SCHEDULE 14A INFORMATION
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The Fairchild Corporation
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The Fairchild Corporation
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PRELIMINARY PROXY
THE FAIRCHILD CORPORATION
Washington Dulles International Airport
300 West Service Road
Chantilly, Virginia 22021
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 17, 1994
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To the Stockholders of
The Fairchild Corporation
The Annual Meeting of Stockholders of The Fairchild
Corporation, a Delaware corporation (the "Company"), will be held
at the Marriott Hotel, Washington Dulles International Airport,
333 West Service Road, Chantilly, Virginia, on Thursday, November
17, 1994, at 10:00 a.m. (local time), for the following purposes:
1. To elect ten (10) directors of the Company for the
ensuing year;
2. To approve grants of stock options to non-employee
directors of the Company;
3. To approve the material terms of the performance goals
for the fiscal 1995 incentive compensation award for the
Company's Chief Executive Officer; and
4. To transact such other business as may properly come
before the meeting or any adjournments or postponements thereof.
Only stockholders of record as of the close of business on
September 19, 1994, will be entitled to notice of and to vote at
the Annual Meeting and at any adjournments or postponements
thereof.
By Order of the Board of Directors
John D. Jackson
Senior Vice President
& Secretary
October 7, 1994
KINDLY DATE AND SIGN THE ENCLOSED PROXY CARD AND PROMPTLY RETURN
IT IN THE ENCLOSED STAMPED, ADDRESSED ENVELOPE. A PROXY MAY BE
REVOKED BY DELIVERING A VALIDLY EXECUTED, LATER DATED PROXY AT
ANY TIME PRIOR TO ITS USE. IF YOU ATTEND THE MEETING, YOU MAY
WITHDRAW YOUR PROXY IF YOU WISH AND VOTE IN PERSON.
PRELIMINARY PROXY
THE FAIRCHILD CORPORATION
Washington Dulles International Airport
300 West Service Road
Chantilly, Virginia 22021
October 7, 1994
PROXY STATEMENT
This statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors (the
"Board") of The Fairchild Corporation (the "Company") for use at
the Annual Meeting of Stockholders to be held on Thursday,
November 17, 1994, at 10:00 a.m. (local time), and at any
adjournments or postponements thereof (the "Annual Meeting").
Holders of record of the Company's Class A Common Stock, par
value $.10 per share (the "Class A Stock"), and Class B Common
Stock, par value $.10 per share (the "Class B Stock"), at the
close of business on September 19, 1994, will be entitled to vote
at the Annual Meeting. On September 19, 1994, there were
shares of Class A Stock and shares of Class
Stock outstanding and eligible to vote. Each share of Class A
Stock entitles the holder thereof to one vote, and each share of
Class B Stock entitles the holder thereof to ten votes, on each
matter scheduled to come before the Annual Meeting. The Class A
Stock and Class B Stock are sometimes collectively referred to
herein as "Stock."
All votes represented by the enclosed proxy will be cast FOR
the ten nominees for director named herein, unless authorization
to do so is withheld by a stockholder for one or more of the ten
nominees, and in the manner specified by that stockholder with
respect to approval of proposals (2) and (3), except that in the
absence of such instructions, the votes will be cast FOR the
approval of proposals (2) and (3). The Board does not know of
any matters, other than those specified herein, which will be
presented for action at the Annual Meeting. In the event that
any other matters should properly come before the Annual Meeting,
it is the intention of the persons named in the enclosed proxy to
vote the proxy in accordance with their best judgment on such
matters. A proxy may be revoked by delivery of a validly
executed, later dated proxy, by notice in writing to the
Secretary of the Company, at the above address, or in person at
the Annual Meeting any time prior to its use.
The ten persons receiving the largest number of votes for
director will be elected. Proposals (2) and (3) require the
affirmative vote of a majority of the shares present at the
meeting. If a stockholder abstains from voting on a proposal,
his shares are considered present at the meeting, but since they
are not affirmative votes, they will have the same practical
effect as a vote against the proposal. Broker non-votes will not
be counted for quorum or any other purpose.
1. ELECTION OF DIRECTORS
Ten directors are to be elected for the ensuing year to hold
office until the next annual meeting of stockholders and until
their successors are elected and qualified. All nominees were
elected to the Board at the 1993 annual meeting of stockholders.
All nominees have previously been designated as "Continuing
Directors" as defined in the Company's Certificate of
Incorporation, as amended.
INFORMATION AS TO NOMINEES
Set forth below is information about each nominee for
election as a director.
Michael T. Alcox, 46, has served as Senior Vice President
and the Chief Financial Officer of the Company since December
1987. He also served as Treasurer of the Company from September
1990 until November 1991. Since 1990, Mr. Alcox also has served
as Vice President and the Chief Financial Officer of RHI
Holdings, Inc. ("RHI") and Fairchild Industries, Inc. ("Fairchild
Industries"), two subsidiaries of the Company. He is a director
of RHI, Fairchild Industries, and Banner Aerospace, Inc.*
("Banner Aerospace"). He became a director of the Company in
1988. (1)(4)(5)
Mortimer M. Caplin, 78, has been a senior member of Caplin &
Drysdale (attorneys) since 1964. Mr. Caplin serves as a director
of Fairchild Industries, Presidential Realty Corporation, Danaher
Corporation and Unigene Laboratories, Inc. He became a director
of the Company in 1990. (1)(2)(6)
Philip David, 63, was a consultant to the Company from
January 1988 to June 1993. He was also an employee of the
Company from January 1988 to December 1989. He was a Professor
of Urban Development at Massachusetts Institute of Technology
until June 1988. Dr. David is also a director of Advanced NMR
Systems, Inc. He became a director of the Company in 1985.
(3)(4)
Thomas J. Flaherty, 56, joined the Company in April 1993, as
the Chief Operating Officer. Since 1993, he also has served as a
director and the Chief Operating Officer of Fairchild Industries.
He was President and the Chief Operating Officer of IMO
Industries, Inc. from 1992 to April 1993. He was the Chief
Executive Officer & President of Transnational Industries, Inc.
from 1990 to 1992. From 1977 to 1990, he held various executive
positions with the Hamilton Standard and Pratt & Whitney units of
United Technologies Corporation. He became a director of the
Company in 1993.
Harold J. Harris, 65, is President of Wm. H. Harris, Inc.
(retailer). He became a director of the Company in 1985.
(2)(3)(5)
Samuel J. Krasney, 69, retired in 1993 as the Chairman of
the Board, the Chief Executive Officer and President of Banner
Aerospace*, positions he had held since June 1990. He continues
to serve as a member of the Board of Banner Aerospace (since June
1990) and also serves as the Vice Chairman of the Board of the
Company (since December 1985). He served as the Chief Operating
Officer of the Company from December 1985 until December 1989.
Mr. Krasney has served as the managing partner of ABBA Capital
Enterprises since October 1985. Mr. Krasney is a director of
FabriCenters of America, Inc. and Waxman Industries, Inc. He
became a director of the Company in 1968.**
Frederick W. McCarthy, 52, is the Chairman of the Board of
Triumph Capital Group, Inc. and Managing Director, Triumph
Corporate Finance Group, Inc. (investment bankers), a position
held since March 1990. Prior thereto, he was a Managing Director
of Drexel Burnham Lambert Incorporated ("Drexel Burnham"),
investment bankers, from 1974 until January 1990. Mr. McCarthy
serves as a director of RHI, RC/Arby's Corporation, Seminole
Kraft Corporation, Stone Savannah River Pulp & Paper Company,
Nutra Max Products, Inc., and Gale Group, Inc. He became a
director of the Company in 1986.*** (3)(5)
Herbert S. Richey, 72, served as President of Richey Coal
Company (coal properties-brokerage and consulting) until December
1993. Mr. Richey is a director of Fairchild Industries, Oglebay
Norton Company and Sifco Industries, Inc. He became a director
of the Company in 1977. (1)(2)(6)
Dr. Eric I. Steiner, 32, has served as Senior Vice
President, Operations of the Company since May 1992, and is
currently President of Camloc/RAM Products, one of the Company's
operating units. He served as Vice President, Business Planning
of the Company from March 1991 until May 1992. He has also
served as Vice President of Fairchild Industries since May 1992.
He received an M.B.A. from Insead in France in 1990. Prior
thereto, he received an M.D. in 1988 from Faculte de Medicine de
Paris and was a medical doctor at Hospitaux De Paris in France
until November 1989. He is a director of Banner Aerospace. Dr.
Steiner became a director of the Company in 1988. He is the son
of Jeffrey J. Steiner.
Jeffrey J. Steiner, 57, has served as the Chairman of the
Board and the Chief Executive Officer of the Company since
December 1985, and as President of the Company since July 1,
1991. Mr. Steiner also served as President of the Company from
November 1988 until January 1990. He has served as the Chairman
of the Board, the Chief Executive Officer and President of Banner
Aerospace* since September 1993. He served as the Vice Chairman
of the Board and as a director of Rexnord Corporation**** from
July 1992 to December 1993. He has served as the Chairman,
President, and the Chief Executive Officer of Fairchild
Industries since July 1991 and of RHI since 1988. Mr. Steiner is
and for the past five years has been President of Cedco Holdings
Ltd., a Bermuda corporation (a securities investor). He serves
as a director of The Franklin Corporation and The Copley Fund.
He became a director of the Company in 1985. He is the father of
Dr. Eric I. Steiner. (1)(4)(5)
The persons named in the proxies will vote the proxies for
the election of the aforementioned nominees for director except
where the authority to vote for the nominees is withheld by the
stockholder submitting the proxy. In the event that any nominee
refuses or is unable to serve as a director (which is not now
anticipated), the persons named as proxies reserve full
discretion to vote for any other person who may be nominated.
- - - - ----------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation and Stock Option Committee.
(4) Member of the Investment Committee.
(5) Member of the Nominating Committee.
(6) Member of the Corporate Ethics and Compliance Committee.
* The Company has a significant equity position in this
company.
** Mr. Jeffrey Steiner, on behalf of himself and his affiliates,
has entered into an agreement with Mr. Krasney to vote all of Mr.
Steiner's and his affiliates' holdings of the Company voting
stock for the election of Mr. Krasney to the Board at the 1994
Annual Meeting.
*** In connection with Drexel Burnham's acting as agent for the
Company in the October 1986 private placement of the Company's
$160,000,000 Intermediate Subordinated Debentures due 2001, the
Company gave Drexel Burnham the right to designate (subject in
certain instances to the approval of the designee by the Board or
certain designated members of the Board) one person to serve on
the Board as long as any of such debentures are outstanding. The
Company has further agreed that the Drexel Burnham designee on
the Board will serve as a member of the Board's Compensation
Committee.
**** Until December 1993, the Company had a significant equity
position in this Company.
BOARD OF DIRECTORS AND CERTAIN COMMITTEE MATTERS
The Board held four meetings during fiscal 1994. No
incumbent director attended less than seventy-five percent of the
aggregate number of meetings of the Board and committees on which
he served except for Dr. David who had several absences for
medical reasons. During fiscal 1994, directors who were not
employed by the Company or its subsidiaries received a quarterly
retainer of $2,500, plus $2,500 for each Board meeting attended
(including as a part of each such meeting any committee meetings
held on the same date), a $500 stipend for any committee meetings
attended that were not held on the same date as a Board meeting,
and reimbursement for travel expenses.
The Board has (i) an Audit Committee whose primary functions
are to examine and consider matters relating to the internal and
external audits of the Company's accounts and its financial
affairs and to select the Company's independent auditor; (ii) a
Compensation and Stock Option Committee whose functions are to
review and approve the compensation and other benefits of the
Chief Executive Officer and other executive officers of the
Company, to review and advise management regarding the benefits,
including bonuses, and other terms and conditions of employment
of other employees of the Company, to review and recommend for
the approval of the full Board the compensation of directors, and
to advise the Board on matters relating to, and to award,
employee stock options; (iii) an Executive Committee whose
functions include considering pertinent matters and exercising
all the powers of the Board, which by law it may exercise when
the Board is not in session; (iv) an Investment Committee to
consider and authorize material investments by the Company and to
advise the Board with respect thereto; (v) a Corporate Ethics and
Compliance Committee to oversee the Company's ethics programs;
and (vi) a Nominating Committee to consider and recommend to the
Board candidates for election to the Board of Directors by the
stockholders. During fiscal 1994, the Audit Committee held two
meetings, the Compensation and Stock Option Committee held three
meetings, and the Nominating and Executive Committees each held
one meeting.
INFORMATION AS TO EXECUTIVE OFFICERS
Set forth below is certain information about each executive
officer of the Company who is not a director of the Company. All
of the executive officers of the Company are elected by the Board
to serve until the next annual meeting of the Board or until
their successors are elected and qualified.
Melvin D. Borer, 51, has served as Vice President of the
Company since September 1993. Mr. Borer has also served as Vice
President of Fairchild Industries since 1991 and as President of
Fairchild Communications Services Company since 1989.
Robert D. Busey, 51, has served as Vice President of the
Company since September 1992. Mr. Busey has also served as Vice
President of Fairchild Industries since November 1993. Prior to
September 1992, Mr. Busey was Assistant Vice President of the
Company and held other management positions with Fairchild
Industries.
Christopher Colavito, 39, has served as Vice President and
Controller of the Company since November 1990. Mr. Colavito also
has served as Vice President and Controller of Fairchild
Industries since August 1989. Prior thereto, Mr. Colavito, who
is a Certified Public Accountant, was Assistant Controller of
Fairchild Industries and held other financial management
positions with Fairchild Industries.
John L. Flynn, 48, has served as Vice President, Tax of the
Company since August 1989. Mr. Flynn also has served as Vice
President, Tax of Fairchild Industries since November 1986.
John D. Jackson, 57, has served as Senior Vice President and
Secretary of the Company since 1990. Mr. Jackson is also Senior
Vice President (since 1989) and Secretary (since 1978) of
Fairchild Industries. Mr. Jackson was Vice President of
Fairchild Industries from 1986 to 1989.
Harold R. Johnson, 71, Brig. Gen., USAF (Ret.), has served
as Senior Vice President, Business Development of the Company
since November 1990. General Johnson has also served as Vice
President of Fairchild Industries since February 1988.
Robert H. Kelley, 46, has served as Vice President, Employee
Benefits of the Company since November 1993. He also has served
as Vice President of Fairchild Industries since November 1993.
Prior thereto, he held other management positions with Fairchild
Industries.
Jerry R. Lirette, 46, has served as Vice President of the
Company since May 1992. Mr. Lirette also has served as Vice
President of Fairchild Industries since 1988, and has served as
President of D-M-E Company since 1983.
Donald E. Miller, 47, has served as Senior Vice President
and General Counsel of the Company since January 1991. Mr.
Miller also has served as Vice President and General Counsel of
Fairchild Industries since November 1991. Prior to 1991, Mr.
Miller was a principal of the law firm of Temkin & Miller, Ltd.
in Providence, Rhode Island.
Karen L. Schneckenburger, 45, has served as Vice President
of the Company since September 1992 and as Treasurer of the
Company since November 1991. Ms. Schneckenburger also has served
as Treasurer of Fairchild Industries since August 1989. Prior
thereto, she served as Director of Finance of Fairchild
Industries from 1986 through 1989.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth
compensation information for each of the Company's Chairman and
Chief Executive Officer and the other four most highly
compensated executive officers of the Company whose salary and
bonus exceeded $100,000 for the most recent fiscal year (the
"named executive officers").
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
----------------------- ----------------------
All Other
Name/Position Year Salary Bonus Other Options Compensation
- - - - ------------- ---- ------ ----- ----- ------- ------------
Jeffrey J. Steiner, 1994 $1,550,011 $2,728,096 -- -- $26,439(2)
Chairman & CEO 1993 1,448,000 -- -- -- 25,634(3)
1992 1,433,727 -- -- -- --
Michael T. Alcox, 1994 240,010 203,750 $14,857(1) -- 5,904(4)
Sr. Vice President 1993 203,925 86,000 16,965(1) 5,000 5,976(4)
& CFO 1992 204,504 -- -- 17,000 --
Donald E. Miller, 1994 185,016 196,250 -- -- 5,946(4)
Sr. Vice President 1993 169,266 70,000 -- 5,000 5,216(4)
and General Counsel 1992 166,467 -- -- 10,000 --
John L. Flynn, 1994 200,019 134,000 -- -- 5,903(4)
Vice President, Tax 1993 161,250 53,700 -- 5,000 4,796(4)
1992 161,708 -- -- 10,500 --
Jerry R. Lirette, 1994 217,385 114,376 -- -- 6,329(4)
Vice President 1993 190,000 143,716 -- 10,000 5,539(4)
1992 189,677 137,845 -- 7,000 --
(1) Tax gross up payments related to reimbursement of relocation
costs.
(2) Includes $19,493 for value of premiums paid by the Company
for split-dollar life insurance coverage and $3,750 for Company
contributions under 401(k) savings plan. Also includes $3,196 in
imputed interest on a loan by the Company to Mr. Steiner.
(3) Includes $19,738 for value of premiums paid by the Company
for split-dollar life insurance coverage and $5,896 for Company
contributions under 401(k) savings plan.
(4) Company contributions under 401(k) savings plan.
The following table sets forth information concerning individual
grants of stock options made during the 1994 fiscal year to each
named executive officer.
OPTIONS GRANTS IN LAST FISCAL YEAR
% Options 5% 10%
Granted Appreci- Appreci-
Shares to all Exercise Expiration ation ation
Name Granted Employees Price Date (2) (2)
- - - - ---- ------- --------- -------- --------- -------- --------
Jeffrey J. Steiner -- -- -- -- -- --
Michael T. Alcox -- -- -- -- -- --
Donald E. Miller -- -- -- -- -- --
John L. Flynn -- -- -- -- -- --
Jerry R. Lirette -- -- -- -- -- --
The following table sets forth information concerning the fiscal
year-end value of unexercised stock options of each of the named
executive officers.
OPTION YEAR-END VALUE TABLE
Value of In-the-Money
Number of Unexercised Outstanding Options at
Options at 6/30/94 6/30/94
--------------------- ----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- - - - ---- ----------- ------------- ----------- -------------
Jeffrey J. Steiner 282,500 -- -- --
Michael T. Alcox 86,250 12,250 -- --
Donald E. Miller 17,500 12,500 -- --
John L. Flynn 11,750 10,750 -- --
Jerry R. Lirette 13,875 13,625 -- --
There were no exercises of stock options by the above-named
individuals during the 1994 fiscal year.
STOCK PERFORMANCE GRAPH
The following graph compares the performance of the
Company's Class A Common Stock with that of the S & P 500 Stock
Index and the S&P Manufacturing (Diversified Industrials) Index
(consisting of 12 industrial manufacturers). The graph plots the
growth in value of an initial $100 investment over the indicated
five year period with all dividends reinvested.
[The line graph depicting "Comparison of Five
Year Cumulative Total Returns" is being
submitted in hard copy under Form SE.]
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of
Directors (the "Committee"), which is composed of three non-
employee Directors, has initial responsibility for all
compensation actions affecting the Company's executive officers,
including base salaries, bonus awards, stock option awards and
the terms and conditions of their employment. The Committee
administers the Company's 1986 Non-Qualified and Incentive Stock
Option Plan (the "1986 Plan").
The Committee makes appropriate recommendations concerning
executive compensation, and reports to the Board of Directors.
Under the supervision, approval and review of the Committee, the
Company's compensation policies and programs are designed to
motivate, retain and attract management with incentives linked to
financial performance of the Company and the value that is
delivered to its shareholders. Specifically, the Company's
policies and programs endeavor to: (i) link executive
compensation to sustainable increases in the financial
performance of the Company, where possible, and where not
possible, preservation of shareholder value; (ii) provide rewards
contingent upon company or business unit performance; (iii)
differentiate compensation based upon individual contribution;
(iv) promote teamwork among executives and other Company
employees; and (v) encourage the retention of a sound management
team. During each fiscal year, the Committee reviews and
recommends to the Board, with any modification it deems
appropriate, base salary levels for the Company's executive
officers, including those executive officers named in the Summary
Compensation Table, and certain other senior managers.
The Company manages the total cash compensation to provide
median levels of cash compensation at average levels of
corporate, business unit, and individual performance. Cash
compensation consists of two components: (i) a base salary that
is competitive with that of other companies paying at the median
level of the market, and (ii) an annual incentive opportunity
that is variable and is reflective of the financial performance
of the Company and the individual performance of the executive
officer. The financial performance objectives are approved by
the Committee and the Board at the beginning of each fiscal year
and are based upon financial plans approved by the Board. When
high levels of performance are achieved, the level of cash
compensation may exceed the median of the market. Conversely,
when the Company, business unit, or the individual falls short of
the predetermined goals, the level of cash compensation may be
substantially below the market median. The objective of this mix
is to deliver total annual cash compensation competitive with
compensation offered at other companies facing similar challenges
for similar positions, while simultaneously linking the payment
of the annual cash incentive to the achievement of specific
objectives in the Company's annual operating plan as approved by
the Board.
The mix between salary and annual incentive pay is related
to an executive's job grade. Executives at higher grade levels
in the Company have a greater percentage of their total cash
compensation contingent on the accomplishment of business
objectives, i.e. the higher the executive grade level, the
greater the proportion of annual compensation is "at risk". The
yearly performance bonus, when awarded, is generally paid in
August with respect to the preceding fiscal year. The award and
size of the performance bonus are based upon: (i) the executive
officer's performance against individual goals; and (ii) the
performance of the executive officer's unit within the Company
against that unit's goals; or (iii) the performance of the
Company against Company goals. Goals vary from year to year and
from unit to unit and, with regard to individual goals of
executive officers, usually include both quantitative and
qualitative factors. The Committee also occasionally awards
special bonuses in connection with extraordinary transactions by
the Company. The bonuses generally are awarded to individuals
who make significant contributions towards consummation of the
transactions.
In addition, the Committee has considered the impact of a
recently enacted provision of the Internal Revenue Code of 1986,
as amended (the "Code"), which in certain circumstances disallows
income tax deductions for compensation in excess of $1,000,000.
This disallowance provision does not apply to performance-based
compensation and certain other forms of compensation. The
Committee currently intends to structure the Company's incentive
compensation awards to the Company's Chief Executive Officer in a
manner that complies with the Code's requirements for
performance-based compensation to ensure that the Company is
entitled to full deductibility of such compensation. One of
these requirements is that the shareholders approve the material
terms of performance goals for such awards. To satisfy this
requirement, the shareholders are being asked elsewhere in this
Proxy Statement to approve the material terms of the performance
goals for the fiscal 1995 incentive compensation award for the
Company's Chief Executive Officer.
The Committee believes that stock option grants serve as a
desirable long-term method of compensation because they closely
ally the interests of management with the preservation and
enhancement of stockholder value and serve as an additional
incentive to promote the success of the Company. In fiscal 1994,
the Committee approved the grant of 27,000 stock options under
the 1986 Plan to key employees. No grants were made to the
Company's senior management in fiscal 1994.
Jeffrey J. Steiner, has served as Chairman of the Board and
Chief Executive Officer of the Company since 1985 and as
President since July, 1991. In fixing Mr. Steiner's salary and
target bonus levels, as well as determining the size of the stock
options, if any, the Compensation Committee and the Board
typically review the financial performance of the Company,
including revenue and profit levels. In addition, the Committee
reviews Mr. Steiner's performance as Chairman of the Board, Chief
Executive Officer and President, his importance to the Company
and his success in implementing its strategic goals.
Mr. Steiner has developed and established initiatives aimed
at improving the operating efficiency and financial performance
of the Company. Following several years of record earnings, the
Company's earnings from operations declined sharply in 1991, as a
result of the global industrial recession and an unusual
combination of circumstances affecting those businesses of the
Company which serve the aerospace and aviation industry,
including, but not limited to, reductions in commercial air
travel and defense spending as well as the deregulation of the
airline industry. These events required major changes in the way
the Company conducts its business, as well as new and innovative
business strategies. During fiscal years 1993 and 1994, under
the direction of Mr. Steiner, the Company (i) has implemented
extensive and innovative recapitalization plans for Fairchild
Industries, Inc., (ii) through its communication services
division, has grown significantly through strategic acquisitions
and synergistic growth, (iii) has implemented aggressive cost-
reduction and cost-control programs at all organizational and
divisional levels, of such proportion as to fundamentally change
the way those organizations and divisions do business, and (iv)
has taken important steps towards implementing a strategy of
diversifying into new, high growth industries. In the
Committee's view, the implementation of this extensive,
aggressive and creative restructuring and diversification program
is indicative of progress toward enhanced long-term financial
performance. Nevertheless, despite Mr. Steiner's achievements,
the Committee and the Board's ability to determine independently
Mr. Steiner's compensation has been significantly constrained by
the terms of the stipulation of settlement of the action entitled
Piven, et al. v. Steiner et al.
During fiscal 1994, the Company sold its equity position in
Rexnord Corporation. In connection with this transaction, Mr.
Steiner handled all of the negotiations, traveled extensively,
and spent a substantial amount of time on issues involved
in the transaction. Because of Mr. Steiner's significant
contribution to this transaction, the Committee awarded him a
special bonus of $2,728,096, which equals one and one half
percent of the gross proceeds received by the Company from the
transaction. Mr. Steiner received no other bonus in fiscal 1994.
Other executive officers of the Company also received special
bonuses in connection with the sale of the Company's interest in
Rexnord Corporation.
The Committee believes that the total compensation program
for executives of the Company is on a level with the compensation
programs provided by other companies facing similar challenges.
The Committee believes that any amounts paid under the annual
incentive plan will be appropriately related to corporate and
individual performance, yielding awards that are directly linked
to the annual financial and operational results of the Company
within the framework of the challenges faced. The Committee also
believes that the 1986 Plan provides opportunities to
participants that are consistent with the returns that are
generated on behalf of the Company's shareholders.
Compensation and Stock Option Committee
of the Board of Directors
Philip David, Chairman
Harold J. Harris
Frederick W. McCarthy
Employment Agreements
Mr. Jeffrey Steiner has an amended and restated employment
agreement with the Company dated September 10, 1992. The term of
the current agreement, under which Mr. Steiner is entitled to
receive a base salary determined by the Compensation and Stock
Option Committee of the Board ($1,400,000 for the current fiscal
year), is five years and is extended annually for additional
one-year periods unless either party gives notice not to extend
the agreement. If Mr. Steiner dies during the term or any
extended term of the agreement, his estate will receive an amount
equal to one year's base salary, plus bonus, if any, for the
fiscal year during which death has occurred, and if the Company
terminates the agreement because of Mr. Steiner's disability for
more than nine consecutive months, or shorter periods aggregating
nine months during any twelve month period, he will receive fifty
percent of his base salary for two years, plus bonus, if any, for
the fiscal year during which termination of his employment has
occurred. In the event of a "change in control" of the Company
or a "trigger event" such as a merger in which the Company is not
the surviving corporation, or a sale of substantially all of the
Company's assets, the term of employment will terminate upon
payment to Mr. Steiner of severance compensation in an amount
equal to the sum of 2.99 times his base salary and 2.99 times the
preceding year's bonus paid to him. Mr. Steiner signed a service
agreement on April 6, 1990 with Banner Investments (U.K.) PLC, a
subsidiary of the Company ("Banner U.K."), pursuant to which Mr.
Steiner is entitled to receive pound sterling 204,000 annually
for the term of the agreement. Pursuant to an amendment dated
November 18, 1992, Mr. Steiner's annual compensation from Banner
U.K. was adjusted, to avoid currency fluctuation, to the greater
of $400,000 or pound sterling 204,000. Pursuant to the terms of
the stipulation of settlement of the action entitled Piven, et
al. v. Steiner et al. filed in the Court of Chancery of the State
of Delaware, Mr. Steiner (a) will not be granted any new stock
options through June 30, 1993; and (b) will not receive a bonus
from the Company through fiscal year 1995 greater than, without
duplication, (i) one and one-half percent of the total value of
any extraordinary transaction, subject to approval of the
Compensation and Stock Option Committee, and (ii) three percent
of Income from Continuing Operations before Taxes on Income and
Extraordinary Items. In addition, Mr. Steiner's base salary
under his employment agreement with the Company will be paid at
an annual rate of $250,000 a year less than its present level of
$1,400,000 for fiscal years 1992 through 1995 and such base
salary may not be increased during that time.
Mr. Flaherty has an employment agreement with the Company
that provides that he will serve as the Chief Operating Officer
of the Company for a term through June 30, 1995, which term will
be automatically extended for additional one year periods unless
either party has given at least six months advance notice of
intention not to extend the term beyond June 30, 1995 or any
later anniversary date. Mr. Flaherty is entitled to receive a
base salary of not less than $175,000 per year for the first 12
months of the term and not less than $225,000 per year for the
remainder of the term. If Mr. Flaherty's employment is
terminated prior to June 30, 1995, for reasons other than cause,
he will be entitled to a continuation of his base salary, at its
then current rate, until the later of June 30, 1995, or a period
of 12 months from date of termination. In addition, incentive
compensation (whether earned or not) will be paid for the fiscal
year in which the termination falls, prorated from the beginning
of such fiscal year. Mr. Flaherty is also entitled to
reimbursement for certain temporary living expenses through June
30, 1994.
Mr. Alcox has a letter agreement with the Company dated
October 23, 1991, that states that if the Company terminates his
employment, at any time, for reasons other than cause, Mr. Alcox
will receive a severance payment equivalent to one month of his
then current base salary for each full year of his employment
with the Company, and incentive compensation (whether earned or
not) based on his then current bonus target pro-rated through the
date of his termination. In addition, in the event of a change
of control of the Company occurring prior to October 23, 1994,
while he is an employee of the Company, Mr. Alcox will receive
two years of his then current base salary, payable half on the
date of the change of control and the balance over a one year
period, provided he remains an employee of the Company and his
employment is not terminated for cause. Mr. Alcox has been
reimbursed by the Company for certain temporary living expenses
incurred after relocating to the Dulles Corporate office in
January 1991, which reimbursement continued in part through June
1994.
Messrs. Miller, Flynn and Lirette each have a letter
agreement with the Company dated October 23, 1991. Each
agreement provides that if the Company terminates their
employment for reasons other than cause prior to October 23,
1994, they each will receive a severance payment equal to one
year of their then current base salary and incentive compensation
(whether earned or not) based on their then current bonus target
prorated through the date of termination. In addition, in the
event of a change of control of the Company occurring prior to
October 23, 1994, Messrs. Miller and Flynn each will receive one
year of their then current base salary, payable one-half on the
date of change of control and the balance over a one year period,
provided they remain employees of the Company and their
employment is not terminated for cause.
Pension and Retirement Benefits
The Company and its subsidiaries have a number of defined
benefit pension plans covering substantially all U.S. employees.
Effective January 1, 1991, the Company adopted the Retirement
Plan for Employees of Fairchild Industries, Inc. ("Fairchild
Retirement Plan"). The following table illustrates the amount of
estimated annual fixed retirement benefits payable under the
Fairchild Retirement Plan to an employee retiring in 1994, at age
65, at various salary levels (average of highest five consecutive
years out of last ten years of service) and years of service.
The Fairchild Retirement Plan defines salary as total
compensation subject to the Internal Revenue Service's limit on
the amount of compensation that may be used to compute benefits
under qualified pension plans. This limit is equal to $150,000
for 1994. The benefit amounts listed in the following table are
not subject to any deduction for Social Security benefits or
other offset amounts.
Average 10 Years 20 Years 30 Years 40 Years
Salary of Service of Service of Service of Service
- - - - ------- ---------- ---------- ---------- ----------
25,000 2,028 4,055 6,083 7,409
50,000 5,028 10,055 15,083 18,221
100,000 11,028 22,055 33,083 39,846
150,000 17,028 34,055 51,083 61,471
200,000 23,028 46,055 69,083 83,096
250,000 25,334 50,669 76,003 91,411
The persons named in the Summary Compensation Table
participate in the Fairchild Retirement Plan. For purposes of
determining benefits under the Fairchild Retirement Plan, Mr.
Steiner's average salary is $228,973 with three years and six
months of credited service. Mr. Alcox's average salary is
$228,973 with three years and six months of credited service.
Mr. Lirette's average salary is $217,750 with 14 years and six
months of credited service. Mr. Miller's average salary is
$218,385 with two years and five months of credited service. Mr.
Flynn's average salary is $210,212 with six years and eight
months of credited service.
The Company has a Supplemental Executive Retirement Plan for
certain key executives which provides additional retirement
benefits based on final average earnings and years of service.
Benefits which may be payable under this plan are not included in
the Summary Compensation Table. This plan provides a maximum
retirement benefit equal to the difference between sixty percent
of the participant's average base salary for the last five years
of employment and the aggregate of the participant's (i) other
Company defined pension benefits, (ii) profit sharing/ESOP
benefits, and (iii) primary Social Security payment. This plan
is unfunded, unqualified and is not subject to the Employee
Retirement Income Security Act of 1974, as amended. The plan was
amended in June 1988 to provide for lump sum pre-retirement
advances on an actuarially reduced basis at the election of
participants age sixty or over, contingent upon approval of the
Compensation and Stock Option Committee. All persons named in
the Summary Compensation Table are eligible for participation in
this plan.
The annual contributions under the Retirement Plan and the
Supplemental Executive Retirement Plan attributable to persons
named in the Summary Compensation Table are not shown since they
cannot be readily determined by the regular actuaries of said
plans. Directors who are not employees of the Company or one of
its subsidiaries are not eligible to participate in these
retirement plans.
2. APPROVAL OF GRANTS OF STOCK OPTIONS
TO NON-EMPLOYEE DIRECTORS
At the Annual Meeting, Shareholders will be asked to approve
certain grants of stock options to non-employee directors of the
Company. On February 17, 1993, the Board of Directors authorized
the grant of stock options to the following non-employee
directors of the Company: Mr. Harris, 30,000 options; Mr.
McCarthy, 30,000 options; Mr. Richey, 35,000 options; Mr. David,
30,000 options; and Mr. Caplin, 5,000 options. On February 17,
1994, the Board authorized the grant of 30,000 options to Mr.
Caplin. These grants are subject to stockholder approval. The
terms of the options are substantially the same as options
granted under the 1986 Plan. The exercise price of the options
will be the fair market value of the Company's Class A Common
Stock on the date of stockholder approval. The exercise price is
payable in cash. Each option vests over a four-year term (at 25%
per year) beginning with the first anniversary of the date of
grant and are exercisable for a term of not more than five years
from the date of grant. The options do not meet the requirements
of Section 422A of the Code ("non-qualified options"). On
September ___, 1994, the fair market value of the Class A Stock
was $________.
Federal Income Tax Consequences - Non-Qualified Stock Options
The issuance of a non-qualified stock option will not result
in any taxable income to the optionee or a tax deduction to the
Company at the time it is granted. Generally, an optionee will
recognize ordinary income at the time the optionee exercises the
option and receives shares, in an amount equal to the excess of
the fair market value of such shares on the date of exercise over
the exercise price. The optionee's tax basis in the shares will
be the sum of the option exercise price and any income recognized
as a result of the exercise of the option.
The Company is entitled to a tax deduction corresponding to
the amount of income recognized by the optionee for the year in
which the optionee recognizes such income for federal income tax
purposes.
The Board recommends a vote for the approval of this
proposal.
3. APPROVAL OF MATERIAL TERMS OF PERFORMANCE
GOALS FOR FISCAL 1995 INCENTIVE
COMPENSATION AWARD FOR THE COMPANY'S
CHIEF EXECUTIVE OFFICER
At the Annual Meeting, the shareholders will be asked to
approve the material terms of the performance goals for the
fiscal 1995 incentive compensation award for the Company's Chief
Executive Officer. Effective for tax years beginning in 1994,
the Code disallows deductions for publicly-held corporations with
respect to compensation in excess of $1,000,000 paid to certain
executive officers. However, compensation payable solely on
account of attainment of one or more performance goals is not
subject to this deduction limitation if the performance goals are
objective, pre-established and determined by a compensation
committee comprised solely of two or more outside directors, the
material terms of the performance goals under which the
compensation is to be paid are disclosed to the shareholders and
approved by a majority vote, and the compensation committee
certifies that the performance goals and other material terms
were in fact satisfied before the compensation is paid.
On May 19, 1994, the Company's Compensation and Stock Option
Committee (the "Committee") established performance goals for the
Chief Executive Officer's fiscal 1995 incentive compensation
award and the maximum amount payable to the Chief Executive
officer if the goals are achieved. The Committee determined the
maximum amount payable within the constraints set forth in the
stipulation of settlement of the action entitled Piven, et al. v.
Steiner et al.
The performance goals and maximum amounts payable for fiscal
1995 are as follows:
1. If the Company (including its consolidated subsidiaries)
achieves pre-tax profits for fiscal 1995, the Chief Executive
Officer may receive up to three percent (3%) of such pre-tax
profits.
2. If the Company engages in an extraordinary transaction
(e.g., purchase or sale of assets not in the ordinary course)
during fiscal 1995, the Chief Executive Officer may receive up to
one and one-half percent (1 1/2%) of the total value of the
transaction.
The Committee retains the right to determine the actual
amount of incentive compensation to be awarded to the Chief
Executive Officer in fiscal 1995 based on his individual
contribution, consistent with the foregoing goals and in an
amount no greater than the maximum amounts.
Assuming the shareholders approve the material terms of the
performance goals as described herein, the Company believes that
any such incentive compensation award to the Chief Executive
Officer will qualify as performance-based compensation that will
be deductible from the Company's gross income for federal income
tax purposes.
The Board recommends that the shareholders vote for approval
of this proposal.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The table below sets forth as of August 31, 1994 the number
of shares and percent of Class A Stock and Class B Stock
beneficially owned by (i) each person known by the Company to own
beneficially more than five percent of any class of Stock, (ii)
each director and nominee for director, and (iii) the directors,
nominees and officers of the Company as a group.
Number of Number of
Shares of Percent Shares of Percent
Class A of Class B of
Stock(1) Class Stock(1) Class
--------- ------- ---------- -------
Michael T. Alcox 111,850(2) * 600 *
Bestin Ltd 3,146,388(3) 23.5% ---- ----
P.O. Box 847
Georgetown, Grand Cayman
Cayman Islands
Mortimer M. Caplin 60,000 * ---- ----
Columbia Savings & 825,000 6.1% ---- ----
Loan Association (4)
8840 Wilshire Boulevard
Beverly, CA 90211
Philip David 12,500 * ---- ----
Fairchild Industries
Master Retirement Trust 818,709 6.1% ---- ----
300 West Service Road
Chantilly, VA 22021
Thomas J. Flaherty 7,500(5) * ---- ----
Harold J. Harris 37,000(6) * ---- ----
Samuel J. Krasney 985,040(7) 7.2% ---- ----
25700 Science Park Drive
Cleveland, OH 44122
Frederick W. McCarthy 20,000 * ---- ----
RHI Holdings Master
Trust 966,966 7.2% ---- ----
300 West Service Road
Chantilly, VA 22021
Herbert S. Richey 6,000 * ---- ----
Eric I. Steiner 81,787(8) * 15,000 *
Jeffrey J. Steiner 6,790,084(9) 40.8% 2,944,996(10) 95.9%
110 East 59th Street
New York, NY 10022
Stinbes Limited 3,156,296(11) 22.9% 2,908,996(12) 94.7%
P.O. Box 847
Georgetown, Grand Cayman
Cayman Islands
All 20 directors,
nominees and officers
as a group 8,318,042(13) 48.5% 2,960,596 98.1%
- - - - ------------------
* Represents less than one percent.
(1) Shares of Class B Stock, which are immediately convertible
into Class A Stock, are also included in the Class A Stock column
on a share-for-share basis. Options that are exercisable
immediately or within sixty days after August 31, 1994 appear in
the Class A Stock column. Warrants are immediately exercisable
into shares of either Class A Stock or Class B Stock and appear
in both the Class A Stock and Class B Stock columns.
(2) Includes exercisable employee stock options to purchase
88,750 shares of Class A Stock.
(3) Bestin Ltd., a corporation organized under the laws of the
Cayman Islands, is an indirect, wholly-owned subsidiary of Bestin
S.A., a Luxembourg joint stock company whose shares are owned by
Paske Investments Ltd., a corporation organized under the laws of
Jersey, Channel Islands, a wholly owned subsidiary of The Friday
Trust ("The Friday Trust"), a trust organized under the laws of
Jersey, Channel Island, of which the sole trustee is Lloyds Bank
Trust Company (Channel Islands) Limited, a trust corporation
registered in Jersey, Channel Islands. Bestin Ltd. was formed
for the purpose of acquiring and holding the Company's shares and
is not presently engaged in any other activities.
(4) On March 22, 1991, the assets of Columbia Savings & Loan
Association were taken over by its conservator, Resolution Trust
Corporation.
(5) Includes exercisable employee stock options to purchase
7,500 shares of Class A Stock.
(6) Includes 27,000 shares of Class A Stock owned by the Wm. H.
Harris, Inc. Profit-Sharing Plan.
(7) Includes exercisable employee stock options to purchase
234,000 shares of Class A Stock. Also includes 44,100 shares of
Class A Stock owned by Mr. Krasney's wife; Mr. Krasney disclaims
beneficial ownership of such shares.
(8) Includes exercisable employee stock options to purchase
28,250 shares of Class A Stock. Includes 5,000 shares of Class A
Stock owned by Mr. Steiner as custodian for his children.
(9) Mr. Steiner is the settlor and a beneficiary of The Friday
Trust, and as such also may be deemed to beneficially own the
Stinbes Limited Shares and the Bestin Ltd. Shares. See notes (3)
and (11) to this table. Includes exercisable employee stock
options to purchase 282,500 shares of Class A Stock and
exercisable warrants to purchase 375,000 shares of Class A Stock
or Class B Stock. Also includes 45,500 shares of Class A Stock
owned by Mr. Steiner as custodian for his children. Also
includes 49,500 shares of Class A Stock owned by Mr. Steiner's
wife; Mr. Steiner disclaims beneficial ownership of such shares.
(10) Mr. Steiner is the settlor and a beneficiary of The Friday
Trust, and as such also may be deemed to beneficially own the
Stinbes Limited Shares. See notes (11) and (12) to this table.
Includes 30,000 shares of Class B Stock owned by Mr. Steiner as
custodian of his children. Also includes 6,000 shares of Class B
Stock owned by Mr. Steiner's wife; Mr. Steiner disclaims
beneficial ownership of such shares. Also includes exercisable
warrants to purchase 375,000 shares of Class A Stock or Class B
Stock.
(11) Consists of 247,300 shares of Class A Stock and 2,533,996
shares of Class B Stock, and exercisable warrants to purchase
375,000 shares of Class A Stock or Class B Stock, owned by
Stinbes Limited, a corporation organized under the laws of the
Cayman Islands, an indirect wholly-owned subsidiary of Bestin
S.A., a Luxembourg joint stock company, whose shares are owned by
Paske Investments Ltd., a corporation organized under the laws of
Jersey, Channel Islands, a wholly owned subsidiary of the Friday
Trust. Stinbes Limited was formed for the purpose of acquiring
and holding the Company's Shares and is not presently engaged in
any other activities.
(12) Includes exercisable warrants to purchase 375,000 shares of
Class A or Class B stock.
(13) Includes exercisable employee stock options to purchase
shares of Class A Stock not otherwise reported above.
Certain Transactions
Mortimer M. Caplin, a director of the Company, is a senior
member of the law firm of Caplin & Drysdale, which rendered legal
services to the Company during fiscal 1994. The Company intends
to use the services of this firm during fiscal 1995.
On July 21, 1993, the Company made a loan of $100,000 to Mr.
Jeffrey Steiner at an interest rate of 7.5 percent per annum,
payable on demand. Mr. Steiner repaid this loan, with interest,
on December 23, 1993.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Arthur Andersen & Co. has served as the Company's
independent auditor since 1968. No change is contemplated. A
representative of Arthur Andersen & Co. will be present at the
Annual Meeting, will have an opportunity to make a statement if
he or she desires to do so, and will be available to respond to
any appropriate questions.
EXPENSES OF SOLICITATION
In addition to the use of the mail, proxy solicitation may
be made by telephone, telegraph and personal interviews by
regular employees of the Company. The Company also will
reimburse brokerage houses and others forwarding proxy materials
to beneficial owners of stock. The costs of soliciting proxies
will be borne by the Company.
STOCKHOLDER PROPOSALS
Stockholders of the Company who wish to make a proposal to
be included in the Company's proxy materials for its 1995 annual
meeting of stockholders must cause such proposal to be received
by the Company at its corporate headquarters, Washington Dulles
International Airport, 300 West Service Road, P.O. Box 10803,
Chantilly, Virginia 22021, Attention: John D. Jackson, Senior
Vice President & Secretary, not later than June 10, 1995.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal
year ended June 30, 1994, was mailed to stockholders with or
prior to mailing of this proxy statement. The Company will
provide free of charge to any stockholder as of the record date
who so requests in writing, a copy of the Company's annual report
on Form 10-K for fiscal year 1994. Requests for such copies
should be directed to John D. Jackson, Senior Vice President &
Secretary, Washington Dulles International Airport, 300 West
Service Road, P.O. Box 10803, Chantilly, Virginia 22021.
By Order of the Board of Directors
John D. Jackson
Senior Vice President
& Secretary
PRELIMINARY PROXY
October 7, 1994
THE FAIRCHILD CORPORATION
This proxy is solicited on behalf of the Board of Directors
of The Fairchild Corporation.
The undersigned hereby appoints Jeffrey J. Steiner, Michael
T. Alcox, and John D. Jackson as proxies, each with the power to
appoint his substitute, and hereby authorizes them to represent
and to vote, as designated below, all the shares of Class A
Common Stock, par value $.10 per share, and Class B Common Stock,
par value $.10 per share, of The Fairchild Corporation held of
record by the undersigned on September 19, 1994 at the Annual
Meeting of Stockholders to be held on Thursday, November 17, 1994
at 10:00 a.m. (local time) and at any adjournments or
postponements thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY.
(Continued and to be signed on the reverse side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR ALL LISTED NOMINEES, AND
FOR THE OTHER PROPOSALS.
1. ELECTION OF DIRECTORS
/ / FOR all listed nominees / / WITHHELD for all.
(except as marked to the contrary
below).
Michael T. Alcox, Mortimer M. Caplin, Philip David, Thomas J.
Flaherty, Harold J. Harris, Samuel J. Krasney, Frederick W.
McCarthy, Herbert S. Richey, Eric I. Steiner, and Jeffrey J.
Steiner
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in the space
provided below.)
- - - - -------------------------
2. TO APPROVE GRANTS OF STOCK OPTIONS TO NON-EMPLOYEE DIRECTORS
OF THE COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
3. TO APPROVE THE MATERIAL TERMS OF THE PERFORMANCE GOALS FOR
THE FISCAL 1995 INCENTIVE COMPENSATION AWARD FOR THE COMPANY'S
CHIEF EXECUTIVE OFFICER.
/ / FOR / / AGAINST / / ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Please sign exactly as name(s)
appear below. When signing as
attorney, executor, administrator,
trustee, guardian or corporate
officer, please give full title as
such.
Dated , 1994
----------------------
----------------------------------
Signature
----------------------------------
Print Name
----------------------------------
Signature if held jointly
----------------------------------
Print Name
PRELIMINARY PROXY
THE FAIRCHILD CORPORATION
SAVINGS PLAN FOR EMPLOYEES OF
THE FAIRCHILD CORPORATION
VOTING INSTRUCTIONS TO TRUSTEE
These voting instructions are solicited on behalf of the Board of
Directors of The Fairchild Corporation.
To the Trustee:
In accordance with the provisions of the Savings Plan for
Employees of The Fairchild Corporation, I hereby instruct you, as
Trustee, to vote or cause to be voted at the Annual Meeting of
Stockholders of The Fairchild Corporation to be held on November
17, 1994 and any adjournments thereof, all shares of The
Fairchild Corporation standing to my credit in the Master Trust
covering the foregoing Plan in which I may be a participant and
which I am entitled to vote at such meeting as follows:
The shares represented by this proxy will be voted as
directed by the stockholder. If no direction is given by 10:00
a.m. (EST) November 15, 1994, this proxy will be voted in the
same percentage as shares held by participants for which the
Trustee has received timely voting instructions. The Trustee
will hold your voting directions in strict confidence. The Proxy
may vote in its discretion upon any other matters properly coming
before the Annual Meeting and any adjournments thereof.
(CONTINUED, AND TO BE SIGNED ON OTHER SIDE)
/ / ----------------------
ACCOUNT NUMBER
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the to vote for all
contrary below). nominees listed.
Michael T. Alcox, Mortimer M. Caplin, Philip David, Thomas J.
Flaherty, Harold J. Harris, Samuel J. Krasney, Frederick W.
McCarthy, Herbert S. Richey, Eric I. Steiner, and Jeffrey J.
Steiner.
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in the space
provided below.)
- - - - -------------------------
2. TO APPROVE GRANTS OF STOCK OPTIONS TO NON-EMPLOYEE DIRECTORS
OF THE COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
3. TO APPROVE THE MATERIAL TERMS OF THE PERFORMANCE GOALS FOR
THE FISCAL 1995 INCENTIVE COMPENSATION AWARD FOR THE COMPANY'S
CHIEF EXECUTIVE OFFICER.
/ / FOR / / AGAINST / / ABSTAIN
4. IN ITS DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Dated , 1994
--------------------------
---------------------------------------
Signature of Stockholder
---------------------------------------
Print Name
Please sign exactly as name
appears hereon. Executors,
administrators, trustees, etc.,
should also indicate their
capacity when signing. If shares
are held jointly, each holder
should sign.