds Income Series, The 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 59 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 1993, prior to which he had been Vice
President--Finance of the Company since 1987 and Vice President--Finance of
BW/IP since 1975.
James J. Gavin, Jr., age 72 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 61 Director of the Company and BW/IP since 1993
Mr. Leal has been Chairman of the Board of Dames & Moore, a worldwide
consulting engineering firm, since 1981. He served as Chief Executive Officer
of Dames & Moore from 1981 to 1994 and as President from 1981 to 1993.
Committee Membership: Compensation and Benefits.
H. Jack Meany, age 72 Director of the Company and BW/IP since 1987
Mr. Meany has been Chairman, President and Chief Executive Officer of Farr
Company since 1994 and a director since 1976. He was President and Chief
Executive Officer of NI Industries, Inc. from 1975 to 1988, a director from
1972 to 1988 and its Chairman of the Board, President and Chief Executive
Officer from 1981 to 1988. Mr. Meany is currently a director of Electronic
Scales International, Inc. and APS, Inc.
Committee Membership: Compensation and Benefits (Chairman), Executive.
James S. Pignatelli, age 51 Director of the Company and BW/IP since 1993
Mr. Pignatelli has been Senior Vice President of Tucson Electric Power
Company since 1994 prior to which he was a consultant to SCEcorp, a public
utility company. Mr. Pignatelli was President and Chief Executive Officer of
Mission Energy Company, an independent power company and subsidiary of SCEcorp,
4
<PAGE>
from 1988 to 1993. From 1975 to 1987, Mr. Pignatelli was employed by SCEcorp,
holding various positions in the company including Manager of Taxes, Assistant
Treasurer and Director of Revenue Requirements. Mr. Pignatelli is currently a
director of Tejas Power Corporation.
Committee Membership: Audit.
William C. Rusnack, age 50 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.
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 five regularly scheduled
or special meetings during the fiscal year ended December 31, 1994 (the "Fiscal
Year"), and the Board of Directors of BW/IP held five 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 two 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 three times during the Fiscal Year, and the
corresponding committee of BW/IP's Board met three times during the Fiscal
Year.
5
<PAGE>
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 Company's 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 1994 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........................ 2,000 $16.875 5/9/04
George D. Leal........................ 2,000 16.875 5/9/04
H. Jack Meany......................... 2,000 16.875 5/9/04
James S. Pignatelli................... 2,000 16.875 5/9/04
William C. Rusnack.................... 2,000 16.875 5/9/04
</TABLE>
- --------
(1) All Options were granted on May 10, 1994, the date of the last annual
meeting of the Company's stockholders. 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>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
One of the Company's principal objectives is to maximize the long-term return
to the Company's stockholders. Under the supervision of the Compensation and
Benefits 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 compensation program is to relate compensation to business objectives
and performance, and enable the Company to attract, retain and provide
incentives to executives who contribute to the success of the Company.
The Committee is comprised entirely of outside, non-employee directors of the
Company. The task of establishing compensation programs generally, and
determining the compensation of executive officers individually, requires
experience in dealing with these matters and applying judgment to them. It
requires the analysis of considerable data and its application in a rapidly
changing business environment while balancing a number of important, and
sometimes competing, factors. The Company must be competitive in the
marketplace for executive talent and reward both corporate and individual
performance, while at the same time maintaining a focus on building long-term
shareholder value. With these requirements in mind the Committee has supervised
the setting of base salaries, as well as the creation of incentive compensation
programs intended to appropriately compensate individuals on both measurable
financial and non-financial goals, while reserving the authority to make
adjustments to compensate for individual circumstances and a changing market.
The compensation package for the CEO and all other executive officers is
comprised of three components: base salary, cash bonus paid under the
Management Incentive Plan (the "MIP") and long term equity based incentives,
through stock options and/or performance units under the Long Term Incentive
Plan (the "LTIP").
Base salaries of the CEO and all other executive officers are set by the
Committee. There is no formula for the setting of base salaries, but each year
a review is conducted of general corporate compensation and executive
compensation survey data and periodically of special compensation surveys
commissioned by the Company. Some of the survey data reviewed include
corporations which are in the S&P 500 and the S&P Manufacturing (Diversified
Industrials) indices. The surveyed data also include information from
corporations which are competitors of the Company and manufacturing companies
of similar size but which are not direct competitors. In 1994 such a special
survey by Towers Perrin was commissioned by the Company and was one of the
sources of data considered by the Committee in setting 1995 base salaries. In
addition to the survey data the Committee considers the merit of each
individual's performance, and the individual's compensation in the context of
both the Company and its industry. The surveys, and what they reveal about base
salaries paid by the Company for comparably responsible positions at other
companies, are considered the most important single factor in setting salaries.
However, the setting of individual base salaries is not entirely a function of
matching the pay for comparable positions, but rather consists of an analysis
of all of the factors, many of which are inherently subjective. The Company's
policy is to generally set base salaries at or near the medians for positions
it believes are comparable to those of the CEO and the other executive
officers.
The Committee believes that the contingent or incentive compensation of the
Company's CEO and other executive officers should be substantially influenced
by the Company's performance and by their individual performance. Therefore,
the MIP provides that a portion of the annual bonus opportunity for each
officer is dependent upon the Company's meeting certain previously defined
financial goals. These goals are determined annually after review of the
compensation surveys described above, which include incentive compensation
data. In 1994 the CEO's financial goal, and a common financial goal for all
other officers, was a specified level of net income for the Company. In
addition, certain officers other than the CEO also have a portion of their
bonus opportunity dependent upon additional financial goals based on other
performance measures
7
<PAGE>
which by virtue of their job responsibilities they are in a position to
influence, such as operating cash flow or net cash flow, division operating
income, or bookings. The CEO and all other officers also have a portion of
their bonus opportunity based upon their individual performance in meeting
certain non-financial goals. These goals are determined by each officer and his
supervisor, or in the case of the CEO by the Committee, and relate to specific
items within the authority of that officer which are determined to have benefit
to the Company. Examples of these non-financial goals during 1994 are items
such as the disposition of the Company's Fluid Controls segment for the CEO,
and for other officers the implementation of cost saving programs,
consolidation of operations and technology implementation. In 1994 the range of
potential bonus payments at target performance levels ranged from 50% of salary
for the CEO and descended in steps to 25% for certain other executive officers.
The range of actual pay outs for cash bonuses in 1994 was from 25% to 43% based
upon the Company's achieving its financial performance targets and the
evaluation of each individual's degree of completion of his or her non-
financial goals.
The LTIP is a plan under which two forms of awards were made in 1994. The
first was stock options to purchase the Company's Common Stock, and the second
was performance units. The general principle governing the granting of awards
was to determine a desired level of Company performance and a total
compensation level for executive officers at targeted levels of corporate
performance, and then relate the two through the reward system so that through
a combination of base salary, bonus, and the LTIP the desired level of
compensation was delivered at target performance. The percentage of total
compensation derived through base salary is lowest for the CEO, who has the
largest portion of his total compensation available through the MIP and LTIP,
and therefore contingent upon the Company's and his own individual performance,
and then cascades down in levels for other officers based upon the scope of
their responsibilities. The number of performance units versus stock options
granted was based upon a split in relative value of 70% options and 30%
performance units in 1994. The values used for this calculation are the $100
face value of performance units at target and the Black Scholes option pricing
model for the stock options.
The value of stock options to participants in the LTIP depends totally upon
increases in the value of the Company's Common Stock over the ten year period
over which the options are outstanding. The goal of the option feature of the
LTIP is to create a commonality of interest between the Company's management
and stockholders by giving an incentive for management to create value for
stockholders through being personally rewarded by doing so. The value of the
performance unit grants are dependent directly on objective financial measures
of performance with emphasis on long-term results as measured over a three year
period. These objective measures are either entirely growth in sales and net
income over the three year measurement period, as is the case for the CEO and
certain other officers, or for officers with division management
responsibilities, a combination of both overall corporate growth in sales and
income and their divisions' growth in sales and division operating income. Each
performance 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.
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
provide a balance of incentives between the performance unit feature 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 number of performance units or options
previously granted was not considered in determining 1994 awards.
The total compensation paid to the CEO and to other executive officers
increased in 1994 compared to 1993 despite the Company's lower profitability.
The reason for these increases is the Company's incentive systems pay based on
targets set within the context of the Company's highly competitive, cyclical
markets. The setting of financial performance targets was therefore done
relative to the actual market conditions in existence at the time the targets
were established, and are not necessarily dependent upon year to year
improvement unless warranted by business conditions.
8
<PAGE>
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
near term.
H. Jack Meany, Chairman
George D. Leal
William C. Rusnack
Compensation and Benefits Committee
9
<PAGE>
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
[PERFORMANCE GRAPH APPEARS HERE]
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG BW/IP,INC., S&P 500 INDEX AND S&P MANUFACTURING
DIVERSIFIED INDUSTRIALS INDEX
<TABLE>
<CAPTION>
Measurement Period S&P S&P MANUFACTURING
(Fiscal Year Covered) BW/IP, INC. 500 INDEX DIVERSIFIED IND.
- --------------------- ----------- --------- -----------------
<S> <C> <C> <C>
Measurement Pt- 5/24/91 $100 $100 $100
FYE 12/31/91 $153.96 $108.95 $ 95.01
FYE 12/31/92 $211.01 $117.25 $102.98
FYE 12/31/93 $178.24 $129.07 $125.02
FYE 12/31/94 $123.54 $130.77 $129.41
</TABLE>
10
<PAGE>
SUMMARY COMPENSATION TABLE
The following table summarizes the total compensation of the Named Executive
Officers for fiscal year 1994, 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) SUBJECT TO OPTIONS) COMPENSATION (3)
------------------ ---- -------- --------- ---------------- ------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Peter C. Valli.......... 1994 $410,000 $175,000 $3,381 35,000 $ 2,184
Chairman, President 1993 390,000 120,000 2,306 26,000 12,391
& Chief Executive 1992 370,000 265,000 569 22,500 11,120
Officer
Alvin L. Dubrow(4)...... 1994 280,000 115,000 471 20,000 2,184
President, Chief 1993 267,000 75,000 1,929 15,000 3,450
Operating Officer 1992 250,000 150,000 740 13,000 3,506
and Director
Eugene P. Cross......... 1994 223,000 80,000 2,640 11,500 2,148
Executive Vice 1993 208,000 55,000 1,865 7,000 2,249
President--Finance, 1992 180,000 100,000 1,808 6,100 2,340
Chief Financial Officer
and Director
Ronald W. Hoppel........ 1994 222,000 85,000 98 11,000 2,599
Vice President-- 1993 211,000 55,000 1,685 8,000 2,732
President of the 1992 200,000 110,000 1,435 6,900 2,637
Pump Division
Richard R. Testwuide.... 1994 195,000 80,000 2,288 10,000 2,383
Vice President-- 1993 188,000 55,000 1,679 7,000 2,249
President of the 1992 180,000 95,000 1,641 6,100 1,768
Seal Division
</TABLE>
- --------
(1) These amounts are the cash awards to the named individuals under BW/IP
Management Incentive Plans. Amounts shown for performance in 1994, 1993 and
1992 were paid by March 15 of the calendar year following the year for
which bonuses were awarded.
(2) Reflects amount reimbursed for the payment of taxes ("gross-up").
(3) Includes amounts contributed or accrued for the fiscal year under the BW/IP
International, Inc. Capital Accumulation Plan, and for Mr. Valli a
corporate paid life insurance premium in the amount of $0 in 1994, $10,468
in 1993 and $7,618 in 1992.
(4) Mr. Dubrow resigned his positions as an officer and director in March 1995,
but remains an employee of the Company.
11
<PAGE>
OPTION GRANTS
The following table summarizes for the Named Executive Officers options to
acquire shares of the Common Stock granted in fiscal year 1994 under the LTIP.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------
PERCENTAGE OF POTENTIAL REALIZABLE VALUE
TOTAL OPTIONS AT ASSUMED ANNUAL RATES OF
GRANTED TO STOCK PRICE APPRECIATION
EMPLOYEES IN FOR OPTION TERM(1)
OPTIONS FISCAL YEAR EXERCISE EXPIRATION --------------------------------
NAME GRANTED (2) 1994 PRICE/SHARE DATE 0% 5% 10%
---- ----------- ------------- ----------- ---------- --- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Peter C. Valli.......... 35,000 21.3% $19.50 3/7/04 0 $ 429,100 $ 1,087,800
Alvin L. Dubrow......... 20,000 12.2 19.50 3/7/04 0 245,200 621,600
Eugene P. Cross......... 11,500 7.0 19.50 3/7/04 0 140,990 357,420
Ronald W. Hoppel........ 11,000 6.7 19.50 3/7/04 0 134,860 341,880
Richard R. Testwuide.... 10,000 6.1 19.50 3/7/04 0 122,600 310,800
All Stockholders........ N/A N/A N/A N/A 0 297,611,500 754,467,000
All Optionees........... 164,550(4) 100.0 19.50 3/7/04 0 2,017,383(3) 5,114,214(3)
Optionee gain as a % of
All Stockholders' Gain. N/A N/A N/A N/A N/A .7% .7%
</TABLE>
- --------
(1) Based upon the $19.50 per share market price on the date of grant and an
annual appreciation of such market price through the expiration date of
such options at the stated rates. These amounts represent assumed rates of
appreciation only and may not necessarily be achieved. Actual gains, if
any, are dependent on the future performance of the Common Stock, as well
the continued employment of the Named Executive Officers through the
vesting period. The potential realizable values indicated have not taken
into account amounts required to be paid as income tax under the Internal
Revenue Code of 1986, as amended (the "Code"), and any applicable state
laws.
(2) BW/IP granted stock options to purchase shares of the Common Stock pursuant
to the LTIP on March 8, 1994. Unless otherwise determined by the
Compensation and Benefits Committee, a stock option may be exercised
commencing three years after the date of grant in one or more installments.
A stock option may only be exercised upon full payment of the option price.
(3) No gain to the optionees is possible without an increase in stock price
appreciation, which will benefit all stockholders commensurately.
(4) Net of options forfeited.
12
<PAGE>
OPTION VALUES
The following table sets forth the number and the dollar value of unexercised
options to purchase Common Stock held by the Named Executive Officers at
December 31, 1994. No options were exercised by these individuals during 1994.
AGGREGATED LAST FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT FISCAL
OPTIONS AT FISCAL YEAR END (#) YEAR-END($)
NAME EXERCISABLE/UNEXERCISABLE (1) EXERCISABLE/UNEXERCISABLE (1)(2)
---- ------------------------------ --------------------------------
<S> <C> <C>
Peter C. Valli.......... 83,500 0
Alvin L. Dubrow......... 48,000 0
Eugene R. Cross......... 24,600 0
Ronald W. Hoppel........ 25,900 0
Richard R. Testwuide.... 23,100 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 30, 1994 ($17
1/8).
LTIP AWARDS
The following table summarizes the performance unit awards made in fiscal
year 1994 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.......... 1,400 3 years $0.00 $140,000 $280,000
Alvin L. Dubrow......... 840 3 years 0.00 84,000 168,000
Eugene P. Cross......... 460 3 years 0.00 46,000 92,000
Ronald W. Hoppel........ 460 3 years 0.00 46,000 92,000
Richard R. Testwuide.... 370 3 years 0.00 37,000 74,000
</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 for the specific performance period 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. Performance
targets are set by the Committee and may be expressed in terms of overall
financial results of the Company, the financial results of specific
divisions or subsidiaries of the Company or other business units thereof,
or a combination thereof.
13
<PAGE>
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 as if
retirement had occurred on December 31, 1994 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. Benefits in the table are not subject to any deduction for
social security benefits. The table does not reflect limitations imposed by the
Code.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------------
AVERAGE
ANNUAL
EARNINGS 15 20 25 30 35 40
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $ 28,359 $ 37,812 $ 47,265 $ 56,718 $ 59,843 $ 62,968
150,000 34,359 45,812 57,265 68,718 72,468 76,218
175,000 40,359 53,812 67,265 80,718 85,093 89,468
200,000 46,359 61,812 77,265 92,718 97,718 102,718
225,000 52,359 69,812 87,265 104,718 110,343 115,968
250,000 58,359 77,812 97,265 116,718 122,968 129,218
275,000 64,359 85,812 107,265 128,718 135,593 142,468
300,000 70,359 93,812 117,265 140,718 148,218 155,718
350,000 82,359 109,812 137,265 164,718 173,468 182,218
400,000 94,359 125,812 157,265 188,718 198,718 208,718
450,000 106,359 141,812 177,265 212,718 223,968 235,218
500,000 118,359 157,812 197,265 236,718 249,218 261,718
550,000 130,359 173,812 217,265 260,718 274,468 288,218
600,000 142,359 189,812 237,265 284,718 299,718 314,718
650,000 154,359 205,812 257,265 308,718 324,968 341,218
700,000 166,359 221,812 277,265 332,718 350,218 367,718
750,000 178,359 237,812 297,265 356,718 375,468 394,218
800,000 190,359 253,812 317,265 380,718 400,718 420,718
</TABLE>
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 limitations imposed by the Code)
for the highest consecutive five years of the ten years preceding retirement.
Participants are covered in the BW/IP RP for 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, 1994, the credited years of service for each Named
Executive Officer are: Mr. Valli, 34 years; Mr. Dubrow, 26 years; Mr. Cross, 25
years; Mr. Hoppel, 30 years; and Mr. Testwuide, 22 years.
Employment Agreement. BW/IP's employment agreement, as amended, with Mr.
Valli provided 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. Mr. Valli's
employment agreement has not been renewed.
14
<PAGE>
If Mr. Valli's employment had been 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 provided that the
Company would have paid 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 would
have continued certain benefits for Mr. Valli during such term. Mr. Valli would
have had Good Reason to terminate his employment with the Company in the event
of a significant change and dimunition in his duties, removal from or failure
to be reelected to the position of Chairman of the Board and Chief Executive
Officer, failure of any successor corporation to assume his employment
agreement or relocation (more than 40 miles) of the Company's headquarters. The
Company would have had Cause to terminate Mr. Valli for failure to
substantially perform his duties, serious misconduct or conviction of a felony.
The amounts payable to Mr. Valli after termination for the reasons described
above were subject to reduction if Mr. Valli chose 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 of the
Company or BW/IP. Under the Program a change in control is deemed to have
occurred if (a) members of the Board of Directors, as of the beginning of any
consecutive twenty-four calendar month period (the "Incumbent Directors") cease
for any reason other than death or retirement to constitute at least a majority
of the Board of Directors; except that any director whose election, or
nomination for election by the Company's stockholders, was approved by a vote
of at least a majority of the members of the Board then still in office who
were members of the Board at the beginning of such twenty-four calendar month
period shall be treated as an Incumbent Director; (b) another person or group
other than the Company, a subsidiary of the Company or an employee benefit plan
of either the Company or a subsidiary becomes the beneficial owner of at least
20% of the voting power of the Company's outstanding securities; or (c) the
Company's stockholders approve (i) a merger or other combination with or into
another corporation, a majority of the directors of which were not directors of
the Company immediately prior to the merger and in which the Company's
stockholders immediately prior to the effective date of such merger own less
than 50% of the voting power in such resulting or surviving corporation
immediately after the merger; (ii) the sale or disposition of all the assets of
the Company; or (iii) liquidation of the Company.
Each of the seven officers covered by the program 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 other benefits (a lump sum payment for 24 additional months of
credited pension service, insurance, outplacement services and for up to one
year a Company-provided automobile). 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
280(G)(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.
15
<PAGE>
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
1995 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. 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.
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.
For the five 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 1995 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
1995 FISCAL YEAR AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
ANNUAL REPORT
The Company's 1994 Annual Report to Stockholders, containing audited
financial statements for the year ended December 31, 1994, is being mailed to
all stockholders of record with this Proxy Statement.
PROPOSALS BY STOCKHOLDERS
Proposals by stockholders intended to be presented at the 1996 Annual Meeting
of Stockholders must be received by the Secretary of the Company no later than
December 13, 1995 to be included in the Company's proxy, notice of meeting and
proxy statement relating to such meeting.
16
<PAGE>
BW/IP, INC.
Proxy Solicited by the Board of Directors for the
Annual Meeting of Stockholders to be held on May 16, 1995
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
Common Stock of BW/IP, Inc. which the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held on May 16, 1995 at 11:00 a.m. at The
Long Beach Hilton Hotel, Two World Trade Center, 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 and 2.
1. Election of Directors
[ ] FOR Eugene P. Cross, James J. Gavin, Jr., George D. Leal,
H. Jack Meany, James S. Pignatelli, William C. Rusnack, and Peter C. Valli
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed
(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
(Continued and to be signed on reverse side)
<PAGE>
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 AND 2. 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 herewith is hereby acknowledged.
Dated_____________________, 1995
________________________________
(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.
