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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ROHR, INC.
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(Name of Registrant as Specified In Its Charter)
ROHR, INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or Item 22(a)(2) of
Schedule 14A.
[_} $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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 filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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Notes:
LOGO ROHR, INC.
850 Lagoon Drive
Chula Vista, California 91910-2098
(619) 691-4111
October 31, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 Annual Meeting of Shareholders
of Rohr, Inc., (the "Company"). It will be held at the offices of the Company,
850 Lagoon Drive, Chula Vista, California, on Saturday, December 7, 1996,
commencing at 10:30 a.m. The Board of Directors and the management of the
Company look forward to greeting personally those shareholders able to attend.
At the meeting you are being asked by the Company to elect four directors
(Proposal No. 1), and to ratify the appointment of Deloitte & Touche LLP as
auditors (Proposal No. 2).
You are requested to give your prompt attention to these matters which are
more fully described in the accompanying Proxy Statement. You are urged to
read the proposals carefully. For the reasons set forth therein, your Board of
Directors recommends a vote "FOR" Proposals 1 and 2.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted at the meeting. Accordingly, after
reading the enclosed Notice of Annual Meeting and Proxy Statement, you are
urged to sign, date and mail the enclosed Proxy Card in the envelope provided
at your earliest convenience.
Dr. Jack D. Steele, having reached 72 years of age, the mandatory retirement
age for non-executive members of the Board of Directors, will step down from
the Board at the conclusion of the Annual Meeting. Dr. Steele has been a Rohr
director since 1976, and has served on the Audit and Ethics Committee, the
Employee Benefits Oversight Committee, and the Nomination and Board Affairs
Committee. I would like to take this opportunity to thank Dr. Steele for his
20 years of dedicated service to Rohr.
On behalf of the Board of Directors, and all of the employees of the
Company, I want to thank you for your cooperation and continued support.
Sincerely,
LOGO
WALLACE BARNES
Chairman of the Board
DIRECTIONS TO ROHR'S ANNUAL MEETING
OF SHAREHOLDERS
10:30 A.M., SATURDAY, DECEMBER 7, 1996
ROHR, INC.
850 LAGOON DRIVE
CHULA VISTA, CALIFORNIA
[INSERT MAP]
FROM
INTERSTATE 5 SOUTH,
TAKE THE E STREET OFF-RAMP
PROCEED THROUGH THE E STREET
INTERSECTION AND TURN RIGHT
AT THE NEXT INTERSECTION,
LAGOON DRIVE.
FOLLOW THE SIGNS TO THE
PARKING AREAS.
TABLE OF CONTENTS
PAGE
----
Notice of Annual Meeting................................................... 1
Proxy Statement............................................................ 2
PROPOSAL NO. 1--ELECTION OF DIRECTORS...................................... 2
Committees of the Board of Directors....................................... 7
Directors' Beneficial Ownership and Compensation........................... 9
Cash Compensation........................................................ 9
Directors' Retirement Plan............................................... 10
Non-Employee Director Stock Option Plan.................................. 10
Stock Compensation Plan for Non-Employee Directors....................... 10
Executive Compensation and Development Committee
Report on Executive Compensation.......................................... 11
Executive Compensation and Other Information............................... 14
Summary Compensation Table............................................... 14
Aggregated Option Exercises in Last Fiscal Year.......................... 15
Retirement Benefits...................................................... 16
Performance Graph........................................................ 18
Employment Contracts....................................................... 19
Indemnification and Severance.............................................. 19
Compliance with Section 16(a) of the Securities Exchange Act of 1934....... 20
Beneficial Ownership of Shares............................................. 21
PROPOSAL NO. 2--APPROVAL OF SELECTION OF AUDITORS.......................... 23
Financial Statements....................................................... 23
Shareholders' Proposals.................................................... 23
Solicitation of Proxies.................................................... 23
Other Business............................................................. 23
LOGO ROHR, INC.
850 Lagoon Drive
Chula Vista, California 91910-2098
(619) 691-4111
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 7, 1996
----------------
The Annual Meeting of the Shareholders of Rohr, Inc., (the "Company"), will
be held at the offices of the Company, 850 Lagoon Drive, Chula Vista,
California, on Saturday, December 7, 1996, at 10:30 a.m., local time, for the
following purposes:
1. Proposal No. 1. To elect four directors for three-year terms expiring
at the 1999 Annual Meeting of Shareholders (see page 2); and
2. Proposal No. 2. To ratify the appointment of Deloitte & Touche LLP as
the Company's independent auditors for fiscal year 1997 (see page 23);
and to transact such other business as may properly come before the meeting or
any adjournment thereof.
Shareholders of record on the books of the Company at the close of business
on October 9, 1996, will be entitled to vote at the meeting or any adjournment
thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING, REGARDLESS
OF THE NUMBER YOU HOLD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD IN THE RETURN ENVELOPE, WHICH
REQUIRES NO POSTAGE WHEN MAILED IN THE UNITED STATES.
Shareholders who attend the meeting may vote in person even though they have
previously mailed their proxy.
LOGO
Richard W. Madsen, Secretary
October 31, 1996
1
LOGO ROHR, INC.
850 Lagoon Drive
Chula Vista, California 91910-2098
(619) 691-4111
October 31, 1996
PROXY STATEMENT
This Proxy Statement and its enclosures are being mailed to shareholders on
or about November 4, 1996.
The enclosed Proxy is solicited by the Board of Directors of Rohr, Inc.,
(the "Company"), for use at the 1996 Annual Meeting of Shareholders. It may be
revoked by you at any time prior to its use by (i) providing a written
revocation to the Secretary of the Company at its offices or (ii) executing
and delivering a later-dated Proxy. Shareholders who attend the meeting may
vote in person even though they have previously submitted a Proxy. Shares
represented by an unrevoked Proxy will be voted as authorized by the
shareholder.
Only shareholders of record at the close of business on October 9, 1996,
will be entitled to vote at the meeting. On that date, the outstanding voting
securities of the Company consisted of 22,411,124 shares of Common Stock.
Except for the election of directors as described below, each share is
entitled to one vote.
The representation in person or by proxy of at least one-half of the
outstanding shares entitled to vote is necessary to provide a quorum at the
meeting. Directors are elected by a plurality of shares present and voting. A
majority of the shares represented at the meeting is required for the approval
of the appointment of Deloitte & Touche LLP.
Abstentions have the same effect as votes against proposals presented to
shareholders, other than in the election of directors. "Non-votes," which
occur when a nominee holding shares for a beneficial owner that have been
voted on one proposal does not vote on another proposal because the nominee
does not have discretionary voting power and has not received instructions
from the beneficial owner, will not be treated as present or voting in person
or by proxy on a proposal, and therefore will have no effect on the outcome of
a vote.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
The Company presently has ten directors, including four whose terms expire
at the Annual Meeting and Dr. Steele who is retiring at the conclusion of the
Annual Meeting. Unless marked to the contrary, the proxies received will be
voted for the election of Sam F. Iacobellis, Robert H. Rau, William P.
Sommers, and James R. Wilson to serve as directors until the Annual Meeting in
1999 and/or until their successors are elected or appointed and qualified. In
the event any nominee declines or becomes unavailable and a vacancy exists,
which is not anticipated, the persons named in the Proxy will vote for a
substitute who shall be designated by the Nomination and Board Affairs
Committee of the Board of Directors.
2
In the election of directors, shareholders or their proxies are entitled to
cumulate their votes, with each share having a number of votes equal to the
number of directors to be elected (four). These votes may be cast for one
candidate or distributed among the four candidates. On all other matters, each
share has only one vote. Proxies being solicited by the Board of Directors
include discretionary authority to cumulate votes.
NOMINEES AND CONTINUING DIRECTORS
The nominees for election as members of the Board of Directors and present
directors whose terms of office will continue after the Annual Meeting, with
information furnished to the Company by them as of October 9, 1996, are as
follows:
Nominees for Terms Expiring in 1999
SAM F. IACOBELLIS
---------------- Mr. Iacobellis, age 67, was the Executive Vice President
---------------- and Deputy Chairman for Major Programs at Rockwell
International, a diversified high-tech, global
corporation engaged in the research, development and
manufacture of a wide range of products for commercial
and government markets, from June 1993 to March 1995,
when he retired. Prior to that and since July 1989, he
served as Executive Vice President and Co-Chief
Operating Officer of that company. Before that, he was
President--Aerospace Operations. He joined North
American Aviation, a predecessor of Rockwell, in 1952.
Mr. Iacobellis was also co-founder and Chairman of the
Board of the Warner Center Bank in Woodland Hills,
California, from its inception in 1981 until 1990 and a
former member of the Board of Governors and Executive
Committee of the Aerospace Industries Association. He is
currently a member of the Board of Directors of the Los
Angeles Area Chamber of Commerce, the California Chamber
of Commerce, the UCLA Board of Visitors, the California
State University Foundation, a member of the California
Business Roundtable, and a member of the California
Business-Higher Education Forum. Mr. Iacobellis became a
Director of Rohr in October 1994. He is the Chairman of
the Customer Support Committee and also serves on the
Employee Benefits Oversight Committee, the Executive
Compensation and Development Committee, and the
Technology Committee.
3
---------------- ROBERT H. RAU
----------------
Mr. Rau, age 60, was elected President and Chief
Executive Officer of the Company in April 1993. Prior to
joining the Company, Mr. Rau was an Executive Vice
President of Parker Hannifin Corporation and, for the
ten years prior to 1993, had served as President of the
Parker Bertea Aerospace segment of Parker Hannifin.
Parker Bertea designs and produces a broad line of
hydraulic, fuel and pneumatic systems and components for
commercial, military and general aviation aircraft. He
joined Parker Hannifin in 1969 and held positions in
finance, program management and general management. Mr.
Rau has extensive experience in the aerospace industry.
In addition, Mr. Rau is a member of the Board of
Governors of the Aerospace Industries Association and a
past Chairman of the General Aviation Manufacturers
Association. He became a director of the Company in
April 1993. Mr. Rau is an ad-hoc, non-voting member of
all the standing committees of the Board except the
Executive Compensation and Development Committee.
WILLIAM P. SOMMERS
----------------
---------------- Dr. Sommers, age 63, has served as the President and
Chief Executive Officer of SRI International since
January 1994. SRI International is a leading contract
research firm. Prior thereto, Dr. Sommers was an
Executive Vice President of Iameter, Inc., since
November 1992. Iameter, Inc., is a medical information
and education company. From 1963 until he retired in
1992, he was with Booz.Allen & Hamilton, Inc. There, he
served as a Senior Vice President, director and member
of the Office of the Chairman and in other senior
management positions. Dr. Sommers has extensive
experience as a management consultant to numerous
technology-based manufacturing and service firms. He
became a director of Rohr in September 1992. He is also
a director of SRI International and Litton Industries,
Inc.; a member of the board of trustees of the Zurich
Kemper Mutual Funds; a director of Therapeutic Discovery
Corp.; a former trustee of the Criminal Justice Legal
Foundation; and a former member of the National Advisory
Council of the University of Michigan, College of
Engineering. He is chairman of the Employee Benefits
Oversight Committee and serves on the Finance Committee
and the Technology Committee.
4
---------------- JAMES R. WILSON
----------------
Mr. Wilson, age 55, is the Chairman of the Board,
President and Chief Executive officer of Thiokol
Corporation, having assumed the position of Chairman in
October 1995 and the position of President and Chief
Executive Officer in October 1993. Mr. Wilson joined
Thiokol in July 1989 as Vice President and Chief
Financial Officer and was named Executive Vice President
in October 1992. Thiokol is the leading producer of
solid propellant rocket motors in the United States and
supplies the U.S. space shuttle program. Thiokol also
produces a broad range of high performance fasteners
used in commercial aircraft and various industrial
applications. Thiokol also owns 49 percent of Howmet
Corporation, a manufacturer of high performance cast
components for aircraft and industrial gas turbine
engines. Prior to joining Thiokol in 1989, Mr. Wilson
served as Chief Financial Officer for Circuit City
Stores (1987-1988), and as Executive Vice President and
Chief Financial Officer for Fairchild Industries, Inc.,
(1982-1987). Earlier, he held various financial
management positions at Textron Inc. He is also a
director of First Security Corporation, a director of
Howmet Corporation, and a Trustee of the College of
Wooster, Wooster, Ohio. Mr. Wilson became a Director of
Rohr in October 1994. He is chairman of the Finance
Committee and serves on the Audit and Ethics Committee,
the Customer Support Committee and the Executive
Compensation and Development Committee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF THE FOUR NOMINEES LISTED ABOVE.
Continuing Directors with Terms Expiring in 1997
ROBERT M. PRICE
----------------
---------------- Mr. Price, age 66, is currently serving as interim Chief
Executive Officer and Chairman of the Board of
International Multifoods. He has been a business
consultant to a number of major American corporations
since January 1990, when he retired as Chairman of
Ceridian (formerly Control Data Corporation),
Minneapolis, Minnesota. He was named President and Chief
Operating Officer of Control Data Corporation in 1980
and Chairman and Chief Executive Officer in 1986. He is
also a director of Public Service Co. of New Mexico,
Albuquerque, New Mexico; Fourth Shift Corporation,
Minneapolis, Minnesota; Affinity Technology, Columbia,
South Carolina; and Tupperware Corp., Orlando, Florida.
Additionally, he is a Chairman of the National Center
for Social Entrepreneurs and a member of Duke
University's Fuqua School of Business Board of Visitors.
He became a director of the Company in June 1991. He is
Chairman of the Executive Compensation and Development
Committee and serves on the Nomination and Board Affairs
Committee and the Technology Committee.
5
---------------- VINCENT N. MARAFINO
----------------
Mr. Marafino, age 66, retired as Executive Vice
President of Lockheed Martin Corporation on January 1,
1996, a position he assumed in March 1995 upon the
completion of the merger of Lockheed Corporation and
Martin Marietta Corporation. Prior to the merger, he
served as Vice Chairman of the Board and Chief Financial
and Administrative Officer for Lockheed Corporation,
having been elected to those positions in August 1988.
Mr. Marafino became Lockheed's Chief Financial Officer
in 1977 and was elected to its board of directors in
1980. He is a member of the Board of Lockheed Martin
Corporation. Mr. Marafino became a director of the
Company in December 1995. He is also a director of
Airport Group International, Inc., and Holy Cross Health
System. Mr. Marafino is the chairman of the Audit and
Ethics Committee and serves on the Employee Benefits
Oversight Committee, the Finance Committee, and the
Nomination and Board Affairs Committee.
Continuing Directors with Terms Expiring in 1998
WALLACE BARNES
----------------
---------------- Mr. Barnes, age 70, has served as the non-executive
Chairman of the Board of Directors of the Company since
December 3, 1994. He served as the non-executive
Chairman of the Board of Directors of Barnes Group Inc.
from April 1991 until July 1995. Prior thereto, he was
the Chairman of Barnes Group Inc. from March 1977 to
April 1991, when he retired; was Chief Executive Officer
from 1977 to 1991; and served as President of that
company from 1964 to 1977. Barnes Group Inc.,
headquartered in Bristol, Connecticut, is a publicly-
traded, multinational company with three groups involved
in automotive maintenance and repair parts, precision
springs and custom metal parts, and aerospace components
for gas turbine engines. He became a director of the
Company in February 1989. He is also a director of
Rogers Corp.; Tradewind Turbines Corporation; DeMaria
Electro Optics Systems, Inc., Bloomfield, Connecticut;
and former Chairman of the Connecticut Business and
Industry Association, the Greater Hartford Chamber of
Commerce, and the University of Hartford. As the non-
executive Chairman of the Board, he serves on all
committees of the Board as an ad-hoc, non-voting member.
6
---------------- EUGENE E. COVERT
----------------
Professor Covert, age 70, became Professor Emeritus of
the Massachusetts Institute of Technology upon his
retirement on July 1, 1996. Prior to that, he had been a
Professor in the Department of Aeronautics and
Astronautics of the Massachusetts Institute of
Technology, Cambridge, Massachusetts, since 1968. From
1985 until 1990, he served as Department Head. Professor
Covert is also a consultant to a number of major
corporations as well as to agencies of the United States
and foreign governments. He is a retired director
ofAllied-Signal Corp. and Physical Sciences, Inc., and
an Honorary Fellow of the American Institute of
Aeronautics and Astronautics. He has been a director of
Rohr since December 1986. He is the chairman of the
Technology Committee and serves on the Audit and Ethics
Committee, the Customer Support Committee, and the
Nomination and Board Affairs Committee.
D. LARRY MOORE
----------------
---------------- Dr. Moore, age 60, has been the President and Chief
Operating Officer of Honeywell, Inc., a provider of
electronic automation and control systems located in
Minneapolis, Minnesota, since 1993. From December 1990
until assuming his current position, he served as
Executive Vice President and Chief Operating Officer of
that company. Dr. Moore has been employed by Honeywell,
Inc., since 1986, having also served as President of its
Space and Aviation Business. Dr. Moore became a director
of Rohr in December 1991. He is also a director of
Honeywell, Inc.; the Geon Co.; Reynolds Metals; the
Aerospace Industries Association; and the National
Association of Manufacturers. He serves on the Audit and
Ethics Committee, the Customer Support Committee, the
Executive Compensation and Development Committee, and
the Finance Committee.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has formed the following standing committees of its
members to assist it in the discharge of its responsibilities: Audit and
Ethics Committee, Customer Support Committee, Employee Benefits Oversight
Committee, Executive Compensation and Development Committee, Finance
Committee, Nomination and Board Affairs Committee, and the Technology
Committee. Memberships in the various committees are assigned by action of the
full Board of Directors.
The full Board of Directors met nine times during fiscal 1996. Each Director
attended more than 75 percent of the aggregate of all Board of Directors'
meetings and meetings of standing committees of the Board of which he was a
member.
7
The function of each committee, its membership, and the number of meetings
held by it or its predecessor committee during fiscal 1996 are shown below:
THE AUDIT AND ETHICS COMMITTEE has two designated functions. In its audit
function, the Committee reviews the Company's public financial statements to
confirm with management and the Company's firm of public accountants that they
comply with generally accepted accounting principles and with the Securities
and Exchange Commission requirements and also that they present fairly the
Company's financial position and the results of its operations. The Committee
also provides oversight concerning the Company's management controls, it being
the intent that such controls be of sufficient quality to provide reasonable
assurances that the Company is complying with Company policies as well as all
prevailing governmental legislation. In its ethics function, the Committee
focuses on the ethical quality of the Company's management by supporting the
establishment of an atmosphere within the Company which will encourage
employees to follow the policy of complying with all laws governing Company
operations and conducting its affairs in keeping with the highest legal and
ethical standards. The voting membership of the Committee currently consists
entirely of directors who are not officers or employees of the Company. The
voting members are Mr. Marafino, Chairman, and Messrs. Covert, Moore, Steele
and Wilson. During fiscal 1996, the Committee met six times.
THE CUSTOMER SUPPORT COMMITTEE exercises the Board of Directors'
responsibility in reviewing and approving certain business proposals and
commitments, under the guidelines of the Board of Directors, which previously
required the consent of the Board. The voting membership of the Committee
currently consists entirely of directors who are not officers or employees of
the Company. The members are Mr. Iacobellis, Chairman, and Messrs. Covert,
Moore and Wilson. During fiscal 1996, the Committee met four times.
THE EMPLOYEE BENEFITS OVERSIGHT COMMITTEE reviews or approves the adoption
and amendment of employee benefit plans, unless the financial effect of such
actions would exceed certain guidelines, in which case the full Board of
Directors takes such action. The Committee appoints the members of the
management employee benefits committee for funded plans, and oversees that
committee's establishment of investment policies and strategies, its
appointment of actuaries and trustees, and its adoption of actuarial
assumptions. The Committee also reviews the funding strategy of the plans
established by the management employee benefits committee. The Committee
currently consists entirely of directors who are not officers or employees of
the Company. The members are Dr. Sommers, Chairman, and Messrs. Iacobellis,
Marafino and Steele. During fiscal 1996, the Committee met three times.
THE EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE establishes an
executive compensation program designed to attract, motivate and retain
individuals of exceptional ability to provide leadership in achieving quality
in all aspects of the Company's business. The Committee is responsible for
determining the annual base salary, short-term and long-term incentive
compensation (including stock awards), and other compensation of the executive
officers of the Company. In addition, the Committee reviews plans for
executive management succession. The membership of the Committee currently
consists entirely of directors who are not officers or employees of the
Company. The members are Mr. Price, Chairman, and Messrs. Iacobellis, Moore
and Wilson. During fiscal 1996, the Committee met six times.
THE FINANCE COMMITTEE reviews, makes recommendations, and reports to the
Board of Directors concerning the quality of the financing plans of the
Company and their adequacy and soundness in providing for the Company's
capital requirements. Currently, the Committee consists of four directors who
are neither officers nor employees of the Company. The members are Mr. Wilson,
Chairman, and Messrs. Marafino, Moore and Sommers. During fiscal 1996, the
Committee met twice.
THE NOMINATION AND BOARD AFFAIRS COMMITTEE, in order to focus on the need
for quality leadership of the Company, reviews the composition of the Board of
Directors and potential
8
nominees to ensure appropriately broad-based business-oriented membership for
the Board of Directors, consisting of persons who are knowledgeable,
experienced and strategic-minded. The Committee also reviews and recommends to
the Board other matters concerning the administration of the Board including
the Board retirement policy, the retention of consultants as appropriate to
assist the Committee in its responsibilities, and the appointment of Committee
assignments and the Committee chairs following review with management. The
Committee consists entirely of directors who are neither officers nor
employees of the Company. The members are Dr. Steele, Chairman, and Messrs.
Covert, Marafino and Price. During fiscal 1996, the Committee met three times.
THE TECHNOLOGY COMMITTEE reviews corporate-wide technology matters, monitors
the implementation of new technology by the Company, and reviews the Company's
performance in the field to ensure conformance with the Company's plans for
growth, customer support, and maintenance of quality. The Committee also
reviews the application of technology to enhance the Company's ability to meet
and exceed customer requirements. The Committee currently consists entirely of
directors who are not officers or employees of the Company. The members are
Professor Covert, Chairman, and Messrs. Iacobellis, Price and Sommers. During
fiscal 1996, the Committee met twice.
ANY SHAREHOLDER DESIRING TO MAKE RECOMMENDATIONS FOR POTENTIAL CANDIDATES
FOR CONSIDERATION BY THE NOMINATION AND BOARD AFFAIRS COMMITTEE MUST SEND
TIMELY NOTICE IN WRITING TO THE SECRETARY OF THE COMPANY. TO BE TIMELY, SUCH
NOTICE SHALL BE DELIVERED OR MAILED AND RECEIVED AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE COMPANY NOT LESS THAN SIXTY (60) DAYS NOR MORE THAN NINETY (90)
DAYS PRIOR TO THE ANNUAL MEETING OF SHAREHOLDERS. SUCH NOTICE SHALL SET FORTH:
(i) AS TO EACH PERSON WHOM THE SHAREHOLDER PROPOSES TO NOMINATE FOR ELECTION
OR RE-ELECTION AS A DIRECTOR, ALL INFORMATION RELATING TO SUCH PERSON THAT IS
REQUIRED TO BE DISCLOSED IN SOLICITATIONS OF PROXIES FOR ELECTION OF DIRECTORS
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, (INCLUDING SUCH
PERSON'S WRITTEN CONSENT TO BEING NAMED IN THE PROXY STATEMENT AS A NOMINEE
AND TO SERVING AS A DIRECTOR IF ELECTED); AND (ii) AS TO THE SHAREHOLDER
GIVING THE NOTICE (a) THE NAME AND ADDRESS AS THEY APPEAR ON THE COMPANY'S
BOOKS OF SUCH SHAREHOLDER, AND (b) THE CLASS AND NUMBER OF SHARES OF THE
COMPANY WHICH ARE BENEFICIALLY OWNED BY SUCH SHAREHOLDER.
DIRECTORS' BENEFICIAL OWNERSHIP AND COMPENSATION
The beneficial ownership of the directors and nominees in the stock of the
Company is shown under the caption "BENEFICIAL OWNERSHIP OF SHARES."
CASH COMPENSATION
Mr. Barnes receives annual cash compensation of $75,000 (less the fair
market value of 250 shares of the Company's common stock granted yearly
pursuant to the Company's 1991 Stock Compensation Plan for Non-Employee
Directors) for service as the non-employee Chairman of the Board of Directors,
plus $1,000 for each meeting of the full Board of Directors and $750 for each
meeting of the Board committees that he attends. In addition, he receives
$1,000 for each day of service not falling on the day of a meeting of the
Board or any committee of the Board.
Other directors who are not employees of the Company receive annual cash
compensation of $25,000 (less the fair market value of 250 shares of the
Company's common stock granted yearly pursuant to the Company's 1991 Stock
Compensation Plan for Non-Employee Directors) for service on the Board of
Directors, including any committees of the Board on which they serve, plus
$1,000 for each meeting of the full Board of Directors and $750 ($1,000 in the
case of the Committee Chairperson) for each meeting of a Board committee that
they attend.
The Company reimburses Directors for their expenses incurred in connection
with attending Board and Board committee meetings.
9
DIRECTORS' RETIREMENT PLAN
The Company has a Directors' Retirement Plan which provides benefits
following retirement to any director who is not an employee of the Company at
the time of his or her retirement from the Board of Directors. Benefits under
the Plan commence as of the first day of the month following the earlier
occurrence of (i) a director achieving 72 years of age, or at such earlier
time as a director elects not to become a candidate to succeed himself as a
director, or (ii) the termination from service as a director (except for
termination for cause) following a "change in control" of the Company (as that
term is defined in the Plan), provided, among other things, such director was
a director on the date of such "change in control." The Company's Bylaws
currently provide that non-employee directors, upon reaching the age of 72
years, shall retire from the Board of Directors at the next following annual
meeting of shareholders. The annual benefit to a retired director under the
Plan is equal to the annual retainer (including the value of the award of
shares made under the 1991 Stock Compensation Plan for Non-Employee Directors)
being paid to directors upon the date of retirement and is payable for a
period equal to the number of years and fractional years of service as a
Company director. The Plan also provides retirement benefits to a surviving
spouse of a director equal to the then-unpaid amount of benefits the director
would have received had he been retired and survived.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
Under the 1988 Non-Employee Director Stock Option Plan, which was approved
by shareholders, an option to purchase 1,000 shares of common stock of the
Company is automatically granted, on the first business day following each
annual meeting at which directors are elected, to each director of the Company
who is not an employee of the Company at the time. The option exercise price
is equal to the fair market value of the stock on the date the option is
granted. Each option granted under the Plan becomes exercisable six months
after its date of grant and expires ten years after its date of grant,
provided, however, that each option that is not already exercisable shall
become immediately exercisable (i) if the optionee ceases to be a director
because of his or her death or total and permanent disability, or (ii) if a
"change in control," as such term is defined in the Plan, shall occur.
Pursuant to the Plan, on December 4, 1995, Messrs. Barnes, Covert, Iacobellis,
Marafino, Moore, Price, Sommers, Steele and Wilson each received an option for
1,000 shares of Common Stock at an option price of $15.125 per share, for a
total grant of nine options covering an aggregate of 9,000 shares of common
stock during fiscal 1996. Mr. Rau, the Company's President and Chief Executive
Officer, as an employee, is ineligible to participate in the Plan.
STOCK COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
Under the Company's 1991 Stock Compensation Plan for Non-Employee Directors,
the Company annually awards to each non-employee director, in partial
consideration for the services rendered by such director during the Company's
prior fiscal year, 250 shares of the Company's common stock, subject to
certain adjustments. The plan provides for a pro-rated award if the director
has not served for the full preceding fiscal year.
On September 13, 1996, awards with respect to the 1996 fiscal year were
determined. Messrs. Barnes, Covert, Iacobellis, Moore, Price, Sommers, Steele
and Wilson received awards of 250 shares each and Mr. Marafino received an
award of 166 shares, for a total grant to all eligible directors of 2,166
shares. On the award date, the Company's common stock closed at $22.625. The
value of these shares reduces the amount of the annual cash retainer paid to
Directors on a dollar-for-dollar basis. Mr. Rau, the Company's President and
Chief Executive Officer, as an employee, is ineligible to participate in the
Plan.
10
EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Executive Compensation and Development Committee (the "Committee") is
responsible for determining the annual base salary, short-term and long-term
incentive compensation (including stock awards), and other compensation of the
executive officers. Each member of the Committee is a non-employee director.
This report describes the applicable policies of the Committee in establishing
the principal components of executive compensation for all executives of the
Company, including the Named Executive Officers in the Summary Compensation
Table during fiscal 1996.
Goals in Determining Executive Compensation; Philosophy of Compensation
The Company's integrated executive compensation program is intended to
accomplish the following goals:
1. Pay competitively to attract, retain and motivate capable executives.
2. Tie individual total compensation to the achievement of specific,
measurable goals related to the success of the Company and to the
performance of the individual and the executive team.
3. Align the financial interests of the executives with shareholder value.
The Committee believes the Company's compensation plans for executives
should be a basic element in the continuing growth of shareholder value. The
purpose of executive compensation is to improve Company performance and
competitiveness by creating and sustaining executive motivation. Pay plans
must be designed to forge links between long-term executive rewards and
shareholder value creation.
In furtherance of these beliefs and to achieve the Company's above-stated
compensation goals, the Committee believes a significant portion of the
executives' compensation should be at risk, based on the financial performance
of the Company. Base salaries of executives are intended to be moderate yet
competitive, with the opportunity to earn the at-risk annual and long-term
incentive payments or awards so as to provide total compensation which is
equal to competitive levels for superior Company performance over a longer
period of time. The financial goals for these incentive compensation plans are
reviewed and approved by the Committee at the beginning of each fiscal year in
conjunction with the Board of Directors' approval of the Company's business
plans.
Factors and Information Generally Considered
The Committee considers the following matters in establishing executive
compensation: (a) Company performance, both in absolute terms and in relation
to similar companies; (b) the performance of each individual executive
officer; (c) periodically, comparative compensation surveys and other material
concerning compensation levels and stock grants at similar companies; (d)
historical compensation levels and stock awards at the Company; (e) the
overall competitive environment for executives and the level of compensation
necessary to attract and retain executive talent; and (f) the input, from time
to time, of professional compensation consultants and management. The
Committee assigns no specific weight to any of the enumerated factors in
establishing executive compensation.
Companies used in comparative analyses for executive compensation purposes
are selected with the assistance of professional compensation consultants.
Selection of such similar companies is based on a variety of factors,
including financial criteria and industry classification. The companies used
in comparative analyses for executive compensation purposes include the
companies in the industry line-of-business index used in the Performance
Graph, as well as the following additional companies, many
11
of which, however, are larger than the Company: Arvin Industries, B.F.
Goodrich, Black & Decker, Borg-Warner Automotive, Coltec Industries, Cummins
Engine, General Dynamics Corporation, General Signal, Hexcel, Honeywell,
Illinois Tool Works, Litton Industries, Northrop Grumman, Precision Castparts,
Raytheon, Rockwell International, Sequa, Sundstrand, TRW, and Varllen. The
Committee relies on a broad array of companies for comparative analysis of
executive compensation because the Committee believes that the Company's
competitors for executive talent are more varied than the industry line-of-
business index chosen for comparing shareholder return in the Performance
Graph.
Executives' Compensation in Fiscal 1996:
The Company establishes pay grades for the executives, including the Named
Executive Officers in the Summary Compensation Table, providing a base salary
range, annual incentive target and targeted periodic stock options for each
pay grade.
Basic Pay Levels. The base salary ranges were established and are
reconsidered following a periodic review of comparative compensation data, and
the actual salary for executives in each range are established periodically.
The salary of each executive officer of the Company is established by the
Committee. Accountability for the achievement of the Company goals was the
most significant factor in determining base salary levels for executive
officers in fiscal 1996.
Incentive, At-Risk Pay. The incentive targets for each executive pay grade
are also established and these targets are expressed as a percentage of base
salary, although in some cases, somewhat higher targets were established on
the basis of the importance of the position to achieving overall Company
success. Annual awards under the Company's Management Incentive Plan are
granted directly in relation to the Company's achievement of specific
performance targets established each year by the Committee. The Committee's
practice, extending back many years, has been to pay incentives under the
Management Incentive Plan only when earned by achievement of such plan
objectives.
At the beginning of fiscal 1996, the Committee believed that the generation
of income, measured by return on net assets, was the top priority for
management. Accordingly, awards under the Management Incentive Plan were
structured at the beginning of the fiscal year on the basis of achieving
specified levels of operating profit before interest and taxes as a percentage
of average net operating assets. Operating profit before interest and taxes in
excess of or below that figure would produce awards in accordance with a
progressive scale. The criteria for earning awards under this plan was
achieved in fiscal 1996 and, consequently, payments were made to the Company's
executives. Awards for the Named Executive Officers are shown under the
heading "Executive Compensation and Other Information," which information
indicates that, for this group in the aggregate, approximately 46.5 percent of
their salary plus their incentive payments under the Management Incentive Plan
was at risk based on financial performance of the Company.
Stock Options. Each pay grade also had a targeted number of periodic stock
options related to the amount of base salary in order to further align the
interests of the executives with shareholder value. The number of options is
determined so as to be able to allow the executive to earn competitive total
compensation for superior Company performance over a longer period of time.
The vesting period for the exercise of these options is generally in
accordance with competitive practices and is designed to retain the executive
and lengthen the period of time when such options must be earned by continued
employment. In 1996, no stock option grants were made in the three highest
levels of executives, except in the case of promotions and newly-hired
executives. The Committee also approved single-year awards to the other
executives and salaried employees.
Compensation of Robert H. Rau, President and Chief Executive Officer
Mr. Rau joined the Company as President and Chief Executive Officer in April
1993. In establishing the compensation levels set forth in his employment
agreement, the Committee
12
considered comparative compensation information, historical compensation
levels for the position he accepted at the Company and an evaluation of the
level of compensation necessary to obtain his services in light of industry
and Company conditions. During fiscal year 1996, the Company continued to
successfully implement its turnaround strategy, including improved operating
income from continuing operations (before taxes, interest and unusual items);
continued to improve productivity; and prepared for anticipated increased
manufacturing and sales in fiscal 1997. The at-risk/incentive portion of Mr.
Rau's compensation for fiscal 1996, which was $582,000, was based upon
achieving the incentive targets established under the Management Incentive
Plan.
The foregoing report has been approved by all members of the Committee.
THE EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
Robert M. Price, Chairman
Sam F. Iacobellis
D. Larry Moore
James R. Wilson
October 4, 1996
13
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company to, or on behalf of, the Company's
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company (determined as of the end of the last fiscal
year) (hereinafter referred to as the "Named Executive Officers") for the
fiscal years ended July 31, 1994, 1995 and 1996.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------- ---------------------
NUMBER
AT-RISK/ OTHER OF SHARES
INCENTIVE ANNUAL RESTRICTED COVERED
NAME AND PRINCIPAL FISCAL COMPEN- COMPEN- STOCK BY
POSITION YEAR SALARY(1) SATION(2) SATION AWARD(S)(3) OPTIONS
- ------------------------ ------ -------- --------- -------- ---------- ---------
R. H. Rau 1996 $569,479 $436,500 $ 30,880 $174,597 0
President and 1995 538,212 132,300 22,907 157,541 213,000
Chief Executive Officer 1994 499,423 360,000 62,282 0 0
L. A. Chapman 1996 $240,522 $ 93,120 $116,538(4) $111,745 0
Senior Vice President 1995 248,499 47,040 43,329 74,419 48,000
and
Chief Financial Officer 1994 57,000 136,800 17,675 157,500 50,000
J. R. Johnson 1996 $227,349 $175,373 $ 12,120 $ 0 0
Senior Vice President, 1995 253,574 44,296 2,706 71,339 48,000
Programs, Technology 1994 208,000 114,800 8,833 57,000 10,000
Resources and
Quality Assurance
G. A. Wetzler 1996 $214,144 $115,702 $ 8,585 $ 59,504 0
Senior Vice President, 1995 233,573 66,797 2,599 $ 41,155 48,000
Operations 1994 170,725 93,200 9,715 93,750 20,000
D. R. Watson 1996 $213,431 $ 82,644 $ 7,999 $ 99,165 0
Senior Vice President, 1995 191,316 83,496 1,168 12,569 48,000
Customer Support and 1994 181,213 93,500 9,505 97,500 20,000
Business Development
- --------
(1) Under the Pretax Savings Plan for Salaried Employees of the Company
(Amended and Restated, 1994), a tax-qualified 401(k) plan which is
available to all salaried and certain bargaining unit employees, the
Company matches 75 percent of the first 4 percent of employee
contributions. Company matching contributions under this Plan for
participants on the executive and officer payrolls had been suspended for
three years but were restarted effective January 1, 1995. Company
contributions and the earnings thereon normally vest at the rate of 20
percent per year until the fifth anniversary of a participant's
employment; after the fifth anniversary, all subsequent and future
contributions and earnings vest immediately. The maximum amount any person
can contribute in calendar year 1996 is limited by federal tax rules. The
amounts contributed by each of the Named Executive Officers with respect
to fiscal year 1996 were: Mr. Rau, $9,500; Mr. Chapman, $9,250; Mr.
Johnson, $9,500; Mr. Wetzler, $9,240; and Mr. Watson $10,303. The amounts
contributed by each Named Executive Officer are included in the salary
disclosed.
(2) Under the Company's Management Incentive Plan (Restated, 1982) (the
"MIP"), at-risk/incentive payments are provided for officers and other
high-level executives having a direct impact on the success of the
Company. The MIP is administered by the Executive Compensation and
Development Committee of the Board of Directors which reviews and
considers individual awards recommended by management and establishes the
annual financial performance objectives under the Plan. For fiscal years
1994 and 1995, the Company adopted an incentive formula designed to reward
top leadership for achieving targeted cash generation from operations,
asset management and net income. Payments under this formula were based on
the amount of cash generated from operating activities as a percentage of
average net assets employed, adjusted to consider net income earned by the
Company. For fiscal year 1996, the Company adopted an incentive formula,
return on net assets, designed to achieve the best return with the least
investment. The incentive formula is designed to encourage high operating
profit and low investment in identified items of working capital and
plant, property and equipment. Return on net assets is determined by
dividing operating profit (before interest and taxes) by net operating
assets (i.e., inventory, receivable and net property, plant and
equipment--less trade payables). The Board of Directors approved both
formulas and a management committee recommendation of who would
participate in the Plan and such participants' level of participation by
assigning a specific number of participation units to each participant. In
fiscal 1995
14
and 1996, certain of the Named Executive Officers elected to have a portion
of their at-risk/incentive awards paid in the form of restricted stock. In
such case, only the portion of their at-risk/incentive award paid in cash
is shown in this column, with the balance shown in the column in the above
table for restricted stock awards. Notwithstanding any incentive payments
earned under the formula, the Board of Directors may, at its sole
discretion, elect not to make any payments if it determines that such
payments would be inappropriate.
(3) In fiscal 1995, the Executive Compensation and Development Committee of
the Board of Directors, in order to increase the linkage between the
interests of executives and shareholders, decided to pay merit increases
for senior officers in restricted stock in lieu of cash. After computing
the amount of the merit increases, that value was divided by $14.38, the
closing price of Rohr common stock on June 30, 1995, to arrive at the
number of shares of restricted stock. The restricted stock will vest one-
third each year starting with the first anniversary of the date of grant
and will be fully vested in three years. The restricted stock is subject
to acceleration of such schedule upon a change in control of the Company.
Dividends, if any, are payable on restricted stock prior to the lapsing of
the restrictions. The number of shares of restricted stock awarded to the
Named Executive Officers during fiscal 1995, with respect to the merit
payments, was as follows: Mr. Rau, 0 shares; Mr. Chapman, 1,237 shares;
Mr. Johnson, 1,250 shares; Mr. Wetzler, 1,429 shares; and Mr. Watson, 874
shares.
In fiscal 1995, the Executive Compensation and Development Committee
established a program pursuant to which an individual can elect to receive
up to 50 percent of his or her at-risk/incentive compensation in either
restricted stock or stock options in lieu of cash; and in fiscal 1996, that
amount was increased from 50 percent to 100 percent. Several of the Named
Executive Officers elected to receive part of their at-risk/incentive
compensation in restricted stock. Individuals making this election receive
an amount of restricted stock equal to 120 percent of the value of that
portion of the at-risk/incentive compensation diverted to restricted stock.
The restricted stock vests one-third per year starting with the first
anniversary of the date of grant and will be fully vested in three years.
The restricted stock is subject to acceleration of such schedule upon a
change in control of the Company. Dividends, if any, are payable on
restricted stock prior to the lapsing of the restrictions. The number of
shares awarded to the Named Executive Officers under this program with
respect to fiscal 1996, at a valuation of $22.625 per share, was as
follows: Mr. Rau, 7,717; Mr. Chapman, 4,939; Mr. Johnson, 0; Mr. Wetzler,
2,630; and Mr. Watson, 4,383.
No other Named Executive Officer purchased or was awarded restricted stock
during fiscal year 1996 (other than as disclosed above). At the end of the
fiscal year, the number and the value of the unreleased restricted stock
held by Mr. Rau were 72,270 shares at a value of $1,527,440; by Mr.
Chapman, 16,298 shares at a value of $346,556; by Mr. Johnson, 7,704 shares
at a value of $165,888; by Mr. Wetzler, 8,186 shares at a value of
$174,092; and by Mr. Watson, 9,382 shares at a value of $197,604, based on
the fair market value of $22.00 at July 31, 1996.
(4) This amount includes a relocation payment of $75,000 in accordance with
Mr. Chapman's employment agreement.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES(1)
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END OPTIONS AT FY-END($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
---- ------------------------- ----------------------------
R. H. Rau .............. 75,000/238,000 $984,375/1,845,750
President and Chief Ex-
ecutive Officer
L. A. Chapman .......... 20,000/78,000 $272,500/750,750
Senior Vice President
and Chief Financial
Officer
J. R. Johnson .......... 66,592/54,000 $530,184/412,500
Senior Vice President,
Programs, Technical
Resources and Quality
Assurance
G. A. Wetzler .......... 54,585/60,000 $426,292/483,000
Senior Vice President,
Operations
D. R. Watson............ 61,412/60,000 $446,624/483,000
Senior Vice President,
Customer Support and
Business Development
- --------
(1) No Named Executive Officer exercised any options during fiscal 1996.
(2) The potential net value of unexercised in-the-money options is based on a
closing price of $22.00 per share on July 31, 1996.
15
RETIREMENT BENEFITS
Qualified Retirement Plans
Under the Company's Salaried Retirement Plan (the "QRP" or "Qualified
Retirement Plan"), certain benefits are available to eligible employees of the
Company and its subsidiaries. The monthly benefits for normal retirement of
persons having sufficient credited service to qualify under the plan are 1 1/2
percent (2 percent for service accrued prior to January 1, 1987) of an
employee's average monthly "compensation," which as to the named executive
officers comprises "salary" and "at-risk/incentive compensation" paid and
shown on the Summary Compensation Table (with certain adjustments) during the
highest five consecutive of the employee's final ten years of employment with
the Company (but earned prior to January 1, 1995), multiplied by the number of
years of service (up to a maximum of 35 years), and reduced by the maximum
offset of federal Social Security benefits permitted by law. Under the QRP,
participants may, under certain conditions, provide a portion of their
benefits to their surviving spouses after their death. Benefits will also be
provided for early retirement, and vested benefits are provided for employees
who terminate after at least five years of credited service. Benefits under
the QRP were frozen as of December 31, 1994, which means that no further years
of credited service may be earned after that date nor may compensation
increases thereafter be considered in calculating the benefits under the QRP.
Cash Balance Retirement Plan
Effective January 1, 1995, the Company established a "Cash Balance
Retirement Plan" which is a defined benefit retirement plan that provides
participants with an individual account balance. Participants earn a
percentage of pay credited to their account which varies on a point system.
Points are determined each year using a combination of age and service. The
amount credited plus interest is paid in a lump sum or an annuity, at the
participant's choice, when leaving the Company or upon the participant's
retirement. This plan partially replaces the frozen Salaried Retirement Plan
discussed above.
Key features of the Cash Balance Plan include the following: (i) accounts
for eligible employees will be credited with from 1.5 percent to 4 percent of
pay annually based on age and service points; (ii) interest will be credited
based on the greater of 5 percent or the return on a five-year Treasury bill;
(iii) longer-service employees will earn extra credits for up to ten years
through a transition provision under this plan; these transition credits range
from 3.5 percent to 7 percent of pay annually; (iv) credits will be allocated
quarterly; (v) no allocations will be made to employees for service over 35
years; and (vi) the benefit is portable; i.e., employees can take their vested
accrued benefit with them if they leave the Company before retirement.
The amount credited to the accounts of the Named Executive Officers through
June 30, 1996, is, for Mr. Rau, $20,347; Mr. Chapman, $5,610; Mr. Johnson,
$23,202; Mr. Wetzler, $19,452; and forMr. Watson, $6,648. Amounts credited
under the Cash Balance Retirement Plan for executives reduce the benefit
payable under the unfunded Supplemental Retirement Plan discussed below.
Supplemental Retirement Plan
In addition to the QRP and the Cash Balance Retirement Plan for all eligible
employees, the Company maintains a Supplemental Retirement Plan (the "SRP")
for officers and other key executive employees. Under the SRP, the Company
will supplement the benefits payable from the QRP and the Cash Balance
Retirement Plan, if necessary, by an amount sufficient to raise total benefits
up to the level prescribed by the SRP. The combined monthly benefit level
prescribed by the SRP for normal retirement ordinarily is 2 percent of an
employee's average monthly "compensation" during the highest five consecutive
of the preceding ten years, multiplied by the number of years of service (up
to a
16
maximum of 35 years), and reduced by the maximum offset of federal Social
Security benefits permitted by law. (The term "compensation" is the same as
defined in the Qualified Retirement Plan, except that it also includes the
effect of any bonuses whether in the form of stock or cash and whether or not
deferred by the recipient. In certain cases approved by the Board of
Directors, a higher percentage than 2 percent can be provided, but only if the
monthly benefit does not exceed 60 percent of compensation, reduced by federal
Social Security benefits.) Benefits are also provided for disability
retirement and for early retirement, based on years of credited service at the
time of such disability or early retirement. No amounts have been "set aside"
for any person under the SRP since the plan is unfunded and benefits are
determinable and payable only upon such person's retirement pursuant to the
formula described above. However, the Company has accrued on its books an
actuarially computed amount relative to the Company's obligations under the
SRP.
The following table illustrates the estimated annual pension benefits which
would be provided at age 65 under the QRP and the Company's unfunded SRP,
after applicable deductions for benefits under the Cash Balance Retirement
Plan and Social Security benefits, to salaried employees having specified
average annual remuneration and years of service. The compensation levels were
frozen as of December 31, 1994. For the Named Executive officers, the years of
credited service as of July 31, 1996, (which is equal to the number of years
of credited service as of December 31, 1994, when the QRP was frozen) are: Mr.
Rau, 2 years; Mr. Chapman, 1 year; Mr. Johnson, 15 years; Mr. Wetzler,
16 years; and Mr. Watson, 7 years. The number of credited years of service
under the SRP as of July 31, 1996, for the Named Executive Officers are: Mr.
Chapman, 3 years; Mr. Johnson, 17 years; Mr. Wetzler, 17 years; and Mr.
Watson, 9 years. Mr. Rau's retirement benefits are disclosed under "Chief
Executive Officer Retirement Benefits."
APPROXIMATE ANNUAL BENEFIT FOR YEARS OF SERVICE INDICATED
AVERAGE ANNUAL
COMPENSATION
FOR HIGHEST
CONSECUTIVE
FIVE YEARS
DURING LAST
TEN YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
BEFORE --------------- --------------- --------------- --------------- ---------------
RETIREMENT QRP SRP QRP SRP QRP SRP QRP SRP QRP SRP
-------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$100,000................ $15,480 $ 3,288 $22,980 $ 5,788 $30,480 $ 8,288 $37,980 $10,788 $45,480 $13,288
$150,000................ 26,730 7,038 37,980 10,788 49,230 14,538 60,480 18,288 71,730 22,038
$200,000................ 26,730 22,038 37,980 30,788 49,230 39,538 60,480 48,288 71,730 57,038
$250,000................ 26,730 37,038 37,980 50,788 49,230 64,538 60,480 78,288 71,730 92,038
$300,000................ 26,730 52,038 37,980 70,788 49,230 89,538 60,480 108,288 71,730 127,038
$400,000................ 26,730 82,038 37,980 110,788 49,230 139,538 60,480 168,288 71,730 197,038
$500,000................ 26,730 112,038 37,980 150,788 49,230 189,538 60,480 228,288 71,730 267,038
$600,000................ 26,730 142,038 37,980 190,788 49,230 239,538 60,480 288,288 71,730 337,038
$700,000................ 26,730 172,038 37,980 230,788 49,230 289,538 60,480 348,388 71,730 407,038
$800,000................ 26,730 202,038 37,980 270,788 49,230 339,538 60,480 408,288 71,730 477,038
$900,000................ 26,730 232.038 37,980 310,788 49,230 389,538 60,480 468,288 71,730 547,038
$1,000,000.............. 26,730 262,038 37,980 350,788 49,230 439,538 60,480 528,288 71,730 617,038
Chief Executive Officer Retirement Benefits
Mr. Rau's employment agreement (see "Employment Contracts") provides for
retirement benefits at age 62 as follows: $464,000 per year to be increased by
approximately $2,890 for each month that Mr. Rau's retirement is delayed past
the age of 62. This amount is to be reduced by the pension he receives from
his former employer or other pension benefits payable from the Company, except
payments made pursuant to the Company's 401(k) Plan or similar plan of his
former employer. The retirement benefit will be payable to Mr. Rau, his
spouse, or his estate for at least ten years following his date of retirement
and shall continue beyond such ten years until the death of both Mr. Rau and
his surviving spouse. In addition, the Company has purchased an insurance
contract to guarantee the payment of Mr. Rau's benefits.
17
PERFORMANCE GRAPH
Regulations of the Securities and Exchange Commission require that this
proxy statement include a line graph comparing the cumulative total
shareholder return on the Company's common stock with the cumulative total
return of (1) the Standard & Poor's 500 Stock Index (S&P 500) and (2) an
industry line-of-business index. The Board of Directors and the Executive
Compensation and Development Committee have approved the use of Standard &
Poor's Aerospace and Defense Index for the line-of-business index, which
consists of the following companies: Boeing Co., General Dynamics Corp.,
Lockheed Martin Corp., McDonnell Douglas Corp., Northrop Grumman Corp.,
Raytheon Co., Rockwell International Corp., and United Technologies Corp.
The following graph compares the five-year cumulative total return on the
Company's common stock to the total return of the S&P 500 and to the Standard
& Poor's Aerospace and Defense Index. The table assumes that, in each case, an
investment of $100 was made on August 1, 1991, and all dividends, if any, were
reinvested. (The Company has not paid a cash dividend on its common stock
since 1975.) Returns are for the fiscal year ended July 31 of each year.
LOGO
YEARS ENDING JULY,
--------------------------------------------
1991 1992 1993 1994 1995 1996
Rohr, Inc.......................... $100 $ 46.52 $ 36.90 $ 49.20 $ 63.10 $ 94.12
S&P 500 Comp-Ltd................... 100 112.79 122.64 128.96 162.64 189.58
Aerospace/Defense.................. 100 101.62 129.75 148.34 220.88 286.63
The Board of Directors and the Executive Compensation and Development
Committee recognize that the market price of the Company's common stock is
influenced by many factors, one of which is the individual performance of the
Company. The stock price performance shown on the graph is not necessarily
indicative of future price performance. The Company will not make nor endorse
any predictions as to the future performance of the Company's common stock.
18
EMPLOYMENT CONTRACTS
Robert H. Rau. The Company has entered into an employment agreement with Mr.
Rau in connection with his employment as President and Chief Executive Officer
of the Company. That agreement provides that beginning on August 1, 1996, the
term of Mr. Rau's employment is automatically extended for successive yearly
periods unless either Mr. Rau or the Board of Directors terminates the
contract on one year's advance notice. Pursuant to the agreement, Mr. Rau
received 100,000 shares of restricted stock at $1.00 per share vesting over
six years and an option to purchase 100,000 shares of the Company's common
stock at $8.875 per share (the then-current market value) vesting at 25
percent per year. He also received 40,000 shares of the Company's common stock
at no additional cost. The agreement provides a change-of-control provision
that he will receive a severance payment at least equivalent to that provided
to other Company officers. (See "Indemnification and Severance" below.) The
provisions for Mr. Rau's retirement under this agreement are shown at
"Retirement Benefits."
Laurence A. Chapman. The Company has entered into an employment agreement
with Mr. Chapman in connection with his employment as Senior Vice President
and Chief Financial Officer of the Company. The agreement provided for
specific sums for fiscal years 1994 and 1995, a starting bonus of $114,000,
and a relocation payment of $75,000, all of which has been paid. Pursuant to
the agreement, Mr. Chapman received a restricted stock grant of 20,000 shares
of common stock at a price of $1.00 per share and a non-qualified stock option
to purchase 50,000 shares of common stock at a price of $8.375 per share, the
fair market value of the common stock at the date of grant, which shares and
option will vest at the rate of 20 percent per year. Mr. Chapman is also
eligible to receive benefits under the Supplemental Retirement Plan which will
credit him with two years of service for each year employed by the Company for
the first 13 years of employment; thereafter, he will earn a year of credited
service for each year employed. Mr. Chapman's right to a pension under the
Supplemental Retirement Plan will vest as he earns credited service, so that
if his employment is terminated for whatever reason, he will be entitled to a
pension based on the years of credited service earned to the date of such
termination.
In order to compensate Mr. Chapman for the loss of his stock options from
his former employer, the Westinghouse Electric Company, the Company will pay
Mr. Chapman on May 1, 1997, up to $250,000, the exact amount to be computed
based on a formula that measures the price change in Westinghouse's stock over
a given period of time and/or the value of such stock during that period if
Westinghouse should cease to exist as a result of a merger or sale of all of
its assets. If there is a change in control of the Company prior to November
1, 1996, Mr. Chapman will receive at that time $250,000 in lieu of certain
other payments he would be eligible to receive if he were to continue his
employment with the Company. If Mr. Chapman is terminated without cause before
the third anniversary of his starting date, the Company will pay him a lump
sum of $228,000 within 30 days thereafter.
INDEMNIFICATION AND SEVERANCE
Pursuant to Bylaw changes previously adopted by the shareholders, the
Company has entered into Indemnity Agreements, in a form also approved by the
shareholders, with each director, the executive officers named in the Summary
Compensation Table, and other officers and executives providing for
indemnification. The Indemnity Agreements provide that the Company will pay
any amount which an indemnitee is legally obligated to pay because of claims
which may be made against such indemnitee based on any act or omission or
neglect or breach of duty, including any error, misstatement, or misleading
statement, committed, attempted or allegedly committed or attempted by the
indemnitee in his capacity as a director or officer, or any matter claimed
against him solely by reason of his serving as such director or officer.
However, no indemnification is provided in cases
19
involving dishonesty or improper personal profit, or for a claim for an
accounting of profits made in connection with a violation of Section 16(b) of
the Securities Exchange Act of 1934. Furthermore, indemnification is provided
by the Company only after the exhaustion of all insurance proceeds under the
Company's officers' and directors' liability insurance policy. The payments to
be made under the Indemnity Agreements include the amounts of all claims,
liabilities, settlements, and costs, including defense costs and costs of
attachment or similar bonds, except that the Company is not obligated to pay
fines or other fees imposed by law which the Company is prohibited by law from
paying.
The Company also has made severance arrangements with each of the executive
officers named in the Summary Compensation Table and with all of its other
officers providing for a severance payment of two times base pay and a target
award under the Management Incentive Plan to any such officer in the event he
is terminated (other than by death, permanent and total disability, certain
retirements, or terminations which are voluntary or for cause) within two
years following a change in control. For these purposes, a change in control
is defined as a merger, consolidation or liquidation of the Company; the
acquisition of 20 percent of the Company's common stock; the sale, mortgage,
lease or other transfer (other than in the ordinary course of business) of 50
percent of the Company's assets or earning power; the receiving of the
benefits of any loan, advance, guarantee, pledge, other financial assistance
or tax credit or advantage provided by the Company to any person or group
which owns 15 percent or more of the common stock of the Company on conditions
not less favorable to the Company than the Company would be able to obtain in
arm's-length negotiations; or if a majority of the Board of Directors is
nominated and elected by other than the current Board and its nominees and
successors. Insurance benefits are also provided until the earliest to occur
of such officer obtaining new employment or reaching age 65.
The Company also has approved modifications to preserve the benefits to all
of its officers and directors previously granted under its stock incentive,
stock option, restricted stock, retirement, and health care plans, in the
event of a change of control (generally as defined above). These provisions
allow any holder of stock options (including an officer) who is so terminated
other than voluntarily or for cause after a change in control to exercise all
of his stock options within a certain period of time after termination of his
employment; fully vest any terminated officer in his benefit, if any, as
calculated under the Supplemental Retirement Plan (and allow the retirement of
any terminated director, under the Directors' Retirement Plan); lift the
restrictions and waive the Company's repurchase options under the restricted
stock plans for any terminated holder of such stock (including any terminated
officer) other than voluntarily or for cause; and obligate the Company to
indemnify any terminated officer from the federal excise tax effects of the
foregoing under Section 67 of the Internal Revenue Code. In addition, if the
change of control involves the acquisition of 40 percent or more of the
Company's common stock, then the restrictions will lift for all holders of
restricted stock (including the officers of the Company) and the stock options
of all holders (including officers) will vest.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Officers, directors and greater-than-10-
percent shareholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on its review
of the copies of such forms received by it, or written representations from
certain reporting persons regarding such forms, the Company believes that,
during fiscal 1996, all filing requirements applicable to its officers,
directors, and greater-than-10-percent beneficial owners were complied with,
except Mr. Rau, the Company's President and Chief Executive Officer, filed a
Form 4 in June 1996 reporting (i) the receipt of a grant of 40,000 shares of
the Company's common stock (which has been reported in all prior proxy
statements) in 1993, and (ii) the acquisition of 2,850 shares of the Company's
common stock by his wife in fiscal year 1995.
20
BENEFICIAL OWNERSHIP OF SHARES*
The Company's common stock is listed for trading on the New York and Pacific
Stock Exchanges, under the symbol "RHR", and on The Stock Exchange, London.
The following table sets forth, as of October 9, 1996, the persons believed
by the Company to be the beneficial owners of more than 5 percent of the
Company's common stock:
AMOUNT PERCENT
NAME AND ADDRESS OF TITLE OF BENEFICIALLY OF
BENEFICIAL OWNER CLASS OWNED CLASS
------------------- ------------ ------------ -------
J. P. Morgan............................ Common Stock 1,883,567 8.4
60 Wall Street
New York, NY 10015
FMR Corp................................ Common Stock 1,423,700 6.5
82 Devonshire Street
Boston, MA 02109
Mellon Bank Corporation................. Common Stock 1,296,014 5.8
10th Market Street
Wilmington, DE 19801
Smith, Donald & Co. Inc................. Common Stock 1,240,100 5.6
15 Essex Road
Paramus, NJ 07652
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* Owners of the Company's common stock also own, on a one-for-one basis,
rights (the "Rights") to purchase from the Company one one-hundredths
(1/100) of a share of Series C Preferred Stock per Right, exercisable upon
the occurrence of certain events. The price and terms of the Rights, which
could entitle the holder to purchase common stock of the Company, or of an
Acquiring Person, are defined in the Amended and Restated Rights Agreement
between the Company and The First National Bank of Chicago dated as of
April 6, 1990, as amended.
21
On October 9, 1996, the Executive Officers and Directors beneficially owned
as a group 1,077,073 shares of common stock of the Company. The following
table shows the individual holdings. Mr. Rau, who is listed in the table as an
Executive Officer, is also a Director. The Company knows of no contractual
arrangements which may, at a subsequent date, result in a change in control of
the Company.
BENEFICIAL OWNERSHIP ON OCTOBER 9, 1996
RIGHT TO ACQUIRE
COMMON OWNERSHIP TOTAL
-------------------- ----------------------- -----------------------
PERCENT OF PERCENT OF PERCENT OF
NAME SHARES(1) CLASS(2) SHARES(1)(3) CLASS(2) SHARES(1)(3) CLASS(2)
---- --------- ---------- ------------ ---------- ------------ ----------
DIRECTORS
Wallace Barnes................ 7,200 -- 7,000 -- 14,200 0.1
Eugene E. Covert.............. 2,100 -- 8,000 -- 10,100 --
Sam F. Iacobellis............. 5,454 -- 2,000 -- 7,454 --
Vincent N. Marafino........... 1,166 -- 1,000 -- 2,166 --
D. Larry Moore................ 1,662 -- 5,000 -- 6,662 --
Robert M. Price............... 1,487 -- 5,966 -- 7,453 --
William P. Sommers............ 1,973 -- 4,000 -- 5,973 --
Jack D. Steele................ 2,800 -- 8,000 -- 10,800 --
James R. Wilson............... 3,454 -- 2,000 -- 5,454 --
EXECUTIVE OFFICERS
L. A. Chapman................. 56,650 0.3 76,154 0.3 132,804 0.6
J. R. Johnson................. 26,353 0.1 98,592 0.5 124,945 0.6
R. W. Madsen.................. 2,123 -- 89,392 0.4 91,515 0.4
A. L. Majors.................. 13,099 0.1 45,958 0.2 59,057 0.3
R. H. Rau..................... 151,245 0.7 221,830 1.0 373,075 1.7
D. R. Watson.................. 20,859 0.1 93,412 0.4 114,271 0.5
G. A Wetzler.................. 24,559 0.1 86,585 0.4 111,144 0.5
------- --- ------- --- --------- ---
All of the above as a group
(16 persons)................. 322,184 1.4 754,889 3.2 1,077,073 4.7
- --------
(1) All executive officers and directors as a group owned beneficially
approximately 4.8 percent of the equity securities of the Company. Shares
shown as beneficially owned are those as to which the named persons
possess sole voting and investment power. However, under the laws of some
states, including California, personal property owned by a married person
may be community property, and under some state community property laws,
including California, either spouse may manage and control such community
property. The Company has no information as to how many of the shares
shown in this table are subject to any community property law. Beneficial
ownership of shares of equity securities has been determined for this
purpose in accordance with Rule 13d-3 of the Securities and Exchange
Commission ("SEC"), under which a person is deemed to be the beneficial
owner of shares of Common Stock if he or she has or shares voting power or
investment power in respect to such shares of Common Stock or has the
right to acquire ownership within 60 days. Accordingly, the amounts shown
on the table do not purport to represent beneficial ownership for any
purpose other than compliance with SEC reporting requirements.
(2) The shares owned by each person, and by the group, and the percentage of
shares owned (where such percentage exceeds 0.1 percent) has been computed
in accordance with Rule 13d-3(d)(1) under the Securities Exchange Act.
(3) Includes shares which may be acquired upon the exercise of stock options
as follows: Messrs. Rau, 217,000 shares; Chapman, 52,000 shares; Johnson,
98,592 shares; Wetzler, 86,585 shares; Watson, 93,412 shares; Madsen,
89,392 shares; Majors, 45,958 shares; Barnes, 7,000 shares; Covert, 8,000
shares; Iacobellis, 2,000 shares; Marafino, 1,000 shares; Moore, 5,000
shares; Price, 5,000 shares; Sommers, 4,000 shares; Steele, 8,000 shares;
Wilson, 2,000 shares; and the group, 724,939 shares. In addition, this
amount includes shares which may be obtainable upon the conversion of the
Company's 7 3/4% Convertible Subordinated Notes due 2004 for Messrs.
Price, 966 shares; Chapman, 24,154 shares; Rau, 4,830 shares; and the
group, 29,950 shares.
22
PROPOSAL NO. 2--APPROVAL OF SELECTION OF AUDITORS
The Company is seeking shareholder approval of its selection of Deloitte &
Touche LLP as the Company's independent auditors for the fiscal year ending
July 31, 1997. Deloitte & Touche LLP has served as the Company's independent
auditors commencing in fiscal 1966.
Shareholder ratification of the selection of Deloitte & Touche LLP as the
Company's independent public accountants is not required by the Company's
Bylaws or otherwise. However, the Board is submitting the selection of
Deloitte & Touche LLP to the shareholders for ratification as a matter of good
corporate practice. If the shareholders fail to ratify the selection, the
Board will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Board in its discretion may direct the appointment
of a different independent accounting firm at any time during the year if the
Board determines that such a change would be in the best interests of the
Company and its shareholders.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting, will be given an opportunity to make a statement if they
desire to do so and will be available at an appropriate time during the
meeting to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF DELOITTE
& TOUCHE LLP AS INDEPENDENT AUDITORS.
FINANCIAL STATEMENTS
The Annual Report of the Company for the fiscal year ended July 31, 1996,
describing the Company's operations and including audited financial
statements, has been mailed prior to or concurrently with this Proxy Statement
to shareholders of record at the close of business on October 9, 1996.
SHAREHOLDERS' PROPOSALS
Proposals by shareholders intended to be considered at the 1997 Annual
Meeting must be received by the Company on or before July 7, 1997, for
consideration for inclusion in the Company's 1997 proxy materials under the
rules of the Securities and Exchange Commission. Rule 14a-8 (of Regulation 14A
of the General Rules and Regulations under the Securities Exchange Act of
1934) sets forth the requirements for shareholder proposals. A copy of Rule
14a-8 will be supplied to a record or beneficial owner upon request of the
Corporate Secretary at the mailing address shown on the first page of this
Proxy Statement.
SOLICITATION OF PROXIES
The Company bears the cost of this solicitation. Proxies may be solicited by
mail, telephone or telegraph or personally by directors, officers and regular
employees of the Company. The Company will reimburse persons holding stock in
their names or in the names of their nominees for reasonable expenses of
forwarding proxy material to their principals. The Company has also retained
D. F. King & Co., Inc., to assist in the distribution and limited solicitation
of proxies for a fee of $7,000, plus out-of-pocket expenses.
OTHER BUSINESS
The Board of Directors does not know of any other business that will be
presented for consideration at the Annual Meeting. If any other business
properly comes before the meeting or any adjournment thereof, the proxy
holders will vote in regard thereto according to their discretion insofar as
such proxies are not limited to the contrary.
LOGO
Richard W. Madsen
Secretary
23
5426
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. Election of Directors. (see reverse)
FOR [_] WITHHELD [_]
FOR, except vote withheld from the following
--------------------------------------------
2. Approval of independent accountants.
FOR [_] AGAINST [_] ABSTAIN [_]
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) Date
- --------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
- --------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
I plan to attend the annual Shareholders' Meeting of ROHR, INC. on Saturday,
Dec. 7, 1996, at 10:30 a.m., to be held at the offices of the COMPANY, 850
Lagoon Drive, Chula Vista, California.
Please send your completed proxy in the enclosed envelope. Include this
reservation card in the envelope only if you plan to attend the meeting.
IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN THIS FORM WITH
YOUR PROXY PROMPTLY.
NAME
----------------------------------------
(PLEASE PRINT)
ADDRESS
-------------------------------------
STREET
- --------------------------------------------
CITY STATE ZIP CODE
PHONE NO.
-----------------------------------
P R O X Y
ROHR, INC.,
CHULA VISTA, CA
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING DECEMBER 7, 1996
The undersigned hereby appoints Wallace Barnes and Richard W. Madsen, and each
of them, his or her proxies with full power of substitution and authorizes them,
or either of them, or their substitutes, to vote the stock of the undersigned at
the 1996 Annual Meeting of Shareholders of ROHR, INC., to be held at the offices
of the Company, 850 Lagoon Drive, Chula Vista, California on Saturday, December
7, 1996, commencing at 10:30 a.m., and at any adjournments thereof, as specified
below and upon such other matters as may properly be brought before the meeting
conferring discretionary authority upon said proxies as to such other matters.
Election of Directors. Nominees:
Sam F. Iacobellis, Robert H. Rau, William P. Sommers, James R. Wilson
If you wish to vote in accordance with the recommendations of the Board of
Directors, simply sign your name on the reverse side and return this card. If
you wish to specify your choices you may do so on the reverse side. Except to
the extent of any contrary direction, this proxy will be taken as authority to
vote FOR proposals 1 and 2.
SEE REVERSE
SIDE
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-- FOLD AND DETACH HERE --