SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
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EnPro Industries, Inc.
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Sincerely, | |
![]() | |
Ernest F. Schaub | |
President and Chief Executive Officer |
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1. | Elect seven directors to hold office until the next Annual Meeting of Shareholders or until their respective successors are elected and qualified; | |
2. | Ratify the selection of PricewaterhouseCoopers LLP as our independent auditors for 2005; | |
3. | Consider and act upon a proposal to amend and restate the Company’s Amended and Restated 2002 Equity Compensation Plan; and | |
4. | Transact such other business as may properly come before the meeting or any adjournment thereof. |
By Order of the Board of Directors, | |
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Richard L. Magee | |
Secretary |
Page | ||||
General Information | 1 | |||
Vote Required for Approval | 2 | |||
Proposal 1 — Election of Directors | 2 | |||
Nominees for Election | 2 | |||
Holdings of Company Equity Securities By Directors and Executive Officers | 4 | |||
Beneficial Ownership of Securities | 5 | |||
Equity Compensation Plan | 5 | |||
Legal Proceedings | 6 | |||
Compensation and Human Resources Committee Report on Executive Compensation | 6 | |||
Executive Compensation | 10 | |||
New Plan Benefits | 12 | |||
Cumulative Total Return Performance Graph | 15 | |||
Governance of the Company | 16 | |||
Section 16(a) Beneficial Ownership Reporting Compliance | 21 | |||
Proposal 2 — Ratification of Auditors | 21 | |||
Audit Committee Report | 21 | |||
Independent Auditors | 22 | |||
Proposal 3 — Approval of Amendment and Restatement of Amended and Restated 2002 Equity Compensation Plan | 23 | |||
Other Matters | 29 | |||
Shareholder Proposals | 29 | |||
Appendix A | A-1 |
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2
3
Amount and Nature | Directors’ | Directors’ | ||||||||||||||
of Beneficial | Phantom | Stock | Percent of | |||||||||||||
Name of Beneficial Owner | Ownership(1) | Shares(2) | Units(3) | Class(4) | ||||||||||||
William R. Holland | 41,250 | 12,285 | — | * | ||||||||||||
Ernest F. Schaub | 426,023 | — | — | 0.2 | % | |||||||||||
J. P. Bolduc | 1,000 | 12,285 | 680 | * | ||||||||||||
Peter C. Browning | 4,340 | 12,285 | — | * | ||||||||||||
Joe T. Ford | 10,000 | 12,285 | 2,366 | * | ||||||||||||
James H. Hance, Jr. | 20,000 | 12,285 | — | * | ||||||||||||
Gordon D. Harnett | 2,060 | 12,285 | 2,366 | * | ||||||||||||
William Dries | 111,918 | — | — | * | ||||||||||||
Richard C. Driscoll | 102,934 | — | — | * | ||||||||||||
Richard L. Magee | 93,914 | — | — | * | ||||||||||||
Robert D. Rehley | 21,513 | — | — | * | ||||||||||||
12 directors and executive officers as a group | 840,023 | 73,710 | 5,412 | 0.4 | % |
* | Less than 1% |
(1) | Includes the following shares that may be acquired within 60 days after March 15, 2005 through the exercise of stock options: Mr. Schaub, 353,900 shares; Mr. Dries, 90,350 shares; Mr. Driscoll, 78,025 shares; Mr. Magee, 78,900 shares; Mr. Rehley, 15,850 shares; and all directors and executive officers as a group, 622,000 shares. Also includes shares held in the EnPro Industries, Inc. Retirement Savings Plan for Salaried Employees allocated as follows: Mr. Dries, 68 shares; Mr. Magee, 14 shares; and Mr. Rehley, 3 shares. All other ownership is direct, except that Messrs. Schaub and Dries indirectly own 6,000 shares and 500 shares, respectively, which are owned by family members. |
(2) | Includes the phantom shares awarded under the Outside Directors’ Phantom Share Plan for which the directors will receive cash, and the phantom shares awarded under the Amended and Restated 2002 Equity Compensation Plan for which the directors will receive shares of Common Stock. See “Governance of the Company — Compensation of Directors.” The latter awards are subject to shareholder approval of the amendment and restatement. Because the phantom shares are not actual shares of our Common Stock, the directors have neither voting nor investment authority with respect to these phantom shares. |
(3) | Indicates the number of stock units credited to those directors who elect to defer all or a part of the cash portion of their annual retainer and meeting fees pursuant to the Deferred Compensation Plan for Non-Employee Directors. See “Governance of the Company — Compensation of Directors.” Because the stock units are not actual shares of our Common Stock, the directors have neither voting nor investment authority with respect to these stock units. |
(4) | Does not include the directors’ phantom shares or stock units described in Notes 2 and 3. Applicable percentage ownership is based on 20,926,667 shares of Common Stock outstanding at March 15, 2005. |
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Name and Address of Beneficial Owner | Amount | Percent of Class(1) | |||||||
Barclays Global Investors, N.A.(2) | 1,822,539 | 8.7 | % | ||||||
45 Fremont Street, San Francisco, CA 94105 | |||||||||
Steel Partners II, L.P.(3) | 1,564,300 | 7.5 | % | ||||||
590 Madison Avenue, 32nd Floor, New York, NY 10022 | |||||||||
Kestrel Investment Management Corporation(4) | 1,557,760 | 7.4 | % | ||||||
411 Borel Avenue, Suite 403, San Mateo, CA 94402 | |||||||||
Lord, Abbett & Co. LLC(5) | 1,512,128 | 7.2 | % | ||||||
90 Hudson Street, Jersey City, NJ 07302 |
(1) | Applicable percentage ownership is based on 20,926,667 shares of Common Stock outstanding at March 15, 2005. |
(2) | This information is based on a Schedule 13G dated February 14, 2005 filed by Barclays Global Investors, N.A. with the Securities and Exchange Commission reporting beneficial ownership as of December 31, 2004. The reporting persons have sole voting power with respect to 1,695,912 shares, and sole dispositive power with respect to 1,822,539 shares. |
(3) | This information is based on a Schedule 13D dated August 4, 2004 filed jointly by Steel Partners II, L.P., Steel Partners, L.L.C. and Warren G. Lichenstein with the Securities and Exchange Commission reporting beneficial ownership as of the filing date. The reporting persons have sole voting power and sole dispositive power with respect to 1,564,300 shares. |
(4) | This information is based on a Schedule 13G amendment dated February 14, 2005 filed by Kestrel Investment Management Corporation with the Securities and Exchange Commission reporting beneficial ownership as of December 31, 2004. The reporting persons have sole voting power with respect to 1,499,880 shares, and sole dispositive power with respect to 1,557,760 shares. |
(5) | This information is based on a Schedule 13G dated February 2, 2005 filed by Lord, Abbett & Co LLC with the Securities and Exchange Commission reporting beneficial ownership as of December 31, 2004. The reporting persons have sole voting power with respect to 1,512,128 shares, and sole dispositive power with respect to 1,512,128 shares. |
Number of Securities | |||||||||||||
Remaining Available for | |||||||||||||
Number of Securities | Future Issuance Under | ||||||||||||
to be Issued Upon | Weighted-Average Exercise | Equity Compensation | |||||||||||
Exercise of Outstanding | Price of Outstanding | Plans (Excluding | |||||||||||
Options, Warrants and | Options, Warrants and | Securities Reflected in | |||||||||||
Plan Category | Rights | Rights | Column (a)) | ||||||||||
(a) | (b) | (c) | |||||||||||
Equity compensation plans approved by security holders | 1,715,333 | $4.88 | 1,543,177 | ||||||||||
Equity compensation plans not approved by security holders | -0- | -0- | -0- | ||||||||||
Total | 1,715,333 | $4.88 | 1,543,177 |
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Base Salary |
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Annual Bonus |
Measures | Weightings | |||
Company Free Cash Flow | 45 | % | ||
Net Income | 30 | % | ||
Net Cash Outflow for Asbestos and Trailing Liabilities | 25 | % |
Long-Term Incentive Compensation |
Long-Term Incentive Plan |
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Measures | Weightings | |||
Company Free Cash Flow | 50 | % | ||
Company Return on Capital | 30 | % | ||
Net Cash Outflow for Asbestos and Trailing Liabilities | 20 | % |
Measures | Weightings | |||
Company Return on Capital | 60 | % | ||
Company Free Cash Flow | 40 | % |
Stock Options and SARs |
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Compensation and Human Resources Committee | |
J.P. Bolduc, Chairman | |
Peter C. Browning | |
William R. Holland |
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Long Term Compensation | |||||||||||||||||||||||||||||||||
Annual Compensation | Awards | Payouts | |||||||||||||||||||||||||||||||
Restricted | Securities | ||||||||||||||||||||||||||||||||
Other Annual | Stock | Underlying | All Other | ||||||||||||||||||||||||||||||
Salary(1) | Bonus(2) | Compensation(3) | Awards | Options/SARS | LTIP | Compensation(4) | |||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($) | ($) | (#) | Payouts | ($) | |||||||||||||||||||||||||
Ernest F. Schaub | 2004 | 600,000 | 575,460 | 90,054 | -0- | -0- | 773,932 | 36,000 | |||||||||||||||||||||||||
President and Chief | 2003 | 596,635 | 879,827 | 64,557 | -0- | 170,000 | -0- | 61,207 | |||||||||||||||||||||||||
Executive Officer | 2002 | 401,539 | 423,487 | 50,281 | -0- | 242,400 | -0- | 24,092 | |||||||||||||||||||||||||
William Dries | 2004 | 310,000 | 218,035 | 40,708 | -0- | -0- | 317,193 | 18,600 | |||||||||||||||||||||||||
Senior Vice President and | 2003 | 308,654 | 333,781 | — | -0- | 42,500 | -0- | 28,241 | |||||||||||||||||||||||||
Chief Financial Officer | 2002 | 173,077 | 162,030 | — | -0- | 60,600 | -0- | 2,585 | |||||||||||||||||||||||||
Richard L. Magee | 2004 | 280,000 | 179,032 | 31,389 | -0- | -0- | 277,544 | 16,800 | |||||||||||||||||||||||||
Senior Vice President, | 2003 | 277,981 | 273,283 | — | -0- | 37,000 | -0- | 24,486 | |||||||||||||||||||||||||
General Counsel and | 2002 | 152,886 | 130,115 | — | -0- | 53,000 | -0- | 9,173 | |||||||||||||||||||||||||
Secretary | |||||||||||||||||||||||||||||||||
Richard C. Driscoll | 2004 | 270,000 | 172,638 | 42,157 | -0- | -0- | 277,544 | 16,200 | |||||||||||||||||||||||||
Senior Vice President, | 2003 | 269,327 | 264,775 | — | -0- | 37,000 | -0- | 23,967 | |||||||||||||||||||||||||
Human Resources and | 2002 | 152,886 | 130,115 | — | -0- | 53,000 | -0- | 9,173 | |||||||||||||||||||||||||
Administration | |||||||||||||||||||||||||||||||||
Robert D. Rehley | 2004 | 151,653 | 70,750 | 16,740 | -0- | -0- | 55,008 | 9,099 | |||||||||||||||||||||||||
Vice President and | 2003 | 148,000 | 101,849 | — | -0- | 7,500 | -0- | 12,605 | |||||||||||||||||||||||||
Treasurer | 2002 | 80,769 | 48,118 | 70,701 | -0- | 10,600 | -0- | 4,846 |
(1) | For 2002, the amount shown includes amounts received from the Company for the seven month period from June 1, 2002, the first day after the Company was spun off from Goodrich Corporation. |
(2) | Bonuses were awarded in February of the following year for performance in each year shown in the table. For each of the named executive officers, except Mr. Rehley, these bonuses were awarded under our Senior Executive Annual Performance Plan. The bonuses for Mr. Rehley were awarded under our Management Annual Performance Plan. |
(3) | For Mr. Schaub, includes payments by the Company for an automobile allowance, financial counseling, security system and related tax gross-up of $33,799, and personal use of Company-provided aircraft of $22,257 in 2004; payments by the Company for an automobile allowance and related tax gross-up of $30,000, and for personal financial counseling services of $29,066 in 2003; and payments by the Company for an automobile allowance and related tax gross-up of $27,735, and personal use of Company provided aircraft of $13,247 in 2002. For Mr. Rehley, includes $64,436 for relocation expenses and related tax gross-up in 2002. For the other named executive officers, no disclosure was provided for 2003 or 2002 because the aggregate dollar value of their other annual compensation did not exceed the threshold specified in Item 402 of Regulation S-K of $50,000 or 10% of the total of their annual salary and bonus. For 2004, the aggregate dollar value of other annual compensation is provided regardless of any applicable threshold. |
(4) | Includes matching contributions in 2004 by the Company under our Retirement Savings Plan for Salaried Employees, a tax qualified defined contribution plan, as follows: Mr. Schaub, $12,300; Mr. Dries, $12,300; Mr. Magee, $12,300; Mr. Driscoll, $12,300; and Mr. Rehley, $9,099. Also includes matching contributions in 2004 by the Company under our Deferred Compensation Plan, a non-qualified plan, as follows: Mr. Schaub, $23,000; Mr. Dries, $3,900; Mr. Magee, $4,500; and Mr. Driscoll, $3,900. Amounts shown for 2003 and 2002 consist of matching contributions by the Company under these same two plans. |
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Number of Securities | ||||||||||||||||
Underlying Unexercised | Value of Unexercised | |||||||||||||||
Options at Fiscal | In-the-Money Options at | |||||||||||||||
Shares Acquired | Year-End(#) | Fiscal Year-End($) | ||||||||||||||
Name | on Exercise(#) | Value Realized($) | Exercisable/Unexercisable | Exercisable/Unexercisable | ||||||||||||
Ernest F. Schaub | 7,500 | 159,225 | 221,680/183,220 | 5,410,865/4,558,482 | ||||||||||||
William Dries | -0- | -0- | 57,295/45,805 | 1,397,773/1,139,645 | ||||||||||||
Richard L. Magee | -0- | -0- | 50,050/39,950 | 1,220,961/993,909 | ||||||||||||
Richard C. Driscoll | 875 | 19,040 | 49,175/39,950 | 1,199,935/993,909 | ||||||||||||
Robert D. Rehley | -0- | -0- | 10,045/8,055 | 245,083/200,435 |
Estimated Future Payouts Under | ||||||||||||||||||||
Number of | Performance or | Non-Stock Price-Based Plans(1) | ||||||||||||||||||
Shares, Units | Other Period Until | |||||||||||||||||||
or Other | Maturation or | Threshold | Target | Maximum | ||||||||||||||||
Name | Rights(#) | Payout | (Shares/$) | (Shares/$) | (Shares/$) | |||||||||||||||
Ernest F. Schaub | 32,400 | 2004-2006 | 16,200 shares | 32,400 shares | 48,600 shares | |||||||||||||||
$120,000 | $600,000 | $1,200,000 | ||||||||||||||||||
William Dries | 10,800 | 2004-2006 | 5,400 shares | 10,800 shares | 16,200 shares | |||||||||||||||
$40,000 | $200,000 | $400,000 | ||||||||||||||||||
Richard L. Magee | 9,500 | 2004-2006 | 4,750 shares | 9,500 shares | 14,250 shares | |||||||||||||||
$35,000 | $175,000 | $350,000 | ||||||||||||||||||
Richard C. Driscoll | 9,500 | 2004-2006 | 4,750 shares | 9,500 shares | 14,250 shares | |||||||||||||||
$35,000 | $175,000 | $350,000 | ||||||||||||||||||
Robert D. Rehley | 2,000 | 2004-2006 | 1,000 shares | 2,000 shares | 3,000 shares | |||||||||||||||
$7,000 | $35,000 | $70,000 |
(1) | Awards granted for the 2004-2006 performance cycle. The actual cash awards range from 0% to 200% of target depending on achievement of pre-established objective performance goals during the three-year performance period. Performance at 80% of performance goals will result in a payout of 20% of the target cash awards; performance at 130% of performance goals will result in a payout of 200% of the target cash awards. For each of the cash awards indicated, 50% of the award will be based on free cash flow before asbestos; 30% on return on capital; and 20% on net cash outflow for asbestos and trailing liabilities. The actual performance share awards range from 0% to 150% of target depending on achievement of pre-established objective performance goals during the three-year performance period. Performance at 80% of performance goals will result in a payout of 50% of the target share awards; performance at 130% of performance goals will result in a payout of 150% of the target share awards. For each of the share awards indicated, 60% of the award will be based on return on capital; and 40% on free cash flow before asbestos. |
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Amended and Restated 2002 | ||||||||
Equity Compensation Plan(1) | ||||||||
Dollar | Number of | |||||||
Name and Principal Position | Value($) | Units | ||||||
Ernest F. Schaub | 600,000 | 21,220 | ||||||
William Dries | 200,000 | 7,075 | ||||||
Richard L. Magee | 175,000 | 6,190 | ||||||
Richard C. Driscoll | 175,000 | 6,190 | ||||||
Robert D. Rehley | 35,000 | 1,240 | ||||||
All current executive officers as a group | 1,220,000 | 43,155 | ||||||
All current directors who are not executive officers, as a group(2) | 150,000 | 5,304 | ||||||
All employees, as a group | 2,135,000 | 139,015 |
(1) | For executive officers and employees, the dollar values and numbers of units shown represent the dollar value as of the grant date of, and the number of, performance shares that make up the target equity awards that are a portion of the awards granted under our Long-Term Incentive Plan for meeting 100% of pre-established performance goals over the performance period of January 1, 2005 to December 31, 2007. The number and value will be adjusted up or down based on the Company’s actual performance. These awards of performance shares are in addition to the cash award granted under the Long-Term Incentive Plan. On the grant date, the value of a share of Common Stock was $28.28. If earned, the Performance Shares vest on February 15, 2008. |
(2) | For current directors who are not executive officers, units shown are phantom shares that correspond to shares of Common Stock. The number of units shown corresponds to the number of phantom shares that will be issued under our 2002 Equity Compensation Plan if the shareholders approve the amendment and restatement to the plan described below under “Proposal 3 — Approval of an Amendment and Restatement of our Amended and Restated 2002 Equity Compensation Plan.” On the grant date, the value of a share of Common Stock was $28.28. The phantom shares will be fully vested upon granting, and will be paid in shares of Common Stock as soon as administratively practicable after a director terminates service as a member of the Board of Directors. |
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Years of Credited Service | ||||||||||||||||||||||||
Average Final Compensation | 5 | 10 | 15 | 20 | 30 | 40 | ||||||||||||||||||
$ 200,000 | 15,260 | 30,520 | 45,790 | 61,050 | 91,570 | 117,830 | ||||||||||||||||||
$ 250,000 | 19,510 | 39,020 | 58,540 | 78,050 | 117,070 | 150,330 | ||||||||||||||||||
$ 300,000 | 23,760 | 47,520 | 71,290 | 95,050 | 142,570 | 182,830 | ||||||||||||||||||
$ 400,000 | 32,260 | 64,520 | 96,790 | 129,050 | 193,570 | 247,830 | ||||||||||||||||||
$ 500,000 | 40,760 | 81,520 | 122,290 | 163,050 | 244,570 | 312,830 | ||||||||||||||||||
$ 750,000 | 62,010 | 124,020 | 186,040 | 248,050 | 372,070 | 475,330 | ||||||||||||||||||
$1,000,000 | 83,260 | 166,520 | 249,790 | 333,050 | 499,570 | 637,830 | ||||||||||||||||||
$1,250,000 | 104,510 | 209,020 | 313,540 | 418,050 | 627,070 | 800,330 | ||||||||||||||||||
$1,500,000 | 125,760 | 251,520 | 377,290 | 503,050 | 754,570 | 962,830 |
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• | any person, entity or group becomes the beneficial owner of 20% or more of the Common Stock or combined voting power of our outstanding securities (subject to certain exceptions), | |
• | there has been a change in the majority of the Company’s directors that has not otherwise been approved by the directors, | |
• | a corporate reorganization occurs where the existing shareholders do not retain more than 70% of the outstanding common stock and combined voting power of the surviving entity in substantially the same proportions as their prior ownership, or | |
• | the Company is liquidated or dissolved, or substantially all of its assets are sold (other than to a company more than 70% of the outstanding common stock and combined voting power of which is held by the shareholders of the Company, in substantially the same proportions as their holdings of Company securities prior to the sale). |
• | a lump sum cash payment equal to the continuation of the individual’s annual base salary in effect immediately prior to termination for a period of time. For the named executive officers, the time periods, which we refer to the as the “Payment Periods,” are: Mr. Schaub, Mr. Dries and Mr. Magee, 3 years; Mr. Driscoll, 21/2 years; and Mr. Rehley, 11/2 years; | |
• | a lump sum cash payment equal to the individual’s pro rata target bonus for the year of termination; | |
• | a lump sum cash payment equal to the pro rata portion of the “calculated market value” of any performance shares awarded to the individual under the LTIP for each incomplete performance period; | |
• | a lump sum cash payment intended to approximate continuation of annual bonuses for the Payment Period. This payment will be equal to the greatest of (i) the individual’s most recent annual bonus, (ii) the individual’s target annual bonus for the year of termination or (iii) the individual’s target |
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annual bonus for the year in which the change in control occurs, multiplied by the number of years in the individual’s Payment Period; | ||
• | a lump sum cash payment equal to the value of foregone LTIP awards for the Payment Period; | |
• | continuation of all health and welfare benefit plans and programs and all fringe benefit programs, perquisites and similar arrangements during the Payment Period; and | |
• | in addition to the benefits to which the individual is entitled under the retirement plans or programs in which he or she participates, a lump sum cash payment at retirement in an amount equal to the actuarial equivalent of the retirement pension to which the individual would have been entitled under the terms of such retirement plans or programs had the individual accumulated additional years of continuous service under such plans equal in length to the Payment Period. |
![(PERFORMANCE GRAPH)](https://capedge.com/proxy/DEF 14A/0000950144-05-003165/g93812g9381224.gif)
5/24/02 | 12/31/02 | 6/30/03 | 12/31/03 | 6/30/04 | 12/31/04 | |||||||||||||||||||
ENPRO INDUSTRIES, INC. | 100.00 | 47.34 | 126.51 | 165.09 | 271.95 | 349.94 | ||||||||||||||||||
PEER GROUP INDEX | 100.00 | 67.76 | 77.73 | 88.16 | 102.70 | 118.74 | ||||||||||||||||||
RUSSELL 2000 INDEX | 100.00 | 78.59 | 91.98 | 114.25 | 121.87 | 134.24 |
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• | normally only the Chief Executive Officer should be an employee director; | |
• | a substantial majority of the members of the Board should be independent directors; | |
• | regularly scheduled executive sessions of the Board are held without management present; | |
• | Board members are expected to attend the Company’s Annual Meeting of Shareholders; and | |
• | the performance and contributions of the Board and its committees should be assessed annually. |
• | the director is, or has been within the last three years, an employee of the Company, or an immediate family member is, or has been within the last three years, an executive officer of the Company; |
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• | the director has received more than $100,000 during any 12-month period within the last three years in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service; | |
• | the director or an immediate family member is a current partner of the Company’s auditor; the director is a current employee of the Company’s auditor; the director has an immediate family member who is a current employee of the Company’s auditor and who participates in the firm’s audit or tax compliance practice; or the director or an immediate family member was within the last three years a partner or employee of the Company’s auditor and personally worked on the Company’s audit within that time; | |
• | the director or an immediate family member is, or has been in the past three years, part of an interlocking directorate in which an executive officer of the Company serves on the compensation committee of another company that concurrently employs the director; | |
• | the director is a current employee, or an immediate family member is a current executive officer of a company that does business with the Company and the sales by that company to the Company or purchases by that company from the Company in any of the last three fiscal years exceed the greater of $500,000 or 1% of such other company’s annual revenues; or | |
• | the director or the director’s spouse serves as an officer, director or trustee of a charitable organization, and the Company’s discretionary charitable contributions to such organization exceed the greater of $500,000 or 1% of the other organization’s annual revenues. |
• | an understanding of generally accepted accounting principles and financial statements; | |
• | the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; | |
• | experience in preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements, or experience actively supervising persons engaged in such activities; | |
• | an understanding of internal controls and procedures for financial reporting; and | |
• | an understanding of audit committee functions. |
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• | Candidates should possess broad training and experience at the policy-making level in business, government, education, technology or philanthropy. | |
• | Candidates should possess expertise that is useful to the Company and complementary to the background and experience of other Board members, so that an optimum balance in Board membership can be achieved and maintained. | |
• | Candidates should be of the highest integrity, possess strength of character and the mature judgment essential to effective decision-making. | |
• | Candidates should be willing to devote the required amount of time to the work of the Board and one or more of its committees. Candidates should be willing to serve on the Board over a period of several years to allow for the development of sound knowledge of the Company and its principal operations. | |
• | Candidates should be without any significant conflict of interest or legal impediment. | |
• | Candidates must be between 18 and 70 years of age. |
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Audit and Risk Management Committee | |
James H. Hance, Jr., Chairman | |
Joe T. Ford | |
Gordon D. Harnett |
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2004 | 2003 | ||||||||
Audit Fees(1) | $ | 1,833,000 | $ | 1,306,200 | |||||
Audit-Related Fees(2) | 79,500 | 94,900 | |||||||
Tax Fees(3) | 0 | 299,700 | |||||||
All Other Fees | 0 | 0 | |||||||
TOTAL FEES | $ | 1,912,500 | $ | 1,700,800 | |||||
(1) | Audit fees consisted of audit work performed in the preparation of financial statements, as well as work generally only the independent auditor can reasonably be expected to provide, such as statutory audits or accounting consultation. The increase in audit fees during 2004 was due primarily to PwC’s audit of our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, which added $849,000 to the audit fees. |
(2) | Audit-related fees consisted principally of services with respect to the audits of benefit plans. |
(3) | Tax fees consisted of fees for services related to tax compliance and reporting and tax consulting. |
• | To permit outside directors to receive awards of phantom stock under the Plan; | |
• | To permit the granting of stock appreciation rights, or SARs, that will be settled in shares of Common Stock; and | |
• | To make other changes required in order for the Plan to comply with new IRS rules on non-qualified deferred compensation. |
Phantom Stock Awards to Outside Directors |
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Stock-Settled Stock Appreciation Rights |
Amendments Resulting from New Deferred Compensation Rules |
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• | Awards granted under the Plan to employees in units or phantom stock, the value of which is based in whole or in part on the value of the Common Stock, must comply with the new rules to the extent the new rules apply; | |
• | The Compensation Committee will no longer have the ability to permit the further deferral of awards under the Plan, or to permit participants to receive or accrue dividends and other distributions with respect to outstanding awards, in each case except in accordance with the new rules to the extent they apply; | |
• | The Committee’s discretion with respect to the effect on outstanding awards of a participant’s termination of employment, leave of absence or other change in employment status may only be exercised in accordance with the new rules, to the extent they apply; and | |
• | In the event of a change in control, all options will still vest immediately, but the Committee’s discretion to make other changes with respect to outstanding awards under the Plan may only be exercised in accordance with the new rules, to the extent they apply. |
Participants |
Plan Administration |
Shares Subject to Plan |
• | The grant of a performance share award or other unit or phantom share award is deemed to be equal to the maximum number of shares of Common Stock issuable under the award; | |
• | If the value of an award is variable on the date it is granted, the value is deemed to be the maximum possible under the award; |
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• | If a participant pays the exercise price of any stock option granted under the Plan by tendering shares of Common Stock to the Company, only the number of shares issued net of the number tendered is deemed delivered; and | |
• | Any shares of Common Stock that are not issued or are returned to the Company, for example because awards have been forfeited, expired, canceled, or withheld to satisfy tax withholding obligations, are again available for awards under the Plan. |
Stock Options |
Performance Share Awards |
Restricted Share Awards |
Other Awards to Employees |
26
Term of the Plan |
Miscellaneous |
• | any person, entity or group becomes the beneficial owner of 20% or more of either the Common Stock or the combined voting power of our outstanding securities (subject to certain exceptions); | |
• | there has been a change in the majority of the Company’s directors that has not otherwise been approved by the directors; | |
• | a corporate reorganization occurs where our existing shareholders do not retain more than 70% of the outstanding common stock and combined voting power of the surviving entity in substantially the same proportions as their prior ownership; or | |
• | the Company is liquidated or dissolved, or substantially all of its assets are sold (other than to a company more than 70% of the outstanding common stock and combined voting power of which is held by the shareholders of the Company, in substantially the same proportions as their holdings of Company securities prior to the sale). |
Federal Income Tax Treatment |
27
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• | a brief description of each proposed matter of business and the reasons for conducting such business at the annual meeting; | |
• | the name and address of the shareholder proposing such business as well as any other shareholders believed to be supporting such proposal; | |
• | the number of shares of each class of the Company stock owned by such shareholders; and | |
• | any material interest of such shareholders in such proposal. |
• | The name and address of the person or persons to be nominated; | |
• | A representation that the shareholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; | |
• | a description of all arrangements or understandings to make the nomination between the shareholder and each nominee and any other person or persons (naming such person or persons); | |
• | all other information regarding each nominee that would be required to be included in a proxy statement if the nominee had been nominated by the Board; and |
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• | the written consent of each nominee to serve as a director if elected. |
By Order of the Board of Directors | |
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Richard L. Magee | |
Secretary |
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(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of Common Stock (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company (other than by exercise of a conversion privilege), (B) any acquisition by the Company or any of its subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (D) any acquisition by any company with respect to which, following such acquisition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, solely in their capacity as shareholders of the Company, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or | |
(ii) individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”), cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest; or | |
(iii) consummation of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the |
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Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation, do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, solely in their capacity as shareholders of the Company, more than 70% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the company resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or | |
(iv) consummation of (A) a complete liquidation or dissolution of the Company or (B) a sale or other disposition of all or substantially all of the assets of the Company, other than to a company, with respect to which following such sale or other disposition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities, solely in their capacity as shareholders of the Company, who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be. |
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![(ENPRO INDUSTRIES, INC. LOGO)](https://capedge.com/proxy/DEF 14A/0000950144-05-003165/g93812g9381201.gif)
Annual Meeting of
Shareholders
Tuesday, May 10, 2005, 11:00 a.m.
Hyatt Charlotte at South Park
5501 Carnegie Blvd.
Charlotte, North Carolina
You can submit your proxy by mail, by telephone or through the internet.
Please use only one of the three response methods.
BY MAIL | BY TELEPHONE | THROUGH THE INTERNET | ||
Mark, sign and date your proxy card and return it in the enclosed envelope to: Wachovia Bank, N.A. Attn: Proxy Tabulation NC-1153 P.O. Box 217950 Charlotte, NC 28254-3555 | (Available only until 12:00 pm EDST on May 9, 2005) Call toll free 1-866-252-6916 on any touch-tone telephone to authorize the voting of your shares. You may call 24 hours a day, 7 days a week. You will be prompted to follow simple instructions. | (Available only until 12:00 pm EDST on May 9, 2005) Access the website at https://www.proxyvotenow.com/npo to authorize the voting of your shares. You may access the site 24 hours a day, 7 days a week. You will be prompted to follow simple instructions. |
IF YOU WANT TO RECEIVE YOUR PROXY MATERIALS ELECTRONICALLY IN THE FUTURE, PLEASE VOTE YOUR SHARES AND SIGN UP FOR ELECTRONIC DELIVERY THROUGH THE INTERNET | ||
If you vote by telephone or by internet, please DO NOT mail back this proxy card. |
— FOLD AND DETACH HERE —
x | Please mark your votes as in this example. |
This proxy, when properly executed, will be voted as directed by the undersigned shareholder(s). If no direction is made, this proxy will be voted FOR the nominees listed below, and FOR proposals 2 and 3, or if the card constitutes voting instructions to a savings plan trustee, the trustee will vote as described in the proxy statement.
The Board of Directors recommends that you vote FOR the nominees listed below and FOR proposals 2 and 3.
FOR | WITHHELD FROM ALL | NOMINEES: | FOR | AGAINST | ABSTAIN | |||||||||||||
1. Election of Directors: | o | o | (01) William R. Holland | 2. | Ratify the selection of | o | o | o | ||||||||||
(02) Ernest F. Schaub | PricewaterhouseCoopers LLP as our | |||||||||||||||||
(03) J.P. Bolduc | independent auditors for 2005 | |||||||||||||||||
(04) Peter C. Browning | ||||||||||||||||||
*Except vote withheld from the | (05) Joe T. Ford | 3. | Consider and act upon a proposal to | o | o | o | ||||||||||||
following nominee(s): | (06) James H. Hance, Jr. | amend the Company’s Amended and | ||||||||||||||||
(07) Gordon D. Harnett | Restated 2002 Equity Compensation Plan | |||||||||||||||||
Change of Address/ | ||||||||||||||||||
comments on reverse | ||||||||||||||||||
side o |
Please sign exactly as name(s) appear on the reverse side. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. | ||||||
SIGNATURE(S) | DATE |
Annual Meeting
of
Shareholders
Hyatt Charlotte at South Park
5501 Carnegie Blvd.
Charlotte, North Carolina
IMPORTANT NOTICE
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, VOTE, SIGN, DATE AND RETURN YOUR PROXY,
OR SUBMIT YOUR VOTE BY INTERNET OR BY TELEPHONE AS SOON AS POSSIBLE.
—FOLD AND DETACH HERE—
ENPRO INDUSTRIES, INC.
The undersigned hereby appoint(s) Ernest F. Schaub and Richard L. Magee, and each of them singularly, attorneys with full power of substitution and revocation to each, for and in the name of the undersigned with all the powers the undersigned would possess if personally present, to vote the shares of the undersigned in EnPro Industries, Inc. Common Stock as indicated on the proposals referred to on the reverse side hereof at the annual meeting of its shareholders to be held May 10, 2005, and at any adjournments thereof, and in their or his discretion upon any other matter which may properly come before said meeting.
This card also constitutes your voting instructions for any and all shares held by Wachovia Bank, N.A. for your account and will be considered to be voting instructions to the plan trustee(s) with respect to shares held in accounts under the plans listed on page 1 of the proxy statement. If you are a participant under any of these plans, please vote your shares electronically or return your proxy no later than Thursday, May 5, 2005.
(Change of Address/Comments) | ||
(If you have written in the above space, please mark the corresponding box on the reverse side of this card.) |
SEE REVERSE
SIDE