-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M2O16bRUEqnCjsd0I7Jtev7R7Y1b3PVGGmhCI7ODrJXWOBRzHyfiwrHNDLmnY88i ZNBpaux3sO77lSWsyaXZBQ== 0000950129-02-001033.txt : 20020415 0000950129-02-001033.hdr.sgml : 20020415 ACCESSION NUMBER: 0000950129-02-001033 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020405 FILED AS OF DATE: 20020305 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COOPER INDUSTRIES INC CENTRAL INDEX KEY: 0000024454 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 314156620 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-01175 FILM NUMBER: 02566834 BUSINESS ADDRESS: STREET 1: 600 TRAVIS STE 5800 STREET 2: CHASE TOWER CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7132098400 MAIL ADDRESS: STREET 1: P O BOX 4446 CITY: HOUSTON STATE: TX ZIP: 77210 FORMER COMPANY: FORMER CONFORMED NAME: COOPER BESSEMER CORP DATE OF NAME CHANGE: 19710505 DEF 14A 1 h94374def14a.txt COOPER INDUSTRIES, INC. - 04/05/02 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A (RULE 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (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 Rule 14a-12
Cooper Industries, Inc - -------------------------------------------------------------------------------- (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: ----------------------------------------------------------------------- [COOPER LOGO] March 5, 2002 Dear Shareholder: On behalf of the Board of Directors, I cordially invite you to attend the Annual Meeting of Cooper Industries' shareholders. The meeting will be held on Friday, April 5, 2002, at 11:00 a.m. in the J.P. Morgan Chase Center Auditorium, 601 Travis Street, Houston, Texas. The notice of meeting and proxy statement following this letter describe the business to be conducted at the meeting, including the election of four directors. To make it easier for you to vote your shares, we are pleased to offer Internet and telephone voting for registered shareholders. Your proxy card and the Notice of Annual Meeting on the inside cover of this proxy statement describe how to use these services. PLEASE TAKE A MOMENT NOW TO VOTE YOUR PROXY VIA THE INTERNET, BY TELEPHONE OR BY SIGNING AND RETURNING YOUR PROXY CARD IN THE ENVELOPE PROVIDED, even if you plan to attend the meeting. YOUR VOTE IS IMPORTANT. The Board of Directors appreciates and encourages shareholder participation. Thank you for your continued support. Sincerely, /s/ H. JOHN RILEY, JR. H. JOHN RILEY, JR. Chairman, President and Chief Executive Officer NOTICE OF ANNUAL MEETING OF SHAREHOLDERS COOPER INDUSTRIES, INC. P.O. BOX 4446 HOUSTON, TEXAS 77210 --------------------- TIME........................ 11:00 a.m. on Friday, April 5, 2002. PLACE....................... J.P. Morgan Chase Center Auditorium, 601 Travis Street, Houston, Texas. Free parking is available at the J.P. Morgan Chase Center. ITEMS OF BUSINESS........... 1. Elect four directors for the term expiring at the 2005 Annual Meeting of Shareholders. 2. If presented at the meeting, consider and vote upon a shareholder proposal requesting the Board of Directors to report to shareholders on social and environmental issues related to sustainability. 3. Consider any other matters to come properly before the meeting or any adjournment thereof. RECORD DATE................. Holders of Common Stock of record at the close of business on March 1, 2002, may vote at the meeting. FINANCIAL STATEMENTS........ Our audited financial statements for the year ended December 31, 2001, and the related Management's Discussion and Analysis of Financial Condition and Results of Operations are included in our Form 10-K, which is contained in the Annual Report that you received in this mailing. IMPORTANT................... In order to avoid additional soliciting expense to Cooper, please vote your proxy as soon as possible, even if you plan to attend the meeting. Shareholders of record can vote by one of the following methods: 1. CALL 1-877-779-8683 from the U.S. and Canada (this call is free) or 001-201-536-8073 from all other countries to vote by telephone anytime up to 12:00 midnight New York time on April 4, 2002; OR 2. GO TO THE WEBSITE: http://www.eproxyvote.com/cbe to vote over the Internet anytime up to 12:00 midnight New York time on April 4, 2002; OR 3. MARK, SIGN, DATE AND RETURN your proxy card in the enclosed postage-paid envelope. If you are voting by telephone or the Internet, please do not mail your proxy card. By order of the Board of Directors: /s/ TERRANCE V. HELZ TERRANCE V. HELZ Associate General Counsel and Secretary Houston, Texas March 5, 2002 TABLE OF CONTENTS Questions and Answers....................................... 2 Cooper Stock Ownership...................................... 4 Proposal 1: Election of Directors........................... 4 Information about Management and Organization of the Board of Directors.............................................. 8 Executive Management Compensation........................... 11 Company Performance......................................... 14 Management Development and Compensation Committee Report on Executive Compensation.................................... 16 Other Compensation Matters.................................. 19 Audit Committee Report...................................... 22 Relationship with Independent Auditors...................... 22 Proposal 2: Shareholder Proposal for a Sustainability Report.................................................... 23
1 PROXY STATEMENT We have sent you this booklet and proxy card because the Board of Directors of Cooper Industries, Inc. ("Cooper") is soliciting your proxy to vote at our 2002 Annual Meeting of Shareholders on April 5, 2002. This booklet contains information about the items being voted on at the Annual Meeting and information about Cooper. QUESTIONS AND ANSWERS - -------------------------------------------------------------------------------- WHAT MAY I VOTE ON? - The election of four nominees to serve on our Board of Directors; and - If presented, a shareholder proposal that the Board of Directors report to shareholders on social and environmental issues related to sustainability. - -------------------------------------------------------------------------------- HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS? The Board recommends voting: - FOR each of the nominees for the Board of Directors; and - AGAINST the shareholder proposal. - -------------------------------------------------------------------------------- WHO IS ENTITLED TO VOTE? Holders of Common Stock as of the close of business on March 1, 2002 may vote at the Annual Meeting. - -------------------------------------------------------------------------------- HOW DO I VOTE? You may vote your shares by means of a proxy using one of the following three methods of voting: - electronically using the Internet, - by use of the telephone, or - by signing and dating the enclosed proxy card and returning it in the prepaid envelope. The instructions for these three methods are contained on the Notice of Annual Meeting which immediately follows the cover page of this proxy statement and also on the enclosed proxy card. If you return your signed proxy card but do not mark the boxes showing how you wish to vote, your shares will be voted as recommended by the Board of Directors. The giving of such proxy does not affect your right to vote in person if you attend the meeting. - -------------------------------------------------------------------------------- CAN I REVOKE MY PROXY CARD? Whichever voting method you use, you have the right to revoke your proxy at any time before the meeting by: - filing with Cooper's Corporate Secretary an instrument revoking your proxy; - attending the meeting and giving notice of revocation; or - submitting a later-dated proxy by any of the three voting methods described above. - -------------------------------------------------------------------------------- IS MY VOTE CONFIDENTIAL? Proxy cards, proxies delivered by Internet or telephone, ballots and voting tabulations that identify individual shareholders are mailed or returned directly to an independent inspector of election, and handled in a manner that protects your voting privacy. The independent inspector of election will count the votes. We have adopted a confidential voting policy which provides that your vote will not be disclosed except: (1) to respond to written comments on the proxy card; (2) as required by law; or (3) in other limited circumstances, such as a proxy contest in opposition to the Board. - -------------------------------------------------------------------------------- 2 WHAT SHARES ARE INCLUDED ON THE PROXY CARDS? The shares listed on your proxy cards represent ALL of your record shares, including the following, as applicable: - shares held in the Cooper Dividend Reinvestment and Stock Purchase Plan; - shares held in custody for your account by J.P. Morgan Chase Bank, as Trustee of the Cooper Industries, Inc. Retirement Savings and Stock Ownership Plan ("CO-SAV"); and - shares acquired through Cooper's Employee Stock Purchase Plan that are being held in a book-entry account at EquiServe Trust Company N.A., Cooper's transfer agent. If you do not properly submit your proxy by one of the three methods described above, your shares (except for CO-SAV) will not be voted. See the question below for an explanation of the voting procedure for CO-SAV shares. If you hold shares in a broker account, you will receive a separate proxy card and instructions from your broker. - -------------------------------------------------------------------------------- HOW IS COOPER COMMON STOCK IN CO-SAV VOTED? If you hold shares of Cooper Common Stock through CO-SAV, you must instruct the CO-SAV trustee, J.P. Morgan Chase Bank, how to vote your shares. If you do not properly submit your proxy by one of the three methods described above (or if you submit your proxy with an unclear voting designation, or with no voting designation at all), then the Trustee will vote the shares in your CO-SAV account in proportion to the way the other CO-SAV participants voted their shares. The Trustee will also vote shares of Common Stock not yet allocated to participants' accounts in proportion to the way that CO-SAV participants voted their shares. CO-SAV votes receive the same confidentiality as all other shares voted. - -------------------------------------------------------------------------------- HOW MANY SHARES CAN VOTE? Each holder of Common Stock at the close of business on March 1, 2002, is entitled to one vote for each share held. These are the only outstanding securities entitled to vote. As of February 22, 2002, 93,587,118 shares of Common Stock were issued and outstanding. - -------------------------------------------------------------------------------- WHAT VOTE IS REQUIRED FOR APPROVAL? Provided a quorum is present, the election of a director and the approval of the shareholder proposal each require the affirmative vote of a majority of the shares represented in person or by proxy at the meeting and entitled to vote on such matters. Abstentions have the same effect as a vote against the proposal. Broker nonvotes are not counted for purposes of voting, but are counted for purposes of a quorum. - -------------------------------------------------------------------------------- WHAT IS A "QUORUM"? A "quorum" is a majority of the issued and outstanding shares. Shareholders may represent their shares by being present at the meeting or their shares may be represented at the meeting by proxy. There must be a quorum for the meeting to be held. If you submit a valid proxy by any of the described methods, even if you abstain from voting, then you will be considered part of the quorum. - -------------------------------------------------------------------------------- WHO CAN ATTEND THE ANNUAL MEETING? If you own Cooper shares on March 1, 2002, you may attend the Annual Meeting. Please indicate on your proxy if you plan to attend. If your shares are held through a broker and you would like to attend, please write to Terrance V. Helz, Associate General Counsel and Secretary, Cooper Industries, Inc., 600 Travis Street, Suite 5800, Houston, Texas 77002, or bring proof of ownership to the meeting. - -------------------------------------------------------------------------------- 3 HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED? Although we do not know of any other business to be considered at the 2002 Annual Meeting, if any other business is presented at the Annual Meeting, your proxy will be voted as determined by the persons voting the proxies. - -------------------------------------------------------------------------------- WHEN ARE THE SHAREHOLDER PROPOSALS FOR THE 2003 ANNUAL MEETING DUE? All shareholder proposals must be submitted in writing to Terrance V. Helz, Associate General Counsel and Secretary, Cooper Industries, Inc., 600 Travis Street, Suite 5800, Houston, Texas 77002. Any shareholder who intends to present a proposal at the 2003 Annual Meeting of Shareholders must deliver the proposal to us so that it is received no later than November 5, 2002, to have the proposal included in our proxy materials for that meeting. Shareholder proposals must also meet other requirements of the Securities and Exchange Act of 1934 to be eligible for inclusion. If a shareholder proposal is received after January 19, 2003, the persons voting the proxies may vote in their discretion on such proposal as to all the shares for which they have received proxies for the 2003 Annual Meeting of Shareholders. - -------------------------------------------------------------------------------- WHAT ARE THE COSTS OF THIS PROXY SOLICITATION? We have retained Georgeson Shareholder Communications, Inc. to assist in the distribution of proxy materials and solicitation of votes for a fee of $16,000, plus out-of-pocket expenses. In addition, we have retained MacKenzie Partners, Inc. to assist in the solicitation of proxies for customary fees, plus out-of-pocket expenses. We also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses of forwarding proxy and solicitation materials to shareholders. Our directors, officers and employees may also solicit proxies without additional compensation by letter, telephone or otherwise. We will bear all expenses of solicitation. - -------------------------------------------------------------------------------- COOPER STOCK OWNERSHIP As of February 22, 2002, there were 27,215 registered holders of Common Stock. We know of no person who was the beneficial owner of more than five percent of the outstanding shares of any class of voting securities as of that date. PROPOSAL 1 ELECTION OF DIRECTORS The authorized number of directors is 11, divided into three classes, one having three members and two having four members each. Each class is elected for a term of three years, so that the term of one class of directors expires at every meeting. The Board of Directors has nominated four persons for election as directors in the class whose term will expire in April 2005, or when their successors are elected and qualified. The nominees are: Warren L. Batts, Robert M. Devlin, Linda A. Hill and H. John Riley, Jr. All of the nominees are directors and members of the class whose term expires at the meeting. If any nominee becomes unable to serve as a director, an event not now anticipated, it is intended that the shares represented by proxies will be voted for the election of a substitute nominated by the Board of Directors. Following is certain information with respect to the persons nominated as directors and the current directors who will continue as directors after the Annual Meeting. 4 NOMINEES FOR TERMS EXPIRING IN 2005 - ------------------------------ WARREN L. BATTS [PHOTO] Mr. Batts was the Chairman and Chief Chairman -- Finance Committee Executive Officer of Tupperware Corporation Member -- Management (diversified consumer products) since its Development and spin-off from Premark International, Inc. in Compensation Committee and 1996 until his retirement in 1997. He also Committee on Nominations served as Chairman and Chief Executive and Corporate Governance Officer of Premark International, Inc. (food Director since 1986 containers, commercial food equipment, Age 69 housewares and decorative laminates) from 1986 until 1996 and as Chairman of Premark International, Inc. until 1997. He is also a director of The Allstate Corporation, Methode Electronics, Inc., Sears, Roebuck and Co. and Sprint Corporation. - ------------------------------ ROBERT M. DEVLIN [PHOTO] Mr. Devlin is Chairman of Curragh Capital Chairman -- Management Partners (venture capital, merchant Development and banking). He was Chairman, President and Compensation Committee Chief Executive Officer of American General Member -- Executive Corporation (financial services) from 1997 Committee, Finance until September 2001. He was elected Vice Committee and Committee on Chairman in 1993, was named President in Nominations and Corporate 1995 and Chief Executive Officer in 1996, Governance and was elected Chairman in 1997. He is Director since 1997 also a director of Phillips Petroleum Age 61 Company. - ------------------------------ LINDA A. HILL [PHOTO] Ms. Hill is a Professor at the Harvard Member -- Audit Committee Business School. She joined the faculty of and Finance Committee Harvard Business School in 1984 as an Director since 1994 Assistant Professor in organizational Age 45 behavior and human resource management. She was named Associate Professor in 1991, Professor in 1995 and the Wallace Brett Donham Professor of Business Administration in 1997. She is also a director of State Street Corporation. - ------------------------------ H. JOHN RILEY, JR. [PHOTO] Mr. Riley is Chairman, President and Chief Chairman -- Executive Executive Officer of Cooper Industries, Committee Inc. He was named President and Chief Director since 1992 Operating Officer in 1992, Chief Executive Age 61 Officer in 1995 and Chairman in 1996. He is also a director of The Allstate Corporation, Baker Hughes Incorporated and Dynegy Inc.
5 PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 2003 - ------------------------------ CLIFFORD J. GRUM [PHOTO] Mr. Grum served as Chairman of the Board Chairman -- Committee on and Chief Executive Officer of Nominations and Corporate Temple-Inland Inc. (container and Governance containerboard, pulp and paperboard, Member -- Executive building products and financial services) Committee, Finance from 1991 until 2000, when he retired. He Committee and Management is also a director of Trinity Industries Development and Inc. and Tupperware Corporation. Compensation Committee Director since 1982 Age 67 - ------------------------------ RALPH E. JACKSON, JR. [PHOTO] Mr. Jackson is Chief Operating Officer of Director since 2001 Cooper Industries, Inc. He was named Age 60 Executive Vice President, Operations in 1992 and Chief Operating Officer in 2001. - ------------------------------ SIR RALPH H. ROBINS [PHOTO] Sir Ralph Robins has served as Chairman of Member -- Audit Committee Rolls-Royce plc since 1992. He is also and Management Development director and Chairman of Cable & Wireless and Compensation Committee plc and a director of Schroders plc and Director since 1991 Standard Chartered plc. Age 69 - ------------------------------ JAMES R. WILSON [PHOTO] Mr. Wilson served as Chairman, President Chairman -- Audit Committee and Chief Executive Officer of Cordant Member -- Management Technologies Inc. from 1995 until 2000, Development and when he retired. He became President and Compensation Committee and Chief Executive Officer and a director in Committee on Nominations 1993, and was elected Chairman in 1995. He and Corporate Governance is also a director of The BFGoodrich Director since 1997 Company. Age 61
6 PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 2004 - ------------------------------ H. LEE SCOTT [PHOTO] Mr. Scott has been President and Chief Member -- Audit Committee Executive Officer of Wal-Mart Stores, Inc. and Finance Committee (discount retailer) since January 2000. He Director since 1999 has been with Wal-Mart since 1979. He served Age 52 as Executive Vice President, Logistics from 1992 to 1995 and Executive Vice President, Merchandising from 1995 to 1998. He was named President and Chief Executive Officer of the Wal-Mart Stores Division in 1998, and Vice Chairman and Chief Operating Officer in 1999. He is also a director of Wal-Mart Stores, Inc. - ------------------------------ DAN F. SMITH [PHOTO] Mr. Smith is President and Chief Executive Member -- Audit Committee, Officer of Lyondell Chemical Company Executive Committee and (petrochemicals and refining operations). He Management Development was named President in 1994 and Chief and Compensation Committee Executive Officer in 1996. Since 1997, he Director since 1998 has also served as Chief Executive Officer Age 55 of Equistar Chemicals, LP, a joint venture company owned 41% by Lyondell. He is also a director of Lyondell Chemical Company and ChemFirst Inc. - ------------------------------ GERALD B. SMITH [PHOTO] Mr. Smith is Chairman and Chief Executive Member -- Audit Committee Officer of Smith Graham & Company, an and Finance Committee investment management firm that he founded Director since 2000 in 1990. He is also a director of Rorento Age: 51 Fund N.V. and Pennzoil-Quaker State Company, and a Trustee of The Charles Schwab Family of Funds.
7 INFORMATION ABOUT MANAGEMENT AND ORGANIZATION OF THE BOARD OF DIRECTORS EXECUTIVE OFFICERS The table below contains certain information as of March 1, 2002 with respect to Cooper's present executive officers. All executive officers are elected to terms that expire at the organizational meeting of the Board of Directors, which follows the Annual Meeting of Shareholders.
YEARS OF OFFICER NAME POSITION AGE SERVICE SINCE ---- -------- --- -------- ------- H. John Riley, Jr. ............ Chairman, President and Chief Executive Officer 61 39 1982 Ralph E. Jackson, Jr. ......... Chief Operating Officer 60 25 1992 Kirk S. Hachigian.............. Executive Vice President, Operations 42 1 2001 Terry A. Klebe................. Senior Vice President, Strategic Sourcing and Chief 47 7 1995 Information Technology Officer D. Bradley McWilliams.......... Senior Vice President and Chief Financial Officer 60 30 1982 Diane K. Schumacher............ Senior Vice President and General Counsel 48 22 1988 David R. Sheil................. Senior Vice President, Human Resources 45 16 1996 David A. White, Jr. ........... Senior Vice President, Strategic Planning and New 60 30 1988 Venture Development Officer Richard J. Bajenski............ Vice President, Investor Relations 49 20 1998 Victoria B. Guennewig.......... Vice President, Public Affairs 51 3 1999 Terrance V. Helz............... Associate General Counsel and Secretary 48 11 2001 Alan J. Hill................... Vice President and Treasurer 57 24 1979 E. Daniel Leightman............ Vice President, Taxes 61 14 1994 Jeffrey B. Levos............... Vice President and Controller 41 2 2000 Terrance M. Smith.............. Vice President, Information Systems 52 16 1996 Robert W. Teets................ Vice President, Environmental Affairs and Risk 51 24 1993 Management
All of the executive officers have been employed by Cooper in management positions for more than five years, except Victoria B. Guennewig, Kirk S. Hachigian, Terrance V. Helz and Jeffrey B. Levos. Victoria B. Guennewig joined Cooper in February 1999 after serving as Vice President, Public Affairs, of The Coastal Corporation since 1997. She previously held management positions in public affairs with Pan Energy Corp and Union Pacific Resources Group Inc. Kirk S. Hachigian joined Cooper in April 2001 after serving as President and Chief Executive Officer of the Asia Pacific Operations unit of GE Lighting since 1997 and as Chairman of the Board and Chief Executive Officer of GE International Mexico from 1996 to 1997. Terrance V. Helz became Secretary of Cooper in August 2001 after serving as Associate General Counsel and Assistant Secretary since 1998 and as Senior Counsel from 1994 to 1998. Jeffrey B. Levos joined Cooper in March 2000 after serving as Vice President and Controller of The Coastal Corporation since 1997 and as their Vice President and General Auditor from 1994 to 1997. 8 SECURITY OWNERSHIP OF MANAGEMENT As of February 22, 2002, each director and each executive officer named in the Summary Compensation Table beneficially owned the number of shares of Cooper Common Stock listed in the following table. Each of the named individuals and all directors and executive officers as a group beneficially owned 1.87% of Cooper's outstanding Common Stock as of that date.
NUMBER OF SHARES NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) ------------------------ --------------------- H. John Riley, Jr. ......................................... 639,404 (2)(3) Warren L. Batts............................................. 24,623 (4)(5) Robert M. Devlin............................................ 5,700 Clifford J. Grum............................................ 23,700 Linda A. Hill............................................... 5,700 Ralph E. Jackson, Jr. ...................................... 219,069 (2)(3) Sir Ralph H. Robins......................................... 6,139 (5) H. Lee Scott................................................ 4,470 (5) Dan F. Smith................................................ 7,278 (5) Gerald B. Smith............................................. 513 James R. Wilson............................................. 11,239 (5) Terry A. Klebe.............................................. 66,506 (2) D. Bradley McWilliams....................................... 131,976 (2)(3) Diane K. Schumacher......................................... 93,197 (3) All Directors and Executive Officers as a Group............. 1,748,191 (2)(3)
- --------------- (1) Includes shares held by executive officers in the Cooper Industries, Inc. Retirement Savings and Stock Ownership Plan. Also includes shares issuable upon the exercise of options granted under either the Stock Incentive Plan or the Directors' Stock Plan that are exercisable within a period of 60 days from March 1, 2002, as follows: Mr. Riley -- 382,665 shares; Mr. Batts -- 4,000 shares; Mr. Devlin -- 2,000 shares; Mr. Grum -- 3,000 shares; Ms. Hill -- 4,000 shares; Sir Ralph Robins -- 4,000 shares; Mr. D. Smith -- 1,000 shares; Mr. Wilson -- 3,000 shares; Mr. Jackson -- 145,165 shares; Mr. Klebe -- 52,798 shares; Mr. McWilliams -- 80,133 shares; Ms. Schumacher -- 62,499 shares; and all directors and executive officers as a group -- 1,101,445 shares. (2) Includes shares the receipt of which has been deferred pursuant to the Stock Incentive Plan and the Executive Restricted Stock Incentive Plan, as follows: Mr. Riley -- 134,713 shares; Mr. Jackson -- 57,788 shares; Mr. Klebe -- 6,798 shares; Mr. McWilliams -- 26,833 shares; and all executive officers as a group -- 258,193 shares. (3) Includes shares the receipt of which has been deferred pursuant to the Management Annual Incentive Plan, as follows: Mr. Riley -- 10,374 shares; Mr. Jackson -- 2,345 shares; Mr. McWilliams -- 4,187 shares; Ms. Schumacher -- 2,607 shares; and all executive officers as a group -- 20,532 shares. (4) Includes 17,200 shares held in a trust for which Mr. Batts is the settlor and trustee and for which a member of his family is the beneficiary. Mr. Batts has sole voting and investment power with respect to these shares. (5) Includes shares the receipt of which has been deferred by the directors under the Directors' Stock Plan and the Directors' Retainer Fee Stock Plan, as follows: Mr. Batts -- 3,423 shares; Sir Ralph Robins -- 513 shares; Mr. Scott -- 4,070 shares; Mr. D. Smith -- 5,478 shares; and Mr. Wilson -- 6,539 shares. 9 MEETINGS OF THE COOPER BOARD AND ITS COMMITTEES Our Board of Directors met on six occasions during 2001. All of the directors attended 75% or more of the meetings of the Board and the Committees of the Board on which they served, except Mr. Dan Smith, who attended 73% of the meetings of the Board and the Committees on which he served. Audit Committee The Audit Committee, which consists of all independent directors, held five meetings during 2001. The Committee's principal responsibilities are to: - Confer with management and the independent auditors regarding financial reporting issues and practices. - Review filings made with the SEC, including the annual financial statements and the annual report on Form 10-K. - Recommend to the Board the appointment of independent auditors and review the auditors' independence, scope of annual audit and audit fees. - Review the internal audit program and the corporate compliance program including compliance with Cooper's Code of Ethics and Business Conduct. - Review the accounting principles and policies of Cooper. Executive Committee The Executive Committee, which is authorized to act on behalf of the full Board between regular meetings of the Board, held no meetings in 2001. Finance Committee The Finance Committee, which consists of all independent directors, held two meetings during 2001. The Committee's principal responsibilities are to: - Review Cooper's financial objectives, capital structure, financing arrangements and similar matters of a financial nature. - Make recommendations to the Board regarding dividends. - Review pension plan asset management. Management Development and Compensation Committee The Management Development and Compensation Committee, which consists of all independent directors, held four meetings during 2001. The Committee's principal responsibilities are to: - Establish corporate compensation policies, including determining base salary and annual and long-term incentive awards for executive officers and other key employees. - Establish specific performance goals and objectives to be used to evaluate performance over a given period. - Evaluate the performance of executive officers and other key employees to determine whether performance goals and objectives have been attained and awards have been earned. - Determine stock option and long-term performance share grants to employees. - Review compliance with stock ownership guidelines for executive officers and other key employees. - Review succession planning and executive development. Committee on Nominations and Corporate Governance The Committee on Nominations and Corporate Governance, which consists of all independent directors, held two meetings in 2001. The Committee's principal responsibilities are to: - Recommend nominees for election to the Board and Committee assignments. - Review and recommend action on shareholder proposals. - Review corporate governance principles. - Consider shareholder recommendations for nominees for election to the Board. (Shareholders must submit such recommendations in writing to Terrance V. Helz, Associate General Counsel and Secretary, Cooper Industries, Inc., 600 Travis Street, Suite 5800, Houston, Texas 77002.) 10 EXECUTIVE MANAGEMENT COMPENSATION The following table presents information about compensation paid or accrued for services by the Chief Executive Officer and our four most highly compensated executive officers (the "Named Executives") for fiscal years 1999, 2000 and 2001. SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION(3) ----------------------- ANNUAL COMPENSATION(1) AWARDS PAYOUTS -------------------------- ---------- ---------- (a) (b) (c) (d) (g) (h) (i) SECURITIES ALL UNDERLYING LTIP OTHER NAME AND SALARY BONUS OPTIONS PAYOUTS COMPENSATION PRINCIPAL POSITION YEAR ($) ($) # ($)(4) ($)(5) ------------------ ---- -------- -------- ---------- ---------- ------------ Riley, Jr., H.J. -- Chairman, President 2001 $965,000 $ 0 162,500 $ 0 $85,388 and Chief Executive Officer 2000 910,000 932,500 150,000 1,258,351 72,671 1999 876,667 704,900 105,000 1,770,291 54,120 Jackson, Jr., R.E. -- Chief Operating 2001 525,000 0 80,000 0 37,573 Officer 2000 479,063 344,400 60,000 460,361 35,350 1999 451,875 306,500 33,000 630,796 26,724 Klebe, T.A. -- Senior Vice President, 2001 308,750 0 27,500 0 13,894 Strategic Sourcing and Chief 2000 282,208 182,900 20,000 163,643 17,199 Information Technology Officer 1999 268,625 220,000 20,000 195,484 12,088 McWilliams, D.B. -- Senior Vice 2001 385,917 0 33,300 0 17,366 President and Chief Financial Officer 2000 368,500 235,700 26,000 306,907 25,686 1999 352,500 202,300 21,000 435,312 20,993 Schumacher, D.K. -- Senior 2001 327,500 0 27,500 0 22,254 Vice President and General Counsel 2000 306,500 208,800 20,000 245,516 21,722 1999 293,208 176,200 16,000 325,576 18,212
- --------------- (1) Column(e) "Other Annual Compensation" has been omitted since there are no amounts to report. The aggregate amount of perquisites and other personal benefits for any Named Executive does not exceed $50,000 or 10% of the total of annual salary and bonus for any such Named Executive. (2) Column (f) "Restricted Stock Awards" has been omitted because there are no amounts to report. (3) See the Long-Term Incentive Plan Table on page 13 disclosing long-term incentive awards granted in 2001 to the Named Executives pursuant to the Stock Incentive Plan. (4) Represents performance-based shares that were earned by the Named Executives under the Stock Incentive Plan in the last year of a four-year performance period ending on December 31 of each of the years listed in the table. (5) The figures in column (i) for 2001 include Cooper's contributions to the Cooper Industries, Inc. Retirement Savings and Stock Ownership Plan and to the Cooper Industries, Inc. Supplemental Excess Defined Contribution Plan, respectively, as follows: H. J. Riley, Jr. $5,119 and $80,269; R. E. Jackson, Jr. $5,906 and $31,667; T. A. Klebe $4,519 and $9,375; D. B. McWilliams $5,015; and $12,351; and D. K. Schumacher $7,875 and $14,379. 11 STOCK OPTIONS The following table presents information about stock option grants to the Named Executives in the last fiscal year. OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS -------------------------------------------------------- NUMBER OF PERCENT OF TOTAL SECURITIES OPTIONS UNDERLYING GRANTED TO EXERCISE OR GRANT DATE OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT NAME GRANTED(#) FISCAL YEAR ($/SH)(1) DATE(2) VALUE($)(3) (a) (b) (c) (d) (e) (f) ---- ---------- ---------------- ----------- ---------- ----------- Riley, Jr., H. J. ....................... 162,500 9.34 $46.10 2/13/2011 $1,873,625 Jackson, Jr., R. E. ..................... 80,000 4.60 46.10 2/13/2011 922,400 Klebe, T. A. ............................ 27,500 1.58 46.10 2/13/2011 317,075 McWilliams, D. B. ....................... 33,300 1.91 46.10 2/13/2011 383,949 Schumacher, D. K. ....................... 27,500 1.58 46.10 2/13/2011 317,075
- --------------- (1) The exercise price of each option is equal to the fair market value of Cooper's Common Stock on the date of grant of the option. (2) Options become one-third exercisable one year after the date of grant, two-thirds exercisable two years after the date of grant, and fully exercisable three years after the date of grant. An optionee may make lifetime transfers of nonqualified stock options to certain family members and trusts. (3) The Black-Scholes option pricing model was used assuming a dividend yield of 3.5%, a risk-free interest rate of 5.14%, an expected stock price volatility based on historical experience of 27.5% and an expected option life based on historical experience of seven years. The attribution of values with the Black-Scholes model to stock option grants requires adoption of certain assumptions, as described above. While the assumptions are believed to be reasonable, the reader is cautioned not to infer a forecast of earnings or dividends either from the model's use or from the values adopted for the model's assumptions. Any future values realized will ultimately depend upon the excess of the stock price on the date the option is exercised over the exercise price. The following table presents information about options exercised during 2001 and the unexercised stock options held at December 31, 2001 by the Named Executives. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS FISCAL YEAR-END (#) AT FISCAL YEAR-END ($) SHARES EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE ACQUIRED VALUE (d) (e) NAME ON EXERCISE(#) REALIZED($) --------------------------- --------------------------- (a) (b) (c) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- -------------- ----------- ----------- ------------- ----------- ------------- Riley, Jr., H. J. .......... 0 $0 243,499 297,501 $0 $0 Jackson, Jr., R. E. ........ 0 0 87,499 131,001 0 0 Klebe, T. A. ............... 0 0 30,298 47,502 0 0 McWilliams, D. B. .......... 0 0 53,366 57,634 0 0 Schumacher, D. K. .......... 0 0 41,332 46,168 0 0
12 LONG-TERM AWARDS The following table presents information about long-term incentive awards granted in 2001 to the Named Executives under the Stock Incentive Plan. The performance-based share awards may be earned based on achievement of performance goals over a four-year period commencing January 1, 2001 and ending on December 31, 2004. The performance goals are based on compound growth in earnings per share over the performance period, with a threshold of 6% compound growth before any awards are earned. At least 15% compound growth in earnings per share must be achieved for a payout at the maximum level shown in the table. The awards, to the extent earned, will be distributed in shares of Cooper Common Stock, or at the executive's election as approved by the Management Development and Compensation Committee, all or a portion of the earned award may be paid in cash. LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK PRICE BASED PLANS --------------------------------------------- (a) (b) (c) (d) (e) (f) NUMBER OF PERFORMANCE OR SHARES, UNITS, OTHER PERIOD OR OTHER UNTIL MATURATION NAME RIGHTS(#) OR PAYOUT THRESHOLD TARGET MAXIMUM ---- -------------- ---------------- ------------- ------------- ------------- Riley, Jr., H. J. ........... 13,500 12/31/2004 13,500 shares 54,200 shares 75,800 shares Jackson, Jr., R. E. ......... 6,700 12/31/2004 6,700 shares 26,700 shares 37,300 shares Klebe, T. A. ................ 2,300 12/31/2004 2,300 shares 9,200 shares 12,800 shares McWilliams, D. B. ........... 2,700 12/31/2004 2,700 shares 10,800 shares 15,200 shares Schumacher, D. K. ........... 2,300 12/31/2004 2,300 shares 9,200 shares 12,800 shares
13 COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG COOPER INDUSTRIES, INC., S&P 500 AND COOPER INDUSTRIES PEER GROUP The following graph compares the total shareholder return on Cooper's Common Stock for the five-year period December 31, 1996 through December 31, 2001 to the total returns for the same period of the Standard & Poor's 500 Stock Index and a Cooper Peer Group Index. The cumulative total return is based upon an initial investment of $100 on December 31, 1996 with dividends reinvested. We currently operate in two primary business areas: electrical products and tools and hardware. The Cooper Peer Group Index consists of corporations whose businesses are representative of these business segments and include: (1) Danaher Corporation, (2) Emerson Electric Co., (3) Hubbell Incorporated (Class B), (4) The Stanley Works, (5) Thomas and Betts Corporation and (6) U.S. Industries. The Cooper Peer Group has been weighted in accordance with each corporation's market capitalization (closing stock price multiplied by the number of shares outstanding) as of the beginning of each of the five years covered by the performance graph. The weighted return for each year is the sum of the products obtained by multiplying (a) the percentage that each corporation's market capitalization represents of the total market capitalization for all corporations in the Index for such year by (b) the total shareholder return for that corporation for such year. CUMULATIVE TOTAL RETURN BASED UPON AN INITIAL INVESTMENT OF $100 ON DECEMBER 31, 1996 WITH DIVIDENDS REINVESTED [PERFORMANCE GRAPH]
DEC-96 DEC-97 DEC-98 DEC-99 DEC-00 DEC-01 ------ ------ ------ ------ ------ ------ Cooper Industries Inc. ............................. $100 $119 $119 $104 $123 $ 96 S&P 500(R).......................................... $100 $133 $171 $208 $189 $166 Custom Composite Index (6 Stocks)................... $100 $125 $130 $121 $158 $132
14 The following graph is offered as an additional measure of Cooper's stock price performance in recent years. The graph compares Cooper's return with the return from an equal investment in the Cooper Peer Group made at the beginning of the five-year period ended December 31, 2001, adjusted for dividend reinvestments, but with no adjustment for changes in market capitalization. CUMULATIVE TOTAL RETURN BASED UPON AN INITIAL INVESTMENT OF $100 ON DECEMBER 31, 1996 WITH DIVIDENDS REINVESTED [PERFORMANCE GRAPH]
DEC-96 DEC-97 DEC-98 DEC-99 DEC-00 DEC-01 ------ ------ ------ ------ ------ ------ Cooper Industries Inc. .............................. $100 $119 $119 $104 $123 $ 96 Custom Composite Index (6 Stocks).................... $100 $133 $125 $111 $109 $102
15 MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION RESPONSIBILITIES OF THE COMMITTEE The Management Development and Compensation Committee (the "Committee") establishes compensation programs for our executive officers that are designed to benefit the long-term interests of Cooper and its shareholders. The Committee also reviews the performance of our executive officers and other key executives every year. The Committee also conducts a complete review of succession planning and executive development at least once every three years. COMPENSATION PHILOSOPHY The Committee's policy is to compensate and reward executive officers and other key executives based on the combination of some or all of the following factors, depending on the executive's responsibilities: corporate performance, business unit performance and individual performance. The Committee evaluates corporate performance and business unit performance by reviewing the extent to which Cooper has accomplished strategic business objectives, such as sales growth, improved profitability, cash flow and management of working capital. The Committee evaluates individual performance by comparing actual accomplishments to the objectives established under Cooper's Management Development and Planning Program. The Committee assesses individual performance as follows: - At the beginning of each performance period, the Committee establishes specific objectives to be used as the basis for evaluating the executive's performance. - During the performance period, the Committee holds periodic discussions on the status of performance objectives. - At the end of the performance period, the Committee reviews the executive's progress on the performance objectives so that there is a clear understanding of what the executive has accomplished. - The Committee determines increases in base salary and annual cash incentive awards based on actual accomplishments during the performance period. - The Committee determines long-term stock incentive awards based on our sustained earnings per share performance over a four-year period. The Committee also takes into account the compensation practices of comparable manufacturing companies (as described below) to ensure that Cooper is able to attract, retain and reward executive officers whose contributions are critical to our long-term success. In developing and administering Cooper's executive compensation program, the Committee receives advice and counsel from Frederic W. Cook & Company, an executive compensation consulting firm. Frederic W. Cook & Company has provided such consulting services to Cooper and other corporations for many years. In 2001, the Committee also received executive compensation consulting services from The Hay Group. There are three major components of Cooper's executive compensation program: a base salary, an annual cash bonus and long-term stock incentive awards. ANNUAL COMPENSATION Base Salary The Committee sets the base salary range for each executive officer using the Hay Group Inc. Job Evaluation System, which provides a comparative assessment of know-how, problem-solving and accountability factors in the job rating process. The Committee also considers the competitiveness of the base salary because the Committee believes it is critical to Cooper's success to attract and retain the best qualified executives. The Committee uses the annual Hay Survey of Compensation Practices to set the salary ranges for executive officers. In 2001, the Hay Survey of Compensation Practices included 276 industrial companies with revenues in excess of $1 billion. The Committee believes that using this broad group of companies to establish salary levels is more appropriate than 16 using a smaller group, such as the peer group used in the share performance graph, because it minimizes the effect of any one company on the average. The Committee's policy is to: (1) establish a salary range for the Chief Executive Officer and the other executives named in the Summary Compensation Table (the "Named Executives"); (2) set the midpoint of the range near the average of the Hay Survey; and (3) pay compensation within the established range. The Committee takes into account the individual's duties, responsibilities, work experience, impact on the business and individual performance when setting each executive's actual base salary. The Committee verifies the Hay data through use of a separate compensation study, known as the Total Compensation Measurement, which includes information on 331 companies compiled by Hewitt Associates. During 2001, the actual base salaries for the Named Executives approximated the 50th percentile of the Hay Survey. The Committee typically reviews salaries of senior executive officers at 12- to 15-month intervals, depending on individual performance and position in the salary range. The Committee makes base salary adjustments primarily based on individual performance with due consideration given to immediate past performance and business decisions that impact our future growth and economic stability. Annual Incentive Compensation The Management Annual Incentive Plan ("MAIP") is a bonus plan for senior executives that is designed to link executive compensation to achievement of our short-term business objectives. The maximum annual award that may be granted to a participant under the MAIP is $2.5 million. The Committee may pay awards earned in cash or in Cooper Common Stock or a combination of cash and stock. Subject to the Committee's approval, a participant in the MAIP may request to have all or a portion of his or her award paid in shares of Cooper stock. In February 2001, the Committee established the performance goals and maximum bonus opportunities under the MAIP for Named Executives and for other executive officers. The performance goals were based upon increases in earnings per share in 2001 over 2000. The bonus opportunity for the Named Executives ranges from 0% to 150% of the salary range midpoint, depending on the executive's position. Under the MAIP, the Committee has discretion to adjust the amount of any award that would otherwise be payable upon achievement of the performance goals based on its assessment of an individual's actual performance. In February 2002, the Committee determined that performance in 2001 did not meet the threshold level established in February 2001 for the award of bonuses under the MAIP. Accordingly, no bonuses were awarded to any of the Named Executives based upon the Company's performance in 2001. LONG-TERM EQUITY BASED COMPENSATION Stock Incentive Compensation The Committee provides incentives to executive officers that are tied to the long-term performance of Cooper in order to link the executive's interests to those of the shareholders and to encourage stock ownership by executives. In November 1995, the Committee adopted the Stock Incentive Plan ("Stock Plan"), which was approved by Cooper's shareholders in April 1996. The Stock Plan provides for the granting of stock options and performance-based share awards to the Named Executives and other key executives. The Committee determines the number of options and performance-based share awards granted based on actual compensation, assumptions relating to stock price and earnings growth, and recommendations from Frederic W. Cook & Co., a compensation consulting firm that advises the Committee on competitive practices among comparable manufacturing companies. The Committee believes that the stock options and performance-based share awards granted under the Stock Plan provide a significant link between the compensation of the Named Executives and other key executives on the one hand and Cooper's long-term goals and shareholders' interests on the other. In February 1998, the Committee granted performance-based share awards under the Stock Plan to the Named Executives for a four-year performance period beginning on January 1, 1998 and ending on December 31, 2001. The Committee set performance goals tied to cumulative compound growth in earnings per share during the performance period. The Committee determined that compound earnings per share growth over the period of at least 6% was required before any award would be earned and at least 15% was required for a payout at the maximum level. 17 In February 2002, the Committee determined that the cumulative increase in Cooper's operating earnings per share during the four-year performance period ending December 31, 2001 was below the minimum level for any shares to be awarded. As a result, based on the performance criteria established in 1998, the Committee determined that no shares were earned by the Named Executives or other executive officers under the four-year performance cycle ending on December 31, 2001. In February 2001, the Committee granted stock options and performance-based share awards to the Named Executives under the Stock Plan. The Committee also granted stock options to other executive, and middle and upper level employees. The stock options expire ten years after the date of grant and become exercisable over a three-year period with one-third vesting in each successive year so that the option is fully exercisable after three years. The options granted in 2001 have an exercise price equal to the fair market value on the date of grant, which was $46.10 per share. The performance-based share awards were granted to the Named Executives for a four-year performance period beginning on January 1, 2001 and ending on December 31, 2004. The Committee set performance goals tied to the cumulative compound growth in earnings per share during the performance period. Cooper must have cumulative compound growth in earnings per share of at least 6% before any awards can be earned and growth of at least 15% for a payout at the maximum award level. The Stock Plan also provides for the granting of restricted stock awards to the Named Executives and other key executives. Restricted stock may be awarded in such numbers and at such times as the Committee determines. Restricted stock is subject to such terms, conditions or restrictions, as the Committee deems appropriate, including restrictions or transferability, requirements of continued employment, individual performance or the financial performance of Cooper. The Committee establishes the period of vesting and forfeiture restrictions at the time of grant, provided that vesting must be at least one year from the date of grant, except in the event of a Change in Control. CHIEF EXECUTIVE OFFICER COMPENSATION Effective February 1, 2001, the Committee approved an increase of $60,000 in Mr. Riley's annual base salary. The Committee based Mr. Riley's base salary adjustment on a review of the compensation levels of chief executive officers of companies of comparable size and in similar businesses, using the competitive surveys previously discussed. The Committee also considered financial results, revenue growth and market expansion as well as Mr. Riley's overall performance as Chairman, President and Chief Executive Officer. Mr. Riley did not receive a salary increase in 2000. In February 2002, under the MAIP, the Committee determined that Cooper's performance was below the threshold performance goal established in February 2001 for earning an annual incentive bonus. Accordingly, Mr. Riley received no bonus award for 2001. Also in February 2002, the Committee determined that Mr. Riley earned no performance shares from the performance-based stock award granted in 1998 under the Stock Plan. In 2001, the Committee granted stock options and performance-based share awards under the Stock Plan to Mr. Riley. The options are shown on the table "Option Grants in Last Fiscal Year" on page 12 and the performance-based share awards are shown in the table "Long-Term Incentive Plan -- Awards in Last Fiscal Year" on page 13. The Committee determined the number of shares awarded to Mr. Riley using the same criteria as for other executive officers. The individual award was based on actual compensation, assumptions relating to stock price and earnings growth and the recommendations and advice of Frederic W. Cook & Co., a compensation consulting firm. The Committee believes that the stock options and performance share awards granted to Mr. Riley are competitive with awards provided to chief executive officers of other similar companies in related businesses. Through the stock options and performance share awards, a significant portion of Mr. Riley's compensation is tied directly to our financial performance and overall return to shareholders. STOCK OWNERSHIP GUIDELINES Effective January 1, 1996, the Committee established stock ownership guidelines for executive officers and certain other key executives as a way to align more closely the interests of the key executives with those of the shareholders. These key executives were required to make continuing progress toward compliance with the guidelines during the five-year period beginning January 1, 1996 and to fully comply with the guidelines by 18 December 31, 2000. Any officers appointed after January 1996 are subject to the guidelines and have a period of five years from appointment to comply. The guidelines are as follows: - Chief Executive Officer -- 4.5 times base salary - Other Senior Officers, including those other officers named in the Summary Compensation Table -- 3 times base salary - Other officers and division presidents -- 1.5 times base salary At its February 2002 meeting, the Committee reviewed the progress of covered executives relative to compliance with the stock ownership guidelines and determined that all of the Named Executives are currently in compliance with the guidelines. OMNIBUS BUDGET RECONCILIATION ACT IMPLICATIONS The Committee has reviewed the provisions of the Omnibus Budget Reconciliation Act of 1993 and the regulations issued under the Act that impose a limit, with certain exceptions, on the amount that a publicly held corporation may deduct in any year for the compensation paid to its five most highly compensated officers. The Committee believes that the bonuses paid pursuant to the MAIP and the awards and options granted pursuant to the Stock Plan will qualify as "performance-based" compensation and will meet the requirements of the current tax law and Internal Revenue Service regulations so as to preserve the tax deductibility of all executive compensation. Robert M. Devlin, Chairman Sir Ralph H. Robins Warren L. Batts Dan F. Smith Clifford J. Grum James R. Wilson
OTHER COMPENSATION MATTERS PENSION BENEFITS Upon retirement, the Named Executives may be entitled to retirement benefits from the Salaried Employees' Retirement Plan of Cooper Industries, Inc. ("Cooper Retirement Plan"), the Cooper Industries, Inc. Supplemental Excess Defined Benefit Plan ("Supplemental Plan") and the Crouse-Hinds Officers' Disability and Supplemental Pension Plan ("Crouse-Hinds Officers' Plan"). Under the Cooper Retirement Plan, Cooper credits the individual's plan account four percent of each year's total compensation up to the Social Security wage base for the year, plus eight percent of each year's total compensation that exceeds the Social Security wage base. For this purpose, total compensation is cash remuneration paid by Cooper to or for the benefit of a member of the Cooper Retirement Plan for services rendered while an employee. For the Named Executives, the total compensation is shown in columns (c) and (d) of the Summary Compensation Table. However, neither performance-based share awards shown in column (h) of the Summary Compensation Table nor deferred compensation is included in total compensation for purposes of the Cooper Retirement Plan. This formula for determining benefit credits became effective on July 1, 1986. Benefits for service through June 30, 1986 were determined based on the retirement plan formula then in effect and converted to initial balances under the Cooper Retirement Plan. The participant receives interest credits on both initial balances and pay-based credits for benefits earned after July 1, 1986 until the participant begins to receive benefit payments. The Plan's interest credit rate for 2001 was 6.25% and will be 2.25% for 2002. The participant may elect to receive benefits at retirement payable in the form of an escalating annuity, a level annuity with or without survivorship or a lump-sum payment. The Supplemental Plan is an unfunded, nonqualified plan that provides to certain employees, including the Named Executives, Cooper Retirement Plan benefits that cannot be paid from a qualified, defined benefit plan because of Internal Revenue Code restrictions. The Supplemental Plan also provides benefits equal to what would have been paid under the Cooper Retirement Plan on amounts of deferred compensation had those amounts not been deferred. The Crouse-Hinds Officers' Plan is an unfunded, nonqualified plan that we assumed following the 19 acquisition of Crouse-Hinds Company. Mr. Riley may receive benefits under the Crouse-Hinds Officers' Plan in addition to amounts payable under our other retirement plans. PENSION BENEFITS
CREDITED YEAR ANNUAL SERVICE AS OF INDIVIDUAL ESTIMATED JANUARY 1, REACHES BENEFIT AT 2002 AGE 65 AGE 65 ------------- ---------- ---------- Riley, Jr., H.J. ........................................... 39.2 2005 $695,000 Jackson, Jr., R. E. ........................................ 26.0 2006 135,000 Klebe, T. A. ............................................... 6.7 2019 80,000 McWilliams, D. B. .......................................... 30.1 2006 130,000 Schumacher, D. K. .......................................... 21.9 2018 109,000
For each Named Executive, the table above shows current credited years of service, the year each reaches age 65, and the projected annual pension benefit at age 65 under the Cooper Retirement Plan, the Supplemental Plan and the Crouse-Hinds Officers' Plan. The projected annual pension benefit is based on the following assumptions: benefits paid on a straight-life annuity basis; continued compensation at the 2001 levels; and an interest credit rate of 2.25%. CHANGE IN CONTROL ARRANGEMENTS Management Continuity Agreements Cooper has Management Continuity Agreements with the Named Executives and certain other key executives. The purpose of the agreements is to encourage the executives to carry out their duties when there is a possibility of a change in control of Cooper. The agreements are not ordinary employment agreements and do not provide any assurance of continued employment. If, during the two-year period following a change in control, Cooper or its successor terminates the executive's employment other than for "cause" or the executive voluntarily terminates employment for "good reason" (as such terms are defined in the agreements), the executive shall receive a lump-sum cash payment equal to a multiple (3x in the case of the Chief Executive Officer, Chief Operating Officer and Senior and Executive Vice Presidents and 2x in the case of the other key executives) of the sum of the executive's salary and bonus, together with the continuation of employee benefits for the number of years equal to the multiplier used to calculate the lump-sum severance payment. The executive would also receive a pro rata payment of their target bonus for the year of termination and a lump-sum payment equal to the incremental benefits and contributions that the executive would have received under Cooper's various retirement and savings plans for the number of years equal to their multiplier, taking into account the severance benefits received by the executive. Finally, the agreements provide for a tax gross-up of any excise tax due under the Internal Revenue Code for these types of agreements. Management Annual Incentive Plan The Named Executives participate in the Management Annual Incentive Plan, which provides an annual bonus opportunity and is designed to tie annual incentive compensation to overall corporate and individual performance. Under the Plan, which is administered by the Management Development and Compensation Committee of the Board (the "Committee"), bonuses are based upon performance goals set by the Committee in February of the bonus year. The Committee may make the award in cash or stock or a combination of both. The Plan provides that upon a change in control of Cooper, all outstanding awards will be deemed earned on a pro rata basis at the target level and will be paid in cash to each eligible executive. Stock Incentive Plan The Named Executives have been granted stock options and performance-based share awards under the Stock Incentive Plan ("Stock Plan"). Options granted under the Stock Plan vest over a period of three years and have a 10-year term. Performance-based share awards granted under the Stock Plan may be earned based on achievement over a specified period of performance goals established by the Committee. At the end of the performance period, 20 performance shares earned, if any, are issued and cash equal to the dividends on the performance shares is paid. The Stock Plan provides that upon a change in control of Cooper, all options will be canceled and Cooper will make a cash payment to the Named Executives equal to the difference in the fair market value of Cooper Common Stock (or the highest price actually paid for the stock in connection with the change in control, if higher) and the option price. In addition, all outstanding performance shares will be deemed earned at the target level and the Company shall issue stock certificates representing such performance shares. DIRECTOR COMPENSATION Cooper pays nonemployee directors an annual retainer fee of $45,000. In addition, nonemployee directors are paid meeting attendance fees of $1,000 for regular committee meetings and $2,000 for special Board or committee meetings. An additional annual retainer of $6,000 is paid to each nonemployee chairman of a standing committee. In lieu of receiving the annual retainer and meeting fees in cash, each nonemployee director may elect, under the Directors Deferred Compensation Plan, to defer receipt of such amounts until a date determined by the director or until retirement from the Board. Alternatively, each nonemployee director may elect to receive all or a portion of the annual retainer fee and meeting fees in shares of Cooper Common Stock instead of cash, under the Directors' Retainer Fee Stock Plan. The Directors' Retainer Fee Stock Plan also provides that each nonemployee director may elect to defer the receipt of all or a portion of the shares of Common Stock otherwise payable under the Plan. Prior to February 1996, under the Cooper Industries, Inc. Directors Retirement Plan, any director with at least 10 years of service as a director (counting a fractional year as a full year), or any director who retired in accordance with the Board's director tenure policy, was entitled to receive a benefit amount equal to the annual basic retainer for nonemployee directors in effect at the time of retirement, exclusive of any special compensation for services as a committee chairman or attendance at meetings. The benefit amount was payable annually in January for the preceding year, or quarterly if elected, for the number of years in which the director served on the Board (counting a fractional year as a full year), with payment to cease with the death of the retired director. In February 1996, the Board terminated the Plan and no additional benefits have accrued after April 30, 1996. However, any benefits accrued under the Plan at that time were grandfathered. Under the Directors' Stock Plan, which was approved by the shareholders in April 1996, each nonemployee director receives an annual stock award of 500 shares of Cooper Common Stock on each annual meeting date. Each newly elected or appointed nonemployee director receives, upon election or appointment, a pro rata stock award according to the time remaining before the next annual meeting date. Each nonemployee director may elect under the Directors' Stock Plan to defer receipt of all or a portion of the shares of Common Stock payable under the Plan until a date determined by the director or until retirement from the Board. Each nonemployee director is also granted annually a stock option for 1,000 shares at fair market value under the Directors' Stock Plan. The option vests on the third anniversary of the date of grant and has a 10-year term. As of December 31, 2001, options for 50,000 shares were outstanding under the Directors' Stock Plan. 21 AUDIT COMMITTEE REPORT The Audit Committee is composed of six independent directors and acts under a written charter adopted by the Board of Directors. Cooper's management is responsible for the quality and integrity of the Company's financial reporting process including the systems of internal controls, and the preparation of the Company's financial statements. The independent auditors, Ernst & Young LLP, are responsible for auditing those financial statements and for expressing an opinion on the conformity of the financial statements with generally accepted accounting principles. The Audit Committee's responsibility is to monitor and review these processes on behalf of the Board of Directors. It is not the Audit Committee's duty or responsibility to conduct auditing or accounting reviews and procedures. Therefore, the Audit Committee has relied, without independent verification, on management's representation that the financial statements have been prepared in accordance with generally accepted accounting principles and on the representations of the independent auditors included in their report on Cooper's financial statements. In fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2001, with Cooper's management and representatives of the independent auditors. The Audit Committee discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended. In addition, the Audit Committee discussed with the independent auditors their independence from Cooper and its management, including the matters in the written disclosures required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees. In reliance on its review of the audited financial statements and the discussions referred to above, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in Cooper's Annual Report on Form 10-K for the year ended December 31, 2001, for filing with the Securities and Exchange Commission. James R. Wilson, Chairman H. Lee Scott Linda A. Hill Dan F. Smith Sir Ralph H. Robins Gerald B. Smith
RELATIONSHIP WITH INDEPENDENT AUDITORS The Board selects our independent auditors for each year. During the year ended December 31, 2001, Ernst & Young LLP was employed principally to perform the annual audit and to render other services. Audit fees for the last fiscal year were $880,000 and all other fees were $2,810,488, including audit related services of $1,389,160 and nonaudit services of $1,421,328. Audit related services generally include fees for pension and statutory audits, accounting consultations, SEC registration statements and business acquisitions. Nonaudit services consist primarily of fees for tax services. The Audit Committee has considered the compatibility of nonaudit services with the auditors' independence. Representatives of Ernst & Young will be present at the meeting and will be available to answer questions and discuss matters pertaining to the Report of Independent Auditors contained in the financial statements included in Cooper's Annual Report on Form 10-K for the fiscal year ended December 31, 2001. Representatives of Ernst & Young will have the opportunity to make a statement, if they desire to do so. FORM 10-K A copy of the Annual Report on Form 10-K for the fiscal year ended December 31, 2001 as filed with the Securities and Exchange Commission is included in the Annual Report sent to you with this proxy statement. It will also be available on our home page at www.cooperindustries.com or may be obtained upon request and without charge, by writing: Public Affairs Department Cooper Industries, Inc. P.O. Box 4446 Houston, Texas 77210 22 PROPOSAL 2 SHAREHOLDER PROPOSAL Seven shareholders have informed us that they intend to present jointly the following proposal at the meeting. The shareholders are as follows: Benedictine Sisters, 530 Bandera Road, San Antonio, Texas 78228, owner of 50 shares of Cooper Common Stock; the Loretto Literary and Benevolent Institution (also known as the Sisters of Loretto), 527 Larkhill Court, St. Louis, Missouri 63119-4943, owner of 458 shares of Cooper Common Stock; Domini Social Investments LLC, 536 Broadway, 7th Floor, New York, New York 10012-3915, owner of 27,900 shares of Cooper Common Stock; the Sisters of Charity Saint Elizabeth, P.O. Box 476, Convent Station, New Jersey 07961-0476, owner of 45 shares of Cooper Common Stock; the Congregation of Holy Cross, Southern Province, 2111 Brackenridge Street, Austin, Texas 78704-4322, owner of 75 shares of Cooper Common Stock; St. Joseph Health System, P.O. Box 14132, Orange, California 92868-1532, owner of 100 shares of Cooper Common Stock; and the Walden/BBT Domestic Social Index Fund c/o Boston Trust Investment Management, Inc., 40 Court Street, Boston, Massachusetts 02108, owner of 600 shares of Cooper Common Stock. SUSTAINABILITY REPORT TO SHAREHOLDERS Whereas, the global economy presents corporations with the challenge of creating sustainable business relationships by participating in the sustainable development of the communities in which they operate. The World Commission on Environment and Development defined sustainable development as "development which meets the needs of the present without compromising the ability of future generations to meet their own needs." (Our Common Future, 1997) We believe the ability of corporations to continue to provide goods/service in our increasingly interdependent world depends on their acceptability to the societies where they do business. Good corporate citizenship goes beyond the traditional functions of creating jobs and paying taxes, to include corporate practices designed to protect human rights, worker rights, land and the environment. A "Millennium Poll on Corporate Social Responsibility" interviewed 25,000 citizens in 23 countries and found that two out of every three people want corporations to contribute to broader societal goals. (Environics International Ltd., October 1999) Concerned investors evaluate companies on their financial, environmental and social performance -- the triple bottom line. Some companies have published sustainability reports and are taking a long-term approach to creating shareholder value through embracing opportunities and managing risks derived from economic, environmental and social developments. We believe sustainability reporting should be included in our company's annual report. According to Dow Jones Sustainability Group, sustainability includes: "Encouraging long lasting social well being in communities where they operate, interacting with different stakeholders (e.g. clients, suppliers, employees, government, local communities and non-governmental organizations) and responding to their specific and evolving needs thereby securing a long term 'license to operate,' superior customer and employee loyalty and ultimately superior financial returns." (www.sustainability-index.com; March 2000) We believe companies need to adopt policies that engage institutions in sustainable economic development strategies to improve the social well being of communities where they operate. We believe corporate sustainability includes a commitment to pay a sustainable living wage to employees. Our company needs to make sure workers have the purchasing power to meet their basic needs. A recent purchasing power index study conducted in 15 cities in Mexico found that it takes four to five Mexican minimum wages to support a family of four (Making the Invisible Visible, Center for Reflection Education and Action, June 2001). We believe paying sustainable wages contributes to community development and employee loyalty to the company. The sustainability of corporations, we believe, is connected to the economic sustainability of their workers and the communities where corporations operate and sell their products. Effective corporate policies can benefit both communities and corporations. RESOLVED: shareholders request the Board of Directors to prepare at reasonable expense a report dealing with the social and environmental issues related to sustainability. A summary of the report should be provided to shareholders by October 2002. 23 SUPPORTING STATEMENT We believe the report should include: 1. The company's operating definition of sustainability. 2. A review of current company policies and practices related to social, environmental and economic sustainability. 3. A summary of long-term plans to integrate sustainability objectives throughout the company's operations. RECOMMENDATION OF THE BOARD OF DIRECTORS THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 2. We believe that our current policies and practices address the concerns of the shareholder proposal concerning social and environmental issues related to sustainability. Simply put, we believe sustainability is good corporate citizenship. Our Code of Ethics and Business Conduct underlies our core values and specifically notes that "Cooper values its good name and its role as a leading citizen in all communities in which it does business." We are committed to enhancing the quality of life in the communities in which we operate by providing financial support to local non-profit organizations, fostering our employees' volunteer efforts and operating safe and environmentally responsible facilities. Cooper and the Cooper Industries Foundation contribute approximately $3.5 million each year to charitable organizations operating in communities where we do business. There are no geographic limitations. Cooper has extensive policies and an active program to ensure that Cooper conducts its operations in a manner that provides a safe and healthy workplace and safeguards the environment. Our compensation policy and practice are to pay wages and benefits that are competitive in the respective communities in which we operate in order to attract and retain quality employees. Wages and benefits must also be competitive within our industry in order to operate our businesses profitably. In Mexico and various other countries in which we operate, wages paid to our employees are well above the minimum wage standards. Cooper's track record demonstrates that, wherever we operate, we work hard to be a good corporate citizen including promoting social and environmental issues related to sustainability. Furthermore, Cooper already publishes various reports on its website (www.cooperindustries.com) in the "About Cooper" section specifically addressing these matters for shareholders and any other interested parties. Therefore, the Board of Directors believes that conducting a special review and preparing a special report to shareholders on social and environmental issues related to sustainability are unnecessary and would not be an effective use of corporate resources. We remain committed to treating all employees with dignity, fairness and respect, protecting the health and safety of our employees, protecting the environment, and enhancing the quality of life in the communities in which we operate. For these reasons, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 2. 24 PROXY [COOPER LOGO] COOPER INDUSTRIES, INC. PROXY FOR ANNUAL MEETING OF SHAREHOLDERS APRIL 5, 2002 SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned shareholder of Cooper Industries, Inc. ("Cooper") appoints Diane K. Schumacher and Terrance V. Helz, or either of them, proxies, with full power of substitution, to vote all shares of stock that the shareholder would be entitled to vote if present at the Annual Meeting of Shareholders of Cooper on Friday, April 5, 2002, at 11:00 a.m. (Central Time) in the J.P. Morgan Chase Center Auditorium, 601 Travis Street, Houston, Texas, and at any adjournments or postponements thereof, with all powers the shareholder would possess if present. The shareholder hereby revokes any proxies previously given with respect to such meeting. THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE, BUT IF NO SPECIFICATION IS MADE, IT WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR (W.L. BATTS, R.M. DEVLIN, L.A. HILL, H.J. RILEY, JR.) AND AGAINST PROPOSAL 2, AND IN THE DISCRETION OF THE PROXIES ON OTHER MATTERS AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. This card also constitutes voting instructions for any shares held for the shareholder in Cooper's Dividend Reinvestment and Stock Purchase Plan and the Cooper Industries, Inc. Retirement Savings and Stock Ownership Plan, as well as any shares acquired through Cooper's Employee Stock Purchase Plan that are being held in a book-entry account at EquiServe Trust Company N.A., as described in the Notice of Meeting and Proxy Statement. (Please date and sign on the reverse side) - -------------------------------------------------------------------------------- o FOLD AND DETACH HERE o HOW TO RECEIVE YOUR ANNUAL REPORT AND PROXY STATEMENT ON-LINE You may receive future Cooper Industries, Inc. annual reports and proxy statements on-line on the Internet by submitting your consent to Cooper. This will save Cooper postage and printing expenses and have information available to you faster. If you have already consented to receive future annual reports and proxy statements on-line, no action is necessary because your consent remains effective until you change or revoke your consent. Most shareholders can elect to view future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail. If you are a registered shareholder and you wish to consent to Internet delivery of future annual reports and proxy statements, follow the instructions set forth below. o Log onto the Internet and go to the web site: http://www.econsent.com/cbe/ (If you are voting your shares this year using the Internet, you can link to this web site directly from the web site where you vote your shares.) o You will be asked to consent to Internet delivery of annual meeting materials and provide your TAXPAYER I.D. NUMBER (U.S. SOCIAL SECURITY NUMBER), E-MAIL ADDRESS AND ACCOUNT NUMBER. Your account number is located above your name on the proxy card. You will not need to provide an account number if you hold shares through the Cooper Industries' Retirement Savings and Stock Ownership Plan. If you are not a registered shareholder and you wish to consent to Internet delivery of future annual reports and proxy statements, please contact the bank, broker or other holder of record through which you hold your shares and inquire about the availability of such option for you. If you consent, your account will be so noted and, when Cooper's 2002 Annual Report and the Proxy Statement for the 2003 Annual Meeting of Shareholders become available, you will be notified by e-mail on how to access them on the Internet. If you do elect to receive your Cooper materials via the Internet, you can still request paper copies by contacting Cooper Industries, Inc. at 600 Travis, Suite 5800, Houston, Texas 77002-1001, Attn: Public Affairs Department. Also, you may change or revoke your consent at any time by going to the above web site and following the applicable instructions. PLEASE MARK YOUR 9327 [X] VOTES AS IN THIS EXAMPLE. THE BOARD OF DIRECTORS RECOMMENDS THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES. A VOTE AGAINST PROPOSAL 2. FOR WITHHELD FOR AGAINST ABSTAIN 1. Election of [ ] [ ] Nominees: 2. Shareholder proposal [ ] [ ] [ ] Directors. 01 W.L. Batts relating to social and 02 R.M. Devlin environmental issues 03 L.A. Hill related to sustainability. 04 H.J. Riley, Jr.
To withhold your vote for any nominee(s), write the name(s) here: - --------------------------------------- I Plan to attend the meeting. [ ] Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. ----------------------------------------- ----------------------------------------- SIGNATURE(S) DATE - -------------------------------------------------------------------------------- o FOLD AND DETACH HERE o THIS IS YOUR PROXY, [COOPER LOGO] YOUR VOTE IS IMPORTANT VOTE BY TELEPHONE OR INTERNET QUICK o EASY o IMMEDIATE You may vote your proxy 24 hours a day, 7 days a week, using either a touch-tone telephone or electronically through the Internet. Voting by touch-tone telephone or through the Internet are cost-effective and convenient ways to vote your shares. YOUR TELEPHONE OR INTERNET VOTE MUST BE RECEIVED BY 12:00 MIDNIGHT NEW YORK TIME ON APRIL 4, 2002. Telephone and Internet proxy voting is permitted under the laws of the state in which Cooper is incorporated. Your telephone or Internet vote authorizes the proxies named on the above proxy card to vote your shares in the same manner as if you marked, signed, and returned your proxy card. VOTE BY PHONE: ON A TOUCH-TONE TELEPHONE DIAL 1-877-PRX-VOTE (1-877-779-8683) FROM THE U.S. AND CANADA OR DIAL 001-201-536-8073 FROM OTHER COUNTRIES. You will be asked to enter the VOTER CONTROL NUMBER that appears on the proxy card. Then follow the instructions. OR VOTE BY INTERNET: LOG ON TO THE INTERNET AND GO TO THE WEB SITE: http://www.eproxyvote.com/cbe Click on the "PROCEED" icon - You will be asked to enter the VOTER CONTROL NUMBER that appears on the proxy card. Then follow the instructions. OR VOTE BY MAIL: Mark, sign and date your proxy card and return it in the postage-paid envelope. IF YOU ARE VOTING BY TELEPHONE OR THE INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD. YOU CAN ALSO ELECT TO RECEIVE FUTURE ANNUAL REPORTS AND PROXY STATEMENTS OVER THE INTERNET INSTEAD OF RECEIVING PAPER COPIES IN THE MAIL. SEE THE REVERSE SIDE OF THE PROXY CARD FOR ADDITIONAL DETAILS. -----END PRIVACY-ENHANCED MESSAGE-----