SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-69e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Exchange Act Rule 14a-11 or Rule 14a-12
TECHNITROL, INC.
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(Name of Registrant as Specified In Its Charter)
- ---------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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TECHNITROL, INC.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1998
------------------------
The Annual Meeting of the Shareholders of Technitrol, Inc. (hereinafter
called the "Company"), will be held in the Meade Room, The Union League of
Philadelphia, 140 South Broad Street, Philadelphia, Pennsylvania, on
Wednesday, May 20, 1998, at 5:00 P.M., Eastern Daylight Saving Time, for the
following purposes:
1) to nominate and elect three directors for a term of three years and
until their successors are elected and qualified;
2) to approve the Technitrol, Inc. Board of Directors Stock Plan;
3) to consider and act upon the selection of KPMG Peat Marwick LLP as
the Company's independent public accountants for the year ending
December 31, 1998; and
4) to transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on March 6, 1998,
will be entitled to vote at the meeting.
By Order of the Board of Directors
Drew A. Moyer
Secretary
Philadelphia, Pennsylvania
March 27, 1998
SHAREHOLDERS ARE REQUESTED TO MARK, SIGN AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED
<PAGE>
TECHNITROL, INC.
1210 Northbrook Drive
Suite 385
Trevose, PA 19053
-----------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, MAY 20, 1998
-----------------------
INTRODUCTION
-----------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Technitrol, Inc. (hereinafter called the
"Company") to be used in voting at the Annual Meeting of the Shareholders of
the Company to be held in the Meade Room, The Union League of Philadelphia,
140 South Broad Street, Philadelphia, Pennsylvania, on Wednesday, May 20,
1998, at 5:00 P.M., Eastern Daylight Saving Time, or at any adjournment or
adjournments thereof. This Proxy Statement, the proxy and a copy of the
Annual Report, including Consolidated Balance Sheets for the years ended
December 31, 1997 and 1996 and Consolidated Statements of Earnings and Cash
Flows for the Company for the years ended December 31, 1997, 1996 and 1995,
have been mailed on or before March 27, 1998, to each shareholder of record at
the close of business on March 6, 1998. The Company's telephone number is
215-355-2900.
You are requested to mark, sign and complete the accompanying proxy and
return it in the envelope provided.
Proxies in such form, if duly signed and received in time for the voting,
will be voted in accordance with the directions of the shareholders. If no
direction is made, the shares represented by proxies will be voted FOR the
election of all nominees and FOR each other proposal described in the attached
Notice of Annual Meeting of Shareholders. The persons designated as proxies
shall have the discretionary authority to vote cumulatively for the election
of Directors and distribute such votes among the nominees standing for
election (except as otherwise instructed by a shareholder in the accompanying
proxy) to assure the election of the nominees of the Board of Directors. The
giving of a proxy does not preclude the right to vote in person should the
person so desire and, as provided by the laws of Pennsylvania, one may revoke
the proxy by giving notice to the Secretary of the Company in writing prior to
the vote to be taken at the meeting, but such revocation shall not affect any
vote previously taken.
The expense of soliciting proxies for the Annual Meeting, including the
cost of preparing, assembling and mailing the notice, proxy and Proxy
Statement, will be paid by the Company. The solicitation will be made by the
use of mails, through brokers and banking institutions, and by officers and
regular employees of the Company. Proxies may be solicited by personal
interview, mail, telephone, facsimile or telegraph.
Each holder of Common Stock of record at the close of business on March 6,
1998, is entitled to one vote per share so held on all matters that come before
the Annual Meeting except in the election of Directors, which shall be by
cumulative voting. The holders of a majority of the issued and outstanding
shares entitled to vote, present in person or represented by proxy, shall
constitute a quorum for the transaction of business. In the election of
Directors, if a shareholder entitled to vote wishes to exercise cumu-
1
<PAGE>
lative voting rights, he shall so indicate his intention to the Chairman of the
Annual Meeting prior to voting, multiply the number of votes to which he may
be entitled by the total number of Directors to be elected in the election and
cast the whole number of such votes among one or more candidates in such
proportion as he desires. The candidates receiving the highest number of votes,
up to the number of Directors to be elected in the election, shall then be
elected. All other matters expected to be brought before the Annual Meeting
require the affirmative vote of the holders of a majority of the Company's
common stock present in person or represented by proxy at the Annual Meeting
for approval.
Shares which are present, or represented by proxy, at the Annual Meeting
will be counted for quorum purposes. For voting purposes, only shares voted
for the election of Directors or the adoption of a proposal, and neither
abstentions nor broker non-votes (i.e., proxies from brokers or nominees
indicating that such persons do not have discretionary authority to vote
shares with respect to the matter), will be counted as voting in favor in
determining whether a Director is elected or a proposal is approved. As a
consequence, abstentions and broker non-votes will have no effect on the
outcome of the vote for the election of Directors, but will have the same
effect as votes against the adoption of all other proposals.
At the close of business on March 6, 1998, there were outstanding and
entitled to vote at the Annual Meeting 16,135,074 shares of Common Stock, the
only class of stock outstanding and entitled to vote at the Annual Meeting.
Proposal No. 1 - Election of Directors
The Board of Directors is divided into three classes. The Directors in
Class I, Messrs. Thomas J. Flakoll, J. Barton Harrison and Graham Humes, are
presently serving terms expiring in 1999. The Directors in Class II, Messrs.
John E. Burrows and James M. Papada, III, are presently serving terms expiring
in 2000. Messrs. Stanley E. Basara, Roy E. Hock and Edward M. Mazze,
currently Class III Directors, are the Board of Directors' nominees for
election at this meeting and will, if elected, serve terms expiring in 2001.
These nominees were recommended to the Board of Directors by the Nominating
Committee on January 28, 1998.
Votes pursuant to the accompanying proxy will be cast equally, unless
otherwise indicated on the proxy, for the election of Messrs. Basara, Hock and
Mazze, provided that, as set forth above, the persons designated as proxies
shall have the discretionary authority to cumulate their votes. However, each
shareholder is allowed to vote his shares cumulatively in the manner
previously described and may indicate such intention on the enclosed proxy.
The three nominees are presently Directors of the Company. It is not
contemplated that Messrs. Basara, Hock or Mazze will be unable or unwilling to
serve as Director, but if that should occur, the Board of Directors reserves
the right to nominate another person in place of any one.
SECURITY OWNERSHIP OF CERTAIN PRINCIPAL OWNERS AND MANAGEMENT
Principal Owners
The following table sets forth as of December 31, 1997, the beneficial
ownership of those persons known by the Company to be the beneficial owners of
more than 5% of the Company's outstanding Common Stock, the only class
authorized:
2
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Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ---------------------------------------------------------------------------
Virginia Frese Palmer 1,942,600(1) 12.04%
Palmer Family Trusts Indirect
7147 Sabino Vista Circle
Tucson, AZ 85750
- ---------------
(1) 1,746,380 of these shares are held in the Palmer Family Trust - Survivor's
Share and 196,220 of these shares are held in the Palmer Family Trust -
Residuary Trust Share. The co-trustees of these two trusts are Virginia
Frese Palmer, widow of Gordon Palmer, Jr., one of the founders of the
Company who died on March 30, 1997, and J. Barton Harrison, a Director of
the Company. Mr. Harrison disclaims any beneficial interest in these
shares.
Management
The following table sets forth as of March 6, 1998, the beneficial
ownership of the Company's Common Stock by the five most highly compensated
officers, all Directors and nominees, and the Directors and officers of the
Company as a group:
Amount of Percent
Name Beneficial Ownership of Class
- ------------------------------------------------------------------------------
Stanley E. Basara ......... 4,400 Direct(1) *
John E. Burrows, Jr. ...... 2,540 Direct(1) *
Thomas J. Flakoll ......... 106,574 Direct(1) *
J. Barton Harrison ........ 2,061,930 Direct(2) 12.78
Roy E. Hock ............... 191,012 Direct(1) 1.18
Graham Humes .............. 88,400 Direct(3) *
John L. Kowalski .......... 23,413 Direct(1) *
Edward M. Mazze ........... 4,100 Direct(1) *
Drew A. Moyer ............. 4,128 Direct(1) *
James M. Papada, III ...... 10,900 Direct(1) *
James J. Rafferty, Jr. .... 111,960 Direct(4) *
Albert Thorp, III ......... 6,084 Direct(1) *
Directors and officers as
a group (13 people) ...... 2,615,641 16.21
* Less than one percent (1%).
(1) Shares are directly owned by the named officer or Director.
(2) Includes 119,330 shares directly owned by Mr. Harrison and 1,942,600
shares held in two trusts. See "Principal Owners" on page two of this
Proxy Statement.
(3) Includes 65,000 shares directly owned by Mr. Humes, 7,400 shares owned by
Mr. Humes' spouse, and 16,000 shares owned by a trust for which Mr. Humes'
spouse is co-trustee. Mr. Humes disclaims any beneficial interest in the
shares owned by his spouse or those shares owned by a trust for which his
spouse is co-trustee.
(4) Includes 77,560 shares directly owned by Mr. Rafferty and 34,400 shares
held by Mr. Rafferty's spouse, for which Mr. Rafferty disclaims any
beneficial interest.
3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
Identification and Business Experience
The following table sets forth certain information with regard to each
person nominated for election or reelection to the Board (Messrs. Basara, Hock
and Mazze), each Director whose term will continue after the Annual Meeting
(Messrs. Burrows, Flakoll, Harrison, Humes, and Papada) and the executive
officers of the Company. The executive officers of the Company are appointed
to their respective offices annually.
Name Age Position
- ------------------------------------------------------------------------------
Stanley E. Basara 64 Director
John E. Burrows, Jr. 50 Director
Thomas J. Flakoll 53 Director, Chief Executive Officer and President
J. Barton Harrison 68 Director
Roy E. Hock 68 Director
Graham Humes 65 Director
John L. Kowalski 54 Vice President
Dieter D. Littles 40 Treasurer
Edward M. Mazze 57 Director
Drew A. Moyer 33 Corporate Controller and Secretary
James M. Papada, III 49 Chairman of the Board
James J. Rafferty, Jr. 60 Vice President
Albert Thorp, III 43 Vice President - Finance and Chief Financial
Officer
There are no family relationships between any officers and/or Directors nor
are there any arrangements or understandings among any officers and/or
Directors and any other person(s) pursuant to which any such officer and/or
Director was or is to be selected as such.
Stanley E. Basara is Director of Operations of Panasonic Broadcasting
Systems Company, where he was President and Chief Operating Officer from 1987
to 1995. Mr. Basara was elected a Director of the Company in September 1993.
John E. Burrows, Jr. is President and Chief Executive Officer of SPI
Polyols, a global producer of specialty chemicals for the food, pharmaceutical
and personal care industries. Prior to joining SPI Polyols, he was Vice
President-North America of Quaker Chemical Corporation and, prior to joining
Quaker Chemical Corporation in 1990, he was Division Manager for Marine
Colloids of FMC Corporation. Mr. Burrows was elected a Director of the
Company in May 1994.
Thomas J. Flakoll was elected Chief Executive Officer of the Company in
October 1995 and has served as President since March 1994. He served as Vice
President from March 1985 until March 1994, and was General Manager of the
Components Division from May 1980 until April 1990. Mr. Flakoll has been a
Director of the Company since 1984.
J. Barton Harrison served as Secretary of the Company from February 1983
to May 1995 and from 1975 to 1977. He is a retired attorney and a Director of
Steel Plant Equipment Corporation. Mr. Harrison has been a Director of the
Company since 1966.
Roy E. Hock was elected Chairman and Chief Executive Officer of the
Company in 1976 and served in those positions until his retirement in December
1995. He has been a Director of the Company since 1967.
4
<PAGE>
Graham Humes is a principal of Compass Capital Partners, Ltd. He was
General Director (CEO) of CARESBAC-St. Petersburg, in St. Petersburg, Russian
Federation, from June 1993 to May 1995. He was Senior Vice President and a
Director of Legg Mason Wood Walker, Inc. from March 1987 through June 1993. He
is a Director of Brunschwig & Fils, Inc., Baltic Cranberry Corporation, St.
Petersburg, Russia and ChemPak S.A. de D.C., Monterrey, Mexico. Mr. Humes
became a Director of the Company in February 1987.
John L. Kowalski was elected Vice President of the Company in September
1995. He is President of the Company's Electronic Components Segment and also
holds the position of President of Pulse. Mr. Kowalski was President of the
Company's Fil-Mag Group from January 1994 through its consolidation into Pulse
in 1995, and he was General Manager of the Company's Components Division from
April 1990 to October 1995. Prior to joining the Company, he held various
management positions at Honeywell, General Electric and Varian.
Dieter D. Littles joined Technitrol in January 1997 and became Treasurer
in March 1997. Prior to joining the Company he was a financial consultant to
firms in the mid-Atlantic area. Mr. Littles was Director of Cash Management
and Treasury at the Franklin Mint in 1995, and held various positions
involving risk management and international cash management at Scott Paper
from 1989 to 1994.
Dr. Edward M. Mazze was appointed Dean, The Belk College of Business
Administration, The University of North Carolina at Charlotte and Professor of
Marketing in July 1993. Prior to that, he was Professor of Marketing and
International Business at Temple University and was formerly the Dean of the
School of Business and Management at Temple. Dr. Mazze also serves as a
management and marketing consultant. He is an honorary Trustee of Delaware
Valley College of Science and Agriculture and serves on the Advisory Boards of
Piedmont Venture Partners, Limited Partners and Remington Capital Partners,
LLC. Dr. Mazze was elected a Director of the Company in November 1985.
Drew A. Moyer joined the Company in October 1989 and was elected
Corporate Controller in May 1995 and Secretary in November 1996. Prior to his
election as Corporate Controller, he served as the Company's Corporate
Accountant and Internal Auditor. Mr. Moyer was previously employed by Ernst &
Young LLP and is a Certified Public Accountant.
James M. Papada, III, Chairman of the Board, has been a partner in the
law firm of Stradley Ronon Stevens & Young LLP since 1987, which firm is
counsel to the Company. He was President and Chief Operating Officer of
Hordis Brothers, Inc., a glass fabricator, from 1983 until 1987 and was a
partner at Stradley Ronon Stevens & Young LLP prior to joining Hordis
Brothers, Inc. Mr. Papada is also a Director of Para-Chem Southern, Inc., CTA
Incorporated, and Glasstech, Inc. He has been a Director of the Company since
1983 and has served as Chairman of the Board since January 1, 1996.
James J. Rafferty, Jr. has held the office of President of Advanced
Metallurgy from 1976 through 1985 and from July 1987 to the present time. He
was appointed Vice President of Technitrol in 1984, President in 1985, and
Vice President in 1987. Mr. Rafferty was a Director of the Company from 1984
until 1997 and is President of the Metallurgical Components Segment.
Albert Thorp, III was elected Vice President of Finance and Chief
Financial Officer in May 1995. Mr. Thorp joined the Company in August 1989
and was elected Corporate Controller in September 1989. He held the
additional position of Treasurer from May 1995 until March 1997. Mr. Thorp is
a Certified Public Accountant.
5
<PAGE>
Committees
The Board of Directors of the Company has an Audit Committee, an
Executive Compensation Committee and a Nominating Committee, the members of
which are non-employee Directors. The current members of such Committees are:
Audit - Messrs. Hock, Humes, and Mazze; Executive Compensation - Messrs.
Basara, Burrows, and Harrison; Nominating - Messrs. Basara, Burrows, and
Mazze. During the year ended December 31, 1997, the Board held six regular
and two special meetings. The Board also met informally via telephone
conference on three additional occasions. No Director attended fewer than 75%
of the aggregate of Board meetings and Committee meetings of which such
Director was a member.
The function of the Executive Compensation Committee is to review and
recommend to the Board the broad plan of key executive compensation, and
implementation thereof, to review the performance and corporate objectives of
the Chief Executive Officer, to review the Company's pension plan and
investment performance thereof and to undertake special assignments as made by
the Board. During the year ended December 31, 1997, the Executive
Compensation Committee held four meetings.
The main function of the Audit Committee is to assist the Board in
fulfilling its fiduciary responsibilities relating to corporate accounting and
reporting practices, including recommendation of the firm to be employed as
independent auditors; consultation with the independent auditor regarding the
plan, scope and cost of the audit and non-audit functions, if any;
consultation and review with the independent auditor of its report (including
accounting practices and principles, adjustments and required disclosure) and
management letter; periodic consultation (outside of management's presence)
with the independent auditor regarding the adequacy of internal controls;
review of internal audit reports and the adequacy of the internal audit plan
and review of the total insurance program for adequacy. No member of
management may be on the Audit Committee. During the year ended December 31,
1997, the Audit Committee held four meetings.
The Nominating Committee met twice in 1997 with all members in
attendance. The Nominating Committee has the responsibility of establishing
the criteria for selecting new directors to fill vacancies on the Board, of
identifying potential candidates to fill director positions when they are
available, of evaluating the qualifications of candidates, and of making
recommendations to the Board. The Committee also recommends a slate of
directors for election by the shareholders at the Annual Meeting. The
Committee will not consider nominees recommended by shareholders; however,
shareholders may nominate persons to serve as Directors at the Annual Meeting.
The Committee, together with the Board, is responsible for evaluating Board
performance.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
Executive Compensation
The following table sets forth information about the compensation of the
Chief Executive Officer and each of the other four most highly compensated
executive officers of the Company for services in all capacities of the
Company and its subsidiaries.
6
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<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Long-Term Compensation All Other
Compensation (1) Restricted Stock Plan Awards Compensation (3)
----------------------------- ---------------------------- --------------------
Fiscal
Name and Principal Position Year Salary Bonus Shares (2) Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Flakoll, Chief Executive 1997 $290,100 $190,000 1,850 $66,716 $ 2,896
Officer and President 1996 243,100 140,000 2,000 44,250 12,286
1995 190,000 100,000 3,380 44,151 49,782
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John L. Kowalski, 1997 218,000 131,000 1,230 44,357 6,460
Vice President 1996 196,900 111,000 1,660 36,728 37,403
1995 155,000 90,000 2,760 36,053 2,970
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James J. Rafferty, Jr., 1997 210,000 122,000 1,190 42,914 2,479
Vice President 1996 164,500 76,000 1,220 26,993 11,888
1995 161,000 42,000 1,660 21,684 34,913
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Albert Thorp, III, 1997 140,000 60,000 600 21,638 12,433
Vice President 1996 120,000 50,000 730 16,151 7,291
1995 92,300 40,000 1,200 15,675 2,153
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Drew A. Moyer, 1997 105,000 45,000 450 16,228 4,553
Corporate Controller & Secretary 1996 85,000 34,000 500 11,063 1,483
1995 59,900 22,500 600 7,838 1,112
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<FN>
- -------------------
(1) None of the five officers received other annual compensation from the
Company exceeding the lesser of $50,000 or 10% of salary and bonus during
the years 1995, 1996 and 1997.
(2) At December 31, 1997, the aggregate shares held under the Restricted Stock
Plans and value thereof was as follows:
Shares Value
------- --------
Mr. Flakoll ...................... 15,880 $476,400
Mr. Kowalski ..................... 18,060 541,800
Mr. Rafferty ..................... 17,760 532,800
Mr. Thorp ........................ 4,830 144,900
Mr. Moyer ........................ 2,400 72,000
(3) Dividends are paid on shares held under the Restricted Stock Plans at the
same rate paid to all shareholders. Amounts include cash received upon
vesting of Restricted Stock Plan awards previously granted, the Company's
contribution under 401(k) Retirement Savings Plans, and term life insurance
premiums paid. For the year 1997, the aggregate sums reported above are
specifically identified as follows:
Cash under
Restricted Stock Plans 401 (k) Plan Term Life Insurance
---------------------- ------------ -------------------
Mr. Flakoll $ -- $2,416 $480
Mr. Kowalski -- 6,400 60
Mr. Rafferty -- 2,159 320
Mr. Thorp 9,860 1,933 640
Mr. Moyer 2,465 1,448 640
</TABLE>
7
<PAGE>
Retirement Plan
The Company maintains a defined benefit pension plan which provides
retirement benefits to employees of the Company and its subsidiaries who are
not covered by an alternative defined contribution plan maintained by a
subsidiary or a collectively bargained agreement providing retirement benefits
from other plans. Generally, the Company makes contributions annually to the
plan based upon the annual salary (excluding bonuses) of each participant and
certain actuarial calculations. The following table sets forth as to the
Company's defined benefit pension plan the approximate annual benefits payable
upon retirement to persons with specified final average salaries and years of
credited service classification. Such benefits are not subject to any
reduction for Social Security. The information assumes that the person retires
at age 65 or older and selects a single life annuity payment:
Years of Credited Service
-----------------------------------------
Final Average Salary 10 Years 20 Years 30 Years 40 Years
-------------------- -------- -------- -------- --------
$ 50,000 $ 5,900 $11,800 $17,700 $17,700
100,000 13,600 27,200 40,800 40,800
150,000 21,300 42,600 63,900 63,900
The participating officers named above and their respective years of
credited service are as follows:
Officers Years of Credited Service
--------------- -------------------------
Mr. Flakoll 17
Mr. Rafferty 22
Mr. Thorp 8
Mr. Moyer 8
Their annual salaries covered by the plan during the year ended December 31,
1997, did not exceed $160,000 each, the maximum allowable amount for qualified
pension plans in 1997.
Under federal law, an employee's benefits under a qualified pension plan,
such as the Company's pension plan outlined above, are limited to certain
maximum amounts. Effective January 1, 1994, the Company adopted a supplemental
retirement plan which supplements, on an unfunded basis, the benefits of any
participant in the qualified pension plan in an amount by which any
participant's benefits are limited by law. The amount of the annual salaries
of Messrs. Flakoll and Rafferty covered by this supplemental plan during the
year ended December 31, 1997, were $130,000 and $50,000, respectively.
Restricted Stock
In 1981, the Board of Directors and the Shareholders of the Company
approved the adoption of an Incentive Compensation Plan. The plan provides
that the Committee administering the plan (the "Committee") has the authority
and flexibility to develop and implement forms of incentive compensation for
executive employees and key employees of each of the operating divisions and
subsidiaries of the Company.
In 1984, the Board of Directors adopted a restricted stock plan
("Restricted Plan II" or "Plan II") under the Incentive Compensation Plan. A
previously-adopted restricted stock plan ("Restricted Plan I") is no longer
used by the Company. Restricted Plan II is designed to enable the Company to
obtain and retain the services of qualified employees, and to reward and
motivate them, by providing them with the opportunity to acquire shares of the
Company's Common Stock. Under Plan II, shares of restricted stock may be
awarded not only to executive employees, but also to employees of each of the
operating divisions and subsidiaries of the Company.
8
<PAGE>
Under Plan II, shares of Common Stock may be awarded to eligible
employees, from time to time, at no cost to such employees. The shares may not
be sold, pledged or otherwise disposed of until the restricted period set forth
in Plan II has ended. During the restricted period (five years), the shares
remain physically in the possession of the Company. If the employee resigns or
has employment terminated by the Company for cause prior to the end of the
restricted period, the shares are returned to the Company. Upon death, total
disability or retirement on the normal retirement date prior to the expiration
of the restricted period, the restrictions will be released. If an employee
elects early retirement or had employment terminated other than for cause, the
employee shall be entitled to pro rata vesting, and the Committee has the power
to adjust the effective award.
Upon vesting of the shares awarded under Restricted Plan II, the eligible
employee receives as additional compensation, an amount of cash equal to the
lesser of (1) the amount (calculated at the highest individual Federal income
tax rate, including surcharge) necessary to pay Federal income taxes on such
shares and additional cash compensation, or (2) 165% of the market value of the
shares as of the date of the initial award by the Committee, all calculated on
the number of shares for which the applicable restricted period has ended.
During 1997, the Committee issued an aggregate amount of 6,840 shares of
the Company's Common Stock to six officers of the Company under Plan II.
During the year ended December 31, 1997, the Company expensed $912,000 in the
aggregate for all participants under the Plan.
The shareholders of the Company have previously authorized 1,200,000
shares for use under the Incentive Compensation Plan and the Restricted Plan
described herein. As of December 31, 1997, 326,675 shares remain available for
future grant.
Compensation of Directors
Non-employee Directors are paid an annual retainer of $16,000 (except for
Committee Chairmen who are paid $18,000) plus $2,000 for each Board Meeting
attended and $750 for each Committee meeting attended. Non-employee Directors
are also paid a daily attendance fee of $2,000 for attendance at the Spring
management meetings of the Company. Under a Deferred Compensation Plan for
non-employee Directors, all or part of the annual fees may be deferred at the
election of the Directors. The Chairman of the Board is paid an additional
annual retainer of $100,000.
Upon approval of the Board of Directors Stock Plan as described in
Proposal No. 2, non-employee Directors will receive Company stock in May of
each year with a market value at that time of $15,000 in 1998, $20,000 in 1999
and $25,000 in 2000 and thereafter. The compensation program for non-employee
Directors, including the proposed stock grants as more fully described in
Proposal No. 2, is based on an extensive review of the Company's Director
compensation program and is designed to ensure that the Director compensation
program will be competitive, highly performance oriented and linked more
closely to the interests of the Company's shareholders. Stock grants received
by non-employee Directors are taxable when received.
Stradley Ronon Stevens & Young LLP, of which Mr. Papada is a partner, has
acted as general counsel to the Company since 1966. The total fees paid to
Stradley Ronon Stevens and Young LLP during 1997 were approximately $615,000.
This amount represents less than two percent of the gross revenues of that
firm. In 1998, the Company plans to retain this firm for similar services.
The transactions with Stradley Ronon Stevens & Young LLP were entered into by
the Company at arm's length in the ordinary course of business and on terms and
conditions that the Company believes to be fair and reasonable.
9
<PAGE>
Board Stock Ownership
In 1996, the Board of Directors of the Company adopted a number of
policies and procedures aimed at strengthening the independence of the Board
and improving its ability to maximize the Company's value to its shareholders.
The policies adopted by the Board include (1) the establishment of a Board
comprised exclusively of outside Directors, except for the Chief Executive
Officer of the Company and (2) the requirement that all Directors invest a
substantial portion of their Director fees in the Company's Common Stock until
the market value of the Director's personal investment has reached $100,000, as
such amount is determined to represent a sufficient interest in the Company.
To achieve this goal, a Director is required to invest an amount equal to at
least one year's total gross Director's fees (retainer and all attendance fees)
in the Company's common stock every three years until the $100,000 obligation
is satisfied. When a Director's personal investment reaches $100,000, the
policy does not require any further investment in the Company. However,
Directors are encouraged to acquire additional shares of the Company's Common
Stock from time to time as their personal financial position allows. Shares
issued under the proposed Board of Directors Stock Plan described in Proposal
No. 2 below will not count in determining whether a Director has met his/her
ownership obligation as described above.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION POLICIES
The Company's executive compensation program is administered by the
Executive Compensation Committee of the Board of Directors (the "Committee").
The Committee is composed of three outside Directors. Upon recommendation by
the Committee, all issues pertaining to executive compensation are submitted to
the full Board of Directors for approval.
Compensation Philosophy: The purpose of the Company's executive
compensation program is to help the Company achieve its mission and goals by
attracting, motivating, and retaining key executives of high caliber and good
potential. Pay opportunities will be competitive for average performance, and
above-average pay will be provided for superior performance. Variable
components of pay will be a significant element of compensation and will be
variable on the basis of performance. They are not to be considered
entitlements.
Components of Compensation: The executive compensation program consists
of base salary, discretionary cash bonuses and awards under Restricted Plan II.
Base salary and potential bonus ranges are established annually following
comparison of the Company and each of its operating units with surveys of other
manufacturing companies of similar size and complexity. The Committee relies
principally on compensation data accumulated and published by Watson Wyatt
Worldwide, a firm of compensation specialists. In order to achieve some
balance between short-term and long-term business objectives of the Company,
the cash bonus is weighted two-thirds by performance criteria relating to the
current business year and one-third by criteria relating to future business
considerations. The weighting for stock awards is reversed with the emphasis
on longer term business development and strategic plans.
Administration in 1997:
Salaries. In determining 1997 executive officer salaries, the Committee
began by considering the previously established salary ranges for each position
and each officer's relationship to the mid-point of his range in light of that
person's tenure with the Company and years in the current position. Next, it
noted the performance of each Segment against its sales, operating profit and
return on employed capital projections and the personal performance of each
Segment's senior executive relative to stated goals and challenges which arose
during the year. Finally, the Committee noted the Company's strong operating
10
<PAGE>
performance in 1996 with net earnings increasing 118.7%, net earnings per share
increasing 76.4%, return on shareholder's equity increasing to 24.1% and the
fact that the Company completed another significant acquisition (Doduco GmbH)
in late 1996. The Committee also noted that the 1996 total return (with
reinvestment of cash dividends) to its shareholders amounted to 71.9%. Officer
salary increases averaged 19.0% in 1997.
In considering the 1997 salary increase for Mr. Flakoll, the Chief
Executive Officer (CEO), the Committee considered the various factors set forth
above as well as the significantly improved profitability of the Company, its
enhanced prospects for future profitable growth and his continued outstanding
leadership.
Cash Bonuses. The current business criteria, mentioned above, include
sales, profits, profits as a percentage of sales, return on employed capital,
cost reduction, quality, customer service and individual performance. The
future business criteria include new product/program development, new market
development, management succession/development, acquisitions and similar items.
The values assigned to each may vary depending upon the business plans and
strategic objectives of each Segment and were negotiated at the beginning of
1997. Achievement of most of the criteria is measured by objective historical
information and numerical data, while some involve subjective judgments. The
Committee retains the prerogative to modify on a uniform basis the results
obtained in light of the Company's overall results and business conditions
existing at the time of its decision. As calculated under the executive
compensation program, 1997 cash bonuses to executive officers totaled $562,500,
or 53.8% of 1997 aggregate executive salaries. The Committee noted the
Company's outstanding performance in 1997 with net earnings increasing 100%,
net earnings per diluted share increasing 99.2% and return on shareholders'
equity increasing to 39.4% in 1997. For continuing operations only, net
earnings increased 60.4%, net earnings per diluted share increased 59.3% and
return on shareholders equity was 28.1%. The Committee also noted that 1997
total return (with reinvestment of cash dividends) to its shareholders amounted
to 57.6%. In view of the foregoing factors, the Committee decided not to
exercise its prerogative to modify the cash bonuses as otherwise calculated.
Stock Awards: Through the Company's Restricted Plan II, the Committee has
endeavored to motivate management through stock ownership. For example, the
named executive officers are shareholders in the Company and are thus
presumably motivated to act on behalf of all shareholders to optimize overall
Company performance. As previously mentioned, the weighting of the performance
criteria for stock awards is based mostly on long-term business development and
plans. Awards under Restricted Plan II vest in five years. For purposes of
the Summary Compensation Table, awards are valued at the current market price
on the date of the grant.
For the year 1997, the Committee based its awards on the levels of
performance attained and elected to not exercise its prerogative to modify the
number of shares awarded. The Committee believes it is in the best interest of
the Company's shareholders to encourage, promote and reward sound long-term
business plans and strategies.
In evaluating Mr. Flakoll's bonus and stock award as CEO for 1997, the
Committee took into account: the Company's overall financial performance in
1997; the extent of the Company's progress in assimilating prior acquisitions;
the increasingly global nature of the Company's business and the relative
performance of each of the Company's business Segments in a year of operating
in a very competitive global economy; the completion of the acquisition of the
Nortel magnetic components business; the progress made by Mr. Flakoll in
achieving the goals which he established with the Committee in early 1997; and,
the level of bonus and stock awards received by the executive officers and key
executives of the Company. The Committee believes that Mr. Flakoll's overall
compensation is fair and reasonable.
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<PAGE>
No member of the Committee is an employee of the Company or any of its
subsidiaries. Mr. Harrison was formerly the Secretary of the Company and
performs certain investment management activities for the Company's pension
plan on a monthly retainer as an independent contractor.
Compensation Committee: John E. Burrows (Chairman), Stanley E. Basara, and J.
Barton Harrison.
COMPARISON OF TEN-YEAR CUMULATIVE TOTAL RETURN
The following graph and table show a ten-year comparison of total
shareholder returns for the Company, the Russell 2000[registered trademark]
Index and the Dow Jones Electrical Components & Equipment Industry Group Index.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Technitrol, Inc. $100.00 $151.96 $211.96 $131.41 $158.67 $155.86 $189.12 $262.20 $449.43 $772.57 $1,217.81
- ----------------------------------------------------------------------------------------------------------------------------------
Russell 2000[registered
trademark] Index $100.00 $124.89 $145.18 $116.86 $170.68 $202.10 $240.31 $235.93 $303.03 $353.01 $ 431.95
- ----------------------------------------------------------------------------------------------------------------------------------
Dow Jones Electrical
Components & Equipment
Industry Group Index $100.00 $98.73 $125.73 $115.11 $144.63 $144.88 $157.70 $164.20 $214.71 $261.48 $ 321.00
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
Assumes $100 invested on December 31, 1987, and reinvestment of dividends.
</TABLE>
12-13
<PAGE>
Proposal No. 2 - Approval of the Technitrol, Inc. Board of Directors
Stock Plan
The shareholders will be requested at the meeting to approve the
Technitrol, Inc. Board of Directors Stock Plan (the "Director Stock Plan")
pursuant to which non-employee Directors ("Outside Directors") will receive
shares of the Company's common stock each year as partial compensation for
their service on the Board of Directors. The purpose of the Director Stock
Plan is to assist the Company in attracting and retaining highly qualified
persons to serve on the Company's Board of Directors and to provide such
Directors an incentive to contribute to the growth and development of the
Company through equity ownership in the Company. The Director Stock Plan was
adopted after many months of discussions and receipt of an independent study
commissioned by the Board in an effort to determine the competitiveness of
compensation compared to similarly sized industrial companies. The Board
believes that shares issued under the Director Stock Plan together with the
Board's own rule with respect to stock ownership (see below) fundamentally
aligns the interest of each outside Director with that of the shareholders of
the Company. The Director Stock Plan as adopted by the Board of Directors on
February 17, 1998, is set forth as Exhibit A to this Proxy Statement. The
description of the Director Stock Plan contained herein is qualified in its
entirety by reference to the Director Stock Plan.
Currently, each Outside Director is obligated to acquire, over time,
shares in the Company with a market value of at least $100,000. (See
"Directors and Executive Officers - Board Stock Ownership" in this Proxy
Statement.) Shares issued under the Director Stock Plan will not count in the
fulfillment of this obligation by the Outside Directors.
Description of the Director Stock Plan
General. The Director Stock Plan will become effective on May 20, 1998,
subject to its approval by the Company's shareholders at the 1998 Annual
Meeting of the Shareholders. The Plan terminates on the date of the Company's
Annual Meeting of Shareholders in 2008 (the "Termination Date") unless earlier
terminated by the Board of Directors.
Participation. All non-executive Directors of the Company are eligible
to participate in the Director Stock Plan. No persons other than non-
executive Directors may participate in the Plan. Under the terms of the
Director Stock Plan, 30,000 shares of the Company's common stock are available
for grant under the Plan. The Plan provides that the number of shares subject
to the Plan will be adjusted equitably for stock splits, stock dividends,
recapitalizations, mergers and other changes in the Company's common stock.
Administration. The Director Stock Plan is administered by the Board of
Directors of the Company. Except as otherwise provided in the Plan, the Board
shall have sole discretion and authority to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan, and to make all
other determinations necessary or advisable in the administration of the Plan.
The number of shares to be granted to the non-employee Directors, however, are
based upon a formula which is described below.
Grants. At the Board of Directors meeting immediately following the
Annual Meeting of Shareholders in 1998, 1999, 2000 and each year thereafter,
the Board of Directors shall issue to each non-employee Director shares of the
Company's common stock worth $15,000, $20,000 and $25,000, respectively, using
the "fair market value" of the Company's common stock on the business day
immediately preceding the date of grant. "Fair market value" means the per
share closing price of the common stock as reported by the principal national
exchange upon which such common stock is traded (or if not traded on a
national exchange then the mean average between the bona fide closing bid and
ask prices). The aggregate value of the Company's common stock to be issued
to all non-executive Directors (seven per-
14
<PAGE>
sons at March 27, 1998) will be $105,000 in 1998, $140,000 in 1999 and
$175,000 in each year thereafter. Grants are fully taxable when received.
Amendments; Termination. The Board of Directors has the right to
terminate the Director Stock Plan at any time. The Board also has the right
to amend or modify the Director Stock Plan at any time or from time to time,
subject to applicable laws, regulations and exchange requirements; provided,
however, the Board may not, without further shareholder approval (i) increase
the total number of shares of common stock subject to the Plan (except for
adjustments described above); (ii) make any amendment or modification unless
the Board determines such amendment or modification would not materially
increase the cost of the Plan to the Company and (iii) continue the Plan in
effect beyond the Termination Date, without the approval of shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2, APPROVAL
OF THE BOARD OF DIRECTORS STOCK PLAN.
Proposal No. 3 - Selection of Auditors
Shareholders will be asked to approve the selection of KPMG Peat Marwick
LLP as independent auditors for the Company and its subsidiaries for the
fiscal year ending December 31, 1998. KPMG Peat Marwick LLP has advised that
it does not have any direct financial interest or any material indirect
financial interest in the Company or its subsidiaries, and during the past
three years has not had any connection in the interest of the Company or its
subsidiaries in any capacity other than as auditors and providing tax and
consulting advice and preparation of tax returns for the Company. A
representative of the firm will be present at the meeting to answer questions
by shareholders concerning the accounts of the Company and, if such
representative so desires, he will have the opportunity to make a statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 3, APPROVAL
OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS FOR THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1998.
SHAREHOLDERS' PROPOSALS
In order to be considered for inclusion in the proxy materials for the
1999 Annual Meeting, shareholders' proposals must be received by the Company
by December 18, 1998. Any change in this date will be communicated to
shareholders in a timely fashion.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's officers and Directors and persons who own more than 10 percent of a
registered class of the Company's equity shares ("ten-percent holders") to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors, and ten-percent holders are
required by regulation to furnish the Company with copies of all Section 16
(a) forms that they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representation that no Forms 5 were required, the Company
believes that, during the fiscal year ended December 31, 1997, all Section 16
(a) filing requirements applicable to its officers, directors, and ten-percent
holders were satisfied.
15
<PAGE>
OTHER MATTERS
The Board of Directors does not know of any other matters to come before
the meeting. However, if any additional matters are properly presented to the
meeting, it is the intention of the persons named in the accompanying proxy to
vote in accordance with their judgment on such matters.
By Order of the Board of Directors
Drew A. Moyer
March 27, 1998 Secretary
16
<PAGE>
Exhibit A
TECHNITROL, INC.
BOARD OF DIRECTORS STOCK PLAN
1. DEFINITIONS
As used herein, the following terms shall have the meanings
hereinafter set forth unless the context clearly indicates to the contrary:
1.1 "Board" - means the Board of Directors of the Company.
1.2 "Business Day" - means a day on which the New York Stock
Exchange is open for the conduct of normal business.
1.3 "Company" - means Technitrol, Inc.
1.4 "Fair Market Value" - means the per share closing price of the
Stock as reported by the principal national exchange upon which such Stock is
traded (or if not traded on a national exchange then the mean average between
the bona fide closing bid and ask prices).
1.5 "Outside Director" - means any person who is a member of the
Board and is not employed by the Company or any subsidiary of the Company.
1.6 "Plan" - means the Company's Board of Directors Stock Plan, the
terms of which are set forth herein.
1.7 "Stock" - means the common stock of the Company.
2. ESTABLISHMENT AND PURPOSE OF PLAN
2.1 Establishment and Purpose of Plan. The Company hereby
establishes the Plan for the purpose of assisting the Company in attracting
and retaining highly qualified persons to serve as Directors on the Board and
to provide such Directors an incentive to contribute to the growth and
development of the Company through equity ownership in the Company.
2.2 Effective Date of Plan. The Plan will be effective on May 20,
1998, subject to shareholder approval at the 1998 Annual Meeting of
Shareholders.
2.3 Expiration of the Plan. The Plan shall terminate at the close
of business on the date of the Company Annual Meeting of the Shareholders in
2008 (the "Termination Date"), or such earlier date as the Board may determine
pursuant to Section 7 of the Plan, and no shares of Stock shall be granted
after that date.
3. STOCK SUBJECT TO PLAN
3.1 Limitations. Subject to adjustment pursuant to the provisions
of Section 3.2 hereof, the number of shares of Stock of the Company which may
be granted under the Plan shall not exceed 30,000 shares.
3.2 Adjustments; Anti-Dilution. If the outstanding shares of
Stock of the Company are hereafter changed or converted into or exchanged
or exchangeable for a different number or kind of shares or other securities
of the Company or of another corporation by reason of a reorganization,
merger, consolidation, recapitalization, reclassification, combination
of shares, stock dividend, stock split or reverse stock split,
17
<PAGE>
appropriate adjustment shall be made in the number of shares and kind of
stock which may be granted as provided in Section 3.1.
4. ADMINISTRATION OF THE PLAN
4.1 Administration by the Board. Subject to the provisions of the
Plan, the Plan shall be administered by the Board.
4.2 Powers and Duties. Except as otherwise provided in the Plan,
the Board shall have sole discretion and authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, and
to make all other determinations necessary or advisable in the administration
of the Plan.
4.3 Liability of the Board. No member of the Board shall be liable
for any action, determination or interpretation under any provision of the
Plan or otherwise if such action, determination or interpretation was done or
made in good faith by such member of the Board.
5. SHARES OF STOCK GRANTED UNDER THE PLAN
5.1 Eligibility. Outside Directors are eligible to participate in
the Plan.
5.2 Grants.
(a) At the organizational meeting of the Board immediately
following the 1998 Annual Meeting of Shareholders, the Board shall grant to
each person who is an Outside Director at the time of such Board meeting such
number of shares of Stock which equals $15,000 using the Fair Market Value of
the Stock on the Business Day immediately preceding the date of grant.
(b) At the organizational meeting of the Board immediately
following the 1999 Annual Meeting of Shareholders, the Board shall grant to
each Outside Director at the time of such Board meeting such number of shares
of Stock which equals $20,000 using the Fair Market Value of the Stock on the
Business Day immediately preceding the date of grant.
(c) At the organizational meeting of the Board immediately
following the 2000 Annual Meeting of Shareholders and each Annual Meeting of
Shareholders thereafter, the Board shall grant to each Outside Director at the
time of such Board meeting such number of shares of Stock which equals $25,000
using the Fair Market Value of the Stock on the Business Day immediately
preceding the date of grant.
5.3 Shares Awarded. The shares of Stock awarded hereunder shall be
issued to the Outside Directors in their own names, with all attendant rights
of a shareholder of the Company.
5.4 Right as a Director. Neither the Plan, nor the granting of any
shares of Stock hereunder, nor any other action taken pursuant to the Plan,
shall constitute or be evidence of any agreement or undertaking, express or
implied, that the Company will retain any director for any period of time, or
at any particular rate of compensation, or with any other benefits whatsoever.
6. DELIVERY OF STOCK CERTIFICATES
6.1 The Company shall not be required to issue or deliver any
certificate for shares of Stock granted hereunder prior to the fulfillment of
any of the following conditions which may, from time to time, be applicable to
the issuance of shares of Stock hereunder:
18
<PAGE>
(a) Listing of Shares. The admission of such shares of Stock
to listing on (i) all stock exchanges on which the Stock of the Company is
then listed or (ii) the National Association of Securities Dealers Automated
Quotation System.
(b) Registration and/or Qualification. (i) Receipt by the
Secretary of the Company from the Outside Director or his/her heirs and
assigns of such documents as the Company shall deem necessary to determine
whether registration of the shares of Stock is required under the Securities
Act of 1933, as amended (the "Act"), or to comply with such Act or any other
law and (ii) the completion of any registration or other qualification of such
shares of Stock under any federal or state securities laws or under the
regulations promulgated by the Securities and Exchange Commission or any other
federal or state governmental regulatory body, which the Board shall deem
necessary or advisable. The Company shall in no event be obligated to
register the shares of Stock granted to any Outside Director pursuant to this
Plan under the Act or any state securities laws.
(c) Approval or Clearance. The obtaining of any approval or
clearance from any federal or state governmental agency which the Board shall
determine to be necessary or advisable.
(d) Reasonable Lapse of Time. The lapse of such reasonable
period of time following the grant of shares of Stock hereunder as the Board
may establish from time to time for reasons of administrative convenience.
7. TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
7.1 The Board has the right to terminate the Plan at any time. The
Board also has the right to amend or modify the Plan at any time or from time
to time, subject to applicable laws, regulations and exchange requirements;
provided, however, the Board may not, without further shareholder approval:
(a) except as contemplated in Section 3.2 of the Plan,
increase the total number of shares of Stock subject to the Plan;
(b) make any amendments or modifications unless the Board
determines any such amendment or modification would not materially increase
the cost of the Plan to the Company; or
(c) continue the Plan in effect beyond the Termination Date.
8. MISCELLANEOUS
8.1 Plan Binding on the Successors. The Plan shall be binding
upon the successors and assigns of the Company.
8.2 Withholding Taxes. Whenever Federal, state and local tax is
due on the grant of shares of Stock under this Plan, the Company may require
the Outside Director to remit an amount sufficient to satisfy Federal, state
and local withholding taxes prior to the delivery of any certificate for such
shares.
8.3 Stock Ownership Requirement. The value of shares of Stock
awarded under this Plan shall not be counted in determining whether an Outside
Director has met his or her Stock ownership requirements as determined by the
Board from time to time.
19
<PAGE>
==============================================================================
REVOCABLE PROXY
TECHNITROL, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
1998 ANNUAL MEETING PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas J. Flakoll and Drew A. Moyer as
Proxies and attorneys-in-fact, each with the power of substitution, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of Common Stock of the Company held of record by the undersigned on March 6,
1998, at the Annual Meeting of Shareholders to be held on May 20, 1998 or any
adjournment thereof.
Please be sure to sign and date this Proxy in the box below. Date
-----------------
- ------------------------------------------------------------------------------
Shareholder sign above Co-holder (if any) sign above
For With- For All
hold Except
1. ELECTION OF DIRECTORS [ ] [ ] [ ]
Stanley E. Basara
Roy E. Hock
Edward M. Mazze
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
- ------------------------------------------------------------------------------
For Against Abstain
2. PROPOSAL TO APPROVE THE [ ] [ ] [ ]
BOARD OF DIRECTORS STOCK
PLAN
For Against Abstain
3. PROPOSAL TO APPROVE THE [ ] [ ] [ ]
APPOINTMENT OF KPMG PEAT
MARWICK LLP as the Company's
independent auditors for the year
commencing January 1, 1998.
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN AND IN ACCORDANCE WITH THE PROXY STATEMENT. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AND FOR PROPOSAL 2
AND IN ACCORDANCE WITH THE INSTRUCTIONS OF THE BOARD OF DIRECTORS ON ALL OTHER
MATTERS.
Please sign this Proxy exactly as name appears on this card. When shares
are held by joint tenants, both should sign. When signing as attorney,
trustee or guardian, or other fiduciary capacity 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.
==============================================================================
