<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
MOTIVEPOWER INDUSTRIES, 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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
* No fee required
<PAGE> 2
MOTIVEPOWER INDUSTRIES, INC.
1200 REEDSDALE STREET
PITTSBURGH, PENNSYLVANIA 15233
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 29, 1998
As a stockholder of MOTIVEPOWER INDUSTRIES, INC. (the "Company"), you
are invited to be present, or represented by proxy, at the Annual Meeting of
Stockholders, to be held at the Sheraton Inn Pittsburgh North, 910 Sheraton
Drive, Mars, Pennsylvania on April 29, 1998 at 11:00 a.m., Pittsburgh time, for
the following purposes:
1. To elect Lee B. Foster II and James P. Miscoll to the Board of
Directors of the Company, each for terms of three (3) years
expiring in 2001. See "Proposal No. 1 -- Election of
Directors" in the Proxy Statement.
2. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent certified public accountants for the
fiscal year ending December 31, 1998. See "Proposal No. 2
--Selection of Auditors" in the Proxy Statement.
3. To amend the Company's Stock Incentive Plan to increase the
number of shares which may be awarded by one million shares
and in certain other respects, principally to conform such
Plan to recent amendments to Federal securities regulations.
See "Proposal No. 3 - Amendment to Stock Incentive Plan" in
the Proxy Statement.
4. To transact such other business as may properly be brought
before the meeting or any adjournment thereof.
Stockholders of record at the close of business on March 2, 1998 are
entitled to vote at the Annual Meeting of Stockholders and all adjournments
thereof. Since a majority of the outstanding shares of the Company's Common
Stock must be represented at the meeting in order to constitute a quorum, all
stockholders are urged either to attend the meeting or to be represented by
proxy.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED REPLY ENVELOPE. Your vote is
important regardless of the number of shares you own. If you later find that you
can be present and you desire to vote in person or, for any other reason, desire
to revoke your proxy, you may do so at any time before the voting.
By Order of the Board of Directors,
/s/ Jeannette Fisher-Garber
-----------------------------------
Jeannette Fisher-Garber, Secretary
March 12, 1998
<PAGE> 3
MOTIVEPOWER INDUSTRIES, INC.
1200 REEDSDALE STREET
PITTSBURGH, PENNSYLVANIA 15233
ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1998
PROXY STATEMENT
This Proxy Statement and the Notice of Annual Meeting and Form of Proxy
accompanying this Proxy Statement, which will be mailed on or about March 20,
1998, are furnished in connection with the solicitation by the Board of
Directors of MotivePower Industries, Inc. ("MPO" or the "Company") of proxies to
be voted at the annual meeting of stockholders to be held at the Sheraton Inn
Pittsburgh North, 910 Sheraton Drive, Mars, Pennsylvania on April 29, 1998 at
11:00 a.m., Pittsburgh time, and any adjournments thereof.
Stockholders of record at the close of business on March 2, 1998 (the
"record date") will be entitled to one vote at the meeting or by proxy for each
share then held. On the record date, there were 17,786,343 shares of Common
Stock of MPO outstanding. All shares represented by proxy will be voted in
accordance with the instructions, if any, given in such proxy. A stockholder may
abstain from voting or may withhold authority to vote for the nominees by
marking the appropriate box on the accompanying proxy card, or may withhold
authority to vote for an individual nominee by drawing a line through such
nominee's name in the appropriate place on the accompanying proxy card. UNLESS
INSTRUCTIONS TO THE CONTRARY ARE GIVEN, EACH PROPERLY EXECUTED PROXY WILL BE
VOTED, AS SPECIFIED BELOW, TO (i) ELECT LEE B. FOSTER II AND JAMES P. MISCOLL AS
DIRECTORS, (ii) RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, AND (iii) TO AMEND THE STOCK INCENTIVE
PLAN.
All proxies may be revoked and execution of the accompanying proxy will
not affect a stockholder's right to revoke it by giving written notice of
revocation to the Secretary at any time before the proxy is voted or by the
mailing of a later-dated proxy. Any stockholder attending the meeting in person
may vote his or her shares even though he or she has executed and mailed a
proxy. A majority of all of the issued and outstanding shares of the Company's
Common Stock is required to be present in person or by proxy to constitute a
quorum. Directors are elected by a plurality. The favorable vote of the holders
of a majority of the shares of Common Stock represented in person or by proxy at
the meeting is required to approve or adopt the proposals presented to the
meeting and to ratify the appointment of Deloitte & Touche LLP.
THIS PROXY STATEMENT IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF
MPO. The expense of making this solicitation is being paid by the Company and
consists of the preparing, assembling and mailing of the Notice of Annual
Meeting, Proxy Statement and Proxy, tabulating returns of proxies, and charges
and expenses of brokerage houses and other custodians, nominees or fiduciaries
for forwarding documents to stockholders. In addition to solicitation by mail,
officers and regular employees of the Company may solicit proxies by telephone,
telegram or in person without additional compensation.
<PAGE> 4
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
Two directors are to be elected at the annual meeting each for terms of
three (3) years expiring in 2001. The Board of Directors has nominated Lee B.
Foster II and James P. Miscoll for election as directors. See "Information
Concerning Directors and Nominees" for a description of the business experience
of and other information concerning the nominees.
To be eligible for election as a director, persons nominated by any
stockholder must be nominated in accordance with procedures set forth in the
Company's By-laws. Those procedures require that written notice of the
nomination be given to the Secretary of the Company at least sixty days prior to
the meeting at which the election is to be held, or, if the meeting is not
announced at least seventy-five days in advance, not later than the tenth
business day following the announcement of the meeting. The Company By-laws
further require that the stockholder's notice include certain information
concerning the nominee as would be required to be included in the Proxy
Statement. The Chairman may decline to acknowledge a nomination not made in
compliance with the requirements of the By-laws.
Unless you indicate to the contrary, the persons named in the
accompanying proxy will vote it for the election of the nominees named above.
If, for any reason, a nominee should be unable to serve as a director at the
time of the meeting, which is not expected to occur, the persons designated
herein as proxies may not vote for the election of any other person not named
herein as a nominee for election to the Board of Directors. See "Information
Concerning Directors and Nominees."
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF
THE NOMINEES. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR
OF THIS PROPOSAL UNLESS A CONTRARY VOTE OR AUTHORITY WITHHELD IS SPECIFIED.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
DIRECTORS AND NOMINEES
The Company's Certificate of Incorporation and By-laws provide that the
directors of the Company are to be classified into three classes, with the
directors in each class serving for three-year terms until their successors are
elected. The By-laws of the Company require from three to fifteen directors as
fixed by the Board. The Board has currently been fixed at seven members. The
terms of the persons currently serving on the Board expire at the annual meeting
of stockholders for the years indicated: Lee B. Foster II and James P. Miscoll
(1998); John C. Pope and Nicholas J. Stanley (1999); and Gilbert E. Carmichael,
Ernesto Fernandez Hurtado and Michael A. Wolf (2000).
Set forth below is information concerning each director and nominee for
director of the Company, including his business experience during the past five
years, his positions with the Company and certain directorships held by him.
There are no family relationships among directors, nor, except as may be
described herein, are there any arrangements or understandings between any
director and another person pursuant to which he was selected as a director or
nominee.
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Nominees for Terms Expiring in 2001
Lee B. Foster II, age 51, has served as a Director of the Company since
August 1996. Mr. Foster has held various positions with L. B. Foster Company
(rail, construction, and tubular products) since 1973, including as President
and Chief Executive Officer since 1990.
James P. Miscoll, age 63, has served as a Director of the Company since
September 1994. Mr. Miscoll held various positions with Bank of America from
1962 until his retirement in 1992, including Vice Chairman from 1984 to 1992,
Executive Officer, Southern California from 1985 to 1992, member of the
Management Committee from 1982 to 1992 and other executive management positions
for the bank in New York City, Asia and Europe. Mr. Miscoll currently serves on
the boards of directors of Chela Financial (financial institution), JP Food
Service, Inc. (foodstuffs company), MK Gold Company (mining), American
International Group, Inc. (insurance and finance), and US Rentals (rental
equipment).
Current Directors with Terms Expiring in 1999
John C. Pope, age 48, has served as the Company's Chairman since
January 1, 1996, having previously served as a Director of the Company since
April 1995. Mr. Pope also serves as a Director Emeritus of UAL Corporation
(commercial airline holding company) and United Airlines, Inc. (commercial
airline), and as a Director of Federal-Mogul Corporation (automotive parts),
Wallace Computer Services, Inc. (business forms), Medaphis Corporation (health
care information services), Lamalie Associates, Inc. (executive recruitment),
Waste Management, Inc. (waste management and disposal), and Dollar Thrifty
Automotive Group, Inc. (car rental). Mr. Pope held various positions with UAL
Corporation and United Airlines, Inc., including President and Chief Operating
Officer from 1992 to 1994 and Director from 1988 to 1994, Vice Chairman from
1989 to 1992, Executive Vice President of Marketing and Planning and Chief
Financial Officer from 1989 to 1990, and Executive Vice President of Finance and
Chief Financial Officer from 1988 to 1989. Prior thereto, Mr. Pope served as
Senior Vice President and Chief Financial Officer of AMR Corporation (commercial
airline holding company) and American Airlines, Inc. (commercial airline).
Nicholas J. Stanley, age 33, has served as a Director of the Company
since April 1994. Mr. Stanley has served as the President of Stanley Investment
& Management (international barter and counter trade programs) since 1990, as
the President and Chief Executive Officer of Fine Arts Graphics, Inc.
(stationery printing) since 1994, and as a Principal of the Titan Group (real
estate investment) since 1990. Mr. Stanley also serves as honorary Consul to the
Kingdom of Thailand.
Current Directors with Terms Expiring in 2000
Gilbert E. Carmichael, age 70, has served as a Vice Chairman of the
Company since January 1996, and as a Director of the Company since April 1994.
He retired as an employee of the Company in April 1997. He served as Vice
Chairman of the Board from April 1994 until March 1995 and as the Company's
Chairman from March 1995 until January 1, 1996. Mr. Carmichael also served as
Senior Vice President of Morrison Knudsen Corporation (engineering and
construction) from 1993 until March 1995. Prior to joining Morrison Knudsen, Mr.
Carmichael served as Administrator of the Federal Railroad Administration from
1989 to 1993. Mr. Carmichael currently serves on the board of directors of Great
Southern National Bank (banking).
Ernesto Fernandez Hurtado, age 76, has served as a Director of the
Company since December 1996. He served as governor of Mexico's Central Bank from
1970 to 1976. He also served as director general of Banco BCH, S.A. from 1977 to
1982 and Bancomer, S.A. from 1982 to 1988. In addition, he has served in various
governmental capacities, including as a member of the Board of Governors of the
International Monetary Fund and a member of the International Monetary
Conference.
Michael A. Wolf, age 55, has served as the President and Chief
Executive Officer of the Company since July 1996 and as a Director since August
1996. Prior thereto, he served as President and Chief Executive Officer of
Pandrol Jackson, Inc. (railroad equipment and contract services) from 1994 to
June 1996, as President and Chief Operating Officer of Hobart Brothers Company
(welding and laser manufacturing) from 1992 to 1994, and as the Executive Vice
President of Case Corporation (agricultural equipment) from 1988 to 1992. In
addition, from 1972 to 1988, Mr. Wolf held various management positions with
increasing responsibility, including as
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Executive Vice President, at Firestone/Bridgestone, Inc. (manufacturer of tires
and automotive parts, and provider of services).
MEETINGS OF THE BOARD OF DIRECTORS
In 1997, the Board of Directors of the Company conducted seven meetings
and all directors were in attendance at each meeting. Each director of the
Company has attended at least seventy-five percent of the meetings held during
the time he has served as a director.
COMMITTEES
There are four active committees of the Board: the Executive and
Finance Committee, the Audit and Corporate Responsibility Committee, the
Compensation and Management Development Committee, and the Nominating and
Corporate Governance Committee.
The Executive and Finance Committee has all authority, consistent with
the Delaware General Corporation Law, as may be granted to it by the Board.
Accordingly, the Executive and Finance Committee may have and may exercise all
the powers and authority of the Board in the oversight of the management of the
business and affairs of the Company, except that the Executive and Finance
Committee will not have the power (except to the extent authorized by a
resolution of the Board) to amend the Company's Certificate of Incorporation or
By-laws, to fix the designations, preferences, and other terms of any preferred
stock of the Company, to adopt an agreement of merger or consolidation, to
authorize the issuance of stock, to declare a dividend or to recommend to the
stockholders of the Company the sale, lease or exchange of all or substantially
all of the Company's property and assets, a dissolution of the Company or a
revocation of such a dissolution. John C. Pope, Michael A. Wolf and Gilbert E.
Carmichael currently serve as members of the Executive and Finance Committee.
Mr. Pope is the Chairman of this Committee. The Executive and Finance Committee
met one time in 1997.
The Audit and Corporate Responsibility Committee has the primary
responsibility for reviewing the Company's policies relating to business conduct
and corporate relationships, including relationships with governmental agencies,
the independent certified public accountants and the general public in addition
to the responsibility for reviewing the professional services to be provided by
the Company's independent auditors, the scope of the audit by the Company's
independent auditors, the annual financial statements of the Company, the
Company's system of internal accounting controls and such other matters with
respect to the accounting, auditing and financial reporting practices and
procedures of the Company as it finds appropriate or as is brought to its
attention. Three of the Company's independent directors, James P. Miscoll,
Ernesto Fernandez Hurtado and Nicholas J. Stanley, currently serve as members of
the Audit and Corporate Responsibility Committee. Mr. Miscoll is the Chairman of
this Committee. The Audit and Corporate Responsibility Committee met six times
in 1997.
The Compensation and Management Development Committee has the primary
responsibility for establishing and administering the Company's compensation
program for the top ten highest paid employees and for overseeing the Company's
compensation program for the top fifty highest impact positions of the Company
("key management"); overseeing selection and professional development and
succession planning of the Company's key management; and regularly consulting
with the Company's management regarding compensation policies, benefits plans,
best practices and benchmarking. Three of the Company's independent directors,
Lee B. Foster II, Nicholas J. Stanley and James P. Miscoll, currently serve as
members of the Compensation and Management Development Committee. Mr. Stanley is
the Chairman of this Committee. The Compensation and Management Development
Committee met eight times in 1997.
The Nominating and Corporate Governance Committee has the primary
responsibility for monitoring and making recommendations to the Board with
respect to developments in the area of corporate governance and Board policies;
annually evaluating the performance of the Board; identifying, evaluating and
recommending to the Board candidates for Board membership; and evaluating the
Company's President and Chief Executive Officer and planning for succession in
that position. John C. Pope, Gilbert E. Carmichael and Lee B. Foster II
currently serve as members of the Nominating and Corporate Governance Committee.
Mr. Pope is the Chairman of this Committee. The Nominating and Corporate
Governance Committee met four times in 1997.
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PROPOSAL NO. 2 -- SELECTION OF AUDITORS
THE PROPOSAL
The Board of Directors appointed Deloitte & Touche LLP, independent
certified public accountants, to audit the financial statements of the Company
and its wholly owned subsidiaries for the fiscal year ending December 31, 1998.
This appointment is being presented to stockholders for ratification. Deloitte &
Touche LLP audited the Company's financial statements for the year ended
December 31, 1997.
A representative of Deloitte & Touche LLP is expected to attend the
meeting and will be afforded an opportunity to make a statement if he or she
desires to do so. This representative is also expected to be available to
respond to appropriate questions.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF
THIS PROPOSAL UNLESS A CONTRARY VOTE OR ABSTENTION IS SPECIFIED.
PROPOSAL NO. 3 -- AMENDMENT TO STOCK INCENTIVE PLAN
BACKGROUND INFORMATION
In March 1994, the Board of Directors of the Company and the
sole stockholder of the Company approved a Stock Incentive Plan of the Company
effective April 1, 1994 (the "Plan" or the "Stock Incentive Plan") which
authorizes the grant of awards ("Awards") in the forms of options ("Options") to
purchase Common Stock, stock appreciation rights, including limited stock
appreciation rights ("SARs"), and restricted stock ("Restricted Stock") to
officers, key employees of the Company and its affiliates and other key
individuals (including non-employees). At the annual meeting of the Company held
in October 1996, the stockholders of the Company approved an amendment to the
Plan to increase the maximum number of shares which may be issued under such
Plan by one million shares. In March 1998, the Board approved additional
amendments to the Plan, subject to stockholder approval, which are being
presented to stockholders for consideration at this annual meeting and are
principally intended to conform the Plan to recently adopted amendments to
Federal securities regulations, as more fully discussed under "Summary of the
Plan--Proposed Amendments."
PARTICIPATION IN THE PLAN
All executive officers and other officers, directors and employees, as
well as independent agents and consultants of the Company and its subsidiaries
are eligible to participate in the Plan, except, as the Plan is currently
constituted, for directors who are members of the Compensation and Management
Development Committee. As proposed to be amended, the Plan would permit Awards
to Compensation and Management Development Committee members. The Company
estimates that fourteen executive officers and approximately thirty-six other
officers and employees and approximately one agent and consultant will be
eligible to participate in the Plan. The Plan is required to be administered by
a committee of the Board (the "Committee"). The Compensation and Management
Development Committee of the Board currently serves as the administrator of the
Plan.
Except for Awards in February 1998 made to certain persons who are not
executive officers (as described under the "New Plan Benefits Table" below), the
Committee has not made a determination as to how many Awards, if any, will be
made under the Plan in 1998 or to whom any such Awards will be made. However,
under the Plan, the Committee has discretion to make Awards to such of the
officers, key employees, agents or consultants of the Company who occupy
responsible managerial or professional positions or who have the capability of
making substantial contributions to the success of the Company. The Plan is
intended to offer participants substantial incentives to join or continue to
serve the Company and, by aligning their interests with
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those of stockholders, to act in a manner calculated to maximize stockholder
value. To this end, the Committee may elect to make Awards to key or exempt
employees in substitution of or in addition to cash bonuses. Accordingly, the
options shown in the "New Plan Benefits" table should not be regarded by
stockholders as the only options that can or will be issued under the Plan
should the proposed amendments be approved and adopted by the stockholders.
NEW PLAN BENEFITS TABLE
MOTIVEPOWER INDUSTRIES, INC. STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
NAMES AND POSITION DOLLAR VALUE(1) NUMBER OF UNITS
------------------ ------------ ---------------
<S> <C> <C>
All Current Executive Officers __ __
(as a group)
Non-Executive Officer Directors __ __
(as a group)
Non-Executive Officer/Employees $176,560 50,000
(as a group)
</TABLE>
(1) The Dollar Value of the Options granted on February 9, 1998 is the amount by
which the closing market price of the Company's Common Stock as reported on the
New York Stock Exchange on March 9, 1998 ($26.00) exceeds the exercise price of
the options granted ($22.4688).
SUMMARY OF THE PLAN
PROPOSED AMENDMENTS. The Board has approved amendments to the Plan to
(i) increase the number of shares which may be awarded under the Plan by one
million shares, (ii) permit the Board to amend the Plan in its sole discretion,
without stockholder approval, as permitted under recently adopted amendments to
Federal securities law regulations, (iii) permit members of the Committee to
also receive Awards as permitted under recently adopted amendments to Federal
securities law regulations, and (iv) define the term "Fair Market Value" by
reference to sales of the Company's stock as reported on the New York Stock
Exchange. The text of the proposed amendments to the Plan is set forth under
"Text of Proposed Amendments."
PURPOSE. The purpose of the Plan is to promote the long-term interests
of the Company and its stockholders by providing officers, key employees of the
Company and its affiliates and other key individuals (including non-employees)
with an additional incentive to promote the financial success of the Company and
its affiliates. The Plan authorizes the granting of Awards to participants in
the following forms: (i) Options to purchase shares of the Company's $.01 par
value Common Stock, (ii) SARs and (iii) Restricted Stock awards.
ELIGIBILITY. Except as modified below, the class of persons eligible to
receive Awards under the Plan are those officers and certain other key or exempt
employees of the Company or its affiliates and those non-employees of the
Company or its affiliates as designated by the Committee from time to time. As
proposed to be amended, the Plan will expressly permit discretionary Awards to
be granted to Committee members, as is permitted under recently adopted
amendments to Federal securities law regulations.
ADMINISTRATION. The Plan is required to be administered by such
committee of the Board of Directors as shall consist of two or more members of
the Board of Directors of the Company who are "disinterested persons," as such
term is defined in Rule 16b-3 promulgated under Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any successor
provision. The Committee has full authority and power to: (i) construe and
interpret the provisions of the Plan and make rules and regulations for the
administration of the Plan
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not inconsistent with the Plan; (ii) decide all questions of eligibility for
Plan participation and for the grant of Awards; (iii) adopt forms of agreements
and other documents consistent with the Plan; (iv) engage agents to perform
legal, accounting and other such professional services as it may deem proper for
administering the Plan; and (v) take such other actions as may be reasonably
required or appropriate to administer the Plan.
SHARES SUBJECT TO PLAN. The Common Stock with respect to which Awards
may be made under the Plan may be either authorized and unissued shares or
issued shares heretofore or hereafter reacquired and held as treasury shares.
The number of shares subject to the Plan is currently 2.5 million. The proposal
being considered by the stockholders would increase the number of shares which
may be issued by one million.
OPTIONS AND SARS. The Committee is authorized to grant to participants
Options, which may be incentive stock options ("ISOs") or nonqualified stock
options ("NQSOs"), and SARs, which may be granted alone or in connection with
and exercisable, in whole or in part, in lieu of an Option. Options and SARs
under the Plan will be granted subject to, among other things, the following
terms and conditions:
The exercise price per share of Common Stock under an Option or SAR
will be determined by the Committee, but may not be less than the Fair Market
Value as of the date of grant. For purposes of the Plan, the term "Fair Market
Value" means, as applied to a specific date, the mean between the highest and
lowest selling price of a share of Common Stock on such date, or if there are no
reported sales on such date, on the last preceding date on which sales were
reported. The Plan presently provides that the selling prices as reported on the
NASDAQ National Market System. The Company proposes to amend the Plan to refer
to the selling prices as reported on the New York Stock Exchange.
A participant will have no rights as a stockholder with respect to any
Common Stock issuable on exercise of any Option or SAR until the date of the
issuance of a stock certificate to the participant for such Common Stock. No
adjustment will be made for dividends or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in the anti-dilution provisions of the Plan.
INCENTIVE STOCK OPTIONS. The terms of any ISOs, which are stock options
intended to meet the requirements of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), granted under the Plan must comply with the above
terms governing Options as modified by the following additional rules:
(A) The Option must be expressly designated as an ISO by the
Committee and in the Award agreement;
(B) No ISO will be granted more than 10 years from the Effective
Date of the Plan and no ISO will be exercisable more than 10
years from the date such ISO is granted;
(C) The exercise price of any ISO will not be less than the Fair
Market Value per share of Common Stock on the date such ISO is
granted;
(D) No ISO will be granted to any individual who at the time such
ISO is granted, owns stock possessing more than ten percent of
the total combined voting power of all classes of stock of the
Company or any affiliate unless the exercise price of such ISO
is at least one hundred and ten percent of the Fair Market
Value per share of Common Stock at the date of grant and such
ISO is not exercisable after the expiration of five years from
the date such ISO is granted;
(E) The aggregate Fair Market Value (determined as of the time any
ISO is granted) of any Company stock with respect to which any
ISOs granted to a participant are exercisable for the first
time by such participant during any calendar year (under the
Plan and all other stock option plans of the Company and any
of its affiliates and any predecessor of any such
corporations) shall not exceed $100,000 as required under
Section 422(d) of
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the Code. (To the extent the $100,000 limit is exceeded, the
$100,000 in Options, measured as described above, granted
earliest in time will be treated as ISOs);
(F) No ISO will be granted to an individual who is not an employee
of the Company, or its affiliates at the time such ISO is
granted; and
(G) Any other terms and conditions as may be required in order
that the ISO qualifies as an "incentive stock option" under
Section 422 of the Code or successor provision.
STOCK APPRECIATION RIGHTS. A SAR will, upon its exercise, entitle the
participant to receive a number of shares of Common Stock or cash or combination
thereof, as the Committee in its discretion shall determine, the aggregate value
of which (i.e., the sum of the amount of cash and/or Fair Market Value of such
Common Stock on date of exercise) shall equal the amount by which the Fair
Market Value per share of Common Stock on the date of such exercise exceeds the
exercise price of such SAR, multiplied by the number of shares of Common Stock
with respect of which the SAR shall have been exercised.
RESTRICTED STOCK AWARDS. The Committee has authority and discretion,
except as expressly limited by the Plan, to grant Awards of Restricted Stock and
to provide the terms and conditions (which need not be identical among
participants) thereof. Awards of Restricted Stock will be evidenced by written
agreements in such form as the Committee from time to time shall approve.
Subject to the applicable restrictions the participant of an Award of
Restricted Stock pursuant to the Plan will have all the rights as a stockholder
with respect to the shares of Common Stock covered by the Award including, but
not limited to, the right to vote such shares, the right to receive cash or
stock dividends with respect thereto and the right to participate in any
subdivision or consolidation of shares or other capital adjustment, or the
payment of a stock dividend or other increase or decrease in such shares,
effected without receipt of consideration by the Company. In the event the
participant receives additional shares of Common Stock pursuant to any of the
foregoing events, the shares acquired will be subject to the same terms,
conditions and restrictions as if such additional shares were received at the
date of the original Award.
RESTRICTIONS ON TRANSFERS. No Option or SAR nor any right of interest
of a participant under the Plan in any instrument evidencing any Option or SAR
under the Plan may be assigned, encumbered, or transferred, except, in the event
of the death of a participant, by will or the laws of descent and distribution.
AMENDMENT AND TERMINATION. As presently in effect, the Plan provides
that the Board of Directors may amend the Plan from time to time in its sole
discretion; provided, however, that no such amendment may, without the approval
of the stockholders of the Company if such approval is required by the laws of
the State of Delaware or Section 422 of the Code or Rule 16b-3 under the
Exchange Act: (a) change the class of persons eligible to receive Awards or
otherwise materially modify the requirements as to eligibility for participation
in the Plan; (b) increase the aggregate number of shares of Common Stock with
respect to which Awards may be made under the Plan; (c) materially increase the
benefits accruing to participants under the Plan; or (d) remove the
administration of the Plan from the Committee or render any member of the
Committee eligible to receive an Award under the Plan while serving thereon. No
amendment may impair the rights of any participant under any outstanding Award
without the participant's consent. The Board of Directors may suspend or
terminate the Plan at any time. Upon termination of the Plan, no additional
Awards will be granted, but the terms of the Plan will continue in full force
and effect with respect to outstanding and unexercised Awards.
As proposed to be amended, the Board will have authority to amend the
Plan from time to time in its sole discretion; provided, however, that (i) the
Board will not effectuate any amendment without consideration of the impact, if
any, to the Company, the Plan and the Plan participants of effectuating any such
amendment by reason of Section 422 of the Code or Rule 16b-3 under the Exchange
Act; and (ii) no amendment may impair the rights of any participant under any
outstanding Award without the participant's consent.
8
<PAGE> 11
Subject to the terms and conditions and the limitations of the Plan,
the Committee may modify, extend or renew the terms of outstanding Awards
granted under the Plan, or accept the surrender of outstanding Awards (to the
extent not theretofore exercised) and authorize the granting of new Awards in
substitution therefor (to the extent not theretofore exercised). The Committee
may accelerate the time at which any Option or SAR is exercisable, subject, (i)
as the Plan is presently constituted, to compliance with the requirements of
Rule 16b-3 (or successor provision) under the Exchange Act, or, (ii) as the Plan
is proposed to be amended, to the Board's consideration of the impact thereof on
the Company, the Plan and the Plan participants. As currently in effect and as
proposed to be amended, no modification of an Award may, without the consent of
the participant, impair any rights or obligations under any outstanding Award.
The Plan terminates on March 29, 2004, and no new Options may be issued
after this date; however, then unexpired Options will continue to be exercisable
in accordance with their terms.
TEXT OF PROPOSED AMENDMENTS
The Company has proposed that the following amendments to the Plan be
approved:
Section 2(k) is to be amended by restating the first sentence thereof
to read as follows:
"Fair Market Value": As applied to a specified date, the mean
between the highest and lowest reported selling price of a
Share on the New York Stock Exchange on such date, or if there
are no reported sales on such date, on the last preceding date
on which sales are reported thereon.
Section 3 is to be amended by restating the first sentence thereof to
read as follows:
Except as modified below, the class of persons eligible to
receive Awards under the Plan shall be those officers and
other key employees of the Company or its Affiliates and those
non-employees of the Company or its Affiliates, as designated
by the Committee from time to time.
Section 4(a) is to be amended by restating the first sentence thereof
to read as follows:
Subject to adjustment by operation of Section 4(b) hereof, the
maximum aggregate number of shares with respect to which
Awards may be made under the Plan is 3,500,000.
Section 16(a)(i) is to be restated to read as follows:
Amendment. The Board may amend the Plan from time to time in
its sole discretion; provided, however, that (i) the Board
will not effectuate any amendment without consideration of the
impact, if any, to the Company, the Plan and the Plan
participants of effectuating any such amendment by reason of
Section 422 of the Code or Rule 16b-3 under the Exchange Act;
and (ii) no amendment may impair the rights of any participant
under any outstanding Award without the participant's consent.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF
THIS PROPOSAL UNLESS A CONTRARY VOTE OR ABSTENTION IS SPECIFIED.
9
<PAGE> 12
INFORMATION CONCERNING EXECUTIVE OFFICERS
INFORMATION CONCERNING EXECUTIVE OFFICERS AND OTHER KEY EMPLOYEES
Set forth below is information concerning each executive officer and
certain key employees of the Company, including his or her business experience
during the past five years, his or her positions with the Company and certain
directorships held by him or her. Officers are appointed annually by the Board
of Directors of the Company and serve, at the pleasure of the Board, until the
appointment of their successors. There are no family relationships among the
officers, nor, except as may be described herein, are there any arrangements or
understandings between any officer and another person pursuant to which he or
she was appointed to office.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Executive Officers
John C. Pope 48 Chairman of the Board
Michael A. Wolf 55 President, Chief Executive Officer and Director
William F. Fabrizio 50 Senior Vice President and Chief Financial Officer
Jeannette Fisher-Garber 46 Vice President, General Counsel and Secretary
William D. Grab 42 Vice President, Controller and Principal Accounting Officer
Thomas P. Lyons 34 Vice President and Treasurer
Scott E. Wahlstrom 34 Vice President Human Resources and Administration
Timothy R. Wesley 36 Vice President Investor and Public Relations
Other Key Employees
Phillip L. Brown 45 President, Power Parts Company
Joseph S. Crawford Jr 53 President, Boise Locomotive Company
Jack E. Floyd 47 President, Touchstone Company
James E. Lindsay 44 President, Engine Systems Company, Inc.
J. Lynn Young 60 President, Motor Coils Manufacturing Company
Gerald M. Rowe 49 Vice President Business Development
</TABLE>
EXECUTIVE OFFICERS
John C. Pope. See "Information Concerning Directors and Nominees" for a
description of Mr. Pope's relevant business experience.
Michael A. Wolf. See "Information Concerning Directors and Nominees"
for a description of Mr. Wolf's relevant business experience.
William F. Fabrizio has served as Senior Vice President and Chief
Financial Officer of the Company since November 1996. From 1995 to November
1996, Mr. Fabrizio served as Chief Financial Officer of Lear Corporation's
Automotive Industries Division (automotive parts), which had acquired Automotive
Industries Holdings, Inc. (automotive parts) in 1995, for which he had also
served as Chief Financial Officer during 1995. Prior thereto, from 1989 to 1994,
he served as the Chief Financial Officer of Rockwell International Corporation's
Automotive Group (automotive parts).
Jeannette Fisher-Garber has served as Vice President, General Counsel
and Secretary of the Company since October 1996. Prior thereto, Ms.
Fisher-Garber served as Corporate Counsel for Federated Investors (mutual funds)
from 1987 to October 1996, as a staff attorney for Joy Manufacturing Company
(manufacturing) from 1979 to 1987 and as a financial analyst for Rockwell
International Corporation (manufacturing) from 1976 to 1979.
William D. Grab has served as Vice President, Controller and Principal
Accounting Officer since April 1995, having previously held various accounting
positions with the Company's Motor Coils Manufacturing Company subsidiary from
1980 to April 1995. Prior thereto, from 1977 to 1980, Mr. Grab was employed at
the public accounting firm of Touche Ross.
10
<PAGE> 13
Thomas P. Lyons has served as Vice President and Treasurer of the
Company since February 1997, having previously served as Treasurer of the
Company since August 1996. Prior thereto, Mr. Lyons served as the Company's
Project Finance Manager from September 1994 to July 1996 and its Senior
Financial Analyst from June 1994 to September 1994.
Scott E. Wahlstrom has served as Vice President Human Resources and
Administration of the Company since August 1996. Prior thereto, he served as the
Company's Corporate Director, Human Resources from August 1995 to August 1996
and as its Corporate Manager, Human Resources from 1994 to August 1995. He
previously served as Manager of International Compensation at Morrison Knudsen
(engineering and construction) from 1992 to 1994. In addition, from 1991 to
1992, Mr. Wahlstrom served as Senior Analyst at Walt Disney Company
(entertainment). Prior to that, Mr. Wahlstrom was employed at the public
accounting firm of Deloitte Haskins and Sells.
Timothy R. Wesley has served as Vice President Investor and Public
Relations of the Company since August 1996. Prior thereto, he served as the
Company's Director, Investor and Public Relations from February 1995 to August
1996. Previously, Mr. Wesley served as Director, Investor and Public Relations
from 1993 to February 1995 and as Public Relations Manager from 1992 to 1993 at
Michael Baker Corporation (engineering and construction).
OTHER KEY EMPLOYEES
Phillip L. Brown has served as President of the Company's Power Parts
subsidiary since August 1997. Prior thereto, Mr. Brown held various executive
positions with Pandrol Jackson (railroad equipment and contract services) from
1985 to 1997. Prior thereto, Mr. Brown held various positions with Tamper
(railroad equipment and contract services) from 1974 to 1985.
Joseph S. Crawford Jr. has served as President of the Company's Boise
Locomotive Company subsidiary (previously the Locomotive Group) since December
1995. Prior thereto, he served as the Company's Executive Vice President,
Locomotive Group from September 1994 to December 1995 and as Senior Vice
President, Operations and Maintenance of the Company from May 1994 to September
1994. From 1988 to May 1994, Mr. Crawford served as Senior Vice President and
General Manager of New Jersey Transit Rail Corporation (transit and rail
operations).
Jack E. Floyd has served as President of the Company's Touchstone
Company subsidiary since October 1997, having previously served as Vice
President and Controller of Boise Locomotive Company from 1996 to 1997 and
Controller of Boise Locomotive Company from 1995 to 1996. Prior thereto, Mr.
Floyd served in various executive management positions with General Electric
(manufacturing) from 1978 to 1995.
James E. Lindsay has served as President of the Company's Engine
Systems Company, Inc. subsidiary since 1994. He also served as a Senior Vice
President of the Company from 1994 to August 1996 and as Senior Vice President -
Marketing of MK Engine Systems Company, Inc.'s division in Simi Valley,
California (formerly Arrowsmith) from 1989 to 1994. Prior thereto, from 1978 to
1989, Mr. Lindsay served in various engineering and marketing capacities dealing
with engine products and components with the Electro-Motive Division of General
Motors Corporation (locomotive manufacturing).
J. Lynn Young has served as the President of the Company's Motor Coils
Manufacturing Company subsidiary since August 1996, having previously served as
its Executive Vice President from 1985 to August 1996. Prior thereto, from 1956
to 1985, Mr. Young held various positions with Westinghouse Electric Corporation
(manufacturing), including as design engineer, engineering manager and product
manager.
Gerald M. Rowe has served as Vice President Business Development of
MotivePower Industries since December 1997. Prior thereto, Mr. Rowe held various
executive positions with Valeo S.A. (automotive parts) from 1988 to 1997. Prior
thereto, from 1983 to 1988, he served as Manager-Product Planning for Firestone
Tire and Rubber Company (manufacturer of tires and automotive parts).
11
<PAGE> 14
COMPENSATION
DIRECTOR COMPENSATION
Effective July 1, 1996, the Company pays each director who is not a
full-time employee of the Company $12,000 per year for his services as a
director. In addition, each director is entitled to receive $1,000 for each
meeting of the Board attended by such director, and $1,000 for each other
Committee meeting attended by a director that serves on either the Nominating
and Corporate Governance Committee, Compensation and Management Development
Committee, Audit and Corporate Responsibility Committee, or Executive and
Finance Committee. In addition, each Committee Chairman receives $1,000 annually
for serving as the Chairman. All directors are reimbursed for their
out-of-pocket expenses incurred in connection with attendance at meetings of,
and other activities relating to serving on, the Board or any Board Committee.
In addition, the Company adopted a Stock Option Plan for Non-Employee
Directors to encourage the highest level of performance for members of the Board
of Directors who are not employees of the Company, by providing such directors
with a proprietary interest in the financial success of the Company. Under the
Plan, each non-employee director is entitled to receive options to purchase
12,000 shares of the Company's Common Stock upon his election to the Board at an
exercise price equal to fifty percent of the market price based on the date
awarded and 1,500 options to be awarded at one hundred percent the average of
the high and low of fair market value of the stock traded on January 2nd of each
year. During 1997, the Company engaged a consultant to benchmark the
compensation of board of directors of similar size companies within the
industry. The result of the study showed that the Board's compensation was in
the range paid by similar size companies within the manufacturing sector. As a
result of the study, the Board resolved that beginning in 1998 it would cease
the practice of discounting initial options by fifty percent and increase the
annual grant of options from 1,500 to 2,000.
EXECUTIVE COMPENSATION
CASH COMPENSATION. The following table describes the compensation paid
by the Company or its subsidiaries to (i) the individual serving as the
Company's Chief Executive Officer for the Company's fiscal year ending as of
December 31, 1997; and (ii) the four most highly compensated key employees or
officers of the Company for the Company's fiscal year ending as of December 31,
1997.
Persons identified as key employees under "Information Concerning
Executive Officers" are deemed to be executive officers for purposes of the
disclosure under "Executive Compensation."
12
<PAGE> 15
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION
------------------------
ANNUAL COMPENSATION AWARDS
--------------------------------------------------------------------------------------
OTHER ANNUAL RESTRICTED OPTIONS/ ALL OTHER
NAME AND POSITION YEAR SALARY BONUS COMPENSATION STOCK SARS COMPENSATION
($) ($) ($) AWARD(S)($) (#) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael A. Wolf 1997 380,961 424,875(1) 212,438(2) 0 0 7,330(3)
President & CEO 1996 173,077 100,000(4) 0 575,000(5) 400,000(6) 4,130(3)
1995 0 0 0 0 0 0
John C. Pope 1997 360,067 396,550(7) 198,275(2) 0(8) 300,000(11) 3,200(9)
Chairman 1996 336,539 0 0 0 0 0
1995 0 0 0 190,500(8) 0(11) 0
Joseph S. Crawford Jr. 1997 208,655 160,650(1) 80,325(2) 0 50,000(12) 3,200(9)
President, Boise 1996 200,000 200,000(13) 0 0 50,000(14) 0
Locomotive Co. 1995 200,858 200,000(13) 0 0 0 2,368(15)
William F. Fabrizio 1997 183,021 93,500(1) 46,750(2) 0 25,000(12) 69,579(16)
Senior Vice President & 1996 17,308 50,0001(7) 0 0 75,000(18) 0
CFO 1995 0 0 0 0 0 0
J. Lynn Young 1997 147,538 75,550(1) 37,750(2) 0 25,000(12) 2,118(9)
President, Motor Coils 1996 133,226 0 0 0 5,000(14) 0
Manufacturing Co. 1995 127,854 35,000(10) 0 0 0 1,301(9)
</TABLE>
(1) This amount represents payments made in February 1998 under the
Company's Executive Incentive Plan for the fiscal year ended December 31, 1997
based on the performance of the Company and the participant during 1997 versus
the quantifiable measures established in the beginning of the year, part of
which was deferred by the participants into Company stock as part of the
Company's deferred compensation program.
(2) This amount represents an additional discretionary bonus the Board
approved under the Company's Executive Incentive Plan. This was awarded on a
discretionary basis due to the extraordinary performance of the Company during
1997 and such award was deferred into Company stock as part of the Company's
deferred compensation program.
(3) The amount shown for 1997 represents Company contributions of
$3,200 to the 401(k) savings plan and $4,130 for the payment of annual insurance
premiums for term life insurance. The amount shown for 1996 is for the payment
of annual insurance premiums for term life insurance.
(4) Under the terms of his employment agreement dated July 1, 1996, Mr.
Wolf received a one-time lump sum bonus of $100,000.
(5) Under the terms of Mr. Wolf's employment agreement dated July 1,
1996 and amendments thereto, Mr. Wolf received 100,000 shares of common stock
restricted as to their ability to be sold. The $575,000 represents the value as
of the date of grant ($5.75 per share) of 100,000 shares of restricted stock
which had a fair market value of $2,325,000 as of December 31, 1997. The
restrictions will lapse at the close of business on June 30, 2001, so long as
Mr. Wolf is still in the employ of the Company on that date, or upon the earlier
occurrence of certain change of control events. If the Company meets certain
performance goals relating
13
<PAGE> 16
to achievement of earnings per share targets in 1998 and 1999, the Company will
accelerate the restrictions to lapse on or before June 30, 1999 for 50,000
shares and June 30, 2000 for 50,000 shares. See "Employment Agreements."
Dividends would be paid on the restricted stock to the same extent paid on the
Company's common stock.
(6) Mr. Wolf was granted 400,000 SARs on May 13, 1996 with a grant
price of $5.25 per share. The SARs vest in twenty percent increments with the
first twenty percent having become exercisable on July 1, 1997 and each
remaining twenty percent increment to become exercisable on July 1 of each of
the subsequent four years. As permitted under the terms of the original grant of
SARs, on October 31, 1996, the Company (i) limited the price at which the SARs
can be exercised to $7.78 per share (which was the average of the high and low
prices at which the Company's common stock was traded on October 31, 1996) and
(ii) issued an equivalent number of non-qualified stock options on October 31,
1996 at the same price and subject to the same vesting schedule, effectively
converting the SARs to stock options. If the Company meets certain performance
goals relating to achievement of earnings per share targets in 1998 and 1999,
the Company will accelerate by one year the time of vesting of the awarded stock
options exercise dates for 240,000 common shares, with the options for 120,000
shares to vest on July 1, 1999 and the options for the remaining 120,000 shares
to vest on July 1, 2000.
(7) This amount represents payments made in February 1998 under the
Company's Executive Incentive Plan for the fiscal year ended December 31, 1997
based on the performance of the Company and Mr. Pope's performance during 1997
versus the quantifiable measures established in the beginning of the year. The
amount was deferred into the Company's deferred compensation plan under which he
elected Company stock.
(8) Under the terms of Mr. Pope's employment agreement dated December
29, 1995, Mr. Pope was granted 50,000 shares (grant date value $3.81 per share)
of common stock restricted as to their ability to be sold. The restrictions
lapsed on 25,000 shares on January 1, 1997 and as a result Mr. Pope was deemed
to have received $203,125 in compensation. The remaining 25,000 shares of
restricted stock had a fair market value on December 31, 1997 of $581,250. The
restrictions lapse on these remaining shares on January 1, 2007 if the Chairman
is still in the employ of the Company or earlier upon the Chairman's termination
of employment with the Company other than for cause or the occurrence of certain
change of control events. Dividends would be paid on the Restricted Stock to the
same extent paid on the Company's common stock. See "Employment Agreements."
(9) This amount represents the Company's contribution to the 401(k)
savings plan.
(10) This amount represents a discretionary bonus award by Motor Coils
Manufacturing Company.
(11) Mr. Pope was granted SARs at a grant price of $3.81 per share on
December 29, 1995 with respect to 300,000 shares (190,000 shares of which were
awarded under the Company's Stock Incentive Plan and the balance outside of such
plan). The SARs with respect to 150,000 shares became exercisable on December
29, 1996. The SARs with respect to the remaining 150,000 shares became
exercisable on December 29, 1997. On March 25, 1997 the Compensation and
Management Development Committee of the Board of Directors and Mr. Pope agreed
(i) to limit the price at which the SARs can be exercised to $10.72 (which was
the average of the high and low prices at which the Company's Common Stock was
traded on March 25, 1997) and (ii) that the Company would grant to Mr. Pope an
equivalent number of non-qualified stock options at an exercise price of $10.72
and subject to the same vesting schedule, effectively converting the SARs to
stock options. The 300,000 SARs granted in 1995 as discussed in this note have
been omitted from this table for 1995 since they would appear duplicative with
the options issued in 1997 upon the effective conversion of such SARs.
(12) The options shown are options to purchase the Company's common
stock at an exercise price of $10.75 per share. These are non-qualified options
granted under the Company's Stock Incentive Plan and have become exercisable
with respect to twenty-five percent of the shares and will become exercisable
with respect to the balance of the shares in equal increments on February 10,
1999, February 10, 2000 and February 10, 2001, unless earlier terminated. These
options terminate February 10, 2007, subject to earlier termination upon
cessation of employment with the Company.
14
<PAGE> 17
(13) The amount shown in this column represents a bonus paid pursuant
to a retention program adopted by the Company in an effort to maintain the then
current management team in the face of uncertainties created by its efforts
during 1995 to sell the Company.
(14) The options shown are options to purchase the Company's common
stock at an exercise price of $5 per share. These options were granted under the
Company's Stock Incentive Plan and have become exercisable with respect to
twenty-five percent of the shares and will become exercisable with respect to
the balance of the shares in equal increments on March 31, 1998, March 31, 1999
and March 31, 2000, unless earlier terminated. These options terminate April 10,
2006, subject to earlier termination upon cessation of employment with the
Company.
(15) This amount represents $764 for the payment of annual insurance
premiums for term life insurance and $1,604 for the Company's contribution to
the 401(k) savings plan.
(16) This amount represents $3,053 for the Company's contribution to
the 401(k) savings plan and $66,526 relating to Company paid relocation
expenses.
(17) This amount represented a signing bonus paid to Mr. Fabrizio when
he joined the Company in November 1996.
(18) The options shown are options to purchase the Company's common
stock at an exercise price of $7.75 per share. These are non-qualified options
granted under the Company's Stock Incentive Plan and have become exercisable
with respect to twenty-five percent of the shares and will become exercisable
with respect to the balance of the shares in equal increments on October 29,
1998, October 29, 1999 and October 29, 2000, unless earlier terminated. These
options terminate October 29, 2006, subject to earlier terminated upon cessation
of employment with the Company.
15
<PAGE> 18
OPTION/SAR AWARDS. The following table sets forth information
concerning options to purchase the Company's Common Stock or SARs with respect
to the Company's Common Stock granted to Named Executives in 1997.
OPTION/SAR GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(2)
- ------------------------------------------------------------------------------------------ -----------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
NAME OPTION/SARS EMPLOYEES OR BASE PRICE EXPIRATION
GRANTED(#)(1) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------ -----------------------------
<S> <C> <C> <C> <C> <C> <C>
John C. Pope 300,000(3) 35.37% $10.72 12/29/05 $1,535,497 $3,677,782
Michael A. Wolf - - - - - -
Joseph S. Crawford Jr. 50,000 5.89% $10.75 2/10/07 $338,030 $856,637
William F. Fabrizio 25,000 2.95% $10.75 2/10/07 $169,015 $428,318
J. Lynn Young 25,000 2.95% $10.75 2/10/07 $169,015 $428,318
</TABLE>
(1) See the notes to the Summary Compensation Table above for a
description of the terms of the options/SARs listed in this table.
(2) The potential realizable value shown is calculated based upon
appreciation of the Common Stock issuable under options, calculated over the
full term of the options assuming five percent and ten percent annual
appreciation in the fair market value of the Company's Common Stock from the
date of grant, net of the exercise price of the options.
(3) This option was issued to Mr. Pope in exchange for modification of
a SAR awarded in 1995. See Note 11 to "Summary Compensation Table" for
description of such SARs.
16
<PAGE> 19
OPTION/SAR VALUES. The following table sets forth information concerning the
options and SARs held or exercised by Named Executives.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1997
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR END (#)(1) FISCAL YEAR END ($)(1)
- ------------------------------------------------------------------------------------------ -------------------------------
SHARES ACQUIRED
ON EXERCISE VALUE
NAME (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John C. Pope 0 $2,073,000(2) 300,000 0 $3,759,000 $ 0
Michael A. Wolf 0 202,500(3) 80,000 320,000 1,237,500 4,950,000
Joseph S. Crawford Jr. 0 0 91,000 100,000 918,562 1,473,437
William F. Fabrizio 0 0 18,750 81,250 290,625 1,184,375
J. Lynn Young 0 0 9,250 30,750 93,812 398,687
</TABLE>
(1) The information is presented as of December 31, 1997. See the notes
to the "Summary Compensation Table" above for a description of the terms of the
options listed in this table.
(2) Represents amounts deposited in a deferred compensation plan in
which Mr. Pope elected solely Company stock upon exercise of a SAR. See Note 11
to the "Summary Compensation Table" for a description of this transaction.
(3) Represents amounts deposited in a deferred compensation plan in
which Mr. Wolf elected solely Company stock upon exercise of a SAR. See Note 6
to the "Summary Compensation Table" for a description of this transaction.
EMPLOYMENT AGREEMENTS. Effective as of December 29, 1995, the Company
entered into an employment agreement with John C. Pope for a term of two years
commencing January 1, 1996, subject to automatic one-year extensions (unless
notice of termination is given), under which Mr. Pope agreed to serve as
Non-Executive Chairman of the Board of the Company. In December 1997, the
parties amended the agreement. Under the terms of his employment agreement, Mr.
Pope will be expected to devote on average no more than three days per week to
the business and affairs of the Company. The agreement provides for payment to
Mr. Pope of a minimum annual base salary of $350,000 and the provision of a
secretary for a maximum of twenty-five hours per week. The agreement also
provides for a restricted stock award to him under the Company's Stock Incentive
Plan of 50,000 shares of the Company's Common Stock. The sale restrictions
lapsed on 25,000 of the shares on January 1, 1997, and will lapse on the
remaining 25,000 shares on January 1, 2007, so long as the Chairman is still in
the employ of the Company on that date, or upon the earlier occurrence of
certain change in control events, or upon the Chairman's earlier termination of
employment with the Company other than for cause. The agreement also provides
for the following in the event that the Chairman's employment is terminated upon
the occurrence of certain change of control events or other than for cause: i) a
lump sum payment equal to two times the sum of a) the Chairman's annual base
salary, and b) the amount of the Chairman's annual bonus compensation; and ii)
for a period of two years after the Chairman's employment is terminated, the
Corporation shall provide Chairman with health insurance, a secretary and
reimbursement of business expenses.
Effective as of July 1, 1996, the Company entered into an employment
agreement with Michael A. Wolf for a term of two years commencing July 1, 1996,
subject to automatic two year extensions (unless notice of termination is
given), under which Mr. Wolf has agreed to serve as President and Chief
Executive Officer of the Company. In February 1998, the parties amended the
agreement. The agreement provides for payment to Mr. Wolf of a minimum annual
base salary of $375,000. The agreement also provides for a restricted stock
award to him under the Company's Stock Incentive Plan of 100,000 shares of the
Company's Common Stock, with the sale
17
<PAGE> 20
restrictions to lapse as to all shares at the close of business on June 30, 2001
or earlier if certain performance thresholds are met (See Note 5 to "Summary
Compensation Table" for a description of restricted stock), so long as Mr. Wolf
is still in the employ of the Company or upon the earlier occurrence of certain
change of control events or upon Mr. Wolf's earlier termination of employment
with the Company for other than cause. In addition, Mr. Wolf received SARs in
respect of 400,000 shares of the Company's Common Stock. (See Note 6 to "Summary
Compensation Table" for a description of such SARs.) The agreement also provides
for the following in the event that the CEO's employment is terminated upon the
occurrence of certain change of control events or other than for cause: (i) a
lump sum payment in cash or stock equal to two times the sum of a) the CEO's
annual base salary, and b) the amount of the CEO's annual bonus compensation;
(ii) for a period of two years after the CEO's employment is terminated, the
Corporation shall provide the CEO with health insurance and reimbursement of
business expenses; and (iii) a relocation fee in the amount of $50,000 less
$10,000 for each full year of employment with the Company. The agreement also
contains a non-competition provision which generally restricts Mr. Wolf from
competing with the Company for two years following the termination of his
employment from the Company.
The Company may also enter into employment agreements with other
executive officers of the Company from time to time.
EXECUTIVE INCENTIVE PLAN. The Company established an Executive
Incentive Plan ("Executive Incentive Plan"), under which officers and key
employees of the Company may earn bonuses. The terms of the Executive Incentive
Plan are described under "Compensation -- Report of the Compensation and
Management Development Committee."
STOCK INCENTIVE PLAN. The Company has adopted a Stock Incentive Plan
pursuant to which awards of incentive stock options, non-qualified stock
options, stock appreciation rights, restricted stock awards, performance share
awards, phantom stock units and similar awards may be made to officers and key
employees. The terms of this plan are described under "Compensation -- Report of
the Compensation and Management Committee."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, Lee B. Foster II, Nicholas J. Stanley and James P. Miscoll
served as the Compensation and Management Development Committee. There are no
interlocking relationships, as defined in the regulations of the Securities and
Exchange Commission, involving any of these individuals.
REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
The Compensation and Management Development Committee has the overall
responsibility to review and monitor executive compensation for the top fifty
highest impact ("key managers") positions and to review and administer the total
compensation and succession planning of the ten highest paid positions of the
Company. This includes administration of the Executive Incentive Plan, Merit
Appraisal Plan, Sales Incentive Plan and Stock Incentive Plan. No awards under
these plans can be made without the approval and authorization of the
Compensation and Management Development Committee. In addition, the Compensation
and Management Development Committee consults with the Company's management on a
regular basis regarding management development succession planning, the
Company's employee insurance programs, the Company's 401(k) savings plan,
compensation policies, deferred compensation, sales incentive plans and other
employee related benefits.
PHILOSOPHY. The Company's policies on executive compensation are
designed to (i) provide compensation to employees at such levels as will enable
the Company to attract and retain employees of the highest caliber, (ii)
compensate employees in a "pay for performance" manner best calculated to
recognize individual, group and subsidiary company performances, and (iii) seek
to align the interests of the employees with the interests of the Company's
stockholders.
COMPONENTS OF EXECUTIVE COMPENSATION. Executive compensation includes
base salary, benefits and incentive compensation in the form of awards of stock,
stock options and stock appreciation rights and cash bonuses, as fixed pursuant
to certain plans or employment agreements. Through the compensation plans
described below, the Company seeks to reward its key management for the
Company's "pay for performance" compensation linked to stockholder value.
18
<PAGE> 21
Salary and Merit Appraisal Plan. The Company conducts formal annual
performance and career development reviews under a formal merit appraisal
program. During 1997 such reviews were conducted for all executive officers and
salary adjustments were made in accordance with these reviews. During the 1998
fiscal year, key managers will be considered for salary or wage adjustment based
on performance, with the aggregate amount of base salary adjustments to be
limited to three percent over 1997 levels.
Long-Term Executive Plan. During 1996, the Company had in effect two
long-term incentive plans that had been established by Morrison Knudsen prior to
the time the Company became a public company. No awards were made or accrued for
the benefit of any participants under either of these plans in 1996. In February
1997, the Company terminated these plans.
Executive Incentive Plan. During 1997, the Company implemented an
Executive Incentive Plan (the "Plan") which had been approved by the
Compensation and Management Development Committee of the Board of Directors.
Under the Plan, effective as of January 1, 1997, up to fifty key senior
management employees are eligible to share in a cash award funding pool
determined by the Compensation and Management Development Committee but not to
exceed twelve percent of the Company's operating income for the year. The Plan
provides that the Compensation and Management Development Committee is to
establish minimum and superior threshold levels of performance before any
incentives are paid. The threshold levels are determined by a mix of financial
results, principally earnings per share and cash flow per share. For 1997, no
bonus could have been paid under the Plan unless the Company first achieved its
minimum thresholds of performance which were established for 1997 by the
Compensation and Management Development Committee to be a minimum earnings per
share level of $ .71 per share. The Company's actual performance for 1997 far
exceeded the minimum and superior threshold levels which allowed for the Plan to
be fully funded. Once the Plan received full funding, the subsidiaries, group
and individuals each were measured by their actual performance versus the
quantifiable measures established at the beginning of the Plan year.
For 1997, the Plan paid out $2,001,183 on February 9, 1998 based on
achievement of the levels of performance. In addition to bonuses based on
quantifiable goals, the Committee also exercised its right to make additional
discretionary awards. The Committee made additional discretionary awards
totaling $1,095,719 solely in the form of Company stock which was paid into the
Company's deferred compensation program on February 17, 1998.
For the 1998 Plan year, the Committee has established the earnings per
share minimum threshold at $1.32 on a basic basis or $1.25 on a diluted basis.
In lieu of cash flow per share, the Committee will use the net change in
Economic Value Added (EVA) as a threshold; for 1998, the minimum threshold level
is a net increase of $3.5 million.
Stock Incentive Plan. The Company's Stock Incentive Plan ("Stock
Incentive Plan"), provides for awards of incentive stock options, non-qualified
stock options, stock appreciation rights, restricted stock awards, performance
share awards, phantom stock units and similar awards may be made to key
management personnel and thereby provide additional incentives for such persons
to devote themselves to the maximum extent practicable to the business of the
Company. The Stock Incentive Plan is also intended to aid in attracting persons
of outstanding ability to enter and remain in the employ of the Company. See
"Proposal No. 3 - Amendment to Stock Incentive Plan."
During 1997, non-qualified stock options were awarded to specific key
managers based on: (i) the salary ranges applicable to such officers and
employees at the time of the award; and (ii) various subjective factors such as
the executive's responsibilities, individual performance and anticipated
contribution to the Company's performance.
Sales Incentive Plan. During 1997, the Compensation and Management
Development Committee approved various sales incentive plans designed to
compensate sales employees for achieving sales levels above certain thresholds.
The sales levels for payouts under the plans were consistent with the Company's
planned growth requirements, and total subsidiary sales goals were reached
before any individual payouts were made.
19
<PAGE> 22
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. On July 1, 1996, Michael
A. Wolf became the President and Chief Executive Officer of the Company. Mr.
Wolf's compensation during 1996 was fixed pursuant to the terms of an employment
agreement he entered into with the Company (see "Executive Compensation
Employment Agreements"). This employment agreement was negotiated on an
arms-length basis by the Company's Chairman and Mr. Wolf. The Compensation and
Management Development Committee consulted with an executive compensation
consulting firm, before entering into negotiations with Mr. Wolf. Although the
consulting firm advised the Compensation and Management Development Committee as
to appropriate compensation levels for similarly sized companies generally, the
Committee did not undertake a formal survey of competitors in agreeing to Mr.
Wolf's compensation package.
DEDUCTIBILITY OF COMPENSATION. The Internal Revenue Service, under
Section 162(m) of the Revenue Code, will generally deny the deduction of
compensation paid to certain executives to the extent such compensation exceeds
one million dollars, subject to an exception for compensation that meets certain
"performance-based" requirements. Whether the Section 162(m) limitation with
respect to an executive will be exceeded and whether the Company's deductions
for compensation paid in excess of the one million dollar cap will be denied
will depend upon the resolution of various factual and legal issues that cannot
be resolved at this time. As to other compensation, while it is not expected
that compensation to executives of the Company will exceed the Section 162(m)
limitation in the foreseeable future (and no officer of the Company received
compensation in 1997 which resulted under Section 162(m) in the
non-deductibility of such compensation to the Company), various relevant
considerations will be reviewed from time to time, taking into account the
interests of the Company and its stockholders, in determining whether to
endeavor to cause such compensation to be exempt from the Section 162(m)
limitation.
SUBMISSION OF REPORT. This report is submitted by the members of the
Compensation and Management Development Committee, Lee B. Foster II, Nicholas J.
Stanley, and James P. Miscoll.
20
<PAGE> 23
PERFORMANCE INFORMATION
Set forth in the table below is a comparison of the total stockholder
return (annual change in share price plus dividends paid, assuming reinvestment
of dividends when paid) assuming an investment of $100 on the starting date for
the period shown for the Company, the Dow Jones Equity Market Index (a broad
equity market index which includes the stock of companies traded on the New York
Stock Exchange), the Russell 2000 Index (a broad equity market index which
includes the stock of companies traded on the New York Stock Exchange) and a
peer group consisting of L.B. Foster Company, Johnstown America Industries,
Inc., ABC Rail Products Corporation, Greenbrier Company, Harmon Industries, Inc.
and Westinghouse Air Brake, the business of each of which includes the
manufacture of locomotive parts for the rail industry. The Company believes that
a comparison of its results with the Russell 2000 Index is more meaningful than
a comparison with the Dow Jones Equity Market Index (also shown below), since
the Russell 2000 Index is limited to companies having market capitalizations
more closely comparable to those of the Company than is the case with the Dow
Jones Equity Market Index. In future years, the Company intends to discontinue
the comparison of its results with those of the Dow Jones Equity Market Index.
The peer group results have been weighted based on the constituents' respective
market capitalizations, as required by the rules of the Securities and Exchange
Commission, and in the case of two companies reflects opening of trading on July
14, 1994 and June 16, 1995, respectively. The Russell 2000 Index reflects
results from April 30, 1994. Except as noted, the return shown in the table is
based on the percentage change from April 26, 1994 (the date of the Company's
commencement of its initial public offering) to December 31, 1994, 1995, 1996
and 1997.
<TABLE>
<CAPTION>
04/26/94 12/94 12/95 12/96 12/97
-------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
MOTIVEPOWER INDUSTRIES, INC. 100 67.03 24.18 49.55 147.45
DOW JONES EQUITY MARKET INDEX 100 103.08 142.64 176.10 234.19
PEER GROUP 100 89.85 67.19 69.42 117.12
RUSSELL 2000 INDEX 100 100.26 128.77 150.01 183.56
</TABLE>
21
<PAGE> 24
SECURITY OWNERSHIP
As of March 2, 1998, there were 17,786,343 shares of the Company's
Common Stock issued and outstanding. The following table sets forth the number
and percentage of the Company's Common Stock known by management of the Company
to be beneficially owned as of March 2, 1998 by (i) all stockholders who own
five percent or more of the Company's Common Stock, (ii) all directors of the
Company, (iii) each current or former executive officer included in the Summary
Compensation Table and (iv) all directors and executive officers of the Company
as a group. Unless stated otherwise, each person so named exercises sole voting
and investment power as to the shares of Common Stock so indicated. Persons
identified as key employees under "Information Concerning Executive Officers"
are deemed to be executive officers for purposes of the disclosure under
"Security Ownership."
<TABLE>
<CAPTION>
Amount and
Name and Address of Nature of Beneficial Percent of
Beneficial Owner Ownership(1) Shares Outstanding
<S> <C> <C>
Pilgram Baxter & Associates, Ltd.(2) 1,878,600 10.6%
Chilton Investment Partners, L.P.(3) 1,738,642 9.8%
Credit Suisse First Boston Inc.(4) 927,171 5.2%
John C. Pope(5) 524,464 2.9%
Michael A. Wolf(6) 441,864 2.5%
Joseph S. Crawford Jr.(7) 126,266 *
Gilbert E. Carmichael(8) 108,367 *
William F. Fabrizio(9) 53,254 *
J. Lynn Young(10) 25,038 *
James P. Miscoll(11) 16,499 *
Lee B. Foster II(12) 7,499 *
Nicholas J. Stanley(13) 5,699 *
Ernesto Fernandez Hurtado(14) 4,499 *
All Directors and Executive 1,320,025 7.4%
Officers as a Group(15)
</TABLE>
* Indicates that the percentage of shares beneficially owned does not exceed one
percent of the class.
(1) For purposes of this table, shares are considered "beneficially"
owned if the person directly or indirectly has the sole or shared power to vote
or direct the voting of the securities or the sole or shared power to dispose of
or direct the disposition of the securities. A person is also considered to
beneficially own shares that such person has the right to acquire within 60
days, and options exercisable within such period are referred to herein as
"currently exercisable."
(2) The address of Pilgram Baxter & Associates, Ltd. Is 823 Duportail
Road, Wayne, PA 19087. The shares are beneficially owned by Pilgram Baxter &
Associates, Ltd.
(3) The address of Chilton Investment Partners, L.P. is 320 Park
Avenue, 22nd Floor, New York, NY 10022. These shares are owned of record by
Chilton Investment Partners, L.P.
(4) The address of Credit Suisse First Boston Inc. is 11 Madison
Avenue, Fourth Floor, New York, NY 10010. These shares are owned of record by
Credit Suisse First Boston Inc.
(5) The shares beneficially owned by Mr. Pope consist of 63,870 shares
owned of record by him or held in a 401(k) savings plan and of which he is the
beneficiary; and 300,000 shares issuable to him upon the exercise of a currently
exercisable option at an exercise price of $10.72 per share, which option
expires on December 29, 2005; and 160,594 shares held in a deferred compensation
plan as to which he bears the economic risk of ownership.
(6) The shares beneficially owned by Mr. Wolf consist of 100,198 shares
owned of record by him or held in a 401(k) savings plan and of which he is the
beneficiary; 109,700 shares held in a personal revocable trust; 15,000 shares
held in an IRA account; and 104,200 shares held in a personal revocable trust of
his spouse.
22
<PAGE> 25
Mr. Wolf also has 80,000 shares issuable to him upon the exercise of a currently
exercisable option at an exercise price of $7.78125, which option expires on May
2, 2006; and 32,766 shares held in a deferred compensation plan as to which he
bears the economic risk of ownership. The options were awarded to Mr. Wolf under
the Company's Stock Incentive Plan.
(7) The shares beneficially owned by Mr. Crawford consist of 5,470
shares owned of record by him or held in a 401(k) savings plan and of which he
is the beneficiary; 16,000 shares issuable to him upon the exercise of a
currently exercisable option at an exercise price of $5.00 per share, which
option expires on April 10, 2006; 37,500 shares issuable to him upon the
exercise of a currently exercisable option at an exercise price of $10.13 per
share, which option expires on November 29, 2004; and 50,000 shares issuable to
him upon the exercise of a currently exercisable option at an exercise price of
$16.00 per share, which option expires on April 26, 2004; and 12,500 shares
issuable to him upon the exercise of a currently exercisable option at an
exercise price of $10.75 per share, which option expires on February 10, 2007;
and 4,796 shares held in a deferred compensation plan as to which he bears the
economic risk of ownership. The options were awarded to Mr. Crawford under the
Company's Stock Incentive Plan.
(8) The shares beneficially owned by Mr. Carmichael consist of 4,367
shares owned of record by him or held in a 401(k) savings plan and of which he
is the beneficiary; 20,000 shares issuable to him upon the exercise of a
currently exercisable option at an exercise price of $3.81 per share, which
option expires on March 31, 1999; 40,000 shares issuable to him upon the
exercise of a currently exercisable option at an exercise price of $5.38 per
share, which option expires on December 31, 1998; and 40,000 shares issuable to
him upon the exercise of a currently exercisable option at an exercise price of
$16.00 per share, which option expires on April 26, 2004. These options were
awarded to Mr. Carmichael under the Company's Stock Incentive Plan. In addition,
Mr. Carmichael was awarded options under the Company's Stock Option Plan for
Non-Employee Directors, of which 4,000 are currently exercisable at an exercise
price of $5.44 per share, which options expire on April 1, 2007.
(9) The shares beneficially owned by Mr. Fabrizio consist of 26,356
shares owned of record by him or held in a 401(k) savings plan and of which he
is the beneficiary; 6,250 shares issuable to him upon the exercise of a
currently exercisable option at an exercise price of $10.75 per share, which
option expires on February 10, 2007; and 18,750 shares issuable to him upon the
exercise of a currently exercisable option at an exercise price of $7.75, which
option expires on October 29, 2006; and 1,898 shares held in a deferred
compensation plan as to which he bears the economic risk of ownership. The
options were awarded to Mr. Fabrizio under the Company's Stock Incentive Plan.
(10) The shares beneficially owned by Mr. Young consist of 6,721 shares
owned of record by him or held in a 401(k) savings plan and of which he is the
beneficiary; 8,000 shares issuable to him upon the exercise of a currently
exercisable option at an exercise price of $14.375, which option expires on
April 26, 2004; 2,500 shares issuable to him upon the exercise of a currently
exercisable option at an exercise price of $5.00 per share, which option expires
on April 10, 2006; and 6,250 shares issuable to him upon the exercise of a
currently held exercisable option at an exercise price of $10.75, which option
expires on February 10, 2007; and 1,567 shares held in a deferred compensation
plan as to which he bears the economic risk of ownership. The options were
awarded to Mr. Young under the Company's Stock Incentive Plan.
(11) The shares beneficially owned by Mr. Miscoll consist of 12,000
shares issuable to him upon the exercise of an option awarded to him under the
Company's Stock Option Plan for Non-Employee Directors at an exercise price of
$4.75 per share, which option is currently exercisable and expires November 10,
2004; and 499 shares issuable to him upon the exercise of an option awarded to
him under the Company's Stock Option Plan for Non-Employee Directors at an
exercise price of $7.94 per share, which option is currently exercisable and
expires January 2, 2007; and 4,000 shares owned of record by the James P.
Miscoll and Ingeburg W. Miscoll Trust, James P. and Ingeburg W. Miscoll,
trustees, under which Mr. Miscoll, as trustee, shares voting and investment
power.
(12) The shares beneficially owned by Mr. Foster consist of 3,000
shares held of record by him; 4000 shares issuable to him upon the exercise of
an option awarded to him at an exercise price of $2.84 per share, which option
is currently exercisable and expires August 22, 2006; and 499 shares issuable to
him upon the exercise of an option awarded to him at an exercise price of $7.94
per share which option is currently exercisable
23
<PAGE> 26
and expires January 2, 2007. All options awarded were under the Company's Stock
Option Plan for Non-Employee Directors.
(13) The shares beneficially owned by Mr. Stanley consist of 5,200
shares owned of record by him and 499 shares issuable to him upon the exercise
of a currently exercisable option awarded to him under the Company's Stock
Option Plan for Non-Employee Directors at an exercise price of $7.94 per share.
This option expires January 2, 2007.
(14) The shares beneficially owned by Mr. Fernandez Hurtado consist of
4,000 shares issuable to him upon the exercise of an option awarded to him at an
exercise price of $3.625 per share, which option is currently exercisable and
expires December 19, 2006; and 499 shares issuable to him upon the exercise of
an option awarded to him at an exercise price of $7.94, which option is
currently exercisable and expires February 2, 2007. All options were awarded
under the Company's Stock Option Plan for Non-Employee Directors
(15) The shares beneficially owned by all directors and executive
officers as a group include shares owned of record as well as shares issuable to
the beneficial owners upon the exercise of options awarded under either the
Company's Stock Incentive Plan or the Company's Stock Option Plan for
Non-Employee Directors, which options are exercisable currently or within 60
days. Persons who were not serving as directors or executive officers as of
March 2, 1998 are not included in this group.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain of its officers and persons who own more than ten
percent of the Company's common stock to file reports of ownership and changes
in ownership with the Securities and Exchange Commission (the "SEC"). Such
persons are required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company and written representations that no other forms are required, the
Company believes that during 1997 all Section 16(a) filing requirements
applicable to its directors, officers and ten percent stockholders during 1997
were complied with, except that a Form 4 was not timely filed with respect to
one transaction each on behalf of Mr. Fabrizio and Mr. Foster (relating to
purchases of stock during Company authorized windows for trading) and one
transaction was inadvertently omitted in a Form 5 filed by Mr. Pope which Form
was promptly amended to include such transaction. Such failure to timely file
was inadvertent and neither of these individuals sold any of the securities
beneficially owned by them during the brief periods of noncompliance.
STOCKHOLDERS' PROPOSALS
To be considered for inclusion in the Company's Proxy Statement for the
next Annual Meeting of Stockholders, stockholder proposals must be sent to the
Company (directed to the attention of Vice President of Investor and Public
Relations) at 1200 Reedsdale Street, Pittsburgh, Pennsylvania 15233, for receipt
not later than January 1, 1999.
24
<PAGE> 27
GENERAL AND OTHER MATTERS
Management knows of no matters, other than those referred to in this
Proxy Statement, which will be presented to the meeting. However, if any other
matters properly come before the meeting or any adjournment, the persons named
in the accompanying proxy will vote it in accordance with their best judgment on
such matters.
The Company will bear the expense of preparing, printing and mailing
this Proxy Statement, as well as the cost of any required solicitation. In
addition to the solicitation of proxies by use of the mails, the Company may use
regular employees, without additional compensation, to request, by telephone or
otherwise, attendance or proxies previously solicited.
UPON WRITTEN REQUEST TO THE COMPANY (DIRECTED TO THE ATTENTION OF VICE
PRESIDENT OF INVESTOR AND PUBLIC RELATIONS AT 1200 REEDSDALE STREET, PITTSBURGH,
PENNSYLVANIA 15233) BY ANY STOCKHOLDER WHOSE PROXY IS SOLICITED HEREBY, THE
COMPANY WILL FURNISH A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1997 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, TOGETHER
WITH FINANCIAL STATEMENTS AND SCHEDULES THERETO, WITHOUT CHARGE TO THE
STOCKHOLDER REQUESTING THE SAME.
By the Order of the Board of Directors,
/s/ Jeannette Fisher-Garber
-----------------------------------
Jeannette Fisher-Garber, Secretary
Pittsburgh, Pennsylvania
March 12, 1998
25
<PAGE> 28
MOTIVEPOWER INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS, APRIL 29, 1998
The undersigned hereby appoints William D. Grab and Jeannette
Fisher-Garber, and each with full power to act without the other, as proxies,
with full power of substitution, for and in the name of the undersigned to vote
and act with respect to all shares of common stock of MotivePower Industries,
Inc. (the "Company") standing in the name of the undersigned on March 2, 1998,
or with respect to which the undersigned is entitled to vote and act, at the
Annual Meeting of Stockholders of the Company to be held April 29, 1998 and at
any and all adjournments thereof, with all the powers the undersigned would
possess if personally present, and particularly, but without limiting the
generality of the foregoing, the matters described on the reverse side of this
Proxy. All shares represented by proxy will be voted in accordance with the
instructions, if any, given in such proxy. A stockholder may abstain from voting
on any proposal or may withhold authority to vote for any nominee(s) by so
indicating on the reverse side.
THIS PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
(SEE OTHER SIDE)
FOLD AND DETACH HERE
<PAGE> 29
Please mark
your votes as
indicated in [ X ]
this example
THE VOTES REPRESENTED BY THIS PROXY WILL BE VOTED AS MARKED BY YOU. HOWEVER, IF
YOU EXECUTE AND RETURN THE PROXY UNMARKED, SUCH VOTES WILL BE VOTED FOR ALL OF
THE PROPOSALS. PLEASE MARK EACH BOX WITH AN "X."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS.
1. Election of Directors (James P. Miscoll and Lee B. Foster, II have been
nominated)
FOR WITHHELD Withheld for the following (write the
for all nominee's name in the space below.)
[ ] [ ] __________________________________________
2. Ratify appointment of Deloitte & Touche LLP as independent certified public
accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To amend the Stock Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, proxies shall be authorized to vote upon such other
matters as may properly be brought before the meeting or any adjournment
thereof.
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in the partnership name
by authorized person.
Dated:_________________________________________________________________________
_______________________________________________________________________________
Signature
_______________________________________________________________________________
Signature if held jointly
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE
<PAGE> 30
VOTING INSTRUCTIONS
MOTIVEPOWER INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS, APRIL 29, 1998
Voting Instructions to the trustee (the "Trustee") of (i) Motivepower
Industries, Inc. 401(k) Savings Plan for Salaried Employees and (ii) Motor
Coils Manufacturing Company 401(k) Savings Plan (each referred to as the
"Plan"):
As a Plan participant, I hereby direct the Trustee to vote and act as set forth
on the reverse side of this card at the Annual Meeting of Stockholders of
MotivePower Industries, Inc. (the "Company") to be held April 29, 1998, and any
and all adjournments thereof, with respect to all shares of common stock of the
Company beneficially owned by me under the Plan as of the record date for such
meeting, March 2, 1998. If properly signed and dated and received without
direction, or if I do not return my card, the Trustee is directed to vote FOR
proposals 1, 2 and 3. This direction applies to all shares of the Company's
common stock allocated or allocable to me under the Plan as of the record date.
The Trustee shall vote and act as provided in the Plan as to any other business
as may properly come before the meeting.
THIS PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
(see other side)
FOLD AND DETACH HERE
<PAGE> 31
Please mark
your votes as
indicated in [ X ]
this example
THE VOTES REPRESENTED BY THIS PROXY WILL BE VOTED AS MARKED BY YOU. HOWEVER, IF
YOU EXECUTE AND RETURN THE PROXY UNMARKED, SUCH VOTES WILL BE VOTED FOR ALL OF
THE PROPOSALS. PLEASE MARK EACH BOX WITH AN "X."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS.
1. Election of Directors (James P. Miscoll and Lee B. Foster, II have been
nominated)
FOR WITHHELD Withheld for the following (write the
for all nominee's name in the space below.)
[ ] [ ] __________________________________________
2. Ratify appointment of Deloitte & Touche LLP as independent certified public
accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To amend the Stock Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, proxies shall be authorized to vote upon such other
matters as may properly be brought before the meeting or any adjournment
thereof.
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in the partnership name
by authorized person.
Dated:_________________________________________________________________________
_______________________________________________________________________________
Signature
_______________________________________________________________________________
Signature if held jointly
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE
