December 3, 1996
Dear Shareholder Member:
You are cordially invited to attend the CompanyOs annual meeting at
10:00 A.M., local time, on Wednesday, January 8, 1997 in the Auditorium
of the Rockford, Illinois, plant. Registration for the meeting will be
in the Cafeteria Atrium located at the rear of the plant. While the
formal meeting begins at 10:00 A.M., we will have an informal social
period from 9:00 A.M. to 9:45 A.M. in the Cafeteria Atrium.
Parking is available directly behind the plant. A map is enclosed with
this notice.
We will be most pleased to greet you in advance of the meeting. Please
complete and return your proxy card now whether or not you plan to
attend.
Sincerely yours,
WOODWARD GOVERNOR COMPANY
John A. Halbrook
Chairman, Board of Directors
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
January 8, 1997
The annual meeting of the shareholder members of Woodward Governor
Company, a Delaware corporation, will be held in the Company's
Auditorium, 5001 North Second Street, Rockford, Illinois, on Wednesday,
January 8, 1997, at 10:00 a.m., local time, for the following purposes:
1. To elect three directors to serve for a term of three years
each;
2. To consider and act upon a proposal to amend Article Fourth
of the Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 7,000,000 to
50,000,000, to increase the number of authorized shares of
Preferred Stock from 3,000,000 to 10,000,000 and to effect a
four-for-one stock split of the Common Stock; and
3. To transact such other business as may properly come before
the meeting or any postponement or postponement or adjournment
thereof.
Shareholders of record at the close of business on November 12, 1996
are entitled to vote at the meeting.
By Order of the Board of Directors
WOODWARD GOVERNOR COMPANY
Carol J. Manning
Corporate Secretary
December 3, 1996
YOUR VOTE IS IMPORTANT
Even if you plan to attend the meeting in person,
please date, sign and return your proxy in the
enclosed envelope. Prompt response is helpful and
your cooperation will be appreciated.
PROXY STATEMENT
FOR
ANNUAL
MEETING
OF
SHAREHOLDERS
Wednesday, January 8, 1997
TO THE SHAREHOLDER MEMBERS:
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of proxies for use at the annual meeting of
shareholder members of Woodward Governor Company (the "Company") to be
held in the Company's Auditorium, 5001 North Second Street, Rockford,
Illinois, on January 8, 1997 at 10:00 A.M., local time, and at any
adjournment thereof.
A copy of the Company's Annual Report for the fiscal year ended
September 30, 1996, including audited financial statements,
accompanies this Proxy Statement. The financial statements
contained therein are not deemed material to the exercise of prudent
judgment in regard to any matter to be acted upon at the Annual Meeting and,
therefore, such financial statements are not incorporated by reference into
this Proxy Statement. This Proxy Statement was mailed to shareholder members
on or about December 3, 1996.
A form of proxy is enclosed for use at the meeting or any postponement
or adjournment thereof. If the proxy is executed and returned, it may
nevertheless be revoked at any time, insofar as it has not been
exercised, by notice to the Secretary of the Company, by submission of
a proxy bearing a later date or by voting in person at the meeting.
Unless revoked, the shares represented by validly executed proxies will
be voted at the meeting in accordance with the directions noted
thereon. Absent such directions, the enclosed proxy gives discretionary
authority to the attorneys named therein, or their substitutes. Each
outstanding share is entitled to one vote on each matter submitted to a
vote, except that in the election of directors each shareholder is
entitled to cast as many votes as the number of shares held by such
shareholder multiplied by the number of directors to be elected and may
cast all such votes for the election of one nominee or distribute such
votes among either two or three nominees as such shareholder chooses.
Shares represented by validly executed proxies will be cumulatively
voted so as to elect all or as many as possible of such director
nominees in such order as the attorneys named therein shall determine
unless the shareholder has otherwise indicated on the proxy. For the
election of directors, the three nominees who receive the most votes
will be elected. The affirmative vote by two-thirds of the holders of
two-thirds of ofthe Common Stock is required to amend Article Fourth of
the Certificate of Incorporation to increase the number of authorized
shares from 7,000,000 to 50,000,000, to increase the number of authorized
shares of Preferred Stock from 3,000,000 to 10,000,000 and to effect the
four-for-one stock split of the Common Stock.
The shares represented by proxies will be voted as directed or, if no
specification is made, "FOR" the election of the Board's nominees to
the Board of Directors, "FOR" the amendment to the Certificate of
Incorporation and to effect the four-for-one stock split and, in the
discretion of the named proxies, on other matters properly before the
meeting.
The Board of Directors has fixed November 12, 1996 as the record date
for the determination of shareholder members entitled to vote at the
meeting. Accordingly, only shareholder members of record at the close
of business on said date will be entitled to vote at the meeting. As of
November 12, 1996, the Company had outstanding 2,887,095 shares of
Common Stock, $0.0625 par value.
Votes cast by proxy or in person at the meeting will be tabulated by
the inspectors of election appointed for the meeting and will determine
whether or not a quorum is present. The inspectors will treat
abstentions as shares that are present and entitled to vote for
purposes of determining the presence of a quorum but as unvoted for
purposes of determining the approval of any matter submitted to the
shareholders for a vote. If a broker indicates on the proxy that it
does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter.
SECURITY OWNERSHIP OF PRINCIPAL HOLDERS AND EXECUTIVE OFFICERS
The following table sets forth as of November 12, 1996 information
provided to the Company concerning ownership of the Company's
outstanding Common Stock by beneficial holders of more than 5% of the
Common Stock, certainthe named executive officers and all directors and
executive officers as a group:
Shares of Common Stock Percent of
Beneficially Owned as of Common Stock
Name November 12, 1996 Outstanding
Principal Holders
Woodward Governor Company
Profit Sharing Trust
5001 North Second Street
Rockford, Illinois 61125-7001 677,380 (1) 23.46%
AMCORE Bank N.A., Rockford
501 Seventh Street
Rockford, Illinois 61110-0037 321,709 (2) 11.14%
Mary B. Bittle
111 Emerson Street, # 643
Denver, Colorado 80218 177,497 (3) 6.15%
Quest Advisory Corp.
Quest Management Company
Charles M. Royce
1414 Avenue of the Americas
New York, New York 10019 214,621 (4) 7.43%
Non-Director Executive Officers
Stephen P. Carter 323 (5) .01%
Vice President and Treasurer
Ronald E. Fulkrod
Vice President 2,315 (5) .08%
Duane L. Miller
Vice President (6) 2,308 (5) .08%
C. Phillip Turner
Vice President 6,194 (5) .21%
All directors and executive
officers as a group - 14 persons 43,399 (5)(7) 1.50%
(1) Shares owned by the Woodward Governor Company Profit Sharing Trust
are held in its Member Investment and Stock Ownership Plan. Vanguard
Fiduciary Trust serves as Trustee of the Profit Sharing Trust. The
Woodward Stock Plan portion of the Plan holds 501,004 shares of Common
Stock. Some of the shares held in the Woodward Stock Plan portion of the
Plan are allocated to participant accounts and the rest of the
shares will be allocated to participants as the principal and
interest on the current outstanding loan to the Plan are repaid.
The Plan directs the Trustee to vote the shares allocated to
participant accounts under the Woodward Stock Plan portion of the
Plan as directed by such participants and to vote all allocated
shares for which no timely instructions are received in the same
proportion as the allocated shares for which instructions are
received. The remaining shares in the Plan are voted by the
Trustee as directed by the Plan's Administrative Committee. In the
event of a tender or exchange offer, participants have the right
individually to decide whether to tender or exchange shares in
their account. The Plan directs the Trustee to tender or exchange
all allocated shares for which no timely instructions are received
in the same proportion as the allocated shares with respect to
which it does receive directions. The remaining unallocated shares
are tendered or exchanged by the Trustee as directed by the Plan's
Administrative Committee.
(2) The Bank has advised the Company that 321,709 shares are owned by
the Bank; 16,444 are held by the Bank as custodian and 305,265
shares are held by the Bank as trustee. Included are 153,659
shares in which Mary B. Bittle has a beneficial interest.
(3) Private investor and retired Director. Includes 58,315 shares held
by the Irl C. Martin Trust inof which Mrs. Bittle is one of three
trustees and an income beneficiary with power of appointment as to
one-half of the assets, 95,344 shares held by the Dorothy C.
Martin Trust of which Mrs. Bittle is one of three trustees and
an income beneficiary with power of appointment as to one-half of
the assets, 6,583 shares held by the Billie Bittle Marital Trust
Number One of which Mrs. Bittle is the trustee and the income
beneficiary, 1,727 shares held by the Billie Bittle Family Trust
of which Mrs. Bittle is the trustee, is the income beneficiary,
and has a power of appointment, and 15,528 shares held by Mary
Barbara Bittle Trust, a revocable living trust of which Mrs.
Bittle is a co-trustee.
(4) Based on Schedule 13G as filed by Quest Advisory Corp. and Quest
Management Company with the Securities and Exchange Commission on
February 14, 1996.
(5) Includes shares (does not include fractional shares) allocated to
participant accounts of executive officers under the Woodward
Governor Company Member Investment and Stock Ownership Plan. Plan
participants direct the Trustee to vote the shares allocated to
participant accounts under the Woodward Stock Plan portion of the
Plan.
(6) Duane L. Miller resigned as Vice President of the Industrial
Controls Group on August 22, 1996 and as a member of the Company
on September 30, 1996.
(7) See table under "ELECTION OF DIRECTORS."
SESECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires directors
and certain officers and beneficial owners of the Company's Common
Stock to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of
common stock. So far as the Company is aware, based solely upon a
review of the reports known by it to have been filed with the SEC, its
compensation programs involving its equity securities, and
representations of its directors and officers, all of the required
filings for the fiscal year ended September 30, 1996 have been timely
made.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION TO THE BOARD
Three directors are to be elected at the annual meeting. Proxies will
be voted for the election of Messrs. J. Grant Beadle, Lawrence E. Gloyd
and J. Peter Jeffrey unless the shareholder signing such proxy
withholds authority to vote for one or more of these nominees in the
manner described on the proxy. Mr. Beadle, Mr. Gloyd and Mr. Jeffrey
are directors of the Company whose terms in office expire this year. If
elected, subject to provisions of the Company's Bylaws summarized under
"DIRECTORS' QUALIFICATIONS," each of the nominees will hold office for
a term ending on the date of the third annual meeting of shareholders
following the January 8, 1997 meeting. The Company does not expect that
any of the nominees will be unavailable for election, but if that
should occur, proxies may be voted for a substitute nominee or nominees
selected by the Board.
The Board of Directors recommends a vote "FOR" the election of the
Board's nominees to the Board of Directors.
INFORMATION CONCERNING NOMINEES AND INCUMBENT DIRECTORS
Name, Age, Principal Year First Shares of Common Stock Percent of
Occupation and Other Elected a Beneficially Owned as of Common Stock
Information Director November 12, 1996 (1) Outstanding
Nominees for Election/Class I/
Term Expiring 2000
J. Grant Beadle, 63, is retired
Chairman and Chief Executive
Officer of Union Special
Corporation, a manufacturer of
industrial sewing machines (2) 1988 1,489 .05%
Lawrence E. Gloyd, 64, is
Chairman and Chief Executive
Officer of CLARCOR Inc.,
Rockford, Illinois, a manufacturer
of filtration and consumer
packaging products (3) 1994 1,523 .05%
J. Peter Jeffrey, 63, is retired
Vice President of Development
at Father Flanagan's Boys' Home
in Boys Town, Nebraska 1981 1,631 .06%
Incumbent Directors/Class II/
Term Expiring 1998
Vern H. Cassens, 64, is Senior
Vice President and Chief Financial
Officer of the Company 1977 10,994 .38%
Carl J. Dargene, 66, is Chairman
of the Board of AMCORE Financial,
Inc., Rockford, Illinois (4) 1990 2,109 .07%
Thomas W. Heenan, 65, is a retired
partner in the law firm of Chapman
and Cutler, Chicago, Illinois 1986 4,709 .16%
Incumbent Directors/Class III/
Term Expiring 1999
John A. Halbrook, 51, is Chairman
and Chief Executive Officer of
the Company 1991 2,271 .08%
Mark Leum, 69, is retired Vice
Chairman of the Board of the
Company (5) 1972 4,001 .14%
Michael T. Yonker, 54, is President
and Chief Executive Officer of
Portec, Inc., which has operations
in the construction equipment,
materials handling and railroad
products industries (6) 1993 1,509 .05%
(1) Includes the maximum number of shares which might be deemed to be
beneficially owned under rules of the Securities and Exchange
Commission, including some duplication. Includes shares (does not
include fractional shares) allocated to participant accounts of
executive officers under the Woodward Governor Company Member
Investment and Stock Ownership Plan. The Plan directs the Trustee to
vote the shares allocated to participant accounts under the Woodward
Stock Plan portion of the Plan as directed by such participants and to
vote all allocated shares for which no timely instructions are received
in the same proportion as the allocated shares for which instructions are
received.
(2) Serves as a director of Portec, Inc.
(3) Serves as a director of CLARCOR Inc., AMCORE Financial, Inc.,
Thomas Industries, Inc. and G.U.D. Holdings Ltd.
(4) Serves as a director of AMCORE Financial, Inc. and CLARCOR Inc.
(5) Serves as a director of Rochelle Bancorp, Inc.
(6) Serves as a director of Portec, Inc., Crown Anderson, Inc. and
Modine Manufacturing Company, Inc.
All nominees and incumbent directors except Mr. Beadle and Mr. Jeffrey
have been engaged in their principal occupation, or in other
responsible positions with the same organizations, for at least the
last five years. Mr. Beadle retired as Chairman and Chief Executive
Officer of Union Special Corporation in May 1991, a position he had
held for seven years. Mr. Jeffrey retired as Vice Chairman and Chief
Executive Officer of AMCORE Bank N.A., Rockford in December 1991, a
position he had held for six years, and served as Vice President of
Development at Father Flanagan's Boys' Home from March 1993 until
December 1995.
The Board of Directors met seven times during the last fiscal year; all
directors attended more than 75% of the aggregate of the total meetings
of the Board of Directors and all committees of the Board on which they
served.
DIRECTORS' COMMITTEES
The Board of Directors has established the following committees, among
others: Audit Committee, Compensation Committee, Executive Committee,
Selection Committee and Stock Option Committee.
The Audit Committee consists of Mr. Jeffrey (Chairman), Mr. Beadle, Mr.
Heenan, Mr. Leum and Mr. Yonker. The Audit Committee is responsible for
recommending to the Board the engagement of independent accountants to
audit the Company's books. The Committee reviews the scope and approach
of both the annual independent audit and internal audits and reviews
the Company's system of internal accounting controls. The Committee met
three times during the year ended September 30, 1996.
The Compensation Committee consists of Mr. Dargene (Chairman), Mr.
Beadle, Mr. Gloyd, Mr. Heenan and Mr. Yonker. The Compensation
Committee is responsible for recommending to the Board the base
compensation of the Company's officers and key personnel. The Committee
evaluates the performance of and reviews the results of the annual
member evaluation for those individuals. The Committee met twice during
the year ended September 30, 1996.
The Executive Committee consists of Mr. Halbrook (Chairman), Mr.
Beadle, Mr. Dargene and Mr. Gloyd. The Executive Committee is
responsible for exercising all the powers and authority of the Board of
Directors in the management of the business when the Board is not in
session and when in the opinion of the Chairman the matter should not
be postponed until the next scheduled meeting of the Board. The
Committee may declare cash dividends. The Committee may not authorize
certain major corporate actions such as amending the Certificate of
Incorporation, amending the Bylaws, adopting an agreement of merger or
consolidation or recommending the sale, lease or exchange of
substantially all of the Company's assets. The Committee met twice
during the year ended September 30, 1996.
The Selection Committee consists of Mr. Beadle (Chairman), Mr. Dargene,
Mr. Halbrook and Mr. Heenan. The Selection Committee is responsible for
recommending to the Board qualified individuals to fill any vacancies
on the Board. The Committee did not hold any formal meetings during the
year ended September 30, 1996.
No procedures have been established for the consideration by the
Selection Committee of nominees recommended by shareholder members of
the Company.
The Stock Option Committee consists of Mr. Beadle, Mr. Gloyd and Mr.
Yonker. The Stock Option Committee administers the Company's Long-Term
Incentive Compensation Plan, determining and taking all action,
including granting of all incentives to eligible working members, in
accordance with the terms of the Plan. The Committee met three times
during the year ended September 30, 1996.
All actions by committees are reported to the Board at the next
scheduled meeting and are subject to approval and revision by the
Board. No legal rights of third parties may be affected by Board
revisions.
DIRECTORS' QUALIFICATIONS
The Company's Bylaws provide that the term of any director shall end on
the September 30th next following the director's seventieth birthday,
unless otherwise determined by the Board, and that no person may serve
as a director unless such person agrees in connection with such service
to be guided by the philosophy and concepts of human and industrial
association of the Company as expressed in its Constitution. Directors
need not be shareholders. Section 2.8 of the Company's Bylaws requires
adequate notice to the Company with respect to nominees for directors
other than those nominated by the Board. A copy of Section 2.8 is
attached to this Proxy Statement as Exhibit A.
EXECUTIVE COMPENSATION
The following table sets forth a summary for the last three fiscal
years of the cash and non-cash compensation paid to John A. Halbrook,
Chairman and Chief Executive Officer of the Company, and to each of the
other four most highly compensated executive officers of the Company
whose total compensation in the year ended September 30, 1996 exceeded
$100,000.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
Securities
Annual Compensation Underlying All Other
Name and Principal Position Year Salary (A1) Bonus (2) Options (#) Compensation (B3)
John A. Halbrook 1996 $326,129 $186,615 8,375 $33,316
Chairman and Chief 1995 342,746 28,621
Executive Officer 1994 254,833 20,401
Vern H. Cassens 1996 200,291 107,663 3,375 24,105
Senior Vice President and 1995 211,710 22,136
Chief Financial Officer 1994 185,550 17,541
C. Phillip Turner 1996 180,830 104,597 2,750 22,460
Vice President 1995 172,786 18,280
1994 144,150 13,624
Duane L. Miller 1996 149,466 34,701 2,750 260,444 (4)
Vice President 1995 147,120 14,775
1994 116,631 10,544
Stephen P. Carter 1996 111,040 29,449 750 12,179
Vice President and 1995 109,368 8,196
Treasurer 1994 82,263 6,404
Ronald E. Fulkrod 1996 109,055 25,502 750 13,441
Vice President 1995 118,047 12,206
1994 97,238 9,223
(1) No executive officer received personal benefits in excess of the
lesser of 10% of cash compensation or $50,000.
(2) Includes amounts deferred pursuant to the Unfunded Deferred
Compensation Plan No. 2.
(3) Includes Company contributions to the Member Investment and Stock
Ownership Plan, Retirement Income Plan and Unfunded Deferred
Compensation Plans.
Company contributions to the Member Investment and Stock Ownership Plan
for the account of each of the executive officers listed included the
following amounts for the years ended: September 30, 1996, Mr. Halbrook
$11,527; Mr. Cassens $11,598; Mr. Turner $11,205; Mr. Miller $6,471; Mr.
Carter $7,460; and Mr. Fulkrod 6,725; September 30, 1995, Mr. Halbrook
$9,736; Mr. Cassens $9,736; Mr. Turner $8,641; Mr. Miller $7,382; Mr.
Carter $4,094 and Mr. Fulkrod $5,770; September 30, 1994, Mr. Halbrook
$9,558; Mr. Cassens $6,551; Mr. Turner $5,088; Mr. Miller $4,197; Mr.
Carter $3,104; and Mr. Fulkrod $3,444.
Company contributions to the Retirement Income Plan for the account of
each of the executive officers listed included the following amounts for
the years ended: September 30, 1996, Mr. Halbrook $7,500; Mr. Cassens
$10,950; Mr. Turner $10,950; Mr. Miller $8,474; Mr. Carter $4,719 and
Mr. Fulkrod $6,715; September 30, 1995, Mr. Halbrook $7,350; Mr. Cassens
$10,800, Mr. Turner $9,639; Mr. Miller $7,393; Mr. Carter $4,102 and Mr.
Fulkrod $6,437; September 30, 1994, Mr. Halbrook $10,842; Mr. Cassens
$10,991; Mr. Turner $8,536; Mr. Miller $6,348; Mr. Carter $3,300; and
Mr. Fulkrod $5,779.
Company contributions to the Unfunded Deferred Compensation Plan were as
follows: September 30, 1996, Mr. Halbrook $14,289; Mr. Cassens $1,557;
and Mr. Turner $305; September 30, 1995, Mr. Halbrook $11,534 and Mr.
Cassens $1,600.
(4) Duane L. Miller resigned as Vice President of the Industrial Controls
Group on August 22, 1996 and as a member of the Company effective
September 30, 1996. In connection with his resignation, the Company
entered into a Separation Agreement with Mr. Miller. In addition to the
amounts set forth in Footnote (3), the Company agreed on a separation
payment of $215,500 and further agreed to cover ancillary benefits for an
amount not to exceed $30,000, which included Cobra medical and insurance
benefits and outplacement, counseling and legal services in addition to
regular member benefits accrued in fiscal year 1996.
The Company's pension plan was terminated as to future contributions on
September 30, 1971 with all benefits fully vested. The plan when terminated
provided for payments of $2.00 per month for each year of service beyond two
years, payable at age 65; however, accumulated reserves are sufficient to
enable the insurance contract holder to provide an additional 31% benefit to
all participants. Annual benefits will remain constant at normal retirement
and are as follows: Mr. Halbrook $0; Mr. Cassens $283, Mr. Turner $283; Mr.
Miller $63; Mr. Carter $0 and Mr. Fulkrod $283.
DIRECTOR COMPENSATION
Directors who are not worker members are paid a monthly retainer plus a
meeting fee. In calendar year 1995 the monthly retainer was $1,375 per month
plus $850 for each Board meeting attended. Effective January 1, 1996 the
monthly retainer was increased to $1,500 per month plus $900 for each Board
meeting attended. Committee members are also compensated at the rate of
$1,350 for committee chairmen and $900 for committee members for each meeting
attended. Directors are also reimbursed for travel expenses incurred in
attending meetings.
Pursuant to Outside Director Stock Purchase Agreements entered into by Mr.
Dargene, Mr. Gloyd, Mr. Heenan, Mr. Jeffrey and Mr. Yonker, the Company sold
Treasury Shares to each of the outside directors at the fair market value per
share as of the purchase date, May 16, 1995. In payment of the purchase price,
each of the participating directors signed a non-interest bearing installment
note payable in 60 monthly installments and authorized the assignment of his
monthly retainer in payment of such installments. The amount of such
indebtedness outstanding at November 12, 1996 for each of the participating
directors was $59,125. Mr. Beadle elected to purchase shares on the open
market rather than purchase the shares from the Company under an Outside
Director Stock Purchase Agreement.
CERTAIN TRANSACTIONS
See "Compensation Committee Interlocks and Insider Participation."
STOCK OPTIONS
At the Annual Meeting held January 10, 1996 the shareholders approved the
Woodward Governor Company 1996 Long-Term Incentive Compensation Plan covering
200,000 shares of the Company's Common Stock.
The following tabulation show information with respect to stock options
granted during fiscal year 1996 under the Woodward Governor Company 1996
Long-Term Incentive Compensation Plan (the "Plan") to the five individuals
named in the Summary Compensation Table:
OPTION GRANTS IN FISCAL YEAR 1996
Individual Grants
Number of % of Total Potential Realizable Value
Securities Options at Assumed Annual Rates of
Underlying Granted to Market Stock Price Appreciation
Options Employees Value For Option Term (3)
Granted (#) in Fiscal Exercise at Date Expiration
Name (1) Year Price (2) of Grant Date 0%($) 5%($) 10%($)
John A. Halbrook 8,375 34.5% $66.50 $73.75 01/10/06 $60,719 $388,441 $984,385
Vern H. Cassens 3,375 13.9 66.50 73.75 01/10/06 24,469 156,536 396,692
C. Phillip Turner 2,750 11.3 66.50 73.75 01/10/06 19,938 127,548 323,231
Duane L. Miller (4) 2,750 11.3 66.50 73.75 01/10/06 19,938 127,548 323,231
Stephen P. Carter 750 3.1 66.50 73.75 01/10/06 5,438 34,786 88,154
Ronald E. Fulkrod 750 3.1 66.50 75.75 01/10/06 5,438 34,786 88,154
(1) Consists of non-qualified options issued for a ten -year term;
options are not exercisable until attainment of performance
targets as determined by the Stock Option Committee.
(2) Closing price of Common Stock as reported on the OTC Bulletin Board as
of October 1, 1995.
(3) The potential realizable value is calculated based on the term of
the option at its time of grant (ten years). It is calculated
assuming that the stock price on the date of grant appreciates at
the indicated annual rate compounded annually for the entire term
of the option and the option is exercised and sold on the last day
of its term for the appreciated stock price. No gain to the
optionee is possible unless the stock price increases over the
option term.
(4) Duane L. Miller resigned as Vice President of the Industrial
Controls Group on August 22, 1996 and as a member of the Company
on September 30, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal
1996 by the individuals named in the Summary Compensation Table and the
value of such officers' unexercised options at September 30, 1996.
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Value Options at In-the-Money Options
on Exercise Realized Fiscal Year-End(#) at Fiscal Year-End ($)
Name (#) ($) Exercisable Unexercisable (1) Exercisable Unexercisable
John A. Halbrook 0 $0 0 8,375 0 $221,938
Vern H. Cassens 0 0 0 3,375 0 89,438
C. Phillip Turner 0 0 0 2,750 0 72,875
Duane L. Miller (2) 0 0 0 2,750 0 72,875
Stephen P. Carter 0 0 0 750 0 19,875
Ronald E. Fulkrod 0 0 0 750 0 19,875
1. Based upon achievement of goals for fiscal year 1996, on November
19, 1996, the following shares became exercisable: Mr. Halbrook
7,740; Mr. Cassens 3,120; Mr. Turner 2,495; Mr. Miller 1,760;
Mr. Carter 750 and Mr. Fulkrod 725.
2. Duane L. Miller resigned as Vice President of the Industrial
Controls Group on August 22, 1996 and as a member of the Company
on September 30, 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Prior to the beginning of fiscal year 1996, management recommended to
the Compensation Committee changes in the Company's compensation
program. The Committee adopted the program, including a recommendation
to the shareholders to adopt the 1996 Long-Term Incentive Compensation
Plan. This plan was approved by the shareholders at the annual meeting
held January 10, 1996.
The new compensation program establishes guidelines to recognize
achievement of both Company and individual performance goals as an
integral part of the compensation program for key management personnel.
A total market-based compensation for key management positions
recognizing experience and competence level is determined through the
use of salary surveys; this process establishes a target total
compensation for the individual. The actual compensation is comprised
of three components:
(1) Base compensation is set within a range of 70% to 85% of target
total cash compensation for the position, thereby putting at least
15% but not more than 30% of total compensation "at risk." The
greater the responsibility, the greater the risk assigned to a
position.
The Compensation Committee, in determining the base compensation
to be paid to each executive officer and certain key management
worker members, other than the Company's Chairman and Chief
Executive Officer, reviewed recommendations prepared by the
Company's Chairman and Chief Executive Officer. These
recommendations were based on executive compensation reviews
prepared by outside compensation consultants as well as the
executive officer's or key management worker member's individual
performance. Such performance was based on individual experience,
responsibilities, management and leadership abilities, and job
performance. The Compensation Committee recommends the base
compensation as well as individual compensation goals and
incentives for the Company's executive officers to the Board of
Directors for approval. The determination of the Chairman and
Chief Executive OfficerOs annual base compensation is specifically
discussed below.
The Compensation Committee's determination of each executive
officer's and key management worker member's base compensation for
the year ended September 30, 1996 was designed to accomplish two
goals. The first goal was to pay executive officers and key
management worker members competitively to attract, retain and
motivate a high-quality senior management team. The second goal
was to link total annual cash compensation to the individual
performance of each executive officer or key management worker
member. The Company's stock performance was not specifically
considered by the Compensation Committee in determining base
compensation for the Company's executive officers and key
management worker members.
(2) An annual incentive compensation is paid based on direct
individual performance, achievement of short-term objectives and
the overall performance of the Company or individual groups or
operating units, as appropriate for the position.
The Compensation Committee consults with the Chairman and Chief
Executive Officer regarding eligibility of executive officers and
key management worker members of the Company for participation in
this program, determining the appropriate performance goals and
confirming attainment or lack thereof.
If certain minimum target results are not achieved, no annual
incentive will be paid. If targeted levels are attained, annual
incentive levels range from 18% of base salary to a practical
maximum of approximately 43% of base salary of participants.
However, given outstanding performance, there is no formal
maximum.
(3) Stock Options may be awarded by the Stock Option Committee under
the Long-Term Incentive Compensation Plan based on the performance
of the Company in the last fiscal year and the participant's
contributions to that performance, and his or her present and
potential contributions to the performance of the Company.
The purpose of the Plan is to further the long-term growth and
profitability of the Company by offering long-term incentives to
certain key management worker members of the Company and to
provide such participating worker members with an equity position
in the Company to further align their interests with those of the
shareholders of the Company.
Under the terms of the Plan, the Stock Option Committee of the
Board of Directors is authorized to grant (i) incentive stock
options under the Internal Revenue Code of 1986 and (ii)
nonqualified stock options to key management worker members of the
Company, its subsidiaries or affiliates who are designated by the
Committee. In fiscal year 1996 there were twelve worker members
eligible to participate in the Plan.
For fiscal year 1996, options became exercisable only if certain
performance goals were attained.
Performance goals may be modified from time to time retroactively
or otherwise as the Committee deems appropriate. Such criteria
may include performance measurements such as: (1) shareholder
value created, (2) business group profitability, (3) cash flow
return on invested assets and (4) personal performance goals. The
weighting of the goals vary according to responsibility. Payout
of incentive compensation is set at different levels dependent on
achievement of (1) a threshold amount, (2) a target amount and (3)
an amount considered outstanding.
The option price of shares granted under the plan shall be
determined by the Committee at the date of the grant. This option
price will not be less than 100% of the fair market value of the
common stock on the October 1 coincident with or immediately
preceding the date the option is granted. In the case of
incentive stock options or options for which the Company desires
to preserve the Company's tax deduction under Section 162(m) of
the Code for compensation paid, the option price will not be less
than the fair market value of the Company's Common Stock on the
date of grant.
COMPENSATION OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
The compensation of John A. Halbrook, Chairman and Chief Executive
Officer of the Company, was determined in the same manner as for all
other executive officers. Mr. Halbrook's base salary in 1996 was
$303,394, a rate that put 30% of his target compensation at risk.
Of the total incentive compensation available to Mr. Halbrook, 67% was
based on total Company performance as measured by shareholder value
created. Shareholder value created was measured by combined increased
earnings, improvement in utilization of receivables, inventory and
investment in capital assets; 33% was based on attainment of individual
objectives, some of which were quantitative in nature. Mr. Halbrook's
incentive compensation for 1996 was $186,615.
Options granted under the 1996 Long Term-Incentive Compensation Plan
confer the right to purchase 7,740 shares of Woodward Governor Company
Common Stock. This award was based in part on the same measures as the
incentive compensation.
Compensation Committee: Carl J. Dargene, Chairman
J. Grant Beadle
Lawrence E. Gloyd
Thomas W. Heenan
Michael T. Yonker
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Dargene, Chairman of the Board of AMCORE Financial, Inc., is also
Vice Chairman of its wholly-owned subsidiary, AMCORE Trust Company, and
Chairman of its wholly-owned subsidiary, AMCORE Bank N.A., Rockford. In
the ordinary course of its business the Company maintains a normal
commercial banking relationship with AMCORE Bank N.A., Rockford. The
maximum amount of borrowings outstanding at any time during the year ended
September 30, 1996 aggregated $5,000,000. Interest has been charged at
the bank's prime rate. Mr. Dargene serves as a member of the Company's
Board and chairman of the Company's Compensation Committee; he also
serves as a director of and a member of the Compensation Committee of
CLARCOR, Inc. whose Chairman and Chief Executive Officer, Mr. Gloyd,
serves as a member of the Company's Board and as a member of the
Company's Compensation Committee. Mr. Gloyd, Chairman and Chief
Executive Officer of CLARCOR, Inc., serves as a member of the Company's
Board and as a member of the Company's Compensation Committee and also
serves as a member of the Compensation Committee of AMCORE Financial,
Inc. Mr. Heenan was, until January 1996, a partner of the law firm of
Chapman and Cutler, which firm the Company retained as Corporate
Counsel during the year ended September 30, 1996, and serves as a
member of the Company's Compensation Committee. Mr. Halbrook, Chairman
and Chief Executive Officer of the Company, serves as a member of the
Board and serves as a member of the Board of Directors of AMCORE Trust
Company.
COMMON STOCK PERFORMANCE
The following Performance Graph compares the Company's cumulative total
return on its Common Stock for a five year period (September 30, 1992
to September 30, 1996) with the cumulative total return of the S&P
Composite 500 Stock Index and the S&P Machinery Diversified Index.
(A DESCRIPTION OF THE GRAPHICAL MATERIAL APPEARS ON PAGE 33.)
TOTAL RETURN TO SHAREHOLDERS
Assumes that the value of the investment in the CompanyOs Common Stock
and each index was $100 on September 30, 1992 and that all dividends
were reinvested.
PROPOSAL TO AMEND ARTICLE FOURTH OF
THE CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED SHARES OF COMMON STOCK TO 50,000,000,
TO INCREASE THE AUTHORIZED SHARES OF PREFERRED STOCK TO 10,000,000
AND TO EFFECT A FOUR-FOR-ONE STOCK SPLIT OF THE COMMON STOCK
The Board of Directors recommends approval of an amendment to Article
Fourth of the Company's Certificate of Incorporation (the
"Certificate") to increase the number of authorized shares of Common
Stock from 7,000,000 to 50,000,000, to increase the authorized shares of
Preferred Stock from 3,000,000 to 10,000,000 and to effect a four-for-one
stock split by reclassifying and changing each share of the Company's Common
Stock outstanding or held in the treasury of the Company on the
effective date of the amendment into four shares of Common Stock. The
proposed amendment to the Certificate as adopted by the Board of
Directors on November 19, 1996 is set forth in Exhibit B to the Proxy
Statement.
If the proposal is adopted by the shareholders, it is expected that the
amendment and stock split will become effective as of the close of
business on January 23, 1997, and on or about February 7, 1997 there
will be mailed to each shareholder of record as of the close of
business on January 23, 1997 three additional shares of Common Stock
for each share held. All new certificates issued will have a par value
of $0.00875 per share. Each certificate currently outstanding with a
par value of $0.0625 per share shall thereafter be deemed to represent
the same number of shares with a par value of $0.00875 each. It will
not be necessary for shareholders to surrender outstanding stock
certificates.
The Company is advised by counsel that the change in par value and the
receipt of additional shares to be distributed pursuant to the split
will not be subject to federal income tax under existing laws. The
split will require an allocation of the tax basis of each share
among the four shares held as a result of the split, and the
holding period for the new shares will include the holding period of
the share with respect to which it was issued.
The purpose of the proposed stock split is to lower the per share
market price of the Company's outstanding Common Stock. As of November
12, 1996, 3,040,000 shares of Common Stock, $0.0625 par value, were
issued, of which 2,887,095 shares were outstanding and 152,905 shares
were held by the Company as treasury shares. Assuming the increase in
the number of authorized shares of Common Stock and the stock split
were effective on such date, 11,548,380 shares would be outstanding,
611,620 shares would be held by the Company as treasury shares and
37,840,000 shares would be authorized and available for issuance by the
Company.
Certain Anti-Takeover Effects of the Proposed Amendment
Under certain circumstances the Board of Directors could create
impediments to, or delay persons seeking to effect, a takeover or
transfer of control of the Company by causing such additional
authorized shares to be issued to a holder or holders who might side
with the Board in opposing a takeover bid that the Board of Directors
determines is not in the best interests of the Company and its
shareholders. Such an issuance could diminish the voting power of
existing shareholders who favor a change in control and the ability to
issue the shares could discourage an attempt to acquire control of the
Company. Management does not currently intend to propose additional
anti-takeover measures in the foreseeable future.
The Company currently has 3,000,000 shares of Preferred Stock
authorized for issuance. If the proposal is adopted by the shareholders,
the number of shares of Preferred Stock authorized for issuance will
increase to 10,000,000. None of such shares is currently issued and
outstanding. Such stock, sometimes referred to as "blank-check"
preferred stock, can be issued by the Board of Directors at its
discretion, fixing the voting and other rights when issued. The
Preferred Stock may be issued in one or more series. The authority of
the Board with respect to each series includes, but is not limited to,
determination of the following: (i) the designation and number of
shares constituting each series; (ii) the dividend rate payable on each
series and whether such dividends are cumulative; (iii) the voting
rights, if any, with respect to each series, whether less than, equal
to, or greater than one vote per share; (iv) the redemption rights, if
any, with respect to each series; (v) the creation, if any, of a
sinking fund with respect to each series; (vi) the conversion rights,
if any with respect to each series; (vii) the preference rights upon
liquidation and dissolution; (viii) the relative priority of the shares
of each series to shares of other classes or series with respect to
dividends or upon the dissolution of or the distribution of assets of
the Company; and (ix) any other rights and qualifications, preferences
and limitations or restrictions on the shares of each series. The
provisions of a particular series of the Preferred Stock, as designated
by the Board of Directors, could have an adverse effect on the earnings
of the Company available for dividends on Common Stock and for other
corporate purposes and on amounts distributable to the holders of
Common Stock if the Company were liquidated. Such provisions may
include restrictions on the ability of the Company to repurchase shares
of Common Stock or to purchase or redeem shares of particular series of
the Preferred Stock if there exists an arrearage in dividends or
sinking fund installments with respect to any other series of Preferred
Stock.
Under certain circumstances, the Company could use additional shares of
Common Stock or the Preferred Stock to create voting impediments or to
frustrate persons seeking to effect a takeover or otherwise gain
control of the Company by increasing the number of shares necessary to
gain control of the Company, or the Company could privately place such
shares with purchasers who might side with the Board in opposing a
hostile takeover bid. The holders of newly issued Preferred Stock may
also be entitled to vote as a separate class on a transaction proposed
by a third party involving the Company, such as a merger, consolidation
or similar transaction and may be entitled to more than one vote per
share held. The Company is not aware of any pending or threatened
efforts to obtain control of the Company and at the date of this proxy
statement, the Company has no agreements, commitments or plans with
respect to the issuances of additional shares of Common Stock or
Preferred Stock, except in connection with the four-for-one split of
the Common Stock and the worker member benefit plans.
Pursuant to the Woodward Governor Company Rights Plan Agreement (the
"Rights Agreement"), effective January 17, 1996, the Company's Board of
Directors issued under the Rights Agreement, as a dividend to the
holders of Common Stock, rights to purchase Preferred Stock. The
Rights Agreement is designed to protect shareholders against the
adverse consequences of partial takeovers and other abusive takeover
tactics which the Board of Directors believes are not in the best
interests of the Company's shareholders by providing for certain rights
to acquire the Preferred Stock of the Company or of an acquiring entity
upon the occurrence of certain events. These rights, should they
become exercisable, could possibly deter a potential takeover of the
Company. A copy of the Rights Agreement was filed with the Securities
and Exchange Commission on January 19, 1996, as an exhibit to the
Company's Registration Statement on Form 8-A.
Other actions taken by the Company in connection with its governing
documents which might be deemed to be "anti-takeover" provisions
include paragraph A of Article Seventh of the Certificate which charges
the Board in performing its duties to be guided by the fundamental
precepts established in the Constitution of the Company and under which
the Board of Directors has the power to establish the rights,
qualifications, powers, duties, rules and procedures governing the
Board of Directors and affecting the power of the directors to manage
the business and affairs of the Company and Section 3.4 of Article 3 of
the By-laws of the Company which requires that no person may serve as a
director of the Company unless he or she agrees to be guided by the
Company's Constitution. These provisions are in keeping with the
distinct business philosophy which the Board believes has long been a
significant factor in the Company's development and in the conduct of
its affairs. This philosophy expressed in the Company's Constitution
is based on the concept of a simulated internal partnership between the
shareholder members and worker members of the Company whereby the
capital contributions of shareholder members are combined with the
talent, energy, loyalty and will-to-do of the worker members. The
Board considers that the Company's philosophy directly promotes an
efficient, harmonious and highly-productive work environment. The
Board believes that the Company's philosophy, which stresses the mutual
interests and dependence of shareholder and worker members, is in the
best long-term interest of both classes of partners as well as
customers, suppliers and the communities in which the Company operates.
The Board believes that it has a duty to oppose any attempted takeover
of the Company which might result in the eventual renunciation of this
philosophy. The Board is of the opinion that the anti-takeover
provisions adopted to date are consistent with the Company's philosophy
and will enhance the ability of the Company to sustain it.
Other provisions which may be deemed "anti-takeover" in nature are (i)
paragraph B of Article Seventh which prohibits amendment to the By-laws
by shareholders except by the affirmative vote of the holders of two-
thirds of the outstanding shares of Common Stock and which prohibits
the adoption by shareholders of a By-law which impairs or impedes the
power of the Board of Directors under paragraph A of Article Seventh,
(ii) paragraph C of Article Seventh which divides the Board of
Directors into three classes that serve staggered three-year terms,
allows solely incumbent directors to fill any vacancies on the Board of
Directors and requires the affirmative vote of the holders of two-
thirds of the outstanding shares of Common Stock of the Company to
remove a director for cause, (iii) paragraph D of Article Seventh which
requires that all action by shareholders must be taken at a meeting,
and that no shareholder action may be taken by written consent, (iv)
paragraph E of Article Seventh which requires that special meetings of
shareholders may be called by the Board of Directors or by its Chairman
and shall be called upon a written request therefor signed by the
holders of two-thirds of the outstanding shares of Common Stock, (v)
Article Fifth of the Certificate which provides that amendments to the
Certificate, mergers and sales of assets require a two-thirds vote,
(vi) amendments to the Company's worker member benefit plans which
provide for a referendum of the worker member participants before any
substantial disposition of Company stock may be made, (vii) amendments
to the Company's worker member benefit plans which provide that in the
event of a tender or exchange offer, each participant has the right to
individually decide whether to tender or exchange company stock in his
or her account, (viii) Article Sixth of the Certificate which provides
for cumulative voting in the election of directors and (ix) the
provisions of the By-laws of the Company requiring that nominations for
election to the Board of Directors by shareholders must be made by
written notice given the Secretary generally not less than 20 days nor
more than 50 days prior to any meeting of shareholders called for the
election of directors. While management has no present intention to
propose other amendments regarding takeovers in future proxy
solicitations, it may deem it advisable to recommend such action in the
future.
In general, the overall effect of the proposed amendment, coupled with
existing actions previously taken by the Company in connection with its
governing documents which might be deemed to be "anti-takeover"
provisions, may be to enhance the continuity and stability of
management by making it more difficult to remove or change incumbent
members of the Board of Directors and by making the Company a less
attractive target for an unfriendly acquisition by an outsider.
The Board of Directors unanimously recommends a vote "FOR" this
proposal. An affirmative vote of the holders of two-thirds of the
outstanding stock is necessary for the adoption thereof.
Upon approval of the four-for-one split of the Company's Common Stock
by the shareholders, the Board of Directors has authorized and directed
the appropriate officers of the Corporation to take all actions
necessary and advisable to apply for the inclusion of the Company's
Common Stock in the Nasdaq National Market System operated by the
National Association of Securities Dealers, Inc.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand L.L.P. have served as the independent public
accountants of the Company for the year ended September 30, 1996, and
it is the present intention of the Board to reappoint them for the
fiscal year ending September 30, 1997. A representative from Coopers &
Lybrand L.L.P. is expected to be present at the Annual Meeting and will be
available to answer appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of shareholders to be included in the Company's proxy
statement for the 1998 annual meeting must be received by the Company
no later than August 6, 1997.
OTHER MATTERS
The cost of solicitation of proxies including preparing, assembling and
mailing this proxy statement and accompanying papers will be borne by
the Company. Solicitation will be made by mail but in some cases may
also be made by letter, telephone, facsimile or personal call of
officers, directors or members of the Company who will not be specially
compensated for such solicitation. The Company has employed Morrow &
Company to solicit proxies for the annual meeting from brokers, bank
nominees, other institutional holders and certain individual
shareholders. The Company has agreed to pay $4,000, plus the
out-of-pocket expenses of Morrow & Company for these services. The
Company will also pay the regular charge of brokers and other nominees
who hold shares of record for forwarding proxy material to the
beneficial owners of such shares.
The Board of Directors knows of no other business to be presented at
the annual meeting. Should any other business properly come before the
meeting, however, action may be taken thereon pursuant to the enclosed
form of proxy, which confers discretionary authority upon the attorneys
named therein, or their substitutes.
By Order of the Board of Directors
WOODWARD GOVERNOR COMPANY
Carol J. Manning
Corporate Secretary
December 3, 1996
EXHIBIT A
SECTION 2.8 OF THE BYLAWS REQUIRING WRITTEN NOTICE
SECTION 2.8 NOMINATIONS FOR DIRECTOR. Nominations for election to the
Board of Directors may be made by the Board of Directors or by any
stockholder entitled to vote for the election of directors. Nominations
other than those made by the Board of Directors shall be made by notice
in writing, delivered or mailed by registered or certified United
States mail, return receipt requested, postage prepaid, to the
Secretary of the Corporation, not less than 20 days nor more than 50
days prior to any meeting of stockholders called for the election of
directors; provided, however, if less than 21 days' notice of the
meeting is given to stockholders, such written notice shall be
delivered or mailed, as prescribed, not later than the close of
business on the seventh day following the day on which the notice of
meeting was mailed to the stockholders. Each such written notice shall
contain the following information:
(a) The name and residence address of the stockholder making the
nomination;
(b) Such information regarding each nominee as would have been
required to be included in a proxy statement filed pursuant
to the proxy rules of the Securities and Exchange Commission
had the nominee been nominated by the Board of Directors; and
(c) The signed consent of each nominee to serve as a member of
the Board of Directors if elected, and the signed agreement
of each nominee that if elected he or she will be guided by
the philosophy and concepts of human and industrial
association of the Corporation as expressed in its
Constitution in connection with the nominee's service as a
member of the Board of Directors.
Unless otherwise determined by the Chairman of the Board of Directors
or by a majority of the directors then in office, any nomination which
is not made in accordance with the foregoing procedure shall be
defective, and any votes which may be cast for the defective nominee
shall be disregarded.
EXHIBIT B
PROPOSED AMENDMENT TO ARTICLE FOURTH OF
THE CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED SHARES OF COMMON STOCK TO 50,000,000,
TO INCREASE THE AUTHORIZED SHARES OF PREFERRED STOCK TO 10,000,000
AND TO EFFECT A FOUR-FOR-ONE STOCK SPLIT OF THE COMMON STOCK
AS ADOPTED BY THE BOARD OF DIRECTORS ON NOVEMBER 19, 1996
RESOLVED, that it is hereby declared advisable by the Board of
Directors of Woodward Governor Company, a Delaware corporation (the
"Corporation"), that Article FOURTH of the Certificate of Incorporation
of the Corporation be amended to read as follows:
"FOURTH. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 60,000,000, of which
50,000,000 shares shall be Common Stock with a par value of $0.00875
per share, and 10,000,000 shares shall be Preferred Stock with a par
value of $0.003 per share.
"The Preferred Stock may be issued from time to time in one or
more series, with each such series to consist of such number of shares
and to have such voting powers (whether less than, equal to or greater
than one vote per share), or limited voting powers or no voting powers,
and such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as shall be stated in the resolution or
resolutions providing for the issue of such series adopted by the Board
of Directors, and the Board of Directors is expressly vested with
authority to the full extent now or hereafter provided by law, to adopt
any such resolution or resolutions. The number of authorized shares of
Preferred Stock may be increased or decreased (but not below the number
of shares then outstanding) by the affirmative vote of the holders of
two-thirds of the outstanding shares of Common Stock without a vote of
the holders of the shares of Preferred Stock, or of any series thereof,
unless a vote of any such holders is required pursuant to the
resolution or resolutions of the Board of Directors providing for the
issue of the series of Preferred Stock."
RESOLVED FURTHER, that upon this amendment to the Certificate of
Incorporation of the Corporation becoming effective pursuant to the
provisions of the General Corporation Law of the State of Delaware,
(a) The total number of shares of Common Stock which the Corporation
is authorized to issue shall be changed from 7,000,000 shares of Common
Stock with a par value of $0.0625 per share to 50,000,000 shares of
Common Stock with a par value of $0.00875 per share;
(b) Each issued share of Common Stock of the Corporation with a par
value of $0.0625 per share (including shares held in the treasury of
the Corporation) shall be changed into four issued shares of Common
Stock of the Corporation with a par value of $0.00875 per share
authorized by this amendment;
(c) Each certificate representing issued shares of Common Stock of the
Corporation with a par value of $0.0625 per share shall be deemed to
represent the same number of shares of Common Stock of the Corporation
with a par value of $0.00875 per share authorized by this amendment;
and
(d) Each holder of record of a certificate representing shares of
Common Stock of the Corporation with a par value of $0.0625 per share
shall be entitled to receive as soon as practicable without surrender
of such certificate a certificate representing three additional shares
of Common Stock of the Corporation of the par value of $0.00875 per
share authorized by this amendment for each share of Common Stock
represented by the certificate of such holder immediately prior to this
amendment becoming effective.
RESOLVED FURTHER, that the above and foregoing proposed amendment to
the Certificate of Incorporation of the Corporation shall not result in
any change in the capital of the Corporation as determined pursuant to
the General Corporation Law of the State of Delaware.
RESOLVED FURTHER, that the above and foregoing proposed amendment to
the Certificate of Incorporation of the Corporation shall not result in
any change in the paid-in capital of the Corporation as determined
pursuant to the Illinois Business Corporation Act.
RESOLVED FURTHER, that the above and foregoing proposed amendment to
the Certificate of Incorporation of the Corporation be considered by
the stockholders of the Corporation at the next annual meeting of the
stockholders of the Corporation to be held on Wednesday, January 8,
1997.
RESOLVED FURTHER, that if the above and foregoing proposed amendment is
adopted by the stockholders of the Corporation, the officers of the
Corporation are hereby directed to file with the Secretary of State of
Delaware a Certificate of Amendment to the Certificate of Incorporation
of the Corporation setting forth the amendment which Certificate of
Amendment shall provide that it is to become effective at the close of
business on January 23, 1997, Eastern Standard Time.
WOODWARD GOVERNOR COMPANY
Proxy for Annual Meeting of the Shareholders - January 8, 1997
Solicited by the Board of Directors
The undersigned shareholder member of Woodward Governor Company, a
Delaware corporation, hereby appoints and constitutes J. Grant Beadle,
Vern H. Cassens and John A. Halbrook, and each of them, the true and
lawful attorneys and proxies of the undersigned with full power of
substitution, for and in the name of the undersigned, to vote as
designated below, including the right to cumulate votes in the election
of directors for such of the nominees as the attorneys and proxies in
their discretion may deem appropriate, all the shares of stock of the
corporation standing in the name of the undersigned on November 12,
1996, at the annual meeting of the shareholders of the corporation to
be held at Rockford, Illinois, on January 8, 1997 at 10:00 A.M., local
time, with authority to vote at said meeting or at any postponement or
adjournment thereof.
1. ELECTION OF DIRECTORS:
__ FOR all nominees listed below __ WITHHOLD AUTHORITY to vote
(except as marked to the
contrary below) for all nominees listed
below
J. Grant Beadle, Lawrence E. Gloyd and J. Peter Jeffrey
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
___________________________________________
2. PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED SHARES OF COMMON STOCK FROM 7,000,000 TO 50,000,000, TO
INCREASE THE AUTHORIZED SHARES OF PREFERRED STOCK FROM 3,000,000 TO
10,000,000 AND TO EFFECT A FOUR-FOR-ONE SPLIT OF THE COMMON STOCK:
__ FOR __ AGAINST __ ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
A majority of said attorneys or proxies who are present at the meeting
shall have, and may exercise, all of the powers of all said attorneys
or proxies hereunder.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED AS DIRECTED OR, IF NO SPECIFICATION IS MADE, "FOR" THE ELECTION
OF THE BOARD'S NOMINEES TO THE BOARD OF DIRECTORS, "FOR" THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION AND IN THE DISCRETION OF
THE NAMED PROXIES ON OTHER MATTERS PROPERLY BEFORE THE MEETING.
(continued, and to be signed, on other side)
_________________________
Dated ____________________________
Signature
____________________________
Print Name of Shareholder
____________________________
Signature
___________________________
Print Name of Shareholder
Please sign exactly as name appears at the left. When shares are held
by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign
in partnership name by authorized person.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY
December 4, 1996
Dear Member:
The Woodward Governor Company Annual Meeting of Shareholders will be
held January 8, 1997. Enclosed is a form of proxy to vote the shares of
Woodward Governor Company common stock allocated in your name in the
Woodward Stock Plan.
Please note that the number of shares indicated on this proxy card may
differ slightly from the number appearing on your last statement.
Vanguard's quarterly account valuation includes the small cash balance
in each account. For proxy purposes, however, the actual number of
shares credited to each member's account, net of the cash position,
must be determined.
In order to allow adequate time for Vanguard to calculate the total
Plan shares voted and the remaining balance that it, as Trustee of the
Deferred Profit Sharing Plan, must vote, a cutoff date has been
established for receipt of all Plan proxies. To be included in the
tabulation, all Plan proxies must be received by Wachovia Bank of North
Carolina no later than Friday, January 3, 1997.
As stated in the accompanying Proxy Statement, the Plan directs the
Trustee to vote all allocated shares for which no timely instructions
are received in the same proportion as the allocated shares for which
it does receive instructions. In order to insure that your shares are
voted in the manner in which you choose, please sign, date and return
your proxy now. We urge you to exercise your right and opportunity as
a shareholder to vote your proxy.
Thank you for your attention.
Sincerely yours,
WOODWARD GOVERNOR COMPANY
Carol J. Manning
Corporate Secretary
Enclosures
TOTAL RETURN TO SHAREHOLDERS
Starting
Basis
Description 1991 1992 1993 1994 1995 1996
Woodward Governor Company (%) -28.63 -5.09 27.94 -14.57 43.07
Woodward Governor Company ($) $100.00 $ 71.37 $ 67.73 $ 86.66 $ 74.03 $105.92
S&P 500 (%) 11.05 13.00 3.69 29.74 20.33
S&P 500 ($) $100.00 $111.05 $125.49 $130.11 $168.82 $203.14
S&P Machinery - Diversified (%) 4.68 38.12 8.92 10.69 30.47
S&P Machinery - Diversified ($) $100.00 $104.68 $144.59 $157.49 $174.32 $227.43
Assumes that the value of the investment in the Company's Common Stock and
each index was $100 on September 30, 1992 and that all dividends were
reinvested.