-----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, LcWkwBFkMkDdDQKwHZ8dG77NnDJwIODNPMF+uZwr2piZFk4xgIvNRxviKr5XV6eZ 2e+EcQMt5YRPixqSZDL05Q== 0000914039-98-000067.txt : 19980312 0000914039-98-000067.hdr.sgml : 19980312 ACCESSION NUMBER: 0000914039-98-000067 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980408 FILED AS OF DATE: 19980311 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARNES GROUP INC CENTRAL INDEX KEY: 0000009984 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 060247840 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-04801 FILM NUMBER: 98563695 BUSINESS ADDRESS: STREET 1: 123 MAIN ST CITY: BRISTOL STATE: CT ZIP: 06011 BUSINESS PHONE: 2035837070 FORMER COMPANY: FORMER CONFORMED NAME: ASSOCIATED SPRING CORP DATE OF NAME CHANGE: 19760518 DEF 14A 1 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 1 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 [x] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a
Barnes Group Inc. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [x] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 Barnes Group Inc. Executive Office 123 Main Street Post Office Box 489 Bristol, Connecticut 06011-0489 U.S.A. Tel. (860) 583-7070 [Barnes Group LOGO] March 11, 1998 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 8, 1998 The Annual Meeting of Stockholders of Barnes Group Inc. will be held at Associated Spring Headquarters, Winding River Office Park, 80 Scott Swamp Road, Farmington, Connecticut 06032, at 10:30 a.m. on Wednesday, April 8, 1998, for the following purposes: 1. to elect three directors for a three-year term; 2. to ratify the selection of independent accountants for 1998; and 3. to transact any other business that lawfully may come before the meeting or at any adjournment thereof. Stockholders of record at the close of business on February 9, 1998 will be entitled to vote at the meeting. Stockholders who do not expect to attend the meeting and wish their stock voted pursuant to the accompanying proxy are requested to date and sign the proxy and return it as soon as possible in the enclosed reply envelope addressed to Barnes Group Inc., Midtown Station, P. O. Box 946, New York, New York 10138-0746. /s/ William V. Grickis, Jr. William V. Grickis, Jr. Secretary 3 PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 8, 1998 This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Barnes Group Inc. (the "Company") of proxies to be voted at the Annual Meeting of Stockholders to be held on April 8, 1998 and at any adjournment thereof. A stockholder who signs and returns a proxy in the accompanying form may revoke it by notifying the Secretary of the meeting in person or in writing (including by delivery of a later dated proxy) at any time before it is voted. This Proxy Statement and the enclosed form of proxy are being sent to stockholders on or about March 11, 1998. ELECTION OF DIRECTORS FOR A THREE-YEAR TERM Three directors are nominated for election at the 1998 Annual Meeting for a three-year term (unless any of them earlier dies, resigns or is removed, as provided in the Company's By-Laws). George T. Carpenter, Donna R. Ecton and Frank E. Grzelecki are nominated for re-election to the Board of Directors for terms expiring at the Annual Meeting in 2001. Pertinent information concerning the nominees for re-election as directors and the seven directors whose terms continue after the meeting is set forth below. Each director has been associated with his/her present organization for at least the past five years unless otherwise noted. Except as expressly stated below, none of the organizations listed as business affiliates of the directors is a subsidiary or other affiliate of the Company. NOMINEES FOR RE-ELECTION GEORGE T. CARPENTER Director since 1985 [PHOTO] Current term expires 1998 Mr. Carpenter, 57, is President of The S. Carpenter Construction Company which is involved in real estate management and general contracting. He is a member of the Executive and the Audit Committees and the Committee on Directors. He is a director of Eagle Financial Corp. and Eagle Federal Savings Bank. DONNA R. ECTON Director since 1987 [PHOTO] Current term expires 1998 Ms. Ecton, 50, is Chief Operating Officer and a director of PETsMART, Inc., an international retailer of pet food, supplies and services. From 1995 to 1996, she was Chairman, President and Chief Executive Officer of Business Mail Express, Inc. From 1991 to 1994, she was President and Chief Executive Officer of Van Houten North America, Inc. and Andes Candies Inc. She is Chairman of the Audit Committee and a member of the Compensation Committee. She is a director of Vencor Inc., a long-term healthcare network, and H & R Block, Inc.
1 4 FRANK E. GRZELECKI Director since 1997 [PHOTO] Current term expires 1998 Mr. Grzelecki, 60, is Vice Chairman of Handy & Harman, a diversified manufacturer and precious metals fabricator. From 1992 to 1997, he served as President, Chief Operating Officer of that Company. He is a member of the Compensation and Management Development Committees and Committee on Directors. He is a director of Chartwell Re Corporation, an insurance holding company; Morgan Group, Inc., which provides delivery services for the prefabricated housing and motor home industries; and Spinnaker Industries, a diversified manufacturer of adhesive-backed materials and process equipment.
CONTINUING DIRECTORS THOMAS O. BARNES Director since 1978 [PHOTO] Current term expires 2000 Mr. Barnes, 49, is Chairman of the Board of Directors and an employee of the Company. From 1993 through May 1997 Mr. Barnes also served as Senior Vice President-Administration. Prior to joining the Company he was President of The Olson Brothers Company, a manufacturer of machined metal parts. He is a member of the Executive Committee. GARY G. BENANAV Director since 1994 [PHOTO] Current term expires 2000 Mr. Benanav, 52, is Chairman and Chief Executive Officer of New York Life International, Inc. and Executive Vice President of New York Life Insurance Company. Prior to this appointment he was Chief Executive Officer of Aeris Ventures, L.L.C., a venture capital firm. From 1993 to 1996, he was an Executive Vice President of Aetna Life and Casualty Company. He is Chairman of the Compensation Committee and a member of the Audit and Executive Committees. He is a director of Executive Risk, a professional liability insurer. WILLIAM S. BRISTOW, JR. Director since 1978 [PHOTO] Current term expires 1999 Mr. Bristow, 44, is President of W. S. Bristow & Associates, Inc. which is engaged in small business development. From 1992 to 1995, Mr. Bristow was New England Region Manager of Roberts Express, Inc., a provider of expedited transportation services. He is Chairman of the Executive Committee and the Committee on Directors and a member of the Audit Committee.
2 5 ROBERT J. CALLANDER Director since 1991 [PHOTO] Current term expires 1999 Mr. Callander, 67, is Executive in Residence at Columbia University School of Business. He retired as Vice Chairman of Chemical Banking Corporation in 1992. He is a member of the Management Development, Compensation, and Executive Committees and the Committee on Directors. He is a director of Beneficial Corporation, an insurance and bank holding company; Omnicom Group, Inc., an advertising holding company; and the Scudder New Asia, World Growth Income, and Korea Funds. ROBERT W. FIONDELLA [Robert W. Fiondella Director since 1997 Photo] Current term expires 2000 Robert W. Fiondella, 55, is Chairman, President and Chief Executive Officer of Phoenix Home Life Mutual Insurance Company, in which position he has served since 1994. In 1992, he was elected President and Principal Operating Officer of the Company. He is Chairman of the Management Development Committee and a member of the Committee on Directors and Audit Committee. He is a director of The Advest Group, Inc., a financial investment firm; Phoenix Duff & Phelps Corporation, an investment company; and PXRE Corporation, a property and casualty reinsurance company. MARCEL P. JOSEPH Director since 1991 [PHOTO] Current term expires 2000 Mr. Joseph, 63, retired as Chairman of the Board of Augat Inc., a manufacturer of electromechanical connectors and other components, in December 1995, and as President and Chief Executive Officer of that company in 1994. He is a member of the Audit, Compensation, and Management Development Committees. THEODORE E. MARTIN Director since 1993 [PHOTO] Current term expires 1999 Mr. Martin, 58, is President and Chief Executive Officer of the Company. From 1993 to 1995, Mr. Martin was Executive Vice President-Operations of the Company and prior to that, President and Chief Operating Officer of the Company's Associated Spring group. He is a member of the Executive Committee. Mr. Martin is a director of Ingersoll-Rand Company, a manufacturer of heavy machinery; Unisys Corporation, a designer, manufacturer and marketer of computer-based information systems; and RJR-Nabisco Holdings Corp.
Directors are elected by a plurality of the votes cast in the election of directors. The Board of Directors unanimously recommends a vote FOR Mr. Carpenter, Ms. Ecton and Mr. Grzelecki (proposal 1 on the proxy card). By resolution of the Board of Directors the number of directors of the Company is currently fixed at eleven. The Board believes that maintenance of an eleven-director Board is in the best interests of the Company and its stockholders. The Company has been conducting a search for a suitable candidate for director and expects to fill the vacancy by appointment when the search is completed. 3 6 THE BOARD AND ITS COMMITTEES In 1997, the Board held six meetings. Each incumbent director of the Company attended in excess of 90% of the meetings of the Board of Directors and Board committees on which he or she served during 1997, except Mr. Callander who attended 73% of such meetings. The Audit Committee is responsible for matters relating to accounting policies and practices, financial reporting and the internal control structure. Each year it recommends to the Board the appointment of a firm of independent accountants to audit the financial statements of the Company. It reviews with representatives of the independent accountants the scope of their audit of the Company's financial statements, results of audits, audit fees and any recommendations with respect to the internal control structure. The Audit Committee also reviews non-audit services rendered by the Company's independent accountants and periodically meets with or receives reports from principal executive officers and the Internal Audit Director of the Company. The Audit Committee held three meetings in 1997. The Benefits Committee administers the Company's pension, profit-sharing and welfare benefits plans. The Benefits Committee held three meetings in 1997. The Compensation Committee administers the Company's incentive and stock plans, sets the salary of the President and Chief Executive Officer, and reviews and approves the compensation of the other executive officers. The Compensation Committee held six meetings in 1997. The Committee on Directors makes recommendations concerning Board membership, functions and compensation. The Committee on Directors will consider director nominations submitted by stockholders in accordance with the procedures described below under the caption "Stockholder Proposals for 1999 Annual Meeting." The Committee on Directors held three meetings in 1997. The Management Development Committee is responsible for planning management succession of the Company's senior officers, reviewing the performance of the Chief Executive Officer, and monitoring management resources and the performance of key executives. The Management Development Committee held three meetings in 1997. The Executive Committee did not meet during 1997. All of these committees are standing committees of the Board. COMPENSATION OF DIRECTORS The annual retainer for directors is $25,000. The fee for attending a meeting is $1,000 ($1,500 if held outside of Connecticut or New York City), except that the committee chairman receives an additional $500 for each meeting at which he or she presides. Messrs. Barnes and Martin do not receive a retainer or meeting fees for service as directors. The grant of rights to receive stock and the payment of dividend equivalents under the Non-Employee Director Deferred Stock Plan are additional forms of director compensation. Under this plan each non-employee director is granted the right to receive 6,000 shares of Common Stock when his or her membership on the Board terminates. The plan provides that each newly elected director will receive the same grant. The plan also provides for the payment of dividend equivalents equal to 6,000 times the dividend per share for each dividend payment date.(1) - --------------- (1)Mr. Barnes became a participant in the plan when it was adopted in 1987. He became an employee in 1993 and continues to participate in the plan. 4 7 MANAGEMENT'S STOCK OWNERSHIP As of January 31, 1998, the Company's directors, nominees for director, named executive officers, and directors and officers as a group beneficially owned the number of shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), shown below:
Amount and Nature of Percent of Name of Person Beneficial Common or Group Ownership(1,2) Stock - --------------------------------------------------------------------------------------------------- Thomas O. Barnes 635,397 3.2% Gary G. Benanav 7,913 * Francis C. Boyle, Jr. 28,533 * William S. Bristow, Jr. 623,886 3.1% Robert J. Callander 9,563 * Leonard M. Carlucci 35,942 * George T. Carpenter 153,573 * Donna R. Ecton 9,274 * Ali A. Fadel 50,614 * Robert W. Fiondella 9,544 * William V. Grickis, Jr. 2,362 * Frank E. Grzelecki 6,000 * Marcel P. Joseph 9,263 * Theodore E. Martin 258,121 1.3% Directors & officers as a group (18 persons) 1,873,989 9.3%
- -------------------------------------------------------------------------------- * Less than 1% of Common Stock beneficially owned. NOTES TO THE STOCK OWNERSHIP TABLE: (1) The named person or group has sole voting and investment power with respect to the shares listed in this column, except as set forth in this Note. Mr. Barnes has sole voting and shared investment power with respect to 334,237 shares and no voting and shared investment power with respect to 75,168 shares. Of these 75,168 shares, 9,000 shares are also included in the figure for Mr. Martin who shares investment power. Included in Mr. Carpenter's total are 136,446 shares held by corporations through which he has voting control. Mr. Bristow has shared voting and shared investment power with respect to 481,680 shares. The remainder of Mr. Bristow's shares are held in a trust which he has the power to revoke. The shares listed for Messrs. Barnes, Boyle, Carlucci, Fadel, Grickis, and Martin, and the directors and officers as a group, include 49,500, 13,875, 15,600, 43,750, 1,200, 192,560 and 326,935 shares, respectively, which they have the right to acquire within 60 days after January 31, 1998. The shares listed for Messrs. Barnes, Boyle, Carlucci, Fadel, Grickis and Martin, and the directors and officers as a group also include 3,487, 14,229, 11,261, 6,864, 395, 9,356 and 66,563 shares, respectively, over which they have voting power and limited investment power. These shares are held under the Company's Guaranteed Stock Plan (an employee stock ownership plan). The shares listed for Messrs. Barnes, Benanav, Bristow, Callander, Carpenter, Ecton, Fiondella, Grzelecki, and Joseph include 6,000 shares each that each of them have the right to receive under the Non-Employee Director Deferred Stock Plan described above. The shares listed for Messrs. Carlucci, Fadel and Martin do not include 46,500, 52,500 and 120,000 incentive stock units, respectively, that each currently may have the right to receive on February 16, 2001 pursuant to an Incentive Stock Right Agreement. A description of the Incentive Stock Right Agreement is contained in Note 3 to the Summary Compensation Table. 5 8 Except for the shares under the Non-Employee Director Deferred Stock Plan and the incentive stock rights of Messrs. Carlucci, Fadel and Martin, the number of shares reported as beneficially owned have been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Except for matters required to be submitted to stockholders, the Board of Directors believes that the Company is controlled by its Board of Directors acting as such. (2) Adjusted for 3-for-1 stock split effective April 25, 1997. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE The Company believes that its officers and directors have complied in 1997 with the filing requirements of the Exchange Act, except that a report filed on behalf of Mr. Cedric D. Beckett, Vice President, Barnes Group Inc. and President, Barnes Aerospace, when he became an executive officer in November 1997, inadvertently omitted ownership of incentive stock units. BENEFICIAL OWNERS OF MORE THAN 5% OF SHARES As of December 31, 1997, the individuals and institutions set forth below are the only persons known by the Company to be beneficial owners of more than 5% of the outstanding shares of Common Stock:
Amount and Nature of Percent of Name and Address Beneficial Common of Beneficial Owner Ownership(4) Stock - ------------------------------------------------------------------------------------------- Mr. Wallace Barnes(1) 2,041,924 10.1% 1875 Perkins Street Bristol, Connecticut 06010 Fleet National Bank(2,3) 5,788,457 28.7% 777 Main Street Hartford, Connecticut 06115
- --------------- (1) As of December 31, 1997, Mr. Wallace Barnes reported that he beneficially owned 2,041,924 (10.1%) shares of Common Stock. He has sole voting and investment power with respect to 1,181,239 shares; and sole voting power and shared investment power with respect to 830,685 shares; and shared voting and shared investment power with respect to 30,000 shares, which are held by a private charitable foundation established by Mr. Barnes, as to which shares he disclaims beneficial ownership. (2) As of December 31, 1997, Fleet National Bank ("Fleet") reported that it was the beneficial owner of 2,586,685 (12.8%) shares of Common Stock. Fleet reported that it had sole voting power with respect to 482,506 shares; sole investment power with respect to 459,416 shares; and shared investment power with respect to 2,117,219 shares. (3) As of December 31, 1997, Fleet reported that it held 3,201,772 (15.9%) shares of Common Stock in its capacity as trustee for the Company's Guaranteed Stock Plan (an employee stock ownership plan). The plan provides that the stock shall be voted by the Trustee as directed by the participants in the plan. Fleet disclaims beneficial ownership as to this stock. (4) Adjusted for 3-for-1 stock split effective April 25, 1997. REPORT OF THE COMPENSATION COMMITTEE The Company's compensation program for executive officers is designed to attract, retain and motivate superior executive talent and to align a significant portion of each officer's total compensation with the performance of the applicable business unit, the Company and the interests of the Company's stockholders. To this end, the Company has implemented a competitive total compensation program for 6 9 executive officers composed of the following elements, each of which are separately discussed below: base salary; annual bonus; and long-term compensation, including both awards under the Company's Long Term Incentive Plan and Stock Incentive Plan. BASE SALARY Base salaries for the President and Chief Executive Officer and other executive officers are established by considering competitive levels for positions of similar responsibility, the experience of the individual and the executive's expected contribution to the Company. Merit increases are determined based upon both the overall performance of the individual and the Company as a whole and changes in competitive compensation levels. Mr. Martin became President and Chief Executive Officer on July 1, 1995. His annual base salary was $525,004 in 1997. In determining Mr. Martin's salary, the Committee considered his leadership skills, fulfillment of financial and strategic objectives, and the salaries of chief executive officers of companies similar to the Company in size and complexity. ANNUAL BONUS Annual bonuses may be earned by executive officers under the Company's Management Incentive Compensation Plan ("MICP"). MICP payments are based on the performance of the Company as a whole or the business unit over which the executive has a direct influence. The measurements for the Company which are applicable to the President and Chief Executive Officer and executive staff officers are based on the Company's consolidated net income. The measurements which are applicable to executive officers having direct responsibility for operating units are based on the operating income of the applicable unit, less a charge for the capital employed by the unit. Each of the Company's executive officers is eligible to receive a percentage of his base salary as a bonus if the Company achieves its financial goals. The percentage varies depending on the individual's position with the Company. In 1997, the maximum amount of base salary payable as a bonus under the MICP to each of the Company's executive officers was: 100% for the President and Chief Executive Officer; 90% for the Group Presidents; 80% for the Senior Vice Presidents; and 50% for the Company's other executive officers. For exceptional performance results, the Compensation Committee may award amounts in excess of maximum to any participant. Mr. Martin received a bonus of $709,458 for fiscal 1997, which is a reflection of the Committee's satisfaction with the Company's record performance for fiscal 1997. LONG-TERM COMPENSATION The Committee believes that stockholder value is created by the generation of cash flow in excess of the risk-adjusted cost of stockholders' equity. The Company's Long Term Incentive Plan ("LTIP") rewards executive officers for increasing the excess of cash flow from operations over the risk-adjusted cost of equity. Under the LTIP, the Committee grants performance units to executive officers. Any resulting cash payments are equal to the increase in the value of the performance units over a three-year period. The value of a performance unit for any single year is equal to cash flow from operations, minus the risk-adjusted cost of equity capital for the current and previous four years. Awards for each three-year cycle are paid in the year following the end of the cycle. Awards under the LTIP paid in 1997 were based on an increase in the value of performance units over the three-year period from 1994 to 1996. Under the 1991 Barnes Group Stock Incentive Plan, the Committee grants stock options and other stock-based awards to executive officers and other key employees in an effort to align the interests of employees with those of stockholders. Except for one-time initial grants (which are typically awarded at 85% of market value) to certain senior executive officers upon assumption of their positions, options generally have been granted on an annual basis at the market price of the common stock on the date of grant. Such options become exercisable over time. In 1997, the Committee granted Mr. Martin a stock 7 10 option for 75,000 shares at fair market value on the date of the grant. In determining the size of the grant the Committee considered the magnitude of grants to chief executive officers of industrial companies of comparable size and complexity and the importance of linking a significant part of Mr. Martin's total compensation package to future performance of the Company's stock. OTHER Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), limits the Company's tax deduction to $1 million per year (the "Million Dollar Cap") for certain compensation paid to each of its Chief Executive Officer ("CEO") and the four highest compensated executives other than the CEO named in the proxy statement (the "Covered Executives"). Regulations issued under the Code exclude from the Million Dollar Cap compensation that is calculated based on attainment of pre-established, objective performance goals, if certain other requirements are met. The Committee's policy is to structure compensation awards for Covered Executives that will be deductible without limitation where doing so will further the purposes of the Company's executive compensation programs. The Committee also considers it important, however, to retain flexibility to design compensation programs that recognize a full range of performance criteria important to the Company's success, even where compensation payable under such programs may not be fully deductible. CONCLUSION The Committee believes that the elements of the compensation programs described above provide a competitive total compensation package to the Company's executive officers. Most importantly, an executive's total compensation is heavily dependent on corporate performance in a manner which aligns the interests of the executive with those of stockholders over the long term. COMPENSATION COMMITTEE: Gary G. Benanav, Chairman Robert J. Callander Donna R. Ecton Frank E. Grzelecki Marcel P. Joseph 8 11 COMPENSATION The following table sets forth compensation paid by the Company to its Chief Executive Officer and to the four remaining most highly-paid persons who were executive officers at the end of 1997 based on salary and any payments made under the MICP. Pursuant to applicable rules, compensation information is also provided for Mr. Barnes, who stepped down as Senior Vice President, Administration in May 1997. SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation ------------------------------- ------------------------------------ Awards Payouts ----------------------- ---------- Other Restricted Securities All Annual Stock Underlying Other Compen- Awards(3) Options(4) LTIP Compen- Name and Principal Position(1) Year Salary Bonus sation(2) ($) (#) Payouts(5) sation(6) ------------------------------ ---- -------- -------- --------- ---------- ---------- ---------- --------- T. E. MARTIN 1997 $525,004 $709,458 $133,289 $ -0- 75,000 $397,582 $163,797 President and 1996 500,004 575,000 18,764 1,660,000 -0- 72,480 29,984 Chief Executive Officer 1995 375,006 187,503 14,011 -0- 120,000 4,620 25,619 L. M. CARLUCCI 1997 220,500 202,965 42,161 -0- 21,600 156,020 50,424 Vice President, Barnes Group Inc. 1996 210,000 189,000 4,377 643,250 -0- 38,880 11,642 and President, Bowman 1995 176,374 88,187 3,613 -0- -0- 1,250 10,396 Distribution W. V. GRICKIS, JR. 1997 174,167 87,084 8,381 -0- 4,800 -0- 26,036 Vice President, General Counsel and Secretary A. A. FADEL 1997 249,012 -0- 19,117 -0- 21,600 177,002 28,116 Vice President, Barnes Group Inc. 1996 240,012 183,202 1,248 726,250 -0- 34,500 6,536 and President, Associated Spring 1995 197,504 80,000 1,275 -0- -0- 1,344 6,580 F. C. BOYLE, JR. 1997 143,800 97,161 13,495 -0- 4,200 64,560 23,734 Vice President, Controller 1996 131,988 65,994 2,596 -0- -0- 18,960 8,196 1995 131,988 65,994 2,596 -0- -0- 1,012 8,196 T. O. BARNES 1997 242,818 96,985 11,477 -0- 9,600 187,762 25,304 Chairman of the Board 1996 230,004 184,003 1,696 -0- -0- 38,240 9,479 1995 212,502 106,251 1,611 -0- -0- 1,555 10,328
(1) Mr. Grickis joined the Company in February 1997; accordingly, no information is provided for him for prior years. (2) The figure for Mr. Martin includes $130,130, $15,619 and $12,944 as reimbursement for taxes paid on insurance premiums paid by the Company and also includes $3,159, $3,145 and $1,067 of "above-market" interest (as defined in rules promulgated by the Securities and Exchange Commission) paid on deferred compensation for the years 1997, 1996 and 1995, respectively. (3) On February 16, 1996, Messrs. Martin, Carlucci and Fadel were each awarded incentive stock rights consisting of 120,000, 46,500 and 52,500 incentive stock units, respectively. Incentive stock units are denominated in shares of Common Stock. Half of the rights awarded to each executive entitle the holder to receive, without payment to the Company, shares of Common Stock equal to the number of incentive stock units credited to the holder on February 16, 2001, provided that the holder is an employee of the Company on that date. Units underlying these rights were credited to each executive as of the date of the award. The other half of the rights awarded to each executive entitle the holder to receive, without payment to the Company, shares of Common Stock equal to the number of incentive stock units credited to the holder on February 16, 2001, provided that the holder is an employee of the Company on that date and that specified performance targets for the Company's earnings per share are met. Units underlying these rights are credited in increments to each executive over the term of the award, commencing February 15, 1997, in accordance with a schedule based on the attainment by the Company of specified levels of earnings per share. Pursuant to the terms of the award, the holder 9 12 is credited with dividend equivalents on all incentive stock units credited to him based upon dividends paid on outstanding shares of Common Stock. Such dividend equivalents, once credited, are converted into a number of additional incentive stock units, as of each dividend payment date, equal to the amount of dividends that would have been paid on the number of shares of Common Stock equal to the number of incentive stock units credited to the holder immediately prior to the dividend payment date divided by the market price of the Common Stock on the dividend payment date. As of December 31, 1997 Messrs. Martin, Carlucci and Fadel were credited with 64,052, 24,819, 28,021 incentive stock units, respectively, having a value as of December 31, 1997 of $1,457,183, $564,632 and $637,478, respectively. (4) Adjusted for 3-for-1 stock split effective April 25, 1997. (5) Payment in the designated year with respect to three-year performance cycles ending the prior year. Thus, the payment made in 1997 covered the three-year cycle ending in 1996. (6) Includes matching contributions by the Company under the Guaranteed Stock Plan and premiums paid for life insurance. In the case of Mr. Barnes, it also includes the amount of dividend equivalents that he received under the Company's Non-Employee Director Deferred Stock Plan described above under the caption "Compensation of Directors." In the case of Mr. Grickis, the amount includes a hiring bonus. STOCK OPTIONS The following table provides information on grants of stock options in 1997 pursuant to the 1991 Barnes Group Stock Incentive Plan to the executive officers listed in the Summary Compensation Table. OPTION/SAR GRANTS IN 1997
Potential Value at Assumed Annual Rates of Number of Percent of Stock Price Securities Total Appreciation to Underlying Options End of Option Term Options Granted to Exercise in 2007(3) Granted(1,2) Employees Price(1) Expiration ----------------------- Name (#) in 1997 ($/Sh) Date 5% 10% - ------------------ ------------ ----------- -------- ---------- ---------- ---------- T. E. Martin 75,000 16.9% $22.333 2/20/07 $1,053,525 $2,669,775 F. C. Boyle, Jr. 4,200 0.9% 22.333 2/20/07 58,997 149,507 L. M. Carlucci 21,600 4.9% 22.333 2/20/07 303,415 768,895 A. A. Fadel 21,600 4.9% 22.333 2/20/07 303,415 768,895 W. V. Grickis, Jr. 4,800 1.1% 22.333 2/20/07 67,426 170,867 T. O. Barnes 9,600 2.2% 22.333 2/20/07 134,851 341,731
(1) Adjusted for 3-for-1 stock split effective April 25, 1997. (2) Options become exercisable in incumbents of 25% over a four-year period beginning with the first year anniversary following the date of the grant. (3) With respect to options expiring on February 20, 2007, the stock price in 2007 would be $36.38 based on 5% annual appreciation from the price on the date of the grant and $57.93 based on 10% annual appreciation. The preceding calculations are not intended by the Company as predictions of future stock prices for Company shares. The following table provides information relating to stock option exercises in 1997 by the named executive officers and the number and value of each such officer's unexercised in-the-money options/SARs on December 31, 1997, based on the difference between the exercise price and the $22.75 per share year-end market price of the Common Stock. 10 13 AGGREGATED OPTION/SAR EXERCISES IN 1997 AND YEAR-END OPTION/SAR VALUES
Number of Securities Value of Unexercised Underlying In-The-Money Unexercised Options/SARs Options/SARs Shares at Fiscal Year-End(#) at Fiscal Year-End($) Acquired on Value --------------------------- --------------------------- Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable - ------------------- ----------- ----------- ----------- ------------- ----------- ------------- T. E. Martin 2,850 $ 37,249 173,910 135,000 $2,053,816 $591,255 F. C. Boyle, Jr. -0- -0- 12,825 4,200 156,877 1,751 L. M. Carlucci 56,850 1,052,850 10,200 21,600 122,584 9,007 A. A. Fadel 57,050 1,011,302 27,100 32,850 377,503 165,720 W. V. Grickis, Jr. -0- -0- -0- 4,800 -0- 2,002 T. O. Barnes 15,000 247,463 39,600 17,100 489,971 108,478
LONG-TERM INCENTIVE PLAN AWARDS The following table provides information relating to grants of performance units in 1997 under the LTIP. LONG-TERM INCENTIVE PLANS -- AWARDS IN 1997
Performance or Number of Other Period Shares, Units Until or Other Maturation Name Rights(#)(1) or Payout(2) - ------------------- ------------- -------------- T. E. Martin 81,600 1997-1999 F. C. Boyle, Jr. 7,500 1997-1999 L. M. Carlucci 30,600 1997-1999 A. A. Fadel 39,900 1997-1999 W. V. Grickis, Jr. -0- 1997-1999 T. O. Barnes 22,800 1997-1999
(1) Adjusted for 3-for-1 stock split effective April 25, 1997. (2) Under the LTIP, there are no thresholds, targets or maximums as those terms are used in the Securities and Exchange Commission's rules. Payments are based on the increase in the value of performance units during the indicated performance period. The value of a performance unit over the three-year period ending December 31, 1997 increased by $3.33. However, this is not necessarily representative of the increase, if any, that will occur during the period 1997-1999. Payments under the LTIP made in the prior three years are shown in the Summary Compensation Table. PENSION PLANS The following table gives examples of estimated annual retirement benefits payable to a named executive officer (other than Messrs. Martin, Carlucci, Fadel and Barnes, whose benefits are estimated in Pension Plan Table B below) as though he had retired in 1997 at age 65 in specified compensation and years of service classifications under the Company's Salaried Retirement Income Plan, Retirement Benefit Equalization Plan, and Supplemental Executive Retirement Plan. 11 14 PENSION PLAN TABLE A
Years of Service --------------------------------------------------------------- Remuneration 15 20 25 30 35 40 - ------------ -------- -------- -------- -------- -------- -------- $125,000 $ 43,238 $ 57,650 $ 72,063 $ 75,188 $ 78,313 $ 81,438 150,000 52,425 69,900 87,375 91,125 94,875 98,625 200,000 70,800 94,400 118,000 123,000 128,000 133,000 250,000 89,175 118,900 148,625 154,875 161,125 167,375 300,000 107,550 143,400 179,250 186,750 194,250 201,750 350,000 125,925 167,900 209,875 218,625 227,375 236,125 400,000 144,300 192,400 240,500 250,500 260,500 270,500 450,000 162,675 216,900 271,125 282,375 293,625 304,875 500,000 181,050 241,400 301,750 314,250 326,750 339,250 550,000 199,425 265,900 332,375 346,125 359,875 373,625 600,000 217,800 290,400 363,000 378,000 393,000 408,000
The compensation included in Pension Plan Table A in determining earnings for retirement plan purposes includes only annual salaries as shown in the column labeled "Salary" in the Summary Compensation Table. Benefits are computed based on a straight-life annuity. The benefits listed in the table are not subject to a deduction for Social Security. Messrs. Martin, Carlucci, Fadel and Barnes all participate in the Company's Supplemental Senior Officer Retirement Plan. The following table gives examples of estimated annual retirement benefits payable under the Company's Supplemental Senior Officer Retirement Plan to each of these senior executive officers and Mr. Barnes as though he had retired in 1997 at age 65 in specified compensation and years of service classifications. PENSION PLAN TABLE B
15 or More Remuneration Years of Service - ------------ ---------------- $ 125,000 $ 68,750 150,000 82,500 200,000 110,000 250,000 137,500 300,000 165,000 350,000 192,500 400,000 220,000 450,000 247,500 500,000 275,000 600,000 330,000 700,000 385,000 800,000 440,000 900,000 495,000 1,000,000 550,000 1,100,000 605,000 1,200,000 660,000 1,300,000 715,000
The compensation included in determining earnings for the Supplemental Senior Officer Retirement Plan includes only annual salary and bonus as shown in the columns labeled "Salary" and "Bonus" in the Summary Compensation Table. Benefits are computed based on a straight-life annuity. This plan functions as an "umbrella" plan, and benefits listed in the table above are subject to deduction for Social 12 15 Security benefits, benefits derived from other employers' pension plans and any benefits earned under the Company's other defined benefit plans, including, without limitation, the Salaried Retirement Income Plan, Retirement Benefit Equalization Plan, and Supplemental Executive Retirement Plan. Years of service as of December 31, 1997, rounded to the nearest whole year, for the named executive officers are as follows: T.E. Martin, 7 years; F.C. Boyle, Jr., 20 years; L.M. Carlucci, 22 years; A.A. Fadel, 6 years; W.V. Grickis, Jr., 1 year; and T.O. Barnes, 7 years. CHANGE-IN-CONTROL AGREEMENTS The Company has entered into change-in-control agreements (the "Agreements") as of October 17, 1997 with Mr. Martin and each executive officer, except Mr. Beckett, and as of November 1, 1997 with Mr. Beckett. The Agreements have an initial term ending on December 31, 1999, with automatic annual extensions beginning in 1999, unless the Company elects not to renew them. Severance benefits are payable upon the occurrence of a Change in Control (as defined in the Agreements) and the subsequent termination of the executive's employment (a) by the Company, other than for Cause or Disability (each as defined in the Agreements) or (b) by the executive for Good Reason (as defined in the Agreements). Upon such a termination following a Change in Control, the executive receives (a) a lump sum payment representing a multiple (3 times in the case of Mr. Martin, 2 times for each other executive) of salary and bonus (defined as the highest of (i) the average annual bonus earned in the three years prior to the year in which the date of termination occurs, (ii) the average annual bonus earned in the three years prior to the year in which the Change in Control occurs or (iii) the target bonus for the year in which the date of termination occurs); (b) a pro rata target award under each of the Company's incentive compensation plans to the date of termination (less any pro rata bonus previously paid for the same period); and (c) benefit plan continuation for a number of months (36 or 24) corresponding to the multiple in (a), which continuation will be reduced to the extent that the executive subsequently receives coverage elsewhere. In addition, the Agreements provide that upon the occurrence of a Change in Control, (a) the executive receives pro rata target awards under the LTIP (as if fully vested) and the Company's other incentive compensation plans; (b) the executive's options vest and become exercisable; and (c) all restrictions on the executive's stock-based awards lapse. Payments to the executive will be reduced to the maximum amount necessary to avoid imposition of the 20% golden parachute excise tax, but only if such reduction will leave the executive in a better after-tax position. No severance payment or benefits will become payable unless the executive signs a release relating to all claims regarding the executive's employment or termination thereof. 13 16 PERFORMANCE GRAPH A stock performance graph based on cumulative total returns (price change plus reinvested dividends) for $100 invested on December 31, 1992 is set forth below. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN OF BARNES GROUP INC., THE S&P 500 INDEX, AND THE S&P MANUFACTURING (INDUSTRIAL DIVERSIFIED) INDEX
- ---------------------------------------------------------------------------------------- 1992 1993 1994 1995 1996 1997 - ---------------------------------------------------------------------------------------- BGI $100.0 $107.1 $135.7 $133.7 $230.9 $269.5 S&P 500 $100.0 $110.0 $111.5 $155.3 $188.5 $251.4 S&P Manuf. Div. Index $100.0 $121.4 $125.6 $176.8 $235.8 $324.7 - ----------------------------------------------------------------------------------------
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS Although not required by the Certificate of Incorporation or By-Laws, it has been the Company's practice for many years to have the stockholders act on a proposal of the Board of Directors relating to the selection of independent accountants. A representative of Price Waterhouse LLP is expected to be present at the meeting and will have the opportunity to make a statement, if desired, and to be available to respond to appropriate questions. The Board of Directors unanimously recommends a vote FOR ratification of the selection of Price Waterhouse LLP as independent accountants (proposal 2 on the proxy card). STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING The Board of Directors requests that any stockholder who wishes to recommend nominees for directors submit names of such nominees in writing to the Secretary of the Company at its address given above prior to December 1, 1998. Stockholders wishing to submit proposals for inclusion in the Company's proxy statement and form of proxy for the 1999 Annual Meeting of Stockholders must submit proposals to the Company at such address by November 4, 1998. Stockholders wishing to present proposals for a formal vote (other than proposals included in the Company's proxy statement), or to nominate candidates for election as directors at a meeting of the Company's stockholders, must do so in accordance with the Company's By-Laws. In order to be presented at the 1999 Annual Meeting, the By-Laws provide that such stockholder proposals or nominations may be made only by a stockholder of record who shall have given notice of the proposed business or nomination to the Company between January 8, 1999 and February 7, 1999. The notice must contain, among other things, the name and address of the stockholder, a brief description of the business desired to be brought before the Annual 14 17 Meeting, the reasons for conducting the business at the Annual Meeting, and the stockholder's ownership of the Company's capital stock. In the case of nominations, the notice should contain the background and stock ownership information with respect to each nominee. Stockholders may obtain a copy of the relevant provisions of the By-Laws by writing to the Secretary of the Company at the address given above. GENERAL The cost of solicitation of proxies will be borne by the Company. Such solicitation will be made by mail and may also be made by the Company's officers and employees personally or by telephone, facsimile or telegram without additional compensation. The Company may also reimburse brokers, dealers, banks, voting trustees or their nominees for their reasonable expenses in sending proxies, proxy material and annual reports to beneficial owners. The Company has retained Georgeson & Company Inc., Wall Street Plaza, New York, New York 10005, to aid in the solicitation of proxies. Georgeson & Company will solicit proxies by personal interview, telephone, facsimile and mail and may request brokerage houses and other nominees and fiduciaries or custodians to forward soliciting materials to beneficial owners of the Company's stock. For these services, the Company will pay a fee of approximately $7,000, plus expenses. The Company had outstanding 20,150,040 shares of common stock as of February 9, 1998, each of which is entitled to one vote. Only holders of record at the close of business on February 9, 1998 will be entitled to vote. Under applicable Delaware law, abstentions and broker non-votes as to any proposal will not be counted as having been voted on the proposal and will have no effect on the outcome of the vote thereon. If a nominee for director should become unavailable for any reason, it is intended that votes will be cast for a substitute nominee designated by the Board of Directors. The Board has no reason to believe the persons nominated will be unable to serve if elected. The Board does not know of any matters to be presented for consideration at the meeting other than the matters described in proposals 1 and 2 of the Notice of Annual Meeting. However, if other matters are presented, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their judgment. All shares represented by the accompanying proxy, if the proxy is given prior to the meeting, will be voted in the manner specified therein. By order of the Board of Directors. /s/ William V. Grickis, Jr. William V. Grickis, Jr. Secretary March 11, 1998 15 18 Barnes Group Inc. Executive Office 123 Main Street Post Office Box 489 Bristol, Connecticut 06011-0489 U.S.A. [Barnes Group Logo] 19 - -------------------------------------------------------------------------------- - FOLD AND DETACH HERE - 1998 - BARNES GROUP INC. - VOTING INSTRUCTION CARD GUARANTEED STOCK PLAN ANNUAL MEETING OF STOCKHOLDERS APRIL 8, 1998 - 10:30 A.M. ASSOCIATED SPRING GROUP HEADQUARTERS WINDING RIVER OFFICE PARK, 80 SCOTT SWAMP ROAD, FARMINGTON, CONNECTICUT 06032 DIRECTIONS: As a participant in the Barnes Group Inc. Guaranteed Stock Plan you are entitled to instruct the Plan's Trustee, Fleet National Bank, how to vote the stock allocated to you under the Plan, a proportionate share of the stock held by the Trustee in a suspense account which is not yet allocated, and a proportionate share of allocated stock for which no voting instructions are received at the Annual Meeting of Stockholders to be held on April 8, 1998, and at any adjournment thereof, upon the matters set forth in the Notice of such meeting. Please complete this card and mail it in the enclosed postage-paid envelope provided to you. It must be received no later than April 3. VOTING INSTRUCTIONS: I, the participant in the Barnes Group Inc. Guaranteed Stock Plan signing this voting instruction card, hereby instruct the Plan's Trustee, Fleet National Bank, to vote the shares of Barnes Group stock allocated to me under the foregoing Plan, a proportionate share of the stock held by the Trustee in the suspense account, and a proportionate share of allocated stock for which no voting instructions are received as specified above. IF NOT OTHERWISE SPECIFIED, THE SHARES COVERED BY THIS VOTING INSTRUCTION CARD WILL, UPON RECEIPT OF THIS SIGNED CARD, BE VOTED FOR PROPOSALS 1 AND 2. (TO BE SIGNED, DATED AND VOTED ABOVE) 20 1998 - BARNES GROUP INC. - VOTING INSTRUCTION CARD GUARANTEED STOCK PLAN Please mark your votes as /X/ indicated in this example. The Board of Directors unanimously recommends a vote FOR each of the following nominees and proposals: 1. ELECTION OF DIRECTORS FOR A THREE-YEAR TERM: George T. Carpenter, Donna R. Ecton and Frank E. Grzelecki (INSTRUCTION: To withhold authority to vote for any individual nominee, For All Nominees Withhold Authority write that nominee's name on the Except as Indicated For All Nominees line provided below.) / / / / ___________________________________ 2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS: FOR AGAINST ABSTAIN / / / / / / I plan to attend the meeting. / / This proxy is solicited on behalf of the Board of Directors. Unless otherwise directed, this proxy shall be voted FOR proposals 1 and 2. Please sign exactly as name(s) appear hereon. If the shares are registered in the names of two or more persons, each should sign. Executors, administrators, trustees, guardians, attorneys-in-fact, general partners, and other persons acting in a representative capacity should add their titles. ___________________________________________________ Signature ___________________________________________________ Signature Dated: ______________________________________, 1998 PLEASE RETURN THIS CARD PROMPTLY USING THE ENCLOSED POSTAGE-PAID ENVELOPE. 21 - ------------------------------------------------------------------------------- - FOLD AND DETACH HERE - 1998 - BARNES GROUP INC. - PROXY ANNUAL MEETING OF STOCKHOLDERS APRIL 8, 1998 - 10:30 A.M. ASSOCIATED SPRING GROUP HEADQUARTERS WINDING RIVER OFFICE PARK, 80 SCOTT SWAMP ROAD, FARMINGTON, CONNECTICUT 06032 U.S.A. The undersigned stockholder of Barnes Group Inc. hereby appoints William V. Grickis, Jr. and Charles E. Lindsey Jr., each with the power to appoint his substitute, as the undersigned's proxies and attorneys-in-fact to vote the shares of stock covered by this proxy at the Annual Meeting of Stockholders on April 8, 1998, or at any adjournment thereof, upon the matters set forth in the Notice of such meeting, with all the powers the undersigned would possess if personally present. Each of said persons is individually authorized to vote as specified on proposals 1 and 2 and otherwise in their discretion. (TO BE SIGNED, DATED AND VOTED ABOVE) 22 1998 - BARNES GROUP INC. - PROXY Please mark your votes as indicated /X/ in this example. The Board of Directors unanimously recommends a vote FOR each of the following nominees and proposals: 1. ELECTION OF DIRECTORS FOR A THREE-YEAR TERM: George T. Carpenter, Donna R. Ecton and Frank E. Grzelecki For All Nominees Withhold Authority Except as Indicated For All Nominees / / / / (INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on the line provided below.) ------------------------------------------------------------- 2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS: FOR AGAINST ABSTAIN / / / / / / I plan to attend the meeting. / / THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THIS PROXY WILL BE VOTED IN THE MANNER SPECIFIED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). UNLESS OTHERWISE DIRECTED, THIS PROXY SHALL BE VOTED FOR PROPOSALS 1 AND 2. PLEASE RETURN THIS CARD PROMPTLY USING THE ENCLOSED POSTAGE-PAID ENVELOPE. SIGNATURE SIGNATURE DATE: ---------------------- ----------------------- ------- PLEASE SIGN EXACTLY AS NAME(S) APPEAR HEREON. IF THE SHARES ARE REGISTERED IN THE NAMES OF TWO OR MORE PERSONS, EACH SHOULD SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS, ATTORNEYS-IN-FACT, GENERAL PARTNERS, AND OTHER PERSONS ACTING IN A REPRESENTATIVE CAPACITY SHOULD ADD THEIR TITLES. WHEN THE PROXY IS GIVEN BY A CORPORATION, IT SHOULD BE SIGNED BY AN AUTHORIZED OFFICER. -----END PRIVACY-ENHANCED MESSAGE-----