<PAGE> 1
SPS
TECHNOLOGIES
-------------------------------------------------------------------------------
SPS TECHNOLOGIES, INC.
101 GREENWOOD AVENUE, SUITE 470
JENKINTOWN, PENNSYLVANIA 19046
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
-------------------------------------------------------------------------------
The Annual Meeting of Shareholders of SPS Technologies, Inc. will be held on
Tuesday, May 2, 1995, 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 I directors for a term of three years;
2. To approve an amendment to the SPS 1988 Long Term Incentive Stock Plan;
3. To act upon a shareholder proposal to elect all directors on an annual basis,
without classification; and
4. 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 March 14, 1995 will be entitled to vote
at the meeting.
Aaron Nerenberg
Secretary
March 30, 1995
-------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
You are urged to mark, sign, date and promptly return your proxy in the
enclosed envelope.
-------------------------------------------------------------------------------
<PAGE> 2
PROXY STATEMENT
===============================================================================
GENERAL
-------------------------------------------------------------------------------
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 Tuesday, May 2, 1995, 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 March 30, 1995.
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. Chemical
GeoServe, 450 West 33rd Street, 15th Floor, New York, NY 10001-2697, has been
employed to solicit proxies by mail, telephone or personal solicitation for a
fee of approximately $6,500, plus expenses. The Company also 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.
-------------------------------------------------------------------------------
VOTING INFORMATION
-------------------------------------------------------------------------------
Only record holders of Common Stock of the Company at the close of
business on March 14, 1995, are entitled to vote. On that date there were
issued and outstanding 5,650,333 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," FOR the proposal to amend the SPS 1988 Long
Term Incentive Stock Plan as stated under the heading "Proposal to Amend SPS
1988 Long Term Incentive Stock Plan" and AGAINST the proposal for annual
election of directors as stated under the heading "Shareholder Proposal for
Annual Election of Directors." Management does not intend to bring any other
matters before the meeting, and it does not know of any additional 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."
<PAGE> 3
-------------------------------------------------------------------------------
OWNERSHIP OF VOTING SECURITIES
-------------------------------------------------------------------------------
As of February 28, 1995, the following persons were known by the Company
to be the principal beneficial owners of the voting securities of the
Company:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Name and Address Amount and Nature of Beneficial
of Beneficial Owner Ownership of Shares of Common Stock Percent of Class
------------------------------------------------------------------------------------------
<S> <C> <C>
Gabelli Funds, Inc., 1,577,680(a) 27.9%
GAMCO Investors, Inc., and
Mario J. Gabelli
One Corporate Center
Rye, NY 10580-1434
Tinicum Enterprises, Inc., 896,049(b) 15.9%
Tinicum Investors, L.P.,
RIT Capital Partners plc,
RUTCO Incorporated,
J. Rothschild Capital
Management Limited,
St. James's Place
Capital plc,
Putnam L. Crafts, Jr.,
James H. Kasschau,
Derald H. Ruttenberg,
Eric M. Ruttenberg,
John C. Ruttenberg,
Katherine T. Ruttenberg,
and Hattie Ruttenberg
990 Stewart Avenue
Garden City, NY 11530
Anne Hallowell Miller 309,300(c) 5.5%
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) 5.1%
666 Fifth Avenue
14th Floor
New York, NY 10103
Howard T. Hallowell III 270,340(e) 4.8%
c/o Stacey W. McConnell
MacElree, Harvey, Gallagher
& Featherman, Ltd.
P.O. Box 660
West Chester, PA 19381-0660
-------------------------------------------------------------------------------------
</TABLE>
(a) Based on information supplied by the named entities in a joint filing on
Schedule 13D made on December 23, 1994, 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: Gabelli
Funds, Inc. -- 179,300 shares (sole voting and dispositive power), GAMCO
Investors, Inc. -- 1,271,320 shares (sole voting and dispositive power) and
119,800 shares (no voting and sole dispositive power). Mr. Mario J. Gabelli
is the majority stockholder of Gabelli Funds, Inc. and individually owns
7,260 shares (sole voting and dispositive power) of the Company's Common
Stock.
2
<PAGE> 4
(b) Based on information supplied by the named entities in a joint filing on
Schedule 13D made on January 25, 1995, 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. (no voting or dispositive power); Tinicum Investors, L.P.
-- 629,939 shares (sole voting and dispositive power); RIT Capital Partners
plc (RIT) -- 132,311 shares (shared voting and dispositive power); RUTCO
Incorporated (no voting or dispositive power); J. Rothschild Capital
Management Limited (JRCML) (no voting or dispositive power); St. James's
Place Capital plc. (no voting or dispositive power); Putnam L. Crafts, Jr.
-- 100,000 shares (sole voting and dispositive power); James H. Kasschau --
10,000 shares (sole voting and dispositive power); Derald H. Ruttenberg --
4,546 shares (sole voting and dispositive power); Eric M. Ruttenberg --
5,615 shares (sole voting and dispositive power); John C. Ruttenberg --
4,546 shares (sole voting and dispositive power); Katherine T. Ruttenberg --
4,546 shares (sole voting and dispositive power); and Hattie Ruttenberg --
4,546 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 managing partner of Tinicum Investors.
(c) Based on information supplied by Mrs. Miller to the Company. 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 305,417 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.
Mrs. Miller has disclaimed beneficial ownership of such shares.
(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 and sole dispositive power over 258,500 shares, shared voting power
and no dispositive power over an additional 26,100 shares and shared voting
and dispositive power over an additional 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 270,095 shares held by Mr.
Hallowell as to which he 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, of which the Company is informed Mr.
Hallowell is a trustee. Mr. Hallowell has disclaimed beneficial ownership of
such shares.
3
<PAGE> 5
Information pertaining to the voting securities of the Company
beneficially owned, as of February 28, 1995, by each director, by the Chief
Executive Officer 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>
----------------------------------------------------------------------------------------------------
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 1% or More
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
Charles W. Grigg 11,000 45,000(c) 1.0%
Howard T. Hallowell III 270,340 0 4.8%
Dr. John F. Lubin 121 1,265 --
Paul F. Miller, Jr. 11,000 2,530 --
Eric M. Ruttenberg 8,606(d) 1,702 --
Raymond P. Sharpe 800 0 --
Harry J. Wilkinson 11,600 60,283 1.3%
John P. McGrath 2,943 26,844 --
Harry W. Antes 300 24,109 --
Aaron Nerenberg 3,275 19,402 --
All Directors and Executive
Officers as a Group (12 persons) 322,653 197,568 8.9%
----------------------------------------------------------------------------------------------------
</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 6,138 shares held by certain members of the Group, over which
such members have shared voting and dispositive power. The total includes
210 shares held by an executive officer not named in the table, as to which
he disclaims beneficial ownership and has no voting or dispositive power.
(b) Represents shares which may be acquired within 60 days of February 28, 1995,
through the exercise of stock options under the SPS 1988 Long Term Incentive
Stock Plan.
(c) Assuming the market price of the Company's Common Stock remains above
$28.125 per share for at least forty-five trading days in any period of
sixty consecutive trading days.
(d) The indicated shares of Common Stock are beneficially owned directly by Mr.
Ruttenberg. Mr. Ruttenberg is a managing partner of Tinicum Investors, a
Delaware partnership ("Investors"), that had direct beneficial ownership of
629,339 shares of Common Stock as of February 28, 1995. Based on
understandings with certain other beneficial owners of Common Stock
described in a Statement on Schedule 13D dated January 25, 1995, Mr.
Ruttenberg and Investors may be deemed to have indirect beneficial ownership
of an additional 276,735 shares of Common Stock beneficially owned directly
by such other beneficial owners as of February 28, 1995. Mr. Ruttenberg
disclaims beneficial ownership of any shares of Common Stock beneficially
owned directly by Investors or such other beneficial owners.
-------------------------------------------------------------------------------
ELECTION OF DIRECTORS
-------------------------------------------------------------------------------
The Company currently has seven directors serving in three classes,
consisting of one class of three members and two classes of two members each.
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.
The terms of office of the two Class I directors expire this year.
Accordingly, shareholders are being asked to elect two Class I directors who
will hold office until the 1998 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 be elected as Class I directors.
4
<PAGE> 6
Listed below are the names of, and certain other information respecting
the two nominees for election as Class I directors, and the other five
directors who will be continuing in office following the meeting.
-----------------------------------------------------------------------------
CLASS I - NOMINEES FOR A THREE-YEAR TERM
-----------------------------------------------------------------------------
HOWARD T. HALLOWELL III
Age: 60 Director since 1992
Economist, since prior to 1990 until his retirement in July, 1994, at Eastman
Kodak Company, a leading manufacturer of photographic equipment and supplies.
A director of PMHP Inc.; Trustee of the Hallowell Foundation.
-----------------------------------------------------------------------------
Charles W. Grigg
Age: 55 Director since 1993
Chairman of the Board and Chief Executive Officer of the Company since
December 1, 1993. Previously, since prior to 1990, President and Chief
Operating Officer of Watts Industries, Inc., a manufacturer of valve
products.
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
CLASS III - DIRECTORS WITH TERMS EXPIRING IN 1996
-----------------------------------------------------------------------------
PAUL F. MILLER, JR.
Age: 67 Director since 1985
Senior Partner in Miller, Anderson & Sherrerd, an investment management firm,
from 1969 until his retirement in 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.
-----------------------------------------------------------------------------
Harry J. Wilkinson
Age: 57 Director since 1986
President and Chief Operating Officer of the Company since prior to 1990. A
director of Drexelbrook Engineering Co. and Flexible Circuits, Inc.
-----------------------------------------------------------------------------
Eric M. Ruttenberg
Age: 39 Director since 1991
Managing Partner of Tinicum Investors, L.P., an investment management
company, since prior to 1990. A director of Kollmorgen Corporation, Eastman
Machine Co., REXA Corporation and Environmental Strategies Corporation;
Trustee, Mount Sinai Medical Center.
-----------------------------------------------------------------------------
5
<PAGE> 7
-----------------------------------------------------------------------------
CLASS II - DIRECTORS WITH TERMS EXPIRING IN 1997
-----------------------------------------------------------------------------
DR. JOHN F. LUBIN
Age: 68 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 1992.
-----------------------------------------------------------------------------
Raymond P. Sharpe
Age: 46 Director since 1994
Executive Vice President of Cookson America, Inc., a manufacturer of
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 prior to 1990. A director of Hisco Corporation; Trustee, St.
Andrews School.
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
BOARD MEETINGS, COMMITTEES AND COMPENSATION OF DIRECTORS
-----------------------------------------------------------------------------
During 1994, there were seven meetings of the Board of Directors of the
Company. Throughout 1994 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), Hallowell, Lubin, Ruttenberg and Sharpe, held two meetings
in 1994. Its functions are 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.
Lubin (Chairman), Grigg, Ruttenberg and Sharpe, held one meeting in 1994. 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 in
accordance with 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
6
<PAGE> 8
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 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.
Ruttenberg (Chairman), Hallowell, Lubin, Miller and Sharpe, held two meetings
in 1994. 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 1994, 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.
7
<PAGE> 9
-----------------------------------------------------------------------------
EXECUTIVE COMPENSATION
-----------------------------------------------------------------------------
The following table sets forth, for the Company's fiscal years ended
December 31, 1994, 1993 and 1992, 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").
-----------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------------------------------------------------------------------------------------------------
Awards
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>
Charles W. Grigg 1994 400,000 150,000 8,318 0 51,474
Chairman and 1993 33,333 0 1,000 150,000 0
Chief Executive Officer 1992 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------
Harry J. Wilkinson 1994 300,000 56,220 28,792 5,000 7,182
President and 1993 293,333 0 39,571 0 7,012
Chief Operating Officer 1992 277,183 0 20,351 0 6,526
----------------------------------------------------------------------------------------------------------------
John P. McGrath 1994 154,000 34,804 1,247 2,000 2,925
Vice President, 1993 149,333 0 4,654 0 1,853
Corporate Services 1992 144,083 0 2,811 0 1,769
----------------------------------------------------------------------------------------------------------------
Harry W. Antes 1994 141,000 17,625 10,201 0 4,247
Vice President, 1993 137,667 0 15,060 0 4,115
Research & Development 1992 125,654 0 11,477 0 3,949
----------------------------------------------------------------------------------------------------------------
Aaron Nerenberg 1994 136,000 33,456 2,036 2,000 1,670
Vice President, Secretary 1993 132,667 0 5,165 0 1,616
and General Counsel 1992 128,500 0 3,378 0 1,548
----------------------------------------------------------------------------------------------------------------
</TABLE>
1. Amounts shown include amounts (where applicable) 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 1994, 1993 and 1992, respectively
as follows for Mr. Grigg - $7,000, $1,000, and 0; and for Mr. Wilkinson -
$7,000, $7,000, and $6,000. 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 1994,
1993 and 1992, respectively, as follows: $882, $881, and $758. In the case
of Mr. Grigg, the amount shown for 1994 includes $43,636 representing
payment for purchase of an automobile from his previous employer including
all federal and state income taxes resulting from such payment, as specified
in his Employment Agreement.
The following tables provide information concerning the number and value
of option grants during the last year and the number and value of options to
purchase the Company's Common Stock held by each of the Named Officers as of
December 31, 1994. All options outstanding were granted under the SPS 1988
Long Term Incentive Stock Plan at 100% of the fair market value of the
Company's Common Stock on the date of grant. The vesting provisions of the
options are determined by the Executive Compensation and Stock Option
Committee.
8
<PAGE> 10
------------------------------------------------------------------------------
OPTION GRANTS IN LAST YEAR
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Potential Realizable
Value
at Assumed Annual
Rates of
Stock Price
Appreciation for
Individual Grants Option Term
--------------------------------------------------------------------------------------------------------
% of Total
Number of Options
Securities Granted to
Underlying Employees Exercise
Options in Last Price Expiration
Name Granted Year ($/Sh) Date 5%($) 10%($)
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Charles W. Grigg 0 0 -- -- -- --
-------------------------------------------------------------------------------------------------------
Harry J. Wilkinson 5,000 6% 23.375 Feb. 28, 2004 73,502 186,269
-------------------------------------------------------------------------------------------------------
John P. McGrath 2,000 3% 23.375 Feb. 28, 2004 29,401 74,507
-------------------------------------------------------------------------------------------------------
Harry W. Antes 0 0 -- -- -- --
-------------------------------------------------------------------------------------------------------
Aaron Nerenberg 2,000 3% 23.375 Feb. 28, 2004 29,401 74,507
-------------------------------------------------------------------------------------------------------
</TABLE>
------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised "In-the-Money"
Options at Options at Year-End
Number of Year-End ($)(1)
Shares Dollar
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
=========================================================================================
<S> <C> <C> <C> <C>
Charles W. Grigg(2) 0 0 0/150,000 0/562,500
-----------------------------------------------------------------------------------------
Harry J. Wilkinson 0 0 59,283/5,000 88,564/10,000
-----------------------------------------------------------------------------------------
John P. McGrath 0 0 26,444/2,000 32,836/4,000
-----------------------------------------------------------------------------------------
Harry W. Antes 0 0 24,109/0 28,254/0
-----------------------------------------------------------------------------------------
Aaron Nerenberg 0 0 19,002/2,000 11,577/4,000
-----------------------------------------------------------------------------------------
</TABLE>
(1) Value of Unexercised Options based on the year end, December 30, 1994, stock
price of $25.375 per share.
(2) 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. 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 Stock, 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:
<TABLE>
<CAPTION>
Target Price Number of Options Vested and Exercisable
-------------- ----------------------------------------
<S> <C>
$28.125 45,000
$34.60 45,000
$43.25 60,000
</TABLE>
9
<PAGE> 11
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 shares of Common Stock issued
pursuant to the option grant (150,000) shall not be sold more quickly than as
follows:
<TABLE>
<CAPTION>
Time Period Cumulative Percent Which May Be Sold
----------- ------------------------------------
<S> <C>
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%
12/1/98 and thereafter 100%
</TABLE>
------------------------------------------------------------------------------
PENSION BENEFITS
------------------------------------------------------------------------------
The following table shows the amount of the total annual pension which a
Named Officer (with the exception of Messrs. McGrath, Antes and Nerenberg)
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>
Average Pensionable
Earnings for Any
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 $27,888 $ 50,388 $ 89,388 $104,388 $104,388
---------------------------------------------------------------------------------------
200,000 32,388 62,388 114,388 134,388 134,388
---------------------------------------------------------------------------------------
250,000 36,888 74,388 139,388 164,388 164,388
---------------------------------------------------------------------------------------
300,000 41,388 86,388 164,388 194,388 194,388
---------------------------------------------------------------------------------------
350,000 45,888 98,388 189,388 224,388 224,388
---------------------------------------------------------------------------------------
400,000 50,388 110,388 214,388 254,388 254,388
---------------------------------------------------------------------------------------
450,000 54,888 122,388 239,388 284,388 284,388
---------------------------------------------------------------------------------------
500,000 59,388 134,388 264,388 314,388 314,388
---------------------------------------------------------------------------------------
</TABLE>
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, 1994, the years of credited service for the Named
Officers were as follows: C. W. Grigg -- 1; H. J. Wilkinson -- 29; J. P.
McGrath -- 36; H. W. Antes -- 15; A. Nerenberg -- 20.
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. Effective December 31, 1994, the RIP was converted to a cash
balance plan. Accordingly, future benefit accruals under RIP will be
determined by Company contribution credits based on age and service, and
interest credits based on one-year Treasury rates.
10
<PAGE> 12
The following table shows the total amount of annual pension which Messrs.
McGrath, Antes and Nerenberg would receive at age 65 for the years of service
indicated under the RIP and the BEP (described above).
------------------------------------------------------------------------------
PENSION PLAN TABLE
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Pensionable
Earnings for Any 10 20 30 40
Five-Year Period Years Years Years Years
Preceding Retirement Service Service Service Service
==============================================================================
<S> <C> <C> <C> <C>
$125,000 $30,740 $47,092 $63,444 $ 69,694
------------------------------------------------------------------------------
150,000 34,490 54,592 74,694 82,194
------------------------------------------------------------------------------
175,000 38,240 62,092 85,944 94,694
------------------------------------------------------------------------------
200,000 41,990 69,592 97,194 107,194
------------------------------------------------------------------------------
</TABLE>
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 retires at or after
age 70 with 5 or more years of service, or at or after age 65 with 10 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 will receive annually a pro rata
amount if the director's service is for less than 10 years. Any non-employee
director may elect to receive discounted options in lieu of all or a portion
of his annual retainer under the SPS 1988 Long Term Incentive Stock Plan. If
the proposal to amend the 1988 Long Term Incentive Stock Plan is approved by
shareholders, each non-employee director will receive restricted stock awards
under the Plan. See "Proposal to Amend the SPS 1988 Long Term Incentive Stock
Plan."
11
<PAGE> 13
------------------------------------------------------------------------------
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 termination of his
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
resulting from such payment for the 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, (i) upon a "change of control" (as defined in the
Executive Severance Agreement described below), the provisions under such
Severance Agreement govern; (ii) 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 (iii)
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 the Company's Management Incentive Plan (MIP). 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, 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 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 (if a participant), and will,
for two years, continue to receive certain insurance benefits on a
cost-sharing basis. The employee's benefits from BEP and SERP (if a
participant) 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 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
12
<PAGE> 14
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 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
Company-paid 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 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.
------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
------------------------------------------------------------------------------
In connection with the Company's Rights Offering of its Common Stock which
concluded in December, 1994 (the "Rights Offering"), the Company entered into
a Standby Purchase Agreement, dated as of November 16, 1994, with certain
Purchasers and Investors. The Purchasers agreed to acquire from the Company,
at the subscription price provided in the Rights Offering, all remaining
shares of Common Stock not subscribed for by the Company's shareholders. Eric
M. Ruttenberg, a director of the Company, is an "Affiliate" (as such term is
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended)
of certain of the Purchasers.
Pursuant to the Standby Purchase Agreement, the Purchasers acquired
268,380 shares of Common Stock for $6,575,310 and received from the Company
$63,088 as reimbursement for certain expenses incurred by the Purchasers in
connection with the Rights Offering. The Purchasers, Investors and their
Affiliates (collectively the "Affiliated Group") owned an aggregate of
785,280 shares of Common Stock, or approximately 13.93% of the 5,636,359
shares of the Company's Common Stock outstanding, at the conclusion of the
Rights Offering and the Purchase of unsubscribed shares in accordance with
the Standby Purchase Agreement.
The Standby Purchase Agreement will terminate upon the earliest to occur
of:
(a) six years from the date of the Standby Purchase Agreement (the
"Term"), or
(b) the date upon which the Affiliated Group no longer beneficially owned
Common Stock representing in excess of 10% of the Total Voting Power (as
defined below), or
------
1 Tinicum Enterprises, Inc., Tinicum Investors, RUTCO Incorporated, Tinicum
Foreign Investments Corporation, Tinicum Associates, G.P., Putnam L. Crafts,
Jr. and James H. Kasschau (collectively, the "Purchasers"), and RIT Capital
Partners plc, J. Rothschild Capital Management Limited and St. James's Place
Capital plc (collectively, the "Investors"). See "Ownership of Voting
Securities" for more recent information on the Affiliated Group as herein
defined.
13
<PAGE> 15
(c) removal of or failure to re-elect the designee(s) of the Purchasers and
Investors to the Board of Directors in certain circumstances contemplated
by the Standby Purchase Agreement.
Pursuant to the Standby Purchase Agreement, the Company has on November
16, 1994, amended its Rights Agreement dated as of November 11, 1988, as
amended, between the Company and Mellon Bank (East), N.A., as Rights Agent
(the "Rights Agreement"), to permit the Affiliated Group to acquire or
beneficially own Common Stock representing up to 20% (the "Percentage
Limitation") of the total voting power in the general election of directors
of the Company ("Total Voting Power"). The Company further agreed, during the
Term, to amend the Rights Agreement as necessary to permit an increase of the
Percentage Limitation in certain circumstances, including the Company's
permitting any other person, generally, to acquire or beneficially own Common
Stock representing in excess of 18% of the Total Voting Power, in which case
the Percentage Limitation will generally automatically increase to 110% of
the percentage of Total Voting Power that such other person is permitted to
acquire or beneficially own.
The Affiliated Group has agreed for approximately six years, to a broad
range of restrictions prohibiting such activities as: soliciting proxies;
generally making shareholder proposals; engaging in efforts to acquire stock
in, or assets of, the Company (by purchase, merger, or otherwise); or seeking
changes in the composition of the Board of Directors. Such restrictions will
be automatically waived (A) if any person publicly makes a bona fide offer to
acquire a majority of the outstanding Common Stock and the Company's Board of
Directors does not oppose such offer, or (B) if any person makes a bona fide
offer to acquire a majority of the outstanding Common Stock and either (i)
the Company's Board of Directors determines to accept such offer, or (ii) the
Company's Board of Directors determines, for example, to seek competing
offers or proposes to effect or negotiate with any person any form of
business combination or similar transaction with the Company, or proposes in
response to such bona fide offer, a recapitalization, share repurchase,
extraordinary dividend or other similar extraordinary transaction involving
the Company, its securities or assets, to the extent necessary to allow the
Affiliated Group to make a competing offer to the Company's Board of
Directors to acquire the Company or its securities or its assets.
The Purchasers and Investors have also agreed that, for approximately six
years, all shares of Common Stock which are directly or indirectly
beneficially owned by the Affiliated Group, other than those shares of Common
Stock which represent voting power of up to 10% of the Total Voting Power,
will be voted in accordance with the recommendation of the majority of the
Company's Board of Directors on all matters submitted to the shareholders for
a vote, including the election of directors of the Company, except with
respect to any matter which, pursuant to the Company's Bylaws, requires the
approval of an 80% super majority of the Company's shareholders, will be
voted pro rata in accordance with the vote of the Company's other
shareholders.
The Purchasers and Investors have further agreed during the Term, with
certain specific exceptions, not to sell or transfer shares of Common stock
representing in excess of 10% of Total Voting Power to any one person in any
transaction or series of transactions, unless such person agrees to be bound
by the terms of the Standby Purchase Agreement.
During the Term, the Company has agreed, generally, to exercise all
authority under applicable law, to cause Eric M. Ruttenberg (or another
designee of the Purchasers and Investors) to be elected to the Company's
Board of Directors and in addition, to the Audit, Executive, Directors and
Executive Compensation and Stock Option Committees of the Board. In the event
the Board of Directors is expanded beyond eight members, the Purchasers and
Investors are entitled to nominate an individual to fill the first out of
each three Board member positions in excess of eight Board member positions
(i.e. the ninth, twelfth, etc.).
The Company also entered into a certain Registration Rights Agreement with
the Purchasers and Investors, dated as of November 16, 1994, pursuant to
which the Company, subject to certain terms and conditions, has granted two
demand registration rights and unlimited piggyback registration rights to the
Purchasers and Investors whereby the Purchasers and Investors may require the
Company to cause shares of Common Stock Beneficially owned by them to be
registered for public sale under the Securities Act. The demand registration
rights will not be exercisable for a period of three years from November 16,
1994, but the piggyback registration rights will be currently exercisable.
All such registration rights will terminate on November 16, 2002.
14
<PAGE> 16
-----------------------------------------------------------------------------
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:
o Emphasize long-term performance and increases in shareholder value.
o Provide base compensation and benefit levels that are competitive with
those in the markets in which the Company competes for executive personnel.
o Reward executives for the achievement of short-term and long-term
financial goals and the enhancement of shareholder value.
o 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.
o Provide a long-term and career-oriented compensation environment.
o 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 those 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 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 and
individual 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.
15
<PAGE> 17
-----------------------------------------------------------------------------
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 1994.
-------------------------------------------------------------------------------
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. Effective December 1, 1994,
Mr. Grigg's annual base salary was increased by the Board of Directors from
$400,000 to $440,000. The Board believes this increase is commensurate with
the Company's improved financial performance during 1994. This base salary is
also believed to be competitive with companies of similar size and
complexity. Mr. Grigg has a 50% of base salary incentive opportunity under
the Company's Management Incentive Plan.
Members of the Executive Compensation and Stock Option Committee -- Paul
F. Miller, Jr. (Chairman); Howard T. Hallowell, III; Dr. John F. Lubin; Eric
M. Ruttenberg; and Raymond P. Sharpe.
16
<PAGE> 18
------------------------------------------------------------------------------
COMMON STOCK PERFORMANCE GRAPH
------------------------------------------------------------------------------
The graph set forth below shows the cumulative shareholder return (i.e.,
price change plus dividends, assuming the reinvestment of dividends) of the
Company's Common Stock during the five-year period ended December 31, 1994,
as compared to the Standard and Poor's 500 Index and the Standard and Poor's
Diversified Manufacturing Index.
Comparison of Five-Year Cumulative Total Return for
SPS, the S&P Index and the S&P Diversified
Industrial Manufacturing Index
(see Notes 1 and 2 below)
DOLLARS
180 |---------------------------------------------------------------------|
| *|
160 |-----------------------------------------------------*---------------|
| # #|
140 |---------------------------------------#-----------------------------|
| # * |
120 |-------------------------*-------------------------------------------|
|$ |
100 |#-----------*--------------------------------------------------------|
|* # |
80 |---------------------------------------------------------------------|
| $ $|
60 |---------------------------------------$-----------------------------|
| $ $ |
40 |------------|------------|-------------|-------------|---------------|
1989 1990 1991 1992 1993 1994
|------------------------------------------------------------------------------|
| S&P 500 Index = # SPS Technologies, Inc = $ S&P Manufacturing Index = * |
|------------------------------------------------------------------------------|
Notes:
(1) Total return assumes reinvestment of dividends.
(2) The above graph assumes $100 was invested on December 31, 1989 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.
------------------------------------------------------------------------------
PROPOSAL TO AMEND THE SPS 1988 LONG TERM INCENTIVE STOCK PLAN
------------------------------------------------------------------------------
The Board of Directors has reviewed the Company's compensation practices
and the 1988 Long Term Incentive Stock Plan (the "Plan") and has concluded
that the Plan should be amended. Accordingly, the Board of Directors has
approved, subject to approval by the shareholders of the Company, the
amendment and restatement of the Plan which, if approved, will be effective
on May 2, 1995.
As more fully described below, the amendment and restatement modifies the
Plan by, among other things: (1) increasing by 300,000 shares of Common Stock
the number of shares available under the Plan in order to allow the continued
granting of options and restricted share awards; (2) providing for the
periodic award of restricted shares to non-employee members of the board of
directors in the amount of $5,000 per year; and (3) permitting the grant of
options to employees of the Company qualifying as "incentive stock options"
under the Internal Revenue Code of 1986, as amended (the "Code"), in addition
to the previously authorized non-qualified stock options.
17
<PAGE> 19
The following discussion summarizes the material features of the amended
and restated Plan, and is qualified in its entirety by reference to Appendix
A to this proxy statement, which sets forth the Plan in full.
The Plan permits the grant of options to acquire, or the award of, up to
942,317 shares (in the aggregate) of the Company's Common Stock. Of such
amount, an aggregate of 140,569 shares have been awarded under the Plan (and
are no longer subject to forfeiture) or have been acquired upon the exercise
of options granted under the Plan, and 779,128 shares have been issued under
the Plan but remain subject to forfeiture or are subject to options which
have been granted and remain outstanding under the Plan. Consequently, prior
to the effectiveness of the proposed amendment of the Plan, there were 22,620
shares available to be awarded or optioned under the Plan. The amendment to
the Plan would increase the number of available shares to 322,620. Shares
which are awarded under the Plan and subsequently forfeited and shares
subject to options granted under the Plan which expire without being
exercised may again be awarded or optioned under the Plan.
The purpose of the 1988 Plan is to enable the Company to attract and
retain officers and other key employees, to encourage those employees to
increase their efforts to make the Company and its subsidiaries successful,
and to encourage ownership in the Company by employees and by non-employee
directors whose continued services are considered important to the Company's
continued progress.
Officers and other key employees of the Company and its subsidiaries may
receive options and restricted share awards under the Plan. If the proposal
to amend the Plan is approved, non-employee directors will receive periodic
restricted share awards under the Plan. Approximately 20 employees, including
two employee-directors, and five non-employee directors are currently
participating in the Plan.
The Plan is administered by the Executive Compensation and Stock Option
Committee (the "Committee") consisting of three or more directors appointed
by the Company's Board of Directors, who are generally not eligible to
receive discretionary grants or awards under the Plan. However, non-employee
directors, including members of the Committee, may elect to receive
discounted options and will receive restricted share awards as described
hereinbelow.
The Committee has authority to interpret the Plan, to establish rules for
its administration, to determine which employees of the Company and its
subsidiaries shall receive options or awards under the Plan, to grant options
and make share awards under the Plan, and, subject to the terms of the Plan,
to establish the terms and conditions of options, discounted options and
restricted share awards.
Awards under the Plan may take the form of fixed price options, variable
price options or restricted shares. In addition, discounted options may be
issued to non-employee directors who elect to receive such discounted options
in lieu of all or a part of their annual retainers.
Under the Plan, a non-employee director may elect each year to receive
discounted options in lieu of all or part of the director's annual retainer.
Any such election is irrevocable and must be made prior to January 1 of the
year to which such election applies. A non-employee director making such an
election will receive, on June 1 of such year or the next following business
day, a discounted option for that number of whole shares of Common Stock as
is equal to that part of the director's "annual retainer" to be represented
by the option divided by: the result obtained by subtracting (a) the par
value of one share of Common Stock from (b) the fair market value of one
share of Common Stock. Options so issued become exercisable on the first
anniversary of the date of issuance, except that such an option can become
exercisable earlier upon the death, disability or retirement of the director.
Upon the termination of service of a non-employee director, any portion of an
option attributable to a portion of the annual retainer which was not
"earned" as of the date of termination is cancelled automatically.
Prior to the amendment of the Plan, options and discounted options awarded
or issued under the Plan have been non-qualified stock options, as opposed to
"incentive stock options" within the meaning of the Internal Revenue Code of
1986, as amended (the "Code"). The proposed amendment permits the Committee
to award fixed price options to employees of the Company which qualify for
treatment as incentive stock options under the Code.
18
<PAGE> 20
A restricted share award consists of shares of Company Common Stock issued
pursuant to an agreement with a participant providing that such shares are
restricted as to transfer and subject to forfeiture and other conditions and
vesting restrictions, if any, set forth in the Plan, if applicable or deemed
appropriate by the Committee on the date of award. No restricted share awards
have been made under the Plan since its inception.
All fixed price options awarded under the Plan have an exercise price
equal to the fair market value of the Company's Common Stock on the date the
option is granted. The option exercise price of a discounted option is the
par value of the Company's Common Stock on the date the option is granted
(presently, $1.00 per share). For variable price options, the exercise price
is initially set at the fair market value of the Company's Common Stock on
the date the option is granted, but is subject at the time of exercise to
reduction by an amount per share equal to the per share amount of the tax
benefit which will inure to the Company by reason of such exercise. No awards
of variable price options have been made since the Plan was amended in 1988.
The exercise price with respect to any option (other than a discounted option
issued to a non-employee director) may be paid in whole or in part with cash
or Common Stock of the Company, as the Committee may determine. Options
expire not more than ten years from the date of grant.
As amended, the Plan will provide for restricted share awards to be made
to each non-employee director of the Company on the effective date of the
amendment and on each fifth anniversary thereafter. Each non-employee
director shall receive on each award date the number of shares of Common
Stock (to the nearest whole share) determined by dividing $25,000 by the fair
market value of the Common Stock on the date the award is made. A person
becoming a non-employee director for the first time shall receive restricted
share awards pro-rated based on the length of time remaining until the next
scheduled award date.
All restricted share awards are initially subject to forfeiture should the
participant cease to serve as a director for any reason other than scheduled
retirement, early retirement with the permission of the board, disability or
death. One fifth of the shares included in a restricted share award cease to
be subject to a risk of forfeiture on the first anniversary of the date of an
award and on each anniversary thereafter, until all shares awarded are no
longer subject to forfeiture. Restricted share awards are held in escrow by
the Company until no longer subject to a risk of forfeiture.
Options and restricted shares are non-transferable except by will or
pursuant to the laws of descent and distribution.
In the event of certain changes of control of the Company, all options and
restricted shares, other than discounted options issued to non-employee
directors, become immediately vested in full. See "Employment Contracts and
Termination of Employment and Change of Control Arrangements."
The number of shares under the Plan and under outstanding but unexercised
options or awards still subject to restriction, and the option exercise
price, are all subject to adjustment for changes in the Company's
capitalization under specified circumstances.
The Board may terminate, amend and modify the Plan, but it may not,
without shareholder approval (i) increase the number of shares available
under the Plan (other than by a change in capitalization), (ii) materially
increase the benefits accruing to participants under the Plan, or (iii)
materially modify the requirements as to eligibility for participation under
the Plan. No termination, amendment or modification of the Plan will affect
adversely the rights of a participant under a previous award. If not sooner
terminated, the Plan will expire on April 29, 2000.
TAX CONSEQUENCES
Generally, there will be no tax consequences to the optionee, the
restricted share award recipient or the Company when a stock option is
granted or a restricted share award is made under the Plan. When an option
(other than an incentive stock option) is exercised, the excess of the then
fair market value of the shares over the option price will constitute
ordinary income to the optionee, and the Company will be entitled to deduct
an equal amount as compensation expense. The exercise of an incentive stock
option will result in neither income to the optionee nor a deduction for the
company. However, the amount by which the fair market value of the underlying
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<PAGE> 21
Common Stock exceeds the exercise price on the date of exercise will be treated
as an item of tax preference and included in the computation of the optionee's
alternative minimum taxable income in the year the incentive stock option is
exercised. In addition, if shares acquired through the exercise of an incentive
stock option are sold within one year following exercise, the optionee will
recognize ordinary income and the Company is entitled to a deduction in an
amount equal to the difference between the option price and the lesser of the
market price on the date of exercise or the net proceeds of the sale. As to
restricted shares, upon the lapse of either the vesting or transferability
restrictions (or both if they lapse together), the participant will recognize
ordinary income equal to the then fair market value of the shares being freed
from restriction, and the Company will be entitled to a corresponding deduction.
Alternatively, the participant may elect, within thirty days after receipt of
the restricted shares, to treat the shares as non-restricted, thereby causing
the recognition of ordinary income upon receipt of the shares in an amount equal
to the fair market value of such shares without regard to any restrictions.
The acceleration provisions on a change of control described above could
trigger adverse tax consequences to the Company and participants under
Sections 280G and 4999 of the Code, including a reduction in the Company's
tax deductions and imposition of a nondeductible 20% excise tax on
participants.
The foregoing is not a complete summary of income tax consequences upon
participants or the Company. It also does not reflect the effects of foreign,
state or local tax laws or wage withholding requirements.
In the event that the shareholders do not approve the amendment and
restatement of the Plan, the amendment will not take effect. The Plan as in
effect prior to such amendment will remain in full force and effect until it
expires by its terms or is terminated by the Board
NEW PLAN BENEFITS
Because the granting of options (other than discounted options) and
restricted share awards (other than restricted share awards to non-employee
directors) is in the discretion of the Committee, and the issuance of
discounted options is pursuant to the prior election of non-employee
directors, it is not possible to determine the number of options or
restricted share awards to be granted or made to each of the Named Officers,
the Company's executive officers as a group, the non-employee directors as a
group or employees (other than executive officers) as a group; nor is it
possible to determine the amounts which would have been granted or awarded to
such persons or groups during 1994, had the Plan as proposed to be amended
then been in existence.
The last reported sales price of the Company's Common Stock as reported on
the New York Stock Exchange Composite Tape on March 27, 1995, was $30.875 per
share.
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BOARD RECOMMENDATION AND SHAREHOLDER VOTE REQUIRED
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
PLAN. Proxies solicited by the Board of Directors will, unless otherwise
directed, be voted FOR this proposal. The affirmative vote of a majority of
the shares of Common Stock present or represented at the meeting is necessary
to approve the proposal. Shares held by persons who abstain from voting on
the proposal and broker "non-votes" will not be voted for or against the
proposal but will have the same effect as votes against the proposal. Shares
held by persons abstaining will be counted in determining whether a quorum is
present for the purpose of voting on the proposal, but broker non-votes will
not be counted for quorum purposes.
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SHAREHOLDER PROPOSAL FOR ANNUAL ELECTION OF DIRECTORS
------------------------------------------------------------------------------
Mr. William Steiner, 4 Radcliff Drive, Great Neck, New York 11024, the
owner of 450 shares of the Company's Common Stock, has informed the Company
that he intends to present a proposal at the Company's Annual Meeting of
Shareholders. The proposal and supporting statement are quoted below.
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<PAGE> 22
Shareholder Proposal
"RESOLVED, That the stockholders of the Company request that the Board of
Directors take the necessary steps, in accordance with state law, to declassify
the Board of Directors so that all directors are elected annually, such
declassification to be effected in a manner that does not affect the unexpired
terms of directors previously elected."
Shareholder Supporting Statement
"The election of directors is the primary avenue for stockholders to
influence corporate governance policies and to hold management accountable for
its implementation of those policies. I believe that the classification of the
Board of Directors, which results in only a portion of the Board being elected
annually, is not in the best interests of the Company and its stockholders.
The Board of Directors of the Company is divided into three classes serving
staggered three-year terms. I believe that the Company's classified Board of
Directors maintains the incumbency of the current Board and therefore of current
management which in turn limits management's accountability to stockholders.
The elimination of the Company's classified Board would require each new
director to stand for election annually and allow stockholders an opportunity to
register their views on the performance of the Board collectively and each
director individually. I believe this is one of the best methods available to
stockholders to insure that the Company will be managed in a manner that is in
the best interests of the stockholders.
As a founding member of the Investors Rights Association of America I
believe that concerns expressed by companies with classified boards that the
annual election of all directors could leave companies without experienced
directors in the event that all incumbents are voted out by stockholders, are
unfounded. In my view, in the unlikely event that stockholders vote to replace
all directors, this decision would express stockholder dissatisfaction with the
incumbent directors and reflect the need for change.
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION."
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Board Recommendation and Shareholder Vote Required
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE PROPOSAL FOR ANNUAL
ELECTION OF THE BOARD. The Board is of the opinion that a classified Board of
Directors is beneficial to the Company and its shareholders because it
provides continuity, stability and experience in the composition of the
Board, while still providing for the election of a portion of the Board each
year. It also enables the Board to represent more effectively the interests
of all shareholders in a wide variety of circumstances, including those
created by the actions of a minority shareholder or group of shareholders.
Proxies solicited by the Board of Directors will, unless otherwise
directed, be voted AGAINST this proposal. The affirmative vote of a majority
of the shares of Common Stock present or represented at the meeting is
necessary to approve the proposal. Shares held by persons who abstain from
voting on the proposal and broker "non-votes" will not be voted for or
against the proposal but will have the same effect as votes against the
proposal. Shares held by persons abstaining will be counted in determining
whether a quorum is present for the purpose of voting on the proposal, but
broker non-votes will not be counted for quorum purposes.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Coopers & Lybrand, L.L.P., the Company's independent certified public
accountants for the year 1994, has been selected by the Board of Directors to
continue for the year 1995. 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.
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<PAGE> 23
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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 1996 must
submit such proposals so as to be received at the office of the Secretary,
SPS Technologies, Inc., 101 Greenwood Avenue, Suite 470, Jenkintown, PA
19046, no later than November 30, 1995.
Aaron Nerenberg
Secretary
March 30, 1995
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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.
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APPENDIX A
SPS 1988 LONG TERM INCENTIVE STOCK PLAN
AS AMENDED EFFECTIVE MAY 2, 1995
1. Name, Purpose and Eligibility. This plan shall be known as the SPS 1988
Long Term Incentive Stock Plan (the "Plan"). The purpose of the Plan is to
advance the interests of SPS Technologies, Inc. (the "Company") by
encouraging and enabling the acquisition of its common stock by officers and
other key employees of the Company and its subsidiaries upon whose judgment
and ability the Company depends for its long term growth and development.
Accordingly, the Plan is intended to promote a close identity of interests
between the Company and its shareholders as well as a means to attract and
retain outstanding management. All salaried employees of the Company and its
subsidiaries and non-employee directors of the Company ("Eligible Employees")
shall be eligible to receive options or awards under and in accordance with
the terms of the Plan.
2. Plan Administration.
(a) The Plan shall be administered by a committee (the "Committee")
which shall consist of no less than three directors appointed by the
Company's Board of Directors (the "Board"). No member of the Committee shall
be, or within one year before having become a member thereof shall have been,
eligible for selection as a person to whom stock may be allocated or to whom
stock options may be granted under the Plan. Non- employee directors,
including members of the Committee, may, however, participate under the Plan
to the extent, and on the terms, specified in Section 8 and Section 9.
(b) Subject to the terms of the Plan, the Committee shall have the sole
authority, in its sole discretion and from time to time, to: (i) designate
the Eligible Employees to whom awards shall be made or options granted under
the Plan; (ii) grant awards provided for in the Plan in such form and amount
as the Committee shall determine; (iii) impose such limitations, restrictions
and conditions upon any such award as the Committee shall deem appropriate;
and (iv) interpret the Plan, adopt, amend and rescind rules and regulations
relating to the Plan, and make all other determinations and take all other
actions necessary and advisable for the administration of the Plan.
(c) Decisions and determinations of the Committee on all matters
relating to the Plan shall be in its sole discretion and shall be conclusive.
No member of the Committee shall be liable for any action taken or decision
made in good faith relating to this Plan or any award hereunder.
3. Types of Awards Under Plan.
(a) Awards under the Plan may be in the form of any one or more of the
following:
(i) options for the purchase of common stock of the Company, which
shall be fixed price or variable price options ("Options"), as more fully
described in Section 6; and
(ii) shares of common stock of the Company which are both restricted
as to transferability and subject to a substantial risk of forfeiture,
whether as performance awards or otherwise ("Restricted Shares"), as
described in Section 7 and Section 9.
(b) In addition, discounted price options ("Discounted Options") may be
issued only to non-employee directors in the circumstances and subject to the
terms and conditions set forth in Section 8.
(c) The Committee may designate fixed price options granted to a person
who (i) is an employee of the Company and (ii) does not own stock possessing
more than ten percent of the total combined voting power of all classes of
stock of the Company as "incentive stock options" within the meaning of
Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"). A
stock option agreement for any option intended to qualify as an incentive
stock option shall contain a statement of such intent.
4. Shares Subject to the Plan. The aggregate number of shares which may be
issued under the Plan is 1,242,317, subject to adjustment as provided in
Section 14. Such shares may be authorized and unissued shares or may be
treasury shares. If an Option or Discounted Option expires or terminates for
any reason during the term of the Plan and prior to its exercise in full, or if
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<PAGE> 25
Restricted Shares are forfeited for any reason, the number of shares previously
subject to but not delivered under such Option or Discounted Option or award of
Restricted Shares shall be available for the grant of Options, Discounted
Options and/or award of Restricted Shares thereafter.
5. Effective Date and Term of Plan. The Plan as amended and restated shall
become effective as of May 2, 1995, if approved by shareholders and shall
remain in effect until April 29, 2000 or until termination by the Board,
whichever occurs first. The effectivenss of the Plan shall constitute its
adoption for the purposes of Section 422A of the Code.
6. Stock Options.
(a) Options granted under the Plan shall be evidenced by stock option
agreements in such form, not inconsistent with this Plan, as the Committee
shall approve from time to time. At the time of the grant the Committee shall
determine for each Option the exercise period, which shall not continue for
more than ten years from the date of Option grant, the appropriate Option
price (as specified below) and such other conditions or restrictions on the
exercise of the Option, including but not limited to vesting provisions, if
any, as the Committee deems appropriate.
(b) The Option price shall be as follows:
(i) In the case of a fixed price Option, the Option price shall be
100% of the Fair Market Value of the common stock on the date the Option is
granted.
(ii) In the case of a variable price Option, the Option price shall be
initially set at 100% of the Fair Market Value of the common stock on the
date the Option is granted. Thereafter, at the time a person holding a
variable price Option under the Plan purchases shares pursuant to such
variable price Option, the Option price initially set shall be reduced (but
not below zero) by an amount per share equal to the per share amount of the
tax benefit which will inure to the Company, by virtue of its entitlement to
a tax deduction on account of such purchase, based on federal, state and
local corporate tax rates in effect in the year of exercise. In determining
the aforesaid amount of tax benefit which would inure to the Company, it is
to be assumed that the Company has sufficient income taxable at the
then-prevailing highest federal, state and local corporate tax rates to
obtain the maximum tax benefit from the available deduction.
In this Plan, "Fair Market Value" shall be the mean of the highest and
lowest selling prices as reported on the New York Stock Exchange Composite
Tape on the date of reference.
(c) The Option price may be paid in cash or, in whole or in part, with
unrestricted shares of Company common stock, as the Committee may determine.
7. Restricted Shares.
(a) Awards of Restricted Shares under the Plan (whether as bonus awards,
performance awards or otherwise) shall be in the form of shares of common
stock of the Company, restricted as to transfer and subject to forfeiture and
other conditions and vesting restrictions, if any, as are set forth in
Section 9, if applicable, or as the Committee shall determine at the date of
each award, and shall be evidenced by restricted stock agreements and escrow
agreements (if the Committee desires that said shares be held in escrow) in
such form and not inconsistent with this Plan, as the Committee shall approve
from time to time. Except with respect to Restricted Shares issued pursuant
to Section 9, the number of Restricted Shares and the restrictions and
conditions pertaining to such shares (and the duration thereof in the
particular case) shall be as the Committee determines and the certificates
for Restricted Shares shall bear evidence of the restrictions and conditions
applicable to such Restricted Shares.
(b) During the period such shares are subject to forfeiture and/or other
conditions, shares awarded hereunder and the grantee's right to receive
dividends thereon, may not be sold, assigned, transferred, exchanged,
pledged, hypothecated or otherwise transferred or encumbered, except as
otherwise herein provided.
(c) The performance standards, if any, set by the Committee for any
grantee may be individual performance standards applicable to the grantee,
may be performance standards for the Company or the division, business unit or
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<PAGE> 26
subsidiary by which the grantee is employed, may be performance standards set
for the grantee under any other plan providing for incentive compensation for
the grantee, or may be any combination of such standards. The Committee may, if
it so chooses, determine the amount of an award of Restricted Shares to an
eligible employee based upon the grantee's salary, job performance and other
factors deemed by the Committee to be appropriate.
(d) The Committee shall have the power to permit, in its discretion, an
acceleration of the expiration of any applicable restriction period with
respect to any part or all of the award, other than an award made pursuant to
Section 9, to any grantee.
8. Non-Employee Director Options.
(a) Anything in this Plan to the contrary notwithstanding, Discounted
Options shall be issued to non- employee directors of the Company in lieu of
the payment to said non-employee directors of any specified portion of the
Annual Retainer otherwise payable, provided said non-employee director shall
have so elected and in the particular case all of the limitations and
provisions of this Section 8 shall have been complied with:
(i) A Discounted Option shall be issued automatically on June 1 (or if
June 1 is not a business day, on the next succeeding business day) of each
year to any non-employee director who, prior to January 1 of such year, files
with the Committee or its designee an irrevocable, written election to
receive such Discounted Option in lieu of all or a specified portion of the
Annual Retainer to be earned in such year by such non- employee director.
(ii) The number of shares subject to a Discounted Option issued to a
non-employee director pursuant to this subsection 8(a)(i) shall be equal to
the nearest number of whole shares determined in accordance with the
following formula:
Portion of Annual Retainer to be
Received as Discounted Option
-------------------------------------- = Number
Fair Market Value on Date of Issue - of Shares
Par Value of Common Stock
"Annual Retainer" shall mean the amount which the non-employee director will
be entitled to receive for serving as a director in the relevant calendar
year, but shall not include fees or expenses for attendance at meetings of
the Board or any committee of the Board or for any other services to be
provided to the Company.
(iii) The Option price per share for the shares covered by Discounted
Options issued in accordance with this Section 8 shall be the par value of
the common stock on the date the Discounted Option is issued.
(iv) No Discounted Option issued under this Section 8 may be exercised
before the first anniversary of the date upon which it was issued; provided,
however, that any Discounted Option so issued shall become exercisable upon
the retirement of the non-employee director because of age or upon the death
or disability of the director, as provided in paragraphs (v) and (vi) of this
Section 8. No Discounted Option issued under this Section 8 shall be
exercisable after the expiration of ten years from the date upon which such
Discounted Option is issued. Each Discounted Option shall be subject to
termination before its date of expiration as hereinafter provided.
(v) Except as herein provided, the rights of a non-employee director in a
Discounted Option issued under this Section 8 shall not terminate upon such
director's termination as a director for any reason (including death,
retirement or disability). That portion of any Discounted Option granted
under this Section 8 which is attributable to a portion of an Annual Retainer
which is not earned due to termination as a director (for any reason) shall
automatically abate and be cancelled.
(vi) Any Discounted Option issued to a non-employe director and
outstanding on the date of his or her death may be exercised by the
administrator of such director's estate, the executor under his or her will,
or the person or persons to whom such Discounted Option shall have been
validly transferred by such executor or administrator pursuant to the will or
laws of intestate succession (but not beyond the specified expiration date of
such Discounted Option).
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<PAGE> 27
(vii) Discounted Options issued under this Section 8 may be exercised
only by written notice to the Company accompanied by payment in cash of the
full consideration for the shares as to which they are exercised.
(b) The provisions of this Section 8 shall apply only to Discounted Options
issued or to be issued to non- employee directors, and shall not be deemed to
modify, limit or otherwise apply to any other provision of this Plan or any
Option issued under this Plan to a participant who is not a non-employee
director of the Company.
(c) To the extent inconsistent with the provisions of any other Section of
this Plan, the provisions of this Section 8 shall govern the rights and
obligations of the Company and non-employee directors respecting Discounted
Options issued or to be issued to non-employee directors. Anything contained
in this Plan to the contrary notwithstanding, the provisions of Section 13
(Changes of Control) shall not apply to Discounted Options issued hereunder
to non-employee directors.
9. Directors' Restricted Share Awards.
(a) Restricted Shares shall be awarded pursuant to the Plan on the date
that the amendment and restatement of the Plan shall become effective and on
the same day (or if such day is not a business day, on the next following
business day) of each fifth succeeding year thereafter, to each person who is
then a non-employee director of the Company in an amount equal to the nearest
number of whole shares determined in accordance with the following formula:
$25,000
---------------------------------- = Number
Fair Market Value on Date of Issue of Shares
In addition, whenever a person who is not a director of the Company on the
date that the amendment and restatement of the Plan shall become effective
shall thereafter become a non-employee director of the Company, Restricted
Shares shall be awarded pursuant to the Plan on the date such person becomes
a director of the Company (or if such day is not a business day, on the next
following business day) in an amount equal to the nearest number of whole
shares determined in accordance with the following formula:
$25,000 x (N/60)
----------------------------------- = Number
Fair Market Value on Date of Issue of Shares
wherein "N" is equal to the number of whole calendar months remaining, at the
time such person becomes a director, until additional Restricted Shares are
to be awarded to persons who are then directors of the Company pursuant to
the first sentence of this Section 9.
(b) Restricted Shares issued pursuant to this Section shall be subject
to forfeiture by the holder in the event that the holder shall cease to be a
director of the Company for reasons other than (i) retirement at the normal
retirement date then in effect for non-employee directors of the Company,
(ii) early retirement with the consent of the board of directors, (iii)
disability, or (iv) death. With respect to each award of Restricted Shares
pursuant to this Section 9, one fifth of the Restricted Shares awarded shall
cease to be subject to forfeiture on the first anniversary of the date of
award, and on each anniversary thereafter until all such Restricted Shares
are no longer subject to forfeiture after five years, provided that the
non-employee director holding such Restricted Shares shall then be continuing
to serve as a director of the Company.
(c) Certificates representing Restricted Shares issued pursuant to this
Section and subject to forefeiture (i) shall bear an appropriate legend
restricting transferability and noting that the shares represented thereby
are subject to forfeiture, and (ii) shall be held in escrow by the Company
until such shares shall cease to be subject to forfeiture. The Company shall
deliver, or cause to be delivered to each participant, a certificate or
certificates representing Restricted Shares owned by such participant which
have ceased to be subject to forfeiture, which certificate or certificates
shall be free of any restrictive legend.
10. Termination of Employment. Except as the Committee otherwise
determines in a particular case (and no such determination with respect to
Restricted Share awards shall be made pursuant to Section 9), a participant
under the Plan whose employment terminates for reasons other than (i)
retirement at the normal retirement date then in effect for employees of the
Company, (ii) early retirement with the consent of the Board, (iii) disability,
26
<PAGE> 28
or (iv) death, shall have no right to receive any benefit or payment for
existing awards under this Plan, and his or her Options, and the right to
exercise them, and Restricted Share awards then subject to forfeiture shall
thereupon terminate forthwith. This Section shall not apply to Discounted
Options awarded to non-employee directors.
11. Death of a Participant. In the event of the death of a participant,
the following shall govern the disposition of his or her interest(s) under
the Plan:
(a) Options. If the deceased participant holds Options some portion of
one or more of which is exercisable at the time of his or her death, the
administrator of such participant's estate, the executor under his or her
will, or the person or persons to whom Options shall have been validly
transferred by such executor or administrator pursuant to the will or laws of
intestate succession shall have the right, within twelve months from the date
of such participant's death, to exercise all unexercised Options (or any
portion thereof) held by such participant on the date of death, but not yet
exercised; provided, however, that no Option shall be exercised after its
specified expiration date.
(b) Restricted Shares. The restrictions and conditions imposed on any
outstanding Restricted Shares which may have been awarded to a deceased
participant shall be removed, and the outstanding Restricted Shares shall be
delivered to such participant's legal representative or beneficiary free of
restrictive legend.
12. Retirement and Disability. In the event of termination of the
employment of a participant (or the termination of a participant's service as
a non-employee director) due to retirement at the normal retirement date then
in effect for employees or non-employee directors of the Company or early
retirement with the consent of the Board, or in the event a participant
becomes disabled, the following shall govern the disposition of his or her
interests under the Plan:
(a) Options. A participant who, upon retirement or disability, holds
Options some portion of one or more of which is then exercisable shall have
the right, within three years of the date of such retirement or disability,
to exercise all unexercised Options (or any portion thereof) held by such
participant on the date of retirement or disability, but not yet exercised;
provided, however, that no Option shall be exercised after its specified
expiration date.
(b) Restricted Shares. A grantee of outstanding Restricted Shares shall
be entitled upon retirement or disability to have the restrictions and
conditions imposed on such shares at the time of the award removed and the
outstanding Restricted Shares delivered to him or her free of restrictive
legend.
13. Changes of Control.
(a) Upon a Change of Control with respect to the Company, as defined
below, all Options and Restricted Shares shall become immediately vested in
full for the period of their remaining terms automatically and without any
action by the Committee or otherwise.
(b) A "Change of Control" shall be deemed to have taken place if:
(i) any Person (except the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such employee benefit plan, or an Exempted
Person), together with all Affiliates and Associates of such Person, shall
become the Beneficial Owner in the aggregate of more than 20% of the common
stock of the Company then outstanding,
(ii) an Exempted Person, together with all Affiliates and Associates
of such Person, shall become the Beneficial Owner in the aggregate of 30% or
more of the common stock of the Company, or
(iii) during any thirty-six month period, individuals who at the
beginning of such period constituted the Board cease for any reason to
constitute a majority thereof, unless the election, or the nomination for
election by the Company's shareholders, of each director who was not a
director at the beginning of such period was approved by a vote of at least
two-thirds of the directors in office at the time of such election or
nomination who were directors at the beginning of such period.
27
<PAGE> 29
(c) If a Person inadvertently becomes a Beneficial Owner of common stock
of the Company aggregating the amounts described in subsection 13(b) and as
soon as practicable divests of a sufficient amount of such stock so as to
hold less than the amounts there described, then, despite the provisions of
subsection 13(b), a Change of Control shall not be deemed to have taken
place.
(d) For the purposes of subsections 13(b) and 13(c) the following terms
shall have the meanings specified in this subsection 13(d):
(i) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(ii) A person shall be deemed the "Beneficial Owner" of any
securities:
(A) that such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for payment, purchase
or exchange;
(B) that such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including without
limitation pursuant to any agreement, arrangement or understanding, whether
or not in writing; provided, however, that a Personal shall not be deemed the
"Beneficial Owner" of any security under this subsection (B) as a result of
an oral or written agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (i) arises solely
from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange Act, and
(ii) is not then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(C) that are beneficially owned, directly or indirectly, by any Person
(or any Affiliate or Associate thereof) with which such Person (or any of
such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subsection B above) or disposing of any voting securities of the
Company; provided, however, that nothing is subsection 12(d)(ii) shall cause
a Person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
(iii) "Exempted Person" shall mean the group known as GAMCO
Investors/Gabelli Funds, Inc. as identified in the most recent Schedule 13D
filed by such group prior to January 22, 1991, unless and until such group or
any person in such group, together with all Affiliates and Associates of such
group or any person in such group, becomes the Beneficial Owner of 30% or
more of the Common Stock then outstanding. The purchaser, assignee or
transferee of the Common Stock of an Exempted Person shall not be an Exempted
Person. Any amendments made to the definition of "Exempted Person" in the
Rights Agreement dated as of November 11, 1988 by and between the Company and
Mellon Bank (East) N.A., as rights agent, as heretofore amended (the "Right
Agreement") shall automatically, without further action by the Company or the
Employee, be incorporated herein.
(iv) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(v) "Subsidiary" shall mean any corporation, partnership or other
entity that is controlled by the Company directly or through one or more
intermediaries.
14. Changes in Capitalization. The (i) total number of shares of common
stock of the Company for which Options or Discounted Options or Restricted
Shares may be granted or Options or Discounted Options exercised,
28
<PAGE> 30
(ii) number of shares subject to each outstanding Option, Discounted Option
or Restricted Share award, and (iii) Option prices and Discounted Option
prices per share shall be subject to appropriate adjustment for any changes
in the number of outstanding shares of common stock resulting from a merger,
recapitalization, stock split, stock dividend or other change in the
Company's corporate or capital structure.
15. Withholding Taxes. Whenever shares of Company common stock are to be
issued or delivered, the Committee shall have the right, at or prior to the
delivery of any certificate or certificates for shares, to require the
grantee to remit to the Company, in cash, in shares of Company common stock,
or in other consideration deemed satisfactory to the Committee, as the
Committee may determine, an amount sufficient to satisfy withholding
requirements, with respect to federal, state and local income and employment
taxes.
16. Employment. The establishment of the Plan and awards hereunder shall
not be construed as conferring on any participant any right to continued
employment, and the employment of any participant may be terminated without
regard to the effect which such action might have upon him or her as a
participant.
17. Transferability.
(a) Options, Discounted Options and Restricted Shares are not
transferable other than by will or the laws of intestate succession. No
transfer by will or by the laws of intestate succession shall be effective to
bind the Company unless the Committee shall have been furnished with a copy
of the deceased participant's will or such other evidence as the Committee
may deem necessary to establish the validity of the transfer.
(b) Only the participant or his or her guardian, or in the event of
death, his or her legal representative or beneficiary, may exercise Options
or Discounted Options and receive deliveries of shares.
18. Non-Uniform Determinations. The Committee's determinations under this
Plan (including without limitation determinations of the persons to receive
awards, the form, amount and timing of such awards, the terms and provisions
of such awards and the agreements evidencing the same, and the establishment
of performance standards) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, awards
under the Plan, whether or not such persons are similarly situated.
19. Effect on Other Plans. Participation in this Plan shall not affect a
participant's eligibility to participate in any other benefit or incentive
plan of the Company.
20. Amendment, Modification, and Termination. The Board, at any time, may
terminate and in any respect amend or modify the Plan; provided, however,
that no such action by the Board, without approval of the Company's
shareholders, may (i) increase the total number of shares of common stock
available under the Plan in the aggregate (except as otherwise provided in
Section 14), (ii) materially increase the benefits accruing to participants
under the Plan, or (iii) materially modify the requirements as to eligibility
for participation under the Plan. The provisions of Section 9 of the Plan may
not be amended more than once in any six month period, except to comport with
changes in the Code or the Employees' Retirement Income Security Act of 1974.
No amendment, modification or termination of the Plan shall in any manner
adversely affect the rights of any participant under an award previously
granted.
21. Governing Law. This Plan shall be governed by the laws of the
Commonwealth of Pennsylvania.
29
<PAGE> 31
SPS SPS TECHNOLOGIES, INC. PROXY
TECHNOLOGIES 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 Tuesday, May 2,
1995, at 10:00 a.m., local time, and any adjournments or postponements thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED,
WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR, FOR THE PROPOSAL TO APPROVE AN
AMENDMENT TO THE SPS 1988 TERM INCENTIVE STOCK PLAN AND AGAINST THE
SHAREHOLDER PROPOSAL TO ELECT ALL DIRECTORS ON AN ANNUAL BASIS, WITHOUT
CLASSIFICATION, 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.
FOLD AND DETACH HERE
<PAGE> 32
1. ELECTION OF DIRECTORS: (INSTRUCTION: To withhold authority
to vote for any individual nominee,
VOTE FOR WITHHOLD strike a line through the nominee's
all nominees listed AUTHORITY name in the list below.)
(except as marked to vote for all
to the contrary) nominees listed Nominees:
CLASS I: Howard T. Hallowell III and
/ / / / Charles W. Grigg
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE
SPS 1988 LONG TERM INCENTIVE STOCK PLAN.
FOR AGAINST ABSTAIN
The Board of Directors
/ / / / / / recommends a vote
FOR this proposal.
3. SHAREHOLDER PROPOSAL TO ELECT ALL DIRECTORS ON AN
ANNUAL BASIS, WITHOUT CLASSIFICATION.
FOR AGAINST ABSTAIN The Board of Directors
recommends a vote
/ / / / / / AGAINST this proposal.
4. DISCRETION IS GRANTED TO VOTE UPON The undersigned hereby revokes
SUCH OTHER MATTERS AS MAY PROPERLY any proxy heretofore given for
COME BEFORE THE MEETING. said 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 1994
Annual Report.
DATE: 1995
-------------------------
(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"
-------------------------------------------
FOLD AND DETACH HERE
