SCHEDULE 14A INFORMATION
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Mine Safety Appliance Company
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[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 Tuesday, May 7, 2002, 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 three directors for a term of
three years;
(2) Selection of Independent Accountants: The selection of independent
accountants for the year ending December 31, 2002;
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 22, 2002 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 22, 2002
March 22, 2002
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, May 7, 2002, 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 22, 2002, the record date for the Annual Meeting, 12,102,227
shares of Common Stock were issued and outstanding, not including 1,415,373
shares held in the Company's Stock Compensation Trust. The shares held in the
Stock Compensation Trust are not considered outstanding for accounting
purposes but are treated as outstanding for certain purposes, including voting
at the Annual Meeting. See "Stock Ownership--Beneficial Ownership of
Management."
Only holders of Common Stock of the Company of record on the books of the
Company at the close of business on February 22, 2002 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
Three directors will be elected at the Annual Meeting to serve until the
Annual Meeting in 2005 and until a successor has been elected and qualified.
The Board of Directors recommends a vote FOR the election of the 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, all
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 2005:
Joseph L. Calihan Managing Partner of 64 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 57 1998 Covenant House
and General Counsel,
Aetna, Inc. (health care
and group benefits)
Thomas H. Witmer Retired (1998); Formerly 59 1997 Medrad, Inc.; Bridge
President and Chief Semiconductor Co., Inc.; The
Executive Officer of Carnegie Museum of Natural
Medrad, Inc. (medical History; Granite State Log
products manufacturer) Homes, Inc.
Continuing Directors with terms expiring in 2003:
Calvin A. Campbell, Chairman, President and 67 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 60 1998 Pittsburgh Symphony Society
Continuing Directors with terms expiring in 2004:
James A. Cederna Chairman, President and 51 2002 Calgon Carbon Corporation
Chief Executive Officer, (an SEC reporting company)
Calgon Carbon Corporation
(air and water
purification)
John T. Ryan III Chairman and Chief 58 1981 Past Chairman, Industrial
Executive Officer of the Safety Equipment
Company Association; Allegheny
Conference on Community
Development; Pittsburgh
Regional Alliance; Vice
Chairman, World Affairs
Council of Pittsburgh
John C. Unkovic Partner and General 58 2002 Manchester Bidwell
Counsel, Reed Smith LLP Corporation
(full service law firm)
2
Prior to becoming President of Calgon Carbon Corporation in April 1999, Mr.
Cederna was President of Arizona Chemical Co., a specialty chemicals
manufacturer, and an officer of International Paper Co., a paper and forest
products company. 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 2001, 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. The current members of the Audit
Committee are directors Calihan, Campbell and Witmer, each for a term expiring
at the 2002 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 2002 organizational meeting of the
Board. The Compensation Committee, which met two times in 2001, 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 2001 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, Ryan and Shaw, each for a term expiring at the 2002 organizational
meeting of the Board. The Nominating Committee, which met once in 2001,
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 ten times during 2002. 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 three 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 2002 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 earned from the Company and its subsidiaries for the
years 2001, 2000 and 1999 by the persons who were in 2001 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 (1) Compensation Awards
----------------------- -------------------------------
Shares
Underlying
Restricted Stock
Name and Stock Options All Other
Principal Position Year Salary ($) Bonus ($) Awards ($)(2) (# of Shares) (3) Compensation ($)(4)
------------------ ---- ------------ ----------- ------------- ----------------- -------------------
John T. Ryan III 2001 $483,323 $ 608,890 -- 72,345 $57,035
Chairman and 2000 $455,280 $ 439,800 $245,313 52,455 $43,486
Chief Executive
Officer 1999 $441,960 $150,550 -- 20,688 $39,252
Thomas B. Hotopp 2001 $ 308,070 $ 249,500 -- 34,715 $29,722
President 2000 $289,879 $230,000 $128,648 26,595 $23,092
1999 $277,920 $ 83,250 -- 10,896 $23,313
Dennis L. Zeitler 2001 $ 193,073 $ 204,530 -- 23,745 $ 8,940
Vice President, Chief 2000 $ 151,469 $ 108,280 $ 42,882 8,835 $ 8,656
Financial Officer and 1999 $ 140,520 $ 34,070 -- 3,480 $12,120
Treasurer
James H. Baillie 2001 $ 250,124 $ 200,000 -- 6,865 $24,878
Vice President; 2000 $243,338 $ 61,600 $107,837 22,305 $25,379
President, MSA Europe 1999 $228,365 $ 45,040 -- -- $46,411
William M.
Lambert 2001 $194,049 $ 173,030 -- 14,125 $17,852
Vice President/ 2000 $176,075 $138,380 $ 52,342 10,875 $12,301
General Manager- 1999 $ 169,296 $ 20,970 -- 4,290 $12,059
Safety Products
Division
--------
(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 of restricted shares awarded on that date. At December 31, 2001
the number and market values of restricted shares held by the Named
Officers were as follows: Mr. Ryan, 17,685 shares ($718,895); Mr. Hotopp,
9,270 shares ($376,826); Mr. Zeitler, 2,865 shares ($116,462); Mr.
Baillie, 5,130 shares ($208,535); and Mr. Lambert, 3,765 shares
($153,047). 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) 2001 amounts include Company matching contributions to the Company's
Retirement Savings and Supplemental Savings Plans as follows: Mr. Ryan,
$36,965; Mr. Hotopp, $21,523; Mr. Zeitler, $284; and Mr. Lambert, $12,477.
The 2001 amounts also include life insurance premiums paid by the Company
as follows: Mr. Ryan, $20,070; Mr. Hotopp, $8,199; Mr. Zeitler, $8,656;
and Mr. Lambert, $5,375. The 2001 amount for Mr. Baillie is the amount
paid to him in lieu of contributions to a retirement plan.
4
Stock Option Grants in 2001
The following table sets forth information concerning stock options granted
to the Named Officers in 2001 under the MSIP:
Number of Percent of
Shares Total Options Grant
Underlying Granted to Exercise Date
Options Employees Price Expiration Present
Name Granted (#) in 2001 ($/Share) (1) Date Value (2)
---- ----------- ------------- ------------- ---------- ---------
John T. Ryan III 3,965 1.7% $27.731 3/12/2006 $ 20,571
68,380 28.9% $25.210 3/12/2011 $564,429
Thomas B. Hotopp 34,715 14.7% $25.210 3/12/2011 $283,500
Dennis L. Zeitler 23,745 10.0% $25.210 3/12/2011 $193,875
James H. Baillie 6,865 2.9% $25.210 3/12/2011 $ 56,018
William M. Lambert 14,125 6.0% $25.210 3/12/2011 $115,313
--------
(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 3,965
shares granted to Mr. Ryan it is 110% of such value. The options became
exercisable on September 12, 2001. The option for 3,965 shares granted to
Mr. Ryan, and 3,965 shares of the options granted to each other Named
Officer are intended to qualify as incentive stock options under the
Internal Revenue Code.
(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 23.48%, expected
dividend yield of 2.12%, expected option term of five years for the option
for 3,965 shares granted to Mr. Ryan and ten years for the remaining
options, and a risk-free rate of return of 5.20%.
Stock Option Exercises and Year-End Values
The following table sets forth information concerning the stock options
under the MSIP exercised by the Named Officers during 2001 and the stock
options under the MSIP held by the Named Officers at December 31, 2001.
Number of Value of
Shares Unexercised
Number of Underlying In-the-
Shares Unexercised Money
Acquired Value Options at Options at
Name on Exercise Realized(1) 12/31/2001(2) 12/31/2001(3)
---- ----------- ----------- ------------- -------------
John T. Ryan III 54,461 $ 967,007 148,372 $2,640,935
Thomas B. Hotopp 61,356 $1,569,863 54,500 $ 940,722
Dennis L. Zeitler 25,119 $ 528,156 13,611 $ 252,028
James H. Baillie 29,170 $ 531,136 None --
William M. Lambert 12,241 $ 396,709 27,879 $ 493,229
--------
(1) Represents the difference between the fair market value of the shares
acquired on the date of the option exercise and the option price of those
shares.
(2) All options were exercisable at December 31, 2001.
(3) Represents the amount by which the December 31, 2001 market value 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 2001 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 is also responsible for
administering the Company's shareholder approved 1998 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 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 by 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.
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.
At its meeting in March 2001, the Committee considered executive officer
salaries for the period April 1, 2001 through March 31, 2002. At the time of
the meeting, the Company had recently received the results of a new survey by
its outside compensation consultants as to the market level salary ranges for
the Company's executive officer positions. In determining executive officer
salaries for the period, the Committee's policy was to bring each officer's
salary to at least 95% of the midpoint of the market level range for the
officer's position, assuming competent individual performance. The increase in
Mr. Ryan's salary for this period reflected this policy as well as recognition
by the Committee of the Company's success in exceeding its 2000 net income
target.
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 2001, this
percentage was 60% of median market level salary for the chief executive
officer, and ranged between 30% and 45% 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, 25% 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 or other 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
Company 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 or
other performance 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 2001, the Committee determined to establish special
incentives to meet the Company's plan for 2001 consolidated net income because
that plan represented a desired significant increase from year 2000 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 2001 consolidated net income exceeded the
target for the maximum special incentives. As a result, the annual bonuses
paid for 2001 were 150% of the bonus amounts determined under the Company's
regular bonus program.
The Committee determined bonuses for 2001 at its meeting in March 2002. 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 increased the targeted bonus for Mr.
Ryan in recognition of the Company's success in exceeding its 2001 net income
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
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
modified in 2001 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, 75% of the dollar value of long-term incentive
awards, as so determined, is made in the form of stock options and 25% in the
form of restricted stock awards. Stock option grants are made annually. The
number of shares for which stock options are granted to each executive officer
is determined by dividing 75% of the dollar value for the officer's position
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 25% of the dollar value of long-term incentive awards for each
executive officer position by the per share market value on the date of the
award. Through 2001, this amount was doubled to reflect that restricted stock
awards were made only in even numbered years. Beginning in 2002, restricted
stock awards will be made on an annual basis at 25% of the annual dollar value
of MSIP awards for each executive officer position. Under the terms of the
awards granted through 2001, the restricted shares granted 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 stock options under the MSIP at its meeting in March 2001.
The amount of the stock option award granted to Mr. Ryan was the targeted
amount under the program for the chief executive officer position.
7
At 2001 compensation levels, the Company anticipates that any effects of the
$1 million cap on deductibility of individual executive officer compensation
imposed by Section 162(m) of the Internal Revenue Code will be de minimus.
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, Shaw and Witmer served as members of the Compensation
Committee during all of 2001.
Mr. Campbell is a majority owner, a director and Chairman, President and
Chief Executive Officer of Goodman Equipment Corporation. During 2001, the
Company and its affiliates received commissions of approximately $104,434 for
acting as sales agents with respect to sales of certain mining locomotives and
spare parts for Goodman Equipment Corporation.
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 Annual Compensation
Years of ---------------------------------------------------------
Service $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000
-------- -------- -------- -------- -------- ---------- ----------
5 $ 12,778 $ 27,417 $ 42,055 $ 56,694 $ 71,333 $ 85,972
15 38,333 82,250 126,166 170,083 213,999 257,916
25 63,889 137,083 210,277 283,471 356,665 429,859
35 89,444 191,916 294,388 396,859 499,331 601,803
45 108,333 229,694 351,054 472,415 593,775 715,136
--------
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 1942. 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, 2002, with a maximum taxable wage base of $84,900
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,
8
with covered compensation including salary and bonus. As of December 31, 2001,
years of service under the plan for the Named Officers were: Mr. Ryan, 32.50
years; Mr. Hotopp, 10.42 years; Mr. Zeitler, 25.00 years; and Mr. Lambert,
20.33 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, $50,000 for Mr. Hotopp, and $40,000 for Messrs. Zeitler and Lambert.
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 (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 provided 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
was 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 were discretionary
with the Compensation Committee and were determined as described above under
"Compensation Committee Report on Executive Compensation." Mr. Baillie also
received 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.
9
Director Compensation
Effective April 1, 2001, directors who are not employees of the Company or
one of its subsidiaries are paid a retainer at the rate of $6,250 per quarter
and $1,200 for each day of a Board meeting and each meeting of a Committee of
the Board that they attend. Prior to that date, the quarterly retainer rate
was $5,000 and the per meeting fee was $1,000.
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 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, on May 15, 2001
directors Calihan, Campbell, Shaw and Witmer were each granted options to
purchase 1,900 shares of Common Stock at an option price of $29.20 and 215
shares of restricted stock.
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 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.
Certain Relationships and Transactions
Mr. Unkovic is a partner in the law firm of Reed Smith LLP, which provides
legal services to the Company as its outside counsel.
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. 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.
10
In the performance of its oversight function, the Audit Committee has
reviewed the Company's audited financial statements for the year ended
December 31, 2001 and has discussed the financial statements with management
and with PricewaterhouseCoopers LLP, the Company's independent accountants for
2001. 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, 2001 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, 2001 of $100 invested on December 31, 1996 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,
----------------------------------------------------
1996 1997 1998 1999 2000 2001
------- ------- ------- ------- ------- -------
Mine Safety Appliances
Company $100.00 $125.48 $138.67 $127.66 $153.68 $250.10
S&P 500 Index $100.00 $131.01 $165.95 $198.35 $178.24 $154.99
Russell 2000 Index $100.00 $120.52 $116.37 $139.20 $133.35 $134.72
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 22, 2002
and 4 1/2% Cumulative Preferred Stock as of February 15, 2002 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................ 3,034,545(2)(3) 22.21% 187(2) 0.89%
Joseph L. Calihan............... 29,865 0.22% -- --
Calvin A. Campbell, Jr.......... 13,815 0.10% -- --
James A. Cederna................ -- -- -- --
Thomas B. Hotopp................ 1,128,607(3)(4) 8.32% -- --
L. Edward Shaw, Jr.............. 187,870(5) 1.39% --(5) --
John C. Unkovic................. 979,824(6) 7.25% 93(6) 0.44%
Thomas H. Witmer................ 6,615 0.05% -- --
Dennis L. Zeitler............... 1,157,593(3)(7) 8.55% -- --
James H. Baillie................ 5,130(7) 0.04% -- --
William M. Lambert.............. 132,277(7) 0.98% -- --
All executive officers and
directors as a group
(16 persons)................... 4,002,143(7) 28.92% 280 1.33%
--------
(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, 148,372 shares; Mr. Calihan, 13,000 shares; Mr.
Campbell, 9,400 shares; Mr. Hotopp, 54,500 shares; Mr. Shaw, 4,900 shares;
Mr. Witmer, 6,400 shares; Mr. Zeitler, 13,611 shares; Mr. Lambert, 27,879
shares; and all directors and executive officers as a group, 321,792
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, 17,685 shares; Mr.
Calihan, 215 shares; Mr. Campbell, 215 shares; Mr. Hotopp, 9,270 shares;
Mr. Shaw, 215 shares; Mr. Witmer, 215 shares; Mr. Zeitler, 2,865 shares;
Mr. Baillie, 5,130 shares; Mr. Lambert, 3,765 shares; and all directors
and executive officers as a group, 55,250 shares.
(2) Does not include 206,973 shares of Common Stock held by Mr. Ryan's wife.
Includes 149,945 shares of Common Stock as to which Mr. Ryan shares voting
and investment power with his wife and 1,210,928 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
951,015 shares of Common Stock is shared with John Unkovic, and voting and
investment power over 1,158,428 shares is shared with Mary Irene Ryan. See
the following discussion of the beneficial ownership of Mary Irene Ryan.
13
(3) Includes 1,045,500 shares of Common Stock held by the trust for the
Company's Non-Contributory Pension Plan for Employees. Mr. Ryan, Mr.
Hotopp and Mr. Zeitler 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 The PNC Financial Services Group, Inc.
(4) Includes 19,337 shares of Common Stock as to which Mr. Hotopp shares
voting and investment power with his wife.
(5) Includes 149,499 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 186,633 shares of
Common Stock and 721 shares of 4 1/2% Cumulative Preferred Stock held
individually by Mr. Shaw's wife.
(6) Mr. Unkovic has sole voting and investment power with respect to 28,809
shares of Common Stock and 93 shares of 4 1/2% Cumulative Preferred 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. See the
following discussion of the beneficial ownership of Mary Irene Ryan.
(7) The Company has established a Stock Compensation Trust which holds
1,415,373 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 94,358 shares of Common Stock
each for Messrs. Zeitler and Lambert, and 471,790 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 22, 2002, 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, Thomas B. Hotopp, John C.
Unkovic and Dennis L. Zeitler 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 1,683,212(1) 12.45%
20 West Woodland Road
Pittsburgh, Pennsylvania 15232
The PNC Financial Services Group, Inc. 2,508,255(2)(3) 18.56%
PNC Bank Building
Pittsburgh, Pennsylvania 15265
Bruce S. Sherman 1,553,988(4) 11.50%
8889 Pelican Bay Blvd.
Naples, FL 34108
14
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
Gregg J. Powers 1,531,588(4) 11.33%
8889 Pelican Bay Blvd.
Naples, FL 34108
Private Capital Management, Inc. 1,531,588(4) 11.33%
8889 Pelican Bay Blvd.
Naples, FL 34108
--------
(1) Mary Irene Ryan has sole voting and investment power with respect to
524,784 and 236,784 shares, respectively, and shares voting and investment
power with respect to 1,158,428 and 1,446,428 shares, respectively with
co-fiduciaries. Of such shares, voting and investment power over 1,158,428
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
Unkovic. Mary Irene Ryan is the mother of John T. Ryan III.
(2) 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 1,092,882 and 15,432 shares,
respectively, and share voting and investment power with respect to 0 and
1,415,673 shares, respectively.
(3) Includes 1,415,373 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 (7) to the immediately preceding table. Also
includes 1,045,500 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.
(4) According to a Schedule 13G filed February 15, 2002, Mr. Sherman is CEO
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 1,531,588 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 22, 2002,
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 4,803,426 shares of Common Stock, representing 35.15%
of the outstanding shares.
Shareholder Rights Plan
The Company has established a shareholder rights plan intended to promote
continuity and stability, deter coercive or partial offers and other unfair
takeover tactics which will not provide fair value to all shareholders, and
enhance the Board's ability to represent all shareholders and thereby maximize
shareholder values.
Under the plan, each share of Common Stock presently outstanding or which is
issued hereafter prior to the Distribution Date (defined below) is granted
one-third of a Right. Each Right entitles the registered holder to purchase
from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock of the Company (the "Preferred Shares") at a
price of $225.00 per one one-thousandth of a Preferred Share, subject to
adjustment in the event of stock dividends and similar events occurring prior
to the Distribution Date. Each one one-thousandth of a Preferred Share would
have voting, dividend and liquidation rights which are the approximate
equivalent of one share of Common Stock.
The Rights are not exercisable until the Distribution Date, which is the
earlier to occur of (i) 10 days following a public announcement that a person
(an "Acquiring Person") has acquired beneficial ownership, as
15
defined in the Rights Agreement, of 15% or more of the outstanding Common
Stock or (ii) 10 business days (unless extended by the Board of Directors)
following the commencement of a tender offer or exchange offer which would
result in the beneficial ownership by a person of 15% or more of the
outstanding Common Stock. Until the Distribution Date, the Rights will be
transferred only with the Common Stock, and the transfer of a share of Common
Stock will also constitute the transfer of the associated Right. Following the
Distribution Date, separate certificates evidencing the Rights will be mailed
to record holders of Common Stock on the Distribution Date, and the Rights
will then become separately tradable. In determining whether an individual or
a qualifying nonbusiness entity has become an Acquiring Person, shares of
Common Stock held continuously on and after February 10, 1997, or acquired by
gift or inheritance from another individual or qualifying entity which held
them on that date, are excluded from the 15% beneficial ownership calculation.
In the event that any person becomes an Acquiring Person (other than
pursuant to certain qualifying tender or exchange offers approved by the
Board) and after expiration of the period during which the Rights may be
redeemed, each holder of a Right, other than Rights beneficially owned by the
Acquiring Person or its associates or affiliates (which will be void), will
thereafter have the right to receive upon exercise shares of Common Stock (or
in certain circumstances, cash, property or other securities of the Company)
having a market value of two times the exercise price of the Right. In the
event that after the first public announcement that any person has become an
Acquiring Person, the Company is acquired in a merger or other business
combination transaction (other than a merger pursuant to certain qualifying
tender or exchange offers) or 50% or more of its assets or earning power are
sold, each holder of a Right, other than Rights beneficially owned by the
Acquiring Person or its associates or affiliates (which will be void), will
thereafter have the right to receive upon exercise of the Right, shares of
common stock of the acquiring company having a market value of two times the
exercise price of the Right.
At any time after a person becomes an Acquiring Person and prior to the
acquisition by such person of 50% or more of the outstanding Common Stock, the
Board of Directors may exchange the Rights (other than Rights which have
become void), in whole or in part, at an exchange ratio of one share of Common
Stock, or one one-thousandth of a Preferred Share (or of a share of a class or
series of the Company's preferred stock having equivalent rights, preferences
and privileges) per Right, subject to adjustment.
At any time prior to 10 days after the public announcement of an Acquiring
Person, the Board of Directors may redeem the Rights in whole, but not in
part, at a redemption price of $.01 per Right. Prior to the Distribution Date,
the terms of the Rights may be amended by the Board of Directors in any
respect whatever, without the consent of the holders of the Rights, except
that the redemption price, the expiration date of the Rights, the exercise
price or the number of Preferred Shares for which a Right is exercisable may
not be amended. After the Distribution Date, the Board may amend certain time
periods and other provisions relating to the Rights, except that the time
period for redemption of the Rights may not be amended after the Rights have
become nonredeemable. The Rights will expire on February 21, 2007 unless
earlier redeemed or exchanged by the Company as described above.
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 2001 Section 16(a) filing requirements applicable to its directors,
officers and greater-than-10% beneficial owners were complied with.
16
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 Board of Directors recommends that the
shareholders approve the selection of the firm of PricewaterhouseCoopers LLP
as the Company's independent accountants for the year ending December 31,
2002. 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 2001
Audit Fees:
As independent accountants for the fiscal year ended December 31, 2001,
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, 2001 and the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for 2001
were $749,100.
Financial Information Systems Design and Implementation Fees:
No fees were billed by PricewaterhouseCoopers LLP for 2001 for professional
services related to financial information systems design and implementation.
All Other Fees:
The aggregate fees billed by PricewaterhouseCoopers LLP for 2001 for all
other non-audit services rendered to the Company were $714,772. These services
were primarily acquisition and tax compliance related.
The Audit Committee of the Board of Directors believes that the provision by
PricewaterhouseCoopers LLP of these non-audit services 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 2003.
17
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 2001 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.
2003 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
22, 2002 for the Company's Annual Meeting in 2003.
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 2003, this deadline would also be November 22,
2002.
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
18
MINE SAFETY APPLIANCES COMPANY
Annual Meeting of Shareholders
Tuesday, May 7, 2002
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--2002 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 2002 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 three Directors for a [_] Vote FOR [_] Vote WITHHELD
term expiring in 2005. Nominees: all nominees from all
(except as nominees
specified below)
01 Joseph L. Calihan 02 L. Edward Shaw, Jr.
03 Thomas H. Witmer
(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 [_] For [_] Against[_] Abstain
LLP as independent accountants.
Address Change? Mark Box [_]
Indicate changes below: Date
------------------- , 2002
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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.
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