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
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Mine Safety Appliances Company
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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Item 22(a)(2) of Schedule 14A.
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6(i)(3).
[_] 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:
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Notes:
[LOGO OF MSA CO.]
MINE SAFETY APPLIANCES COMPANY P.O. BOX 426, PITTSBURGH, PENNSYLVANIA 15230
PHONE (412) 967-3000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE HOLDERS OF COMMON STOCK OF
MINE SAFETY APPLIANCES COMPANY:
Notice is hereby given that the Annual Meeting of Shareholders of Mine
Safety Appliances Company will be held on Tuesday, April 23, 1996, at 10:00
A.M., local Pittsburgh time, at the Company's headquarters, 121 Gamma Drive,
RIDC Industrial Park, O'Hara Township, Pittsburgh, Pennsylvania for the purpose
of considering and acting upon the following:
(1) Election of Directors: The election of two directors for a term of
three years;
(2) Selection of Auditors: The selection of independent auditors for
the year ending December 31, 1996;
and such other business as may properly come before the Annual Meeting or any
adjournment thereof.
Only the holders of Common Stock of the Company of record on the books of
the Company at the close of business on February 16, 1996 are entitled to notice
of and to vote at the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you expect
to attend the meeting, please execute and date the accompanying form of proxy
and return it to the Company in the enclosed self-addressed, stamped envelope at
your earliest convenience. If you attend the meeting, you may, if you wish,
withdraw your proxy and vote your shares in person.
By Order of the Board of Directors,
DONALD H. CUOZZO
Secretary
March 14, 1996
March 14, 1996
MINE SAFETY APPLIANCES COMPANY
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Mine Safety Appliances Company (the "Company") of
proxies in the accompanying form to be voted at the Annual Meeting of
Shareholders of the Company to be held on Tuesday, April 23, 1996, and at any
and all adjournments thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. If a proxy in the accompanying form is
duly executed and returned, the shares of Common Stock represented thereby will
be voted and, where a specification is made by the shareholder, will be voted in
accordance with such specification. A shareholder giving the accompanying proxy
has the power to revoke it at any time prior to its exercise upon written notice
given to the Secretary of the Company.
The mailing address of the principal executive offices of the Company is
P.O. Box 426, Pittsburgh, Pennsylvania 15230.
VOTING SECURITIES AND RECORD DATE
As of February 16, 1996, the Company had 5,181,810 shares of Common Stock
issued and outstanding. Holders of Common Stock of the Company of record on the
books of the Company at the close of business on February 16, 1996 are entitled
to notice of and to vote at the Annual Meeting and at any adjournment thereof.
Such holders are entitled to one vote for each share held and do not have
cumulative voting rights with respect to the election of directors. Holders of
outstanding shares of the Company's 4-1/2% Cumulative Preferred Stock are not
entitled to vote at the meeting.
See "Security Ownership" for information with respect to share ownership by
the directors and executive officers of the Company and the beneficial owners of
5% or more of the Company's Common Stock.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Two directors will be elected at the Annual Meeting to serve until the
Annual Meeting in 1999 and until a successor has been elected and qualified. The
Board of Directors recommends a vote FOR the election of the two nominees named
below, each of whom has consented to be named as a nominee and to serve if
elected. Properly executed proxies timely received in the accompanying form will
be voted for the election of the nominees named below, unless otherwise directed
thereon, or for a substitute nominee designated by the Board in the event a
nominee named becomes unavailable for election.
The following table sets forth certain information about the nominees, both
of whom are currently members of the Board, and about the other directors whose
terms of office will continue after the Annual Meeting:
1
PRINCIPAL OCCUPATION AND ANY DIRECTOR OTHER
NAME POSITION WITH THE COMPANY AGE SINCE DIRECTORSHIPS
- ---- ------------------------- --- ----- -------------
NOMINEES FOR TERMS EXPIRING IN 1999:
Joseph L. Calihan Managing Partner of Bradford 58 1993 None
Capital Partners (venture capital
investments and acquisitions);
Chairman of the Board and Chief
Executive Officer of Bradford
Schools, Inc. (post-secondary
business schools)
Leo N. Short, Jr. Retired; formerly Chairman of the 69 1986 None
Board and Chief Executive Officer
of the Company
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 1997:
Calvin A. Campbell, Jr. President and Chief Executive 61 1994 Eastman Chemical Company
Officer of Goodman Equipment
Corporation (manufacturer of
underground mining locomotives
and plastics blow molding
machinery)
G. Donald Gerlach Partner of Reed Smith Shaw & 62 1989 None
McClay (attorneys-at-law); Vice
Chairman of Keystone Financial
Corp. (hospital investment
manager)
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 1998:
Helen Lee Henderson Investor; President of Chiron 57 1991 None
Productions, Ltd. (theatrical and
media productions)
John T. Ryan III President, Chairman and Chief 52 1981 None
Executive Officer of the Company
For at least the past five years, directors Calihan, Campbell, Gerlach and
Henderson have engaged in the principal occupations indicated in the table
above. Prior to becoming President, Chairman and Chief Executive Officer in
October 1991, Mr. Ryan was President of the Company since April 1990 and
previously was Executive Vice President of the Company. Mr. Short was Chairman
of the Board and Chief Executive Officer of the Company from April 1990 to
October 1991 and previously was President and Chief Executive Officer of the
Company. Mr. Campbell also was Chairman of the Board (May 1991 to May 1992) and
President and Chief Executive Officer (February 1992 to May 1992) of Cyprus
Minerals Company (now Cyprus Amax Minerals Company).
The Board of Directors has established an Audit Committee, a Compensation
Committee, a Nominating Committee and certain other committees. The Audit
Committee, which met three times during 1995, reviews the
2
preparations for and scope of the annual audit of the Company's financial
statements, makes recommendations as to the retention of independent auditors
and as to their fees and performs such other duties relating to the financial
statements of the Company and other matters as the Board of Directors may assign
from time to time. The current members of the Audit Committee are directors
Calihan, Campbell, Gerlach and Henderson, each for a term expiring at the 1996
organizational meeting of the Board of Directors.
The Compensation Committee presently consists of directors Campbell,
Gerlach, Henderson and Short, each for a term expiring at the 1996
organizational meeting of the Board. The Compensation Committee, which met two
times in 1995, makes recommendations to the Board with respect to the
compensation of officers of the Company. A report of the Compensation Committee
as to its policies in recommending the 1995 compensation of the Company's
executive officers appears below. The Compensation Committee also administers
the Company's 1987 Management Share Incentive Plan, and is empowered to award
restricted shares and grant stock options thereunder, and administers the
predecessor 1980 Management Share Incentive Plan.
The current members of the Nominating Committee are directors Calihan,
Gerlach, Henderson and Ryan, each for a term expiring at the 1996 organizational
meeting of the Board. The Nominating Committee, which met one time in 1995,
considers potential candidates for election to the Board of Directors and makes
recommendations to the Board. Any shareholder who desires to have an individual
considered for nomination by the Nominating Committee must submit a
recommendation in writing to the Secretary of the Company not later than
November 30 preceding the annual meeting at which the election is to be held.
The Board of Directors met six times during 1995. All current directors
attended at least 75% of the combined total of the meetings of the Board and of
all committees on which they served.
VOTE REQUIRED
The two candidates receiving the highest numbers of votes cast by the
holders of Common Stock voting in person or by proxy will be elected as
directors. A proxy vote indicated as withheld from a nominee will not be cast
for such nominee but will be counted in determining whether a quorum exists for
the meeting.
The Company's Restated Articles require that any shareholder intending to
nominate a candidate for election as a director must give written notice,
containing specified information, to the Secretary of the Company not later than
90 days in advance of the meeting at which the election is to be held. No such
notices were received with respect to the 1996 Annual Meeting. Therefore, only
the nominees named above will be eligible for election at the meeting.
3
OTHER INFORMATION CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual, long-term
and other compensation paid or accrued by the Company and its subsidiaries for
the years 1995, 1994 and 1993 for the persons who were at the end of 1995 the
chief executive officer and the other four most highly compensated executive
officers of the Company (the "Named Officers"):
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------------- --------------------------
SHARES
UNDERLYING
OTHER STOCK
ANNUAL RESTRICTED OPTIONS
NAME AND COMPENSA- STOCK (NUMBER OF ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) TION ($)(1) AWARDS ($)(2) SHARES) COMPENSATION ($)(3)
- ------------------ ---- ---------- --------- ----------- ------------- ---------- -------------------
John T. Ryan III, 1995 $ 335,280 $ 219,500 -- -- -- $ 28,082
President, 1994 298,356 132,431 -- -- 5,530 25,198
Chairman and 1993 298,356 62,853 -- $ 326,564 -- 23,074
Chief Executive
Officer
Werner E. Christen, 1995 $ 323,153 $ 42,412 -- -- -- --
Vice President 1994 268,736 30,320 -- -- -- --
(Managing 1993 268,736 -- -- -- -- --
Director of MSA
Europe and General
Director of German
subsidiary)
Thomas B. Hotopp, 1995 $ 201,840 $ 77,000 -- -- -- $ 15,623
Senior Vice 1994 192,204 47,124 -- -- 2,220 14,652
President- 1993 192,204 32,500 -- $ 125,995 -- 13,352
Safety Products
Frederick Tepper, 1995 $ 161,400 $ 32,700 -- -- -- $ 23,302
Vice President 1994 150,840 42,784 -- -- 1,710 23,258
(General Manager, 1993 150,840 25,700 -- $ 89,341 -- 21,210
Instrument Division)
James E. Herald, 1995 $ 150,000 $ 56,500 -- -- -- $ 17,586
Vice President- 1994 138,900 37,555 -- -- 1,330 14,626
Finance 1993 138,900 17,600 -- $ 91,875 -- 15,444
- ---------
(1) For each year, the incremental cost to the Company of personal benefits
provided to any Named Officer did not exceed the lesser of $50,000 or 10%
of aggregate salary and bonus.
(2) The amounts shown in this column represent the market values on January 29,
1993 of restricted shares awarded on that date. At December 31, 1995 the
number and market values of restricted shares held by the Named Officers
were as follows: Mr. Ryan, 7,475 shares ($358,800); Mr. Christen, none; Mr.
Hotopp, 2,884 shares ($138,432); Mr. Tepper, 2,045 shares ($98,160); and
Mr. Herald, 2,103 shares ($100,944). Holders of restricted shares receive
dividends at the same rate as paid on other shares of Common Stock.
(3) 1995 amounts include Company matching contributions to the Company's
Retirement Savings and Supplemental Savings Plans as follows: Mr. Ryan,
$13,959; Mr. Hotopp, $9,959; Mr. Tepper, $8,284; and Mr. Herald, $7,503.
1995 amounts also include life insurance premiums paid by the Company as
follows: Mr. Ryan, $14,123; Mr. Hotopp, $5,664; Mr. Tepper, $15,018; and
Mr. Herald, $10,083.
4
STOCK OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth information concerning stock options under
the MSIP exercised by the Named Officers during 1995 and stock options under the
MSIP held by the Named Officers at December 31, 1995. No stock options were
granted to the Named Officers in 1995.
NUMBER OF
SHARES VALUE OF
NUMBER OF UNDERLYING UNEXERCISED
SHARES VALUE UNEXERCISED IN-THE-MONEY
ACQUIRED REALIZED OPTIONS AT OPTIONS AT
NAME ON EXERCISE (1) 12/31/95 12/31/95 (4)
- ---- ----------- -------- ----------- ------------
John T. Ryan III 860 $ 2,365 9,043(2) $ 0
1,887(3) $ 0
Werner E. Christen -- -- 0 --
Thomas B. Hotopp -- -- 3,720(2) $ 14,318
Frederick Tepper 1,160 $ 11,455 6,810(2) $ 52,903
James E. Herald -- -- 3,930(2) $ 11,120
- ---------
(1) Represents the difference between the fair market value of the shares
acquired on the date of exercise and the option price.
(2) Options exercisable at December 31, 1995.
(3) Options not exercisable at December 31, 1995.
(4) Represents the amount by which the December 31, 1995 market value of the
shares subject to certain unexercised options exceeded the option price of
those options as follows: Mr. Hotopp, 3,720 shares; Mr. Tepper, 5,310
shares; and Mr. Herald, 2,930 shares. At December 31, 1995, the option
price of all other unexercised options exceeded the market value of the
option shares.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on 1995 executive compensation:
The Compensation Committee of the Board of Directors is responsible for
recommending to the Board salaries and bonuses to be paid to the Company's
corporate officers, including its executive officers. The Compensation Committee
is also responsible for administering the Company's shareholder approved 1987
Management Share Incentive Plan (the "MSIP"), which permits the Committee to
make discretionary grants of stock options and restricted stock as incentives to
executive officers and other key employees.
The Compensation Committee's policy in recommending salaries is designed to
pay executive officer salaries at competitive levels necessary to attract and
retain competent personnel while at the same time recognizing Company, division
and individual performance factors. To do this, the Company periodically retains
compensation consultants to assist in evaluating each United States executive
officer position and in determining the market level salary range for the
position based on salaries paid for executive positions with similar duties and
responsibilities by other manufacturing companies of comparable size and sales
volumes. Between these periodic evaluations, market level salary ranges for each
position are reviewed to reflect changes shown by data provided from
compensation surveys. Within the market level salary range for each executive
officer position, the salary to be paid to the individual officer is determined
based on a consideration of Company, division and individual performance. For
United States officers other than the chief executive officer, Company
performance, measured primarily by consolidated net income for the preceding
year, and compensation survey data are used to establish the aggregate budget
for salary adjustments. Individual salary adjustments are then determined by
allocating the aggregate budget taking into consideration the relationship of
the officer's current salary to the market level range and an evaluation of the
officer's individual performance made initially by the chief executive officer
or the officer's other immediate supervisor. In the case of the chief executive
officer, the individual performance evaluation and the determination of the
amount of the salary adjustment are made by the Compensation Committee.
5
The Company has one executive officer located overseas, Werner E. Christen,
a Vice President of the Company. Mr. Christen is the Managing Director of MSA
Europe and the General Director of the Company's German subsidiary. The
determination of Mr. Christen's salary is made in a manner similar to that used
for executive officers located in the United States, except that the market
level salary range for his position is determined by reference to salaries paid
for similar executive positions in Germany and corporate performance is measured
by the income of the German subsidiary, rather than by consolidated net income.
In determining Mr. Christen's salary, the Company also takes into account the
fact that Mr. Christen does not participate in stock option and restricted stock
awards made to other executive officers under the MSIP and also does not receive
many of the insurance and other benefits available to United States officers.
The Committee considered 1995 executive officer salaries at its meeting in
December 1994. In reviewing executive officer salaries, the Committee
considered, in addition to individual performance evaluations, the results of an
October 1994 report by William M. Mercer Incorporated, a compensation
consultant, which compared the Company's salaries for executive officer
positions with market salaries for comparable positions. In the case of John T.
Ryan III, the chief executive officer, the report indicated that Mr. Ryan's 1994
salary was sufficiently below the median market salary for his position as to be
outside the range of 80% to 120% of the median market salary specified in the
Committee's compensation policy. The Committee also considered a request by Mr.
Ryan to limit the amount of his salary increase. In deference to Mr. Ryan's
request, the Committee increased Mr. Ryan's 1995 salary by only the amount
necessary to achieve the minimum 80% relationship to the median market salary
for his position.
The Company's annual bonus policy is designed to make a significant
percentage of an executive officer's total cash compensation dependent upon
corporate and individual performance. At targeted levels for United States
officers, this percentage is 50% of median market level salary for the chief
executive officer, and ranges between 40% and 20% of median market level salary
for other executive officers. For the chief executive officer, the percentage of
the targeted bonus earned is initially determined as the percentage of
achievement of a targeted level of consolidated earnings before interest and
taxes (EBIT) for the year by the Company's worldwide operations. For other
United States officers, from 25% to 50% of the initial bonus determination is
based on the percentage of achievement of the consolidated EBIT target, and the
remainder is determined based on the percentage of achievement of EBIT targets
established for the Company's United States operations and, in the case of
division managers, its operating divisions. The initial percentage of the
targeted bonus earned based on EBIT performance may be adjusted upward or
downward for each officer based upon an evaluation of the individual officer's
performance during the year, which is made initially by the chief executive
officer or the officer's other immediate supervisor or, in the case of the chief
executive officer, by the Compensation Committee. Individual bonuses may not
exceed 150% of targeted levels, and no bonus is paid based on EBIT which is less
than 50% of the targeted amount. The total amount payable as bonuses in any year
may not exceed 3% of consolidated EBIT. The determination of the amount of the
annual bonus to be paid to Mr. Christen is made after taking into consideration
the income of the Company's German subsidiary and an evaluation of his
individual performance.
The Committee considered bonuses for 1995 at its meeting in February 1996.
The amount of the 1995 bonus paid to John T. Ryan III, the chief executive
officer, reflected the percentage of achievement by the Company of the 1995
consolidated EBIT target.
Awards under the MSIP are intended to provide executive officers with
long-term incentives in the form of stock-based compensation to remain with the
Company and to work to increase shareowner value. Under both types of awards
authorized by the MSIP, stock options and restricted stock, the value received
by the officer is a direct function of the Company's success in achieving a
long-term increase in the market value of its Common Stock. Historically, the
Committee has considered the grant of stock option awards every second year and
the grant of restricted stock awards every third year. In accordance with this
practice, no awards under the MSIP were granted in 1995.
The Company believes that stock options granted under the MSIP qualify as
"performance-based compensation" under Section 162(m) of the Internal Revenue
Code, and the Company does not anticipate that it will be affected by the cap on
deductibility of executive compensation imposed by that Section.
6
The foregoing report was submitted by the Compensation Committee of the
Board of Directors:
G. Donald Gerlach, Chairman
Calvin A. Campbell, Jr.
Helen Lee Henderson
Leo N. Short, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no interlocking relationships, as defined in regulations of the
Securities and Exchange Commission, involving members of the Compensation
Committee.
Directors Gerlach, Campbell, Henderson and Short served as members of the
Compensation Committee during all of 1995. Former director John T. Ryan, Jr.
also served as a member of the Compensation Committee prior to his death in July
1995.
Mr. Short is a former officer of the Company. Mr. Gerlach is a partner in
the law firm of Reed Smith Shaw & McClay, which provides legal services to the
Company as its outside counsel. Mr. Campbell is a majority owner, a director and
President and Chief Executive Officer of Goodman Equipment Corporation. During
1995, the Company and its affiliates received commissions of approximately
$106,900 for acting as sales agents with respect to sales of certain mining
locomotives and spare parts for Goodman Equipment Corporation. John T. Ryan, Jr.
was a former officer of the Company and was the father of John T. Ryan III.
RETIREMENT PLANS
The following table shows the estimated annual retirement benefits payable
upon normal retirement at age 65 under the Company's Non-Contributory Pension
Plan for Employees to participating employees, including executive officers, in
selected compensation and years-of-service classifications.
5 YEAR AVERAGE COMPENSATION
YEARS OF --------------------------------------------------------------------
SERVICE $100,000 $200,000 $300,000 $400,000 $500,000 $600,000
------- -------- -------- -------- -------- -------- --------
5 $ 6,408 $ 14,158 $ 21,908 $ 29,658 $ 37,408 $ 45,158
15 19,223 42,473 65,723 88,973 112,223 135,473
25 32,038 70,788 109,538 148,288 187,038 225,788
35 44,854 99,104 153,354 207,604 261,854 316,104
45 54,854 119,104 183,354 247,604 311,854 376,104
- ---------
Notes:
1. Years of service are based upon completed months of service from date of
hire to date of retirement.
2. The benefits actually payable under the plan will be subject to the
limitations of Sections 415 and 401(a)(17) of the Internal Revenue Code.
These limitations have not been reflected in the table. However, the Board
of Directors has passed a resolution providing for the payment by the
Company to officers on an unfunded basis of the difference between the
amounts payable under the benefit formula of the plan and the benefit
limitations of Sections 415 and 401(a)(17) of the Internal Revenue Code.
3. This table applies to employees born in calendar year 1936. The actual
benefits payable will vary slightly depending upon the actual year of
birth.
4. The benefits shown have been calculated using the Social Security law in
effect on January 1, 1996, with a maximum taxable wage base of $62,700
assumed until retirement.
The amounts shown in the table are straight-life annuity amounts, assuming
no election of any available survivorship option, and are not subject to any
Social Security or other offsets. Benefits under the plan are based on the
highest annual average of the participant's covered compensation for any five
consecutive years of service, with covered compensation including salary and
bonus. As of December 31, 1995, years of service under the plan for the Named
Officers were: Mr. Ryan III, 26.50 years; Mr. Hotopp, 4.42 years; Mr. Tepper,
38.28 years; and Mr. Herald, 8.33 years.
7
Mr. Christen does not participate in the Company's retirement plans, but
instead participates in a separate plan of the Company's German subsidiary.
Assuming normal retirement at age 65, the annual retirement benefit payable to
Mr. Christen under this plan would be approximately 45% of his final annual
salary. Based upon his 1995 salary, the amount of Mr. Christen's annual
retirement benefit is estimated to be approximately $145,000.
The Company's Executive Insurance Program was established to assist members
of senior management approved by the Board in procuring life insurance during
their working careers and to provide them with additional flexibility and
benefits upon retirement. Under the program, the Company's group term life
insurance in excess of $50,000 is replaced with permanent insurance up to an
approved amount. Premiums are paid by the Company and are included under "All
Other Compensation" in the above compensation table. In lieu of insurance after
retirement, the participant may elect (i) an uninsured death benefit from the
Company in the insurance amount, which would be taxable when paid, or (ii) to
have 75% of the insurance amount paid to him by the Company in monthly
installments over 15 years. If the second uninsured alternative were selected,
the annual amount payable by the Company upon retirement would be $50,000 for
Mr. Ryan III and $30,000 for Messrs. Hotopp, Tepper and Herald. If either of the
two uninsured alternatives are selected, the death benefit on the insurance
policy would be paid to the Company. Mr. Christen does not participate in this
program.
DIRECTOR COMPENSATION
In 1995, directors who are not employees of the Company or one of its
subsidiaries were paid a quarterly retainer of $4,000 and $1,000 for each Board
meeting and $700 for each meeting of a Committee of the Board that they
attended. Directors who are employees of the Company or a subsidiary do not
receive additional compensation for service as a director. Under the Retirement
Plan for Directors, directors who retire from the Board on or after attaining
age 70 and completing at least 5 years of service as a director are entitled to
receive a lifetime quarterly retirement allowance equal to the quarterly
directors' retainer payable at the time of their retirement.
The 1990 Non-Employee Directors' Stock Option Plan (the "DSOP") was
approved by the shareholders at the 1991 Annual Meeting. Its purposes are to
enhance the mutuality of interests between the Board and the shareholders by
increasing the share ownership of non-employee directors and to assist the
Company in attracting and retaining able persons to serve as directors. Under
the DSOP, directors who are not employees of the Company or a subsidiary receive
annual stock option grants to purchase up to 500 shares of Common Stock at an
option price equal to the market value on the date the options are granted. The
options become exercisable six months from the date of grant and expire ten
years from the date of grant. Options which have not yet become exercisable are
forfeited if the grantee ceases to be a director for reasons other than death or
disability. Otherwise, unexpired options may generally be exercised for two
years following termination of service as a director. The total number of shares
which may be issued under the DSOP is limited to 50,000 shares of Common Stock.
Pursuant to the terms of the DSOP, on May 1, 1995 options to purchase 500 shares
of Common Stock at an exercise price of $44.00 per share were granted to
directors Calihan, Campbell, Gerlach, Henderson and Short.
Subsequent to his retirement as an employee, Mr. Short entered into a
consulting agreement with the Company providing an annual consulting fee as
compensation for his advisory services. In 1995, the consulting fee under the
agreement was $30,000. The consulting agreement has a one-year term, renewable
from year to year. If Mr. Short were to become incapacitated or die, the fee for
the balance of the one-year term would be paid in a lump sum to him or his
estate.
CERTAIN TRANSACTIONS
In December 1995, the Company repurchased 375,422 shares of Common Stock
from affiliated entities of State Farm Mutual Automobile Insurance Company at a
price of $42.75 per share. At the time of the purchase, the 375,422 shares owned
by the State Farm affiliates represented approximately 6.72% of the outstanding
shares. The purchase price was determined by reference to market prices at the
time of purchase.
In November 1995, the Company repurchased 25,040 shares of Common Stock
from the estate of John T. Ryan, Jr. at a price of $50.00 per share. The
purchase price was determined by reference to market prices at the time of
purchase. John T. Ryan, Jr. was a director of the Company until his death in
July 1995 and was the father of John T. Ryan III, the President and Chief
Executive Officer of the Company. John T. Ryan III and his mother, Mary Irene
Ryan, a beneficial owner of 12.94% of the outstanding Common Stock, are
co-executors and beneficiaries of the estate of John T. Ryan, Jr.
8
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Among S&P 500 Index, Russell 2000 Index and Mine Safety Appliances Company
Set forth below is a line graph comparing the cumulative total returns
(assuming reinvestment of dividends) for the five years ended December 31, 1995
of $100 invested on December 31, 1990 in each of the Company's Common Stock, the
Standard & Poor's 500 Composite Index and the Russell 2000 Index. Because its
competitors are principally privately held concerns or subsidiaries or divisions
of corporations engaged in multiple lines of business, the Company does not
believe it feasible to construct a peer group comparison on an industry or
line-of-business basis. The Russell 2000 Index, while including corporations
both larger and smaller than the Company in terms of market capitalization, is
composed of corporations with an average market capitalization similar to that
of the Company.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG MSA, S&P 500 INDEX AND RUSSELL 2000 INDEX
Measurement period S&P 500 RUSSEL 2000
(Fiscal year Covered) MSA Index Index
- --------------------- -------- ------- -----------
Measurement PT -
12/31/90 $100 $100 $100
FYE 12/31/91 $ 90 $130 $146
FYE 12/31/92 $ 83 $140 $173
FYE 12/31/93 $ 90 $155 $206
FYE 12/31/94 $ 98 $157 $202
FYE 12/31/95 $106 $215 $259
STOCK OWNERSHIP
Under regulations of the Securities and Exchange Commission, a person is
considered the "beneficial owner" of a security if the person has or shares with
others the power to vote the security (voting power) or the power to dispose of
the security (investment power). In the tables which follow, "beneficial
ownership" of the Company's stock is determined in accordance with these
regulations and does not necessarily indicate that the person listed as a
"beneficial owner" has an economic interest in the shares indicated as
"beneficially owned."
BENEFICIAL OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the amount and nature
of beneficial ownership of the Company's Common Stock as of February 16, 1996
and 4-1/2% Cumulative Preferred Stock as of February 9, 1996 by each director
and Named Officer and by all directors and executive officers as a group. Except
as otherwise indicated in the footnotes to the table, the person named or a
member of the group has sole voting and investment power with respect to the
shares listed.
9
4-1/2% CUMULATIVE
COMMON STOCK PREFERRED STOCK
------------------------- -----------------------
AMOUNT AND AMOUNT AND
NATURE OF PERCENT NATURE OF PERCENT
BENEFICIAL OF BENEFICIAL OF
OWNERSHIP (1) CLASS (1) OWNERSHIP CLASS
------------- --------- ---------- -------
John T. Ryan III 678,902(2) 13.07% 446(2) 1.90%
Joseph L. Calihan 4,750 .09% -- --
Calvin A. Campbell, Jr. 1,000 .02% -- --
G. Donald Gerlach 271,528(3) 5.24% 93(3) 0.40%
Helen Lee Henderson 608,545(4) 11.74% 897(4) 3.83%
Leo N. Short, Jr. 17,230(5) .33% -- --
Werner E. Christen 400 .01% -- --
Thomas B. Hotopp 7,604 .15% -- --
Frederick Tepper 8,855(6) .17% -- --
James E. Herald 6,864 .13% -- --
All executive officers and directors
as a group (15 persons) 1,364,370(7) 26.14% 1,436 6.13%
- ---------
(1) The number of shares of Common Stock beneficially owned and the number of
shares of Common Stock outstanding used in calculating the percent of class
include the following shares of Common Stock which may be aquired within 60
days upon the exercise of stock options held under the MSIP or the DSOP:
Mr. Ryan, 11,130 shares; Mr. Calihan, 1,200 shares; Mr. Campbell, none; Mr.
Gerlach, 1,600 shares; Ms. Henderson, 1,600 shares; Mr. Short, 1,400
shares; Mr. Christen, none; Mr. Hotopp, 3,720 shares; Mr. Tepper, 6,810
shares; Mr. Herald, 3,930 shares; and all directors and executive officers
as a group, 37,960 shares. The number of shares of Common Stock
beneficially owned also includes the following restricted shares awarded
under the MSIP, as to which such persons have voting power only: Mr. Ryan,
7,475 shares; Mr. Hotopp, 2,884 shares; Mr. Tepper, 2,045 shares; Mr.
Herald, 2,103 shares; and all directors and executive officers as a group,
20,219 shares.
(2) Does not include 90,778 shares of Common Stock held by Mr. Ryan's wife.
Includes 457,705 shares of Common Stock and 259 shares of 4-1/2% Cumulative
Preferred Stock held by Mr. Ryan as co-trustee of various trusts and
co-executor of an estate, as to which voting and investment power is shared
with other co-fiduciaries. Of such shares, voting and investment power over
260,000 shares of Common Stock is shared with G. Donald Gerlach, and voting
and investment power over 442,005 shares of Common Stock and 259 shares of
4-1/2% Cumulative Preferred Stock is shared with Mary Irene Ryan. See the
following discussion of the beneficial ownership of Mary Irene Ryan.
(3) Does not include 100 shares of Common Stock owned by Mr. Gerlach's wife.
Includes 260,000 shares of Common Stock held by Mr. Gerlach as co-trustee
of various trusts, as to which voting and investment power is shared with
other co-fiduciaries. Of such shares, voting and investment power over
260,000 shares of Common Stock is shared with John T. Ryan III, and voting
and investment power over 242,500 shares of Common Stock is shared with
Mary Irene Ryan. See the following discussion of the beneficial ownership
of Mary Irene Ryan.
(4) Includes 535,005 shares of Common Stock and 318 shares of 4-1/2% Cumulative
Preferred Stock held in trusts, as to which Ms. Henderson shares voting and
investment power with co-trustees. See the following discussion of the
beneficial ownership of PNC Bank Corp.
(5) Includes 4,600 shares of Common Stock as to which Mr. Short shares voting
and investment power with his wife.
(6) Does not include 5,088 shares of Common Stock owned by Mr. Tepper's wife.
(7) See the other footnotes above. Also includes 2,300 shares of Common Stock
as to which executive officers not named in the table share voting and
investment power with their wives.
10
5% BENEFICIAL OWNERS
As of February 16, 1996, to the best of the Company's knowledge, six
persons or entities beneficially owned more than 5% of the Company's Common
Stock. The beneficial ownership of John T. Ryan III, G. Donald Gerlach and Helen
Lee Henderson appears in the immediately preceding table. The following table
sets forth the beneficial ownership of the other 5% beneficial owners, based
upon information provided by such persons:
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------- ---------- -------
Mary Irene Ryan 670,661(1)(2)(3) 12.94%
20 West Woodland Road
Pittsburgh, Pennsylvania 15232
PNC Bank Corp. 648,014(4)(5)(6) 12.51%
PNC Bank Building
Pittsburgh, Pennsylvania 15265
Helen Ruth Henderson 407,026(6)(7) 7.85%
728 Fairview Road
Pittsburgh, Pennsylvania 15238
- ---------
(1) Mary Irene Ryan has sole voting and investment power with respect to
228,656 and 132,656 shares, respectively, and shares voting and investment
power with respect to 442,005 and 538,005 shares, respectively.
(2) Includes 441,805 shares of Common Stock and an option for an additional 200
shares as to which Mary Irene Ryan and John T. Ryan III share voting and
investment power as co-fiduciaries. Mary Irene Ryan is the mother of John
T. Ryan III.
(3) Includes 242,500 shares of Common Stock as to which Mary Irene Ryan and G.
Donald Gerlach share voting and investment power as co-fiduciaries.
(4) All shares are held by subsidiary banks of PNC Bank Corp. ("PNC") in
various fiduciary capacities. The banks have sole voting and investment
power with respect to 60,669 and 3,000 shares, respectively, and share
voting and investment power with respect to 587,345 and 591,714 shares,
respectively.
(5) Includes 531,015 shares as to which PNC and Helen Lee Henderson share
voting and investment power as co-trustees. The trustees have delegated the
authority to vote these shares to Helen Lee Henderson.
(6) Includes 52,340 shares as to which PNC and Helen Ruth Henderson share
voting and investment power.
(7) Helen Ruth Henderson has sole voting and investment power with respect to
309,134 shares and shares voting and investment power with respect to
97,892 and 52,340 shares, respectively. Does not include 6,240 shares of
Common Stock held by Helen Ruth Henderson's husband. Helen Ruth Henderson
is the mother of Helen Lee Henderson.
BENEFICIAL OWNERSHIP OF RYAN AND HENDERSON FAMILIES
The preceding tables disclose in accordance with Securities and Exchange
Commission requirements only a portion of the aggregate beneficial ownership of
the Company's Common Stock by the Ryan and Henderson families. As of February
16, 1996, members of the extended family of John T. Ryan III and Mary Irene
Ryan, including trusts for their benefit, beneficially owned an aggregate of
1,737,133 shares of Common Stock, representing 33.45% of the outstanding shares.
As of the same date, members of the extended family of Helen Lee Henderson and
Helen Ruth Henderson, including trusts for their benefit, beneficially owned an
aggregate of 1,108,584 shares of Common Stock, representing 21.39% of the
outstanding shares.
11
BENEFICIAL OWNERSHIP REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires that
directors and officers of the Company and beneficial owners of more than 10% of
its Common Stock file reports with the Securities and Exchange Commission with
respect to changes in their beneficial ownership of equity securities of the
Company. Based solely upon a review of the copies of such reports furnished to
the Company and written representations by certain persons that reports on Form
5 were not required, the Company believes that all 1995 Section 16(a) filing
requirements applicable to its directors, officers and greater-than-10%
beneficial owners were complied with.
PROPOSAL NO. 2
SELECTION OF AUDITORS
Because of the importance to the shareholders of having the Company's
accounts reviewed by independent accountants, it is the opinion of the Board of
Directors that the selection of auditors should be submitted to the
shareholders. The firm of Price Waterhouse LLP has been the independent auditors
for the Company since 1959. Price Waterhouse LLP has advised the Company that
neither the firm nor any of its partners has any direct or material indirect
financial interest in the Company or any of its subsidiaries.
As independent accountants for the fiscal year ended December 31, 1995
Price Waterhouse LLP provided auditing services in connection with their
examination of the consolidated financial statements of the Company, the
separate financial statements of its subsidiaries and periodic filings made by
the Company with the Securities and Exchange Commission.
The Board of Directors recommends a vote for the selection of Price
Waterhouse LLP as independent auditors, and proxies received in the accompanying
form will be so voted, unless a contrary specification is made. It is expected
that one or more representatives of Price Waterhouse LLP will be present at the
Annual Meeting with the opportunity to make a statement, if they desire to do
so, and to respond to appropriate questions. See "Election of Directors" for
information concerning the Audit Committee of the Board of Directors.
Approval of this proposal requires the affirmative vote of a majority of
the votes cast on the proposal at the Annual Meeting by the holders of Common
Stock voting in person or by proxy. Under the Pennsylvania Business Corporation
Law, an abstention is not a vote cast and will not be counted in determining the
number of votes required for approval, though it will be counted in determining
the presence of a quorum. In the event the proposal is not approved, the Board
will treat this as a recommendation to consider other auditors for 1997.
OTHER MATTERS
The Board of Directors does not know of any matters, other than those
referred to herein, which will be presented for action at the meeting. However,
in the event of a vote on any other matter that should properly come before the
meeting, it is intended that proxies received in the accompanying form will be
voted thereon in accordance with the discretion and judgment of the persons
named in the proxies.
ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST TO THE UNDERSIGNED SECRETARY OF THE COMPANY (AT THE
ADDRESS SPECIFIED ON PAGE 1) BY ANY SHAREHOLDER WHOSE PROXY IS SOLICITED HEREBY,
THE COMPANY WILL FURNISH A COPY OF ITS 1995 ANNUAL REPORT ON FORM 10-K TO THE
SECURITIES AND EXCHANGE COMMISSION, TOGETHER WITH FINANCIAL STATEMENTS AND
SCHEDULES THERETO, WITHOUT CHARGE TO THE SHAREHOLDER REQUESTING SAME.
1997 SHAREHOLDER PROPOSALS
To be eligible for inclusion in the Company's proxy statement for the 1997
Annual Meeting, any shareholder's proposal(s) must be received by the Company at
its principal executive offices not later than November 14, 1996.
12
EXPENSES OF SOLICITATION
All expenses incident to the solicitation of proxies by the Board of
Directors will be paid by the Company. The Company will, upon request, reimburse
brokerage houses and other custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred in forwarding copies of solicitation material to
beneficial owners of Common Stock held in the names of such persons. In addition
to solicitation by mail, in a limited number of instances, regular employees of
the Company may solicit proxies in person or by telegraph or telephone.
Employees will receive no additional compensation for any such solicitation.
By Order of the Board of Directors,
DONALD H. CUOZZO
Secretary
13
[LOGO OF MSA CO.]
MINE SAFETY APPLIANCES COMPANY P.O. BOX 426, PITTSBURGH, PENNSYLVANIA 15230
PHONE (412) 967-3000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE HOLDERS OF 4-1/2% CUMULATIVE PREFERRED STOCK
OF MINE SAFETY APPLIANCES COMPANY:
Notice is hereby given that the Annual Meeting of Shareholders of Mine
Safety Appliances Company will be held on Tuesday, April 23, 1996, at 10:00
A.M., local Pittsburgh time, at the Company's headquarters, 121 Gamma Drive,
RIDC Industrial Park, O'Hara Township, Pittsburgh, Pennsylvania for the purpose
of considering and acting upon the following:
(1) Election of Directors: The election of two directors for a term of
three years;
(2) Selection of Auditors: The selection of independent auditors for
the year ending December 31, 1996;
and such other business as may properly come before the Annual Meeting or any
adjournment thereof.
Only the holders of Common Stock of the Company of record on the books of
the Company at the close of business on February 16, 1996 are entitled to notice
of and to vote at the meeting and any adjournment thereof.
You are cordially invited to attend the meeting even though as a holder of
4-1/2% Cumulative Preferred Stock you have no voting rights.
By Order of the Board of Directors,
DONALD H. CUOZZO
Secretary
March 14, 1996
PROXY--MINE SAFETY APPLIANCES COMPANY--1996 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints JOHN T. RYAN III and DONALD H. CUOZZO, or
either of them, as proxies, with power of substitution, to vote all shares of
MINE SAFETY APPLIANCES COMPANY which the undersigned is entitled to vote at the
1996 Annual Meeting of Shareholders and any adjournment thereof:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2 BELOW:
1. Election of two Directors for terms expiring in 1999.
Nominees: Joseph L. Calihan and Leo N. Short, Jr.
FOR all nominees listed (except as WITHHOLD AUTHORITY to
marked to the contrary below) [_] vote for all nominees listed [_]
(Instructions: To withhold authority to vote for any nominee, write that
nominee's name on the line provided below.)
2. Selection of Price Waterhouse LLP FOR [_] AGAINST [_] ABSTAIN [_]
as independent auditors.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS GIVEN, FOR
ITEMS 1 AND 2 ABOVE. A VOTE FOR ITEM 1 INCLUDES DISCRETIONARY AUTHORITY TO VOTE
FOR A SUBSTITUTE IF ANY NOMINEE LISTED BECOMES UNABLE OR UNWILLING TO SERVE. The
proxies named are authorized to vote in their discretion upon such other matters
as may properly come before the meeting or any adjournment thereof.
The undersigned hereby revokes all previous proxies for such Annual Meeting,
acknowledges receipt of the Notice of Annual Meeting and Proxy Statement, and
ratifies all that said proxies may do by virtue hereof.
Dated.................................., 1996
...................................... (SEAL)
...................................... (SEAL)
(Signature)
Please sign exactly as your name appears
hereon. FOR JOINT ACCOUNTS, EACH JOINT OWNER
SHOULD SIGN. When signing as attorney,
executor, administrator, trustee, etc.,
please give your full title as such. If a
corporation, please sign full corporate name
by President or other authorized officer and
give full title. If a partnership, please
sign in partnership name by authorized person
and give full title.
PLEASE MARK, DATE, EXECUTE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
