SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/ / 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 Section 240.14a-12
Triumph Group, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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TRIUMPH GROUP, INC.
FOUR GLENHARDIE CORPORATE CENTER
1255 DRUMMERS LANE - SUITE 200
WAYNE, PENNSYLVANIA 19087
(610) 975-0420
Notice of Annual Meeting of Stockholders
To Be Held on July 16, 2001
To the holders of shares of common stock and class D common stock:
You are invited to be present either in person or by proxy at the annual
meeting of stockholders of Triumph Group, Inc. to be held at Triumph's principal
executive offices at Four Glenhardie Corporate Center, 1255 Drummers Lane -
Suite 200, Wayne, Pennsylvania 19087, on Monday, July 16, 2001, beginning at
9:30 a.m., local time, for the following purposes:
1. To elect all six directors for the coming year;
2. To ratify the selection of Ernst & Young LLP as Triumph's independent
auditors for the fiscal year ending March 31, 2002; and
3. To transact any other business as may properly come before the meeting or
any postponements or adjournments.
Management currently knows of no other business to be presented at the
meeting. If any other matters come before the meeting, the persons named in the
enclosed proxy will vote with their judgment on those matters.
The board of directors has fixed the close of business on May 31, 2001 as
the record date for determining stockholders entitled to notice of and to vote
at the meeting and any adjournments. To make sure that your vote is counted,
please complete, date and sign the enclosed proxy and return it promptly in the
enclosed envelope, whether or not you plan to attend the meeting in person. A
self-addressed, postage paid envelope is enclosed for your convenience. If you
do attend the meeting, you may then withdraw your proxy and vote your shares in
person. In any event, you may revoke your proxy prior to its exercise. Shares
represented by proxies which are returned properly signed but unmarked will be
voted in favor of proposals made by Triumph.
By order of the board of directors,
/s/ Richard M. Eisenstaedt
-----------------------------
Richard M. Eisenstaedt
June 18, 2001 Secretary
Wayne, Pennsylvania
Your vote is important
PLEASE FILL IN, DATE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. NO POSTAGE IS NECESSARY IF THE ENVELOPE IS MAILED IN THE UNITED STATES.
TRIUMPH GROUP, INC.
FOUR GLENHARDIE CORPORATE CENTER
1255 DRUMMERS LANE - SUITE 200
WAYNE, PENNSYLVANIA 19087
(610) 975-0420
--------------------
Proxy Statement
For 2001 Annual Meeting of Stockholders
To be held on July 16, 2001
GENERAL INFORMATION
This proxy statement is sent by the board of directors of Triumph Group,
Inc. to solicit proxies to be voted at its annual meeting of stockholders on
Monday, July 16, 2001, to be held at 9:30 a.m., local time, at Triumph's offices
at Four Glenhardie Corporate Center, 1255 Drummers Lane - Suite 200, Wayne,
Pennsylvania and at any adjournments, for the purposes stated in the
accompanying notice of the meeting. This proxy statement, the notice and the
enclosed proxy card will first be mailed to stockholders entitled to vote on or
about June 18, 2001.
Sending a signed proxy will not affect your right to attend the meeting
and vote in person because the proxy is revocable. You have the power to revoke
your proxy by, among other methods, giving written notice to the secretary of
Triumph at any time before your proxy is exercised or by attending the meeting
and voting in person.
When your proxy card is returned properly signed, your shares will be
voted according to your instructions. The board knows of no matters that are
likely to be brought before the meeting other than the matters specifically
referred to in the notice of the meeting. If any other matters properly come
before the meeting, the persons named in the enclosed proxy, or their duly
appointed substitutes acting at the meeting, will be authorized to vote or
otherwise act with their judgment in those matters. In the absence of contrary
instructions, your shares included on the enclosed proxy will be voted "FOR" the
nominees for director stated thereon and "FOR" the ratification of the selection
of Ernst & Young LLP as Triumph's independent auditors for the fiscal year
ending March 31, 2002.
SOLICITATION OF PROXIES
Triumph will pay for this proxy solicitation. Officers and other regular
employees may solicit proxies by mail, in person or by telephone or telecopy.
These officers and other regular employees will not receive additional
compensation. Triumph is required to pay, upon request, the reasonable expenses
incurred by record holders of common stock, who are brokers, dealers, banks,
voting trustees or other nominees for mailing proxy material and annual
stockholder reports to any beneficial owners of common stock they hold of
record.
QUORUM AND VOTING RIGHTS
Holders of record of Triumph's common stock and class D common stock, as
of the close of business on May 31, 2001, the record date, will be entitled to
notice and to vote at the meeting and at any adjournments. Holders of shares of
common stock are entitled to vote on all matters brought before the meeting.
Holders of class D common stock are not entitled to vote in the election of
directors, but are entitled to vote on all other matters brought before the
meeting. Each share of class D common stock may be converted into one share of
common stock, at any time, at the option of the holder.
As of the record date, there were 12,468,601 shares of common stock
outstanding and entitled to vote on the election of directors. As of the record
date, there were 12,468,601 shares of common stock and 3,348,535 shares of class
D common stock for a total of 15,817,136 shares outstanding and entitled to vote
on all other matters. Holders of common stock will vote on the election of
directors as a class and the holders of common stock and class D common stock
will vote on all other matters together as a class. Each outstanding share of
common stock and class D common stock entitles the holder to one vote.
The presence in person or by proxy of the holders of a majority of the
outstanding common stock and class D common stock is necessary to constitute a
quorum at the meeting.
Directors will be elected by a plurality of the votes cast by holders of
common stock, voting together as a class, represented in person or by proxy at
the meeting. Abstentions in the election of directors will be counted for the
purpose of determining whether a quorum is present at the meeting but will not
be considered as votes cast. Because directors are elected by a plurality of
votes, abstentions will not have an impact on their election.
The holders of common stock are entitled to cumulate their votes in the
election of directors, which means a holder of common stock may cast as many
votes in the aggregate as he or she is entitled to vote multiplied by the number
of directors to be elected and to cast all votes for one director nominee or
distribute these votes among two or more director nominees, as a holder sees
fit. Each holder of common stock may indicate his or her preference on the
enclosed proxy. If no preference is indicated, that holder's votes will be voted
pro rata in favor of all nominees indicated.
Ratification of the board's selection of Triumph's auditors and any other
matters brought before the meeting, other than the election of directors, will
require the favorable vote of a majority of the shares of common stock and class
D common stock, voting together as a class, represented in person or by proxy at
the meeting. Triumph is not aware of any matter, other than as referred to in
this proxy statement, to be presented at the meeting. Abstentions in
ratification of the selection of Triumph's auditors and of any other proposals
will be counted for the purpose of determining whether a quorum is present at
the meeting and as votes cast and will have the effect of a negative vote.
Broker non-votes for all proposals will not be counted in determining the
presence of a quorum and will not be considered as votes cast, and will have no
effect on the results of the votes.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The board currently consists of six directors. At the meeting, the
stockholders will elect all six directors for a term ending at the next annual
meeting of stockholders and until that director's successor is duly elected and
qualified.
The table below lists the name of each person nominated by the board to
serve as a director for the coming year. All of the nominees are currently
directors of Triumph for terms expiring at the
2
meeting. Each nominee has consented to be named as a nominee and, to the
knowledge of Triumph, is willing to serve as a director, if elected. Should any
of the nominees not remain a nominee at the end of the meeting (a situation
which is not anticipated), solicited proxies will be voted in favor of those who
remain as nominees and may be voted for substitute nominees. Unless contrary
instructions are given on the proxy, the shares represented by a properly
executed proxy will be voted pro rata "FOR" the election of Richard C. Ill, John
R. Bartholdson, Richard C. Gozon, Claude F. Kronk, Joseph M. Silvestri and
William O. Albertini.
Nominees Age Year First Elected a Director
- -------- --- -----------------------------
Richard C. Ill 58 1993
John R. Bartholdson 56 1993
Richard C. Gozon 62 1993
Claude F. Kronk 69 1993
Joseph M. Silvestri 39 1994
William O. Albertini 57 1999
The principal occupations and qualifications of each nominee for director
are as follows:
Richard C. Ill has been President and Chief Executive Officer and a
director of Triumph since 1993. Mr. Ill is a member of the board of directors of
the Aerospace Industry Association, the board of directors of Derrman and Davis,
Inc. and the advisory board of Outward Bound, USA.
John R. Bartholdson has been Senior Vice President, Chief Financial
Officer and Treasurer and a director of Triumph since 1993. Mr. Bartholdson
serves on the board of directors and is a member of the compensation committee
of PBHG Funds, Inc.
Richard C. Gozon has been a director of Triumph since 1993. Mr. Gozon has
been Executive Vice President of Weyerhaeuser Company since 1994. Mr. Gozon
serves on the board of directors of U.G.I. Corporation, AmeriSource Health
Corporation and AmeriGas Partners, L.P.
Claude F. Kronk has been a director of Triumph since 1993. Mr. Kronk
retired on January 1, 1998 from his position as Vice Chairman and Chief
Executive Officer of J&L Specialty Steel, Inc., a position which he held in
excess of five years. Mr. Kronk serves on the board of directors of Cold Metal
Products, Co.
Joseph M. Silvestri has been a director of Triumph since 1994. Mr.
Silvestri has been employed by Citicorp Venture Capital, Ltd. since 1990 and has
been a Vice President since 1995. Mr. Silvestri serves on the board of directors
of Euramax International, Inc., GNI Group, Inc., ISG Resources, MacDermid,
Incorporated and Delco Remy International, Inc.
William O. Albertini has been a director of Triumph since May 1999. Mr.
Albertini was Executive Vice President and Chief Financial Officer of Bell
Atlantic Corp. from 1991 through 1998. In 1998, Mr. Albertini became Executive
Vice President and Chief Financial Officer of Bell Atlantic Global Wireless and
remained in that position until his retirement on April 30, 1999. Mr. Albertini
serves on the board of directors of American Water Works Co. Inc., Blackrock
Funds, People's State Bank and Midwest Independent System Operator, Inc. and is
also a member of the Advisory Committee of Safeguard Scientifics, Inc.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" EACH OF THESE NOMINEES.
THE SIX NOMINEES RECEIVING THE HIGHEST NUMBER OF AFFIRMATIVE VOTES WILL BE
ELECTED AS DIRECTORS.
3
MEETINGS AND COMMITTEES OF THE BOARD
The board held six (6) meetings during Triumph's fiscal year ended March
31, 2001 and also acted by unanimous consents in writing. The standing
committees of the board are the audit committee and the compensation committee.
Triumph does not have an executive committee or a nominating committee.
The audit committee, consisting of Messrs. Kronk, Albertini and Gozon, met
three times during the last fiscal year and met informally one time during the
last fiscal year. Triumph's board adopted a charter for the audit committee in
April 2000. A copy of the charter is included as an appendix to this proxy
statement. The audit committee communicates and receives information directly
from Triumph's independent auditors. The compensation committee, consisting of
Messrs. Gozon, Kronk and Silvestri, met one time during the last fiscal year.
The compensation committee periodically reviews and evaluates the compensation
of Triumph's officers, administers Triumph's 1996 Stock Option Plan and
establishes guidelines for compensation of other personnel.
REPORT OF AUDIT COMMITTEE
The audit committee of the board of directors is composed of three
independent directors and operates under a written charter adopted by the board
and attached to this proxy statement as Appendix A. All members of the audit
committee are "independent" as defined in Section 303.01(B)(2)(a) and (3) of the
New York Stock Exchange's listing standards. The members of the audit committee
are not professionally engaged in the practice of auditing or accounting nor are
they experts in the fields of auditing or accounting, including in respect of
auditor independence. However, all committee members are financially literate
and at least one member has accounting or related financial management
expertise.
Management is responsible for Triumph's internal controls and the
financial reporting process, including the presentation and integrity of our
financial statements. Triumph's independent accountants are responsible for
performing an independent audit of our financial statements in accordance with
auditing standards generally accepted in the United States and to issue a report
thereon. The audit committee's responsibility is to monitor and oversee these
processes on behalf of the board of directors. The audit committee also
recommends to the board of directors the selection of our independent
accountants.
In 2001, the audit committee met and held discussions with management and
the independent auditors. In addition, the members of the audit committee
individually reviewed our financial statements before such statements were filed
with the SEC in Triumph's periodic reports on Forms 10-Q and 10-K and all press
releases containing earnings reports. Management represented to the audit
committee that our financial statements were prepared in accordance with
accounting principles generally accepted in the United States, and the audit
committee reviewed and discussed the financial statements with management and
the independent auditors. The audit committee also discussed with the
independent auditors the matters required to be discussed by Statements on
Auditing Standards No. 61, Communication with Audit Committees.
Triumph's independent auditors also provided to the audit committee the
written disclosures required by the Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and discussed with the audit
committee Ernst & Young LLP's independence.
4
Based on the audit committee's discussion with management and the
independent auditors and its review of the representation of management and the
report of the independent auditors to the audit committee, the audit committee
recommended that the board include the audited financial statements in Triumph's
Annual Report on Form 10-K for the year ended March 31, 2001, to be filed with
the SEC.
Audit Committee
Claude F. Kronk (Chairman)
William O. Albertini
Richard C. Gozon
This report of the audit committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or under the Exchange Act
except to the extent that Triumph specifically incorporates this information by
reference, and shall not otherwise be deemed filed under the Securities Act and
the Exchange Act and shall not be deemed soliciting material.
COMPENSATION OF DIRECTORS
Directors who are also employees of Triumph or Citicorp Venture Capital do
not receive additional compensation for serving as directors. Each director who
is not an employee of Triumph or Citicorp Venture Capital receives an annual fee
of $15,000 and a fee of $1,000 for attendance at each board meeting (unless held
by telephone conference call) and $500 for each committee meeting (unless held
on the same day as a board meeting or held by telephone conference call). Each
director who is not an employee of Triumph is entitled to receive options to
purchase shares of common stock under Triumph's directors' stock option plan.
Any options granted under the directors' plan are in addition to other
compensation paid to those directors. All directors are reimbursed for
out-of-pocket expenses incurred in attending meetings of the board or its
committees.
5
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to the President and
Chief Executive Officer and to each of the four most highly compensated
executive officers of Triumph and its subsidiaries, other than the President and
Chief Executive Officer, for the fiscal years ended March 31, 2001, 2000 and
1999.
"Bonus" consists of cash bonuses earned in the fiscal year identified, of
which only a portion was paid in that year to Messrs. Ill and Bartholdson at
their request and the balance was deferred.
"Other Annual Compensation" reflects amounts contributed by Triumph to its
401(k) Plan for the benefit of the named employee.
"All Other Compensation" consists of group term life insurance premiums
and for fiscal years 2001 and 2000 premiums related to Triumph's Executive Life
Program - Collateral Assignment Split Dollar Agreement.
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards
-----------------------------------------------------------------
Other Annual Restricted All Other
Name and Position Year Salary Bonus Compensation Stock Awards Compensation
- ----------------- ---- ------ ----- ------------ ------------ ------------
Richard C. Ill 2001 $450,000 $540,000 $5,663 $656,625(1) $342,272(2)
President and Chief 2000 375,000 268,250 5,025 0 38,249(4)
Executive Officer 1999 345,000 379,500 5,225 0 8,550
John R. Bartholdson 2001 350,000 385,000 5,297 386,250(5) 246,180(3)
Senior Vice President, Chief 2000 315,000 204,750 4,940 0 26,847(4)
Financial Officer and 1999 290,000 290,000 5,129 0 4,320
Treasurer
Lawrence J. Resnick 2001(6) 216,251 179,200 5,362 0 420
Vice President 2000 - - - - -
1999 - - - - -
Richard M. Eisenstaedt 2001 193,000 135,100 5,179 0 2,717
Vice President, General 2000 182,500 83,000 4,853 0 8,621(4)
Counsel and Secretary 1999 175,500 115,000 4,950 0 2,592
Kevin E. Kindig 2001 120,000 70,000 3,600 0 517
Vice President and 2000 105,000 48,000 3,150 0 740(4)
Controller 1999 100,000 55,000 3,000 0 714
6
- ----------
(1) Mr. Ill was granted an aggregate of 17,000 shares of restricted common
stock on January 3, 2001. Such shares had a value of $646,000 at the end
of the last fiscal year and will vest over three years as follows: 5,666
on January 3, 2002; 5,667 on January 3, 2003; and 5,667 on January 3,
2004. Triumph will not pay dividends on the shares of restricted stock.
(2) Includes: (i) $335,733, representing the present value of $28,760 in
yearly interest forgone by Triumph for the Executive Life Program -
Collateral Assignment Split Dollar Agreement (the "Agreement")
multiplied by the 24 years to maturity of the policy; (ii) $1,637,
representing income reportable by the executive officer pursuant to
the Agreement; and (iii) $4,902, representing income imputed to the
executive officer under Triumph's group term life insurance policy.
(3) Includes: (i) $241,172, representing the present value of $20,324 in
yearly interest forgone by Triumph for the Executive Life Program -
Collateral Assignment Split Dollar Agreement (the "Agreement")
multiplied by the 24 years to maturity of the policy; (ii) $1,138,
representing income reportable by the executive officer pursuant to
the Agreement; and (iii) $3,870, representing income imputed to the
executive officer under Triumph's group term life insurance policy.
(4) These amounts include the present value of the yearly interest foregone by
Triumph for the Executive Life Program - Collateral Assignment Split
Dollar Agreement in fiscal year 2000 for Messrs. Ill, Bartholdson,
Eisenstaedt and Kindig in the amounts of $2,036, $1,351, $392 and $138,
respectively.
(5) Mr. Bartholdson was granted an aggregate of 10,000 shares of restricted
common stock on January 3, 2001. Such shares had a value of $380,000 at
the end of the last fiscal year and will vest over three years as follows:
3,333 on January 3, 2002; 3,334 on January 3, 2003; and 3,333 on January
3, 2004. Triumph will not pay dividends on the shares of restricted stock.
(6) Mr. Resnick became a Vice President of Triumph on August 1, 2000.
Previously, Mr. Resnick was the President of Triumph Controls, Inc., one
of Triumph's subsidiaries.
OPTION GRANTS IN LAST FISCAL YEAR
Triumph did not grant any options under its 1996 Stock Option Plan for the
named executive officers during the fiscal year ended March 31, 2001.
FISCAL YEAR END OPTION VALUES
The following table lists, for each of the named executive officers,
information about the value of unexercised options at March 31, 2001.
The fair market value of "in-the-money" options was calculated based on
the difference between the exercise price of the options held and the closing
price per share for common stock on the NYSE of $38.00 on March 30, 2001,
multiplied by the number of options held.
Number of Securities Value of
Underlying Unexercised Unexercised In-
Options at Fiscal the-Money Options at
Shares Year End (#) Fiscal Year End ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized($) Unexercisable Unexercisable
- ---- ------------ ----------- ------------- -------------
Richard C. Ill 0 0 49,000/24,000 $ 722,810/$173,430
John R. Bartholdson 0 0 49,000/24,000 722,810/173,430
Lawrence J. Resnick 0 0 28,992/10,375 485,183/95,130
Richard M. Eisenstaedt 0 0 14,250/7,750 211,140/63,420
Kevin E. Kindig 0 0 12,000/4,000 202,468/37,405
7
EMPLOYMENT AGREEMENTS
Triumph entered into employment agreements with Richard C. Ill and John R.
Bartholdson, effective July 1, 1999, pursuant to which Messrs. Ill and
Bartholdson serve as President and Chief Executive Officer and as Senior Vice
President and Chief Financial Officer, respectively, of Triumph through
September 30, 2002, unless earlier terminated by the board or, in certain
circumstances following a change in control transaction, by the executive. These
agreements provide for an annual salary to Mr. Ill of not less than $375,000 and
to Mr. Bartholdson of not less than $315,000, plus incentive compensation as
determined by the board or the compensation committee, by authority delegated by
the board, and comparable benefits and perquisites given to other members of
senior management. Messrs. Ill and Bartholdson are entitled to severance and
other payments following the earlier termination of employment by Triumph or
upon termination by the executive following a change in control of Triumph. The
executive may terminate his employment following a change in control
transaction, if as a result of this change in control, the executive in good
faith is unable to carry out his duties and responsibilities, the executive is
required to accept a material reduction in his duties and responsibilities or a
geographical relocation or the successor company fails to assume the executive's
employment agreement. In the event of any early termination (other than for
"cause," death or disability), Messrs. Ill and Bartholdson are entitled to
receive a severance payment from Triumph equal to one-twelfth of their
respective salaries for 24 months. Messrs. Ill and Bartholdson are required to
devote substantially all of their time and effort during normal business hours
(reasonable sick leave and vacations excepted) to the business and affairs of
Triumph.
Triumph has also entered into employment agreements with each of Richard
M. Eisenstaedt and Lawrence J. Resnick, effective July 1, 1999 and August 1,
2000, respectively. Pursuant to his employment agreement, Mr. Eisenstaedt serves
as Vice President and General Counsel of Triumph through June 30, 2002, unless
earlier terminated by the board or, in certain circumstances following a change
in control transaction, by the executive. Pursuant to his employment agreement,
Mr. Resnick serves as Vice President of Triumph through July 31, 2003, unless
earlier terminated by the board, or in certain circumstances following a change
in control transaction by the executive.
These agreements provide for an annual salary to Mr. Eisenstaedt of not
less than $182,500 and to Mr. Resnick of not less than $220,000, plus incentive
compensation as determined by the board or the compensation committee, by
authority delegated by the board, and comparable benefits and perquisites given
to other members of senior management. Messrs. Eisenstaedt and Resnick are
entitled to severance and other payments following the earlier termination of
employment by Triumph or upon termination by the executive following a change in
control of Triumph. The executive may terminate his employment following a
change in control transaction, if as a result of this change in control, he in
good faith is unable to carry out his duties and responsibilities, he is
required to accept a material reduction in his duties and responsibilities or a
geographical relocation or the successor company fails to assume his employment
agreement. In the event of any early termination (other than for "cause", death
or disability), Messrs. Eisenstaedt and Resnick are entitled to receive a
severance payment from Triumph equal to one-twelfth of their salaries for 24
months. Mr. Eisenstaedt and Mr. Resnick are required to devote substantially all
of their time and effort during normal business hours (reasonable sick leave and
vacations excepted) to the business and affairs of Triumph.
8
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERALL POLICY
Triumph's executive compensation program is designed to be closely linked
to corporate performance and results. To this end, Triumph has developed an
overall compensation plan to provide its executive officers with the opportunity
to earn cash compensation plus the opportunity to accumulate stock-based wealth
commensurate with the long-term growth and value created for Triumph's
stockholders. Triumph's compensation strategy is to place the major portion of
total compensation at risk in the form of annual incentives and long-term,
stock-based compensation programs. The overall objectives of this strategy are
to attract and retain the best and most experienced executive talent, to
motivate these executives to achieve the goals inherent in Triumph's business
strategy, to link executive and stockholder interests through equity-based plans
and finally to provide a compensation package that recognizes individual
contributions as well as overall business results.
The compensation committee receives from time to time comprehensive data
and analyses from independent compensation consultants who evaluate Triumph's
compensation program against industry and peer group norms. Triumph seeks to
offer base salaries for Triumph's executive officers at levels that are
competitive with its industry group, that is, companies of similar size in the
aviation and general manufacturing industries. In addition, Triumph provides
significant incentive opportunities for its executive officers. Triumph's target
for total cash compensation opportunities (salary plus bonus) is between the
median and the 75th percentile for its industry group, with significant
variability based on company-wide, business unit and individual performance.
Triumph's annual incentive plan for executive officers is tied to business plans
using a performance matrix based on consolidated return on operating assets,
consolidated operating income and earnings per share. For the two most highly
compensated executive officers, Triumph's target for annual incentive awards is
60% and 55%, respectively, and their maximum annual incentive awards are 120%
and 110%, respectively. Triumph's other executive officers
have annual incentive award opportunities which are determined by the executive
officer's job function and level within Triumph. The actual award is established
by the President and Chief Executive Officer of Triumph based on the performance
of Triumph and the individual, subject to the review and approval of the
compensation committee. For fiscal year 2001, awards above 50% of salary must be
deferred and executive officers may elect two year deferrals or career
deferrals. All deferrals are subject to the accrual of interest to be paid by
Triumph to the executive officer. Stock options are awarded to executive
officers and other management employees to align the interest of Triumph's
management with those of its stockholders.
The compensation committee determines the compensation of Richard C. Ill,
the President and Chief Executive Officer of Triumph, and of John R.
Bartholdson, the Senior Vice President, Chief Financial Officer and Treasurer of
Triumph. In addition, the board reviews the compensation proposed to be awarded
by Messrs. Ill and Bartholdson to Triumph's other three executive officers and
the presidents of each of Triumph's operating divisions and subsidiaries.
As discussed above, the key elements of Triumph's executive compensation
consist of base salary, annual bonus, and options granted under Triumph's option
plans. The compensation committee's policies for each of these elements,
including the basis for the compensation awarded to Mr. Ill, Triumph's President
and Chief Executive Officer, are discussed below.
In addition, while the elements of compensation described below are
considered separately, the compensation committee takes into account the full
compensation package afforded by Triumph to the individual, including matching
under its 401(k) plan, insurance and other benefits, as well as the programs
described below.
9
BASE SALARIES
Base salaries for executive officers are initially determined by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for executive
talent, including a comparison to base salaries for comparable positions at
other companies in Triumph's industry group. Annual salary adjustments are
determined by evaluating the performance of Triumph and of each executive
officer, and also take into account new responsibilities.
For the base salary granted to Mr. Ill for the fiscal year ended March 31,
2001, the compensation committee took into account a comparison of base salaries
of chief executive officers of Triumph's industry group, Triumph's success in
meeting its financial objectives in this fiscal year, the success of Triumph's
financial performance compared with similar companies engaged in providing
products and services to the aviation industry, the economic conditions
encountered within the aviation industry generally, the performance of the
common stock and the assessment by the compensation committee of Mr. Ill's
individual performance. The compensation committee also took into account the
longevity of Mr. Ill's service to Triumph and its belief that Mr. Ill is an
excellent representative of Triumph to the public by virtue of his stature in
the community and the industry. Mr. Ill was granted a base salary of $450,000
for the fiscal year ended March 31, 2001.
ANNUAL BONUS
Triumph's executive officers are eligible for an annual cash bonus. The
corporate performance measure for bonus payments is tied to business plans based
on levels of consolidated return on operating assets, consolidated operating
income and earnings per share. If a minimum level of consolidated return on
operating assets and consolidated operating income is not met, no bonuses will
be paid. Individual non-financial performance measures are considered and, where
appropriate, unit performance measures, in determining bonus.
Triumph exceeded its planned levels of performance for the year in
consolidated cash return on operating assets, consolidated operating income and
earnings per share goals for the fiscal year ended March 31, 2001. For the
fiscal year ended March 31, 2001, Mr. Ill was awarded a bonus of $540,000.
STOCK OPTIONS
Under the 1996 stock option plan, stock options may be granted to
Triumph's executive officers as well as its other employees. The compensation
committee sets guidelines for the size of stock option awards based on similar
factors, including competitive compensation data, as are used to determine base
salaries and annual bonus. In the event of poor corporate performance, the
compensation committee may elect not to award options.
Stock options are designed to align the interests of executives with those
of the stockholders. Stock options are granted with an exercise price equal to
the market price of the common stock on the date of grant, vest over four years
and may be exercised for up to ten years from the date of grant. This approach
is designed to incentivize the creation of stockholder value over the long term
because the full benefit of the compensation package cannot be realized unless
stock price appreciation occurs over a number of years.
No options to purchase shares of common stock were granted to executive
officers of Triumph during the fiscal year ended March 31, 2001. The
compensation committee believes that significant equity interests in Triumph
held by Triumph's management align the interests of stockholders and management.
10
RESTRICTED STOCK
Effective January 3, 2001, the compensation committee awarded 17,000
shares and 10,000 shares of restricted stock to Messrs. Ill and Bartholdson,
respectively. The awards were in recognition of the significant growth of
Triumph under their leadership and, in the opinion of the committee, brings the
overall compensation for these two executives in line with senior executives at
other companies in Triumph's peer group that demonstrate superior performance.
The restricted stock awards are each subject to full or partial
forfeiture, in the manner set forth in the restricted stock award, if the
respective executive voluntarily resigns from Triumph within three (3) years of
the grant.
CONCLUSION
Through the programs described above, a significant portion of Triumph's
executive compensation is linked directly to individual and corporate
performance and stock price performance relative to that of the overall market
as well as the industry index. The compensation committee intends to continue
the policy of linking executive compensation to corporate performance and
returns to
stockholders, recognizing that the ups and downs of the business
cycle from time to time may result in an imbalance for a particular period.
Compensation Committee
Richard C. Gozon (Chairman)
Claude F. Kronk
Joseph M. Silvestri
This report of the compensation committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or under the Exchange Act
except to the extent that Triumph specifically incorporates this information by
reference, and shall not otherwise be deemed filed under the Securities Act and
the Exchange Act and shall not be deemed soliciting material.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee of the board is composed of Richard C. Gozon,
Claude F. Kronk and Joseph M. Silvestri. None of the members of the compensation
committee were employees of Triumph during the fiscal year ended March 31, 2001.
11
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
MANAGEMENT
As of May 31, 2001, the following nominees for director, the following
executive officers, all directors and executive officers as a group, and the
following 5% beneficial owners, were known to Triumph to be beneficial owners
(as defined in regulations issued by the SEC) of the outstanding common stock
and class D common stock shown below.
A person is deemed to be the beneficial owner of securities that can be
acquired by that person within 60 days from the date of this proxy statement
upon the exercise of options and warrants. Each beneficial owner's percentage
ownership is determined by assuming that options and warrants that are held by
that person (but not those held by any other person) and that are exercisable
within 60 days from the date of this proxy statement have been exercised.
Unless otherwise indicated, the address of each person identified is c/o
Four Glenhardie Corporate Center, 1255 Drummers Lane - Suite 200, Wayne,
Pennsylvania 19087.
Unless otherwise noted, Triumph believes that all persons named in the
table have sole voting and investment power with respect to all shares of common
stock and class D common stock beneficially owned by them.
The percent of total shares outstanding is based upon outstanding shares
of common stock and class D common stock.
Shares Beneficially Owned
-------------------------
Percent of
Total Shares
Name Number Outstanding
- ---- ------ -----------
Richard C. Ill............................... 345,693(1) 2.2%
John R. Bartholdson ......................... 314,976(2)(3) 2.0%
Lawrence J. Resnick.......................... 92,117(4) *
Richard M. Eisenstaedt ...................... 17,750(5) *
Kevin E. Kindig.............................. 43,753(6)(7) *
Richard C. Gozon ............................ 72,929(8) *
Claude F. Kronk ............................. 79,303(9)(10) *
Joseph M. Silvestri ......................... 25,658(11)(12) *
William O. Albertini......................... 7,834(13) *
Citicorp Venture Capital, Ltd................ 4,648,535(14) 29.4%
399 Park Avenue
New York, NY 10043
Private Capital Management, Inc.............. 1,645,549 10.4%
3003 Tamiami Trail North
Naples, Fl 34103
All executive officers and
directors as a group
(9 persons).................................. 1,000,013 6.3%
12
- ----------
* Less than one percent.
(1) Mr. Ill currently holds stock options to purchase 58,500 shares of common
stock, which options may be exercised in the next 60 days. This amount
also includes 17,000 shares of restricted common stock, none of which have
vested by May 31, 2001.
(2) Mr. Bartholdson currently holds stock options to purchase 58,500 shares of
common stock, which options may be exercised in the next 60 days. This
amount also includes 10,000 shares of restricted common stock, none of
which have vested by May 31, 2001.
(3) Mr. Bartholdson disclaims beneficial ownership of 3,050 shares of common
stock beneficially owned by his daughter.
(4) Mr. Resnick currently holds options to purchase 32,117 shares of common
stock, which options may be exercised in the next 60 days.
(5) Mr. Eisenstaedt currently holds stock options to purchase 16,750 shares of
common stock, which options may be exercised in the next 60 days.
(6) Mr. Kindig currently holds stock options to purchase 13,000 shares of
common stock, which options may be exercised in the next 60 days.
(7) Mr. Kindig disclaims beneficial ownership of 200 shares of common stock
beneficially owned by his children.
(8) Mr. Gozon currently holds stock options to purchase 1,834 shares of common
stock, which options may be exercised in the next 60 days.
(9) Mr. Kronk currently holds stock options to purchase 1,834 shares of common
stock, which options may be exercised in the next 60 days.
(10) Mr. Kronk disclaims beneficial ownership of 2,500 shares of common stock
beneficially owned by his daughter.
(11) Mr. Silvestri currently holds stock options to purchase 1,834 shares of
common stock, which options may be exercised in the next 60 days.
(12) Mr. Silvestri disclaims beneficial ownership of the shares of common stock
and class D common stock held by Citicorp Venture Capital, Ltd.
(13) Mr. Albertini currently holds stock options to purchase 1,834 shares of
common stock, which options may be exercised in the next 60 days.
(14) Includes 1,300,000 shares of common stock and 3,348,535 shares of class D
common stock, which class D common stock cannot be voted in the election
of directors.
PRINCIPAL STOCKHOLDERS
As of May 31, 2001, each of the following persons was known to Triumph to
be a "beneficial owner" (as defined in regulations issued by the SEC) of more
than five percent of the outstanding common stock and class D common stock.
The information in this table was furnished by Citicorp Venture Capital,
Ltd. and Private Capital Management, Inc. in reports to Triumph and by filings
with the SEC.
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership of Class
- -------------- ------------------- -------------------- --------
Common stock Citicorp Venture Capital, Ltd. 4,648,535(1) 29.4%
and class D 399 Park Avenue
common stock New York, NY 10043
Common stock Private Capital Management, Inc. 1,645,549 10.4%
3003 Tamiami Trail North
Naples, FL 34103
- -----------
(1) Includes 1,300,000 shares of common stock and 3,348,535 shares of class D
common stock, which class D common stock cannot be voted in the election
of directors.
13
PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
stockholder return on the common stock, on a quarterly basis, from October 24,
1996 to the present with the cumulative total return over the same period of (i)
the Aerospace/Defense Industry Index published by Standard & Poor's and (ii) the
Russell 2000 index.
[In the printed proxy statement a graph appears depicting the following plot
points.]
Research Data Group Peer Group Total Return Worksheet
TRIUMPH GROUP INC NEW
Cumulative Total Return
-----------------------------------------------------------------
10/25/1996 3/97 3/98 3/99 3/00 3/01
TRIUMPH GROUP, INC 100.00 115.52 204.02 108.05 133.91 174.71
RUSSELL 2000 100.00 127.34 141.68 118.65 162.89 137.93
S&P AEROSPACE/DEFENSE 100.00 109.84 121.47 86.45 79.38 119.09
Triumph has not paid cash dividends on its common stock. HISTORIC STOCK
PRICE IS NOT INDICATIVE OF FUTURE STOCK PRICE PERFORMANCE.
14
PROPOSAL NO. 2 - RATIFICATION OF SELECTION OF AUDITORS
The board has selected Ernst & Young LLP as Triumph's independent
auditors for the fiscal year ending March 31, 2002 and the stockholders are
asked to ratify this selection. Ernst & Young LLP has advised Triumph that it
has no direct or material indirect interest in Triumph or its affiliates.
Representatives of Ernst & Young LLP are expected to attend the meeting, will
have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions. The favorable
vote of a majority of shares of common stock and class D common stock
entitled to vote at the meeting, voting together as a class, is required to
approve the ratification of the selection of auditors.
AUDIT FEES
Ernst & Young LLP's fees for the audit of Triumph's financial statements
for the fiscal year ended March 31, 2001 and for the reviews of Triumph's
interim financial statements were $516,000. During fiscal 2001, none of the
hours Ernst & Young LLP expended on Triumph's financial audit were provided by
persons other than Ernst & Young LLP's full-time permanent employees.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young LLP billed no fees during fiscal year 2001 for information
technology consulting.
ALL OTHER FEES
Ernst & Young LLP's fees during fiscal year 2001 for professional services
other than audit services and information technology consulting fees were
$316,543. Triumph's audit committee has determined that Ernst & Young LLP's
rendering of all other non-audit services is compatible with maintaining auditor
independence.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31,
2002.
GENERAL AND OTHER MATTERS
The board knows of no matter, other than as referred to in this proxy
statement, which will be presented at the meeting. However, if other matters
properly come before the meeting, or any of its adjournments, the person or
persons voting the proxies will vote them with their judgment in those matters.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Triumph's directors,
officers (including a person performing a principal policy-making function)
and persons who own more than 10% of a registered class of Triumph's equity
securities to file with the SEC initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of Triumph.
Directors, officers and 10% holders are required by SEC regulations to send
Triumph copies of all of the Section 16(a) reports they file. Based solely
upon a review of the copies of the forms sent to Triumph and the
representations made by the reporting persons to Triumph, Triumph believes
that during the fiscal year ended March 31, 2001, its directors, officers and
10% holders complied with all filing requirements under Section 16(a) of the
Exchange Act.
15
STOCKHOLDER PROPOSALS -- 2002 ANNUAL MEETING
Proposals of stockholders intended to be presented at the annual meeting
of stockholders in 2002 must be received by February 15, 2002 to be considered
for inclusion in Triumph's proxy statement and form of proxy relating to that
meeting. If any stockholder wishes to present a proposal to the 2002 annual
meeting of stockholders that is not included in Triumph's proxy statement for
that meeting and fails to submit that proposal to the Secretary of Triumph on or
before May 1, 2002, then Triumph will be allowed to use its discretionary voting
authority when the proposal is raised at the annual meeting, without any
discussion of the matter in its proxy statement. Stockholder proposals should be
directed to the Secretary, at the address of Triumph set forth on the first page
of this proxy statement.
By order of the board of directors,
/s/ Richard M. Eisenstaedt
--------------------------
Richard M. Eisenstaedt
Secretary
June 18, 2001
Appendix A
TRIUMPH GROUP, INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter governs the operation of the audit committee. The committee shall
review and reassess the charter at least annually and obtain the approval of the
board of directors. The committee shall be appointed by the board of directors
and shall comprise at least three directors, each of whom are independent of
management and Triumph Group, Inc. ("Triumph"). Members of the committee shall
be considered independent if they have no relationship that may interfere with
the exercise of their independence from management and Triumph and shall meet
the other independence requirements for serving on audit committees as set forth
in the NYSE's listed company manual. All committee members shall be financially
literate and at least one member shall have accounting or related financial
management expertise.
STATEMENT OF POLICY
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to Triumph's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of Triumph's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors, the internal auditors
and management of Triumph. In discharging its oversight role, the committee is
empowered to investigate any matter brought to its attention with full access to
all books, records facilities, and personnel of Triumph and the power to retain
outside counsel, or other experts for this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the audit committee is to oversee Triumph's
financial reporting process on behalf of the board and report the results of
their activities to the board. Management is responsible for preparing Triumph's
financial statements, and the independent auditors are responsible for auditing
those financial statements. The committee in carrying out its responsibilities
believes its policies and procedures should remain flexible, in order to best
react to changing conditions and circumstances. The committee should take the
appropriate actions to set the overall corporate "tone" for quality financial
reporting, sound business risk practice, and ethical behavior.
The following shall be the principal recurring processes of the audit committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the committee may supplement them as
appropriate.
o The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board and the audit committee, as representative of
Triumph's shareholders. The committee shall have the ultimate authority
and responsibility to select, evaluate and, where appropriate, replace the
independent auditors. The committee shall discuss with the auditors their
independence from management and Triumph and shall ensure the Committee's
receipt from the independent auditors of the written disclosures required
A-1
by the Independence Standards Board. Annually, the committee shall review
and recommend to the board the selection of Triumph's independent
auditors, subject to shareholders' approval.
o The committee shall discuss with the internal auditors and the independent
auditors the overall scope and plans for their respective audits including
the adequacy of staffing and compensation. Also, the committee shall
discuss with management, the internal auditors, and the independent
auditors the adequacy and effectiveness of the accounting and financial
controls, including Triumph's system to monitor and manage business risk,
and legal and ethical compliance programs. Further, the committee shall
meet separately with the internal auditors and the independent auditors,
with and without management present, to discuss the result of their
examinations.
o The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of Triumph's
Quarterly Report on Form 10-Q. Also the committee shall discuss the
results of the quarterly review and any other matters required to be
communicated to the committee by the independent auditors under generally
accepted auditing standards. The chair of the committee may represent the
entire committee for the purposes of this review.
o The committee shall review with management and the independent auditors
the financial statements to be included in Triumph's Annual Report on Form
10-K (or the annual report to shareholders if distributed prior to the
filing of Form 10-K), including their judgment about the quality, not just
acceptability, of accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial statements.
Also, the committee shall discuss the results of the annual audit and any
other matters required to be communicated to the committee by the
independent auditors under generally accepted auditing standards.
o The Committee shall issue annually a report to be included in Triumph's
proxy statement for its annual meeting of stockholders and include in such
report whether the committee recommended to the Board of Directors that
the audited financial statements be included in that year's Annual Report
on Form 10-K.
A-2
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TRIUMPH GROUP, INC.
The undersigned hereby appoints Richard C. Ill and John R. Bartholdson as
proxies, with power to act without the other and with power of substitution, and
hereby authorizes them to represent and vote, as designated on the other side,
all the shares of stock of Triumph Group, Inc. standing in the name of the
undersigned with all powers which the undersigned would possess if present at
the Annual Meeting of Stockholders of the Company to be held on July 16, 2001 or
any adjournments thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
IF NO DIRECTION IS MADE WITH RESPECT TO THE ELECTION Please mark
OF DIRECTORS OR IF YOU VOTE "FOR" THE ELECTION OF THE your votes as
NOMINEES AS DIRECTORS, THE PROXIES WILL ALLOCATE VOTES indicated in
IN THEIR DISCRETION AMONG THE NOMINEES, UNLESS OTHERWISE this example /X/
SPECIFIED.
THE BOARD RECOMMENDS A VOTE "FOR" THE FOLLOWING DIRECTORS:
Nominees: Richard C. Ill, John R. Bartholdson, Claude F. Kronk, Richard C.
Gozon, Joseph M. Silvestri, and William O. Albertini.
To distribute your votes on a cumulative basis, write below the name(s) of the
nominee(s) you wish to vote for and the number of votes you wish to cast for
each.
- --------------------------------------------------------------------------------
1. ELECTION AS DIRECTORS
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(EXCEPT FOR THOSE NOMINEES to vote for all nominees
I HAVE CROSSED-OUT) listed to the right
/ / / /
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL 2.
2. Ratify appointment of Ernst & Young LLP as independent auditors.
FOR AGAINST ABSTAIN
/ / / / / /
SIGNATURE______ _________________ SIGNATURE____________________ DATE__________
NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE