SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the Appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ZURN INDUSTRIES, INC.
(Name Of Registrant As Specified In Its Charter)
(Name Of Person(s) Filing Proxy Statement If Other Than The Registrant)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously:
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
June 27, 1995
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders. We
look forward to meeting all who are able to attend.
Whether or not you plan to attend, please take a few minutes now to complete,
sign, and return the enclosed proxy or voting instructions to ensure that your
shares will be represented at the meeting. Proxy voting is one of your
important rights as a Zurn Shareholder and a vital link between you and your
Company.
If your stock is registered in the name of a bank, broker, or other nominee,
you still have the right to vote by sending your voting instruction form to
the record holder.
Thank you for your continuing interest in our Company.
/s/ Robert R. Womack
ROBERT R. WOMACK
Chairman and Chief Executive Officer
Please mail your proxy to:
KeyCorp Shareholder Services, Inc.
Corporate Trust Division
P.O. Box 97112
Cleveland, Ohio, U.S.A. 44197-1123
NOTICE OF ANNUAL MEETING
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Zurn Industries, Inc. will be held in
the Lecture Hall, Villa Maria Center, 2551 West 8th Street, Erie, Pennsylvania
on Friday, August 4, 1995, at 10:00 a.m., EDT, for the following purposes:
1. To elect two (2) directors for terms of three (3) years each and one (1)
director for a term of one (1) year.
2. To adopt the 1995 Directors Stock Option Plan.
3. To ratify the appointment of Ernst & Young LLP as independent auditors
for the current fiscal year.
4. To consider and act upon such other business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on June 19, 1995, as
the record date for the determination of Shareholders entitled to notice of
and to vote at this Annual Meeting.
ZURN INDUSTRIES, INC.
DENNIS HAINES
General Counsel and Secretary
Erie, Pennsylvania
June 27, 1995
EVERY SHAREHOLDER'S VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, AND RETURN YOUR PROXY.
ZURN INDUSTRIES, INC.
ONE ZURN PLACE
ERIE, PENNSYLVANIA 16514-2000
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Zurn Industries, Inc. (hereinafter the "Company") of
proxies for the Annual Meeting of Shareholders to be held Friday, August 4,
1995. You are requested to sign and return the enclosed proxy card to ensure
that your shares are voted. A Shareholder giving this proxy has the power to
revoke it at any time before it is exercised by giving notice to the Secretary
of the Company. The cost of proxy solicitation will be borne by the Company.
Once the Notice of Annual Meeting, this Proxy Statement and proxy form have
been mailed, employees of the Company may solicit proxies by personal
interview, mail, telephone, or telegraph. The Company has retained Morrow &
Co., Inc. to aid in the solicitation of certain proxies at an anticipated fee
of $5,000 plus out-of-pocket expenses. A copy of the Annual Report for the
fiscal year ended March 31, 1995, accompanies this Proxy Statement or has been
mailed to Shareholders entitled to vote at this Annual Meeting. This Proxy
Statement is first being mailed to Shareholders on or about June 27, 1995.
VOTING SECURITIES
On the record date, June 19, 1995, there were outstanding 12,340,648 shares
of Common Stock and 2,400 shares of Preferred Stock entitled to notice of and
to vote at the meeting. Each share of Common Stock and each share of Preferred
Stock is entitled to one vote and holders of Common and Preferred Stock will
vote together as a single class.
ELECTION OF DIRECTORS
Two (2) directors are to be elected for a term of three (3) years each and one
(1) director is to be elected for a term of one (1) year. It is intended that
the shares represented by the proxies will be voted in favor of nominees
proposed by the Board of Directors who are listed on the following page along
with brief statements setting forth their present principal occupations and
other information. In the event that any nominee for director shall not be a
candidate for election, votes will be cast for such substitute nominee as may
be nominated by the Board of Directors. A majority of the votes cast is
required to elect a director. Abstentions and broker nonvotes will not be
counted as votes cast.
Page 1
NOMINEES FOR ELECTION AS DIRECTORS
For a term of three years each:
EDWARD J. CAMPBELL
Former President, J I Case Co.(farm and construction machinery and
equipment) and Newport News Shipbuilding (shipbuilding and repairing).
Director of Global Marine, Inc. and Titan Wheel International.
Age 67 Board Committees - 1, 2, 3, 5 Director since August 1986
ROBERT R. WOMACK
Chairman and Chief Executive Officer, Zurn Industries, Inc. Associated
with the Company since 1994. Formerly an independent consultant, former
Vice Chairman and Chief Executive Officer, IMO Industries, Inc.
(controls, pumps and engineered power products) and former Director,
President and Chief Operating Officer, Ranco, Inc.
Age 57 Board Committees - 2, 5 Director since October 1994
For a term of one year:
DAVID W. WALLACE
Director, Chairman and Chief Executive Officer, Lone Star Industries,
Inc. (cement and concrete products) and Director and Chairman, The
Putnam Trust Company of Greenwich (commercial bank and trust company).
Former Chairman, National Securities and Research Corporation (mutual
fund investment manager) and former Chairman and Chief Executive
Officer, Todd Shipyards Corporation and Bangor Punta Corp.
Age 71 Board Committees - 2, 4, 5 Director since August 1986
DIRECTORS WHOSE TERMS OF OFFICE CONTINUE UNTIL 1996
ZOE BAIRD
Senior Vice President and General Counsel, Aetna Life and Casualty
Company (multiline insurance company). Former Counsellor and Staff
Executive, General Electric Company (aerospace, broadcasting, and
electrical equipment manufacturer). Director of Southern New England
Telecommunications Corporation and The Southern New England Telephone
Company.
Age 43 Board Committees - 1, 3, 5, 6 Director since August 1993
WILLIAM E. BUTLER
Director, Chairman and Chief Executive Officer, Eaton Corporation
(manufacturer of vehicle powertrain components and controls). Director
of Bearings Inc., Ferro Corporation, The Goodyear Tire & Rubber Company,
and Pitney-Bowes, Inc.
Age 64 Board Committees - 1,4,5 Director since November 1992
Page 2
DIRECTORS WHOSE TERMS OF OFFICE CONTINUE UNTIL 1997
WILLIAM A. FREEMAN
President, Zurn Industries, Inc. Senior Vice President-Finance and
Administration, 1986-1991. Associated with the Company since 1973.
Director of Integra Financial Corporation.
Age 52 Board Committee - 3 Director since April 1991
ROBERT D. NEARY
Former Co-Chairman, Ernst & Young LLP (international accounting and
consulting firm). Director of Cold Metal Products, Inc.
Age 61 Board Committee - 5 Director since June 1995
The Board elected Mr. Neary on June 8, 1995, to fill the vacancy in the office
of director created by the retirement of Mr. George H. Schofield.
DIRECTOR WHO IS RETIRING
ALTON S. CARTWRIGHT
Former Chairman and Chief Executive Officer, Canadian General Electric
Company. Director of Co-Steel, Inc.
Age 72 Board Committees - 3, 4, 5, 6 Director since June 1984
Mr. Cartwright will not stand for re-election in accordance with the Board's
retirement policy. He has given generously of his time and has contributed
significantly to the Company's progress.
The Board has eliminated the office of director held by Mr. Charles L.
Hedrick, who retired from the Company in April 1995. Upon Mr. Cartwright's
retirement, the office of director that he now holds will be eliminated, the
number of directors will be seven, and five of the seven directors will be
nonmanagement directors.
Board Committees
1 - Audit
2 - Executive
3 - Finance
4 - Management Development and Compensation
5 - Nominating
6 - Public Policy
Page 3
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, an Executive Committee, a
Finance Committee, a Management Development and Compensation Committee, a
Nominating Committee, and a Public Policy Committee. The membership of each
of these committees is designated in the information on Nominees and
Directors.
The Audit Committee (W.E. Butler, Chairman) considers accounting and auditing
matters concerning the Company and makes recommendations to the Board of
Directors as the Committee deems appropriate. Its responsibilities also
include recommending to the Board the engagement of independent public
accountants to audit the financial statements of the Company, reviewing the
proposed scope and results of the annual audit, and reviewing the scope,
adequacy, and results of the Company's internal audit and control procedures.
The Executive Committee (E.J. Campbell, Chairman) possesses and may exercise
all of the powers of the Board of Directors in the management of the Company's
business between meetings of the Board. In addition, specific powers and
duties may be conferred on the Committee by the Board from time to time.
The Finance Committee (E.J. Campbell, Chairman) establishes investment
policies for the Company's cash and pension funds and reviews and recommends
to the Board actions with respect to borrowing and credit agreements and the
payment of dividends.
The Management Development and Compensation Committee (D.W. Wallace, Chairman)
reviews the plans for developing successor executive officers and senior
operating management. It also approves the adoption of compensation plans and
the payments or grants made under the plans.
The Nominating Committee (D.W. Wallace, Chairman) selects and recommends to
the Board nominees for election as directors and will consider nominees
recommended by the Shareholders. Recommendations by Shareholders must be
forwarded to the Secretary of the Company at least 90 days prior to the Annual
Meeting and should identify the nominee by name and provide pertinent
information concerning the nominee's background and experience.
The Public Policy Committee (A.S. Cartwright, Chairman) reviews the Company's
policies and procedures to assure sensitivity and responsiveness to corporate
citizenship issues. These include Shareholder issues and social and public
concerns such as the environment, product and public safety, employee health
and safety, affirmative action and charitable contributions.
During the prior fiscal year, the Audit Committee and the Public Policy
Committee each met three times, the Management Development and Compensation
Committee and the Finance Committee met two times, and the Nominating
Committee met once. Six meetings of the Board of Directors were conducted.
Each Director attended more than 75% of the meetings of the Board and the
committees on which he or she served.
Page 4
SECURITY OWNERSHIP OF COMMON STOCK
Beneficial ownership of the Common Stock of the Company as of June 8, 1995, by
each party known to the directors to own more than 5%, by each director and
named executive officer, and by directors and executive officers as a group,
was:
Number of Shares
Sole Investment Shared Investment Percent of
Name and Voting Power (1) and Voting Power Class (2)
Owners of More Than 5%:
Systematic Financial
Management Incorporated (3) 1,355,563 10.5%
Mitchell Hutchins
Institutional Investors,
Inc. (4) 1,086,000 8.4%
Directors and Named
Executive Officers:
Zoe Baird 1,100
William E. Butler 1,300
Edward J. Campbell 6,234
Alton S. Cartwright 6,000
Donald F. Fessler 39,365
William A. Freeman 82,945
Charles L. Hedrick 68,427
Robert D. Neary 1,000
John E. Rutzler III 12,250
George H. Schofield 142,288 1.1%
David W. Wallace 7,000 2,000
Robert R. Womack 6,000
Directors and Executive
Officers as a group 493,611 14,760 3.9%
(1) Includes shares that may be acquired within 60 days after June 8,
1995, upon the exercise of options: D.F. Fessler - 36,250; W.A.
Freeman - 53,000; C.L. Hedrick - 49,000; J.E. Rutzler III - 12,250;
G.H. Schofield - 93,750; Z. Baird - 1,000; W.E. Butler - 1,000; each
other nonemployee director, except R.D. Neary - 5,000; all directors
and executive officers as a group - 295,250.
(2) No entry means that the named party owns less than 1% of outstanding
Common Stock and shares deemed to be outstanding in accordance with
rules of the Securities and Exchange Commission.
(3) 2 Executive Drive, Fort Lee, NJ 07024.
(4) 1285 Avenue of the Americas, New York, NY 10019.
(5) Includes 50,448 shares held by an estate in which an Executive
Officer, as Executor, has no current beneficial interest.
Page 5
SUMMARY COMPENSATION TABLE
The following sets forth the compensation of the Company's Chief Executive
Officers and the other four most highly compensated executive officers (the
"named executive officers") for the past three fiscal years ended March 31.
The Company's stock option plan is its only long-term compensation plan.
Long-Term
Compensation
Number of
Annual Securities
Compensation Underlying
Name and Position Year Salary Bonus Other Stock Options
George H. Schofield (1) 1995 $390,000
Chairman and 1994 390,000
Chief Executive Officer 1993 388,000 $260,000 25,000
Robert R. Womack (1) 1995 137,500 $74,447 (2) 75,000
Chief Executive Officer
Charles L. Hedrick (3) 1995 270,000 25,000
Vice Chairman 1994 262,750 18,000
1993 241,000 175,000 16,000
William A. Freeman 1995 260,000 25,000
President 1994 240,000 18,000
1993 218,333 175,000 16,000
Donald F. Fessler 1995 211,250 100,000 19,000
Executive Vice 1994 200,000 80,000 15,000
President 1993 185,750 160,000 14,000
John E. Rutzler III 1995 122,133 15,000 3,000
Vice President- 1994 118,467 15,000 3,000
Controller 1993 115,000 30,000 3,000
(1) R.R. Womack was appointed Chief Executive Officer effective October
17, 1994, and was elected Chairman upon the retirement of G.H.
Schofield on March 31, 1995.
(2) Income taxes attributable to the reimbursement of relocation expenses.
(3) C.L. Hedrick retired on April 30, 1995.
The named executive officers, other than J.E. Rutzler III, and one other
executive officer have entered into agreements with the Company which become
effective only in the event of a change in control of the Company as defined
in the agreements. The agreements provide, in general, that if employment is
terminated following a change in control, the Company shall pay a severance
payment equal to three times current annual salary and average incentive
compensation paid in the last three years of employment.
Page 6
STOCK OPTION GRANTS
The Company's stock option plan provides for the granting of options to officers and key employees to
purchase Common Stock at its market value on the grant date. The following sets forth the grants of stock
options to the named executive officers in the year ended March 31, 1995. As granted, the options have a
ten-year term and become exercisable on the fourth anniversary of the grant date. The potential realizable
values are based on appreciation rates prescribed by the Securities and Exchange Commission and are not
intended to forecast the possible future appreciation of the Company's shares to the approximately $30 to
$34 per share at 5% and $48 to $54 per share at 10% implicit in the amounts shown in the table at the end of
the ten-year option periods.
Potential Realizable
Individual Grants Value at Assumed
Number of Annual Rates of
Securities Percent of Stock Price
Underlying Total Options Exercise Appreciation for
Options Granted to Price Expiration Option Term
Name Granted Employees Per Share Date 5% 10%
G.H. Schofield None None None None None None
R.R. Womack 75,000 28.6% $18.625 10/16/2004 $878,487 $2,226,259
C.L. Hedrick 25,000 9.6 20.75 4/30/1997 (1) (1)
W.A. Freeman 25,000 9.6 20.75 4/17/2004 326,239 826,754
D.F. Fessler 19,000 7.2 20.75 4/17/2004 247,942 628,333
J.E. Rutzler III 3,000 1.1 20.75 4/17/2004 39,149 99,210
(1) Options of C.L. Hedrick expire prior to becoming exercisable due to his retirement.
Page 7
/TABLE
STOCK OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
The following sets forth named executive officers' stock options outstanding at March 31, 1995, none of
which were in-the-money based on the $18.375 per share market price of the Company's stock on that date. No
shares were acquired on the exercise of stock options during Fiscal 1995.
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-The-Money Options
on Value Options at March 31, 1995 at March 31, 1995
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
G.H. Schofield None None 81,250 18,750 None None
R.R. Womack None None None 75,000 None None
C.L. Hedrick None None 42,250 53,750 None None
W.A. Freeman None None 45,250 54,750 None None
D.F. Fessler None None 30,000 43,750 None None
J.E. Rutzler III None None 10,750 8,250 None None
Page 7 continued
/TABLE
PENSION PLANS
The Company's Retirement Plan for the group in which the Company's executive
officers participate provides monthly pensions for each year of credited
service at normal retirement age of 65 (62 for employees joining the plan
prior to January 1987) at the rate of .95% (1.25% before 1987 and .65% before
1967) of a participant's average base salary during the five highest calendar
years of earnings within the last ten calendar years of credited service.
From 1987 through 1990, the rate of 1.4% of a participant's average monthly
base salary that was over a covered compensation limit applied to those
employees who elected to make contributions to the plan. The Company's
Supplemental Pension Plan provides for the payment of any pension benefits
that would be paid by the Retirement Plan if not for federal laws precluding
the payment of qualified plan benefits attributable to deferred compensation
and compensation exceeding $150,000 per year.
The four most highly compensated named executive officers and one other
executive officer are participants in the Supplemental Executive Retirement
Plan. This is a noncontributory plan that provides, at normal retirement age
of 62, for monthly pensions equal to 1.8% (2% before 1991) of the
participant's average base salary and incentive compensation during the five
highest calendar years of earnings within the last ten calendar years of
employment for each year of employment by the Company, up to a maximum of 25
years. Pension benefits under the plan are either straight-life or 50% joint
and survivor (if married) annuities and are subject to reduction for (1)
benefits that would be payable under the Company's Retirement Plan assuming
participation in that plan from the first date of eligibility and (2) the
employer-provided portion of any benefit to which a participant is entitled
under any qualified pension plan maintained by any previous employer of the
participant.
The table on the next page sets forth, at the normal retirement age, the
estimated total amount of the annual straight-life annuity retirement
benefits, which are not subject to reduction for Social Security benefits,
under: (1) the Retirement Plan and Supplemental Pension Plan combined,
assuming the .95% benefit rate applies to all years of service; and (2) the
Supplemental Executive Retirement Plan, assuming the 2% benefit rate applies
to all years of service and without regard to any offsets. The compensation
covered by the plans is the average salary and bonuses, as applicable,
included in the Summary Compensation Table.
Page 8
Combined Retirement Supplemental Executive
and Supplemental Plans Retirement Plan
Benefits Benefits
Years of Service Years of Service
Remuneration 10 20 25 10 20 25
$200,000 $19,000 $ 38,000 $ 47,500 $ 40,000 $ 80,000 $100,000
400,000 38,000 76,000 95,000 80,000 160,000 200,000
600,000 57,000 114,000 142,500 120,000 240,000 300,000
800,000 76,000 152,000 190,000 160,000 320,000 400,000
Name Years of Credited Service Years of Credited Service
G.H. Schofield 10.25 (1)
R.R. Womack (2) Not Applicable
C.L. Hedrick 28.67 25
W.A. Freeman 25.33 25
D.F. Fessler 39.42 25
J.E. Rutzler III 8.25 Not Applicable
(1) G.H. Schofield's Supplemental Executive Retirement Plan pension is
entirely offset by benefits to which he is entitled under a previous
employer's plan.
(2) R.R. Womack will become an eligible participant in the Retirement and
Supplemental plans on January 1, 1996, at which time he will have 1.25
years of credited service.
DIRECTORS' COMPENSATION
Nonemployee members of the Board of Directors receive an annual fee of $21,000
and a fee of $700 for each meeting. Under the Company's Deferred Compensation
Plan for Nonemployee Directors, directors may elect to defer all or any part
of their remuneration for such period as they elect. Amounts deferred earn
interest at the prime rate.
The Company's Retirement Plans for Nonemployee Directors are noncontributory
plans. For directors first elected prior to 1986, the plan provides for an
annual pension equal to the annual director's retainer fee in effect at
December 31, 1985. For directors first elected after 1985 who have met the
service requirements, the plan provides at retirement after the age of 65 for
an annual pension equal to 50% of the annual director's retainer fee at the
date of retirement, payable for the lesser of life or the number of years of
service as a director. Pension benefits are not subject to reduction for
Social Security benefits or other offset amounts.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE REPORT
The Management Development and Compensation Committee (the "Committee") is
comprised entirely of nonemployee independent members of the Board of
Directors. The Committee reviews the plans for developing successor executive
officers and senior operating management. It also approves the adoption of
compensation plans and the payments or grants made under the plans. This
report describes the Company's compensation philosophy and programs and, for
Page 9
Fiscal 1995, the bases on which the named executive officers' compensation
were determined by the Committee.
The Company's success is largely dependent on the employees and their
performance. High performance levels are encouraged by providing challenging
careers, stimulating work environments, career development and competitive
compensation. The compensation programs are designed to attract and retain
qualified individuals and are intended to link total compensation to financial
results and enhanced Shareholder value. The Committee takes into
consideration the Company's performance over a number of years, as well as
expectations for the future, when determining the total amount and form of
compensation for any one year rather than using formula-based criteria to
measure executive officers' performance in a single year.
Executive compensation has three components: (1) base salary; (2) annual
incentive compensation generally based on the Company's earnings; and (3)
stock options which create ownership opportunity and compensation aligned with
Shareholders' interests. The Committee periodically reviews these programs to
ensure that they are competitive and meet the Committee's philosophy which
emphasizes performance related compensation over base salary. However,
because of the low level of earnings in Fiscal 1995, performance-based
compensation was limited, while more than 40% of the named executive officers'
total compensation in Fiscal 1993 was performance-based. Future appreciation
in the value of stock options will increase the performance-based percentage
to the extent the market price of the Company's Common Stock rises.
Base salary is governed by a salary administration plan having position levels
with pay ranges based on job evaluations by an employee benefits consulting
firm and numerous compensation surveys by nationally recognized firms. Within
the salary structure, executive officers are paid based on individual
capabilities and contributions. These assessments, within the framework of
total compensation, are made by the Committee with respect to the Chief
Executive Officer, and his recommendations for the other executive officers
are evaluated and approved by the Committee.
The Committee administers the Company's Incentive Compensation Plan which
provides that an amount equal to 4% of earnings before income taxes in excess
of a 10% return on the Company's net worth plus 4% of earnings before income
taxes in excess of a 20% return on the Company's net worth is available to the
Committee to make incentive compensation payments. The distributable amount
may be modified by the Committee in circumstances it views as appropriate
(e.g., when the Company incurs an unusual gain or loss). Using both financial
and nonfinancial criteria to measure performance, the Committee determines the
amount to be awarded to the Chief Executive Officer and, based on his
recommendations and their evaluation, to each other executive officer. In
Fiscal 1995, the Plan's formula precluded incentive compensation awards.
However, the Committee recognized that the low earnings level was attributable
only to certain business units. Therefore, on the recommendation of the Chief
Executive Officer, limited incentive compensation awards were made based on
individual unit financial performance and achievement of nonbudgetary
objectives.
Page 10
The Company's stock option plan adopted by the Shareholders in 1991 allows the
Committee to provide to the executive officers and other key employees
incentive rewards for their efforts if the value of the Company's Common Stock
appreciates. Option awards generally are made annually based on total
compensation considerations, including previous awards, and the Committee's
assessment of the individual's ability to enhance Shareholder value. The
options awarded in Fiscal 1995 may not be exercised until 1998 and, as Mr.
Schofield would retire before then, no stock options were granted to him. Mr.
Womack was granted stock options when he joined the Company so as to provide a
significant incentive to increase the market value of the Company's Common
Stock.
The Company's compensation plans allow executive officers and certain others
to defer until retirement 10% or more of salary and 25% to 100% of incentive
compensation awards. Amounts deferred earn interest at the prime rate, or 25%
or more of deferred incentive compensation may be accounted for as if it were
invested in shares of the Company's Common Stock.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
David W. Wallace, Chairman
William E. Butler
Alton S. Cartwright
PERFORMANCE GRAPH
The graph below compares the change in the value of the Company's Common Stock
to the S&P 500 Composite Stock Price Index and the Dow Jones Heavy
Construction Industry Group Index, a published industry index. Each of the
cumulative total returns presented assume a $100 investment on March 31, 1990,
and reinvestment of dividends.
In the printed Proxy Statement, the following data is presented
in a line graph:
Fiscal Year Ended March 31
1990 1991 1992 1993 1994 1995
Zurn Industries, Inc. $100.00 $ 94.40 $ 92.94 $ 97.73 $ 63.81 $ 52.24
S&P 500 Composite 100.00 114.41 127.05 146.39 148.55 171.68
Dow Jones Heavy Construction 100.00 115.58 95.27 101.19 126.49 109.62
Page 11
1995 DIRECTORS STOCK OPTION PLAN
The Board of Directors proposes the adoption of the 1995 Directors Stock
Option Plan presented as Exhibit A to the Proxy Statement (the "1995 Plan").
The 1995 Plan, if adopted, will succeed the 1989 Directors Stock Option Plan,
which expired in August 1994.
Under the 1995 Plan, each Director of the Company who is not employed by the
Company (a "nonmanagement director") will automatically receive annually an
option to purchase 2,000 shares of the Company's Common Stock. The 1995 Plan
is designed to enable the Company to continue to attract and retain
independent executives and professionals whose experience and proven
leadership abilities are important to the growth and development of the
Company. The 1995 Plan is also designed to more closely identify the
interests of nonmanagement directors with those of Company Shareholders. As
of June 8, 1995, the Company has six nonmanagement directors, and upon the
retirement of Mr. Cartwright in August 1995, there will be five nonmanagement
directors.
Options distributed under the 1995 Plan will be nonqualified options. The
option price per share will be equal to the fair market value of a Company
share on the distribution date. The options may be exercised on payment of
the option price in cash or Common Stock of the Company, or a combination of
both.
The term of each option will be ten years and each option will become
exercisable six months after the date of distribution. In the event an
optionee ceases to be a director for any reason other than retirement, full
and complete disability, or death, an exercisable option may be exercised
within ninety days after leaving the Board. Options may be exercised within
five years following retirement, full and complete disability, or death.
Otherwise, an option may be exercised at any time during its remaining term.
The 1995 Plan will be administered by the Board. The maximum number of shares
that may be issued under the 1995 Plan is 150,000, subject to adjustment for
stock splits and certain other changes in capitalization. In the event of a
change in control of the Company, outstanding options distributed more than
six months before the change in control may be exchanged for their value based
on the then current difference between the option price and the fair market
value. Options distributed under the 1995 Plan are nontransferable and,
during the optionee's lifetime, may be exercised only by the optionee.
If adopted, the 1995 Plan will become effective on August 4, 1995, and will
terminate on August 31, 2005.
The Board of Directors has the power to suspend, discontinue or amend the 1995
Plan without Shareholder approval; however, no amendment may change the number
of shares subject to the plan, materially modify the requirements for
participation, or materially increase the benefits accruing to participants.
The distribution of stock options will not result in taxable income for the
optionee or in a deduction for the Company. The exercise of a stock option
Page 12
will result in ordinary income for the optionee and a deduction for the
Company measured by the difference between the option price and the fair
market value of the shares received at the time that the option is exercised.
The closing price of the Company's Common Stock on the New York Stock Exchange
on June 8, 1995, was $19.125 per share.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE 1995
DIRECTORS STOCK OPTION PLAN. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL
BE SO VOTED UNLESS OTHERWISE SPECIFIED. A MAJORITY OF THE VOTES CAST IS
REQUIRED FOR ADOPTION OF THE 1995 PLAN. ABSTENTIONS AND BROKER NONVOTES WILL
NOT BE COUNTED AS VOTES CAST.
APPOINTMENT OF AUDITORS
The Board of Directors, acting upon the recommendation of its Audit Committee,
has appointed, subject to ratification by the Shareholders at the Annual
Meeting, the firm of Ernst & Young LLP as independent auditors of the Company
for the fiscal year ending March 31, 1996. This firm has acted in this
capacity since 1968. Representatives of Ernst & Young LLP will be present at
the meeting with the opportunity to make statements and be available to
respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR 1996
Proposals intended to be presented by Shareholders at the 1996 Annual Meeting
must be received for inclusion in the proxy statement for that meeting by
February 28, 1996.
OTHER MATTERS
The Board of Directors does not intend to present at the meeting any matters
other than those hereinbefore mentioned, and does not know of any other
matters to be presented. However, if any other matters properly come before
the meeting, it is the intention of the persons named in the enclosed proxy to
vote thereon in accordance with their judgment on such matters.
By Order of the Board of Directors
DENNIS HAINES
General Counsel and Secretary
Erie, Pennsylvania
June 27, 1995
Page 13
EXHIBIT A
1995 DIRECTORS STOCK OPTION PLAN
I. PURPOSE
The Zurn Industries, Inc. 1995 Directors Stock Option Plan (the "1995
Plan") is intended to advance the interests of Zurn Industries, Inc. (the
"Company") and its Shareholders by affording to directors of the Company,
upon whose judgment and experience the Company is dependent for the
successful administration of its business, the incentive advantages
inherent in stock ownership, to the end that the Company may attract and
retain them as directors.
II. OPTIONS
The Shareholders of the Company have authorized the distribution of
options with respect to no more than 150,000 shares of Common Stock of
the Company subject to adjustment as provided in Section V. Such shares
may be authorized and unissued or may have been issued and reacquired and
held in the Treasury of the Company. Any shares which have been subject
to an option which for any reason expires or is terminated unexercised
shall again be available for options.
Each nonemployee member of the Company's Board of Directors shall be a
Participant in the 1995 Plan. No person who is also an employee of the
Company or one of its subsidiaries shall be a Participant except with
respect to any options received prior to becoming such an employee.
Each Participant who was not an employee of the Company or of one of its
subsidiaries during the six-month period preceding the date options are
distributed shall receive on the first business day following the final
adjournment of the Company's Annual Meetings of Shareholders during the
term of the 1995 Plan an option to purchase 2,000 shares of the Company's
Common Stock provided there is a sufficient number of shares available;
otherwise, the number of shares shall be prorated.
The holder of an option shall, as such, have none of the rights of a
Shareholder.
III. TERMS AND CONDITIONS OF OPTIONS
Option Price
The option price shall be the closing price of the Common Stock of
the Company on The New York Stock Exchange on the day prior to the
day the option is distributed or, if no sale of the Company's Stock
shall have been made on that Exchange on that day, on the next
preceding day on which there was a sale (Fair Market Value). In no
event shall the purchase price be less than the par value of the
shares.
Payment
Payment for all shares shall be made in cash or with Common Stock of
the Company or a combination of both delivered at the time that
Page 14
an option, or any part thereof, is exercised. No shares shall be issued
until full payment therefor has been made. Common Stock of the Company
used as payment shall have been owned by the optionee not less than six
months preceding the date the option is exercised and shall be valued at
its Fair Market Value.
Term Of Option
The duration of stock options shall be ten years from the date of
distribution.
Exercise Of Option
No option shall be exercised prior to six months after the date on
which the option was distributed. While an optionee is a Director
of the Company and in the case of an optionee who ceases to be a
Director of the Company by reason of retirement, full and complete
disability, or death, an option may be exercised prior to its
expiration only by the optionee or, in the case of death, by the
executor or administrator of the optionee's estate or by a person
who acquired the right to exercise such option by bequest or
inheritance. All option privileges continue for five years after
retirement, full and complete disability, or death, but not after
the expiration of the option term. Otherwise, an exercisable option
may only be exercised within the ninety day period after an optionee
ceases to be a Director of the Company. An option shall not be
transferable by the optionee other than by will or by the laws of
descent and distribution.
IV. CHANGE IN CONTROL OF THE COMPANY
Notwithstanding any other provisions in the 1995 Plan or the terms of any
option distributed pursuant to the 1995 Plan, in the event of a change in
control, each optionee may, during the period of thirty days following
the change in control, require the Company to purchase outstanding
options distributed more than six months before the change in control
from the optionee at a purchase price equal to the excess of the market
value per share over the option price multiplied by the number of shares
subject to such options specified by the optionee for purchase in a
written notice to the Company, attention of the Secretary. For purposes
of this paragraph, market value per share shall mean the higher of (1)
the average of the highest sales price per share of the Company's Common
Stock on The New York Stock Exchange Composite Tape on each of the five
trading days immediately preceding the date the optionee so notifies the
Company and (2) the highest price, if any, offered in connection with a
change in control. The amount paid to each optionee by the Company shall
be in cash or by certified check and shall be reduced by any taxes
required to be withheld.
A Change in Control shall be deemed to occur if: (1) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended [the "Exchange Act"], other than the Company, any
trustee or other fiduciary holding securities under an employee benefit
plan of the Company, or any Company owned, directly or indirectly, by the
Shareholders of the Company in substantially the same proportions as
Page 15
their ownership of stock of the Company), becomes the "beneficial owner"
(as defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities;
(2) during any period of two consecutive years (not including any period
prior to the distribution of an option) individuals who at the beginning
of such period constitute the Board, and any new director (other than a
director designated by a person who has entered into an agreement with
the Company to effect a transaction described in clauses (1), (3) or (4)
of this paragraph) whose election by the Board or nomination for election
by the Company's Shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved cease for any reason to
constitute a majority thereof; (3) the Shareholders of the Company
approve a merger or consolidation of the Company with any other company,
other than (a) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50%
of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation or (b) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the combined
voting power of the Company's then outstanding securities; or (4) the
Shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
V. ADJUSTMENTS IN EVENT OF RECAPITALIZATION
If the Company shall issue any additional shares of Common Stock by way
of stock dividend, stock split, subdivision or reclassification of shares
of outstanding Common Stock, then in any of those events the aggregate
number of shares subject to the 1995 Plan, and the number of shares and
the option price per share of all stock subject to outstanding options
shall be adjusted in order to appropriately reflect such capitalization
changes.
Upon any merger of one or more corporations into the Company or after any
consolidation in which the Company shall be the surviving corporation,
each optionee shall, at no cost, be entitled, upon any exercise of an
option, to receive (subject to any required action by the Shareholders)
in place of the shares of the Company as to which such option shall have
been exercised, the number and class of stock or other securities to
which such option shall be entitled pursuant to the terms of the
agreement of merger or consolidation. The Board of Directors has the
right to make, in its sole discretion, any adjustment required to
equitably reflect any changes in the number or kind of shares to which
the optionee would be entitled under the terms of such agreement of
merger or consolidation had the option been exercised at the time of such
merger or consolidation.
Page 16
Anything herein contained to the contrary notwithstanding, in the event
(1) the Company shall be liquidated or dissolved, (2) the Company shall
be a party to a merger or consolidation in which the Company will not be
the surviving corporation, or (3) the Company shall sell substantially
all of its assets and business to another corporation for a consideration
consisting principally of shares or other securities of the purchasing
corporation which are to be distributed among the Shareholders of the
Company (other than dissenting Shareholders), then in any of these events
the Board of Directors, prior to the consummation of such dissolution,
merger, consolidation or sale of assets, shall make every reasonable
effort to advise the holders of outstanding options that such transaction
is imminent, and shall in the case of liquidation, and may in the case of
such merger, consolidation or sale of assets, in its sole discretion, fix
a date and notify the optionees thereof, at least thirty days prior
thereto, on or prior to which, but not thereafter, the optionees may
exercise the options in respect of any or all of the shares then
remaining unpurchased.
VI. ADMINISTRATION OF THE 1995 PLAN
The 1995 Plan shall be administered by the Board of Directors of the
Company which shall construe and interpret the 1995 Plan. The 1995 Plan
may be terminated, except with respect to outstanding options, at any
time by the Board of Directors.
The Board of Directors may amend the 1995 Plan provided that, subject to
the provisions of Section IV, no amendment shall (1) impair any option
theretofore distributed under the 1995 Plan, (2) change the option price,
or (3) without the approval of Shareholders, increase the number of
shares of Common Stock authorized to be optioned and sold or change the
number of shares which may be purchased pursuant to an option.
VII. EFFECTIVE DATE AND TERM OF 1995 PLAN
The 1995 Plan shall be effective on August 4, 1995, and shall terminate
August 31, 2005. However, termination shall not impair the validity of
outstanding options nor shall it affect the authority of the Board of
Directors to administer the 1995 Plan after August 31, 2005, or earlier
termination date, to the extent that it relates to those options which
remain outstanding beyond such date.
Page 17
ZURN INDUSTRIES, INC.
Proxy Solicited by the Board of Directors
P The undersigned appoints Robert R. Womack and Dennis Haines, or either of
them, as proxies to vote in their discretion, all shares of the undersigned
R as fully as the undersigned could do if personally present at the Annual
Meeting of Stockholders to be held at the Lecture Hall, Villa Maria Center,
O Erie, Pennsylvania, on August 4, 1995, at 10:00 a.m. and at any adjournment
thereof, on all matters coming before said meeting. Shares represented by
X this Proxy will be voted as designated.
Y Directors Recommend a Vote For: (change of address)
For a term of three years: ________________________
Edward J. Campbell and Robert R. Womack ________________________
________________________
For a term of one year: ________________________
David W. Wallace (If you have written in
the above space, please
mark the corresponding
box on the reverse side
of this card.)
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The proxies cannot
vote your shares unless you sign and return this card.
___________
[See Reverse]
[ Side ]
[___________]
_____
[ ] Please mark your SHARES IN YOUR NAME REINVESTMENT SHARES
[ X ] votes as in this
[_____] example.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of ____ ____ 2. Adoption of 1995 ____ ____ ____
Directors [ ] [ ] Directors' Stock [ ] [ ] [ ]
(see reverse) [____] [____] Option Plan [____] [____] [____]
For, except vote withheld from 3. Ratify appoint- ____ ____ ____
the following nominee(s): ment of auditors. [ ] [ ] [ ]
[____] [____] [____]
______________________________
Change ____
of [ ]
Address [____]
PLEASE DATE, SIGN, AND RETURN
IN THE ENCLOSED ENVELOPE --
NO POSTAGE NECESSARY
SIGNATURES(S) __________________________________________ DATE______________
SIGNATURES(S) __________________________________________ DATE______________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.