<PAGE> 1
<TABLE>
<S> <C> <C>
700 Terrace Point Drive Phone 616-724-5000
SPX CORPORATION P.O. Box 3301 Fax 616-724-5720
Muskegon, MI 49443-3301
</TABLE>
March 25, 1996
Fellow Shareholders:
You are cordially invited to attend the 1996 Annual
Meeting of Shareholders on Wednesday, April 24, 1996 at 9:00
a.m. (Eastern Time), at the Company's headquarters, 700 Terrace
Point Drive, Muskegon, Michigan. The items to be acted upon at
the meeting are listed in the Notice of Annual Meeting and are
described in the Proxy Statement. Shareholders of record at the
close of business on March 15, 1996 are entitled to vote at the
Annual Meeting.
Along with the other members of your Board of
Directors, I look forward to the opportunity of personally
greeting those shareholders who attend this year's meeting. I
urge you to vote, sign, date and return the proxy card in the
enclosed postage-paid envelope, even if you plan to attend the
meeting. All shareholders are welcome to attend the Annual
Meeting and to vote in person, whether or not they have returned
the proxy card.
Sincerely,
JOHN B. BLYSTONE
JOHN B. BLYSTONE
Chairman, President and
Chief Executive Officer
<PAGE> 2
SPX CORPORATION
700 TERRACE POINT DRIVE MUSKEGON, MICHIGAN 49443-3301
TELEPHONE (616) 724-5000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1996
To the Shareholders:
The Annual Meeting of Shareholders of SPX Corporation will be held at the
offices of the Company at 700 Terrace Point Drive in Muskegon, Michigan, on
Wednesday, April 24, 1996 at 9:00 a.m. (Eastern Time), for the purpose of
considering and taking action with respect to the following matters:
1. The election of three directors of the Company;
2. The approval of the Company's EVA Incentive Compensation Plan; and
3. Such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on March 15, 1996 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting of Shareholders. The transfer books of the Company
will not be closed.
Each shareholder, including any shareholder who expects to attend the
meeting in person, is requested to execute the enclosed proxy and return it as
promptly as possible in the accompanying stamped envelope. The proxy may be
revoked by the shareholder at any time before it is exercised, and shareholders
who are present at the meeting may withdraw their proxies and vote in person.
A copy of the Company's 1995 Annual Report to Shareholders has been mailed
to each shareholder.
By Order of the Board of Directors,
JAMES M. SHERIDAN
Vice President and Secretary
Muskegon, Michigan
March 25, 1996
IMPORTANT--PLEASE MAIL YOUR SIGNED PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE PROVIDED FOR THIS PURPOSE
<PAGE> 3
SPX CORPORATION
700 TERRACE POINT DRIVE MUSKEGON, MICHIGAN 49443-3301
TELEPHONE (616) 724-5000
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1996
This proxy statement is furnished in connection with the solicitation of
proxies to be voted at the Annual Meeting of Shareholders of SPX Corporation to
be held on Wednesday, April 24, 1996.
The enclosed proxy is solicited by the Board of Directors of the Company
and will be voted at the Annual Meeting and any adjournments thereof. The
enclosed proxy may be revoked at any time before it is exercised. The only
business which the Board of Directors intends to present or knows will be
presented is the election of three directors and the approval of the Company's
new EVA Incentive Compensation Plan. The proxy confers discretionary authority
upon the persons named therein, or their substitutes, with respect to any other
business which may properly come before the meeting. Shares represented by a
properly executed proxy in the accompanying form will be voted at the meeting
and, when instructions have been given by the shareholder, will be voted in
accordance with those instructions. If no instructions are given, the
shareholder's shares will be voted according to the recommendations of the Board
of Directors.
RECORD DATE AND VOTING AT THE MEETING
The holders of record on March 15, 1996, the record date, of Common Stock,
$10 par value, of the Company will be entitled to one vote per share on each
matter submitted to the meeting. At the close of business on the record date,
there were outstanding 14,325,318 shares of Common Stock. No other voting
securities of the Company were outstanding at the close of business on the
record date. The holders of one-third of the total shares issued and
outstanding, whether present in person or represented by proxy, will constitute
a quorum for the transaction of business at the meeting.
The affirmative vote of a majority of the total shares represented in
person or by proxy and entitled to vote at the meeting is required for the
election of directors, the approval of the Company's EVA Incentive Compensation
Plan and the approval of such other business as may properly come before the
meeting or any adjournment thereof.
In accordance with Delaware law, a shareholder entitled to vote for the
election of directors can withhold authority to vote for all nominees for
directors or can withhold authority to vote for certain nominees for directors.
Abstentions from the proposal to elect directors and the proposal to approve the
Company's EVA Incentive Compensation Plan are treated as votes against the
election of the directors and against the Plan, respectively. Broker non-votes
are treated as shares as to which voting power has been withheld by the
beneficial holders of those shares, and therefore, as shares not entitled to
vote.
This proxy statement and the proxy were first mailed to shareholders on or
about March 25, 1996.
ELECTION OF DIRECTORS
At the date of the Annual Meeting, the Board of Directors will consist of
nine members, divided into three classes. At this Annual Meeting, three nominees
are to be elected to serve for a term of three years and until their respective
successors are elected and qualified. The remaining six directors will continue
to serve as set forth below, with two directors having terms expiring in April
1997 and four directors having terms expiring in April 1998. Each of the
nominees is now a director of the Company and has agreed to serve if elected.
The proxy holders will vote the proxies received by them for the three nominees,
or in the event of a contingency not presently foreseen, for different persons
as substitutes therefor.
<PAGE> 4
The following sets forth with respect to each nominee and each director
continuing to serve, his or her name, age, principal occupation, the year in
which he or she first became a director of the Company, committee assignments
and directorships in other business corporations.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A THREE-YEAR TERM EXPIRING APRIL 1999
<TABLE>
<S> <C>
[CAMPBELL PHOTO] J. KERMIT CAMPBELL
Mr. Campbell, 57, is a private investor and leadership consultant. He
was formerly President and Chief Executive Officer of Herman Miller,
Inc., a manufacturer of furniture and other products for offices and
other work environments. He joined the SPX Board in 1993 and is a member
of the Audit Committee and the Compensation Committee. He is Chairman
and a principal of Cellar Masters of America.
[KERBER PHOTO] RONALD L. KERBER
Mr. Kerber, 52, is the Executive Vice President and Chief Technology
Officer of Whirlpool Corporation, a manufacturer of major home
appliances. He joined the SPX Board in 1992 and is a member of the Audit
Committee and the Finance Committee.
[MERLIN PHOTO] PETER H. MERLIN
Mr. Merlin, 67, is a Partner of Gardner, Carton & Douglas, Corporate
Counsel for the Company. He joined the SPX Board in 1975 and is a member
of the Director Affairs Committee, Finance Committee and Executive
Committee. He is a director of Aldi, Inc., Lechler, Inc., a Trustee of
Northwestern Memorial Hospital and Chairman and Director of the Chicago
Horticultural Society-Botanic Garden.
</TABLE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN
OFFICE WHOSE TERMS EXPIRE APRIL 1997
<TABLE>
<S> <C>
[BLYSTONE PHOTO] JOHN B. BLYSTONE
Mr. Blystone, 42, is the Chairman, President and Chief Executive Officer
of the Company. He joined the SPX Board in December, 1995 and is
Chairman of the Executive Committee.
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C>
[EHMANN PHOTO] FRANK A. EHMANN
Mr. Ehmann, 62, is the former President and Chief Operating Officer of
American Hospital Supply Corporation. He joined the SPX Board in 1988
and is a member of the Compensation Committee, Director Affairs
Committee and Executive Committee. He is a director of American Health
Corp., Inc., AHA Investment Funds, Inc., Genderm, Inc. and Kinetic
Concepts, Inc.
</TABLE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN
OFFICE WHOSE TERMS EXPIRE APRIL 1998
<TABLE>
<S> <C>
[COFFIN PHOTO] SARAH R. COFFIN
Ms. Coffin, 43, is the Vice President, Specialty Group Manager of H.B.
Fuller Company, a manufacturer of adhesives, sealants, coatings, paints
and other specialty chemicals. She joined the SPX Board in 1995 and is a
member of the Compensation Committee and the Finance Committee.
[HOPKINS PHOTO] EDWARD D. HOPKINS
Mr. Hopkins, 58, is the former Chairman, President and Chief Executive
Officer of Medalist Industries, Inc., a designer, manufacturer and
distributor of fastener and fastener related products. He joined the SPX
Board in 1986 and is a member of the Executive Committee and the Finance
Committee.
[JOHNSON PHOTO] CHARLES E. JOHNSON II
Mr. Johnson, 60, is a private investor and former President and Chief
Operating Officer of the Company. From July through December 1995 he
served as Chairman and Chief Executive Officer of the Company. He joined
the SPX Board in 1976 and is a member of the Executive Committee, Audit
Committee and Director Affairs Committee. He is a director of Baker
College of Muskegon and Hackley Hospital.
[WILLIAMS PHOTO] DAVID P. WILLIAMS
Mr. Williams, 61, is President and Chief Operating Officer of The Budd
Company, a manufacturer of automobile and truck body components, wheel
and brake products, castings, stampings, chassis frame components, air
bag components, automotive heating accessories and cold weather starting
aids. He joined the SPX Board in 1992 and is a member of the Audit
Committee and the Compensation Committee. He is a director of The Budd
Company, Budd Canada Inc., Greening Donald Co. Ltd., Standard Federal
Bank, Thyssen Production Systems, Inc. and WTVS Channel 56-Detroit
Public Television.
</TABLE>
Each of the nominees and directors of the Company has had the principal
occupation set forth above or has been an executive officer or partner with the
respective organization for the past five years; except for
3
<PAGE> 6
Mr. Blystone, who prior to joining the Company in December 1995, was from 1988
to 1991 Senior Vice President of JI Case, a division of Tenneco, Inc., from 1991
to 1994 was with General Electric Company as Vice President and General Manager
of GE Superabrasives and from 1994 to 1995 as President and Chief Executive
Officer of Nuovo Pignone and GE Power Systems Europe; Mr. Campbell, who prior to
joining Herman Miller, Inc. in 1992, was a group vice president of Dow Corning
Corporation, where he held various executive positions since 1960; Ms. Coffin,
who prior to joining H.B. Fuller Company in 1994, held executive positions with
G.E. Plastics, a business unit of General Electric Company, for more than five
years; and Mr. Kerber, who from 1988 to 1991 was Vice President, Technology and
Business Development at McDonnell Douglas Corp.
The law firm of Gardner, Carton and Douglas, where Mr. Merlin is a partner,
has been retained by the Company to represent it on various legal matters.
BOARD OF DIRECTORS AND ITS COMMITTEES
There were nine meetings of the Board of Directors of the Company in 1995
and each director attended at least 75% of the aggregate of the total number of
Board meetings and meetings of Committees of which he or she was a member.
The Board of Directors has established committees which deal with certain
areas of the Board's responsibility. These committees are the Audit Committee,
Compensation Committee, Director Affairs Committee, Executive Committee, and
Finance Committee.
The Audit Committee, which held three meetings in 1995, has the primary
responsibility to ensure the integrity of the financial information reported by
the Company. Its functions are: (i) to make recommendations on the selection of
independent auditors; (ii) to review the scope of the annual audit to be
performed by the independent auditors and the audits conducted by the internal
audit staff; (iii) to review the results of those audits; (iv) to meet
periodically with management, the independent public accountants and the
internal audit staff to review financial, accounting and internal control
matters; and (v) to meet periodically with both the independent public
accountants and the internal audit staff, and without management being present,
to discuss the results of their audit work and their opinions as to the adequacy
of internal accounting controls and the quality of financial reporting.
The Compensation Committee, which held four meetings in 1995, is
responsible for considering and approving the Company's compensation program for
senior management, including the grant of stock options and other awards under
the Company's Stock Compensation Plan, Annual Performance Compensation Plan and
long-term Performance Unit Plan.
The Director Affairs Committee, which held six meetings during 1995, (i)
conducts a continuing study of the size, structure and composition of the Board;
(ii) makes recommendations to the Board on changes in compensation of directors;
(iii) seeks out and interviews possible candidates for Board membership and
reports its recommendations to the Board; and (iv) determines the criteria for
selection and retention of Board members. Although the Committee has its own
procedures for selecting nominees for Board membership, it will give due
consideration to nominees recommended by shareholders. A shareholder desiring to
recommend a person for nomination to the Board must provide written notice to
the Secretary of the Company no later than 120 days prior to the first
anniversary of the 1996 Annual Meeting of Shareholders and in compliance with
the requirements set forth in the Company's by-laws. In addition, the nominating
shareholder should submit a complete resume of the proposed nominee's
qualifications and background together with a statement setting forth the
reasons why such person should be considered for membership.
The Executive Committee, which held one meeting in 1995, has authority to
act on most matters during the intervals between Board meetings.
The Finance Committee, which met once in 1995, (i) reviews the Company's
strategic and annual plans and major capital projects; (ii) studies the
Company's capital structure and makes recommendations to the Board on debt and
equity financing; (iii) reviews the investment performance, actuarial
assumptions and
4
<PAGE> 7
funding practices for the Company's pension, healthcare and defined contribution
plans; and (iv) reviews the Company's risk management practices and its dividend
policy.
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned as of March 15, 1996, or as to which there was a right
to acquire beneficial ownership within 60 days of such date, by each director,
each executive officer named in the Summary Compensation Table and all directors
and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER
OF
SHARES PERCENT
BENEFICIALLY OF
OWNED(1)(2)(3) CLASS
------- ---
<S> <C> <C>
Curtis T. Atkisson, Jr............................... 82,793(4) *
John B. Blystone..................................... 148,300(5) 1.0%
J. Kermit Campbell................................... 5,517 *
Sarah R. Coffin...................................... 1,741 *
Frank A. Ehmann...................................... 10,858 *
Edward D. Hopkins.................................... 11,017 *
Charles E. Johnson II................................ 69,357(4) *
Dale A. Johnson...................................... 147,959 1.0%
Ronald L. Kerber..................................... 7,758 *
Stephen A. Lison..................................... 47,971(4) *
Peter H. Merlin...................................... 10,836 *
James M. Sheridan.................................... 79,428(4) *
William L. Trubeck................................... 16,120 *
David P. Williams.................................... 6,800 *
Albert A. Zagotta.................................... 20,458 *
All directors and executive officers as a group
(17 persons) including the above-named............. 712,135 5.0%
</TABLE>
- - - ---------------
* Less than 1%.
(1) Included for Messrs. Atkisson, Blystone, D.A. Johnson, Lison, Sheridan,
Trubeck, Zagotta and all executive officers are their respective allocated
shares held in the SPX Corporation Savings and Stock Ownership Plan.
Non-employee directors do not participate in this plan.
(2) Except as otherwise indicated, each director and executive officer has sole
voting and investment power over the shares he or she beneficially owns.
(3) Includes shares which may be acquired within 60 days pursuant to options as
follows: Mr. Atkisson -- 59,500 shares, Mr. Campbell -- 3,900 shares, Ms.
Coffin -- 2,600 shares, Mr. Ehmann -- 9,200 shares, Mr. Hopkins -- 9,200
shares, Mr. C. E. Johnson II -- 6,400 shares, Mr. D. A. Johnson -- 111,000
shares, Mr. Kerber -- 6,400 shares, Mr. Lison -- 39,000 shares, Mr. Merlin
-- 9,200 shares, Mr. Sheridan -- 66,500 shares, Mr. Trubeck -- 14,000
shares, Mr. Williams -- 5,300 shares, and all directors and executive
officers as a group (17 persons) -- 454,700 shares.
(4) Includes shares held by family members of certain directors and executive
officers in which such directors and officers disclaim any beneficial
interest.
(5) Includes 125,000 shares of restricted stock granted to Mr. Blystone as part
of his initial employment contract with the Company. These shares vest
ratably based on continued employment to the vesting date at the rate of
25,000 shares per year beginning December 1, 1996. Mr. Blystone will
receive all dividends on, and has the right to vote, these shares.
5
<PAGE> 8
OTHER PRINCIPAL SHAREHOLDERS
The Company is not aware of any person or group who beneficially owns more
than 5% of the Company's Common Stock except the following:
<TABLE>
<CAPTION>
AMOUNT OF PERCENT
BENEFICIAL OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
--------------------------------------------------- --------- -------
<S> <C> <C>
FMR Corp. (Fidelity Investments) 1,508,600(1) 10.5%
82 Devonshire Street
Boston, MA 02109
Fidelity Management Trust Company 1,492,872(2) 10.4%
82 Devonshire Street
Boston, MA 02109
State of Wisconsin Investment Board 1,253,000 8.7%
P.O. Box 7842
Madison, WI 53707
ICM Asset Management, Inc. 944,850 6.6%
601 W. Main Ave., Suite 917
Spokane, WA 99201
Harris Associates L.P. 866,000(3) 6.0%
Two North LaSalle Street, Suite 500
Chicago, IL 60602
</TABLE>
- - - ---------------
(1) Fidelity Management & Research Company, a wholly-owned subsidiary of FMR
Corp. and an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, is the beneficial owner of 1,508,600
shares of the Company. Of that total number of shares, 697,800 (5.42%) are
owned by Fidelity Value Fund.
(2) Fidelity Management Trust Company is the Trustee of the Company's Savings
and Stock Ownership Plan and as of February 29, 1996 owned such number of
shares pursuant to the Plan.
(3) Harris Associates L.P. serves as investment advisor to Harris Associates
Investment Trust (the "Trust"). The series of the Trust designated The
Oakmark Fund and The Oakmark Small Cap Fund beneficially own 815,800 and
50,000 shares of the Company, respectively.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes compensation received by the Company's Chief
Executive Officers and the five other most highly paid executive officers for
the three fiscal years ended December 31, 1995. None of the eight named officers
is employed under contract or employment agreement except for Mr. Blystone.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- - - -----------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------------------------------------
AWARDS PAYOUTS
- - - -----------------------------------------------------------------------------------------------------------------
OTHER NUMBER OF
ANNUAL RESTRICTED SECURITIES ALL OTHER
COMPENSA- STOCK UNDERLYING LTIP COMPENSA-
SALARY BONUS TION(1) AWARD(S) OPTIONS PAYOUTS TION(3)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)(2) ($)
- - - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John B. Blystone
--------------
Chairman, President and 1995 $ 17,308 -- -- $1,968,750(4) 125,000 $ 420,779(5)
Chief Executive Officer 1994 -- -- 0 0 --
(12/18/95 to present) 1993 -- -- 0 0 --
Charles E. Johnson II(6)
- - - ---------------------
Chairman and Chief 1995 $153,000 -- -- 0 1,600 $ 531,418(6)
Executive Officer 1994 -- -- 0 0 --
(6/28/95 to 12/18/95) 1993 -- -- 0 0 --
Dale A. Johnson
- - - --------------
Chairman and Chief 1995 $252,500 -- -- 0 0 0 $1,486,993(7)
Executive Officer 1994 $475,000 $379,396 0 36,000 $377,944 $ 28,489(7)
(resigned 6/28/95) 1993 $465,000 $ 65,872 0 35,000 0 $ 14,819
Curtis T. Atkisson, Jr.
- - - ------------------
President and Chief 1995 $304,000 $ 34,709 -- 0 0 0 $ 388,407(8)
Operating Officer 1994 $292,000 $214,268 0 21,000 $216,882 $ 13,140
(retired 10/31/95) 1993 $280,000 $ 37,229 0 21,000 0 $ 5,071
William L. Trubeck(9)
- - - -------------------
Senior Vice President -- 1995 $275,000 $ 31,262 -- 0 0 0 $ 15,750
Finance and Chief 1994 $ 37,020 $ 75,000 0 14,000 0 $ 952
Financial Officer 1993 -- -- 0 0 0 --
Albert A. Zagotta(10)
- - - -------------------
Executive Vice President 1995 $255,000 $ 26,864 -- 0 0 0 $ 19,273
1994 $245,000 $177,680 0 16,000 0 $ 103,094(10)
1993 -- -- 0 0 0 --
James M. Sheridan
- - - ----------------
Vice President,
Administration, 1995 $213,500 $ 27,468 -- 0 0 0 $ 15,377
General Counsel and 1994 $205,000 $127,699 0 12,000 $131,569 $ 9,224
Corporate Secretary 1993 $200,000 $ 18,000 0 12,000 0 $ 3,557
Stephen A. Lison
- - - --------------
Vice President, 1995 $153,500 $ 15,648 -- 0 0 0 $ 10,167
Human Resources 1994 $147,000 $ 72,440 0 7,000 $ 77,451 $ 6,615
1993 $138,000 $ 21,625 0 6,800 0 $ 2,476
- - - -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No other Annual Compensation other than perquisites is payable. Perquisites
are below threshold reporting.
(2) Messrs. D.A. Johnson, Atkisson, Sheridan and Lison were participants in the
1992-1994 Performance Unit Plan which concluded as of December 31, 1994.
The plan paid incentive awards to the four executive officers in the form
of cash (performance units) and shares (performance shares). All of the
cash and 1/3 of the shares awarded vested immediately on the award payment
date (January 17, 1995). The remaining 2/3 of the shares vest, based on
continued employment, 1/3 on January 14, 1996 and 1/3 on January 17, 1997.
Mr. D.A. Johnson and Mr. Atkisson retired during 1995 and their unvested
shares were vested as of their respective retirement dates. The total cash
and
7
<PAGE> 10
shares (vested and unvested) earned by each named officer was: Mr. D.A.
Johnson, $153,000 and 13,232 shares; Mr. Atkisson, $87,750 and 7,596
shares; Mr. Sheridan, $53,250 and 4,607 shares; and Mr. Lison, $31,500 and
2,703 shares. The amount shown above as LTIP Payouts in 1994 include cash
payments and the total value of the vested and unvested shares based on the
January 17, 1995 share closing price of $17.00.
(3) Except as otherwise noted in the footnotes to this table, the amounts
reported in this column include only Company contributions to its qualified
and non-qualified defined contribution plans.
(4) An award of 125,000 shares of Restricted Stock was made to Mr. Blystone on
November 24, 1995 as part of his initial employment contract. The value of
the award was $1,984,375 based on the December 29, 1995 closing price of
the shares of $15.875. These shares vest ratably over 5 years at 20% per
year beginning December 1, 1996. Mr. Blystone receives dividends on and has
the right to vote all the shares, vested and nonvested.
(5) Includes a $420,000 cash payment made to Mr. Blystone upon joining the
Company as part of his initial employment contract. The balance of the
amount reported is the Company contributions to Mr. Blystone's accounts in
the Company's qualified and non-qualified defined contribution plans.
(6) In addition to his compensation as an outside director of the Company which
amounted to $42,500, Mr. C.E. Johnson was paid salary amounting to $153,000
in 1995 for serving as Chief Executive Officer during the period indicated
and, in addition, was granted an increase in his annual pension from the
Company from $97,048 to $150,000 per year. The amount attributable to this
increased pension is shown in the Table under All Other Compensation.
(7) Includes $31,932 of Company contributions to Mr. Johnson's accounts in the
Company's qualified and non-qualified defined contribution plans; the
annual premium of $7,114 for a life insurance policy issued on the life of
Mr. Johnson under a deferred compensation agreement entered into originally
by the Owatonna Tool Company and Mr. Johnson in 1981 and which was settled
in 1995 with a lump sum payment equal to the cash value of the policy
amounting to $221,050; severance pay of $1,010,000 and pension enhancement
as part of his severance package valued at $416,415 and other cash payments
as part of his severance totaling $21,532.
(8) Includes $23,323 of Company contributions to Mr. Atkisson's accounts in the
Company's qualified and non-qualified defined contribution plans and a
pension enhancement as part of his retirement package valued at $365,084.
(9) Mr. Trubeck was elected to his current position when he joined the Company
on November 14, 1994.
(10) Mr. Zagotta was elected to his current position when he joined the Company
upon the consolidation of Sealed Power Technologies Limited Partnership.
Includes $4,620 of Company contributions to Mr. Zagotta's accounts in the
Company's qualified and non-qualified defined contribution plans and
$98,474 realized upon the cancellation of his stock options in Sealed Power
Technologies Limited Partnership paid in 1994.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- - - -----------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL OPTIONS EXERCISE
OPTIONS GRANTED TO OR GRANT DATE
GRANTED(1) EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE(2)(3)
NAME (#) 1995 ($/SHARE) DATE $
- - - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John B. Blystone.............. 125,000 100% $15.75 11/24/05 $ 635,000
- - - -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The option granted is nonqualified, is for a period of 10 years, becomes
exercisable in full 6 months after the date of grant and was granted
pursuant to Mr. Blystone's initial employment agreement. No tandem or
freestanding SARs were granted in 1995. There are no performance-based
conditions to exercisability, reload or tax reimbursement features
associated with the option granted in 1995. The exercise price is fixed for
the life of the option at the closing price of SPX Corporation's common
stock on the grant date.
(2) The estimated grant date present value reflected in the above table is
determined using the Black-Scholes model. The material assumptions and
adjustments incorporated in the Black-Scholes model in estimating the value
of the options reflected in the above table include the following:
- An option exercise price of $15.75, equal to the fair market value of the
underlying stock on the date of grant.
- An option term of ten years.
- An interest rate of 5.9 percent, which represents the interest rate on a
U.S. Treasury security with a maturity date corresponding to that of the
option term.
- Volatility of .277 calculated using monthly price and dividend data for
the five-year period ending in the grant month.
- Dividend yield at the rate of 2.9 percent representing the average
dividend yield for the five-year period ending in the grant month.
The ultimate values of the option will depend on the future market price of
SPX Corporation's common stock, which cannot be forecasted with reasonable
accuracy. The actual value, if any, an optionee will realize upon exercise
of an option will depend on the excess of the market value of the Company's
common stock over the exercise price on the date the option is exercised.
8
<PAGE> 11
(3) The Company changed its annual cycle for the granting of options from
December to February; therefore, no options were granted to the other named
executive officers in 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal 1995
by the named executive officers and the value of such officers' unexercised
options at December 31, 1995.
<TABLE>
<CAPTION>
- - - -----------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES STOCK OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE YEAR END(1) FISCAL YEAR END(1)
ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME (#) ($) (#) ($)
<S> <C> <C> <C> <C>
- - - -----------------------------------------------------------------------------------------------------------------
John B. Blystone.................. 0 0 0/125,000 $0/$15,625
Charles E. Johnson II............. 0 0 6,600/0 $2,963/0
Dale A. Johnson................... 25,000 $81,250 151,550/0 $54,091/0
Curtis T. Atkisson, Jr............ 0 0 84,500/0 $130,875/0
William L. Trubeck................ 0 0 14,000/0 $12,250/0
Albert A. Zagotta................. 0 0 16,000/0 $14,000/0
James M. Sheridan................. 3,500 $ 7,000 66,500/0 $82,088/0
Stephen A. Lison.................. 1,500 $ 3,188 39,000/0 $47,278/0
- - - -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All exercisable options were exercisable immediately at December 31, 1995.
All unexercisable options were those granted to Mr. Blystone on November 24,
1995 and were in-the-money as of December 31, 1995. The value of the options
is based upon the year-end closing price of the Company's Common Stock as
reported on the New York Stock Exchange composite tape ($15.875). No SARs
are held by the named executive officers.
SPX CORPORATION PERFORMANCE UNIT PLAN
The Company has sponsored a long-term incentive plan called the SPX
Corporation Performance Unit Plan, which operates on three-year performance
periods. At the beginning of each performance period, a participant is granted a
target award based on a percentage of his current salary. The target award is
then divided equally between cash units of $500 each and shares of the Company's
Common Stock. At the end of the performance period, depending upon the level of
the performance achieved, the cash units earned will be valued from zero to a
maximum of $750 and the number of shares earned will range from zero to 150% of
the target amount.
For the 1995 performance period (January 1, 1995 to December 31, 1997), the
corporate goal is expressed in terms of growth in the Company's share price plus
dividends relative to the growth in the S&P 500 Index as follows:
<TABLE>
<CAPTION>
SPX PERFORMANCE LEVEL OF ACHIEVEMENT
--------------------------------- -----------------------------------------------
<S> <C> <C>
Less than 80% of S&P 500 growth -- No awards earned
80% of S&P 500 growth -- 50% of target award earned (threshold)
100% of S&P 500 growth -- 100% of target award earned (target)
150% of S&P 500 growth -- 150% of target award earned (maximum)
</TABLE>
9
<PAGE> 12
Cash units and one-third of the shares earned are payable immediately
following the close of a performance period. The remaining two-thirds of the
earned shares vest ratably over the two years following the close of the
performance period based on continued employment.
The following table sets forth the awards and opportunities for the
three-year performance period January 1, 1995 to December 31, 1997 for the
executives named in the Summary Compensation Table.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- - - ------------------------------------------------------------------------------------------------------------------
CASH PERFORMANCE OR
UNITS/SHARE OTHER PERIOD UNTIL
UNITS OR OTHER MATURATION OR THRESHOLD(1)(2) TARGET MAXIMUM(3)
NAME RIGHTS (#) PAYOUT ($ OR #) ($ OR #)(2) ($ OR #)
- - - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John B. Blystone -- -- -- -- --
Charles E. Johnson II -- -- -- -- --
Dale A. Johnson 230 cash units/ 1/1/95 $57,500 and $115,000 and Cash and shares
7347 share through 3674 shares 7347 shares may not exceed a
units 12/31/97 value of $460,000
Curtis T. Atkisson, 132 cash units/ 1/1/95 $33,000 and $66,000 and Cash and shares
Jr. 4216 share through 2108 shares 4216 shares may not exceed a
units 12/31/97 value of $264,000
William L. Trubeck 91 cash units/ 1/1/95 $22,750 and $45,500 and Cash and shares
2908 share through 1454 shares 2908 shares may not exceed a
units 12/31/97 value of $182,000
Albert A. Zagotta 96 cash units/ 1/1/95 $24,000 and $48,000 and Cash and shares
3058 share through 1529 shares 3058 shares may not exceed a
units 12/31/97 value of $192,000
James M. Sheridan 80 cash units/ 1/1/95 $20,000 and $40,000 and Cash and shares
2554 share through 1277 shares 2554 shares may not exceed a
units 12/31/97 value of $160,000
Stephen A. Lison 47 cash units/ 1/1/95 $11,750 and $23,500 and Cash and shares
1499 share through 750 shares 1499 shares may not exceed a
units 12/31/97 value of $94,000
- - - ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No awards are paid if the minimum level of achievement is not reached.
(2) Shares earned are valued at the NYSE closing price of SPX Corporation's
shares on the trading day in the first quarter of 1998 when the award
payment, if earned, is made (the award payment date).
(3) The maximum award value payable to any participant is 200% of the grant date
dollar value of the total award at target, and, if maximum is achieved, the
participant's shares earned are reduced accordingly based on their dollar
value at the end of the performance period. The dollar amount shown is the
aggregate maximum value of cash and shares.
10
<PAGE> 13
PENSION PLANS
The annual pension benefits payable to the executives named in the Summary
Compensation Table can be determined from the following table.
<TABLE>
<CAPTION>
- - - -----------------------------------------------------------------------------------------------
YEARS OF CREDITED SERVICE
--------------------------------------------------------------------------
FINAL THREE-YEAR
AVERAGE
COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- - - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$200,000 $ 77,333 $116,000 $116,000 $116,000 $116,000 $123,500
300,000 116,000 174,000 174,000 174,000 174,000 185,250
400,000 154,667 232,000 232,000 232,000 232,000 247,000
500,000 193,334 290,000 290,000 290,000 290,000 308,750
600,000 232,000 348,000 348,000 348,000 348,000 370,500
700,000 270,667 406,000 406,000 406,000 406,000 432,250
800,000 309,333 464,000 464,000 464,000 464,000 494,000
900,000 348,000 522,000 522,000 522,000 522,000 555,750
- - - -----------------------------------------------------------------------------------------------
</TABLE>
Covered compensation is based on salary and bonus as shown in the Summary
Compensation Table.
The estimated years of credited service at normal retirement age for the
persons named in the Summary Compensation Table are: Mr. Blystone -- 23 years;
Mr. Trubeck -- 17 years; Mr. Zagotta -- 13 years; Mr. Sheridan -- 30 years; Mr.
Lison -- 31 years; Mr. D.A. Johnson retired on June 28, 1995 with 21 years of
credited service and Mr. Atkisson retired on October 31, 1995 with 10 years of
credited service.
The annual retirement benefits shown in the above table are computed on the
basis of a straight life annuity.
The amounts reported in this Pension Plan Table are payable at the normal
retirement age of 65 and are payable from the Company's qualified pension plan
and Supplemental Retirement Plan for officers and other key executives. The
amounts shown are subject to reduction by the sum of the executive's primary
Social Security benefit and any pension benefits payable from prior employer
plans. A participant may retire as early as age 55, but benefits payable at
early retirement are subject to reductions that approximate actuarial values.
DIRECTORS' COMPENSATION
Directors who are employees of the Company or a subsidiary do not receive
directors' fees. Directors who are not employees receive an annual retainer plus
$1,000 for each regular or special meeting attended. The annual retainer was
increased effective January 1, 1995, from $20,000 to $22,000 and is paid
one-half in cash and one-half in SPX shares until the director achieves total
SPX share ownership at least equivalent in value to the annual retainer amount,
after which the entire retainer amount is paid in cash. For service on
Committees of the Board, non-employee directors of the Company receive $1,000
for each Committee meeting which they attend. The Chairman of each Committee
receives an additional annual retainer of $1,500. In addition to the payment of
such fees, the Company reimburses all directors for expenses incurred in
carrying out their duties.
Under the Directors' Retirement Plan, any director who retires after ten or
more years of service as a director is entitled to an annual pension, payable
for life, equal to the annual retainer in effect on the retirement date.
Directors who retire with more than five years but less than ten years of
service receive a proration of the ten-year amount. Benefits under the Plan
commence on the later of the retired director's sixty-fifth birthday or
retirement from the Board of Directors. The Directors' Retirement Plan provides
that upon a change-of-control, as defined under "Change of Control Agreements"
below, a director who has less than five years of service as a director will be
deemed to have completed five years of service, each former director will
11
<PAGE> 14
receive an immediate lump-sum payment of the actuarial present value of the
director's benefit under the Plan, and each director who does not receive an
immediate lump-sum payment will receive a lump-sum payment which is the
actuarial present value of the director's Plan benefit upon termination of the
directorship or termination of the Plan. The Company also has established a
trust to ensure payment to all directors of these benefits.
Stock options for the purchase of 1,000 shares of Common Stock were granted
to each non-employee director on February 17, 1988. After that date, each
non-employee director will be granted options for the purchase of 1,000 shares
of Common Stock upon his or her initial election to the Board of Directors.
Options also will be granted to non-employee directors, after the initial 1,000
share grant, on the date of each subsequent annual Board meeting, for a number
of shares equivalent in value to the director's annual retainer divided by the
closing price on that date. Each option gives the eligible director the right to
purchase shares of the Company's Common Stock at 100% of the closing price on
the date of grant, to expire three years from the date of termination of
service, but in no event longer than ten years from the date of grant. The
option prices for outstanding options granted to directors range from $14.125 to
$28.00 per share.
CHANGE OF CONTROL AGREEMENTS
The Board of Directors authorized the Company to enter into change of
control severance agreements with its executive officers. These agreements are
with Messrs. Blystone, Zagotta, Trubeck, Sheridan, and Lison, as well as five
additional executives, and the agreements provide for the payment of
compensation and benefits in the event of termination of employment following a
change-of-control. A change-of-control is generally defined as (i) the
acquisition by a person, other than the Company, of 20% or more in voting power
of the Company's securities; (ii) a change in the majority of the Board of
Directors over a two-year period; (iii) the sale of all or substantially all the
Company's assets or the merger or consolidation of the Company with any other
corporation, except where the Company's owners continue to hold at least 80% of
the voting power in the new or surviving entity's securities; or (iv) the
acquisition by a person, other than the Company, pursuant to an exchange or
tender offer for securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities.
Each severance agreement will remain in effect for at least three years
following the date of its execution. Thereafter, each agreement will be extended
annually unless the Company gives proper notice of its election not to extend.
If a change-of-control occurs during the term of an agreement, it will remain in
effect for three years following the change-of-control.
An executive whose employment is terminated after a change-of-control will
generally receive additional compensation only if the termination was by the
Company without cause or by the executive because of a diminution in salary,
benefits or responsibilities or related reasons. An executive whose termination
follows a change-of-control, but not because of one of the above reasons, will
generally receive normal severance pay, payment of certain accrued vested
benefits, a prorated bonus, vacation pay, deferred compensation and amounts
payable under the terms of the EVA Incentive Compensation Plan. The severance
agreements provide the following additional benefits payable after a
change-of-control to executives who are terminated without cause or who resign
for the reasons described above: (i) three times the sum of the executive's base
salary and annual target bonus; (ii) continued health care coverage for three
years; (iii) continued life insurance coverage for a period of three years in
the amount of twice the executive's base salary and thereafter at one times base
salary for the remainder of his or her life; (iv) full vesting and three
additional years of credit under the Company's qualified pension plan, excess
pension plan and supplemental retirement plan; (v) a lump-sum payment under the
Company's supplemental retirement savings plan; (vi) a prorated award under the
Performance Unit Plan or the EVA Incentive Compensation Plan; (vii) the removal
of any restrictions placed on shares of restricted stock; (viii) the payment of
any federal excise taxes; and (ix) the reimbursement of legal and tax audit
fees, if any, incurred as a result of the termination. The Company has
established a trust to ensure payment to all executives whose employment is
terminated after a change-of-control of the compensation and benefits described
herein.
12
<PAGE> 15
DEATH BENEFIT PLAN FOR KEY MANAGERS
As part of the total compensation package developed to assist the Company
in attracting and retaining top quality managers, the Company in 1985 adopted a
death benefit plan for certain key managers designated as eligible by the
Company's Board of Directors. As of January, 1996, 29 active key managers,
including officers named in the Summary Compensation Table, together with 30
retired managers were participating. Under this plan, if death occurs before
retirement, the participant's beneficiary will receive a payment which, when
adjusted for income taxes, will equal two times the amount of the individual's
base salary as of the date of death. If death occurs after retirement the amount
paid to the beneficiary after adjustment for income taxes will equal one times
final base salary. The Company has purchased life insurance contracts on the
lives of the participants, with the Company as owner and beneficiary, to
indemnify the Company for the cost of such benefits. The cost incurred by the
Company for this Plan during 1995 was not significant.
Irrespective of any statement to the contrary included in any Company
filing under the Securities Exchange Act of 1934, as amended, that
might incorporate by reference future filings, including this Proxy
Statement, in whole or in part, the following report of the
Compensation Committee and the Performance Graph on page 17 shall not
be incorporated by reference into any such filings.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE OFFICERS' COMPENSATION
The Company's Compensation Committee (the "Committee"), which is comprised
of four outside directors of the Company, is responsible for considering and
approving the Company's compensation program for senior management, including
the Company's executive officers. The key objectives of the Committee in
establishing compensation programs for senior management are: (i) to attract and
retain highly qualified executives to manage the Company and its operating
divisions, and (ii) to provide strong financial incentives, at reasonable cost
to the Company's shareholders, for senior management to maximize the Company's
shareholder value.
The Company's executive compensation program consists of three basic
elements -- base salary, an annual bonus and longer term incentives which
include performance units and stock options. Beginning in 1996, performance
units will no longer be awarded and stock options will be granted as described
below.
Base Salaries
Each executive officer has a base salary range and midpoint. Midpoints are
determined on the basis of competitive compensation data. Position in range is
determined on the basis of experience and performance.
Annual Bonuses
In 1995, the Company's annual bonus plan provided for awards based on net
income (80% of opportunity) and personal performance goals (20% of opportunity).
Individual performance goals are established each year for executive officers
based on the individual's area of responsibility. These goals are generally
measured subjectively rather than quantitatively and include managing divisional
integration efforts, succession and organizational plans and productivity and
quality improvement projects.
The Company's net income performance in 1995 did not meet the threshold
levels and the executive officers received no payment on the 80% portion of the
annual Plan opportunity. The Committee awarded payments averaging 13% above
target for personal goal achievement by the executive officers in 1995 and these
amounts are shown for the named executive officers in the Summary Compensation
Table.
The Company also has a Performance Unit Plan under which award
opportunities were granted in 1993, 1994 and 1995. The payout of award
opportunities for corporate executive officers is based on the Company's total
return to shareholders for a three-year period relative to the S&P 500. No award
opportunities are to be granted under this Plan after 1995.
13
<PAGE> 16
Beginning in 1996, the Committee, based on the recommendations of
management, recommended to the board, and the board has adopted, the new EVA
Incentive Plan. The new plan provides for awards based on improvements in
Economic Value Added (EVA). EVA is a measure of operating profit after deduction
of all costs, including the cost of the Company's equity capital. The EVA bonus
plan is based on three key concepts: 1) a target bonus, 2) a fixed share of EVA
improvement in excess of expected EVA improvement ("excess EVA improvement") and
3) a bonus bank. The EVA bonus earned is equal to the sum of the target bonus
plus the fixed share of excess EVA improvement (which may be negative). The
bonus earned is credited to the bonus bank, and the bonus available to be paid
to the participant is equal to the amount of the bonus bank balance, up to the
amount of the target bonus, plus 1/3 of the bonus bank balance in excess of the
target bonus. Of the total bonus available to be paid 80% is paid automatically
and the remaining 20% is contingent upon the achievement of individual
performance goals. No bonus is paid when the bonus bank balance is negative and
negative bonus bank balances are carried forward to offset future bonuses
earned. There is no cap on the bonus awards that can be achieved for superior
levels of excess EVA improvement.
The Committee believes that excess EVA improvement provides the best
operating performance measure of shareholder returns in excess of the cost of
equity capital. To ensure that the plan provides strong incentives for
management to increase shareholder value and does not reward poor performance by
reducing performance standards nor penalize superior performance by raising
performance standards, it is the Committee's intention that there will be no
recalibration of expected EVA improvement or management's share of excess EVA
improvement for a period of at least four years.
Stock Options
In past years, the Company has made annual stock option grants to executive
officers using a "competitive grant value" concept. The number of option shares
awarded to an executive officer was determined by dividing the current share
price into a percentage (90% to 120% depending on the level of responsibility)
of the executive's salary. As part of a reevaluation of the Company's executive
compensation plans undertaken in December 1995 the Compensation Committee
changed the time for awarding stock options from December to February. As a
consequence, no options, other than those awarded to Mr. Blystone as part of his
employment agreement, were granted to an executive officer of the Company in
1995.
Consistent with the fixed share concept underlying the EVA program, the
Company, in 1996 and subsequent years, plans to make annual stock option grants
to executive officers on a "fixed share" basis. Under the new program, executive
officers will receive each year an option on a fixed number of shares of stock
without regard to the current price of the stock. Under the fixed share program,
the number of option shares granted will not be increased to offset a decline in
the stock price (as would be necessary to maintain a competitive grant value),
and will not decrease to offset an increase in the stock price (as would also be
necessary to maintain a competitive grant value).
The value of current total compensation opportunities for senior management
is slightly below a median competitive level based on the data from the Hewitt
Associates Total Compensation Data Base (Core Group III, a group of middle
market industrial companies). In the future, the Company's competitive position
will depend on Company performance. If the Company does well, the fixed share
concepts underlying the total compensation program will raise the Company's
competitive position above median levels. If the Company does poorly, the fixed
share concepts will cause the Company's competitive position to fall below
median levels. The Committee believes that the total compensation program
provides very strong incentives to maximize shareholder value with reasonable
balance between the Company's need to retain strong senior management and
shareholder cost objectives.
Internal Revenue Code Section 162(m) limits the deduction a publicly-held
company is allowed for compensation paid to executive officers, including those
named in the table on page 7. Generally, amounts paid in excess of $1 million to
a covered executive, other than performance-based compensation, cannot be
deducted. In order to be performance-based compensation for purposes of the new
tax law, the performance measures must be approved by the shareholders. The
Committee will continue to consider ways to maximize the deductibility of
executive compensation, while retaining the discretion the Committee deems
necessary to
14
<PAGE> 17
compensate executive officers in a manner commensurate with performance and the
competitive environment for executive talent.
COMPENSATION OF CHAIRMAN AND CHIEF EXECUTIVE OFFICERS
The Committee established the 1995 compensation of Dale A. Johnson, the
Chairman and Chief Executive Officer through June 1995, using substantially the
same criteria that were used to determine compensation levels for other
executive officers discussed earlier in this report. Mr. Johnson's compensation
was reviewed against the compensation paid to chief executive officers in the
comparison groups referred to earlier in this report. His 1995 total
compensation package (including salary, short and long-term incentive
opportunity and the projected value of stock awards) places him at the 50th
percentile of the total compensation amounts paid to chief executive officers in
the Hewitt Associates Core Group III. In the Committee's view, this level of
opportunity provides adequate and necessary incentives.
Mr. Johnson's 1995 salary was determined based on the financial position of
the Company at the end of 1994, Mr. Johnson's performance and competitive market
data on salary levels. The Committee increased Mr. Johnson's salary in
recognition of the performance of the Company in 1994. The Company does not
assign relative weighting factors of performance in establishing the salary of
the Chief Executive Officer.
Mr. Johnson resigned as Chairman and Chief Executive Officer of the Company
on June 28, 1995. Pursuant to his resignation, the Company agreed to payment of
severance equal to two years' salary ($1,010,000), no payment of any bonus for
1995 and a retirement benefit enhancement valued at $416,415. Mr. Johnson will
also continue to be a participant, on a reduced basis, in the Company's
Performance Unit Plan pertaining to periods ending December 31, 1996 and will
have no participation in the Plan for the period ending December 31, 1997.
From June 28, 1995 through December 18, 1995, Charles E. Johnson II served
as Chairman and Chief Executive Officer of the Company. Mr. Johnson, a director
of the Company since 1976, was formerly the President and Chief Operating
Officer of the Company. As Chief Executive Officer, he was paid a salary of
$25,000 per month plus an amount ($531,418) calculated to increase his Company
pension plan payment to $150,000 per annum.
On December 18, 1995, John B. Blystone became Chairman, President and Chief
Executive Officer of the Company and a member of its Board of Directors. In
establishing Mr. Blystone's compensation, the Committee focused on four
objectives: alignment -- giving incentives to choose strategies and investments
that maximize shareholder value; leverage -- giving sufficient incentive
compensation to motivate the executive to take risks and make difficult
decisions in order to maximize shareholder value; retention -- giving the
executive sufficient total compensation to keep him at the Company, particularly
during periods of difficult performance due to market and industry factors; and
shareholder cost -- limiting the cost of management compensation to levels that
will maximize shareholder value. In pursuing these four basic objectives the
Committee also took into account the competitive environment for comparable
executive talent with the view to providing a package of incentives that would
motivate the Chief Executive Officer to provide the Company with leadership over
the long term. Pursuant to the employment agreement with Mr. Blystone, he will
be paid an annual base salary of $450,000 and an annual bonus and long-term
incentives to be established pursuant to the Company's recently adopted EVA
Incentive Compensation Plan that will, for the year ended December 31, 1996,
result in a minimum $250,000 cash award to be paid during the first quarter of
1997. In addition, stock options for 125,000 shares and a restricted stock award
of 125,000 shares of the Company's common stock were granted. In addition, Mr.
Blystone was paid $420,000, in cash, upon joining the Company to partially
compensate him for compensation and benefits he forfeited upon leaving his prior
employer. In the Committee's view, the terms of Mr. Blystone's employment are
comparable to terms granted to chief executive officers of comparable companies
and are necessary to attract and retain a chief executive officer in the
competitive environment for executive talent.
15
<PAGE> 18
The foregoing report has been approved by all members of the Committee.
The Compensation Committee
Frank A. Ehmann, Chairman
J. Kermit Campbell
Sarah R. Coffin
David P. Williams
16
<PAGE> 19
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Common Stock of the Company for the last five fiscal years with the cumulative
total return on the S&P 500 Composite Index and the S&P Auto Parts-Aftermarket
Index over the same period (assuming the investment of $100 in the Company's
Common Stock, the S&P 500 Index and the S&P Auto Parts-Aftermarket Index on
December 31, 1990, and reinvestment of all dividends). The companies included in
the S&P Auto Parts-Aftermarket Index are Cooper Tire and Rubber Co.; Echlin,
Inc.; Genuine Parts Co.; and Goodyear Tire and Rubber Co.
[GRAPH]
CHARISMA
<TABLE>
<CAPTION>
Measurement Period Auto Parts-
(Fiscal Year Covered) SPX Corp. S&P 500 A/Mkt.
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 93.30 130.47 183.46
1992 130.77 140.41 230.73
1993 132.13 154.56 268.18
1994 126.83 156.60 233.88
1995 124.41 215.45 289.15
</TABLE>
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during 1995 were Frank A. Ehmann
(Chairman), J. Kermit Campbell, Sarah R. Coffin and David P. Williams. All
Committee members are outside directors and no committee member is or has ever
been an officer or employee of the Company.
17
<PAGE> 20
PROPOSAL TO APPROVE THE
EVA INCENTIVE COMPENSATION PLAN
On February 21, 1996, the Board of Directors, upon the recommendation of
the Compensation Committee, adopted an incentive compensation plan based on the
economic value added concept, the SPX Corporation EVA Incentive Compensation
Plan (the "EVA Plan"), subject to approval by the shareholders at the 1996
Annual Meeting of Shareholders. The purpose of the EVA Plan is to link incentive
awards for officers and key managers to the creation of investor wealth and to
promote a culture of performance and ownership. Officers and key managers are
approved for EVA Plan participation by the Compensation Committee.
The EVA Plan provides for bonuses based on improvements in economic value
added ("EVA"). EVA is equal to the net operating profit after tax minus a charge
for all capital employed in the business including the Company's equity capital.
The charge for capital is equal to the Company's weighted average cost of debt
and equity at the Company's targeted debt to equity ratio, currently 11%, times
the total capital employed in the business.
An EVA Plan bonus is based on three key components: 1) a Target Bonus, 2)
the EVA improvement in excess of expected EVA improvement ("Excess EVA
Improvement"), and 3) a Bonus Bank. The bonus that may be earned by a
participant for any fiscal year is the sum of the participant's Target Bonus
plus a fixed share of the Excess EVA Improvement (which may be negative). Target
Bonuses are a percentage of the salary midpoint (which, for plan purposes, may
not increase by more than 10% per year) for each of the executive officer
positions, with the percentage set at 80% for the Chief Executive Officer and
60% or 50% for the other executive officers. The expected EVA improvement for
1996 over 1995 is $4.2 million. The amount of expected EVA improvement for
succeeding years is increased 10% each year. Excess EVA Improvement, which is
the amount by which actual EVA improvement exceeds or falls short of expected
EVA improvement, can be positive or negative without limitation. The CEO's fixed
share of the Excess EVA Improvement is 7%, and the aggregate share for all other
executive officers is 14% with each officer receiving an allocation
proportionate to Target Bonuses.
The bonus earned by each participant is determined by the Compensation
Committee following release of the Company's financial statements for the
applicable fiscal year and then credited to each participant's Bonus Bank, which
has an initial balance of zero. The bonus available to be paid is the
participant's Bonus Bank balance up to his or her Target Bonus, plus one-third
of the Bonus Bank balance in excess of the Target Bonus. The participant
receives 80% of that amount without further conditions and the remaining 20% if
individual performance goals are attained.
The bonus available to be paid to the participant is charged against the
participant's Bonus Bank balance to determine the beginning balance for the next
fiscal year. No bonus is paid when the Bonus Bank balance (following credits for
any EVA bonus earned during the year) is negative, and negative Bonus Bank
balances are carried forward to offset future bonuses earned. There is no cap on
positive bonuses that can be earned and credited to the Bonus Bank for superior
performance. There is also no cap on negative bonuses that may be deducted from
the Bonus Bank for poor performance.
The Company has determined that, for 1996, the Target Bonus for the CEO is
$397,158 and for all seven executive officers including the CEO is $1,112,222.
By way of example, if the Company has EVA improvement in 1996 of $5 million, the
Excess EVA Improvement over the $4.2 million expected amount would be a positive
$800,000. This would produce a bonus for the CEO as follows: The fixed share of
the Excess EVA Improvement to be added to the CEO's Target Bonus would be 7% of
$800,000, or $56,000. This amount would then be added to the Target Bonus of
$397,158 for a bonus earned of $453,158, which would be added to the CEO's Bonus
Bank. The payout from the Bonus Bank to the CEO would be the Bonus Bank balance
of $453,158 up to the $397,158 Target Bonus, plus 1/3 of $453,158 minus
$397,158, or $18,667. The bonus payable would be the Target Bonus of $397,158
plus $18,667 or $415,825, of which 80% would be paid out automatically and 20%
would be based on individual performance goals. The CEO's beginning Bonus Bank
for 1997 would be $453,158 minus $415,825, or $37,333. Any portion of the 20%
that is not paid is forfeited and not credited back to the Bonus Bank.
18
<PAGE> 21
The Committee believes that Excess EVA Improvement provides the best
operating performance measure of shareholder returns in excess of the cost of
equity capital. To ensure that the EVA Plan provides strong incentives for
management to increase shareholder value and does not reward poor performance by
reducing performance standards nor penalize superior performance by raising
performance standards, it is the Committee's intention that there will be no
recalibration of expected EVA improvement or management's share of Excess EVA
Improvement for a period of at least four years.
The Board of Directors recommends a vote "FOR" the above proposal to
approve the SPX Corporation EVA Incentive Compensation Plan.
1997 SHAREHOLDER PROPOSALS AND NOMINATING PROCEDURES
Proposals of shareholders intended for inclusion in the Company's proxy
statement relating to the 1997 Annual Meeting must be received at the Company's
Principal Executive Offices (please address to the attention of James M.
Sheridan, Secretary) not later than November 25, 1996. Any such proposal must
comply with Rule 14a-8 of Regulation 14A of the proxy rules of the Securities
and Exchange Commission.
The bylaws of the Company require that nominations for a director to be
elected at the 1997 Annual Meeting, other than those made by the Board, be
submitted to the Secretary of the Company not later than December 24, 1996. The
bylaws also require that notice of such nominations contain certain information
regarding the nominee and certain information regarding the nominating
shareholder. Any shareholder may obtain a copy of the applicable bylaw from the
Secretary of the Company upon written request.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, the Company's independent auditors since 1952, has
been appointed by the Board of Directors as the Company's independent auditors
for the current year. Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting to be available to answer appropriate questions
and to make a statement if they so desire.
GENERAL
The cost of preparing, assembling and mailing this proxy statement and
accompanying papers will be borne by the Company. Solicitations will be made by
mail but in some cases may also be made by telephone or personal call by
officers, directors or regular employees of the Company, who will not be
specially compensated for such solicitation. The Company has retained the Kissel
Blake Organization, Inc. to assist in the solicitation of proxies for a fee of
$7,500 plus expenses. The entire cost of such solicitation will be borne by the
Company, which will include the cost of supplying necessary additional copies of
the solicitation materials for beneficial owners of shares held of record by
brokers, dealers, banks and voting trustees, and their nominees and, upon
request, the reasonable expenses of such record holders for completing the
mailing of the solicitation materials to those beneficial owners.
By Order of the Board of Directors,
JAMES M. SHERIDAN
Vice President and Secretary
Muskegon, Michigan
March 25, 1996
19
<PAGE> 22
SPX CORPORATION
FOR SHAREHOLDERS WITH COMMON SHARES HELD IN THE COMPANY'S KSOP TRUST:
1. Please notice the number of shares held in the KSOP Trust is indicated
separately on the proxy card.
2. It is important to remember that your specific voting directions to the
Trustee are strictly confidential and may not be divulged by the Trustee to
anyone, including the company or any director, officer, employee or agent of
the company. The Trustee will vote the shares being held by the Trust and
not yet allocated to participant's accounts in the same manner and proportion
as the shares for which the Trustee has received timely voting instructions.
Shares in participant accounts for which no timely voting instructions are
received by the Trustee, will also be voted in the same manner.
PROXY/VOTING INSTRUCTION CARD
SPX CORPORATION
MUSKEGON, MICHIGAN
ANNUAL MEETING APRIL 24, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of SPX Corporation, a Delaware corporation,
hereby appoints John B. Blystone, William L. Trubeck and James M. Sheridan, or
any one of them, with full power of substitution, to act as his agents and
proxies at the Annual Meeting of Shareholders of the Company to be held in
Muskegon, Michigan, on April 24, 1996 at 9 a.m. (Eastern Standard Time) with
authority to vote at said meeting, and any adjournments thereof, as indicated
below, all shares of stock of the Company standing in the name of the
undersigned on the books of the Company.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ITEM 1 AND ITEM 2.
(Continued and to be signed and
dated on the other side.)
SPX CORPORATION
P.O. BOX 11208
NEW YORK, N.Y. 10203-0208
<PAGE> 23
SPX CORPORATION NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1996
Dear Shareholder:
The Annual Meeting of Shareholders of SPX Corporation will be held at 9:00 a.m.
Eastern Standard Time on Wednesday, April 24, 1996 at the company's
headquarters in Muskegon, Michigan, for the following purposes:
1. To elect three directors to the Board of Directors.
2. To approve the SPX Corporation EVA Incentive Compensation Plan.
3. To address such other business as may properly come before the
meeting.
Only holders of Common Stock of SPX Corporation of record at the close of
business on March 15, 1996 will be entitled to vote at the meeting or any
adjournment thereof.
TO BE SURE THAT YOUR VOTE IS COUNTED, WE URGE YOU TO COMPLETE AND SIGN THE
PROXY/VOTING INSTRUCTION CARD BELOW, DETACH IT FROM THIS LETTER AND RETURN IT
IN THE POSTAGE PAID ENVELOPE ENCLOSED IN THIS PACKAGE. The giving of such proxy
does not affect your right to vote in person if you attend the meeting. The
prompt return of your signed proxy will aid the company in reducing the expense
of additional proxy solicitation.
For shareholders with common shares held in the company's KSOP Trust, please
read the reverse side of this letter.
BY ORDER OF THE BOARD OF DIRECTORS
JAMES M. SHERIDAN
March 25, 1996 JAMES M. SHERIDAN
Vice President, Administration
Secretary and General Counsel
DETACH PROXY CARD HERE
<TABLE>
<S><C>
/ /
1. Election of three Directors 2. Approval of the EVA Incentive Compensation Plan.
For Against Exceptions* FOR AGAINST ABSTAIN
Nominees: J. Kermit Campbell, Ronald L. Kerber and Peter H. Merlin
________________________________________________________ 3. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before
*Exceptions_______________________________________________________ the meeting.
To vote your shares for all Director nominees, mark
the "For" box on Item 1. To withhold voting for all
nominees, mark the "Withhold" box. If you do not wish
your shares voted "for" a particular nominee, mark
the "Exceptions" box and enter the name(s) of the
exception(s) in the space provided. CHANGE OF ADDRESS AND
OR COMMENTS MARK HERE
If you sign as agent or in any other representative
capacity, please state the capacity in which you sign.
If shares are registered in the names of two or more
persons, each such person should sign this proxy.
DATE ___________________________________________, 1996
SIGNATURE ____________________________________________
VOTES MUST BE INDICATED X
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD (X) IN BLACK OR BLUE INK.
PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
