<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 14a-11(c) or Rule 14a-12
CASE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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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:
- --------------------------------------------------------------------------------
[ ] 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 17, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
which will begin at 9:00 a.m. on Wednesday, May 13, 1998. 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 welcome Ronald Goldsberry as a new director nominee. Dr. Goldsberry has
outstanding credentials and provides added outside perspective to our Board. In
addition, we will review our 1997 performance and look ahead at 1998.
Case reached new levels of financial performance in 1997, setting records for
both earnings and revenues. These results demonstrate the effectiveness of our
operating strategy of combining growth and cost reduction actions to annually
increase earnings within our goal of 10 to 15 percent. Our performance is the
culmination of many achievements, several of which are outlined in the
accompanying copy of our 1997 Annual Report.
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 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 13, 1998
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 13, 1998,
at 9:00 a.m., local 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 1998, and
3. Such other matters as may properly come before the Annual Meeting.
The close of business on March 23, 1998, has been fixed as the record date
for determination of common stockholders entitled to notice of and to vote at
the Annual Meeting. A list of these stockholders will be maintained and open for
examination by any stockholder, for any purpose germane to the Annual 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 17, 1998
<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 13, 1998
This Proxy Statement (the "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 1998 Annual Meeting of Stockholders
of the Corporation to be held on May 13, 1998 and any adjournments thereof (the
"Annual Meeting"). The Proxy Statement and accompanying Proxy/Voting Instruction
Card ("Proxy") are first being sent to stockholders on or about April 17, 1998.
Only common stockholders of record on the books of the Corporation at the
close of business on March 23, 1998 (the "Record Date") will be entitled to
notice of and to vote at the Annual Meeting. Each of these stockholders will be
entitled to one vote per share. There were outstanding at the close of business
on the Record Date 74,412,068 shares of common stock of the Corporation ("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 1999 Annual Meeting
of Stockholders and until a successor is duly elected and qualified. Mr. Dana G.
Mead, a director of the Corporation since April 1994, retired from Case's Board
on December 22, 1997.
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, except Dr. Goldsberry, 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>
Pei-Yuan Chia PEI-YUAN CHIA DIRECTOR SINCE 1997
59, 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 also a director of American
International Group, Inc. and Baxter International Inc.
Ronald E. Goldsberry RONALD E. GOLDSBERRY NEW DIRECTOR NOMINEE
55, Vice President and General Manager of Ford Motor
Company, a global manufacturer and marketer of automobiles,
trucks and related parts and accessories, since 1994. He
previously served as Executive Director of Sales and Service
Strategies of Ford from 1990 to 1994 and General Manager of
Plastics and Trim Products from 1987 to 1990. Dr. Goldsberry
is also a director of UNUM Corporation.
Jeffery T. Grade JEFFERY T. GRADE DIRECTOR SINCE 1995
54, Chairman and Chief Executive Officer of Harnischfeger
Industries, Inc., a manufacturer 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 1997
56, President and Chief Operating Officer of Abbott
Laboratories, a global diversified health care products
company, since 1990. He joined Abbott in 1972, becoming
Executive Vice President and a director in 1985. In addition
to Abbott, Mr. Hodgson is also a director of The St. Paul
Companies, Inc.
Katherine M. Hudson KATHERINE M. HUDSON DIRECTOR SINCE 1996
51, President, Chief Executive Officer and a director of
W.H. Brady Co., a manufacturer of coated films and
industrial products, since January 1994. Prior thereto, 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.
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
Gerald Rosenfeld GERALD ROSENFELD DIRECTOR SINCE 1994
51, Senior Managing Director of NationsBanc Montgomery Securities LLC, an investment banking
firm, since April 1998. Prior to that time, he was a Managing Director and head of Investment
Banking of Lazard Freres & Co. LLC, an investment banking firm, from 1992 to 1998, and a
Managing Director and Group Head at Bankers Trust Securities Inc., an investment banking
firm, from 1988 to 1992.
Jean-Pierre Rosso JEAN-PIERRE ROSSO DIRECTOR SINCE 1994
57, Chairman and Chief Executive Officer of the Corporation since October 1997. Prior
thereto, he served as its Chairman, President and Chief Executive Officer since March 1996,
and as its President and Chief Executive Officer from April 1994, when he joined the
Corporation. 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. He is a member of
The Business Roundtable. Mr. Rosso is also a director of ADC Telecommunications, Inc., Crown
Cork & Seal Company, Inc. and Inland Steel Industries, Inc. and its subsidiaries, Inland
Steel Company and Ryerson Tull, Inc.
Theodore R. Tetzlaff THEODORE R. TETZLAFF DIRECTOR SINCE 1994
54, Partner in the law firm of Jenner & Block, Chicago, since 1976 and Chairman of its
Executive Committee and Operations & Finance Committee since July 1997. Mr. Tetzlaff is also
General Counsel of Tenneco Inc., serving in that capacity since July 1992. He was formerly
Vice President, Legal and External Affairs, of Cummins Engine Company, Inc. from 1980 to
1982. Mr. Tetzlaff is also a director of Continental Materials Corp. and a Commissioner of
the Public Building Commission of Chicago.
Thomas N. Urban THOMAS N. URBAN DIRECTOR SINCE 1995
63, served as Chairman of the Board of Directors of Pioneer Hi-Bred International, Inc.,
which develops and markets hybrid and varietal seeds, from 1984 to 1996, as Chief Executive
Officer from 1981 to 1995, and as President from 1979 to 1981. Mr. Urban was also a Visiting
Professor at the Harvard Graduate School of Business Administration from August 1995 to March
1997. In addition to Pioneer, Mr. Urban is also a director of ING America Insurance Holdings,
Inc. and Sigma Aldrich Corporation.
</TABLE>
3
<PAGE> 7
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1997, the Board of Directors held four meetings. Each director
attended 75% or more of the aggregate meetings of the Board of Directors, and of
the committees of the Board on which the director was assigned, during the time
the director served.
There are three standing committees of the Board of Directors, which have
the following members, and the responsibilities and authority described below.
Mr. Chia, Ms. Hudson, Mr. Rosenfeld and Mr. Urban serve as members of the
Audit Committee of the Board of Directors. Ms. Hudson acts as Chairperson 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 the
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 twice during 1997.
Mr. Grade, Mr. Hodgson, Mr. Rosenfeld and Mr. Tetzlaff serve as members of
the Compensation Committee of the Board of Directors. Mr. Rosenfeld acts as
Chairperson 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 1997. A subcommittee of the Compensation
Committee, the Equity Committee, comprised of Messrs. Grade and Hodgson, has 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 "Exchange Act"). The Equity Committee met
twice during 1997.
Mr. Grade, Ms. Hudson and Mr. Urban serve as members of the Nominating
Committee of the Board of Directors. Mr. Urban acts as Chairperson 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 Corporate Governance Guidelines, (ii) aid in attracting
qualified candidates to serve as non-employee directors, (iii) assess the
Board's performance annually as provided in the Guidelines, (iv) review, assess
and make recommendations to the Board regarding the size and composition of the
Board, and (v) have such other duties and exercise such other authority as may
be provided in the Guidelines or as may be assigned to it from time to time by
the Board. The Nominating Committee met twice during 1997.
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. Pursuant to the Outside
Directors' Equity Compensation Plan, outside directors are each paid an annual
retainer fee of $28,000 (payable all in Common Stock or, if elected by the
director, up to $14,000 in cash with the remainder in Common Stock), and an
attendance fee of $1,000 plus expenses for each meeting of the Board of
Directors and each committee meeting attended. In addition, each director who
serves as a committee chair is paid an annual retainer fee of $4,000 (payable
all in Common Stock or, if elected by the director, up to $2,000 in cash with
the remainder in Common Stock), per committee chair held. Annual retainer fees
and committee chair fees are paid on a quarterly basis on the last day of each
plan year quarter. Any individual becoming or ceasing to be a director between
annual meetings of stockholders will be paid such retainer fees and committee
chair fees, if any, on a pro rata basis.
Beginning with the 1998 Annual Meeting, directors may elect to defer all or
a portion of their annual retainer fees and committee chair fees. If a director
makes a deferral election, a number of stock equivalent units will be credited
to the director's deferral account. The number of stock equivalent units
credited will be determined by dividing the amount of fees that would have been
paid to the director, but for the deferral election, by the fair market value of
a share of Common Stock on the deferral election date. The Corporation will
distribute the deferred amounts in a lump sum, in shares of Common Stock, at the
time the director terminates service as a director. Stock equivalent units will
not be credited with dividends and the directors will have no voting rights with
respect to such stock equivalent units.
On the date of each annual meeting of stockholders, each outside director
receives an option to purchase 1,000 shares (1,500 shares beginning with the
1998 Annual Meeting) 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 stockholders will receive an option to
purchase a pro rata portion of Common Stock, based on the date of such
appointment, with an exercise price equal to the fair market value of Common
Stock on the date of such appointment. These options 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 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 automatically vest
and become exercisable for a six-month period.
5
<PAGE> 9
------------------------------
STOCK OWNERSHIP
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
At March 31, 1998, the number of shares of Common Stock and Cumulative
Convertible Second Preferred Stock of the Corporation beneficially owned, with
sole voting and investment power except as indicated, and the number of
performance share units held by (i) each director, nominee and executive officer
whose name is set forth in the Summary Compensation Table herein, and (ii) all
directors, nominees and executive officers as a group were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
NUMBER OF SHARES AND
NATURE OF BENEFICIAL OWNERSHIP
- -------------------------------------------------------------------------------------------------------
CUMULATIVE NUMBER OF
COMMON CONVERTIBLE SECOND PERFORMANCE SHARE
STOCK(1) PREFERRED STOCK(2) UNITS HELD(3)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DIRECTORS AND NOMINEES
Pei-yuan Chia............................. 1,381 -- --
Ronald E. Goldsberry...................... -- -- --
Jeffery T. Grade.......................... 752 -- --
Thomas R. Hodgson......................... 1,381 -- --
Katherine M. Hudson....................... 1,156 -- --
Gerald Rosenfeld.......................... 3,095 -- --
Jean-Pierre Rosso......................... 466,546 20,500 137,000
Theodore R. Tetzlaff...................... 4,773 -- --
Thomas N. Urban........................... 2,221 -- --
EXECUTIVE OFFICERS
Steven G. Lamb............................ 194,845 5,000 95,000
Theodore R. French........................ 154,167 4,000 73,000
Richard M. Christman...................... 137,312 3,000 18,000
Richard S. Brennan........................ 30,000 -- --
All directors, nominees and executive
officers as a group..................... 997,629 32,500 323,000
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) Excludes shares of Common Stock into which the Corporation's Cumulative
Convertible Second Preferred Stock (described below) may currently be
converted. Includes 386,410 shares, 160,766 shares, 130,100 shares, 124,898
shares, 28,000 shares and 832,174 shares for Messrs. Rosso, Lamb, French,
Christman, Brennan and all directors, nominees and executive officers as a
group, respectively, with respect to which such persons have the right to
acquire beneficial ownership through the exercise of stock options which are
vested or will become vested within 60 days of March 31, 1998 under the
Corporation's Equity Incentive Plan. The percent of the class of Common
Stock owned by each director, nominee and executive officer was less than
1%, and the percent owned by all directors, nominees and executive officers
as a group was 1.3%.
(2) These non-voting shares, each of which is convertible into 2.2883 shares of
Common Stock, are held under the Corporation's Equity Incentive Plan.
Messrs. Rosso, Lamb, French, Christman and all directors, nominees and
executive officers as a group own 54.7%, 13.3%, 10.7%, 8.0% and 86.7%,
respectively, of the Corporation's Cumulative Convertible Second Preferred
Stock.
(3) The performance share units are described in footnote (1) to the Long-Term
Incentive Awards Table on page 10 hereof. Messrs. Rosso, Lamb, French and
Christman and all directors, nominees and executive officers as a group hold
26.6%, 18.4%, 14.2%, 3.5% and 62.7% respectively, of the Corporation's
performance share units.
As of March 31, 1998, 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 31, 1998, the companies named below were the only persons known by
the Corporation to be beneficial owners of five percent or more of shares of
Common Stock:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
FMR Corp.(1)................................................ 9,694,406 12.88%
82 Devonshire Street
Boston, MA 02109
- -------------------------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co.(2).............. 5,479,935 7.30%
1585 Broadway
New York, NY 10036
- -------------------------------------------------------------------------------------------------
The Prudential Insurance Company of America(3).............. 5,475,046 7.29%
751 Broad Street
Newark, New Jersey 07102
- -------------------------------------------------------------------------------------------------
Wellington Management Company, LLP(4)....................... 7,647,711 10.18%
75 State Street
Boston, MA 02109
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) FMR Corp., on behalf of itself, Fidelity Management & Research Company,
Fidelity Magellan Fund, Fidelity Management Trust Company, Fidelity
International Limited and Edward C. Johnson 3d, reported aggregate sole
voting power as to 614,946 shares and sole investment power as to 9,694,406
shares. Information with regard to FMR Corp. is based solely on a Schedule
13G, dated February 9, 1998, containing information as of December 31, 1997.
(2) Morgan Stanley, Dean Witter, Discover & Co. ("Morgan Stanley"), on behalf of
itself and Miller, Anderson & Sherrerd, LLP, reported aggregate shared
voting power as to 4,044,256 shares and shared investment power as to
4,510,356 shares. Information with regard to Morgan Stanley is based solely
on a Schedule 13G, dated February 10, 1998, containing information as of
December 31, 1997.
(3) The Prudential Insurance Company of America ("Prudential") reported sole
voting and investment power as to 703,600 shares, shared voting power as to
4,434,646 shares and shared investment power as to 4,771,446 shares.
Information with regard to Prudential is based solely on a Schedule 13G,
dated February 10, 1998, containing information as of December 31, 1997.
Jennison Associates Capital Corp. ("Jennison"), a wholly-owned subsidiary of
Prudential, also reported beneficial ownership of 4,184,460 of the 5,475,046
shares reported as beneficially owned by Prudential, with sole voting power
as to 825,900 shares, shared voting power as to 3,098,460 shares, and shared
investment power as to 4,184,460 shares. Information with regard to Jennison
is based solely on a Schedule 13G, dated February 12, 1998, containing
information as of December 31, 1997.
(4) Wellington Management Company, LLP ("WMC") reported shared voting power as
to 223,888 shares and shared investment power as to 7,647,711 shares. WMC
also reported that shares beneficially owned by it are owned of record by
clients of WMC, including Vanguard/Windsor Funds, Inc. ("Vanguard/
Windsor"), which have the right to receive, or the power to direct the
receipt of, dividends from Common Stock. Vanguard/Windsor also reported
beneficial ownership of 7,242,500 of the 7,647,711 shares reported as
beneficially owned by WMC, with sole voting power and shared investment
power. Information with regard to WMC is based solely on a Schedule 13G,
dated February 10, 1998, containing information as of December 31, 1997; and
information with regard to Vanguard/Windsor is based solely on a Schedule
13G, dated February 9, 1998, containing information as of December 31, 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act 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
7
<PAGE> 11
SEC to furnish the Corporation with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of 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 reporting persons failed to file Section
16(a) forms on a timely basis for 1997.
----------------------------------------------
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the remuneration paid by the Corporation for
services rendered by its Chairman and Chief Executive Officer and each of its
four other most highly compensated executive officers during 1997 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(#) COMPENSATION(4)
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Jean-Pierre Rosso............... 1997 $800,004 $1,210,539 $133,447 $ -- 221,310 $145,605
Chairman and Chief 1996 700,008 1,283,333 81,974 1,337,500 75,000 81,067
Executive Officer 1995 638,760 699,900 224,430 850,000 75,000 32,753
Steven G. Lamb.................. 1997 515,004 677,280 188,307 -- 150,000 80,289
President and Chief 1996 439,375 466,667 474,116 535,000 20,000 15,450
Operating Officer 1995 366,739 350,000 382,889 425,000 27,000 11,271
Theodore R. French.............. 1997 391,252 416,788 51,792 -- 120,000 53,890
President, Financial Services, 1996 314,500 320,000 110,024 535,000 15,000 14,056
and Chief Financial 1995 265,264 296,660 6,338 425,000 23,000 12,459
Officer
Richard M. Christman............ 1997 300,000 196,648 46,670 -- 30,000 115,054
Senior Vice President 1996 259,008 169,125 33,581 171,200 6,800 36,176
1995 250,017 252,979 10,844 136,000 64,800 15,749
Richard S. Brennan.............. 1997 320,000 130,000 -- -- 3,000 --
General Counsel 1996 309,000 100,000 -- 53,500 3,000 --
and Secretary 1995 262,500 100,000 -- -- 28,000 --
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the value of shares received pursuant to a program of the
Corporation which permits participants 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. Shares awarded under such program during 1997 were
subject to a forfeiture provision and a restriction on disposition for
twelve months, and during 1996 and 1995 were subject to a restriction on
disposition for six months. Pursuant to the program, Messrs. Rosso, Lamb,
French and Christman exchanged $520,000, $510,000, $50,000 and $61,600 of
cash bonus, respectively, in 1997, and 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 1997: for Mr. Rosso, $35,534 in family benefits and
$31,781 in reimbursement for certain taxes; for Mr. Lamb, $146,660 in
reimbursement for certain taxes; and for Mr. Christman, $34,949 in
reimbursement for certain taxes; (ii) 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; and (iii) 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.
(3) The amounts disclosed for 1996 and 1995 are based on the total number of
shares of restricted Common Stock awarded under the Corporation's Equity
Incentive Plan and the closing price per share of Common
8
<PAGE> 12
Stock on the date of the grant. Dividends will be paid on all restricted
shares of Common Stock held by each individual. The holdings of unvested
restricted stock, including the performance share units described in
footnote (1) to the Long-Term Incentive Awards Table on page 10 hereof, as
of December 31, 1997, are: for Messrs. Rosso, Lamb, French, Christman and
Brennan, 182,000, 115,000, 93,000, 24,400 and 1,000 shares of Common Stock,
respectively. The aggregate value of the unvested restricted shares and
performance share units held at December 31, 1997, for each of the named
executive officers, based on the closing price of $60.44 per share for
Common Stock on such date (as reported on the New York Stock Exchange
Composite Tape), for Messrs. Rosso, Lamb, French, Christman and Brennan was
$11,000,080, $6,950,600, $5,620,920, $1,474,736 and $60,440, respectively.
(4) Includes amounts contributed or deferred pursuant to the Corporation's ERISA
Excess Plan and/or Retirement Savings Plan during 1997, 1996 and 1995 for
the accounts of Messrs. Rosso, Lamb, French and Christman of $120,968,
$59,581, $9,240; $74,655, $11,106, $9,000; $48,844, $10,202, $9,240; and
$113,821, $34,998, $14,657, respectively; and amounts imputed as income for
federal income tax purposes under the Corporation's group life insurance
plan during 1997, 1996 and 1995 for Messrs. Rosso, Lamb, French and
Christman of $24,637, $21,486, $23,513; $5,634, $4,342, $2,271; $5,046,
3,854, $3,219; and $1,233, $1,178, $1,092, respectively.
OPTION GRANTS IN 1997
The following table sets forth the number of shares of Common Stock subject
to stock options that were granted during 1997 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 Common
Stock over the term of the option 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(4)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION -------------------------
NAME GRANTED IN 1997 PER SHARE(3) DATE 5% 10%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jean-Pierre Rosso 210,000(1) 20.1% $60.1875 5/13/2007 $7,948,835 $20,143,909
11,310(2) 1.1% 62.8790 8/17/2004 293,132 684,496
Steven G. Lamb 150,000(1) 14.4% 60.1875 5/13/2007 5,677,739 14,388,506
Theodore R. French 120,000(1) 11.5% 60.1875 5/13/2007 4,542,191 11,510,805
Richard M. Christman 30,000(1) 2.9% 60.1875 5/13/2007 1,135,548 2,877,701
Richard S. Brennan 3,000(1) 0.3% 55.8750 1/25/2008 139,718 324,707
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of performance stock options for Common Stock granted under the
Corporation's Equity Incentive Plan. The performance stock options
automatically become exercisable seven years from the grant date (January
26, 2002 for Mr. Brennan). Subject, in each case, to the individual's
continued employment with the Corporation, exercisability of such options
may be accelerated to three years from the grant date (January 26, 2000 for
Mr. Brennan), or quarterly thereafter, upon the attainment of specified
increases in the market value of Common Stock, plus dividends, expressed in
the form of an annual compound growth rate, which is measured from the
closing price of Common Stock on the day preceding the grant date.
Exercisability of such options may also be accelerated upon death,
retirement at age 65 or older, or total disability if such event occurs at
least six months after the grant date. Under certain circumstances the
options may become exercisable upon a Change-in-Control of the Corporation.
The performance stock 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 (a "Reload Stock Option") to purchase the number of shares so
delivered. These Reload Stock Options are granted at fair market value on
the grant date, become exercisable six months from the grant date and expire
coincident with the options they replace. Grantees are limited to two Reload
Stock Options in any calendar year and a total of ten Reload Stock Options.
As a condition to receiving the performance stock options, each executive
officer had to execute a Confidentiality and Non-Competition Agreement.
(2) Represents a Reload Stock Option granted on July 21, 1997 under the
Corporation's Equity Incentive Plan.
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<PAGE> 13
(3) All options were granted at fair market value on the date of grant.
(4) 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 Common Stock. No gain to the optionee is possible without a price
increase in 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 Common Stock would be, in each case, 41% and 96%,
respectively, above the exercise or base price of the options.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
The following table sets forth the shares of Common Stock acquired and the
value realized on the exercise of options during 1997 and the number and value
of unexercised stock options for Common Stock held, as of December 31, 1997, 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, 1997 DECEMBER 31, 1997(1)
ACQUIRED ON VALUE ------------------------------------------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jean-Pierre Rosso 100,000 $4,385,556 375,100 296,310 $13,263,506 $ 841,563
Steven G. Lamb 60,000 2,747,700 190,766 168,334 7,298,418 218,651
Theodore R. French 63,000 2,654,266 170,100 135,000 6,524,444 187,813
Richard M. Christman 50,000 2,316,280 124,898 86,802 4,891,712 1,941,570
Richard S. Brennan -- -- 3,000 31,000 42,125 967,138
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the closing stock price for Common Stock on December 31, 1997 of
$60.44 per share.
LONG-TERM INCENTIVE AWARDS IN 1997
The following table sets forth information concerning the performance share
units awarded under the Corporation's Equity Incentive Plan during 1997 to the
persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK
NUMBER OF OTHER PERIOD PRICE-BASED PLANS
SHARES, UNITS UNTIL -------------------------
OR OTHER MATURATION OR THRESHOLD MAXIMUM
NAME RIGHTS(#)(1) PAYOUT (#) (#)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jean-Pierre Rosso 137,000 1997-2004 27,400 137,000
Steven G. Lamb 95,000 1997-2004 19,000 95,000
Theodore R. French 73,000 1997-2004 14,600 73,000
Richard M. Christman 18,000 1997-2004 3,600 18,000
Richard S. Brennan -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of performance share units awarded under the Corporation's Equity
Incentive Plan. Upon vesting, the performance share units are converted into
an equal number of shares of Common Stock. The performance share units
awarded to the Corporation's executive officers vest, if at all, subject to
the condition of the individual's continued employment with the Corporation,
upon attainment of specified increases in the market price of Common Stock,
plus dividends, expressed in the form of an annual compound growth rate,
which is measured from the closing price of Common Stock on the day
preceding the grant date. Except as described below, no performance share
units awarded to an executive officer can vest until May 2000, after which
the performance share units vest, if at all, on a quarterly basis until May
2004. The individual becomes fully vested in all performance share units
upon death, retirement at age 65 or older, or total disability, if such
event occurs at least six months after the grant date. Under certain
circumstances, the performance share units vest upon a Change-in-Control of
the Corporation. All unvested performance share units described in this
column shall be forfeited in May 2004. As a condition to receiving the
performance share units, each recipient had to execute a Confidentiality and
Non-Competition Agreement.
10
<PAGE> 14
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
On March 20, 1997, 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 1997 of $800,000,
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) an 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 thereafter), 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; 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
options of Tenneco Inc. ("Tenneco"), the former parent of the Corporation) 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 Common Stock
exceeds the exercise price of such forfeited options. On December 10, 1997, the
Corporation's Board of Directors approved an increase in Mr. Rosso's base annual
salary to $850,000 effective January 1, 1998. 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 reasonably 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 COMPENSATION
Consistent with Case Corporation's primary objective of long-term
maximization of stockholder value, Case has achieved outstanding stock price
appreciation for its stockholders since becoming a public company. 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 Case's executive compensation programs in an
effective manner.
Governing Principles
In overseeing the Corporation's executive remuneration program, the
Committee bases the program on several principles, as set forth below.
- 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. Approximately
three-fourths of executives' total compensation is at risk in the form of
incentive compensation tied to performance.
- Emphasize Stockholder Value Objective -- The majority of at-risk
compensation is comprised of long-term, equity-based programs which serve
as the cornerstone of Case's executive compensation program. Consistent
with this principle, an executive's net worth depends heavily on
appreciation in the value of
12
<PAGE> 16
the Corporation's stock over the long term. Also, executives are required
to own stock valued at one-half to four times base salary, depending on
responsibility level.
- 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. Long-term incentive
opportunities are emphasized which reinforce stockholder value creation
and a high performance culture.
- Develop and Retain Leadership -- To assist the Board of Directors in
identifying and retaining key leadership, the Committee also works to
identify knowledgeable executives who demonstrate the ability to deliver
results that increase stockholder value. Continued development and
retention of current and future leadership is an integral part of the
overall Case compensation strategy.
Executive 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 to the success of the Corporation's
business, employees, stockholders, and the communities in which those
individuals live and work.
Compensation Overview and Components
In determining the amount of compensation for the Chief Executive Officer
and other executives, the Compensation Committee reviews detailed competitive
compensation information provided by independent consultants specializing in
executive compensation. This includes comprehensive surveys for two Comparator
Groups, the Peer Group and High Performing Group, as well as specific
information for key direct competitors. The Peer Group consisted of 24
manufacturing companies with median (50th percentile) annual revenues
approximately equal to Case. These companies were chosen because they operate in
a business similar to Case's and compete for similar types of executives. The
High Performing Group consisted of 23 manufacturing companies with an
exceptional history of financial performance which compares 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. Some of the
companies that comprise the above Comparator Groups are included in the
published industry index in the Stock Performance Graph included in this Proxy
Statement. The Compensation Committee believes the Corporation's competitors for
executive talent extend beyond the companies 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 is addressed separately below.
Base Salaries
Base salary levels are established annually based on a review of salary
levels for executives in the external benchmarks described above. The
Corporation attempts to establish base salaries at the median of the Peer Group.
Since the Corporation's initial public offering, overall competitiveness for a
sample of executive positions has grown close to the median.
Annual increases to base salaries result generally from an individual
executive performing in accordance with the Corporation's Performance Alignment
Process, as well as market movements. 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
merit increase made in January 1998 for executives (excluding the Chief
Executive Officer) was 4.1 percent, which was consistent with industry averages.
Additionally, as base salary levels in the marketplace are strongly aligned
with responsibility level, it is important to note that as plans for top
leadership stability continue to evolve and as the Corporation continues to
grow, the responsibilities of a number of positions (e.g., Chairman and Chief
Executive Officer; President and Chief Operating Officer; and President,
Financial Services, and Chief Financial Officer) increase greatly.
13
<PAGE> 17
Compensation changes during the last year reflect the result of changing
responsibilities, primarily for these key positions.
Annual Incentives
The Compensation Committee administers the Executive 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 1997, the financial performance targets were based on the
achievement of Corporate Economic Value Added (EVA) and, at the Business Unit
level, operating net income and operating cash flow goals. EVA is defined as net
operating earnings after taxes, less the cost of capital. This measure is one of
several used to focus executive accountability on the continuous improvement of
stockholder value and the efficient use of capital, while it strengthens the
Corporation's culture of ownership. The resulting target bonus levels are
intended to provide the opportunity to earn annual cash pay in the mid-range of
the Peer Group, provided performance is at an expected level. Individual bonuses
may be above or below this level, depending upon performance.
At the end of the year, the Compensation Committee approved bonus awards
for executive officers based on the degree of achievement with the target
performance goals and judgments regarding each executive officer's individual
performance and contribution to achieving corporate-wide goals. The Committee
also reviewed aggregate bonuses under the Executive Compensation Plan. Bonus
awards for executives (excluding the Chief Executive Officer) averaged 130
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 forfeiture upon voluntary termination or for
cause for one year), discounted from the fair market value by 25 percent.
Approximately 42 percent of the executives made an election to convert some
portion of their bonus into Common Stock.
Long-Term Incentives
Long-term stock-based incentives comprise the largest portion of the value
of an executive's total compensation package and serve as the cornerstone of the
Corporation's executive compensation program. 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.
Factors considered in determining actual individual award levels include an
executive's level of responsibility, salary, historical award data, individual
performance, career potential, and stock ownership position in addition to
compensation practices at comparator companies. The targeted amount of annual
long-term incentives awarded by the Corporation to its executives is at the
median of the Peer Group with individual award guidelines structured to provide
75th percentile or higher awards to high performing and/or high potential
executives.
In 1997, Case's traditional long-term incentives of restricted stock and
stock options were replaced with performance share units and performance stock
options. This change was intended to reinforce stockholder value creation and a
pay-for-performance philosophy. Performance share units and performance stock
options are similar to restricted stock and stock options except that the awards
may be earned based solely on the achievement of stretch performance goals or on
a combination of achievement of stretch performance objectives and continued
service, as opposed to vesting tied only to continued service under traditional
restricted stock and stock options.
Combination awards of performance share units and performance stock options
were made in 1997 to executive officers (with the exception of Mr. Brennan) in
an effort to support the continuing creation of stockholder value, the
achievement of the Corporation's strategic objectives, and the retention of the
continued services of top leadership.
The performance share unit awards to these executive officers have a
seven-year term and a minimum three-year waiting period (subject to limited
exceptions for retirement at age 65 or older, death, total disability or a
Change-in-Control of the Corporation) before any shares may be vested. These
awards are subject to
14
<PAGE> 18
automatic forfeiture, in whole or in part, if Total Shareholder Return targets
are not met within seven years from the date of grant. To the extent the target
Total Shareholder Return is not achieved, the full award will not be earned;
there is no provision for eventual vesting based on continued service alone.
The performance stock option awards to these executive officers were made
at the fair market value on the date of grant and have a ten-year term. The
option awards are subject to the same performance vesting terms and provisions
as the performance share unit awards. The performance stock option awards will
vest, however, by continued service seven years after grant, which is intended
to lessen the financial impact of the awards to the Corporation.
Mr. Brennan was awarded performance stock options in 1997 which were
similar to those awarded to other executive officers except that the minimum
waiting period for vesting is two years instead of three, and the award will
vest based on continued service in four years rather than seven.
Stock Ownership
As mentioned in 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 has established stock ownership guidelines which
require each executive officer 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 were required to own 50 percent
of their specified multiple by December 1997, and are required to own 75 percent
by December 1998 and 100 percent by December 1999. The Compensation Committee
periodically reviews the guidelines for appropriateness relative to external
considerations, as well as current ownership levels relative to the guidelines.
Chief Executive Officer Compensation
Mr. Rosso's compensation was determined consistent with the principles laid
out above. Overall, the Compensation Committee believes that the Corporation's
performance for 1997 was excellent due to its record earnings, 11% sales growth,
and a 14% increase in earnings per share. Actual financial performance exceeded
goals set at the beginning of the year.
Given the Corporation's performance under his capable and effective
leadership, Mr. Rosso was paid a base salary of $800,000 in 1997 and received an
annual bonus of $1,040,000. Mr. Rosso elected to receive 50 percent of his 1997
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 11,093 shares of Common Stock which are subject to forfeiture for one year.
Mr. Rosso's performance share unit award and performance stock option grant for
1997 as previously described are consistent with his employment contract and are
designed to provide him with an additional incentive to enhance stockholder
value and continue to effectively lead the Corporation.
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. The amount of stock Mr. Rosso actually owns far exceeds his
current target.
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 executive officers 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 authorize compensation which may not, in a specific case, be fully
deductible by the Corporation to recognize individual achievement or to assure
payment of compensation which is competitive in the marketplace.
15
<PAGE> 19
Conclusion
The Compensation Committee believes these executive compensation policies
and practices effectively serve the interest of stockholders and the
Corporation. The various compensation programs offered are appropriately
balanced to provide increased motivation for executive officers to continue to
contribute to the Corporation's overall future success, 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, Chairperson
Jeffery T. Grade
Thomas R. Hodgson
Theodore R. Tetzlaff
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From January 1, 1997 to May 14, 1997, the Corporation's Compensation
Committee consisted of Messrs. Andrews, Grade, Rosenfeld and Tetzlaff. On the
latter date Mr. Andrews retired from the Corporation's Board and from all Board
committees on which he then served. Mr. Hodgson became a member of the
Corporation's Compensation Committee at that time. None of Messrs. Andrews,
Grade, Hodgson, Rosenfeld or Tetzlaff was or has been an officer or employee of
the Corporation or any of its subsidiaries.
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 1997.
During 1997, 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 1998. 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 1997, 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, was a Managing Director of Lazard Freres during
1997. The Corporation may engage Lazard Freres or its affiliates for similar
services during 1998.
During 1997, Mr. Andrews was indebted to Case Credit Corporation, a
subsidiary of the Corporation, as a result of seven loans for the financing of
various pieces of agricultural equipment purchased from an independent dealer in
1993, 1995, 1996 and 1997 for use in his farming business. The loans bear annual
rates of interest between 3.9% and 8.9%, with varying terms of up to 60 months
and maturity dates from August 12, 1998 to January 1, 2001. The highest
aggregate amount of indebtedness outstanding under these loans since the
beginning of 1997 until the time of Mr. Andrews' retirement was $240,915. As of
March 31, 1998, $181,171 was outstanding under these loans. In addition, Mr.
Andrews' farm used prototype agricultural equipment of the Corporation for test
purposes during 1997.
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 changes, for the periods
indicated, in the Cumulative Total Return on an investment in Common Stock 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 Common Stock, the S&P 500 and the Peer
Group. "Cumulative Total Return" on a share of Common Stock, 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, 1997 (assuming
the reinvestment of dividends over such period), and (ii) the difference between
the price of a share of Common Stock, the S&P 500 and the Peer Group,
respectively, at June 30, 1994, and each fiscal-year-end date through December
31, 1997, by (b) the price of a share of Common Stock, the S&P 500 and the Peer
Group, respectively, at June 30, 1994.
<TABLE>
<CAPTION>
S&P
Measurement Period Machinery
(Fiscal Year Covered) Index S&P 500 Case
<S> <C> <C> <C>
6/30/94 100.00 100.00 100.00
12/30/94 103.00 105.00 114.00
12/29/95 127.00 144.00 245.00
12/31/96 158.00 177.00 293.00
12/31/97 202.00 236.00 326.00
</TABLE>
The stock price performance shown on this graph is not necessarily
indicative of the future stock price performance of Common Stock.
---------------------------------------------------------
CERTAIN RELATIONSHIPS AND TRANSACTIONS
In July 1995, the Corporation extended to Mr. Lamb, the 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 this loan is $105,000. In March 1996, the Corporation extended to Mr.
French, the President, Financial Services, 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 this facility is $120,000.
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
1997 for Mr. Brennan's services. The Corporation and its subsidiaries engaged
Mayer, Brown & Platt for legal services during 1997, and the Corporation and its
subsidiaries intend to retain such firm for similar services during 1998. In
1997, 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 in 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.
- --------------------------------------------------------------------------------
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 1998 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 1999, rather than 1998,
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
---------------------------
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
18
<PAGE> 22
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 18,
1998 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 1999
Annual Meeting of Stockholders.
Stockholder proposals not included in the 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 17, 1998
19
<PAGE> 23
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
ANNUAL MEETING
OF STOCKHOLDERS
MAY 13, 1998
CASE CORPORATION
700 STATE STREET, RACINE, WISCONSIN 53404
CASE LOGO
(LOGO) PRINTED ON RECYCLED PAPER
<PAGE> 24
CASE CORPORATION
1998 ANNUAL MEETING OF STOCKHOLDERS
PROXY/VOTING INSTRUCTION CARD [CASE LOGO]
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
23, 1998 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 13, 1998, 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 Thomas R. Hodgson Jean-Pierre Rosso
Ronald E. Goldsberry Katherine M. Hudson Theodore R. Tetzlaff
Jeffery T. Grade 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 -
<TABLE>
<S><C>
[X] PLEASE MARK YOUR
VOTES 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 DISCRECTION OF THE PROXIES
DIRECTORS ANDERSEN LLP AS NAMED HEREIN, THE PROXIES
(SEE REVERSE) INDEPENDENT PUBLIC ARE 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
</TABLE>
- FOLD AND DETACH HERE -
[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
