<PAGE> 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
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
(Name of Registrant as Specified in Its Charter)
THE TIMKEN COMPANY
(Name of Person(s) Filing Proxy Statement)
THE TIMKEN COMPANY
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] 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: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: N/A
(4) Proposed maximum aggregate value of transaction: N/A
[ ] Check box if any part of the fee is offset as provided by
the 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:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
<PAGE> Notice of 1994
Annual Meeting of
Shareholders
and
Proxy Statement
THE TIMKEN COMPANY
CANTON, OHIO U.S.A.
TABLE OF CONTENTS
PAGE
Chairman's Letter 1
Notice of Annual Meeting 3
Proxy Statement 4
Election of Directors 4
Election of Class III
Directors (Item No. 1) 5
Information Concerning
Nominees and
Continuing Directors 5
Beneficial Stock
Ownership 9
Executive Compensation 12
Auditors 24
General 24
March 2, 1994
Dear Shareholder:
The 1994 Annual Meeting of The Timken Company will be held on
Tuesday, April 19, 1994, at ten o'clock in the morning at the
Corporate Office of the Company in Canton, Ohio.
This year, you are being asked to act upon one matter recommended
by your Board of Directors. Details of this matter are contained
in the accompanying Notice of Annual Meeting and Proxy Statement.
Please read the enclosed information carefully before completing
and returning the enclosed proxy card. Returning your proxy card
as soon as possible will assure your representation at the
meeting, whether or not you plan to attend.
I appreciate the strong support of our shareholders over the
years and look forward to a similar vote of support at the 1994
Annual Meeting.
Sincerely,
W. R. Timken, Jr.
<PAGE>
<PAGE>
THE TIMKEN COMPANY
CANTON, OHIO
_____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
__________________________________________
The Annual Meeting of Shareholders of The Timken Company will be
held on Tuesday, April 19, 1994, at 10:00 A.M., at 1835 Dueber
Avenue, S.W., Canton, Ohio, for the following purposes:
1. To elect four Directors to serve in Class III for a term of
three years.
2. To transact such other business as may properly come before
the meeting.
Holders of Common Stock of record at the close of business on
February 21, 1994, are the shareholders entitled to notice of and
to vote at the meeting.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD, WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING. For your convenience, a
self-addressed envelope is enclosed requiring no postage if
mailed in the United States.
LARRY R. BROWN
Vice President and General Counsel
March 2, 1994
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR PROXY CARD.
<PAGE>
<PAGE> THE TIMKEN COMPANY
____________________
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors in
connection with the Annual Meeting of Shareholders to be held
April 19, 1994, for the purpose of considering and acting upon
the matters specified in the foregoing Notice.
Financial and other reports will be submitted to the meeting, but
it is not intended that any action will be taken on these
reports. The Board of Directors is not aware that matters other
than those specified in the foregoing Notice will be brought
before the meeting for action. However, if any such matters
should be brought before the meeting, the persons appointed as
proxies may vote or act upon such matters according to their
judgment.
MAILING ADDRESS; MAILING AND NOTIFICATION DATES
The mailing address of the Executive Offices of the Company is
1835 Dueber Avenue, S.W., Canton, Ohio 44706-2798. The
approximate date on which this Proxy Statement and form of proxy
will be first sent or given to shareholders is March 4, 1994. In
the event that proxy soliciting material for the 1995 Annual
Meeting is sent to shareholders on approximately the same date in
1995, the Company must be notified no later than November 4,
1994, of any shareholder proposals to be presented at the 1995
Annual Meeting, if such proposals are to be set forth in the 1995
proxy soliciting material.
ELECTION OF DIRECTORS
The Company presently has twelve Directors who, pursuant to the
Regulations of the Company, are divided into three classes with
four Directors in each Class. At the Board of Directors meeting
held on February 4, 1994, Richard A. Gulling gave notice he was
retiring from the Board effective immediately after the meeting,
pursuant to the Board of Directors retirement policy. At the
same meeting, the Board of Directors elected J. Clayburn La
Force, Jr. to fill the vacancy created by Mr. Gulling's
resignation. Mr. La Force will serve the remainder of Mr.
Gulling's term in Class II, which will expire at the 1996 Annual
Meeting. At the 1994 Annual Meeting, four Directors will be
elected to serve in Class III for a three-year term to expire at
the 1997 Annual Meeting. Under Ohio law and the Company's
Amended Articles of Incorporation, candidates for Directors
receiving the greatest number of votes shall be elected.
If any nominee becomes unavailable for any reason or should a
vacancy occur before the election (which events are not
anticipated), the persons named in the enclosed proxy form may
substitute another person as a nominee or may reduce the number
of nominees to such extent as they shall deem advisable.
<PAGE>
<PAGE>
ITEM NO. 1
ELECTION OF CLASS III DIRECTORS
The Board of Directors, by resolution at its February 4, 1994
meeting, nominated the four individuals set forth below to be
elected Directors in Class III at the 1994 Annual Meeting to
serve for a term of three years expiring at the Annual Meeting in
1997 (or until their respective successors are elected and
qualified). All of the nominees have been previously elected as
a Director by the shareholders. Each of the nominees listed
below has consented to serve as a Director if elected.
Unless otherwise indicated on any proxy, the persons named as
proxies on the enclosed proxy form intend to vote the shares the
form represents for the election of the nominees named below.
The following table, based in part on information received from
the respective nominees and in part from the records of the
Company, sets forth information regarding each nominee as of
January 27, 1994.
<TABLE>
<CAPTION>
AGE; PRINCIPAL POSITION OR OFFICE; DIRECTOR
BUSINESS EXPERIENCE FOR LAST 5 YEARS CONTINUOUSLY
NAME OF NOMINEE DIRECTORSHIPS OF PUBLICLY HELD COMPANIES SINCE
<C> <C> <C>
Stanley C. Gault 68, Chairman of the Board and Chief Executive 1988
Officer of The Goodyear Tire and Rubber
Company, manufacturer of tires, chemicals,
polymers, plastic film and other rubber
products.
Previous position: Chairman of the Board
and Chief Executive Officer of Rubbermaid
Incorporated, manufacturer and distributor
of rubber and plastic products for consumer
and institutional markets.
Director of: Avon Products, Inc.,
International Paper Company; PPG Industries,
Inc.; Rubbermaid Incorporated;
The Goodyear Tire and Rubber Company.
John M. Timken, Jr. 42, Private Investor. 1986
W. R. Timken, Jr. 55, Chairman - Board of Directors. 1965
Director of: Diebold, Incorporated;
The Louisiana Land and Exploration
Company; Trinova Corporation.
Alton W. Whitehouse 66, Retired Chairman and Chief 1986
Executive Officer of The Standard
Oil Company, principally producer
of domestic oil and natural gas.
Director of: Cleveland-Cliffs, Inc.
/TABLE
<PAGE>
<PAGE>
CONTINUING DIRECTORS
The remaining eight Directors, named below, will continue to
serve in their respective classes. The following table, based in
part on information received from the respective Directors and in
part from the records of the Company, sets forth information
regarding each continuing Director as of January 27, 1994.
<TABLE>
<CAPTION>
AGE; PRINCIPAL POSITION OR OFFICE; DIRECTOR
BUSINESS EXPERIENCE FOR LAST FIVE YEARS; TERM CONTINUOUSLY
NAME OF DIRECTOR DIRECTORSHIPS OF PUBLICLY HELD COMPANIES EXPIRES SINCE
<C> <C> <C> <C>
Robert Anderson 73, Chairman Emeritus and April, 1995 1988
Former Chairman of the Board and
Chief Executive Officer of Rockwell
International Corporation, a multi-industry
company applying advanced technology to a
wide range of products in its aerospace,
electronics, automotive, and graphics
businesses. Director of: Bank of America
NT & SA (only through April 30, 1993);
BankAmerica Corporation (only through April
30, 1993); Foundation Health Corporation;
Optical Data Systems, Inc.; Rockwell
International Corporation (only through
February 2, 1993).
Peter J. Ashton 58, Executive Vice President and April, 1995 1983
President - Bearings. Previous position:
Executive Vice President - Bearings.
J. Clayburn La Force, Jr. 65, Emeritus Dean and Professor April, 1996 1994
The John E. Anderson Graduate School of Management,
University of California, Los Angeles. Previous
positions: Acting Dean, Hong Kong University
of Science and Technology; Dean, John E. Anderson
Graduate School of Management, University of
California, Los Angeles. Director of: Shearson
VIP; Eli Lilly and Company; Rockwell International
Corporation; Jacobs Engineering Group, Inc.; The
BlackRock Funds; Imperial Credit Industries, Inc.;
Payden & Rygel Investment Trust; Provident Investment
Counsel Mutual Funds.
Robert W. Mahoney 57, Chairman of the Board and Chief April, 1996 1992
Executive Officer of Diebold, Incorporated,
a company specializing in the automation
of self-service transactions, security products,
software and service for its products.
Previous position: President and Chief
Executive Officer of Diebold, Incorporated.
Director of: Diebold, Incorporated.
<PAGE>
James W. Pilz 65, Retired Executive Vice President of April, 1996 1972
The Timken Company.
Ward J. Timken 51, Vice President. April, 1995 1971
Previous position: Director - Human
Resource Development.
Joseph F. Toot, Jr. 58, President and Chief Executive Officer. April, 1996 1968
Previous position: President.
Director of: Rockwell International
Corporation.
Charles H. West 59, Executive Vice President and April, 1995 1984
President - Steel.
Previous position: Executive Vice
President - Steel.
</TABLE>
W. R. Timken, Jr. and Ward J. Timken are brothers and are
cousins of John M. Timken, Jr. The Board of Directors has an
Audit Committee and a Compensation Committee; it does not have a
nominating committee since the Board as a whole performs that
function. Messrs. Robert W. Mahoney (Chairman), J. Clayburn La
Force, Jr. and John M. Timken, Jr. are the members of the Audit
Committee, which generally monitors the audit of the Company's
financial statements conducted by the auditors of the Company.
Messrs. Robert Anderson, Stanley C. Gault and Alton W. Whitehouse
(Chairman) are the members of the Compensation Committee, which
establishes compensation for the Company's Officers and
determines incentive and performance awards. During 1993, there
were seven meetings of the Board of Directors, three meetings of
its Audit Committee and five meetings of its Compensation
Committee. All nominees for Director and all continuing
Directors attended 75 percent or more of the meetings of the
Board and its Committees which they were eligible to attend.
Each Director who served in 1993, including each Director
who is an Officer, was paid at the annual rate of $20,000 during
1993 for services as a Director, unless the Director waived all
or a portion of the Director's fee. Upon his election to the
Board on February 4, 1994, J. Clayburn La Force, Jr. received a
grant of 1,000 restricted shares under The Timken Company
Long-term Incentive Plan. Each Director who served in 1993, who
is not currently an employee of the Company, received a grant of
200 shares of Common Stock under The Timken Company Long-term
Incentive Plan following the Annual Meeting of Shareholders on
April 20, 1993, and such Directors (including Mr. La Force) will
continue to receive annual grants of 200 shares of Common Stock
under the Plan following the Annual Meeting of Shareholders each
year for so long as they continue to serve as Non-employee
Directors. Members of the Audit Committee and the Compensation
Committee received additional compensation at the rate of $10,000
per year for the Committee Chairmen and $5,000 per year for each
<PAGE>regular Committee member unless the Director waived all or
a portion of the Committee fee. Any Director may elect to defer
the receipt of all or a certain specified portion of these fees
based upon an Optional Deferment of Directors' Fees Plan. Under
this Plan, amounts deferred by a Director earn interest and are
payable to the Director in a lump sum on the date previously
elected by him or in installment payments beginning when the
Director ceases to be a Director.
At its November 5, 1993, meeting, the Board passed a
resolution that effective January 1, 1994, Directors who are
employees of the Company shall no longer receive separate fees as
Directors of the Company nor as members of any committee of the
Board, provided, however, that each Director who presently is an
employee of the Company and who had been receiving the annual
Directors fee shall have the sum of $20,000 added to his base
salary on a one-time basis effective January 1, 1994.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table shows, as of January 27, 1994, the beneficial
ownership of Common Stock of the Company by each continuing
Director and nominee for election as a Director and by all
continuing Directors, nominees for Directors and Officers as a
group. Beneficial ownership of Common Stock has been determined
for this purpose in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934 and is based on either the sole
or shared power to vote or direct the voting of Common Stock or
on either the sole or shared power to dispose or direct the
disposition of Common Stock. Beneficial ownership as determined
in this manner does not necessarily bear on the economic
incidents of ownership of Common Stock.
<PAGE>
<PAGE>
<TABLE>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
<CAPTION>
SOLE VOTING SHARED VOTING
OR INVESTMENT OR INVESTMENT AGGREGATE PERCENT OF
CLASS NAME POWER POWER AMOUNT CLASS
<C> <C> <C> <C> <C> <C>
Common Stock Robert Anderson 1,200 1,000 2,200 *
Common Stock Peter J. Ashton 91,969 <F1>(1) -- 91,969 *
Common Stock Stanley C. Gault 8,200 -- 8,200 *
Common Stock Richard A. Gulling <F2>(2) 16,398 -- 16,398 *
Common Stock Donald L. Hart 42,709 <F1>(1) -- 42,709 *
Common Stock Robert W. Mahoney 1,268 -- 1,268 *
Common Stock James W. Pilz 1,316 <F1>(1) -- 1,316 *
Common Stock John M. Timken, Jr. 162,966 127,506 <F3>(3) 290,472 *
Common Stock Ward J. Timken 153,822 <F1>(1) 3,310,907 <F3>(3) 3,464,729 11.2
Common Stock W. R. Timken, Jr. 99,002 <F1>(1) 3,814,485 <F3>(3) 3,913,487 12.7
Common Stock Joseph F Toot, Jr. 155,172 <F1>(1) 100 155,272 *
Common Stock Charles H. West 89,876 <F1>(1) 291 90,167 *
Common Stock Alton W. Whitehouse 4,200 -- 4,200 *
Common Stock All Directors, 1,000,641 3,988,611 4,989,252 16.2
Nominees for Directors
and Officers as a Group <F4>(4)
*Percent of class is less than 1%.
<FN>
<F1>(1) Includes shares which the individual named in the table has the right to acquire, on or before March 28, 1994, through
the exercise of stock options pursuant to the 1985 Incentive Plan and the Long-Term Incentive Plan, as follows: Peter J.
Ashton - 76,250; Donald L. Hart - 27,175; James W. Pilz - 6,000; Ward J. Timken - 675; W. R. Timken, Jr. - 5,775; Joseph
F. Toot, Jr. - 127,700; Charles H. West - 67,775; all Directors, Nominees and Officers as a Group - 435,918.
<F2>(2) R. A. Gulling retired as a Director on February 4, 1994, and was replaced by J. Clayburn La Force, Jr., who received a
grant of 1,000 restricted shares under the Timken Company Long-Term Incentive Plan upon his election to the Board on
February 4, 1994. These shares are not included in this table. Mr. LaForce has no beneficial ownership of any additional
shares.
<F3>(3) Includes shares for which another individual named in the table is also deemed to be the beneficial owner, as follows:
John M. Timken, Jr. - 22,406; Ward J. Timken - 3,293,296; W. R. Timken, Jr. - 3,315,702.
<F4>(4) The number of shares beneficially owned by all Directors, nominees for Directors and Officers as a group has been
adjusted to eliminate duplications of beneficial ownership.
</TABLE>
<PAGE>
Members of the Timken family, including Messrs. John M. Timken,
Jr., Ward J. Timken and W. R. Timken, Jr., have in the aggregate
sole or shared voting power with respect to at least an aggregate
of 5,873,626 shares (19.0%) of Common Stock. The members of the
Timken family identified in the table are not deemed to be the
beneficial owners of all such shares. The Timken Foundation of
Canton, 236 Third Street, S.W., Canton, Ohio 44702, holds
2,623,972 of these shares, representing 8.5% of the outstanding
Common Stock. Messrs. Ward J. Timken, W. R. Timken, W. R.
Timken, Jr. and Donald R. Black are trustees of the Foundation
and share the voting and investment power.
Participants in the Company's Savings and Investment Pension
Plan have voting power over an aggregate of 2,700,566 shares
(8.8%) of Common Stock of the Company.
In its most recent filing with the Securities and Exchange
Commission dated July 10, 1990, by the State of Wisconsin
Investment Board, P.O. Box 7842, Madison, Wisconsin 53707,
indicates that this institution had sole voting and investment
power over 1,813,200 shares (5.9%) of the Company's outstanding
Common Stock.
<PAGE>
<PAGE> EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning 1991, 1992
and 1993 compensation for the Company's Chief Executive Officer
and the four most highly compensated Executive Officers who were
Executive Officers during 1993.
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
AWARDS
<F1>(A) <F2>(B)
RESTRICTED SECURITIES ALL
NAME AND STOCK UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARD(S) OPTIONS COMP
($) ($) ($) (#) ($)
<C> <C> <C> <C> <C> <C> <C>
Joseph F. Toot, Jr. <F3>(C) 1993 526,875 0 0 20,000 44,236
President and 1992 489,500 0 0 23,100 44,345
Chief Executive Officer 1991 500,989 0 0 31,900 48,826
W. R. Timken, Jr. 1993 471,875 0 0 20,000 41,706
Chairman - Board of 1992 425,833 0 0 23,100 41,140
Directors 1991 424,110 0 0 0 44,364
Peter J. Ashton 1993 349,063 0 0 11,000 33,962
Executive Vice President 1992 316,083 0 0 11,100 33,648
and President - Bearings 1991 317,763 0 0 15,300 36,406
Charles H. West 1993 311,250 0 0 10,000 34,317
Executive Vice President 1992 282,500 0 0 9,600 34,030
and President - Steel 1991 284,962 0 0 13,300 36,438
Donald L. Hart 1993 218,229 0 0 5,700 10,038
Vice President - Bearings - 1992 193,500 0 0 4,500 9,642
North and South America 1991 204,112 0 0 6,200 11,771
<FN>
<F1>(A) Any dividend equivalents earned as described in footnote A of the Option Grants in Last Fiscal Year Table are intended to be
shown in the Restricted Stock Awards Column when earned. The dividend equivalents are not traditional restricted stock but
deferred shares with no dividend or voting rights. Dividend equivalents were earned pursuant to the 1985 Incentive Plan in
1988 and 1989. At year end, there were no outstanding deferred shares earned as dividend equivalents.
<PAGE>
<F2>(B) The amounts shown in this column have been derived as follows:
Mr. Toot:
1993 - $7,195, 1992 - $6,982, 1991 - $6,780 annual Company contribution to the Savings and Investment Pension Plan (SIP Plan).
1993 - $17,041, 1992 - $17,363 annual Company contribution to the Excess Savings and Investment Pension Plan (Excess SIP Plan).
1991 - $22,046 annual Company contribution to the Annual Thrift Plan (ATP). Effective January 1, 1992, the ATP was eliminated.
1993 - $20,000, 1992 - $20,000, 1991 - $20,000 Directors fees.
Mr. Timken:
1993 - $7,195, 1992 - $6,982, 1991 - $6,780 annual Company contribution to the SIP Plan.
1993 - $14,511, 1992 - $14,158 annual Company contribution to the Excess SIP Plan.
1991 - $17,584 annual Company contribution to the ATP.
1993 - $20,000, 1992 - $20,000, 1991 - $20,000 Directors fees.
Mr. Ashton:
1993 - $7,195, 1992 - $6,982, 1991 - $6,780 annual Company contribution to the SIP Plan.
1993 - $6,767, 1992 - $6,666 annual Company contribution to the Excess SIP Plan.
1991 - $9,626 annual Company contribution to the ATP.
1993 - $20,000, 1992 - $20,000, 1991 - $20,000 Directors fees.
Mr. West:
1993 - $7,195, 1992 - $6,982, 1991 - $6,780 annual Company contribution to the SIP Plan.
1993 - $7,122, 1992 - $7,048 annual Company contribution to the Excess SIP Plan.
1991 - $9,658 annual Company contribution to the ATP.
1993 - $20,000, 1992 - $20,000, 1991 - $20,000 Directors fees.
Mr. Hart:
1993 - $7,195, 1992 - $6,982, 1991 - $6,780 annual Company contribution to the SIP Plan. 1993 - $2,843, 1992 - $2,660 annual
Company contribution to the Excess SIP Plan.
1991 - $4,991 annual Company contribution to the ATP.
<F3>(C) Mr. Toot was elected to the position of Chief Executive Officer on August 7, 1992.
</TABLE>
<PAGE>
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to
unexercised stock option grants under The 1985 Incentive Plan of
The Timken Company or The Timken Company Long-Term Incentive
Plan. None of the named individuals exercised stock options in
1993.
<TABLE>
<CAPTION>
<F1>(A)
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
STOCK OPTIONS STOCK OPTIONS
AT YEAR-END AT YEAR-END
# $
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<C> <C> <C> <C> <C>
Joseph F. Toot, Jr. 119,725 53,275 $223,037 $255,399
W. R. Timken, Jr. 5,775 37,325 27,431 129,793
Peter J. Ashton 72,425 26,975 258,424 125,911
Charles H. West 64,450 23,850 198,768 110,318
Donald L. Hart 25,625 12,175 45,505 53,980
<FN>
<F1>(A) Based on the closing stock price on the New York Stock Exchange at year end.
</TABLE>
<PAGE>
<PAGE> OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock
option grants made during 1993 pursuant to The Timken Company
Long-Term Incentive Plan approved by shareholders on April 21,
1992.
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
PERCENT
<F1>(A) OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO EXERCISE <F2>(B)
UNDERLYING EMPLOYEES OR BASE GRANT DATE
OPTIONS IN FISCAL PRICE EXPIRATION PRESENT VALUE
NAME GRANTED YEAR ($/SHARE) DATE ($)
<C> <C> <C> <C> <C> <C>
Joseph F. Toot, Jr. 20,000 9.1% $31.250 May 7, 2003 $172,600
W. R. Timken, Jr. 20,000 9.1% 31.250 May 7, 2003 172,600
Peter J. Ashton 11,000 5.0% 31.250 May 7, 2003 94,930
Charles H. West 10,000 4.5% 31.250 May 7, 2003 86,300
Donald L. Hart 5,700 2.6% 31.250 May 7, 2003 42,921
<FN>
<F1>(A) Options granted in 1993 are exercisable starting 12
months after the date granted, with 25% of the options
covered thereby becoming exercisable at that time and
with an additional 25% becoming exercisable on each
successive anniversary date. The options granted in
1993 provide for the crediting to the optionee of
dividend equivalents in the form of Company common
stock, but only when total net income per share of the
outstanding common stock is at least 200 percent of
the total amount of cash dividends paid per share
during the calendar year. Dividend equivalents earned
in this manner are paid in the form of deferred
shares, which are subject to forfeiture until credited
to the optionee, which generally occurs after 4 years.
The agreements pertaining to these options also
provide that such options will become exercisable in
full in the event of a change in control, as defined
in such agreements, of the Company. If, following a
change in control, the optionee's employment is
terminated, all dividend equivalents are also vested.
<PAGE>
For additional information about dividend equivalents, refer
to Footnote A of the Summary Compensation Table.
<F2>(B) The rules on executive compensation disclosure issued
by the Securities and Exchange Commission authorize
the use of the Black-Scholes option valuation model in
valuing executive stock options. The Company used
this model to estimate grant date present value.
Under this model, basic assumptions are made
concerning variables such as interest rates, stock
price volatility and future dividend yield, which are
difficult to predict. Vesting restrictions, which
reduce option values, are not recognized with this
valuation approach. There is, of course, no assurance
that the value realized by the executive will be at or
near this estimated value, for the actual value, if
any, an executive may realize will depend on the
excess of the stock price over the exercise price on
the date the option is exercised. The Company does
not advocate or necessarily agree that the
Black-Scholes model can properly determine the value
of an option.
</TABLE>
The following assumptions were used in establishing the
Black-Scholes value for Messrs. Toot, Timken, Ashton and West:
(a) an option term of 10 years; (b) an interest rate of 5.9%,
which is the interest rate for a 10-year treasury bond on May
7, 1993; (c) volatility of .2418 calculated using the quarter
ending stock price for 5 years prior to the grant date; (d)
dividend yield of 3.27%, the average amount paid annually,
over the 5 years prior to grant date.
The Black-Scholes assumptions were modified for Mr. Hart
due to his age. Mr. Hart's options are expected to expire in
7.1 years as opposed to 10 years, and the interest rate was
reduced to 5.38% from 5.9%.
<PAGE>
PENSION PLAN TABLE
The following table shows the estimated annual retirement
benefits for Executive Officers in the earnings and years of
service combinations indicated.
YEARS OF SERVICE (A) (B) (D)
REMUNERATION (C) 30 35 40
200,000 110,250 128,625 147,000
300,000 165,375 192,938 220,500
400,000 220,500 257,250 294,000
500,000 275,625 321,563 367,500
600,000 330,750 385,875 441,000
(A) Amounts in this section of the table have been developed in
accordance with the provisions of the retirement plan and
individual agreements based upon a straight life annuity,
not under any of the various survivor options and before
adjustment for Social Security benefits (officers benefits
are subject to Social Security offsets). These amounts
have been determined without regard to the maximum benefit
limitations for defined benefit plans and the limitations
on compensation imposed by the Internal Revenue Code of
1986, as amended. The Board of Directors has authorized a
supplemental retirement plan and individual agreements that
direct the payment out of general funds of the Company of
any benefits calculated under the provisions of the
applicable retirement plan that may exceed these limits.
(B) The credited years of service as of December 31, 1993, for
the individuals listed in the Summary Compensation Table
are 31 for Mr. Toot, 31 for Mr. Timken, 41 for Mr. Ashton,
39 for Mr. West and 37 for Mr. Hart. There is no
incremental benefit level for years of service in excess of
40.
(C) Plan benefits are based upon average earnings, excluding
Directors fees but including fifty percent of any cash
bonus plan award, for the highest five consecutive calendar
years of the ten years preceding retirement (Final Average
Earnings ). Effective January 1, 1994, one hundred percent
of any subsequent cash bonus plan award will be included in
the calculation of average earnings.
(D) Amounts shown in the table are developed assuming
retirement at age 62 and Final Average Earnings equal to
Remuneration in 1993.
<PAGE>
CHANGE IN CONTROL SEVERANCE AGREEMENTS
The Company is a party to Severance Agreements with 12 of its
officers and 2 officers of a subsidiary (including all of those
individuals named in the Summary Compensation Table). Under
these Agreements, an individual to whom certain events occur,
such as a reduction in responsibilities or termination of
employment, following a change in control (as defined in the
Agreements), will be entitled to receive payment in an amount,
grossed up for any excise taxes payable by the individual, equal
to three times the individuals annual salary and average
Management Performance Plan award based upon the past three years
payments plus a lump sum of amounts owing under the Company's
supplemental retirement plan (assuming the individual continued
to work until three years after the change in control). The
individual would also receive certain benefits under the SIP
Plan. The amounts payable under these Severance Agreements are
secured by a trust arrangement.
CHANGE IN CONTROL SEVERANCE PAY PLAN
The Company has implemented a Severance Pay Plan covering
approximately ninety key associates (other than those that are
party to Severance Agreements). Under the Severance Pay Plan, an
individual whose employment is terminated following a change in
control (as defined in the Plan) may be entitled to receive
payment in an amount equal to 150% to 200% of the individuals
annual base salary (depending upon length of service), grossed up
for any excise taxes payable by the individual, and may also have
certain benefits continued for a period of six months. The
Company has created a trust arrangement to provide funds for the
enforcement of the Severance Pay Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the Committee ) of the Board of
Directors is composed of Robert Anderson, Stanley C. Gault and
Alton W. Whitehouse, Chairman. No member of the Committee is a
former or current officer or employee of the Company or of any of
its subsidiaries.
COMPENSATION PHILOSOPHY
The Company's compensation philosophy focuses on both short and
long-term incentive programs that, when added to base salary,
provide a total compensation package that will enable the Company
to attract and retain superior quality executive officers. This
approach is intended to enhance Company performance and
shareholder value by tying in closely the financial interests of
executive officers and senior managers with those of
shareholders. Specifically, the Committee's philosophy includes
these three primary ingredients:
<PAGE>
Provide sufficient opportunity in total direct compensation that
enables the Company to attract, retain and motivate superior
quality executive management.
Establish base salaries for executive management based upon
market data from a peer group of companies.
Link the financial interests of executive management with those
of shareholders, with short and long-term incentive plans tied to
corporate, business unit and individual performance.
The Company, with the Committee's guidance and approval, has
developed a compensation program based on this philosophy for
executive officers, including the Chief Executive Officer and the
other named executive officers. This program has three
components: base salary, annual bonus and long-term incentives.
Base salaries, on average, are administered at or slightly below
the market median. The Company relies on its annual bonus and
long-term incentive awards, tied directly to individual, business
unit and corporate performance, to provide total direct
compensation at the desired level. The Committee determines
specific compensation actions for the Chief Executive Officer and
considers and acts upon recommendations made by the Chief
Executive Officer regarding compensation of other executive
officers and key associates.
In 1993, the Company conducted an extensive review of total
direct compensation being paid by companies having net sales from
one to five billion dollars and which are comparable for
compensation purposes. Total direct compensation includes base
salary, annual bonus and long-term incentives. The Company
reviewed information contained in three surveys published by
compensation consulting firms. The information selected from the
surveys covered 106 companies in one survey, 118 in another
survey and 56 in the third survey. The Company then compared
total direct compensation opportunity provided to executive
officers to median total direct compensation for the selected
companies of similar size. This study focused on the total
opportunity available from each item of total direct
compensation. Following completion of this analysis and
development of proposed base salary ranges and target bonus
opportunity, an independent compensation consultant reviewed the
findings and met with the Compensation Committee, which then
approved revised base salary ranges and target bonus opportunity
percentages.
<PAGE>
A recent release issued by the Securities and Exchange Commission
provided that compensation committee reports should address a
company's policy with respect to qualifying compensation paid to
its executive officers for deductibility under the $1 million
deduction limit set forth in the recently enacted tax
legislation. The Committee has reviewed the new legislation and,
in view of the levels of base salary and the size of potential
bonuses, does not foresee anyone exceeding the $1 million
compensation limit in 1994. Accordingly, the Committee believes
it is unnecessary at this time to take any action.
BASE SALARY
Base salary ranges are developed to reflect the varying levels
of responsibility of the Chief Executive Officer and other
executive officers. The current ranges are based on the surveys
previously discussed and in consultation with an independent
compensation consultant. Base salary ranges generally are
equivalent to amounts paid to senior managers with comparable
responsibilities for the companies studied. Periodically, the
Committee reviews with the Chief Executive Officer and the Vice
President - Human Resources & Logistics and approves, with any
modifications it deems appropriate, individual base salary
amounts for executive officers based on individual performance
and position in the salary range.
The companies included in the surveys used to develop base salary
ranges are not the same companies used in the peer group index
appearing in the performance graph. For compensation purposes,
the Company uses surveys of companies of similar size because
this is the employment market in which it competes. The
performance graph, on the other hand, employs a peer index
comprised of the Dow Jones Steel Index and seven bearing
companies that are direct competitors of the Company's Bearing
Business. Of the seven bearing companies, five are foreign
companies. The reason for selecting the companies in the peer
index had no relationship to compensation comparisons, where the
Company seeks to look at other companies of similar size that are
more representative of the labor market for executive talent
whether or not they are in the bearing or steel business.
All executive officers, commencing August 11, 1991, had their
base salary reduced 10 percent because of the difficult economic
conditions the Company was experiencing. Compensation actions,
which include merit increases and promotions, continued to occur
in 1992 and 1993. Such actions were applied against reduced
salaries. One-half of the salary reduction was restored on July
1, 1993, and the remainder on October 1, 1993.
<PAGE>
Effective January 1, 1994, base salary for those officers who
presently serve as directors of the Company was increased by
$20,000 on a one-time basis. This resulted from a determination
by the Board, upon recommendation of the Committee, that,
effective January 1, 1994, directors who are employees of the
Company would not be paid a separate directors fee. These
officers had been receiving a yearly directors fee of $20,000.
<PAGE>
<PAGE>
ANNUAL BONUS
The Company's Management Performance Plan provides cash bonuses
to be paid to executive officers and senior managers based
principally on the achievement of specific operating performance
goals established annually by the Committee and thereafter
approved by the Board. Management recommends performance goals
to the Committee based upon business plans approved by management
and reviewed with the Board of Directors.
In 1993, the Management Performance Plan provided for bonus
guideline opportunities for executive officers that ranged from
30 to 50 percent of base salary, though amounts could vary above
and below that range depending upon Company and business unit
performance (including quantitative and qualitative measures) and
individual accomplishment. Bonus opportunities for the Chairman
of the Board and the Chief Executive Officer were based upon the
attainment of corporate goals and individual performance, with
bonus opportunities for the other executive officers based on a
combination of corporate, business unit and individual
performance. The Company has required the attainment of a
minimum level of net earnings to fund any bonuses. The Plans
performance measurements considered one and three-year
discretionary and operating cash flow and their relationship to
net replacement assets. These measurements were used because
they reflected cash profits generated from assets employed both
on a current basis and over a longer-term perspective and were a
reflection of what had been provided to management by
shareholders to operate the Company. The Committee also
evaluates the quality of the Company's short-term financial
performance and its progress on long-term objectives. For 1993,
the Committee determined that a partial bonus would be paid to
plan participants if a net earnings goal and a one-year cash flow
goal were met.
The Committee believes that progress was made in 1993 in the
Company's performance. Excluding asset impairment and
restructuring charges, earnings from operations increased for the
second consecutive year despite the very slow economic recovery
in the U.S., difficulties in the economies of many of the
countries in which the Company does business and a deepening
recession in Europe. Notwithstanding these achievements during
1993, the Committee nevertheless determined that no bonuses
should be paid in view of the failure to achieve the net earnings
and cash flow return on asset goals set by the Committee and the
Board. This is the third consecutive year that bonuses have not
been paid under the Management Performance Plan because, due to
worldwide economic conditions, the Company has not achieved a
level of financial performance for its shareholders that
management and the Committee desired.
<PAGE>
In 1994, the Committee and the Board will require the attainment
of a minimum level of return on invested capital to fund any
bonuses. The Committee will consider the Company's return on
invested capital relative to its cost of capital in establishing
any bonus fund. The Plan's specific performance measure will be
earnings before interest and taxes as a percent of beginning
invested capital. The return on invested capital measure was
selected due to its demonstrated correlation with the creation of
shareholder value, the ability to be easily understood and widely
applied as well as facilitating appropriate target setting. At
its December meeting, the Board approved the goals set by the
Committee for the Management Performance Plan for 1994, using
this financial measure. The target guideline opportunity for
executive officers in 1994 will range from 35 to 55 percent of
base salary. This revision was based upon the survey of total
direct compensation discussed above and the review by the
independent compensation consultant.
LONG-TERM INCENTIVES
The Committee recommended and the shareholders approved the
Company's Long-Term Incentive Plan at the Annual Meeting on April
21, 1992. The number of shares that may be issued or transferred
under the Plan may not exceed in the aggregate 1,400,000 shares
of Common Stock. Although awards under the Plan can be made in
the form of non-qualified stock options, incentive stock options,
appreciation rights, restricted shares and deferred shares, the
Committee has chosen to grant primarily non-qualified stock
options. The option price per common share must be equal to or
greater than the market value per share on the date of the grant.
For grants to executive officers and the Chief Executive Officer,
the Committee has granted non-qualified options with an option
price at market value on the date of grant. The Company has
chosen to use non-qualified stock options so that executive
officers and other participants gain value only if the Company's
shareholders gain value. Moreover, this Plan includes a
mechanism to provide incentives to participants even in years
when no payout is made under the Management Performance Plan.
Under the Long-Term Incentive Plan, no incentive stock options or
appreciation rights have been granted to any Plan participant and
no deferred shares or restricted shares have been granted to
executive officers with the exception of an executive officer who
received a grant of deferred shares when he was rehired by the
Company in March, 1993, after holding an executive position in
state government.
Awards under the Long-Term Incentive Plan are considered
annually. On May 7, 1993, the Committee approved a grant of
non-qualified stock options for the executive officers and key
associates. These grants were valued at the market price on the
<PAGE>date of the grant. The ultimate grant that was approved
was based upon an evaluation of the individual performance of
each participant under the Plan. An initial determination of the
size of the grant was determined by dividing the midpoint of the
salary ranges by the market value per share of stock on the day
of grant. Those amounts were modified by multiplying them by a
Position Level Adjustment that ranged from .4 to 1.4 based on the
position level within the organizational hierarchy. These
products were multiplied by a Grant Adjustment Factor, generally
70%-100%, that considered the number of shares available under
the Plan and the desire not to award an excess number of shares
in any one year. Finally, the amounts were rounded to the
nearest 100 shares. After this initial determination, management
reviewed and revised as necessary the size of the proposed grant
based on individual performance. The Chief Executive Officer and
the Vice President - Human Resources and Logistics presented the
recommended grants to the Committee. The Committee reviewed and
approved the grants considering the formula, individual
performance and the number of shares allocated to the Plan.
Chief Executive Officer Compensation
The Chief Executive Officer's compensation is based upon the same
factors previously discussed with regard to the executive officer
compensation philosophy. The factors making up his compensation
include base salary, annual bonus and long-term incentives. The
base salary range for the Chief Executive Officer is determined
using survey data in the same manner as for other executive
officers. Mr. Toot's last increase was in August, 1992, when he
was promoted to Chief Executive Officer. Commencing August 11,
1991, Mr. Toot's and all other executive officers' base salary
was reduced 10% because of the difficult economic conditions the
Company was experiencing. One-half of the salary reduction was
restored on July 1, 1993, and the remainder on October 1, 1993.
The Chief Executive Officer's compensation is related to the
Company's performance through the Management Performance Plan and
the Long-Term Incentive Plan. During 1993, his guideline bonus
opportunity was 50 percent of base salary. Since corporate
performance goals were not met, no annual bonus was paid to Mr.
Toot or to any of the other executive officers. In May, 1993,
Mr. Toot, along with the other executive officers, received
option grants under the Long-Term Incentive Plan. Mr. Toot
received options for 20,000 shares as a result of the grant in
May, 1993.
<PAGE>
At its December meeting, the Committee conducted an evaluation of
the Chief Executive Officer's performance. The Committee was
pleased with Mr. Toot's leadership of the Company during 1993.
The financial performance of the Company improved in 1993 despite
the difficult and negative economic conditions in Europe and
elsewhere in the world. The Committee believes that, through Mr.
Toot's leadership, management has effectively directed the
operations of the Company in difficult worldwide economic
conditions and the Company continues to maintain its leadership
position in the tapered roller bearing and specialty alloy steels
markets.
Compensation Committee
Alton W. Whitehouse, Chairman
Robert Anderson
Stanley C. Gault
<PAGE>
<PAGE>
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN<F1>*
AMONG TIMKEN COMPANY, S&P 500 & PEER INDEX<F2>**
[GRAPH NOT INCLUDED]
Assumes $100 invested on January 1, 1989, in Timken Company Common Stock, S&P 500 Index and Peer Index.
<CAPTION>
1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C>
Timken Company $ 80.42 $ 63.49 $ 74.19 $ 85.95 $ 112.55
S&P 500 131.58 127.47 166.58 179.32 197.04
70% Bearing/30% Steel 136.95 87.25 87.21 85.99 109.50
<FN>
<F1>*Total returns assumes reinvestment of dividends.
<F2>**Fiscal year ending December 31.
</TABLE>
The line graph compares the cumulative, total shareholder
returns over five years for The Timken Company, the S&P 500 Stock
Index, and a peer index that proportionately reflects The Timken
Company's two businesses. The Dow Jones Steel Index comprises
30% of the peer index, while seven bearing companies make up 70%.
The bearing companies are Brenco, FAG, Kaydon, Koyo, NSK, NTN,
and SKF. The five international bearing companies in the index
trade in Germany, Japan and Sweden. The total returns for these
markets equivalent to the S&P 500 were $170.80, $63.44 and
$190.02, respectively, on a $100 investment over five years.
<PAGE>
<PAGE> AUDITORS
The independent accounting firm of Ernst & Young has acted as
the Company's auditor for many years and has been selected as the
auditor for the current year. Representatives of that firm are
expected to be present at the Annual Meeting and will have an
opportunity to make a statement, if they so desire, and will be
available to respond to appropriate questions.
GENERAL
On the record date of February 21, 1994, there were outstanding
30,857,651 shares of Common Stock, each entitled to one vote upon
all matters presented to the meeting.
The enclosed proxy is solicited by the Board of Directors, and
the entire cost of solicitation will be paid by the Company. In
addition to solicitation by mail, Officers and regular employees
of the Company, without extra remuneration, may solicit the
return of proxies by telephone, telegraph or personal contact.
Brokerage houses, nominees, fiduciaries and other custodians will
be requested to forward soliciting material to the beneficial
owners of shares held of record by them and will be reimbursed
for their expenses. The Company has retained Georgeson & Co. to
assist in the solicitation of proxies for a fee not to exceed
$9,500, plus reasonable out-of-pocket expenses.
Shares represented by properly executed proxies will be voted at
the meeting in accordance with the shareholders' instructions.
In the absence of specific instructions, the shares will be voted
for the election of Directors as indicated under Item No. 1.
You may, without affecting any vote previously taken, revoke
your proxy by a later proxy received by the Company, or by giving
notice to the Company either in writing or at the meeting.
First Chicago Trust Company of New York will be responsible for
tabulating the results of shareholder voting. First Chicago will
submit a total vote only, keeping all individual votes
confidential. Representatives of First Chicago will serve as
inspectors of election for the Annual Meeting. Under Ohio law
and the Company's Amended Articles of Incorporation and Amended
Regulations, properly executed proxies marked "abstain" will be
counted for purposes of determining whether a quorum has been
achieved at the Annual Meeting but proxies representing shares
held in "street name" by brokers that are not voted will not be
counted for quorum purposes. Such abstentions and "broker non-
votes" will not be counted in the election of Directors.
<PAGE>
In its meeting on November 5, 1993, the Board of Directors
passed a resolution which provides that if the Board of Directors
extends or renews the Company's shareholder rights agreement,
which was adopted in December, 1986, or adopts a new rights
agreement, on or after January 6, 1997, the Board of Directors
will submit the extended, renewed or new rights agreement to a
vote of the Company's shareholders, on an advisory, non-binding
basis, at the next succeeding annual meeting of the Company's
shareholders, and that each three years thereafter, the Board of
Directors will resubmit any rights agreement to a vote of the
Company's shareholders on an advisory, non-binding basis.
AFTER APRIL 1, 1994, THE COMPANY WILL FURNISH TO EACH
SHAREHOLDER, UPON WRITTEN REQUEST AND WITHOUT CHARGE, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1993, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES
THERETO, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
REQUESTS SHOULD BE ADDRESSED TO SCOTT A. SCHERFF, DIRECTOR -
LEGAL SERVICES AND ASSISTANT SECRETARY, THE TIMKEN COMPANY, 1835
DUEBER AVENUE, S.W. - GNE-01, CANTON, OHIO 44706-2798.
<PAGE>
<PAGE> THE TIMKEN COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints W.R. Timken, Jr.; Joseph F. Toot, Jr.;
and Larry R. Brown, and each of them, as true and lawful proxies,
with full power of substitution, to vote and act for the
undersigned at the annual meeting of shareholders of THE TIMKEN
COMPANY to be held at 1835 Dueber Avenue, S.W., Canton, Ohio, on
April 19, 1994, at 10:00 A.M., and at any adjournment thereof, as
fully as the undersigned could vote and act if personally present
on the matter set forth on the reverse hereof, and, in their
discretion on such other matters as may properly come before the
meeting.
ITEM 1. ELECTION OF DIRECTORS.
Elect Stanley C. Gault, John M. Timken, Jr., W.R. Timken, Jr.,
and Alton W. Whitehouse in Class III for a term expiring at the
1997 Annual Meeting.
PLEASE SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND MAIL
PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
<PAGE>
X Please mark your votes
as in this example.
The shares represented by this proxy will be voted as recommended
by the Board of Directors unless otherwise specified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS ITEM
FOR WITHHELD
1. Election of
Directors
(see reverse)
For, except vote withheld from the following nominee(s):
_____________________________________
NOTE: Please sign exactly as name or names appears
hereon. Joint owners should each sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
__________________________________________________________
Signature(s) of Shareholder(s) Date
__________________________________________________________
Signature if held jointly Date
