CURTISS-WRIGHT CORPORATION
1200 Wall Street West, Lyndhurst, New Jersey 07071
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Curtiss-Wright Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of
Curtiss-Wright Corporation, a Delaware corporation, will be held at the Novotel
Meadowlands Hotel, One Polito Avenue, Lyndhurst, New Jersey on Friday, May 5,
1995, at 2:00 p.m., for the following purposes:
(1) To elect six directors, each to hold office until the next Annual
Meeting of Stockholders and until his or her successor shall have been elected
and shall qualify;
(2) To consider and act upon a proposal to approve the Corporation's 1995
Long-Term Incentive Plan;
(3) To appoint independent accountants for the current year, Price
Waterhouse having been nominated as such by the Board of Directors; and
(4) To consider and transact such other business as may properly come
before the meeting.
Only holders of common stock of record at the close of business on March
10, 1995 are entitled to notice of and to vote at the meeting. A list of such
holders will be at the offices of the Corporation, 1200 Wall Street West,
Lyndhurst, N.J. 07071, during the ten days preceding the meeting date.
PLEASE FILL IN, SIGN AND PROMPTLY RETURN YOUR PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. Stockholders who plan to attend the meeting
in person are nevertheless requested to sign and return their proxies to make
certain that their stock will be represented at the meeting should they be
prevented unexpectedly from attending.
By Order of the Board of Directors,
Dana M. Taylor, Jr.
Secretary
March 13, 1995
- 1 -
CURTISS-WRIGHT CORPORATION
1200 Wall Street West, Lyndhurst, New Jersey 07071
PROXY STATEMENT
This Proxy Statement is furnished by Curtiss-Wright Corporation
(hereinafter called the "Corporation" or the "Company") in connection with the
solicitation of proxies for use at the Annual Meeting of Stockholders to be
held at the time and place and for the purposes set forth in the foregoing
Notice of Annual Meeting of Stockholders. The Proxy Statement and accompanying
proxy will be first mailed to stockholders on or about March 17, 1995.
As of March 10, 1995, the record date for determining the holders of common
stock entitled to notice of and to vote at the Annual Meeting, there were
outstanding and entitled to vote at the Annual Meeting 5,059,053 shares of
common stock. Each share of stock is entitled to one vote.
The proxy card provides space for a shareholder to withhold voting for any
or all nominees for the Board of Directors, and to abstain from voting for the
appointment of independent accountants or for the Corporation's 1995 Long-Term
Incentive Plan if the shareholder chooses to do so. The election of directors
requires a plurality of the votes cast while the approval of the appointment of
independent accountants and of the Corporation's 1995 Long-Term Incentive Plan
both require the affirmative vote of a majority in interest of the stockholders
present in person or by proxy and entitled to vote. Abstentions and broker
non-votes are counted for purposes of determining whether a quorum is present
at the meeting. An abstention will be treated as a negative vote with respect
to each matter other than the election of directors as to which the shareholder
abstained. As to broker non-votes, if a broker indicates on the proxy that it
does not have discretionary authority to vote on a particular matter, those
shares will not be considered as present and entitled to vote with respect to
that matter.
Where a specific designation is given in the proxy with respect to the vote
on the election of directors, the appointment of independent accountants, or
approval of the Corporation's 1995 Long-Term Incentive Plan, the proxy will be
voted in accordance with such designation. If no such designation is made, the
proxy will be voted in favor of the directors named below, in favor of the
appointment of independent accountants, and in favor of the 1995 Long-Term
Incentive Plan. Anyone giving a proxy may revoke it at any time before its use
at the Meeting by personally appearing at the Meeting and casting a contrary
vote, or by giving a later proxy indicating a desire to vote differently than
is indicated by his earlier proxy.
ELECTION OF DIRECTORS
At this Annual Meeting six directors are to be elected, each to hold office
until the next Annual Meeting of Stockholders and until his or her successor
shall have been duly elected and shall qualify. Each nominee has been
recommended for election by the Nominating Committee of the Board of Directors
and by the Board. In the event that any such nominee should become unavailable
for election, the persons named in the proxy may vote for the election of a
substitute nominee. However, the Board of Directors has no reason to believe
that any of the nominees described below will be unavailable for election.
- 2 -
Shirley D. Brinsfield, Chairman of the Board of Directors, has decided to
retire upon the expiration of his present term, and will not stand for
reelection as a director at the Annual Meeting of Stockholders. Mr. Brinsfield
has served as a director since 1972. His contribution through the years has
been valued and appreciated.
The following information is provided as of March 10, 1995 with respect to
each nominee for election as a director.
Business Experience and
Principal Occupation
For Last Five Years; Year
Directorships in Public First
Corporations and Investment Elected
Name Companies; Age Director
- ---------------- -------------------------------------------- --------
Thomas R. Berner Partner in Berner & Berner, P.C., attorneys.
Age 47. 1990
John S. Bull Former President of Moran Towing & Transpor-
tation Co., Incorporated, engaged in marine
transportation. Age 84. 1961
James B. Busey,IV President and chief executive officer of
Armed Forces Communications and Electronics
Association since September 1992; Director,
Mitre Corporation since February 1995;
Director, Texas Instruments, Incorporated
since July 1992; Deputy Secretary, U.S.
Department of Transportation, 1991-June 1992;
Administrator, Federal Aviation Administration,
1989-91; retired from U.S. Navy as Admiral in
1989. Age 62.
David Lasky President of Curtiss-Wright Corporation since
May 1993; formerly Senior Vice President,
General Counsel and Secretary of the Corporation.
Age 62. 1993
William W. Sihler Professor of Business Administration, Darden
Graduate School of Business Administration,
University of Virginia. Age 57. 1991
J. McLain Stewart Director, McKinsey & Company, Management
Consultants. Age 78. 1989
- 3 -
The following table sets forth information concerning the ownership of
common stock of the Corporation by each director and nominee, each of the
executive officers named in the Summary Compensation Table below and all
directors and executive officers as a group, as of March 10, 1995. Except as
noted in the first footnote to this table, the shares were owned directly and
the owner had the sole voting and investment power in respect thereof. None of
those individuals owned any common stock of Unitrin, Inc., Argonaut Group,
Inc., or Teledyne, Inc. (For information in respect of the relationship among
Unitrin, Inc., Argonaut Group, Inc., Teledyne, Inc. and the Corporation, see
pages 18 and 19.)
% of
Number of Shares Outstanding
Name of Beneficial Owner Beneficially Owned Common Stock
- ------------------------ ------------------ ------------
Thomas R. Berner 485 a b
John S. Bull 250 b
James B. Busey, IV 0 b
David Lasky 36,541 c b
Robert E. Mutch 9,750 d b
Gerald Nachman 22,686 e b
William W. Sihler 200 b
J. McLain Stewart 0 b
Dana M. Taylor, Jr. 5,350 f b
George J. Yohrling 6,186 g b
Directors and Executive
Officers as a group
(13 persons) 81,448 1%
==============================================================================
Note:
======
a Includes 190 shares owned by Nancy Berner, wife of Mr. Berner. Mr. Berner
denies that he is the benefical owner of such shares.
b Less than one percent
c Includes right to purchase 12,900 shares through the exercise
of stock options.
d Includes right to purchase 6,500 shares through the exercise
of stock options.
e Includes right to purchase 6,900 shares through the exercise
of stock options.
f Includes right to purchase 3,400 shares through the exercise
of stock options.
g Includes right to purchase 3,060 shares through the exercise
of stock options.
- 4 -
OPERATION OF BOARD OF DIRECTORS AND COMMITTEES
During 1994 the Board of Directors held five meetings. All of the Directors
attended at least 75% of the aggregate of all meetings in 1994 of the Board of
Directors and Committees on which they served.
The Audit Committee of the Board of Directors, presently consisting of
Messrs. Thomas R. Berner, John S. Bull, and William W. Sihler, met two times
during 1994. The Committee's functions include the following: making
recommendations to the Board as to the nomination of independent accountants
for appointment by the stockholders; reviewing annual financial statements of
the Corporation prior to their publication; reviewing the report by the
independent accountants concerning the prior year's audit and management's
response thereto; and consulting with the independent accountants and
management concerning internal accounting controls.
The Executive Compensation Committee, presently consisting of Messrs. Thomas
R. Berner, John S. Bull and J. McLain Stewart, met three times during 1994.
This Committee reviews compensation of elected officers prior to submission to
the Board; establishes specific awards to be made to individuals under the
Corporation's Incentive Compensation, Stock Option and Restricted Stock
Purchase Plans; and reviews the establishment and/or amendment of executive
compensation plans, including the Employees' Savings and Investment Plan.
The Nominating Committee, presently consisting of Messrs. John S. Bull and
J. McLain Stewart, met once in 1994. Its responsibilities include the
following: (i) recommending to the Board of Directors nominees for election as
Directors; (ii) establishing procedures for identifying candidates for the
Board and periodically reviewing potential candidates; and (iii) recommending
to the Board criteria for Board membership. Any stockholder may recommend
nominees to the Committee for consideration by writing to the Secretary of the
Corporation. Such submission should include the full name and address of each
proposed nominee, a statement of his or her business experience and
qualifications and a written statement from the proposed nominee consenting to
his or her nomination and agreeing to serve if elected.
INDEPENDENT ACCOUNTANTS
The Board of Directors has nominated the firm of Price Waterhouse for
appointment by the stockholders as independent accountants for the purpose of
auditing and reporting upon the financial statements of the Corporation for its
fiscal year ending December 31, 1995, subject to the approval of its
appointment by stockholders at the Annual Meeting. The firm of Price
Waterhouse was engaged on March 19, 1992 and served in this capacity for the
Corporation through the fiscal year ended December 31, 1994. The selection of
Price Waterhouse to serve as independent accountants of the Corporation was
based upon a recommendation by the Audit Committee of the Board of Directors
and was approved by the full Board. Representatives of Price Waterhouse are
expected to be present at the Annual Meeting of Stockholders to make such
statements and answer such questions as are appropriate.
If the stockholders fail to so appoint Price Waterhouse, the Board of
Directors, pursuant to the By-Laws of the Corporation, will appoint other
independent accountants to perform such duties for the current fiscal year.
It is not contemplated that such appointment of other independent accountants
would be submitted to the stockholders for ratification. The appointment of
independent accountants to serve with respect to the year 1996 would be acted
upon by the stockholders at their Annual Meeting early in that year.
- 5 -
EXECUTIVE COMPENSATION
Report of Executive Compensation Committee
on Executive Compensation
The Executive Compensation Committee (the "Committee") of the Board of
Directors is responsible for the administration of the executive compensation
program of the Corporation. The Committee is composed of three non-employee
Directors, who are not eligible to participate in the Corporation's
compensation plans for employees.
In 1994 the compensation of the executive officers of the Corporation
consisted of salary, cash awards under the Modified Incentive Compensation Plan
(the "I.C. Plan") of the Corporation, and stock options pursuant to the
Corporation's amended 1985 Stock Option Plan. The levels of these compensation
elements are arrived at through consideration of a number of objective and
subjective factors. Salaries are reviewed by the Committee, generally
annually, largely on the basis of individual performance and contributions to
the Corporation. The recommendations of the Committee as to salary adjustments
are acted upon by the Board. The maximum amount available each year for awards
under the I.C. Plan is based solely on a formula tied to the earnings of the
Corporation as a whole (i.e., the sum of 12% of the excess over $3,000,000 of
consolidated net earnings (after taxes and before deducting such 12% amount) of
the Corporation and its subsidiaries for each of the four consecutive years
immediately preceding the year in which the current award is to be made, less
the aggregate amount of the awards made during the three consecutive years
immediately preceding the year in which the current award is to be made).
Stock options are offered to officers and key employees to provide additional
motivation to work toward increasing the value of the Corporation.
In determining Mr. Lasky's salary the Committee took into account specific
measures of performance, including operating income, return on net worth, and
operating cash flow, both actual and budgeted and forecasted for the
Corporation for the first quarter of 1994 as well as for full year 1993.
The Committee also took into consideration various indicators of corporate
performance in making an award to Mr. Lasky under the I.C. Plan. In awarding
stock options to Mr. Lasky, the Committee considered Mr. Lasky's efforts to
implement strategic planning methods to develop and grow the Corporation's
business. Also considered were a number of objective financial measures of
corporate performance.
With respect to considering the increase of salaries of its other executive
officers the Committee considered each person's years of service and total
compensation received. The Committee then considered schedules showing
operating income, return on net worth and operating cash flow, actual, budgeted
and forecasted, of each of the Corporation's facilities and of the Corporation
as a whole. At the same time, the Committee took into account the relationship
of the compensation of the Corporation's executive officers to the compensation
of individuals occupying comparable positions in other organizations of a
similar size and nature, with a view to ensuring that executives are
appropriately compensated, properly motivated and, where desirable, are
retained in the employment of the Corporation. The Committee also considered
factors relating to the performance of the individual officers. In making
awards to its executive officers under the I.C. Plan, the Committee took into
consideration the individual contributions each made to the success of the
Corporation, through personal ability, industry, loyalty and service pursuant
to the provisions of the I.C. Plan. The Board in turn has reviewed and
approved such awards.
- 6 -
In awarding stock options to its key employees and executive officers the
Committee considered the effect such persons' efforts could have on the growth
of the Corporation. In determining the size of such awards, the Committee
considered the previously expressed views of its compensation consultant, who
had advised that awards of the size granted under the Stock Option Plan were
fair and reasonable and consistent with corresponding awards made by other
corporations.
John S. Bull, Chairman
Thomas R. Berner
J. McLain Stewart
SUMMARY COMPENSATION TABLE
------------------------------
The following table contains information concerning the five most highly
compensated executive officers of the Corporation.
Long Term Awards
----------------------
Annual Compensation (f) (g) (i)
(a) ---------------------- Restricted Securities All
Name and Principal (b) (c) (d) Stock Underlying Other
Position Year Salary5 Bonus6 Awards7 Options Compensation8
- --------------------- ---- -------- -------- -------- --------- -------------
David Lasky, President 1994 $311,000 $183,500 7,500 $10,031
1993 $284,000 $158,500 5,400 $15,976
1992 $250,500 $158,500 $15,147
Gerald Nachman, 1994 $264,000 $ 93,250 3,700 $ 8,252
1 1993 $253,000 $108,250 3,200 $13,762
1992 $241,000 $108,250 $13,472
Robert E. Mutch 1994 $180,200 $ 64,000 3,500 $ 8,629
2 1993 $171,000 $ 67,000 3,000 $ 6,721
1992 $160,500 $ 67,000 $10,952
Dana M. Taylor, Jr., 1994 $162,615 $ 30,000 1,800 $ 6,666
3 1993 $154,115 $ 30,000 1,600 $ 9,234
George J. Yohrling 1994 $159,600 $ 49,300 1,710 $ 4,545
4 1993 $152,000 $ 55,000 1,350 $ 6,962
1992 $150,000 $ 55,000 $ 6,008
- --------------------------------------------------------------------------------------
Footnote on next Page
Footnote to Preceeding Page
<FN>
1 Executive V.P. of Curtiss-Wright Corp; President, Metal Improvement Company
2 Executive V.P. of Curtiss-Wright Corp.; President, Curtiss-Wright Flight
Systems, Inc. and Curtiss-Wright Flight Systems/Shelby, Inc.
3 General Counsel & Secretary
4 V.P. of Curtiss-Wright Corp.; Sr. V.P., Curtiss-Wright Flight Systems /
Shelby, Inc.
5 Includes salaries and amounts deferred under the Corporation's Savings and
Investment Plan
6 Includes portions paid in 1992, 1993 and 1994 of deferred bonus installments
awarded in 1992 provided officer satisfied certain conditions, including
continued service with the corporation. Messrs. Lasky, Nachman and Mutch
received $13,500, $8,250 and $7,000 respectively in each year. Mr Taylor
received $5,000 in 1992 and 1993 and $125 in 1994 and Mr Yohrling received
$5,000 in 1992 and 1993 and $4,250 in 1994.
7 Mr. Lasky holds 1,200 shares of restricted common stock and Mr. Nachman holds
150 shares which are valued at $43,650 and $5,456, respectively, based upon the
closing market price at December 31, 1994. These shares however do not have a
current realizable value since they were purchased subject to restrictions
against sale, transfer or pledge and are subject to rights of repurchase for
various periods of at least three years from the date of grant. Holders of
restricted stock receive dividends at the same time and at the same rate as
other common stock owners.
8 This consists of the dollar value of insurance premiums paid by the
Corporation during the covered fiscal year for term life insurance and
contributions by the Corporation which have become vested pursuant to the
Corporation's Employees' Savings Plan made to September 1, 1994 at which time
the Plan was modified and contibutions were no longer made by the Corporation.
- 7 -
OPTIONS GRANTED IN LAST FISCAL YEAR
PURSUANT TO THE CORPORATION'S AMENDED 1985 STOCK OPTION PLAN
% of Total
Option Grant
Shares Covered Granted to Exercise Date
by Options Employees Price Present
Name Granted 1 in 1994 per Share Expiration Date Value 2
- ----------- -------------- ---------- --------- ---------------- --------
D. Lasky 7,500 14.5% $36.00 Nov. 15, 2004 $83,925
G. Nachman 3,700 7.1 36.00 Nov. 15, 2004 41,403
R. Mutch 3,500 6.7 36.00 Nov. 15, 2004 39,165
D. Taylor 1,800 3.4 36.00 Nov. 15, 2004 20,142
G. Yohrling 1,710 3.3 36.00 Nov. 15, 2004 19,134
AGGREGATED OPTION/EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
(a) (b) (c) (d) (e)
No. of Securities Value of Unexercised
Underlying In-the-Money
Unexecised Options Options
at Fiscal Year-End at Fiscal Year-End 3
Shares $
Aquired Value Exercisable / Exercisable /
Name on Exercise Realized Unexercisable Unexercisable
- ----------- ----------- -------- -------------------- --------------------
D. Lasky 0 0 1,800 / 11,100 $6,408 / $39,516
G. Nachman 0 0 1,067 / 5,834 3,798 / 20,769
R. Mutch 0 0 1,000 / 5,500 3,560 / 19,580
D. Taylor 0 0 533 / 2,866 1,897 / 10,203
G. Yohrling 0 0 450 / 2,610 1,602 / 9,292
Footnotes on next Page
<FN>
1 Options were granted with an exercise price of 100% of the market price on
the date of grant. The options are exercisable to the extent of one third of
the total number of shares covered beginning on the first anniversary of the
grant, two thirds from the second anniversary and in full after the third
anniversary. The options are not transferrable other than by will or by the
laws of descent and distribution. If the optionee terminates his or her
employement (other than by reason of retirement) the option expires upon such
event.
2 These values were calculated using the Black-Scholes option pricing model.
The Black-scholes model is a complicatd mathematical formula which is widely
used and accepted for valuing traded stock options. The model is premised on
immediate exercisability and transferability of the options. This is not true
for the Corporation's options granted to executive officers and other
Employees. Therefore, the values shown are theoretical and are not intended to
reflect the actual values the recipients may eventually realize. Any ultimate
value will depend on the market value of the Corporation's stock at a future
date. In addition to the stock price at time of grant and the execicse price,
which are identical, and the ten-year term of each option, the following
assumptions were used to calculate the values shown: expected dividend yield
(2.8 precent - the current yield of the Coporation's common shares on the grant
date), expected stock price volatility (.1039 - the most recent volatility for
the month-end stock prices of the Corporation's common shares for the 12 months
of the most recently completed calendar year), and risk-free rate of return
(8.0 percent - equal to the yield on a 10 year U.S. Treasury bond on the option
grant date).
3 Calculated by determining the difference between the fair market value of
the Common Stock underlying the options on December 31, 1994 ($36.00, the
closing price on the New York Stock Exchange Composite Transactions) and the
exercise price of the option date.
- 8-
Termination of Employment
- -------------------------
Pursuant to a policy designed to retain key employees established by the
Corporation's Board of Directors in 1977, the Corporation has agreements with
Messrs. Lasky, Nachman, Mutch, Taylor and Yohrling which provide for the
payment by the Corporation of severance pay, in the case of involuntary
termination of employment other than for cause, in an amount equal to one
year's base salary at the time of termination, as well as the continued
availability of certain employee benefits, for a period of one year following
termination. The agreements provide that such severance pay and benefits also
would be made available in the case of voluntary retirement or termination of
employment which is the direct result of a change in the terms or conditions of
employment, including a reduction in compensation or in job responsibilities.
At the option of the employee, said amount of severance pay may be paid over
the two year period following such termination, in which case such employee
benefits would continue in effect for the same period. Under the agreements,
the payment of severance pay, and the availability of benefits, is contingent
upon a number of conditions, including the employee's performance of his
agreements with respect to providing consulting services and not entering into
competition with the Corporation.
Retirement Plan
- ---------------
The Corporation's Retirement Plan is a tax qualified, defined benefit,
trusteed plan. On September 1, 1994 the Corporation amended this plan so as,
among other changes, to modify the benefits payable and to make the Plan
non-contributory. At the same time, the Retirement Plans of the Corporation's
Metal Improvement Company, Inc. and Curtiss-Wright Flight Systems/Shelby Inc.
subsidiaries were merged into the Corporation's Retirement Plan.
Prior to the September 1, 1994 actions, benefits were provided in two
parts. Part one benefits were those directly related to total annual
compensation (i.e., base salary plus, beginning July 1, 1970, incentive
compensation paid to the employee in the prior calendar year) on which employee
contributions (of 3% of annual compensation in excess of $3,600) were based.
Part two benefits were those related to average annual compensation for the
highest five consecutive years in the ten years prior to retirement. The
following tables illustrate the estimated aggregate amount of annual benefits
which will be payable on retirement at age 65 to an employee in the
compensation classification specified, computed on a straight life annuity
basis and under various assumptions as to compensation and years of
contributory participation in the program, attributable to service prior to
September 1, 1994.
- 9-
Part I BENEFIT
Assumed Annual
Compensation for Period of Resultant Annual Benefit
Contributory Participation Assuming Participation for
- --------------------------- --------------------------------------------------
15 years 20 years 25 years 30 years 35 years
-------- --------- --------- -------- --------
$150,000 $22,500 $30,000 $37,500 $45,000 $52,500
200,000 30,000 40,000 50,000 60,000 70,000
250,000 37,500 50,000 62,500 75,000 87,500
300,000 45,000 60,000 75,000 90,000 105,000
350,000 52,500 70,000 87,500 105,000 122,500
400,000 60,000 80,000 100,000 120,000 140,000
450,000 67,500 90,000 112,500 135,000 157,500
500,000 75,000 100,000 125,000 150,000 175,000
550,000 82,500 110,000 137,500 165,000 192,500
600,000 90,000 120,000 150,000 180,000 210,000
650,000 97,500 130,000 162,500 195,000 227,500
Part II BENEFIT
Assumed Average Annual
Compensation Highest Resultant Annual Benefit
5 Consecutive Years in at Age 65
Last 10 Years Assuming 15 or More
Preceding Retirement Years of Service
- ----------------------- ------------------------
$150,000 $43,920
200,000 58,920
250,000 73,920
300,000 88,920
350,000 103,920
400,000 118,920
450,000 133,920
500,000 148,920
550,000 163,920
600,000 178,920
650,000 193,920
An employee whose compensation fell within the levels set forth on the
above tables would receive the appropriate amounts of both the Part I and Part
II Benefits shown above on his retirement by reason of his employment prior to
September 1, 1994.
- 10 -
The Plan as amended on September 1, 1994 provides benefits computed
prospectively under a formula which is integrated with social security and
which provides for an annual benefit at age 65 equal to 1% of the employee's
five-year final average compensation up to the social security covered
compensation (currently $25,920) times years of service, plus 1.5% of
compensation in excess of covered compensation times years of service. The
amended Plan provides that employees are to receive their benefit accrued to
September 1, 1994, adjusted for increases in compensation between that date and
retirement or other termination, together with the benefit accruing under the
new Plan. The amended Plan also provides that an employee age 55 or older on
the date of the amendment with five years of contributory service as of August
31, 1994 shall not receive a lesser benefit than he would have received under
the Plan as in effect prior to the amendment, adjusted for the value of
contributions that would have been made subsequent to September 1, 1994. The
following table illustrates the estimated aggregate amount of annual benefits
attributable to service on or after September 1, 1994 under the new formula
that will be payable on retirement at age 65 to an employee in the compensation
classification specified, under various assumptions as to compensation and
years of service.
YEARS OF SERVICE
----------------------------------------------------------
Compensation 10 15 20 25 30 35
____________ ________ ________ ________ ________ ________ ________
$150,000 $ 21,204 $ 31,806 $ 42,408 $ 53,010 $ 63,612 $ 74,214
200,000 28,704 43,056 57,408 71,760 86,112 100,464
250,000 36,204 54,306 72,408 90,510 108,612 126,714
300,000 43,704 65,556 87,408 109,260 131,112 152,964
350,000 51,204 76,806 102,408 128,010 153,612 179,214
400,000 58,704 88,056 117,408 146,760 176,112 205,464
450,000 66,204 99,306 132,408 165,510 198,612 231,714
500,000 73,704 110,556 147,408 184,260 221,112 257,964
550,000 81,204 121,806 162,408 203,010 243,612 284,214
For all above charts, the current compensation covered by the Retirement
Plan is substantially equivalent to the cash compensation reported under the
headings entitled "Salary" and "Bonus" on page 7 of this Proxy Statement for
the executive officers listed there.
In addition, a cash balance component was added to the Plan on September 1,
1994 under which during each year of participation in the Plan a participant
earns a pay-based credit equal to 3% of his or her compensation. The
employee's account balance is credited with interest annually.
- 11 -
Under the Employee Retirement Income Security Act of 1974 ("ERISA"), a
benefit is payable to the spouse of each employee commencing with his death,
unless a contrary election has been effectively made by the employee. In
practice, many employees do make such election and, as a consequence, the
amount actually received on retirement by such employees would be lower than
reflected by the above tables. The Internal Revenue Code provides that
effective January 1, 1995 the maximum allowable annual benefit under the
Retirement Plan is $120,000 (adjusted for each year of employment beyond
age 65) and the maximum allowable annual compensation that may be included in
the calculation of a benefit under the Retirement Plan is $150,000. These
limits are substantially lower than the maximum amounts shown above.
Accordingly, the Corporation maintains a Retirement Benefits Restoration Plan
(the "Restoration Plan") whereby all participants in the Retirement Plan whose
benefits or compensation under the Retirement Plan would exceed the limitations
imposed by the Internal Revenue Code will receive a supplemental retirement
benefit equal to the excess of the benefit which would have been payable to
hem under the Retirement Plan but for said limitations, over the amount payable
under the Retirement Plan, given said limitations. Such supplemental benefit
is not funded. On September 1, 1994 the Corporation also merged the Retirement
Benefits Restoration Plans of the Corporation's Metal Improvement Company and
Curtiss-Wright Flight Systems/Shelby, Inc. subsidiaries into the Curtiss-Wright
Retirement Benefits Restoration Plan. The amounts set forth in the preceding
table include amounts payable pursuant to the Restoration Plan. Benefit
amounts listed in the foregoing table are not subject to reduction for any
social security benefits to which Plan participants may be entitled. Credited
years of service under the Retirement Plan at December 31, 1994 are as follows:
David Lasky, 32 years; Gerald Nachman, 20 years; Robert E. Mutch, 16 years;
Dana M. Taylor, 21 years; and George Yohrling, 18 years.
COMPENSATION OF DIRECTORS
Currently all Directors who are not also employees of the Corporation
receive an annual director's fee of $20,000 except Mr. Brinsfield who receives
a retainer of $100,000 per annum, payable in equal quarterly installments, in
addition to the regular compensation paid non-employee Directors of the
Corporation. Each non-employee Director receives a fee of $900 for every Board
and Committee meeting attended. For each Director who is not an employee, the
Corporation provides group term life insurance coverage of $50,000.
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total stockholder
returns (assuming the reinvestment of dividends) on common stock of the
Corporation with such returns of companies listed on the Russell 2000 Index and
the S & P Aerospace/Defense Index. The graph assumes $100 invested on January
1, 1990 in stock of the Corporation and the companies on each of these indices.
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COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
===============================================
DATE Curtiss-Wright Corp. Peer Group Russell 2000
-------- -------------------- ------------ --------------
12/29/89 0.00 100.00 100.00 100.00
12/31/90 -23.14 76.86 103.65 93.55
12/31/91 3.44 103.44 125.04 136.63
12/31/92 8.35 108.35 133.42 161.81
12/31/93 30.01 130.01 182.99 192.38
12/30/94 35.19 135.19 193.62 188.87
PROPOSAL TO APPROVE THE 1995 LONG-TERM INCENTIVE PLAN
The Company's 1995 Long-Term Incentive Plan (the "Plan") was adopted by the
Board of Directors on February 7, 1995. A copy of the Plan is attached hereto
as Exhibit A, and the following summary description is qualified in its
entirety by reference to the Plan. The purposes of the Plan are to advance the
long-term interests of the Company by motivating key employees with the
opportunity to obtain an equity interest in the Company, and to attract and
retain key employees upon whose judgment the success of the Company largely
depends. Under the terms of the Plan, the Executive Compensation Committee of
the Board of Directors may grant stock options, stock appreciation rights,
limited stock appreciation rights, restricted stock awards, performance shares,
and/or performance units to key employees of the Company.
The Plan will be effective as of May 5, 1995, subject to stockholder
approval, and will remain in effect for ten years after the date of shareholder
approval. This Plan will replace both the 1985 Stock Option Plan (which
expired on February 13, 1995) and the 1989 Restricted Stock Option Plan (which
will be terminated by passage of this Plan).
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NUMBER OF SHARES
================
The Plan provides that no more than 500,000 shares of the Company's Common
Stock will be available in the aggregate for the grant of stock options, stock
appreciation rights, limited stock appreciation rights, restricted stock
awards, performance shares, and/or performance units from time to time. The
total number of shares available for grant in each year shall be one percent of
the shares outstanding at the beginning of that year, although that number may
be increased by the number of shares available but unused in prior years, and
by the number of shares covered by previously terminated or forfeited awards.
No more than 25,000 shares of Common Stock subject to the Plan may be awarded
in any year to any participant in the Plan.
These numbers are subject to adjustment to reflect certain extraordinary
distributions of cash or shares of stock and certain stock changes such as
stock dividends, stock splits and share exchanges. Shares of Common Stock
available for issuance under the Plan may be authorized but unissued treasury
shares.
ADMINISTRATION; ELIGIBILITY
===========================
The Plan will be administered by the Executive Compensation Committee of the
Board of Directors of the Company (the "Committee") composed of not less than
three directors, each of whom shall be a "disinterested person" as that term is
used and defined under Rule 16b-3 under the Securities Exchange Act of 1934, as
amended. Members of the Committee will be appointed by and will serve at the
pleasure of the Board of Directors. The initial members of Committee are
Messrs. Berner, Bull and Stewart. The selection of the participants in the
Plan and the extent of the participation of each will be determined by the
Committee. Such participants will be employees of the Company and its
subsidiaries whose performance, as determined by the Committee, can have an
effect on the growth, profitability and success of the Company.
STOCK OPTIONS
=============
The Committee may grant a participant the option to purchase shares of Common
Stock of the Company through incentive stock options qualified under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") or options
not qualified under Section 422 of the Code ("non-qualified stock options") or
a combination of both. Incentive and non-qualified stock options must be
granted at not less than 100% of the fair market value of the underlying Common
Stock on the date the option is granted, except for up to 25% of the shares
which may be granted in the form of non-qualified stock options priced at no
less than 50% of the fair market value of the shares of Common Stock on the
date of grant. Upon exercise, the option price is to be paid in full in cash,
in shares of Common Stock, in such other consideration as the Committee may
deem appropriate, or through an arrangement with a broker. Options will be
exercisable in whole or in such installments and at such times as may be
determined by the Committee, provided that no incentive stock option may be
exercisable more than ten years after the date of its grant.
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STOCK APPRECIATION RIGHTS
=========================
The Committee may grant key employees the right to receive a payment equal to
the appreciation in market value of a stated number of shares of Common Stock
from the date of the agreement granting the stock appreciation right (the "base
price") to its date of exercise. These stock appreciation rights may or may
not be granted in tandem with stock options.
Stock appreciation rights granted in tandem with stock options will be
exercisable only to the extent the related stock option is exercisable and upon
exercise of such a tandem stock appreciation right, the related stock option
shall be canceled to the extent of the number of stock appreciation rights
exercised and such shares will not thereafter be eligible for grant under the
Plan. The base price for a tandem stock appreciation right will be determined
by the Committee, but it must not be less than the exercise price of the
related stock option.
Free-standing stock appreciation rights will be exercisable at the time or
times determined by the Committee. The base price for a free-standing stock
appreciation right will be determined by the Committee, but it must not be less
than the fair market value of the Common Stock on the date of the grant of the
stock appreciation right.
LIMITED STOCK APPRECIATION RIGHTS
=================================
The Committee may grant key employees the right to receive a payment in cash
equal to the appreciation over the base price by the greater of either the
highest price of shares of Common Stock paid in connection with a change in
control or the highest price of the shares of Common Stock during the 60 days
prior to the change in control. These limited stock appreciation rights may be
granted at the time the option or stock appreciation right is granted or at any
time thereafter. Limited stock appreciation rights are exercisable in full for
a period of seven months following the date of a change in control.
If limited stock appreciation rights are exercised, any stock options and
stock appreciation rights to which they are attached can no longer be
exercised. If the stock options or stock appreciation rights are exercised or
terminated, the limited stock appreciation rights are simultaneously canceled.
RESTRICTED STOCK AWARDS
=======================
The Plan permits the Committee to award restricted stock to key employees of
the Company (without payment of consideration by the participant) with such
terms, conditions, restrictions or limitations as the Committee deems
appropriate. While the restrictions are in effect, the Committee may permit a
participant the right to vote shares and the right to receive any dividends.
Restricted stock awards may be evidenced by stock certificates, book-entry
registrations or in such other manner as the Committee determines.
PERFORMANCE SHARES AND PERFORMANCE UNITS
========================================
The Plan permits the Committee to grant performance shares and performance
units to key employees, which will entitle the participant to convert the
performance shares or performance units into shares of Common Stock or into
cash or into a combination thereof, as determined by the Committee, if
pre-determined performance targets or goals are met. Performance goals will
include one or more of the following: net earnings, operating income, cash
flow, return on equity, return on capital employed, return on assets, and total
stockholder return. The Committee will determine the length of the performance
period.
- 15 -
Award payments made in cash rather than by the issuance of shares
shall not result in additional shares being available for reissuance under the
Plan. No participant shall receive a cash award of more than $500,000 in any
plan year.
EMPLOYMENT; TRANSFERABILITY
===========================
The Committee is authorized under the Plan to adopt policies regarding the
entitlement of participants who cease to be employed by the Company because of
death, disability, resignation, termination or retirement. These policies may
vary depending upon the specific circumstances and the individual involved.
The rights and interests of a participant under the Plan, including his or
her rights under any award issued or granted under the Plan, may not be
assigned, sold, encumbered or transferred except by will or the laws of descent
and distribution in the event of the death of the participant.
AMENDMENTS
==========
The Committee may suspend, reinstate and terminate the Plan or any portion
thereof at any time. In addition, the Committee may, from time to time, amend
the Plan in any manner, but may not without stockholder approval adopt any
amendment which would (a) increase the number of shares of Common Stock which
may be issued under the Plan (except in the event of certain extraordinary
distributions of cash or shares of stock, as described in the Plan), or (b)
change the employees or class of employees eligible to participate in the Plan.
FEDERAL INCOME TAX CONSEQUENCES
===============================
The following is a summary of the Federal income tax treatment of the
incentive stock options, non-qualified stock options, stock appreciation
rights, limited stock appreciation rights, restricted stock awards, performance
shares and performance units that may be granted under the Plan based upon the
current provisions of the Code and regulations promulgated thereunder.
INCENTIVE STOCK OPTIONS. Incentive stock options under the Plan are intended
to meet the requirements of Section 422 of the Code. Under this section of the
Code, if an option holder acquires stock upon the exercise of an option, no
income will result to the option holder and the Company will be allowed no
deduction as a result of such exercise if the following conditions are met:
(a) at all times during the period beginning with the date of the grant of the
option and ending on the date three months before the date of such exercise,
the option holder is an employee of the Company or of a subsidiary; and (b) the
option holder makes no disposition of the stock within two years from the date
the option is granted nor within one year after the option is exercised. In
the event of a sale of such stock by the option holder after compliance with
these conditions, any gain realized over the price paid for the stock will
ordinarily be treated as a long-term capital gain, and any loss will ordinarily
be treated as a long-term capital loss, in the year of sale. The exercise of
an incentive stock option may result in alternative minimum tax liability to
the option holder.
If the option holder fails to comply with the employment or holding period
requirements discussed above, he will be treated as having received
compensation taxable as ordinary income or having received a capital gain in
accordance with the provisions of the Code. If the option holder is treated as
having received compensation because of this failure to comply with either
condition above, an equivalent deduction from income will be allowed to the
Company in the same year.
- 16 -
NON-QUALIFIED STOCK OPTIONS. An option holder who exercises a non-qualified
stock option will generally realize compensation taxable as ordinary income in
an amount equal to the difference between the option price and the fair market
value of the shares on the date of exercise, and the Company will be entitled
to a deduction from income in the same amount. The option holder's basis in
such shares will be the fair market value on the date exercised, and the
long-term or short-term capital gain or loss, depending on the holding period
of the shares, will be recognized in the year of sale.
STOCK APPRECIATION RIGHTS. The grant of a stock appreciation right will not
result in tax consequences to the Company or to an option holder. An option
holder who exercises a stock appreciation right will realize compensation
taxable as ordinary income in an amount equal to the cash or the fair market
value of the shares received on the date of exercise, and the Company will
be entitled to a deduction in the same amount.
If an employee allows a stock appreciation right to expire, otherwise than as
a result of exercising the related option, the Internal Revenue Service may
contend that the employee will have taxable income in the year of expiration
equal to the amount of cash or the fair market value of stock which he would
have received if he had exercised his stock appreciation right immediately
before it expired. In addition, under Treasury Regulations governing incentive
stock options, a stock appreciation right with respect to an incentive stock
option must be granted at the same time the incentive stock option is granted
in order to ensure that the incentive stock option remains qualified as such.
LIMITED STOCK APPRECIATION RIGHTS. The grant of a limited stock appreciation
right will not result in tax consequences to the Company or to a participant.
A participant who exercises a limited stock appreciation right will realize
compensation taxable as ordinary income in an amount equal to the cash or the
fair market value of the shares received on the date of exercise, and the
Company will be entitled to a deduction in the same amount. A participant who
does not exercise at the time of a change in control and allows the limited
stock appreciation rights to lapse could be taxed as though exercise had
occurred at either of those two dates.
RESTRICTED STOCK AWARDS. Restricted stock awards granted under the Plan will
constitute taxable income to the recipient, and a deductible expense to the
Company, in the year in which the restrictions lapse unless the participant
elects to recognize income in the year the award is made. Unless such an
election is made, the amount of the taxable income and corresponding deduction
will be equal to the excess of the fair market value of the stock on the date
the restrictions lapse over the amount, if any, paid for such stock. The
Company is also allowed a compensation deduction for dividends paid to
participants (provided they have not elected to recognize income at the time of
the award) on restricted stock while the restrictions remain in force.
PERFORMANCE SHARES AND PERFORMANCE UNITS. Performance shares and performance
units awarded under the Plan will not constitute a taxable event to the
recipient until such time as the recipient actually receives shares of Common
Stock or cash related to such award. The amount of taxable income will be
equal to the amount of cash received or the fair market value of stock received
at such time. The Company will be entitled to a compensation deduction in the
same year.
RECOMMENDATION OF THE BOARD OF DIRECTORS; VOTE REQUIRED
The Board of Directors recommends approval of the Plan.
- 17 -
SECURITY OWNERSHIP AND TRANSACTIONS WITH CERTAIN BENEFICIAL
OWNERS
The following information is given with respect to the persons who, to the
knowledge of the Corporation, own beneficially more than 5% of any class of the
voting securities of the Corporation outstanding as of March 10, 1995.
Amount & Nature Percent
Name & Address of of Beneficial of
Title of Class Beneficial Owner Ownership Class
- ---------------- ---------------------------- ------------------ ---------
Common Stock Unitrin, Inc.
One East Wacker Drive 2,191,200 shares 43.3%
Chicago, Illinois 60601 Indirect
Common Stock Argonaut Group, Inc.
1800 Avenue of the Stars 411,100 shares 8.1%
Los Angeles, Cal. 90067 Indirect
Common Stock GAMCO Investors, Inc. 540,720 shares 10.69%
and Direct
Gabelli Funds, Inc. 189,900 shares 3.75%
Corporate Center at Rye Direct
Rye, NY 10580
Common Stock Quest Advisory Corp. 326,400 shares 6.45%
and Direct
Quest Management Co. 21,000 shares 0.42%
1414 Ave. of the Americas Direct
New York, NY 10019
A Schedule 13D dated April 6, 1990 of Unitrin, Inc. ("Unitrin") and two of
its subsidiaries reported: (i) ownership by those subsidiaries of the
2,191,200 shares of common stock shown above; (ii) that the stock had been
acquired for investment; (iii) that each of the subsidiaries shares with
Unitrin voting and dispositive power with respect to the stock owned by that
subsidiary and (iv) that Unitrin might be deemed a beneficial owner of this
stock. A Teledyne, Inc. ("Teledyne") Schedule 13D amendment dated April 6,
1990 indicated that the Unitrin subsidiaries owning common stock of the
Corporation had been Teledyne subsidiaries but that as a result of the spin-off
by Teledyne to its stockholders of the outstanding stock of Unitrin, those
companies had ceased to be Teledyne subsidiaries, effective March 31, 1990.
The amendment also stated that Teledyne may no longer be deemed to be a
beneficial owner of the common stock of the Corporation owned by the Unitrin
subsidiaries. According to Teledyne's proxy statement dated March 18, 1994
three of the seven Directors of Unitrin are Directors of Teledyne. The
Teledyne proxy statement also indicates that Directors and executive officers
of Teledyne own beneficially in the aggregate over 20% of the outstanding
common stock of Unitrin.
A Schedule 13D dated October 9, 1986 of Argonaut Group, Inc. ("Argonaut") and
three of its subsidiaries reported: (i) ownership by those subsidiaries of the
411,100 shares of common stock shown above; (ii) that the stock had been
acquired for investment; (iii) that each of those subsidiaries shares with
Argonaut voting and dispositive power with respect to the stock owned by that
subsidiary and (iv) that Argonaut might be deemed a beneficial owner of this
stock.
- 18 -
A Teledyne Schedule 13D amendment dated October 9, 1986 also indicated
that the Argonaut subsidiaries owning common stock of the Corporation had been
Teledyne subsidiaries but that as a result of the spin-off by Teledyne to its
stockholders of the outstanding stock of Argonaut, those companies had ceased
to be Teledyne subsidiaries, effective September 30, 1986. The amendment also
stated that Teledyne may no longer be deemed to be a beneficial owner of the
common stock of the Corporation owned by the Argonaut subsidiaries. Teledyne's
proxy statement dated March 18, 1994 indicates that four of the five Argonaut
Directors are also Directors of Teledyne and that Directors and executive
officers of Teledyne beneficially own in the aggregate more than 20% of
Argonaut's outstanding common stock. Finally, the Teledyne proxy statement
states that three Directors of Unitrin are also Directors of Argonaut.
Under the circumstances outlined above, Teledyne may be deemed to be in
"control" of the Corporation (as the term control is defined in the regulations
promulgated pursuant to the Securities Exchange Act of 1934). However, to date
no attempt has been made to obtain representation on the Board of Directors of
the Corporation, to direct its management or policies or otherwise to exercise
"control" over it.
Since January 1, 1994 the Corporation and its subsidiaries have engaged in
various transactions with subsidiaries of Teledyne in the ordinary course of
business, each of which was either in an amount of less than $60,000 or was
awarded on the basis of competitive bidding.
In their Schedule 13D as amended through July 22, 1993, GAMCO Investors, Inc.
("GAMCO") and Gabelli Funds, Inc. ("GFI") have reported that (i) they are
investment advisers and beneficially own the shares set forth in the above
table but have no economic interest in the shares (such interest presumably
residing in their investment advisory clients); (ii) the shares were purchased
for investment; (iii) GAMCO exercises sole voting and dispositive power over
462,720 shares, and sole dispositive power and no voting power over the
balance, and GFI exercises sole voting and sole dispositive power over 189,900
shares; (iv) GAMCO and GFI were formerly wholly-owned subsidiaries of The
Gabelli Group, Inc. ("TGGI") which, effective August 31, 1990, merged into GFI,
and GAMCO is a wholly-owned subsidiary of GFI; (v) Mario J. Gabelli ("Gabelli")
is the majority stockholder, Chairman of the Board and Chief Executive Officer
of GFI, the sole director and Chairman and Chief Executive Officer of GAMCO,
and Chief Investment Officer of GAMCO and GFI; and (vi) Gabelli is deemed to
have beneficial ownership of the shares beneficially owned by GAMCO and GFI but
GAMCO and GFI do not admit that they constitute a "group" in respect of the
shares.
A February 10, 1995 amended Schedule 13G filed by Quest and QMC reported that
they had increased their beneficial ownership from 240,400 shares to 326,400
shares and from 18,900 shares to 21,000 shares, respectively, of common stock
of the Corporation. The amended report stated that Charles M. Royce may be
deemed to be a controlling person of Quest and QMC and as such may be deemed to
beneficially own the shares of common stock of Curtiss-Wright beneficially
owned by Quest and QMC but that he disclaimed beneficial ownership of the
shares held by Quest and QMC. The amended report further stated that these
shares had been acquired in the ordinary course of business and not for the
purposes of control of the Corporation.
- 19 -
OTHER MATTERS WHICH MAY BE PRESENTED FOR ACTION AT THE MEETING
The Board of Directors does not intend to present for action at this Annual
Meeting any matter other than those specifically set forth in the Notice of
Annual Meeting. If any other matter is properly presented for action at the
Meeting, it is the intention of persons named in the proxy to vote thereon in
accordance with their judgment pursuant to the discretionary authority
conferred by the proxy.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the next Annual Meeting
must be received by the Office of the Secretary, Curtiss-Wright Corporation,
1200 Wall Street West, Lyndhurst, New Jersey 07071 no later than November 13,
1995 for inclusion in the Corporation's Proxy Statement and form of proxy
relating to that Meeting.
PERSONS MAKING THE SOLICITATION
This solicitation of proxies is made on behalf of the Board of Directors of
the Corporation, and the cost thereof will be borne by the Corporation. The
Corporation will reimburse brokerage firms and nominees for their expenses in
forwarding proxy material to beneficial owners of the stock of the Corporation.
In addition, a number of employees, officers and directors of the Corporation
(none of whom will receive any compensation therefore in addition to his
regular compensation) may solicit proxies. The solicitation will be made by
mail and in addition, the telephone, facsimile, telegrams and personal
interviews may be utilized.
By Order of the Board of Directors
Dana M. Taylor, Jr.
Secretary
Date: March 13, 1995
- 20 -