SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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-11c or Section 240.14a-12
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number 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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(4) Proposed maximum aggregate value of transaction:
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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 number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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NOTICE OF ANNUAL MEETING -- MAY 21, 2003
AND PROXY STATEMENT
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
1001 Air Brake Avenue
Wilmerding, Pennsylvania 15148
Dear Stockholder:
We invite you to attend the annual meeting of stockholders of Westinghouse Air
Brake Technologies Corporation, doing business as Wabtec, on May 21, 2003 at
11:00 a.m. in Pittsburgh, Pennsylvania.
This booklet includes the formal notice of the meeting and the proxy statement.
The proxy statement tells you more about the items we will vote on at the
meeting. It also explains how the voting process works and gives personal
information about our director candidates.
Whether or not you plan to attend, please promptly complete, sign, date and
return your proxy card in the enclosed envelope, or you may vote over the
Internet or by telephone by following the instructions found on the proxy card.
Regardless of the method used, please vote your shares in accordance with your
wishes so that enough shares are represented to allow us to conduct the business
of the annual meeting. Mailing your proxy(s) or voting over the Internet or by
telephone does not affect your right to vote in person if you attend the annual
meeting.
Sincerely yours,
Alvaro Garcia-Tunon
Senior Vice President,
Chief Financial Officer and
Secretary
April 18, 2003
NOTICE OF 2003 ANNUAL MEETING
DATE, TIME AND PLACE
- May 21, 2003
- 11:00 a.m.
- Omni William Penn
William Penn Place
Pittsburgh, Pennsylvania, 15219
PURPOSE
- Elect three directors for a term of three years
- Ratify appointment of independent accountants
- Conduct other business if properly raised
PROCEDURES
- If you own stock directly, please complete the enclosed proxy card requested
by the Board.
- Only stockholders of record on March 24, 2003 receive notice of and may vote
at the meeting.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE, AND RETURN YOUR PROXY CARD
PROMPTLY IN THE ENCLOSED ENVELOPE OR VOTE OVER THE INTERNET OR BY TELEPHONE.
Alvaro Garcia-Tunon
Senior Vice President,
Chief Financial Officer and
Secretary
April 18, 2003
CONTENTS
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GENERAL..................................................... 1
COMMON STOCK OWNERSHIP...................................... 2
Director and Executive Officer Stock Ownership............ 2
Other Owners of More than 5%.............................. 3
Section 16(a) Beneficial Ownership Reporting.............. 3
PROPOSAL 1 -- ELECT DIRECTORS............................... 4
Nominees.................................................. 4
Directors' Compensation................................... 5
The Board and Committees.................................. 6
The Audit Committee....................................... 6
Audit Committee Report.................................... 6
The Compensation Committee................................ 7
Summary Compensation Table................................ 7
Option Grants in 2002..................................... 8
2002 Aggregate Option Exercises and Year-End Option
Values................................................. 8
Equity Compensation Plan Information...................... 9
Compensation Committee Report............................. 9
Stock Performance Graph................................... 11
Related Party Transactions................................ 11
PROPOSAL 2 -- RATIFY INDEPENDENT ACCOUNTANTS................ 12
Audit Fees................................................ 12
Financial Information Systems Design and Implementation
Fees................................................... 12
All Other Fees............................................ 12
OTHER INFORMATION........................................... 13
Expenses of Solicitation.................................. 13
Stockholder Proposals for Next Year....................... 13
GENERAL
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We have sent you this booklet and proxy on or about April 18, 2003 because the
Board of Directors of Westinghouse Air Brake Technologies Corporation, doing
business as Wabtec, is soliciting your proxy to vote at the company's 2003
annual meeting of stockholders.
WHO MAY VOTE
Stockholders of Wabtec as reflected in our stock records at the close of
business on March 24, 2003 may vote. You have one vote for each share of Wabtec
common stock you own.
HOW TO VOTE
You may vote in person at the meeting or by proxy. Most shareholders of record
have a choice of voting by proxy over the Internet, by telephone, or by using a
traditional proxy card. Please check your proxy card or the information
forwarded by your bank, stockbroker or other holder of record to see which
options are available to you. We recommend you vote by proxy even if you plan to
attend the meeting. You can always change your vote at the meeting.
ELECTRONIC ACCESS TO PROXY MATERIALS AND ANNUAL REPORT
This notice of Annual Meeting and Proxy Statement and the 2003 Annual Report are
available on our Internet site at http//www.wabtec.com. If you are a shareholder
of record and would like to view future proxy statements and annual reports over
the Internet instead of receiving copies in the mail, follow the instructions
provided when you vote over the Internet or by telephone, or check the
appropriate box on the proxy card if mailing your proxy. If you hold your shares
through a bank, stockbroker or other holder, check the information provided by
that entity for instructions on how to view future proxy statements and annual
reports and vote your shares over the Internet. Choosing to receive your proxy
materials online saves us the cost of producing and mailing these materials to
your home or office and gives you an automatic link to the proxy voting site.
HOW A PROXY WORKS
Giving us a proxy means you authorize us to vote your shares in accordance with
your directions. If you do not make any selections, your shares will be voted in
favor of our director candidates and ratification of the independent public
accountants.
You may receive more than one proxy or voting card depending on how you hold
your shares. Shares registered in your name are generally covered by one card.
If you hold shares through someone else, such as a stockbroker, you may get
material from them asking how you want to vote.
CHANGING YOUR VOTE
You may revoke your proxy before it is voted by submitting a new proxy with a
later date, by voting in person at the meeting or by notifying Wabtec's
Secretary in writing.
COMMON STOCK OUTSTANDING
As of the close of business on March 24, 2003, 43,449,249 shares of Wabtec
common stock were issued and outstanding.
QUORUM AND VOTING INFORMATION
In order to conduct the business of the meeting, we must have a quorum. This
means at least a majority of the outstanding shares eligible to vote must be
represented at the meeting, either in person or by proxy. You are considered a
part of the quorum if you submit a properly signed proxy card, vote over the
Internet or vote by telephone.
If a quorum is present at the meeting, the three director candidates receiving
the most votes will be elected to fill the three open seats on the Board.
Ratification of the appointment of the independent public accountants requires
the favorable vote of a majority of the shares present in person or by proxy.
Approval of any other matter that properly comes before the Board requires the
favorable vote of a majority of shares present in person or by proxy, unless the
matter requires more than a majority vote under statute or our bylaws.
Because the total shares voted "for," "against," or "abstain" are counted to
determine the minimum votes required for approval, if you abstain from
-1-
voting, it has the same legal effect as a vote against. If a broker limits the
number of shares voted on the proposal on its proxy card or indicates that the
shares represented by the proxy card are not being voted on the proposal, it is
considered a broker non-vote. Broker non-votes are not counted as a vote or used
to determine the favorable votes required to approve the proposal.
COMMON STOCK OWNERSHIP
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DIRECTOR AND EXECUTIVE OFFICER STOCK OWNERSHIP
Under the proxy rules of the Securities and Exchange Commission, a person
beneficially owns Wabtec common stock if the person has the power to vote or
dispose of the shares, or if such power may be acquired, by exercising options
or otherwise, within 60 days. The table below shows how much Wabtec common stock
is beneficially owned as of February 28, 2003 by directors, nominees for
director, the chief executive officer and the four other highest paid executive
officers in 2002. Each person has sole voting power and sole dispositive power
unless indicated otherwise.
EXECUTIVE OFFICER SHARES OWNED PERCENT OF CLASS
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William E. Kassling......................................... 1,914,996(1)(2) 4.41%
Gregory T. H. Davies........................................ 440,865(2) 1.01%
Robert J. Brooks............................................ 583,212(2)(3) 1.34%
Paul E. Golden.............................................. 68,297(2) *
John M. Meister............................................. 382,775(2) *
NON-EMPLOYEE DIRECTOR/NOMINEE SHARES OWNED PERCENT OF CLASS
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Kim G. Davis................................................ 2,412,000(2)(4) 5.55%
Emilio A. Fernandez......................................... 780,001(2)(5) 1.80%
Lee B. Foster, II........................................... 38,839(2)(6) *
James P. Miscoll............................................ 21,111(2) *
James V. Napier............................................. 34,166(2) *
Michael W. D. Howell........................................ 778(7) *
Directors and Executive Officers as a Group (17 persons).... 7,161,385(2) 16.48%
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* Less than 1%
(1) Includes 456,660 shares beneficially owned by Mr. Kassling. Also includes
1,449,836 shares beneficially owned by Davideco, a Pennsylvania business
trust, 8,000 shares owned by Mr. Kassling's wife and 500 shares owned by Mr.
Kassling's son. Mr. Kassling disclaims beneficial ownership of the shares
held by his wife and son.
(2) Includes options that are exercisable on or within 60 days of February 28,
2003 as follows: Mr. Brooks 174,899; Mr. Davies 392,167; Mr. Davis 5,000;
Mr. Fernandez 108,872; Mr. Foster 9,666; Mr. Golden 64,334; Mr. Kassling
353,131; Mr. Meister 163,232; Mr. Miscoll 9,666; Mr. Napier 19,666; and all
directors and executive officers as a group 1,734,551.
(3) Includes 213,810 shares beneficially owned by Mr. Brooks. Also includes
369,402 shares owned by Suebro, Inc., a Delaware holding company.
(4) Includes 2,405,000 shares beneficially owned by Charlesbank Equity Fund II,
Limited Partnership. Mr. Davis is a Managing Director and co-founder of
Charlesbank Capital Partners LLC, an investment advisor to Charlesbank
Equity Fund II, Limited Partnership. Also includes 7,000 shares owned
beneficially by Mr. Davis. Mr. Davis disclaims beneficial ownership of the
Charlesbank shares.
(5) Includes 510,405 shares beneficially owned by Mr. Fernandez. Also includes
257,175 shares beneficially owned by Mr. Fernandez's wife and 12,421 shares
beneficially owned by his son. Mr. Fernandez disclaims beneficial ownership
of the shares held by his wife and son.
(6) Includes 31,001 shares beneficially owned by Mr. Foster, 6,600 shares held
by Foster Holdings, Inc. and 1,238 shares held in Mr. Foster's deferred
compensation account.
(7) Shares held by Hilliard Lyons as custodian for Mr. Howell's retirement
account.
-2-
OTHER OWNERS OF MORE THAN 5%
The following table shows stockholders who are known to the company to be a
beneficial owner of more than 5% of Wabtec's common stock as of December 31,
2002.
SHARES OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK OF CLASS
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State Street Research & Management Company.................. 4,696,600(1) 10.81%
One Financial Center, 30th Floor
Boston, MA 02111
First Manhattan Co. ........................................ 2,768,262(2) 6.37%
437 Madison Avenue
New York, NY 10022
Shapiro Capital Management Company, Inc. ................... 2,567,932(3) 5.91%
3060 Peachtree Road, N.W.
Atlanta, GA 30305
Charlesbank Equity Fund II, Limited Partnership............. 2,405,000(4) 5.54%
600 Atlantic Avenue, 26th Floor
Boston, MA 02210
Vestar Equity Partners, L.P. ............................... 2,400,000 5.52%
c/o Vestar Capital Partners, Inc.
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, Colorado 80202
---------------
(1) According to Schedule 13G dated February 14, 2003 filed with the Securities
and Exchange Commission by State Street (updated as of February 28, 2003).
State Street Research & Management Company is a registered investment
adviser with sole power to vote and dispose of 4,696,600 shares. These
shares are owned by various clients of State Street Research & Management
Company and State Street disclaims any beneficial ownership in such shares.
(2) According to Schedule 13G dated February 14, 2003 filed with the Securities
and Exchange Commission by First Manhattan. First Manhattan Co. is a
registered investment adviser and has sole voting and sole dispositive power
with respect to 181,000 shares. Family members of the general partners of
First Manhattan Co. own 681,550 shares which are being reported for
informational purposes. First Manhattan disclaims dispositive power for
319,650 shares and beneficial ownership of 361,900 shares.
(3) According to Schedule 13G dated February 10, 2003 filed with the Securities
and Exchange Commission by Shapiro (and updated as of February 28, 2003).
Shapiro Capital Management Company, Inc. is a registered investment adviser
and Samuel R. Shapiro is the president, a director and majority shareholder
of Shapiro Capital Management who may be deemed to have beneficial
ownership. Mr. Shapiro owns no shares for his own account.
(4) According to Schedule 13G dated February 14, 2003 filed with the Securities
and Exchange Commission, Charlesbank Capital Partners, LLC acts as an
investment manager to Harvard Private Capital Holdings, Inc. through
Charlesbank Equity Fund II, Limited Partnership pursuant to an Investment
and Advisory Agreement between Charlesbank Capital Partners, LLC and
Charlesbank Equity Fund II, Limited Partnership, dated as of September 30,
2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers to file reports of beneficial ownership and changes in
beneficial ownership of Wabtec stock. Directors and officers must furnish us
with copies of these reports. Based on these copies and directors' and executive
officers' representations we believe all directors and executive officers
complied with the requirements in 2002.
-3-
PROPOSAL 1 -- ELECT DIRECTORS
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Wabtec's Board of Directors currently has eight members and four vacant seats.
The board is divided into three classes whose terms of office end in successive
years. Robert J. Brooks resigned his position in the class of directors whose
term expires in 2003. Mr. Brooks was then appointed by the Board to fill a
vacancy in the class of directors whose term expires in 2004. Gregory T. H.
Davies and Kim G. Davis, whose terms of office are expiring, have been nominated
to serve for new terms ending in 2006. Michael W. D. Howell has been nominated
to serve as a director for a term of office expiring in 2006 in the vacancy
created by Mr. Brooks. The board may act at a future date to fill the three
remaining vacancies or reduce the size of the board. The nominations were made
by the Nominating Committee of the Board and approved by the Board. The
Nominating Committee has the sole authority to make the nominations and met two
times in 2002. The members of the Nominating Committee are Mr. Davies and Mr.
Kassling.
Your proxy will be voted FOR the election of these nominees unless you withhold
authority to vote for any one or more of them. If any nominee is unable or
unwilling to stand for election, your proxy authorizes us to vote for a
replacement nominee if the board names one.
Only votes for a candidate are counted in the election of directors. The three
nominees who receive the most votes will be elected as directors.
THE BOARD RECOMMENDS YOU VOTE FOR EACH OF THE FOLLOWING CANDIDATES.
NOMINEES TO SERVE FOR A THREE-YEAR TERM EXPIRING IN 2006
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Gregory T. H. Davies Chief Executive Officer and President of Wabtec since
Age 56 February 2001; President and Chief Operating Officer
Director since 1999 of Wabtec from February 1998 to February 2001. Vice
President and Group Executive of Danaher Corporation
from prior to 1997 until February 1998.
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Kim G. Davis Managing Director of Charlesbank Capital Partners,
Age 49 LLC and predecessors since 1998; General Partner of
Director since 1997 Coral Reef Capital, LLC from prior to 1997 to
February 1998.
Director of Shoppers Drug Mart
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Michael W. D. Howell Chief Executive Officer of Transport Initiatives
Age 55 Edinburgh Limited since May 2002; Chairman of FPT
Group Limited from April 1998 to March 2002.
Director of Arlington Capital Management (CI) Limited
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-4-
CONTINUING DIRECTORS WITH A TERM EXPIRING IN 2005
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Emilio A. Fernandez Vice Chairman of Wabtec since March 1998; Executive
Age 58 Vice President of Wabtec from prior to 1997 to
Director since 1995 February 1998.
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Lee B. Foster, II Chairman of L. B. Foster Company since 1998; Chief
Age 56 Executive Officer of L. B. Foster Company from prior
Director since 1999 to 1997 to 2002; President of L.B. Foster from prior
to 1997 to 2000.
Director of L. B. Foster Company.
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James V. Napier Chairman of Scientific Atlanta, Inc. from prior to
Age 66 1997 to November 2000.
Director since 1995
Director of Scientific Atlanta, Engelhard
Corporation, Vulcan Materials Company, McKesson HBOC,
Personnel Group of America, Inc., and Intelligent
Systems, Inc.
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CONTINUING DIRECTORS WITH A TERM EXPIRING IN 2004
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Robert J. Brooks Executive Vice President -- Strategic Development of
Age: 59 Wabtec since March 2003; Executive Vice President of
Director since 1990 Wabtec from November 1999 to March 2003; Chief
Financial Officer of Wabtec since prior to 1997 to
March 2003.
Director of Crucible Materials Corporation
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William E. Kassling Chairman of Wabtec from prior to 1996; Chief
Age 59 Executive Officer of Wabtec from prior to 1996 to
Director since 1990 February 2001; President of Wabtec from prior to 1996
to February 1998.
Director of Aearo Corporation, Scientific Atlanta,
Inc. and Parker-Hannifin Corporation
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James P. Miscoll Independent Businessman since prior to 1997. Mr.
Age 68 Miscoll held various positions with Bank of America
Director since 1999 since 1962, including Vice Chairman from 1984 through
his retirement in 1992.
Director of MK Gold Company and 21st Century
Industries; Senior advisor to AIG
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DIRECTORS' COMPENSATION
Wabtec's non-employee director compensation plan pays each director who is not
an employee of the company a cash retainer of $10,000 per year for his services
as a director. In addition, each such director is entitled to receive $1,000 for
each meeting of the Board attended in person, and $1,000 per Board committee
meeting. Non-employee directors receive $500 for participating in a Board or a
committee meeting by telephone. All directors are reimbursed for their
out-of-pocket expenses incurred in connection with attendance at meetings and
other activities relating to the Board or Board Committee.
In addition, the non-employee directors also participate in the 1995
Non-Employee Directors' Fee and Stock Option Plan to encourage the highest level
of performance for members of the Board of Directors by providing such directors
with a proprietary interest in the Company's financial success. Under the Plan,
each non-employee director is entitled to receive 1,000 shares of
-5-
common stock annually. In addition, all non-employee directors as of January 25,
2000 received a one time initial grant of 5,000 stock options (priced at $12.75
with a vesting period of three years), received 5,000 stock options on December
5, 2000 (priced at $9.535 with a vesting period of three years) and will receive
2,000 stock options each January 2 during their term of service on the Board.
Such grants will be priced at the average of the high and low stock price on the
day granted, with a vesting period of three years. These grants commenced in
January 2002. Newly elected directors are eligible to receive 5,000 stock
options upon their initial election to the Board.
THE BOARD AND COMMITTEES
The Board met five times during 2002. All directors attended at least 75% of all
meetings of the Board and the Committees on which they served in 2002. The Board
committees that help the Board fulfill its duties include the Nominating
Committee, the Audit Committee and the Compensation Committee.
THE AUDIT COMMITTEE
The Audit Committee acts under a written charter which was amended and restated
by the Board of Directors on February 20, 2002. The Audit Committee provides
assistance to the Board in fulfilling their oversight responsibility to
stockholders, potential stockholders, the investment community and others
relating to Wabtec's financial statements and the financial reporting process,
the systems of internal accounting and financial controls, the internal audit
function, the annual independent audit of Wabtec's financial statements, and the
legal compliance and ethics programs as established by management and the Board.
The Audit Committee met six times in 2002. The Audit Committee members are Mr.
Davis, Mr. Fernandez and Mr. Miscoll. The Board of Directors, in its business
judgment, has concluded that all Audit Committee members are independent as
defined by the New York Stock Exchange listing standards.
AUDIT COMMITTEE REPORT
The audit committee is responsible for reviewing the Company's financial
reporting process on behalf of the Board of Directors. Management of the Company
has the primary responsibility for the financial statements and the reporting
process, including the system of internal controls. In the performance of our
oversight function, we meet with management periodically to consider the
adequacy of the Company's internal controls and the objectivity of its financial
reporting. We meet privately with the independent public accountants, who have
unrestricted access to the audit committee. Specifically, we have reviewed and
discussed with management and the independent public accountants the Company's
consolidated financial statements as of and for the fiscal year ended December
31, 2002.
We have also discussed with the independent public accountants the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as currently in effect.
Furthermore, we have received and reviewed the written disclosures and the
letter from the independent public accountants required by Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees,
as currently in effect, and have discussed with the independent public
accountants their independence.
Based on the review and discussions referred to above, we recommended to the
Board of Directors that the audited financial statements referred to above be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2002 to be filed with the Securities and Exchange Commission.
As part of the ongoing oversight process, the Audit Committee has been closely
monitoring the significant regulatory activities of the SEC and the NYSE during
the 2002 fiscal year. In order to ensure compliance with all of the new and
pending rules and regulations, the Audit Committee has sought and received the
advice of legal counsel and the advice of its independent public accountants.
The Audit Committee has reviewed its existing charter, policies and procedures
and is positioning itself to timely adopt and implement considered and
functional policies and procedures, and to update its charter accordingly.
Respectfully submitted,
James P. Miscoll, Chairman
Kim G. Davis
Emilio A. Fernandez
-6-
THE COMPENSATION COMMITTEE
The Compensation Committee participates in establishing the salary and bonus
levels of Wabtec officers, reviews management organization and development and
major employee benefit programs and establishes and administers executive
compensation programs. The Compensation Committee members are: Mr. Davis, Mr.
Fernandez, Mr. Foster, and Mr. Napier. The committee met four times in 2002.
SUMMARY COMPENSATION TABLE
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This table shows the compensation for Wabtec's Chief Executive Officer and the
four other most highly paid executive officers in 2002.
ANNUAL LONG TERM ALL OTHER
COMPENSATION COMPENSATION AWARDS COMPENSATION(1)
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SECURITIES RESTRICTED
NAME AND UNDERLYING STOCK
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS AWARD
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William E. Kassling 2002 $449,009 $256,448 100,000 -- $133,884
Chairman 2001 449,009 299,593 -- -- 81,765
2000 449,009 -- 100,000 67,748(2) 250,416
Gregory T. H. Davies 2002 $601,269 $351,259 150,000 -- $108,997
President and 2001 554,029 387,001 -- -- 63,785
Chief Executive Officer 2000 368,992 -- 175,000 67,748(2)(3) 54,766
Robert J. Brooks(4) 2002 $228,250 $131,936 20,000 -- $ 50,331
Executive Vice
President 2001 218,769 146,794 -- -- 54,190
and Chief Financial 2000 210,000 50,000 55,000 -- 155,490
Officer
Paul E. Golden 2002 $208,731 $147,731 30,000 -- $ 42,445
President -- Freight 2001 193,846 103,115 -- -- 41,039
Group 2000 150,000 40,067 50,000 -- 8,250
John M. Meister 2002 $227,500 $ 915 20,000 -- $ 75,495(5)
Executive Vice
President, 2001 221,312 1,830 -- -- 32,209
Transit Group 2000 218,500 -- 40,000 -- 139,514
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(1) The amounts reported in this column for 2002, which represent at least 25%
of the total amount of other compensation reported for 2002, are: estate and
tax planning for Mr. Kassling ($40,000); tax gross up benefits for Mr.
Kassling ($50,815), Mr. Davies ($41,722) and Mr. Brooks ($13,854); company
matching contributions to the 401(k) plan for Mr. Brooks ($18,000) and Mr.
Golden ($18,000); and car allowances for Mr. Golden ($12,974). Amounts for
2001 include payments for various executive perquisites including company
cars, club dues and company contributions to the 401(k) plan. Amounts for
2000 also include payments under the executive retirement plan and payments
for split dollar life insurance as follows: Mr. Kassling $148,262, Mr.
Meister $105,605 and Mr. Brooks $108,322.
(2) Mr. Kassling and Mr. Davies were each awarded 4,920 shares of restricted
common stock in lieu of a $100,000 cash bonus for fiscal year 2000. The
award is valued at $67,748 on February 26, 2001, the date of the award. The
shares must be held for one year before they can be sold.
(3) Mr. Davies was awarded 15,000 shares of restricted common stock on February
26, 1998, valued at $372,188 on the date of grant and $358,594 as of
December 31, 1998. 6,000 shares vested on February 26, 1999 valued at
$118,313 on the date of vesting and $103,688 as of December 31, 1999. 7,000
shares vested on February 26, 2000, valued at $68,031 on the date of vesting
and $84,455 as of December 31, 2000. 2,000 shares vested on February 26,
2001, valued at $27,540 on the date of vesting.
(4) Mr. Brooks stepped down as Wabtec's Chief Financial Officer effective March
31, 2003. He is now Executive Vice President -- Strategic Development.
(5) Includes $40,600 of income realized from the exercise of 10,000 stock
options and the related sale of Wabtec stock on February 24, 2002.
-7-
OPTION GRANTS IN 2002
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% OF TOTAL
NO. OF SHARES OPTIONS GRANTED GRANT DATE
SUBJECT TO OPTIONS TO EMPLOYEES EXERCISE EXPIRATION PRESENT
NAME GRANTED(1) IN 2002 PRICE/SHARE DATE VALUE(2)
----------------------------------------------------------------------------------------------------------
William E. Kassling 100,000 12.0% $12.13 1/7/12 $519,000
Chairman
Gregory T.H. Davies 150,000 18.0% $12.13 1/7/12 $778,500
President and Chief
Executive Officer
Robert J. Brooks 20,000 2.4% $12.13 1/7/12 $103,800
Executive Vice President
and Chief Financial
Officer
Paul E. Golden 30,000 3.6% $12.13 1/7/12 $155,700
President -- Freight Group
John M. Meister 20,000 2.4% $12.13 1/7/12 $103,800
Executive Vice President
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(1) The option grants were made on January 7, 2002 under the Wabtec Stock
Incentive Plan.
(2) Based on the Black-Scholes option pricing model adopted for use in valuing
executive stock options. The actual value, if any, an executive may realize
will depend on the excess of the stock price over the exercise price on the
date the option is exercised. There is no assurance that the value realized
by an executive will be at or near the value estimated by the Black-Scholes
model. The estimated values under that model were calculated based on the
following Assumptions:
JANUARY 7, 2002
GRANT
Dividend Yield 0.30
Exercise Date Five Year Expected Life
Risk-Free Interest Rate 4.39%
Volatility 43.81
2002 AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
This table shows the number and value of stock options exercised and unexercised
for the named executive officers.
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT IN-THE-MONEY OPTIONS
ON VALUE DECEMBER 31, 2002 AT DECEMBER 31, 2002
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
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William E. Kassling -- -- 319,797/133,333 $290,335/$321,165
Chairman
Gregory T. H. Davies -- -- 317,167/208,333 $347,335/$437,665
President and Chief
Executive Officer
Robert J. Brooks -- -- 163,232/38,333 $ 127,535/$98,965
Executive Vice President
and Chief Financial Officer
Paul E. Golden -- -- 49,334/46,666 $107,353/$106,472
President -- Freight
Group
John M. Meister 10,000 $40,600(2) 143,232/33,333 $ 51,150/$82,550
Executive Vice President
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(1) The value of unexercised options is based on the difference between the
exercise prices of the various option grants and the closing price of
Wabtec's Common Stock on the New York Stock Exchange on December 31, 2002 of
$13.89.
(2) Mr. Meister exercised 10,000 options at a strike price of 9.535 on February
24, 2002. The options were sold on the same day for 13.595, which resulted
in a gain of $40,600.
-8-
EQUITY COMPENSATION PLAN INFORMATION
This table provides aggregate information as of December 31, 2002 concerning
equity awards under Wabtec's compensation plans and arrangements.
(B) (C)
(A) NUMBER OF SECURITIES
NUMBER OF SECURITIES TO REMAINING AVAILABLE FOR
BE ISSUED UPON WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
EXERCISE OF EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
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Equity compensation plans
approved by shareholders.... 4,981,296 $13.44 1,343,893
Equity compensation plans not
approved by shareholders.... 0 0 0
Total....................... 4,981,296 $13.44 1,343,893
COMPENSATION COMMITTEE REPORT
Even if Wabtec's previous filings under the Securities Laws incorporate future
filings, including proxy statements, the following report and the Stock
Performance Graph on page 11 are NOT incorporated by reference into any of those
previous filings.
All of the members of the Compensation Committee are non-employee directors. The
committee's principal responsibility is to review, recommend and approve changes
to our compensation policies and programs. The committee is also responsible for
reviewing and approving all compensation actions for the Chief Executive Officer
and other executive officers.
Our compensation plan has three basic components:
- base salaries and bonuses,
- benefit plans, and
- long-term incentives.
BASE SALARIES AND BONUSES. The committee recommends base salaries and bonuses
of executive officers to the board, which then establishes these items. Base
salaries are determined at the beginning of the year and bonuses are awarded
after our fiscal year results are available.
Executive officers' base salaries depend mainly on their office and
responsibilities and are reviewed annually. Mr. Davies serves as Chief Executive
Officer of Wabtec. The committee reviews and approves Mr. Davies' salary each
year. As Chief Executive Officer, Mr. Davies' annual base salary is $615,000.
Mr. Davies also receives a bonus based on the same factors as the other
Executive Officers as discussed below.
During 2002, Wabtec had in effect an executive bonus plan, which had been
approved by the Board. Bonuses are based upon the success of two factors: a
financial performance factor, which measures (i) earnings before interest and
taxes and (ii) working capital; and a personal performance factor which measures
whether the executive has attained certain goals agreed to by the executive, his
supervisor, and the Board. There are guidelines as to the payment of bonuses,
although the Committee may exercise its discretion with respect to those
guidelines. We believe this philosophy encourages Wabtec and our executives to
establish ambitious goals and promotes teamwork, productivity and profitability.
Wabtec's employees may purchase shares of Wabtec common stock under the 1998
Employee Stock Purchase Plan. The plan allows eligible employees to purchase
shares of Wabtec common stock for 85% of fair market value through payroll
deductions. We believe that this plan promotes Wabtec's continued success by
encouraging our employees to have increased awareness of, and commitment to, our
corporate-wide goals. Messrs. Kassling, Davies, Brooks and Golden participated
in this plan during 2002. They purchased shares of common stock with a total
fair market value, when purchased, of $21,416, $22,138, $21,043 and $10,368
respectively.
-9-
LONG-TERM INCENTIVES. The committee may grant long-term incentives to employees
by granting stock options and making restricted share awards under the 2000
Stock Incentive Plan. The committee views stock options and restricted share
awards as incentives to enable Wabtec to hire and retain executives and to
provide executives with incentives related to the Company's stock price so they
have interests similar to your interests as Wabtec common stockholders. Our
decision to grant stock options or award restricted shares is based upon an
individual's job level, among other factors.
OTHER. Executive officers also may participate in Wabtec's 401(k) Plan. Wabtec
provides certain other personal benefits to certain employees, including
executive officers, that are not significant in total.
Respectfully submitted,
James V. Napier, Chairman
Emilio A. Fernandez
Lee B. Foster
Kim G. Davis
-10-
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return, through
December 31, 2002, of Wabtec's common stock, the S&P 500 and a peer group of
manufacturing companies which we believe closely resemble us. The graph assumes
that a person invested $100 on December 31, 1997 and that dividends are
reinvested.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
[LINE GRAPH]
--------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002
--------------------------------------------------------------------------------
WABTEC Corp $100.00 $ 95.53 $ 69.53 $ 46.21 $ 48.52 $55.54
S & P 500 $100.00 $128.58 $155.64 $141.47 $124.66 $97.11
Peer Group Only $100.00 $ 86.41 $ 64.82 $ 56.50 $ 62.39 $45.75
The peer group consists of the following publicly traded manufacturing companies
engaged in lines of business similar to those of Wabtec: Atchison Casting Corp.,
The Greenbrier Companies, L.B. Foster Company and Trinity Industries.
RELATED PARTY TRANSACTIONS
STOCKHOLDERS AGREEMENT
Wabtec, certain members of management, Vestar Equity Partners, Charlesbank
Equity Fund II, Limited Partnership, and American Industrial Partners Capital
have a Stockholders Agreement that provides for Board membership if the parties
own a certain percentage of stock.
REGISTRATION RIGHTS AGREEMENT
Wabtec, Charlesbank, American Industrial Partners, Vestar and certain individual
stockholders have an agreement that allows Charlesbank and Vestar to demand
registration of their shares to allow public sale. All parties have rights to
register their shares if Wabtec is registering shares for sale.
-11-
PROPOSAL 2 -- RATIFY INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
On May 30, 2002, we dismissed Arthur Andersen, LLP as Wabtec's independent
public accountants, and, after a review of several possible candidates,
appointed Ernst & Young, LLP to serve as Wabtec's independent public accountants
for fiscal year 2002, in accordance with the recommendation of Wabtec's Board of
Directors and its Audit Committee. The company dismissed Arthur Andersen, LLP as
its auditor because it believed that the firm could no longer provide the
necessary services on a global basis.
Arthur Andersen's reports on Wabtec's financial statements for each of the
fiscal years, ended December 31, 2000, and December 31, 2001, did not contain an
adverse opinion or disclaimer of opinion, nor were such reports qualified or
modified as to uncertainty, audit scope or accounting principles.
During the fiscal years, ended December 31, 2000, and December 31, 2001, and
through the date of their dismissal, there were no disagreements with Arthur
Andersen on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if not resolved to
Arthur Andersen's satisfaction would have caused them to make reference to the
subject matter of the disagreement in connection with the audit reports of
Wabtec's consolidated financial statements for such years. There were no
reportable events as described under Item 304(a) (i) (v) of Regulation S-K.
During each of the fiscal years, ended December 31, 2000 and December 31, 2001,
and through the date hereof, Wabtec did not consult Ernst & Young with respect
to the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
our financial statements, or any other matters or reportable events as set forth
in Items 304 (a) (2) (i) and (ii) of Regulation S-K.
We have provided both Arthur Andersen and Ernst & Young with a copy of this
disclosure.
On February 19, 2003, our Board of Directors approved the Audit Committee's
recommendation that Ernst & Young be appointed to audit our financial statements
for 2003. Although you are not required to ratify this appointment, we ask that
you do. If you do not, we will reconsider our choice. A representative of Ernst
& Young will be at the meeting to answer appropriate questions and make a
statement if they desire.
This proposal is adopted if a majority of the shares present in person or by
proxy vote for the proposal. Because the total shares voted "for," "against," or
"abstain" are counted to determine the minimum votes required for approval, if
you abstain from voting, it has the same legal effect as if you vote against. If
a broker limits the number of shares voted on the proposal on its proxy card or
indicates that the shares represented by the proxy card are not being voted on
the proposal, it is considered a broker non-vote. Broker non-votes are not
counted as a vote or used to determine the favorable votes required to approve
the proposal.
THE BOARD RECOMMENDS YOU VOTE FOR THIS PROPOSAL.
AUDIT FEES
Wabtec was billed $450,886 in aggregate fees by the independent public
accountants for the professional services rendered for the audit of Wabtec's
financial statements for the year ended December 31, 2002, and the reviews of
its financial statements included in its Forms 10-Q for the 2002 fiscal year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The independent public accountants did not bill Wabtec for any financial
information systems design and implementation fees for services rendered during
2002.
ALL OTHER FEES
In addition to the audit fees described above, the independent public
accountants billed Wabtec approximately $161,845 for other audit and
accounting-related services and $165,665 for tax outsourcing and compliance
(which includes the review of annual tax returns) for the 2002 fiscal year.
-12-
OTHER INFORMATION
--------------------------------------------------------------------------------
We do not expect any business to come before the meeting other than the election
of directors and the ratification of the independent public accountants. If
other business is properly raised, your proxy authorizes its holder to vote
according to their best judgment.
EXPENSES OF SOLICITATION
Wabtec pays the cost for proxy solicitation. In addition to mailing, officers
and employees may solicit proxies in person, by telephone or telegraph. Wabtec
will pay about $15,000 to Mellon Investor Services, LLC, for sending the proxy
material and the 2002 Annual Report to stockholders. We will also reimburse
other nominees, custodians or fiduciaries who forward these materials to
stockholders for their expenses in doing so.
STOCKHOLDER PROPOSALS FOR NEXT YEAR
To be eligible for inclusion in next year's proxy for the 2004 annual meeting,
the deadline for stockholder proposals is December 19, 2003. Additionally, our
advance notice provision in our by-laws requires that for business to otherwise
be properly brought before the annual meeting, notice must be submitted to us
between December 19, 2003 and February 18, 2004.
By order of the Board of Directors,
Alvaro Garcia-Tunon
Senior Vice President, Chief Financial Officer and
Secretary
-13-
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2. Please [ ]
Mark Here
ITEM (1) - Election of the following three Directors for a term for Address
expiring in 2006: Change or
01 Gregory T. H. Davies, 02 Kim G. Davis and Comments
03 Michael W. D. Howell SEE REVERSE SIDE
FOR all Nominees WITHHOLD AUTHORITY
(except as to Vote for All Please mark
shown below) Nominees your votes as
indicated in [X]
[ ] [ ] this example
A vote FOR includes discretionary authority to vote for a
substituted nominee if any of the nominees listed becomes unable ITEM (2) - The ratification of the appointment of Ernst
to serve or for good cause will not serve. & Young, LLP as independent public accountants
of the Company for the 2003 fiscal year.
(To withhold authority to vote for one or more such nominees,
write such nominees' name(s) on the line below.) FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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By checking the box to the right, I consent to [ ]
future access of the Annual Report, Proxy
Statements, prospectuses and other communications
electronically via the Internet. I understand that
the company may no longer distribute printed
materials to me for any future shareholder meeting
until such consent is revoked. I understand that I
may revoke any consent at any time by contacting
the Company's transfer agent, Mellon Investor
Services LLC, Ridgefield Park, NJ and that costs
normally associated with electronic access, such as
usage and telephone charges will be my
responsibility. Please disregard if you have
previously provided your consent decision.
Please date and sign exactly as your name appears
hereon and return in the enclosed envelope. If
acting as attorney, executor, administrator,
guardian or trustee, please so indicate with your
full title when signing. If a corporation, please
sign in full corporate name, by duly authorized
officer. If shares are held jointly, each
stockholder named should sign.
SIGNATURE SIGNATURE DATE
----------------------------------------- ------------------------------------------ --------
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
FOLD AND DETACH HERE
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET AND TELEPHONE VOTING IS AVAILABLE THROUGH
11 PM EASTERN TIME
THE DAY PRIOR TO ANNUAL MEETING DAY.
YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES
TO VOTE YOUR SHARES IN THE SAME MANNER AS IF YOU MARKED,
SIGNED AND RETURNED YOUR PROXY CARD.
INTERNET TELEPHONE MAIL
http://www.eproxy.com/wab 1-800-435-6710
Use the Internet to vote your proxy. Use any touch-tone telephone to Mark, sign and date
Have your proxy card in hand when vote your proxy. Have your proxy your proxy card
you access the web site. You will be OR card in hand when you call. You will OR and
prompted to enter your control be prompted to enter your control return it in the
number, located in the box below, to number, located in the box below, enclosed postage-paid
create and submit an electronic and then follow the directions envelope.
ballot. given.
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE, YOU
DO NOT NEED TO MAIL BACK YOUR PROXY CARD.
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
VOTING INSTRUCTIONS FOR THE ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
OMNI WILLIAM PENN, PITTSBURGH, PENNSYLVANIA
WEDNESDAY, MAY 21, 2003 - 11:00 A.M. (LOCAL TIME)
The undersigned stockholder of WESTINGHOUSE AIR BRAKE TECHNOLOGIES
CORPORATION (the "Company") does hereby appoint WILLIAM E. KASSLING, GREGORY T.
H. DAVIES and ROBERT J. BROOKS, and each of them acting individually, with full
power of substitution, as proxies of the undersigned to vote at the Annual
Meeting of Stockholders of the Company, to be held May 21, 2003 (the "Annual
Meeting"), and at all adjournments thereof, all the shares of Common Stock of
the Company which the undersigned may be entitled to vote, on the matters set
out on the reverse side of this proxy card and described in the Proxy Statement
and, in their discretion, on any other business which may properly come before
the Annual Meeting.
The undersigned stockholder hereby revokes all previous proxies for the
Annual Meeting and acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, both dated April 18, 2003, and of the Annual
Report to Stockholders for 2002.
You are urged to promptly return this proxy card in the enclosed envelope
whether or not you expect to attend the Annual Meeting in person so that your
shares may be voted in accordance with your wishes and in order that the
presence of a quorum may be assured at the Annual Meeting.
The shares represented by this proxy card will be voted as directed by the
stockholder. If this proxy card is executed but no direction is given, such
shares will be voted "FOR" items 1 and 2.
(Continued and to be signed on the reverse side)
Address Change/Comments (Mark the corresponding box on the reverse side)
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FOLD AND DETACH HERE