<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 Section240.14a-11(c) or
Section240.14a-12
STRUCTURAL DYNAMICS RESEARCH 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:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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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<PAGE>
STRUCTURAL DYNAMICS RESEARCH CORPORATION
2000 EASTMAN DRIVE
MILFORD, OHIO 45150
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 6, 1999
TO THE SHAREHOLDERS OF STRUCTURAL DYNAMICS RESEARCH CORPORATION:
You are cordially invited to attend the Annual Meeting of the Shareholders
of Structural Dynamics Research Corporation to be held on May 6, 1999 at 2:00
P.M. at the Company's offices, 2000 Eastman Drive, Milford, Ohio 45150, for the
purpose of considering and acting on the following:
1. Election of four Class II directors to serve until the 2001 Annual
Meeting.
2. Ratification of the appointment of PricewaterhouseCoopers LLP as the
independent auditors of the Company for 1999.
3. Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on March 18, 1999 will be
entitled to vote at the meeting.
By Order of the Board of Directors
[JOHN A. MONGELLUZZO SIGNATURE]
John A. Mongelluzzo
Secretary
April 1, 1999
IMPORTANT
A PROXY STATEMENT AND PROXY ARE SUBMITTED HEREWITH. AS A SHAREHOLDER, YOU
ARE URGED TO COMPLETE AND MAIL THE PROXY PROMPTLY WHETHER OR NOT YOU PLAN TO
ATTEND THIS ANNUAL MEETING IN PERSON. THE ENCLOSED ENVELOPE FOR RETURN OF PROXY
REQUIRES NO POSTAGE IF MAILED IN THE U.S.A. SHAREHOLDERS ATTENDING THE MEETING
MAY PERSONALLY VOTE ON ALL MATTERS WHICH ARE CONSIDERED IN WHICH EVENT THEIR
SIGNED PROXIES ARE REVOKED. IT IS IMPORTANT THAT YOUR SHARES BE VOTED. IN ORDER
TO AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK
YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY.
<PAGE>
STRUCTURAL DYNAMICS RESEARCH CORPORATION
2000 EASTMAN DRIVE
MILFORD, OHIO 45150
April 1, 1999
PROXY STATEMENT
The enclosed form of proxy is being solicited on behalf of the Board of
Directors of Structural Dynamics Research Corporation (also referred to as
"SDRC" or the "Company") for the Annual Meeting of Shareholders to be held on
May 6, 1999. Each of the 35,642,423 shares of Common Stock outstanding on March
18, 1999, the record date of the meeting, is entitled to one vote on all matters
coming before the meeting. Only shareholders of record on the books of the
Company at the close of business on March 18, 1999 will be entitled to vote at
the meeting either in person or by proxy. The Company has hired Morrow & Co.,
Inc. to assist it in soliciting proxies. This Proxy Statement is being mailed to
shareholders on or about April 1, 1999.
The shares represented by all properly executed proxies which are sent to
the Company will be voted as designated and each not designated will be voted
affirmatively. Each person granting a proxy may revoke it by giving notice to
the Company's Secretary in writing or in open meeting at any time before it is
voted. Proxies will be solicited principally by mail, but may also be solicited
by directors, officers and other regular employees of the Company who will
receive no compensation therefor in addition to their regular salaries. Brokers
and others who hold stock in trust will be asked to send proxy materials to the
beneficial owners of the stock, and the Company will reimburse them for their
expenses. The expense of soliciting proxies will be borne by the Company.
The Annual Report of the Company for the fiscal year ended December 31, 1998
is enclosed with this Proxy Statement.
ELECTION OF DIRECTORS
The Company's Board of Directors is comprised of two classes, Class I
consisting of three directors and Class II consisting of four directors, with no
vacancies. At this Annual Meeting, the four directors of Class II are to be
elected to hold office until the 2001 Annual Meeting of Shareholders. It is the
intention of the individuals named in the proxy to vote for the election of only
the four nominees designated for Class II directorships. Only the maximum of
four Class II directors may be elected. The Company is not currently aware of
any potential candidates who may be nominated at or prior to the meeting, and in
no event will the proxies solicited hereby be voted for other than the four
nominees designated for Class II directorships.
The nominees, William J. Weyand, John E. McDowell, James W. Nethercott and
Gilbert R. Whitaker, Jr., are currently serving as members of the Board of
Directors. While management has no reason to believe that any of the nominees
will, prior to the date of the meeting, refuse or be unable to accept the
nominations, should any nominee so refuse or become unable to accept, the
proxies will be voted for the election of such substitute nominee, if any, as
may be recommended by the Board of Directors. Nominees receiving the four
highest totals of votes cast in the election will be elected as directors.
Proxies in the form solicited hereby which are returned to the Company will be
voted in favor of the four nominees specified above unless otherwise instructed
by the shareholders. Abstentions and shares not
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voted by brokers and other entities holding shares on behalf of beneficial
owners will not be counted and will have no effect on the outcome of the
election.
Information with respect to each of the four nominees is as follows:
CLASS II DIRECTORS
(TERMS EXPIRE IN 1999)
WILLIAM J. WEYAND, Chairman of the Board, President and Chief Executive
Officer of the Company since February, 1998. Prior to joining the Company in
June, 1997 as its President and Chief Executive Officer, Mr. Weyand served as
Executive Vice President of Measurex Corporation (a world leader in the process
control industry and Computer Integrated Manufacturing (CIM)). Mr. Weyand is 54
years of age and has been a director of the Company since June, 1997.
JAMES W. NETHERCOTT, retired Senior Vice President, chief financial officer
and a director of The Procter & Gamble Company (a diversified consumer products
manufacturer), having served in all three capacities from 1979 until his
retirement in 1991. Mr. Nethercott is 71 years of age and has been a director of
the Company since February, 1995.
JOHN E. McDOWELL, of counsel with the Cincinnati law firm of Dinsmore &
Shohl LLP, counsel to the Company since its inception. Mr. McDowell also served
as Secretary of the Company from 1967 until 1983. Mr. McDowell is 71 years of
age and has been a director of the Company since October, 1967.
GILBERT R. WHITAKER, JR., is currently Dean and H. Joe Nelson, III Professor
of Business Economics, Jesse H. Jones Graduate School of Management, Rice
University. Prior to that, he served as Professor of Business Economics,
University of Michigan from 1979 until June, 1997 and served as Provost and
Executive Vice President for Academic Affairs, University of Michigan from 1990
to 1995. Dr. Whitaker also served as Dean of the School of Business
Administration, University of Michigan from 1979 to 1990. Dr. Whitaker currently
serves as a director of Johnson Controls, Inc., Lincoln National Corporation and
the Handleman Company. Dr. Whitaker is 67 years of age and has been a director
of the Company since July, 1988.
The following sets forth similar information with respect to incumbent
directors in Class I of the Board of Directors who are not nominees for election
at this Annual Meeting of Shareholders:
CLASS I DIRECTORS
(TERMS EXPIRE IN 2000)
WILLIAM P. CONLIN, Lead Director since October, 1996 and Chairman of the
Board of the Company from February, 1995 to October, 1996. Mr. Conlin served as
President of CalComp, Inc., a subsidiary of Lockheed Corporation, from 1983 to
1993. Mr. Conlin currently serves as a director of Syntellect Incorporated. Mr.
Conlin is 65 years of age and has been a director of the Company since April,
1993.
BANNUS B. HUDSON, is currently Chairman, President and Chief Executive
Officer of Beverages & More, Inc. (the country's second largest beverage
retailer) and formerly served as President and Chief Executive Officer of Equity
Enterprises, Inc., a strategic consulting firm. Prior to that, he served as
President and Chief Executive Officer of The United States Shoe Corporation,
having served in such capacities for more than five years, until May, 1995. Mr.
Hudson is also a director of Ohio National Financial Services and U.S.
Biomaterials Corporation. Mr. Hudson is 53 years of age and has been a director
of the Company since June, 1995.
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ARTHUR B. SIMS, has served as Chief Executive Officer and Chairman of the
Board of 3D Systems Corporation (developer, manufacturer and marketer of rapid
prototyping systems) since August, 1993 and, since September, 1991, has also
served as Chief Executive Officer of 3D Systems, Inc., a California corporation
which is an indirect, wholly-owned subsidiary of 3D Systems Corporation. From
September, 1990 until September, 1991, Mr. Sims was an independent management
consultant. Mr. Sims is 61 years of age and has been a director of the Company
since July, 1995.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
In the fiscal year ended December 31, 1998, the Board of Directors met on 14
occasions. Each incumbent director during the last fiscal year attended 75% or
more of the aggregate of (i) the total number of meetings of the Board of
Directors (held during the period for which he has been a director) and (ii) the
total number of meetings held by all committees of the Board on which he served
(during the periods that he served).
The Board's committee structure is governed by formal Board of Directors
Guidelines on Corporate Governance Issues (the "Corporate Governance
Guidelines") which include written charters for each committee. Among other
provisions, the Corporate Governance Guidelines specify that only outside
directors may serve on the committees. Information regarding the committees is
set forth below.
The Company has an Audit Committee of the Board of Directors, which held
eight meetings during 1998. The Audit Committee recommends to the entire Board
of Directors the independent auditors to be retained by the Company, consults
with the independent auditors with respect to their audit plans, reviews the
independent auditors' audit report and any management letters issued by the
auditors, consults with management and the independent auditors with regard to
financial reporting prior to public disclosure, and consults with the
independent auditors with regard to the adequacy of internal controls. The
present members of the Audit Committee are Messrs. Nethercott (Chairman), Conlin
and McDowell.
The Company has a Compensation Committee of the Board of Directors, which
held three meetings during 1998. The Compensation Committee recommends to the
entire Board of Directors the compensation arrangements for the Chief Executive
Officer, determines the compensation of the corporate officers of the Company,
administers the Company's stock option plans, and reviews proposed changes in
management organization. The present members of the Compensation Committee are
Messrs. Hudson (Chairman) and Conlin and Dr. Whitaker.
The Board of Directors has a Nominating and Director Affairs Committee,
which held one meeting during 1998. The functions of this Committee are to
recommend corporate governance policies, to lead the annual self-evaluation of
the Board and to periodically seek out qualified candidates for election to the
Board and to make recommendations to the whole Board with respect to nominees.
The Committee also makes recommendations as to exercise of the Board's authority
to determine the number of its members, within the limits provided by the
Company's Amended Code of Regulations. The members of the Nominating and
Director Affairs Committee are Messrs. McDowell (Chairman), Conlin and Sims.
Shareholders wishing to communicate with the Nominating and Director Affairs
Committee concerning potential director candidates may do so by corresponding
with the Company's Secretary, John A. Mongelluzzo, and including the name and
biographical data of the individual being suggested.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY
The following table is a summary of certain information concerning the
compensation awarded or paid to, or earned by, the Company's chief executive
officer, each of the Company's other four most highly compensated executive
officers (the "named executives") who held office as of the end of 1998, and
during each of the last three fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
--------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) OPTIONS(#) COMPENSATION($)(2)
- ---------------------------------------- ---- --------- -------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
William J. Weyand 1998 469,295 -- 450,000 shs.(3) 203,586(4)
Chairman of the Board, 1997 200,276 150,000 450,000 shs. 111,657(4)
President and Chief Executive Officer 1996 -- -- -- --
Robert M. Nierman 1998 273,583 -- -- 12,024(6)
Executive Vice President and Chief 1997 184,926 90,000 110,000 shs.(3)(5) 936(6)
Operating Officer 1996 -- -- 80,000 shs. --
Mark C. Goldstein 1998 222,333 -- -- 8,578(7)
Vice President, Products Group 1997 173,209 70,000 85,000 shs.(3) 5,397(7)
1996 -- -- 70,000 shs. --
John A. Mongelluzzo 1998 189,354 -- 70,000 shs.(3) 9,198(8)
Vice President, Secretary and General 1997 183,429 55,000 50,000 shs. 4,919(8)
Counsel 1996 147,333 75,000 20,000 shs. 4,658(8)
Jeffrey J. Vorholt 1998 223,479 -- 85,000 shs.(3) 9,535(9)
Vice President, Chief Financial 1997 218,804 90,000 60,000 shs. 5,450(9)
Officer and Treasurer 1996 180,000 115,000 25,000 shs. 5,167(9)
</TABLE>
- ------------------------
(1) Amounts shown consist of cash bonuses earned under the Company's Executive
Incentive Compensation Plan with respect to the Company's performance in the
reported year but which were actually paid out in the subsequent year.
(2) All amounts shown include amounts contributed by the Company pursuant to the
Company's Tax Deferred Capital Accumulation (401(k)) Plan and, for 1998, its
related Supplemental Retirement Plan, except in the case of Messrs. Weyand
and Nierman who did not participate prior to the year 1998. Participants in
the Company's plans may elect to reduce their salaries by no less than 1%
per month and no greater than 15% per year and to have such amount
contributed to their accounts in this plan. They may also make other
voluntary contributions from time to time. With respect to any fiscal year,
the Company may elect to partially match employee contributions. Such
matching contributions may be either in cash or in shares of the Company's
Common Stock. The Company
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<PAGE>
elected to make such contributions for all the years shown. The Company's
contributions were made in the form of Common Stock. Amounts in this plan
become available for payout upon termination or retirement only.
(3) Represents shares underlying stock options which were cancelled and reissued
as a result of participation in the Company's September 25, 1998 stock
option exchange program. See "Report on Repricing of Options."
(4) Includes for 1998, $4,800 representing the Company's 401(k) plan
contributions and $9,792, representing the Company's Supplemental Retirement
Plan contribution. Also includes, for 1998 and 1997, $2,333 and $1,166 which
were term life insurance premiums paid by the Company for insurance
benefitting the named executive and includes, for 1998 and 1997, $186,661
and $110,491 in payment of costs associated with Mr. Weyand's relocation to
Cincinnati, Ohio from Atlanta, Georgia. See "Executive
Compensation -- Employment Agreement."
(5) Mr. Nierman also received a separate 30,000 share option grant early in 1998
which he subsequently surrendered as a result of participation in the
Company's September 25, 1998 stock option exchange program; the 110,000
shares shown is the net number of options granted to Mr. Nierman in 1998.
(6) Includes for 1998, $4,800 representing the Company's 401(k) plan
contribution and $4,875 representing the Company's Supplemental Retirement
Plan contribution. Also includes, for 1998 and 1997, $2,349 and $936 which
were term life insurance premiums paid by the Company for insurance
benefitting the named executive.
(7) Includes, for 1998 and 1997, $4,800 and $4,750 representing the Company's
401(k) plan contributions and for 1998 $3,050 representing the Company's
Supplemental Retirement Plan contribution. Also includes, for 1998 and 1999,
$728 and $647 which was term life insurance premiums paid by the Company for
insurance benefitting the named executive.
(8) Includes, for 1998, 1997, and 1996, respectively, $4,171, $4,750, and $4,500
representing the Company's 401(k) plan contributions, and for 1998 $4,842
representing the Company's Supplemental Retirement Plan contribution. Also
includes for 1998, 1997 and 1996, $185, $169, $158, which were term life
insurance premiums paid by the Company for insurance benefitting the named
executive.
(9) Includes, for 1998, 1997, and 1996, respectively, $4,800, $4,750, $4,500
representing the Company's 401(k) plan contributions, and for 1998 $3,500
representing the Company's Supplemental Retirement Plan contribution. Also
includes for 1998, 1997 and 1996, $1,235, $700, and $667, which were term
life insurance premiums paid by the Company for insurance benefitting the
named executive.
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STOCK OPTIONS
The following table sets forth information regarding stock options granted
to the named executives during 1998:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE
--------------------------------------------------- AT ASSUMED ANNUAL
% OF TOTAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION
UNDERLYING EMPLOYEES IN OR BASE FOR OPTION TERM
OPTIONS FISCAL PRICE EXPIRATION ----------------------
NAME GRANTED#(1) YEAR(2) ($/SH.) DATE 5%($) 10%($)
- ---------------------------------------- ----------- ------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William J. Weyand 450,000(3) 8.7 11.0625 9/25/2008 3,130,716 7,933,849
Robert M. Nierman 110,000(3)(4) 2.1 11.0625 9/25/2008 765,286 1,939,385
Mark C. Goldstein 85,000(3) 1.6 11.0625 9/25/2008 591,357 1,498,616
John A. Mongelluzzo 70,000(3) 1.3 11.0625 9/25/2008 487,000 1,234,154
Jeffrey J. Vorholt 85,000(3) 1.6 11.0625 9/25/2008 591,357 1,498,616
</TABLE>
- ------------------------
(1) Generally, all such options first become exercisable as to 33% of the shares
covered after the end of the first year after the date of grant, as to 67%
of the shares covered after the end of two years, and are exercisable in
full after the end of three years. The option exercise price, generally, is
not adjustable over the 10-year term of the options except due to stock
splits and similar occurrences affecting all outstanding stock. However, in
the case of options to purchase 350,000 shares held by Mr. Weyand which
relate to an option grant negotiated at the time Mr. Weyand became employed
by the Company, vesting occurs with respect to 50,000 shares per year
commencing on May 25, 1999 and extending through May 25, 2005.
(2) The percentage shown in the above table reflects the ratio of the total
options granted to the named person during the fiscal year over the total
options granted to all employees during the fiscal year, including all
employees eligible to participate in the September 25, 1998 stock option
exchange program.
(3) Represents option shares cancelled and reissued as a result of participation
in the Company's September 25, 1998 stock option exchange program.
(4) A separate 30,000 share option grant was included in the 110,000 option
shares exchanged by Mr. Nierman on September 25, 1998.
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The following table sets forth information regarding stock options exercised
by the named executives during 1998 and the value of unexercised in-the-money
options held by the named parties as of December 31, 1998:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FY-END(#) FY-END($)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ------------- ----------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
William J. Weyand 0 0 0 450,000 0 3,431,250
Robert M. Nierman 0 0 0 110,000 0 838,750
Mark C. Goldstein 0 0 76,500 85,000 353,625 648,125
John A. Mongelluzzo 1,600 34,750 91,600 70,000 510,163 533,750
Jeffrey J. Vorholt 0 0 9,900 85,000 127,772 648,125
</TABLE>
COMPENSATION OF DIRECTORS
During the year ended December 31, 1998, the Company's outside directors
(those directors who are not employees of the Company) who chaired a Board
committee received compensation of $35,000 per year and all other outside
directors received $30,000 per year. In 1998, the Lead Director, a non-executive
position, received an additional $10,000 per month. The Company does not
additionally compensate employee directors. All directors are reimbursed for all
expenses incurred in connection with attendance at meetings of the Board and the
performance of Board duties.
Outside directors are eligible to participate in the Company's Non-qualified
Unfunded Deferred Compensation Plan for Outside Directors (the "Deferred
Compensation Plan"). Participants in the Deferred Compensation Plan may elect to
have payment of up to 100% of their cash director's compensation (in 25%
increments) deferred and held in either a stock equivalent account which will be
valued based on the market price of the Company's Common Stock or an
interest-bearing account which will accrue interest at a bank prime rate as it
may vary from time to time. Elections must be made on an annual basis in advance
and once made are irrevocable.
In addition, outside directors currently receive stock options under the
1996 Directors' Non-Discretionary Stock Plan (the "Directors' Plan"). The
Directors' Plan provides that upon their initial election or appointment,
non-employee directors are automatically issued options to purchase 10,000
shares of the Company's Common Stock and that at every annual organizational
meeting of directors each then-serving director will receive an additional
option to purchase 10,000 shares. All options granted under the Directors' Plan
have a five year term and an exercise price equal to 100% of the fair market
value of the Common Stock on the date of issuance. Options are not exercisable
at all for six months after their issuance, at which time they become
exercisable as to 50% of the shares covered. After 12 months, they become
exercisable in full until expiration.
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<PAGE>
The Directors' Plan also permits directors, in advance on an annual basis,
to elect to receive all or a specified percentage of their annual cash
compensation in the form of Common Stock rather than cash. The Board of
Directors has formally adopted director stock ownership guidelines under which
directors are expected to achieve and maintain significant levels of Common
Stock ownership which the Directors' Plan is designed to facilitate.
EMPLOYMENT AGREEMENTS
On June 19, 1997, the Company entered into an employment agreement with
William J. Weyand pursuant to which Mr. Weyand agreed to become employed by the
Company as its President and Chief Executive Officer. The agreement provides for
an annual base salary of at least $400,000 and further provides that Mr. Weyand
is eligible to earn performance-based incentive compensation of up to 120% of
his annual salary in accordance with the Company's Executive Incentive
Compensation Plan. The Company also agreed to pay certain expenses incurred in
connection with Mr. Weyand's relocation to Cincinnati, Ohio from Atlanta,
Georgia.
The initial term of the agreement runs through December 31, 2000 and will be
automatically extended through December 31, 2002 unless either party notifies
the other on or before July 1, 2000 that the agreement will terminate on
December 31, 2000. If the Company exercises its right to terminate the agreement
as of December 31, 2000, Mr. Weyand will be entitled to a termination payment
equal to his then current annual salary plus the amount of his annual bonus for
the fiscal year preceding the year of termination. If the Company terminates the
agreement without cause at any other time, Mr. Weyand will be entitled to a
termination payment equal to the greater of (i) his then current annual salary
plus his annual bonus for the fiscal year preceding the year of termination
multiplied by the number of years or fractional years remaining in the initial
term of the agreement, or (ii) 100% of his then current annual salary plus his
annual bonus for the fiscal year preceding the year of termination. Mr. Weyand
is also a party to the Company's standard severance compensation agreement
(described below) which would provide for certain severance benefits in the
event of termination following a change in control. Any such benefits would be
in lieu of and not in addition to severance payments under the employment
agreement.
Mr. Weyand's employment agreement also provided for an initial grant to him
under the Company's 1994 Long-Term Stock Incentive Plan of options to purchase
200,000 shares of Common Stock vesting over four years, and a supplemental grant
of options to purchase an additional 150,000 shares, the vesting of which was
conditioned upon Mr. Weyand making open market purchases of at least 20,000
shares of Common Stock within six months of his employment commencement date.
Mr. Weyand purchased 25,000 shares on the open market shortly before the
effective date of his employment agreement.
SEVERANCE COMPENSATION AGREEMENTS
In order to minimize distraction in circumstances arising from a change in
control, the Company has entered into severance compensation agreements with
each of the named executives, as well as other executive officers of the
Company, which provide for the payment of severance compensation in the event
the employment of the named executive or other officer is terminated by the
Company within two years following a change in control of the Company other than
due to death or disability or for cause, or if the executive terminates his or
her employment for "good reason." Good reason is defined in detail in the
agreements and generally exists if there is a material change in the terms and
conditions of the
8
<PAGE>
executive's employment. The severance benefits payable under these agreements
are equal to 250% of the sum of the prior year's base salary and annual bonus
target.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company has
furnished the following report on executive compensation:
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is comprised of three non-employee directors of the Company. No
member of the Compensation Committee has any insider or interlocking
relationship with the Company, as these terms are defined in applicable rules
and regulations of the Securities and Exchange Commission. The Compensation
Committee is responsible for developing and recommending the Company's executive
compensation principles, policies and programs to the Board of Directors. In
addition, the Compensation Committee recommends to the Board of Directors on an
annual basis the compensation to be paid to the Chief Executive Officer and,
with advice from the Chief Executive Officer, determines the amount paid to each
of the other executive officers of the Company, including the named executives.
The Compensation Committee works with an outside compensation consultant and
supports its compensation decisions through analysis of published surveys and
special studies undertaken periodically.
The Company's compensation programs are designed to provide its executive
officers with market competitive salaries and the opportunity to earn incentive
compensation related to performance expectations identified by the Board. The
objectives of the Company's executive compensation program as developed by the
Compensation Committee are to:
- Provide a direct link between executive officer compensation and the
interests of the Company's shareholders by making a significant portion of
executive officer compensation dependent upon the financial performance of
the Company and the price performance of the Company's Common Stock.
- Support the achievement of the Company's annual and long-term goals and
objectives as determined annually by the Board.
- Establish base salaries targeted at a median level for comparable
positions within a comparison group of companies, with incentive
opportunities designed to pay total compensation well above average for
outstanding Company performance.
- Provide opportunities for equity ownership based on competitive levels,
corporate/segment performance, share price performance, and share dilution
considerations.
- Achieve and maintain desired levels of Common Stock ownership within the
executive officer group; desired levels of Common Stock ownership are
amounts valued at three times the salary level for the Chief Executive
Officer and two times or one time the salary level for other executive
officers of the Company. The Company's stock incentive plans are designed
to provide opportunities for ownership through retention of shares
obtained through the exercise of options.
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<PAGE>
- Provide compensation plans and arrangements that encourage the retention
of better-performing executives.
The Compensation Committee's executive compensation policies seek to provide
an opportunity for compensation, that varies with performance, which compares
favorably to levels provided to executives within a comparative group of
companies engaged in high technology businesses. These companies are generally
either competitive with or complementary to the Company's business and are
generally of comparable size, business characteristics and complexity (the
"Comparative Group"). All of the companies in the Comparative Group whose shares
are traded on the Nasdaq National Market are included in the Nasdaq Computer and
Data Processing Services Stocks Index (see "Executive Compensation -- Financial
Performance"). The Comparative Group also includes certain companies whose
shares are traded on other exchanges, and are therefore not included in such
index, but are nevertheless considered to be comparable to the Company for this
purpose.
The Compensation Committee developed an executive compensation strategy
which targets total direct compensation (base salary plus annual incentives plus
long-term incentives) at competitive levels compared to the Comparative Group in
a manner which directly links the interests of the Company's executives and its
shareholders and focuses executives on sustainable long-term growth. Individual
compensation levels recommended by the Compensation Committee may vary
significantly among the Company's executive officers and from year to year,
because such levels may also be based in major part on annual and long-term
corporate performance, as well as on individual performance. The Compensation
Committee assigns more weight to long-term corporate performance for higher
level executives and more weight to annual corporate and individual performance
for lower level executives in determining the compensation level of any
individual executive officer.
COMPENSATION OF EXECUTIVE OFFICERS
The compensation of executive officers of the Company includes (i) base
salary, (ii) annual incentive cash bonuses, and (iii) long-term incentive
compensation currently in the form of stock options. Bonuses and stock options
(collectively, "Incentive Compensation") may represent between one-third and
two-thirds of an executive officer's potential annual compensation, depending
upon the position. In general, the proportion of an executive officer's
compensation that is Incentive Compensation increases with the level of
responsibility of the officer. Executive officers also receive various benefits
generally available to all employees of the Company, such as 401(k) and medical
plans.
BASE SALARIES
The Compensation Committee seeks to set base salaries for the Company's
executive officers at levels which are competitive with median levels for
executives with similar roles and responsibilities within the Comparative Group.
In setting annual salaries for individuals, the Compensation Committee first
considers the compensation paid for similar positions within the Comparative
Group and the executive's experience, level and scope of responsibility as a
benchmark reference. It then considers individual performance of the executive
measured against expectations in developing its salary increase recommendations.
Based on these principles, salary increases were granted to named executives in
1998.
10
<PAGE>
ANNUAL INCENTIVE BONUSES
Working with an outside compensation consultant and analyzing the total
executive compensation components of the Comparative Group, the Compensation
Committee has developed an Executive Incentive Compensation Plan ("EIC Plan").
Under the EIC Plan, the Compensation Committee recommends to the Board of
Directors an aggregate target cash bonus amount for incentive-eligible
executives. A target bonus pool will be established based upon specific
performance measures approved by the Board of Directors, which will include a
test of reasonableness for incentive compensation as a percentage of pre-tax
income of the Company.
Each year the Board establishes three levels of achievement for EIC Plan
performance goals -- threshold, target and outstanding. Generally, at
performance levels below the threshold, no bonuses are payable unless otherwise
approved by the Compensation Committee. The target bonus pool is determined by
the sum of individual participants' awards at target performance levels.
Individual bonuses at target may range from 10% to 60% of base annual salary at
target. Upon reaching the threshold performance goals, a participant will be
eligible for up to 50% of his or her target bonus. Actual bonus payments will be
interpolated between threshold (50%), target (100%) and outstanding
(150% -- 200%) and will not exceed 200% of the target bonus.
Applying the basic principles of the EIC Plan to 1998 Company and individual
performances, at its February, 1999 meeting the Compensation Committee elected
not to approve bonuses for the then-serving named executives due to a level of
performance in 1998 below target. (See "Executive Compensation -- Summary
Compensation Table.")
OPTION GRANTS
The Company's stock incentive plans authorize the Compensation Committee to
award stock options and restricted stock to executive officers and other key
employees. Stock option grants are designed to align the long-term interests of
the Company's key employees with those of its shareholders by directly linking
compensation to shareholder interest, as well as enabling key employees to
develop and maintain significant long-term equity ownership positions.
The number of options granted to an executive officer is a function of
grants for similar positions made by the companies within the Comparative Group
and the executive's level of responsibility. Variance from these numbers is
based upon the Compensation Committee's reasoned expectation of the executive's
future contribution to the Company. Generally, the Compensation Committee grants
non-statutory options during each fiscal year at an exercise price equal to the
fair market value of Company Common Stock on the date of grant. Option grants
are designed to enable executive officers to achieve and maintain the stock
ownership guidelines established for executive officers over a five year period
of time.
The table set forth below in the Report on Repricing of Options provides
information on all repricing of any options held by any executive officer during
the last ten years. Because the exchange program is the only option repricing
ever undertaken by the Company, the table only contains information regarding
that program.
11
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of the Company's Chief Executive Officer is determined
utilizing the same methodology that is applied to all other executive officers
as described above. Mr. Weyand's 1998 incentive compensation was determined
applying the same principles utilized in determining incentive compensation for
other executive officers. The year 1998 was disappointing for many high
technology companies, and like other high technology companies the Company did
not fully achieve all of its 1998 financial objectives due in part to a general
decline in the Company's market areas. The Committee elected not to grant Mr.
Weyand a bonus for 1998, compared to a $150,000 bonus for 1997. In view of the
Company's strong second-half 1998 recovery, however, the Committee did grant Mr.
Weyand an annual stock option of 110,000 shares for the full year 1998 compared
to 100,000 shares for the six months of the preceding year that Mr. Weyand was
with the Company.
William P. Conlin Bannus B. Hudson Gilbert R. Whitaker, Jr.
12
<PAGE>
REPORT ON REPRICING OF OPTIONS
It has always been the policy of the Board of Directors not to reprice its
outstanding employee stock options. However, 1998 was an extremely difficult
year with respect to employee attrition, particularly among its key employees.
Due in large part to the overall decline which generally affected firms in the
Company's industry, many of the Company's competitors had already repriced
outstanding stock options, as was well known by the Company's employees. The
Company was faced with the prospect of losing substantial numbers of
difficult-to-replace employees if some action were not taken immediately.
Because of the immediacy of the Company's attrition problem, in August 1998, the
Compensation Committee, at the request of management, undertook a review of the
outstanding options which had been granted to the Company's employees in prior
years. The Committee recognized the fact that the Company constantly competes
with other companies in its industry, and high technology businesses generally,
to attract and thereafter to retain the highly-qualified employees who are
essential to the Company's success. The Committee determined that, under all of
the prevailing circumstances, most of the Company's employees to whom options
had been awarded in prior years held their options at exercise prices that
limited the options' effectiveness as a tool for employee retention and as
long-term performance incentives.
After studying what other companies had recently done under similar
circumstances and considering various possible methods of dealing with this
problem, the Committee, and subsequently the full Board of Directors, determined
that the problem was so critical to the Company's future success that it could
only be effectively addressed by means of an option exchange program which would
permit employees (but not directors) with options to exchange them for new
options at a more current exercise price.
The Board was mindful of the fact that in 1995 the Company faced a similar
situation where many of its employees held "underwater" options. However, at
that time this was due in large part to issues internal to the Company rather
than to general market forces, and in that context the Board adopted a policy
that it would not reprice outstanding options at that time without the majority
vote of the Company's shareholders. The Board also stated its intention to
review that policy on an annual basis and to advise the Company's shareholders
in advance of any determination to establish an option repricing policy that did
not require shareholder approval. Because of the immediate nature of the
Company's current attrition problem, it was necessary to move very quickly to
avoid irreversible harm. It was not feasible to formally notify all shareholders
or to seek their formal approval. However, the Board did design the option
exchange program to be effective only after a significant majority of the
Company's shareholders had first been advised of the program. Management was
directed to immediately contact major shareholders for this purpose, and
representatives of the holders of at least 70% of the Company's outstanding
Common Stock were contacted.
Following the Board's action, it took the further step of formally adopting
a Board of Directors By-Law stating the Board's general policy of not repricing
outstanding options and of seeking shareholder concurrence with any future
repricing program. This By-Law as adopted provides that any repeal or amendment
will require the prior approval of a majority of the Company's shareholders.
The exchange program provided that any employee holding options as of
September 25, 1998 that were originally granted on or after January 1, 1996
would be entitled to receive new options in exchange for the surrender of old
options on a one-for-one basis. Options granted prior to January 1, 1996 were
not included in the exchange program. The exercise price of the new options
equaled the market price of
13
<PAGE>
the Company's Common Stock at the close of business on September 25, 1998, which
was $11.0625 per share. Regardless of the vested or unvested status of the old
options surrendered, the new options generally began a new vesting schedule and
thus will not be exercisable at all prior to the first anniversary of their
issuance, September 25, 1999, at which time they will become 33% vested.
Implementation of a new vesting period for these options was intended to enhance
their impact as a retention device. They become vested, or exercisable, as to
67% on the second anniversary date and are fully vested on the third anniversary
date, but only if the optionee remains employed by the Company. The program was
implemented to realign the value of the previously granted options, upon
exerciseability, with the market value at the time of repricing. The expectation
is that the opportunity to earn compensation based on appreciation of the
Company's Common Stock from the repriced level will motivate employees to
achieve superior results over the long term, encourage key employees to remain
with the Company and compensate employees for work and economic sacrifices made,
thus benefitting all shareholders.
TEN-YEAR OPTION REPRICING
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
SECURITIES OPTION TERM
UNDERLYING MARKET PRICE EXERCISE REMAINING
NUMBER OF OF STOCK PRICE AT TIME NEW AT DATE OF
OPTIONS AT TIME OF OF REPRICING EXERCISE REPRICING
NAME DATE REPRICED REPRICING ($) ($) PRICE ($) (YEARS)
- -------------------------------- --------- ----------- ------------- ------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William J. Weyand............... 9/25/98 350,000 11.0625 26.3125 11.0625 8.74
100,000 11.0625 18.5625 11.0625 9.21
Robert M. Nierman............... 9/25/98 20,000 11.0625 22.75 11.0625 8.35
20,000 11.0625 22.50 11.0625 8.39
40,000 11.0625 18.125 11.0625 9.21
30,000 11.0625 24.3125 11.0625 9.33
Mark C. Goldstein............... 9/25/98 15,000 11.0625 31.25 11.0625 7.60
30,000 11.0625 22.50 11.0625 8.39
40,000 11.0625 18.125 11.0625 9.21
John A. Mongelluzzo............. 9/25/98 20,000 11.0625 31.25 11.0625 7.60
25,000 11.0625 22.50 11.0625 8.39
25,000 11.0625 18.125 11.0625 9.21
Jeffrey J. Vorholt.............. 9/25/98 25,000 11.0625 31.25 11.0625 7.60
25,000 11.0625 22.50 11.0625 8.39
35,000 11.0625 18.125 11.0625 9.21
Bryan M. Valentine.............. 9/25/98 20,000 11.0625 32.25 11.0625 7.60
25,000 11.0625 22.50 11.0625 8.39
25,000 11.0625 18.125 11.0625 9.21
</TABLE>
William P. Conlin Bannus B. Hudson Gilbert R. Whitaker, Jr.
14
<PAGE>
FINANCIAL PERFORMANCE
The following graph summarizes the cumulative return on $100 invested in the
Company's Common Stock, the S&P 500 Stock Index and the Nasdaq Computer and Data
Processing Services Stocks Index over a five year period as calculated by the
Center for Research in Security Prices at the University of Chicago.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SDRC STOCK S&P 500 NASDAQ C&D
<S> <C> <C> <C>
1993 $100.0 $100.0 $100.0
1994 $31.0 $101.0 $121.0
1995 $170.0 $140.0 $185.0
1996 $116.0 $172.0 $228.0
1997 $130.0 $220.0 $280.0
1998 $115.0 $296.0 $502.0
</TABLE>
15
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
Under Section 13(d) of the Securities Exchange Act of 1934 and the rules
promulgated thereunder, a beneficial owner of a security is any person who
directly or indirectly has or shares voting power or investment power over such
security. Such beneficial owner under this definition need not enjoy the
economic benefit of such securities. The following shareholders are known by the
Company to be the beneficial owners of 5% or more of the Company's Common Stock
as of December 31, 1998:
<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------ ----------------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock State of Wisconsin Investment 4,726,000(1) 12.99%
Board
P.O. Box 7842
Madison, WI 53707
Common Stock J. & W. Seligman Co., Inc. 5,689,164(2) 15.65%
Seligman Communications &
Information Fund, Inc.
William C. Morris
100 Park Avenue
New York, NY 10017
</TABLE>
- ------------------------
(1) The information in the above table and in this footnote was obtained from a
Schedule 13G filed by such shareholders. Such shareholder has the sole power
to vote and to direct the disposition of such shares.
(2) The information in the above table and in this footnote was obtained from a
Schedule 13G filed by such shareholders. Such shareholders have, among
themselves, the shared power to vote and to direct the disposition of all
such shares.
16
<PAGE>
MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock by its directors, the named executives, and all directors and
executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
- -------------------- --------------------------------------------- ---------------- ----------
<S> <C> <C> <C>
Common Stock........ William J. Weyand 63,902 shs.(3) .2 %
Common Stock........ William P. Conlin 56,400 shs.(4) .2 %
Common Stock........ Bannus B. Hudson 56,473 shs.(5) .2 %
Common Stock........ John E. McDowell 89,885 shs.(6) .3 %
Common Stock........ James W. Nethercott 47,589 shs.(7) .1 %
Common Stock........ Arthur B. Sims 45,480 shs.(8) .1 %
Common Stock........ Gilbert R. Whitaker, Jr. 54,400 shs.(9) .2 %
Common Stock........ Robert M. Nierman 1,016 shs.(10) .01 %
Common Stock........ Mark C. Goldstein 73,885 shs.(11) .2 %
Common Stock........ John A. Mongelluzzo 88,605 shs.(12) .3 %
Common Stock........ Jeffrey J. Vorholt 12,829 shs.(13) .04 %
Common Stock........ All Directors and Executive Officers
as Group (13 Persons) 622,724 shs.(14) 1.7 %
</TABLE>
- ------------------------
(1) All the information in the above table is shown as of March 18, 1999. The
persons and entities named in the above table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in other footnotes to this table.
For purposes of this table, stock options are considered to be currently
exercisable if by their terms they may be exercised as of March 18, 1999 or
if they become exercisable within 60 days thereafter.
(2) These percentages assume the exercise of certain currently exercisable
stock options, which options have not in fact been exercised.
(3) Includes 63,902 shares held of record or beneficially by Mr. Weyand.
(4) Includes 6,400 shares held of record or beneficially by Mr. Conlin and
50,000 shares which are issuable upon the exercise of currently exercisable,
but unexercised stock options.
(5) Includes 12,500 shares held of record by Mr. Hudson and 43,973 shares which
are issuable upon the exercise of currently exercisable, but unexercised
stock options.
(6) Includes 17,485 shares held of record by Mr. McDowell; 32,400 shares held
of record by Mr. McDowell's wife (including 1,800 shares held in trust for
the benefit of their grandchildren); and 40,000 shares which are issuable
upon the exercise of currently exercisable, but unexercised stock options.
(7) Includes 5,000 shares held of record by Mr. Nethercott and 42,589 shares
which are issuable upon the exercise of currently exercisable, but
unexercised stock options.
17
<PAGE>
(8) Includes 2,000 shares held of record or beneficially by Mr. Sims and 43,480
shares which are issuable upon the exercise of currently exercisable, but
unexercised stock options.
(9) Includes 14,400 shares held of record by Dr. Whitaker and 40,000 shares
which are issuable upon the exercise of currently exercisable, but
unexercised stock options.
(10) Includes 1,016 shares held beneficially by Mr. Nierman.
(11) Includes 5,385 shares held of record or beneficially by Mr. Goldstein and
68,500 shares which are issuable upon the exercise of currently exercisable,
but unexercised stock options.
(12) Includes 4,997 shares held of record or beneficially by Mr. Mongelluzzo, 8
shares held in trust for his children and 83,600 shares which are issuable
upon the exercise of currently exercisable, but unexercised stock options.
(13) Includes 12,829 shares held of record or beneficially by Mr. Vorholt.
(14) Includes a total of 444,142 shares which are issuable upon the exercise of
currently exercisable, but unexercised stock options.
ELECTION OF AUDITORS
The accounting firm of PricewaterhouseCoopers LLP is presently serving as
the Company's independent accounting firm as recommended by the Audit Committee
and approved by the Board. PricewaterhouseCoopers LLP also served as the
Company's independent auditors with respect to the Company's financial
statements for the fiscal year ended December 31, 1998. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting.
They will have an opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions. The affirmative vote of a
majority of the Company's Common Stock present in person or by proxy at the
Annual Meeting and entitled to vote is required to adopt the resolution. Action
by shareholders is not required by law in the appointment of independent
auditors, but their appointment is submitted by the Board of Directors in order
to give the shareholders a voice in the selection of auditors. If the resolution
is rejected by the shareholders, the Board of Directors will reconsider its
choice of PricewaterhouseCoopers LLP as the Company's independent auditors.
Proxies in the form solicited hereby which are returned to the Company will be
voted in favor of the resolution unless otherwise instructed by the
shareholders. Abstentions will have the same effect as votes cast against the
resolution, provided such shares are properly present at the meeting in person
or by proxy. Shares not voted by brokers and other entities holding shares on
behalf of beneficial owners will have no effect on the outcome of the proposal.
The Board of Directors recommends the adoption of the resolution.
The resolution states:
RESOLVED, that shareholders of the Company hereby ratify the action of
the Board of Directors in retaining PricewaterhouseCoopers LLP as the
independent auditors of the Company for 1999.
2000 ANNUAL MEETING OF SHAREHOLDERS
In order for any shareholder proposals for the 2000 Annual Meeting of
Shareholders to be eligible for inclusion in the Company's proxy statement
relating to that meeting and to be presented for shareholder action at that
meeting, they must be received by the Secretary of the Company at
18
<PAGE>
2000 Eastman Drive, Milford, Ohio 45150, prior to December 2, 1999. The form of
proxy distributed by the Company with respect to the 2000 Annual Meeting of
Shareholders may include the discretionary authority to vote on any matter which
is presented to the shareholders at the meeting (other than by management) if
the Company does not receive notice of that matter at the above address prior to
February 15, 2000.
OTHER MATTERS
The Company has retained Morrow & Co., Inc., a professional solicitation
firm, to assist in soliciting proxies for a fee estimated at $7,500. Morrow &
Co., Inc. will use approximately 30 people to solicit proxies on behalf of the
Company.
The Board of Directors does not know of any other business to be presented
to the meeting and does not intend to bring other matters before the meeting.
However, if other matters properly come before the meeting, it is intended that
the persons named in the accompanying proxy will vote thereon according to their
best judgment in the interests of the Company.
By Order of the Board of Directors
[JOHN A MONGELLUZZO SIGNATURE]
John A. Mongelluzzo
Secretary
19
<PAGE>
[LOGO]
-------------------------------------------
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
----------------------------
1999
ANNUAL MEETING
OF SHAREHOLDERS
MAY 6, 1999
<PAGE>
PROXY STRUCTURAL DYNAMICS RESEARCH CORPORATION
2000 Eastman Drive
Milford, Ohio 45150
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William J. Weyand, John A. Mongelluzzo and
Jeffrey J. Vorholt, and each of them, with full power of substitution, as
proxies to vote, as designated below, for and in the name of the undersigned all
shares of stock of Structural Dynamics Research Corporation which the
undersigned is entitled to vote at the Annual Meeting of the Shareholders of
said Company scheduled to be held on May 6, 1999 at 2:00 p.m. at the Company's
offices, 2000 Eastman Drive, Milford, Ohio 45150 or at any adjournment or recess
thereof.
Please mark X in the appropriate box. The Board of Directors recommends a
FOR vote on each proposal.
1. ELECTION OF CLASS II DIRECTORS.
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary below)
WILLIAM J. WEYAND, JOHN E. MCDOWELL, JAMES W. NETHERCOTT, GILBERT R. WHITAKER,
JR.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
the nominee's name on the space provided below)
- --------------------------------------------------------------------------------
<PAGE>
2. Ratification of the appointment of PricewaterhouseCoopers LLP as the
independent auditors of the Company for 1999.
/ / FOR / / ABSTAIN / / AGAINST
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR the election of Directors and FOR the proposal in paragraph 2.
ALL FORMER PROXIES ARE HEREBY REVOKED.
NUMBER OF SHARES ............
-----------------------------
(Signature of Shareholder)
-----------------------------
(Signature of Shareholder)
(Please sign exactly as your
name appears hereon. All
joint owners should sign.
When signing in a fiduciary
capacity or as a corporate
officer, please give your
full title as such)
Dated: .............. , 1998
