SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
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[X] Definitive Proxy Statement
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[_] 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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Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[Logo of Mine Safety Appliances Company]
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 Thursday, May 10, 2001, at 9:00
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 one director for a term of
three years;
(2) Selection of Independent Accountants: The selection of independent
accountants for the year ending December 31, 2001;
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 23, 2001 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 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 23, 2001
March 23, 2001
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 Thursday, May 10, 2001, 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 23, 2001, the Company had 13,461,283 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 23, 2001 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 "Stock 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
One director will be elected at the Annual Meeting to serve until the Annual
Meeting in 2004 and until a successor has been elected and qualified. The
Board of Directors recommends a vote FOR the election of the nominee named
below, who 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 nominee named below, unless otherwise directed
thereon, or for a substitute nominee designated by the Board in the event the
nominee named becomes unavailable for election.
The following table sets forth certain information about the nominee, who is
currently a member 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
- ---- ---------------------------- --- -------- -------------
Nominee for term expiring in 2004:
John T. Ryan III Chairman and Chief 57 1981 Immediate Past Chairman,
Executive Officer of the Industrial Safety Equipment
Company Association; Allegheny
Conference on Community
Development; Pittsburgh
Regional Alliance; Vice
Chairman, World Affairs
Council of Pittsburgh
Continuing Directors with terms expiring in 2002:
Joseph L. Calihan Managing Partner of 63 1993 Extra Mile Education
Bradford Capital Partners Foundation; Pittsburgh
(venture capital Foundation; Trustee,
investments and Historical Society of
acquisitions); Chairman of Western Pennsylvania
the Board of Bradford
Schools, Inc. (post-
secondary business
schools)
L. Edward Shaw, Jr. Executive Vice President 56 1998 None
and General Counsel,
Aetna, Inc. (health care
and group benefits)
Thomas H. Witmer Retired (1998); Formerly 58 1997 Medrad, Inc.; Granite State
President and Chief Log Homes, Inc.; Carnegie
Executive Officer of Museum of Natural History
Medrad, Inc. (medical
products manufacturer)
Continuing Directors with terms expiring in 2003:
Calvin A. Campbell, Chairman, President and 66 1994 Eastman Chemical Company
Jr. Chief Executive Officer of (an SEC reporting company);
Goodman Equipment Bulley & Andrews;
Corporation (manufacturer National Mining Association;
of underground mining and Former Chairman, National
tunneling locomotives and Association of
parts and services for Manufacturers; Trustee,
plastics injection molding Illinois Institute of
machinery) Technology
Thomas B. Hotopp President of the Company 59 1998 Pittsburgh Symphony Society
2
Mr. Hotopp became President of the Company in December 1996 and previously
served as Senior Vice President since 1991. From May 1996 to April 1999, Mr.
Shaw served in various positions for National Westminster Bank Plc., including
most recently as Chief Corporate Officer, North America. Previously he was
Executive Vice President and General Counsel of The Chase Manhattan
Corporation and The Chase Manhattan Bank, N.A. Mr. Shaw is the brother-in-law
of Mr. Ryan. Each other director has engaged in the principal occupation
indicated in the above table for at least the past five years. Mr. Ryan also
served as President of the Company from April 1990 to December 1996.
The Board of Directors has established an Audit Committee, a Compensation
Committee, a Nominating Committee and certain other committees.
The Audit Committee, which met two times during 2000, assists the Board in
fulfilling its responsibility to the shareholders and investment community
with regard to the quality and integrity of the financial reports of the
Company. The Committee reviews the Company's financial statements and internal
controls. The Committee also reviews plans, findings and recommendations of
internal and external auditors. The Committee evaluates the competence,
effectiveness and independence of the internal and external auditors and makes
recommendations to the Board of Directors as to the retention of independent
accountants and as to their fees and performs such other duties as the Board
of Directors may assign from time to time. A copy of the Audit Committee's
charter is attached to this Proxy Statement as Appendix A. The current members
of the Audit Committee are directors Calihan, Campbell and Witmer, each for a
term expiring at the 2001 organizational meeting of the Board of Directors.
The Compensation Committee presently consists of directors Campbell, Shaw
and Witmer, each for a term expiring at the 2001 organizational meeting of the
Board. The Compensation Committee, which met three times in 2000, 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 2000 compensation of the Company's executive officers appears
later. The Compensation Committee also administers the Company's 1987 and 1998
Management Share Incentive Plans (the "MSIP").
The current members of the Nominating Committee are directors Calihan,
Campbell, Shaw and Ryan, each for a term expiring at the 2001 organizational
meeting of the Board. The Nominating Committee, which met two times in 2000,
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 nine times during 2000. All 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 candidate receiving the highest number of votes cast by the holders of
Common Stock voting in person or by proxy will be elected as a director. 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 2000 Annual Meeting. Therefore,
only the nominee 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 earned from the Company and its subsidiaries for the
years 2000, 1999 and 1998 by the persons who were in 2000 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 Restricted Stock
Name and Annual Stock Options All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($)(1) Awards ($)(2) (# of Shares) (3) Compensation ($)(4)
------------------ ---- ---------- --------- ------------------- ------------- ----------------- -------------------
John T. Ryan III 2000 $455,280 $439,800 -- $245,313 52,455 $43,486
Chairman and 1999 $441,960 $150,550 -- -- 20,688 $39,252
Chief Executive 1998 $420,840 $172,610 -- $242,756 21,324 $37,526
Officer
Thomas B. Hotopp 2000 $289,879 $230,000 -- $128,648 26,595 $23,092
President 1999 $277,920 $ 83,250 -- -- 10,896 $23,313
1998 $264,600 $ 99,940 -- $127,076 10,098 $23,897
James H. Baillie (5) 2000 $243,338 $ 61,600 -- $107,837 22,305 $25,379
Vice President; 1999 $228,365 $ 45,040 -- -- -- $46,411
President, MSA 1998 -- -- -- -- -- --
Europe
William M. Lambert 2000 $176,075 $138,380 -- $ 52,342 10,875 $12,301
Vice President/ 1999 $169,296 $ 20,970 -- -- 4,290 $12,059
General Manager- 1998 $161,999 $ 20,920 -- $ 51,478 4,080 $12,751
Safety Products
Division
George W. Steggles 2000 $179,039 $131,970 -- $ 65,585 13,635 $20,260
Senior Vice 1999 $169,680 $ 82,050 -- -- 5,370 $18,195
President- 1998 $154,200 $ 39,804 -- $ 47,826 3,810 $18,478
International
- --------
(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 February
28, 2000 and March 10, 1998 of restricted shares awarded on those dates.
At December 31, 2000 the number and market values (based on prices as of
December 29, 2000) of restricted shares held by the Named Officers were as
follows: Mr. Ryan, 23,700 shares ($568,800); Mr. Hotopp, 12,420 shares
($298,080); Mr. Baillie, 5,130 shares ($123,120); Mr. Lambert, 5,040
shares ($120,960); and Mr. Steggles, 5,490 shares ($131,760). Holders of
restricted shares receive dividends at the same rate as paid on other
shares of Common Stock.
(3) Share numbers have been adjusted to give effect to the 3-for-1 Common
Stock split in May 2000.
(4) 2000 amounts include Company matching contributions to the Company's
Retirement Savings and Supplemental Savings Plans as follows: Mr. Ryan,
$24,233; Mr. Hotopp, $14,893; Mr. Lambert, $6,926; and Mr. Steggles,
$10,444. The 2000 amounts also include life insurance premiums paid by the
Company as follows: Mr. Ryan, $19,253; Mr. Hotopp, $8,199; Mr. Lambert,
$5,375; and Mr. Steggles, $9,816. The 2000 amount for Mr. Baillie is the
amount paid to him in lieu of contributions to a retirement plan.
(5) Mr. Baillie was first employed by the Company in January 1999.
4
Stock Option Grants in 2000
The following table sets forth information concerning stock options granted
to the Named Officers in 2000 under the MSIP:
Number of Percent of
Shares Total Options Grant
Underlying Granted to Exercise Date
Options Employees Price Expiration Present
Name Granted (#) in 2000 ($/Share) (1) Date Value (2)
- ---- ----------- ------------- ------------- ---------- ---------
John T. Ryan III 4,755 1.8% $23.12293 2/28/2005 $ 20,366
47,700 18.4% $21.02083 2/28/2010 $345,491
Thomas B. Hotopp 26,595 10.2% $21.02083 2/28/2010 $192,628
James H. Baillie 22,305 8.6% $21.02083 2/28/2010 $161,555
William M. Lambert 10,875 4.2% $21.02083 2/28/2010 $ 78,768
George W. Steggles 13,635 5.3% $21.02083 2/28/2010 $ 98,758
- --------
(1) The exercise price is the market value of the Common Stock on the date the
options were granted, except that in the case of the option for 4,755
shares granted to Mr. Ryan it is 110% of such value. The options became
exercisable on August 28, 2000. The option for 4,755 shares granted to Mr.
Ryan, and 4,755 shares of the options granted to each other Named Officer
are intended to qualify as incentive stock options under the Internal
Revenue Code. The information relating to the options has been adjusted to
give effect to the 3-for-1 split of the Common Stock in May 2000.
(2) The grant date present value of the options has been determined utilizing
the Black-Scholes option pricing model. The assumptions used to arrive at
the present values were: stock price volatility of 19%, expected dividend
yield of 2.26%, expected option term of five years for the option for
4,755 shares granted to Mr. Ryan and ten years for the remaining options,
and a risk-free rate of return of 6.85% for the option for 4,755 shares
granted to Mr. Ryan and 6.95% for the remaining options.
Stock Option Exercises and Year-End Values
No stock options were exercised by the Named Officers in 2000. The following
table sets forth information concerning the stock options under the MSIP held
by the Named Officers at December 31, 2000.
Number of Shares Value of Unexercised
Underlying Unexercised Options In-the-Money Options
Name at 12/31/2000 (1) at 12/31/2000 (2)
- ---- ------------------------------ --------------------
John T. Ryan III 130,488 $562,316
Thomas B. Hotopp 81,141 $413,185
James H. Baillie 22,305 $ 66,450
William M. Lambert 25,995 $107,150
George W. Steggles 19,005 $ 57,067
- --------
(1) All options were exercisable at December 31, 2000.
(2) Represents the amount by which the December 31, 2000 market value (based
on prices as of December 29, 2000) of the shares subject to unexercised
options exceeded the option price of those options.
5
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on 2000 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
executive officers. The Compensation Committee was also responsible in 2000
for administering the Company's shareholder approved 1998 Management Share
Incentive Plan (the "MSIP"), which permitted 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. The general budget for salary increases is determined
by taking into account compensation survey data and general financial
considerations relating to the Company's overall budget. Individual salary
adjustments are then determined by taking into consideration the budget for
salary increases, 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.
The Company has one executive officer located overseas, James H. Baillie,
President of MSA Europe. Mr. Baillie's salary is determined 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 Europe.
The Committee considered 2000 executive officer salaries at its meeting in
December 1999. The 3% salary increase given to Mr. Ryan reflected the
percentage increase in the market level salary midpoint 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 2000, this
percentage was 50% of median market level salary for the chief executive
officer, and ranged between 40% and 30% 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
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 geographic areas and/or operating divisions with which the
officer is associated. 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 under the regular bonus program
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 amounts payable as
bonuses in any year for all participants under the regular bonus program may
not exceed 6% of consolidated EBIT.
6
At its meeting in March 2000, the Committee determined to establish special
incentives to meet the Company's plan for 2000 consolidated net income because
that plan represented a desired significant increase from year 1999 results.
Under this special incentive plan, annual bonuses earned under the regular
bonus plan would be increased by 30% if the Company met its plan for
consolidated net income and could be increased by up to 50% if consolidated
net income exceeded the plan by a specified target amount. The Committee was
very pleased that the Company's 2000 consolidated net income exceeded the
target for the maximum special incentives. As a result, the annual bonuses
paid for 2000 were 150% of the bonus amounts determined under the Company's
regular bonus program.
The Committee determined bonuses for 2000 at its meeting in March 2001. The
amount of the regular bonus awarded to Mr. Ryan, before application of the
above special 150% multiplier, was 105% of the targeted amount for the chief
executive officer position. The Committee awarded Mr. Ryan a bonus in excess
of the targeted amount in recognition of the fact that the Company had
significantly exceeded its plan for 2000 consolidated net income and in
recognition of his leadership in establishing aggressive short-, intermediate-
and long-term strategies for the Company for the years 2001 and beyond.
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
utilized under the MSIP, stock options and restricted stock, the value
realized in the future 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. The Committee's long-term incentive award program under the MSIP was
adopted in 1996 based on recommendations resulting from a study by a
compensation consulting firm. Under the program, the targeted annualized
dollar value of MSIP awards for each executive officer position is based on
the market level annualized dollar value of long-term incentive awards for
similar positions, as determined from compensation survey data.
On an annualized basis, 50% of the adjusted dollar value of long-term
incentive awards, as so determined, is made in the form of stock options and
50% in the form of restricted stock awards. Stock option grants are made
annually, and restricted stock awards are made every other year. The number of
shares for which stock options are granted to each executive officer is
determined by dividing 50% of the adjusted dollar value by the per share value
of the options as determined under the Black-Scholes option pricing model.
Stock options are normally granted as incentive stock options within the
limits established by the Internal Revenue Code and as nonqualified options
above those limits. The option price is equal to the fair market value of the
option shares as of the date the options are granted, except that in the case
of incentive stock options granted to Mr. Ryan, the option price is 110% of
the grant date fair market value. The options become exercisable six months
from the date of grant and have a term of ten years, except that in the case
of incentive stock options granted to Mr. Ryan the term is five years. The
options generally are exercisable only while the grantee remains an employee
of the Company or a subsidiary, except that the options may be exercised for
limited periods after a termination of employment due to death, disability or
retirement or a voluntary termination with the consent of the Company.
The number of shares awarded in the form of restricted stock is determined
by dividing 50% of the adjusted dollar value of long-term incentive awards for
each executive officer by the per share market value on the date of the award,
and then doubling this amount to reflect that restricted stock awards are made
only once every two years. Under the terms of the awards, the restricted
shares granted will vest over a term of four years, with one-half of the
shares awarded vesting on March 15 of each of the third and fourth years
following the award date. Until vesting, the restricted shares are held in
escrow by the Company, may not be sold and generally will be forfeited if the
officer's employment terminates other than by death, disability or retirement
under a Company retirement plan. Unless and until the restricted shares are
forfeited to the Company, the officer may vote the restricted shares and
receives dividends on the shares which are not subject to forfeiture.
In accordance with the Committee's long-term incentive program, the
Committee granted both stock options and restricted stock under the MSIP at
its meeting in February 2000. At the meeting, the Committee considered
7
an analysis prepared for the Company by a compensation consultant indicating
that the median annual value of the Company's stock incentive awards was only
approximately 40% of the market level median of a group of companies with
comparable sales. Pending further study of future levels of stock incentive
awards, the Committee determined that for 2000 it would on a one-time basis
triple the normal program values of the Company's stock option awards, without
increasing the normal program values of the restricted stock awards. The
amount of the stock incentive awards granted to Mr. Ryan reflected the
targeted levels for his position, including the one-time increase in stock
option awards.
At current compensation levels, the Company does not anticipate that it will
be affected by the $1 million cap on deductibility of individual executive
officer compensation imposed by Section 162(m) of the Internal Revenue Code.
The foregoing report was submitted by the Compensation Committee of the
Board of Directors:
Calvin A. Campbell, Jr.,
Chairman
L. Edward Shaw, Jr.
Thomas H. Witmer
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 Campbell and Witmer served as members of the Compensation
Committee during all of 2000, and director Shaw became a member of the
Committee at the organizational meeting of the Board following the 2000 Annual
Meeting. Former director G. Donald Gerlach served as a member of the Committee
until the 2000 Annual Meeting, and former director Helen Lee Henderson served
as a member of the Committee until her resignation from the Board in June
2000.
Mr. Campbell is a majority owner, a director and Chairman, President and
Chief Executive Officer of Goodman Equipment Corporation. During 2000, the
Company and its affiliates received commissions of approximately $122,360 for
acting as sales agents with respect to sales of certain mining locomotives and
spare parts for Goodman Equipment Corporation. Mr. Gerlach was of counsel to
the law firm of Reed Smith LLP, which provides legal services to the Company
as its outside counsel. In June 2000, the Company purchased an aggregate of
1,926,646 shares of Common Stock from Ms. Henderson, a member of her immediate
family and trusts which she controlled at a price of $25 per share. The
Company also repurchased for the difference between $25 and the option price,
stock options for 10,800 shares granted to Ms. Henderson under the Company's
Non- Employee Directors' Stock Option Plan. An additional 165,000 shares had
been purchased in May 2000 at a purchase price of $22.75 per share. The
purchase price in each case was determined with reference to market prices at
the time of the purchase agreement.
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 $300,000 $500,000 $700,000 $900,000
-------- -------- -------- -------- -------- --------
5 $ 5,626 $ 20,437 $ 35,248 $ 50,059 $ 64,870
15 16,879 61,312 105,745 150,178 194,611
25 28,131 102,186 176,241 250,296 324,351
35 39,383 143,060 246,738 350,415 454,092
45 48,939 171,727 294,515 417,303 540,091
8
- --------
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
Company has a supplemental plan 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 pension 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 1941. 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, 2001, with a maximum taxable wage base of $80,400
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, 2000, years of service under the plan for the Named
Officers were: Mr. Ryan, 31.50 years; Mr. Hotopp, 9.42 years; Mr. Lambert,
19.33 years; and Mr. Steggles, 8.66 years.
Mr. Baillie does not participate in the Company's retirement plans, but
instead receives an annual payment in lieu of retirement plan contributions.
This payment is included under "All Other Compensation" in the Summary
Compensation Table on page 4. Messrs. Ryan and Hotopp also participate in the
Retirement Plan for Directors. Under this plan, the annual benefit payable
upon retirement after 5 years service as a director, and commencing when the
sum of age and years of service equals 75, would be $20,000 for Mr. Ryan and
$6,739 for Mr. Hotopp.
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 individual 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 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 $66,667 for
Mr. Ryan III, $50,000 for Mr. Hotopp, and $40,000 for Messrs. Lambert and
Steggles. If either of the two uninsured alternatives are selected, the death
benefit on the insurance policy would be paid to the Company. Mr. Baillie does
not participate in this program.
Change In Control Severance Agreements; Employment Agreement
The Company has entered into agreements with each of the Named Officers the
stated purpose of which is to encourage the officers' continued attention and
dedication to their duties without distraction in the event of an actual or
potential change in control of the Company. In the agreements, the officers
agree that if a potential change in control, as defined in the agreements,
occurs, the officers will remain in the employment of the Company for at least
6 months or until an actual change in control occurs, unless employment is
sooner terminated by the executive for good reason, as defined in the
agreement, or due to death, disability or retirement or by the Company. In
return, the agreements provide that if within 3 years after a change in
control, as defined in the agreement, the officer's employment is terminated
by the Company without cause, as defined in the agreement, or the officer
terminates his employment for good reason, as defined in the agreement, the
officer will be entitled to receive (a) a lump sum payment equal to three
times the sum of (i) officer's annual salary plus
9
(ii) the average annual bonus paid to the officer for the preceding two years,
(b) continuation for 36 months of medical, dental, accident and life insurance
benefits and (c) 36 months additional service credit under the Company's
executive insurance and post-retirement health care programs. In the case of
Mr. Ryan, these benefits would also be payable if he voluntarily terminated
his employment for any reason within one year after a change in control. The
benefits payable under the agreements are limited to the amount that can be
paid without triggering any excise tax or rendering any amounts non-deductible
under the Internal Revenue Code. Except in the case of Mr. Ryan, the
limitation will not apply if the reduced benefit is less than the unreduced
benefit after payment of any excise tax.
In connection with his employment by the Company in January 1999, Mr.
Baillie entered into employment agreements with the Company and its German
subsidiary. The agreements provide for Mr. Baillie's employment as President
of MSA Europe through 2001 at an initial annual salary rate of $240,300,
subject to annual review by the Company's Compensation Committee. Mr. Baillie
is entitled to earn an annual bonus targeted at 30% of salary and stock
incentive awards beginning in 2000 targeted at $108,000 per year. Except for a
guaranteed minimum bonus of $36,000 for 1999, these awards are discretionary
with the Compensation Committee and are determined as described above under
"Compensation Committee Report on Executive Compensation." Mr. Baillie will
also receive an annual payment of $30,000, less the amount of medical and
dental insurance premiums paid by the Company, in lieu of contributions or
benefits under the Company's retirement plans. Either party may terminate Mr.
Baillie's employment at any time on 60 days' notice. If the Company
involuntarily terminates Mr. Baillie's employment without cause, Mr. Baillie
would be entitled to prorated salary, bonus, stock compensation and retirement
payment through the month of termination plus a severance payment equal to the
annual salary rate then in effect.
Director Compensation
In 2000, directors who are not employees of the Company or one of its
subsidiaries were paid a retainer at the rate of $5,000 per quarter and $1,000
for each day of a Board meeting and each meeting of a Committee of the Board
that they attended. Effective April 1, 2001, the quarterly retainer will
increase to $6,250 and the per meeting fee will increase to $1,200.
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 the non-employee directors and to assist the
Company in attracting and retaining able persons to serve as directors. The
total number of shares which may be issued under the DSOP is limited to
150,000 shares of Common Stock. Under the DSOP as amended effective April 1,
2001, directors who are not employees of the Company or a subsidiary will
receive on the third business day following each annual meeting stock option
grants having a grant date value under the Black-Scholes option pricing model
equal to 75% of the annual directors' retainer and grants of restricted stock
having a grant date market value equal to 25% of the annual directors'
retainer. The options will have an option price equal to the market value on
the grant date, will become exercisable six months from the date of grant and
will expire ten years from the date of grant. If a director resigns or is
removed from office for cause, options which have not yet become exercisable
are forfeited, and exercisable options will remain exercisable for 90 days.
Otherwise, unexpired options may generally be exercised for five years
following termination of service as a director. The restricted shares will
vest on the date of the third annual meeting following the date of grant.
Unvested shares are forfeited if the director terminates service for reasons
other than death, disability or retirement. Pursuant to the terms of the DSOP
as then in effect, on May 15, 2000 options to purchase 1,500 shares of Common
Stock at an exercise price of $22.875 per share were granted to directors
Calihan, Campbell, Shaw and Witmer. No restricted stock was granted under the
DSOP in 2000.
Prior to April 1, 2001, directors who retired from the Board after
completing at least 5 years of service as a director were entitled under the
Retirement Plan for Directors to receive a lifetime quarterly retirement
allowance, beginning when the sum of their age and years of service equals or
exceeds 75, in an amount equal to the quarterly directors' retainer payable at
the time of their retirement. Effective April 1, 2001, benefits under
10
the Plan were frozen so that the quarterly retirement allowance, if any,
payable to future retirees will be limited to (a)(1) the director's years of
service as of April 1, 2001 divided by (2) the years of service at the date
the sum of the director's age and years of service would equal 75, times (b)
the $5,000 quarterly retainer amount previously in effect. Directors who are
employees of the Company or a subsidiary participated in the Retirement Plan
for Directors, but do not receive other additional compensation for service as
a director.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors assists the Board in
fulfilling its oversight responsibilities relating to, among other things, the
quality and integrity of the Company's financial reports. The Committee
operates pursuant to a written charter adopted by the Board in May 2000, a
copy of which is attached to this Proxy Statement as Appendix A. The Board of
Directors, in its business judgment, has determined that all members of the
Audit Committee are "independent" as defined in Section 121(A) of the listing
standards of the American Stock Exchange.
The management of the Company is responsible for the preparation,
presentation and integrity of the Company's financial statements and the
adequacy of its internal controls. The independent accountants are responsible
for planning and carrying out an audit in accordance with generally accepted
auditing standards and expressing an opinion based on the audit as to whether
the Company's audited financial statements fairly present the Company's
consolidated financial position, results of operation and cash flows in
conformity with generally accepted accounting principles.
In the performance of its oversight function, the Audit Committee has
reviewed the Company's audited financial statements for the year ended
December 31, 2000 and has discussed the financial statements with management
and with PricewaterhouseCoopers LLP, the Company's independent accountants for
2000. The Audit Committee has received from the independent accountants
written disclosures pursuant to Statement on Auditing Standards No. 61,
Communication with Audit Committees, and has discussed those matters with the
independent accountants. The Audit Committee has also received from the
independent accountants the written disclosures and the letter required by
Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees, and has discussed with the independent accountants their
independence.
Based upon the review and discussions described in this Report, and subject
to the limitations on the role and responsibilities of the Audit Committee as
referred to in this report and described in the Committee's charter, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2000 to be filed with the Securities and Exchange
Commission.
The foregoing report was submitted by the Audit Committee of the Board of
Directors.
Joseph L. Calihan
Calvin A. Campbell, Jr.
Thomas H. Witmer
11
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 and table comparing the cumulative total
returns (assuming reinvestment of dividends) for the five years ended December
31, 2000 of $100 invested on December 31, 1995 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]
Value at December 31,
----------------------------------------------------
1995 1996 1997 1998 1999 2000
------- ------- ------- ------- ------- -------
Mine Safety Appliances
Company $100.00 $110.94 $136.46 $147.92 $133.33 $157.03
S&P 500 Index $100.00 $120.26 $157.56 $199.57 $238.54 $214.36
Russell 2000 Index $100.00 $114.76 $138.31 $133.54 $159.75 $153.03
12
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 23, 2001
and 4 1/2% Cumulative Preferred Stock as of February 16, 2001 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.
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 2,945,810(2)(3) 21.67% 187 0.89%
Joseph L. Calihan 27,750 0.21% -- --
Calvin A. Campbell, Jr. 11,700 0.09% -- --
Thomas B. Hotopp 1,238,403(3)(4) 9.14% -- --
L. Edward Shaw, Jr. 186,480(5) 1.38% --(5) --
Thomas H. Witmer 4,500 0.03% -- --
James H. Baillie 104,662(6) 0.78% -- --
William M. Lambert 109,711(6) 0.81% -- --
George W. Steggles 106,522(6) 0.79% -- --
All executive officers and
directors as a group
(14 persons) 4,099,165(6) 29.61% 187 0.89%
- --------
(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 acquired
within 60 days upon the exercise of stock options held under the MSIP or
the DSOP: Mr. Ryan, 130,488 shares; Mr. Calihan, 11,100 shares; Mr.
Campbell, 7,500 shares; Mr. Hotopp, 81,141 shares; Mr. Shaw, 3,000 shares;
Mr. Witmer, 4,500 shares; Mr. Baillie, 22,305 shares; Mr. Lambert, 25,995
shares; Mr. Steggles, 19,005 shares; and all directors and executive
officers as a group, 382,689 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,
23,700 shares; Mr. Hotopp, 12,420 shares; Mr. Baillie, 5,130 shares; Mr.
Lambert, 5,040 shares; Mr. Steggles, 5,490 shares; and all directors and
executive officers as a group, 69,780 shares.
(2) Does not include 352,882 shares of Common Stock held by Mr. Ryan's wife.
Includes 1,220,523 shares of Common Stock held in trusts, as to which Mr.
Ryan shares voting and investment power with co-fiduciaries. Of such
shares, voting and investment power over 1,168,023 shares of Common Stock
is shared with Mary Irene Ryan, and voting and investment power over
951,015 shares of Common Stock is shared with John C. Unkovic. See the
following discussion of the beneficial ownership of Mary Irene Ryan and
John C. Unkovic.
(3) Includes 1,125,000 shares of Common Stock held by the trust for the
Company's Non-Contributory Pension Plan for Employees. Mr. Ryan, Mr.
Hotopp and Dennis L. Zeitler, a Vice President of the Company, share
investment power over these shares as the members of the Investment
Committee for the Plan. Voting power over these shares is held by PNC
Bank, as trustee. See the following discussion of the beneficial ownership
of Mr. Zeitler and The PNC Financial Services Group, Inc.
13
(4) Includes 4,500 shares of Common Stock as to which Mr. Hotopp shares voting
and investment power with his wife.
(5) Includes 150,499 jointly owned shares of Common Stock, as to which Mr.
Shaw shares voting and investment power with his wife, and 19,196 shares
of Common Stock held as custodian. Does not include 186,760 shares of
Common Stock and 721 shares of 4 1/2% Cumulative Preferred Stock held
individually by Mr. Shaw's wife.
(6) The Company has established a Stock Compensation Trust which holds
1,621,785 shares of Common Stock which are available to satisfy
obligations of the Company under its stock incentive plans. Under the
terms of the Trust Agreement, the trustee, PNC Bank, must follow the
directions of the holders of stock options under the plans, excluding
members of the Board of Directors, in voting the shares held by the Trust
and in determining whether such shares should be tendered in the event of
a tender or exchange offer for the Common Stock. Each such option holder
has the power to direct the trustee with respect to a number of shares of
Common Stock equal to the shares held by the Trust divided by the number
of option holders. Included in the table are 77,227 shares of Common Stock
each for Messrs. Baillie, Lambert and Steggles, and 617,816 shares of
Common Stock for all directors and executive officers as a group, as to
which such persons and other executive officers of the Company have such
voting and investment power. See the following discussion of the
beneficial ownership of The PNC Financial Services Group, Inc.
5% Beneficial Owners
As of February 23, 2001, to the best of the Company's knowledge, nine
persons or entities beneficially owned more than 5% of the Company's Common
Stock. The beneficial ownership of John T. Ryan III and Thomas B. Hotopp
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:
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
- ------------------- -------------------- --------
Mary Irene Ryan 1,715,070(1) 12.74%
20 West Woodland Road
Pittsburgh, Pennsylvania 15232
John C. Unkovic 979,824(2) 7.28%
435 Sixth Avenue
Pittsburgh, PA 15219
Dennis L. Zeitler 1,220,902(3) 9.06%
P.O. Box 426
Pittsburgh, PA 15230
The PNC Financial Services Group, Inc. 2,816,467(4)(5) 20.92%
PNC Bank Building
Pittsburgh, Pennsylvania 15265
Bruce S. Sherman 1,359,132(6) 10.10%
3003 Tamiami Trail N.
Naples, FL 34103
Gregg J. Powers 1,336,732(6) 9.93%
3003 Tamiami Trail N.
Naples, FL 34103
Private Capital Management, Inc. 1,336,732(6) 9.93%
3003 Tamiami Trail N.
Naples, FL 34103
14
- --------
(1) Mary Irene Ryan has sole voting and investment power with respect to
547,047 and 259,047 shares, respectively, and shares voting and investment
power with respect to 1,168,023 and 1,456,023 shares, respectively with
co-fiduciaries. Of such shares, voting and investment power over 1,168,023
shares of Common Stock is shared with John T. Ryan III, and voting and
investment power over 898,515 shares of Common Stock is shared with John
C. Unkovic. Mary Irene Ryan is the mother of John T. Ryan III.
(2) John C. Unkovic has sole voting and investment power with respect to
28,809 shares of Common Stock. Voting and investment power with respect to
951,015 shares of Common Stock held in various trusts is shared with co-
fiduciaries, including John T. Ryan III and Mary Irene Ryan. Voting and
investment power over all 951,015 of these shares is shared with John T.
Ryan III, and voting and investment power over 898,515 of these shares is
shared with Mary Irene Ryan. Mr. Unkovic is a partner of the law firm of
Reed Smith LLP, which provides legal services to the Company as its
outside counsel.
(3) Includes 1,125,000 shares held by the trust for the Company's Non-
Contributory Pension Plan for Employees and 77,227 shares held by the
Company's Stock Compensation Trust. See footnotes (3) and (6) to the
immediately preceding table. Also includes 14,985 shares which Mr. Zeitler
may acquire within 60 days upon the exercise of stock options held under
the MSIP.
(4) All shares are held by subsidiary banks of The PNC Financial Services
Group, Inc. in various fiduciary capacities. The banks have sole voting
and investment power with respect to 1,194,682 and 15,432 shares,
respectively, and share voting and investment power with respect to 0 and
1,625,685 shares, respectively.
(5) Includes 1,621,785 shares of Common Stock held by the Company's Stock
Compensation Trust, as to which investment power is shared with certain
executive officers of the Company and other holders of stock options under
Company plans. See footnote (6) to the immediately preceding table. Also
includes 1,125,000 shares of Common Stock held by the trust for the
Company's Non-Contributory Pension Plan for Employees. See footnote (3) to
the immediately preceding table.
(6) According to a Schedule 13G filed February 14, 2001, Mr. Sherman is
Chairman and Mr. Powers is President of Private Capital Management, Inc.,
an investment advisor ("PCM"), and in that capacity share voting and
investment power with PCM over 1,336,732 shares of Common Stock which PCM
holds on behalf of its clients. Mr. Sherman has sole voting and investment
power over 21,500 shares of Common Stock and also shares voting and
investment power over 900 shares of Common Stock with another person.
Beneficial Ownership of Ryan Family
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 family. As of February 23, 2001,
members of the extended family of John T. Ryan III and Mary Irene Ryan,
including trusts for their benefit, beneficially owned to the knowledge of the
Company an aggregate of 4,877,377 shares of Common Stock, representing 35.88%
of the outstanding shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
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 2000 Section 16(a) filing requirements applicable to its directors,
officers and greater-than-10% beneficial owners were complied with.
15
PROPOSAL NO. 2
SELECTION OF INDEPENDENT ACCOUNTANTS
Because of the importance to the shareholders of having the Company's
financial statements audited by independent accountants, it is the opinion of
the Board of Directors that the selection of independent accountants should be
submitted to the shareholders. The firm of PricewaterhouseCoopers LLP has been
the independent accountants for the Company since 1959. PricewaterhouseCoopers
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.
Fees of PricewaterhouseCoopers LLP for 2000
Audit Fees:
As independent accountants for the fiscal year ended December 31, 2000,
PricewaterhouseCoopers LLP provided auditing services in connection with their
examination of the consolidated financial statements of the Company, the
separate financial statements of certain of its subsidiaries and certain
periodic filings made by the
Company with the Securities and Exchange Commission. The aggregate fees billed
by PricewaterhouseCoopers LLP for professional services rendered for the audit
of the Company's annual financial statements for the year ended December 31,
2000 and the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q for 2000 were $847,396.
Financial Information Systems Design and Implementation Fees:
The aggregate fees billed by PricewaterhouseCoopers LLP for 2000 for
professional services related to financial information systems design and
implementation were $6,200.
All Other Fees:
The aggregate fees billed by PricewaterhouseCoopers LLP for 2000 for all
other non-audit services rendered to the Company were $225,036.
The Audit Committee of the Board of Directors has considered whether the
provision by PricewaterhouseCoopers LLP of the non-audit services referred to
under the two preceding captions is compatible with maintaining that firm's
independence.
Board Recommendation and Required Vote
The Board of Directors recommends a vote for the selection of
PricewaterhouseCoopers LLP as independent accountants, 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
PricewaterhouseCoopers 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 2002.
16
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 2000 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.
2002 SHAREHOLDER PROPOSALS
The Company's bylaws require that any shareholder intending to present a
proposal for action at an Annual Meeting must give written notice of the
proposal, containing specified information, so that it is received by the
Company not later than the notice deadline under the bylaw. This notice
deadline will generally be 120 days prior to the anniversary date of the
Company's Proxy Statement for the previous year's Annual Meeting, or November
23, 2001 for the Company's Annual Meeting in 2002.
The bylaw described above does not affect the right of a shareholder to
request inclusion of a shareholder proposal in the Company's Proxy Statement
pursuant to Securities and Exchange Commission Rule 14a-8 or to present for
action at an Annual Meeting any proposal so included. Rule 14a-8 requires that
written notice of a shareholder proposal requested to be included in the
Company's proxy materials pursuant to the Rule must also generally be received
by the Company not later than 120 days prior to the anniversary date of the
Company's Proxy Statement for the previous year's Annual Meeting. For the
Company's Annual Meeting in 2002, this deadline would also be November 23,
2001.
The notices of shareholder proposals described under this caption must be
given to the Secretary of the Company at the address set forth on page 1. A
copy of the bylaw provision described above will be furnished to any
shareholder upon written request to the Secretary at the same address.
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 telephone. Employees will receive no additional compensation for any such
solicitation.
By Order of the Board of Directors,
DONALD H. CUOZZO
Secretary
17
Appendix A
Adopted by MSA's Board of Directors
May 10, 2000
MINE SAFETY APPLIANCES COMPANY
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
A. STATEMENT OF POLICY.
The Audit Committee shall provide assistance to the Board of Directors (the
"Board") in fulfilling its responsibility to the shareholders and investment
community relating to corporate accounting, reporting practices of Mine Safety
Appliances Company (the "Company") and the quality and integrity of the
financial reports of the Company. In so doing, it is the responsibility of the
Audit Committee to maintain free and open means of communication between the
Directors, the independent accountants, the internal auditors and the
financial management of the Company. The ultimate accountability of the
independent accountants is to the Board and the Audit Committee.
B. COMPOSITION AND MEETINGS.
The members of the Audit Committee, including a designated Chair, shall be
appointed by the Board and shall meet at least twice a year and more
frequently if the Committee deems necessary.
The Audit Committee shall consist of three or more members comprised solely
of independent non-management directors who meet the independence requirements
of the American Stock Exchange. Each member of the Audit Committee shall be
able to read and understand fundamental elements of financial statements,
including the Company's balance sheet, income statement, and cash flow
statement or will be able to do so within a reasonable period after his or her
appointment to the Audit Committee. Audit Committee members may enhance their
familiarity with finance and accounting by participating in educational
programs conducted by the Company or an outside consultant upon request.
At least one member of the Committee must have past employment experience in
finance or accounting, requisite professional certification in accounting, or
any other comparable experience or background which results in financial
sophistication, including being or having been a chief executive officer,
chief financial officer or other senior officer with financial oversight
responsibilities.
The Audit Committee may invite members of management, members of the Board,
or others to attend their meetings and provide relevant information.
At least once a year, the Audit Committee shall confer with the Company's
independent accountants, Company management and internal auditors in separate
executive sessions to address any matters that should be discussed privately.
C. DUTIES AND RESPONSIBILITIES.
To fulfill its duties and responsibilities, the Audit Committee shall:
(1) Review the audit plans of the independent accountants and internal
auditors for each year, including the degree of coordination, and
approve related fees and costs to ensure that audits are comprehensive
and complete.
A-1
(2) Inquire about the need for significant changes in audit plans, scope
restrictions and to review any serious disputes between the
independent accountants and management.
(3) Review significant findings and recommendations resulting from
external and internal audits and the adequacy of management's related
responses.
(4) Review the adequacy of internal financial controls, areas of
significant risk or exposure and steps taken to minimize such risks or
exposures.
(5) Recommend to the Board the selection of independent accountants to
audit the annual financial statements of the Company and its
consolidated subsidiaries, or where appropriate, recommend their
termination.
(6) Review and evaluate the professional qualifications, effectiveness and
independence of the internal auditors and independent accountants
(including a review of consulting services provided by the independent
accountants).
(7) Ensure that the independent accountants submit on a periodic basis to
the Audit Committee, a formal written statement regarding their
independence delineating all relationships between the independent
accountants and the Company consistent with Independence Standards
Board Standard 1. Engage in a dialogue with the independent
accountants regarding any relationships that may reasonably be thought
to bear on independence and, if necessary, recommend that the Board
take appropriate action to ensure that their independence is
maintained.
(8) Review and discuss with management and the independent accountants the
audited financial statements, (including Management's Discussion and
Analysis) to be included in the Company's Annual Report on Form 10-K
and review and consider with the independent accountants the matters
required to be discussed by Statement on Auditing Standards No. 61.
Based on these discussions, the Audit Committee will advise the Board
whether it recommends that the audited financial statements be
included in the Annual Report on Form 10-K.
(9) Establish an understanding with the independent accountants that they
will advise the Committee through its Chair and management of the
Company of any matters identified through procedures followed for
interim quarterly financial statements, and that such notification is
to be made prior to the related press release or, if not practicable,
prior to filing Forms 10-Q.
(10) Review, with the assistance of the Company's independent accountants
and legal counsel, significant accounting and reporting issues,
including professional, legal and regulatory pronouncements, and
understand their impact on the Company's financial statements.
(11) Prepare an Audit Committee report to shareholders as required by the
Securities and Exchange Commission. The report should be included in
the Company's annual proxy statement.
(12) Review and reassess the adequacy of the Audit Committee Charter on an
annual basis and recommend any proposed changes to the Board for
approval.
(13) Report the Audit Committee's actions and recommendations to the
Board.
A-2
MINE SAFETY APPLIANCES COMPANY
Annual Meeting of Shareholders
Thursday, May 10, 2001
9:00 a.m.
121 Gamma Drive
RIDC Industrial Park
Pittsburgh, PA 15238
Mine Safety Appliances Company
- -------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors.
Proxy--Mine Safety Appliances Company--2001 Annual Meeting of Shareholders
The undersigned hereby appoints John T. Ryan III, Thomas B. Hotopp and
Donald H. Cuozzo, or any 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 2001 Annual Meeting of Shareholders and any
adjournment thereof:
This proxy will be voted as directed, or, if no direction is given, FOR
items 1 and 2 below. A vote FOR item 1 includes discretionary authority to
vote for a substitute if the 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.
PLEASE MARK, DATE, EXECUTE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
\/ Please detach here \/
The Board of Directors Recommends a Vote FOR Items 1 and 2 Below:
1. Election of one Director for a term [_] Vote FOR [_] Vote WITHHELD
expiring in 2004. Nominee: all nominees from all
01 John T. Ryan, Jr. (except as nominees
specified
below)
(Instructions: To withhold authority to [ ]
vote for any nominee, write the
number(s) of the nominee(s) in the box
provided to the right.)
2. Selection of PricewaterhouseCoopers
LLP as independent accountants. [_] For [_] Against[_] Abstain
Address Change? Mark Box [_]
Indicate changes below: Date___________________ , 2001
Signature (s) in Box
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.
- --
- --
[Logo of Mine Safety Appliances Company]
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 Thursday, May 10, 2001, at 9:00
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 one director for a term of
three years;
(2) Selection of Independent Accountants: The selection of independent
accountants for the year ending December 31, 2001;
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 23, 2001 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 23, 2001
