<PAGE>
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 (S)240.14a-11(c) or (S)240.14a-12
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] 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:
Notes:
<PAGE>
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
2121 SAN JACINTO, SUITE 2500
DALLAS, TEXAS 75201
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
TO BE HELD MARCH 19, 1997
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Global Industrial Technologies, Inc.,
a Delaware corporation, will be held at the Horchow Auditorium, Dallas Museum
of Art, 1717 North Harwood, Dallas, Texas, on Wednesday, March 19, 1997, at
10:00 a.m., for the following purposes:
1. To elect two Class II Directors to serve for a three-year term or
until their successors are elected and qualified; and
2. To transact such other business as may properly come before the
meeting or any postponement or adjournment thereof.
Only shareholders of record at the close of business at January 27, 1997,
are entitled to notice of and to vote at the meeting or any postponement or
adjournment thereof.
We hope you will be represented at the meeting. Please sign and return the
enclosed proxy card in the accompanying envelope as promptly as possible,
whether or not you expect to be present in person. Your vote is important. The
Board of Directors of the Company appreciates the cooperation of shareholders
in directing proxies to vote at the meeting.
By Order of the Board of Directors
Graham L. Adelman
LOGO
Senior Vice President, General
Counsel and Secretary
Dallas, Texas
February 4, 1997
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THIS MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY AT YOUR EARLIEST
CONVENIENCE. A REPLY ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES, IS PROVIDED FOR THIS PURPOSE. YOUR IMMEDIATE ATTENTION IS
REQUESTED IN ORDER TO SAVE YOUR COMPANY ADDITIONAL SOLICITATION EXPENSE.
1
<PAGE>
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
2121 SAN JACINTO, SUITE 2500
DALLAS, TEXAS 75201
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 19, 1997
The enclosed proxy is solicited on behalf of the Board of Directors of
Global Industrial Technologies, Inc. (the "Company" or "Global") for use at
the Annual Meeting of Shareholders to be held Wednesday, March 19, 1997, at
10:00 a.m., at the Horchow Auditorium, Dallas Museum of Art, 1717 North
Harwood, Dallas, Texas, and at any and all postponements and adjournments of
the meeting. The approximate date this Proxy Statement and the enclosed form
of proxy are first being sent to shareholders is February 4, 1997.
OUTSTANDING SHARES AND VOTING RIGHTS
The close of business January 27, 1997, is the record date for the
determination of shareholders entitled to notice of and to vote at the
meeting. At January 27, 1997, the Company had outstanding and entitled to vote
at the meeting 22,707,315 shares of Common Stock. Each share entitles the
holder to one vote.
If properly executed and received in time for voting, and not revoked, the
enclosed proxy will be voted as indicated in accordance with the instructions
thereon. If no directions to the contrary are indicated, the persons named in
the enclosed proxy will vote all shares in favor of the proposals specified in
the attached notice.
Sending a signed proxy will not affect the shareholder's right to attend the
Annual Meeting and vote in person since the proxy is revocable. The grant of a
later proxy revokes this proxy. The presence at the meeting of a shareholder
who has been given a proxy does not revoke the proxy unless the shareholder
votes the shares subject to the proxy by written ballot or files written
notice of the revocation with the secretary of the meeting prior the proxy
being voted.
The enclosed proxy confers discretionary authority to vote with respect to
any and all of the following matters that may come before the meeting: (i)
matters which the Company does not know about a reasonable time before the
proxy solicitation and are properly presented at the meeting; (ii) the
election of any person to any office for which a bona fide nominee is unable
to serve or for good cause will not serve; and (iii) matters incident to the
conduct of the meeting. In connection with such matters, the persons named in
the enclosed form of proxy will vote in accordance with their best judgment.
Subject to a quorum, the affirmative vote of a plurality of the shares
present in person or represented by proxy at the meeting and entitled to vote
is required for the election of Directors. Votes will be tabulated by an
inspector of election appointed by the Company's Board of Directors.
Abstentions and broker non-votes have no effect on determinations of plurality
except to the extent that they affect the total votes received by any
particular candidate.
2
<PAGE>
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides that there
shall be three classes of Directors of as nearly equal size as possible, each
class being elected for a three-year term and only one class being elected
each year. The Board of Directors has nominated Rawles Fulgham and J. L.
Jackson for election to the Board of Directors for three year terms expiring
at the Annual Meeting of Shareholders in 2000 or until their successors are
elected and qualified. Messrs. Fulgham and Jackson are incumbents whose
current terms commenced upon their election by the shareholders of the Company
on March 16, 1994. Unless otherwise instructed, it is intended that the shares
represented by the enclosed proxy will be voted for the election of the two
nominees.
The Board of Directors has no reason to believe that any nominee will be
unable to serve if elected. In the event that any nominee shall become
unavailable for election, it is intended that such shares will be voted for
the election of a substitute nominee selected by the persons named in the
enclosed proxy unless the Board should determine to reduce the number of
Directors pursuant to the Restated Certificate of Incorporation of the
Company.
<TABLE>
<CAPTION>
YEAR
BUSINESS EXPERIENCE FIRST
DURING PAST 5 YEARS AND ELECTED
NAME (AGE) OTHER INFORMATION DIRECTOR
---------- ----------------------- --------
NOMINEES TO SERVE FOR A THREE-YEAR TERM EXPIRING 2000
<C> <S> <C>
Rawles Fulgham (69) Senior Advisor, Merrill Lynch & Co. Inc., 1992
financial services, Dallas, Texas, since
September 1989; Advisor to certain
Committees of the Board of Directors of
Dorchester Hugoton Limited since
September 1995; Executive Director,
MerrillLynch Private Capital, Inc.,
private financings, from August 1982 to
September 1989. Director, BancTec, Inc.,
NCH Corporation, and Dresser Industries,
Inc.
J. L. Jackson (64) Chairman of the Company since January 1, 1992
1994; Chief Executive Officer of the
Company since October 1993; President
from July 1994 to December 1995; Vice
Chairman of the Company from October
1993 to December 1993; for more than
fiveyears, business consultant to the
petroleum industry; President and Chief
Operating Officer, Diamond Shamrock
Corporation, 1983-1986.
CONTINUING DIRECTORS-TERM EXPIRING 1998
David H. Blake (56) Executive Vice President of Playoff 1992
Corporation, publisher of sports trading
cards and games, and WrapIt Corporation,
packaging supplies and services, since
January 1996; Dean, Edwin L. Cox School
of Business, Southern
MethodistUniversity, from January 1990
to December 1996; Dean and Professor,
Graduate School of Management, Rutgers-
The State University of New Jersey,
January 1983 to December 1989.
Richard W. Vieser (69) Chairman of the Board, President and 1992
Chief Executive Officer, FL Industries,
Inc., electrical equipment and high
efficiency industrial and commercial
heating and cooling equipment, June 1985
until retirement November 1989;
Chairmanof the Board, President and
Chief Executive Officer, Lear Siegler,
Inc., March 1987 until retirement
November 1989; Chairman and Chief
Executive Officer, FL Aerospace Corp.,
September 1986 until retirement November
1989. Director, Ceridian Corporation
(formerly Control Data Corporation),
Dresser Industries, Inc., Sybron
Corporation and Varian Associates, Inc.
CONTINUING DIRECTOR-TERM EXPIRING 1999
Samuel B. Casey, Jr. (69) Chairman of the Board, Dixon Ticonderoga 1992
Company, manufacturer and marketer of
writing products, October 1985 until
retirement February 1989. Director,
Dresser Industries, Inc. and Dixon
Ticonderoga Company.
</TABLE>
3
<PAGE>
ADDITIONAL INFORMATION RELATING TO THE BOARD OF DIRECTORS
The Board of Directors has standing Audit and Finance, Executive
Compensation and Executive Committees and a Committee on Directors. During
fiscal 1996, there were eight meetings of the Board of Directors, one of which
was attended by telephone. Attendance by Directors at meetings of the Board
and its Committees was 100% in 1996.
The Audit and Finance Committee consists of Messrs. Casey (Chairman), Blake,
Fulgham and Vieser. The functions of the Committee, which held three meetings
during fiscal 1996, are to recommend to the Board of Directors independent
accountants, whose duty it is to audit the books and accounts of the Company
and its subsidiaries for the fiscal year for which they are appointed, and to
review the scope and results of the annual audit activities of the independent
accountants and the Company's internal auditors.
The Executive Compensation Committee is composed of Messrs. Vieser
(Chairman), Blake, Casey and Fulgham. The Committee, which held five meetings
during fiscal 1996, reviews the performance of the Chief Executive Officer,
reviews and recommends to the Board salaries of officers, reviews the
performance of key employees of the Company, and administers the Company's
executive compensation plans.
The Executive Committee, consisting of Messrs. Jackson (Chairman), Fulgham,
and Vieser, exercises all powers, except to the extent limited by law, of the
Board of Directors during the intervals between meetings of the Board of
Directors. The were no Executive Committee meetings held during fiscal 1996.
The Committee on Directors develops and recommends to the Board of Directors
criteria for the selection of candidates for Director and considers and
recommends to the Board nominees for election as Directors to be proposed on
behalf of the Board of Directors at the annual meeting of shareholders. The
Committee, which held one meeting during fiscal 1996, also considers Director
nominees recommended by shareholders. Any such recommendation, together with
the nominee's qualifications and consent to be considered as a nominee, should
be sent to the Secretary of the Company. The Committee also advises the Board
concerning the qualifications of candidates for the positions of Chairman of
the Board and Chief Executive Officer. The Committee is composed of Messrs.
Fulgham (Chairman), Blake, Casey and Vieser.
A Director who is an employee of the Company receives no fees or
remuneration, as such, for services as a member of the Board of Directors or
any Committee of the Board. During fiscal 1996, each Director of the Company
who was not an employee received an annual retainer of $20,000 for Board
membership, $2,500 for each Committee membership, $1,000 for service as
Chairman of a Committee, and $1,000 for each day on which one or more meetings
of the Board of Directors or any Committee thereof was attended. A fee of $350
was paid for Board or Committee meetings attended by telephone. In addition,
each non-employee Director may be paid a fee of $1,000 for each day on which
he is engaged in Company business, other than attendance at meetings of the
Board of Directors or any Committee thereof, at the request of the Chairman of
the Board.
Under the Global Industrial Technologies, Inc. 1993 Directors Stock
Incentive/Retirement Plan, each non-employee Director was granted on December
15, 1993, a non-qualified option to purchase 8,000 shares of Common Stock at a
price of $14.56, which was the fair market value of the Common Stock on that
date (average of the high and low selling prices). On April 1, 1994, and April
1, 1996, each non-employee Director was granted an additional non-qualified
option to purchase 4,000 shares of Common Stock at a price equal to its then
fair market value of $13.69 and $24.50, respectively. Pursuant to the Plan, on
April 1, 1998, each non-employee Director will also be granted a non-qualified
option to purchase 4,000 shares at a price equal to the fair market value of
Common Stock on the day of grant. All options become exercisable six months
after the date of grant and expire ten years after the grant date or one year
following the retirement, disability or death of a Director to whom granted.
Directors must retain ownership of 50% of the shares they receive upon
exercise for 10 years or, if sooner, until six months after retirement from
the Board.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows, as of September 30, 1996, certain information
regarding those persons known to the Company to have been the beneficial
owners on such date of more than 5% of the Common Stock then outstanding.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES OF PERCENT OF
BENEFICIAL OWNER COMMON STOCK OWNED CLASS
------------------- ------------------- ----------
<S> <C> <C>
Prudential Insurance Company of America..................... 2,269,200(1) 10.04%
19 Prudential Plaza
Newark, New Jersey 07102
Pioneering Management Corporation........................... 1,699,300(1) 7.52%
60 State Street
Boston, Massachusetts 02109
David L. Babson & Co., Inc. ................................ 1,364,650(2) 6.04%
One Memorial Drive
Cambridge, Massachusetts 02142
C. S. McKee & Company Inc. ................................. 1,326,284(1) 5.87%
One Gateway Center
Pittsburgh, Pennsylvannia 15222
Mellon Bank Corporation..................................... 1,162,174(3) 5.14%
One Mellon Bank Center
Room 1935
Pittsburgh, Pennsylvannia 15258
</TABLE>
- --------
(1) Based upon a Form 13F filed with the Securities and Exchange Commission on
or about November 16, 1996.
(2) Based upon a Form 13F filed with the Securities and Exchange Commission on
or about November 16, 1996, in which voting authority with respect to all
shares was disclaimed.
(3) Based upon a Form 13F filed with the Securities and Exchange Commission on
or about November 16, 1996, in which voting authority with respect to
104,580 of such shares was disclaimed.
5
<PAGE>
The following table states the number of shares of Common Stock of the
Company owned by each current Director and nominee and by all Directors and
officers as a group as of December 31, 1996. No Director or officer
beneficially owned more than 1% of the 22,699,290 Shares of Common Stock
outstanding on such date. The number of shares beneficially owned by all
Directors and officers as a group represented 3.2% of the Common Stock which
would then have been outstanding if all options exercisable by such persons
before March 1, 1997 had been exercised. Each individual named has sole
investment and voting power with respect to the securities shown.
<TABLE>
<CAPTION>
NAMES SHARES OWNED(1) STOCK UNITS(2)
----- --------------- --------------
<S> <C> <C>
J. L. Jackson................................ 215,636 58,963
Donald C. Mielke............................. 115,227 19,951
David H. Blake............................... 17,000 0
Samuel B. Casey, Jr.......................... 16,699 0
Rawles Fulgham............................... 22,000 0
Richard W. Vieser............................ 51,633 0
Graham L. Adelman............................ 41,800 7,894
Juan M. Bravo................................ 33,335 7,396
Thomas R. Hurst.............................. 51,582 14,378
All Directors, nominees and officers as a
group
(15 persons)................................ 728,805 137,549
</TABLE>
- --------
(1) Includes the following shares subject to options and related restricted
incentive stock awards granted to persons included in the table under
various incentive compensation plans of the Company, including options
exercisable on or within sixty days after December 31, 1996; 205,550
shares for Mr. Jackson; 106,550 shares for Mr. Mielke; 13,500 shares for
Mr. Adelman; 29,000 shares for Mr. Bravo; 51,450 shares for Mr. Hurst;
16,000 shares for each of Messrs. Blake, Casey, Fulgham and Vieser; and
610,970 shares for all Directors and officers as a group. Such shares are
considered to be beneficially owned under the rules of the Securities and
Exchange Commission and are considered to be outstanding for the purpose
of calculating percentage ownership.
(2) Stock Units represent shares of Common Stock which may be distributable
after termination of employment to persons included in the table who have
deferred payment of annual incentive compensation pursuant to the
Company's Deferred Compensation Plan. Stock Units represent an additional
exposure of such persons to changes in the value of Common Stock which is
not reflected in the column "Shares Owned." See "Report of Executive
Compensation Commitee--Policies Applicable to All Executive Officers--
Stock Ownership Requirements."
The Board of Directors adopted a Stock Ownership Requirements Policy in
January 1994. See "Report of Executive Compensation Committee"). At December
31, 1996, the total Shares Owned and Stock Units of Directors and officers, as
a group, was 866,354 or approximately 216% of the 401,010 Shares Owned and
Stock Units of Directors and officers on December 31, 1993.
REPORT OF EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee is responsible for all components of
the compensation program for the executive management team, including the
named executive officers. The Committee is comprised of outside directors
elected to the Board. This Committee administers and reviews the executive
compensation plans to meet the needs of the shareholders and the Global
organization.
The overall tenet of the Company's compensation plan is to provide a
competitive compensation program to recruit, motivate, reward and retain the
caliber of executive talent necessary to provide long-term growth opportunity
for the shareholders and employees. The competitive levels of the compensation
programs are reviewed by the Executive Compensation Committee using external
sources of market information and analysis provided by outside compensation
consultants. Changes to the programs are made if appropriate to cause
compensation to be more closely linked to the interests of the shareholders.
6
<PAGE>
The Committee considers an officer's total compensation package whenever a
change is made to any individual component. Base salary levels impact awards
granted under the short-term incentive plans and the number of shares for
which stock options are granted.
POLICIES APPLICABLE TO ALL EXECUTIVE OFFICERS
Stock Ownership Requirements. As a means to develop more officer and
management ownership in the Company, the Board of Directors approved the
Company's Stock Ownership Requirements Policy in January 1994. This policy
establishes stock ownership and retention levels for officers and other
managers which are stated as multiples of their base salaries. The Stock
Ownership Requirements Policy also provides that at least 50% of any annual
incentive payment to which an officer is entitled must either be invested in
Common Stock or credited in the form of Stock Units under the Company's
Deferred Compensation Plan until such time as the officer's ownership
requirements are satisfied. In addition, at least 25% of any shares acquired
by an officer upon exercise of stock options must be retained until such
requirements have been met. After having attained the required ownership, an
officer must continue to meet the requirement until retirement or termination.
The required ownership level for the Chairman and Chief Executive Officer is
3.5 times annual base salary. Accordingly, Mr. Jackson is required to acquire
and retain, until retirement or termination, beneficial ownership of Common
Stock or Stock Units with a market value equivalent to $1,925,000. As of
December 31, 1996, he had attained 80% of this requirement. The other
executive officers have ownership requirement levels ranging from 1.5 to 2.5
times their annual base salaries, or $3,415,000 in aggregate. As of December
31, 1996, 76% of this requirement had been met, in aggregate, by executive
officers other than Mr. Jackson.
Base Salary and Annual Bonus. Each of the Company's executive officers
receives a base salary and has an opportunity to earn an annual incentive
payment. Under Global's Incentive Compensation Plan for Officers and
Headquarters Staff ("Headquarters Plan"), payments, if any, to participants
are based upon attainment during the fiscal year of financial performance
targets for the Company. Under the Division Executive Incentive Plan
("Division Plan"), payments to officers who are also Division Presidents are
determined based primarily upon financial performance objectives for the
Company's major business units.
The Headquarters Plan and Division Plan ("Plans") enable the Committee to
provide incentives for participants to contribute each year to growth in
Company earnings and other financial and nonfinancial goals. Pursuant to Board
authorization, funds available for distribution for 1996 under the
Headquarters Plan could equal up to 4% of the Company's net after tax profit,
adjusted for unusual items, provided that net earnings, as adjusted,
constituted at least a threshold return on shareholders' equity. Financial
performance targets for 1996 under the Headquarters Plan were based on
attainment of a targeted return upon shareholders' equity for the fiscal year.
For 1996, funds equal to up to 6% of net after tax profits were authorized for
payments under the Division Plan. Major business unit financial performance
targets for 1996 were based upon proposals submitted to the Committee by the
Chief Executive Officer and Chief Operating Officer which, in turn, reflected
the annual operating plans prepared for those business units. The targeted
return on shareholders' equity for 1996 as well as the 1996 business unit
financial performance measures were determined by the Committee, which may
revise performance objectives to reflect unanticipated, significant changes in
the Company's businesses during a plan year.
It has been the policy of the Committee to establish a base salary range for
each executive officer position and a midpoint for the range which would place
the base salary of that position in approximately the 50th percentile of
market salary. In considering base salary changes, the Committee reviews the
performance of each named officer, the recent financial performance of the
Company, and the position of the officer's current salary in the established
range. While the Company participates in several compensation surveys, the
primary survey used to determine the salary range and midpoint for executive
officers is prepared by a major consulting firm with data from 300 U.S.
manufacturing corporations, including approximately half of the Fortune 500.
The compensation levels of Global executives are compared to executives of
companies with similar revenue levels.
7
<PAGE>
Survey data is reviewed both on a consolidated industry basis, as well as more
specific industry groupings of multiple industry companies and
metalworking/fabricating companies. The Committee also determines annually a
target incentive opportunity for each executive officer which would place that
officer at about the 50th percentile of market annual incentive compensation
determined by reference to the previously mentioned surveys.
Executive officer base salary increases of approximately 5% on average were
approved by the Committee in 1996. If no incentive payment is earned under the
Plans, it is expected that an executive officer's base salary alone will place
the officer below the 35th percentile of total annual market compensation.
In addition to 10 officers, 86 other employees participated in the Plans
during 1996. The amount earned by each participant was related to the extent
to which the financial criteria established by the Committee were achieved.
For 1996, approximately 97% of the Company objective was attained and from 34%
to 155% of the objectives of each business unit were achieved. The Board of
Directors, in the case of the Chief Executive Officer, and the Chief Executive
Officer with respect to the other executive officers of the Company, has
discretion to increase or reduce payments otherwise earned under the Plans by
a participant based upon individual performance. Adjustments, positive and
negative, of up to $23,200 were made to individual executive officer payments
for the 1996 plan year.
As stated above, the Stock Ownership Requirements Policy adopted by the
Board of Directors requires officers to invest at least 50% of any payments to
which they are entitled under the Plans in Global Common Stock or Stock Units
until such time as their ownership requirements are met and to maintain such
ownership levels until retirement or termination.
Stock Option Program. Executive officers also are eligible to receive stock
option grants under the Company's 1992 Stock Compensation Plan ("Stock Plan")
which is intended to encourage them to take actions which will result in
realization by shareholders of an attractive return on their Common Stock
investment. The Committee believes that stock option grants, in combination
with the Company's Stock Ownership Requirements Policy, are an effective means
of aligning executive compensation with shareholder interests. Generally, the
Committee grants options to executive officers for a number of shares which is
above the average levels for other companies of similar size because of stock
ownership requirements.
The Committee granted officers options during 1996 under the Stock Plan to
purchase 157,000 shares of Common Stock for $17.19 to $19.25 per share, the
market prices at the dates of grant. Each option is fully exercisable six
months after the grant date and expires ten years after the date of grant. The
number of shares for which options were granted to each executive officer is
based upon the officer's position and base salary and individual performance
as well as the Company's emphasis on and requirement for officer stock
ownership. The number of shares subject to outstanding options previously
granted to a Stock Plan participant are not taken into consideration.
CHIEF EXECUTIVE OFFICER COMPENSATION
Since Mr. Jackson's election as Chief Executive Officer in October 1993,
greater emphasis has been placed upon profitable growth, the Company's
operations have become more decentralized, and a strategy has been pursued of
redeploying the value of the Company's assets into businesses with greater
earnings and cash flow growth potential than those in which it had previously
participated. Moreover, Mr. Jackson has made a consistent effort to
communicate the values of care, honesty, integrity and trust to employees and
to promote a "win-win-win partnership" among shareholders, employees and
customers of the Company.
Mr. Jackson's base salary and bonus opportunity under the Plan for 1996 were
determined by the Committee in accordance with the policies described above.
He received an annual base salary increase of $50,000 during the year and his
incentive payment for 1996 of $350,000 was directly related to generation by
the Company of an adjusted return on shareholders' equity for the year equal
to approximately 97% of the target which had been
8
<PAGE>
set by the Committee. Mr. Jackson has invested approximately 43% of this
incentive payment in Stock Units under the Company's Deferred Compensation
Plan. He elected to so invest 100% of his 1994 incentive award and 60% of his
1995 incentive award. None of his Stock Units may be distributed until after
his retirement or termination.
Mr. Jackson was granted a stock option under the Stock Plan for 34,250
shares in July 1996. The Committee granted the option for fewer shares than
the number determined in the manner described above in view of a significant
decrease in the price of the Common Stock during the first half of the year.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code generally limits the corporate
tax deduction for compensation paid during a year to a public company's chief
executive officer and its four other most highly compensated executed officers
to $1 million, unless specified conditions are met. Certain performance-based
compensation is not subject to the deduction limitation. The Company did not
have nondeductible compensation expense during 1996 and is not expected to
have such in 1997. Nevertheless, the Committee intends to review this matter
from time to time and, if appropriate and consistent with the Company's
compensation philosophy, may recommend in the future that actions be taken to
maximize the amount of compensation expense that is deductible to the Company.
Members of the Executive Compensation
Committee:
R. W. Vieser, Chairman
David H. Blake
Samuel B. Casey, Jr.
Rawles Fulgham
The foregoing Report on Executive Officer Compensation shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. There were no
Committee interlocks.
9
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table reflects the cash and non-cash compensation paid or
accrued for the Chief Executive Officer and below named executive officers of
the Company for fiscal 1996.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ --------------------- -------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION(1) YEAR ($) ($) ($)(2) ($) # ($) ($)(3)
--------------------- ---- -------- -------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. L. Jackson........... 1996 $541,672 $350,000 $ 56,349 $ 0 34,250 $ 0 $20,967
Chairman and Chief 1995 $491,667 $500,000 $112,300 $ 0 72,800 $ 0 $36,900
Executive Officer 1994 $450,000 $210,000 $ 78,365 $ 0 71,500 $ 0 $25,002
Gene E. Leeson(4)....... 1996 $315,000 $ 0 $ 0 $ 0 0 $ 0 $ 4,356
Vice Chairman 1995 $310,833 $236,300 $ 88,141 $ 0 44,400 $ 0 $28,342
1994 $287,513 $ 96,700 $ 0 $ 0 40,000 $ 0 $ 0
Donald C. Mielke........ 1996 $310,417 $164,500 $ 23,372 $ 0 35,300 $ 0 $ 9,464
President and Chief 1995 $249,584 $196,900 $ 71,141 $ 0 50,300 $ 0 $16,735
Operating Officer 1994 $210,000 $ 71,141 $ 0 $ 0 30,000 $ 0 $ 0
Juan M. Bravo........... 1996 $229,000 $160,000 $ 53,023(5) $ 0 24,000 $ 0 $10,380
Vice President- 1995 $204,000 $ 68,000 $ 8,209 $ 0 5,000 $ 0 $ 2,301
Division President 1994 $ 17,000 $ 90,000 $ 0 $ 0 0 $ 0 $ 0
Thomas R. Hurst......... 1996 $185,833 $125,000 $ 27,322 $ 0 15,200 $ 0 $ 8,805
Vice President- 1995 $177,600 $116,000 $ 42,144 $ 0 15,200 $ 0 $11,118
Division President 1994 $165,000 $106,000 $ 0 $ 0 15,000 $ 0 $ 0
Graham L. Adelman....... 1996 $200,000 $ 82,400 $ 29,333 $ 0 13,500 $ 0 $ 5,603
Sr. Vice President 1995 $ 53,846 $ 30,000 $ 10,659 $ 0 26,800 $ 0 $ 1,980
General Counsel and 1994 $ 0 $ 0 $ 0 $ 0 0 $ 0 $ 0
Secretary
</TABLE>
- --------
(1) Prior to December 1995, Mr. Jackson had also been President of the Company
and Mr. Mielke had been Senior Vice President-Finance and Administration.
Mr. Bravo was hired in October 1994 as President of Refractarios
Mexicanos, S.A. de C.V. and in March 1996 was elected a Vice President of
the Company. Mr. Adelman became an employee and officer of the Company in
July 1995.
(2) Represents a discount on phantom Stock Units deemed purchased with
incentive compensation deferred under the Company's Deferred Compensation
Plan and on an actuarially determined pension benefit attributable to the
amount deferred. The Deferred Compensation Plan provides that Stock Units,
which have a value equivalent to that of a share of Common Stock, may be
deemed purchased with deferred incentive plan payouts for 75% of the
average closing price of Common Stock over a specified period of time
prior to an annual purchase date. Stock Units are not distributable until
retirement or termination. Distributions may be made in shares of Common
Stock, if approved by the Executive Compensation Committee, or in cash
equivalent to the market value at the time of distribution of such shares.
This column does not include the value of perquisites and other personal
benefits because the aggregate value of such compensation did not exceed
the lesser of $50,000 or 10% of the total amount of annual salary and
bonus.
(3) Consists of a nonqualified pension benefit attributable to the amount of
incentive compensation deferred under the Company's Deferred Compensation
Plan and of contributions of $1,917 for Mr. Jackson, $4,356 for Mr.
Leeson, $3,852 for Mr. Mielke, $1,820 for Mr. Bravo, and $1,830 for Mr.
Hurst made by the Company during 1996 under its Deferred Savings Plan to
match contributions made by these officers to their accounts.
(4) Compensation paid to Mr. Leeson and to his estate upon his death in
October 1996.
(5) Includes payments made as a result of Mr. Bravo's relocation from Mexico.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes options granted during fiscal 1996 to the
executive officers named in the Summary Compensation Table, and the potential
value of the shares subject to such options upon their expiration in July
2006.
<TABLE>
<CAPTION>
POTENTIAL
NUMBER OF % OF TOTAL REALIZABLE VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE OR APPRECIATION FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME GRANTED (1) FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ----------- ------------ ----------- ---------- -- ---------------
<S> <C> <C> <C> <C> <C> <C>
J. L. Jackson........... 34,250 9.2% $17.1875 7-16-2006 $ 370,213 $ 938,191
Gene E. Leeson.......... n/a n/a n/a n/a n/a n/a
Donald C. Mielke........ 18,750 5.0% $17.1875 7-16-2006 $ 202,671 $ 513,608
Juan M. Bravo........... 24,000 6.5% $17.1875 7-16-2006 $ 259,419 $ 657,419
Thomas R. Hurst......... 11,500 3.1% $17.1875 7-16-2006 $ 124,305 $ 315,013
Graham L. Adelman....... 13,500 3.6% $17.1875 7-16-2006 $ 145,923 $ 367,798
All Shareholders (2).................................................... $818,066,377 $ 1,302,633,984
</TABLE>
- --------
(1) Options granted on July 17, 1996, and exercisable in full on January 17,
1997.
(2) The Potential Realizable Value for All Shareholders represents the
aggregate value at the end of 10 years of all Common Stock outstanding on
December 31, 1996, which then had a value of $502,221,791, assuming the
same rates of appreciation used to calculate the Potential Realizable
Value of shares subject to the stock options summarized in the table. Such
information is shown for comparison purposes only and does not represent
an estimate or prediction of future Common Stock price.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUE TABLE
The following table summarizes the value at October 31, 1996, of all the
shares subject to options granted to the named executive officers of the
Company.
<TABLE>
<CAPTION>
POTENTIAL
NUMBER OF SECURITIES REALIZABLE VALUE AT ASSUMED
UNDERLYING UNEXERCISED ANNUAL RATES OF STOCK PRICE
SHARES OPTIONS AT FISCAL YEAR END APPRECIATION FOR OPTION TERM
ACQUIRED ON VALUE ------------------------------ -----------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- ----------- -------- ------------- -------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
J. L. Jackson........... 0 $ 0 171,300 43,250 $ 819,781 $ 103,797
Gene E. Leeson.......... 70,248 $611,524 119,634 0 $ 743,167 $ 0
Donald C. Mielke........ 0 $ 0 87,800 21,250 $ 351,469 $ 39,453
Juan M. Bravo........... 0 $ 0 5,000 24,000 $ 14,063 $ 34,500
Thomas R. Hurst......... 0 $ 0 39,950 12,750 $ 226,781 $ 26,063
Graham L. Adelman....... 26,800 $202,675 0 13,500 $ 0 $ 19,406
</TABLE>
- --------
(1) The fiscal year end value of the Common Stock was $18.625 per share.
11
<PAGE>
RETIREMENT PLANS
The estimated total annual retirement benefits payable at age 65 under
Company pension plans in which Messrs. Jackson, Hurst, Mielke, Adelman and
Bravo participate are set forth below. The retirement benefits of Messrs.
Jackson and Mielke, who became employees of the Company in 1993, Mr. Bravo,
who became an employee in 1994, and Mr. Adelman, who became an employee in
1995, will not become vested until they complete 5 years of vesting service.
The chart illustrates benefits accrued to October 31, 1996.
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE
ANNUAL -------------------------------------------------------------------------
COMPENSATION 5 15 25 35
------------ ------- ------- ------- -------
$ $ $ $ $
<S> <C> <C> <C> <C>
200,000 16,387 41,027 77,747 114,468
400,000 33,987 85,627 162,347 239,068
600,000 51,587 130,227 246,947 363,668
800,000 69,187 174,827 331,547 488,268
1,000,000 86,787 219,427 416,147 612,868
1,200,000 104,387 264,027 500,747 737,468
</TABLE>
Less than 10% of the amounts shown in the "Salary" and "Bonus" columns of
the Summary Compensation Table for each of the named individuals is excluded
in determining benefits. Years of credited service for the individuals named
in the Summary Compensation Table are as follows: Mr. Jackson 3 years, Mr.
Mielke 3.33 years, Mr. Bravo .83 years, Mr. Hurst 33.75 years, and Mr. Adelman
1.25 years.
Benefits are computed as straight-life annuity amounts which may be paid in
various forms. Amounts shown in the pension plan table reflect a partial
offset for estimated Social Security benefits.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Pursuant to the Company's 1992 Stock Compensation Plan, in the event of an
impending merger, reorganization, or liquidation of the Company, or sale of
substantially all of its business or property, the Board may, at its
discretion and without shareholder approval, declare some or all outstanding
options to be immediately exercisable in full without regard to prescribed
vesting periods.
Pursuant to the 1992 Stock Compensation Plan, in the event of a change in
control of the Company without approval of a majority of the members of the
Board of Directors in office immediately prior to the event, all restrictions
on outstanding shares of restricted stock immediately lapse if related option
shares have not been disposed of prior to such change in control.
12
<PAGE>
PERFORMANCE GRAPH
The graph set forth below compares the cumulative total returns for Global's
Common Stock , the Standard & Poor's Small Cap 600 Index, and a Peer Group
comprised of A.P. Green Industries, Inc., Minerals Technologies Inc.,
Ingersoll-Rand Company, Cooper Industries, Inc., Harnischfeger Industries,
Inc., and Oglebay Norton Company for the period August 3, 1992 (first day of
public trading of the Common Stock) through October 31, 1996. The graph
assumes an investment on August 3, 1992 of $100 in each of the Company's
Common Stock, the stocks comprising the Standard & Poor's Small Cap 600 Index,
and the common stocks of the Peer Group companies, and that all paid dividends
were reinvested.
LOGO
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
----------------------------------
8/92 10/92 10/93 10/94 10/95 10/96
---- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
GLOBAL INDUSTRIAL TECHNOLOGIES, INC......... 100 84 138 137 188 204
S&P SMALLCAP 600............................ 100 104 139 134 163 202
PEER GROUP.................................. 100 100 122 107 109 131
</TABLE>
The Performance Graph above shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates such
information by reference, and shall not otherwise be deemed filed under such
Acts.
OTHER MATTERS
The Board of Directors is not aware of any other matter to be presented for
action at the meeting.
13
<PAGE>
INFORMATION ON INDEPENDENT ACCOUNTANTS
The Board of Directors has designated the firm of Price Waterhouse LLP as
independent accountants of the Company for the 1997 fiscal year. No member of
Price Waterhouse LLP or any of its associates has any financial interest in the
Company or its affiliates. A representative of Price Waterhouse LLP will be
present at the Annual Meeting to answer appropriate questions from the
shareholders and will be afforded an opportunity to make any statement on
behalf of Price Waterhouse LLP that he may desire.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
officers and Directors, and persons who beneficially own more than 10% of a
registered class of the Company's equity securities, to file reports of
securities ownership and changes in such ownership with the Securities and
Exchange Commission (the "SEC"). Officers, directors and greater than 10%
beneficial owners also are required by rules promulgated by the SEC to furnish
the Company with copies of all Section 16(a) reports they file.
Based solely upon a review of the copies of such forms furnished to the
Company, or written representations that no Form 5 filings were required for
certain executive officers, the Company believes that all filing requirements
under Section 16(a) applicable to its officers, Directors and greater than 10%
beneficial owners were complied with during fiscal 1996, with the exception of
a statement of initial ownership that was filed on December 4, 1996, by Mr.
George W. Pasley who was elected Vice President, Communications and Investor
Relations, of the Company in September 1996.
EXPENSE OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition, the
Company will reimburse brokers or other persons holding stock in their names or
in the names of their nominees for charges and expenses in forwarding proxies
and proxy material to beneficial owners. Solicitations may further be made by
officers and regular employees of the Company, without additional compensation,
by use of the mails, telephone, telegraph or by personal calls. The Company has
retained Morrow & Co. Inc., New York, New York, to assist in the solicitation
at a cost of $10,000, plus reasonable out-of-pocket expenses.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
In order for a shareholder proposal to be included in the proxy and proxy
statement of the Company relating to a meeting of shareholders, a shareholder
proponent must comply with the requirements of Rule 14a-8 under the Securities
Exchange Act of 1934. A proposal intended to be presented by a shareholder at
the 1998 Annual Meeting must be received by the Secretary of the Company at its
principal executive offices not later than September 30, 1997. If not received
by such date, pursuant to the rules and regulations promulgated under the
Securities Exchange Act of 1934, a shareholder proposal shall not be considered
for inclusion in the Company's proxy statement and form of proxy relating to
the Annual Meeting of Shareholders to be held March 18, 1998.
The Restated Certificate of Incorporation of the Company sets forth the
procedure to be followed by a shareholder who wishes to bring certain business
before an annual meeting. Generally, only a shareholder of record entitled to
vote at the meeting may make a proposal and must do so by means of a written
notice setting forth, as to each matter proposed, a brief description of the
business desired to be brought before the meeting and the reasons therefor. The
notice must be directed to the Secretary of the Company and delivered to its
principal executives offices not less than 50 days prior to the meeting;
provided, that in the event that less than 50 days notice is given to the
shareholder by the Company of the annual meeting, such notice by the
shareholder must be received not later than the close of business on the 10th
day following the day on which such notice of
14
<PAGE>
the date of the annual meeting was mailed by the Company. Any material
interest such shareholder has in any such matter, as well as the shareholder's
name and address as they appear in the Company's books and the class and
number of shares of capital stock of the Company owned by the shareholder
beneficially and of record, is also required to be stated. The Chairman of the
Annual Meeting shall determine whether, based upon the facts presented, any
business is properly brought before the meeting.
ANNUAL REPORT
A summary annual report of the Company for the fiscal year ended October 31,
1996, has been mailed to shareholders.
FINANCIAL STATEMENTS
Consolidated financial statements of the Company and its subsidiaries are
contained in the Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1996, which is being delivered with this Notice and Proxy
Statement.
The foregoing notice and proxy statement are sent by order of the Board of
Directors.
15
<PAGE>
[ ]
The Board of Directors recommends a vote FOR the nominees named below:
1. Election of two Class II
Directors
FOR all nominees
named below [X]
WITHHOLD AUTHORITY to vote
for all nominees named below. [X]
*EXCEPTIONS [X]
Nominees: J. L. Jackson and Rawles Fulgham
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions ___________________________________________________________________
Change of Address or
Comments Mark Here [X]
The signature on this Proxy should correspond exactly with stockholder's
name as printed to the left. In the case of joint tenancies, co-executors,
or co-trustees, both should sign. Persons signing as Attorney, Executor,
Administrator, Trustee or Guardian should give their full title.
Dated: _____________________________________________________ 199 _____
______________________________________________________________________
Signature
______________________________________________________________________
Signature
Votes must be indicated
(x) in Black or Blue Ink. [X]
(Please sign, date and return this proxy
in the enclosed postage prepaid envelope.)
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
This proxy is Solicited on Behalf of the Board of Directors
S. B. CASEY, JR. and GRAHAM L. ADELMAN, or any of them, with power of
substitution to each, are hereby authorized to represent the undersigned at the
Annual Meeting of Shareholders of GLOBAL INDUSTRIAL TECHNOLOGIES, INC., to be
held at the Horchow Auditorium, Dallas Museum of Art, 1717 North Harwood,
Dallas, Texas, on March 19, 1997 at 10:00 a.m., and to vote the number of
shares which the undersigned would be entitled to vote if personally present
on all matters properly coming before the meeting or any adjournment or
postponement thereof.
Where a vote is not specified, the proxies will vote the shares represented
by this Proxy FOR the election of the persons nominated to serve as Directors
and will vote in their discretion on any other matters properly coming before
the meeting.
The Board of Directors recommends a vote "FOR ELECTION OF" the persons
nominated to serve as Directors.
(Continued and to be dated and signed on the reverse side.)
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
P.O. BOX 11149
NEW YORK, N.Y. 10203-0149
