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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 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 Section 240.14a-12
GARDNER DENVER, INC.
........................................................................
(Name of Registrant as Specified In Its Charter)
........................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
...............................................................
2) Aggregate number of securities to which transaction applies:
...............................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was determined.):
...............................................................
4) Proposed maximum aggregate value of transaction:
...............................................................
5) Total fee paid:
...............................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
...............................................................
2) Form Schedule or Registration Statement No.:
<PAGE>
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[GARDNER DENVER LOGO]
March 26, 1999
TO OUR STOCKHOLDERS:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders on Tuesday, May 4, 1999 at 1:30 p.m., at the Holiday
Inn Quincy, 201 South Third Street, Quincy, Illinois.
The attached Notice and Proxy Statement describe the business of
the meeting. After the transaction of the formal business, I will
report on current operations and plans. A question and answer period
will follow.
We look forward to a significant vote of the Common Stock,
either in person or by proxy. This year, three convenient ways to
vote your proxy are offered by Gardner Denver. If you are a
stockholder of record, you may use the toll-free telephone number on
the proxy card to vote your shares. You may also vote your shares
via the Internet by following the simple instructions on the proxy
card. If you prefer, simply complete, date, sign and return your
proxy in the enclosed stamped and addressed envelope. Regardless of
your method of voting, you may revoke your proxy and vote in person
if you decide to attend the Annual Meeting. Your support is
appreciated, and we hope that you will be able to join us at the
May 4 meeting.
Cordially,
/s/ Ross J. Centanni
Ross J. Centanni
Chairman, President and
Chief Executive Officer
<PAGE>
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GARDNER DENVER, INC.
1800 GARDNER EXPRESSWAY
QUINCY, ILLINOIS 62301
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
The 1999 Annual Meeting of Stockholders of Gardner Denver, Inc.
(the "Company") will be held at the Holiday Inn Quincy, 201 South
Third Street, Quincy, Illinois on Tuesday, May 4, 1999, at 1:30
p.m., for the following purposes:
1. To elect four directors, three for a three-year term each,
and one for a one-year term;
2. To amend the Company's Long-Term Incentive Plan; and
3. To transact such other business as properly may come before
the meeting or any adjournment thereof.
Stockholders of record at the close of business on March 12,
1999, are entitled to notice of and to vote at the meeting.
Stockholders of record may vote their proxy by completing the
enclosed proxy card, by calling the toll-free number indicated on
the proxy card, or by accessing the Internet web site specified in
the instructions included on the proxy card. A stockholder may
revoke a proxy at any time before it is voted at the meeting by
following the procedures set forth in the attached Proxy Statement.
FOR THE BOARD OF DIRECTORS
Helen W. Cornell
Vice President, Corporate Secretary
Quincy, Illinois
March 26, 1999
RETURN OF PROXIES REQUESTED
-----------------------------------------------------------
TO ASSURE YOUR REPRESENTATION AT THE MEETING,
PLEASE SIGN, DATE AND PROMPTLY MAIL THE ENCLOSED PROXY,
FOR WHICH A RETURN ENVELOPE IS PROVIDED; CALL THE
TOLL-FREE NUMBER INDICATED ON THE ENCLOSED PROXY;
OR ACCESS THE INTERNET WEB SITE SPECIFIED IN THE
INSTRUCTIONS ON THE PROXY CARD.
-----------------------------------------------------------
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<PAGE>
GARDNER DENVER, INC.
1800 GARDNER EXPRESSWAY
QUINCY, ILLINOIS 62301
PROXY STATEMENT
GENERAL INFORMATION
The accompanying proxy is solicited by the Board of Directors of
Gardner Denver, Inc. (the "Company" or "Gardner Denver") and will be
voted in accordance with the instruction given in the proxy if it is
returned duly executed (either signed or voted through the toll-free
telephone or Internet procedures described below) and is not
revoked. A stockholder may revoke a proxy at any time before it is
voted by giving notice to the Company in writing or in open meeting.
Attendance at the meeting will not in and of itself revoke a proxy.
Two independent judges from the First Chicago Trust Company of New
York, the Company's transfer agent, will tabulate the votes cast at
the Annual Meeting.
Stockholders of record may vote their proxy using the toll-free
number listed on the proxy card, via the Internet or they may sign,
date and mail their proxies in the postage paid envelope provided.
The telephone and Internet voting procedures are designed to
authenticate stockholders' identities. The procedures allow
stockholders to give their voting instructions and to confirm that
their instructions have been properly recorded. The Company has been
advised by counsel that the procedures which have been put in place
are consistent with the requirements of applicable law. Specific
instructions to be followed by any stockholder of record interested
in voting by telephone or the Internet are set forth on the enclosed
proxy card.
This Proxy Statement and the accompanying proxy were first
mailed to stockholders on or about March 26, 1999. The record date
for determining the stockholders entitled to vote at the meeting was
the close of business on March 12, 1999 (the "Record Date"). On that
date, the outstanding voting securities of the Company were
15,072,444 shares of Common Stock, par value $0.01 ("Common Stock").
Each share of Common Stock is entitled to one vote. A majority of
the outstanding shares of Common Stock is required to establish a
quorum.
The Company is not aware of any matter that will be presented to
the meeting for action on the part of the stockholders other than
that stated in the notice. If any other matter is properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote the shares to which the proxy relates in
accordance with their best judgment. Abstentions will be considered
present at the meeting for purposes of determining a quorum with
respect to items brought before the meeting, but will not be counted
as voting for or against the issue to which the abstention relates.
Brokers holding shares for beneficial owners must vote those
shares according to specific instructions received from the owner.
If specific instructions are not received, brokers may vote these
shares in their discretion on certain routine matters, such as the
election of directors. However, the New York Stock Exchange Rules
preclude brokers from exercising their voting discretion on certain
proposals, including the proposed amendment to the Long-Term
Incentive Plan (the "Incentive Plan"). In these cases, brokers may
not vote on the proposals when they do not receive specific
instructions from the beneficial owner, resulting in what is known
as a "broker non-vote". Any "broker non-vote" will be considered
present for quorum purposes with respect to items brought before the
meeting, but will not be counted as voting with regard to the issue
to which it relates.
The enclosed proxy indicates on its face the total number of
shares of Common Stock registered in your name on the Record Date,
whether held in book entry or certificate form. If you are a
participant in the Gardner Denver, Inc. Retirement Savings Plan (the
"Savings Plan") the enclosed proxy includes the number of equivalent
shares credited to your respective account. When your proxy is
returned properly signed, it will serve
1
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as direction to Bankers Trust Company, as Trustee (the "Trustee")
for the Savings Plan, to vote the shares held for your account in
accordance with your instructions. Your properly signed proxy will
also serve as a direction to the Trustee to vote all of the
uninstructed shares of Common Stock credited to other participants'
accounts and shares of Common Stock not yet allocated to
participants' accounts in the same manner as you indicated. The
Trustee will vote shares of Common Stock for which no instructions
are received and shares of Common Stock not yet allocated to
participants' accounts in the same proportion (for or against) as
the shares of Common Stock for which instructions are received from
participants. If you fail to return a proxy properly signed, the
equivalent shares of Common Stock credited to your account will be
voted by the Trustee in the same proportion as the shares for which
instructions were received from other Savings Plan participants.
The cost of soliciting proxies will be paid by the Company. The
Company will, upon request, reimburse brokerage houses, custodians,
nominees and others for their out-of-pocket and reasonable clerical
expenses incurred in connection with such solicitation. For the
purpose of obtaining broad representation at the meeting, Georgeson
& Company Inc. has been retained by the Company to assist in the
solicitation of proxies at an anticipated cost of approximately
$10,000 plus reimbursement of reasonable expenses. Officers and
employees of the Company, without being additionally compensated,
may also make requests by letter, telephone or in person for the
return of proxies.
ELECTION OF DIRECTORS
The authorized number of directors of the Company is presently
fixed at eight, divided into three classes, with two classes having
three members and one class having two members. Typically, directors
in each class are elected for three-year terms so that the term of
office of one class of directors expires at each annual meeting.
For election as directors at the Annual Meeting of Stockholders
to be held on May 4, 1999, the Board of Directors has approved the
nominations of Donald G. Barger, Jr., Michael J. Sebastian and
Raymond R. Hipp, who are currently directors, each to serve for a
three-year term expiring in 2002. The Board of Directors has also
approved the nomination of Richard L. Thompson, who is currently a
director, to serve a one-year term expiring in 2000. Mr. Thompson
was appointed by the Board of Directors in November 1998 as a member
of the class of directors with a term expiring in 2000. The Board of
Directors provided that Mr. Thompson be nominated for election by
stockholders at the next annual meeting.
The affirmative vote of a majority of the outstanding shares of
Common Stock present at the meeting, in person or by proxy, is
required to elect each of the nominees to the director positions. If
you return a proxy properly executed or vote your proxy using the
telephone or Internet procedures available, but do not indicate your
voting preference, the shares represented by your proxy will be
voted for the election of the nominees for director named in this
Proxy Statement.
If any one of the nominees becomes unavailable for election, the
accompanying proxy will be voted for the election of such person, if
any, as shall be recommended by the Board of Directors, or will be
voted in favor of holding a vacancy to be filled by the directors.
The Company has no reason to believe that any nominee will be
unavailable.
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The following information is provided regarding the nominees for
election as a director and each of the other directors who will
continue in office after the meeting:
NOMINEES FOR ELECTION
TERMS EXPIRING AT THE 2002 ANNUAL MEETING OF STOCKHOLDERS
[PHOTO] DONALD G. BARGER, JR., age 56, has been a director of
Gardner Denver since its spin-off from Cooper Industries,
Inc. ("Cooper") in April 1994. He has held the position of
Vice President and Chief Financial Officer of Hillenbrand
Industries Inc. ("Hillenbrand"), a publicly traded holding
company serving healthcare and funeral services, since March
1998. He served as Vice President, Chief Financial Officer
of Worthington Industries, Inc. ("Worthington"), a publicly
held manufacturer of metal and plastic products and
processed steel products, from September 1993 until joining
Hillenbrand. From 1986 until joining Worthington in 1993,
Mr. Barger was Vice President-Controller of The BF Goodrich
Company, a publicly held manufacturer of aerospace and
specialty chemicals and plastics. Mr. Barger has a B.S.
degree from the United States Naval Academy and an M.B.A.
from the University of Pennsylvania, Wharton School of
Business. Mr. Barger is a director of the Quanex Corporation
("Quanex"), a publicly held manufacturer of engineered steel
bars, aluminum flat-rolled products, and engineered,
fabricated-metal products.
[PHOTO] RAYMOND R. HIPP, age 56, has been a director of Gardner
Denver since November 1998. Mr. Hipp serves as Chairman,
President and CEO of Alternative Resources Corporation
("ARC"), a provider of information technology staffing and
component outsourcing, a position he has held since August
1998. From August 1996 until joining ARC, Mr. Hipp was the
President and CEO of ITI Marketing Services, Inc., a
teleservices provider. Mr. Hipp was President of Comdisco
Disaster Recovery Services, Inc., a wholly-owned subsidiary
of Comdisco, Inc. ("Comdisco"), from 1980 until 1994. From
1984 to 1992, Mr. Hipp also served as the Senior Vice
President of Comdisco. He was Executive Vice President and a
director of Comdisco from 1992 until 1994. Mr. Hipp has a
B.S. degree from Southeast Missouri State University and is
a director of ARC.
[PHOTO] MICHAEL J. SEBASTIAN, age 68, has been a director of Gardner
Denver since its incorporation in November 1993. He was
previously Executive Vice President of Cooper from February
1982 until his retirement in August 1995. Mr. Sebastian has
a B.S.M.E. degree from Santa Clara University and has
completed the Harvard Business School's Advanced Management
Program. Mr. Sebastian is a director of Cooper Cameron
Corporation, a publicly held manufacturer of oil and gas
pressure control equipment and gas turbines, compressors,
reciprocating engines and turbochargers, and Quanex.
3
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TERM EXPIRING AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
[PHOTO] RICHARD L. THOMPSON, age 59, was elected to the Gardner
Denver Board of Directors in November 1998. Mr. Thompson is
a Group President and Executive Office Member of Caterpillar
Inc. ("Caterpillar"), with administrative responsibility for
the gas turbine and reciprocating engine business, as well
as corporate research and development activities. Mr.
Thompson has held advancing levels of responsibility within
Caterpillar since joining the company in 1983. Mr. Thompson
earned a B.S. in electrical engineering and an M.B.A. from
Stanford University and has completed the Caterpillar
Advanced Management Program. Mr. Thompson presently serves
on the Boards of Directors of Hindustan Powerplus Ltd.,
Lennox International, Inc. and Proctor Community Hospital.
He is also a member of Bradley University's College of
Business Administration Advisory Council and the Academy of
Transportation to Russia.
DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE MEETING
TERMS EXPIRING AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
[PHOTO] ROSS J. CENTANNI, age 53, has been President and Chief
Executive Officer and a director of Gardner Denver since its
incorporation in November 1993. He has been Chairman of
Gardner Denver's Board of Directors since November 1998.
Prior to Gardner Denver's spin-off from Cooper, he was Vice
President and General Manager of Gardner Denver's
predecessor, the Gardner-Denver Industrial Machinery
Division, (the "Division"), where he also served as Director
of Marketing from August 1985 to June 1990. Mr. Centanni was
Director of Corporate Planning for Cooper from August 1981
until joining the Division in 1985. He has a B.S. degree in
industrial technology and an M.B.A. degree from Louisiana
State University. Mr. Centanni is a director of Denman
Services, Inc., a privately held supplier of medical
products.
[PHOTO] ALAN E. RIEDEL, age 68, has been a director of Gardner
Denver since its incorporation in November 1993 and served
as Chairman of the Board of Directors from November 1993
until November 1998. Mr. Riedel was previously Vice Chairman
of Cooper from August 1992 until his retirement in March
1994. From 1973 until August 1992, Mr. Riedel was Senior
Vice President, Administration for Cooper. He has a B.A.
degree in government and an Honorary Doctor of Laws degree
from Ohio University and a J.D. degree from Case Western
Reserve University School of Law. He has also completed the
Harvard Business School's Advanced Management Program. Mr.
Riedel is a director of Factory Mutual Insurance Company;
Belden Inc., a publicly held manufacturer of electronic and
electrical wire and cable; and The Standard Products
Company, a publicly held manufacturer of rubber and plastic
parts for the automotive industry. He is a trustee and
former chairman of the Ohio University Foundation. Mr.
Riedel currently is of counsel to Squire, Sanders and
Dempsey L.L.P., which provided legal services to the Company
during 1998 and continues to render such services to the
Company.
4
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FOR TERMS EXPIRING AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS
[PHOTO] FRANK J. HANSEN, age 57, has been a director of Gardner
Denver since June 1997. He has been President, Chief
Operating Officer and a member of the Board of Directors of
IDEX Corporation ("IDEX"), a publicly held manufacturer of
proprietary fluid handling and industrial products, since
January 1998. Mr. Hansen was previously Senior Vice
President of IDEX from July 1994 until his promotion. From
June 1989 to July 1994, he was President of IDEX's Viking
Pump Business Unit. Mr. Hansen has a B.S. degree in Business
Administration from Portland State University, and also
serves as a director of the Oakton Community College Educa-
tional Foundation.
[PHOTO] THOMAS M. MCKENNA, age 61, has been a director of Gardner
Denver since its spin-off from Cooper in April 1994. Mr.
McKenna is the President of United Sugars Corporation, a
marketing cooperative which is one of the nation's largest
sugar marketers to both the industrial and retail markets, a
position he has held since December 1998. He was President
and Chief Executive Officer of Moorman Manufacturing Company
("Moorman"), a privately held manufacturer of agricultural
supplies, from August 1993 until January 1998. Mr. McKenna
joined Moorman as Executive Vice President and Chief
Operating Officer in August 1991, was elected to the Board
of Directors in November 1991 and was President and Chief
Operating Officer from November 1992 through July 1993. On
December 30, 1997, Moorman was acquired by Archer Daniels
Midland Company. Mr. McKenna has a B.A. degree from St.
Mary's College and an M.B.A. from Loyola University.
COMMITTEES, COMPENSATION AND GOVERNANCE OF
THE BOARD OF DIRECTORS
The Company's Board of Directors (the "Board") held seven
meetings during 1998. The Board has a standing Audit and Finance
Committee and a standing Management Development and Compensation
Committee, each composed exclusively of nonemployee directors.
During 1998, each director attended at least 75% of the meetings of
the Board and the committees on which the director served. The Board
does not have a standing Nominating Committee. Director nominations
are made by the full Board.
The Audit and Finance Committee, currently composed of Donald G.
Barger, Jr., Chairman, Frank J. Hansen, Raymond R. Hipp and Michael
J. Sebastian, held three meetings during 1998. The functions of the
Audit and Finance Committee are to instruct the independent auditors
that the Board is the representative of the stockholders and as such
is the client of the auditors; recommend the nomination of
independent auditors for appointment by the Board; review the
independence of the auditors, the planned scope and results of their
examination and the scope of any significant non-audit work
performed; review the scope and results of the Company's internal
control activities; review accounting changes having a material
impact on the financial statements of the Company and filings made
with the Securities and Exchange Commission as required; hold
conferences and reviews with the auditors as may be deemed desirable
by either the Audit and Finance Committee, the auditors or
management, and report to the Board the results of such reviews and
conferences; monitor compliance with the Company's Corporate
Conflicts of Interest and Ethical Conduct Policy; review information
concerning environmental, legal and other matters which may
represent material financial exposure; and submit to the Board any
recommendations the Committee may have. The Audit and Finance
Committee also oversees the Company's Pension Investment Committee
in their establishment of investment objectives, policies and
performance criteria for the management of the Company's retirement
and benefit plan assets.
The Management Development and Compensation Committee, currently
composed of Alan E. Riedel, Chairman, Thomas M. McKenna and Richard
L. Thompson, held three meetings during 1998. The functions of the
Management Development and Compensation Committee are to review and
consider succession planning,
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executive performance, organizational structure and assist the Chief
Executive Officer in developing recommendations in these areas for
Board consideration; review and consult with the Chief Executive
Officer concerning the selection of officers of the Company and
establish reasonable compensation for officers, including incentive
compensation and bonuses, deferred compensation, pensions, and other
benefits; designate those employees who will receive grants of stock
options and other awards under the Company's Incentive Plan and the
type and size of such grants; administer the Incentive Plan,
including amendments and restatements as appropriate; and recommend
to the Board one or more candidates for Chief Executive Officer in
the event the position becomes unexpectedly vacant.
COMPENSATION OF DIRECTORS
The Company's nonemployee directors each receive an annual
retainer of $16,000. Additionally, nonemployee directors receive
meeting attendance fees of $1,250 per meeting for board meetings and
$1,000 per meeting for committee meetings. Directors are also
reimbursed for reasonable expenses incurred in connection with
attending board and committee meetings.
The Gardner Denver, Inc. Phantom Stock Plan for Outside
Directors (the "Phantom Stock Plan") has been established to more
closely align the interests of the nonemployee directors and the
Company's stockholders by increasing each nonemployee director's
proprietary interest in the Company in the form of "phantom stock
units".
Under the Phantom Stock Plan, which is an unfunded plan, the
Company credits the equivalent of $4,000 annually, in equal monthly
amounts, to the phantom stock unit account of each nonemployee
director. Phantom stock units are credited based upon the previous
month's average closing price per share for the Company's Common
Stock. Each nonemployee director may also elect to defer all or some
portion of his annual director's fees under the Phantom Stock Plan
and have such amount credited on a monthly basis as phantom stock
units, based on the previous month's average closing price per share
for the Company's Common Stock. If the Company were to pay
dividends, dividend equivalents would be credited to each
nonemployee director's account on the dividend record date. The fair
market value of a director's account will be distributed as a cash
payment to the director (or his beneficiary), when the director
ceases to be a director of the Company for any reason.
Alternatively, a director may elect to have the fair market value of
his account distributed in twelve or fewer equal monthly
installments, but without interest on the deferred payments. The
fair market value of a director's account is determined by reference
to the average closing price per share for the Company's Common
Stock during the thirty trading days immediately preceding the date
the director ceases to be a director. The following table summarizes
the number of phantom stock units credited to each nonemployee
director as of March 15, 1999:
<TABLE>
<CAPTION>
PHANTOM STOCK
NAME UNITS
---- -------------
<S> <C>
Donald G. Barger, Jr.................... 1,115
Raymond R. Hipp......................... 212
Frank J. Hansen......................... 348
Thomas M. McKenna....................... 3,888
Alan E. Riedel.......................... 6,366
Michael J. Sebastian.................... 656
Richard L. Thompson..................... 371
------
Total............................... 12,956
</TABLE>
Under the Incentive Plan, each nonemployee director is
automatically granted options to purchase 3,000 shares of the
Company's Common Stock on the date immediately following the Annual
Meeting of Stockholders. These options become exercisable one year
from the date of grant, at the fair market value of the Common Stock
on the date of the grant, and expire five years from the date of
grant, subject to prior termination, under the terms of the
Incentive Plan.
6
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CORPORATE GOVERNANCE
The Company's Board of Directors has adopted a policy regarding
Corporate Governance. The objective of this policy is to ensure that
the Board maintains its independence, objectivity and effectiveness
in fulfilling its responsibilities to the Company's stockholders.
The policy describes the criteria for selection and retention of
outside directors; factors to ensure the Board remains independent;
administrative practices of the Board; and the composition and
compensation of the Board. The policy requires that the majority of
the Board be nonemployee directors, with varied and complementary
backgrounds. Directors may serve on the boards of directors of no
more than four for-profit organizations, including the Company, and
interlocking directorships are prohibited. The policy specifies that
a nonemployee director will retire at age 70 years and that, at any
one time, at least 50% of the number of nonemployee directors shall
be actively employed.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The Company maintains Stock Ownership Guidelines for its
nonemployee directors, executive officers and other key employees.
Under these guidelines, each nonemployee director is expected to
maintain an equity interest in the Company equal to one times his
annual retainer by the end of his first year as a director and three
times his annual retainer at the end of five years of service on the
Board. The guidelines also require that the CEO maintain an equity
interest equal to five times his annual base salary and each
Corporate Vice President maintain an equity interest in the Company
equal to three times his annual base salary. These equity interests
are to be achieved by the fifth anniversary of each individual's
appointment as an officer. Common Stock held directly by the officer
and indirectly for the benefit of the officer in the Savings Plan
and the related Supplemental Excess Defined Contribution Plan
("Excess Defined Contribution Plan") are considered in determining
compliance with these guidelines.
The following table sets forth, as of March 15, 1999,
information with respect to the beneficial ownership of the
Company's Common Stock by (a) each director, (b) each of the
Company's four most highly compensated executive officers in 1998
who is not a director and, (c) all directors and executive officers
as a group. A separate table is also included which sets forth each
person known by the Company to be the beneficial owner of more than
5% of the Company's outstanding Common Stock as of the dates
indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
--------------------------------------------
EMPLOYEE
DIRECT 401(K) PERCENT
NAME OF BENEFICIAL OWNERS OWNERSHIP<F1> PLAN<F2> OF CLASS
------------------------- ------------- -------- --------
<S> <C> <C> <C>
DIRECTORS
Donald G. Barger, Jr........................................ 20,400<F3>,<F4> <F*>
Ross J. Centanni............................................ 397,676<F3>,<F5> 13,088 2.7%
Frank J. Hansen............................................. 5,900<F3> <F*>
Raymond R. Hipp............................................. -0- <F*>
Thomas M. McKenna........................................... 15,780<F3> <F*>
Alan E. Riedel.............................................. 68,298<F3>,<F6> <F*>
Michael J. Sebastian........................................ 38,469<F3> <F*>
Richard L. Thompson......................................... 700 <F*>
NAMED EXECUTIVE OFFICERS (NOT DIRECTORS)
Philip R. Roth.............................................. 60,002<F3> 1,907 <F*>
David Brown................................................. 10,167<F3> 736 <F*>
J. Dennis Shull............................................. 133,776<F3>,<F7> 5,480 <F*>
Helen W. Cornell............................................ 96,224<F3> 3,475 <F*>
All directors and executive officers as a group............. 953,000<F3>,<F4>,<F5>,<F6>,<F7> 28,885 6.3%
<FN>
- -------
<F*> Less than 1%
<F1> Each beneficial owner has sole voting and investment power with respect to
all shares except as indicated below.
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<F2> Each beneficial owner has sole voting power, but limited investment power
with respect to all shares held in the Savings Plan, which is a 401(k)
plan, and the related Excess Defined Contribution Plan.
<F3> Includes shares that could be acquired by the exercise of stock options
granted under the Incentive Plan that are currently exercisable or
exercisable within 60 days after March 15, 1999, as follows: 12,000 shares
for Mr. Barger; 256,669 shares for Mr. Centanni; 3,000 shares for Mr.
Hansen; 12,000 shares for Mr. McKenna; 3,000 shares for Mr. Riedel, 6,000
shares for Mr. Sebastian; 49,302 shares for Mr. Roth; 10,167 shares for
Mr. Brown; 75,500 shares for Mr. Shull; 62,668 shares for Ms. Cornell; and
561,807 shares for the group.
<F4> Includes 150 shares owned by Mr. Barger's son, as to which Mr. Barger
shares voting and investment power.
<F5> Includes 4,059 shares owned by Mr. Centanni's wife and children, as to
which Mr. Centanni shares voting and investment power.
<F6> Includes 300 shares owned by Mr. Riedel's wife and 3,000 shares held in a
non-profit charitable corporation, as to which Mr. Riedel shares voting
and investment power, and 7,000 shares held in an IRA/Keough account.
<F7> Includes 684 shares owned by Mr. Shull's children, as to which Mr. Shull
shares voting and investment power.
</TABLE>
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
<S> <C> <C>
First Manhattan Company................... 2,196,375<F1> 14.6%
437 Madison Avenue
New York, New York
FMR Corporation........................... 1,076,155<F2> 7.1%
82 Devonshire Street
Boston, Massachusetts
Ira Sochet................................ 1,027,494<F3> 6.8%
9350 South Dixie Highway
Miami, Florida
<FN>
- -------
<F1> Based on Schedule 13G filing, dated as of February 11, 1999, made by First
Manhattan Company ("First Manhattan"). First Manhattan reported that it
has sole voting and sole investment powers with respect to 217,800 shares,
shared voting power as to 1,931,775 shares and shared investment power as
to 1,978,575 shares. Of the shares beneficially owned, 610,200 shares are
owned by family members of General Partners of First Manhattan. With
respect to these 610,200 shares, First Manhattan disclaims beneficial
ownership as to 135,000 shares and disclaims investment power as to
475,200 shares.
<F2> Based on Schedule 13G filing, dated as of February 1, 1999, made by FMR
Corporation and certain of its affiliates, one of which is an investment
advisor registered under the Investment Advisors Act of 1940
(collectively, "FMR"). FMR reported that it has neither sole nor shared
voting power with respect to shares beneficially owned. FMR has sole
investment power with respect to all shares beneficially owned.
<F3> Based on written confirmation received February 17, 1999, from Mr. Ira
Sochet. Mr. Sochet previously filed an amended Schedule 13D, dated as of
February 5, 1997, reporting that he has sole voting and investment powers
with respect to all shares of Common Stock beneficially owned at that
time. Mr. Sochet acknowledged in his written confirmation that he
continues to have sole voting and investment powers with respect to all
shares beneficially owned.
</TABLE>
8
<PAGE>
<PAGE>
EXECUTIVE MANAGEMENT COMPENSATION
The following tables present compensation earned by the Chief
Executive Officer and the next four most highly compensated
executive officers of the Company for the years indicated and
information regarding stock option transactions by each officer in
1998.
<TABLE>
TABLE 1
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
--------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
----------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)<F1> ($)<F2>
--------------------------- ---- --------- -------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Ross J. Centanni........................ 1998 $405,833 $531,000 50,000 $37,199
Chairman, President & CEO 1997 325,833 420,000 45,000 31,313
1996 275,000 370,000 90,001 28,575
Philip R. Roth.......................... 1998 195,000 184,000 15,000 15,525
Vice President, Finance & CFO <F3> 1997 185,000 150,000 15,001 13,275
1996 114,577 110,000 45,001 5,156
David Brown............................. 1998 184,167 115,000 8,000 13,913
Vice President & General Manager, 1997 74,423 125,000 22,501 3,349
Blower Division <F3>
J. Dennis Shull......................... 1998 171,667 150,000 15,000 14,061
Vice President & General Manager, 1997 150,000 140,000 11,251 11,925
Compressor & Pump Division 1996 137,333 115,000 18,000 10,905
Helen W. Cornell........................ 1998 132,500 115,000 11,000 9,149
Vice President, Corporate Secretary 1997 108,000 70,000 7,501 7,110
& Treasurer 1996 100,500 50,000 18,000 6,998
<FN>
- -------
<F1> The Company effected a two-for-one stock split of its Common Stock on
January 15, 1997 and a three-for-two stock split on December 29, 1997.
Long term compensation awards have been restated to reflect the effect of
these stock splits.
<F2> Amounts under "All Other Compensation" reflect the Company's contribution
on behalf of each of the named executive officers to the Savings Plan and
the related Excess Defined Contribution Plan.
<F3> Mr. Roth became an executive officer when he joined the Company in May
1996. Mr. Brown became an executive officer when he joined the Company in
August 1997.
</TABLE>
9
<PAGE>
<PAGE>
<TABLE>
TABLE 2
OPTION GRANTS IN 1998
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
- --------------------------------------------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM<F3>
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------
NAME GRANTED(#)<F1> IN 1998 ($/SH)<F2> DATE<F1> 5%($) 10%($)
---- -------------- ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ross J. Centanni................. 50,000 19% $26.84 03/02/08 $844,092 $2,139,099
Philip R. Roth................... 15,000 6 26.84 03/02/08 253,228 641,730
David Brown...................... 8,000 3 26.84 03/02/08 135,055 342,256
J. Dennis Shull.................. 15,000 6 26.84 03/02/08 253,228 641,730
Helen W. Cornell................. 11,000 4 26.84 03/02/08 185,700 470,602
<FN>
- -------
<F1> These options have a ten-year term from the date of grant and are
exercisable in increments of one-third each on the first, second and third
annual anniversary dates following the date of grant.
<F2> The exercise price is equal to the average of the high and low price of
the Company's Common Stock on the respective date of grant.
<F3> Potential realizable value is based on an assumption that the market price
of the stock appreciates at the stated rate, compounded annually, from the
date of grant until the end of the ten-year option term. The assumed
market price of the stock, compounded annually at 5% per year for ten
years, is $43.72, and $69.62 if compounded annually at 10% for ten years.
At December 31, 1998, the market price of the stock was $14.34. These
values are calculated based on requirements promulgated by the Securities
and Exchange Commission and are not intended to reflect future stock price
appreciation for the Company's Common Stock.
</TABLE>
<TABLE>
TABLE 3
AGGREGATED OPTION EXERCISES IN 1998
AND DECEMBER 31, 1998 OPTION VALUES<F1>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1998(#) AT DECEMBER 31, 1998($)<F3>
SHARES ---------------------- ---------------------------
ACQUIRED ON VALUE
NAME EXERCISE(#) RECEIVED($)<F2> EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- --------------- ------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Ross J. Centanni......... 90,600 $2,417,888 195,001 110,001 $1,629,401 $169,071
Philip R. Roth........... 3,800 40,613 24,301 40,001 98,315 76,407
David Brown.............. -0- -0- 7,500 23,001 -0- -0-
J. Dennis Shull.......... 52,500 1,223,880 60,750 28,501 551,849 33,813
Helen W. Cornell......... 22,773 570,038 50,501 22,000 455,004 33,813
<FN>
- -------
<F1> The Company effected a two-for-one stock split of its Common Stock on
January 15, 1997 and a three-for-two split on December 29, 1997. The
number of shares acquired on exercise, the number of securities underlying
unexercised options and the related exercise prices have been adjusted to
reflect these stock splits.
<F2> The value received for shares acquired on exercise in 1998 is calculated
using the difference between the fair market value of the Company's Common
Stock, as indicated by the average high and low trading value of the
Common Stock on the exercise date, and the option exercise price.
<F3> The value of the unexercised in-the-money options at December 31, 1998 is
calculated using the difference between the fair market value of the
Company's Common Stock, as indicated by the average high and low trading
value of the Common Stock on December 31, 1998 ($14.34), and the option
exercise prices.
</TABLE>
10
<PAGE>
<PAGE>
REPORT OF THE MANAGEMENT DEVELOPMENT
AND COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The goal of the Management Development and Compensation
Committee (the "Committee") is to compensate the executive officers
of Gardner Denver based on the scope of their responsibilities, the
achievement of specific annual objectives and the Company's annual
and longer term performance. Annually, the Committee reviews and
establishes the compensation and benefits of the executives,
including base salaries, annual bonus opportunities and grants of
awards under the Incentive Plan. These elements are blended to
provide competitive pay, reward achievement of financial and
strategic objectives and align the interests of the Company's
executives with those of the Company's stockholders.
The Company maintains a compensation plan for executives that
consists of (i) base salary, (ii) annual incentive compensation
through bonus opportunities and (iii) long-term incentives,
currently in the form of stock option grants. The Company hired
Frederic W. Cook & Co., Inc. ("Cook & Co.") in 1998 to review the
Company's existing executive compensation practices and mix of pay,
i.e., salary, bonus and long-term incentive, for competitiveness
with peer companies and with a broad group of manufacturing
companies. Cook & Co. confirmed to the Company that such practices
were consistent with the Company's goal of attracting and retaining
the best qualified executives.
BASE SALARY
The Committee establishes a base salary for each executive
officer at approximately the market median salary level for similar
positions in independent manufacturing companies with annual
revenues generally comparable to those of the Company. In 1998, the
Committee utilized three surveys selected by its independent
compensation consultant in determining the market median salary
level for each executive officer. This data was used in a regression
analysis to project the salary, bonus and total annual cash
compensation paid to executives of companies with annual revenues of
approximately $400 million. Cook & Co. also provided specific
comparisons of several peer companies' compensation practices for
each company's CEO and four most highly compensated officers. The
comparative data and results of the regression analysis were
combined to calculate competitive consensus data, benchmark the
compensation practices of the Company and develop compensation
recommendations for each of the executives for 1998.
ANNUAL INCENTIVE COMPENSATION
An annual cash bonus opportunity is awarded at the discretion of
the Committee. This bonus is designed to relate the executive's
annual compensation to overall corporate and individual performance.
The bonus award is based on goals established by the Committee that
combine personal performance as well as corporate, and if
applicable, division, performance during the bonus year. These goals
are determined in the first quarter of the bonus year. The
calculation of the annual cash bonus utilizes a target bonus
concept, tempered by the Committee's judgment. A target bonus,
expressed as a percentage of annual base salary, is specified for
each executive officer, corresponding to median cash bonus payments
made by comparable companies based upon the competitive consensus
data for similar positions.
Except for the Division General Managers, corporate performance
was judged based on a combination of diluted earnings per share
(weighted at 60%) and the level of cash flow (weighted at 40%)
generated by the Company in 1998. Both diluted earnings per share
and cash flow were adjusted to exclude extraordinary transactions
such as the financial effect of the acquisition completed in March
1998 and a share repurchase program, since these items were not
known at the time bonus targets were determined. Diluted earnings
per share was included in the benchmark to reflect the effect of
management's performance on stockholder return. Free cash flow was
utilized in the benchmark due to the continued importance of cash
flow in providing funds to pursue the Company's growth strategies.
Free cash flow was defined as the sum of the Company's net cash
provided by operating activities and net cash used for investing
activities, excluding any cash related to the acquisition completed
in March. Bonus payments increase as performance levels increase,
and could range from
11
<PAGE>
<PAGE>
zero if cash flow was less than $16.5 million and diluted earnings
per share was less than $1.70, to a maximum payment if cash flow
was at least $25.2 million and diluted earnings per share was at
least $2.30. The maximum bonus payment, which is 250% of the median
cash bonus payment for comparable size companies, results in total
cash compensation for the executive officers in the 75th percentile
or higher of the competitive consensus data.
The bonus payments for 1998 would have provided market median
compensation if the Company had generated diluted earnings per share
of $2.00 in 1998 and $17.2 million of free cash flow. Bonus payments
between the 50th and 75th percentiles resulted from the $2.22
diluted earnings per share (excluding the earnings provided by the
acquisition and the effect of the share repurchase program) and
$31.1 million of cash flow (excluding funds utilized in completing
the acquisition) achieved in 1998.
Bonus payments for the Division General Managers were determined
based on a combination of the corporate, division and individual
performance. Corporate performance was judged based on diluted
earnings per share (weighted at 40%). Division performance for each
General Manager was assessed based on the respective division's
earnings before interest, taxes, depreciation and amortization
(weighted at 40%) and a second division-specific performance
objective (weighted at 20%). The successful relocation of the
centrifugal manufacturing operation and Blower Division headquarters
to Peachtree City, Georgia and the level of Compressor and Pump
Division's gross inventory at December 31, 1998 were the
division-specific objectives in 1998.
The Committee has the ability to vary formula outcomes to
further reflect the degree of achievement of personal performance
goals and overall perceived contributions by each participant. In
reviewing individual contributions, the Committee evaluated the
performance of each executive against specific, predetermined goals
that had been agreed upon with respect to that executive. This
process did not involve the use of specific formulas or the
assignment of weights to specific factors. In making its
determinations for executives other than Mr. Centanni, the Committee
also considered the advice and recommendation of Mr. Centanni.
LONG-TERM INCENTIVES
Under the Incentive Plan, designated employees are eligible from
time to time to receive awards in the form of stock options, stock
appreciation rights, restricted stock grants or performance shares,
as determined by the Committee. The purpose of these awards is to
promote the long-term financial interests of the Company by
encouraging employees to acquire an ownership position and to
provide incentives for specific employee performance. In selecting
the recipients and size of awards, the Committee views each
recipient's opportunity for significant contribution to the
Company's future growth and profitability.
The Committee currently utilizes stock options to provide the
named executives and other key employees with incentives that are
related to the long-term performance of the Company. The specific
number of stock options granted to an executive is determined by the
Committee, with the advice and counsel of Mr. Centanni, based upon
the individual's level of responsibility and a subjective judgment
by the Committee of the executive's contribution to the financial
performance of the Company. In 1998, the stock option grants
approximated the median grants for the competitive consensus data.
Options are granted at the average market price for the Common Stock
on the date of grant and have value only if the market price of the
underlying Common Stock appreciates. In 1998, the Committee granted
options with ten-year terms. Furthermore, since options are
exercisable in cumulative increments of one-third each year over a
three-year period, the Committee believes options provide an
appropriate long-term incentive for those receiving grants, as well
as stability in the work force.
12
<PAGE>
<PAGE>
COMPENSATION OF CEO
Mr. Centanni's base salary in 1998 was determined as described
above. His annual bonus opportunity depended upon the corporate and
his individual performance. In considering Mr. Centanni's individual
performance for purposes of the annual bonus, the Committee
considered the degree of achievement of diluted earnings per share
and free cash flow goals established by the Committee as well as
individual goals agreed upon between the Committee and Mr. Centanni.
The successful relocation of the centrifugal blower manufacturing
facility to Georgia; further implementation of SAP, an
enterprise-wide software system; integration of recent acquisitions;
and related achievements were carefully considered by the Committee.
The Committee did not assign weights or apply any formula to these
factors. In determining the 1998 stock option grant, the Committee
considered the range of option grants for CEOs in the competitive
consensus data as presented by Cook & Co. and set Mr. Centanni's
grant at the minimum of the range of the option grants presented.
OTHER
Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), limits the deductibility by public corporations of
compensation paid to specified executive officers. All compensation
paid in 1998 to the Company's executive officers, including the
compensation element of shares received under the Company's
Incentive Plan, qualified for deduction under Section 162(m).
Alan E. Riedel, Chairman
Thomas M. McKenna
Richard L. Thompson
13
<PAGE>
<PAGE>
STOCK PERFORMANCE GRAPH
The Common Stock of the Company was registered under the
Securities Exchange Act of 1934, effective March 31, 1994, and
trading of such Common Stock began April 18, 1994, on a when-issued
basis. The following table compares the cumulative total stockholder
return for the Company's Common Stock on an annual basis through
December 31, 1998 to the cumulative total returns for the same
periods of the (a) Standard & Poor's 500 Stock Index; (b) Standard
and Poor's MidCap Index for Manufacturing (Specialized Industries),
a pre-established industry index believed by the Company to have a
peer group relationship with the Company; and (c) Standard & Poor's
SmallCap 600, an industry index which includes the Company's Common
Stock as of August 26, 1998. All information presented assumes the
reinvestment of dividends.
[GRAPH]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
03/31/94 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gardner Denver $100 $100 $190 $342 $759 $442
S&P 500 $100 $105 $145 $178 $238 $306
MidCap Specialized $100 $95 $116 $148 $165 $143
SmallCap 600 $100 $101 $131 $158 $199 $196
- ------------------------------------------------------------------------------------------
<FN>
<F1> The cumulative total return on the Company's Common Stock is reflected to
begin as of the effective date of its registration under the Securities
Exchange Act of 1934, March 31, 1994, but is based on the closing price of
the first date of trading, April 18, 1994. Comparative cumulative total
return data is calculated based on an investment on April 1, 1994.
</TABLE>
14
<PAGE>
<PAGE>
EMPLOYEE AND EXECUTIVE BENEFIT PLANS
In addition to the Incentive Plan discussed elsewhere in this
Proxy Statement and group health, hospitalization and life insurance
plans generally available to all employees, the Company also
provides the following plans for the benefit of employees and
executive officers.
SAVINGS PLAN
The Savings Plan, which is intended to qualify under Section
401(k) of the Code, is administered by the Management Development
and Compensation Committee of the Board of Directors. All employees,
including officers of the Company, are eligible to participate in
the Savings Plan, except that employees covered by a collective
bargaining agreement may participate only if such agreement
specifically provides for participation in the Savings Plan. Under
the Savings Plan, each participating employee may elect to reduce
his or her salary by up to 16%, subject to certain limitations set
forth in the Code, and have such amount contributed to the Savings
Plan. The Company makes matching contributions to the Savings Plan
in an amount equal to 100% of each participant's elective
contributions up to 3% of such participant's compensation, and in an
amount equal to 50% of each participant's elective contributions
greater than 3%, up to 6% of the participant's annual compensation.
Contributions by participants in excess of 6% of annual compensation
are not matched by the Company. The Company maintains the Excess
Defined Contribution Plan that provides to certain employees
(including those named in the Summary Compensation Table ) benefits
of the Savings Plan that cannot be provided by a qualified defined
contribution plan due to Code provisions.
A participant's elective contributions and the Company's
matching contributions are fully vested when they are made.
Participants are able to direct the investment of their
contributions among eight investment funds, while the Company's
matching contributions must be invested in Common Stock of the
Company.
RETIREMENT PLANS
The Company maintains the Gardner Denver, Inc. Pension Plan (the
"Pension Plan") and the Gardner Denver, Inc. Supplemental Excess
Defined Benefit Plan (the "Excess Defined Benefit Plan") for the
benefit of all salaried employees and certain hourly employees as
defined in the Pension Plan.
Under the Pension Plan, the Company credits 4% of total
compensation paid up to the Social Security wage base for the year,
plus 8% of total compensation paid in excess of the Social Security
wage base, annually to each individual's account. For this purpose,
total compensation is cash remuneration paid during the year by the
Company to or for the benefit of a participant in the Pension Plan,
including base salary for the current year and annual cash bonus
earned during the prior year but paid in the current year for the
executives named in the Summary Compensation Table.
Employees who were formerly employees of Cooper were credited in
the Pension Plan for service while employed by Cooper. Benefits for
service through December 31, 1993 were determined under the Cooper
Salaried Employees' Pension Plan then in effect and converted to
initial balances under the Pension Plan. Funds equal to the
actuarial value of accrued liabilities for all participants, plus a
pro rata portion of the Cooper plan excess assets, were transferred
from the Cooper pension trust to a trust established by Gardner
Denver for the Pension Plan. Benefits at retirement are payable, as
the participant elects, in the form of a level annuity with or
without survivorship or a lump-sum payment. The Company will
maintain the status of the plan as a qualified defined benefit plan
through sufficient contributions to a trust fund to meet the minimum
requirements under the Code.
The Company also maintains the Excess Defined Benefit Plan. The
Excess Defined Benefit Plan is a nonqualified plan providing certain
employees, including those named in the Summary Compensation Table,
Pension Plan benefits that cannot be paid from a qualified, defined
benefit plan due to provisions of the Code. Under the Excess Defined
Benefit Plan, the Company credits 12% of annual compensation paid in
excess of $160,000 to the individual accounts of the participating
employees, including those named in the Summary Compensation Table.
The Excess Defined Benefit Plan is funded through contributions by
the Company to a Rabbi Trust.
15
<PAGE>
<PAGE>
For each of the individuals named in the Summary Compensation
Table, the following table shows current credited years of service,
the year each attains age 65, and the projected annual pension
benefit (including amounts payable under the Excess Defined Benefit
Plan) at age 65. The projected annual pension benefit assumes that
benefits will be paid on a straight-life annuity basis, compensation
for each executive officer continues at December 31, 1998 base
salary levels plus an annual cash bonus equal to the average cash
bonus received by each officer in 1998 and 1997, and an interest
rate of 6.0%.
<TABLE>
<CAPTION>
YEARS OF
CREDITED YEAR
SERVICE AS OF INDIVIDUAL ESTIMATED ANNUAL
MARCH 15, 1999 REACHES AGE 65 BENEFIT AT AGE 65
-------------- -------------- -----------------
<S> <C> <C> <C>
Ross J. Centanni.............. 19 2010 $167,957
Philip R. Roth................ 2 2016 75,058
David Brown................... 1 2013 50,160
J. Dennis Shull............... 23 2014 83,474
Helen W. Cornell.............. 10 2023 93,753
</TABLE>
STOCK REPURCHASE PROGRAM FOR EXECUTIVE OFFICERS
The Company has established Common Stock ownership guidelines as
part of its Corporate Governance Policy and previously granted stock
options under the Incentive Plan to promote the Company's long-term
interests. Executive officers have exercised a portion of such stock
options in accordance with the Incentive Plan and applicable stock
option agreements. The cumulative increase in the market price of
the Company's Common Stock since such stock options were granted
resulted in the imposition of significant alternative minimum taxes
on these employees. Therefore, the Company has established a Stock
Repurchase Program for its executive officers, to provide a means
for them to sell Gardner Denver Common Stock and obtain sufficient
funds to meet alternative minimum tax obligations which arise from
the exercise of incentive stock options. The program is intended to
mitigate any potential disruption to an orderly trading market in
the Company's Common Stock, which could result if the executives'
trades were effected through securities brokers, in the context of
the Company's relatively small average trading volume. The sales
price under this program is the average of the high and low sales
prices of the Company's Common Stock on the composite tape of the
New York Stock Exchange on the date of the repurchase. The
determination to sell shares under this program is final and must be
submitted either on the day of the sale or no later than prior to
the initiation of trading the following day.
MANAGEMENT CONTINUITY AGREEMENTS
The Company has a Management Continuity Agreement (the
"Agreement") with each of the individuals named in the Summary
Compensation Table. The purpose of the Agreement is to encourage
each of the executive officers to continue to carry out the
officer's duties in the event of a possible change in control of the
Company.
Benefits are payable under the Agreement only if a "Change of
Control" has occurred and within two years the officer's employment
is terminated (a) by the Company or its successor for reasons other
than "cause," or (b) voluntarily by the officer for "good reason,"
in each case as defined in the Agreement. A "Change of Control" will
be deemed to have occurred if either (i) any person or group
acquires beneficial ownership of 20% of the voting securities of the
Company, (ii) there is a change in the composition of a majority of
the Board of Directors within any two-year period which change is
not approved by certain of the directors who were directors at the
beginning of such two-year period, or (iii) a change in control (as
such term is used in Schedule 14A promulgated under the Securities
Exchange Act of 1934) otherwise occurs. The principal benefits to be
provided to the officers under the Agreements are (i) a lump sum
payment equal to a year's compensation (base salary and incentive
compensation) multiplied by a factor of two, and (ii) continued
participation in the Company's other employee benefit programs for
two years following termination, but not beyond age 65.
16
<PAGE>
<PAGE>
AMENDMENT TO THE INCENTIVE PLAN
The Incentive Plan was adopted by the Board of Directors of the
Company and by Cooper, as the sole stockholder, in December 1993.
The Incentive Plan was amended by the stockholders of the Company in
May 1996 and by the Board in November 1998. At its March 2, 1999
meeting, the Board of Directors, subject to the approval of the
stockholders, adopted an amendment to the Incentive Plan as
described below:
DESCRIPTION OF AMENDMENT
It is proposed that the Incentive Plan be amended to increase
the number of shares of Common Stock as to which awards may be
granted. The Incentive Plan currently provides for the issuance of
2,250,000 shares. As of March 3, 1999, 899,217 shares had been
issued upon the exercise of options granted under the Incentive
Plan; there were outstanding options to purchase 1,249,701 shares of
Common Stock and only 101,082 shares remained available for grants.
The proposed amendment would increase the number of shares available
for issuance by 500,000, which number would be added to the number
of shares remaining available for issuance on the date immediately
prior to the 1999 Annual Meeting of Stockholders. The closing price
of the Company's Common Stock as quoted on the New York Stock
Exchange on March 3, 1999 was $12.00.
The Board believes stock options are a useful form of incentive
compensation and increasing the number of shares issuable under the
Incentive Plan would permit the Company to continue to provide such
incentives in the future. Accordingly, the Incentive Plan is
proposed to be amended so that Section 5.1 would read as follows:
5.1. The aggregate number of shares of Common Stock
available for grant of awards under the Plan shall be that
number of shares remaining available for grant under the Plan on
the close of business on the date immediately prior to the 1999
Annual Meeting of Stockholders plus 500,000, subject to the
adjustments provided for in Section 15 hereof. Shares of Common
Stock available for issuance under the Plan may be authorized
and unissued shares or treasury shares, as the Company may from
time to time determine.
MATERIAL TERMS OF THE INCENTIVE PLAN
Purpose and Administration
The Incentive Plan was established to promote the long-term
financial interests of the Company, including its growth and
performance, by encouraging its employees to acquire an ownership
interest in the Company, enhancing the Company's ability to attract
and retain employees of outstanding ability and aligning employees'
interests with those of the Company's stockholders.
The Incentive Plan is administered by the Management Development
and Compensation Committee of the Board of Directors. Except with
respect to nonemployee director stock options, the Committee is
authorized to determine who may participate in the Incentive Plan,
the number and types of awards to be made to each participant and
the terms, conditions and limitations applicable to each award, as
set forth in an award agreement. The Committee designates
participants from those employees who have demonstrated significant
management potential or who have the capacity for a substantial
contribution to the successful performance of the Company.
Awards
Awards granted to employees under the Incentive Plan may consist
of stock options, stock appreciation rights, restricted stock grants
and performance shares.
Stock options may be in the form of incentive stock options or
nonstatutory stock options. Options are exercisable at such times
and in such installments as are determined by the Committee,
provided that no stock option is exercisable more than ten years
after the date of the grant. Options generally may not be exercised
following termination of service, except due to retirement,
disability or death. The option exercise price is established by the
Committee, but it can not be less than the fair market value on the
date of grant. Payment of the option exercise price is made at the
time of exercise and may be in cash, shares of Common Stock or a
17
<PAGE>
<PAGE>
combination thereof. The Committee may grant nonstatutory stock
options which are transferable to family members or entities which
are exclusively family-related for estate tax planning purposes.
Stock appreciation rights granted under the Incentive Plan
entitle the participant to receive a payment equal to the increase,
as of the date of exercise or surrender, in the fair market value of
a stated number of shares of Common Stock over the option or base
price stated in an award agreement. Stock appreciation rights may be
granted in tandem with stock options or alone. A tandem stock
appreciation right is exercisable only to the extent that the
related stock option is exercisable. Upon the exercise of a tandem
stock appreciation right, the related stock option is automatically
canceled to the extent of the number of stock appreciation rights
exercised. Stock appreciation rights may not be exercised earlier
than six months after grant.
Restricted stock awards granted under the Incentive Plan are
subject to forfeiture under such conditions and for such period of
time as the Committee may establish at the time of grant. Such
conditions may include restrictions on transferability, requirements
of continued employment and individual or Company performance.
During the period in which any shares of Common Stock are subject to
forfeiture restrictions, the Committee may grant to the participant
all or any of the rights of a stockholder with respect to such
shares.
Awards may be granted in the form of shares of Common Stock that
are earned only after the attainment of predetermined performance
targets during a performance period established by the Committee. At
the end of the performance period, any performance shares earned are
converted into Common Stock, cash or a combination of both. A
participant must be an employee at the end of the performance period
to receive the performance shares unless the participant dies,
retires, becomes disabled or with the Committee's consent ceases to
be an employee prior to the end of the period.
Nonemployee Director Stock Options
Under the Incentive Plan each nonemployee director automatically
receives a grant of stock options on the date following each Annual
Meeting of Stockholders. Nonemployee director stock options become
exercisable on the first anniversary of the date of grant and
terminate upon the expiration of five years from such date. If a
person ceases to be a nonemployee director by virtue of death,
disability or retirement, outstanding options generally remain
exercisable for a period of one year (but not later than the
expiration date of the options). If a nonemployee director's service
terminates for any other reason, options not then exercisable are
canceled and options that are exercisable may be exercised at any
time within 90 days after such termination (but not later than the
expiration date of the options). The option exercise price of a
nonemployee director stock option is the fair market value on the
date of grant. Options granted to nonemployee directors are not
transferable by the director except by will or the laws of descent
and distribution.
Effect of Change of Control
The Incentive Plan provides for the acceleration of certain
benefits in the event of a "Change of Control" (as defined in the
Incentive Plan) of the Company. Upon the occurrence of a Change of
Control, options held by employees but not yet exercisable and
options held by nonemployee directors will be canceled in exchange
for a cash payment as set forth in the Incentive Plan. In addition,
upon a Change of Control all stock appreciation rights that have not
been granted in tandem with options and that have been outstanding
for at least six months will become exercisable in full,
restrictions on restricted stock will lapse and all performance
shares will be deemed to be earned in full.
Federal Income Tax Consequences
In general, the grant of a stock option will not be a taxable
event to a recipient and it will not result in a deduction to the
Company. The tax consequences associated with the exercise of a
stock option, and the subsequent disposition of Common Stock
acquired on exercise of such an option depend in part on whether the
option is an incentive stock option or a nonstatutory stock option.
Upon the exercise of a nonstatutory stock option, the
participant will recognize ordinary compensation income equal to the
excess of the fair market value of the Common Stock received upon
exercise over the exercise price. The Company will be able to claim
a deduction in an equivalent amount, provided it satisfies federal
income tax withholding requirements. Any gain or loss upon a
subsequent sale or exchange of the
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Common Stock will be capital gain or loss, long-term or short-term
depending on the holding period for the Common Stock.
Generally, a participant will not recognize ordinary income at
the time of exercise of an incentive stock option and no deduction
will be available to the Company, provided the option is exercised
while the participant is an employee or, in certain circumstances,
for a limited period of time thereafter. However, the difference
between the option price and the fair market value of the stock on
the date of exercise is treated as a preference item for purposes of
the alternative minimum tax. If the sale of shares acquired under an
incentive stock option does not occur within two years after the
date of grant and within one year after the date of exercise, any
gain or loss realized will be treated as a long-term capital gain or
loss. If a disposition occurs prior to the expiration of these
one-year or two-year holding periods, the participant recognizes
ordinary income at the time of disposition, and the Company is
entitled to a deduction, in an amount equal to the excess of the
fair market value of the Common Stock at the date of exercise (or
the fair market value of the Common Stock on the disposition date,
if lower) over the exercise price.
A participant who receives shares of restricted stock generally
will recognize ordinary compensation income at the time the
restrictions on transferability lapse, based on the fair market
value of the Common Stock at that time. This amount is deductible
for federal income tax purposes by the Company. Dividends paid with
respect to Common Stock that is nontransferable will be ordinary
compensation income to the participant and generally deductible by
the Company. Alternatively, a participant may elect immediate
recognition of income at the time of receipt of restricted stock. In
such event, the participant will recognize the fair market value of
the restricted stock at the time of grant as income, and the Company
will be entitled to a corresponding deduction. Dividends paid with
respect to these shares will not be deductible by the Company. If
this tax treatment is elected, and the restricted stock is
subsequently forfeited, the participant will not be entitled to any
offsetting tax deduction.
Generally, when a participant receives payment with respect to a
stock appreciation right granted to him under the Incentive Plan,
the amount of cash and the fair market value of the Common Stock
received will be ordinary compensation income to such participant
and will be allowed as a deduction for federal income tax purposes
by the Company.
Other Provisions
The Company may withhold, or require a participant to remit to
the Company, an amount sufficient to satisfy any federal, state or
local withholding tax requirements associated with awards under the
Incentive Plan. The Committee may permit a participant to elect to
satisfy such withholding obligation by having the Company retain the
number of shares of Common Stock whose fair market value equals the
amount required to be withheld.
The Company's Board of Directors may amend, suspend or terminate
all or any portion of the Incentive Plan at any time, subject to
stockholder approval in certain instances. If not terminated earlier
by the Company, the Incentive Plan will expire on December 22, 2003.
No suspension or termination of the Incentive Plan will alter the
rights of any participant with respect to any award outstanding, and
no amendment of the Incentive Plan will alter the rights of any
participant with respect to any award outstanding, unless such
amendment is approved by the participant.
Approval of the Amendment requires the affirmative vote of a
majority of the Common Stock represented at the meeting. Dissenting
votes do not give rise to appraisal or other similar rights on the
part of dissenting stockholders.
The Board of Directors believes that the adoption of the
Amendment will be in the best interests of the stockholders and,
accordingly, recommends a vote FOR this proposal, which is Item 2 on
the proxy card. Proxies received in response to the Board's
solicitation will be voted FOR approval of the Amendment if no
specific instructions are included for Item 2.
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RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company employed Arthur Andersen LLP ("Arthur Andersen") to
perform the annual audit and to render other services for 1998, and
the Board of Directors has reappointed Arthur Andersen to render
these same services in 1999. Representatives of Arthur Andersen will
be present at the meeting and will be available to answer questions
and discuss matters pertaining to the Report of Independent Public
Accountants contained in the 1998 Annual Report to Stockholders,
which accompanies this Proxy Statement. Representatives of Arthur
Andersen will have the opportunity to make a statement, if they
desire to do so.
STOCKHOLDERS' PROPOSALS FOR 2000 ANNUAL MEETING
Stockholders' proposals intended to be presented at the 2000
Annual Meeting must be received by the Company at its principal
executive offices (Attention: Corporate Secretary) on or before
November 27, 1999 for inclusion in the Company's proxy materials for
that meeting. Any stockholder proposal submitted other than for
inclusion in the Company's proxy materials for that meeting must be
received by the Company no later than March 5, 2000, or such
proposal will be considered untimely. If a stockholder proposal is
received after March 5, 2000, the Company may vote all of the shares
for which it has received proxies for the 2000 Annual Meeting in its
discretion as to the proposal.
GARDNER DENVER, INC.
Helen W. Cornell
Vice President, Corporate
Secretary
March 26, 1999
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GARDNER DENVER, INC.
LONG-TERM INCENTIVE PLAN
(As amended May 7, 1996, May 4, 1998, November 2, 1998 and May 4, 1999)
(Adjusted to reflect two-for-one stock split January 15, 1997 and
three-for-two stock split December 29, 1997)
1. PURPOSE
The purpose of the Gardner Denver, Inc. Long-Term Incentive Plan
(the "Plan") is to promote the long-term financial interests of Gardner
Denver, Inc. (the "Company"), including its growth and performance, by
encouraging employees of the Company and its subsidiaries to acquire an
ownership position in the Company, enhancing the ability of the Company
to attract and retain employees of outstanding ability, and providing
employees with an interest in the Company parallel to that of the
Company's stockholders.
2. DEFINITIONS
2.1 "Administrative Policies" means the administrative policies
and procedures adopted and amended from time to time by the Committee to
administer the Plan.
2.2 "Award" means any form of stock option, stock appreciation
right, restricted stock award, or performance share granted under the
Plan, whether singly, in combination, or in tandem, to a Participant by
the Committee pursuant to such terms, conditions, restrictions and
limitations, if any, as the Committee may establish by the Award
Agreement or otherwise.
2.3 "Award Agreement" means a written agreement with respect to
an Award between the Company and a Participant establishing the terms,
conditions, restrictions and limitations applicable to an Award. To the
extent an Award Agreement is inconsistent with the terms of the Plan,
the Plan shall govern the rights of the Participant thereunder.
2.4 "Board" shall mean the Board of Directors of the Company.
2.5 "Change of Control" means a change in control of the Company
(other than the initial distribution of Common Stock by Cooper
Industries, Inc.) of a nature that would be required to be reported
(assuming such event has not been "previously reported") in response to
Item 6(e) of Schedule 4A of Regulation 14A promulgated under the
Exchange Act; provided that, without limitation, a Change of Control
shall be deemed to have occurred at such time as (i) any "person" within
the meaning of Section 14(d) of the Exchange Act, is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's
then outstanding securities, or (ii) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a
majority thereof unless the election, or the
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nomination for election by the Company's shareholders, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
2.6 "Change of Control Price" means the higher of (i) the Fair
Market Value on the date of determination of the Change of Control or
(ii) the highest price per share actually paid for the Common Stock in
connection with the Change of Control of the Company.
2.7 "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
2.8 "Committee" means the Management Development and Compensation
Committee of the Board, or such other committee designated by the Board
to administer the Plan, provided that the members of the Committee
qualify as disinterested administrators under Rule 16b-3 of the Exchange
Act.
2.9 "Common Stock" means the Common Stock, par value $0.01 per
share, of the Company.
2.10 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.11 "Fair Market Value" means the average of the high and low
price of a share of Common Stock as reported on the composite tape for
securities listed on the Stock Exchange for the applicable date,
provided that if no sales of Common Stock were made on the Stock
Exchange on that date, the average of the high and low prices as
reported on the composite tape for the preceding day on which sales of
Common Stock were made.
2.12 "Participant" means an officer or employee of the Company or
its subsidiaries who is selected by the Committee to participate in the
Plan, and nonemployee directors of the Company to the extent provided in
Section 11 hereof.
2.13 "Stock Exchange" means the composite tape of the New York
Stock Exchange ("NYSE") or, if the Common Stock is no longer included on
the NYSE, then such other market price reporting system on which the
Common Stock is traded or quoted designated by the Committee after it
determines that such other exchange is both reliable and reasonably
accessible.
3. ADMINISTRATION
3.1 The Plan shall be administered by the Committee. A majority
of the Committee shall constitute a quorum, and the acts of a majority
of a quorum shall be the acts of the Committee.
3.2 Subject to the provisions of the Plan, the Committee (i)
shall select the Participants, determine the type of Awards to be made
to Participants, determine the shares or
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share units subject to Awards, and (ii) shall have the authority to
interpret the Plan, to establish, amend, and rescind any Administrative
Policies, to determine the terms and provisions of any agreements
entered into hereunder, and to make all other determinations necessary
or advisable for the administration of the Plan. The Committee may
correct any defect, supply any omission or reconcile any inconsistency
in the Plan or in any Award in the manner and to the extent it shall
deem desirable to carry it into effect. The determinations of the
Committee in the administration of the Plan, as described herein, shall
be final and conclusive, provided, however, that no action shall be
taken which will prevent the options granted under Section 11 or any
Award granted under the Plan from meeting the requirements for exemption
from Section 16(b) of the Exchange Act, or subsequent comparable
statute, as set forth in Rule 16(b)-3 of the Exchange Act or any
subsequent comparable rule.
3.3 In order to enable Participants who are foreign nationals or
employed outside the United States, or both, to receive Awards under the
Plan, the Committee may adopt such amendments, Administrative Policies,
subplans and the like as are necessary or advisable, in the opinion of
the Committee, to effectuate the purposes of the Plan.
4. ELIGIBILITY
All employees of the Company and its subsidiaries who have
demonstrated significant management potential or who have the capacity
for contributing in a substantial measure to the successful performance
of the Company, as determined by the Committee, are eligible to be
Participants in the Plan. Participants may receive one or more Awards
under the Plan. Directors of the Corporation other than directors who
are employees of the Corporation shall be eligible only to receive stock
options pursuant to Section 11 hereof.
5. SHARES SUBJECT TO THE PLAN
5.1 The aggregate number of shares of Common Stock available for
grant of Awards under the Plan shall be that number of shares remaining
available for grant under the Plan on the close of business on the date
immediately prior to the 1999 Annual Meeting of Stockholders plus
500,000, subject to the adjustments provided for in Section 15 hereof.
Shares of Common Stock available for issuance under the Plan may be
authorized and unissued shares or treasury shares, as the Company may
from time to time determine.
5.2 Shares of Common Stock subject to an Award that expires
unexercised or that is forfeited, terminated or cancelled, in whole or
in part, or is paid in cash in lieu of Common Stock, shall thereafter
again be available for grant under the Plan, provided that if the
Participant who had been granted such Award (i) was an officer subject
to the provisions of Section 16(b) of the Exchange Act and (ii) received
benefits of ownership of such shares for purposes of Section 16(b) of
the Exchange Act (such as dividends with respect to forfeited shares of
restricted stock),
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such shares shall not thereafter be available for grant under the Plan
to officers subject to the provisions of Section 16(b) of the Exchange
Act.
6. AWARDS
Awards under the Plan may consist of: stock options (either
incentive stock options within the meaning of Section 422 of the Code or
nonstatutory stock options), stock appreciation rights, restricted stock
grants and performance shares; provided that no participant may be
granted Awards during any calendar year with respect thereto in excess
of 180,000 shares of Common Stock. Awards of performance shares and
restricted stock may provide the Participant with dividends or dividend
equivalents and voting rights prior to vesting (whether based on a
period of time or based on attainment of specified performance
conditions). The terms, conditions and restrictions of each Award shall
be set forth in an Award Agreement.
7. STOCK OPTIONS
7.1 Grants. Awards may be granted in the form of stock options.
Stock options may be incentive stock options within the meaning of
Section 422 of the Code or nonqualified stock options (i.e., stock
options which are not incentive stock options), or a combination of
both, or any particular type of tax advantage option authorized by the
Code from time to time.
7.2 Terms and Conditions of Options. An option shall be
exercisable in whole or in such installments and at such times and upon
such terms as may be determined by the Committee; provided, however,
that no stock option shall be exercisable more than ten years after the
date of grant thereof. The option exercise price shall be established by
the Committee, but such price shall not be less than the Fair Market
Value on the date of the stock option's grant subject to adjustment as
provided in Section 15 hereof.
7.3 Restrictions Relating to Incentive Stock Options. Stock
options issued in the form of incentive stock options shall, in addition
to being subject to all applicable terms, conditions, restrictions and
limitations established by the Committee, comply with Section 422 of the
Code. Incentive stock options shall be granted only to full time
employees of the Company and its subsidiaries within the meaning of
Section 424 of the Code. The aggregate Fair Market Value (determined as
of the date the option is granted) of shares with respect to which
incentive stock options are exercisable for the first time by an
individual during any calendar year (under this Plan or any other plan
of the Company which provides for the granting of incentive stock
options) may not exceed $100,000 or such other number as may be
applicable under the Code from time to time.
7.4 Payment. Upon exercise, a Participant may pay the option
exercise price of a stock option in cash, shares of Common Stock, stock
appreciation rights or a combination of the foregoing, or such other
consideration as the Committee may deem appropriate. The Committee shall
establish appropriate methods for accepting Common Stock and may impose
such conditions as it deems appropriate on the use of such Common Stock
to exercise a stock option.
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7.5 Additional Terms and Conditions. The Committee may, by way of
the Award Agreement or Administrative Policies, establish such other
terms, conditions or restrictions, if any, on any stock option award,
provided they are consistent with the Plan. The Committee may condition
the vesting of stock options on the achievement of financial performance
criteria established by the Committee at the time of grant.
8. STOCK APPRECIATION RIGHTS
8.1 Grants. Awards may be granted in the form of stock
appreciation rights ("SARs"). SARs shall entitle the recipient to
receive a payment equal to the appreciation in market value of a stated
number of shares of Common Stock from the price stated in the Award
Agreement to the Fair Market Value on the date of exercise or surrender.
An SAR may be granted in tandem with all or a portion of a related stock
option under the Plan ("Tandem SARs"), or may be granted separately
("Freestanding SARs"); provided, however, that Freestanding SARs shall
be granted only to Participants who are foreign nationals or are
employed outside of the United States, or both, and as to whom the
Committee determines the interests of the Company could not as
conveniently be served by the grant of other forms of Awards under the
Plan. A Tandem SAR may be granted either at the time of the grant of
the related stock option or at any time thereafter during the term of
the stock option. An SAR may be exercised no sooner than six months
after it is granted. In the case of SARs granted in tandem with stock
options granted prior to the grant of such SARs, the appreciation in
value shall be appreciation from the option exercise price of such
related stock option to the Fair Market Value on the date of exercise.
8.2 Terms and Conditions of Tandem SARs. A Tandem SAR shall be
exercisable to the extent, and only to the extent, that the related
stock option is exercisable. Upon exercise of a Tandem SAR as to some or
all of the shares covered in an Award, the related stock option shall be
cancelled automatically to the extent of the number of SAR's exercised,
and such shares shall not thereafter be eligible for grant under Section
5 hereof.
8.3 Terms and Conditions of Freestanding SARs. Freestanding SARs
shall be exercisable in whole or in such installments and at such times
as may be determined by the Committee. The base price of a Freestanding
SAR shall be determined by the Committee; provided, however, that such
price shall not be less than the Fair Market Value on the date of the
award of the Freestanding SAR.
8.4 Deemed Exercise. The Committee may provide that an SAR shall
be deemed to be exercised at the close of business on the scheduled
expiration date of such SAR, if at such time the SAR by its terms is
otherwise exercisable and, if so exercised, would result in a payment to
the Participant.
8.5 Additional Terms and Conditions. The Committee may, by way of
the Award Agreement or Administrative Policies, determine such other
terms, conditions and restrictions, if any, on any SAR Award, provided
they are consistent with the Plan.
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9. RESTRICTED STOCK AWARDS
9.1 Grants. Awards may be granted in the form of restricted
stock ("Restricted Stock Awards"). Restricted Stock Awards shall be
awarded in such numbers and at such times as the Committee shall
determine.
9.2 Award Restrictions. Restricted Stock Awards shall be subject
to such terms, conditions or restrictions as the Committee deems
appropriate including, but not limited to, restrictions on
transferability, requirements of continued employment, individual
performance or the financial performance of the Company. The period of
vesting and the forfeiture restrictions shall be established by the
Committee at the time of grant, except that each restriction period
shall not be less than 12 months.
9.3 Rights as Shareholders. During the period in which any
restricted shares of Common Stock are subject to forfeiture restrictions
imposed under the preceding paragraph, the Committee may, in its
discretion, grant to the Participant to whom such restricted shares have
been awarded, all or any of the rights of a shareholder with respect to
such shares, including, but not limited to, the right to vote such
shares and to receive dividends.
9.4 Evidence of Award. Any Restricted Stock Award granted under
the Plan may be evidenced in such manner as the Committee deems
appropriate, including, without limitation, book entry registration or
issuance of a stock certificate or certificates.
10. PERFORMANCE SHARES
10.1 Grants. Awards may be granted in the form of shares of
Common Stock that are earned only after the attainment of predetermined
performance targets during a performance period as established by the
Committee ("Performance Shares").
10.2 Performance Criteria. The Committee may grant an Award of
Performance Shares to Participants as of the first day of each
Performance Period. As used herein, the term "Performance Period" means
the period during which a Performance Target is measured and the term
"Performance Target" means the predetermined goals established by the
Committee. A Performance Target will be established at the beginning of
each Performance Period. A Performance Target shall be based upon one
or any combination of the following goals or business criteria: (i)
revenues of the Company; (ii) operating income of the Company; (iii) net
income of the Company; (iv) earnings per share of the Company's Common
Stock; (v) the Company's return on equity; (vi) cash flow of the
Company; or (vii) Company stockholder total return. The Committee shall
be permitted to make adjustments when determining the attainment of a
Performance Target to reflect extraordinary or nonrecurring items or
events, or unusual nonrecurring gains or losses identified in the
Company's financial statements, as long as any such adjustments are made
in a manner consistent with Section 162(m) to the extent applicable.
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Awards of Performance Shares made to Participants subject to Section
162(m) of the Code are intended to qualify under Section 162(m) and
provisions of such Awards shall be interpreted in a manner consistent
with that intent to the extent appropriate. The foregoing provisions of
this Section 10.2 also shall be applicable to grants of Restricted Stock
Awards make under Section 9 hereof to the extent such Restricted Stock
Awards are subject to the financial performance of the Company. At the
end of the Performance Period, Performance Shares shall be converted
into Common Stock (or cash or a combination of Common Stock and cash, as
determined by the Award Agreement) and distributed to Participants based
upon such entitlement. Award payments made in cash rather than the
issuance of Common Stock shall not, by reason of such payment in cash,
result in additional shares being available for reissuance pursuant to
Section 5 hereof.
10.3 Additional Terms and Conditions. The Committee may, by way
of the Award Agreement or Administrative Policies, determine the manner
of payment of Awards of Performance Shares and other terms, conditions
or restrictions, if any, on any Award of Performance Shares, provided
they are consistent with the Plan.
11. DIRECTORS' STOCK OPTIONS
11.1 Grants. Awards may be granted to nonemployee directors only
in the form of stock options satisfying the requirements of this Section
11 ("Director Stock Options"). Subject to Section 15 hereof, on the date
following the commencement of the Company's annual meeting of
stockholders each year, there shall be granted to each nonemployee
director an option to purchase 3,000 shares of Common Stock. All such
options shall be nonstatutory stock options.
11.2 Option Exercise Price. The option exercise price of Director
Stock Options shall be 100 percent of the Fair Market Value on the date
such options are granted. The Committee shall be authorized to compute
the price per share on the date of grant. Payment of the option exercise
price may be made in cash or in shares of Common Stock or a combination
of cash and Common Stock.
11.3 Option Agreement. Director Stock Options shall be evidenced
by an Award Agreement, dated as of the date of the grant, which
agreement shall be in such form, consistent with the terms and
requirements of this Section 11, as shall be approved by the Committee
from time to time and executed on behalf of the Company by its chief
executive officer.
11.4 Terms and Conditions of Director Stock Option. Director
Stock Options shall become fully exercisable on the first anniversary of
the date of grant and shall terminate upon the expiration of five years
from the date of grant. To the extent an option is not otherwise
exercisable at the date of the nonemployee director's retirement under a
retirement plan or policy of the Company, it shall become fully
exercisable upon such retirement provided, however, that Director Stock
Options shall not become exercisable under this sentence prior to the
expiration of six months from the date of grant. Upon such retirement,
such options shall be exercisable for a period of one year, subject to
the original term thereof. Options not otherwise exercisable at the
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time of the disability or death of a nonemployee director during
continued service with the Company shall become fully exercisable upon
his disability or death, unless the date of disability or death occurs
prior to the expiration of six months from the date of grant. Upon the
disability or death of a nonemployee director while in service as a
director, such options shall remain exercisable (subject to the original
term of the option) for a period of one year after the date of
disability or of death. To the extent an option is exercisable on the
date a director ceases to be a director (other than by reason of
disability, death or retirement), the option shall continue to be
exercisable (subject to the original term of the option) for a period of
90 days thereafter.
11.5 Transferability. No option shall be transferable by a
nonemployee director except by will or the laws of descent and
distribution, and during the director's life time options may be
exercised only by him or his legal representative.
11.6 Change of Control. Director Stock Options not otherwise
exercisable at the time of a Change of Control shall become fully
exercisable upon such Change of Control; provided, however, that options
shall not become exercisable under this provision prior to the
expiration of six months from the date of grant. In the case of a Change
of Control:
(i) The Company shall make payment to directors with respect to
Director Stock Options in cash in an amount equal to the appreciation in
the value of the Director Stock Option from the option exercise price
specified in the Award Agreement to the Change of Control Price.
(ii) The cash payments to directors shall be due and payable, and
shall be paid by the Company, immediately upon the occurrence of such
Change of Control; and
(iii) After the payment provided for in (i) above, nonemployee
directors shall have no further rights under Director Stock Options
outstanding at the time of such Change in Control.
11.7 Initial Grant to Directors. Effective on the date for
the distribution of the Common Stock by Cooper Industries, Inc.
("Distribution Date"), each nonemployee director shall be granted an
option for 2,000 shares of Common Stock at an exercise price equal to
the average closing price of the Common Stock for the 30 trading days
beginning five days after the Distribution Date. The options will become
exercisable on the first anniversary of the date of grant and will
expire five years after the date of grant. Pursuant to Section 15 of the
Plan, each Initial Grant to nonemployee directors that was outstanding
on January 15, 1997 was increased to 4,000 shares and to 6,000 shares on
December 29, 1997. Except as provided in this Section 11.7, the terms
and conditions of the initial options shall be as set forth in Section
11 of the Plan.
12. DIVIDENDS AND DIVIDEND EQUIVALENTS; DEFERRALS
12.1 If an Award is granted in the form of a Restricted Stock
Award or a Freestanding SAR, the Committee may choose, at the time of
the grant of the Award, to include as part of such Award an entitlement
to receive dividends or dividend equivalents, subject to
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such terms, conditions, restrictions or limitations, if any, as the
Committee may establish. Dividends and dividend equivalents shall be
paid in such form and manner and at such time as the Committee shall
determine.
12.2 The Committee may permit Participants to elect to defer the
issuance of shares or the settlement of Awards in cash under
Administrative Policies established by the Committee. It may also
provide that deferred settlements include the payment or crediting of
interest on the deferral amounts or the payment or crediting of dividend
equivalents on deferred settlements denominated in shares.
13. TERMINATION OF EMPLOYMENT
The Committee shall adopt Administrative Policies determining the
entitlement of Participants who cease to be employed by either the
Company or its subsidiaries due to death, disability, resignation,
termination or retirement pursuant to an established retirement plan or
policy of the Company or its subsidiaries.
14. ASSIGNMENT AND TRANSFER
The rights and interests of a Participant under the Plan may not
be assigned, encumbered or transferred except, in the event of the death
of a Participant, by will or the laws of descent and distribution.
Notwithstanding the foregoing, the Committee may, in its discretion,
grant stock options to one or more executive officers of the Company on
terms that permit the stock options to be transferred by any such
executive officer, for estate planning purposes, to (a) the executive
officer's spouse, children, grandchildren, parents, siblings,
stepchildren, stepgrandchildren or in-laws ("Family Members"), (b)
entities that are exclusively family-related, including trusts for the
exclusive benefit of Family Members and limited partnerships or limited
liability companies in which Family Members are the only partners or
members, or (c) such other persons or entities specifically approved by
the Committee. The terms and conditions applicable to the transfer of
any such stock options shall be established by the Committee, in its
discretion but consistent with this Section 14, and shall be contained
in the applicable stock option agreement between the Company and the
executive officer.
15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding shares of Common
Stock by reason of a reorganization, recapitalization, stock split,
stock dividend, combination or exchange of shares, merger, consolidation
or any change in the corporate structure or shares of the Company, the
maximum aggregate number and class of shares as to which Awards may be
granted under the Plan and the shares issuable pursuant to then
outstanding Awards shall be appropriately adjusted by the Committee,
whose determination shall be final.
-9-
<PAGE>
<PAGE>
16. WITHHOLDING TAXES
The Company shall have the right to deduct from any payment to be
made pursuant to the Plan the amount of any taxes required by law to be
withheld therefrom, or to require a Participant to pay to the Company
such amount required to be withheld prior to the issuance or delivery of
any shares of Stock or the payment of cash under the Plan. The Committee
may, in its discretion, permit a Participant to elect to satisfy such
withholding obligation by having the Company retain the number of shares
of Common Stock whose Fair Market Value equals the amount required to be
withheld. Any fraction of a share of Common Stock required to satisfy
such obligation shall be disregarded and the amount due shall instead be
paid in cash to the Participant.
17. REGULATORY APPROVALS AND LISTINGS
Notwithstanding anything contained in this Plan to the contrary,
the Company shall have no obligation to issue or deliver certificates of
Common Stock evidencing Restricted Stock Awards or any other Award
payable in Common Stock prior to (i) the obtaining of any approval from
any governmental agency which the Company shall, in its sole discretion,
determine to be necessary or advisable, (ii) the admission of such
shares to listing on the Stock Exchange and (iii) the completion of any
registration or other qualification of said shares under any state or
federal law or ruling of any governmental body which the Company shall,
in its sole discretion, determine to be necessary or advisable.
18. NO RIGHT TO CONTINUED EMPLOYMENT OR GRANTS
No person shall have any claim or right to be granted an Award,
and the grant of an Award shall not be construed as giving a Participant
the right to be retained in the employ of the Company or its
subsidiaries. Further, the Company and its subsidiaries expressly
reserve the right at any time to dismiss a Participant free from any
liability, or any claim under the Plan, except as provided herein or in
any Award Agreement entered into hereunder.
19. CHANGE OF CONTROL
In the event of a Change of Control, (i) all SARs which have not
been granted in tandem with stock options and which have been
outstanding for at least six months shall become exercisable in full,
(ii) the restrictions applicable to all shares of restricted stock shall
lapse and such shares shall be deemed fully vested and all restricted
stock granted in the form of share units shall be paid in cash, (iii)
all Performance Shares shall be deemed to be earned in full and all
Performance Shares granted in the form of share units shall be paid in
cash, and (iv) any Participant who has been granted a stock option which
is not exercisable in full shall be entitled, in lieu of the exercise of
the portion of the stock option which is not exercisable, to obtain a
cash payment in an amount equal to the difference between the option
price of such stock option and (A) in the event the Change of Control is
the result of a tender offer or exchange offer for the Common Stock, the
final offer price per share paid for the Common Stock, or such lower
price as the Committee may determine with respect to any incentive stock
option to preserve its incentive stock option status, multiplied by the
number of shares of Common Stock covered by such
-10-
<PAGE>
<PAGE>
portion of the stock option, or (B) in the event the Change of Control
is the result of any other occurrence, the aggregate value of the Common
Stock covered by such portion of the stock option, as determined by the
Committee at such time. The Committee may, in its discretion, include
such further provisions and limitations in any agreement documenting
such Awards as it may deem equitable and in the best interests of the
Company.
20. AMENDMENT
The Board may amend, suspend or terminate the Plan or any portion
thereof at any time, provided that no amendment shall be made without
stockholder approval if such approval is necessary in order for the Plan
to continue to comply with Rule 16b-3 under the Exchange Act; and
provided further, that the provisions of Section 11 shall not be amended
more than once every six months, other than to comport with changes in
the Internal Revenue Code, the Employee Retirement Income Security Act,
or the rules thereunder.
21. GOVERNING LAW
The validity, construction and effect of the Plan and any actions
taken or relating to the Plan shall be determined in accordance with the
laws of the State of Delaware and applicable Federal law.
22. RIGHTS AS SHAREHOLDER
Except as otherwise provided in the Award Agreement, a Participant
shall have no rights as a shareholder until he or she becomes the holder
of record. To the extent any person acquires a right to receive payments
from the Company under this Plan, such rights shall be no greater than
the rights of an unsecured creditor of the Company.
23. EFFECTIVE DATE
The Plan shall be effective upon approval by the Board and
approval by the holders of a majority of the shares of Common Stock.
Subject to earlier termination pursuant to Section 20, the Plan shall
have a term of 10 years from its effective date. After termination of
the Plan, no future Awards may be granted but previously made Awards
shall remain outstanding in accordance with their applicable terms and
conditions and the terms and conditions of the Plan.
24. INITIAL GRANT OF STOCK OPTIONS
Notwithstanding the provisions of Section 7 of the Plan, an
initial grant of options for the aggregate amount of 675,000 shares of
Common Stock (adjusted for the two stock splits completed in 1997) shall
be made on December 31, 1993 to the persons and in the amounts shown on
Exhibit A attached hereto. The initial options shall have an exercise
price equal to the average closing price of the Common Stock for the 30
trading days beginning five days after the date of the distribution of
Common Stock by Cooper Industries, Inc. (adjusted for the two stock
splits completed in 1997). The options will expire on December 31, 1998
and shall vest as to one-third of such options on each of the first
three anniversaries of the date of grant.
-11-
<PAGE>
<PAGE>
GARDNER DENVER, INC.
COMMON STOCK
PROXY/VOTING INSTRUCTIONS SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1999
The undersigned (the "stockholder"), having received the Notice
P and Proxy Statement for the Annual Meeting of Stockholders,
R appoints Ross J. Centanni, Philip R. Roth and Helen W. Cornell,
O and each or any of them, as proxies, with full power of
X substitution, to represent the stockholder and to vote all shares
Y of Common Stock of Gardner Denver, Inc. which the stockholder is
entitled to vote at the Annual Meeting of Stockholders of the
Company, to be held at the Holiday Inn Quincy, 201 South Third
Street, Quincy, Illinois on Tuesday, May 4, 1999 at 1:30 p.m.,
local time, and any and all adjournments of the meeting, in the
manner specified.
Should any other matter requiring a vote of the stockholders
arise, the proxies named above are authorized to vote in
accordance with their best judgment in the interest of the
Company. The Board of Directors is not aware of any matter which
is to be presented for action at the meeting, other than as set
forth on this card.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND MAIL PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR OTHERWISE TO P.O. BOX 8615,
EDISON, NEW JERSEY, 08818-9123.
Comments: -------------
----------------------------------------- SEE REVERSE
-------------------------------------------------- SIDE
-------------------------------------------------- -------------
(If you have written in the above space, please mark the "comments"
box on the reverse side of this card.)
* DETACH PROXY CARD *
[GARDNER
DENVER LOGO] STOCKHOLDER INFORMATION
CORPORATE OFFICES TRANSFER AGENT AND REGISTRAR
Gardner Denver, Inc. First Chicago Trust Company of New York
1800 Gardner Expressway c/o EquiServe
Quincy, Illinois 62301-9464 P.O. Box 2500
(217) 222-5400 Jersey City, New Jersey 07303-2500
E-mail address: (800) 519-3111
[email protected] (201) 324-1225
(201) 222-4955 (for the hearing impaired)
E-mail address: [email protected]
INTERNET ACCESS
For Internet access to information on your
Gardner Denver investment, contact our
transfer agent at (877) 843-9327 for a
personal identification number and visit
their web site at http://www.fctc.com.
NEWS RELEASES BY FAX
News releases, including the quarterly earnings release, are available
by fax, without charge, by calling (800) 758-5804, extension 303875, or
by visiting our homepage at HTTP://WWW.GARDNERDENVER.COM.
<PAGE>
<PAGE>
MARK YOUR
X PLEASE MARK YOUR
VOTE AS IN THIS
EXAMPLE.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS INDICATED,
WILL BE VOTED "FOR" PROPOSAL 1 AND PROPOSAL 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES AND "FOR"
PROPOSAL 2.
1. Election of For Withheld
Directors / / / /
Four Directors are to be elected at the meeting.
The nominees of the Board of Directors are:
Donald G. Barger, Jr., Raymond R. Hipp,
Michael J. Sebastian & Richard L. Thompson
To withhold your vote for any nominee(s), write the name(s) here:
- -----------------------------------------------------------------
2. Approval of Amendment to For Against Abstain
Long-Term Incentive Plan. / / / / / /
Comments (see reverse) / /
I plan to attend the annual meeting. / /
Please sign exactly as name or names appear on this proxy card.
Executors, administrators, trustees, or other representatives should so
indicate when signing. If a corporation, please sign in corporate name
by president or other authorized officer.
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Signature(s) of Stockholder(s) Date
* FOLD AND DETACH HERE *
YOUR VOTER CONTROL NUMBER IS:
-----------------------------
-----------------------------
GARDNER DENVER, INC.
ANNUAL MEETING OF STOCKHOLDERS - MAY 4, 1999, 1:30 P.M.
HOLIDAY INN QUINCY - 201 SOUTH THIRD STREET, QUINCY, ILLINOIS 62301
VOTE BY TELEPHONE OR INTERNET
QUICK - EASY - IMMEDIATE
Gardner Denver encourages you to take advantage of two new convenient
ways to vote your shares.
You may now vote your proxy 24 hours a day, 7 days a week, using either
a touch-tone telephone or through the Internet. Your telephone or
Internet vote must be received by 12:00 midnight Eastern time on May 3,
1999. Voting electronically eliminates the need to return your proxy
card.
Your telephone or Internet vote authorizes the proxies named on the
above proxy card to vote your shares in the same manner as if you
marked, signed and returned your proxy card.
VOTE BY PHONE: ON A TOUCH-TONE TELEPHONE DIAL 1-800-OK2-VOTE
- -------------- (1-800-852-8683) FROM THE U.S. AND CANADA. You
will be asked to enter the VOTER CONTROL NUMBER
located in the box just below the perforation on
this proxy card. This series of numbers is
necessary to access both the telephone and Internet
voting system.
OR
VOTE BY INTERNET: POINT YOUR BROWSER TO THE WEB ADDRESS:
- ----------------- HTTP://WWW.VOTE-BY-NET.COM
You will be asked to enter the VOTER CONTROL NUMBER
located in the box just below the perforation on
this proxy card. Then follow the instructions.
OR
VOTE BY MAIL: Mark, sign and date your proxy card and return it
- ------------- in the postage-paid envelope. If you are voting by
telephone or the Internet, you do not need to
return your proxy card.
<PAGE>
THIS IS YOUR PROXY. YOUR VOTE IS IMPORTANT. IT IS IMPORTANT THAT YOUR
SHARES ARE REPRESENTED AT THIS MEETING, WHETHER OR NOT YOU ATTEND THE
MEETING IN PERSON. TO MAKE SURE YOUR SHARES ARE REPRESENTED, WE URGE YOU
TO COMPLETE AND MAIL YOUR PROXY CARD, OR VOTE TELEPHONICALLY OR VIA THE
INTERNET BY FOLLOWING THE INSTRUCTIONS ABOVE. THANK YOU FOR VOTING.
