<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
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
SPX 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)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
<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 27, 1997
Fellow Shareholders:
You are cordially invited to attend the 1997 Annual
Meeting of Shareholders on Wednesday, April 23, 1997 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 14, 1997 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> 3
SPX CORPORATION
700 TERRACE POINT DRIVE MUSKEGON, MICHIGAN 49443-3301
TELEPHONE (616) 724-5000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1997
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 23, 1997 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 two directors of the Company;
2. The approval of amendments to the Company's 1992 Stock Compensation
Plan, which will increase the shares available by 1,200,000;
3. The approval of the adoption of the Company's 1997 Non-Employee
Directors' Compensation Plan; and
4. Such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on March 14, 1997 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 1996 Annual Report to Shareholders has been mailed
to each shareholder.
By Order of the Board of Directors,
CHRISTOPHER J. KEARNEY
Vice President, Secretary
and General Counsel
Muskegon, Michigan
March 27, 1997
IMPORTANT--PLEASE MAIL YOUR SIGNED PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE PROVIDED FOR THIS PURPOSE
<PAGE> 4
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 23, 1997
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 23, 1997.
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 two directors, approval of amendments to the
Company's 1992 Stock Compensation Plan which, among other matters, will increase
the number of shares available for options and grants by 1,200,000 and approval
of the Company's 1997 Non-Employee Directors' Compensation Plan. The proxy
confers discretionary authority upon the persons named therein, or their
substitutes, with respect to any other business that 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 14, 1997, 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 14,877,014 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 amendments to the Company's 1992 Stock
Compensation Plan, the approval of the Company's 1997 Non-Employee Directors'
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
director or can withhold authority to vote for certain nominees for director.
Abstentions from the proposal to elect directors and the proposals to approve
the amendments to the Company's 1992 Stock Compensation Plan and Company's 1997
Non-Employee Directors' Compensation Plan are treated as votes against the
election of the directors and against the Plans 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 27, 1997.
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, two nominees
are to be elected to serve for a term of three years and until their respective
successors are elected and qualified. The remaining seven directors will
continue to serve
<PAGE> 5
as set forth below, with four directors having terms expiring in April 1998 and
three directors having terms expiring in April 1999. 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 two nominees, or in the event of
a contingency not presently foreseen, for different persons as substitutes
therefor.
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 2000
<TABLE>
<S> <C>
BLYSTONE PHOTO JOHN B. BLYSTONE
Mr. Blystone, 43, 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
and a member of the Governance Committee.
EHMANN PHOTO FRANK A. EHMANN
Mr. Ehmann, 63, is the former President and Chief Operating
Officer of American Hospital Supply Corporation. He joined
the SPX Board in 1988 and is Chairman of the Compensation
Committee and a member of the Governance 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, 44, 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 Retirement Funds Committee.
HOPKINS PHOTO EDWARD D. HOPKINS
Mr. Hopkins, 59, 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 Audit Committee.
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
JOHNSON PHOTO CHARLES E. JOHNSON II
Mr. Johnson, 61, 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 Chairman of the Audit Committee and a member of
the Executive Committee and the Governance Committee. He is
a director of Hackley Hospital.
WILLIAMS PHOTO DAVID P. WILLIAMS
Mr. Williams, 62, is President and Chief Operating Officer
of The Budd Company, a manufacturer of automobile and truck
body components, castings, stampings, chassis frame
components, air bag components, automotive heating
accessories and cold weather starting aids. He joined the
SPX Board in 1992, is Chairman of the Retirement Funds
Committee and is a member of the Compensation Committee and
the Executive Committee. He is a director of The Budd
Company, Budd Canada Inc., Standard Federal Bank, Thyssen
Production Systems, Inc. and Thyssen Budd Automotive.
</TABLE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING
IN OFFICE WHOSE TERMS EXPIRE APRIL 1999
<TABLE>
<S> <C>
CAMPBELL PHOTO J. KERMIT CAMPBELL
Mr. Campbell, 58, 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, 53, 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 Retirement
Funds Committee.
MERLIN PHOTO PETER H. MERLIN
Mr. Merlin, 68, is a Partner of Gardner, Carton & Douglas,
Corporate Counsel for the Company. He joined the SPX Board
in 1975 and is Chairman of the Governance Committee and a
member of the Executive Committee and Retirement Funds
Committee. He is a director of Aldi, Inc. and Lechler, Inc.,
a Trustee of Northwestern Memorial Hospital and Chairman and
Director of the Chicago Horticultural Society-Botanic
Garden.
</TABLE>
3
<PAGE> 7
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 Mr. Blystone, who
prior to joining the Company in December 1995, was, from 1991 to 1994, 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 was with Herman
Miller, Inc. from 1992 to 1995, and previously had been 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.
The law firm of Gardner, Carton & 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 six meetings of the Board of Directors of the Company in 1996
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, Governance Committee, Executive Committee, and
Retirement Funds Committee.
The Audit Committee, which held two meetings in 1996, has the primary
responsibility of ensuring 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, 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 three meetings in 1996, is
responsible for considering and approving the Company's compensation program for
senior management, including executive employment agreements, the grant of stock
options and other awards under the Company's Stock Compensation Plan and awards
under the EVA Incentive Compensation Plan.
The Governance Committee, which held one meeting during 1996, (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 1997 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 a directorship.
The Executive Committee, which held no meetings in 1996, has authority to
act on most matters during the intervals between Board meetings.
The Retirement Funds Committee, which held one meeting in 1996, reviews the
investment performance, actuarial assumptions and funding practices for the
Company's pension, healthcare and defined contribution plans.
4
<PAGE> 8
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned as of March 14, 1997, 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>
John B. Blystone(4)......................................... 273,761 1.9%
J. Kermit Campbell.......................................... 6,517 *
Sarah R. Coffin............................................. 4,796 *
Frank A. Ehmann............................................. 11,858 *
Edward D. Hopkins........................................... 12,017 *
Robert C. Huff.............................................. 9,387 *
Charles E. Johnson II(5).................................... 70,557 *
Ronald L. Kerber............................................ 5,213 *
Daniel J. Moody............................................. 24,750 *
Peter H. Merlin............................................. 11,836 *
Thomas J. Riordan........................................... 1,000 *
James M. Sheridan(5)........................................ 82,422 *
William L. Trubeck.......................................... 16,666 *
David P. Williams........................................... 7,800 *
All directors and executive officers as a group (19 persons)
including the above-named................................. 684,748 4.7%
</TABLE>
- ---------------
* Less than 1%.
(1) Included for Messrs. Blystone, Huff, Moody, Riordan, Sheridan, Trubeck 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. Blystone - 125,000 shares, Mr. Campbell - 4,900 shares, Mrs.
Coffin - 3,600 shares, Mr. Ehmann - 10,200 shares, Mr. Hopkins - 10,200
shares, Mr. Huff - 7,000 shares, Mr. Johnson - 7,600 shares, Mr. Kerber -
3,400 shares, Mr. Merlin - 8,600 shares, Mr. Moody - 21,500 shares, Mr.
Riordan - 0 shares, Mr. Sheridan - 66,500 shares, Mr. Trubeck - 14,000
shares, and Mr. Williams - 6,300 shares.
(4) 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) Includes shares held by family members of certain directors and executive
officers in which such directors and officers disclaim any beneficial
interest.
5
<PAGE> 9
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 based on information
filed on Schedule 13D or Schedule 13G:
<TABLE>
<CAPTION>
AMOUNT OF PERCENT
BENEFICIAL OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
------------------------------------ ---------- -------
<S> <C> <C>
Harris Associates L.P. 1,507,900(1) 10.1%
Two North LaSalle Street, Suite 500
Chicago, IL 60602
FMR Corp. (Fidelity Investments) 1,500,100(2) 10.1%
82 Devonshire Street
Boston, MA 02109
Fidelity Management Trust Company 1,354,285(3) 9.1%
82 Devonshire Street
Boston, MA 02109
ICM Asset Management, Inc. 830,800 5.6%
601 W. Main Ave., Suite 917
Spokane, WA 99201
</TABLE>
- ---------------
(1) Harris Associates L.P. serves as investment advisor to Harris Associates
Investment Trust (the "Trust"). The series of the Trust designated The
Oakmark Fund, The Oakmark Small Cap Fund and The Oakmark Select Fund
beneficially own 967,900, 500,000 and 40,000 shares of the Company,
respectively.
(2) 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 1,500,100 shares
of the Company.
(3) Fidelity Management Trust Company is the Trustee of the Company's Savings
and Stock Ownership Plan and as of February 28, 1997 owned such number of
shares pursuant to Plan.
6
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes compensation received for the last three
fiscal years by the Company's Chief Executive Officer and the five other most
highly paid executive officers for the three fiscal years ended December 31,
1996. None of the six named officers is employed under contract or employment
agreement except for Mr. Blystone.
SUMMARY COMPENSATION TABLE
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
<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 1996 450,000 947,396 85,622(4) 0 0(5) 0 20,250
Chief Executive Officer 1995 17,308 0 0 1,968,750(6) 125,000 0 420,779(7)
(12/18/95 to present) 1994
Daniel J. Moody
- --------------
President, Sealed Power 1996 186,000 524,767 0 0 12,500 112,042 7,125
Division 1995 176,000 14,304 0 0 0 0 6,930
1994 160,000 94,005 0 0 9,000 0 6,930
James M. Sheridan
- ----------------
Vice President, Administration, 1996 228,500 325,049 0 0 21,000 154,104 11,519
General Counsel and 1995 213,500 27,468 0 0 0 0 15,377
Corporate Secretary 1994 205,000 127,699 0 0 12,000 131,569 9,224
William L. Trubeck
- ----------------
Senior Vice President, 1996 187,981 289,618 0 0 21,000 0 113,863(8)
Finance and Chief 1995 275,000 31,262 0 0 0 0 15,750
Financial Officer 1994 37,020 75,000 0 0 14,000 0 952
(resigned 8/31/96)*
Thomas J. Riordan
- ----------------
President, OE Tool & 1996 205,000 236,328 94,832(4) 0 10,000 0 6,209
Equipment Division 1995
(2/26/96 to present) 1994
Robert C. Huff
- -------------
Vice President, Procurement 1996 165,000 194,689 0 0 12,500 90,570 8,041
1995 153,000 13,692 0 0 0 0 10,145
1994 146,000 72,440 0 0 7,000 0 7,300
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Mr. Trubeck was succeeded by Patrick J. O'Leary who was elected Vice
President-Finance, Treasurer and Chief Financial Officer of the Company
effective October 14, 1996.
(1) No other Annual Compensation other than perquisites and personal benefits
is payable. Except as otherwise indicated, perquisites and personal
benefits are below threshold reporting.
(2) Messrs. Moody, Sheridan and Huff were participants in the 1994-1996
Performance Unit Plan which concluded as of December 31, 1996. The Plan
paid incentive awards to three officers in the form of cash (performance
units) and shares of common stock (performance shares). All of the cash and
one-third of the shares vested as of December 31, 1996. The remaining
shares vest, based on continued employment, one-third on January 15, 1998,
and one-third on January 15, 1999. The total cash and shares (vested and
unvested) earned by each officer for the 1994-1996 performance period was
Mr. Moody - $112,042 and 0 shares, Mr. Sheridan - $57,750 and 2,642 shares
and Mr. Huff - $33,750 and 1,558 shares. The amount shown above as "LTIP
Payouts" in 1996 include the cash payments and the total value of the
vested and unvested shares. The other named executive officers did not
participate in this Plan for the 1994-1996 performance period.
(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) Moving expenses paid by the Company in connection with the hiring of the
executive officer.
7
<PAGE> 11
(5) In lieu of a stock option award for 1996, the Company granted Mr. Blystone
a five-year non-interest bearing loan of $368,000 to fund the purchase by
Mr. Blystone of shares of the Company's Common Stock on the open market. It
is the intention of the Company to forgive this loan if Mr. Blystone
remains with the Company for the five-year term of the loan or if certain
other conditions are met.
(6) 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 25,000
shares per year beginning December 1, 1996. Mr. Blystone receives dividends
on and has the right to vote all the shares, vested and nonvested.
(7) 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.
(8) Includes a severance payment of $99,159 paid following the termination of
Mr. Trubeck's employment with the Company.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL OPTIONS EXERCISE
OPTIONS GRANTED TO OR GRANT DATE
GRANTED(1) EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE(2)
NAME (#) 1996 ($/SHARE) DATE ($)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
John B. Blystone(3).............. 0 -- -- -- --
Daniel J. Moody.................. 12,500 5.3% $ 14.75 2/19/06 $55,750
James M. Sheridan................ 21,000 8.8% $ 14.75 2/19/06 $93,660
William L. Trubeck............... 21,000 8.8% $ 14.75 2/19/06 $93,660
Thomas J. Riordan................ 10,000 4.2% $14.625 2/26/06 $44,600
Robert C. Huff................... 12,500 5.3% $ 14.75 2/19/06 $55,750
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Each option was granted on February 20, 1996, (except for Mr. Riordan's,
which was granted on February 26, 1996) is nonqualified, is for a period of
ten years, becomes exercisable as to 50% of the shares two years after the
date of grant, and in full three years after the date of grant and was
granted pursuant to the SPX Corporation 1992 Stock Compensation Plan. Mr.
Trubeck's option was fully vested after six months. No tandem or
freestanding SARs were granted in 1996. There are no performance-based
conditions to exercisability, reload or tax reimbursement features
associated with the options granted in 1996. 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 $14.75 ($14.625 in the case of Mr. Riordan's
options), which is equal to the fair market value of the underlying stock
on the date of grant.
- An option term of ten years and an expected life of six years.
- An interest rate of 5.8%, which represents the interest rate on a U.S.
Treasury security with a maturity date corresponding to that of the option
term.
- Volatility of .344 calculated using monthly price and dividend data for
the five-year period ending in the grant month.
- Dividend yield at the rate of 3.2% representing the average dividend
yield for the five-year period ending in the grant month.
The ultimate value of the option will depend on the future market price of
SPX Corporation's common stock, which cannot be forecasted with reasonable
accuracy. The actual value, if any, an optionee will realize upon exercise
of an option will depend on the excess of the market value of the Company's
common stock over the exercise price on the date the option is exercised.
(3) Mr. Blystone did not receive an option grant in 1996, but in lieu thereof,
was granted a loan, the proceeds of which were used to purchase shares of
the Company's common stock. The loan arrangement is more specifically
described in footnote 5 of the Compensation Table.
8
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal 1996
by the named executive officers and the value of such officers' unexercised
options at December 31, 1996.
<TABLE>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES STOCK OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE YEAR END(1) FISCAL YEAR END(1)
ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME (#) ($) (#) ($)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
John B. Blystone................. 0 0 125,000/0 $2,921,875/0
Daniel J. Moody.................. 0 0 9,000/12,500 $217,125/$304,688
James M. Sheridan................ 0 0 66,500/21,000 $1,602,213/$511,875
William L. Trubeck............... 21,000 $299,460 14,000/0 $337,750/0
Thomas J. Riordan................ 0 0 0/10,000 0/$245,000
Robert C. Huff................... 0 0 7,000/12,500 $168,875/$304,688
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All exercisable options were exercisable immediately at December 31, 1996.
All unexercisable options were those granted to the named executive
officers on February 20, 1996 or February 26, 1996, and were in-the-money
as of December 31, 1996. The value of the options is based upon the mean
between the December 31, 1996 high and low selling prices of the Company's
Common Stock as reported on the New York Stock Exchange composite tape
($39.125). No SARs are held by the named executive officers.
SPX CORPORATION PERFORMANCE UNIT PLAN
The Company has previously sponsored a long-term incentive plan called the
SPX Corporation Performance Unit Plan, which operates on three-year performance
periods. The Plan was phased out with the adoption of the EVA Incentive
Compensation Plan in 1996 but continues for the remainder of performance periods
beginning in 1995 and prior years. At the beginning of each performance period,
a participant was granted a target award based on a percentage of his or her
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 $750 and the number
of shares earned will range from zero to 150% of the target amount.
For the 1995 performance period (January 1, 1995 to December 31, 1997), the
corporate goal was expressed in terms of growth in the Company's share price
plus dividends relative to the growth in the S&P 500 Index as follows:
<TABLE>
<CAPTION>
SPX PERFORMANCE LEVEL OF ACHIEVEMENT
--------------- --------------------
<S> <C> <C>
Less than 80% of S&P 500 growth No awards earned
80% of S&P 500 growth 50% of target award earned (threshold)
100% of S&P 500 growth 100% of target award earned (target)
150% of S&P 500 growth 150% of target award earned (maximum)
</TABLE>
Cash units and one-third of the shares earned are payable immediately
following the close of a performance period. The remaining two-thirds of the
earned shares vest ratably over the two years following the close of the
performance period based on continued employment.
9
<PAGE> 13
The following table sets forth the awards and opportunities for the
three-year performance period January 1, 1995 to December 31, 1997 for the
executives named in the Summary Compensation Table.
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CASH UNITS/SHARE PERFORMANCE OR OTHER
UNITS OR OTHER PERIOD UNTIL THRESHOLD(1)(2) TARGET(2) MAXIMUM(3)
NAME RIGHTS(#) MATURATION OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
John B. Blystone * -- -- -- --
Daniel J. Moody 63 cash units/ 1/1/95 $15,750 and $31,500 and Cash and shares
2,018 share units through 1,009 shares 2,018 shares may not exceed a
value of
12/31/97 $126,600
James M. Sheridan 80 cash units/ 1/1/95 $20,000 and $40,000 and Cash and shares
2,554 share units through 1,277 shares 2,554 shares may not exceed a
value of
12/31/97 $160,200
William L. Trubeck 91 cash units/ 1/1/95 $22,750 and $45,500 and Cash and shares
2,908 share units through 1,454 shares 2,908 shares may not exceed a
value of
12/31/97 $182,000
Thomas J. Riordan * -- -- -- --
Robert C. Huff 47 cash units/ 1/1/95 $11,750 and $23,500 and Cash and shares
1,499 share units through 750 shares 1,499 shares may not exceed a
12/31/97 value of $94,000
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Messrs. Blystone and Riordan did not participate in this Plan.
(1) No awards are paid if the minimum level of achievement is not reached.
(2) Shares earned are valued at the average NYSE closing price of SPX
Corporation's shares for the month of December 1997, when the award payment,
if earned, is determined.
(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> 14
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
1,000,000 386,667 580,000 580,000 580,000 580,000 617,500
1,100,000 425,333 638,000 638,000 638,000 638,000 679,250
1,200,000 464,000 696,000 696,000 696,000 696,000 741,000
1,300,000 502,667 754,000 754,000 754,000 754,000 802,750
1,400,000 541,333 812,000 812,000 812,000 812,000 864,500
1,500,000 580,000 870,000 870,000 870,000 870,000 926,250
- ---------------------------------------------------------------------------------------------------------
</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. Moody -- 40 years; Mr. Sheridan -- 30 years; Mr. Riordan -- 25 years; Mr.
Huff -- 35 years. Mr. Trubeck resigned on August 31, 1996, and was not vested in
any pension benefit.
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 from age 62 that approximate
actuarial values.
DIRECTORS' COMPENSATION
Directors who are employees of the Company or a subsidiary do not receive
directors' fees. For 1996, directors received an annual retainer of $22,000 plus
$1,000 for each regular or special meeting attended. The annual retainer was
paid one-half in cash and one-half in SPX shares until the director achieved
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 received $1,000 for each
Committee meeting which they attended. The Chairman of each Committee received
an additional annual retainer of $1,500. In addition to the payment of such
fees, the Company reimbursed all directors for expenses incurred in carrying out
their duties.
11
<PAGE> 15
Under the Directors' Retirement Plan, which was terminated for active
directors at the end of 1996, any director who retired 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 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 was granted options for the purchase of 1,000 shares of
Common Stock upon his or her initial election to the Board of Directors. Options
were 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.
Effective February 26, 1997, the above described standard arrangement for
directors compensation was replaced by the SPX Corporation 1997 Non-Employee
Directors' Compensation Plan, which is being presented to the shareholders at
the annual meeting for approval. For a detailed description of this new
compensation arrangement, see the "Proposal to Adopt the SPX Corporation 1997
Non-Employee Directors' Compensation Plan" on pages 23 through 25 and the text
of the Plan on pages A-1 through A-6.
CHANGE OF CONTROL AGREEMENTS
The Company has entered into change of control severance agreements with
its executive officers. These agreements are with Messrs. Blystone, Sheridan,
Riordan and Huff, as well as 6 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 15% 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 sales 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 15% 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 his election to terminate
after 30 days following a change-of-control or 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
12
<PAGE> 16
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.
EMPLOYMENT AGREEMENTS
1995 Employment Agreement with John B. Blystone
Until January 1, 1997, Mr. Blystone served the Company pursuant to an
employment agreement dated as of December 18, 1995 (the "1995 Agreement"). The
1995 Agreement provided for an employment term through January 31, 1998 at a
base salary of $450,000. The 1995 Agreement also provided participation in the
Company's annual EVA Incentive Compensation Plan, a stock option grant with
respect to 125,000 shares of Common Stock and a restricted stock award of
125,000 shares. In the event of early termination of Mr. Blystone's employment
by the Company without cause or by him for good reason, the 1995 Agreement
provided for lump sum salary and bonus payments, vesting of options, restricted
stock and equity and incentive plan awards and certain benefit plan continuation
substantially similar to the new employment agreement described below.
New Employment Agreement with John B. Blystone
The Company and Mr. Blystone executed a new employment agreement on
February 27, 1997, effective as of January 1, 1997, which provides for Mr.
Blystone's employment through December 31, 2001, with automatic extensions
commencing January 1, 1999, to provide for a continuous three-year term after
that date (subject to earlier termination in certain circumstances as described
below).
The new employment agreement provides for an annual base salary of at least
$650,000. Through 1999, Mr. Blystone is eligible to receive an annual bonus
under the Company's EVA Incentive Compensation Plan (the terms of which cannot
be changed as to Mr. Blystone without his consent) and thereafter under the
Company's annual bonus plan as then in effect for senior executives, provided
that in all years the annual bonus is to be based on a target award equal to 80%
of his annual base salary midpoint.
In connection with the new employment agreement, the Committee also granted
to Mr. Blystone, on February 26, 1997, a stock option award with respect to a
total of 1,000,000 shares of Common Stock. Of this total, 250,000 shares covered
by the award have an exercise price of $45.75, the fair market value of the
Company's Common Stock on February 26, 1997. The exercise prices for the
remainder of the award are in excess of the fair market value on that date:
250,000 shares have an exercise price of $60.00 (approximately 133% of fair
market value); 250,000 shares have an exercise price of $75.00 (approximately
167% of fair market value); and 250,000 shares have an exercise price of $90.00
(approximately 200% of fair market value). Other than the occurrence of certain
events described below, no portion of the option award shall vest prior to
January 1, 2002. The option has a ten-year term and was granted in addition to
and outside of the 1992 Stock Compensation Plan. Mr. Blystone will continue to
receive annual option awards under the 1992 Stock Compensation Plan in
accordance with the fixed share grant guidelines under the EVA Incentive
Compensation Program, which is described in the Compensation Committee Report.
Under the new employment agreement, in the event of Mr. Blystone's
voluntary resignation or the termination of his employment for cause, he will be
entitled to receive the compensation and benefits earned
13
<PAGE> 17
to date, but shall forfeit any options, restricted stock or other benefits not
then vested. In the event of Mr. Blystone's death or disability, he shall be
entitled to receive compensation and benefits earned, full payment of his
individual bonus reserve balance under the Company's EVA Incentive Compensation
Plan and shall be fully vested in all options, restricted stock and other equity
or incentive compensation awards. If Mr. Blystone's employment is terminated by
the Company without cause, or if he resigns for good reason, in addition to
payout of his individual bonus reserve and vesting of options, restricted stock
and other equity and incentive compensation, he will be entitled to receive a
pro rata bonus payment for the year of termination, a lump sum payment equal to
three times his then annual salary and target bonus, continuation of employee
benefits and perquisites for three years or, if earlier, until such benefits or
perquisites are obtained from a subsequent employer, vesting of benefits under
the Company's supplemental pension plan with credit for three additional years
of service and the salary and bonus continuation reflected by the lump sum
salary and bonus payments, outplacement services, and a stock depreciation right
obligating the Company to pay to Mr. Blystone the excess, if any, of the average
closing price of the Common Stock during the five trading days prior to his
termination of employment over his actual gross selling price for shares of
Common Stock (including any shares which may be acquired upon exercise of an
option) as to which Mr. Blystone, within 20 days after the termination of his
employment, gives the Company written notice of his intention to sell. In the
event that any amounts or benefits received by Mr. Blystone are subject to the
excise tax imposed under Section 4999 of the Internal Revenue Code, he would
also be entitled to receive an additional amount (a "gross-up" payment) equal to
such excise tax and the excise, income and other taxes imposed on the gross-up
payment.
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, 1997, 28 active key managers,
including officers named in the Summary Compensation Table, together with 28
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 some 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 1996 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 18 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 opportunity under the EVA Incentive
Compensation Plan and stock options.
14
<PAGE> 18
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 1996, the shareholders approved the SPX Corporation EVA Incentive
Compensation 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 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 eligible to be earned is equal to the sum of the
target bonus plus the fixed share of excess EVA improvement (which may be
negative). The bonus eligible to be earned is credited to the bonus bank, and
the bonus earned and 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 individual performance. 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
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 or 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 beginning with 1996.
The Company achieved outstanding performance in 1996. The Company's EVA
improvement was $26.6 million versus an expected EVA improvement of $4.2 million
resulting in a bonus multiple of 5.15. This performance was reflected in the
Company's earnings from operations, excluding restructuring and non-recurring
charges, which grew from $42 million to $71 million; and, even more
significantly, a gain in the market value of the Company's shares of over $300
million. The Company's share price performance was 22nd best out of 2,900
companies traded on the New York Stock Exchange and significantly outperformed
the S&P 500 and the peer groups shown on the Performance Graph on page 18.
The 1996 target bonuses for the chief executive officer and the five
executive officers named in the Compensation Table was $970,134 and their share
of EVA improvement in excess of expected EVA improvement was $3,864,948,
resulting in a declared bonus for them as a group of $4,835,082. An amount equal
to the individual's target bonus plus one-third of the excess over target is
available to be paid out and 80% of the amount is automatic and the remaining
20% is contingent upon individual performance. The bonus amounts earned and paid
to the chief executive officer and the other named executives are shown in the
Compensation Table. The amount of the declared bonus that is not yet earned and
available to be paid is carried forward in the individual's bonus bank and
payment is contingent on future EVA performance.
Stock Options
Consistent with the fixed share concept underlying the EVA incentive
compensation program, the Company, in 1996 and subsequent years, will 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 and will not decrease to offset
an increase in the stock price. In February 1996, the Committee granted stock
options to the executive officers as set forth in the Compensation Table.
15
<PAGE> 19
In early 1996 the value of total compensation opportunities for senior
management was 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 compensate executive officers in a manner commensurate with
performance and the competitive environment for executive talent.
COMPENSATION OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER
As Chairman and Chief Executive Officer, Mr. Blystone was compensated
during 1996 in accordance with his 1995 Agreement. Pursuant to the 1995
Agreement, he was paid an annual base salary of $450,000 and the declared bonus
eligible to be earned of $2,047,869 under the EVA Plan, or 5.15 times his Target
Award of $397,159. This amount reflects the 7% fixed share of Excess EVA
Improvement allocated to the CEO and the determination by the Compensation
Committee that Mr. Blystone attained all of his personal performance goals for
the year, which resulted in a paid bonus of $947,396 with the balance carried
forward in his bonus bank. Upon his joining the Company in December 1995, Mr.
Blystone was granted stock options for 125,000 shares and a restricted stock
award of 125,000 shares of the Company's Common Stock. Mr. Blystone did not
receive a stock option grant in 1996 and in lieu thereof the Company loaned him
$368,000 to enable him to purchase Company Common Stock on the open market.
Mr. Blystone's 1995 Agreement provided for a term ending on January 31,
1999. Under the 1995 Agreement, if by October 31, 1998, the Company and Mr.
Blystone failed to reach a mutually satisfactory employment agreement to
commence on February 1, 1999, then Mr. Blystone would be entitled to resign and
receive the severance and other benefits provided under the 1995 Agreement as if
his employment were involuntarily terminated by the Company. Taking into account
Mr. Blystone's performance since joining the Company, the other opportunities
that are likely to be available to Mr. Blystone in the interim period and the
potential economic incentive that the 1995 Agreement may create for Mr. Blystone
to not agree to a mutually satisfactory replacement agreement, the Committee
determined in early 1997 to develop and offer to Mr. Blystone a new employment
agreement to assure that he would remain with the Company on a long-term basis.
The Committee obtained the recommendations of nationally-known consultants on
executive compensation and designed an aggressive, retention-oriented
compensation package to provide Mr. Blystone with a strong economic incentive to
remain with the Company and to continue to drive significant growth in the
Company's performance and shareholder value. On February 26, 1997, the
Compensation Committee and the Board of Directors approved a new employment
agreement for Mr. Blystone, effective as of January 1, 1997, which is described
on page 13.
The Committee believes that the retention-oriented combination of the size
of the option award under the new agreement, its delayed vesting and premium
exercise pricing, provides Mr. Blystone with an appropriately strong economic
incentive to remain with the Company and to drive significant growth in
shareholder value. While the Committee realizes that if Mr. Blystone is
successful in doing so he will earn substantial compensation, such compensation
will necessarily be accompanied by substantial long-term benefits for the
Company's shareholders as well.
16
<PAGE> 20
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
17
<PAGE> 21
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, the S&P Auto Parts & Equipment
Index, and the S&P Hardware & Tools Index over the same period (assuming the
investment of $100 in the Company's Common Stock, the S&P 500 Index, the S&P
Auto Parts & Equipment Index, and the S&P Hardware & Tools Index on December 31,
1991, and reinvestment of all dividends). The companies included in the S&P Auto
Parts & Equipment Index are Cooper Tire & Rubber; Dana Corp.; Echlin Inc.;
Goodyear Tire & Rubber; ITT Industries, Inc.; Snap-on Inc.; and TRW Inc. The
companies included in the S&P Hardware & Tools Index are Black & Decker Corp.
and Stanley Works.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD SPX S&P 500 AUTO PARTS & HARDWARE &
(FISCAL YEAR COVERED) CORPORATION EQUIPMENT TOOLS
<S> <C> <C> <C> <C>
1991 100.00 100.00 100.00 100.00
1992 140.16 107.62 125.77 103.80
1993 141.62 118.46 146.18 117.88
1994 135.94 120.03 127.48 115.34
1995 133.35 165.13 157.61 169.02
1996 331.05 203.05 176.84 158.72
</TABLE>
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during 1996 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.
18
<PAGE> 22
PROPOSAL TO AMEND
SPX CORPORATION 1992 STOCK COMPENSATION PLAN
On April 28, 1993, the Company's shareholders approved the adoption of the
Company's 1992 Stock Compensation Plan (the "1992 Plan"). On December 11, 1996,
the Board of Directors adopted, subject to shareholder approval, amendments to
the 1992 Plan to (i) increase the number of shares of Common Stock available for
issuance under the 1992 Plan by 1,200,000 to 1,900,000 shares, and (ii)
eliminate the ability under the 1992 Plan to issue options to non-employee
directors.
Success of the Company depends, in large part, on its ability to attract,
retain and motivate key employees with experience and ability. The Board of
Directors believes that the opportunity to receive stock-based incentives under
the 1992 Plan provides an important incentive to key employees of the Company
and that the 1992 Plan will continue to assist the Company in attracting and
retaining quality personnel. However, in light of the proposed adoption of the
Company's 1997 Non-Employee Directors' Compensation Plan, the Board of Directors
believes that it is no longer necessary to provide for grants of stock options
to non-employee directors of the Company pursuant to the 1992 Plan. Accordingly,
the Board of Directors believes that the amendments to the 1992 Plan are in the
best interests of the Company and its shareholders and recommends a vote for the
proposal to approve the amendments to the 1992 Plan. The following is a summary
of the major provisions of the 1992 Plan and is qualified in its entirety by
reference to the full text of the Plan.
The 1992 Plan allows the Compensation Committee of the Board of Directors
to grant awards to key employees of incentive stock options, non-qualified stock
options, stock appreciation rights, restricted stock and performance units. The
1992 Plan also authorizes the granting of options to non-employee directors
("Director Options"), although this feature would be eliminated by the proposed
amendments.
As of December 10, 1996 and prior to the amendments, there were no shares
available for future issuance under the 1992 Plan. The Board of Directors
approved amendments to the Plan on December 11, 1996, subject to shareholder
approval, to authorize an additional 1,200,000 shares to be made available for
future issuance of stock options under the 1992 Plan and consistent with the
fixed share grant guidelines established in connection with the Company's EVA
Incentive Compensation Plan. On January 14, 1997 and February 26, 1997, the
Compensation Committee granted options subject to approval of the amendments by
the shareholders for 287,500 shares.
Since its inception, no stock appreciation rights, restricted stock or
performance units have been awarded under the 1992 Plan. Set forth in the table
below is information regarding awards of options made since the inception of the
1992 Plan including options granted in 1997 following the amendments approved by
the Board of Directors in December 1996.
<TABLE>
<CAPTION>
NUMBER OF
STOCK OPTIONS
-------------
<S> <C>
John B. Blystone, Chairman, President and Chief Executive
Officer and Nominee for Election as Director.............. 65,000
Frank A. Ehmann, Nominee for Election as Director........... 5,200
Daniel J. Moody, President, Sealed Power Division........... 21,500
James M. Sheridan, Vice President, Administration, General
Counsel and Corporate Secretary........................... 80,000
William L. Trubeck, Senior Vice President, Finance and Chief
Financial Officer......................................... 35,000
Thomas J. Riordan, President, OE Tool & Equipment
Division.................................................. 25,000
Robert C. Huff, Vice President, Procurement................. 34,500
All current executive officers as a group................... 379,600
All current non-employee Directors as a group............... 39,700
All participants as a group (other than current executive
officers)................................................. 732,150
</TABLE>
19
<PAGE> 23
ADMINISTRATION. The 1992 Plan is administered by the Compensation Committee
of the Board of Directors, as appointed by the Board from among those directors
who are not employees of the Company and who are "Disinterested Persons" within
the meaning of Rule 16b-3 of the Securities Exchange Act of 1934 (the
"Committee"). The Committee has the authority to determine award eligibility,
timing, and the type, amount and terms of such awards. The Committee is also
authorized to interpret the 1992 Plan, to establish rules and regulations
thereunder and to make all other determinations necessary or advisable for the
1992 Plan's proper administration.
The Board of Directors may terminate, amend or modify the 1992 Plan at any
time; provided, however, that the Board of Directors may not, without the
approval of the shareholders, increase the total amount of the Company's Common
Stock which may be issued under the 1992 Plan (except as specifically provided
in Section 5 of the 1992 Plan); change the provisions of the 1992 Plan regarding
the option price (except as permitted by Section 5 of the 1992 Plan); materially
increase the cost of the 1992 Plan or materially increase the benefits to 1992
Plan participants; extend the period during which awards may be granted; extend
the maximum period after the date of grant during which options or stock
appreciation rights may be exercised; or change the provisions of the 1992 Plan
regarding Director Options, including a change in the number, timing, terms,
conditions or eligibility requirements. In addition, no amendment, modification
or termination of the 1992 Plan shall adversely affect any outstanding awards
previously granted under the 1992 Plan without the consent of the 1992 Plan
participant.
ELIGIBILITY. Participants in the 1992 Plan are selected by the Committee
from among those employees of the Company or any 50%-or-more-owned subsidiary of
the Company, who, in the opinion of the Committee, are in a position to
contribute materially to the Company's long-term growth, development and
continued financial success and also may include awards to recognize or foster
extraordinary performance, promotion, retention or recruitment. As of December
31, 1996, there were approximately 125 employee participants in the 1992 Plan.
Because persons eligible to participate in the 1992 Stock Compensation 1992 Plan
are determined by the Committee, the number of employees that will be eligible
to participate in the future, and the amounts of any awards to be granted,
cannot now be determined.
SHARES AVAILABLE FOR THE 1992 PLAN. The total number of shares of Common
Stock subject to awards under the 1992 Plan currently may not exceed 700,000
(1,900,000 as proposed to be amended), of which no more than 200,000 shares may
be granted in the form of restricted stock. If any award granted under the 1992
Plan or its predecessor terminates or lapses, the shares reserved for those
awards will be available again for the grant of an award under the terms of the
1992 Plan. In the event of any change in the outstanding shares of Common Stock
by reason of a stock dividend or split, recapitalization, merger, consolidation
or other similar corporate change, the aggregate number of shares of Common
Stock subject to each outstanding option, and its stated option price, shall be
appropriately adjusted by the Committee.
DIRECTOR OPTIONS. Currently, Director Options for the purchase of 1,000
shares of Common stock are granted to each non-employee director upon his or her
initial election to the Board of Directors. Director Options also are granted to
each non-employee director once each year, on the date of the annual Board
meeting, in an amount equivalent in value to each director's annual retainer.
Director Options are not awarded to non-employee directors owning, either
directly or indirectly, more than 10% of the combined voting power of the
Company's Common Stock, or to those non-employee directors not considered to be
"disinterested persons" within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1934. Director Options are in the form of non-qualified stock
options, whose grant is intended not to fall under the provisions of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"). The option price
of each share of Common Stock subject to a Director Option is 100% of the fair
market value of the Common Stock on the date of grant. Each Director Option is
immediately exercisable within the three-year period following termination of
the director's Board membership, but in no event beyond the tenth anniversary of
the date of its grant. The preestablished eligibility, timing, size and option
price of Director Options are not subject to amendment or modification by the
Committee. Director Options are eliminated by the proposed amendment to the
Plan.
STOCK OPTIONS. The Committee may grant stock options to key employees in
the form of incentive stock options (within the meaning of Code Section 422),
non-qualified stock options or any combination thereof.
20
<PAGE> 24
The option price per share cannot be less than the fair market value of the
Company's Common Stock on the date of grant. Options may be made exercisable
during any specified period of time following the date of grant, but in no event
may the exercise period exceed ten years. Upon exercise, payment of the option
price may be in cash or its equivalent in previously-owned Common Stock, or in
any combination thereof. Incentive stock options may not be granted to employees
owning, either directly or indirectly, more than 10% of the combined voting
power of the Company's Common Stock. The aggregate fair market value (as of the
date of grant) of the Common Stock with respect to which incentive stock options
are exercisable for the first time during any particular calendar year may not
exceed $100,000. If employment is terminated due to death, disability or
retirement, all outstanding options shall become immediately exercisable and
shall remain so during the shorter of (i) the time period remaining prior to the
expiration date of the options, or (ii) such period as shall be determined by
the Committee. If employment is terminated for any other reason, the participant
may exercise any outstanding option within such period as shall be determined by
the Committee, but in no event beyond the expiration date of the option and only
to the extent such option was exercisable on the date of the participant's
termination of employment.
STOCK APPRECIATION RIGHTS. The Committee may grant stock appreciation
rights to key employees either in conjunction with the awarding of non-qualified
stock options or on an independent stand-alone basis. Each stock appreciation
right allows the holder to elect to receive payment from the Company equal to
the excess of the fair market value of a share of Common Stock at the date of
the exercise of the right over the exercise price of the right. The exercise by
a participant of a stock appreciation right granted in conjunction with a non-
qualified option will reduce the number of such participant's related
non-qualified stock options proportionately. Such rights may be exercised at any
time during the life of the related stock option. Stand-alone rights may be
exercised during a period not to exceed ten years, as determined by the
Committee. Upon exercise of a stock appreciation right, payment will be made by
the Company in cash. At the time of grant, the Company may establish a maximum
amount per share that will be payable upon exercise of a right. If employment is
terminated due to death, disability, retirement or any other reason, any
outstanding rights shall be exercisable according to the same rules as those
described above for options.
RESTRICTED STOCK. The Committee may grant shares of Common Stock to a
participant which shall include restrictions on ownership for a stated period of
time during which the participant will not be able to sell, exchange, transfer,
pledge or otherwise dispose of the restricted shares. Upon lapse of the
restriction period, shares become freely transferable, with complete ownership
vested in the participant. If a participant's employment is terminated during
the period of restriction due to death, disability or normal retirement (as
defined by the Company), all remaining restrictions automatically terminate and
the shares become freely transferable. If employment is terminated involuntarily
during the restriction period or due to early retirement (as defined by the
Company), the Committee may waive the restrictions on any or all restricted
shares held by the participant and add any new restrictions that the Committee
deems appropriate. If the Committee does not waive the restrictions, or if
employment is terminated for any other reason, the shares are automatically
forfeited by the participant and revert to the Company. During the period of
restriction, participants may exercise full voting rights and are entitled to
receive all dividends and other distributions paid with respect to the
restricted shares.
PERFORMANCE UNITS. Performance units may be granted subject to such terms
and conditions as the Committee in its discretion shall determine. Performance
units may be granted either in the form of cash units or in share units which
are equal in value to one share of the Company's Common Stock. The Committee
shall establish the performance goals to be attained in respect of the units,
various percentages of performance unit value to be paid out upon the
attainment, in whole or in part, of the performance goals and such other
performance unit terms, conditions and restrictions as the Committee shall deem
appropriate. As soon as practicable after the termination of the performance
period, the Committee shall determine the payment, if any, which is due on the
performance units in accordance with the terms thereof, and whether the payment
of the cash units and share units shall be made in the form of cash or shares of
Common Stock, or a combination thereof.
TRANSFERABILITY. No stock option, stock appreciation right, restricted
stock or performance unit granted under the 1992 Plan may be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated, otherwise than by will
or by the laws of descent and distribution.
21
<PAGE> 25
EFFECTIVE DATE AND DURATION. The 1992 Plan was effective as of December 15,
1992. No awards will be granted under the 1992 Plan after December 15, 2002.
TAX CONSEQUENCES. Under the present federal income tax laws, awards under
the 1992 Plan will have the following consequences:
For incentive stock options, a 1992 Plan participant will incur no regular
income tax liability upon grant or exercise, provided the participant, at all
times during the period beginning on the date of the grant of the option and
ending on the date three months before the date of exercise, was an employee of
the Company or one if its subsidiaries. The "spread" between the option price
and the Common Stock's fair market value at exercise, however, is an adjustment
for purposes of the alternative minimum tax. Income tax on the Common Stock's
appreciation is deferred until the shares are actually sold by the participant.
Upon the sale of the shares, the participant will realize long-term capital gain
(or loss) if the date of sale is at least two years after the date of grant of
the option and the shares have been held by the participant for at least one
year. The capital gain (or loss) will be measured by the difference between the
selling price of the shares and the option price. If these holding-period
requirements are not satisfied, the participant will at the time of sale (or
other disqualifying disposition) recognize ordinary income equal to the lesser
of (a) the gain realized on the sale (or other disqualifying disposition), or
(b) the difference between the option price and the fair market value of the
shares on the date of exercise, but if the participant held the shares for more
than one year any additional gain will be treated as long-term capital gain. If
the participant does not satisfy the employment requirement described in the
first sentence of this paragraph, the participant will recognize ordinary income
at the time of exercise under the tax rules governing the exercise of a
non-qualified stock option described below. The Company will be entitled to an
income tax deduction only if and to the extent that a participant realizes
ordinary income.
For non-qualified stock options and director Options, there are no tax
consequences to the Company or to the participant upon grant. Upon exercise, any
participant who is an employee or outside director will recognize ordinary
income in an amount equal to the spread between the option price and the Common
Stock's fair market value at exercise. The Company will receive a tax deduction
upon exercise of the non-qualified option in an amount equal to the spread.
For stock appreciation rights, there are no tax consequences to the Company
or to the participant upon grant. Upon exercise, the participant must recognize
ordinary income in the amount of the appreciation paid to the participant. The
Company receives a corresponding deduction in the same amount. Similarly,
performance units are neither taxable to the participant nor deductible by the
Company until any payments are made.
For restricted stock since the stock is nontransferable and is subject to a
substantial risk of forfeiture, the participant has no taxable income until the
restrictions lapse. At that time the participant's taxable income and the
Company's tax deduction are measured by the fair market value of the shares. The
participant may, however, avoid the delay in computing the amount of taxable
gain by filing with the Internal Revenue Service, within 30 days after receiving
the restricted shares, an election to make the computation at the time of
receipt of the shares.
PROPOSED AMENDMENTS.
Number of Shares Available for Issuance. As of December 10, 1996, there
were no shares available for issuance. The Board of Directors proposes that the
1992 Plan be amended to increase the aggregate number of shares of Common Stock
available for issuance under the 1992 Plan to 1,900,000 shares (with 200,000
shares available for issuance in the form of restricted stock), thereby assuring
that sufficient shares are available for future grants. The maximum number of
shares of Common Stock (including options, stock appreciation rights, restricted
stock and performance units) that may be granted during any calendar year to any
participant in the 1992 Plan is 100,000, subject to certain adjustments.
Director Options. The Board of Directors has proposed the adoption of the
1997 Non-Employee Directors' Compensation Plan, as discussed below. As a result
of the adoption of the new plan, it will no longer be necessary or desirable for
the Company to issue Director Options under the 1992 Plan. Therefore, the
22
<PAGE> 26
Board of Directors proposes that the 1992 Plan be amended to eliminate the
issuance of Director Options under the 1992 Plan.
REQUIRED VOTE. The affirmative vote of a majority of the outstanding shares
of Common Stock represented at the Annual Meeting is necessary for approval of
the amendments to the 1992 Plan. If the proposal of the Board of Directors to
amend the 1992 Plan is approved by the shareholders, the 1992 Plan will be
amended effective as of December 11, 1996.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL
OF THE AMENDMENTS TO THE 1992 STOCK COMPENSATION PLAN.
PROPOSAL TO APPROVE THE
SPX CORPORATION 1997 NON-EMPLOYEE DIRECTORS'
COMPENSATION PLAN
On February 26, 1997, the Board of Directors approved, for submission to a
vote of the shareholders, the SPX Corporation 1997 Non-Employee Directors'
Compensation Plan (the "Directors' Plan"). A summary of the principal provisions
of the Directors' Plan as set forth below and a complete copy of the Directors'
Plan is attached to this proxy statement as Exhibit A.
The Directors' Plan replaces the Company's traditional compensation program
for non-employee directors with an approach that ties a greater portion of the
directors' compensation to the Company's performance. Recent surveys and
studies, including the report of the Blue Ribbon Commission of the National
Association of Corporate Directors show that many corporations are eliminating
director retirement programs and making other modifications to director
compensation in order to compensate non-employee directors solely in cash and
equity. The Board of Directors believes that the compensation program set forth
in the Directors' Plan will enable the Company to continue to attract, retain
and motivate its non-employee directors, whose skill, experience and efforts are
important to the continued success of the Company.
The Directors' Plan has three primary components. The first is the
establishment of a deferred account for each non-employee director with respect
to his or her accrued benefit under the Directors Retirement Plan. As described
above under the heading "Director Compensation", the Board of Directors
terminated the Directors Retirement Plan, effective as of December 31, 1996, and
on February 26, 1997, provided for the conversion of benefits accrued thereunder
as part of the Directors' Plan. As a result of that termination, each current
non-employee director will receive an initial credit to his or her deferred
compensation account under the Directors' Plan equal to 115% of the present
value of the benefit accrued as of January 1, 1997. The balance of the account,
together with earnings thereon, will be paid to the non-employee director when
he or she ceases to be a director.
The second component is designed to provide compensation to non-employee
directors in the form of stock options. Up to 75,000 shares of Common Stock have
been reserved for issuance pursuant to options granted under the Directors'
Plan. On February 26, 1997, each non-employee director was awarded an option (a
"Director Option"), subject to shareholder approval of the Directors' Plan, to
purchase 1,500 shares of Common Stock at a price per share of $45.75, the
closing price of the Common Stock on that date. Each non-employee director will
automatically be granted a Director Option on January 15, 1998 and January 15,
1999, to purchase 1,500 shares of Common Stock at a purchase price equal to the
closing price per share on the date of grant. Pursuant to the Directors' Plan,
the Board of Directors may thereafter establish subsequent grant dates to the
extent there are shares available for issuance under the Directors' Plan. An
option to purchase 1,500 shares of Common Stock will also be granted to each new
non-employee director upon his or her election to the Board of Directors.
Director Options are fully exercisable six months from the date of grant, or
earlier, upon a change in control as defined in the Directors' Plan. If a
non-employee director ceases to be a director for any reason, his or her
Director Options will remain exercisable for three years thereafter (one year in
the event of death), provided that no Director Option may be exercised after the
expiration of ten years from the date of grant.
23
<PAGE> 27
Director Options will not be incentive stock options under applicable
federal tax laws. As a result, each non-employee director will recognize
ordinary taxable income upon the exercise of a Director Option equal to the
spread between the value of a share of Common Stock on the day of exercise and
the exercise price per share. The Company will be entitled to a deduction for
federal income tax purpose in an amount equal to such ordinary taxable income.
The maximum number of shares available for grants of Common Stock under the
Directors' Plan is 75,000 and such number shall be adjusted to reflect any
increase or decrease in the number of shares issued due to stock splits and
other capital adjustments. There are presently eight non-employee directors
eligible to participate under the Directors' Plan.
The third component of the Directors' Plan is an annual cash payment to
non-employee directors in lieu of the annual retainer and per meeting and
committee chairman fees. Under the Directors' Plan, each non-employee director
will be entitled to receive on a calendar year basis a cash payment equal to
$25,500 plus an additional amount determined by reference to the Company's
performance under the SPX Corporation EVA Incentive Compensation Plan (the "EVA
Plan"). The amount of the additional cash payment, if any, will be equal to
$5,000 multiplied by the multiple of target award earned by the Company's Chief
Executive Officer for that year under the EVA Plan. The additional amount will
be payable to the non-employee directors at the same time and in the same manner
as the bonuses are paid under the EVA Plan, including application of the bonus
reserve provisions. A non-employee director's bonus reserve balance will,
however, be payable to the non-employee director if he or she ceases to be a
director for any reason. Receipt of the annual cash payment, including the
portion attributable to EVA Plan performance, may be deferred by the
non-employee director.
The Directors' Plan will be administered by the Board of Directors. The
Directors' Plan is designed to be perpetual in existence, subject, in the case
of the grant of Director Options, to the maximum number of shares of Common
Stock reserved for issuance under the Plan. The Board of Directors may amend or
terminate the Directors' Plan at anytime without further approval by the
shareholders, except that no amendment to increase the number of shares of
Common Stock available for issuance under the Directors' Plan may be made
without shareholder approval. It is currently anticipated that the Board of
Directors will review the Directors' Plan in 1999 in conjunction with the
Company's review of the EVA Plan and, to the extent deemed necessary or
advisable, modify the Directors' Plan. Such modifications may include increases
to the cash payments or the granting of additional options, subject to the share
limitation.
The following table sets forth the number of shares of Common Stock
underlying Director Options which were granted to non-employee directors on
February 26, 1997, subject to approval by the shareholders, and the amount of
the additional cash payment that would have been made to the non-employee
directors with respect to 1996 had the Directors' Plan been in place during
1996. Grants of Director Options covering 1,500 shares of Common Stock each will
also be made to the non-employee directors on January 15, 1998, and January 15,
1999.
1997 NON-EMPLOYEE DIRECTORS' COMPENSATION PLAN
<TABLE>
<CAPTION>
NON-EMPLOYEE DIRECTORS STOCK OPTIONS(#)(1) ADDITIONAL EVA-BASED COMPENSATION(2)
---------------------- ------------------- ------------------------------------
<S> <C> <C>
J. Kermit Campbell........... 1,500 $ 25,750
Sarah Coffin................. 1,500 25,750
Frank A. Ehmann.............. 1,500 25,750
Edward C. Hopkins............ 1,500 25,750
Charles E. Johnson, II....... 1,500 25,750
Ronald Kerber................ 1,500 25,750
Peter H. Merlin.............. 1,500 25,750
David P. Williams............ 1,500 25,750
All Non-Employee Directors as
a Group.................... 12,000 $206,000
</TABLE>
- ---------------
(1) Each stock option has an exercise price of $45.75, the closing price per
share on February 26, 1997, the date the Directors' Plan was approved by the
Board of Directors. Each option will be fully exercisable six
24
<PAGE> 28
months from the date of grant and will expire ten years after the date of
grant, unless earlier terminated in connection with the non-employee
director ceasing to be a director.
(2) The additional amount which may be payable to the non-employee directors for
1997 and thereafter is dependent upon the Company's performance under the
EVA Plan for 1997 and thereafter and, accordingly, is not determinable. The
amount set forth in the table is the additional amount that would have been
declared for 1996 based on the 5.15 multiple of target award earned by the
CEO attained under the EVA Plan in 1996.
Upon approval of the Directors' Plan, no further options will be granted to
non-employee directors under the Company's 1992 Stock Compensation Plan (see
"Directors' Compensation" and "Proposal to Amend SPX Corporation 1992 Stock
Compensation Plan" above for a description of such options).
REQUIRED VOTE. The affirmative vote of the holders of a majority of the
shares of Common Stock present in person or by proxy and entitled to vote at the
annual meeting is required to approve the Directors' Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL
OF THE 1997 NON-EMPLOYEE DIRECTORS' COMPENSATION PLAN.
1998 SHAREHOLDER PROPOSALS AND NOMINATING PROCEDURES
Proposals by shareholders intended for inclusion in the Company's proxy
statement relating to the 1998 Annual Meeting must be received at the Company's
Principal Executive Offices (please address to the attention of Christopher J.
Kearney, Secretary) not later than November 25, 1997. 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 1998 Annual Meeting, other than those made by the Board, be
submitted to the Secretary of the Company not later than December 23, 1997. 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 $9,000 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
25
<PAGE> 29
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,
CHRISTOPHER J. KEARNEY
Vice President, Secretary
and General Counsel
Muskegon, Michigan
March 27, 1997
26
<PAGE> 30
EXHIBIT A
SPX CORPORATION
1997 NON-EMPLOYEE DIRECTORS'
COMPENSATION PLAN
SECTION 1. ESTABLISHMENT, PURPOSES AND EFFECTIVE DATE OF PLAN
1.1 Establishment. SPX Corporation, a Delaware corporation, hereby
establishes the "1997 NON-EMPLOYEE DIRECTORS' COMPENSATION PLAN" (the "Plan").
The Plan provides for the compensation of the Company's Non-Employee Directors.
1.2 Purposes. The purpose of the Plan is to advance the interests of the
Company and its shareholders by replacing the Company's traditional compensation
program for Non-Employee Directors with a compensation program that provides and
encourages the acquisition of additional equity interest in the Company by such
Directors, and by replacing the traditional annual retainer, meeting and
committee chairman fees with a cash payment, a portion of which is dependent
upon the Company's performance under its EVA Incentive Compensation Plan,
thereby increasing the Non-Employee Directors' stake in the future growth and
prosperity of the Company, and furthering their identity of interest with those
of the Company's shareholders. By thus compensating Non-Employee Directors, the
Company seeks to attract, retain, compensate and motivate those highly competent
individuals whose judgment, initiative, leadership, and efforts are important to
the continued success of the Company.
1.3 Effective Date. The effective date of the Plan is February 26, 1997,
subject to the approval by the Company's shareholders at the 1997 Annual Meeting
of Shareholders.
SECTION 2. DEFINITIONS
As used herein, the following terms shall have the meanings hereinafter set
forth:
(a) "Annual Meeting" means the Annual Meeting of the shareholders of
the Company.
(b) "Cash Payment" means the cash amount payable to a Non-Employee
Director pursuant to Section 8 below.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Common Stock" or "Share" means the Common Stock, par value $10.00
per share, of the Company or such other class of shares or other securities
as may be applicable pursuant to the provisions of subsection 4.3.
(f) "Company" means SPX Corporation, a Delaware corporation.
(g) "Deferred Mutual Fund Unit" means the equivalent of one share of a
respective mutual fund or other security designated by the Board for
purposes of measuring the value of a Deferred Account established pursuant
to Section 5 of the Plan.
(h) "Director Options" means Options granted hereunder to non-employee
directors.
(i) "Dividend Date" means with respect to the mutual fund or other
securities underlying a Deferred Mutual Fund Unit, the payment date of any
dividend declared on such mutual fund or securities.
(j) "Effective Date" means February 26, 1997, the date on which the
Plan was approved by the Board, subject to the approval of the Company's
shareholders at the 1997 Annual Meeting.
(k) "EVA Plan" means the SPX Corporation EVA Incentive Compensation
Plan.
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(l) "EVA Plan Bonus Multiple" means, as to any calendar year, the
aggregate amount of the Declared Bonuses (as such terms are defined in the
EVA Plan) for the Company's chief executive officer with respect to the
calendar year, divided by the Target Bonus amount of the chief executive
officer for the calendar year.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means, as to any date, the closing price of a
share of Common Stock as reported in the "NYSE-Composite Transactions"
section of the Midwest Edition of The Wall Street Journal for such date or,
if no prices are quoted for such date, on the next preceding date on which
such prices of Common Stock are so quoted.
(o) "Grant Date" means, with respect to each individual who is a
Non-Employee Director on or after the Effective Date, each of the Effective
Date, January 15, 1998, and January 15, 1999, and such other dates
thereafter as the Board may establish. With respect to any individual who
first becomes a Non-Employee Director after the Effective Date and prior to
January 15, 1999, the date the individual first becomes a Non-Employee
Director shall also be a Grant Date.
(p) "Non-Employee Director" means any person who is a member of the
Board and who is not, as of the date of an award under the Plan, an
employee of the Company or any of its subsidiaries.
(q) "Retirement Plan" means the SPX Corporation Directors' Retirement
Plan.
(r) "Retirement Plan Conversion Date" means the date of the 1997
Annual Meeting, provided this Plan is approved by the shareholders at such
meeting.
SECTION 3. ELIGIBILITY
Each Non-Employee Director as of the Effective Date and each person who
becomes a Non-Employee Director after the Effective Date shall be eligible to
participate in the Equity Plan.
SECTION 4. SHARES OF COMMON STOCK AVAILABLE
4.1 Number. The total number of shares of Common Stock of the Company
subject to issuance under the Plan, and subject to adjustment upon occurrence of
any of the events indicated in subsection 4.3, may not exceed 75,000. The Shares
to be delivered under the Plan may consist, in whole or in part, of authorized
but unissued stock or treasury stock not reserved for any other purpose.
4.2 Unused Stock. In the event any shares of Common Stock that are subject
to an Director Option which, for any reason, expires, terminates or is canceled
as to such shares, such shares again shall become available for issuance under
the Plan.
4.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Common Stock that occurs after ratification of the Plan by
the shareholders of the Company by reason of a Common Stock dividend or split,
recapitalization, merger, consolidation, combination, exchange of shares, or
other similar corporate change, the aggregate number of shares of Common Stock
subject to Director Options to be granted or outstanding pursuant to Section 7
hereof, and/or the stated option price, shall be appropriately adjusted by the
Board, whose determination shall be conclusive; provided, however, that
fractional shares shall be rounded to the nearest whole share.
SECTION 5. DEFERRED ACCOUNT
5.1 Deferred Account. The Company shall establish a deferred account (an
"Account") for each current Non-Employee Director whose benefit under the
Retirement Plan is converted pursuant to subsection 5.2 below and for any other
Non-Employer Director who makes an election to defer Cash Payments in accordance
with Section 8 hereof. Distributions equal to the balance credited to the a
Non-Employee Director's Account shall be made in cash in accordance with
Sections 6 or 9 hereof. The balance of the Account is dependent on the value per
share of the mutual fund shares or other securities underlying the
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Deferred Mutual Fund Units on the date of distribution, and is therefore subject
to market fluctuations in value until such distribution.
5.2 Conversion of Retirement Plan Benefit. On the Retirement Plan
Conversion Date, the accrued benefit of each current Non-Employee Director under
the Retirement Plan shall be converted into Deferred Mutual Fund Units in an
amount equal to 115% of the present value of such Director's accrued benefit
under the Retirement Plan, valued as of January 1, 1997. Prior to the Retirement
Plan Conversion Date, each Non-Employee Director shall make an election with
respect to the conversion of such Director's vested benefit among the respective
Deferred Mutual Fund Units. Such conversion shall be effective as of the
Retirement Plan Conversion Date and will take place based on the value of the
mutual fund shares or other securities underlying the such Deferred Mutual Fund
Units on such date.
5.3 Investment of Account. A Non-Employee Director may elect to change the
mix of the Deferred Mutual Fund Units credited to the Director's Account
annually by making an election with respect thereto prior to date of each Annual
Meeting, commencing with the 1998 Annual Meeting. Such conversion shall be
effective as of the Annual Meeting date and will take placed based on the value
of the mutual fund shares or other securities underlying the Deferred Mutual
Fund Units on such date.
5.4 Dividends. At any time a balance in Deferred Mutual Fund Units is
maintained in an Account, there shall be credited to the Account additional
Deferred Mutual Fund Units on each Dividend Date. Such additional number of
Deferred Mutual Fund Units shall be determined by reference to the number of
mutual fund shares or other securities that would be issued by the mutual fund
or the issuer of the other securities with respect to the reinvestment of such
dividend. In the absence of such reinvestment, the number of such additional
Deferred Mutual Units shall be determined by (i) multiplying the total number of
Deferred Mutual Fund Units (including fractional Deferred Mutual Fund Units)
credited to the Account immediately prior to the Dividend Date by the amount of
the dividend per share of the underlying mutual fund or other security and (ii)
dividing the product by the Fair Market Value Per Share as of such Dividend
Date. Additional Deferred Mutual Fund Units shall be similarly credited on each
Dividend Date on which a balance Deferred Mutual Fund Units is maintained in the
Account.
5.5 Nontransferability of Deferred Mutual Fund Units. No Deferred Mutual
Fund Units shall be pledged, hypothecated or transferred by a Non-Employee
Director other than by will or the laws of descent and distribution.
SECTION 6. DISTRIBUTION OF ACCOUNT
6.1 Cessation of Directorship; Attainment of Age 70. Upon the first to
occur of the date a Non-Employee Director attains age 70 or the date the
Non-Employee Director ceases to be a director of the Company for any reason
other than death, the balance of such Director's Account shall be paid in a lump
sum to the Director within ninety (90) days after such date, but in no event
later than the December 31st of the calendar year in which such date occurs.
6.2 Death. In the event of the death of a Non-Employee Director while a
Director, the entire value of the Deferred Units credited to the Account, as of
the date of the Non-Employee Director's death, shall be paid in cash in a lump
sum to such surviving beneficiary or beneficiaries as the current Non-Employee
Director may have designated by notice in writing to the Company or by will, or,
if no beneficiaries are so designated, the legal representative of such
Director's estate.
SECTION 7. DIRECTOR OPTIONS
7.1 Grant and Eligibility. On each Grant Date, Director Options for the
purchase of 1,500 shares of Common Stock will be granted to each individual who
is a Non-Employee Director.
7.2 Director Option Agreement. Each Director Option shall be evidenced by a
Director Option Agreement that shall specify the option price, the duration of
the option, the number of shares of Common Stock to which the option pertains,
and such other provisions as the Board shall determine.
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7.3 Tax Status. Director Options shall be options in the form of
nonqualified stock options which are intended not to fall under the provisions
of Code Section 422.
7.4 Option Price and Payment. The option price of each share of Common
Stock subject to a Director Option shall be 100% of the Fair Market Value on the
Grant Date. Director Options shall be exercised by the delivery of a written
notice to the Company setting forth the number of shares of Common Stock with
respect to which the option is to be exercised, accompanied by full payment for
the Shares. Upon exercise of any Director Option, the option price shall be
payable to the Company in full either (a) in cash or its equivalent, or (b) by
tendering shares of previously acquired Common Stock having a Fair Market Value
at the time of exercise equal to the total option price, or (c) by a combination
of (a) and (b).
7.5 Vesting and Duration of Options. Each Director Option shall vest and
become exercisable in full upon the first to occur of (a) the expiration of six
months after the Grant Date, unless prior thereto the Non-Employee Director has
ceased to be a director for any reason other than death or disability, (b) the
death or disability of the Non-Employee Director, or (c) a Change in Control (as
provided in Section 9 hereof). Once vested, Director Options shall expire upon
the first to occur of the date which is (i) three years following termination of
the director's Board membership for any reason other than death, or (ii) one
year following the date of the Non-Employee Director's death; provided, however,
in no event may any Director Option be exercised beyond the tenth anniversary of
its Grant Date.
SECTION 8. CASH PAYMENT
With respect to service during each calendar year (or portion thereof) on
or after the Effective Date, each Non-Employee Director shall be entitled to
receive cash payments at an annual rate of $25,500 plus an amount equal to
$5,000 multiplied by the EVA Plan Bonus Multiple for the calendar year. The
amount payable to the Non-Employee Director with respect to the EVA Plan Bonus
Multiple shall be determined and paid in the same manner as bonuses are
determined and paid under the bonus reserve provisions of the EVA Plan,
provided, however, that in applying such provisions all personal performance
criteria shall be deemed to be fully satisfied and full payment of any amounts
credited to the bonus reserve shall be made at the time the Non-Employee
Director ceases to be a director of the Company for any reason. Payment of all
or a portion of the Cash Payment otherwise payable to a Non-Employee Director
may be deferred as specified by a timely election filed by the Non-Employee
Director with the Company; provided, however, that such deferral election must
apply to all of the Cash Payment to which a Non-Employee Director may be
entitled with respect to a calendar year, to all of such Cash Payment other than
the portion determined by reference to the EVA Plan, or to all of the portion
determined by reference to the EVA Plan. An election will be considered timely
with respect to 1997 if received prior to the date of the 1997 Annual Meeting
and for each calendar year thereafter if received prior to the first day of such
calendar year. The amount of Cash Payment so deferred shall be credited to an
Account established pursuant to Section 5 hereof as Deferred Mutual Fund Units
as provided in the Non-Employee Director's deferral election based on the value
of the mutual fund shares or other security underlying such Deferred Mutual Fund
Units on the date the deferred Cash Payment would otherwise have been made. Such
amounts shall be thereafter be subject to the provisions of Section 5 and 6
hereof relating to the conversion of Deferred Mutual Fund Units, dividends
thereon, and distribution thereof.
SECTION 9. EFFECT OF CHANGE IN CONTROL
9.1 Change in Control. For purposes of this Plan, a "Change in Control"
shall be deemed to have occurred if:
(a) Any person, entity or group (within the meaning of Sections 13(d)
and 14(d) of the Exchange Act), excluding, for this purpose, the Company or
any subsidiaries, any employee benefit plan of the Company or its
subsidiaries which acquires beneficial ownership of voting securities of
the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly of securities of the
Company representing fifteen percent (15%) or more of the combined voting
power of the Company's then outstanding securities; provided, however, that
no Change in Control
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shall be deemed to have occurred as the result of an acquisition of
securities of the Company by the Company which, by reducing the number of
voting securities outstanding, increases the direct or indirect beneficial
ownership interest of any person to fifteen percent (15%) or more of the
combined voting power of the Company's then outstanding securities, but any
subsequent increase in the direct or indirect beneficial ownership interest
of such a person in the Company shall be deemed a Change of Control; and
provided further that if the Board of Directors of the Company determines
in good faith that a person who has become the beneficial owner directly or
indirectly of securities of the Company representing fifteen percent (15%)
or more of the combined voting power of the Company's then outstanding
securities has inadvertently reached that level of ownership interest, and
if such person divests as promptly as practicable a sufficient amount of
securities of the Company so that the person no longer has a direct or
indirect beneficial ownership interest in fifteen percent (15%) or more of
the combined voting power of the Company's then outstanding securities,
then no Change of Control shall be deemed to have occurred; or
(b) During any period of two (2) consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning of
such two-year period constitute the Board and any new director (except for
a director designated by a person who has entered into an agreement to
effect a transaction described elsewhere in this subsection 9.1) whose
election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination of election was previously so
approved, cease for any reason to constitute at least a majority thereof;
or
(c) The shareholders of the Company approve a plan of complete
liquidation of the Company, an agreement for the sale or other disposition
by the Company of all or substantially all of the Company's assets, or a
plan of reorganization, merger or consolidation of the Company with any
other corporation, except for a reorganization, merger or consolidation in
which the security owners of the Company immediately prior to the
reorganization, merger or consolidation continue to own at least
eighty-five percent (85%) of the voting securities of the new (or
continuing) entity immediately after such reorganization, merger or
consolidation.
9.2 Effect of Change in Control. Notwithstanding any other provision of the
Plan, if a Change in Control occurs, then:
(a) the entire balance of any Account maintained pursuant to Section 5
and any bonus reserve amounts not yet paid pursuant to Section 8 hereof
shall be paid in cash in a lump sum as promptly as practicable, but not
more than thirty (30) days following the date of the Change in Control; and
(b) each Director Option shall become fully vested and exercisable as
of the date of the Change in Control.
SECTION 10. AMENDMENT AND TERMINATION
The Board, or any committee to the extent authorized by the Board, may make
such modifications to the Plan as it shall deem advisable, without further
approval of the shareholders of the Company, except the Share limitation set
forth in Section 4 cannot be increased without approval of the shareholders. The
Plan shall continue in effect without limit unless and until the Board otherwise
determines.
SECTION 11. MISCELLANEOUS
11.1 Rights of Directors. Neither the Plan nor any action taken hereunder
shall be construed as giving any Non-Employee Director any right to continue to
serve as a Director of the Company or otherwise to be retained in the service of
the Company.
11.2 Funding Not Required. Neither a Non-Employee Director nor any other
person shall have any interest in any fund or in any specific asset of the
Company by reason of amounts credited to the Account of such Director, nor the
right to exercise any of the rights or privileges of a shareholder with respect
to any
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Deferred Stock Unit credited to such Account, nor the right to receive any
distribution under the Plan except as expressly provided herein. Distributions
hereunder shall be made from the general funds of the Company or from a grantor
trust established for purposes of assuring that funds will be available to
satisfy the obligations of the Company with respect to the Accounts, and the
rights of the Director shall be those of an unsecured general creditor of the
Company.
11.3 Indemnification. Each person who is or shall have been a member of the
Board shall be indemnified and held harmless by the Company against and from any
loss, cost, liability or expense that may be imposed upon or reasonably incurred
by him in connection with or resulting from any claim, action, suit or
proceeding to which he may be a party or in which he may be involved by reason
of any action taken or failure to act under the Plan and against and from any
and all amounts paid by him in settlement thereof, with the Company's approval,
or paid by him in satisfaction of any judgment in any such action, suit or
proceeding against him, provided he shall give the Company an opportunity, at
its expense, to handle and defend the same before he undertakes to handle and
defend it on his own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Certificate of Incorporation or Bylaws, as a matter
of law or otherwise, or any power that the Company may have to indemnify them or
hold them harmless.
11.4 Requirements of Law. The granting of Director Options and the issuance
of shares of Common Stock with respect to an option exercise, shall be subject
to all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
11.5 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Michigan.
11.6 Administration. The Board may establish such rules and regulations
with respect to the proper administration of the Plan as it may determine, and
may amend or revoke any rule or regulation so established. This Plan shall be
interpreted by and all questions arising in connection therewith shall be
determined by a majority of the Board, whose interpretation or determination,
when made in good faith, shall be conclusive and binding.
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SPX CORPORATION NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1997
DEAR SHAREHOLDER:
The Annual Meeting of Shareholders of SPX Corporation will be held at 9:00 a.m.
Eastern Standard Time on Wednesday, April 23, 1997 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 amendments to the SPX Corporation 1992 Stock Compensation
Plan.
3. To approve the SPX Corporation 1997 Directors Compensation Plan.
4. 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 14, 1997 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
Vice President, Administration
March ___, 1997 Secretary and General Counsel
Detach Proxy Card Here
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
1. Election of Directors: 2. Approval of amendments to the 1992 Stock 4. In their discretion, the Proxies are
Compensation Plan. authorized to vote upon such other
For [ ] Withheld [ ] Exceptions* [ ] For [ ] Against [ ] Abstain [ ] business as may properly come before
the meeting.
NOMINEES JOHN B. BLYSTONE AND FRANK A. 3. Approval of the 1997 Director Compensation
EHMANN Plan.
For [ ] Against [ ] Abstain [ ]
*Exceptions___________________________
______________________________________
Please check this box if you plan
To vote your shares for all Director to attend the Annual Meeting. [ ]
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 If you sign as agent or in any other
enter the name(s) of the exception(s) in representative capacity, please state
the space provided. 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:__________________________, 1995
Signature________________________________
Votes MUST be indicated
(x) in Black or Blue ink. [ ]
</TABLE>
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE
ENCLOSED ENVELOPE.
<PAGE> 37
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.
Detach Proxy Card Here
- ------------------------------------------------------------------------------
PROXY/VOTING INSTRUCTION CARD
SPX CORPORATION
Muskegon, Michigan
ANNUAL MEETING APRIL 23, 1997
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, Patrick O'Leary 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 23, 1997 at 9 a.m. (Eastern Time) with authority to vote at
said meeting, and any and all 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
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ITEM 1, ITEM 2 AND ITEM 3.
(Continued and to be Signed and dated on the other side.)
SPX CORPORATION
P.O. BOX 11158
NEW YORK, N.Y. 10203-0158
