<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CASE CORPORATION
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
CASE CORPORATION LOGO
CASE CORPORATION
700 STATE STREET
RACINE, WISCONSIN 53404
April 4, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
which will begin at 9:00 a.m. on Wednesday, May 14, 1997. The meeting will be
held at the Roma Lodge, 7130 Spring Street, Racine, Wisconsin. The formal Notice
of Meeting and Proxy Statement containing further information about the meeting
are on the following pages.
The primary business of the meeting will be to elect directors for the coming
year and to approve the selection of independent public accountants. We will
also express our thanks to Mark Andrews, who is retiring from Case's Board of
Directors, and welcome two director nominees who recently joined Case's Board,
namely Pei-yuan Chia and Thomas R. Hodgson. These nominees possess outstanding
credentials and provide added expertise and global perspective to our Board.
Finally, at the meeting, we will also report to you on our 1996 performance and
look ahead at 1997.
Case had another outstanding year in 1996. In addition to achieving superior
financial performance, we also completed several acquisitions, joint ventures
and new product introductions that add new growth potential going forward. The
accompanying copy of our 1996 Annual Report gives a more complete picture of our
performance.
Your vote at the meeting is important no matter how many shares you own. To
ensure that your shares will be voted, please sign and date the enclosed
Proxy/Voting Instruction Card and return it promptly in the accompanying
envelope. You are encouraged to specify your choices on matters to be voted
upon. However, it is not necessary to specify any choice if you wish to vote in
accordance with the recommendations of the Board of Directors. I hope that you
will be able to attend the meeting. If you do, you may vote your stock in person
even though you have returned a card.
If you have any questions about the matters being voted upon or require
assistance in completing your Proxy/Voting Instruction Card, contact Bryan
Kneeland in Investor Relations at 414/636-5390.
Very truly yours,
ROSSO SIG
Jean-Pierre Rosso
Chairman, President and
Chief Executive Officer
<PAGE> 3
CASE CORPORATION LOGO
CASE CORPORATION
700 State Street
Racine, Wisconsin 53404
(414) 636-6011
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1997
To the Stockholders of Case Corporation:
The Annual Meeting of Stockholders of Case Corporation will be held at the
Roma Lodge, 7130 Spring Street, Racine, Wisconsin, on Wednesday, May 14, 1997,
at 9:00 a.m., Racine time, for the purpose of considering and voting upon:
1. The election of a Board of Directors to serve until the next Annual
Meeting and until their successors are elected and have qualified,
2. The appointment of Arthur Andersen LLP as independent public accountants
for the year 1997, and
3. Such other matters as may properly come before the meeting.
The close of business on March 21, 1997, has been fixed as the record date
for determination of common stockholders entitled to notice of and to vote at
such Annual Meeting. A list of such stockholders will be maintained and open for
examination by any stockholder, for any purpose germane to the meeting, during
regular business hours at the above address of the Corporation for ten days
prior to the meeting.
By order of the Board of Directors
RICHARD S. BRENNAN
Secretary
Racine, Wisconsin
April 4, 1997
<PAGE> 4
CASE CORPORATION LOGO
CASE CORPORATION
700 State Street
Racine, Wisconsin 53404
(414) 636-6011
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 14, 1997
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Case Corporation ("Case" or the "Corporation") of
proxies for use at the 1997 Annual Meeting of Stockholders of the Corporation to
be held on May 14, 1997, and any adjournments thereof. This Proxy Statement and
accompanying Proxy/Voting Instruction Card ("Proxy") are first being sent to
stockholders on or about April 4, 1997.
Only common stockholders of record on the books of the Corporation at the
close of business on March 21, 1997 (the "Record Date") will be entitled to
notice of and to vote at the Annual Meeting or any adjournments thereof. Each
such stockholder will be entitled to one vote per share. There were outstanding
at the close of business on the Record Date 74,205,025 shares of common stock of
the Corporation (the "Common Stock"). The presence in person or by Proxy of the
holders of shares of Common Stock representing a majority of all outstanding
shares of Common Stock entitled to vote will constitute a quorum. Votes cast in
person or by Proxy will be tabulated by inspectors of election appointed for the
Annual Meeting who will determine whether a quorum is present.
-----------------------------------
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
The Board of Directors has fixed the number of directors to be elected at
nine, each of whom is to serve for a term to expire at the 1998 Annual Meeting
of Stockholders and until a successor is duly elected and qualified. Mr. Mark
Andrews, a director of the Corporation since June 1994, is not standing for
reelection.
Unless authority is withheld in accordance with instructions on the Proxy,
the persons named as proxies in the Proxy, or their substitutes, will vote for
the following nominees for director, each of whom has been designated as such by
the Board of Directors. If, for any reason not presently known, any of the
nominees is not available for election, a Proxy may be voted for another person
selected by the Board of Directors or the size of the Board of Directors may be
reduced. Holders of the Proxies may also vote for fewer than nine nominees if,
in the judgment of the Proxy holders, such action is necessary or desirable.
Directors are elected by the affirmative vote of the holders of a plurality of
the shares present, in person or by Proxy, and authorized to vote on the matter,
with the result that votes withheld will not affect the outcome of an election.
1
<PAGE> 5
The following information, including age and principal occupation for the
last five years, has been furnished by the respective nominees. All of the
following nominees are presently serving as members of the Corporation's Board
of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE FOLLOWING NOMINEES:
<TABLE>
<S> <C> <C>
Pei-yuan Chia PEI-YUAN CHIA DIRECTOR SINCE MARCH 1997
[Photo] 58, served as Vice Chairman of Citicorp, a global financial
services company, and its principal subsidiary, Citibank,
N.A., between 1994 and 1996, where he headed its global
consumer business since 1992 and had added responsibility as
the senior customer and government contact for Asia. Mr.
Chia became a director of Citicorp and Citibank in 1993,
retiring from those directorates and his Vice Chairman
positions in 1996. He is presently a director of American
International Group, Inc. and Baxter International Inc.
Jeffery T. Grade JEFFERY T. GRADE DIRECTOR SINCE AUGUST 1995
[Photo] 53, Chairman and Chief Executive Officer of Harnischfeger
Industries, Inc., which is engaged in the manufacture of
mining and material-handling equipment and paper-making
machinery, since 1993. He previously served as President and
Chief Executive Officer of Harnischfeger from 1992 to 1993
and President and Chief Operating Officer from 1986 to 1992.
In addition to Harnischfeger, Mr. Grade is also a director
of Coeur D'Alene Mines Corporation and Measurex Corporation.
Thomas R. Hodgson THOMAS R. HODGSON DIRECTOR SINCE MARCH 1997
[Photo] 55, President and Chief Operating Officer of Abbott
Laboratories, a global diversified health care products
company, since 1990. He joined Abbott in 1972, becoming an
Executive Vice President in 1985. Mr. Hodgson has also
served as a director of Abbott since 1985.
Katherine M. Hudson KATHERINE M. HUDSON DIRECTOR SINCE MARCH 1996
[Photo] 50, President, Chief Executive Officer and a director of
W.H. Brady Co., a manufacturer of coated films and
industrial products, since January 1994. Prior to assuming
her position with that company, she was Vice President and
General Manager of the Professional, Printing and Publishing
Imaging Division of Eastman Kodak Company, which is engaged
primarily in developing, manufacturing, and marketing
consumer and commercial imaging products, since 1991, and
Chief Information Officer of that company from 1988 through
1991. Ms. Hudson is also a director of Apple Computer, Inc.
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
Dana G. Mead Photo DANA G. MEAD DIRECTOR SINCE APRIL 1994
61, Chairman, Chief Executive Officer and a director of
Tenneco Inc., a diversified industrial company, and has
served as an executive officer of that company since April
1992 when he joined Tenneco Inc. as Chief Operating Officer.
He became President of Tenneco Inc. in May 1992 and was
elected to the additional positions of Chief Executive
Officer and Chairman of Tenneco Inc. in February 1994. Mr.
Mead was Chairman of the Corporation from its incorporation
in April 1994 until March 1996. He was Chairman of Tenneco
Equipment Corporation, the Corporation's predecessor, from
September 1992 through June 1994, and Chief Executive
Officer of that company from September 1992 until April
1994. Prior to joining Tenneco Inc., Mr. Mead served as an
Executive Vice President of International Paper Company, a
manufacturer of container board and other paper products,
since 1988, and served as Senior Vice President of that
company from 1981. He is also a director of Baker Hughes
Incorporated, Unisource Worldwide Inc., Textron Inc. and
Newport News Shipbuilding Inc.
Gerald Rosenfeld Photo GERALD ROSENFELD DIRECTOR SINCE JUNE 1994
50, Managing Director of Lazard Freres & Co. LLC, an
investment banking firm, since 1992. Prior to that time, he
was a Managing Director and Group Head at Bankers Trust
Securities Inc., an investment banking firm, since 1988.
Jean-Pierre Rosso Photo JEAN-PIERRE ROSSO DIRECTOR SINCE APRIL 1994
56, Chairman, President and Chief Executive Officer of the
Corporation since March 1996. Prior thereto, he served as
its President and Chief Executive Officer since joining the
Corporation in April 1994. Prior to April 1994, Mr. Rosso
was President of the Home and Building Control business of
Honeywell Inc., a producer of advanced technology products,
since 1992 and served as President of that company's
European operations from 1987 through 1991. Mr. Rosso is
also a director of ADC Telecommunications, Inc., Crown Cork
& Seal Company, Inc., Inland Steel Industries, Inc. and its
subsidiaries, Inland Steel Company and Ryerson Tull, Inc.,
and Principal Mutual Life Insurance Company.
Theodore R. Tetzlaff THEODORE R. TETZLAFF DIRECTOR SINCE APRIL 1994
Photo 53, Partner in the law firm of Jenner & Block, Chicago, for
more than five years. Mr. Tetzlaff is also General Counsel
of Tenneco Inc., serving in that capacity since July 1992.
He is also a director of Continental Materials Corp. and a
Commissioner of the Public Building Commission of Chicago.
Thomas N. Urban Photo THOMAS N. URBAN DIRECTOR SINCE AUGUST 1995
62, Visiting Professor at the Harvard Graduate School of
Business Administration since August 1995. Prior thereto,
Mr. Urban served as Chairman of the Board of Directors of
Pioneer Hi-Bred International, Inc., which is engaged in the
development and sale of hybrid and varietal seeds, from
January 1984 to December 1996, as Chief Executive Officer
from 1981 to August 1995, and as President from 1979 until
1981. He continues to serve as a director of Pioneer Hi-Bred
International, Inc., as well as a director of the Equitable
of Iowa Companies and Sigma Aldrich Corporation.
</TABLE>
3
<PAGE> 7
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1996, the Board of Directors held six meetings. All directors,
except Mr. Mead, attended 75% or more of the aggregate number of meetings of the
Board of Directors, and of the committees of the Board on which the director was
assigned, during the time they served.
There are three standing committees of the Board of Directors, which have
the following members, and the responsibilities and authority described below.
Mr. Andrews, Ms. Hudson, Mr. Rosenfeld and Mr. Urban serve as members of
the Audit Committee of the Board of Directors. Mr. Andrews acts as Chairman of
the Committee. The Audit Committee has the responsibility, among other things,
to (i) recommend the selection of the Corporation's independent public
accountants, (ii) review and approve the scope of the independent public
accountants' audit activity and extent of non-audit services, (iii) review with
management and such independent public accountants the adequacy of the
Corporation's basic accounting system and the effectiveness of the Corporation's
internal audit plan and activities, (iv) review with management and the
independent public accountants the Corporation's financial statements which are
the subject of the independent public accountants' certification, (v) exercise
general oversight over the Corporation's financial reporting process, (vi)
review litigation and other legal matters that may affect the Corporation's
financial condition, and (vii) monitor compliance with the Corporation's
business ethics and other policies. The Audit Committee met three times during
1996.
Mr. Andrews, Mr. Grade, Mr. Rosenfeld and Mr. Tetzlaff serve as members of
the Compensation Committee of the Board of Directors. Mr. Rosenfeld acts as
Chairman of the Committee. The Compensation Committee has the responsibility,
among other things, to (i) establish the salary rates of executive officers of
the Corporation, (ii) examine periodically the compensation structure of the
Corporation, (iii) administer the incentive and deferred compensation plans of
the Corporation, and (iv) make recommendations to the Board of Directors
concerning long-term plans for executive compensation. The Compensation
Committee met four times during 1996. A subcommittee of the Compensation
Committee, the Equity Committee, comprised of Messrs. Andrews and Grade, was
established in December 1996 and given the responsibility of making stock option
grants, stock awards and other equity-based awards pursuant to the Corporation's
Equity Incentive Plan to officers of the Corporation that are subject to Section
16 of the Securities Exchange Act of 1934, as amended. The Equity Committee did
not meet during 1996.
Mr. Grade, Ms. Hudson, Mr. Mead and Mr. Urban serve as members of the
Nominating Committee of the Board of Directors. Mr. Urban acts as Chairman of
the Committee. The Nominating Committee has the responsibility, among other
things, to (i) identify, with the direct input of the Chairman of the Board and
the Chief Executive Officer, possible candidates to serve as non-employee
directors of the Corporation in accordance with the guidelines and criteria set
forth in the Corporation's Governance Guidelines, (ii) aid in attracting
qualified candidates to serve as non-employee directors, (iii) review, in
consultation with the Chief Executive Officer and the Chairman of the Board,
each director's continuation on the Board at regular intervals to be determined
by the Nominating Committee, (iv) assess annually the Board's performance as
provided in the Corporation's Governance Guidelines, (v) review, assess and make
recommendations to the Board regarding the size and composition of the Board,
and (vi) have such other duties and exercise such other authority as may be
provided in the Governance Guidelines or as may be assigned to it from time to
time by the Board. The Nominating Committee met once during 1996.
A stockholder may recommend to the Nominating Committee persons as
potential nominees for director by submitting the names of such persons in
writing to the Secretary of the Corporation.
A stockholder may directly nominate persons for election to the Board of
Directors if the stockholder submits such nomination, together with related
information required by the Corporation's By-Laws, in writing to the Secretary
of the Corporation not less than 50 days nor more than 75 days prior to the date
of any annual meeting of stockholders; provided, however, that in the event that
less than 65 days' notice or public disclosure of the date of the annual meeting
is given or made to stockholders, a stockholder's notice will be timely if
received not later than the close of business on the 15th day after the day on
which such notice or public disclosure was given or made.
4
<PAGE> 8
COMPENSATION OF DIRECTORS
Directors who are salaried officers of the Corporation or of any of its
subsidiaries do not receive any compensation for service as a director or a
member of any committee of the Board of Directors. For the term expiring at the
1997 Annual Meeting, all other directors are each being paid an annual retainer
fee of $24,000 and an attendance fee of $1,000 plus expenses for each meeting of
the Board of Directors and each committee meeting attended. Each director who
serves as a committee chair is paid an additional fee of $4,000 per committee
chair held. Beginning with the term expiring at the 1998 Annual Meeting, the
retainer fee has been increased to $28,000 per annum.
Pursuant to the Outside Directors' Equity Compensation Plan, directors'
annual retainer fees and committee chair fees will be paid on a quarterly basis,
on the last day of each plan year quarter, by delivering to the director shares
of Common Stock representing 25% of the annual retainer and committee chair fees
to which such director is entitled for the year. Directors may irrevocably elect
prior to the annual meeting of stockholders to have up to 50% of such fees paid
in cash. Individuals becoming or ceasing to be directors between annual meetings
of the stockholders will be paid such retainer fees and chair fees, if any, on a
pro rata basis.
On the date of each annual meeting of stockholders, each outside director
will receive an option to purchase 1,000 shares of Common Stock at a purchase
price per share equal to the fair market value of Common Stock on the date of
grant. Any individual becoming a director between annual meetings of the
stockholders will receive an option to purchase a pro rata portion of 1,000
shares of Common Stock, based on the date of such appointment, with an exercise
price equal to the fair market value on the date of such appointment. Such
option will remain in effect for ten years after the date of grant (or, if
earlier, six months after the date an individual ceases to be an outside
director) and will vest and become exercisable three years after the date of
grant (or, if earlier, in the case of options which have been outstanding for at
least six months, on the date the individual ceases to be an outside director,
unless such individual has been removed by the stockholders for cause). If a
director ceases to serve in such capacity because of death or disability, then
the options granted to that director will become exercisable for a six-month
period.
5
<PAGE> 9
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STOCK OWNERSHIP
DIRECTORS AND EXECUTIVE OFFICERS
At March 25, 1997, the number of shares of Common Stock and Cumulative
Convertible Second Preferred Stock of the Corporation beneficially owned by (i)
each director and the executive officers whose names are set forth in the
Summary Compensation Table herein, and (ii) all directors and executive officers
as a group, were as follows:
<TABLE>
<CAPTION>
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NUMBER OF SHARES AND
NATURE OF BENEFICIAL OWNERSHIP
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CUMULATIVE
COMMON CONVERTIBLE SECOND
STOCK(1) PREFERRED STOCK(2)
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<S> <C> <C>
DIRECTORS
Mark Andrews................................................ 3,614 --
Pei-yuan Chia............................................... 1,000 --
Jeffery T. Grade............................................ 424 --
Thomas R. Hodgson........................................... 1,000 --
Katherine M. Hudson......................................... 792 --
Dana G. Mead................................................ 1,336 --
Gerald Rosenfeld............................................ 1,592 --
Jean-Pierre Rosso........................................... 93,406 20,500
Theodore R. Tetzlaff........................................ 3,336 --
Thomas N. Urban............................................. 1,718 --
EXECUTIVE OFFICERS
Steven G. Lamb.............................................. 34,935 5,000
Theodore R. French.......................................... 27,734 4,000
Richard M. Christman........................................ 20,714 3,000
Richard S. Brennan.......................................... 3,000 --
All directors and executive officers as a group............. 194,601 32,500
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</TABLE>
(1) Each director and executive officer has sole voting and investment power
over the shares beneficially owned as set forth in this column, except for
shares which are restricted and held by the Corporation on behalf of
directors and executive officers under the Corporation's Equity Incentive
Plan which were 54,481 shares, 23,482 shares, 20,927 shares, 7,045 shares,
1,000 shares and 106,935 shares for Messrs. Rosso, Lamb, French, Christman,
Brennan and all directors and executive officers as a group, respectively,
and shares subject to options that are exercisable for shares of Common
Stock within sixty days of March 25, 1997, which were 25,100 shares, 9,100
shares, 5,100 shares, 10,366 shares, 1,000 shares and 50,666 shares for
Messrs. Rosso, Lamb, French, Christman, Brennan and all directors and
executive officers as a group, respectively. The percent of the class of
Common Stock owned by each director and each executive officer and by all
executive officers and directors as a group was less than 1%.
(2) The shares set forth in this column are restricted and held under the
Corporation's Equity Incentive Plan. These non-voting shares, each of which
is convertible into 2.2883 shares of the Corporation's Common Stock,
comprise 86.7% of the Corporation's Cumulative Convertible Second Preferred
Stock. Messrs. Rosso, Lamb, French and Christman own 54.7%, 13.3%, 10.7%,
and 8.0%, respectively, of the Corporation's Cumulative Convertible Second
Preferred Stock.
As of March 25, 1997, no director or executive officer owned any of the
Corporation's Series A Cumulative Convertible Preferred Stock.
6
<PAGE> 10
OTHER STOCK OWNERSHIP
At March 25, 1997, the companies named below were the only persons known by
the Corporation to be beneficial owners of five percent or more of the
Corporation's Common Stock:
<TABLE>
<CAPTION>
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NAME AND ADDRESS OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES OWNED CLASS
- -------------------------------------------------------------------------------------------
<S> <C> <C>
FMR Corp.(1)................................................ 11,022,443 14.96%
82 Devonshire Street
Boston, MA 02109
- -------------------------------------------------------------------------------------------
Wellington Management Company, LLP(2)....................... 4,564,000 6.22%
75 State Street
Boston, MA 02109
- -------------------------------------------------------------------------------------------
</TABLE>
(1) Information with regard to FMR Corp. is based solely on a Schedule 13G,
dated February 14, 1997, containing information as of December 31, 1996.
This number represents the aggregate number of shares beneficially owned by
FMR Corp., including Fidelity Management & Research Company, a wholly-owned
subsidiary of FMR Corp., which is the beneficial owner of 10,372,440 shares
of the Corporation's Common Stock or approximately 14.08% of the class of
Common Stock, and Fidelity Magellan Fund, which is the beneficial owner of
6,598,400 shares of the Corporation's Common Stock or approximately 8.96% of
the class of Common Stock. FMR Corp. has the sole power to vote or direct
the vote of 411,604 shares and sole power to dispose or direct the
disposition of 11,022,443 shares.
(2) Information with regard to Wellington Management Company, LLP ("WMC") is
based solely on a Schedule 13G, dated January 24, 1997, containing
information as of December 31, 1996. The securities as to which such
Schedule 13G is filed by WMC, in its capacity as investment advisor, are
owned of record by clients of WMC. Those clients, including Vanguard/Windsor
Fund, Inc., have the right to receive, or the power to direct the receipt
of, dividends from, or the proceeds of the sale of, such securities. WMC, in
its capacity as investment adviser, is deemed to beneficially own 4,564,000
shares, or 6.22% of the Corporation's Common Stock, because of WMC's shared
power to dispose or to direct the disposition of such shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's officers and directors, and persons who own more than ten
percent of a registered class of the Corporation's equity securities, to file
reports of securities ownership and changes in such ownership with the
Securities and Exchange Commission (the "SEC"). Officers, directors and
greater-than-ten-percent shareholders also are required by rules promulgated by
the SEC to furnish the Corporation with copies of all Section 16(a) forms they
file.
Based solely on a review of the copies of such Section 16(a) forms
furnished to the Corporation, and certain written representations received by
the Corporation from reporting persons indicating that no other reports were
required, the Corporation has determined that no such reporting persons failed
to file such Section 16(a) forms on a timely basis for 1996, except that Messrs.
Rosso, Lamb, French and Christman each inadvertently failed to file a Form 5 to
report one transaction occurring in 1994 in which they each were granted an
option to acquire 100 shares of the Corporation's Common Stock. Additionally,
Mr. Andrews inadvertently failed to file four Form 4 reports and a single Form 5
report for five transactions that occurred during 1995 and 1996 in which he
acquired, in the aggregate, 16 shares of the Corporation's Common Stock in
connection with the reinvestment of dividends paid on his Common Stock of the
Corporation through an arrangement with his broker.
7
<PAGE> 11
----------------------------------------------
EXECUTIVE OFFICER COMPENSATION
On June 23, 1994, the Corporation acquired through a reorganization (the
"Reorganization") the farm and construction equipment business of Tenneco
Equipment Corporation, a wholly-owned subsidiary of Tenneco Inc. ("Tenneco").
Immediately prior to the Reorganization, Messrs. Rosso, Lamb, French and
Christman were employees of Tenneco Equipment Corporation, and all compensation
was paid by that company under plans and programs administered by it or Tenneco.
Accordingly, compensation for those executive officers reflected in the
following tables for 1994, until the time of the Reorganization, was paid by
Tenneco or Tenneco Equipment Corporation. A result of the Reorganization was for
those executive officers to become employees of the Corporation, and the
compensation for those executive officers reflected in the following tables for
1994 following the Reorganization, 1995 and 1996 was paid by the Corporation.
SUMMARY COMPENSATION TABLE
The following table sets forth the remuneration paid by the Corporation
(and, if applicable, Tenneco Equipment Corporation, the Corporation's
predecessor prior to the Reorganization) for services rendered by its Chairman,
President and Chief Executive Officer and each of its four other most highly
compensated executive officers during 1996 for the years indicated.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------------- --------------------------
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS(3) OPTIONS(#)(4) COMPENSATION(5)
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Jean-Pierre Rosso............... 1996 $700,008 $1,283,333 $ 81,974 $1,337,500 75,000 $81,067
Chairman, President 1995 638,760 699,900 224,430 850,000 75,000 32,753
and Chief Executive 1994 332,142 500,000 1,098,908 1,951,910 420,100 33,390
Officer
Steven G. Lamb.................. 1996 439,375 466,667 474,116 535,000 20,000 15,450
Executive Vice 1995 366,739 350,000 382,889 425,000 27,000 11,271
President and Chief 1994 222,084 409,380(6) 322,764 387,176 236,100 25,558
Operating Officer
Theodore R. French.............. 1996 314,500 320,000 110,024 535,000 15,000 14,056
Senior Vice President 1995 265,264 296,660 6,338 425,000 23,000 12,459
and Chief Financial 1994 192,792 200,000 193,316 296,807 214,100 22,378
Officer
Richard M. Christman............ 1996 259,008 169,125 33,581 171,200 6,800 36,176
Senior Vice President 1995 250,017 252,979 10,844 136,000 64,800 15,749
1994 221,823 208,900 151,693 256,496 164,100 25,050
Richard S. Brennan.............. 1996 309,000 100,000 -- 53,500 3,000 --
General Counsel 1995 262,500 100,000 -- -- 28,000 --
and Secretary
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the value of shares received pursuant to a program of the
Corporation which permits eligible officers to exchange all or a portion of
their annual cash bonus for shares of Common Stock equal in value to
133 1/3% of the foregone cash award, which were subject to restrictions on
dispositions for six months. Pursuant to the program, Messrs. Rosso, Lamb,
French and Christman exchanged $550,000, $200,000, $60,000 and $12,375 of
cash bonus, respectively, in 1996, and Messrs. Rosso, French and Christman
exchanged $300,000, $20,000 and $60,000 of cash bonus, respectively, in
1995.
(2) Includes (i) during 1996: for Mr. Rosso, $25,379 in family benefits and
$26,015 in reimbursement for certain taxes; for Mr. Lamb, $161,494 in
relocation expenses and $121,465 in reimbursement for certain taxes; for Mr.
French, $55,329 in relocation expenses and $35,049 in reimbursement for
certain taxes; and for Mr. Christman, $14,152 in reimbursement for certain
taxes; (ii) during 1995: for Mr. Rosso, $27,197 in family benefits, $44,716
in membership dues and $118,508 in reimbursement for certain taxes; for Mr.
Lamb, $94,770 in relocation expenses and $18,738 in reimbursement for
certain taxes; and for Messrs. French and Christman, respectively, $6,338
and $10,844 in reimbursement for certain taxes; and (iii) during 1994: for
Mr. Rosso, $32,963 in relocation expenses, $26,177 in family benefits and
$994,368 in reimbursement for certain taxes; and for Messrs. Lamb, French,
and Christman, respectively, $322,764, $193,316, and $151,693 in
reimbursement for certain taxes.
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<PAGE> 12
(3) The amount for 1996 and 1995 is based on the number of shares of restricted
Common Stock awarded and the closing price per share of Common Stock on the
date of the grant. Dividends will be paid on the restricted shares of Common
Stock held by each individual. In 1994, restricted stock awards include
shares of the Corporation's Common Stock, the Corporation's Cumulative
Convertible Second Preferred Stock and the common stock of Tenneco. The
holdings of restricted stock, as of December 31, 1996, are: (i) for Messrs.
Rosso, Lamb, French, Christman and Brennan, 45,210, 20,111, 20,095, 6,848
and 1,000 shares of the Corporation's Common Stock, respectively; and (ii)
for Messrs. Rosso, Lamb, French and Christman, 20,500, 5,000, 4,000 and
3,000 shares of the Corporation's Cumulative Convertible Second Preferred
Stock, respectively. The aggregate value of restricted stock held at
December 31, 1996, for each of the named executive officers, based on the
closing price of the Corporation's Common Stock of $54.50 per share (as
reported on the New York Stock Exchange Composite Tape), and a share price
of $124.71 for the Cumulative Convertible Second Preferred Stock (based on
the greater of the $50 per share stated value of such stock on December 31,
1996 or the conversion of such stock into 2.2883 shares of the Corporation's
Common Stock at the closing price of Common Stock on December 31, 1996) for
Messrs. Rosso, Lamb, French, Christman and Brennan was $5,020,500,
$1,719,600, $1,594,018, $747,346 and $54,500, respectively.
(4) In 1994, this amount includes non-qualified stock options to purchase
20,000, 6,000, 4,000 and 4,000 shares of Tenneco common stock awarded under
the 1994 Tenneco Inc. Stock Ownership Plan for Messrs. Rosso, Lamb, French
and Christman, respectively. Subsequently, the options awarded to Messrs.
Lamb, French and Christman lapsed under the terms of such plan.
(5) Includes amounts contributed or deferred pursuant to the Corporation's ERISA
Excess Plan and/or Retirement Savings Plan during 1996 for the accounts of
Messrs. Rosso, Lamb, French and Christman of $59,581, $11,106, $10,202 and
$34,998, respectively; and amounts imputed as income for federal income tax
purposes under the Corporation's group life insurance plan during 1996 for
Messrs. Rosso, Lamb, French and Christman of $21,486, $4,343, $3,854 and
$1,178, respectively.
(6) Includes a $169,380 foreign cost-of-living adjustment, which is not included
as salary or bonus in computing benefits under other employee benefit plans
of the Corporation.
OPTION GRANTS IN 1996
The following table sets forth the number of shares of Common Stock of the
Corporation subject to stock options that were granted during 1996 to the
persons named in the Summary Compensation Table and the potential realizable
value of such options assuming a 5% and 10% compounded appreciation in the
market value of the Common Stock over the term of the option grants.
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(3)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION -----------------------
NAME GRANTED (1) IN 1996 PER SHARE(2) DATE 5% 10%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jean-Pierre Rosso 75,000 28.0% $53.4375 12/11/2006 $2,512,856 $6,375,263
Steven G. Lamb 20,000 7.5% 53.4375 12/11/2006 670,095 1,700,070
Theodore R. French 15,000 5.6% 53.4375 12/11/2006 502,571 1,275,053
Richard M. Christman 6,800 2.5% 53.4375 12/11/2006 227,832 578,024
Richard S. Brennan 3,000 1.1% 53.4375 12/11/2006 100,514 255,011
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The options in this column consist of non-qualified options granted under
the Corporation's Equity Incentive Plan. All of the options were granted on
December 11, 1996 and one-third becomes exercisable on each of December 11,
1997, 1998 and 1999. These options provide that a grantee who delivers
shares of Common Stock to pay the option exercise price will be granted,
upon such delivery and without any further action by the Corporation, an
additional option to purchase the number of shares so delivered. These
"reload" options are granted at 100% of the fair market value (as defined in
the plan) on the date they are granted, become exercisable six months from
the grant date and expire coincident with the options
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<PAGE> 13
they replace. Grantees are limited to ten Reload Stock Options and the
automatic grant of such reload options is limited to twice during any one
calendar year.
(2) All options were granted at 100% of the fair market value on the date of
grant.
(3) The dollar amounts under these columns are the result of calculations for
the period from the date of grant to the expiration of the option at the
assumed 5% and 10% annual appreciation rates set by the SEC and, therefore,
are not intended to forecast possible future appreciation, if any, in the
price of the Corporation's Common Stock. No gain to the optionee is possible
without an increase in price of the shares underlying the respective
options. To realize the potential values set forth in the 5% and 10% columns
of this table, the per share market price of the Corporation's Common Stock
would be, in each case, 63% and 159%, respectively, above the exercise or
base price of the options.
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
The following table sets forth the shares acquired and the value realized
on the exercise of options during 1996 and the number and value of unexercised
stock options held, as of December 31, 1996, by the persons named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NUMBER OF OPTIONS HELD AT HELD AT
SHARES DECEMBER 31, 1996 DECEMBER 31, 1996(1)
ACQUIRED ON VALUE ---------------------------------------------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jean-Pierre Rosso -- -- 40,581(2) 532,739(3) $382,714 $14,667,705
Steven G. Lamb 8,000 $216,500 5,100 264,000 61,663 8,298,875
Theodore R. French -- -- 10,432 237,668 232,620 7,552,730
Richard M. Christman 850(4) 6,110(5) 7,698 224,002 200,837 7,314,851
Richard S. Brennan -- -- 1,000 30,000 11,625 799,888
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the closing stock price on December 31, 1996 of $54.50 per share
for the Corporation's Common Stock and $45.125 per share for Tenneco common
stock.
(2) Includes options to purchase 15,481 shares of Tenneco common stock granted
under the 1994 Tenneco Stock Ownership Plan.
(3) Includes options to purchase 7,739 shares of Tenneco common stock granted
under the 1994 Tenneco Stock Ownership Plan.
(4) Represents shares of Tenneco common stock acquired on January 10, 1996 from
the exercise of options that were granted under a Tenneco stock option plan.
(5) Represents the value realized on January 10, 1996 from the exercise of
options for shares of Tenneco common stock that were granted under a Tenneco
stock option plan.
PENSION PLAN
The Corporation does not maintain a defined benefit pension plan covering
United States salaried employees. However, certain of the Corporation's salaried
employees in the United States have participated in the Tenneco Inc. Retirement
Plan, and certain executive officers and other key employees of the Corporation
have participated in the Tenneco Inc. Benefit Equalization Plan and Tenneco Inc.
Supplemental Executive Retirement Plan. Case employees ceased to participate in
such plans (collectively, the "Tenneco Pension Plan") after the Reorganization;
however, they have a fully vested and non-forfeitable interest in their benefits
accrued through such date. An employee of the Corporation may not begin to
receive benefits from the Tenneco Pension Plan until he separates from service
with the Corporation or attains normal retirement age, if earlier. Although
employees of the Corporation will not accrue any additional benefits under the
Tenneco Pension Plan for service with the Corporation, such service will be
counted under the Tenneco Pension Plan for purposes of determining whether a
participant has met the requirements for early retirement benefits. As of
December 31, 1996, Messrs. Lamb, French and Christman had accrued pension
benefits, payable annually as a straight life annuity upon normal retirement,
under the Tenneco Pension Plan of $2,960, $8,568 and $51,383, respectively.
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<PAGE> 14
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
On June 13, 1996, the Corporation and Mr. Rosso amended and restated his
employment agreement. The principal provisions of the amended and restated
employment agreement included (i) a base annual salary for 1996 of $700,000,
subject to future increases as approved by the Compensation Committee; (ii) an
annual target bonus which relates to 1996 and subsequent years of not less than
base annual salary; (iii) annual target value of stock awards aggregating not
less than $1 million; (iv) non-cash compensation and qualified/welfare benefits
generally provided to the Corporation's senior executive officers, financial and
estate planning benefits, reimbursement for certain educational expenses of his
children and a country club membership; (v) minimum pension guarantees of
benefits no less than those which would have been provided by a former employer;
and (vi) severance benefits of three times his base salary if his employment is
terminated within four years of April 1, 1994 (two times his base salary if
terminated after the four year period), other than for death, disability or the
gross neglect of his duties. If Mr. Rosso resigns voluntarily or retires, he
will not be entitled to the severance benefits unless he voluntarily terminates
after (a) there is a material reduction or material adverse alteration in the
nature of his position, responsibilities or authorities (including the failure
to elect and continue to elect Mr. Rosso to the Corporation's Board of
Directors); (b) there is a material reduction in his compensation or benefits;
(c) he becomes the holder of a lesser office or title than President and Chief
Executive Officer of the Corporation; or (d) his job is relocated to a location
which is more than 50 miles from the Corporation's present location. In the
event he receives severance, the Corporation will continue to provide him with
all the same benefits as in effect prior to termination, his stock options
(including Tenneco options) will vest on the date of termination and he will be
paid the value of any restricted stock (including Tenneco restricted stock)
which he forfeits. In addition, the severance benefit will be included in
calculating his minimum pension guarantees. The employment agreement also
provides that if any options (including Tenneco options) granted to Mr. Rosso
are forfeited upon termination of his employment with the Corporation, he will
receive from the Corporation a payment equal to the amount by which the fair
market value of the Common Stock exceeds the exercise price of such forfeited
options. On March 20, 1997, Mr. Rosso and the Corporation executed a new amended
and restated employment agreement to reflect an increase in his base annual
salary to $800,000 effective January 1, 1997. On March 5, 1997, the Board
authorized the establishment of a trust, the assets of which shall be subject to
the Corporation's general creditors, for the purpose of assisting the
Corporation in meeting certain unfunded obligations of the Corporation,
including the minimum pension guarantee under Mr. Rosso's employment agreement
and certain other obligations under the Corporation's Deferred Compensation
Plan.
On March 15, 1996, the Board of Directors authorized the Corporation to
enter into Change-in-Control Agreements (the "Severance Agreements") with
Messrs. Rosso, Lamb and French. The Severance Agreements will provide severance
benefits in the event the executive's employment is terminated by the
Corporation for any reason other than cause or by the executive for "good
reason" within 12 months following a Potential Change-in-Control or within 36
months following a Change-in-Control, as each such term is defined below. In
addition, the Severance Agreements provide severance benefits if the executive
voluntarily terminates employment during the 90-day period commencing on the
first anniversary of a Change-in-Control. Upon an eligible termination of
employment, the executive is entitled to a lump sum cash payment equal to three
times his annual base salary, plus an amount equal to three times the greatest
of (i) his bonus for the preceding year, (ii) the target bonus for the year of
termination, or (iii) the bonus which would otherwise be payable to the
executive for the year of termination, plus an amount equal to three times the
amount of the Corporation's contribution to the Case Corporation Retirement
Savings Plan for the calendar year preceding the year of termination. The
executive is also entitled to 36 months of continuing medical insurance,
disability income protection, life insurance coverage and death benefits, and
perquisites. The Severance Agreements also provide that vesting of all stock
awards will accelerate upon a Change-in-Control. If such acceleration is not
permitted under the terms of the plans pursuant to which such stock awards were
made, and the executive forfeits the award following the Change-in-Control, the
executive will receive the value of the forfeited award in cash. If payments
under the Severance Agreements would cause the executive to be subject to excise
taxes under section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), the executive will be entitled to an additional payment from the
Corporation in the amount of such excise taxes, plus an amount equal to any
taxes arising by reason of the additional payment. Mr. Rosso will also be
entitled to an additional three years of service in determining the minimum
pension guarantee provided under his employment agreement. To the
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<PAGE> 15
extent that Mr. Rosso receives severance benefits under a Severance Agreement,
such benefits will be in lieu of the severance benefits otherwise payable under
Mr. Rosso's employment agreement.
Generally, for purposes of the Severance Agreements, a "Change-in-Control"
will be deemed to occur (i) upon the acquisition of 25% or more of the
Corporation's voting power or outstanding stock by any party (other than certain
related parties), (ii) upon a tender offer pursuant to which the person making
the offer owns or has accepted for payment 25% or more of the total voting power
of the Corporation's stock, three business days before any such offer is to
terminate (unless the offer is withdrawn first) or such person could own, by the
terms of the offer plus any shares owned by such person, 50% or more of such
total voting power when the offer terminates, (iii) if the Corporation's
stockholders approve a merger or consolidation of the Corporation with any other
company (unless the Corporation's voting stock continues to represent more than
70% of the combined voting power of the Corporation's or surviving entity's
voting stock, or the Corporation's directors continue to constitute at least 50%
of the directors of the surviving entity immediately after the merger or
consolidation), or (iv) if during any consecutive two-year period, the Board
consists of a majority of directors whose nomination for election was not
approved by at least two-thirds of the directors then in office who were
directors at the beginning of the two-year period or whose nomination was so
approved. A "Potential Change-in-Control" will be deemed to occur if (i) any
person who is the beneficial owner of 9.5% or more of the voting power of the
Corporation's outstanding securities increases its beneficial ownership by 5% or
more of the voting power of the Corporation's outstanding securities over the
percentage owned on the agreement date, (ii) a tender offer is made for 25% or
more of the total voting power of the Corporation's stock, (iii) any person
makes a solicitation of proxies for the election of directors who have not been
recommended by the Corporation, (iv) the Corporation enters into negotiations
with respect to a transaction which would upon consummation constitute a
Change-in-Control, or (v) the Board adopts a resolution to the effect that a
Potential Change-in-Control has occurred for purposes of the Severance
Agreement.
An executive may terminate employment for "good reason" if (i) there is a
significant change in the nature or scope of his duties or a breach by the
Corporation of any other provision of the Severance Agreement, (ii) his office
is relocated to a location which is more than 50 miles from the location of his
present office, (iii) the executive determines that, as a result of the
Change-in-Control and circumstances thereafter significantly affecting his
position, he is unable to exercise the authorities, power, function or duties
associated with his position prior to the Change-in-Control or Potential
Change-in-Control, as applicable, or (iv) the Corporation fails to obtain a
satisfactory agreement from any successor to assume and perform the Severance
Agreement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE OFFICER COMPENSATION
Case Corporation has achieved outstanding stock price appreciation for its
stockholders since becoming a public company. This performance is strongly
linked to Case's primary objective of long-term maximization of stockholder
value. The Compensation Committee of the Board of Directors has developed
executive compensation policies and programs that adhere to this key objective
and are clearly aimed at increasing stockholder value. The Compensation
Committee is comprised of four outside directors who are also strongly committed
to implementing and administering the approved programs in an effective manner.
In overseeing the Corporation's executive remuneration program, the Committee
bases the program on several principles, as set forth below.
Governing Principles
The specific governing principles of the Compensation Committee are:
- Place High Portion at Risk -- The Corporation's executive compensation
programs are strongly linked to measured financial performance and place a
significant portion of compensation at risk. The actual portion of
incentive compensation at risk for a representative sample of executives
approximated 66 percent of total compensation.
- Emphasize Stockholder Value Objective -- The majority of at-risk
compensation provided is comprised of long-term, equity-based programs.
Consistent with this principle, an executive's net worth depends heavily
on appreciation in the value of the Corporation's stock over the long
term. Also, officers are required to own stock valued at one to four times
base salary, depending on responsibility level.
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<PAGE> 16
- Pay Competitively for Results -- The compensation offered by the
Corporation is designed to be competitive with other manufacturing
companies, as well as high-performing companies. Total compensation
opportunities are emphasized with less focus on the competitive posture of
each individual component of compensation.
- Align Business and Organizational Objectives -- The annual incentive plan
is based primarily on measured financial performance, with payouts
dependent upon results. Financial performance is linked strongly to key
business and organizational objectives which, for 1996, included net
income and cash flow.
Executive officer compensation is also based on performance against
non-financial objectives. Executive officers are expected to uphold the
fundamental principles embodied in the Corporation's strategic framework and its
Statement of Business Conduct. These principles primarily include a commitment
to integrity, development of a diverse organization, customer focus and
continuous quality improvement. In upholding these non-financial objectives,
executives not only contribute to their own success, but also help further the
prospering of the business, employees, stockholders and the communities in which
they live and work.
General Administration and Compensation Components
In determining the amount of compensation for the Chief Executive Officer
and other executives, the Compensation Committee reviews the results of a
compensation survey of selected comparator companies conducted by independent
consultants specializing in executive compensation. For 1996, a Peer Group was
the primary Comparator Group, with a reference point added using a group of
"High-Performing" companies.
The Peer Group
The Peer Group consisted of 24 manufacturing companies with median annual
revenues of approximately $6.5 billion. These companies were chosen because they
(i) operate in a business similar to Case's; (ii) compete for similar types of
executives; and (iii) submit their executive compensation data to the database
maintained by the consulting firm that conducted the survey.
The High-Performing Group
The High-Performing Group consisted of 23 manufacturing companies. These
companies were chosen because they (i) fit the profile of "high performing"
companies as designated by Case and the independent consulting firm; (ii) have
an exceptional history of one- to five- year total stockholder return, return on
equity, return on assets, return on capital, earnings per share and sales
performance; and (iii) compare relatively to Case's strong performance since
becoming a public company.
The survey data above is supplemented with other data sources to assist
with the verification of results and benchmarking of best practices. The
companies that comprise the above Comparator Groups are not the same companies
in the published industry index in the Stock Performance Graph included in this
Proxy Statement. The Compensation Committee believes the Corporation's most
direct competitors for executive talent are not necessarily all of the companies
that would be included in the published industry index established for comparing
stockholder returns.
The key elements of Case's executive compensation program are base salary,
annual incentives and long-term incentives. Each are addressed separately below.
Base Salaries
Base salary levels are established annually based on a review of salary
levels for executives in the Comparator Groups. The Corporation attempts to
establish base salaries at the 50th percentile of the Peer Group. Since the
initial public offering, overall competitiveness for a sample of executive
positions has grown close to the 50th percentile.
Annual increases to base salaries result generally from an individual
executive performing in accordance with the Corporation's Performance Alignment
Process. The Performance Alignment Process establishes individual work
assignments, detailed goals and priorities, and expected leadership behaviors
that contribute directly to the achievement of the Corporation's strategic
business plan and annual operating plan. The average
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<PAGE> 17
merit increase made in January 1997 for executives (excluding the Chief
Executive Officer) was 3.7 percent based on individual performance. Anticipated
merit increases for the Peer Group range from 4.7 percent (median) to 5 percent
(average).
Additionally, as base salary levels in the marketplace are strongly aligned
with responsibility level, it is important to note that as the Corporation
transitions from a wholly-owned subsidiary to a stand alone, publicly traded
company, the responsibilities of a number of positions (i.e., Chief Executive
Officer, Chief Operating Officer and Chief Financial Officer) increase greatly.
Compensation changes from 1996 to 1997 reflect the result of increasing
responsibilities, primarily for these key positions.
The salary range structure for the entire executive group was adjusted 3
percent for 1997. This compares to 3 percent for the Peer Group.
Annual Incentives
The Compensation Committee administers the Executive Incentive Compensation
Plan, which awards annual performance-based compensation in relation to the
achievement of targeted corporate performance goals established at the beginning
of the year. For 1996, the financial performance targets were based on the
achievement of net income and operating cash flow goals. These performance goals
were established to require exceptional performance by executives and employees
of the Corporation. The resulting target bonus levels are intended to provide
the opportunity to earn the mid-range of pay of the Peer Group, provided
performance is at an expected level. Certain individuals may receive
compensation above or below this level, depending upon performance.
At the end of the year, the Compensation Committee approved bonus awards
based on the degree of achievement with the target performance goals and
judgments regarding each executive's individual performance and contribution to
achieving corporate-wide goals. Bonus awards for executives (excluding the Chief
Executive Officer) averaged 135 percent of their respective target award levels.
To further promote the Corporation's philosophy of executive stock
ownership, executives can elect to receive all or a part of earned bonuses in
shares of Common Stock (subject to restrictions on disposition), discounted from
the fair market value by 25 percent. Approximately 82 percent of the executive
officers made an election to convert some portion of their bonus into Common
Stock.
Long-Term Incentives
Long-term incentives comprise the largest portion, approximately 47
percent, of the value of an executive's total compensation package (i.e.,
excluding benefits and perquisites). The Compensation Committee believes that
long-term incentives align executive interests with those of stockholders,
encourage retention of experienced personnel and create appropriate incentives
to maximize stockholder value.
In determining actual award levels, an executive's level of responsibility,
historical award data, individual performance criteria, compensation practices
at comparator companies and his/her total compensation package are considered.
The targeted amount of annual long-term incentives awarded by the Corporation to
its executives is in the mid-range of the Peer Group. For 1996 performance, the
Corporation approved awards of 118,700 shares of restricted stock, and granted
options to purchase 231,800 shares of Common Stock to its executives.
Restricted stock awards were made to executive officers in December 1996
and were intended to provide an additional incentive to improve stockholder
value and to reward the performance by these individuals in exceeding corporate
performance goals established for 1996.
Stock option grants were made to executive officers in December 1996 to
recognize the efforts of each executive officer toward the Corporation exceeding
its performance goals established for 1996. Stock option grants were made at
fair market value on the date of grant approval and have a ten-year term. The
stock options have value only if the stock price appreciates in value from the
date the options are granted.
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<PAGE> 18
Stock Ownership
As mentioned by the Governing Principles earlier, the Compensation
Committee believes that tying the interests of executives to those of the
stockholders results in enhanced stockholder value. In keeping with this
principle, the Committee established stock ownership guidelines which require
executive officers to retain a multiple of their base salary in shares of Common
Stock. Higher levels of management employees are required to maintain a larger
multiple. Executive officers must own 50 percent of their specified multiple by
December 1997, 75 percent by December 1998, and 100 percent by December 1999.
Therefore, guideline multiples were set based on benchmarking stockholder
value-focused companies. Hence, guideline multiples are consistent with these
leading-edge companies.
Chief Executive Officer Compensation
Mr. Rosso was paid a base salary of $700,000 in 1996. Overall, the
Compensation Committee believes that the Corporation's performance for 1996 was
excellent. Actual financial performance exceeded goals set at the beginning of
the year.
This performance under Mr. Rosso's capable and effective leadership was the
basis for formulating his annual bonus and restricted stock grant for 1996.
Accordingly, Mr. Rosso received an annual bonus of $1,100,000. Mr. Rosso elected
to receive 50 percent of his 1996 bonus in Common Stock, discounted by 25
percent from the fair market value in accordance with the Corporation's Equity
Incentive Plan. This election resulted in 9,271 shares of Common Stock which are
subject to restrictions on disposition until July 8, 1997. Mr. Rosso's
restricted stock award and option grant for 1996 as previously described above
in this Proxy Statement are consistent with his employment contract and are
designed to provide him with an additional incentive to enhance stockholder
value.
In order to encourage continued stock ownership by the Corporation's Chief
Executive Officer, Mr. Rosso's stock ownership multiple is equal to four times
his base salary.
Policy With Respect to the $1 Million Deduction Limit
Section 162(m) of the Code limits the Corporation's deduction for
compensation paid to the Chief Executive Officer and the four other most highly
compensated individuals to $1 million unless certain requirements are met. The
policy of the Corporation and the Board Committees having compensation
responsibilities is to establish and maintain a compensation program which will
optimize the deductibility of compensation. The Corporation, however, reserves
the right to use its judgment, where merited by the need for flexibility to
respond to changing business conditions or by an individual's performance, to
authorize compensation which may not, in a specific case, be fully deductible by
the Corporation.
Conclusion
The Compensation Committee believes these executive compensation policies
and practices serve the interest of stockholders and the Corporation
effectively. The various compensation programs offered are appropriately
balanced to provide increased motivation for executive officers to contribute to
the Corporation's overall future successes, thereby increasing the value of the
Corporation for the stockholders' benefit.
We will continue to monitor the effectiveness of the Corporation's total
compensation program to meet the ongoing needs of the Corporation.
COMPENSATION COMMITTEE
Gerald Rosenfeld (Chairman)
Mark Andrews
Jeffery T. Grade
Theodore R. Tetzlaff
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, Messrs. Andrews, Grade, Rosenfeld and Tetzlaff (none of whom
was or had been an officer or employee of the Corporation or any of its
subsidiaries) served on the Corporation's Compensation Committee.
Except as set forth below, there were no interlocks or insider
participation with other companies within the meaning of the SEC's proxy rules
during 1996.
During 1996, the Corporation and its subsidiaries engaged the law firm of
Jenner & Block for legal services. Mr. Tetzlaff, a director of the Corporation,
is a partner of Jenner & Block. The Corporation intends to engage Jenner & Block
for similar services during 1997. Pursuant to an agreement with the Corporation,
Mr. Tetzlaff has agreed to devote whatever time is necessary to attend to the
responsibilities as a director of the Corporation and will not receive from
Jenner & Block any part of the fees paid by the Corporation to that firm during
the period he serves as a director.
During 1996, the Corporation and its subsidiaries engaged the investment
banking firm of Lazard Freres & Co. LLC for advisory services. Mr. Rosenfeld, a
director of the Corporation, is a Managing Director of Lazard Freres. The
Corporation may engage Lazard Freres or its affiliates for similar services
during 1997.
During 1996, Mr. Andrews, a director of the Corporation, was indebted to
Case Credit Corporation, a subsidiary of the Corporation, as a result of five
loans for the financing of various pieces of agricultural equipment purchased
from an independent dealer in 1993, 1995 and 1996 for use in his farming
business. Two loans bear interest at a rate of 5.9% per year and three loans
bear interest at a rate of 8.5% per year, each with varying terms of up to 60
months, and mature on August 12, 1998, November 1, 1998, April 26, 1999, July 1,
1999, and December 15, 1999, respectively. The highest aggregate amount of
indebtedness outstanding under such loans since the beginning of 1996 was
$279,442. As of December 31, 1996, $243,654 was outstanding under such loans. In
addition, Mr. Andrew's farm used prototype agricultural equipment of the
Corporation for test purposes during 1996.
All such transactions discussed above involving Messrs. Tetzlaff, Rosenfeld
and Andrews were in the ordinary course of business.
16
<PAGE> 20
------------------------------------------------
STOCK PRICE PERFORMANCE GRAPH
------------------------------------------------
The following performance graph compares the semiannual changes, for the
period indicated, in the Cumulative Total Return on an investment in the Common
Stock of the Corporation with (i) the Standard & Poor's 500 Stock Index (the
"S&P 500") and (ii) the Standard & Poor's Machinery (Diversified) Stock Index
(the "Peer Group").
The comparison reflects the investment of $100 on June 30, 1994, and the
reinvestment of dividends, in each of the Corporation's Common Stock, the S&P
500 and the Peer Group. "Cumulative Total Return" on a share of Common Stock of
the Corporation, the S&P 500 and the Peer Group is measured by dividing (a) the
sum of (i) the cumulative amount of dividends for the period of June 30, 1994
through December 31, 1996 (assuming the reinvestment of dividends over such
period), and (ii) the difference between the price of a share of Common Stock of
the Corporation, the S&P 500 and the Peer Group, respectively, at June 30, 1994,
and each semiannual date through December 31, 1996, by (b) the price of a share
of such Common Stock, the S&P 500 and the Peer Group, respectively, at June 30,
1994.
[CHART]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CASE S&P 500 PEER GROUP
(FISCAL YEAR COVERED)
<S> <C> <C> <C>
6/30/94 100.00 100.00 100.00
12/31/94 114.00 105.00 103.00
6/30/95 159.00 126.00 126.00
12/31/95 245.00 144.00 127.00
6/30/96 258.00 159.00 145.00
12/31/96 293.00 177.00 158.00
</TABLE>
The stock price performance shown on this graph is not necessarily
indicative of the future stock price performance of the Corporation's Common
Stock.
---------------------------------------------------------
CERTAIN RELATIONSHIPS AND TRANSACTIONS
---------------------------------------------------------
In July 1995, the Corporation extended to Mr. Lamb, the Executive Vice
President and Chief Operating Officer of the Corporation, an interest-free loan
of $150,000 for the purchase of his residence upon returning to the United
States from an overseas assignment. The loan is payable in ten equal
installments, beginning on December 31, 1995, and ending on December 31, 2004.
The amount presently outstanding under such loan is $120,000. In March 1996, the
Corporation extended to Mr. French, the Senior Vice President and Chief
Financial Officer of the Corporation, a $150,000 credit facility on the same
terms for the purchase of a residence. The amount presently outstanding under
such facility is $135,000.
Mr. Brennan, the General Counsel and Secretary of the Corporation, is also
a partner of Mayer, Brown & Platt, and is compensated under an arrangement
whereby any salary and bonus paid by the Corporation is paid to him by the
Corporation through that law firm. The compensation for Mr. Brennan reflected in
the Summary Compensation Table represents the amount paid by the Corporation to
Mayer, Brown & Platt in
17
<PAGE> 21
1996 for Mr. Brennan's services. The Corporation and its subsidiaries engaged
Mayer, Brown & Platt for legal services during 1996, and the Corporation and its
subsidiaries intend to retain such firm for similar such services during 1997.
In 1996, the amount paid or accrued by the Corporation to Mayer, Brown & Platt
was approximately $3.5 million for legal fees and expenses, not including the
compensation paid to Mr. Brennan reflected on the Summary Compensation Table.
Pursuant to an agreement with the Corporation, Mr. Brennan will not receive from
Mayer, Brown & Platt any part of the fees paid by the Corporation to that firm
during the period he serves as General Counsel and Secretary.
Following the Reorganization, Tenneco continued to own approximately 21% of
the Corporation's Common Stock as of January 1, 1996. Three of the Corporation's
directors during 1996, Peter Menikoff (who did not stand for reelection at the
1996 Annual Meeting), and Messrs. Mead and Tetzlaff are executive officers of
Tenneco, and two of the Corporation's directors during 1996, Messrs. Mead and
Andrews, are directors of Tenneco. On March 13, 1996, Tenneco divested all of
its remaining Common Stock in an underwritten public offering. In connection
with certain agreements entered into at the time of the Reorganization, the
Corporation paid the registration fee and other expenses related to such sale of
Common Stock of approximately $760,000.
In 1996, the amount paid or accrued by the Corporation and its subsidiaries
to Tenneco and its subsidiaries was approximately $9.1 million, including
approximately $4 million for products purchased in the ordinary course of
business and corporate overhead and other expenses arising from the
Corporation's prior affiliation with Tenneco, and approximately $5.1 million for
the settlement of certain intercompany balances between the Corporation and
Tenneco. The Corporation and its subsidiaries received in 1996 from Tenneco and
its subsidiaries approximately $6.5 million for the servicing of retail
receivables retained by Tenneco in connection with the Reorganization.
Subsequent to November 30, 1996, such retail receivables were sold by Tenneco in
an asset-backed securitization transaction.
In January 1996, the Corporation repurchased all of its 10 1/2% Senior
Subordinated Notes due 2002 (the "Subordinated Notes") having a principal value
of approximately $277.5 million. The Subordinated Notes were issued to a
subsidiary of Tenneco as part of the consideration for the acquisition of the
Case Business. Pursuant to an agreement between the Corporation, Tenneco,
Tenneco Equipment Corporation and an affiliate of CS First Boston Corporation,
the Corporation acquired the Subordinated Notes for approximately $313.6
million, reflecting the approximate current value of the Subordinated Notes,
from an affiliate of CS First Boston Corporation, which had first purchased the
Subordinated Notes from Tenneco Equipment Corporation.
-----------------------------------------------------------
APPROVAL OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------------------------
Upon recommendation of the Audit Committee of the Board of Directors, the
Board of Directors has appointed Arthur Andersen LLP as independent public
accountants for the Corporation to examine its consolidated financial statements
for the year 1997 and has determined that it would be desirable to request that
the stockholders approve such appointment.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting and will have the opportunity to make a statement if they desire to do
so. They will also be available to respond to appropriate questions.
In the event that the appointment of Arthur Andersen LLP is not approved,
then the Audit Committee and the Board of Directors will consider such a vote as
advice to select other independent accountants for 1998, rather than 1997,
because of the difficulty and expense involved in changing independent
accountants on short notice.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS.
18
<PAGE> 22
---------------------------
OTHER MATTERS
---------------------------
VOTING OF SHARES
The Board of Directors is not aware of any other matters that may properly
come before the Annual Meeting. However, should any such matters come before the
Annual Meeting, it is the intention of the proxies named in the Proxy to vote
all Proxies (unless otherwise directed by stockholders) in accordance with their
judgment on such matters pursuant to discretionary authority granted in the
Proxy.
Proxies will be voted on the proposals referred to thereon, and presented
at the Annual Meeting, in accordance with the stockholder's specifications
marked thereon. Stockholders are encouraged to specify their choices on matters
to be voted upon. If no specification is made with respect to any such proposal,
a Proxy will be voted as to such proposal in accordance with the recommendation
of the Board of Directors set forth above in this Proxy Statement. A Proxy may
be revoked at any time before it is voted at the meeting by voting in person or
by delivering a later dated proxy or a written notice of revocation to the
Secretary of the Corporation so as to be received by the Secretary prior to the
vote.
The Corporation's By-Laws require that a majority of the shares entitled to
vote at the Annual Meeting of Stockholders be present, in person or by Proxy, to
establish a quorum. Shares abstaining with regard to a matter to be presented to
the stockholders constitute part of the quorum present with respect to such
matter; however, shares for which voting power has been withheld, such as broker
non-votes, do not constitute part of the quorum present with respect to such
matter. Consequently, the number of shares representing the quorum present for
the meeting may be greater than the shares present for action on a particular
proposal. If a quorum is present, abstentions and broker non-votes will have no
effect on the outcome of the election of directors since directors are elected
by a plurality of the votes cast. However, approval of the appointment of the
Corporation's independent public accountants will require the affirmative vote
of the holders of shares of Common Stock representing more than 50% of the
voting power of shares represented at the meeting in person or by Proxy and
entitled to vote on the matter. As a result, shares which abstain from voting
will count as votes against such appointment and broker non-votes will have no
effect on the outcome.
PROXY SOLICITATION EXPENSE
The cost of solicitation of proxies will be borne by the Corporation.
Solicitation will be made by mail, and may be made by directors, officers and
employees, personally or by telephone or telegram. Proxy cards and material also
will be distributed to beneficial owners of stock through brokers, custodians,
nominees and other like parties, and the Corporation expects to reimburse such
parties for their charges and expenses. Georgeson & Co. Inc., New York, New
York, has been retained to assist the Corporation in the solicitation of proxies
at a fee estimated not to exceed $7,000.
STOCKHOLDER PROPOSALS
Stockholder proposals must be received by the Corporation by December 5,
1997 and must otherwise comply with the rules of the SEC to be included in the
Corporation's Proxy Statement and form of proxy for the Corporation's 1998
Annual Meeting of Stockholders.
Stockholder proposals not included in the Corporation's Proxy Statement
must comply with the advance notice procedure set forth in the Corporation's
By-Laws to be properly considered at an annual meeting of stockholders. This
procedure requires that such proposals be submitted in writing to the Secretary
of the Corporation, together with other related information required by the
Corporation's By-Laws, not less than 50 days nor more than 75 days prior to the
date of such annual meeting of stockholders; provided, however, that in the
event that less than 65 days' notice or public disclosure of the date of the
annual meeting is given or made to stockholders, a stockholder's notice will be
timely if received not later than the close of business on the 15th day after
the day on which such notice or public disclosure was given or made.
By order of the Board of Directors
RICHARD S. BRENNAN
Secretary
Racine, Wisconsin
April 4, 1997
19
<PAGE> 23
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
ANNUAL MEETING
OF STOCKHOLDERS
MAY 14, 1997
CASE CORPORATION
700 STATE STREET, RACINE, WISCONSIN 53404
CASE LOGO
<PAGE> 24
CASE CORPORATION
1997 ANNUAL MEETING OF STOCKHOLDERS [CASE LOGO]
PROXY/VOTING INSTRUCTION CARD
The undersigned hereby appoints Jean-Pierre Rosso, Richard S. Brennan, and Kevin
J. Hallagan, and any of them, with full power of substitution, as Proxies to
vote, as directed on the reverse side of this card, or, if not so directed, in
accordance with the Board of Directors' recommendations, all shares of Case
Corporation held of record by the undersigned at the close of business on March
21, 1997 and entitled to vote at the Annual Meeting of Stockholders of Case
Corporation to be held at the Roma Lodge, 7130 Spring Street, Racine,
Wisconsin, at 9:00 a.m., Racine time, on May 14, 1997, or at any adjournment
thereof, and to vote, in their discretion, upon such other matters as may
properly come before the Annual Meeting.
Director Nominees:
Pei-yuan Chia Katherine M. Hudson Jean-Pierre Rosso
Jeffery T. Grade Dana G. Mead Theodore R. Tetzlaff
Thomas R. Hodgson Gerald Rosenfeld Thomas N. Urban
This card also constitutes directions to the Trustee of the Case Corporation
Retirement Savings Plan by participants in such plan.
_____________
|SEE REVERSE|
| SIDE |
|___________|
- FOLD AND DETACH HERE -
<PAGE> 25
<TABLE>
<S><C>
PLEASE MARK YOUR
X VOTE AS IN THIS
EXAMPLE.
This Proxy is solicited by the Board of Directors. When properly executed, it will be voted in the manner directed. If no
direction is given, this Proxy will be voted FOR all of the Board of Directors' nominees and FOR proposal 2.
- ------------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR its nominees and FOR proposal 2.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of 2. Approval of Arthur 3. In the Discretion of the Proxies
Directors / / / / Andersen LLP as / / / / / / named herein, the Proxies are
(see reverse) Independent Public authorized to vote upon other
Accountants matters as may properly come
before the meeting.
FOR all nominees except:
- ----------------------------------------------------
The signer hereby revokes all Proxies heretofore
given by the signer to vote at said meeting or
any adjournments thereof.
NOTE: Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
------------------------------------------------
------------------------------------------------
SIGNATURE DATE
- FOLD AND DETACH HERE -
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[CASE LOGO] THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
FOR ASSISTANCE IN THESE AREAS:
- - DIVIDEND CHECKS - ADDRESS CHANGES - LEGAL TRANSFERS
- - CONSOLIDATION OF ACCOUNTS - ELIMINATE MULTIPLE ACCOUNTS FOR
ONE HOLDER AND CERTAIN DUPLICATE STOCKHOLDER MAILINGS GOING
TO ONE ADDRESS. (Dividend checks, annual reports and proxy materials would
continue to be mailed to each stockholder.)
JUST CALL OUR TRANSFER AGENT'S TELEPHONE RESPONSE CENTER:
(800) 519-3111 OR (201) 324-1225
OR WRITE TO:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
P.O. BOX 2500
JERSEY CITY, NEW JERSEY 07303-2500
