Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
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
CURTISS-WRIGHT CORPORATION
..................................................................
(Name of Registrant as Specified In Its Charter)
..................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
[CURTISS-WRIGHT LOGO]
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Curtiss-Wright Corporation ("Curtiss-Wright"), a Delaware corporation, to be
held on Friday, April 26, 2002 at the Renaissance Meadowlands Hotel, 801
Rutherford Avenue, Rutherford, New Jersey commencing at 2:00 p.m., local time.
At the Annual Meeting:
1. Holders of Class B common stock will be asked to consider and vote upon
the election of seven Class B directors;
2. Holders of Common stock will be asked to consider and vote upon the
election of one Common director;
3. Holders of Common stock and Class B common stock will be asked to
consider and act upon a proposal to amend the Corporation's 1995
Long-Term Incentive Plan to increase the number of shares reserved for
issuance thereunder by 500,000 additional shares;
4. Holders of Common stock and Class B common stock will be asked to
consider and vote upon the ratification of the appointment of
PricewaterhouseCoopers LLP as the Corporation's independent accountants
for the 2002 fiscal year;
5. Holders of Common stock and Class B common stock will be asked to
consider and transact such other business as may properly come before the
meeting.
Only holders of Class B common stock are entitled to vote in the election of
the Class B directors. Only holders of Common stock are entitled to vote in the
election of the Common director. The attached Proxy Statement presents the
details of these proposals.
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY NOMINATED THE CLASS B DIRECTORS AND
THE COMMON DIRECTOR AND APPROVED PROPOSALS 3 AND 4 ABOVE AND RECOMMENDS A VOTE
FOR THE NOMINEES FOR CLASS B DIRECTOR AND THE COMMON DIRECTOR, AND A VOTE FOR
THE PROPOSALS' APPROVAL AND ADOPTION.
YOUR PARTICIPATION AND VOTE ARE IMPORTANT. THE ELECTION OF EACH CLASS OF
DIRECTORS WILL NOT BE EFFECTED WITHOUT THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT
LEAST A MAJORITY OF THE RESPECTIVE OUTSTANDING CLASS OF COMMON STOCK VOTING AT
THE ANNUAL MEETING. THE ADOPTION OF PROPOSALS 3 AND 4 WILL NOT BE EFFECTED
WITHOUT THE AFFIRMATIVE VOTE OF AT LEAST A MAJORITY OF ALL THE OUTSTANDING
COMMON STOCK, VOTING AS A SINGLE CLASS, PRESENT AND VOTING AT THE ANNUAL
MEETING.
FOR FURTHER INFORMATION REGARDING THE MATTERS TO BE VOTED ON AT THE ANNUAL
MEETING, I URGE YOU TO CAREFULLY READ THE ACCOMPANYING PROXY STATEMENT, DATED
MARCH 7, 2002. If you have more questions about these proposals or would like
additional copies of the Proxy Statement, you should contact Gary J. Benschip,
Treasurer of Curtiss-Wright Corporation, 1200 Wall Street West, Lyndhurst, New
Jersey 07071; telephone: (201) 896-8400. Even if you plan to attend the Annual
Meeting in person, please complete, sign, date, and promptly return the enclosed
proxy card in the enclosed postage-paid envelope or by electronic means. This
will not limit your right to attend or vote at the Annual Meeting.
Sincerely,
Martin R. Benante
MARTIN R. BENANTE
Chairman and Chief Executive Officer
CURTISS-WRIGHT CORPORATION
1200 WALL STREET WEST, LYNDHURST, NEW JERSEY 07071
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
CURTISS-WRIGHT CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Curtiss-Wright Corporation, a Delaware corporation, will be held at
the Renaissance Meadowlands Hotel, 801 Rutherford Avenue, Rutherford, New Jersey
on Friday, April 26, 2002, at 2:00 p.m., for the following purposes:
(1) To elect seven Class B common stock directors, each to hold office
until the next Annual Meeting of Stockholders, and until his or her
successor shall have been elected and shall qualify;
(2) To elect one Common stock director to hold office until the next
Annual Meeting of Stockholders, and until his or her successor shall have
been elected and shall qualify;
(3) To consider and act upon a proposal to amend the Corporation's 1995
Long-Term Incentive Plan to increase the number of shares reserved for
issuance thereunder by 500,000 additional shares;
(4) To appoint independent accountants for the current year,
PricewaterhouseCoopers LLP having been nominated as such by the board of
directors; and
(5) To consider and transact such other business as may properly come
before the meeting.
Only record holders of Common stock and Class B common stock at the close of
business on March 5, 2002 are entitled to notice of and to vote at the Annual
Meeting. Only record holders of Common stock are entitled to vote on the
election of the Common stock director, and only record holders of the Class B
common stock are entitled to vote on the election of the Class B directors.
Record holders of both classes of stock are entitled to vote as a single class
on all other matters submitted to a vote of the stockholders. A list of such
holders for each class of common stock will be available for examination by any
stockholder at the meeting and at the offices of the Corporation, 1200 Wall
Street West, Lyndhurst, New Jersey 07071, during the ten days preceding the
meeting date.
All stockholders are cordially invited to attend the meeting in person.
Stockholders who plan to attend the meeting in person are nevertheless requested
to sign and return their proxies to make certain that their stock will be
represented at the meeting should they be prevented unexpectedly from attending.
By Order of the Board of Directors,
MICHAEL J. DENTON,
Secretary
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN, SIGN
AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
March 2002
CURTISS-WRIGHT CORPORATION
1200 WALL STREET WEST, LYNDHURST, NEW JERSEY 07071
PROXY STATEMENT
This proxy statement is being furnished by Curtiss-Wright Corporation
(hereinafter called the "Corporation" or the "Company") on or about March 18,
2002 in connection with the solicitation of proxies for use at the Annual
Meeting of Stockholders to be held at the time and place and for the purposes
set forth in the foregoing Notice of Annual Meeting of Stockholders.
The Company's Restated Certificate of Incorporation provides
that the holders of Class B common stock are entitled to elect at least 80% of
the members of the board. As a result, the holders of Class B common stock are
currently entitled to elect seven directors (the "Class B directors") and the
holders of Common stock are currently entitled to elect one director (the
"Common director").
As of March 5, 2002, the record date for determining the holders of stock
entitled to notice of and to vote at the annual meeting, there were 6,001,170
shares of Common stock ("Common stock") outstanding, and there were 4,382,102
shares of Class B common stock ("Class B common stock") outstanding constituting
all the voting stock of the Corporation entitled to vote at the Annual Meeting.
Each share of stock is entitled to one vote. Only holders of Class B common
stock are entitled to vote in the election of the Class B directors, and only
holders of Common stock are entitled to vote in the election of the Common
director. A majority of the Class B common stock present in person or
represented by proxy at the meeting and actually cast, will elect the Class B
directors, and a majority of the Common stock present in person or represented
by proxy at the meeting and actually cast, will elect the Common director. In
all other matters submitted to a vote of stockholders, holders of Common stock
and Class B common stock will vote together as a single class.
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Common stock and Class B common stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum at
the Annual Meeting for purpose of voting on the amendment to the 1995 Long-Term
Incentive Plan and the ratification of the appointment of PricewaterhouseCoopers
LLP as independent accountants for fiscal year 2002. The presence, in person or
by properly executed proxy, of the holders of a majority of the outstanding
shares of each class of stock entitled to vote at the meeting is necessary to
constitute a quorum at the Annual Meeting for purposes of the election of each
class of directors.
The proxy card provides space for a stockholder to withhold voting for any
or all nominees for the board of directors, and to abstain from voting for the
amendment to the 1995 Long-Term Incentive Plan and the appointment of
independent accountants. The election of directors requires a plurality of the
votes cast by each class of stock. The approval of the amendment to the 1995
Long-Term Incentive Plan and the appointment of the independent accountants
require the affirmative vote of a majority of the shares of Common stock and
Class B common stock, as a single class, present in person or represented by
proxy. Abstentions and broker non-votes are counted for purposes of determining
whether a quorum is present at the meeting. An abstention will be treated as a
negative vote with respect to each matter other than the election of a director
as to whom the stockholder abstained. As to broker non-votes, if a broker
indicates on the proxy that it does not have discretionary authority to vote on
a particular matter, the shares represented by the non-votes will not be
considered as present and entitled to vote with respect to that matter.
All shares of Common stock and Class B common stock which are entitled to
vote and are represented at the Annual Meeting by properly executed proxies
received prior to or at the Annual Meeting, and not revoked, will be voted at
the Annual Meeting in accordance with the instructions indicated on such
proxies. If no instructions are indicated (other than in the case of broker
non-votes),
such proxies will be voted as recommended by our board of directors. If any
other matters are properly presented at the Annual Meeting for consideration,
including, among other things, consideration of a motion to adjourn such Annual
Meeting to another time and/or place (including, without limitation, for the
purposes of soliciting additional proxies), the persons named in the enclosed
forms of proxy and acting thereunder will have discretion to vote on such
matters in accordance with their judgment.
Any proxy given pursuant to this solicitation may be revoked by the
stockholder giving it at any time before its use by delivering to the Secretary
of the Corporation at the above address of the Corporation, written notice of
revocation or a duly executed proxy bearing a later date, or by attending the
meeting and voting in person.
PERSONS MAKING THE SOLICITATION
This solicitation of proxies is made on behalf of the board of directors of
the Corporation, and the cost thereof will be borne by the Corporation. The
Corporation will reimburse brokerage firms and nominees for their expenses in
forwarding proxy material to beneficial owners of the stock of the Corporation.
In addition, a number of employees, officers and directors of the Corporation
(none of whom will receive any compensation therefore in addition to his regular
compensation) may solicit proxies. The solicitation will be made by mail and in
addition, the telephone, telegrams, facsimile and other electronic communication
and personal interviews may be utilized.
HOUSEHOLDING OF ANNUAL DISCLOSURE DOCUMENTS
The Securities and Exchange Commission recently approved a new rule
governing the delivery of annual disclosure documents. The rule allows the
Corporation to send a single set of our annual report and proxy statement to any
household at which two or more stockholders reside if we believe that the
stockholders are members of the same family. This rule benefits both
stockholders and the Corporation. It reduces the volume of duplicate information
received at your house and helps to reduce the Corporation's expenses. Each
stockholder will continue to receive a separate proxy card. If your household
received a single set of disclosure documents for this year, but you would
prefer to receive your own copy, please contact our transfer agent, American
Stock Transfer & Trust Company, by calling their toll-free number,
1-800-416-3745. If you would like to receive your own set of the Corporation's
annual disclosure documents in future years, please follow the directions below.
Similarly, if you share an address with another Curtiss-Wright stockholder and
together both of you wish to receive only a single set of the Corporation's
annual disclosure documents, please follow these directions: Please contact our
transfer agent, American Stock Transfer & Trust Company, and inform them of your
request by calling them, 1-800-416-3745, or writing to them at 6201-15th Avenue,
Brooklyn, New York 11219.
DEADLINE FOR RECEIPT OF STOCKHOLDER
PROPOSALS FOR 2003 ANNUAL MEETING
Pursuant to regulations of the United States Securities and Exchange
Commission (the "SEC"), shareholders who intend to submit proposals for
inclusion in the Corporation's proxy materials for the 2003 Annual Meeting must
do so no later than November 26, 2002. This requirement is separate from the
SEC's other requirements that must be met to have a shareholder proposal
included in the Corporation's Proxy Statement. In addition, this requirement is
independent of certain other notice requirements of the Corporation's
Restated By-laws described immediately below. All shareholder proposals and
notices should be submitted to Michael J. Denton, Secretary, Curtiss-Wright
Corporation, 1200 Wall Street West, Lyndhurst, New Jersey 07071. The attached
proxy card grants the proxy holders discretionary authority to vote on any
matter raised and presented at the Annual Meeting. Pursuant to amended SEC Rule
14a-4(c)(1), the Corporation shall exercise discretionary
2
voting authority to the extent conferred by proxy with respect to shareholder
proposals received after February 8, 2003.
If a shareholder of record wishes to nominate directors or bring other
business to be considered by shareholders at the 2003 Annual Meeting, such
proposals may only be made in accordance with the following procedure. Under the
Corporation's Restated By-laws, nominations of directors or other proposals by
shareholders must be made in writing to the Corporation no later than
January 26, 2003 and no earlier than December 26, 2002. However, if the
date of the 2003 Annual Meeting is advanced by more than 30 days or delayed by
more than 70 days from the anniversary date of the 2002 Annual Meeting, then
such nominations and proposals must be delivered in writing to the Corporation
no earlier than 120 days prior to the 2003 Annual Meeting and no later than the
close of business on the later of (i) the 90th day prior to the 2002 Annual
Meeting, or (ii) the 10th day following the day on which public announcement of
the date of the 2003 Annual Meeting is first made.
All shareholder proposals and notices should be submitted to Michael J.
Denton, Secretary, Curtiss-Wright Corporation, 1200 Wall Street West, Lyndhurst,
New Jersey 07071. Please note that these requirements relate only to matters
proposed to be considered for the 2003 Annual Meeting. They are separate from
the SEC's requirements to have shareholder proposals included in the
Corporation's 2003 Proxy Statement.
APPRAISAL RIGHTS
Holders of either class of Curtiss-Wright common stock are not entitled to
appraisal rights under Section 262 of the General Corporation Law of the State
of Delaware in connection with any of the matters discussed in this proxy
statement.
RECAPITALIZATION
In November 2001, the Corporation completed its tax-free recapitalization of
its common stock. The recapitalization permitted a tax-free distribution by
Unitrin, Inc. ("Unitrin") to its shareholders of its approximately 44% equity
position in the Corporation.
Unitrin owned approximately 4.4 million or 44% of the then outstanding
shares of the Corporation. Under the recapitalization plan, and in order to meet
certain tax requirements, these shares were exchanged for an equivalent number
of shares of a new Class B common stock which are entitled to elect 80 percent
of the Corporation's board of directors. Unitrin immediately distributed the
Class B shares to its approximately 8,000 registered stockholders in a tax-free
distribution. The holders of the remaining outstanding shares of the
Corporation's Common stock are entitled to elect up to 20% of the Corporation's
board of directors. Other than the right to elect directors, the two classes of
common stock vote as a single class (except as required by law) and are equal in
all other respects. The Class B common stock is also listed on the New York
Stock Exchange.
Also in connection with the recapitalization, the Corporation's shareholders
approved certain amendments to its Restated Certificate of Incorporation and
By-laws providing for, among other things, the elimination of the shareholders'
ability to act by written consent or call a special meeting, and the requirement
of a two-thirds vote of shareholders to amend certain provisions of the Restated
Certificate of Incorporation. Copies of the Restated Certificate of
Incorporation and By-laws are attached as Appendix C-1 and Appendix D-1,
respectively, to the Corporation's Definitive Proxy Material on Schedule 14A,
filed with the United States Securities and Exchange Commission on September 5,
2001.
3
PROPOSALS 1 AND 2
ELECTION OF DIRECTORS
At this Annual Meeting eight directors are to be elected, each to hold
office until the next Annual Meeting and until his or her successor shall have
been duly elected and shall qualify except as set forth below. Each nominee has
been recommended for election by the committee on directors and governance of
the board of directors and by the board. In the event that any such nominee
should become unavailable for election, the persons named in the proxy may vote
for the election of a substitute nominee. However, the board of directors has no
reason to believe that any of the nominees described below will be unavailable
for election.
Pursuant to the Restated Certificate of Incorporation, record holders of the
Class B common stock are entitled to elect 80% of the members of the board of
directors (rounded upwards, if necessary) and holders of the Common stock are
entitled to elect the remaining directors (but in no event less than one
director). In connection with the Unitrin divestiture of its 44% interest in the
Corporation in November 2001, the board of directors fixed the number of
directors at eight, one of whom is elected by the holders of Common stock and
seven of whom are elected by the holders of Class B common stock. Prior to
November 2001, the board consisted of eight directors. The following table shows
the members of the different classes of the board of directors. The board of
directors has the ability to change the size and composition of the board of
directors. However, to ensure that there will be at least one Common stock
director at all times, the board of directors may not consist of fewer than five
members.
DIRECTOR CLASS
-------- -----
Martin R. Benante.................................... Class B common stock
James B. Busey IV.................................... Class B common stock
David Lasky.......................................... Class B common stock
William B. Mitchell.................................. Class B common stock
John R. Myers........................................ Class B common stock
William W. Sihler.................................... Class B common stock
J. McLain Stewart.................................... Class B common stock
S. Marce Fuller...................................... Common stock
TERM OF OFFICE
The eight nominees listed are to serve one-year terms of office, are
currently directors of the Company and have indicated their willingness to
serve. However, if any nominee is unable or declines to serve as a director at
the time of the Annual Meeting, proxies will be voted for the nominee designated
by the present board to fill the vacancy. The term of office of each person
elected as a director will continue until the 2003 Annual Meeting or until a
successor has been elected and qualified.
The board of directors recommends that the stockholders vote "FOR" the
nominees listed below:
BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION FOR LAST FIVE FIRST CLASS OF
YEARS; DIRECTORSHIPS IN PUBLIC CORPORATIONS AND YEAR COMMON
NAME INVESTMENT COMPANIES; AGE ELECTED STOCK
---- ---------------------------------------------------------- ------- -----
Martin R. Benante Chairman of the Board of Directors and Chief Executive 1999 Class B
Officer of Curtiss-Wright Corporation since April 2000;
formerly President and Chief Operating Officer from
April 1999 to April 2000; formerly Vice-President of the
Corporation since April 1996; formerly President of
Curtiss-Wright Flow Control Corporation from March
1995 to April 1999, Age 49.
(table continued on next page)
4
(table continued from previous page)
BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION FOR LAST FIVE FIRST CLASS OF
YEARS; DIRECTORSHIPS IN PUBLIC CORPORATIONS AND YEAR COMMON
NAME INVESTMENT COMPANIES; AGE ELECTED STOCK
---- ---------------------------------------------------------- ------- -----
James B. Busey IV Aviation safety and security consultant, April 1996-pre- 1995 Class B
sent; Director, Mitre Corporation since February 1995;
Director, Texas Instruments, Incorporated since July 1993;
President and Chief Executive Officer of the Armed Forces
Communications and Electronics Association, September
1993-April 1996; Age 69.
S. Marce Fuller President, Chief Executive Officer, and Director of Mirant 2000 Common
Corporation, a competitive energy company (formerly known
as Southern Energy, Inc.) since July 1999; President and
Chief Executive Officer of Mirant Americas Energy
Marketing, LP September 1997 -- July 1999; Executive
Vice-President of Mirant Corporation from October 1998 to
July 1999; Senior Vice President of Mirant Corporation
from May 1996 to October 1998; Vice President of Mirant
Corporation 1994-1996; Age 41.
David Lasky Consultant, Curtiss-Wright Corporation since April 2000; 1993 Class B
Director, Primex Technologies, Inc. from January 1997 to
January 2001; formerly Chairman of the Board of Directors
of Curtiss-Wright Corporation from May 1995 to April 2000;
formerly Chief Executive Officer of Curtiss-Wright
Corporation from April 1999 to April 2000; formerly
President of Curtiss-Wright Corporation from 1993 to April
1999. Age 69.
William B. Mitchell Director, Mitre Corporation since May 1997; Director, 1996 Class B
Primex Technologies, Inc. from January 1997 to January
2001; Vice Chairman, 1993-1996, Director, 1990-1996 and
Executive Vice President, 1987-1993 of Texas Instruments
Incorporated; Chairman, American Electronics Association,
September 1995-September 1996; Age 66.
John R. Myers Chairman and Chief Executive Officer, Tru-Circle Corpo- 1996 Class B
ration since June 1999; Director, Iomega Corporation since
1994; limited partner of Carlisle Enterprises, a venture
capital group, since 1993; Consultant, UNC, Inc.,
August-December 1996; Chairman of the Board of Garrett
Aviation Services, 1994-1996; Age 65.
William W. Sihler Professor of Business Administration, Darden Graduate 1991 Class B
School of Business Administration, University of Virgin-
ia. Age 64.
J. McLain Stewart Director, McKinsey & Company, Management Consultants, 1989 Class B
until 1997. Age 85.
5
OTHER DIRECTORSHIPS
Directors of the Company are presently serving on the following boards of
directors of other companies:
NAME OF DIRECTOR COMPANY
---------------- -------
James B. Busey IV............................ Texas Instruments, Incorporated
Mitre Corporation
S. Marce Fuller.............................. Mirant Corporation
Earthlink, Inc.
William B. Mitchell.......................... Mitre Corporation
John R. Myers................................ Iomega Corporation
Tru-Circle Corporation
CERTAIN LEGAL PROCEEDINGS
Ms. Fuller served as an executive officer of Mobile Energy Services Company,
LLC (Mobile Energy) from 1995 until July 2001 and she served as president and
chief executive officer of its parent company Mobile Energy Services Holdings,
Inc. (MESH) from August 1997 to January 1999. Mobile Energy owns a generating
facility which provides power and steam to a tissue mill in Mobile, Alabama.
Mobile Energy and MESH filed for bankruptcy on January 14, 1999 in response to
the announcement by its then largest customer, a pulp mill, of plans to cease
operations in September 1999. A proposed plan of reorganization for Mobile
Energy and MESH is pending before the bankruptcy court.
BENEFICIAL OWNERSHIP
The following table sets forth information concerning the ownership of
common stock of the Corporation by each director and nominee, each of the
executive officers named in the Summary Compensation Table below and all
directors and executive officers as a group, as of February 1, 2002. The shares
are owned directly and the owner has the sole voting and investment power in
respect thereof.
NUMBER OF SHARES % OF CLASS OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING COMMON STOCK
------------------------ ------------------ ----------- ------------
Martin R. Benante(1)............................... 32,482 (2) Common
James B. Busey IV(3)............................... 3,151 (2) Common
S. Marce Fuller(4)................................. 389 (2) Common
David Lasky(5)..................................... 99,322 1.7% Common
William B. Mitchell(6)............................. 2,955 (2) Common
John R. Myers(6)................................... 1,393 (2) Common
Gerald Nachman(7).................................. 80,039 1.4% Common
Joseph Napoleon(8)................................. 9,434 (2) Common
William W. Sihler(6)............................... 1,326 (2) Common
J. McLain Stewart(9)............................... 1,227 (2) Common
Glenn E. Tynan(10)................................. 518 (2) Common
George J. Yohrling(11)............................. 31,265 (2) Common
Directors and Executive Officers as a group
(14 persons)(12)................................. 274,990 4.8% Common
---------
(1) Of the total number of shares, 31,548 represents the number of shares that
may be acquired within 60 days upon the exercise of options granted under
the Corporation's 1985 Stock Option Plan and 1995 Long-Term Incentive Plan.
(2) Less than one percent.
(footnotes continued on next page)
6
(footnotes continued from previous page)
(3) Includes 311 shares of restricted common stock issued pursuant to the
Corporation's 1996 Stock Plan for Non-Employee Directors and rounding down
to the next whole share for fractional shares purchased pursuant to a
broker dividend reinvestment plan.
(4) Shares are restricted common stock issued pursuant to the Corporation's
1996 Stock Plan for Non-Employee Directors.
(5) Of the total number of shares, 47,480 represents the number of shares that
may be acquired within 60 days upon the exercise of options granted under
the Corporation's 1995 Long-Term Incentive Plan.
(6) Includes 311 shares of restricted common stock issued pursuant to the
Corporation's 1996 Stock Plan for Non-Employee Directors.
(7) Of the total number of shares, 46,053 represents the number of shares that
may be acquired within 60 days upon the exercise of options granted under
the Corporation's 1985 Stock Option Plan and 1995 Long-Term Incentive Plan.
(8) Of the total number of shares, 9,134 represents the number of shares that
may be acquired within 60 days upon the exercise of options granted under
the Corporation's 1985 Stock Option Plan and 1995 Long-Term Incentive Plan.
(9) This consists of 311 shares of restricted common stock issued pursuant to
the Corporation's 1996 Stock Plan for Non-Employee Directors and 400 shares
which are indirectly beneficially owned as custodian pursuant to the
Uniform Gift to Minors Act.
(10) Represents the number of shares that may be acquired within 60 days upon
the exercise of options granted under the Corporation's 1995 Long-Term
Incentive Plan.
(11) Of the total number of shares, 24,546 represents the number of shares that
may be acquired within 60 days upon the exercise of options granted under
the Corporation's 1985 Stock Option Plan and 1995 Long-Term Incentive Plan.
(12) Of the total number of shares, 170,102 represents the number of shares that
may be acquired within 60 days upon the exercise of options granted under
the Corporation's 1985 Stock Option Plan and 1995 Long-Term Incentive Plan.
7
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal year 2001, there were no material proceedings to which any
director, nominee, or executive officer of the Corporation is a party adverse to
the Corporation or any of its subsidiaries or has a material interest adverse to
the Corporation. No director, nominee or executive officer has been indebted in
excess of $60,000 to the Corporation or any of its subsidiaries during the last
fiscal year.
During fiscal year 2000, the Corporation entered into a retirement and
consulting arrangement with David Lasky which provided for his retirement as of
April 10, 2000, from his position as chairman and chief executive officer of the
Company and each of its affiliates for all purposes. The agreement further
provides that Mr. Lasky shall serve as a consultant to the Company commencing on
his retirement date and ending on April 9, 2003.
During fiscal year 2001, commencing on April 9, 2001, the Company began
paying Mr. Lasky, over 12 equal monthly installments, a consulting fee at the
annual rate of $300,000. During the 12-month period commencing on April 9, 2002,
Mr. Lasky's consulting fee will be at the annual rate of $200,000. The agreement
also provides for other health and welfare benefits under the Company's existing
programs for Mr. Lasky and his spouse. A copy of Mr. Lasky's agreement is
attached as Exhibit (10)(xi) to the Company's Annual Report on Form 10-K for
fiscal year ended December 31, 2000, filed with the United States Securities and
Exchange Commission on March 19, 2001.
Mr. Lasky remains a member of the Company's board of directors subject to
subsequent election by the shareholders. During the consulting period, Mr. Lasky
is not entitled to compensation for serving as a member of the board. The
Company's obligations under the consulting arrangement are not dependent upon
Mr. Lasky's continued service as a member of the board of directors. In addition
to receiving his consulting fee, Mr. Lasky received compensation for certain
long-term incentive awards granted to him while he was an employee of the
Corporation. For year 2001, Mr. Lasky exercised stock options resulting in
income of $1,003,693, and received $135,334 as payment for performance units
awarded to him in November 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of filings under Section 16(a) of the
Exchange Act, as amended, received by it, or written representations from
certain reporting persons, the Corporation believes that during fiscal year
2001, all Section 16(a) filing requirements were met.
OPERATION OF BOARD OF DIRECTORS AND COMMITTEES
During 2001 the board of directors held nine meetings. All of the directors
attended at least 94% of the aggregate of all meetings in 2001 of the board of
directors and committees on which they served.
The audit committee, presently consisting of Messrs. William W. Sihler,
James B. Busey IV and Ms. S. Marce Fuller, met five times during 2001. The
committee's functions include the following: serving as an independent and
objective party to monitor the Corporation's financial reporting process and
internal control system; reviewing and appraising the audit efforts of the
Corporation's independent accountants; providing an open avenue of communication
among the independent accountants, the Corporation's financial and senior
management and the board of directors; and making recommendations to the board
as to the nomination of independent accountants for appointment by the
stockholders. The audit committee acts under a written charter first adopted and
approved by the board of directors in April 2000. Each of the members of the
audit committee is "independent" as defined by the New York Stock Exchange
listing standards. A copy of the audit committee's charter is attached as
Appendix 1 to the Corporation's Definitive Proxy Materials filed with the
Securities and Exchange Commission on March 19, 2001.
The executive compensation committee, presently consisting of Messrs. John
R. Myers, William B. Mitchell, and J. McLain Stewart, met four times during
2001. This committee reviews compensation of elected officers prior to
submission to the board; establishes specific awards to be made to individuals
8
under the Corporation's Modified Incentive Compensation Plan and the
Corporation's 1995 Long-Term Incentive Plan; and reviews the establishment
and/or amendment of executive compensation plans.
The committee on directors and governance (formerly known as the nominating
committee), presently consisting of Messrs. J. McLain Stewart, James B. Busey
IV, David Lasky, and John R. Myers, met one time in 2001. Consistent with the
change of the committee's name, the committee's responsibilities as expanded
include the following: (i) recommending to the board of directors nominees for
election as directors; (ii) establishing procedures for identifying candidates
for the board and periodically reviewing potential candidates; (iii)
recommending to the board criteria for board membership; (iv) developing
recommendations to enhance the board's effectiveness; and (v) reviewing and
making recommendations relating to the board's compensation. Any stockholder may
recommend nominees to the committee for consideration by writing to the
Secretary of the Corporation. Such submission should include the full name and
address of each proposed nominee, a statement of his or her business experience
and qualifications and a written statement from the proposed nominee consenting
to his or her nomination and agreeing to serve if elected.
REPORT OF AUDIT COMMITTEE(1)
In fulfilling the oversight responsibilities, the audit committee reviewed
the audited financial statements in the Annual Report on Form 10-K with
management, including a discussion of the quality, not just the acceptability,
of the accounting principles, the reasonableness of significant judgments, and
the clarity of disclosures in the financial statements for the fiscal year ended
December 31, 2001.
The audit committee reviewed with the independent accountants, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Corporation's
accounting principles and such other matters as are required to be discussed
with the audit committee under generally accepted auditing standards. In
addition, the audit committee discussed with the independent accountants their
independence from management and the Corporation including the matters in the
written disclosures required by the Independence Standards Board and considered
the compatibility of nonaudit services with the auditors' independence. The
audit committee also discussed with the auditors the matters set forth in the
Statement of Auditing Standards No. 61.
The audit committee discussed with the Corporation's internal and
independent auditors the overall scopes and plans for their respective audits.
The audit committee met with the internal and independent auditors, with and
without management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls, and the overall quality of the
Corporation's financial reporting.
Based upon these reviews and discussions, the audit committee recommended to
the board of directors that the audited financial statements be included in the
Annual Report on Form 10-K filed with the SEC.
AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
WILLIAM W. SIHLER, Chairman
JAMES B. BUSEY IV
S. MARCE FULLER
---------
(1) The material in this report is not soliciting material, is not deemed filed
with the SEC and is not incorporated by reference in any filing of the
Corporation under the Securities Act of 1933 or the Exchange Act, whether
made before or after the date of this proxy statement and irrespective of
any general incorporation language in such filing.
9
EXECUTIVE COMPENSATION
REPORT OF EXECUTIVE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The executive compensation committee (the "Committee") of the board of
directors is responsible for the administration of the executive compensation
program of the Corporation. The committee is composed of three independent
non-employee directors who are not eligible to participate in the Corporation's
compensation plans for employees.
In 2001, the compensation of the executive officers of the Corporation
consisted of salary, cash bonus awards under the Modified Incentive Compensation
Plan (the "Bonus Plan") of the Corporation and non-qualified stock options and
performance units pursuant to the Corporation's 1995 Long-Term Incentive Plan
("1995 LTI Plan"). The amount of compensation for each of these elements is
arrived at through consideration of a number of objective and subjective
factors.
SALARY
Officer salaries are subject to annual review by the committee and are
adjusted on the basis of competitive salary ranges for the officers' positions,
individual performance and the officers' contributions to the Corporation. Also
considered in 2001 were survey data related to compensation of officers in the
Corporation's peer group of companies, the recommendations of the Corporation's
compensation consultant as to appropriate target salary levels for the
Corporation's officers, and each officer's years of service and total
compensation received in 2000 and 1999. A number of objective financial measures
of performance, corporate or business unit, as appropriate, were also
considered. The board acts upon the recommendations of the committee as to
salary adjustments. In determining Mr. Benante's salary, the committee took into
account the compensation paid by other corporations of similar size and nature
and Mr. Benante's years of service and other non-salary compensation. The
committee also considered specific measures of corporate performance, including
return on assets, return on capital employed, return on equity, and operating
cash flow, both for the full years 2000 and 1999, and on a year-to-date basis,
for 2001. In 2001, Mr. Benante's annual salary rate was established to be in
line with the salaries paid by other corporations of similar size and nature to
their chief executive officers of similar years of service.
BONUS
Since 1998, the Corporation's Bonus Plan has been structured to align the
awards granted under the Bonus Plan with the performance of the Corporation and
its business units as well as to place a value on individual achievements.
Payments under the Bonus Plan are made both to officers and to a broad group of
other key employees. The amount of the annual bonus paid to each participant,
including Mr. Benante, under the bonus plan is based on the attainment of
performance objectives agreed to by senior management, and the committee early
in the fiscal year. The 2001 bonus awards were made early in the year, and were
based on performance during 2000. Early in the year, each participant in the
Bonus Plan is notified of a pre-set bonus range, including a threshold level
below which no bonus will be paid, a target at which the full "contemplated"
bonus would be paid and a maximum award level above the target level. The
threshold level is pre-set at approximately 50% of the target and the maximum is
set at 200% of the target. Sixty percent (60%) of each bonus award is based on a
pre-established quantitative objective ("business unit's operating earnings")
and forty percent (40%) on pre-established individual qualitative objectives. A
target level of operating earnings was proposed by senior management and
approved by the committee. In addition to the quantitative factor, the committee
also considered the success of participants in attaining their pre-agreed
qualitative performance objectives for the year. The qualitative objectives are
non-financial in nature, but are measurable and weighted as appropriate to their
relative importance to the success of the Corporation.
LONG-TERM INCENTIVE AWARDS
In 2001 the awards made under the 1995 LTI Plan consisted of performance
units and stock options. Made to a broad group of key employees in addition to
corporate officers, they are intended to
10
attract and retain highly qualified key employees and to provide those employees
with an additional incentive to work over a longer period toward increasing the
value of the Corporation and improving the results of the business units with
which they are associated.
In determining the 2001 long-term incentive target awards the committee
considered the effect that the efforts of the recipients could have on the
growth of the Corporation and their value to the business. In awarding target
awards in performance units to its key employees and executive officers, the
committee considered specific objectives relating to increases in the gross
average annual sales of the individual business unit or the Corporation as a
whole, as appropriate, over a three year period ending December 31, 2004, and to
the average annual return on capital, as defined, during the same period for the
respective organizations. The committee also considered the amount of 2001 and
2000 base pay, the annual bonus received by the awardees in each of those years
and the 2000 stock options and performance unit awards that each had received.
In awarding stock options to its key employees and executive officers, the
committee considered the effect such persons' efforts could have on the growth
of the Corporation. Options were granted with an exercise price of 100% of the
market price on the date of grant. Except for those options granted to the
Executive Vice Presidents of the Corporation, the options are exercisable to the
extent of one third of the total number of shares covered beginning on the first
anniversary of the grant, two thirds from the second anniversary and in full
after the third anniversary. Options granted to the Executive Vice Presidents
are fully exercisable after the third anniversary of the grant date provided
that the respective business unit of each Executive Vice President meets certain
defined financial criteria established by the committee. In the event a business
unit does not achieve the established financial criteria, the options do not
vest and are forfeited. The committee does retain discretion to make changes to
the vesting parameters.
While to some degree grants were based on subjective factors relating to the
performance of individuals, in 2001 the committee continued the practice of
having 1995 LTI Plan awards bear a relationship to base salary, based on the
target percentages previously suggested by the Corporation's compensation
consultant. Recommendations previously supplied by the Corporation's
compensation consultant also confirmed that awards of the size granted under the
1995 LTI Plan were fair and reasonable and consistent with corresponding awards
made by other corporations.
In making a target award of long-term incentive compensation to Mr. Benante,
the committee considered factors beyond those applicable to other officers. The
committee made this award to Mr. Benante to provide a further incentive for him
to continue his efforts to advance the interests of the Corporation. Mr.
Benante's dedication to the strategic planning process and the progress that
continues to be made in identifying and exploring growth opportunities were
considered, as was the impact Mr. Benante's efforts could have on future growth.
The committee also considered the compensation awarded other chief executive
officers, as reported by a compensation consultant advising the Corporation with
respect to its overall executive compensation program. A number of objective
financial measures of corporate performance were also considered.
JOHN R. MYERS, Chairman
WILLIAM B. MITCHELL
J. MCLAIN STEWART
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the executive compensation committee is an officer or an
employee of the Corporation or any of its subsidiaries, and no member has any
interlocking or insider relationships with the Corporation which are required to
be reported under applicable rules and regulations of the Securities and
Exchange Commission.
11
SUMMARY COMPENSATION TABLE
The following table contains information concerning the five most highly
compensated executive officers of the Corporation as of December 31, 2001.
LONG-TERM COMPENSATION
-------------------------------
AWARDS PAY-OUTS
------------------ ----------
ANNUAL COMPENSATION (g)
(a) ------------------------------- SECURITIES (h) (i)
NAME AND PRINCIPAL (b) (c) (d) UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY(1) BONUS OPTIONS PAYOUTS(2) COMPENSATION(3)
-------- ---- --------- ----- ------- ---------- ---------------
(NUMBER OF SHARES)
------------------
Martin R. Benante, Chairman and 2001 $469,231 $352,500 21,186 $43,189 $6,434
Chief Executive Officer of 2000 $359,616 $170,000 11,646 $41,107 $3,897
Curtiss-Wright Corp. 1999 $232,577 $ 81,840 14,987 $ -- $3,505
Gerald Nachman, Executive V.P. of 2001 $348,308 $202,561 12,712 $ -- $2,988
Curtiss-Wright Corp.; President, 2000 $337,308 $170,000 6,599 $70,110 $2,794
Metal Improvement Company, Inc. 1999 $330,000 $243,950 8,603 $ -- $2,794
George J. Yohrling, Executive V.P. 2001 $275,308 $158,118 12,712 $ -- $1,347
of Curtiss-Wright Corp.; 2000 $249,058 $135,034 4,930 $ -- $1,325
President, Curtiss-Wright Flight 1999 $232,300 $ 59,299 5,735 $ -- $1,321
Systems, Inc.
Joseph Napoleon, Executive V.P. of 2001 $245,100 $146,730 12,712 $14,245 $3,040
Curtiss-Wright Corporation; 2000 $192,780 $ 77,275 3,882 $13,297 $2,675
President of Curtiss-Wright Flow 1999 $140,472 $ 26,532 4,171 $ -- $1,895
Control Corporation
Glenn E. Tynan, Controller of 2001 $160,365 $ 73,500 2,542 $ -- $3,473
Curtiss-Wright Corporation(4) 2000 $ 91,212 $ -- 1,553 $ -- $1,983
1999 $ -- $ -- $ -- $--
---------
(1) Includes salaries and amounts deferred under the Corporation's Savings and
Investment Plan and Executive Deferred Compensation Plan.
(2) Payments made to eligible employees based upon the maturity of performance
unit grants made in 1997 under the Corporation's 1995 LTI Plan. Year 2000
was the first year such payments were made under the 1995 LTI Plan. Payments
are conditioned upon the achievement of financial performance of the
Corporation and its subsidiaries. Refer to discussion below for additional
details with regards to Performance Unit payments.
(3) Includes premium payments for executive life insurance paid by the
Corporation during the covered fiscal year for term life insurance.
(4) Mr. Tynan commenced his employment with the Company on May 31, 2000.
12
PERFORMANCE UNITS
Pursuant to the Corporation's 1995 LTI Plan, the executive compensation
committee of the board of directors awarded performance units in November 2001
to its executive officers, senior managers and other key employees.
Performance units are denominated in dollars and payable in cash three years
after their award date, contingent upon attaining an average annual return on
capital and an average annual growth rate based upon objectives established by
the executive compensation committee of the board of directors. Awards to
employees of the Corporation's business units are based on the extent to which
these objectives are achieved by the business unit, or units, with which the
employees are affiliated. Awards to employees of the corporate office are based
on the extent to which the Corporation as a whole achieves these objectives.
The values shown below reflect the potential value at a target value of one
dollar per unit payable at the end of the three-year performance period if the
Corporation's average return on capital and average annual growth rate
objectives are attained. The chart also reflects the fact that each unit may
prove to be worth a maximum of approximately two dollars if both performance
targets are substantially exceeded, or nothing at all, depending upon the extent
to which the performance targets are not met.
AWARD OF PERFORMANCE UNITS
NUMBER OF MINIMUM MAXIMUM PERFORMANCE
NAME UNITS VALUE TARGET VALUE VALUE(1) PERIOD
---- ----- ----- ------------ -------- ------
M. Benante......................... 2001 - 150,000 $0 $150,000 $304,500 2002-2004
2000 - 150,000 $0 $150,000 $304,500 2001-2003
1999 - 140,250 $0 $140,250 $284,708 2000-2002
G. Nachman......................... 2001 - 150,000 $0 $150,000 $304,500 2002-2004
2000 - 85,000 $0 $ 85,000 $172,550 2001-2003
1999 - 82,500 $0 $ 82,500 $167,475 2000-2002
G. Yohrling........................ 2001 - 150,000 $0 $150,000 $304,500 2002-2004
2000 - 63,500 $0 $ 63,500 $128,905 2001-2003
1999 - 55,000 $0 $ 55,000 $111,650 2000-2002
J. Napoleon........................ 2001 - 150,000 $0 $150,000 $304,500 2002-2004
2000 - 50,000 $0 $ 50,000 $101,500 2001-2003
1999 - 40,000 $0 $ 40,000 $ 81,200 2000-2002
G. Tynan(2)........................ 2001 - 30,000 $0 $ 30,000 $ 60,900 2002-2004
2000 - 20,000 $0 $ 20,000 $ 40,600 2001-2003
1999 - $0 $ $ 2000-2002
---------
(1) The performance units are denominated in dollars and are contingent upon
satisfaction of performance objectives keyed to profitable growth over a
period of three fiscal years commencing with the fiscal year following such
awards. Based upon the satisfaction of performance objectives, the value of
the units is determined by comparing the number of units to the extent to
which objectives were satisfied and assigning a percentage from a
pre-established matrix. The maximum percentage available is 203%. If
retirement occurs at age sixty-five or thereafter, the performance units are
still payable to the employee over the three years following the date of
retirement, prorated for the period of employment prior to retirement.
(2) Mr. Tynan commenced his employment with the Company on May 31, 2000.
13
OPTIONS GRANTED IN LAST FISCAL YEAR
PURSUANT TO THE CORPORATION'S 1995 LONG-TERM INCENTIVE PLAN
% OF
SHARES TOTAL OPTIONS
COVERED BY GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE GRANT DATE
NAME GRANTED(1) 2001 PER SHARE EXPIRATION DATE PRESENT VALUE(2)
---- ---------- ---- --------- --------------- ----------------
Martin R. Benante............. 21,186 10.2% $43.70 Nov. 20, 2011 $287,494
Gerald Nachman................ 12,712 6.1% $43.70 Nov. 20, 2011 $172,502
George J. Yohrling............ 12,712 6.1% $43.70 Nov. 20, 2011 $172,502
Joseph Napoleon............... 12,712 6.1% $43.70 Nov. 20, 2011 $172,502
Glenn E. Tynan................ 2,542 1.2% $43.70 Nov. 20, 2011 $ 34,495
---------
(1) Options were granted with an exercise price of 100% of the market price on
the date of grant. The options are usually exercisable to the extent of one
third of the total number of shares covered beginning on the first
anniversary of the grant, two thirds from the second anniversary and in full
after the third anniversary. The options awarded to Messrs. Nachman,
Yohrling and Napoleon on November 20, 2001 vest in their entirety on
November 20, 2004 only upon the achievement of certain financial goals by
their respective business units. The options are not transferable other than
upon the death of the optionee, in which case they are transferable pursuant
to a designation of the optionee, or by will or by the laws of descent and
distribution. If the optionee terminates his or her employment the option
expires upon such event; however, if employment is terminated by early
retirement under a retirement plan of the Corporation, the option may be
exercised within three months following the date of retirement. If
retirement occurs at age sixty-five or thereafter, the option may be
exercised within three years of the date of retirement but no later than ten
years following the option grant date.
(2) These values were calculated using the Black-Scholes option pricing model.
The Black-Scholes model is a complicated mathematical formula, which is
widely used and accepted for valuing traded stock options. The model is
premised on immediate exercisability and transferability of the options.
This is not true for the Corporation's options granted to executive officers
and other employees. Therefore, the values shown are theoretical and are not
intended to reflect the actual values the recipients may eventually realize.
Any ultimate value will depend on the market value of the Corporation's
stock at a future date. In addition to the stock price at time of grant and
the exercise price, which are identical, the following assumptions were used
to calculate the values shown: expected dividend yield (1.37 percent, the
current yield of the Corporation's common shares on the grant date),
expected stock price volatility (24.18 percent, the most recent volatility
for the month-end stock prices of the Corporation's common shares for the
preceding 3 years), risk-free rate of return (4.66 percent equal to the
yield on a 7-year U.S. Treasury bond on the option grant date), and expected
exercise of options within seven years from the date of the grant.
14
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
(d)
NUMBER OF (e)
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
(b) YEAR-END YEAR-END(1)
SHARES (c) -------- -----------
(a) ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- ------------- -------------
Martin R. Benante................ 0 $0 31,548/32,643 $ 438,804/$122,632
Gerald Nachman................... 0 $0 46,053/19,979 $ 779,152/$80,038
George J. Yohrling............... 0 $0 24,546/17,910 $ 416,076/$70,531
Joseph Napoleon.................. 0 $0 9,134/16,690 $ 131,052/$65,337
Glenn E. Tynan................... 0 $0 518/3,577 $ 16/$10,326
---------
(1) Calculated by determining the difference between the fair market value of
the common stock underlying the options on December 31, 2001 ($47.75, the
closing price on the New York Stock Exchange Composite Transactions) and the
exercise price of the options on that date.
TERMINATION OF EMPLOYMENT
Pursuant to a policy designed to retain key employees established by the
Corporation's board of directors in 1977, the Corporation has at-will severance
agreements with Messrs. Benante, Nachman, Yohrling, Napoleon and Tynan, as well
as a number of other key employees, which provide for the payment by the
Corporation of severance pay, in the case of involuntary termination of
employment other than for cause, in an amount equal to one year's base salary
and bonus at the time of termination, as well as the continued availability of
certain employee benefits, for a period of one year following termination. The
at-will severance agreements provide that such severance pay and benefits also
would be made available in the case of voluntary retirement or termination of
employment, which is the direct result of a change in the terms or conditions of
employment, including a reduction in compensation or in job responsibilities. At
the option of the employee, said amount of severance pay may be paid over the
two-year period following such termination, in which case such employee benefits
would continue in effect for the same period. Under the at-will severance
agreements, the payment of severance pay, and the availability of benefits, is
contingent upon a number of conditions, including the employee's performance of
his agreements with respect to providing consulting services, releasing the
Corporation from any employment related claims, and not entering into
competition with the Corporation.
The Company entered into a Mutual Separation Agreement with Mr. Robert A.
Bosi, formerly the Corporation's Vice President -- Finance on November 12, 2001.
Pursuant to this Agreement, Mr. Bosi resigned as an employee of the Company as
of November 12, 2001, and the Company agreed to (i) pay Mr. Bosi his base salary
of $196,000 for seventeen months (the "Severance Period"); (ii) pay Mr. Bosi his
full target bonus of $87,500 for fiscal 2001 (iii) permit Mr. Bosi to continue
to vest in his stock options through the Severance Period; and (iv) permit
Mr. Bosi to continue to participate in the Company's group medical and dental
programs and life and disability insurance programs in accordance with the terms
of such plans as applicable to employees generally, until the sooner of the
conclusion of the Severance Period or his eligibility for such benefit at a new
employer. In the event that Mr. Bosi violates his nondisclosure and
confidentiality obligations to the Company, his right to receive the benefits
listed in (i) and (iii) shall terminate and he shall be required to repay any
amounts received under (i) and (ii) during the Severance Period.
The Company also entered into a Mutual Separation Agreement with Mr. Brian
D. O'Neill, formerly the Corporation's General Counsel and Corporate Secretary
on June 4, 2001. Pursuant to this Agreement, Mr. O'Neill resigned as an employee
of the Company as of June 4, 2001, and the Company
15
agreed to (i) pay Mr. O'Neill his base salary of $160,000 for seventeen months
(the "Severance Period"); (ii) permit Mr. O'Neill to continue to vest in his
stock options through the Severance Period; and (iii) permit Mr. O'Neill to
continue to participate in the Company's group medical and dental programs and
life and disability insurance programs in accordance with the terms of such
plans as applicable to employees generally, until the sooner of the conclusion
of the Severance Period or his eligibility for such benefit at a new employer.
In the event that Mr. O'Neill violates his nondisclosure and confidentiality
obligations to the Company, his right to receive the benefits listed in (i) and
(ii) shall terminate and he shall be required to repay any amounts received
under (i) during the Severance Period.
Consistent with the Corporation's policy designed to retain key employees,
the Corporation also has Change in Control severance protection agreements with
Messrs. Benante, Nachman, Yohrling, Napoleon and Tynan. The agreements with
Messrs. Benante, Nachman, Yohrling, and Napoleon provide for payment of
severance pay equal to three times the sum of the executive's base salary and
average annual bonus over a three-year period and the continued availability of
certain employee benefits for a period of two years following termination of
employment, in each case if employment is terminated within twenty-four months
following a change in control of the Corporation. The Corporation's Change in
Control severance protection agreement with Mr. Tynan provides for payment of
severance pay equal to two times the sum of his base salary and average annual
bonus over a two-year period, and the same benefits as described above.
Mr. Benante's agreement also differs from those of Messrs. Nachman, Yohrling,
Napoleon, and Tynan in that Mr. Benante may voluntarily terminate his employment
with Curtiss-Wright for any reason after the first year of service following a
change in control, and still obtain the benefits provided for under the
agreement.
All Change in Control severance protection agreements provide for the
vesting of all benefits accrued through the termination of employment in the
Corporation's Retirement and Retirement Benefits Restoration Plans; provided
however, that if vesting under any such Plan is not permitted by applicable law,
an actuarially determined lump sum shall be paid in an amount equaling the
non-vested benefit under the applicable Plan. All Change in Control severance
protection agreements further provide that upon a change in control any
previously awarded performance units under the Corporation's 1995 LTI Plan shall
be paid on a pro-rata basis for the period of employment and that previously
awarded stock options shall become fully vested and exercisable. The severance
pay and benefits under the Change-in-Control severance protection agreements are
in lieu of any that would be provided under the Corporation's at-will severance
agreements previously discussed above.
RETIREMENT PLAN
The Corporation's Retirement Plan (the "Retirement Plan") is a tax
qualified, defined benefit, trusteed plan. The Plan is non-contributory and
covers most employees, including the Corporation's executive officers. On
September 1, 1994, the Corporation amended the Retirement Plan. Benefits accrued
as of August 31, 1994 were transferred into the amended Retirement Plan. As of
September 1, 1994 the following monthly pension benefits had been accrued:
Martin R. Benante, $137; Gerald Nachman, $11,885; George J. Yohrling, $2,559;
and Joseph Napoleon, $2,261. Mr. Tynan commenced employment with the Corporation
on May 31, 2000 and therefore did not accrue a monthly pension under the
Retirement Plan prior to September 1, 1994. These benefits are indexed to
reflect increases in compensation, as defined, from that date forward. The
Retirement Plan as amended provides for an annual benefit at age 65 of 1.5%
times the five year final average compensation in excess of social security
covered compensation plus 1% of the five year final average compensation up to
social security covered compensation, in each case multiplied by the
participant's years of service after September 1, 1994, not to exceed 35. In
addition, a participant earns a pay-based cash balance credit equal to 3% of his
or her compensation.
In April 1999, the Corporation entered into supplemental retirement
agreements with Messrs. Nachman and Yohrling. The agreements provide certain
enhanced retirement benefits on an annual
16
basis for as long as Messrs. Nachman and Yohrling remain in the employ of the
Corporation. A copy of a Standard Supplemental Retirement Agreement is attached
as Exhibit (10) to the Company's Quarterly Report on Form 10-Q for the period
ending June 30, 2000, filed with the United States Securities and Exchange
Commission on August 14, 2000. The Corporation recently renewed both agreements
in accordance with their respective terms and conditions with Mr. Nachman and
Mr. Yohrling. As of February 1, 2002, Mr. Nachman had accrued an additional
monthly benefit of $3,000 and Mr. Yohrling had accrued an additional monthly
benefit of $1,500.
The chart below illustrates the estimated aggregate amount of annual
benefits on a straight life annuity basis attributable to service on or after
September 1, 1994 that would be payable on retirement at age 65 to an employee
in the compensation classification specified, under various assumptions as to
compensation and years of service. The current compensation covered by the
Retirement Plan is substantially equivalent to the cash compensation reported
under the headings entitled "Salary" and "Bonus" on page 17 of this Proxy
Statement for the executive officers listed there.
YEARS OF SERVICE
----------------------------------------------------
COMPENSATION 15 20 25 30 35
------------ -- -- -- -- --
$125,000 .................................. $ 25,160 $ 33,547 $ 41,934 $ 50,320 $ 58,707
150,000 .................................. 30,785 41,047 51,309 61,570 71,832
175,000 .................................. 36,410 48,547 60,684 72,820 84,957
200,000 .................................. 42,035 56,047 70,059 84,070 98,082
225,000 .................................. 47,660 63,547 79,434 95,320 111,207
250,000 .................................. 53,285 71,047 88,809 106,570 124,332
300,000 .................................. 64,535 86,047 107,559 129,070 150,582
400,000 .................................. 87,035 116,047 145,059 174,070 203,082
450,000 .................................. 98,285 131,047 163,809 196,570 229,332
500,000 .................................. 109,535 146,047 182,559 219,070 255,582
550,000 .................................. 120,785 161,047 201,309 241,570 281,832
Under the Employee Retirement Income Security Act of 1974 ("ERISA"), many
employees elect a survivor option payable to the employee's spouse and, as a
consequence, the amount actually received on retirement by such employee would
be less than indicated above. The Internal Revenue Code provides that effective
January 1, 2001 the maximum allowable annual benefit under the Retirement Plan
is $160,000 (adjusted for each year of employment beyond age 65) and the maximum
allowable annual compensation that may be included in the calculation of a
benefit under the Retirement Plan is $200,000. These limits are substantially
lower than the maximum amounts shown above. Accordingly, the Corporation
maintains a Retirement Benefits Restoration Plan (the "Restoration Plan")
whereby all participants in the Retirement Plan whose benefits or compensation
under the Retirement Plan would exceed the limitations imposed by the Internal
Revenue Code will receive a supplemental retirement benefit equal to the excess
of the benefit which would have been payable to them under the Retirement Plan
but for said limitations, over the amount payable under the generally applicable
formulas of the Retirement Plan, given said limitations. Such supplemental
benefit is not funded. The amounts set forth above include amounts payable
pursuant to the Restoration Plan. Benefit amounts are not subject to reduction
for any Social Security benefits to which Plan participants may be entitled.
Credited years of service under the Retirement Plan at December 31, 2001 are as
follows: Gerald Nachman, 27 years; George J. Yohrling, 25 years; Martin R.
Benante, 23 years; Joseph Napoleon, 32 years; and Glenn E. Tynan, 2 years. For
each of these persons as of said date, credited service for purposes of the
pay-based cash balance credit referred to above includes seven years and four
months under the preceding chart.
In the event of a change in control, the Corporation has agreed to fund a
"Rabbi" trust agreement between the Corporation and PNC Bank, N.A. dated
January 30, 1998, which provides for the payment of the Corporation's obligation
under the Restoration Plan referred to in the preceding paragraph.
17
COMPENSATION OF DIRECTORS
Currently all directors, excluding Mr. Lasky, who are not also employees of
the Corporation receive an annual director's fee of $20,000 and meeting fees of
$1,200 for every board and committee meeting attended. Additionally, an annual
retainer for the chairman of committees is paid at the rate of $3,000 per annum.
The board of directors also operates under a fee structure, not to exceed $2,000
per day, for non-employee directors who provide services to the Corporation
beyond the normal duties of the director. Any such services must be authorized
in advance by the board of directors and requested by the chairman of the board.
Pursuant to the 1996 Stock Plan for Non-Employee Directors (the "Stock Plan for
Directors") non-employee directors may elect to receive their annual director
fees and meeting fees in the form of common stock of the Corporation or in cash
or both. Elections have been made to receive shares in lieu of cash fees and to
defer receipt of said shares. In 2001, four non-employee directors received a
portion of their 1999 and 1998 deferred compensation under the Stock Plan for
Directors totaling an aggregate of 2,442 shares of the Corporation's Common
stock. The aggregate balance of said deferred shares remaining in the Stock Plan
for Directors was 11,630 as of December 31, 2001. The shares issued to the four
non-employee directors are included in the table on page 6. The aggregate
balance of shares remaining in the Stock Plan for Directors has not been
included in the table on page 6, since these shares have not yet been issued. In
addition, in accordance with the terms of the Stock Plan for Directors each
non-employee director on the board in 1996 received 516 restricted shares of
common stock in 1996. S. Marce Fuller received 389 restricted shares in
April 2000 after her election to the board of directors at the 2000 Annual
Meeting of Stockholders. In June 2001, the restrictions on the initial stock
grants to Messrs. Busey, Mitchell, Myers, Sihler, and Stewart lapsed. Pursuant
to the terms of the Stock Plan for Directors, Messrs. Busey, Mitchell, Myers,
Sihler, and Stewart received 311 restricted shares of Common stock for serving
five years as directors from the date of the initial grant in 1996. The shares
will remain restricted for a period of five years from the date of grant and
during that period may not be sold or transferred and are subject to forfeiture
if the director resigns or declines to continue serving as such during that
period. These shares are included in the table on page 6. For each director who
is not an employee, the Corporation also provides group term life insurance
coverage in the amount of $150,000.
18
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total stockholder
returns (assuming the reinvestment of dividends) on common stock of the
Corporation with such returns of companies listed on the Russell 2000 Index and
the S & P Aerospace/Defense Index. The graph assumes $100 invested on December
31, 1996 in stock of the Corporation and the companies on each of these indices.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG CURTISS-WRIGHT CORP., THE RUSSELL 2000 INDEX
AND THE S&P AEROSPACE/DEFENSE INDEX
[PERFORMANCE GRAPH]
12/96 12/97 12/98 12/99 12/00 12/01
----- ----- ----- ----- ----- -----
Curtiss-Wright $100 146.43 155.87 152.92 195.25 202.86
S&P Aerospace/Defense $100 102.88 78.87 76.83 121.13 100.50
Russell 2000 $100 122.36 119.25 144.60 140.23 143.71
Curtiss-Wright-Class B** $100.00 104.19
* $100 invested on 12/31/96 in Common Stock or Index, and on 11/6/01 in
Class B-including Reinvestment of Dividends. Fiscal Year ending December 31.
** Curtiss-Wright Class B common stock commenced trading on the New York Stock
Exchange on November 29, 2001.
19
SECURITY OWNERSHIP AND TRANSACTIONS WITH CERTAIN BENEFICIAL OWNERS
The following information is given with respect to the persons who, to the
knowledge of the Corporation, own beneficially more than 5% of any class of the
voting securities of the Corporation outstanding as of February 14, 2002.
AMOUNT AND NATURE
NAME & ADDRESS OF OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------- ---------------- --------- --------
Common Stock Argonaut Group, Inc(1) 822,200 shares 14.4%
1800 Avenue of the Stars Indirect
Los Angeles, Cal. 90067
Common Stock GAMCO Investors, Inc.,(2) 760,650 shares 13.3%
Direct
Gabelli Funds, LLC, 259,000 shares 4.5%
Direct
Gabelli Securities, Inc. 500 shares Less than 1%
Direct
Gabelli & Company, Inc. 100 shares Less than 1%
Corporate Center at Rye Direct
Rye, NY 10580
Common Stock Royce & Associates, Inc.(3) 944,000 shares 16.5%
1414 Ave. of the Americas Direct
New York, NY 10019
Common Stock Dimensional Fund Advisors, Inc.(4) 348,199 shares 6.1%
1299 Ocean Avenue Direct
Santa Monica, CA 90401
Class B Common Stock Singleton Group LLC(5) 942,103 shares 21.5%
335 North Maple Drive Direct
Beverly Hills, CA 90210
Class B Common Stock George Kozmetsky(6) 266,540 shares 6.1%
P.O. Box 2253 Direct
Austin, TX 78768
---------
(1) This information is as of October 9, 1986 and is based upon a report on
Schedule 13D filed by Argonaut Group, Inc. with the Securities and Exchange
Commission.
(2) This information is as of February 25, 2002 and is based upon a report on
Schedule 13D filed by Gabelli Asset Management Inc with the Securities and
Exchange Commission.
(3) This information is as of February 7, 2002 and is based upon a report on
Schedule 13D filed by Royce & Associates, Inc. with the Securities and
Exchange Commission.
(4) This information is as of February 12, 2002 and is based upon a report on
Schedule 13G filed by Dimensional Fund Advisors, Inc. with the Securities
and Exchange Commission.
(5) This information is as of March 1, 2002 and is based upon a report on
Schedule 13D filed by joint reporting persons: Singleton Group LLC, Caroline
W. Singleton, William W. Singleton, and Donald E. Rugg, with the Securities
and Exchange Commission.
(6) This information is based on a distribution ratio of 6.4948 shares of Class
B common stock for each 100 shares of Unitrin stock as reported on Schedule
13D dated August 24, 2000.
20
PROPOSAL 3
AMENDMENT OF THE CORPORATION'S
1995 LONG-TERM INCENTIVE PLAN
The Corporation's stockholders are being asked to approve an amendment of
the Corporation's 1995 LTI Plan, to increase the number of shares of the
Corporation's common stock, both Common and Class B, reserved for issuance under
the 1995 LTI Plan by 500,000 shares. The board of directors unanimously adopted
this amendment, subject to stockholder approval at the Annual Meeting.
The proposed amendment will assure that a sufficient reserve of common stock
remains available for issuance under the 1995 LTI Plan to accommodate the
Corporation's recent growth in 2001 and anticipated growth in 2002 as well as
allow the Corporation to continue to utilize equity incentives to attract and
retain the services of key individuals and other personnel essential to the
Corporation's long-term growth and financial success. The Corporation relies
significantly on equity incentives in the form of stock option grants and
performance units in order to attract and retain key employees and other
personnel and believes such equity incentives are necessary for the Corporation
to remain competitive in the marketplace for executive talent and other key
employees.
Option grants made to newly hired or continuing employees will be based on
both competitive market conditions and individual performance. The following is
a summary of the principal features of the 1995 LTI Plan. The summary, however,
does not purport to be a complete description of all the provisions of the 1995
LTI Plan. Any stockholder of the Corporation who wishes to obtain a copy of the
actual plan document may do so without charge upon written request to the
Corporate Secretary at the Corporation's principal executive offices in
Lyndhurst, New Jersey, or locate a copy attached as Exhibit A to the
Corporation's Definitive Proxy Materials filed with the Securities and Exchange
Commission on March 22, 1995.
THE LONG-TERM INCENTIVE PLAN GENERALLY
The board originally adopted and shareholders approved the 1995 LTI Plan in
May 1995. The 1995 LTI Plan has been amended from time to time since its initial
adoption. Currently, awards may not be granted pursuant to the 1995 LTI Plan
after May 5, 2005. The 1995 LTI Plan provides for the grant of performance based
awards to key employees, including employees who are officers and members of the
board. Non-employee directors may not receive awards under the 1995 LTI Plan.
The Corporation currently has approximately 200 employees who are eligible to
participate in the 1995 LTI Plan. Option based awards may be granted under the
1995 LTI Plan in the form of incentive stock options or non-qualified stock
options.
SHARES AVAILABLE UNDER THE PLAN
As of December 31, 2001, options covering 794,957 shares reserved for
issuance have been granted. The Board proposes to amend the Plan to increase the
number of shares that can be issued from 1,000,000 to 1,500,000. The number of
shares that can be issued and the number of shares subject to outstanding
options may be adjusted in the event of a stock split, stock dividend,
recapitalization or other similar event affecting the number of shares of
Curtiss-Wright's common stock.
PLAN ADMINISTRATION
The compensation committee of the board of directors administers the 1995
LTI Plan. Subject to the specific terms of the 1995 LTI Plan, the committee
determines eligibility as well as the timing, type, amount and terms of grants.
The committee also interprets the 1995 LTI Plan and the terms of any awards
granted under the 1995 LTI Plan. The committee also makes all other
determinations necessary or advisable for the 1995 LTI Plan's administration. No
award to any individual employee during any calendar year may exceed fifty
thousand (50,000) shares, subject to any adjustment for a stock split,
21
stock dividend, recapitalization or other similar event affecting the number of
shares of the Corporation's stock.
STOCK OPTIONS
The committee may grant a participant the option to purchase shares of the
Corporation's securities through incentive stock options qualified under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") or options not
qualified under Section 422 of the Code ("non-qualified stock options") or a
combination of both. Incentive and non-qualified stock options must be granted
at not less than 100% of the fair market value of the underlying common stock on
the date the option is granted, except for up to 25% of the shares which may be
granted in the form of non-qualified stock options priced at no less than 50% of
the fair market value of the shares of common stock on the date of grant. Upon
exercise, the option price is to be paid in full in cash, in shares of common
stock, in such other consideration, as the committee may deem appropriate, or
through an arrangement with a broker. Options will be exercisable in whole or in
such installments and at such times as may be determined by the committee,
provided that no incentive stock option may be exercisable more than ten years
after the date of its grant.
STOCK APPRECIATION RIGHTS
The committee may grant key employees the right to receive a payment equal
to the appreciation in market value of a stated number of shares of any security
from the date of the agreement granting the stock appreciation right (the "base
price") to its date of exercise. These stock appreciation rights may or may not
be granted in tandem with stock options. Stock appreciation rights granted in
tandem with stock options will be exercisable only to the extent the related
stock option is exercisable and upon exercise of such a tandem stock
appreciation right, the related stock option shall be canceled to the extent of
the number of stock appreciation rights exercised and such shares will not
thereafter be eligible for grant under the 1995 LTI Plan. The base price for a
tandem stock appreciation right will be determined by the committee, but it must
not be less than the exercise price of the related stock option.
Freestanding stock appreciation rights will be exercisable at the time or
times determined by the committee. The base price for a free-standing stock
appreciation right will be determined by the committee, but it must not be less
than the fair market value of the security on the date of the grant of the stock
appreciation right.
LIMITED STOCK APPRECIATION RIGHTS
The committee may grant key employees the right to receive a payment in cash
equal to the appreciation over the base price by the greater of either the
highest price of shares of common stock paid in connection with a change in
control or the highest price of the shares of common stock during the 60 days
prior to the change in control. These limited stock appreciation rights may be
granted at the time the option or stock appreciation right is granted or at any
time thereafter. Limited stock appreciation rights are exercisable in full for a
period of seven months following the date of a change in control. If limited
stock appreciation rights are exercised, any stock options and stock
appreciation rights to which they are attached can no longer be exercised. If
the stock options or stock appreciation rights are exercised or terminated, the
limited stock appreciation rights are simultaneously canceled.
RESTRICTED STOCK AWARDS
The 1995 LTI Plan permits the committee to award restricted stock to key
employees of the Company (without payment of consideration by the participant)
with such terms, conditions, restrictions or limitations as the committee deems
appropriate. While the restrictions are in effect, the committee may permit a
participant the right to vote shares and the right to receive any dividends.
Restricted stock awards may be evidenced by stock certificates, book-entry
registrations or in such other manner as the committee determines.
22
PERFORMANCE SHARES AND PERFORMANCE UNITS
The 1995 LTI Plan permits the committee to grant performance shares and
performance units to key employees, which entitle the participant to convert the
performance shares or performance units into shares of common stock or into cash
or into a combination thereof, as determined by the committee, if pre-determined
performance targets or goals are met. Performance goals include one or more of
the following: net earnings, operating income, cash flow, return on equity,
return on capital employed, return on assets, and total stockholder return. The
committee determines the length of the performance period. Award payments made
in cash rather than by the issuance of shares do not result in additional shares
being available for reissuance under the 1995 LTI Plan. No participant shall
receive a cash award of more than $500,000 in any plan year.
EMPLOYMENT; TRANSFERABILITY
The Committee is authorized under the 1995 LTI Plan to adopt policies
regarding the entitlement of participants who cease to be employed by the
Company because of death, disability, resignation, termination or retirement.
These policies may vary depending upon the specific circumstances and the
individual involved. The rights and interests of a participant under the 1995
LTI Plan, including his or her rights under any award issued or granted under
the 1995 LTI Plan, may not be assigned, sold, encumbered or transferred except
by will or the laws of descent and distribution in the event of the death of the
participant.
TAX CONSEQUENCES
Participants in the 1995 LTI Plan do not recognize taxable income by reason
of the grant or vesting of an option, and the Corporation does not receive a tax
deduction by reason of either event. At exercise, the federal tax consequences
vary depending on whether the award is an incentive stock option or a
non-qualified stock option.
Incentive Stock Options. Incentive stock options under the 1995 LTI Plan are
intended to meet the requirements of Section 422 of the Code. Under this section
of the Code, if an option holder acquires stock upon the exercise of an option,
no income results to the option holder and the Corporation is not allowed a
deduction as a result of such exercise if the following conditions are met: (a)
at all times during the period beginning with the date of the grant of the
option and ending on the date three months before the date of such exercise, the
option holder is an employee of the Corporation or of a subsidiary; and (b) the
option holder makes no disposition of the stock within two years from the date
the option is granted nor within one year after the option is exercised. In the
event of a sale of such stock by the option holder after compliance with these
conditions, any gain realized over the price paid for the stock will ordinarily
be treated as a long-term capital gain, and any loss will ordinarily be treated
as a long-term capital loss, in the year of sale. The exercise of an incentive
stock option may result in alternative minimum tax liability to the option
holder. If the option holder fails to comply with the employment or holding
period requirements discussed above, he will be treated as having received
compensation taxable as ordinary income or having received a capital gain in
accordance with the provisions of the Code. If the option holder is treated as
having received compensation because of this failure to comply with either
condition above, an equivalent deduction from income will be allowed to the
Corporation in the same year.
Non-Qualified Stock Options. An option holder who exercises a non-qualified
stock option generally realizes compensation taxable as ordinary income in an
amount equal to the difference between the option price and the fair market
value of the shares on the date of exercise, and the Corporation is entitled to
a deduction from income in the same amount. The option holder's basis in such
shares will be the fair market value on the date exercised, and the long-term or
short-term capital gain or loss, depending on the holding period of the shares,
will be recognized in the year of sale.
Stock Appreciation Rights. The grant of a stock appreciation right does not
result in tax consequences to the Corporation or to the option holder. An option
holder who exercises a stock
23
appreciation right will realize compensation taxable as ordinary income in an
amount equal to the cash or the fair market value of the shares received on the
date of exercise, and the Corporation will be entitled to a deduction in the
same amount. If an employee allows a stock appreciation right to expire,
otherwise than as a result of exercising the related option, the Internal
Revenue Service may contend that the employee will have taxable income in the
year of expiration equal to the amount of cash or the fair market value of stock
which he would have received if he had exercised his stock appreciation right
immediately before it expired. In addition, under Treasury Regulations governing
incentive stock options, a stock appreciation right with respect to an incentive
stock option must be granted at the same time the incentive stock option is
granted in order to ensure that the incentive stock option remains qualified as
such.
Limited Stock Appreciation Rights. The grant of a limited stock appreciation
right will not result in tax consequences to the Corporation or to a
participant. A participant who exercises a limited stock appreciation right will
realize compensation taxable as ordinary income in an amount equal to the cash
or the fair market value of the shares received on the date of exercise, and the
Corporation will be entitled to a deduction in the same amount. A participant
who does not exercise at the time of a change in control and allows the limited
stock appreciation rights to lapse could be taxed as though exercise had
occurred at either of those two dates.
Restricted Stock Awards. Restricted stock awards granted under the 1995 LTI
Plan will constitute taxable income to the recipient, and a deductible expense
to the Corporation, in the year in which the restrictions lapse unless the
participant elects to recognize income in the year the award is made. Unless
such an election is made, the amount of the taxable income and corresponding
deduction will be equal to the excess of the fair market value of the stock on
the date the restrictions lapse over the amount, if any, paid for such stock.
The Corporation is also allowed a compensation deduction for dividends paid to
participants (provided they have not elected to recognize income at the time of
the award) on restricted stock while the restrictions remain in force.
Performance Shares and Performance Units. Performance shares and performance
units awarded under the 1995 LTI Plan will not constitute a taxable event to the
recipient until such time as the recipient actually receives shares of common
stock or cash related to such award. The amount of taxable income will be equal
to the amount of cash received or the fair market value of stock received at
such time. The Corporation will be entitled to a compensation deduction in the
same year.
PLAN AMENDMENT AND TERMINATION
Currently, the 1995 LTI Plan will terminate on May 5, 2005. The committee
may suspend, reinstate and terminate the 1995 LTI Plan or any portion thereof at
any time. In addition, the committee may, from time to time, amend the 1995 LTI
Plan in any manner, but may not without stockholder approval adopt any amendment
which would (a) increase the number of shares of common stock which may be
issued under the 1995 LTI Plan (except in the event of certain extraordinary
distributions of cash or shares of stock, as described in the 1995 LTI Plan), or
(b) change the employees or class of employees eligible to participate in the
1995 LTI Plan.
BOARD RECOMMENDATION
The board of directors unanimously recommends a vote FOR the amendment of
the 1995 Long-Term Incentive Plan.
PROPOSAL 4
INDEPENDENT ACCOUNTANTS
The board of directors has nominated the firm of PricewaterhouseCoopers LLP
for appointment by the stockholders as independent accountants for the purpose
of auditing and reporting upon the financial statements of the Corporation for
its fiscal year ending December 31, 2002, subject to the approval of its
appointment by stockholders at the Annual Meeting. The firm of
24
PricewaterhouseCoopers LLP was engaged in 1992 and has served in this capacity
for the Corporation through the fiscal year ended December 31, 2001. The
selection of PricewaterhouseCoopers LLP to serve as independent accountants of
the Corporation was based upon a recommendation by the audit committee of the
board of directors and was approved by the full board. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting to
make such statements and answer such questions as are appropriate.
If the stockholders fail to so appoint PricewaterhouseCoopers LLP, the board
of directors, pursuant to the by-laws of the Corporation, will appoint other
independent accountants to perform such duties for the current fiscal year. It
is not contemplated that such appointment of other independent accountants would
be submitted to the stockholders for ratification. The appointment of
independent accountants to serve with respect to the year 2003 would be acted
upon by the stockholders at their annual meeting early in that year.
BOARD RECOMMENDATION
The board of directors recommends a vote FOR the ratification of the
appointment of PricewaterhouseCoopers LLP as independent accountants for the
calendar year ending December 31, 2002.
PRINCIPAL ACCOUNTING FIRM FEES
The following table sets forth the aggregate fees billed to Curtiss-Wright
Corporation for the fiscal year ended December 31, 2001 by the Company's
principal accounting firm, PricewaterhouseCoopers, LLP:
Audit Fees and Expenses..................................... $494,622
Financial Information Systems Design and Implementation
Fees...................................................... $ 0
All Other Fees.............................................. $444,211(a)(b)
--------
$938,833
--------
--------
---------
(a) Includes fees for tax consulting and other non-audit services.
(b) The audit committee has determined that provision of these services is
compatible with maintaining the principal accountant's independence.
OTHER MATTERS WHICH MAY BE PRESENTED FOR ACTION AT THE MEETING
The board of directors does not intend to present for action at this annual
meeting any matter other than those specifically set forth in the Notice of
Annual Meeting. If any other matter is properly presented for action at the
Meeting, it is the intention of persons named in the proxy to vote thereon in
accordance with their judgment pursuant to the discretionary authority conferred
by the proxy.
By Order of the Board of Directors
MICHAEL J. DENTON
Secretary
Dated: March 5, 2002
25
APPENDIX 1
ANNUAL MEETING OF STOCKHOLDERS OF
CURTISS-WRIGHT CORPORATION
April 26, 2002
Co. #_______________ Acct. #______________
-------------------------
PROXY VOTING INSTRUCTIONS
-------------------------
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
YOUR CONTROL NUMBER IS [ ]
WHEN PROXY PROOF IS OKAYED PLEASE SIGN & DATE IT HERE__________________________
Please Detach and Mail in the Envelope Provided
--------------------------------------------------------------------------------
--- Please mark your
A X votes as in this
--- example.
FOR WITHHOLD
all nominees AUTHORITY
listed to the right to vote for all
(except as marked nominees listed
to contrary) to the right
1. & 2.
Election [ ] [ ]
of Directors.
INSTRUCTION: To withhold authority to vote for
any individual nominee, write that nominee's
name in the space provided below.
----------------------------------------------
Nominees:
---------
Class B Common
------- ------
M. R. Benante S. M. Fuller
J. B. Busey IV
D. Lasky
W. B. Mitchell
J. R. Meyers
W. W. Sihler
J. M. Stewart
Only those votes cast by Class B Common Stock stockholders shall be
considered for the election of Class B directors, and only those votes cast by
Common Stock stockholders shall be considered for the election of the
Common director.
FOR AGAINST ABSTAIN
(3) PROPOSAL TO AMEND THE CORPORATION'S
1995 LONG-TERM INCENTIVE PLAN to increase [ ] [ ] [ ]
the authorized number of shares under the plan
by 500,000 shares.
(4) PROPOSAL TO APPROVE THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP as [ ] [ ] [ ]
independent public accountants of the
Corporation.
PLEASE MARK, SIGN, DATE AND MAIL IN ENCLOSED ENVELOPE.
NO POSTAGE REQUIRED IN UNITED STATES.
Signature_______________ Signature_______________ Date_______________
NOTE: Please sign name as fully and exactly as it appears above. When signing in
a fiduciary or representative capacity, please give full title as such.
Where more than one owner, each owner should sign. Proxies executed by a
corporation should be signed in full corporate name and by duly authorized
officer.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CURTISS-WRIGHT CORPORATION
1200 Wall Street West, Lyndhurst, New Jersey 07071
This Proxy Solicited on Behalf of the Board of Directors
The undersigned appoints MARTIN R. BENANTE, GLENN E. TYNAN and MICHAEL J.
DENTON and each of them as proxies with power of substitution to vote all shares
of the Corporation which the undersigned is entitled to vote at the Annual
Meeting of Stockholders on April 26, 2002, at the Renaissance Meadowlands Hotel,
801 Rutherford Avenue, Rutherford, New Jersey at 2:00 p.m. local time, or any
adjournment or postponement thereof, with all the powers the undersigned would
have if personally present, as specified, respecting the following matters
described in the accompanying Proxy Statement and, in their discretion, on other
matters which come before the meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH STOCKHOLDER SPECIFICATIONS. THE
BOARD OF DIRECTORS OF CURTISS-WRIGHT CORPORATION RECOMMENDS A VOTE "FOR" EACH OF
PROPOSAL ONE, PROPOSAL TWO, PROPOSAL THREE AND PROPOSAL FOUR. UNLESS DIRECTED BY
THIS PROXY TO VOTE OTHERWISE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND
4. A MAJORITY (OR IF ONLY ONE, THEN THAT ONE) OF THE PROXIES OR SUBSTITUTES
ACTING AT THE MEETING MAY EXERCISE THE POWERS CONFERRED HEREIN. RECEIPT OF THE
ACCOMPANYING NOTICE OF MEETING AND PROXY STATEMENT IS HEREBY ACKNOWLEDGED.
(To be signed on reverse side)
--------------------------------------------------------------------------------