SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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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] No fee required
[ ] 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.:
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4) Date Filed:
(ZURN LOGO)
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
June 27, 1997
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 Zurn Industries.
Very truly yours,
/s/ Robert R. Womack
ROBERT R. WOMACK
Chairman and Chief Executive Officer
Please mail your proxy to:
National City Bank
Corporate Trust Operations
P.O. Box 92301
Cleveland, Ohio, U.S.A. 44101-8636
(ZURN LOGO)
NOTICE OF ANNUAL MEETING
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Zurn Industries, Inc. will be held
at the Pittsburgh Airport Marriott Hotel, Parkway West-Montour Run Exit, 100
Aten Road, Coraopolis, Pennsylvania on Friday, August 1, 1997, at 9:30 a.m.,
EDT, for the following purposes:
1. To elect three (3) directors for terms of three (3) years each and
one (1) director for a term of two (2) years.
2. To ratify the appointment of Ernst & Young LLP as independent
auditors for the current fiscal year.
3. 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 20, 1997,
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, 1997
EVERY SHAREHOLDER'S VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, AND RETURN YOUR PROXY.
ZURN INDUSTRIES, INC.
ONE ZURN PLACE
ERIE, PENNSYLVANIA 16505
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 1,
1997. 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 the 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, 1997, 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, 1997.
On the record date, June 20, 1997, there were outstanding 12,366,212
shares of common stock and 2,072 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.
AGENDA ITEM NO. 1
ELECTION OF DIRECTORS
Three (3) directors are to be elected for a term of three (3) years each
and one (1) director for a term of two (2) years. 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 in the following paragraphs 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.
Nominees For a Term of Three Years Each
Scott G. Arbuckle
Age 65, Director since January 1997, and member of the Corporate
Governance and Nominating Committee. Retired Chairman and Chief Executive
Officer of Eljer Industries, Inc.
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Michael K. Brown
Age 59, Director since October 1995, and member of the Audit Committee
and the Corporate Governance and Nominating Committee. Director and Senior
Advisor, Brown Brothers Harriman (HK) Ltd. and former Area General Manager,
Standard Chartered Bank, Singapore. Also, inter alia, former Director, Export
Credit Insurance Corporation of Singapore, Hong Kong Government Industry
Development Board, and Hong Kong Government Textiles Advisory Board.
Robert D. Neary
Age 63, Director since June 1995, Chair of the Audit Committee, and
member of the Management Development and Compensation Committee and of the
Corporate Governance and Nominating Committee. Retired Co-Chairman, Ernst &
Young (international accounting and consulting firm). Chairman of the Board
of Trustees and President, Armada Funds and Director, Cold Metal Products,
Inc.
Nominee For a Term of Two Years
John M. Sergey
Age 54, Director since June 1997, and member of the Corporate Governance
and Nominating Committee. President and Chief Executive Officer, Strategic
Distribution, Inc. (industrial supply procurement solutions). Former
Executive Vice President, GAF Corporation, and President and Chief Executive
Officer, GAF Materials Corporation (building materials manufacturer).
Directors Whose Terms of Office Continue Until 1998
Edward J. Campbell
Age 69, Director since August 1986, Chair of the Executive and Finance
Committee, and member of the Management Development and Compensation Committee
and of the Corporate Governance and Nominating Committee. Retired 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.
Robert R. Womack
Age 59, Director since October 1994, and member of the Executive and
Finance Committee and of the Corporate Governance and Nominating Committee.
Chairman and Chief Executive Officer, Zurn Industries, Inc. 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.
Directors Whose Terms of Office Continue Until 1999
Zoe Baird
Age 45, Director since August 1993, Chair of the Corporate Governance
and Nominating Committee, and member of the Audit Committee. President, John
and Mary R. Markle Foundation (effective January 1998) and Senior Research
Associate and Senior Visiting Scholar, Yale Law School. Former Senior Vice
President and General Counsel, Aetna Life and Casualty Company (multiline
insurance company) and former Counsellor and Staff Executive, General Electric
-2-
Company (aerospace, broadcasting, and electrical equipment manufacturer).
Director of Southern New England Telecommunications Corporation and The
Southern New England Telephone Company.
William E. Butler
Age 66, Director since November 1992, Chair of the Management
Development and Compensation Committee, and member of the Executive and
Finance Committee and of the Corporate Governance and Nominating Committee.
Retired Director, Chairman and Chief Executive Officer, Eaton Corporation
(manufacturer of vehicle powertrain components and controls). Director of
Applied Industrial Technologies, Inc., Ferro Corporation, The Goodyear Tire &
Rubber Company, and Pitney-Bowes, Inc.
Committees of the Board of Directors
The Board has an Audit Committee, an Executive and Finance Committee, a
Management Development and Compensation Committee, and a Corporate Governance
and Nominating Committee. The membership of each of these committees is
designated in the information on Nominees and Directors.
The Audit Committee 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 compliance with environmental
and other laws, and reviewing the scope, adequacy, and results of the
Company's internal audit and control procedures. This Committee consists
exclusively of nonmanagement directors.
The Executive and Finance Committee 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. The Committee also establishes
investment policies for the Company's cash and pension funds, reviews and
recommends to the Board actions with respect to borrowing and credit
agreements and the payment of dividends, and reviews charitable contributions.
The Management Development and Compensation Committee reviews 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. Like the Audit Committee, this Committee consists
exclusively of nonmanagement directors.
The Corporate Governance and Nominating Committee, on which all of the
Board's directors serve, addresses Shareholder proposals and formulates
policies and procedures pertaining to corporate governance. In addition, this
Committee selects and recommends nominees for election as directors and will
consider nominees recommended by Shareholders.(1)
_____________________________
(1) 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.
-3-
The Board meets in executive session prior to every regular meeting of
the Board as a means of allowing candid interchange of ideas and concerns.
These sessions are held in the presence of the Chairman, who is also the Chief
Executive Officer, but outside the presence of other management personnel.
There is no prescribed list of issues or length for these sessions.
Nonmanagement directors meet outside the presence of the Chief Executive
Officer to discuss the performance of the Chief Executive Officer and other
matters as may be deemed appropriate.
During the prior fiscal year, the Management Development and
Compensation Committee, the Executive and Finance Committee, the Corporate
Development and Nominating Committee and the Audit Committee each met three
times. There were eight meetings of the Board of Directors. Each Director
attended more than 75% of the meetings of Board and the committees on which he
or she served.
-4-
Security Ownership Of Common stock
Beneficial ownership of the common stock of the Company as of June 10,
1997, 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%
Southeastern Asset
Management (3) 1,795,200 13.6%
Fidelity Management &
Research Co. (4) 1,375,300 10.4
First Manhattan Capital
Management (5) 1,060,402 8.0
Directors and Named Executive Officers
Scott G. Arbuckle 2,000
Zoe Baird 5,894
Michael K. Brown 3,648
William E. Butler 6,829
Donald L. Butynski 45,000
Edward J. Campbell 10,790
Dennis Haines 37,050 100
John R. Mellett 22,000 425
Robert D. Neary 5,778
John M. Sergey 1,000
Frank E. Sheeder 22,215
Robert R. Womack 31,250 607
Directors and Executive
Officers as a group (6) 297,858 14,860 2.4
_____________________________
(1) Includes shares that may be acquired within 60 days after June 10, 1997,
upon the exercise of options: Z. Baird - 5,000; M.K. Brown - 2,000; W.E.
Butler - 5,000; D.L. Butynski - 45,000; E.J. Campbell - 9,000; D. Haines -
35,750; J.R. Mellett - 20,000; R.D. Neary - 4,000; F.E. Sheeder - 13,750;
R.R. Womack - 21,250; all directors and executive officers as a group -
188,750.
(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) 6075 Poplar Avenue, Suite 900, Memphis, TN 38119.
(4) 82 Devonshire Street, Boston, MA 92109.
(5) 437 Madison Avenue, New York, NY 10022.
(6) Includes 50,448 shares held by an estate in which an Executive Officer, as
Executor, has no current beneficial interest.
-5-
Summary Compensation Table
The following sets forth the compensation of the Company's Chief Executive
Officer and the other four most highly compensated executive officers (the
"Named Executive Officers") for the past three fiscal years ended March 31.
Stock options are the only form of long-term compensation that has been granted
by the Company.
Long-Term
Compensation
Number of
Annual Securities
Compensation Underlying
Name and Position Year Salary Bonus Other Stock Options
Robert R. Womack (1) 1997 $400,000 $400,000 60,000
Chairman and Chief 1996 320,833 125,000 25,000
Executive Officer 1995 137,500 $74,447 (2) 75,000
Donald L. Butynski (3) 1997 240,000 30,000
Group Vice President 1996 237,917 22,000
Frank E. Sheeder (3) 1997 235,000 174,895 50,235 (2) 30,000
Group Vice President 1996 162,116 60,000 13,450 (2) 25,000
John R. Mellett (3) 1997 210,000 164,975 30,000
Senior Vice President- 1996 166,667 60,000 32,102 (2) 25,000
Chief Financial Officer
Dennis Haines 1997 145,000 98,150 25,000
General Counsel 1996 131,000 35,000 15,000
and Secretary 1995 120,000 16,000 10,000
_____________________________
(1) R.R. Womack was appointed Chief Executive Officer effective October 17,
1994, and was elected Chairman effective April 1, 1995.
(2) Income taxes arising from the reimbursement of relocation expenses.
(3) D.L. Butynski, F.E. Sheeder, and J.R. Mellett were appointed effective May
1, 1995, August 14, 1995, and July 1, 1995, respectively.
The Named Executive Officers 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.
-6-
Stock Option Grants
The Company's 1996 Employee Stock Plan, like prior plans, provides for the
granting of options 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, 1997. As granted, the options
have a ten-year term and they become exercisable in 25% increments over the
first four years following the grant. 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 $33 per share at 5% and $53 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 Percent Annual Rates of
Securities of Total Exercise Stock Price
Underlying Options Price Appreciation for
Options Granted to Per Expiration Option Term
Name Granted Employees Share Date 5% 10%
R.R. Womack 30,000 9.8% $20.125 4/21/2006 $379,695 $962,222
30,000 9.8 20.375 6/02/2006 384,412 974,175
D.L. Butynski 20,000 6.5 20.125 4/21/2006 253,130 641,481
10,000 3.3 20.375 6/02/2006 128,137 324,725
F.E. Sheeder 20,000 6.5 20.125 4/21/2006 253,130 641,481
10,000 3.3 20.375 6/02/2006 128,137 324,725
J.R. Mellett 20,000 6.5 20.125 4/21/2006 253,130 641,481
10,000 3.3 20.375 6/02/2006 128,137 324,725
D. Haines 15,000 4.9 20.125 4/21/2006 189,848 481,111
10,000 3.3 20.375 6/02/2006 128,137 324,725
Stock Option Exercises And Fiscal Year End Option Values
The following sets forth for the Named Executive Officers information
about stock options exercised during the year ended March 31, 1997, and
outstanding at March 31, 1997.
Number
of Securities Value
Underlying of Unexercised
Unexercised In-The-Money
Shares Options Options
Acquired at March 31, 1997 at March 31, 1997
on Value Exer- Unexer- Exer- Unexer-
Name Exercise Realized cisable cisable cisable cisable
R.R. Womack None None 6,250 153,750 None $661,875
D.L. Butynski 5,500 $24,750 22,000 71,500 None 231,500
F.E. Sheeder None None 6,250 48,750 $21,875 186,875
J.R. Mellett None None 6,250 48,750 26,563 200,938
D. Haines None None 17,750 54,250 13,125 175,000
-7-
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) 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 in 1995 as indexed for inflation thereafter.
Mr. Womack and one other executive officer are participants in the
Supplemental Executive Retirement Plan. This is a noncontributory plan that
will provide Mr. Womack, at normal retirement age of 65, a monthly pension equal
to 2.25% of his average base salary and incentive compensation during the last
three years of employment for each year of his service as Chief Executive
Officer if he is employed in that capacity through October 17, 1998. The plan
will provide the other executive officer, at normal retirement age of 62, a
monthly pension equal to 45% (50% before 1991) of his average base salary and
incentive compensation during the five highest calendar years of earnings within
the last ten calendar years of employment. 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 following table 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 2.25% and 2% benefit rates 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.
-8-
Combined Retirement Supplemental Executive
Supplemental Plans Retirement Plan
Years of Service Years of Service
10 15 20 5 10 25
Benefit Rate Benefit Rate
Remuneration .95% 2.25% 2%
$ 100,000 $ 9,500 $ 14,250 $ 19,000 $ 50,000
200,000 19,000 28,500 38,000 100,000
300,000 28,500 42,750 57,000 150,000
400,000 38,000 57,000 76,000
500,000 47,500 71,250 95,000 $ 56,250 $112,500
1,000,000 95,000 142,500 190,000 112,500 225,000
Name Years of Credited Service
R.R. Womack 2.42
D.L. Butynski 11.00
F.E. Sheeder 1.67
J.R. Mellett 1.83
D. Haines 10.25
Directors' Compensation
Nonemployee members of the Board of Directors currently 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. Each nonemployee director
also receives annually (1) a nonqualified option for 2,000 shares of the
Company's common stock at its market value on the distribution date and (2) an
award of 500 shares of common stock restricted as to sale for five years or, if
earlier, until the director attains age 65 and completes five years of service
as a director or the occurrence of a change in control of the Company or other
events, both as defined in the 1995 Directors Stock Option Plan.
The Company's retirement plans for outside directors have been terminated
except for providing benefits to directors who retired prior to August 3, 1996,
and Mr. Campbell who will receive for 10 years following retirement, or his
earlier death, a pension equal to 50% of the director annual cash retainer fee
in effect at the date of retirement. In consideration for the termination of
the retirement plan, directors with unvested accrued benefits on August 2,
1996, received the equivalent of the present value of such benefits in common
stock of the Company having the same restrictions as the annual award shares as
follows:
Present Value of Number of Shares
Director Unvested Accrued Benefit of Common stock
Z. Baird $ 4,038 194
M.K. Brown 3,079 148
W.E. Butler 21,357 1,029
R.D. Neary 5,784 278
Total $34,258 1,649
-9-
Related-Party Transactions
Mr. Brown is a director and senior advisor of Brown Brothers Harriman (HK)
Ltd., a wholly-owned subsidiary of Brown Brothers Harriman & Co., which
participates in a credit agreement with other lending institutions for term and
revolving loans on which the Company is entitled to draw. The maximum
participation of Brown Brothers Harriman & Co. is $10 million. Brown Brothers
Harriman & Co. also performed certain incidental services for the Company in
the last fiscal year by way of cash management and other similar services and
may perform like services in the current fiscal year. The fees paid on account
of these services in the last fiscal year or expected to be paid in the current
fiscal year are substantially less than five percent of Brown Brothers Harriman
& Co.'s consolidated gross revenue for the last fiscal year.
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 fiscal 1997, 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 during the fiscal year and each individual's
performance against goals established at the beginning of the year. Target
incentive compensation is set with the majority of an individual's incentive
compensation tied to business performance and remainder tied to individual
performance goals. Under the Incentive Compensation Program adopted on April
22, 1996, the Chief Executive Officer and each executive selected by the
Committee has the opportunity to earn incentive compensation equal to a pre-
defined target percentage of salary based upon the achievement of specific
pretax profit targets and other performance goals. Actual payouts may range from
zero to 200 percent of the target percentage of salary.
Executive compensation has three components: (1) base salary; (2) annual
incentive compensation; and (3) stock options and awards 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. The Committee's policy is to position the value of salary,
annual incentives, and stock option grants at the median of similarly-sized
industrial companies. This peer group consists of companies participating in
-10-
published pay surveys and, therefore, is broader than the group of companies in
the Dow Jones Building Materials and Heavy Construction indexes used in the
Company's performance graph. The Company designs and administers its
compensation program to retain tax deductibility pursuant to section 162(m) of
the Internal Revenue Code.
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 Chief Executive Officer's incentive compensation for fiscal 1997 was
based upon goal achievement, improved company performance, and strategically
restructuring the Company to position it for future growth. Likewise, other
executive officers' incentive compensation was based on the Company's earnings
compared to the pre-established target and the achievement of individual goals.
The Company's 1996 Employee Stock Plan allows the Committee to provide
incentive rewards for employees' 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. While the
Plan allows other forms of long-term incentives, only stock options were granted
in fiscal 1997 and, pursuant to the Plan, three executive officers received a
portion of their fiscal 1997 incentive compensation in common stock of the
Company.
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.
This Committee also instituted required stock-holding levels for executive
officers and senior management ranging from 1 to 3 times annual salary to be
phased in over the next three to five years. These holding levels will further
link their compensation to the Company's common stock performance and
enhancement of shareholder value.
By Committee charter, the repricing of stock options is prohibited.
MANAGEMENT DEVELOPMENT AND
COMPENSATION COMMITTEE
William E. Butler, Chair
Edward J. Campbell
Robert D. Neary
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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, the Dow Jones Building Materials
Industry Group Index, and the Dow Jones Heavy Construction Industry Group Index.
Because of the acquisition of Eljer Industries, Inc. and discontinuing three
industry segments, a transition to the building materials index is being made as
it is viewed for the future as being more representative than the construction
industry index of companies whose performance is likely to be influenced by the
same factors affecting the Company.
The Company's common stock total return in fiscal 1997 gained 20.4% while
the building materials index return gained 19.9% and the heavy construction
index return lost 15.9%.
(GRAPH)
Fiscal Year Ended March 31
1992 1993 1994 1995 1996 1997
Zurn Industries, Inc. $100.00 $105.16 $ 68.66 $ 56.21 $ 63.88 $ 76.88
S&P 500 Composite 100.00 115.23 116.93 135.13 178.51 213.90
Dow Jones Building
Materials 100.00 124.20 123.10 122.96 145.85 174.90
Dow Jones Heavy
Construction 100.00 106.21 132.77 115.07 154.13 129.61
AGENDA ITEM NO. 2
APPOINTMENT OF AUDITORS
The Board of Directors, acting upon the recommendation of its Audit
Committee, has appointed the firm of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending March 31, 1998, subject to
ratification by the Shareholders at the Annual Meeting. 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.
-12-
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.
SHAREHOLDER PROPOSALS FOR 1998
Proposals intended to be presented by Shareholders at the 1998 Annual
Meeting must be received for inclusion in the proxy statement for that meeting
by February 27, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
DENNIS HAINES
General Counsel and Secretary
Erie, Pennsylvania
June 27, 1997
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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 Pittsburgh Airport Marriott Hotel,
O Coraopolis, Pennsylvania, on August 1, 1997, at 9:30 a.m. and at any
adjournment thereof, on all matters coming before said meeting. Shares
X represented by this Proxy will be voted as designated.
Y Directors Recommend a Vote For: (change of address)
For a term of three years: ________________________
Scott G. Arbuckle ________________________
Michael K. Brown ________________________
Robert D. Neary ________________________
(If you have written in the
For a term of two years: above space, please mark
John M. Sergey 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. Ratify appoint- ____ ____ ____
Directors [ ] [ ] ment of auditors [ ] [ ] [ ]
(see reverse) [____] [____] [____] [____] [____]
For, except vote withheld from
the following nominee(s):
______________________________
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.