<PAGE>
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
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 Rule 14a-11(c) or Rule 14a-12
ALBANY INTERNATIONAL CORP.
------------------------
(Name of Registrant as Specified In Its Charter)
------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
/ /(4) Proposed maximum aggregate value of transaction:
/ /(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO]
March 27, 1998
To the Stockholders of Albany International Corp.:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of Albany International Corp. which will be held at the Company's Press Fabrics
Division, 253 Troy Road (Route 4), East Greenbush, New York at 11:00 a.m. on
Tuesday, May 12, 1998.
All stockholders are invited to join us after the meeting for a luncheon
honoring J. Spencer Standish, who will be stepping down as Chairman of the Board
after over 46 years of service with the Company.
If you plan to attend the meeting and the luncheon, please so indicate on
the enclosed reply card so that we can make the necessary arrangements. The
reply card and your completed proxy should be mailed separately. (An addressed,
postage-prepaid envelope is enclosed for your return of the proxy.)
Information about the meeting, including a description of the various
matters on which the stockholders will act, will be found in the formal Notice
of Annual Meeting and in the Proxy Statement which is attached. The Annual
Report for the fiscal year ended December 31, 1997 is being mailed to you with
these materials.
Sincerely yours,
<TABLE>
<S> <C>
[LOGO] [LOGO]
J. SPENCER STANDISH FRANCIS L. McKONE
CHAIRMAN OF THE BOARD PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
<PAGE>
ALBANY INTERNATIONAL CORP.
1373 BROADWAY, ALBANY, NEW YORK
MAILING ADDRESS: P. O. BOX 1907, ALBANY, NEW YORK 12201
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1998
The Annual Meeting of Stockholders of Albany International Corp. will be
held at the Company's Press Fabrics Division, 253 Troy Road (Route 4), East
Greenbush, New York, on Tuesday, May 12, 1998 at 11:00 a.m., Eastern Time, for
the following purposes:
1. To elect eight Directors to serve until the next Annual Meeting of
Stockholders and until their successors have been elected and qualified.
2. To consider and take action on a proposal to approve the Albany
International Corp. 1998 Stock Option Plan.
3. To consider and take action on a proposal to elect Coopers & Lybrand
as auditors for the Company for 1998.
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on March 13, 1998 will
be entitled to vote at the Annual Meeting of Stockholders or any adjournment or
adjournments thereof.
Whether or not you plan to be present at the Annual Meeting, PLEASE SIGN,
DATE AND RETURN PROMPTLY THE ENCLOSED PROXY to ensure that your shares are
voted. A return envelope, which requires no postage if mailed in the United
States, is enclosed for your convenience.
THOMAS H. HAGOORT
SECRETARY
March 27, 1998
<PAGE>
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Albany International Corp. ("the Company"), 1373 Broadway,
Albany, New York (P.O. Box 1907, Albany, New York 12201), of proxies in the
accompanying form for use at the Annual Meeting of Stockholders to be held on
May 12, 1998 and at any adjournment or adjournments thereof. Each properly
executed proxy in such form received prior to the Annual Meeting will be voted
with respect to all shares represented thereby and will be voted in accordance
with the specifications, if any, made thereon. If no specification is made, the
shares will be voted in accordance with the recommendations of the Board of
Directors. If a stockholder is a participant in the Company's Dividend
Reinvestment Plan, the Albany International Corp. Prosperity Plus 401(k) Plan or
the Albany International Corp. Prosperity Plus ESOP, a properly executed proxy
will also serve as voting instructions with respect to shares in the
stockholder's account in such plans. A proxy may be revoked at any time prior to
the voting thereof. This proxy statement and the accompanying form of proxy are
first being mailed to stockholders of the Company on or about March 27, 1998.
The only persons entitled to vote at the Annual Meeting and any adjournment
or adjournments thereof are (1) holders of record at the close of business on
March 13, 1998 of the 24,296,194 shares of the Company's Class A Common Stock
outstanding on such date and (2) holders of record at the close of business on
March 13, 1998 of the 5,615,563 shares of the Company's Class B Common Stock
outstanding on such date. Each share of Class A Common Stock is entitled to one
vote on each matter to be voted upon. Each share of Class B Common Stock is
entitled to ten votes on each matter to be voted upon.
Under the by-laws of the Company, the presence, in person or by proxy, of
shares having a majority of the total number of votes entitled to be cast at the
meeting is necessary to constitute a quorum. Under Delaware law, if a quorum is
present, a plurality of the votes entitled to be cast at the meeting by the
shares present in person or by proxy is required for the election of directors
and a majority of the votes entitled to be cast at the meeting by the shares
present in person or by proxy is required for approval of the 1998 Stock Option
Plan and the election of the auditors. Shares present at the meeting in person
or by proxy and entitled to vote which abstain or fail to vote on any matter
will be counted as present and entitled to vote but such abstention or failure
to vote will not be counted as an affirmative or negative vote. Broker non-votes
will be treated as shares present at the meeting which are entitled to vote but
which fail to do so. In the case of approval of the 1998 Stock Option Plan and
the election of auditors, an abstention or failure to vote will have the same
effect as a negative vote, whether or not this effect is intended.
2
<PAGE>
ELECTION OF DIRECTORS
Eight members of the Board of Directors will be elected to serve until the
next Annual Meeting of Stockholders and until their successors are elected and
qualified. Unless otherwise specified on the proxy, the shares represented by a
proxy in the accompanying form will be voted for the election of the eight
nominees listed below, all of whom are presently serving as directors. If any
nominee should be unavailable to serve, which event is not anticipated, the
shares will be voted for a substitute nominee proposed by the Board of
Directors, unless the Board reduces the number of Directors.
<TABLE>
<S> <C>
[PHOTO] FRANCIS L. McKONE joined the Company in 1964. He has been a Director
of the Company since 1983. He has served as President and Chief
Executive Officer since 1993, President since 1984, Executive Vice
President from 1983 to 1984, Group Vice President-Paper Making
Products Group from 1979 to 1983, and prior to 1979 as Vice President
of the Company and Division President-Paper Making Products, U.S. He
is a member of the Paper Industry Management Association, the
Technical Association of the Pulp and Paper Industry, the Canadian
Pulp and Paper Association, the Board of Overseers of the Lally School
of Management and Technology at Rensselaer Polytechnic Institute and
the Board of Trustees of Rensselaer Polytechnic Institute. He also
serves as a Director of Albank, FSB and Thermo Fibergen, Inc. and is a
Trustee of the Institute of Paper Science and Technology. Age 63.
[PHOTO] THOMAS R. BEECHER, JR. has been a Director of the Company since 1969.
He has been President of Beecher Securities Corporation, venture
capital investments, since 1979. He is a Director of International
Motion Control Incorporated, Rand Capital Corporation and Beecher
Securities Corporation. He is a Regent Emeritus of Canisius College, a
member of the Governing Board of the Community Foundation for Greater
Buffalo, Vice-Chairman of the Board of Buffalo General Health System,
Treasurer of CGF Health System and a founder and Director of the
Buffalo Inner-City Scholarship Opportunity Network. Age 62.
[PHOTO] CHARLES B. BUCHANAN joined the Company in 1957. He has served the
Company as a Director since 1969 and as Vice President and Secretary
from 1980 until February 1, 1997. He is a Director of Fox Valley
Corporation, a Trustee of Skidmore College and Albany Medical Center
and co-chairman of the Capital Region Sponsor-a-Scholar Program. Age
66.
[PHOTO] ALLAN STENSHAMN has been a Director of the Company since 1983. Since
1976 he has been a partner in the law firm Lagerlof & Leman
(previously Advokatfirman Lagerlof) in Stockholm, Sweden, which, among
other activities, provides legal services to Swedish subsidiaries of
the Company. He is the Chairman of the Board and a director of six
Swedish subsidiaries of the Company: Albany Nordiskafilt AB;
Nordiskafilt AB; Nordiska Maskinfilt AB; Nomafa AB; Albany Wallbergs
AB; and DEWA Consulting AB. In addition, he holds directorships in a
number of Swedish subsidiaries of U.S. companies, including CPC
International, Inc., General Electric Capital Corporation, Mars Inc.,
Merck & Co., Philip Morris Inc., and Texas Instruments, Inc. Age 64.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
[PHOTO] BARBARA P. WRIGHT has been a Director of the Company since 1989. Since
1985 she has been a partner in the law firm of Finch, Montgomery &
Wright, which is located in Palo Alto, California. She is a Director
of The Packard Humanities Institute and The Stanford Theater
Foundation and Secretary of several nonprofit charitable
organizations, including The David and Lucile Packard Foundation and
The Monterey Bay Aquarium Foundation. Age 51.
[PHOTO] JOSEPH G. MORONE has been a Director of the Company since January
1996. Since 1997, he has been President of Bentley College in Waltham,
Massachusetts. From 1993 to 1997, he served as Dean of the Lally
School of Management and Technology at Rensselaer Polytechnic
Institute. From 1991 to 1993 he was the Andersen Consulting Professor
of Management at the Lally School, and from 1992 to 1993 served as
Director of the School's Center for Science and Technology Policy.
Prior to joining the Lally School, he was a senior associate for the
Keyworth Company, a technology consulting firm, and worked in General
Electric Company's Corporate Research and Development. He is a
Director of Albany Medical Center, Transworld Music Corporation and
nVIEW Corporation. Age 44.
[PHOTO] CHRISTINE L. STANDISH has been a Director of the Company since
November 6, 1997. She has also served as a Director of the J. S.
Standish Company since 1988. Previously, she served the Company as a
Corporate Marketing Associate from 1989 to 1991, and was employed as a
Graphic Designer for Skidmore, Owings & Merrill. She is the daughter
of J. Spencer Standish. Age 32.
[PHOTO] FRANK R. SCHMELER joined the Company in 1964. He has been a Director
of the Company since November 6, 1997. He has served the Company as
Executive Vice President and Chief Operating Officer since 1997, as
Senior Vice President from 1988 to 1997, as Vice President and General
Manager of the Felt Division from 1984 to 1988, as Division Vice
President and General Manager, Albany International Canada from 1978
to 1984 and as Vice President of Marketing, Albany International
Canada from 1976 to 1978. Age 59.
</TABLE>
4
<PAGE>
SHARE OWNERSHIP
As of the close of business on March 13, 1998, shares of capital stock of
the Company were beneficially owned by each of the directors, the named officers
and all directors and officers as a group, as follows:
<TABLE>
<CAPTION>
SHARES OF SHARES OF
CLASS A CLASS B
COMMON PERCENT OF COMMON PERCENT OF
STOCK OUTSTANDING STOCK OUTSTANDING
BENEFICIALLY CLASS A BENEFICIALLY CLASS B
OWNED(A) COMMON STOCK OWNED COMMON STOCK
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
J. Spencer Standish..................................... 5,144,860(b) 17.48% 4,854,860(c) 86.45%
Francis L. McKone....................................... 433,200(d) 1.76% 1,000(e) (f)
Thomas R. Beecher, Jr................................... 475,400(g) 1.92% 470,400(h) 8.38%
Charles B. Buchanan..................................... 144,540(i) (f) -- --
Allan Stenshamn......................................... 4,938 (f) -- --
Barbara P. Wright....................................... 44,938(j) (f) -- --
Joseph G. Morone........................................ 938 (f) -- --
Christine L. Standish................................... 126,493(k) (f) 126,000(l) 2.24%
Frank R. Schmeler....................................... 205,040(m) (f) -- --
Michael C. Nahl......................................... 291,250(n) 1.18% 1,000 (f)
J. Weldon Cole.......................................... 21,000(o) (f) -- --
Edward Walther.......................................... 20,000(p) (f) -- --
All officers and directors as a group (22 persons
including those named above).......................... 7,089,495 22.91% 5,453,360 97.11%
</TABLE>
- ------------------------
(a) Since shares of Class B Common Stock are convertible at any time into shares
of Class A Common Stock on a one-for-one basis, they are reflected in the
above table both as Class B shares beneficially owned and as Class A shares
beneficially owned.
(b) Includes (i) 290,000 shares issuable upon exercise of options exercisable
currently or within 60 days and (ii) 4,854,860 shares issuable upon
conversion of an equal number of shares of Class B Common Stock. Does not
include 493 shares of Class A Common Stock beneficially owned by his
daughter, Christine L. Standish, as to which shares J. Spencer Standish
disclaims beneficial ownership. The nature of Mr. Standish's beneficial
ownership of the Class B shares is described in note (c) below.
(c) Includes (i) 3,205,100 shares held by J.S. Standish Company, a corporation
of which he is a director and as to which he holds the power to elect all of
the directors and (ii) 1,649,760 shares held by three trusts as to each of
which he has sole voting and investment power. Does not include 126,000
shares of Class B Common Stock owned outright by his son, John C. Standish,
or 126,000 shares of Class B Common Stock owned outright by his daughter,
Christine L. Standish, as to which shares J. Spencer Standish disclaims
beneficial ownership.
(d) Includes (i) 46,200 shares owned outright, (ii) 386,000 shares issuable upon
exercise of options exercisable currently or within 60 days and (iii) 1,000
shares issuable upon conversion of an equal number of shares of Class B
Common Stock.
(e) Includes 1,000 shares owned outright. Does not include 3,205,100 shares held
by J.S. Standish Company, of which he is a director.
(f) Ownership is less than 1%.
(g) Includes (i) 5,000 shares owned outright and (ii) 470,400 shares issuable
upon conversion of an equal number of shares of Class B Common Stock. The
nature of Mr. Beecher's ownership of Class B shares
5
<PAGE>
is described in note (h) below. Does not include 100 shares owned by his
spouse, as to which shares he disclaims beneficial ownership.
(h) Includes (i) 235,200 shares held by a trust for the sole benefit of John C.
Standish (son of J. Spencer Standish) and (ii) 235,200 shares held by a
trust for the sole benefit of Christine L. Standish (daughter of J. Spencer
Standish). Mr. Beecher is the sole trustee of such trusts with sole voting
and investment power. Does not include 3,205,100 shares held by J.S.
Standish Company, of which he is a director.
(i) Includes (i) 124,932 shares owned outright, (ii) 1,800 shares issuable upon
exercise of options exercisable currently or within 60 days and (iii) 17,808
shares held by a trust of which he is the sole trustee with sole voting and
investment power and of which his wife is a beneficiary. Does not include
5,000 shares held by a trust of which Mr. Buchanan is a beneficiary. Mr.
Buchanan has no voting or dispositive power as to such trust and disclaims
beneficial ownership of such shares. Also does not include 17,840 shares
owned outright by his spouse, as to which shares he disclaims beneficial
ownership.
(j) Includes 44,938 shares owned outright or as community property with her
spouse. Does not include 753,904 shares held in various trusts of which she
is a beneficiary but in regard to which she has no voting or investment
power.
(k) Includes (i) 126,000 shares issuable upon conversion of an equal number of
shares of Class B Common Stock and (ii) 493 shares held by Ms. Standish or
her husband, an employee of the Company, in their respective accounts in the
Company's 401(k) retirement savings and employee stock ownership plans. The
nature of Ms. Standish's beneficial ownership of the Class B shares is
described in note (l) below.
(l) Owned outright. Does not include (i) 235,200 shares held by a trust for her
sole benefit, as to which she has no voting or investing power, or (ii)
3,205,100 shares held by J.S. Standish Company, of which she is a director.
(m) Includes (i) 33,040 shares owned outright and (ii) 172,000 shares issuable
upon exercise of options exercisable currently or within 60 days.
(n) Includes (i) 250 shares owned outright, (ii) 285,000 shares issuable upon
exercise of options exercisable currently or within 60 days, (iii) 1,000
shares issuable upon conversion of an equal number of shares of Class B
Common Stock and (iv) 5,000 shares owned by a trust for the benefit of his
mother, of which he is trustee.
(o) Includes (i) 1,000 shares owned outright and (ii) 20,000 shares issuable
upon exercise of options exercisable currently or within 60 days.
(p) Includes 20,000 shares issuable upon exercise of options exercisable
currently or within 60 days.
Each of the individuals named in the preceding table has sole voting and
investment power over shares listed as beneficially owned, except as indicated.
6
<PAGE>
The following persons have informed the Company that they were the
"beneficial owners" (as defined by the rules of the Securities and Exchange
Commission) of more than five percent of the Company's outstanding shares of
Class A Common Stock as of December 31, 1997:
<TABLE>
<CAPTION>
PERCENT OF
SHARES OF CLASS A
COMPANY'S CLASS A COMMON STOCK
COMMON STOCK OUTSTANDING ON
NAME(S) (A) BENEFICIALLY OWNED MARCH 13, 1998
- --------------------------------------------------------- ------------------ --------------
<S> <C> <C>
J. Spencer Standish...................................... 5,144,860(b) 17.48%
J. S. Standish Company(c)................................ 3,205,100(d) 11.65%
Wellington Management Company, LLP....................... 2,597,900(e) 10.69%
Vanguard/Windsor Funds, Inc.............................. 2,400,000(f) 9.88%
Bruce B. Purdy........................................... 1,788,629(g) 7.36%
Sound Shore Management, Inc.............................. 1,313,500(h) 5.41%
Mellon Bank Corporation.................................. 1,285,026(i) 5.29%
Reich & Tang Asset Management L.P........................ 1,246,400(j) 5.13%
Marshall & Ilsley Corporation............................ 1,246,112(k) 5.13%
Norwest Corporation...................................... 1,226,700(l) 5.05%
Norwest Bank Colorado, N.A............................... 1,221,400 5.03%
</TABLE>
- ------------------------
(a) Addresses of the beneficial owners listed in the above table are as follows:
J. Spencer Standish, c/o Albany International Corp., P.O. Box 1907, Albany,
New York 12201; J. S. Standish Company, c/o J. Spencer Standish, Albany
International Corp., P.O. Box 1907, Albany, New York 12201; Wellington
Management Company, LLP, 75 State Street, Boston, Massachusetts 02109;
Vanguard/Windsor Funds, Inc., c/o The Vanguard Group, P.O. Box 2600, Valley
Forge, Pennsylvania 19482-2600; Bruce B. Purdy, P.O. Box 8047, Incline
Village, Nevada 89452; Sound Shore Management, Inc., 8 Sound Shore Drive,
Greenwich, Connecticut 06836; Mellon Bank Corporation, One Mellon Bank
Center, Pittsburgh, Pennsylvania 15258; Reich & Tang Asset Management L.P.,
100 Park Avenue, New York, New York 10017; Marshall & Ilsley Corporation,
770 N. Water Street, Milwaukee, Wisconsin 53202; Norwest Corporation,
Norwest Center, Sixth and Marquette, Minneapolis, Minnesota 55479-1026; and
Norwest Bank Colorado, N.A., 1740 Broadway, Denver, Colorado 80274-8677.
(b) The nature of Mr. Standish's ownership of these shares is described in note
(b) on page 5 of this proxy statement.
(c) J. S. Standish Company is a corporation as to which J. Spencer Standish
holds the power to elect all of the directors. Current directors of J. S.
Standish Company include J. Spencer Standish, John C. Standish (son of J.
Spencer Standish), Christine L. Standish (daughter of J. Spencer Standish),
Thomas R. Beecher, Jr. (a director of the Company) and Francis L. McKone
(President and a director of the Company).
(d) Includes 3,205,100 shares issuable on conversion of an equal number of
shares of Class B Common Stock.
(e) Wellington Management Company, LLP, ("WMC") is an investment adviser
registered with the Securities and Exchange Commission under the Investment
Advisers Act of 1940, as amended. WMC, in its capacity as investment
adviser, may be deemed to have beneficial ownership of the listed shares of
Class A Common Stock that are owned by numerous investment advisory clients.
WMC has sole power to vote or direct the vote of none of such shares, shared
power to vote or direct the vote of 110,800 of such shares, and shared power
to dispose or direct the disposition of all of such shares.
(f) Vanguard/Windsor Funds, Inc. is an investment company registered under
Section 8 of the Investment Company Act. Vanguard/Windsor Funds, Inc. has
sole power to vote or direct the vote, and shared power to dispose or direct
the disposition, of all such shares.
7
<PAGE>
(g) Includes (i) 1,573,333 shares held by three separate trusts as to each of
which Mr. Purdy is co-trustee sharing voting and investment power, and (ii)
215,296 shares held by six trusts as to each of which Barbara G. Purdy, his
wife, is co-trustee sharing voting and investment power (Mr. Purdy disclaims
beneficial ownership of such shares). Marshall & Ilsley Trust Company is a
trustee of trusts holding an aggregate of 1,107,352 of the shares reported
as beneficially owned by Mr. Purdy (see note (k) below).
(h) Sound Shore Management, Inc. ("SSM") is an investment adviser registered
with the Securities and Exchange Commission under the Investment Advisers
Act of 1940, as amended. SSM, in its capacity as investment adviser, may be
deemed to have beneficial ownership of the shares listed, which are owned by
various investment advisory clients. SSM has sole power to vote or direct
the voting of 1,262,000 shares, shared power to vote or direct the voting of
no shares, and sole power to dispose or direct the disposition of all of
such shares.
(i) All of the listed shares are held by Mellon Bank Corporation and its
subsidiaries in their various fiduciary capacities. Mellon Bank Corporation
and such subsidiaries have sole power to vote or direct the vote of
1,187,726 shares, shared power to vote or direct the vote of no shares, sole
power to dispose or direct the disposition of 1,228,126 shares, and shared
power to dispose or direct the disposition of 56,900 shares.
(j) These shares are held by Reich & Tang Asset Management L.P. on behalf of
certain accounts for which Reich & Tang Asset Management L.P. provides
investment advice. Reich & Tang Asset Management L.P. has shared power to
vote or direct the vote and shared power to dispose or direct the
disposition of all of such shares.
(k) These shares are beneficially owned by Marshall & Ilsley Corporation and its
direct or indirect subsidiaries, including Marshall & Ilsley Trust Company
and M & I Marshall & Ilsley Trust Company of Arizona, in their various
fiduciary capacities. Marshall & Ilsley Corporation or such subsidiaries
have sole power to vote or direct the vote of 420,384 of such shares, shared
power to vote or direct the vote of 825,728 of such shares, sole power to
dispose or direct the disposition of 18,760 of such shares, and shared power
to dispose or direct the disposition of 1,227,352 of such shares.
(l) Includes those shares shown as beneficially owned by Norwest Bank Colorado,
N.A. Of the listed shares, Norwest Corporation has sole power to vote or
direct the vote of 1,224,300 shares, shared power to vote or direct the vote
of no shares, sole power to dispose of or direct the disposition of
1,190,600 shares and shared power to dispose or direct the disposition of
35,000 shares.
8
<PAGE>
The following persons have informed the Company that they are the beneficial
owners of more than five percent of the Company's outstanding shares of Class B
Common Stock:
<TABLE>
<CAPTION>
SHARES OF
COMPANY'S CLASS B PERCENT OF
COMMON STOCK OUTSTANDING
BENEFICIALLY CLASS B
NAME(S)(A) OWNED COMMON STOCK
- ---------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
J. Spencer Standish....................................... 4,854,860(b) 86.45%
J. S. Standish Company(c)................................. 3,205,100 57.08%
Thomas R. Beecher, Jr..................................... 470,400(d) 8.38%
</TABLE>
- ------------------------
(a) Addresses of the beneficial owners listed in the above table are as follows:
J. Spencer Standish, c/o Albany International Corp., P.O. Box 1907, Albany,
New York 12201; J. S. Standish Company, c/o J. Spencer Standish, Albany
International Corp., P.O. Box 1907, Albany, New York 12201; Thomas R.
Beecher, Jr., c/o Beecher Securities Corporation, 200 Theater Place,
Buffalo, New York 14202.
(b) The nature of Mr. Standish's ownership of these shares is described in note
(c) on page 5 of this proxy statement.
(c) See note (c) on page 7 of this proxy statement.
(d) The nature of Mr. Beecher's ownership of these shares is described in note
(h) on page 6 of this proxy statement.
VOTING POWER OF MR. STANDISH
J. Spencer Standish, related persons and Thomas R. Beecher, Jr., as sole
trustee of trusts for the benefit of children of J. Spencer Standish, now hold
in the aggregate shares entitling them to cast approximately 69.3% of the
combined votes entitled to be cast by all stockholders of the Company.
Accordingly, if J. Spencer Standish, related persons and Thomas R. Beecher, Jr.,
as such trustee, cast votes as expected, election of the director nominees
listed above, approval of the 1998 Stock Option Plan and election of Coopers &
Lybrand as the Company's auditors will be assured.
9
<PAGE>
1998 STOCK OPTION PLAN
The Board of Directors has approved, subject to approval by the
stockholders, a new stock option plan ("the 1998 Plan") intended to encourage
officers and other key employees of the Company and its subsidiaries to remain
in the employ of the Company. A copy of the 1998 Plan is attached to this Proxy
Statement as Exhibit A. The following description of the 1998 Plan is in all
respects qualified by reference to Exhibit A:
ADMINISTRATION: The 1998 Plan will be administered by a committee ("the
Committee") consisting of the Company's Board of Directors or such committee of
the Board as the Board may designate from time to time. The Board of Directors
has designated the Compensation and Stock Option Committee to serve as the
Committee until further action by the Board.
SHARES SUBJECT TO PLAN: The 1998 Plan authorizes the grant of options to
purchase a number of shares of Class A Common Stock initially equal to 500,000.
In addition, the 1998 Plan will allow the Board to increase this amount from
time to time, provided that it may not be increased by more than 500,000 in any
calendar year and that no such increase may cause the total number of shares
then available for option to exceed 1,000,000. The Company may deliver either
authorized but unissued shares or treasury shares upon the exercise of an
option. If options granted under the 1998 Plan expire or are terminated or
surrendered without having been exercised, the shares of Class A Common Stock
subject thereto may again be optioned. Assuming full exercise by the Committee
of its power to increase annually the number of shares available for options,
the maximum number of shares that could be issued upon exercise of options
granted pursuant to the 1998 Plan would be 5,500,000.
PARTICIPATION: Options may be granted by the Committee to officers and
other key employees of the Company and its subsidiaries. The maximum number of
Class A shares with respect to which any optionee may be granted options during
any calendar year may not exceed 100,000. Approximately 200 persons would be
potentially eligible to receive options under the 1998 Plan.
TERM OF OPTIONS: The Committee will determine the term of each option,
which may not exceed 20 years. The Committee also has the power to shorten the
term of an option and to determine the effect on any option of the holder's
termination of employment or of any conduct or activity of the holder.
EXERCISE PRICE: The per share exercise price of an option will be
determined by the Committee at the time of granting the option but may not be
less than 100% of the fair market value (determined by the Committee) of a share
of Class A Common Stock on the date of grant. The exercise price may be paid in
cash or, in the discretion of the Committee, in shares of the Company's Class A
Common Stock. The proceeds received by the Company on the exercise of options
will be used for general corporate purposes.
EXERCISE OF OPTIONS: The times at which an option granted under the 1998
Plan will become exercisable will be determined by the Committee at the time of
grant. In the past, options granted under the Company's option plans have become
exercisable as to 20% of the shares covered thereby on each of the first five
anniversaries of the date of grant, but only if the optionee is then employed by
the Company or a subsidiary. The Committee has indicated its intention to
continue this practice, but will not be obligated to do so.
RECAPITALIZATION, ETC.: In the event of a stock dividend, recapitalization,
merger, consolidation, split-up, combination or exchange of shares, or the like,
the Committee will be empowered, but not obligated, to make appropriate
adjustments in the number and class of shares subject to the 1998 Plan, in the
number of shares subject to options granted thereunder and in the exercise
prices of such options.
TRANSFERABILITY: The Committee has the authority to determine the extent to
which options granted under the 1998 Plan will be transferable.
10
<PAGE>
AMENDMENT AND TERMINATION: The Board of Directors may at any time terminate
or amend the 1998 Plan in any respect, except that, without the approval of the
stockholders, no amendment may (1) materially increase the number of shares for
which options may be granted under the 1998 Plan or (2) increase the maximum
number of shares for which options may be granted to any optionee during any
calendar year. Unless the 1998 Plan is previously terminated, options may be
granted under the 1998 Plan through December 31, 2008.
TAX AND ACCOUNTING CONSEQUENCES: The 1998 Plan permits grants of incentive
stock options, intended to meet the requirements of Section 422 of the Internal
Revenue Code, as well as of non-qualified options.
Incentive Stock Options
The Company has been advised that the federal income tax consequences to the
Company and the optionee of the grant and exercise of incentive stock options
under the 1998 Plan, under the current provisions of the Internal Revenue Code,
are substantially as follows: Generally, a person who is granted an incentive
stock option is not required to recognize taxable income at the time of the
grant or at the time of exercise and the Company is not entitled to a deduction
at the time of grant or at the time of exercise. Under certain circumstances,
however, an optionee may be subject to alternative minimum tax with respect to
the exercise of his or her incentive stock options. Generally, the gain
realized, but not recognized, upon the exercise of an incentive stock option
(equal to the difference between the fair market value of the shares received
upon exercise of the incentive stock option and the purchase price paid for such
shares) is included in the optionee's alternative minimum taxable income and,
depending upon the optionee's overall tax situation, he or she may be required
to pay alternative minimum tax on such gain.
If an optionee does not dispose of the shares acquired pursuant to the
exercise of an incentive stock option before the later of two years from the
date of grant and one year from the date of exercise, any gain or loss realized
on a subsequent disposition of the shares will be treated as capital gain or
loss. Under such circumstances, the Company will not be entitled to any
deduction for federal income tax purposes. An optionee must also own the shares
of stock acquired upon exercise of an incentive stock option for more than
eighteen months for the gain or loss realized on the sale to qualify as
long-term capital gain or loss.
If an optionee disposes of the shares received upon the exercise of an
incentive stock option either (1) within one year of the exercise date or (2)
within two years after the grant date, the optionee will generally recognize
ordinary income equal to the lesser of (a) the excess of the fair market value
of the shares on the date of exercise over the purchase price paid for the
shares upon exercise and (b) the amount of gain realized on the sale. Any gain
realized in excess of the ordinary income recognized, and any loss realized,
will be long-term or short-term capital gain or loss, depending upon the length
of the period the optionee held the shares. If an optionee is required to
recognize ordinary income as a result of the disposition of shares acquired on
the exercise of an incentive stock option, the Company, subject to general rules
relating to the reasonableness of the optionee's compensation and the limitation
under Section 162(m) of the Internal Revenue Code, will be entitled to a
deduction for an equivalent amount.
Non-Qualified Stock Options
The Company has been advised that the federal income tax consequences to the
Company and the optionee of the grant and exercise of non-qualified options
under the 1998 Plan, under the current provisions of the Internal Revenue Code,
are substantially as follows: An optionee is not deemed to receive any income at
the time the option is granted. If the option is exercised, the optionee is
deemed to have received ordinary income, on the exercise date, in an amount
equal to the difference, on the exercise date, between the exercise price and
the fair market value of the acquired shares. The Company is generally entitled,
in the year in which the option is exercised, to a corresponding deduction,
subject to general rules relating to the reasonableness of the optionee's
compensation and the limitation under Rule 162(m) of the Code.
11
<PAGE>
Section 162(m) of the Code generally limits to $1 million the amount of
compensation paid to certain "covered employees" of a publicly held corporation
(generally, the corporation's chief executive officer and four most highly
compensated executive officers other than the chief executive officer) that may
be deducted by the corporation as an expense. Certain performance-based
compensation, the material terms of which are disclosed to the corporation's
stockholders and approved by a majority stockholder vote, is exempt from the $1
million limitation. Based on regulations of the Internal Revenue Service
promulgated under Section 162(m), grants of stock options under the 1998 Plan
approved by a Committee consisting solely of "outside directors" (as defined in
such regulations) would appear to constitute performance-based compensation that
would be exempt under Section 162(m). As presently constituted, the Compensation
and Stock Option Committee would not be deemed to consist solely of "outside
directors" (as defined in such regulations). See the "COMPENSATION AND STOCK
OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION" on pages 17-19 for a
discussion of the impact of Section 162(m) on the Company.
Under current accounting rules, there is no earnings charge to the Company
for financial accounting purposes in connection with the grant, existence or
exercise of any stock option granted under the 1998 Plan. The Company is,
however, required to disclose, and does disclose, in a footnote to its annual
consolidated financial statements, the impact of such grants on consolidated net
income and earnings per share.
Approval and adoption of the 1998 Plan by stockholders requires the
affirmative vote of a majority of the votes entitled to be cast by the shares of
Class A and Class B Common Stock represented and entitled to vote at the Annual
Meeting. J. Spencer Standish, related persons and Thomas R. Beecher, Jr., as
trustee of trusts for the benefit of children of J. Spencer Standish, have
indicated their intention to vote in favor of approval of the 1998 Plan.
Accordingly, such approval is assured. See "VOTING POWER OF MR. STANDISH" on
page 9 of this proxy statement.
THE BOARD HAS UNANIMOUSLY APPROVED THE 1998 PLAN AND RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE 1998 PLAN.
12
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding compensation of the
Company's Chief Executive Officer and each of the Company's four other most
highly compensated executive officers (together hereinafter referred to as "the
Named Officers"), based on salary and bonuses earned during 1997.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION --------------------------
---------------------------------------------------------- RESTRICTED
NAME AND PRINCIPAL FISCAL OTHER ANNUAL STOCK STOCK
POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS OPTIONS
- ------------------------------ ----------- ---------- ---------- --------------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Francis L. McKone............. 1997 $ 521,402 $ 260,000 -- -- -- -- 40,000
President and Chief 1996 479,821 250,000 -- 40,000
Executive Officer 1995 451,250 307,500 -- 40,000
Frank R. Schmeler............. 1997 $ 350,237 $ 165,000 -- -- -- -- 25,000
Executive Vice 1996 307,821 135,000 -- 25,000
President 1995 285,150 168,800 -- 25,000
Edward Walther................ 1997 $ 318,829 $ 140,000 -- -- -- -- 25,000
Executive Vice 1996 273,425 120,000 -- 25,000
President 1995 251,000 129,400 -- 25,000
Michael C. Nahl............... 1997 $ 321,648 $ 140,000 -- -- -- -- 275,000
Senior Vice 1996 309,498 116,500 -- 25,000
President and Chief 1995 300,500 157,000 -- 25,000
Financial Officer
J. Weldon Cole................ 1997 $ 318,579 $ 110,000 -- -- -- -- 25,000
Senior Vice 1996 306,579 115,300 -- 25,000
President 1995 297,500 155,000 -- 25,000
<CAPTION>
NAME AND PRINCIPAL ALL OTHER
POSITION COMPENSATION
- ------------------------------ ----------------------
<S> <C>
Francis L. McKone............. $ 68,274(3)
President and Chief 51,569(3)
Executive Officer 37,296(3)
Frank R. Schmeler............. $ 15,918(4)
Executive Vice 9,000(4)
President 8,015(4)
Edward Walther................ $ 18,222(5)
Executive Vice 20,284(5)
President 31,395(5)
Michael C. Nahl............... $ 45,473(3)
Senior Vice 30,844(3)
President and Chief 19,700(3)
Financial Officer
J. Weldon Cole................ $ 24,720(3)
Senior Vice 9,843(3)
President 731(3)
</TABLE>
- ------------------------
(1) Reflects bonus earned during the fiscal year which was paid during the next
fiscal year.
(2) While the Named Officers enjoy certain perquisites, such perquisites did not
exceed the lesser of $50,000 or 10% of the salary and bonus of any of the
Named Officers.
(3) Above-market earnings credited, but not paid or payable, to the Named
Officer during the fiscal year with respect to deferred compensation.
(4) Above-market earnings credited, but not paid or payable, to Mr. Schmeler
during the fiscal year with respect to deferred compensation, except that
the amount shown for 1995 also includes an international assignment premium
of $2,161.
(5) Includes (a) above-market earnings of $6,389 in 1997, $1,084 in 1996 and
$145 in 1995 credited, but not paid or payable, to Mr. Walther during such
year with respect to deferred compensation and (b) an international
assignment premium of $11,833 in 1997, $19,200 in 1996 and $31,250 in 1995.
13
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
- ----------------------------------------------------------- % OF TOTAL
NUMBER OF OPTIONS/SARS
SECURITIES GRANTED TO EXERCISE OR GRANT DATE
UNDERLYING OPTIONS/ EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME SARS GRANTED FISCAL YEAR ($/SH) DATE (2) VALUE $(3)
- -------------------------------------- ------------------- ----------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Francis L. McKone..................... 40,000(4) 5.8% $ 19.75 4/15/17 $ 318,424
Frank R. Schmeler..................... 25,000(4) 3.6% 19.75 4/15/17 234,658
Edward Walther........................ 25,000(4) 3.6% 19.75 4/15/17 248,583
Michael C. Nahl....................... 25,000(4) 3.6% 19.75 4/15/17 246,200
Michael C. Nahl....................... 250,000(5) 35.9% 25.5625 11/5/17 2,867,875
J. Weldon Cole........................ 25,000(4) 3.6% 19.75 4/15/17 216,118
</TABLE>
- ------------------------
(1) None of the grants referred to in the table included stock appreciation
rights. The exercise price for each option is the fair market value of a
share of Class A Common Stock on the date of grant.
(2) The Stock Option Committee may, at any time, accelerate the expiration date
to a date not less than ten years from the date of the grant.
(3) Calculated using the Black-Scholes method which includes the following
assumptions: expected volatility factor of 24.1% based upon 1989-97 weekly
common stock price variation of high, low and closing prices; risk-free
(zero-coupon U.S. Treasury Bond) interest rates ranging from 5.76% to 6.05%
based on expected remaining life of the options; and dividend yields at the
date of grant for each option of 1.8%. No adjustments were made for certain
factors that are generally recognized to reduce the value of option
contracts: I.E., that the option grants have limited transferability; that
the options step-vest and are, therefore, not exercisable for a number of
years; that, in one case, the option does not become exercisable unless a
specified market price has been reached; and that there is a risk of
forfeiture of the non-vested portion of each option if employment is
terminated.
(4) The option becomes exercisable as to 20% of the shares on each of the first
five anniversaries of the date of grant but only if the optionee is then
employed by the Company or a subsidiary. In the event of termination of the
optionee's employment, the option terminates as to all shares as to which it
is not then exercisable, except that, in the case of voluntary termination
after age 62, death, disability or involuntary termination the option
becomes exercisable, immediately prior to such termination, as to one-half
of the shares as to which it is not then exercisable.
(5) The option is not exercisable unless the market price of Class A Common
Stock reaches $48 per share while the optionee is employed by the Company or
a subsidiary. When the target price is achieved, the option becomes
exercisable as to a number of shares determined by multiplying 25,000 times
the number of full years that have elapsed since the grant date. Thereafter,
the option becomes exercisable as to an additional 25,000 shares on each
anniversary of the grant date while the optionee remains an employee. In the
event of termination of the optionee's employment, the option terminates as
to all shares as to which it is not then exercisable, except that, in the
case of voluntary termination after age 62, death, disability or involuntary
termination, if the target price has been achieved prior to such
termination, the option becomes exercisable, immediately prior to such
termination, as to one-half of the shares as to which it is not then
exercisable.
14
<PAGE>
OPTION/SAR EXERCISES DURING 1997 AND YEAR-END VALUES
No stock options or stock appreciation rights were exercised by any of the
Named Officers during 1997. The following table sets forth information with
respect to stock options held by the Named Officers at December 31, 1997. No
stock appreciation rights were held by the Named Officers at that date.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1997 AT DECEMBER 31, 1997 ($)(1)
-------------------------- ---------------------------
<S> <C> <C> <C> <C>
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------- ----------- ------------- ------------ -------------
Francis L. McKone........................................ 362,000 128,000 $ 2,467,000 $ 353,000
Frank R. Schmeler........................................ 159,000 76,000 923,250 197,375
Edward Walther........................................... 15,000 60,000 11,250 104,375
Michael C. Nahl.......................................... 270,000 330,000 1,870,000 220,625
J. Weldon Cole........................................... 15,000 60,000 11,250 104,375
</TABLE>
- ------------------------
(1) Represents the difference between the closing price of the Company's Class A
Common Stock on December 31, 1997 ($23 per share) and the exercise price of
the options.
PENSION PLAN TABLE
The following table shows, as of December 31, 1997, the maximum amounts
payable (on a straight life annuity basis) at age 65 under the Company's Pension
Plus Plan. The amounts shown are without regard to the impact of the limits on
credited earnings prescribed by Section 401 of the Internal Revenue Code and on
annual benefits prescribed by Section 415 of the Internal Revenue Code, in each
case as described in the Pension Plus Plan.
<TABLE>
<CAPTION>
MAXIMUM ANNUAL BENEFITS UPON RETIREMENT WITH YEARS OF
SERVICE INDICATED
CREDITED EARNINGS -----------------------------------------------------
(1) 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- -------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(ROUNDED TO NEAREST $500)
125,$000......... $ 26,000 $ 35,000 $ 43,500 $ 52,500 $ 54,000
150,000......... 32,000 42,500 53,000 63,500 65,500
175,000......... 37,500 50,000 62,500 75,000 77,000
200,000......... 43,000 57,500 72,000 86,000 88,500
225,000......... 48,500 65,000 81,500 97,500 100,000
250,000......... 54,500 72,500 90,500 108,500 112,000
300,000......... 65,500 87,500 109,500 131,000 135,000
400,000......... 88,000 117,500 147,000 176,000 181,000
450,000......... 99,500 132,500 165,500 198,500 204,500
500,000......... 110,500 147,500 184,500 221,000 227,500
</TABLE>
- ------------------------
(1) The Company's Pension Plus Plan, applicable to all salaried and most hourly
employees in the United States, provides generally that an employee who
retires at his normal retirement age (age 65) will receive a maximum annual
pension equal to (a) 1% of his average annual base compensation for the
three most highly compensated consecutive calendar years in his last ten
years of employment times
15
<PAGE>
his years of service (up to 30) plus (b) .5% of the amount by which such
average annual base compensation exceeds a Social Security offset ($25,497
in 1997, increasing thereafter in proportion to the increase in the Social
Security Taxable Wage Base) times his years of service (up to 30) plus (c)
.25% of such average annual base compensation times his years of service in
excess of 30. Effective April 1, 1994, the aggregate benefit payable
pursuant to clauses (a) and (b) above was reduced to 1% of such average
annual compensation for years of service (up to 30) earned after March 31,
1994. Effective January 1, 1999, this benefit will be reduced further to
.75% of such average annual compensation for years of service (up to 30)
earned after December 31, 1998. The numbers in the above table do not
reflect these reductions.
In the case of the Named Officers, base compensation for purposes of the
Pension Plan is the amount shown as "Salary" in the Summary Compensation Table.
The number of credited years of service under the Plan for each of the Named
Officers are as follows: 34 years for Francis L. McKone; 34 years for Frank R.
Schmeler; 3 years for Edward Walther; 17 years for Michael C. Nahl; and 3 years
for J. Weldon Cole.
Section 415 of the Internal Revenue Code places certain limitations on
pensions that may be paid under federal income tax qualified plans. Section 401
of the Code also limits the amount of annual compensation that may be used to
calculate annual benefits under such plans. The Company has adopted an unfunded
supplemental employee retirement plan pursuant to which the Company will replace
any Pension Plus Plan benefits (calculated as described in Note 1 to the
preceding table) which a participant is prevented from receiving by reason of
these limitations. All employees, including executive officers, to whom such
limitations become applicable are eligible to receive benefits under the
unfunded supplemental employee retirement plan.
16
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions with respect to compensation of executive officers and the grant
of stock options were made for 1997 by the Compensation and Stock Option
Committee of the Board of Directors. Thomas R. Beecher, Jr., J. Spencer
Standish, Allan Stenshamn and Barbara P. Wright were members of the Committee
throughout 1997. Stanley I. Landgraf was a member of the Committee until his
death in June 1997. Christine L. Standish, daughter of J. Spencer Standish, was
appointed to the Committee in November 1997. Mr. Standish, as Chairman of the
Board, is an employee of the Company. None of the other persons who were members
of the Committee in 1997 were employees of the Company at that time.
The Compensation and Stock Option Committee ("the Committee") has provided
the following report:
COMPENSATION OF THE EXECUTIVE OFFICERS
The Committee seeks to compensate the executive officers of the Company,
including the Chief Executive Officer, at levels, and in a manner, which will
(a) enable the Company to attract and retain talented, well qualified,
experienced and highly-motivated individuals whose performance will
substantially enhance the Company's performance; and
(b) closely align the interests of each executive officer with the
interests of the Company's stockholders.
These objectives are pursued through a base salary, annual cash bonuses and
stock options.
Total cash compensation of each executive officer--base salary plus annual
cash bonus--is intended to be competitive with companies with which the Company
competes for executive talent. The Committee believes that such competitors are
not limited to companies in the same industry and that comparisons should be
made to the compensation practices of a cross-section of U.S. industrial
companies with comparable sales volumes and international complexity.
Accordingly, the Company periodically retains the services of professional
compensation consultants to compare the compensation of its executive officers
with such a cross-section. Consultants were most recently retained for this
purpose in 1996. In addition, the Committee reviews such published surveys and
other materials regarding compensation as are provided from time to time by the
Company's Human Resources department.
In general, the Committee sought to achieve total cash compensation for 1997
for each executive officer, including the Chief Executive Officer, which would
place it at the median of compensation paid by U.S. industrial companies with
comparable sales volumes and international complexity to executives with
comparable talents, qualifications, experience and responsibilities. Where
positions of a comparable nature could not be identified in comparable
companies, total cash compensation was established by reference to other
positions within the Company for which comparisons could be identified. The
Committee also made such adjustments as it deemed appropriate to reflect the
past and anticipated performance of the individual executive officer, to take
into account various subjective criteria such as leadership ability, dedication
and initiative, and to achieve internal equity in compensation.
Base salaries of executive officers--including each of the Named
Officers--are established as a percentage of targeted total cash compensation
for each officer, the percentage ranging from 66 2/3% in the case of the Chief
Executive Officer to approximately 77% in the case of other executive officers.
Base salaries are not based on corporate or business unit performance. Annual
cash bonuses, on the other hand, are focused on corporate and business unit
performance factors identified by the Committee and on the performance of the
individual executive officer in the relevant fiscal year. A cash bonus
sufficient to bring total cash compensation to the targeted level is paid only
if the Committee determines that performance levels which it considers
appropriate for the particular fiscal year have been achieved. Lesser bonuses
will
17
<PAGE>
be paid if such performance levels are not achieved and larger bonuses, not
exceeding 100% of base salary, will be paid if performance exceeds such levels.
Salaries of executive officers are customarily adjusted in April of each
year. In April 1997 the salaries of all executive officers were increased by an
average of approximately 3.6% (excluding increases granted in recognition of a
substantial change in responsibilities) to reflect the reported rate of
increases by comparable companies. Increases actually granted to executive
officers for this purpose ranged from zero to 5.2%.
Early in 1997 the Committee determined that cash bonuses for executive
officers for the year would be based, as in 1996, on Company performance with
respect to operating income, share of market and management of inventories and
accounts receivable. The Committee further indicated that it would exercise its
discretion, after the close of the fiscal year, in determining to what extent
cash bonuses had been earned and reserved the right to take individual
performance factors into account and to employ both objective and subjective
criteria.
Following the close of 1997, the Committee reviewed Company performance with
respect to the three factors it had identified. The Committee determined that,
as a general matter, bonuses for executive officers for 1997 should be
approximately at their target levels, with variations made on the basis of
individual performance.
The Company has two stock option plans, the 1988 Stock Option Plan and the
1992 Stock Option Plan. No stock appreciation rights may be granted under the
plans and stock options granted may not be treated as Incentive Stock Options
under the Internal Revenue Code. Options granted under the plans are intended as
an incentive to officers and other key employees of the Company to encourage
them to remain in the employ of the Company by affording them a greater interest
in its success. The Committee determines when options become exercisable.
Normally, 20% of each grant becomes exercisable each year but only if the
optionee is an employee at the time. The exercise price of each option is the
market price of the Company's shares on the date of the grant. In 1997, one
option, for 250,000 shares, was granted to an executive officer outside of the
existing stock option plans (see "OPTION/SAR GRANTS IN LAST FISCAL YEAR" on page
14.
The size of the individual stock options granted during 1997, including the
option granted to the Chief Executive Officer, was determined entirely by the
discretion of the Committee. The principal factors influencing the size of
individual grants in 1997 were position responsibility, compensation level and
internal equity. The Committee also considered matters which pertained to the
particular individual and which were relevant to the plans' purpose of
encouraging continued employment, including the performance of the individual,
the number of options already held by the individual and the extent to which
such options had not yet become exercisable. In determining the size of
individual grants, the Committee does not consider measures of corporate
performance.
At the present time the Committee does not anticipate that Section 162(m) of
the Internal Revenue Code will in the ordinary course prevent the Company from
deducting executive officer compensation as an expense on its corporate income
tax returns. As a result, the Committee has not had to decide whether to
qualify, or not to qualify, any particular form of compensation under that
section of the Code.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
As in the case of the other executive officers, the target total cash
compensation of Mr. McKone for 1997 was set at a level believed by the Committee
to be reasonably competitive with compensation paid by comparable U.S.
industrial companies to executives with comparable talents, qualifications,
experience and responsibilities. The Committee also took into account Mr.
McKone's many years of outstanding service to the Company. In April 1997 Mr.
McKone received a 5.2% salary increase, reflecting the Committee's favorable
evaluation of Mr. McKone's overall performance as Chief Executive Officer in a
difficult
18
<PAGE>
business environment. In February 1998, the Committee granted Mr. McKone an
on-target bonus with respect to 1997, in recognition of Mr. McKone's leadership
in achieving increases in net sales, operating income and net income despite
adverse currency fluctuations and other obstacles, in controlling costs and
improving process, in the development and commercialization of new products, in
completing a new plant facility in Korea and in further expanding the Company's
non-pmc business. In April 1997, the Committee granted an option to Mr. McKone
for 40,000 shares. In making this grant, the Committee took into account the
importance to the Company of retaining Mr. McKone's outstanding leadership in a
difficult business environment and the fact that the options then held by him
would shortly be exercisable as to all but 88,000 shares.
Compensation and Stock Option
Committee
Thomas R. Beecher, Chairman
J. Spencer Standish
Christine L. Standish
Allan Stenshamn
Barbara P. Wright
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee is composed of Directors
Beecher, J. S. Standish, C. L. Standish, Stenshamn and Wright. Mr. Standish is
Chairman of the Board and an employee of the Company and is the father of C. L.
Standish. Mr. Stenshamn is an officer (Chairman of the Board) and a director of
six Swedish subsidiaries of the Company: Albany Nordiskafilt AB; Nordiskafilt
AB; Nordiska Maskinfilt AB; Nomafa AB; Albany Wallbergs AB; and DEWA Consulting
AB. Mr. Standish, Mr. McKone, Mr. Beecher and Ms. Standish are members of the
Board of Directors of J.S. Standish Company ("JSSC"). Mr. Standish and Mr.
Beecher are also officers of JSSC (President and Secretary, respectively). The
Board of Directors of JSSC serves the functions of a compensation committee. The
aggregate amount received with respect to all services rendered to JSSC during
1997 was $2,100 in the case of each of Mr. Standish, Mr. McKone and Ms. Standish
and $3,000 in the case of Mr. Beecher.
19
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares cumulative total return of the Company's Class
A Common Stock during the five years ended December 31, 1997 with the cumulative
total return on the S&P 500 Index and a selected peer group.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ALBANY INTERNATIONAL PEER GROUP S&P 500
<S> <C> <C> <C>
1992 100 100 100
1993 124.9 114.8 110.1
1994 128.1 87.2 111.5
1995 122.8 72.8 153.5
1996 159.5 94.3 188.7
1997 161.6 126.2 251.6
</TABLE>
The peer group consists of companies in related industries with comparable
sales volumes. Companies included are: Dixie Yarns, Inc., Guilford Mills, Inc.,
Nashua Corporation, and Pope & Talbot, Inc.. There are no comparable domestic
paper machine clothing manufacturers with publicly reported financial
statements.
The comparison assumes $100 was invested on December 31, 1992 in the
Company's Class A Common Stock, the S&P 500 Index and the peer group and assumes
reinvestment of dividends.
DIRECTORS' FEES
Directors who are not employees of the Company receive an annual retainer in
the amount of $20,000. Under the Directors Annual Retainer Plan approved by the
stockholders in 1996, one-half of the retainer will be received in the form of
shares of Class A Common Stock of the Company (the number of shares being
determined on the basis of the closing price of the shares on the day of the
Annual Meeting). In addition, such Directors are paid $700 for each meeting of
the Board or a committee thereof that they attend up to a maximum payment of
$1,400 for any one day (or, in the case of a committee chairman, $1,700 per
day), and are paid $700 for each day they are engaged in Company business at the
request of the Chairman of the Board. Committee chairmen are paid $1,000 for
each committee meeting they attend. Each Director may elect to defer payment of
all or any part of the cash fees payable for services as a Director. In
addition, each Director whose service as a Director terminates after such
Director attains age 65 and who is not eligible to receive a pension under any
other Company retirement program is entitled to receive an annual pension equal
to the annual retainer payable to non-employee members of the Board of Directors
at the time of his or her termination of service, which annual pension is
payable in equal
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quarterly installments during his or her lifetime for a number of years equal to
the number of full years of service by such person as a Director.
Mr. Stenshamn received, in addition to fees received by him for his services
during 1997 as a Director of the Company, total fees of approximately $4,000 for
his services during 1997 as a Director of subsidiaries of the Company.
COMMITTEES
Among the committees of the Board of Directors are a Compensation and Stock
Option Committee, the current members of which are Directors Beecher, J. Spencer
Standish, Stenshamn, Wright and Christine L. Standish, and an Audit Committee
comprised of Directors Stenshamn, Wright and Morone.
The Compensation and Stock Option Committee met three times in 1997. The
Committee determines the compensation of the executive officers of the Company,
establishes compensation policy for management generally, decides upon the grant
of options under, and administers, the Company's stock option plans and makes
recommendations to the Board of Directors as to possible changes in certain
employee benefits. The Committee also makes recommendations to the Board as to
the election of officers. Recommendations of persons for nomination as Directors
may be sent to the attention of the Company's Secretary.
The Audit Committee met two times in 1997. The Committee recommends the
engagement of auditors and reviews the planning and scope of the audit and the
results of the audit. The Committee also reviews the Company's policies and
procedures on internal accounting and financial controls. The implementation and
maintenance of internal controls is understood to be primarily the
responsibility of management.
ATTENDANCE
The Board of Directors of the Company met five times during 1997. Each
Director attended 75% or more of the aggregate of the number of meetings of the
Board and of the committees of the Board on which he or she served.
COMPLIANCE WITH STOCK OWNERSHIP REPORTING REQUIREMENTS
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and any persons holding more than 10% of the Company's Class A Common
Stock, to file with the Securities and Exchange Commission reports disclosing
their initial ownership of the Company's equity securities, as well as
subsequent reports disclosing changes in such ownership. Except as provided
below, to the Company's knowledge, based solely on a review of such reports
furnished to it and written representations by certain reporting persons that no
other reports were required, during the year ended December 31, 1997, all
persons who were subject to the reporting requirements of Section 16(a) complied
with such requirements, except that Edward Hahn, Vice President--Research &
Development, failed to file a Form 4 reflecting disposition of 33 shares of
Class A Common Stock in November 1997 from his account in a dividend
reinvestment plan sponsored by Harris Bank and Trust. This disposition was
subsequently reported on a Form 5 filed earlier this year.
ELECTION OF AUDITORS
The Board of Directors proposes and recommends the election, at the Annual
Meeting, of the firm of Coopers & Lybrand as the Company's auditors for the year
1998. This firm of independent certified public accountants has served as the
Company's auditors since 1959. Coopers & Lybrand has advised the Company that
neither it nor any of its members has any direct or material indirect financial
interest in the
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Company or any of its subsidiaries. A representative of the firm will be present
at the meeting, will be given an opportunity to make a statement and will be
available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the Company's
1999 Annual Meeting of Stockholders must be received by the Company at its
principal executive offices at P.O. Box 1907, Albany, New York, 12201-1907 not
later than November 27, 1998 in order to be considered for inclusion in the
Company's proxy statement and form of proxy.
OTHER MATTERS
The Board knows of no other matters to be presented for consideration at the
Annual Meeting. Should any other matters properly come before the meeting, the
persons named in the accompanying proxy will vote such proxy thereon in
accordance with their best judgment.
The cost of soliciting proxies in the accompanying form will be borne by the
Company. In addition to solicitation of proxies by use of the mails, regular
employees of the Company, without additional compensation, may solicit proxies
personally by or telephone.
THOMAS H. HAGOORT
SECRETARY
March 27, 1998
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EXHIBIT A
ALBANY INTERNATIONAL CORP.
1998 STOCK OPTION PLAN
1. PURPOSE.
This plan ("the 1998 Plan") is intended as an incentive to officers and
other key employees of Albany International Corp. ("the Company") and its
subsidiaries to encourage them to remain in the employ of the Company and its
subsidiaries by affording them a greater interest in the success of the Company
and its subsidiaries.
2. ADMINISTRATION.
The 1998 Plan shall be administered by the Committee (as herein defined).
Subject to the provisions of the 1998 Plan, the Committee shall have authority,
within its absolute discretion:
(a) to grant options for shares of Class A Common Stock of the Company
under the 1998 Plan; provided, that the maximum number of shares of Class A
Common Stock with respect to which any optionee may be granted options
during any calendar year shall not exceed 100,000;
(b) to determine which of the officers and other key employees of the
Company and its subsidiaries shall be granted options;
(c) to determine the time or times when options shall be granted and the
number of shares to be subject to each option;
(d) to determine the option price of the Class A Common Stock subject to
each option, which shall not be less than 100% of the fair market value of
the Class A Common Stock on the date of granting of an option;
(e) to determine the fair market value of the Class A Common Stock on
the date of the granting of an option;
(f) to determine the term of each option, which shall not continue for
more than twenty years from the date of granting of the option, and to
accelerate the expiration of the term of an option;
(g) to determine the time or times when each option shall be exercisable
and to accelerate at any time the time or times when an outstanding option
shall be exercisable;
(h) to accept, as full or partial payment of the option price and/or any
taxes to be withheld by the Company upon exercise of any option, shares of
Class A Common Stock tendered by the optionee or requested by the optionee
to be withheld from the shares to be delivered upon such exercise, and to
determine the value of the shares so tendered or withheld;
(i) to determine, to the extent permitted by law, the status under the
Internal Revenue Code of any option granted under the 1998 Plan, including,
without limitation, whether the option shall be treated as an Incentive
Stock Option;
(j) to determine the effect on any option of the termination of the
employment of the optionee and of any conduct or activity of the optionee;
(k) to determine the extent to which options granted under the 1998 Plan
shall be assignable or transferable;
(l) to prescribe from time to time the form or forms of the instruments
evidencing options granted under the 1998 Plan;
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(m) to adopt, amend and rescind from time to time such rules and
regulations as it, in its absolute discretion, may deem to be advisable in
connection with administration of the 1998 Plan;
(n) to construe and interpret the 1998 Plan, instruments evidencing
options granted under the 1998 Plan and rules and regulations adopted by the
Committee with respect to the 1998 Plan; and
(o) to make all other determinations which the Committee, in its
absolute discretion, deems necessary or desirable at any time with respect
to the administration of the 1998 Plan.
All decisions, determinations and interpretations of the Committee shall be
final and binding on all optionees and on any other persons claiming rights
under this Plan or with respect to any option granted hereunder.
As used herein, the term "the Committee" shall mean the Board of Directors
or such Committee of the Board of Directors as the Board of Directors may from
time to time designate for this purpose.
3. SHARES SUBJECT TO THE 1998 PLAN.
Subject to Article 4 hereof, the aggregate number of shares for which
options may be granted under the 1998 Plan shall be (a) 500,000 shares of Class
A Common Stock of the Company as presently constituted plus (b) such additional
number of shares as the Board of Directors of the Company shall, from time to
time subsequent to January 1, 1999 and during the term of the 1998 Plan,
determine; provided that the number of shares so added by the Board of Directors
shall not exceed, in any one calendar year, 500,000 shares of Class A Common
Stock as presently constituted; and provided, further, that the total number of
shares then available for the grant of options pursuant to the 1998 Plan shall
not exceed 1,000,000 at any time.
If any options granted under the 1998 Plan shall expire, terminate or be
surrendered, in whole or in part, the number of shares as to which such options
shall not have been exercised shall thereupon again become available for option
hereunder.
Shares of Class A Common Stock to be issued upon exercise of options granted
under the 1998 Plan may be either authorized but unissued shares or issued
shares reacquired in any manner by the Company, as the Board of Directors may
from time to time determine.
Cash proceeds received upon the exercise of options granted under the 1998
Plan shall be added to the general funds of the Company and may be used for any
corporate purpose.
4. RECAPITALIZATIONS, ETC.
Notwithstanding any other provision of the 1998 Plan, in the event of any
change in the outstanding common stock of the Company by reason of a stock
dividend, recapitalization, merger, consolidation, split-up, combination or
exchange of shares or the like, the aggregate number and class of shares for
which options may be granted under the 1998 Plan, the number and class of shares
subject to each outstanding option and the option prices may be (but are not
required to be) appropriately adjusted by the Committee, whose determination
shall be conclusive. No fractional shares shall be issued under the 1998 Plan
and any fractional shares resulting from computations pursuant to this Article 4
shall be eliminated from the option.
5. INDEMNIFICATION OF COMMITTEE.
In addition to such other rights of indemnification as they may have as
directors, as members of the Committee or otherwise, the members of the
Committee shall be indemnified by the Company against the reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with an appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the 1998
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Plan or any option granted hereunder and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his or her duties, provided that within sixty days after institution of any such
action, suit or proceeding, a Committee member shall in writing offer the
Company the opportunity, at its own expense, to handle and defend the same.
6. AMENDMENT AND TERMINATION OF THE 1998 PLAN.
No option shall be granted under the 1998 Plan subsequent to December 31,
2008. The Board of Directors of the Company may, at any time, suspend or
terminate the 1998 Plan or make changes in or additions to it as the Board of
Directors deems advisable; provided, however, that, except as provided in
Article 4 hereof, the Board of Directors may not, without approval by a majority
of the votes entitled to be cast by shares of common stock of the Company
present and entitled to be cast at a meeting of stockholders of the Company,
materially increase the aggregate number of shares for which options may be
granted under the 1998 Plan or increase the maximum number of shares of Class A
Common Stock with respect to which any optionee may be granted options during
any calendar year.
7. SHAREHOLDER APPROVAL.
The 1998 Plan shall not become effective unless and until it has been
approved by a majority of the votes entitled to be cast by shares of common
stock of the Company present or represented and entitled to be cast at the first
meeting of stockholders of the Company held after approval of the 1998 Plan by
the Board of Directors of the Company.
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ALBANY INTERNATIONAL CORP.
Proxy solicited on Behalf of the Board of Directors
for Annual Meeting of Stockholders to be held May 12, 1998
The undersigned hereby constitutes and appoints J. Spencer Standish,
Thomas R. Beecher, Jr. and Charles B. Buchanan, and each of them, the true
and lawful agents and proxies of the undersigned, with full power of
substitution in each, to vote, as indicated herein, all of the shares of
Common Stock which the undersigned would be entitled to vote if present in
person, at the Annual Meeting of Stockholders of ALBANY INTERNATIONAL CORP.
to be held at the Company's Press Fabrics Division, 253 Troy Road (Route 4),
East Greenbush, New York on Tuesday, May 12, 1998, at 11:00 a.m. local time,
and any adjournment or adjournments thereof, on matters coming before said
meeting.
The shares represented by this proxy, when properly executed, will be
voted in the manner directed herein. If no direction is made, the shares
will be voted FOR proposals 1, 2 and 3.
Election of Directors, Nominees: Francis L. McKone,
Thomas R. Beecher, Jr., Charles B. Buchanan, Allan Stenshamn,
Barbara P. Wright, Joseph G. Morone, Christine L. Standish and
Frank R. Schmeler
PROXY
PROXY
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side)
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
For All
Except
Proposals of the Board of Directors
For
Against
Abstain
For
Withheld
Other Matters
1. Election of Directors, (Nominees listed on reverse side).
3. Approval of auditors.
Nominee(s) Exceptions
For
Against
Abstain
2. Approval of 1998 Stock Option Plan.
4. In their discretion upon other matters that may properly come before this
meeting.
THIS AREA RESERVED FOR PRINTING
OF NAME AND ADDRESS
AREA RESERVED FOR
PRINTING OF MULTIPLE
SHARE PLANS
This proxy must be signed exactly as name appears hereon. Executors,
administrators, trustees, etc., should give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized officer.
Dated, 1998
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Signature(s) of Stockholder(s)
