SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 [Amendment No. ]
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
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TECHNITROL, INC.
- ---------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
TECHNITROL, INC.
- ---------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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how it was determined.
TECHNITROL, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 23, 1995
The Annual Meeting of the Shareholders of Technitrol, Inc.
(hereinafter called the "Company"), will be held in the Lincoln Memorial
Room, Union League of Philadelphia, 140 South Broad Street, Philadelphia,
Pennsylvania, on Tuesday, May 23, 1995, at 4:30 P.M., Eastern Daylight
Saving Time, for the following purposes:
(1) to nominate and elect three directors for a term of three years
and until their successors are elected and qualified:
(2) to consider and act upon the selection of KPMG Peat Marwick LLP as
the Company's independent public accounts for the year ending December 31,
1995; and
(3) to transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on March 10,
1995, will be entitled to vote at the meeting.
By Order of the Board of Directors
J. Barton Harrison
Secretary
Philadelphia, Pennsylvania
April 17, 1995
SHAREHOLDERS ARE REQUESTED TO MARK, SIGN AND RETURN THE ENCLOSED
PROXY PROMPTLY IN THE ENVELOPE PROVIDED
TECHNITROL, INC.
1210 Northbrook Drive
Suite 385
Trevose, PA 19053
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, MAY 23, 1995
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Technitrol, Inc. (hereinafter
called the "Company") to be used in voting at the Annual Meeting of the
Shareholders of the Company to be held in the Lincoln Memorial Room, Union
League of Philadelphia, 140 South Broad Street, Philadelphia, Pennsylvania,
on May 23, 1995, at 4:30 P.M., Eastern Daylight Saving Time, or at any
adjournment or adjournments thereof. This Proxy Statement, the proxy and a
copy of the Annual Report, including Consolidated Balance Sheets for the
years ended December 31, 1994 and 1993 and Consolidated Statements of
Earnings and Retained Earnings of the Company for the years ended December
31, 1994, 1993 and 1992, have been mailed to each shareholder of record at
the close of business on March 10, 1995, on or before April 17, 1995. The
Company's telephone number is 215-355-2900.
You are requested to mark, sign and complete the accompanying proxy
and return it in the envelope provided.
Proxies in such form, if duly signed and received in time for the
voting, will be voted in accordance with the directions of the
shareholders. The persons designated as proxies shall have the
discretionary authority to vote cumulatively for the election of Directors
and distribute such votes among the nominees standing for election (except
as otherwise instructed by a shareholder in the accompanying proxy) to
assure the election of the nominees of the Board of Directors. The giving
of a proxy does not preclude the right to vote in person should the person
so desire and, as provided by the laws of Pennsylvania, one may revoke the
proxy by giving notice to the Secretary of the Company in writing or in
open meeting, but such revocation shall not affect any vote previously
taken.
The expense of soliciting proxies for the Annual Meeting, including
the cost of preparing, assembling and mailing the notice, proxy and Proxy
Statement, will be paid by the Company. The solicitation will be made by
the use of the mails, through brokers and banking institutions, and by
officers and regular employees of the Company, Proxies may be solicited by
personal interview, mail, telephone or telegraph.
Each holder of Common Stock of record at the close of business on
March 10, 1995, is entitled to one vote per share so held on all matters
that come before the Annual Meeting except in the election for directors
which shall be by cumulative voting. In the election of directors, if a
shareholder entitled to vote wishes to exercise cumulative voting rights,
he shall so indicate his intention to the Chairman of the Annual Meeting
prior to voting, multiply the number of votes to which he may be entitled
by the total number of directors to be elected in the election and cast the
whole number of such votes among one or more candidates in such proportion
as he desires. The candidates receiving the highest number of votes, up to
the number of directors to be elected in the election, shall then be
elected.
At the close of business on March 10, 1995, there were outstanding and
entitled to vote at the Annual Meeting 6,021,152 shares of Common Stock,
the only class of stock outstanding and entitled to vote at the Annual
Meeting.
Proposal No. 1--Election of Directors
The Board of Directors is divided into three classes. The Directors in
Class I, Messrs. Thomas J. Flakoll, J. Barton Harrison and Graham Humes are
presently serving terms expiring in 1996. The Directors in Class II,
Messrs. John E. Burrows, Jr., James M. Papada, III and James J. Rafferty,
Jr., are presently serving terms expiring in 1997. The Directors in Class
III, Messrs. Roy E. Hock, Edward M. Mazze and Stanley E. Basara, are the
Board of Directors' nominees for election at this meeting and will, if
elected, serve terms expiring in 1998.
Votes pursuant to the accompanying proxy will be cast equally, unless
otherwise indicated on the proxy, for the election of Messrs. Hock, Mazze
and Basara, provided that, as set forth above, the persons designated as
proxies shall have the discretionary authority to cumulate their votes.
However, each shareholder is allowed to vote his shares cumulatively in the
manner previously described and may indicate such intention on the enclosed
proxy. The three nominees are presently directors of the Company. It is not
contemplated that any of Messrs.. Hock, Mazze or Basara will be unable or
unwilling to serve as a Director, but should that occur, the Board of
Directors reserves the right to nominate another person in place of any
one.
SECURITY OWNERSHIP OF CERTAIN PRINCIPAL OWNERS AND MANAGEMENT
Principal Owners
The following table sets forth as of December 31, 1994, the beneficial
ownership of those person known by the Company to be the beneficial owners
of more than 5% of the Company's outstanding Common Stock, the only class
authorized:
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ---------------------------------------------------------------------------
Gordon Palmer, Jr. 996,300 (1) 16.55%
7147 Sabino Vista Circle Direct
Tucson, AZ 85715
Tinicum Investors Group 505,500 (2) 8.40%
990 Stewart Avenue Direct
Garden City, NY 11530
Dimensional Fund Advisors, Inc. 390,300 (3) 6.48%
1299 Ocean Avenue, 11th Floor Indirect
Santa Monica, CA 90401
- -------------
(1) Mr. Palmer is one of the founders of the Company. For many years he was
an officer of the Company and served as a Director from 1947 until July
31, 1991. He has been retired since 1977.
(2) Group consists of Tinicum Investors which owns 337,185 shares
("Investors"), James H. Kasschau, an officer and director of Investors,
who owns 30,000 shares, and RIT Capital Partners plc, which owns
138,315 shares ("RIT"). With respect to said shares, RIT shares voting
and dispositive powers with J. Rothschild Capital Management Ltd.
("Capital"). Investors and Mr. Kasschau have the same address and RIT
and Capital are located at 15 St. James's Place, London SW1A INW,
England.
(3) Of these shares, 232,800 shares are held of record by Dimensional Fund
Advisors, Inc. ("Dimensional"), a registered investment adviser,
150,300 shares by DFA Investment Dimensions Group, Inc. and 7,200
shares by The DFA Investment Trust Company. Though Dimensional is
deemed to be the beneficial owner of all such shares, it disclaims such
beneficial ownership.
Management
The following table sets forth as of March 10, 1995, the beneficial
ownership of the Company's Common Stock by all Directors and nominees, and
the Directors and officers of the Company as a group:
Amount and Nature of Percent
Name Beneficial Ownership of Class
- ---------------------------------------------------------------------------
J. Barton Harrison............... 81,670 Direct 1.36
Roy E. Hock...................... 270,659 Direct 4.50
James M. Papada, III............. 2,400 Direct .04
James J. Rafferty, Jr. .......... 53,100 Direct .88
Thomas J. Flakoll................ 40,259 Direct .67
Edward M. Mazze.................. 1,900 Direct .03
Graham Humes..................... 21,000 Direct .35
Stanley E. Basara................ 1,500 Direct .02
John E. Burrows, Jr.............. 600 Direct .01
Directors and Officers as
a group (12 people)............ 483,335 8.03
DIRECTORS AND EXECUTIVE OFFICERS
Identification and Business Experience
The following table sets forth certain information with regard to each
person nominated for election or reelection to the Board (Messrs. Basara,
Hock and Mazze), each Director whose term will continue after the Annual
Meeting (Messrs. Burrows, Flakoll, Harrison, Humes, Papada and Rafferty)
and the executive officers of the Company.
Name Age Position
- ---------------------------------------------------------------------------
Roy E. Hock........... 65 Chief Executive Offer and Chairman of the Board
Thomas J. Flakoll..... 50 Chief Operating Officer, President and Director
James J. Rafferty, Jr. 57 Vice President and Director
Michael J. Kirchoff... 50 Group Vice President
J. Barton Harrison.... 65 Secretary and Director
Robert J. Citrino..... 62 Treasurer
Albert Thorp, III..... 40 Corporate Controller
James M. Papada, III.. 46 Director
Edward M. Mazze....... 54 Director
Graham Humes.......... 62 Director
Stanley E. Basara..... 61 Director
John E. Burrows, Jr... 47 Director
There is no family relationship between any officers and/or Directors nor
are there any arrangements or understandings among any officers and/or
Directors and any other person(s) pursuant to which any such officer and/or
Director was or is to be selected as such.
Mr. Hock has been a Director since 1967 and was elected Chief
Executive Officer in 1976. He held the office of President from 1973
through November, 1985 and from July, 1987 to March, 1994.
Mr. Flakoll was elected President and Chief Operating Officer of the
Company in March of 1994, having been a Vice President since November,
1985. He was General Manager of the Components Division from 1980 until
April, 1990, and was elected a Director in 1984. Prior to joining the
Company, Mr. Flakoll held positions with the Fermont Division of Dynamics
Corporation of America as Director of Operations and as Director of
Engineering, and with Bowmar Instrument Corporation as Director of
Manufacturing and Director of Engineering.
Mr. Rafferty has held the office of President of Advanced Metallurgy
from 1976 through 1985 and from July, 1987 to the present time. He was
appointed Vice President and Director of Technitrol in 1984, President in
1985 and Vice President in 1987. Previously, Mr. Rafferty held positions
with Dietrich Industries, Blairsville Division, as Division Manager, and
with National Aluminum Products as Vice President of Production.
Mr. Kirchoff was elected Group Vice President in January of 1995.
Previously, he was employed by Victoreen, Inc. from 1986 to 1993, serving
as President and Chief Executive Officer since 1988. Prior to that, he was
employed in various capacities by EG&G Ortec, Inc. from 1972 to 1986,
including General Manager, Materials Analysis Division from 1981 to 1985
and then Vice President, Marketing and Sales, to 1986.
Mr. Harrison has been a Director since 1966, and was elected Secretary
effective February 7, 1983, a position which he previously held from 1975
to 1977. Mr. Harrison was President of Extracorporeal, Inc. a manufacturer
of medical devices, from October, 1977, until October, 1982. Currently, he
is also a director of Steel Plant Equipment Corporation.
Mr. Citrino served in the capacity of Controller for over two years
and has been employed by the Company since 1967. He was elected Treasurer
on March 16, 1983.
Mr. Thorp joined the Company in August, 1989, and was elected
Corporate Controller on September 27, 1989. From February, 1986, until
August, 1989, he was Controller of the Medical Packaging Division of PM
Company. Prior to that, he was Plant Controller for Centocor, Inc. from
November, 1984, until February, 1986. Mr. Thorp is a Certified Public
Accountant.
From February, 1983, until December, 1987, Mr. Papada was President
and Chief Operating Officer of Hordis Brothers, Inc., a privately-held
glass fabricator. Commencing December, 1987, Mr. Papada became a partner in
the law firm of Stradley, Ronon, Stevens & Young, where he had been a
partner prior to his joining Hordis. Stradley, Ronon, Stevens & Young is
counsel to the Company. Mr. Papada is also a Director of Para-Chem
Southern, Inc., and has been a Director of the Company since 1983.
Dr. Mazze was elected a Director of the Company in November, 1985. On
July 1, 1993, Dr. Mazze was appointed Dean, The Belk College of Business
Administration, The University of North Carolina at Charlotte and
Professor of Marketing. Prior to that he was Professor of Marketing and
International Business at Temple University and was formerly the Dean of
the School of Business and Management at Temple. From 1975 to 1979, he was
Dean of the W. Paul Stillman School of Business at Seton Hall University.
Dr. Mazze also serves as a management and marketing consultant. He is a
Trustee of Delaware Valley College of Science and Agriculture.
Mr. Humes was elected a Director of the Company in November, 1986,
effective February, 1987. He is General Director (CEO) of CARESBAC-St.
Petersburg, in St. Petersburg, Russian Federation. He was a Senior Vice
President and a Managing Director of Legg Mason Wood Walker, Inc. from
March 1987 through June 1993. From 1974 through February, 1987, he was a
Senior Vice President of Mellon Bank (East), N.A. and Manager of the
Corporate Finance Group. He is a Director of Brunschwig & Fils, Inc.,
CARESBAC-St. Petersburg and CARESBAC-Bulgaria, Sophia, Bulgaria.
Mr. Basara was elected as a Director by the Board of Directors in
September 1993. Mr. Basara has been President and Chief Operating Officer
of Panasonic Broadcast Systems Company since 1987. From June 1982 through
1986 he was President of Thompson-CFS, Inc. From 1956 to 1981 he was
employed by RCA Corporation, his last position being Division Vice
President and General Manager of RCA's Broadcast Systems Division.
Mr. Burrows was elected as a Class II Director in May of 1994.
Currently, he is Vice President-North America of Quaker Chemical
Corporation. From 1973 until his appointment at Quaker Chemical Corporation
in March, 1990, he held various management positions at FMC Corporation,
the most recent being Division Manager, Marine Colloids, a biotech and food
specialty chemical operation with sales in 75 countries and plants in
Europe, the U.S. and the Philippines.
Committees
The Board of Directors of the Company has an Audit Committee and an
Executive Compensation Committee, the members of which are non-employee
Directors. The current members of such Committees are: Audit -- Messrs.
Burrows, Humes and Papada; Executive Compensation -- Messrs. Basara,
Harrison and Mazze. During the year ended December 31, 1994, the Board,
Audit and Executive Compensation Committees held seven, three and three
meetings, respectively. No director attended fewer than 75% of the
aggregate of Board meetings and Committee meetings of which such Director
was a member. The Board does not have a nominating or similar committee.
The function of the Executive Compensation Committee is to review and
recommend to the Board the broad plan of key executive compensation, and
implementation thereof, to review the performance and corporate objectives
of the Chief Executive Officer and Chief Operating Officer, to review the
Company's pension plan and investment performance thereof and to undertake
special assignments as made by the Board.
The main function of the Audit Committee is to assist the Board in
fulfilling its fiduciary responsibilities relating to corporate accounting
and reporting practices, including recommendation of the firm to be
employed as independent auditors, consultation with the independent auditor
regarding the plan, scope and cost of the audit and non-audit functions, if
any; consultation and review with the independent auditor of its report
(including accounting practices and principles, adjustments and required
disclosure) and management letter; periodic consultation (outside of
management's presence) with the independent auditor regarding the adequacy
of internal controls; review of internal audit reports and review of the
total insurance program for adequacy.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
Executive Compensation
The following table sets forth the cash compensation, as well as the
value of restricted stock plan awards, paid to the Company's three
executive officers whose cash compensation for each of the three years
ended December 31, 1994, exceeded $100,000.
SUMMARY COMPENSATION TABLE
Annual Long-Term Compensation All Other
Compensation (1) Restricted Stock Plan Awards Compensation (3)
--------------------- ---------------------------- -------------------
Fiscal
Name and Principal Position Year Salary Bonus Shares (2) Value
- -----------------------------------------------------------------------------------------------------------------
Roy E. Hock, Chief 1994 $207,000 $100,000 1,830 $27,221 $37,033
Executive Officer and 1993 187,000 58,000 2,700 31,500 15,524
Chairman of the Board 1992 187,000 30,000 1,500 13,188 3,159
Thomas J. Flakoll, Chief 1994 161,800 87,000 1,680 24,990 37,574
Operating Officer and 1993 141,000 47,000 2,070 24,150 23,634
President 1992 141,000 30,000 1,500 13,188 7,904
James J. Rafferty, Jr. 1994 150,000 70,000 1,440 21,420 9,772
Vice President 1993 143,000 47,000 2,400 28,000 22,199
1992 143,000 30,000 1,500 13,188 14,820
<FN>
(1) None of the three officers received other annual compensation exceeding
the lesser of $50,000 or 10% of salary and bonus during the years 1992,
1993 and 1994.
(2) At December 31, 1994, the aggregate shares held under the Restricted
Stock Plans and value thereof was a follows: Mr. Hock, 4,200 shares
values at $57,225; Mr. Flakoll, 8,970 shares valued at $122,216; and
Mr. Rafferty, 11,100 shares values at $151,238. Dividends are paid on
shares held under the Restricted Stock Plans. Shares in 1993 and 1992
adjusted to reflect 200% stock dividend effective September 18, 1994.
(3) Includes cash received upon vesting of Restricted Stock Plan awards
previously granted, Company's contribution under the 401(k) Retirement
Savings Plan, and term life insurance premiums paid. For the year 1994,
the aggregate sums reported above are specifically identified as
follows:
Cash under
Restricted Stock Plans 401(k) Plan Term Life Insurance
---------------------- ----------- -------------------
Mr. Hock........ $33,683 $3,105 $1,245
Mr. Flakoll..... 34,027 2,329 1,218
Mr. Rafferty.... 6,737 2,246 789
Retirement Plan
The Company maintains a defined benefit pension plan which provides
retirement benefits to employees of the Company and its subsidiaries who
are not covered by a collectively bargained agreement providing retirement
benefits from other plans. The Company makes contributions annually to the
plan based upon the annual salary (excluding bonuses) of each participant
and certain actuarial calculations. The following table sets forth as to
the Company's defined benefit pension plan the annual benefits payable upon
retirement to persons with specified final average salaries and years of
credited service classification. The information assumes that the person
retires at age 65 or older and selects a single life annuity payment:
Years of Credited Service
--------------------------------------------
Final Average Salary 10 Years 20 Years 30 Years 40 Years
-------- -------- -------- --------
$150,000............ $16,000 $12,000 $18,000 $18,000
100,000............. 13,700 27,500 41,200 41,200
150,000............. 21,400 42,900 64,300 64,300
Messrs. Hock, Flakoll and Rafferty have 35, 14 and 19 years of credited
service under the plan, respectively, and their annual salaries covered by
the plan during the year ended December 31, 1994, were $150,000 each, the
maximum allowable amount for qualified pension plans in 1994.
Under federal law, an employee's benefits under a qualified pension
plan, such as the Company's pension plan outlined above, are limited to
certain maximum amounts. Effective January 1, 1994, the Company adopted a
supplemental retirement plan which supplements, on an unfunded basis, the
benefits of any participant in the qualified pension plan in an amount by
which any participant's benefits are limited by law. The amount of the
annual salaries of Messrs. Hock and Flakoll covered by this supplemental
plan during the year ended December 31, 1994, were $57,000 and $11,800,
respectively.
Restricted Stock
In 1981, the Board of Directors and the Shareholders of the Company
approved the adoption of an Incentive Compensation Plan. The plan provides
that the Committee administering the plan (the "Committee") has the
authority and flexibility to develop and implement forms of incentive
compensation for executive employees and key employees of each of the
operating divisions and subsidiaries of the Company.
Pursuant to the authority granted it under the plan, the Committee
adopted a Restricted Stock Plan (the "Restricted Plan I"), pursuant to
which shares of restricted stock may be awarded to executive employees, at
no cost to such employee. These shares may not be sold, pledged, or
otherwise disposed of until the restriction period set forth in Restricted
Plan I (the "Restricted Period") has ended. During the Restricted Period,
the executive must remain in the employ of the Company, except for normal
retirement, or early retirement with the Committee's permission. In the
event that the executive ceases to be an employee of the Company during the
Restricted Period, then ownership of the shares reverts to the Company.
At such times as the shares are issue to an executive pursuant to
Restricted Plan I, the Committee determines performance targets
(the"Performance Target"). The Performance Target must be achieved by the
executive, if at all (but subject to the provision set forth below), at any
time on or before the third anniversary of the date of the issuance of
shares under Restricted Plan I (the "Performance Date"). The Restricted
Period related to the shares issued to each executive from time to time
expires upon the earlier of the seventh anniversary of the issuance of such
shares or the Performance Date. Restricted Plan I also provides that the
Committee can determine, at the Performance Date, that a Performance Target
has been partially achieved and may then modify the number of shares as to
which the Restricted Period has ended. If the executive dies or becomes
totally disabled after shares have been issued to him or her, Restricted
Plan I provides in some instances for the early termination of the
Restricted Period, and allows, in other instances, for the early
termination of the Restricted Period at the discretion of the Committee.
In 1984, the Board of Directors adopted a second restricted stock plan
("Restricted Plan II") under the Incentive Compensation Plan. Restricted
Plan II is designed to enable the Company to obtain and retain the services
of qualified employees, and to reward and motivate them, by provided them
with the opportunity to acquire shares of the Company's Common Stock. Under
the Restricted Plan II, shares of restricted stock may be awarded not only
to executive employees, but also to key employees of each of the operating
divisions and subsidiaries of the Company.
Under Restricted Plan II, shares of Common Stock may be awarded to
eligible employees, from time to time, at no cost to such employees. The
shares may not be sold, pledged or otherwise disposed of until the
restricted period set forth in Restricted Plan II has ended. During the
restricted period (five years), the shares remain physically in the
possession of the Company. If the employee resigns or has employment
terminated by the Company for cause prior to the end of the restricted
period, the shares are returned to the Company. Upon death, total
disability or retirement on the normal retirement date prior to the
expiration of the restricted period, the restrictions will be released. If
an employee elects early retirement or had employment terminated other than
for cause, the employee shall be entitled to pro rata vesting, and the
Committee has the power to adjust the effective award.
Under both Restricted Plan I and Restricted Plan II (collectively, the
"Plans"), the executive at the Performance Date or the eligible employee
upon vesting of the shares awarded, receives as additional compensation, an
amount of cash equal to the lesser of (1) the amount (calculated at the
highest individual Federal income tax rate, including surcharge) necessary
to pay Federal income taxes on such shares and additional cash
compensation, and (2) 165% of the market value of the shares as of the date
of the initial award by the Committee, all calculated on the number of
shares for which the applicable restricted period has ended.
During 1994, the Committee issued an aggregate amount of 8,220 shares
of the Company's Common Stock to five officers of the Company under
Plan II. During the year ended December 31, 1994, the Company expensed
$994,000 in the aggregate for all participants under the Plan.
The shareholders of the Company have previously authorized 600,000
shares for use under the Incentive Compensation Plan and the two Plans
described herein. As of December 31, 1994, 222,490 shares remain available
for future grant.
Compensation of Directors
Non-employee Directors are paid an annual retainer of $8,000 (except
for Committee Chairmen who are paid $10,000) plus $1,000 for each Board
Meeting attended and $750 for each Committee meeting attended. Under a
Deferred Compensation Plan for non-employee Directors, all or part of the
annual fees may be deferred at the election of the Directors.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION POLICIES
The Company's executive compensation program is administered by the
Executive Compensation Committee of the Board of Directors (the
"Committee"). The Committee is composed of three outside directors. Upon
recommendation by the Committee, all issues pertaining to executive
compensation are submitted to the full Board of Directors for approval.
Compensation Philosophy: The purpose of the Company's executive
compensation program is to help the Company achieve its mission and goals
by attracting, motivating, and retaining key executives of high caliber and
good potential. Pay opportunities will be competitive for average
performance, and above average pay will be provided for superior
performance. Variable components of pay will be a significant element of
compensation and will be variable on the basis of performance. They are not
to be considered entitlements.
Components of Compensation: The executive compensation program
consists of base salary, discretionary cash bonuses and awards under the
Restricted Stock Plans. Base salary and potential bonus ranges are
established annually following comparison of the Company and each of its
operating units with surveys of other manufacturing companies of similar
size and complexity. Though utilizing several different surveys, the
Committee relies principally on The National Executive Compensation Survey
published annually by the Management Association of Illinois. In order to
achieve some balance between short term and long term business objectives
of the Company, the cash bonus is weighted two-thirds by performance
criteria relating to the current business year and one-third by criteria
relating to future business considerations. The weighting for stock awards
is reversed with the emphasis on longer term business development and
strategic plans.
Administration in 1994:
Salaries. In determining 1994 executive salaries, the Committee began
by noting that there had been no increases in 1993. It then considered the
previously established salary ranges for each position and each executive's
relationship to the mid-point of his range in light of his tenure with the
Company and years in the current position. Next, it noted the performance
of each individual operating unit against its sales, operating profit and
return on employed capital projections and the personal performance of each
operating unit's senior executive relative to stated goals and challenges
which arose during the year. Finally, the Committee noted the Company's
improved performance in 1993 with net earnings from operations increasing
18.3%, net earnings from operations per share increasing 16.7% and return
on shareholder's equity increasing 17.6% over 1992. The Committee also
noted that the 1993 total return (with reinvestment of cash dividends) to
its shareholders amounted to 21.3%. 1994 executive salary increases
averaged 10.2%.
In considering the salary increase of the Chief Executive Offer (CEO),
the Committee specifically noted his thirty-four years of service to the
Company and that, at his own request, he had not received any salary
increase during the four preceding years.
Cash Bonuses. The current business criteria, mentioned above, include
sales, profits, profits as a percentage of sales, return on employed
capital, cost reduction, quality, customer services and individual
performance. The future business criteria include new product/program
development, new market development, management succession/development,
acquisitions and similar items. The values assigned to each may vary
depending upon the business plans and strategic objectives of each
operating unit and were negotiated at the beginning of 1994. Achievement of
most of the criteria is measured by objective historical information and
numerical data, while some involve subjective judgments. The Committee
retains the prerogative to modify on a uniform basis the results obtained
in light of the Company's overall results and business conditions existing
at the time of its decision. As calculated under the executive compensation
program, 1994 executive cash bonuses totaled $466,000, or 41.7%, of 1994
aggregate executive salaries. The Committee noted the Company's outstanding
performance in 1994 with net earning from operations increasing 106.9%, net
earnings per share increasing 105.3% and return on shareholders equity
increasing 97.7% over 1993. The Committee also noted that 1994 total return
(with reinvestment of cash dividends) to its shareholders amounted to
38.6%. In view of the foregoing factors, the Committee decided not to
exercise its prerogative to modify the cash bonuses as otherwise
calculated.
Stock Awards: Through the Company's Restricted Stock Plans, the
Committee has endeavored to motivate management through stock ownership.
For example, each of Messrs. Hock, Flakoll and Rafferty are significant
shareholders in the Company and are thus presumably motivated to act on
behalf of all shareholders to optimize overall Company performance. As
previously mentioned, the weighting of the performance criteria for stock
awards is based mostly on long term business development and plans. This is
appropriate since awards under Restricted Plan I vest in seven years, but
may vest in the third year if preset performance goals are attained. Awards
under Restricted Stock Plan II vest in five years. For purposes of the
Summary Compensation Table, awards are valued at the current market price
on the date of the grant.
For the year 1994, the Committee based its awards on the levels of
performance attained and elected to not exercise its prerogative to modify
the number of shares earned. The Committee believes it is in the best
interest of the Company's shareholders to encourage, promote and reward
sound long term business plans and strategies.
In evaluating the CEO's bonus and stock award for 1994, the Committee
took into account: the Company's overall financial performance in 1994; the
extent of the Company's progress in assimilating prior acquisitions; the
relative performance of each of the Company's subsidiaries and divisions in
a year of operating in a strong domestic, but very competitive economy; the
progress made by the Chief Executive Officer in achieving the goals which
he established with the Committee in early 1994; and, the level of bonus
and stock awards received by the executive officers and executives of the
Company's subsidiaries and divisions. The Committee also wished to
recognize his thirty-five years of service to the Company. The Committee
believes that the overall compensation of the Chief Executive Officer is
fair and reasonable.
No member of the Committee is an employee of the Company or any of its
subsidiaries. Mr. Harrison is the Secretary of the Company and performs the
functions of this office on a per diem basis as an independent contractor,
spending approximately sixty to seventy days annually, as required.
Compensation Committee: J. Barton Harrison (Chairman), Stanley E.
Basara, Edward M. Mazze.
COMPARISON OF SEVEN-YEAR CUMULATIVE TOTAL RETURN
The following graph and table show a seven-year comparison of total
shareholder returns for the Company, AMEX Market Value Index and Dow Jones
Electrical Components & Equipment Industry Group Index.
COMPARISON OF 7-YEAR CUMULATIVE TOTAL RETURN
1987 1988 1989 1990 1991 1992 1993 1994
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Technitrol, Inc. $100.00 $151.96 $211.96 $131.41 $158.67 $155.86 $189.12 $262.20
AMEX Market Value Index $100.00 $117.54 $145.19 $118.34 $151.74 $153.34 $183.27 $166.57
Dow Jones Electrical
Components & Equipment
Industry Group Index $100.00 $198.73 $125.73 $115.11 $144.63 $144.88 $157.70 $164.20
<FN>
Assumes $100 invested on December 31, 1987, and reinvestment of dividends.
Proposal No. 2 -- Selection of Auditors
Shareholders will be asked to approve the selection of KPMG Peat
Marwick LLP as independent auditors for the Company and its subsidiaries
for the fiscal year ending December 31, 1994. KPMG Peat Marwick LLP has
advised that it does not have any direct financial interest or any material
indirect financial interest in the Company or its subsidiaries, and during
the past three years has not had any connection with the Company or its
subsidiaries in any capacity other than as auditors and providing tax
advice and preparation of tax returns for the Company. A representative of
the firm will be present at the meeting to answer questions by shareholders
concerning the accounts of the Company and, if such representative so
desires, he will have the opportunity to make a statement.
The affirmative vote of a majority of the shares entitled to vote at
the meeting is required for approval of selection of auditors.
SHAREHOLDERS PROPOSALS
In order to be considered for inclusion in the proxy materials for the
1996 Annual Meeting, shareholders proposals must be received by the Company
by December 22, 1995. Any change in this date will be communicated to
shareholders in a timely fashion.
OTHER MATTERS
The Board of Directors does not know of any other matters to come
before the meeting. However, if any additional matters are properly
presented to the meeting, it is the intention of the persons named in the
accompanying proxy to vote in accordance with their judgment on such
matters.
By order of the Board of Directors
J. Barton Harrison
Secretary
April 17, 1995
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PROXY CARD
[ X ] PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
TECHNITROL, INC.
1995 ANNUAL MEETING PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Roy E. Hock and Robert J. Citrino as
Proxies and attorneys-in-fact, each with the power of substitution, and
hereby authorizes them to represent and to vote, as designated below, all
the shares of Common Stock of the Company held of record by the undersigned
on March 10, 1995, at the Annual Meeting of Shareholders to be held on May
23, 1995 or any adjournment thereof.
1. ELECTION OF DIRECTORS
Stanley E. Basara
Roy E. Hock
Edward M. Mazze
[ ] For [ ] Withhold [ ] For All Except
INSTRUCTION: To withold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
___________________________________________________________________________
2. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP as the
Company's independent auditors for the year commencing January 1, 1995.
[ ] For [ ] Against [ ] Abstain
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN AND IN ACCORDANCE WITH THE PROXY STATEMENT. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AND FOR
PROPOSAL 2 AND IN ACCORDANCE WITH THE INSTRUCTIONS OF THE BOARD OF
DIRECTORS ON ALL OTHER MATTERS.
Please sign this Proxy exactly as name appears on this card. When shares
are held by joint tenants, both should sign. When signing as attorney,
trustee or guardian or other fiduciary capacity please give full title as
such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership please sign in Partnership name
by authorized person.
Please be sure to sign and date this Proxy in the box below.
DATE ____________________________
___________________________________________________________________________
Stockholder sign above-----Co-holder (if any) sign above
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Detach above card, sign, date and mail in postage paid envelope provided.
TECHNITROL, INC.
1210 NORTHBROOK DRIVE, SUITE 385, TREVOSE, PA 19053
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PLEASE ACT PROMPTLY
SIGN, DATE, & MAIL PROXY CARD TODAY
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