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(LOGO)
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SPS Technologies, Inc.
101 Greenwood Avenue, Suite 470
Jenkintown, Pennsylvania 19046
Notice of
Annual Meeting of Shareholders
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The Annual Meeting of Shareholders of SPS Technologies, Inc. will be held
on Monday, May 23, 1994, at ten o'clock a.m., local time, at 17 Mellon
Bank Center, 1735 Market Street, Philadelphia, Pennsylvania 19101, in the
Forum Room (eighth floor), for the following purposes:
1. To elect two Class II directors for a term of three years; and
2. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
All shareholders are cordially invited to attend the meeting.
Shareholders of record at the close of business on April 4, 1994 will be
entitled to vote at the meeting.
Aaron Nerenberg
Secretary
April 22, 1994
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YOUR VOTE IS IMPORTANT
You are urged to mark, sign, date and promptly return your proxy in the
enclosed envelope.
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Proxy Statement
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General
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This proxy statement is furnished in connection with the solicitation
of proxies for use at the Annual Meeting of Shareholders of SPS
Technologies, Inc. ("Company"), to be held on Monday, May 23, 1994, and
at any adjournments or postponements thereof. This proxy statement and the
enclosed form of proxy are first being mailed to shareholders on or about
April 22, 1994.
Shareholders are requested to mark, sign, date and return in the
envelope provided, the enclosed proxy which is being solicited by the
Board of Directors of the Company. No postage is required if the proxy is
returned in the enclosed envelope and mailed in the United States.
Execution of the enclosed proxy will not affect a shareholder's right
to attend the meeting and vote in person. The proxy is revocable by
delivering written notice of revocation to the Secretary of the Company at
any time before the proxy is voted, by a properly executed, later-dated
proxy, or by attending the meeting and voting in person.
The cost of soliciting proxies will be paid by the Company. The
Company will reimburse brokers, custodians, nominees and fiduciaries for
the cost of forwarding materials to beneficial owners. Proxies may be
solicited by directors, officers and employees, but such persons will not
be specially compensated for such services.
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Voting Information
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Only record holders of Common Stock of the Company at the close of
business on April 4, 1994, are entitled to vote. On that date there were
issued and outstanding 5,107,292 shares of Common Stock, par value $1.00
per share, each of which is entitled to one vote and which, in the
election of directors, has cumulative voting rights. This means that
shareholders have the right to multiply the number of votes to which they
may be entitled by the total number of directors to be elected in the same
election and may cast the whole number of such votes for one nominee or
may distribute them among any two or more nominees. Proxy holders may vote
cumulatively for any or all of the nominees, and it is the Company's
intention to have the proxy holders exercise such cumulative voting rights
to elect the maximum number of nominees proposed by the Board of
Directors.
Shares represented by proxies in the accompanying form, unless
otherwise directed, will be voted at the Annual Meeting or any
adjournments or postponements thereof FOR the election of directors as
stated under the heading "Election of Directors". Management does not
intend to bring any other matters before the meeting, and it does not know
of any proposals to be presented by others. However, if any other matters
properly come before the meeting, the persons named in the accompanying
proxy will vote thereon in accordance with their best judgment. Under the
Company's By-laws, proposals of shareholders to be presented at the
meeting must be submitted in accordance with the procedures summarized
below under the heading "Proposals of Shareholders."
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Ownership of Voting Securities
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As of April 15, 1994, the following persons were known by the Company
to be the beneficial owners of more than 5% of the voting securities of
the Company:
<TABLE>
<CAPTION>
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Name and Address Amount and Nature of Beneficial
of Beneficial Owner Ownership of Shares of Common Stock Percent of Class
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<S> <C> <C>
Gabelli Funds, Inc., 1,436,400(a) 28.1%
GAMCO Investors, Inc.,
Gabelli & Company, Inc. and
Mario J. Gabelli
One Corporate Center
Rye, NY 10580-1434
Tinicum Enterprises, Inc., 504,300(b) 9.9%
Tinicum Investors, L.P.,
RIT Capital Partners plc,
J. Rothschild Holdings plc,
J. Rothschild Capital
Management Limited,
St. James's Place Capital plc, and
Putnam L. Crafts, Jr.
900 Stewart Avenue
Garden City, NY 11530
Anne Hallowell Miller 310,099(c) 6.1%
c/o Stacey W. McConnell
MacElree, Harvey, Gallagher
& Featherman, Ltd.
P.O. Box 660
West Chester, PA 19381-0660
Pinnacle Associates Ltd. 286,000(d) 5.6%
666 Fifth Avenue
14th Floor
New York, NY 10103
Howard T. Hallowell III 264,340(e) 5.2%
c/o Stacey W. McConnell
MacElree, Harvey, Gallagher
& Featherman, Ltd.
P.O. Box 660
West Chester, PA 19381-0660
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</TABLE>
(a) Based on information supplied by the named entities in a joint filing
on Schedule 13D made on January 6, 1994 with the Securities and
Exchange Commission. According to such filing, the named entities held
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<PAGE> 4
sole, shared or no voting and dispositive power over the shares as
follows: Gabelli Funds, Inc. - 169,500 shares (sole voting and
dispositive power), GAMCO Investors, Inc. - 1,148,800 shares (sole
voting and dispositive power) and 104,700 shares (no voting and sole
dispositive power) and Gabelli & Company, Inc. - 6,800 shares (shared
voting and dispositive power). Mr. Mario J. Gabelli is the majority
stockholder of Gabelli Funds, Inc. and individually owns 6,600 shares
(sole voting and dispositive power) of the Company's Common Stock.
(b) Based on information supplied by the named entities in a joint filing
on Schedule 13D made on October 10, 1991, with the Securities and
Exchange Commission. According to such filing, the named entities held
sole, shared or no voting and dispositive power over the shares as
follows: Tinicum Enterprises, Inc. - 214,000 shares (sole voting and
dispositive power); Tinicum Investors, L.P. - 73,904 shares (sole
voting and dispositive power); RIT Capital Partners plc (RIT) -
132,311 shares (shared voting and dispositive power); J. Rothschild
Holdings plc (no voting or dispositive power); J. Rothschild Capital
Management Limited (JRCML) - 132,311 shares (shared voting and
dispositive power); St. James's Place Capital plc (no voting or
dispositive power); and Putnam L. Crafts, Jr. - 84,085 shares (sole
voting and dispositive power). The filing indicates that pursuant to a
discretionary management agreement between RIT and JRCML, JRCML serves
as the investment manager of RIT's investment portfolio and pursuant
to such agreement has the authority on behalf of RIT to vote and
dispose of RIT's shares. Eric M. Ruttenberg, a director of the
Company, is a stockholder, director and executive officer of Tinicum
Enterprises, Inc. and a general partner of Tinicum Investors, L.P.
(c) Based on information supplied by Mrs. Miller in a filing on Schedule
13D made on August 21, 1989, with the Securities and Exchange
Commission and modified subsequently by a letter to the Company dated
March 22, 1994. According to such information, the shareholdings
indicated by Mrs. Miller include 3,883 shares held in a fiduciary
capacity in which she has a beneficial interest and shared voting and
dispositive power, and 306,216 shares held by Mrs. Miller as to which
she has sole voting and dispositive power. The amount of shares held
and percent of ownership shown does not include 64,906 shares held by
the Hallowell Foundation, established in 1956 by H. Thomas Hallowell,
Jr., of which the Company is informed Mrs. Miller is a trustee.
(d) Based on information supplied by Pinnacle Associates Ltd. in a filing
on Schedule 13G made on February 11, 1992, with the Securities and
Exchange Commission. According to such filing, the named entity held
sole voting power over 258,500 shares; shared voting power over 27,500
shares; sole dispositive power over 284,600 shares; and shared
dispositive power over 1,400 shares.
(e) Based on information supplied by Mr. Hallowell to the Company.
According to such information, the shareholdings indicated by Mr.
Hallowell include 245 shares held in a fiduciary capacity in which he
has a beneficial interest and shared voting and dispositive power, and
264,095 shares held by Mr. Hallowell as to which he holds sole voting
and dispositive power. The amount of shares held and percent of
ownership shown does not include 64,906 shares held by the Hallowell
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Foundation established in 1956 by H. Thomas Hallowell, Jr., of which
the Company is informed Mr. Hallowell is a trustee. Mr. Hallowell has
disclaimed beneficial ownership of such shares.
Information pertaining to the voting securities of the Company
beneficially owned, as of March 31, 1994, by each director, by the
Chief Executive Officers and the four other most highly compensated
executive officers, and by the group consisting of such persons and
the Company's other executive officers (the "Group") is set forth
below. This information has been supplied in each instance by the
individuals involved.
<TABLE>
<CAPTION>
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Name of Individual or Amount and Nature of Acquirable
Number of Beneficial Ownership of Shares Within Percent of Class
Persons in Group of Common Stock(a) 60 Days(b) If More Than 1%
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<S> <C> <C> <C>
Charles W. Grigg 5,000 0 -
Howard T. Hallowell III 264,340 0 5.2%
Dr. John F. Lubin 110 779 -
Allen C. Menke 3,100 1,351 -
Paul F. Miller, Jr. 11,000 1,557 -
Eric M. Ruttenberg 0(c) 729 -
John R. Selby 62,910 87,317 2.9%
F. James Skinner 500 1,351 -
Harry J. Wilkinson 11,600 59,283 1.4%
Edward H. Kottcamp, Jr. 500 30,660 -
Arthur B. Belden 700 26,250 -
John P. McGrath 2,676 26,444 -
All Directors & Executive
Officers as a Group (16 persons) 365,501 292,032 12.2%
</TABLE>
(a) The individuals named in the table or included in the Group each
exercise sole voting and dispositive power over the shares
beneficially owned by them except for 6,621 shares held by certain
members of the Group, over which such members have shared voting and
dispositive power. The total includes 700 shares held by Mr. Belden's
wife, as to which Mr. Belden disclaims beneficial ownership and has no
voting or dispositive power.
(b) Represents shares which may be acquired within 60 days of March 31,
1994, through the exercise of stock options under the SPS 1988 Long
Term Incentive Stock Plan.
(c) Eric M. Ruttenberg is a stockholder, director and officer of Tinicum
Enterprises, Inc. ("Enterprises") and a general partner of Tinicum
Investors, L.P. ("Investors") which have direct beneficial ownership
of 214,000 and 73,904 shares of Common Stock, respectively. Based on
understandings with certain other beneficial owners of shares of
Common Stock as set forth in a Schedule 13D filed on October 10, 1991,
with the Securities and Exchange Commission with respect to such
shares, Enterprises and Investors may be deemed to have indirect
beneficial ownership of an additional 216,396 shares of Common Stock,
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<PAGE> 6
directly owned by such other beneficial owners. Mr. Ruttenberg
disclaims beneficial ownership of any shares of Common Stock
beneficially owned directly or indirectly by Enterprises, Investors or
such other beneficial owners.
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Election of Directors
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The Company currently has eight directors serving in three classes,
consisting of two classes of three members each and one class of two
members. The term of office of one class will expire each year. Members of
each class are elected for terms of three years, except in the case of a
vacancy in any class, in which case the vacancy may be filled by the Board
of Directors for the balance of the term of the class in which the vacancy
exists. Charles W. Grigg was appointed a director in Class I, effective as
of December 1, 1993, to replace John R. Selby, who resigned upon
retirement, effective November 30, 1993.
The terms of office of the two Class II directors expire this year.
Accordingly, shareholders are being asked to elect two Class II directors
who will hold office until the 1997 Annual Meeting of Shareholders and
until their successors are duly elected and qualified. Unless you indicate
otherwise, your proxy will be voted in favor of the election of each of
the nominees named below for a three-year term. Should any nominee become
unavailable for election for any unforeseen reason, the Board of Directors
or the Executive Committee of the Board of Directors will determine how
the proxies will be voted. The two nominees receiving the highest number
of votes cast at the meeting will become directors at the conclusion of
the vote tabulation.
Listed below are the names of, and certain other information
respecting, the two nominees for election as Class II directors, and the
other five directors who will be continuing in office following the
meeting. F. James Skinner and Allen C. Menke are retiring from the Board
of Directors, effective on the date of the Annual Meeting of Shareholders.
Mr. Sharpe has been nominated by the Board of Directors to fill the
vacancy in Class II created by Mr. Skinner's retirement. The position in
Class I of the Board held by Allen C. Menke will be vacant as of May 23,
1994, due to his retirement. The Board has not yet identified a
replacement to fill the vacancy created by Mr. Menke's retirement.
Accordingly, the Board has not named a nominee to fill such vacancy, nor
will proxies be voted for a greater number of persons than the number of
nominees named.
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CLASS II - NOMINEES FOR A THREE-YEAR TERM
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Dr. John F. Lubin
Age: 67 Director since 1979
Educator, University of Pennsylvania since 1949 and a Professor of
Management, The Wharton School, University of Pennsylvania, from 1968
until his retirement as Professor Emeritus in July, 1992.
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Raymond P. Sharpe
Age: 45 Nominee for Director
Executive Vice President of Cookson America, Inc., a manufacturer of
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<PAGE> 7
industrial materials, and Chief Operating Officer of the Electronic
Materials Division, a supplier of special chemicals, metals, printed
circuit board laminates and equipment to the printed circuit board
fabrication and electronic assembly market, since 1994. President of the
Electronic Materials Division since 1989. A director of Hisco Corporation;
Trustee, St. Andrews School.
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CLASS I - DIRECTORS WITH TERMS EXPIRING IN 1995
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Howard T. Hallowell III
Age: 59 Director since 1992
Economist, since prior to 1989, at Eastman Kodak Company, a leading
manufacturer of photographic equipment and supplies. A trustee of the
Hallowell Foundation.
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Charles W. Grigg
Age: 54 Director since 1993
Chairman of the Board and Chief Executive Officer of the Company since
December 1, 1993. Previously, since prior to 1989, President and Chief
Operating Officer of Watts Industries, Inc., a manufacturer of valve
products.
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CLASS III - DIRECTORS WITH TERMS EXPIRING IN 1996
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Paul F. Miller, Jr.
Age: 66 Director since 1985
Senior Partner in Miller, Anderson & Sherrerd, an investment management
firm, from 1969 until his retirement in December, 1991. A director of
Hewlett-Packard Co., The Mead Corporation, Rohm and Haas Co., LTCB-MAS,
Inc. and Century IV; Trustee, University of Pennsylvania, The Ford
Foundation and The Colonial Williamsburg Foundation.
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Harry J. Wilkinson
Age: 56 Director since 1986
President and Chief Operating Officer of the Company since prior to 1989.
A director of Drexelbrook Engineering Co. and Flexible Circuits, Inc.
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Eric M. Ruttenberg
Age: 38 Director since 1991
Executive Vice President of Tinicum Investors, L.P., an investment
management company, since prior to 1989. A director of Kollmorgen
Corporation, Eastman Machine Co., REXA Corporation and Environmental
Strategies Corporation; Trustee, Mount Sinai Medical Center.
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<PAGE> 8
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Board Meetings, Committees and Compensation of Directors
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During 1993, there were nine meetings of the Board of Directors of the
Company. Throughout 1993 there was an Executive Compensation and Stock
Option Committee, a Directors Committee and an Audit Committee.
The Executive Compensation and Stock Option Committee, composed of
Messrs. Miller (Chairman), Lubin, Menke, Ruttenberg and Skinner, held two
meetings in 1993. Its function is to fix the salaries and other
compensation of all officers and key executives of the Company other than
the Chief Executive Officer and the President of the Company (whose
compensation is fixed by the Board of Directors), to evaluate the
Company's executive compensation programs to insure that they remain
effective in retaining and attracting managerial talent, and to administer
certain of the Company's executive incentive compensation and stock option
plans, including the granting of awards as provided in those plans.
The Directors Committee of the Board of Directors, composed of Messrs.
Skinner (Chairman), Lubin, Menke, Ruttenberg and Selby (until November 30,
1993, and thereafter, Mr. Grigg), held one meeting in 1993. Its functions
are to nominate candidates for election to the Board of Directors,
recommend nominees for service on its standing committees, review programs
for senior management succession, make recommendations to the Board on
matters of directors' compensation, benefits, retirement and tenure
policy, and consider nominees for director recommended by shareholders.
The Directors Committee will consider shareholder nominations under
the Company's By-laws as approved by shareholders. To be considered,
notice of a nomination must be received not less than 60 days before the
date of the relevant Annual Shareholders' Meeting. Such notice must
include (i) the name and address of the nominating shareholder, (ii) a
representation that the shareholder is entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting, (iii) the
name, age, business and residence addresses and principal occupation of
such proposed nominee, (iv) a description of any and all arrangements or
understandings between the shareholder and each proposed nominee, (v) such
other information as would be required by the Securities and Exchange
Commission to be included in a proxy statement soliciting proxies for the
election of the proposed nominee, and (vi) the signed consent of each such
individual to serve as director if elected. The Board may require any
proposed nominee to furnish other information reasonably required to
determine the proposed nominee's eligibility and qualifications to serve
as a director. Under Pennsylvania law, to be eligible, a nominee must be
an individual 18 years of age or older. Factors relevant to a nominee's
qualifications would include his or her experience or lack thereof in
managing business enterprises, service on other boards of directors,
potential or actual conflicts of interest, expertise in a field related to
the Company's business, criminal record and other similar information. If
the Board (after affording the shareholder a reasonable opportunity to
cure any deficiency in the original notice) determines that an individual
was not proposed in accordance with the By-laws, then such individual
would not be eligible for nomination and election as a director. If a
nominee is determined to have been properly proposed by a shareholder, and
the Directors Committee determines not to nominate the person, the
shareholder proposing such person may nominate the candidate at the
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<PAGE> 9
meeting. A copy of the Company's By-laws specifying the requirements for
nominations for director will be furnished to any shareholder without
charge upon written request to the Secretary of the Company.
The Audit Committee of the Board of Directors, composed of Messrs.
Menke (Chairman), Hallowell, Lubin, Miller and Skinner, held two meetings
in 1993. Its functions include meeting periodically with the Company's
management, internal auditors and independent certified public accountants
to review with each whether they are properly discharging their respective
responsibilities. In addition, this committee is responsible for
recommendations to the Board of Directors in the selection and retention
of the Company's independent certified public accountants, for
establishing the scope of their accounting services and for approval of
related fees.
In 1993, all of the directors attended more than 75% of the aggregate
of the meetings of the Board and the committees of the Board on which they
served.
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Executive Compensation
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The following table sets forth, for the Company's fiscal years ended
December 31, 1991 through 1993, the total annual and long-term
compensation of the Chairman and Chief Executive Officer and the four
other most highly compensated executive officers other than the Chairman
and Chief Executive Officer (the "Named Officers").
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Summary Compensation Table
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<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
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Awards
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Securities
Other Annual Underlying All Other
Name and Salary Bonus Compensation Options Compensation
Principal Position Year ($)(1 ($)(2) ($)(3) (#) ($)(4)
<S> <C> <C> <C> <C> <C> <C>
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Charles W. Grigg(5) 1993 33,333 0 1,000 150,000 0
Chairman and Chief 1992 0 0 0 0 0
Executive Officer 1991 0 0 0 0 0
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John R. Selby(6) 1993 486,827 0 61,851 0 57,922
Chairman and 1992 468,450 0 46,501 0 15,810
Chief Executive Officer 1991 417,500 0 39,588 23,900 13,777
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Harry J. Wilkinson 1993 293,333 0 39,571 0 7,012
President and 1992 277,183 0 20,351 0 6,526
Chief Operating Officer 1991 273,750 70,500 16,824 15,600 4,253
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Edward H. Kottcamp, Jr.(7) 1993 209,667 0 18,216 0 4,252
Group Vice President, 1992 204,083 0 13,765 0 4,116
Materials and Technology 1991 195,000 22,000 11,630 11,100 3,892
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Arthur B. Belden(8) 1993 177,000 0 8,675 0 1,357
Vice President, 1992 169,667 0 5,610 0 1,290
Finance 1991 158,750 36,000 4,182 9,200 1,185
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John P. McGrath 1993 149,333 0 4,654 0 1,853
Vice President, 1992 144,083 0 2,811 0 1,769
Corporate Services 1991 135,833 24,000 2,218 7,800 1,644
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</TABLE>
1. Amounts shown include amounts deferred by the Named Officers under the
Company's Executive Deferred Compensation Plan.
2. Amounts shown reflect payments to the Named Officers under the
Company's Management Incentive Plan.
3. Amounts shown include directors' fees for 1993 through 1991,
respectively as follows for Mr. Grigg - $1,000, 0, 0; for Mr. Selby -
$6,000, $6,000 and $5,700; and for Mr. Wilkinson - $7,000, $6,000, and
$5,700. Amounts shown also reflect, for each of the Named Officers,
interest accrued in excess of 120% of the applicable federal long-term
rate with respect to the Company's Executive Deferred Compensation
Plan.
4. Amounts shown include payments by the Company to each of the Named
Officers for term life insurance and, in the case of Mr. Wilkinson,
deemed compensation under a Split Dollar Life Insurance Plan, for the
years 1993 through 1991, respectively, as follows: $881, $758, and
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<PAGE> 11
$635. Mr. Selby was also a beneficiary of this plan, but is not deemed
to have received compensation thereunder for the covered years. In the
case of Mr. Selby, the amount shown for 1993 includes $41,250, which he
was paid under the Consulting Agreement described in note 6 below.
5. Amounts shown reflect compensation for Mr. Grigg as of December 1,
1993, the date when he became Chairman and Chief Executive Officer of
the Company.
6. Mr. Selby retired, effective November 30, 1993. In connection with Mr.
Selby's retirement, the Company entered into a Consulting Agreement
with him for the period from December 1, 1993 through August 31, 1994.
His compensation under this Agreement for December, 1993 was $41,250,
and for the period from January 1, 1994 through August 31, 1994 is
$20,833 per month. The Consulting Agreement includes a provision
whereby Mr. Selby will not compete with the Company during the period
from December 1, 1993 through August 31, 1995.
7. Mr. Kottcamp resigned as an executive officer, effective December 31,
1993. Under the Company's Senior Executive Severance Plan (described
below), he may remain an employee for up to one year.
8. Mr. Belden resigned as an executive officer, effective January 31,
1994. Under the Company's Senior Executive Severance Plan (described
below), he may remain an employee for up to one year.
----------
The following tables provide information concerning the number and value
of option grants during the last year and the number and value of options
to purchase the Company's Common Stock held by each of the Named Officers
as of December 31, 1993. No option grants were made during 1993 to the
Named Officers, with the exception of Mr. Grigg, who received an option
grant of 150,000 shares of the Company's common stock on December 1, 1993,
upon being elected Chairman and Chief Executive Officer of the Company.
All options outstanding were granted under the SPS 1988 Long Term
Incentive Stock Plan at 100% of the fair market value of the Company's
Common Stock on the date of grant. The vesting provisions of the options
are determined by the Executive Compensation and Stock Option Committee.
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<PAGE> 12
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Option Grants in Last Year
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<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term
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% of
Total
Options
Number of Granted
Securities to
Underlying Employees Exercise
Options in Last Price Expiration
Name Granted Year ($/Sh) Date 5%($) 10%($)
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<S> <C> <C> <C> <C> <C> <C>
Charles W. Grigg(1) 150,000 100% 21.6250 Nov. 30, 2003 2,040,000 5,169,700
- -----------------------------------------------------------------------------------------------------------------------
John R. Selby 0 0 - - - -
- -----------------------------------------------------------------------------------------------------------------------
Harry J. Wilkinson 0 0 - - - -
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Edward H. Kottcamp, Jr. 0 0 - - - -
- -----------------------------------------------------------------------------------------------------------------------
Arthur B. Belden 0 0 - - - -
- -----------------------------------------------------------------------------------------------------------------------
John P. McGrath 0 0 - - - -
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Grigg received an option grant under the SPS 1988 Long Term
Incentive Stock Plan ("Plan") on December 1, 1993, upon being
elected Chairman and Chief Executive Officer of the Company. No
portion of the grant is exercisable until December 1, 1994. Except as
provided to the contrary below or upon a Change of Control, as
provided in the Plan, the option grant shall not vest or become
exercisable until November 30, 2000. In the event the closing sale
price of the Company's common shares, as reported on the New York
Stock Exchange Composite Tape, equals or exceeds the target price set
forth below for at least forty-five trading days in any period of
sixty consecutive trading days, then the number of options set forth
opposite such target price shall thereupon become vested and
exercisable:
Target Price Number of Options Vested and Exercisable
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$28.125 45,000
$34.60 45,000
$43.25 60,000
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<PAGE> 13
In the event of a Change of Control, all options become immediately vested
in full for the period of their remaining terms. The Stock Option
Agreement contains certain resale restrictions. The total number of common
shares issued pursuant to the option grant (150,000) shall not be sold
more quickly than as follows:
Time Period Cumulative Percent Which May Be Sold
------------------------------------------------------------------
12/1/93 to 11/30/94 0%
12/1/94 to 11/30/95 20%
12/1/95 to 11/30/96 40%
12/1/96 to 11/30/97 60%
12/1/97 to 11/30/98 80%
12/1/99 and thereafter 100%
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Aggregated Option Exercises and Year-End Option Value Table
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<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised "In-the-Money"
Options at Options at Year-End
Year-End ($)(1)
Number of
Shares Dollar
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles W. Grigg 0 0 0/150,000 0/0
- -------------------------------------------------------------------------------------------------------
John R. Selby 0 0 87,317/0 0/0
- -------------------------------------------------------------------------------------------------------
Harry J. Wilkinson 0 0 59,283/0 0/0
- -------------------------------------------------------------------------------------------------------
Edward H. Kottcamp, Jr. 0 0 30,660/0 0/0
- -------------------------------------------------------------------------------------------------------
Arthur B. Belden 0 0 26,250/0 0/0
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John P. McGrath 0 0 26,444/0 0/0
- -------------------------------------------------------------------------------------------------------
</TABLE>
1. At the end of 1993, the price of the Company's Common Stock was less
than the various option exercise prices.
<PAGE>
<PAGE> 14
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Pension Benefits
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The following table shows the amount of the total annual pension which
a Named Officer (with the exception of Mr. McGrath) would receive at age
65 for the years-of-service indicated under (i) the Company's Retirement
Income Plan (RIP), a qualified plan in which the benefit is based upon the
highest average pensionable earnings for any five-year period preceding
retirement and years-of-service, and is integrated with up to 50% of
primary social security benefits; (ii) the Benefit Equalization Plan
(BEP), a non-qualified unfunded plan which makes up retirement benefit
reductions under RIP due to ceilings established by the Internal Revenue
Code and/or reductions due to participation in the Executive Deferred
Compensation Plan; and (iii) the Supplemental Executive Retirement Plan
(SERP), a non-qualified unfunded plan in which an enhanced retirement
benefit is accrued based upon highest average pensionable earnings and
years-of-service.
- ------------------------------------------------------------------------------
Pension Plan Table
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Years of Service
- ---------------------------------------------------------------------------------------------------
Average Pensionable
Earnings for
Five-Year Period 5 Years 10 Years 20 Years 30 Years 40 Years
Preceding Retirement Service Service Service Service Service
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$150,000 $27,270 $ 49,770 $ 88,770 $103,770 $103,770
- ---------------------------------------------------------------------------------------------------
200,000 31,770 61,770 113,770 133,770 133,770
- ---------------------------------------------------------------------------------------------------
250,000 36,270 73,770 138,770 163,770 163,770
- ---------------------------------------------------------------------------------------------------
300,000 40,770 85,770 163,770 193,770 193,770
- ---------------------------------------------------------------------------------------------------
350,000 45,270 97,770 188,770 223,770 223,770
- ---------------------------------------------------------------------------------------------------
400,000 49,770 109,770 213,770 253,770 253,770
- ---------------------------------------------------------------------------------------------------
450,000 54,270 121,770 238,770 283,770 283,770
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE> 15
Pensionable earnings with respect to the Named Officers are based
solely on the amounts shown in the salary column of the Summary
Compensation Table.
As of December 31, 1993, the years of credited service for the Named
Officers were as follows: C. W. Grigg - 0; J.R. Selby - 22; H.J. Wilkinson
- 28; E.H. Kottcamp, Jr. - 6; A.B. Belden - 20; J . P. McGrath - 35.
The total annual payments represent the straight life annuity amounts
payable at age 65 including primary social security benefits and benefits
provided under RIP, BEP and SERP, for the years-of-service indicated in
the Pension Table.
J. R. Selby, a Named Officer, retired as of November 30, 1993 after 22
years and received lump sum payments of his pension benefits under the
three retirement plans as follows: (i) under the RIP - $779,558; (ii)
under the BEP - $698,799; and (iii) under the SERP - $994,542.
The following table shows the total amount of annual pension which Mr.
McGrath would receive at age 65 for the years-of-service indicated under
the RIP and the BEP (described above).
- ------------------------------------------------------------------------------
Pension Plan Table
- ------------------------------------------------------------------------------
Years of Service
- ------------------------------------------------------------------------------
Average Pensionable 35 Years 45 Years
Earnings for Service Service
Five-Year Period
Preceding Retirement
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
$125,000 $ 52,490 $ 58,740
- ------------------------------------------------------------------------------
150,000 64,365 71,865
- ------------------------------------------------------------------------------
175,000 76,240 84,990
- ------------------------------------------------------------------------------
The total annual payments represent the straight life annuity amounts
payable at age 65 including primary social security benefits and benefits
provided under RIP and BEP, for the years-of-service indicated in the
Pension Table.
- ------------------------------------------------------------------------------
Compensation of Directors
- ------------------------------------------------------------------------------
Each director who is not an employee of the Company receives an annual
retainer of $17,000 plus a fee of $1,000 for each meeting of the Board of
Directors or one of its committees attended by him. Each director who is
an employee of the Company receives a fee of $1,000 for each meeting of
the Board of Directors attended by him. A director who is not a
participant in any of the Company's qualified retirement plans and who
<PAGE>
<PAGE> 16
retires at or after age 70 with 5 or more years of service will receive
annually during his lifetime an amount equal to the annual retainer in
effect as of the date of his retirement. Any such director who retires at
or after age 65 with 10 or more years of service will receive annually a
similar amount during his lifetime, or a pro rata amount if the director's
service is for less than 10 years. Any non-employee director may elect to
receive discounted price stock options in lieu of all or a portion of his
annual retainer under the SPS 1988 Long Term Incentive Stock Plan.
- ------------------------------------------------------------------------------
Employment Contracts and Termination of Employment and Change of Control
Arrangements
- ------------------------------------------------------------------------------
The Company has entered into an Employment Agreement with Mr. Grigg
commencing on December 1, 1993 and continuing until his termination of
employment with the Company or his retirement at age 65. The Agreement
provides for an annual base salary in the first year of $400,000, with an
increase on each subsequent December 1 of an amount equal to at least the
percentage increase in the Consumer Price Index for the Philadelphia
Region. The Employment Agreement also provides for an incentive bonus
payment of $150,000 for the first year, and eligibility to participate in
the Company's Management Incentive Plan thereafter. The Agreement further
provides for a payment of up to $25,000 plus any federal and state income
tax liability for purchase of an automobile from his previous employer. He
is eligible to participate in all executive benefit plans, stock option
programs and employee fringe benefits during his employment with the
Company. The Employment Agreement contains severance provisions whereby,
upon a "change of control" (as defined in the Executive Severance
Agreement described below), the provisions under such Severance Agreement
govern; upon termination of employment by Mr. Grigg, or by the Company for
"cause" (as defined in the Employment Agreement) or upon death,
disability or retirement, he is entitled only to the benefits accrued
under the specific benefit plans in which he participates; and upon
termination of employment by the Company without "cause," if within the
first three years of employment, he is entitled to 200% of his base salary
then in effect plus such benefits to which he would have been entitled
under the Company's Senior Executive Severance Plan (described below) as
if he were a participant, and if after three years of employment, the
benefits provided in the Senior Executive Severance Plan (described
below). Mr. Grigg is subject to a non-competition provision during the
term of his employment with the Company and for a period of two years
thereafter.
The Company has entered into an Executive Severance Agreement
("Agreement") with each of the Named Officers. The Agreement provides
that if a "triggering termination" of employment (as defined in the
Agreement) occurs within three years after a "change of control" of the
Company (as defined in the Agreement), then the employee is entitled to
receive within 15 days after the employee's termination date, among other
benefits, cash in an amount equal to two times the sum of the employee's
annual base salary plus the incentive bonus awards earned by or allocated
to the employee in the previous fiscal year under each of the Company's
Management Incentive Plan (MIP) and Executive Incentive Plan (EIP). A
"triggering termination" generally includes a termination of employment
initiated by the Company for any reason other than a disability qualifying
the employee for benefits under the Company's Long Term Disability Plan,
<PAGE>
<PAGE> 17
or for "cause" (as defined in the Agreement), or by the employee for
certain reasons set forth in the Agreement.
Upon a "triggering termination," the employee will also be entitled
to receive the appreciated value of all the employee's stock options
outstanding and unexercised as of the termination date (whether or not
vested), any unpaid salary, all incentive bonus awards payable to, earned
by or allocated to the employee under the MIP and EIP, and all amounts
deferred by the employee under any incentive plan and under the Company's
Executive Deferred Compensation Plan. The employee will also receive two
additional years of credited service under each of the Company's RIP, BEP
and SERP, and will, for two years, continue to receive certain insurance
benefits on a cost-sharing basis. The employee's benefits from BEP and
SERP are payable in a lump sum within 15 days after the termination date.
Any restrictions remaining on restricted shares that may have been awarded
to the employee lapse, and the employee will own such shares free and
clear of any Company-imposed restriction. Any non-competition agreements
(including non-compete provisions of the EIP and MIP) terminate; however,
the employee will continue to be bound by the confidentiality provisions
of the Agreement. Each Agreement provides for compensation to the employee
for any adverse effect of payments under the Agreement determined to be
"excess parachute payments," as defined in the Internal Revenue Code.
Pursuant to the Company's Senior Executive Severance Plan (SESP), each
of the Named Officers would receive certain compensation and benefits in
the event of termination of employment with the Company, without a change
of control, for any reason other than for "cause" (as defined in the
SESP) or a disability which qualifies the participant for benefits under
the Company's Long Term Disability Plan, or if initiated by the
participant, upon the occurrence of certain events described in the SESP.
Upon such termination, the participant is entitled to receive (among other
benefits) the base salary in effect prior to the termination date for a
period of up to 12 months, all bonuses earned under the MIP and EIP for
completed and uncompleted (pro rata) periods, and all amounts deferred
under the Company's Executive Deferred Compensation Plan. The participant
will remain on the Company's payroll for up to 12 months, during which all
employee benefits to which the participant was entitled prior to the
termination will continue, and the participant will be entitled to
professional outplacement services. At the end of the 12-month period, the
participant will be vested in the Company's BEP and SERP (if a
participant) and will be entitled to receive a lump sum payment of these
retirement benefits. Restrictions on restricted shares, if any, issued to
the participant lapse. The participant is prohibited from competing with
the Company during the 12-month period following termination of
employment. If the participant is employed by a competitor of the Company
without the Company's consent, the ongoing benefits described above cease
as of the date of such employment. If the participant is employed on a
full-time basis by other than a competitor, the ongoing benefits cease
either as of the date of such employment or six months, whichever is
later. In the event an employee receives a payment under the Agreement, he
is not eligible to receive any payment under the SESP. The Company has
agreed that the SESP will not be terminated or amended to reduce or
eliminate the benefits granted to certain employees, including the Named
Officers. The SESP provides for additional compensation to the participant
<PAGE>
<PAGE> 18
if any plan payment is subject to an excise or similar tax under the
Internal Revenue Code.
In addition, the Company offers retiring executives (including the
Named Officers) an agreement pursuant to which, under certain
circumstances, the Company would be required to pay in a lump sum all
amounts otherwise payable periodically to them under any plan of, or
agreement with, the Company. Such lump sum payment would be made only if,
within three years after a "change of control" (as defined in such
agreement), there is a change in two of the top three executive officers
of the Company designated in such agreement. To date, no such agreements
are in effect.
For a discussion of payments received by a Named Officer upon his
retirement at year-end 1993, refer to the discussion following the Pension
Plan Table.
- ------------------------------------------------------------------------------
Compensation Committee Report on Executive Compensation
Overview and Philosophy
- ------------------------------------------------------------------------------
The Executive Compensation and Stock Option Committee of the Board of
Directors ("Compensation Committee") is composed entirely of outside
directors and is responsible for developing and making recommendations to
the Board with respect to the Company's executive compensation policies.
In addition, the Compensation Committee annually recommends to the full
Board the compensation to be paid to the Chief Executive Officer and
President, and determines the compensation of each of the other executive
officers of the Company. The Compensation Committee is free to engage and
consult with outside compensation consultants as it sees fit and generally
has access to independent compensation data.
The objectives of the Company's executive compensation program are to:
* Emphasize long-term performance and increases in shareholder value.
* Provide base compensation and benefit levels that are competitive
with those in the markets in which the Company competes for
executive personnel.
* Reward executives for the achievement of short-term and long-term
financial goals and the enhancement of shareholder value.
* Support a performance-oriented environment by providing incentive
compensation that changes in a consistent and predictable way with
both the financial performance of the Company and management
performance in support of strategic objectives.
* Provide a long-term and career-oriented compensation environment.
* Offer meaningful and competitive retirement and supplemental
benefits that are consistent with the Company's objective of
retaining key employees.
The executive compensation program provides a compensation package
that is competitive with that offered by similar companies. The Company
periodically reviews the competitive practices of companies in the
fabricated metals, durable manufacturing and other industries, as well as
with a broader group of companies of comparable size and complexity.
Actual compensation levels may be greater or less than average competitive
levels in surveyed companies based upon annual and long-term Company
<PAGE>
<PAGE> 19
performance as well as individual performance. The Compensation Committee
uses its discretion to set executive compensation at levels warranted in
its judgment by external, internal or an individual's circumstances.
- ------------------------------------------------------------------------------
Executive Officer Compensation
- ------------------------------------------------------------------------------
Executive officer compensation is comprised of base salary, annual
cash incentive compensation, long-term incentive compensation in the form
of stock options, specific benefits designed to provide remuneration for
career service, and various benefits, including medical, life insurance
and savings plans generally available to employees of the Company.
- ------------------------------------------------------------------------------
Base Salary
- ------------------------------------------------------------------------------
Base salary levels for the Company's executive officers are
competitively set relative to certain companies in the fabricated metals,
durable manufacturing and other industries as well as other comparable
companies. In determining salaries, the Compensation Committee also takes
into account individual experience and performance and specific expertise
beneficial to the Company.
- ------------------------------------------------------------------------------
Incentive Compensation
- ------------------------------------------------------------------------------
The Company's incentive programs are intended to provide incentives to
achieve financial and individual objectives, and to reward exceptional
performance. The Management Incentive Plan is the Company's annual
incentive program for executive officers and key managers. The purpose of
the plan is to provide a direct financial incentive in the form of an
annual cash bonus to executives for the attainment of annual financial and
individual goals. Threshold, target and maximum goals for total Company
and individual business unit performance are set by the Compensation
Committee at the beginning of each fiscal year.
- ------------------------------------------------------------------------------
Equity-Based Compensation
- ------------------------------------------------------------------------------
The equity-based compensation component of the Company's executive
compensation program is oriented toward the achievement of increasing
shareholder value over the long term. This component of the program - the
SPS 1988 Long Term Incentive Stock Plan - provides for grants of stock
options which align the executive's awards with future shareholder gains.
These grants enable executives to develop and maintain a significant,
long-term ownership position in the Company's Common Stock.
- ------------------------------------------------------------------------------
Executive Benefits
- ------------------------------------------------------------------------------
The benefit component of executive compensation is designed to provide
executives with adequate and meaningful retirement benefits which are
reflective of the benefits offered in comparable companies, and which
encourage career-service orientation of the Company's executives. In
addition, other benefits such as perquisites are rigidly controlled and
minimized. The amount of such perquisites, as determined in accordance
with rules of the Securities and Exchange Commission relating to executive
compensation, did not exceed 10% of salary for fiscal 1993.
- ------------------------------------------------------------------------------
Chief Executive Officer Compensation
- ------------------------------------------------------------------------------
The compensation of the Chief Executive Officer (CEO) is fixed by the
full Board of Directors (other than the CEO) consistent with the practices
described above. Factors considered by the Board of Directors in deciding
the compensation of the CEO are generally subjective. Mr. Selby received
the same base salary during 1993 as the previous year, and he received no
<PAGE>
<PAGE> 20
bonus during 1993. Mr. Grigg's annual base salary was set by the Board of
Directors at $400,000, which amount was set to be competitive with
companies of similar size and complexity. Mr. Grigg, in his first year of
employment, will earn a fixed bonus of $150,000.
Members of the Executive Compensation and Stock Option Committee -
Paul F. Miller, Jr., Chairman; Dr. John F. Lubin; Allen C. Menke; Eric M.
Ruttenberg and F. James Skinner.
<PAGE>
<PAGE> 21
- ------------------------------------------------------------------------------
Common Stock Performance Graph
- ------------------------------------------------------------------------------
The graph set forth below shows the cumulative shareholder return
(i.e., price change plus reinvestment of dividends) of the Company's
Common Stock during the five-year period ended December 31, 1993, as
compared to the Standard and Poor's 500 Index and the Standard and Poor's
Diversified Manufacturing Index.
Comparison of Five-Year Cumulative Total Return for
SPS, the S&P Index and the S&P Diversified
Industrial Manufacturing Index
(see notes 1 and 2 below)
-|--------------------------------------------------------------|-
| |
200 -| *|
| |
| * $|
| * |
D 160 -| |
O | $ |
L | $ |
L | * * |
A 120 -| |
R | $ $ |
S |*&$ |
| & |
80 -| |
| & |
| & &|
| & |
40 -|-----------|------------|------------|-----------|------------|-
1988 1989 1990 1991 1992 1993
* = S&P 500 Index & = SPS Technologies, Inc. $ = S&P Manufacturing Index
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
S&P 500 Index $100.00 $131.70 $127.62 $166.54 $179.20 $197.30
SPS Technologies, Inc. 100.00 98.80 51.18 67.50 55.62 50.30
S&P Manufacturing Index 100.00 111.80 110.79 135.83 147.24 178.47
Notes:
(1) Total return assumes reinvestment of dividends.
(2) The above graph assumes $100 was invested on December 31, 1988 in SPS
Technologies Common Stock, the S&P 500 Index and S&P Diversified
Industrial Manufacturing Index. The values shown in the graph above
are as of the end of each period indicated. Raw data for the S&P 500
Index and S&P Diversified Manufacturing Index are supplied by S&P.
<PAGE>
<PAGE> 22
- ------------------------------------------------------------------------------
Independent Certified Public Accountants
- ------------------------------------------------------------------------------
Coopers & Lybrand, the Company's independent certified public
accountants for the year 1993, has been selected to continue for the year
1994. Representatives of Coopers & Lybrand are expected to be present at
the Annual Meeting with the opportunity to make a statement if they desire
to do so and to respond to appropriate questions.
- ------------------------------------------------------------------------------
Proposals of Shareholders
- ------------------------------------------------------------------------------
Under the Company's By-laws, notice of any proposal to be presented by
any shareholder at a meeting must be received by the Secretary of the
Company not less than 60 days in advance of the meeting. The notice must
include the text of the proposal to be presented, a brief written
statement of the reasons why such shareholder favors the proposal, the
name and address of record of the proposing shareholder, a representation
that the shareholder is entitled to vote at the meeting and intends to
appear at the meeting, in person or by proxy, the number of shares of
stock beneficially owned by such shareholder and any material interest of
such shareholder in the proposal (other than as a shareholder). A copy of
the Company's By-laws specifying these requirements will be furnished to
any shareholder without charge upon written request to the Secretary.
Under the rules of the Securities and Exchange Commission,
shareholders wishing to submit proposals for inclusion in the Proxy
Statement of the Board of Directors for the Annual Meeting of Shareholders
to be held in 1995 must submit such proposals so as to be received by the
office of the Secretary, SPS Technologies, Inc., 101 Greenwood Avenue,
Suite 470, Jenkintown, PA 19046, no later than November 22, 1994.
Aaron Nerenberg
Secretary
April 22, 1994
- ------------------------------------------------------------------------------
Upon written request to the office of the Secretary,
SPS Technologies, Inc.,
101 Greenwood Avenue, Suite 470, Jenkintown, PA 19046,
the Company will provide, without charge, to any shareholder
solicited hereby, a copy of its Annual Report on Form 10-K,
including the financial statements and the schedules thereto.
- ------------------------------------------------------------------------------
<PAGE>
<PAGE> 23
(LOGO) SPS TECHNOLOGIES, INC. PROXY
Jenkintown, PA 19046
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby constitutes and appoints Charles W. Grigg and
Harry J. Wilkinson or either of them, proxies, with full power of
substitution, to represent and to vote as specified on the reverse side
hereof all of the shares of Common Stock that the undersigned would be
entitled to vote if personally present at the Annual Meeting of
Shareholders of SPS Technologies, Inc. to be held at 17 Mellon Bank
Center, 1735 Market Street, Philadelphia, Pennsylvania in the Forum Room
(eighth floor), on Monday, May 23, 1994, at 10:00 a.m., local time, and
any adjournments on postponements thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED,
WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR, IN THE MANNER STATED IN THE
PROXY STATEMENT.
Please mark, sign and date this proxy card on the reverse side hereof and
return it promptly using the enclosed envelope.
<PAGE>
<PAGE> 24
1. ELECTION OF DIRECTORS:
VOTE FOR WITHHOLD
all nominees listed AUTHORITY
(except as marked to vote for all
to the contrary) nominees listed
/ / / /
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.)
Nominees:
CLASS II: John F. Lubin and Raymond P. Sharpe
2. DISCRETION IS GRANTED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
The undersigned hereby revokes any proxy heretofore given for and meeting
and ratifies and confirms all that the named proxies shall do by virtue
hereof. The undersigned has received the Notice of said meeting including
the Proxy Statement and the 1993 Annual Report.
DATE: ------------------------------ , 1994
-------------------------------------(Seal)
Signature
--------------------------------------(Seal)
Signature
Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full corporate
name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
- ---------------------------------------------
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
- ---------------------------------------------
<PAGE>
