-----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, Q9zf+XBFgRRtyJc2ei4O827Lvi9eun3vhJesUW5nmCrUrm44z07PvREwCYYqasAW 0Z7PaV4EjJpEGOw3nzaWyw== 0000950152-99-000923.txt : 19990215 0000950152-99-000923.hdr.sgml : 19990215 ACCESSION NUMBER: 0000950152-99-000923 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENCORP INC CENTRAL INDEX KEY: 0000040888 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 340244000 STATE OF INCORPORATION: OH FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-01520 FILM NUMBER: 99534634 BUSINESS ADDRESS: STREET 1: 175 GHENT RD CITY: FAIRLAWN STATE: OH ZIP: 44333 BUSINESS PHONE: 2168694200 MAIL ADDRESS: STREET 1: 175 GHENT RD CITY: FAIRLAWN STATE: OH ZIP: 44333 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL TIRE & RUBBER CO DATE OF NAME CHANGE: 19840330 DEF 14A 1 GENCORP INC. DEF 14A 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SCHEDULE 14A (RULE 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 sec.240.14a-11(c) or sec.240.14a-12
GENCORP INC. (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) XXXXXXXXXXXXXXXX (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)(4) 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: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 GENCORP INC. 175 GHENT ROAD, FAIRLAWN, OHIO 44333 ------------------ NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ------------------ To the Shareholders of February 12, 1999 GenCorp Inc.: Fairlawn, Ohio The Annual Meeting of Shareholders of GENCORP INC. (the "Company") will be held at the Akron West Hilton Inn, 3180 West Market Street, Fairlawn, Ohio, on March 31, 1999 at 9 o'clock a.m. to consider and act on the following matters: 1. Election of Directors to serve a term of three years. (page 2) 2. Ratification of the Board of Directors' selection of Ernst & Young LLP as independent auditors to audit the books of account and other corporate records of the Company for 1999. (page 23) 3. Such other matters as may properly come before the meeting or any adjournments thereof. The Board of Directors has fixed the close of business on February 8, 1999 as the record date for the determination of shareholders entitled to receive notice of and to vote at the meeting. NOTE: THE BOARD CURRENTLY INTENDS TO CALL A SPECIAL SHAREHOLDERS MEETING LATER IN THE YEAR TO CONSIDER THE PROPOSAL ANNOUNCED DECEMBER 17, 1998 TO SPIN-OFF GENCORP'S PERFORMANCE CHEMICALS AND DECORATIVE & BUILDING PRODUCTS BUSINESSES AS A SEPARATE, PUBLICLY TRADED POLYMER PRODUCTS COMPANY. SHAREHOLDERS WILL RECEIVE ADDITIONAL INFORMATION PRIOR TO THE SPECIAL MEETING. THE COMPANY HAS A GREAT NUMBER OF SHAREHOLDERS ENTITLED TO VOTE AT THE ANNUAL MEETING WHO OWN FEWER THAN 100 SHARES. WHETHER YOU OWN ONE SHARE OR HUNDREDS OF SHARES, YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO PROMPTLY VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY. YOUR COOPERATION WILL ENABLE THE COMPANY TO AVOID ADDITIONAL EXPENSE AND DELAY. A RETURN ENVELOPE, REQUIRING NO POSTAGE IF MAILED IN THE UNITED STATES, IS ENCLOSED FOR YOUR CONVENIENCE. By order of the Board of Directors, EDWARD R. DYE, Secretary 3 ANNUAL MEETING OF GENCORP INC. 175 GHENT ROAD, FAIRLAWN, OHIO 44333 ------------------ PROXY STATEMENT February 12, 1999 This Proxy Statement is being mailed to shareholders beginning approximately February 12, 1999 in connection with the solicitation by the Company, on behalf of its Board of Directors, of proxies to be used at the Annual Meeting of Shareholders of the Company which is to be held on March 31, 1999 at the Akron West Hilton Inn, 3180 West Market Street, Fairlawn, Ohio, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. If the accompanying form of proxy is signed, dated and returned to the Company's transfer agent, The Bank of New York, it will be voted, but it may be revoked at any time before it is voted. Shares in respect of which a proxy or other written instruction is not received by the Bank will not be voted. The presence of a shareholder at the meeting does not revoke any proxy previously given. A shareholder, without affecting any vote previously taken, may revoke his or her proxy by giving notice to the Company in writing or in open meeting. Any shares held for the account of a shareholder participating in the GenCorp dividend reinvestment program will be voted in accordance with the participant's instructions set forth in the proxy returned to the Bank in respect of the shares which the shareholder holds of record. If a proxy in respect of the shares which the shareholder holds of record is not returned to the Bank, the shareholder's dividend reinvestment program shares will not be voted. The Trustees for the Company's savings and profit sharing plans, Mellon Bank N.A. and Royal Trust Corporation of Canada, and the GenCorp Trustee for the Company's Stock Incentive Compensation Plan, will each vote any shares held for participants' accounts in accordance with the confidential voting instructions returned by the participants to the Trustees, (CLo) The Bank of New York. If such confidential voting instructions are not returned, the participants' shares will be voted by the Trustees in accordance with the instructions of the Benefits Management Committee for the plans. A copy of the Company's 1998 Annual Report, including financial statements, is enclosed in the envelope with this Proxy Statement. At the close of business on February 8, 1999, there were 41,627,934 outstanding shares of Common Stock and no outstanding shares of Cumulative Preference Stock of the Company. Holders of outstanding shares of Common Stock are entitled to one vote for each full share held on the February 8, 1999 record date. 1 4 NOMINATION AND ELECTION OF DIRECTORS The Company's Code of Regulations provides for a Board of not less than seven nor more than seventeen directors, and authorizes the Board to determine from time to time the number of directors within that range that will constitute the Board by the affirmative vote of a majority of the members then in office. Additionally, the Company's Articles of Incorporation require that the Board of Directors be divided into three classes having staggered terms. Dr. Robert K. Jaedicke and General Paul X. Kelley ordinarily would retire at this Annual Meeting pursuant to a Board policy that a director should retire at the annual meeting following his or her 70th birthday. Because of the extensive effort that will be required to complete the proposed spin-off of the Company's Performance Chemicals and Decorative & Building Products businesses and start up a new publicly traded polymer products company, the Board decided to waive immediate compliance with its retirement policy in order to continue to draw upon their experience and expertise. Dr. Jaedicke has agreed to continue as a director as long as his services are required. However, because of other commitments, General Kelley, who has served as a director since 1989, has decided to retire from the Board. Additionally, Robert D. Kunisch, a director since 1992, has decided not to stand for reelection due to anticipated scheduling conflicts. The contributions of General Kelley and Mr. Kunisch to the Company throughout the years have been of inestimable value, and their participation will be greatly missed. Mr. D. Michael Steuert, who has resigned from his position as Senior Vice President and Chief Financial Officer of the Company effective February 14, 1999, has had significant involvement in planning and structuring the proposed spin-off of the polymer businesses. The Board wishes to further utilize Mr. Steuert's knowledge and experience, and has nominated him for election as a director. The Board has, therefore, reduced the number of directors constituting the Board from eleven to ten, and has set the number of directors to be elected at this annual meeting at four. The Board recommends the election of its four nominees named below. Abstentions and non-votes are counted as present for purposes of determining whether a quorum is present at the meeting. Directors are elected by a plurality of the votes cast. Votes cast for a nominee will be counted in favor of election. Withhold votes and broker non-votes will not count either in favor of, or against, election of a nominee. It is the intention of the persons named in the accompanying form of proxy, unless authorization to do so is withheld, to vote for the election of the Board's four nominees. Proxies cannot be voted for a greater number of persons than the number of directors set by the Board for election. If, prior to the meeting, a nominee becomes unable to serve as a director for any reason, the proxyholders reserve the right to substitute another person of their choice in such nominee's place and stead. It is not anticipated that any nominee will be unavailable for election. The Company has no provision for cumulative voting in the election of directors. Holders of Common Stock are, therefore, entitled to cast one vote for each share held on the February 8, 1999 record date for each nominee for director. The information set forth below is given as of December 31, 1998 unless stated otherwise. Each nominee for election and each director continuing in office has had the same principal occupation or employment during the past five years unless otherwise indicated. 2 5 NOMINEES FOR ELECTION AT THIS MEETING TO THREE-YEAR TERMS EXPIRING IN MARCH 2002: CHARLES A. CORRY Director since 1995 Chairman of the Executive Committee of USX Corporation, Pittsburgh, PA (producer of energy and metal products). Chairman and Chief Executive Officer of USX from 1989 until retirement in 1995 (President and a Director since February 1988). Director, Mellon Bank Corporation and Mellon Bank, N.A., Pittsburgh, PA. Chairman of the Organization & Compensation Committee and member of the Finance, Nominating & Corporate Governance and Executive Committees of the Board. Age 66. WILLIAM K. HALL Director since 1995 Chairman and Chief Executive Officer of Falcon Building Products, Inc., Chicago, IL (manufacturer of building products) since 1997 (President and Chief Executive Officer since 1994). Previously President and Chief Executive Officer of Eagle Industries, Inc., Chicago, IL (diversified manufacturing company) from 1988 until 1997. Director of A. M. Castle & Co., Franklin Park, IL. Member of the Finance and Organization & Compensation Committees of the Board. Age 55. DR. ROBERT K. JAEDICKE Director since 1990 Professor of Accounting at the Graduate School of Business, Stanford University, Stanford, CA since 1961 (formerly served as Dean of the Graduate School of Business from 1983 until 1990). Director of Boise Cascade Corporation, Boise, ID; Enron Corporation, Houston, TX; California Water Services Company, San Jose, CA, and State Farm Insurance Companies, Bloomington, IL. Chairman of the Audit Committee and member of the Finance and Government Affairs & Environmental Issues Committees of the Board. Age 69. D. MICHAEL STEUERT New nominee Senior Vice President and Chief Financial Officer of Litton Industries, Inc., Woodland Hills, CA (an aerospace, defense and consumer electronics company) effective February 15, 1999. Previously Senior Vice President and Chief Financial Officer of GenCorp from August 1994 until February 14, 1999; Vice President and Chief Financial Officer of the Company (from June 1990 to 1994) and Treasurer of the Company (from May 1986 to June 1990). Age 50. DIRECTORS WHOSE TERMS CONTINUE UNTIL MARCH 2000: JAMES M. OSTERHOFF Director since 1990 Executive Vice President and Chief Financial Officer of US WEST Inc., Englewood, CO (communications company) from 1991 until retirement in 1995. Previously Vice President, Chief Financial Officer of Digital Equipment Corporation, Maynard, MA (computer systems, software and services company). Director of Financial Security Assurance Holdings Ltd., New York, NY. Chairman of the Finance Committee and Member of the Audit and Government Affairs & Environmental Issues Committees of the Board. Age 62. 3 6 J. GARY COOPER Director since 1998 Chairman and Chief Executive Officer of Commonwealth National Bank, Mobile, AL (a commercial bank) since January 1998. United States Ambassador to Jamaica from November 1994 until November 1997. Previously Senior Vice President, David Volkert and Associates (engineering and architectural firm) from 1992 until 1994. Assistant Secretary of the Air Force for Manpower, Reserve Affairs, Installations and the Environment from 1989 to 1992. Active and reserve duty, United States Marine Corps until 1996. Major General, United States Marine Corps Reserve. Member of the Government Affairs & Environmental Issues and Nominating & Corporate Governance Committees of the Board. Age 62. JOHN B. YASINSKY Director since 1993 Chairman of the Board since March 1995 and Chief Executive Officer and President of the Company since July 1994. A Director of the Company since November 1993 (and President and Chief Operating Officer from November 1993 until July 1994). Previously Group President, Westinghouse Electric Corporation, Pittsburgh, PA (power generation and electrical equipment manufacturing company) from February 1993 until November 1993; President, Westinghouse Power Systems from 1990 to 1993. Director of CMS Energy Corporation, Dearborn, MI and Consumers Power Company, Jackson, MI. Chairman of the Executive Committee of the Board. Age 59. DIRECTORS WHOSE TERMS CONTINUE UNTIL MARCH 2001: DIANE E. MCGARRY Director since 1995 Senior Vice President, Eastern Operations, North American Solutions Group of Xerox Corporation, Rochester, NY (a manufacturer of copiers and electronic office equipment) since January 1999; previously Vice President/General Manager, Color Solutions Business Unit of Xerox from March 1998 until January 1999; Chairman, President and Chief Executive Officer of Xerox Canada Inc., North York, Ontario, Canada, from 1993 until March 1998; Director, Sales Operations for the United Kingdom for Rank Xerox, a joint venture between Xerox and the Rank Organization from 1991 to 1993; Executive Assistant to the Chairman and Chief Executive Officer of Xerox from February 1990 to 1991. Member of the Audit, Organization & Compensation and Government Affairs & Environmental Issues Committees of the Board. Age 49. DR. R. BYRON PIPES Director since 1993 Distinguished Visiting Scientist, College of William and Mary, Williamsburg, VA since 1998. Seventeenth President of Rensselaer Polytechnic Institute, Troy, NY from 1993 until 1998. Provost of the University of Delaware from 1991 until 1993 and Dean of the College of Engineering from 1985 until 1993. Chairman of the Nominating & Corporate Governance Committee and member of the Executive and Finance Committees of the Board. Age 57. STEVEN W. PERCY Director since 1997 Chairman and Chief Executive Officer of BP America Inc., Cleveland, OH (a petroleum extraction, refining and distribution company) since 1996; Executive Vice President of BP America and President of BP Oil in the United States from 1992 to 1996; Group Treasurer of the British Petroleum Company, plc and Chief Executive of BP Finance International from 1989 until 1992. Director of BP America, Cleveland, OH. Member of the Organization & Compensation and Nominating & Corporate Governance Committees of the Board. Age 52. 4 7 HOLDINGS OF SHARES OF THE COMPANY'S CAPITAL STOCK SECURITY OWNERSHIP OF MANAGEMENT The following table lists share ownership of the Company's Common Stock by directors and executive officers of the Company as of February 1, 1999. Unless otherwise indicated, share ownership is direct.
AMOUNT OF PERCENT BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS - ---------------------------------------------------------------------------------------------- J. Gary Cooper 613 -- Charles A. Corry 2,900 -- William K. Hall 3,535 -- Robert K. Jaedicke 1,768 -- Paul X. Kelley 2,661 -- Robert D. Kunisch 2,463 -- Diane E. McGarry 1,561 -- James M. Osterhoff 4,269(1) -- Steven W. Percy 822 -- R. Byron Pipes 1,761 -- John B. Yasinsky 591,442(2)(3) 1.42% Robert A. Wolfe 66,274(2)(3) -- Nathaniel J. Mass 97,815(2)(3) -- D. Michael Steuert 210,343(2)(3) -- Kevin M. McMullen 91,334(2)(3) -- All directors and executive officers as a group 1,458,036(2)(3) 3.50% (23 persons)
- --------------- (1) Includes 4,069 shares held indirectly through the James M. Osterhoff trust. (2) Includes shares subject to stock options which may be exercised within 60 days of February 1, 1999 as follows: Mr. Yasinsky, 490,300 shares; Mr. Wolfe, 48,750 shares; Mr. Mass 88,750 shares; Mr. Steuert, 142,000 shares; Mr. McMullen, 85,000 shares, and all executive officers as a group, 1,094,400 shares. Nonemployee directors do not participate in the Company's stock option plan. (3) Includes the approximate number of shares credited to the individual's account as of February 1, 1999 under the GenCorp Retirement Savings Plan, and where applicable, under the GenCorp Stock Incentive Compensation Plan and under the GenCorp Profit Sharing Retirement and Savings Plan, a savings plan for salaried employees sponsored by the Company prior to September 1989. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's executive officers and directors to file reports of ownership and changes in ownership of GenCorp equity securities and certain benefit plan interests with the Securities and Exchange Commission and the New York and Chicago Stock Exchanges and to furnish to the Company copies of all Section 16(a) forms which they file. Based upon its review of copies of Section 16(a) forms received by it, or written representations received from certain reporting persons, the Company believes that its executive officers and directors have complied with all applicable Section 16(a) filing requirements for fiscal 1998. 5 8 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table lists the only persons believed by the Company to be the beneficial owners of more than five percent of the 41,525,640 shares of the Company's Common Stock outstanding as of December 31, 1998. The dates applicable to the beneficial ownership indicated are set forth in the footnotes below.
SHARES PERCENT BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS - ------------------------------------------------------------------------------------------ GenCorp employee savings plans 5,831,479 14.04%(1) 175 Ghent Road Fairlawn, OH 44333 FMR Corp. 4,406,173 10.61%(2) 82 Devonshire Street Boston, MA 02109 Mario J. Gabelli/Gabelli Funds Inc. 3,217,875 7.75%(3) One Corporate Center Rye, NY 10580 Franklin Resources, Inc. 2,739,300 6.60%(4) 777 Mariners Island Boulevard San Mateo, CA 94404 The Prudential Insurance Company of America 2,176,745 5.24%(5) Prudential Plaza Newark, NJ 07102
- --------------- (1) Shares held at December 31, 1998 by the Trustee for the plans, Mellon Bank, included 491,669 shares held for the GenCorp Profit Sharing Retirement and Savings Plan, and 5,339,810 shares held for the GenCorp Retirement Savings Plan. Shares are voted by the Trustee in accordance with instructions of the participating employees to whose accounts such shares are allocated, except that shares for which no employee instructions are received and shares held for the plans which have not been allocated to participants' accounts are voted by the Trustee in accordance with instructions of the Benefits Management Committee ("Committee") for the plans. The Committee presently consists of four persons, all of whom are officers of the Company. (2) FMR reported that it had sole power to vote 252,100 shares, sole dispositive power with respect to 4,406,173 shares and no shared voting or dispositive power in Amendment No. 3 to Schedule 13G dated January 31, 1998 and filed with the Securities and Exchange Commission. (3) Mario J. Gabelli, directly as to 2,625 shares and through and shared with various entities within Gabelli Funds Inc. as to the balance of the shares, has investment discretion with respect to all shares, sole voting authority with respect to 3,202,875 shares and no voting authority with respect to 15,000 shares, according to Amendment No. 26 to Schedule 13D dated January 8, 1998 and filed with the Securities and Exchange Commission. (4) Franklin Resources, Inc. reports sole voting and dispositive authority for 2,020,600 shares held by Franklin Mutual Advisers, Inc., sole voting and dispositive authority for 641,000 shares held by Templeton Investment Counsel, Inc., and sole voting and dispositive power for 77,700 shares held by Templeton Management Limited in Amendment No. 1 to Schedule 13G dated January 22, 1999 and filed with the Securities and Exchange Commission. (5) Prudential reported that it had sole voting and dispositive authority with respect to 1,490,700 shares and shared voting and dispositive authority with respect to 686,045 shares in Amendment No. 4 to Schedule 13G dated January 26, 1999 and filed with the Securities and Exchange Commission. 6 9 BOARD OF DIRECTORS MEETINGS AND COMMITTEES MEETINGS OF THE BOARD The Company's Board of Directors held six meetings during the 1998 fiscal year. ORGANIZATION & COMPENSATION COMMITTEE The Organization & Compensation Committee reviews periodically the organization of the Company and its management, including major changes in the organization of the Company and the responsibility of management as proposed by the Chief Executive Officer; monitors executive development and succession planning, reviews the effectiveness and performance of senior management and makes recommendations to the Board concerning the appointment and removal of officers; periodically reviews the compensation philosophy, policies and practices of the Company and makes recommendations to the Board concerning major changes, as appropriate; annually reviews changes in the Company's employee benefit, savings and retirement plans and reports thereon to the Board; administers the Company's incentive and deferred compensation plans; and approves, and in some cases recommends to the Board of Directors for approval, the compensation of employee-directors, officers, and principal executives of the Company. Four meetings were held during 1998. Additional information regarding the Organization & Compensation Committee begins on page 16. AUDIT COMMITTEE The Audit Committee reviews and evaluates the scope of the audits to be performed, the adequacy of services performed by, and the fees and compensation of the independent auditors and receives and reviews a report from the independent auditors prior to the publication of the audited financial statements; considers and recommends to the Board of Directors the selection of the independent auditors to examine the consolidated financial statements of the Company for the next year; reviews and evaluates the scope and appropriateness of the Company's internal audit programs and plans and its system of internal control; reviews and evaluates the appropriateness of the Company's accounting principles and practices and financial reporting and receives periodic reports from the Internal Audit and Law Departments on a number of matters, including compliance with the Company's Policy on Legal and Ethical Conduct. Four meetings were held during 1998. Members of the Audit Committee are: Robert K. Jaedicke, Chairman, Paul X. Kelley, Robert D. Kunisch, Diane E. McGarry and James M. Osterhoff. EXECUTIVE COMMITTEE During the intervals between meetings of the Board of Directors, the Executive Committee, unless restricted by resolution of the Board, may exercise, under the control and direction of the Board, all of the powers of the Board of Directors in the management and control of the business of the Company. The Executive Committee held two meetings during 1998. Members of the Executive Committee are: John B. Yasinsky, Chairman, Charles A. Corry, Robert D. Kunisch and R. Byron Pipes. FINANCE COMMITTEE The Finance Committee makes recommendations to the Board in regard to planning of the Company with respect to its capital structure and raising of its long-term capital and with regard to dividend action of the Company; reviews the performance and management of the Company's employee benefit funds; and makes recommendations to the Board in regard to contributions to any pension plan, profit sharing, retirement or savings plan of the Company, or any proposed changes in the funding method or interest assumption or in amortization of liabilities in connection with funding any such plan. Four meetings were held during 1998. Members of the Finance Committee are: James M. Osterhoff, Chairman, Charles A. Corry, William K. Hall, Robert K. Jaedicke and R. Byron Pipes. 7 10 NOMINATING & CORPORATE GOVERNANCE COMMITTEE The Nominating & Corporate Governance Committee periodically reviews and makes recommendations to the Board concerning the criteria for selection and retention of directors, the composition of the Board, structure and function of Board committees, retirement policies and compensation and benefits of directors; recommends to the Board qualified candidates to serve as directors of the Company and aids in attracting qualified candidates to the Board; considers and makes recommendations to the Board concerning director nominations submitted by shareholders. To be considered for election at an Annual Meeting, shareholder nominations must be accompanied by the written consent of each such nominee and must be mailed to the Nominating & Corporate Governance Committee, 175 Ghent Road, Fairlawn, Ohio 44333, Attention: Secretary, and received by the Secretary no later than the December 1 immediately preceding the date of the annual meeting at which the nominee is to be considered for election. Four meetings were held during 1998. Members of the Nominating & Corporate Governance Committee are: R. Byron Pipes, Chairman, J. Gary Cooper, Charles A. Corry, Paul X. Kelley and Steven W. Percy. GOVERNMENT AFFAIRS & ENVIRONMENTAL ISSUES COMMITTEE The Government Affairs & Environmental Issues Committee periodically reviews and advises the Board regarding significant matters of public policy, including proposed actions by foreign and domestic governments which may significantly affect the Company; reviews and advises the Board regarding adoption or amendment of major company policies and programs relating to matters of public policy; monitors the proposed adoption or amendment of significant environmental legislation and regulations and advises the Board regarding the impact such proposals may have upon the Company and, where appropriate, the nature of the Company's response thereto; periodically reviews and advises the Board regarding the status of the Company's environmental policies and performance under its environmental compliance programs; and periodically reviews and reports to the Board regarding the status of, and estimated liabilities for, environmental remediation. Three meetings were held during 1998. Members of the Government Affairs & Environmental Issues Committee are: Paul X. Kelley, Chairman, J. Gary Cooper, Robert K. Jaedicke, Diane E. McGarry and James M. Osterhoff. 8 11 COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION -------------------------------- ------------------------------------------------- AWARDS PAYOUTS ------------------------------ ---------------- OTHER ANNUAL RESTRICTED SECURITIES SALARY BONUS COMPENSATION STOCK UNDERLYING LTIP PAYOUTS NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) AWARDS ($) OPTIONS/SARS (9) ($) - ------------------------- John B. Yasinsky 1998 695,833 800,000(1) 16,000(6) -- 85,000 420,000(10) Chairman, 1997 666,667 850,000(2) 16,000(6) -- 100,000 698,200(11) Chief Executive Officer 1996 620,833 600,000(3) 16,000(6) -- 100,000 281,266(12) and President Robert A. Wolfe 1998 330,792 317,000(1) 18,127(7) -- 22,500 -- Vice President; 1997 81,250 150,000(2) 7,051(7) $336,712(8) 75,000 -- President, Aerojet-General 1996 -- -- -- -- -- -- Corporation Nathaniel J. Mass 1998 338,333 295,000(1) 6,643(7) -- 24,000 98,539(10) Senior Vice President, 1997 320,833 285,000(2) 156,696(7) -- 30,000 -- Strategic Growth 1996 144,423 250,000(4) 2,621(7) -- 75,000 -- D. Michael Steuert 1998 328,333 295,000(1) 10,000(6) -- 24,000 118,467(10) Senior Vice 1997 312,500 310,000(2) 10,000(6) -- 30,000 193,054(11) President & Chief 1996 272,083 265,000(3) 10,000(6) -- -- 85,291(12)(13) Financial Officer Kevin M. McMullen 1998 270,833 225,000(1) -- -- 20,000 125,441(10) Vice President; President, 1997 250,000 175,000(2) -- -- 25,000 -- Decorative & Building 1996 56,890 220,000(5) -- -- 75,000 -- Products Business Unit ALL OTHER COMPENSATION NAME AND PRINCIPAL POSITION ($) (14)(15) - ------------------------- John B. Yasinsky 69,563 Chairman, 54,466 Chief Executive Officer 47,065 and President Robert A. Wolfe 21,636 Vice President; 3,438 President, Aerojet-General -- Corporation Nathaniel J. Mass 28,050 Senior Vice President, 18,324 Strategic Growth 6,066 D. Michael Steuert 44,516 Senior Vice 36,463 President & Chief 28,666 Financial Officer Kevin M. McMullen 20,063 Vice President; President, 16,405 Decorative & Building 1,876 Products Business Unit
- --------------- (1) All elected officers received 20% of their net 1998 incentive bonus in shares of GenCorp Common Stock (based upon the closing price on January 29, 1999 as reported in the New York Stock Exchange Composite Transactions published in the Wall Street Journal) as follows: Mr. Yasinsky, 4,163 shares; Mr. Wolfe, 2,712 shares; Mr. Mass, 1,416 shares; Mr. Steuert, 1,514 shares and Mr. McMullen, 1,146 shares. (2) All elected officers received 20% of their net 1997 incentive bonus in shares of GenCorp Common Stock (based upon the closing price on January 30, 1998 as reported in the New York Stock Exchange Composite Transactions published in the Wall Street Journal) as follows: Mr. Yasinsky, 4,179 shares; Mr. Wolfe, 683 shares; Mr. Mass 1,349 shares; Mr. Steuert, 1,505 shares and Mr. McMullen, 837 shares. (3) Messrs. Yasinsky and Steuert each received part of their 1996 incentive bonus in shares of GenCorp Common Stock (based upon the closing price on January 20, 1997 as reported in the New York Stock Exchange Composite Transactions published in the Wall Street Journal) as follows: Mr. Yasinsky, 9,140 shares; and Mr. Steuert, 2,474 shares. (4) Includes a 1996 year-end payment of $100,000 and a one-time payment of $150,000 pursuant to Mr. Mass' employment agreement to compensate him for loss of a 1996 bonus from his former employer. (5) Includes a 1996 year-end incentive bonus of $125,000 and a hiring bonus of $95,000 pursuant to Mr. McMullen's employment agreement.
9 12 (6) Cash allowances in lieu of a Company provided automobile. Perquisites and other personal benefits provided to the named executive officers during 1998, 1997 and 1996 did not exceed disclosure thresholds established by the Securities and Exchange Commission. (7) Reimbursement for taxes payable in connection with relocation. (8) Represents 12,300 shares granted September 2, 1997 at a market price of $27.375 subject to restrictions in Mr. Wolfe's employment agreement described on page 15. Market value of such shares at November 30, 1998 was $302,887. Dividends are paid during the restricted period. (9) Shares of GenCorp Common Stock underlying options granted pursuant to the GenCorp Inc. 1997 and 1993 Stock Option Plans. (10) Amounts paid for the 1996-1998 performance period under the Company's Long-Term Incentive Program. The net amount, after tax withholding, was paid in shares of GenCorp Common Stock based upon the January 29, 1999 closing price shown in the New York Stock Exchange Composite Transactions published in the Wall Street Journal. Mr. Wolfe did not participate during the 1996-1998 performance period. (11) Amounts paid for the 1995-1997 performance period under the Company's Long-Term Incentive Program. The net amount, after tax withholding, was paid in shares of GenCorp Common Stock based upon the January 30, 1998 closing price shown in the New York Stock Exchange Composite Transactions published in the Wall Street Journal. Messrs. Wolfe, Mass and McMullen did not participate during the 1995-1997 performance period. (12) Awards paid for the 1994-1996 performance period under the Company's Long-Term Incentive Program. Messrs. Wolfe, Mass and McMullen did not participate during the 1994-1996 performance period. The amount shown for Mr. Steuert includes $7,461 paid under the Company's Stock Incentive Compensation Plan discussed in footnote (13). (13) Represents the value of awards granted in years prior to 1993 which were paid pursuant to payment elections filed by the executive at the time of grant under the Company's Stock Incentive Compensation Plan, a predecessor to the Company's Long-Term Incentive Program. Payments are made in shares of GenCorp Common Stock. The value of an award is dependent upon the market value of GenCorp Common Stock at the payment date. (14) Amounts accrued as dividend and interest earnings on prior years' awards under the Company's Stock Incentive Compensation Plan. Dividends declared on Common Stock credited to the executive's account in the trust fund are credited to the executive's account as an additional number of shares determined by dividing the aggregate amount of the dividend by the market value of Common Stock on the dividend date. The actual value of the shares distributed on a future payment date will be based upon the market value of Common Stock at the future payment date. Amounts accrued during 1998, and the number of shares attributable thereto for D. Michael Steuert were $15,791 (626 shares). Messrs. Yasinsky, Wolfe, Mass and McMullen did not participate in the Plan. (15) Company contributions to the executive's account in the GenCorp Retirement Savings Plan and, where applicable, the amount credited to the executive's account in the Company's
10 13 Benefits Restoration Plan, a nonfunded plan which restores to the individual's account amounts otherwise excluded due to limitations imposed by the Internal Revenue Code of 1986 ("Code") on contributions and includable compensation under qualified plans. Amounts credited during 1998 were: John B. Yasinsky $69,563, Robert A. Wolfe $21,636, Nathaniel J. Mass $28,050, D. Michael Steuert $28,725 and Kevin M. McMullen $20,063.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR OPTION TERM INDIVIDUAL GRANTS (TEN YEARS)(3)(4) - -------------------------------------------------------------------------------------------------------------------------- NUMBER OF PERCENT OF SECURITIES TOTAL UNDERLYING OPTIONS/SARS OPTIONS/SARS GRANTED TO EXERCISE OR GRANTED EMPLOYEES BASE PRICE EXPIRATION NAME (#)(1) IN FISCAL YEAR ($/SHARE)(2) DATE 0% ($) 5% ($) 10%($) - -------------------------------------------------------------------------------------------------------------------------- John B. Yasinsky 85,000 11.30% $30.1875 3-25-08 $-0- $ 1,613,704 $ 4,089,444 Robert A. Wolfe 22,500 2.99% 30.1875 3-25-08 -0- 427,157 1,082,500 Nathaniel J. Mass 24,000 3.19% 30.1875 3-25-08 -0- 455,634 1,154,666 D. Michael Steuert(5) 24,000 3.19% 30.1875 3-25-08 -0- 113,909 288,667 Kevin M. McMullen 20,000 2.66% 30.1875 3-25-08 -0- 379,695 962,222 All Shareholders(6) N/A N/A N/A N/A -0- 2,041,909,423 3,251,399,497 - --------------------------------------------------------------------------------------------------------------------------
(1) Non-qualified stock options granted pursuant to the GenCorp Inc. 1997 Stock Option Plan ("Plan") for the number of shares of GenCorp Inc. Common Stock indicated. No Stock Appreciation Rights were granted in 1998. Options granted March 25, 1998 become exercisable in 25% increments on September 22, 1998 and on March 25, 1999, 2000 and 2001, respectively. (2) Exercise price equals the closing market price of GenCorp Common Stock on the date of grant as reported in the New York Stock Exchange Composite Transactions published in the Wall Street Journal. (3) The 0%, 5% and 10% appreciation over 10 years' option valuation method assumes a stock price of $30.1875, $49.17 and $78.30, respectively, at March 25, 2008. (4) The potential realizable values are shown in the table in conformity with Securities and Exchange Commission regulations, and are not intended to forecast possible future appreciation. The Company is not aware of any formula which will predict with reasonable accuracy the future appreciation of equity securities. No gain can be realized by optionees without an appreciation in stock price, which will benefit all shareholders commensurately. A 0% appreciation in stock price will result in zero dollars for an optionee. (5) Projected values based upon exercisable option for 6,000 shares. Under the terms of the 1997 Stock Option Plan, 1998 options granted to Mr. Steuert which would have become exercisable on March 25, 1999, 2000 and 2001 will lapse upon his February 14, 1999 resignation. (6) Based upon 41,525,640 shares of GenCorp Common Stock outstanding on December 31, 1998. 11 14 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE- SHARES OPTIONS/SARS AT FISCAL YEAR MONEY OPTIONS/SARS AT ACQUIRED END(#)(1) FISCAL YEAR END ($) ON VALUE --------------------------- ----------------------------- NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - -------------------------------------------------------------------------------------------------------------- John B. Yasinsky 0 0 444,050 138,750 $4,304,787 $484,375 Robert A. Wolfe 0 0 43,125 54,375 -0- -0- Nathaniel J. Mass 2,000 $12,625 75,250 51,750 606,531 264,844 D. Michael Steuert 0 0 128,500 33,000 1,399,375 84,375 Kevin M. McMullen 0 0 73,750 46,250 667,969 269,531
- --------------- (1) No SARs have been issued under the Plan. LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS UNDER NON- PERFORMANCE OR Stock Price-Based Plans(2)(3) NUMBER OF OTHER PERIOD UNTIL ----------------------------------- SHARES, UNITS OR MATURATION OR THRESHOLD TARGET MAXIMUM NAME OTHER RIGHTS PAYOUT ($) ($) ($) - --------------------------------------------------------------------------------------------------------------- John B. Yasinsky (1) 3 Years 224,375 448,750 897,500 Robert A. Wolfe (1) 3 Years 64,779 129,558 259,117 Nathaniel J. Mass (1) 3 Years 63,333 126,667 253,333 D. Michael Steuert(4) (1) 3 Years -- -- -- Kevin M. McMullen (1) 3 Years 49,583 99,167 198,333
- --------------- (1) Indicates awards under the GenCorp Inc. Long-Term Incentive Program ("Program") pursuant to which key employees designated by the Organization & Compensation Committee may receive incentive payments equal to specified percentages of average annual compensation (salary and bonus paid under the Company's Executive Incentive Compensation Program) upon attainment of specified threshold, target or maximum levels of financial performance ("performance goals") over a three-year performance period. For the 1998-2000 performance period, threshold, target and maximum performance goals for corporate officers are designated percentages of corporate return on assets employed ("ROAE") and earnings per share (EPS) growth, and for business unit presidents, designated percentages of corporate and business unit ROAE and operating profit (OP) growth for their respective business units. No payments are made under the Program if financial performance for the performance period falls below threshold levels. (2) Percentages of average annual compensation (determined for the three-year performance period) payable to participants upon attainment of performance goals for the 1998-2000 performance period are as follows:
THRESHOLD TARGET MAXIMUM --------- ------ ------- Chairman, CEO and President 15% 30% 60% Senior Vice Presidents/ other Corporate Officers 10% 20% 40% Business Unit Presidents 10% 20% 40%
12 15 (3) Future payouts, if any, will be calculated on the basis of actual average annual compensation paid to the participant during the three-year performance period. For purposes of the table above, estimated future payouts have been calculated on the basis of the participant's 1998 fiscal year salary and bonus shown in the Summary Compensation Table on page 9. (4) Mr. Steuert will not participate in the Program following his February 14, 1999 resignation. PENSION BENEFITS The Company's salaried pension plans include several formulas for the determination of benefits, and require that the formula providing the highest benefit be utilized to determine an individual employee's actual benefit. Benefits for Messrs. Mass, Steuert and McMullen have been determined pursuant to a formula which utilizes five-year average compensation for years of service prior to December 1, 1999 and a career average formula for service from December 1, 1999 to normal retirement. Mr. Wolfe's benefit has been determined pursuant to the plan's career average formula. The benefit for Mr. Yasinsky has been determined pursuant to the terms of his employment agreement. Estimated benefits are shown below because the required calculations do not lend themselves to a typical pension plan table where benefits can be determined by the reader solely upon the basis of years of service and final compensation.
APPROXIMATE ESTIMATED YEARS OF CREDITED ANNUAL BENEFITS SERVICE AT PAYABLE AT NAME NORMAL RETIREMENT NORMAL RETIREMENT(1) - --------------------------------------------------------------------- John B. Yasinsky(2) 41 $885,442 Robert A. Wolfe 6 61,298 Nathaniel J. Mass 19 224,647 D. Michael Steuert(3) 12 89,197 Kevin M. McMullen 29 245,717
- --------------- (1) Retirement benefits shown in the table for Messrs. Mass, Steuert and McMullen were calculated pursuant to the terms of the Pension Plan for Salaried Employees of GenCorp Inc. (the "GenCorp Pension Plan"). Mr. Wolfe's benefit was calculated pursuant to the Aerojet-General Corporation Consolidated Pension Plan (the "Aerojet Pension Plan"). There is no offset for Social Security payments. Mr. Yasinsky's retirement benefit has been determined pursuant to the supplemental pension provisions of his employment agreement described on page 15. The benefits shown are estimated (except Mr. Steuert's) and have not been adjusted for any survivor option. Each estimated benefit is based upon the assumption that the executive will remain an employee until age 65 at a rate of compensation equivalent to that in effect on December 1, 1998 and that the pension plan under which such estimated benefit is calculated will remain unchanged. Benefits for Messrs. Mass, Steuert and McMullen have been determined by a formula which provides for a benefit (A) for years of service prior to December 1, 1999 of (i) 1.125% of five-year average compensation ("average compensation") up to the average Social Security wage base ("ASSWB") plus 1.5% of average compensation in excess of the ASSWB multiplied by the total of such years of service up to 35 years and (ii) 1.5% of average compensation multiplied by the total years of service in excess of 35 years, and (B) for each year of service after December 1, 1999 (i) prior to attainment of 35 years of service, 1.625% of annual compensation up to the ASSWB plus 2.0% of annual compensation in excess of the ASSWB, 13 16 and (ii) after attainment of 35 years of service, 2.0% of annual compensation. The benefit for Mr. Wolfe has been determined pursuant to the same formula described in part (B) above. The benefits shown in the table have not been reduced to reflect either (i) the limitation on includable compensation or the overall benefit limitation imposed on pension plans qualified under Section 401(a) of the Code, or (ii) a plan's own exclusions from includable compensation, since the amount of any such reductions will be restored to the individual pursuant to the terms of the Company's Benefits Restoration Plan, a nonfunded plan with benefits payable out of the general assets of the Company. (2) Mr. Yasinsky's benefit is the product of (i) total years of service (including 30 years credited upon Mr. Yasinsky's employment with the Company, plus additional years accrued as an employee until age 65), (ii) 1.47%, and (iii) the average of his five highest years of compensation (salary and incentive bonus only) during the ten years preceding retirement. Under the terms of Mr. Yasinsky's employment agreement, amounts determined pursuant to the foregoing formula will be paid out of Company funds and will be offset by any payments made from the GenCorp Pension Plan and the pension plan of his prior employer. (3) Reflects the deferred vested pension benefit which will be payable to Mr. Steuert at age 65. Years of service are based upon his February 14, 1999 resignation date. ------------------------ COMPENSATION OF DIRECTORS Each nonemployee director receives a retainer of $24,000 per year and an attendance fee of $1,000 for each Board and Committee meeting attended. Nonemployee directors who serve as Chairman of a Committee of the Board receive an annual fee of $2,000 in consideration of such service. In March 1998 each nonemployee director received two hundred restricted shares of GenCorp Common Stock pursuant to the terms of a Restricted Stock Agreement between the director and the Company. The restricted shares will vest March 25, 2000. Dividends on restricted shares are automatically reinvested through the Company's dividend reinvestment program (unless a director opts out). All shares may be voted, but ownership may not be transferred until service on the Board terminates. Unvested shares will be forfeited in the event of a voluntary resignation or refusal to stand for reelection, but vesting will be accelerated in the event of death, disability or retirement pursuant to the Company's Retirement Plan for Nonemployee Directors described below. Each nonemployee director who terminates his or her service on the Board after at least sixty months of service will receive an annual retirement benefit equal to the retainer in effect on the date such director's service terminates, payable in monthly installments, until the number of monthly payments made equals the lesser of (a) the individual's months of service as a director, or (b) 120 monthly payments. In the event of death prior to payment of the applicable number of installments, the aggregate amount of unpaid monthly installments will be paid, in a lump sum, to the retired director's surviving spouse or other designated beneficiary, if any, or to the retired director's estate. Under the Board's retirement policy, a director's term of office normally expires at the annual meeting following his or her seventieth birthday regardless of the term of the class for which such director was last elected. Under special circumstances, however, the Board may waive immediate compliance and request that a director postpone his or her retirement until a subsequent date. 14 17 Directors who are also employees of the Company are not compensated separately for serving on the Board and are not paid a retainer or additional compensation for attendance at Board or committee meetings. EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS If the directors remove Mr. Yasinsky from the position of Chairman and CEO prior to age 65 for any reason other than for "cause" as defined in his October 18, 1993 employment agreement, Mr. Yasinsky may elect to terminate his employment and receive (a) a termination payment equal to two times the sum of (i) his annual base salary at the time of termination and (ii) his incentive bonus for the last completed fiscal year preceding termination, and (b) a supplemental pension determined as described in footnote (2) on page 14. The agreement also provides that Mr. Yasinsky will participate in the GenCorp Pension Plan, and that his supplemental pension will be offset by the amount of any pension payment made from the GenCorp Pension Plan and any pension payment received from his former employer. In the event of death prior to electing a payment option, the supplemental pension will be paid to Mr. Yasinsky's surviving spouse for her life, calculated as if he had attained age 62, retired, and elected a joint and 100% survivor annuity. In the event of disability prior to age 62, the Company will pay Mr. Yasinsky an amount equal to 60% of his base monthly salary (offset for payments received under Social Security) until eligible for supplemental pension benefits at age 62. Mr. Robert A. Wolfe's July 28, 1997 employment agreement provided an initial base salary of $325,000 per annum and a guaranteed 1997 incentive bonus equal to 50% of the bonus amount to which he would have been entitled if he had been employed by Aerojet during the entire 1997 fiscal year. Upon his employment date, Mr. Wolfe received an option to purchase 75,000 shares of GenCorp Common Stock at an exercise price equal to the closing market price on his employment date, and 12,300 restricted shares of GenCorp Common Stock. During a three-year restriction period, Mr. Wolfe has full dividend and voting rights, but he will forfeit 100% of the restricted shares if his employment at GenCorp or Aerojet terminates within three years of his employment date other than due to death, disability or change-in-control of Aerojet. If Mr. Wolfe's employment with Aerojet and GenCorp terminates due to a change-in-control of Aerojet or GenCorp within five years of his employment date, GenCorp will pay to him the accrued pension benefits in which he failed to vest pursuant to the terms of the Aerojet Consolidated Pension Plan and GenCorp Benefits Restoration Plan; if his employment with Aerojet and GenCorp terminates for any reason after three years from his employment date, GenCorp will guarantee a minimum annual retirement income of $57,239. Mr. Nathaniel J. Mass' May 13, 1996 employment agreement provided an initial base salary of $300,000 per annum, increasing to $325,000 February 1, 1997, a one time bonus of $150,000 to compensate him for loss of an expected bonus payment from his prior employer, a prorated 1996 incentive bonus, with a minimum of $75,000 and an option to purchase 75,000 shares of GenCorp Common Stock at an exercise price equal to the closing market price on his employment date. If Mr. Mass' employment is terminated by GenCorp, for reasons other than for cause or due to disability or mandatory retirement, he will be eligible to receive separation pay in the form of (a) continuing base salary at the rate in effect on the date of termination and (b) continuing bonus payments, each in the annualized amount of his last bonus payment preceding the date of termination, for a period not to exceed the shortest of (i) two years from the date of termination, or (ii) until he obtains comparable employment. Mr. Kevin McMullen's July 16, 1996 employment agreement provided an initial base salary 15 18 of $250,000 per annum, subject to pro-rata adjustment at the end of the 1996 fiscal year, a one-time hiring bonus of $95,000, a 1996 incentive bonus of $125,000, and an option to purchase 75,000 shares of GenCorp Common Stock at an exercise price equal to the closing market price on his employment date. If Mr. McMullen's employment is terminated by GenCorp other than for cause, disability or retirement, he will be eligible for continuation of his base salary in effect at termination for a period not to exceed the shorter of (i) eighteen months or (ii) until he obtains comparable employment. During 1997 the Board of Directors authorized the Company to enter into amended and restated severance agreements with fourteen elected officers, including the named executive officers. The severance agreements (which supersede agreements entered into in October 1990 or thereafter) provide for a severance payment in an amount equal to the officer's base salary plus bonus (as defined in the agreement) multiplied by a factor of 3 in the case of the Chief Executive Officer or a Senior Vice President, or by a factor of 2 for other covered officers, if within three years after a change-in-control (as such term is defined in the agreements), the officer's employment is terminated (i) by the Company for any reason other than death, disability or cause, or (ii) by the officer following the occurrence of one or more adverse events enumerated in the agreement. The agreements provide for payment of performance awards under the Long-Term Incentive Program, continuation of health and life benefits for 24 or 36 months, as appropriate, vesting of accrued retirement benefits, payment of the amount required to cover excise taxes, if any, financial counseling, outplacement and accounting fees and costs of legal representation if required to enforce the agreement. Mr. Wolfe's agreement includes a provision for payment of the same severance compensation if his employment is terminated within three years after a change-in-control of Aerojet. Agreements for Messrs. Yasinsky and Mass each include a requirement that any amount which may become payable under the severance agreement be offset by any amount which may be paid under the individual executive's employment agreement as a result of termination of employment due to a change-in-control. Mr. Yasinsky's agreement also provides that he may terminate his employment for any reason, or without reason, during the 30-day period immediately following the date six months after the occurrence of a change-in-control, with the right to severance compensation under his agreement. The severance agreements renew annually unless terminated pursuant to provisions included therein. ORGANIZATION & COMPENSATION COMMITTEE FUNCTION The Organization & Compensation Committee ("Committee") advises and recommends to the Board of Directors the total compensation of the Chairman of the Board, Chief Executive Officer and President. In addition, the Committee, with the counsel of the Chief Executive Officer, considers and establishes base pay and incentive bonuses for the executive officers of the Company elected by the Board (other than those named above). The base pay and incentive bonuses of the principal executives of the consolidated Company are subject to ratification by the Committee. The Committee also administers the Company's long-term incentive and deferred compensation plans and makes recommendations to the directors concerning such plans. Further information regarding the functions of the Organization & Compensation Committee appears on page 7. ORGANIZATION & COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Committee is composed entirely of nonemployee directors. Current Committee members are Charles A. Corry, Committee Chairman, William K. Hall, Robert D. Kunisch, Diane E. McGarry and Steven W. Percy. All nonemployee directors participate in decisions 16 19 regarding the compensation of the Chairman and Chief Executive Officer. Therefore, J. Gary Cooper, Robert K. Jaedicke, Paul X. Kelley, James M. Osterhoff and R. Byron Pipes participated in decisions regarding Mr. Yasinsky's 1998 compensation. BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION EXECUTIVE COMPENSATION PHILOSOPHY The Committee desires to provide an executive compensation program which allows for the effective recruitment, retention and motivation of highly qualified individuals who are key to the Company's current and future success. The Committee believes the Company's executive compensation program is designed to: create and reinforce a strategic alignment among the vision, goals and priorities of the Company; promote the interests of GenCorp's shareholders; respond to, and differentiate, both individual responsibilities and performance; properly balance the focus on both short and long-term Company performance; allow the Company to respond to changes for similar positions in the competitive marketplace; and prudently administer the fiscal resources of the organization. In the application of this philosophy, the Committee recognizes the need to attract and retain individuals who, by their actions, will add to shareholder value. In order to strengthen the alignment between the interests of shareholders and the interests of senior executives of the Company, in 1997 the Committee approved share ownership guidelines which apply to the Company's fourteen elected officers and took effect beginning in 1998. Under these guidelines, each elected officer is expected to own shares of GenCorp Common Stock equal in aggregate market value to a designated multiple of the officer's annual salary. These ownership levels should be attained within five years from the effective date of the program, and anyone who becomes an elected officer after 1998 will be expected to comply with the ownership guidelines within five years from his or her election. Shares beneficially owned through any GenCorp compensation or benefit plan will be included in an officer's aggregate ownership, but unexercised stock options do not count toward fulfillment of the guidelines. EXECUTIVE COMPENSATION STRUCTURE Executive compensation at GenCorp consists of four components -- base pay, an annual incentive bonus, stock options and an opportunity to participate in the GenCorp Inc. Long-Term Incentive Program. Each of these components is intended to meet a different objective. They are combined to focus the individual executive on high levels of sustained performance directed at key organizational objectives. A degree of risk/reward potential has been built into the compensation program to provide adequate motivation to achieve superior results. Compensation levels for executives vary depending on the scope of their individual responsibilities, as well as on the degree of individual performance and achievement. ANNUAL CASH COMPENSATION Annual cash compensation consists of two components: base pay and incentive bonus. Each year the Committee reviews historical information and analyses of current executive compensation trends and practices. Information for these analyses is derived from several national executive compensation surveys. The data selected from these surveys is representative of organizations which are similar to the Company in sales volume and business focus. The 50th percentile of compensation survey data is used as a reference point in combination with actual performance, in establishing competitive compensation levels within the Company. 17 20 BASE PAY The level of base pay for the reported executives is established relative to the 50th percentile of competitive pay levels for comparable positions at similar organizations. Each executive position is reviewed against this standard, with consideration given to performance and experience. These factors are incorporated into a determination regarding the level at which to set, and the amount by which to change, any executive's base pay. No specific weighting is applied to these factors. Rather, the collective judgment of the Committee members is utilized in establishing the appropriate level of base pay for the following year. INCENTIVE BONUSES Since fiscal 1995, incentive bonuses have been determined pursuant to the Company's Executive Incentive Compensation Program which was approved by the Committee at its January 1995 meeting. The primary purpose of this pay-for-performance program is to reward executives for achievement of specific objectives in three primary areas of responsibility: financial performance, continuous improvement (operational objectives applicable to the Company's business units) and special objectives (specific to the individual). Incentive bonus amounts are intended to vary in a consistent and predictable manner with the financial and operational performance of the Company and its various business units, as well as with the performance of the individual executive. Executives in positions which have significant scope, authority and impact on the Company's performance may be considered for participation. The named executive officers all participate in the program. Annually, financial performance objectives for the consolidated Company and each business unit are derived from stretch target goals established in the annual operating plan (AOP). Continuous improvement objectives for the business units are derived from the AOP, and are based upon a comparison to the results of the prior year. Special objectives are activities that should be accomplished during the year to achieve results which may be outside of the direct measurements associated with financial performance and continuous improvement, yet are of significant value to overall Company performance. Typically special objectives relate to projects which will impact other measures or strategic actions that will benefit the Company over an extended period of time. Two or more individuals may share a special objective where mutual effort is required for its accomplishment. Each participating executive has a maximum incentive opportunity expressed as a percentage of annual base pay. The level of this incentive opportunity has been set after a review of prevailing incentive opportunities for similar executive positions at similar organizations. These opportunities vary depending on the anticipated level of potential contribution for a particular position. The three performance categories, financial performance, continuous improvement, and special objectives, will be taken into account, as appropriate, in determining an incentive bonus award. The three performance categories will be weighted in importance, and will total 100% of the incentive opportunity. This weighting may be adjusted in any year to allow management flexibility in focusing the executive on critical achievement areas. At the end of each fiscal year, management will evaluate each executive for each of the applicable performance categories, and will recommend to the Committee a bonus commensurate with the performance achieved. The financial performance category will yield no bonus if the threshold level of return on assets employed (ROAE) for the fiscal year has not been achieved. For continuous improvement in operations, no credit will be given for any item 18 21 which has results that show no improvement from the prior year's performance. These performance evaluations, with appropriate discretionary adjustments, form the basis for management's recommendations to the Committee. Incentive bonuses are generally paid in cash. However, beginning with fiscal 1997, the Company's elected officers receive 20% of their incentive payment in shares of GenCorp Common Stock. LONG-TERM INCENTIVE PROGRAM The Long-Term Incentive Program has limited executive participation that includes the named executive officers. The purpose of the program is to motivate executives to achieve sustained improvement in predetermined performance objectives over a three-year period. The nonemployee directors set specific threshold, target, and maximum achievement levels for each three-year performance period after reviewing the strategic business plans of the Company. For the 1998-2000 performance period, upon recommendation of the Committee, the nonemployee directors have adopted ROAE as one of two performance measures (each weighted at 50%) for the consolidated Company and each business unit. Earnings per share (EPS) growth is the additional performance measure for corporate participants and operating profit growth is the additional performance measure for each business unit. Potential earnings for the named executives range from 10% to 60% of average annual cash compensation over the three-year period. The net value (after tax withholding) of any performance awards earned by participants will be paid in shares of GenCorp Common Stock. Additional data concerning the Program, including the percentages of compensation payable upon attainment of performance goals, can be found in the footnotes to the Long-Term Incentive Plans -- Awards table beginning on page 12. STOCK OPTIONS The Company's philosophy is to consider the interests of shareholders in the payment of executive compensation, and specifically, to link the interests of executives to the interests of shareholders. Stock options help accomplish this goal and are an important component of overall compensation. In 1998 the Company granted stock options to executives in positions that have the ability to significantly impact the Company's performance. In determining the size of these grants the Company followed competitive norms based on the current practice of a broad base of companies with comparable revenues. ORGANIZATION & COMPENSATION COMMITTEE POLICY WITH REGARD TO DEDUCTIBILITY OF EXECUTIVE COMPENSATION Section 162(m) of the Internal Revenue Code imposes limits on the deductibility of certain compensation in excess of $1 million paid to the Chief Executive Officer and other named executive officers of public companies. Management has reviewed the regulations and feels that the current compensation program and policies are appropriate. The Company's executive compensation program contains several elements, each of which are intended to support organizational goals and priorities. Factors taken into consideration in setting compensation targets and determining actual distribution of awards include: prevailing pay practices for comparable organizations, performance of individuals as well as business units and the Company, expansion of responsibilities, and potential for future con- tributions. In those years when performance is exceptional, it is possible under the current compensation program for one or more officers to surpass the $1 million threshold. At this time the Committee does not believe that accommodating the IRS regulations will produce material benefits or increases in shareholder value. However, the Committee intends to re- 19 22 view this issue regularly and may change its position in future years. By: The Organization & Compensation Committee of the Board of Directors: C. A. Corry, Chairman W. K. Hall R. D. Kunisch D. E. McGarry S. W. Percy CEO COMPENSATION At its meeting on January 29, 1998, the Committee reviewed Mr. Yasinsky's compensation history and comparable CEO annual cash compensation data available from several national executive compensation survey sources, including the Towers Perrin Executive Compensation Data Base and Hewitt Associates Project 777, Management Compensation Services study. Based on the foregoing information and the recognition that Mr. Yasinsky's performance is meeting expectations by providing effective operational and strategic leadership and driving initiatives intended to position the Company for long-term growth and increased shareholder value, the Committee recommended to the nonemployee directors that base pay for Mr. Yasinsky be increased 3.7% to $700,000 for 1998. At its March 1998 meeting, the Board granted Mr. Yasinsky an option to purchase 85,000 shares of GenCorp Common Stock. This grant was based on consideration of his continued strong performance, including strategic initiatives put in place to achieve operational excellence and value creating growth, and the competitive status of his total long-term compensation compared with CEOs of comparable companies. The incentive bonus for Mr. Yasinsky is determined after the close of the fiscal year pursuant to the Executive Incentive Compensation program discussed on page 18. For 1998, CEO performance was evaluated in three categories: financial performance versus stretch objectives for sales, operating profit, ROAE and cash flow, a special objective focused on creating new annualized sales in targeted areas via acquisitions and new programs not in the annual operating plan, and CEO leadership in six specific categories. At its January 28, 1999 meeting, the Committee considered management's written evaluation regarding attainment of corporate financial results, and Mr. Yasinsky's performance relative to his special growth objective. The Committee also evaluated Mr. Yasinsky's leadership performance in the six key areas, as well as the Company's overall performance in meeting top priority goals identified at the start of the year. Overall, the Committee is very pleased with Mr. Yasinsky's progress with a program of continuing positive change that is focused on achieving operational excellence and value creating growth. Specific 1998 achievements included the following. A corporate strategic redirection was established that will involve the spin-off of the Polymer Products segment businesses. With strong 1998 sales growth of 11%, reported earnings per share increased almost 16% with more than 9% growth from operations. Overall performance against his stretch financial objectives was strong with an 83% of maximum achievement. Outstanding strategic execution resulted in the completion of four key targeted acquisitions, a pending joint venture, and new government program wins not in plan, that collectively create about $350 million of new value creating annualized sales with strong double-digit operating profit margins. The GenCorp portfolio was further strengthened with the successful divestiture of the Plastics Extrusions, GenWall and Residential Wallcovering businesses (1998 sales of $26 million and negative $5 million operating profit). Excellent progress was made under the Operational Excellence initiatives. Six Sigma Quality training topped 1,000 with 816 managers and 109 black belts now certified. Six Sigma-driven projects met target with nearly $15 million in cost reductions while inventories 20 23 and cycle time improved per plan with Supply Chain Management successes. Good progress was made on moving the initial Sacramento area excess land carve-outs through the approval and entitlement process. And progress continued on strengthening people resources, institutionalizing GenCorp's defined culture and seamless partnership approach to management. The Committee concluded that Mr. Yasinsky's performance against the specific leadership criteria was excellent, and they continue to be very pleased with his overall performance. After utilizing the specific formula and considering other terms of the Program, the Committee recommended to the nonemployee directors that Mr. Yasinsky receive a 1998 incentive bonus of $800,000, of which 20%, after tax withholding, was paid in shares of GenCorp Common Stock. In addition to stock options as described above, Mr. Yasinsky's long-term compensation includes an opportunity for payment under the Long-Term Incentive Program described on page 19. Performance met the ROAE target for the just completed 1996-1998 performance period under the Long-Term Incentive Program. Based on this performance, the Committee recommended a long-term performance payment to Mr. Yasinsky for the 1996 -- 1998 performance period of $420,000 which, after tax withholding, was paid fully in shares of GenCorp Common Stock. The foregoing recommendations for Mr. Yasinsky were approved by the following nonemployee members of the Board of Directors: J. G. Cooper R. D. Kunisch C. A. Corry D. E. McGarry W. K. Hall J. M. Osterhoff R. K. Jaedicke S. W. Percy P. X. Kelley R. B. Pipes
21 24 PERFORMANCE GRAPH The following graph compares the cumulative total shareholder return, assuming reinvestment of dividends, of the Company's Common Stock with the cumulative total return, assuming reinvestment of dividends, of the Standard & Poor's Manufacturing (Diversified) Index and the Standard & Poor's 500 Composite Stock Price Index. COMPARISON OF CUMULATIVE TOTAL RETURN AMONG GENCORP, S&P 500 INDEX, AND S&P MANUFACTURING (DIVERSIFIED) INDEX [GRAPH] Chart depicts the value, on the November 30 of the specified year, of $100 invested on November 30, 1993 in GenCorp Common Stock, the S&P 500 Index, and the S&P Manufacturing (Diversified) Index.
YEARS ENDING NOVEMBER 30 --------------------------------------------------------- COMPANY/INDEX 1993 1994 1995 1996 1997 1998 ------------- ---- ---- ---- ---- ---- ---- GENCORP $ 100 $ 78.23 $ 93.19 $153.23 $213.23 $214.53 S&P 500 $ 100 $101.05 $138.41 $176.98 $227.44 $281.26 S&P MANUFACTURING (DIVERSIFIED) $ 100 $102.34 $150.03 $210.73 $248.47 $280.23
SOURCE: STANDARD & POOR'S COMPUSTAT 22 25 APPOINTMENT OF INDEPENDENT AUDITORS Upon recommendation of the Audit Committee, and subject to ratification by the shareholders at the March 31, 1999 Annual Meeting, the Board of Directors has appointed Ernst & Young LLP as independent auditors to examine the consolidated financial statements of the Company for the fiscal year ending November 30, 1999. If the Board's appointment is not ratified, or if Ernst & Young LLP declines to act or becomes incapable of action, or if their employment is discontinued, the Board will appoint other independent auditors whose continued employment after the next Annual Meeting of Shareholders shall be subject to ratification by the shareholders. Ernst & Young representatives are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire, and it is expected that they will respond to appropriate questions raised at the meeting. The persons named in the accompanying form of proxy intend to vote such proxies to ratify the appointment of Ernst & Young LLP unless a contrary choice is indicated. The Board of Directors recommends a vote FOR ratification of the appointment of independent auditors. OTHER BUSINESS The Board of Directors is not aware of any other matters which may come before the meeting. However, if any other matters do properly come before the meeting, it is the intention of the persons named in the accompanying form of proxy, pursuant to discretionary authority conferred thereby, to vote the proxy, in accordance with their best judgment on such matters. GENERAL INFORMATION SUBMISSION OF SHAREHOLDER PROPOSALS To be eligible for inclusion in the Company's proxy materials for the March 2000 Annual Meeting, a shareholder proposal must be received by the Company's Secretary on or before October 15, 1999 at the Company's offices located at 175 Ghent Road, Fairlawn, OH 44333. A shareholder who wishes to present a proposal for consideration at the March 2000 Annual Meeting without inclusion of such proposal in the Company's proxy materials must give notice of such proposal to the Company at the foregoing address on or before December 29, 1999. SOLICITATION EXPENSE The Company will bear the cost of solicitation of proxies. In addition to the use of the mails, the Company may solicit proxies by personal interview, telephone and telegraph. The Company will reimburse brokers and other persons holding shares for others for their reasonable expenses in sending soliciting material to their principals. The Company has also made arrangements with Georgeson & Company Inc., New York, NY, to assist in the solicitation of proxies for a fee of $8,500 plus reimbursement of normal expenses. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND IN PERSON ARE URGED TO VOTE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. By order of the Board of Directors, EDWARD R. DYE, Secretary February 12, 1999 23 26 [GENCORP LOGO] John B. Yasinsky Chairman and Chief Executive Officer February 12, 1999 Dear Shareholder: Enclosed are GenCorp's 1998 Annual Report and 1999 Proxy Statement. As our Annual Report reflects, 1998 marked the third consecutive year of significant operational improvement and earnings per share growth in our multi-year journey to enhance shareholder value. It was also a year of substantial value-creating growth as a result of several key targeted acquisitions we completed and internal growth accomplishments. The Annual Report also discusses the plan we announced on December 17, 1998 to spin-off our Performance Chemicals and Decorative & Building Products businesses to GenCorp shareholders as a separate publicly traded polymer products company. Under the plan, GenCorp would continue to operate its aerospace and defense and fine chemicals segment, Aerojet, and the automotive Vehicle Sealing business. We believe the spin-off will provide renewed vitality and opportunity for value-creating growth by creating two strong, independently focused and growing companies. The spin-off requires approval by GenCorp shareholders. A Special Shareholders Meeting will be scheduled later in the year to consider the spin-off proposal. The regular 1999 Annual Meeting will be held on March 31, 1999 at the Akron West Hilton in Fairlawn, Ohio. Details are provided in the enclosed Proxy Statement. Your vote is important to us. Whether or not you plan to attend the Annual Meeting, please take time to complete and return the attached proxy card. Sincerely, /s/ John Yasinsky John Yasinsky Please Detach Proxy Card Here - -------------------------------------------------------------------------------- [ ] 1. ELECTION OF DIRECTORS TO A THREE-YEAR TERM EXPIRING AT THE MARCH 2002 ANNUAL MEETING. FOR all nominees listed below [ X ] WITHHOLD AUTHORITY to vote for all nominees listed below. [ X ] *EXCEPTIONS [ X ] Nominees: Charles A. Corry, William K. Hall, Dr. Robert K. Jaedicke and D. Michael Steuert. (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW). *Exceptions --------------------------------------------------------------------- 2. TO RATIFY THE BOARD OF DIRECTORS' selection of Ernst & Young LLP as the independent auditors of the Company. 3. Upon matters incident to the conduct of the meeting and such other business as may properly come before the meeting or any adjournments thereof. FOR [ X ] AGAINST [ X ] ABSTAIN [ X ] Change of Address and or Comments Mark Here [ X ] Please sign exactly as name appears at left. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, give full title as such. If a corporation, sign in full corporate name by President or other authorized officer. If a partnership, sign in partnership name by authorized person. DATE , 1999 ------------------------------- - -------------------------------------------------------------------------------- Signature - -------------------------------------------------------------------------------- Signature if held jointly VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK. [ X ] 27 PLEASE DETACH HERE You Must Detach This Portion of the Proxy Card Before Returning It In the Enclosed Envelope - -------------------------------------------------------------------------------- GENCORP INC. 175 GHENT ROAD - FAIRLAWN, OHIO 44333 PROXY FOR HOLDERS OF COMMON STOCK SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints WILLIAM R. PHILLIPS, EDWARD R. DYE and MICHAEL E. HICKS, and each of them, his proxy, with power of substitution, to vote all shares of Common Stock of GenCorp Inc. which the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held at the Akron West Hilton Inn, 3180 West Market Street, Akron, Ohio 44333 on March 31, 1999, and any adjournments thereof, and appoints the proxyholders to vote as directed below and in accordance with their judgment on matters incident to the conduct of the meeting and any matters of other business referred to in item 3: THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, SUCH SHARES WILL BE VOTED FOR ALL NOMINEES IN ITEM 1, FOR ITEM 2, AND IN ACCORDANCE WITH THE PROXYHOLDERS' JUDGMENT ON MATTERS INCIDENT TO THE CONDUCT OF THE MEETING AND ANY MATTERS OF OTHER BUSINESS REFERRED TO IN ITEM 3. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2. (Continued, and to be signed and dated on the other side.) GENCORP INC. P.O. BOX 11104 NEW YORK, N.Y. 10203-0104 28 [GENCORP LOGO] John B. Yasinsky Chairman and Chief Executive Officer February 12, 1999 Dear Shareholder: Enclosed are GenCorp's 1998 Annual Report and 1999 Proxy Statement. As our Annual Report reflects, 1998 marked the third consecutive year of significant operational improvement and earnings per share growth in our multi-year journey to enhance shareholder value. It was also a year of substantial value-creating growth as a result of several key targeted acquisitions we completed and internal growth accomplishments. The Annual Report also discusses the plan we announced on December 17, 1998 to spin-off our Performance Chemicals and Decorative & Building Products businesses to GenCorp shareholders as a separate publicly traded polymer products company. Under the plan, GenCorp would continue to operate its aerospace and defense and fine chemicals segment, Aerojet, and the automotive Vehicle Sealing business. We believe the spin-off will provide renewed vitality and opportunity for value-creating growth by creating two strong, independently focused and growing companies. The spin-off requires approval by GenCorp share-holders. A Special Shareholders Meeting will be scheduled later in the year to consider the spin-off proposal. The regular 1999 Annual Meeting will be held on March 31, 1999 at the Akron West Hilton in Fairlawn, Ohio. Details are provided in the enclosed Proxy Statement. Your vote is important to us. Whether or not you plan to attend the Annual Meeting, please take time to complete and return the attached proxy card. Sincerely, /s/ John Yasinsky John Yasinsky Please Detach Proxy Card Here - -------------------------------------------------------------------------------- [ ] 1. ELECTION OF DIRECTORS TO A THREE-YEAR TERM EXPIRING AT THE MARCH 2002 ANNUAL MEETING. FOR all nominees listed below [ X ] WITHHOLD AUTHORITY to vote for all nominees listed below. [ X ] *EXCEPTIONS [ X ] Nominees: Charles A. Corry, William K. Hall, Dr. Robert K. Jaedicke and D. Michael Steuert. (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW). *Exceptions --------------------------------------------------------------------- 2. TO RATIFY THE BOARD OF DIRECTORS' selection of Ernst & Young LLP as the independent auditors of the Company. 3. Upon matters incident to the conduct of the meeting and such other business as may properly come before the meeting or any adjournments thereof. FOR [ X ] AGAINST [ X ] ABSTAIN [ X ] Change of Address and or Comments Mark Here [ X ] Please sign exactly as name appears at left. Your shares may not be voted by the Trustee unless you sign and return this card so that it will reach the Trustee not later than March 29, 1999. DATE , 1999 ------------------------------- - -------------------------------------------------------------------------------- Signature Votes MUST be indicated (x) in Black or Blue ink. [ X ] 29 Please Detach Here You Must Detach This Portion of the Proxy Card Before Returning It In the Enclosed Envelope - -------------------------------------------------------------------------------- CONFIDENTIAL VOTING INSTRUCTIONS To: ROYAL TRUST CORPORATION OF CANADA, TRUSTEE FOR THE GENCORP CANADA INC. SAVINGS PLAN I hereby authorize the Trustee to vote (or cause to be voted) all shares of Common Stock of GenCorp Inc. which may be allocated to my account in the GenCorp Stock Fund of the GenCorp Canada Inc. Savings Plan at the Annual Meeting of Shareholders to be held at the Akron West Hilton Inn, 3180 West Market Street, Akron, Ohio 44333 on March 31, 1999, and at any adjournments thereof, and direct the Trustee to vote as instructed below and in accordance with its judgment on matters incident to the conduct of the meeting and any matters of other business referred to in item 3: (THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY) THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE PLAN PARTICIPANT. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, SUCH SHARES WILL BE VOTED FOR ALL NOMINEES IN ITEM 1, FOR ITEM 2, AND IN ACCORDANCE WITH THE TRUSTEES' JUDGMENT ON MATTERS INCIDENT TO THE CONDUCT OF THE MEETING AND ANY MATTERS OF OTHER BUSINESS REFERRED TO IN ITEM 3. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2. (Continued, and to be signed and dated on the other side.) GENCORP INC. P.O. BOX 11104 NEW YORK, N.Y. 10203-0104 30 [GENCORP LOGO] John B. Yasinsky Chairman and Chief Executive Officer February 12, 1999 Dear Shareholder: Enclosed are GenCorp's 1998 Annual Report and 1999 Proxy Statement. As our Annual Report reflects, 1998 marked the third consecutive year of significant operational improvement and earnings per share growth in our multi-year journey to enhance shareholder value. It was also a year of substantial value-creating growth as a result of several key targeted acquisitions we completed and internal growth accomplishments. The Annual Report also discusses the plan we announced on December 17, 1998 to spin-off our Performance Chemicals and Decorative & Building Products businesses to GenCorp shareholders as a separate publicly traded polymer products company. Under the plan, GenCorp would continue to operate its aerospace and defense and fine chemicals segment, Aerojet, and the automotive Vehicle Sealing business. We believe the spin-off will provide renewed vitality and opportunity for value-creating growth by creating two strong, independently focused and growing companies. The spin-off requires approval by GenCorp share-holders. A Special Shareholders Meeting will be scheduled later in the year to consider the spin-off proposal. The regular 1999 Annual Meeting will be held on March 31, 1999 at the Akron West Hilton in Fairlawn, Ohio. Details are provided in the enclosed Proxy Statement. Your vote is important to us. Whether or not you plan to attend the Annual Meeting, please take time to complete and return the attached proxy card. Sincerely, /s/ John Yasinsky John Yasinsky Please Detach Proxy Card Here - -------------------------------------------------------------------------------- [ ] 1. ELECTION OF DIRECTORS TO A THREE-YEAR TERM EXPIRING AT THE MARCH 2002 ANNUAL MEETING. FOR all nominees listed below [ X ] WITHHOLD AUTHORITY to vote for all nominees listed below. [ X ] *EXCEPTIONS [ X ] Nominees: Charles A. Corry, William K. Hall, Dr. Robert K. Jaedicke and D. Michael Steuert. (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW). *Exceptions --------------------------------------------------------------------- 2. TO RATIFY THE BOARD OF DIRECTORS' selection of Ernst & Young LLP as the independent auditors of the Company. 3. Upon matters incident to the conduct of the meeting and such other business as may properly come before the meeting or any adjournments thereof. FOR [ X ] AGAINST [ X ] ABSTAIN [ X ] Change of Address and or Comments Mark Here [ X ] Please sign exactly as name appears at left. Your shares may not be voted by the Trustee unless you sign and return this card so that it will reach the Trustee not later than March 29, 1999. DATE , 1999 ------------------------------- - -------------------------------------------------------------------------------- Signature Votes MUST be indicated (x) in Black or Blue ink. [ X ] 31 PLEASE DETACH HERE You Must Detach This Portion of the Proxy Card Before Returning It In the Enclosed Envelope - -------------------------------------------------------------------------------- CONFIDENTIAL VOTING INSTRUCTIONS To: MELLON BANK, N.A., TRUSTEE FOR THE GENCORP INC. SAVINGS AND PROFIT SHARING PLANS I hereby authorize the Trustee to vote (or cause to be voted) all shares of Common Stock of GenCorp Inc. which may be allocated to my account in the GenCorp Stock Fund of the GenCorp Retirement Savings Plan and/or the GenCorp Profit Sharing Plan at the Annual Meeting of Shareholders to be held at the Akron West Hilton Inn, 3180 West Market Street, Akron, Ohio 44333 on March 31, 1999, and at any adjournments thereof, and direct the Trustee to vote as instructed below and in accordance with its judgment on matters incident to the conduct of the meeting and any matters of other business referred to in item 3: (THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY) THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE PLAN PARTICIPANT. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, SUCH SHARES WILL BE VOTED FOR ALL NOMINEES IN ITEM 1, FOR ITEM 2, AND IN ACCORDANCE WITH THE TRUSTEES' JUDGMENT ON MATTERS INCIDENT TO THE CONDUCT OF THE MEETING AND ANY MATTERS OF OTHER BUSINESS REFERRED TO IN ITEM 3. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2. (Continued, and to be signed and dated on the other side.) GENCORP INC. P.O. BOX 11104 NEW YORK, N.Y. 10203-0104 32 [GENCORP LOGO] John B. Yasinsky Chairman and Chief Executive Officer February 12, 1999 Dear Shareholder: Enclosed are GenCorp's 1998 Annual Report and 1999 Proxy Statement. As our Annual Report reflects, 1998 marked the third consecutive year of significant operational improvement and earnings per share growth in our multi-year journey to enhance shareholder value. It was also a year of substantial value-creating growth as a result of several key targeted acquisitions we completed and internal growth accomplishments. The Annual Report also discusses the plan we announced on December 17, 1998 to spin-off our Performance Chemicals and Decorative & Building Products businesses to GenCorp shareholders as a separate publicly traded polymer products company. Under the plan, GenCorp would continue to operate its aerospace and defense and fine chemicals segment, Aerojet, and the automotive Vehicle Sealing business. We believe the spin-off will provide renewed vitality and opportunity for value-creating growth by creating two strong, independently focused and growing companies. The spin-off requires approval by GenCorp share-holders. A Special Shareholders Meeting will be scheduled later in the year to consider the spin-off proposal. The regular 1999 Annual Meeting will be held on March 31, 1999 at the Akron West Hilton in Fairlawn, Ohio. Details are provided in the enclosed Proxy Statement. Your vote is important to us. Whether or not you plan to attend the Annual Meeting, please take time to complete and return the attached proxy card. Sincerely, /s/ John Yasinsky John Yasinsky Please Detach Proxy Card Here - -------------------------------------------------------------------------------- [ ] 1. ELECTION OF DIRECTORS TO A THREE-YEAR TERM EXPIRING AT THE MARCH 2002 ANNUAL MEETING. FOR all nominees listed below [ X ] WITHHOLD AUTHORITY to vote for all nominees listed below. [ X ] *EXCEPTIONS [ X ] Nominees: Charles A. Corry, William K. Hall, Dr. Robert K. Jaedicke and D. Michael Steuert. (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW). *Exceptions --------------------------------------------------------------------- 2. TO RATIFY THE BOARD OF DIRECTORS' selection of Ernst & Young LLP as the independent auditors of the Company. 3. Upon matters incident to the conduct of the meeting and such other business as may properly come before the meeting or any adjournments thereof. FOR [ X ] AGAINST [ X ] ABSTAIN [ X ] Change of Address and or Comments Mark Here [ X ] Please sign exactly as name appears at left. Your shares may not be voted by the Trustee unless you sign and return this card so that it will reach the Trustee not later than March 29, 1999. DATE , 1999 ------------------------------- - -------------------------------------------------------------------------------- Signature Votes MUST be indicated (x) in Black or Blue ink. [ X ] 33 PLEASE DETACH HERE You Must Detach This Portion of the Proxy Card Before Returning It In the Enclosed Envelope - -------------------------------------------------------------------------------- CONFIDENTIAL VOTING INSTRUCTIONS To: THE TRUSTEE FOR THE GENCORP INC. STOCK INCENTIVE COMPENSATION PLAN I hereby authorize the Trustee to vote (or cause to be voted) all shares of Common Stock of GenCorp Inc. which may be allocated to my account in the GenCorp Stock Incentive Compensation Plan Trust at the Annual Meeting of Shareholders to be held at the Akron West Hilton Inn, 3180 West Market Street, Akron, Ohio 44333 on March 31, 1999, and any adjournments thereof, and direct the Trustee to vote as instructed below and in accordance with its judgment on matters incident to the conduct of the meeting and any matters of other business referred to in item 3: (THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY) THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE PLAN PARTICIPANT. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, SUCH SHARES WILL BE VOTED FOR ALL NOMINEES IN ITEM 1, FOR ITEM 2, AND IN ACCORDANCE WITH THE TRUSTEES' JUDGMENT ON MATTERS INCIDENT TO THE CONDUCT OF THE MEETING AND ANY MATTERS OF OTHER BUSINESS REFERRED TO IN ITEM 3. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2. (Continued, and to be signed and dated on the other side.) GENCORP INC. P.O. BOX 11104 NEW YORK, N.Y. 10203-0104 -----END PRIVACY-ENHANCED MESSAGE-----