<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [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
ESCO ELECTRONICS CORPORATION
- --------------------------------------------------------------------------------
(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:
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<PAGE> 2
ESCO LOGO
NOTICE OF THE ANNUAL MEETING OF
THE STOCKHOLDERS OF
ESCO ELECTRONICS CORPORATION
St. Louis, Missouri
December 9, 1999
TO THE STOCKHOLDERS OF
ESCO ELECTRONICS CORPORATION:
The Annual Meeting of the Stockholders of ESCO Electronics Corporation will
be held at the Hilton St. Louis Frontenac Hotel, 1335 South Lindbergh Blvd., St.
Louis County, Missouri 63131 on Thursday, February 3, 2000, commencing at 10:00
a.m., at which meeting only holders of record of common stock trust receipts
representing the Company's common stock at the close of business on November 26,
1999, will be entitled to direct The Chase Manhattan Bank, as trustee under the
Company's Deposit and Trust Agreement, to vote, for the following purposes:
1. To elect two directors; and
2. To transact such other and further business, if any, as lawfully may be
brought before the meeting.
ESCO ELECTRONICS CORPORATION
BY /s/ D J Moore
Chairman, President and
Chief Executive Officer
/s/ Alyson S. Barclay
Secretary
EVEN THOUGH YOU MAY PLAN TO ATTEND THE MEETING IN PERSON, PLEASE EXECUTE
THE ENCLOSED PROXY AND MAIL IT PROMPTLY. A RETURN ENVELOPE WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED FOR YOUR CONVENIENCE.
<PAGE> 3
ESCO ELECTRONICS CORPORATION
8888 LADUE ROAD, ST. LOUIS, MISSOURI 63124
PROXY STATEMENT
FOR THE ANNUAL MEETING OF THE STOCKHOLDERS TO BE HELD FEBRUARY 3, 2000
This proxy statement is furnished to the holders of common stock trust
receipts ("Receipts") which represent all of the issued and outstanding shares
of common stock of ESCO Electronics Corporation (the "Company") in connection
with the solicitation of proxies for use in connection with the Annual Meeting
of the Stockholders to be held February 3, 2000, and all adjournments thereof,
for the purposes set forth in the accompanying Notice of the Annual Meeting of
the Stockholders. Such holders are hereinafter referred to as the
"Stockholders". The Receipts are issued pursuant to a Deposit and Trust
Agreement (the "Trust Agreement") by and among the Company, Emerson Electric Co.
("Emerson"), The Chase Manhattan Bank (the "Trustee"), and the holders of
Receipts from time to time. The Trust Agreement was executed in connection with
the distribution on October 19, 1990 (the "1990 Stock Distribution") to Emerson
shareholders of record as of the close of business on October 5, 1990 of one
share of the Company's common stock for every 20 shares of Emerson common stock
owned on such date. The Receipts represent shares of the Company's common stock
(the "Common Shares") held by the Trustee on behalf of each holder of a Receipt
pursuant to the Trust Agreement. Pursuant to the Trust Agreement, each holder,
except in certain circumstances, is generally entitled to direct the Trustee as
to how the Common Shares represented by such Receipts are to be voted, and these
voting instructions may include granting a discretionary proxy to persons
designated by the Company. Effective January 17, 2000, all outstanding Receipts
will be exchanged for the Common Shares represented by them pursuant to the
terms of the Trust Agreement. The Company's transfer agent will forward to you
the necessary information to effect the exchange. The Company is first mailing
this proxy statement and the enclosed form of proxy to Stockholders on or about
December 9, 1999.
Whether or not you expect to be present in person at the meeting, you are
requested to fill in, sign, date and return the enclosed form of proxy. If you
attend the meeting, you may of course direct the Trustee to vote by ballot. If
you do not attend the meeting, the Common Shares represented by your Receipts
can be voted only when represented by a properly executed proxy. In this case
you have several choices:
- You may vote on each proposal when returning the enclosed proxy form, in
which case the Common Shares represented by your Receipts will be voted
in accordance with your choices.
- You may, when appropriate, indicate a preference to abstain on any
proposal, which will have the effect described in "VOTING" on page 15.
- You may return a properly executed proxy form without indicating your
preferences, in which case the proxies will instruct the Trustee to vote
the Common Shares represented by your Receipts FOR election of the
directors nominated by the Board of Directors.
Any person giving such proxy has the right to revoke it at any time before
it is voted by giving written notice of revocation to the Secretary of the
Company, by duly executing and delivering a proxy bearing a later date, or by
attending the Annual Meeting and directing the Trustee to cast a contrary vote
in person.
The close of business on November 26, 1999 has been fixed as the record
date for the determination of the Stockholders entitled to instruct the Trustee
how to vote at the Annual Meeting of the Stockholders. As of the record date,
Receipts representing 12,421,769 Common Shares were outstanding and entitled to
be voted at such meeting. The holders of the Receipts will be entitled to direct
the Trustee to cast one vote for each Common Share represented by a Receipt held
of record on the record date.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended September 30, 1999 accompanies this proxy statement.
The solicitation of this proxy is made by the Board of Directors of the
Company. The solicitation will be by mail, and the expense thereof will be paid
by the Company. Proxies may also be solicited by telephone or telefax by
directors, officers or regular employees of the Company.
2
<PAGE> 4
I. ELECTION OF DIRECTORS
NOMINEES AND CONTINUING DIRECTORS
The Company's Bylaws provide that the number of directors shall not be less
than three nor greater than ten, and shall be determined from time to time by
majority vote of the Board of Directors. In accordance with the Bylaws, the
Board of Directors has fixed the number of directors at seven. The Board is
divided into three classes, with the terms of office of each class ending in
successive years. Two directors of the Company are to be elected for terms
expiring at the Annual Meeting in 2003, or until their respective successors
have been elected and have qualified. Certain information with respect to the
nominees for election as directors proposed by the Company and the other
directors whose terms of office as directors will continue after the Annual
Meeting is set forth below. Should any one or more of the nominees be unable or
unwilling to serve (which is not expected), the proxies (except proxies marked
to the contrary) will be voted for such other person or persons as the Board of
Directors of the Company may recommend. Proxies cannot be voted for more than
two nominees.
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL OCCUPATION OR SERVED AS
POSITION, OTHER DIRECTORSHIPS DIRECTOR SINCE
---------------------------------- --------------
<S> <C>
TO BE ELECTED FOR TERMS ENDING IN 2003
J.M. McConnell, 58.......................................... 1996
President and Chief Executive Officer, Instron
Corporation, manufacturer of scientific instruments
Director of Instron Corporation
D. C. Trauscht, 66.......................................... 1991
Chairman, BW Capital Corporation, private investment
company
Director of Cordant Technologies Inc., Blue Bird
Corporation, Wynn's International Corp., Burns
International Services Corp., Global Motorsports Inc.
TO CONTINUE IN OFFICE UNTIL 2002
W. S. Antle III, 55......................................... 1994
Chairman, President and Chief Executive Officer, Oak
Industries Inc., manufacturer of components and
controls
Director of Oak Industries Inc., GenRad, Inc., Nvest
Companies, L.P.
L.W. Solley, 57............................................. 1999
Chairman and Chief Executive Officer, Fisher Controls
International, Inc., manufacturer of valves and
regulators
Executive Vice President, Emerson Electric Co.,
manufacturer of electrical and other products
TO CONTINUE IN OFFICE UNTIL 2001
J. J. Carey, 71............................................. 1990
Retired Chairman of the Board, Allendale Mutual Insurance
Co., industrial property insurer
D. J. Moore, 61............................................. 1990
Chairman, President and Chief Executive Officer of the
Company
Director of Instron Corporation
J.M. Stolze, 56............................................. 1999
Executive Vice President and Chief Financial Officer, MEMC
Electronic Materials, Inc., manufacturer of silicon
wafers
</TABLE>
3
<PAGE> 5
Each of the nominees and continuing directors has had the same position
with the same employer as stated in the preceding table during the past five
years, except as follows:
From January 1993 until April 1995, Mr. Trauscht was Chairman, President
and Chief Executive Officer of Borg-Warner Security Corporation. From April to
October 1995, Mr. Trauscht was Chairman and Chief Executive Officer, and from
October 1995 to December 1995, he was Chairman. Since January 1996, he has been
Chairman of BW Capital Corporation.
From December 1989 until May 1995, Mr. Antle was President and Chief
Executive Officer of Oak Industries Inc. Since the latter date, he has been
Chairman, President and Chief Executive Officer.
From June 1993 until his retirement in March 1995, Mr. Carey served as
Chairman of the Board of Allendale Mutual Insurance Co.
From June 1977 until June 1995, Mr. Stolze was a partner of KPMG LLP or its
predecessors.
BOARD OF DIRECTORS AND COMMITTEES
There were seven meetings of the Board of Directors during fiscal year
1999. All of the incumbent directors attended at least 75% of the meetings of
the Board and committees on which they served. Directors who are employees of
the Company do not receive any compensation for service as directors. Each non-
employee director is currently paid an annual retainer of $18,000 and fees of
$700 plus expenses for attendance at each Board meeting. In addition, each
non-employee director receives a fee of 300 Receipts per fiscal quarter. Each
committee chairman is currently paid an annual retainer of $1,200, and each
committee member is paid $600 plus expenses for attendance at each Board
committee meeting. In addition, during fiscal year 1999 Mr. Trauscht received
$8,000, and Messrs. Antle and McConnell each received $5,000 for their services
as chairman and members, respectively, of a special committee. Under the
Company's extended compensation plan for non-employee directors, each such
director who has served as a non-employee director for at least five years or
whose tenure as a director expires pursuant to the Company's Bylaws restriction
regarding maximum age for election will, after the later of termination of
services as a director or reaching age 65, receive for life a percentage of the
annual cash retainer for directors in effect at the time of termination of
service. Such percentage is a minimum of 50% and increases to 60% for six years'
service, 70% for seven years' service, 80% for eight years' service, 90% for
nine years' service and 100% for ten or more years' service. In the event of
death of a retired director who is eligible under this plan, 50% of the benefit
will be paid to the surviving spouse for life.
The members of the Board of Directors are appointed to various committees.
The standing committees of the Board are: the Executive Committee, the Audit and
Finance Committee, and the Human Resources and Ethics Committee. The Board does
not have a standing nominating committee.
The Executive Committee's function is to exercise the full authority of the
Board of Directors between Board meetings, except that the Executive Committee
may not take certain specified actions which the Board of Directors reserved for
action by the whole Board. The Committee held no meetings in fiscal year 1999.
Mr. Moore (Chairman), Mr. Antle and Mr. Trauscht are the members of the
Committee.
The Audit and Finance Committee's functions generally are to review the
Company's reports to Stockholders with management and the independent auditors;
appoint the firm of independent auditors to perform the annual audit; review the
scope of the auditors' work and review and approve their fees; review the
Company's internal controls; review financing requirements and strategy for the
Company; and certain other matters. The Committee met four times in fiscal year
1999. Mr. Antle (Chairman), Mr. Carey, Mr. McConnell and Mr. Stolze are the
members of the Committee.
The Human Resources and Ethics Committee's functions generally are to
review and approve various compensation and benefit plans; implement and oversee
the Charitable Contributions Program; oversee the Company's Code of Business
Ethics and Conduct and the Ethics Program; determine when service by an officer
or director is eligible for indemnification; and administer the Performance
Share Plans and the Stock
4
<PAGE> 6
Option Plans. The Committee met five times in fiscal year 1999. Mr. Trauscht
(Chairman), Mr. Carey and Mr. Solley are the members of the Committee.
EXECUTIVE COMPENSATION
REPORT OF THE HUMAN RESOURCES AND ETHICS COMMITTEE
ON EXECUTIVE COMPENSATION
INTRODUCTION
The following report is provided by the Human Resources and Ethics
Committee of the Board of Directors. The Committee supervises the Company's
Executive Compensation Program (the "Program") and is directly responsible for
compensation actions affecting the Chairman, President and Chief Executive
Officer (the "Chief Executive Officer"), other executive officers and other
senior executives of the Company. The Committee, which consists entirely of
non-employee directors, met five times in fiscal year 1999.
EXECUTIVE COMPENSATION PHILOSOPHY
The Program is designed and administered to relate executive compensation
to four basic objectives:
- Competitive Position: The Program is designed to pay competitive
compensation so the Company can attract and retain highly qualified
executives. To assist it in determining competitive compensation
practices, the Committee frequently utilizes information about
compensation levels of other companies, including information provided by
qualified independent consultants. When compensation significantly varies
from competitive levels, the Committee makes appropriate adjustments over
time through the annual compensation planning process.
- Company Performance: The Program is designed to reflect overall Company
performance, with appropriate consideration of conditions that exist in
the industries in which it engages. In determining compensation levels
and compensation changes, the Committee considers the Company's overall
performance in meeting both short-term and long-term objectives. The
Committee considers achievement of operating objectives in areas such as
sales, earnings, entered orders and cash management, as well as progress
toward long-term strategic objectives.
- Stockholder Return: The Program has been designed to establish a direct
link between the interests of the Company's executives and its
Stockholders. This is accomplished by allocating a substantial portion of
senior management compensation to stock-based programs tied directly to
Stockholder return.
- Individual Performance: In addition to the above factors, the Committee
considers the executive's individual performance and contributions to the
Company's results in determining appropriate compensation levels.
THE EXECUTIVE COMPENSATION PROGRAM
To achieve the above objectives, the Program consists of three basic
elements:
- Base Salary: The base salary of each executive is reviewed annually and
set by the Committee at the beginning of each fiscal year. Salary changes
reflect overall Company performance, pay competitiveness and the
individual's performance. The targeted percentage of cash compensation
represented by base salary varies based on the level of the position,
with a target of approximately 60% for the Chief Executive Officer and
approximately 70% for the other executive officers.
- Annual Incentive Cash Compensation: A substantial portion of each
executive's annual cash compensation is tied to Company performance
through the Company's Performance Compensation Plan, an annual incentive
cash compensation program. The Committee determines the annual
Performance Compensation payment for each executive at the end of each
fiscal year on the basis of subjective evaluations of Company
performance, considering market conditions and industry circumstances, in
key areas such as sales, earnings, entered orders and cash management.
The
5
<PAGE> 7
executive's performance and the relative competitiveness of the executive's
compensation level are also considered in the determination of the Performance
Compensation payment.
- Long-Term Incentive Compensation: To ensure that management's interests
are directly tied to Stockholder return, a substantial portion of senior
executive total compensation is provided by stock-based, long-term
compensation plans. To place emphasis on Stockholder return, the Company
has implemented stock option, performance share and restricted stock
programs. Awards and payments to executive officers under these programs
are included in the accompanying tables. The Company's stock option plans
provide for the award of incentive stock options, non-qualified stock
options, and stock appreciation rights ("SARs"). No SARs have been
awarded to date. All options granted to date, when first issued, have
been awarded at an exercise price equal to the fair market value of the
stock on the date of the award. The Company's performance share plans
provide for the earning of shares if the Company achieves specified
performance objectives established at the time of the award. All
performance share awards made to date have directly encouraged
Stockholder value creation by providing for earning of shares if the
Company achieves specific stock price targets. The restricted stock
awards, in which vesting is contingent on continued employment for a
specified period, also provide for Stockholder value creation as this
component of the compensation system is designed to retain senior
executives and motivate them to improve market value of the stock over a
number of years.
FISCAL YEAR 1999 EXECUTIVE OFFICER COMPENSATION
Fiscal year 1999 base salaries for the executive officers, which are shown
in the Summary Compensation Table on page 8, were set at the beginning of fiscal
year 1999. The salaries were set based on a subjective evaluation of fiscal year
1998 performance and salary levels compared to similar companies, consistent
with the methodology described below.
In determining fiscal year 1999 Performance Compensation Plan payments for
the executive officers, the Committee considered the competitiveness of cash
compensation levels compared to similar companies. The Committee utilized
information in an executive compensation report from a nationally recognized,
independent compensation consulting firm. In view of the impending sale of the
Company's Systems & Electronics Inc. subsidiary ("SEI"), that report compared
the Company's compensation practices to publicly traded filtration/fluid flow
companies selected on the basis of their similarity to the Company. Total cash
compensation of the Company's Chief Executive Officer and other executive
officers, including both base salary and the annual incentive compensation
payment, was below the median level for the chief executive officer and other
executive officers of the comparison companies. Total compensation of the
Company's Chief Executive Officer and other executive officers, including base
salary, annual incentive cash compensation and long-term incentive compensation,
was also lower than the median total compensation for the comparable officers of
the comparison companies. The Committee also considered the Company's operating
performance and progress made on strategic initiatives. Overall performance of
the Company was judged to be solid in fiscal year 1999, with continued growth in
the Company's commercial business. In 1999, the Company achieved sales of $416.1
million compared with $365.1 million in 1998. Net earnings in fiscal year 1999
were $25.4 million, or $2.02 per share, compared with net earnings of $11.3
million, or $.90 per share, in fiscal year 1998. The fiscal 1999 results reflect
a pre-tax gain of $59.9 million related to the sale of the SEI subsidiary,
partially offset by nonrecurring charges of $9.1 million related to
restructuring of certain business areas and $25 million related to the effect of
an accounting change. All of the Company's operating subsidiaries generated
positive cash flow in fiscal year 1999. The Company made excellent progress
towards achievement of its strategic objectives in fiscal year 1999. Of major
significance was the completion of the sale of SEI, the Company's last large
defense business. Although the sale of SEI will reduce revenues in the short
term, it substantially reduces the Company's risk profile and provides the
financial capability to make commercial acquisitions in the Company's core
business areas, fund internal growth and continue the stock repurchase program.
Based on a subjective evaluation of the above factors, the Committee
approved a performance compensation plan payment of $246,500 for the Chief
Executive Officer. Fiscal year 1999 total cash
6
<PAGE> 8
compensation for the Chief Executive Officer remained slightly below the market
as determined by the 1998 median compensation level of chief executive officers
based on the aforementioned compensation report. The total cash compensation
levels established for the Company's other executive officers are detailed in
the Summary Compensation Table on page 8. The 1999 total cash compensation
levels for the other executive officers as a group are lower than the median
cash compensation levels for the comparable executive officers of the comparison
companies.
Consistent with the Committee's objective of aligning the interests of
senior management and Stockholders, in fiscal year 1999 the Committee awarded
the Chief Executive Officer options for 54,000 shares under the 1999 Stock
Option Plan. The other executive officers as a group were awarded options for a
total of 54,000 shares under the Plan. The option exercise price of all such
options awarded is the fair market value of the shares on the date of the award.
The Company has employment agreements with the Chief Executive Officer and
the other current executive officers as described on page 12. The Chief
Executive Officer and the other current executive officers are covered by a
Severance Plan which is described on page 12.
Section 162(m) of the Internal Revenue Code denies a federal income tax
deduction for compensation in excess of $1 million paid to any of the Company's
highest paid executive officers unless the compensation qualifies for a
performance-based exception. The 1999 Stock Option Plan is designed to permit
awards that satisfy the performance-based exception of section 162(m). To date,
no other specific action has been taken with respect to section 162(m) because
the Company's compensation levels have not been expected to exceed the $1
million limit by a material amount. The Committee intends to review the
potential effect of section 162(m) periodically and may in the future take other
appropriate actions to qualify, to the extent reasonable, executive officer
compensation for deductibility under section 162(m).
SUMMARY
The Committee believes the Company's compensation program has been designed
and managed by the Committee to directly link the compensation of the Company's
executives to Company performance, individual performance and Stockholder
return. The level of total direct compensation paid to the Company's Chief
Executive Officer over the last three year period is slightly below the median
competitive level for similar companies in the filtration/fluid flow comparison
group. The total direct compensation for the Company's other senior executives
is also slightly below market levels as determined by the comparison group. The
Committee will continue to address these compensation levels over time,
consistent with Company and individual performance, and will continue to
emphasize performance-based and stock-based compensation that links management
and Stockholder interests.
The Human Resources and
Ethics Committee
D.C. Trauscht, Chairman
J. J. Carey
L.W. Solley
7
<PAGE> 9
SUMMARY COMPENSATION TABLE
The following table contains certain information concerning compensation
for each of the last three fiscal years relating to the Company's Chief
Executive Officer and its other three executive officers serving at September
30, 1999, for all services rendered in all capacities to the Company and its
subsidiaries.
<TABLE>
<CAPTION>
LONG TERM-COMPENSATION
--------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ------------------------ -----------
-------------------------------------------- ($) (#)
($) RESTRICTED SECURITIES ($) ($)
NAME AND FISCAL ($) ($) OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION(1)
------------------ ------ -------- -------- ------------ ---------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
D.J. Moore................. 1999 $425,000 $246,500 $6,664 $ 0 54,000 $ 0 $ 390
Chairman, President and 1998 400,000 225,000 5,200 564,000(2) 0 641,672 341
Chief Executive Officer 1997 370,000 235,000 6,035 0 30,000 445,496 310
P.M. Ford.................. 1999 170,000 70,550 3,570 0 18,000 0 846
Senior Vice President and 1998 158,000 65,000 2,546 161,438(3) 0 175,000 879
Chief Financial Officer 1997 145,000 65,000 3,211 0 7,500 121,499 1,052
W. Stark................... 1999 170,000 68,000 4,671 0 18,000 0 1,265
Senior Vice President, 1998 160,000 62,000 1,079 161,438(3) 0 175,000 1,276
Secretary and General 1997 148,000 60,000 1,052 0 7,500 121,499 1,599
Counsel
V.L. Richey................ 1999 110,000 44,200 1,847 0 18,000 0 0
Vice President, 1998 -- -- -- -- -- -- --
Administration 1997 -- -- -- -- -- -- --
</TABLE>
- -------------------------
(1) Represents the dollar value of the benefit of premiums paid for split-dollar
life insurance policies.
(2) Represents fair market value of $17.625 per share at the time of award for
the 32,000 shares awarded. The value of these shares at September 30, 1999
was $360,000 based on fair market value of $11.25 per share. As of that
date, Mr. Moore held no other restricted stock. These shares will vest if
Mr. Moore continues in the employment of the Company through the vesting
date, September 30, 2000, upon his earlier termination on account of death
or disability, or upon his termination by the Company other than for cause.
If any dividends are paid on the Receipts, they would be paid on this
restricted stock.
(3) Represents fair market value of $17.9375 per share at the time of award for
the 9,000 shares awarded. The value of these shares at September 30, 1999
was $101,250 based on fair market value of $11.25 per share. As of that
date, the executive officers held no other restricted stock. As awarded, the
vesting of these shares was contingent upon the recipient continuing in the
employment of the Company until September 30, 2001. Pursuant to the
severance agreement and special separation agreement described on page 13,
these shares will vest and become payable December 31, 1999. If any
dividends are paid on the Receipts, they would be paid on this restricted
stock.
The Company's stock option, restricted stock award and performance share
award agreements and Supplemental Executive Retirement Plan applicable to the
named executive officers generally provide for acceleration of vesting and, in
certain cases, payout, of awards and retirement benefits under such agreements
and Plan in the event of a change in control of the Company, as defined in such
agreements and Plan, respectively.
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<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
(#) % OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO ($)
UNDERLYING EMPLOYEES ($/SHARE) GRANT DATE
OPTIONS IN FISCAL EXERCISE EXPIRATION PRESENT
NAME GRANTED(1) YEAR PRICE DATE VALUE(2)
---- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
D.J. Moore.............................. 54,000(3) 10.33 $10.7813 02/09/09 $277,947
P.M. Ford............................... 18,000(4) 3.44 10.7813 02/09/09 92,649
W. Stark................................ 18,000(4) 3.44 10.7813 02/09/09 92,649
V.L. Richey............................. 18,000(3) 3.44 10.7813 02/09/09 92,649
</TABLE>
- -------------------------
(1) All stock option grants are non-transferrable, have a term of ten years from
the date of grant, and have an exercise price equal to 100% of the fair
market value on the date of grant. In the event of a change in control of
the Company, 100% of the options granted may be immediately exercised.
(2) Estimated present values based on the Black-Scholes option pricing model, a
mathematical formula used to value options traded on stock exchanges. The
following assumptions were used in applying the model to calculate the
values: expected future stock price annual volatility rate of 0.353;
risk-free rate of return of 5.89% for the option term; annual dividend yield
of 0%; and a ten-year option term. No adjustments have been made for
non-transferability or risk of forfeiture. The actual value of the options
will depend on the market price of the shares on the date the options are
exercised, and may vary significantly from the theoretical values estimated
by the Black-Scholes model.
(3) Exercisable as follows: one-third of the options granted may be exercised on
or after October 1, 2000, one-third on or after October 1, 2001, and
one-third on or after October 1, 2002.
(4) As awarded, exercisable as described in note (3) above. Pursuant to the
severance agreement and special separation agreement described on page 13,
these options will be exercisable on or after December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
No stock options were exercised by the named executive officers during
fiscal year 1999.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
No awards were made to the named executive officers during fiscal year 1999
under the Company's Performance Share Plans.
RETIREMENT PLAN
At the time of the 1990 Stock Distribution, the Company established a
Retirement Plan (the "Retirement Plan") in which the Company's executive
officers as well as other salaried employees participate. Prior to the 1990
Stock Distribution, the executive officers participated in one of the pension
plans of Emerson or its subsidiaries. The Retirement Plan is substantially
identical to the Emerson Retirement Plan at the time of the 1990 Stock
Distribution (the "Emerson Retirement Plan"). Under the Retirement Plan, a
participant will be credited with his service under the Emerson Retirement Plan,
but his benefit accrued under the Retirement Plan will be offset by his benefit
accrued under the Emerson Retirement Plan as of September 30, 1990. Benefits
under the Retirement Plan may be reduced under certain maximum provisions of the
Internal Revenue Code. In 1993, the Company adopted a Supplemental Executive
Retirement Plan (the "SERP") which provides that where any such reductions
occur, the Company will pay a retirement supplement (as an operating expense) to
certain executives, including the executive officers. The SERP will maintain
total retirement benefits at the formula level of the Retirement Plan.
9
<PAGE> 11
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ANNUAL RETIREMENT BENEFIT AT AGE 65 AFTER
---------------------------------------------------------------
10 15 20 25 30 35
AVERAGE ANNUAL YEARS OF YEARS OF YEARS OF YEARS OF YEARS OF YEARS OF
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE
-------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$150,000...... $ 20,847 $ 31,271 $ 41,694 $ 52,118 $ 62,541 $ 72,965
250,000...... 35,847 53,771 71,694 89,618 107,541 125,465
350,000...... 50,847 76,271 101,694 127,118 152,541 177,965
450,000...... 65,847 98,771 131,694 164,618 197,541 230,465
550,000...... 80,847 121,271 161,694 202,118 242,541 282,965
650,000...... 95,847 143,771 191,694 239,618 287,541 335,465
750,000...... 110,847 166,271 221,694 277,118 332,541 387,965
850,000...... 125,847 188,771 251,694 314,618 377,541 440,465
</TABLE>
These plans provide for fixed retirement benefits based on the
participant's credited years of service, five-year average compensation (the
highest average annual cash compensation during any five consecutive years), and
applicable Social Security covered compensation. The dollar amounts listed for
salary and bonus in the Summary Compensation Table are substantially the same as
the compensation covered by these plans. The foregoing table shows the combined
annual benefits that will be payable from these plans on the basis of a single
life annuity with five years certain.
Under current law, the benefit amounts will not be subject to any deduction
for Social Security or other offset amounts. The credited years of service
covered by these plans for each of the persons named in the Summary Compensation
Table were as follows as of October 1, 1999: Mr. Moore, 15.5; Mr. Ford, 21; Mr.
Stark, 10; and Mr. Richey, 13. The Company agreed to assume a supplemental
retirement benefit granted to Mr. Ford by Emerson designed to provide him credit
for an additional nine years of service, and to use Emerson's contributory
formula for determining this benefit. Payment of the specified retirement
benefits is contingent upon continuation of the plans in their present form
until the employee retires.
10
<PAGE> 12
PERFORMANCE GRAPH
The following graph presents a comparison of the cumulative total
shareholder return on the Receipts as measured against the Standard & Poor's 500
Stock Index (the "Index"), a peer group against which return on the Receipts was
measured in the proxy statement for the 1999 Annual Meeting of Shareholders (the
"1998 Peer Group") and another peer group (the "1999 Peer Group"). The Company
has added the 1999 Peer Group, which is comprised of publicly traded companies
primarily engaged in the manufacture of filtration/fluid flow products, as a
comparison group this year due to management's belief that the companies
included in the 1999 Peer Group more closely resemble the Company than the
companies included in the 1998 Peer Group, which is comprised of companies
primarily in the defense industry. The Company intends in future periods to
provide comparisons only to the Index and the 1999 Peer Group due to the sale in
1999 of the Company's defense subsidiary, Systems & Electronics Inc. The Company
is not a component of the Index, the 1998 Peer Group or the 1999 Peer Group. The
measurement period begins on September 30, 1994 and measures at each September
30 thereafter. These figures assume that all dividends paid over the measurement
period were reinvested, and the starting value of each index and the investments
in the Receipts were $100 at the close of trading on September 30, 1994.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURNS
GRAPH
<TABLE>
<CAPTION>
9/94 9/95 9/96 9/97 9/98 9/99
<S> <C> <C> <C> <C> <C> <C> <C>
ESCO Electronics Corporation 100 92 97 242 141 153
1999 Peer Group 100 134 150 159 115 145
1998 Peer Group 100 140 193 231 149 202
S&P 500 100 130 156 219 239 306
</TABLE>
The 1999 Peer Group is comprised of Calgon Carbon Corporation, Clacor Inc.,
Cuno Inc., Donaldson, Inc., Farr Co., Ionics Inc., Lydall Inc., Millipore Corp.,
Osmonics Inc. and Pall Corporation. The companies composing the 1998 Peer Group
are the same companies which composed the peer group used in the proxy statement
for the 1999 Annual Meeting of Stockholders except that Sunstrand Corp. has
since been acquired by another company and has been excluded. The 1998 Peer
Group is comprised of: AAR Corp., Boeing Co., CAE Inc., Cordant Technologies
Inc. (formerly named "Thiokol Corp."), Gencorp Inc., General Dynamics
11
<PAGE> 13
Corp., General Motors Corp. (GMH), Moog Inc. Class A, Nichols Research Corp.,
Northrop Grumman Corp., OEA Inc., Raytheon Co., Rockwell International Corp.,
Transtechnology Corp., United Industrial Corp., and Wyman-Gordon Co.
SEVERANCE PLAN
The Company has established a Severance Plan (the "Plan") covering the
executive officers. Under the Plan, following an occurrence of a Change of
Control (as defined), each executive officer will be entitled to be employed by
the Company for a three-year period with respect to Messrs. Moore, Ford and
Stark and for a two-year period with respect to Messrs. V.L. Richey and C.J.
Kretschmer and Ms. A.S. Barclay, during which: (i) he or she will be paid a
minimum base salary equal to his or her base salary prior to the Change of
Control, and a minimum annual bonus based on the average of his or her bonuses
during the last five preceding fiscal years, disregarding the highest and lowest
such years, and (ii) he or she will continue to receive the employee benefits to
which he or she was entitled prior to the Change of Control. During this
employment period, if the executive officer's employment is terminated by the
Company other than for cause or disability or the executive officer terminates
his or her employment following certain actions by the Company, he or she will
be entitled to receive, among other things: (i) three times, in the case of
Messrs. Moore, Ford and Stark and two times in the case of Messrs. Richey,
Kretschmer and Ms. Barclay, his or her minimum annual base salary and minimum
annual bonus, (ii) the lump sum value of a supplemental retirement benefit equal
to the difference between (a) his or her benefits under the Retirement Plan and
SERP by the addition of three years in the case of Messrs. Moore, Ford and
Stark, and two years in the case of Messrs. Richey, Kretschmer and Ms. Barclay,
of credited service and (b) the amounts actually payable under such plans, and
(iii) the continuation of his or her employee benefits for three years in the
case of Messrs. Moore, Ford and Stark, and two years in the case of Messrs.
Richey, Kretschmer and Ms. Barclay. The Company may amend the Plan, but no
amendment adverse to the rights of the executive officers will be effective
unless notice thereof has been given by the Company to the affected executive
officers at least one year prior to the occurrence of a Change of Control.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company has entered into employment agreements effective on or about
November 1, 1999 with Messrs. Moore, Richey and Kretschmer and Ms. Barclay, the
current executive officers. The employment agreements have terms of four years
for Mr. Moore and three years for the other current executive officers. The
agreements provide for a base salary of not less than their fiscal year 1999
base salary and an annual bonus in accordance with the Performance Compensation
Plan. These executives are also entitled to participate in any stock options,
restricted stock awards, performance shares and other compensation as the
Company's Human Resources and Ethics Committee shall determine. They are also
entitled to participate in all employee benefit programs of the Company
applicable to senior executives, and the Company will continue to provide
certain perquisites.
The Company has the right to terminate the employment of the current
executive officers at any time upon thirty days' notice for cause or without
cause, and these executives have the right to resign at any time upon thirty
days' notice. If an executive's employment is terminated by the Company other
than for cause, or if an executive terminates his employment following certain
actions by the Company, the executive will be entitled to receive certain
benefits. In the case of Mr. Moore, he will receive: (i) for three years, the
continuation of his then-current base salary and bonus (bonus calculated using
the average annual percentage of base salary under the Performance Compensation
Plan for the past five consecutive fiscal years, excluding the highest and
lowest percentage), (ii) the lump sum value of a supplemental retirement benefit
equal to the difference between (a) his benefits under the Retirement Plan and
SERP by the addition of three years of credited service and age and (b) the
amounts actually payable under such plans, (iii) immediate vesting of
outstanding stock options and restricted stock awards, and immediate vesting and
payout of awards outstanding under the performance share plan, and (iv)
continuation of certain employee benefits and perquisites for the period of base
salary continuation. In the case of the other current executive officers, they
will receive: (i) for one year, the continuation of his or her then-current base
salary and bonus (bonus
12
<PAGE> 14
calculated by using no less than the annual percentage of base salary under the
Performance Compensation Plan for the last fiscal year), (ii) immediate vesting
of outstanding stock options and immediate vesting and payout of shares earned
under the Performance Share Plan, and (iii) continuation of certain employee
benefits and perquisites for the period of base salary continuation. If an
executive's employment is terminated in connection with a Change of Control, or
in the case of Mr. Moore, if he terminates his employment based on a Change of
Control, the executive will not receive the foregoing benefits, and will receive
instead the benefits payable under the Company's Severance Plan.
As a result of the divestiture of the Company's major defense business,
Systems & Electronics Inc., the Company entered into a severance agreement with
Mr. Stark and a special separation agreement with Mr. Ford. These agreements
have an effective employment termination date of December 31, 1999. Under the
terms of these agreements, Messrs. Stark and Ford will receive: (i) two years of
their current base salary and bonus (bonus calculated using the average annual
percentage of base salary under the Performance Compensation Plan for the past
five consecutive fiscal years, excluding the highest and lowest percentage) to
be paid in installments on each regular employee pay day over the next two
years, (ii) the lump sum value of a supplemental retirement benefit equal to the
difference between (a) their benefits under the Retirement Plan and SERP by the
addition of two years of credited service and age and (b) the amounts actually
payable, (iii) immediate vesting of outstanding stock options and restricted
stock awards, and immediate vesting and payout of awards outstanding under the
performance share plan, and (iv) a supplement or continuation of certain
employee benefits and perquisites for the period of base salary continuation. In
the event there is a Change of Control prior to December 31, 1999, these
agreements will become null and void, and the provisions of the Company's
Severance Plan will be applicable.
All of the aforementioned agreements prohibit the executives from
disclosing confidential information or trade secrets concerning the Company, and
for a specific period from soliciting employees of the Company and from
soliciting customers or distributors of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
number of Receipts beneficially owned by the directors and executive officers of
the Company as of November 1, 1999. Except as otherwise noted, each person has
sole voting and investment power as to his shares.
<TABLE>
<CAPTION>
NUMBER OF
COMMON SHARES
NAME OF REPRESENTED BY RECEIPTS
BENEFICIAL OWNER BENEFICIALLY OWNED(1)(2)
---------------- ------------------------
<S> <C>
W. S. Antle III...................................... 5,621
A.S. Barclay......................................... 9,453
J. J. Carey.......................................... 6,875
C.J. Kretschmer...................................... 36,428
J.M. McConnell....................................... 3,877
D. J. Moore.......................................... 304,211(3)
V.L. Richey.......................................... 15,596
L.W. Solley.......................................... 500
J.M. Stolze.......................................... 300
D.C. Trauscht........................................ 9,175
All directors and executive officers as a group (10
persons)........................................... 392,036
</TABLE>
- -------------------------
(1) The percentage of total outstanding Receipts beneficially owned by any
individual does not exceed 1% except in the case of Mr. Moore, 2.4%. The
percentage beneficially owned by all directors and executive officers as a
group is 3.2%.
(2) Includes the following Receipts covered by employee stock options granted
under the 1990 and 1994 Stock Option Plans which the individual has the
right to acquire within 60 days after November 1, 1999:
13
<PAGE> 15
Ms. Barclay 6,918; Mr. Kretschmer 20,648; Mr. Moore 100,546; Mr. Richey 9,891;
and all directors and executive officers as a group, 138,003.
(3) Includes 32,000 Receipts which are non-transferable and do not vest until
Mr. Moore remains employed by the Company through September 30, 2000 or
until his earlier termination on account of death or disability, until a
change of control of the Company, or termination by the Company other than
for cause.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to each
person known by the Company to own beneficially Receipts representing more than
five percent of the outstanding Common Shares:
<TABLE>
<CAPTION>
NUMBER OF COMMON SHARES PERCENT
NAME AND ADDRESS OF REPRESENTED BY RECEIPTS OF OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY OWNED COMMON SHARES
------------------- ----------------------- --------------
<S> <C> <C>
Franklin Resources, Inc. ........................ 946,950(1) 7.6%
and certain other parties
777 Mariners Island Boulevard
San Mateo, CA 94403-7777
Dimensional Fund Advisors, Inc. ................. 895,700(2) 7.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Merrill Lynch & Co., Inc. and certain other 767,100(3) 6.2%
parties........................................
800 Scudders Mill Road
Plainsboro, NJ 08536
Donald Smith & Co., Inc. ........................ 663,000(4) 5.3%
East 80 Route 4 Suite 360
Paramus, NJ 07652
David L. Babson & Company ....................... 642,900(5) 5.2%
One Memorial Drive
Cambridge, MA 02142-1300
</TABLE>
- -------------------------
(1) Based on information provided by Franklin Resources, Inc. ("FRI") indicating
beneficial ownership as of September 30, 1999 by the mutual funds in the
Franklin/Templeton Group of Funds (a tradename for U.S.-based separate,
unaffiliated investment companies whose investment advisers are direct or
indirect wholly-owned subsidiaries of FRI) and other managed accounts
advised by direct or indirect wholly-owned subsidiaries of FRI. Charles B.
Johnson and Rupert H. Johnson, Jr. each owns in excess of 10% of the
outstanding common stock of FRI, and may each be deemed to be the beneficial
owner of the 946,950 shares. Franklin Advisory Services, LLC ("FAS"), is the
investment adviser for such shares. FAS has sole voting power as to 843,600
shares and sole investment power as to 946,950 shares. Each of the foregoing
persons and entities disclaims any economic interest in or beneficial
ownership of the 946,950 shares. The address of FAS is One Parker Plaza,
Sixteenth Floor, Fort Lee, NJ 07024.
(2) Based on information provided by Dimensional Fund Advisors, Inc.
("Dimensional"), a registered investment adviser, indicating beneficial
ownership as of September 30, 1999 (having sole voting power and/or sole
investment power as to all such 895,700 shares). All such shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of The DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and the DFA Participating
Group Trust, investment vehicles for qualified employee benefit plans, as to
all of which Dimensional serves as investment manager.
(3) Based on information provided by Merrill Lynch & Co., Inc. ("ML&Co.")
indicating beneficial ownership as of November 12, 1999. Merrill Lynch Asset
Management, L.P. ("MLAM") and Ford Asset Management, L.P. ("FAM") are
investment advisers registered under Section 203 of the Investment Advisers
Act of 1940 and are wholly-owned subsidiaries of ML&Co. As such, ML&Co. may
be deemed to share with MLAM and FAM dispositive power and voting authority.
MLAM and FAM
14
<PAGE> 16
act as investment advisers for certain investment companies registered under
Section 8 of the Investment Company Act of 1940 as well as certain client
accounts. One such investment company advised by MLAM, the Merrill Lynch
Variable Series Funds, Inc. (Special Value Focus), holds 249,300 shares,
while an investment company advised by FAM, the Merrill Lynch Special Value
Fund, Inc., holds 517,800 shares. Although neither MLAM, FAM nor these
investment companies individually hold a position equal to or greater than
5% of outstanding shares, on an aggregate basis these positions represent
6.2% of the outstanding shares. Thus, ML&Co. on behalf of ML Asset
Management Group may be deemed to beneficially own 6.2% of the outstanding
shares.
(4) Based on information provided by Donald Smith & Co., Inc. indicating
beneficial ownership as of November 1, 1999 (having sole voting and
investment power as to all such shares).
(5) Based on information provided by David L. Babson & Company indicating
beneficial ownership as of November 1, 1999 (having sole voting and
investment power as to all such shares).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own beneficially more than ten
percent of any class of equity security of the Company to file with the
Securities and Exchange Commission initial reports of such ownership and reports
of changes in such ownership. Officers, directors and such beneficial owners are
required by Securities and Exchange Commission regulation to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
based solely on review of the copies of such reports furnished to the Company
and written representations that no other reports were required, during the
fiscal year ended September 30, 1999, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION OF THE
TWO NOMINEES FOR DIRECTORS.
II. VOTING
The affirmative vote of the holders of a majority of the shares entitled to
vote which are present in person or represented by proxy at the 2000 Annual
Meeting is required to elect directors and to act on any other matters properly
brought before the meeting. Shares represented by proxies which are marked
"withhold authority" with respect to the election of any one or more nominees
for election as directors and proxies which are marked to deny discretionary
authority on other matters will be counted for the purpose of determining the
number of shares represented by proxy at the meeting. Such proxies will thus
have the same effect as if the shares represented thereby were voted against
such nominee or nominees and against such other matters, respectively. Shares
not voted on one or more but less than all such matters on proxies returned by
brokers will be treated as not represented at the meeting as to such matter or
matters.
The Company knows of no other matters to come before the meeting. If any
other matters properly come before the meeting, the proxies solicited hereby
will be voted on such matters in accordance with the judgment of the persons
voting such proxies.
III. INDEPENDENT AUDITORS
KPMG LLP were the auditors for the fiscal year ended September 30, 1999,
and the Audit and Finance Committee has selected them as auditors for the year
ending September 30, 2000. A representative of KPMG LLP is expected to be
present at the meeting with the opportunity to make a statement and/or respond
to appropriate questions from Stockholders.
15
<PAGE> 17
IV. STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the 2001 Annual
Meeting must be received by the Company by August 11, 2000 for inclusion in the
Company's proxy statement and proxy relating to that meeting. Upon receipt of
any such proposal, the Company will determine whether or not to include such
proposal in the proxy statement and proxy in accordance with regulations
governing the solicitation of proxies.
In order for a Stockholder to nominate a candidate for director, under the
Company's Articles of Incorporation, timely notice of the nomination must be
given to the Company in advance of the meeting. Ordinarily, such notice must be
given not less than 60 nor more than 90 days before the meeting (but if the
Company gives less than 50 days' notice or prior public disclosure of the date
of the meeting, then the Stockholder must give such notice within 10 days after
notice of the meeting is mailed or other public disclosure of the meeting is
made, whichever occurs first). The Stockholder filing the notice of nomination
must describe various matters regarding the nominee, including such information
as name, address, occupation and shares held.
In order for a Stockholder to bring other business before a Stockholder
meeting, timely notice must be given to the Company within the time limits
described above. Such notice must include a description of the proposed
business, the reasons therefor and other specified matters. The Board may reject
any such proposals that are not made in accordance with these procedures or that
are not a proper subject for Stockholder action in accordance with the
provisions of applicable law. These requirements are separate from and in
addition to the requirements a Stockholder must meet to have a proposal included
in the Company's proxy statement. The foregoing time limits also apply in
determining whether notice is timely for purposes of rules adopted by the
Securities and Exchange Commission relating to the exercise of discretionary
voting authority.
In each case, the notice must be given to the Secretary of the Company,
whose address is 8888 Ladue Road, Suite 200, St. Louis, Missouri 63124-2090. Any
Stockholder desiring a copy of the Company's Articles of Incorporation or Bylaws
or the Trust Agreement will be furnished one without charge upon written request
to the Secretary.
16
<PAGE> 18
ESCO ELECTRONICS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, as holder of record of the common stock trust receipts
(the "Receipts") representing Common Stock of ESCO ELECTRONICS CORPORATION (the
"Company"), does hereby appoint D.J. Moore, C.J. Kretschmer and A.S. Barclay, or
any of them, the true and lawful attorneys in fact, agents and proxies of the
undersigned to represent the undersigned at the Annual Meeting of Stockholders
of the Company, to be held on February 3, 2000, commencing at 10:00 A.M., St.
Louis time, at the Hilton St. Louis Frontenac Hotel, 1335 S. Lindbergh Blvd.,
St. Louis County, Missouri, 63131 and at any and all adjournments of such
meeting, and to instruct The Chase Manhattan Bank, as trustee under the
Company's Deposit and Trust Agreement (the "Trustee"), to vote all the shares of
Common Stock of the Company represented by the Receipts standing on the register
of the Company's stock transfer agent in the name of the undersigned as follows,
and in their discretion on such other business as may properly come before the
meeting:
(Continued, and to be signed, on the other side)
/\ PLEASE DETACH PROXY HERE, SIGN AND MAIL /\
<PAGE> 19
<TABLE>
<S><C>
PLEASE MARK
YOUR VOTES AS
INDICATED IN [ X ]
THIS EXAMPLE
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL:
1. ELECTION OF DIRECTORS (INSTRUCTION: To withhold authority
FOR all nominees WITHHOLD to vote for any Individual
listed to the right AUTHORITY nominee, strike a line through the
(except as marked to vote for all nominee's name on the list below.)
to the contrary) nominees listed
to the right
Nominees: J.M. McConnell, D.C. Trauscht
| | | |
The undersigned hereby acknowledges receipt
of the Notice of the Annual Meeting and
accompanying Proxy Statement dated December
9, 1999.
The proxies will instruct the Trustee to
vote the Common Shares represented by your
Receipts in the manner directed herein by
the undersigned Receiptholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1.
Please sign exactly as your name appears to
the left. When signing as an attorney,
executor, administrator, trustee or
guardian, please give full title as such.
If signing on behalf of a corporation,
please sign in full corporate name by
______ President or other authorized officer. If
| signing on behalf of a partnership, please
| sign in partnership name by authorized
| person.
Dated:
-------------------------------------
-------------------------------------------
(Signature)
-------------------------------------------
(Signature - if held jointly, both holders
must sign.)
IF ADDRESS APPEARING TO THE LEFT IS
INCORRECT, KINDLY MAKE CORRECTION.
</TABLE>
/\ PLEASE DETACH PROXY HERE, SIGN AND MAIL /\
[ESCO LOGO]
December 9, 1999
Dear Stockholder:
The annual meeting of stockholders of ESCO Electronics Corporation will be
held at the Hilton St. Louis Frontenac Hotel, 1335 S. Lindbergh Blvd., St.
Louis County, Missouri 63131 at 10:00 a.m. on Thursday, February 3, 2000.
It is important that your shares are represented at this meeting. Whether
or not you plan to attend the meeting, please review the enclosed proxy
materials, complete the attached proxy form above, and return it promptly in
the envelope provided.
Thank you.
