SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-12
ESCO TECHNOLOGIES INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(4) Date filed:
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[ESCO TECHNOLOGIES LOGO]
NOTICE OF THE ANNUAL MEETING OF
THE STOCKHOLDERS OF
ESCO TECHNOLOGIES INC.
St. Louis, Missouri
December 11, 2001
TO THE STOCKHOLDERS OF
ESCO TECHNOLOGIES INC.:
The Annual Meeting of the Stockholders of ESCO Technologies Inc. will be
held at the Hilton St. Louis Frontenac Hotel, 1335 South Lindbergh Blvd., St.
Louis County, Missouri 63131 on Tuesday, February 5, 2002, commencing at 10:00
A.M., at which meeting only holders of record of the Company's common stock at
the close of business on November 28, 2001 will be entitled to vote, for the
following purposes:
1. To elect three directors; and
2. To transact such other and further business, if any, as lawfully may be
brought before the meeting.
ESCO TECHNOLOGIES INC.
BY /s/ D J Moore
Chairman and
Chief Executive Officer
/s/ Alyson S. Barclay
Secretary
EVEN THOUGH YOU MAY PLAN TO ATTEND THE MEETING IN PERSON, PLEASE EXECUTE
THE ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY. A RETURN ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED FOR YOUR
CONVENIENCE.
ESCO TECHNOLOGIES INC.
8888 LADUE ROAD, SUITE 200, ST. LOUIS, MISSOURI 63124-2056
PROXY STATEMENT
FOR THE ANNUAL MEETING OF THE STOCKHOLDERS TO BE HELD FEBRUARY 5, 2002
This proxy statement is furnished to the holders of all of the issued and
outstanding shares of common stock (the "Common Shares") of ESCO Technologies
Inc. (the "Company") in connection with the solicitation of proxies for use in
connection with the Annual Meeting of the Stockholders to be held February 5,
2002, and all adjournments thereof, for the purposes set forth in the
accompanying Notice of the Annual Meeting of the Stockholders. Such holders are
hereinafter referred to as the "Stockholders". The Company is first mailing this
proxy statement and the enclosed form of proxy to Stockholders on or about
December 11, 2001.
Whether or not you expect to be present in person at the meeting, you are
requested to fill in, sign, date and return the enclosed form of proxy. If you
attend the meeting, you may of course vote by ballot. If you do not attend the
meeting, the Common Shares can be voted only when represented by a properly
executed proxy. In this case you have several choices:
- You may vote on each proposal when returning the enclosed proxy form, in
which case the Common Shares will be voted in accordance with your
choices.
- You may, when appropriate, indicate a preference to abstain on any
proposal, which will have the effect described in "VOTING" on page 17.
- You may return a properly executed proxy form without indicating your
preferences, in which case the proxies will vote the Common Shares FOR
election of the directors nominated by the Board of Directors and in
their discretion on such other business as may properly come before the
meeting.
Any person giving such proxy has the right to revoke it at any time before
it is voted by giving written notice of revocation to the Secretary of the
Company, by duly executing and delivering a proxy bearing a later date, or by
attending the Annual Meeting and casting a contrary vote in person.
The close of business on November 28, 2001 has been fixed as the record
date for the determination of the Stockholders entitled to vote at the Annual
Meeting of the Stockholders. As of the record date, 12,408,755 Common Shares
were outstanding and entitled to be voted at such meeting. The Stockholders will
be entitled to cast one vote for each Common Share held of record on the record
date.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended September 30, 2001 accompanies this proxy statement.
The solicitation of this proxy is made by the Board of Directors of the
Company. The solicitation will be by mail, and the expense thereof will be paid
by the Company. Proxies may also be solicited by telephone or telefax by
directors, officers or regular employees of the Company.
2
I. ELECTION OF DIRECTORS
NOMINEES AND CONTINUING DIRECTORS
The Company's Bylaws provide that the number of directors shall not be less
than three nor greater than ten, and shall be determined from time to time by
majority vote of the Board of Directors. In accordance with the Bylaws, the
Board of Directors has fixed the number of directors at seven. The Board is
divided into three classes, with the terms of office of each class ending in
successive years. Three directors of the Company are to be elected for terms
expiring at the Annual Meeting in 2005, or until their respective successors
have been elected and have qualified. Certain information with respect to the
nominees for election as directors proposed by the Company and the other
directors whose terms of office as directors will continue after the Annual
Meeting is set forth below. Should any one or more of the nominees be unable or
unwilling to serve (which is not expected), the proxies (except proxies marked
to the contrary) will be voted for such other person or persons as the Board of
Directors of the Company may recommend. Proxies cannot be voted for more than
three nominees.
NAME, AGE, PRINCIPAL OCCUPATION OR SERVED AS
POSITION, OTHER DIRECTORSHIPS DIRECTOR SINCE
---------------------------------- --------------
TO BE ELECTED FOR TERMS ENDING IN 2005
W.S. Antle III, 57.......................................... 1994
Former Chairman, President and Chief Executive Officer of
Oak Industries Inc., manufacturer of components and
controls,
Director of GenRad, Inc., John H. Harland Company
L.W. Solley, 59............................................. 1999
Chairman and Chief Executive Officer, Fisher Controls
International, Inc., manufacturer of valves and
regulators,
Executive Vice President, Emerson Electric Co.,
manufacturer of electrical and other products
J.D. Woods, 70.............................................. 2001
Chairman Emeritus and retired Chief Executive Officer,
Baker Hughes Incorporated, supplier of oilfield
equipment and services,
Director of Varco International, United States Enrichment
Corporation, OMI Corporation
TO CONTINUE IN OFFICE UNTIL 2004
D.J. Moore, 63.............................................. 1990
Chairman and Chief Executive Officer of the Company
J.M. Stolze, 58............................................. 1999
Executive Vice President and Chief Financial Officer, MEMC
Electronic Materials, Inc., manufacturer of silicon
wafers
TO CONTINUE IN OFFICE UNTIL 2003
J.M. McConnell, 60.......................................... 1996
Former President and Chief Executive Officer, Instron
Corporation, manufacturer of scientific instruments,
Director of WTC Corp.
D.C. Trauscht, 68........................................... 1991
Chairman, BW Capital Corporation, private investment
company,
Director of Global Motorsports Inc., OMI Corporation
Each of the nominees and continuing directors has had the same position
with the same employer as stated in the preceding table during the past five
years, except as follows:
From May 1995 until January 2000, Mr. Antle was Chairman, President and
Chief Executive Officer of Oak Industries Inc.
3
From January 1986 to January 1997, Mr. Woods was Chairman, President and
Chief Executive Officer of Baker Hughes Incorporated.
From October 1992 until August 2001, Mr. Moore was Chairman, President and
Chief Executive Officer of the Company.
From April 1990 until September 2001, Mr. McConnell was President and Chief
Executive Officer of Instron Corporation.
BOARD OF DIRECTORS AND COMMITTEES
There were six meetings of the Board of Directors during fiscal year 2001.
All of the incumbent directors attended at least 75% of the meetings of the
Board and committees on which they served, except that Mr. Woods attended three
of the five meetings held after he became a director. Directors who are
employees of the Company do not receive any compensation for service as
directors. Each non-employee director is currently paid a cash or stock
equivalent retainer of $5,000 per fiscal quarter and a fee of $900 plus expenses
for attendance at each Board meeting. In addition, each non-employee director
receives a retainer of 325 Common Shares per fiscal quarter. Each Board
committee chairman is currently paid an annual retainer of $2,000, and each
committee member is paid $800 plus expenses for attendance at each committee
meeting. Under the Company's extended compensation plan for non-employee
directors who began Board service prior to April 2001, each such director who
has served as a non-employee director for at least five years or whose tenure as
a director expires pursuant to the Company's Bylaws restriction regarding
maximum age for election will, after the later of termination of services as a
director or reaching age 65, receive for life a percentage of the fiscal year
2001 annual cash retainer for directors. Such percentage is a minimum of 50% and
increases to 60% for six years' service, 70% for seven years' service, 80% for
eight years' service, 90% for nine years' service and 100% for ten or more
years' service. In the event of death of a retired director who is eligible
under this plan, 50% of the benefit will be paid to the surviving spouse for
life. If the eligible director so elects, the actuarial equivalent of the
benefit may be received in a single lump sum.
Directors may elect to defer receipt of all of the cash portion and/or all
of the stock portion of the quarterly retainer. If elected, the deferred amounts
are credited to the director's deferred compensation account in stock
equivalents. Deferred amounts will be distributed in Common Shares or cash at
such future dates as specified by the director unless distribution is
accelerated in certain circumstances, including a change in control of the
Company. The stock portion which has been deferred may only be distributed in
Common Shares.
The members of the Board of Directors are appointed to various committees.
The standing committees of the Board are: the Executive Committee, the Audit and
Finance Committee, and the Human Resources and Ethics Committee. The Board does
not have a standing nominating committee.
The Executive Committee's function is to exercise the full authority of the
Board of Directors between Board meetings, except that the Executive Committee
may not take certain specified actions which the Board of Directors has reserved
for action by the whole Board. The Committee held no meetings in fiscal year
2001. Mr. Moore (Chairman), Mr. Antle and Mr. Trauscht are the members of the
Committee.
The Audit and Finance Committee's functions generally are to oversee the
Company's financial reporting process; review the Company's reports to
Stockholders with management and the independent auditors and receive certain
assurances from management; appoint the firm of independent auditors to perform
the annual audit; annually evaluate the qualifications and prior performance of
the independent auditors; review the scope of the auditors' work and approve
their fees; review the Company's internal controls with the independent and the
internal auditors; and review financing requirements and strategy for the
Company. The Committee met four times in fiscal year 2001. Mr. Antle (Chairman),
Mr. McConnell and Mr. Stolze are the members of the Committee.
The Human Resources and Ethics Committee's functions generally are to
review and approve various compensation and benefit plans; oversee the Company's
Code of Business Ethics and Conduct and the Ethics Program; administer the
long-term incentive compensation plans; determine when service by an officer or
4
director is eligible for indemnification; and implement and oversee the
Charitable Contributions Program. The Committee met five times in fiscal year
2001. Mr. Trauscht (Chairman), Mr. Solley and Mr. Woods are the members of the
Committee.
REPORT OF THE AUDIT AND FINANCE COMMITTEE
The Audit and Finance Committee of the Board of Directors (the "Committee")
is composed of three independent directors (as defined by the New York Stock
Exchange's listing standards) and operates under a written charter adopted by
the Board of Directors. The Committee has prepared the following report on its
activities with respect to the Company's audited financial statements for the
fiscal year ended September 30, 2001 (the "audited financial statements").
- The Committee has reviewed and discussed the audited financial statements
with management;
- The Committee has discussed with KPMG LLP, the Company's independent
auditors, the matters required to be discussed by Statements on Auditing
Standards No. 61;
- The Committee has received the written disclosures and the letter from
KPMG required by Independence Standards Board Standard No. 1, and has
discussed with KPMG its independence from the Company; and
- Based on the review and discussions referred to above and relying
thereon, the Committee has 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 fiscal year ended September 30, 2001, for filing
with the U.S. Securities and Exchange Commission.
The Audit and Finance Committee
W.S. Antle III, Chairman
J.M. McConnell
J.M. Stolze
5
EXECUTIVE COMPENSATION
REPORT OF THE HUMAN RESOURCES AND ETHICS COMMITTEE
ON EXECUTIVE COMPENSATION
INTRODUCTION
The following report is provided by the Human Resources and Ethics
Committee of the Board of Directors. The Committee supervises the Company's
Executive Compensation Program (the "Program") and is directly responsible for
compensation actions affecting the Chairman and Chief Executive Officer (the
"Chief Executive Officer"), other executive officers and other senior executives
of the Company. The Committee consists entirely of non-employee directors.
EXECUTIVE COMPENSATION PHILOSOPHY
The Program is designed and administered to relate executive compensation
to four basic objectives:
- Competitive Position: The Program is designed to pay competitive
compensation so the Company can attract and retain highly qualified
executives. To assist it in determining competitive compensation
practices, the Committee frequently utilizes information about
compensation levels of peer companies and other manufacturing companies
of similar size, including information provided by qualified independent
consultants. When compensation significantly varies from competitive
levels, the Committee makes appropriate adjustments over time through the
annual compensation planning process.
- Company Performance: The Program is designed to reflect overall Company
performance, with appropriate consideration of conditions that exist in
the industries in which it engages. In determining compensation levels
and compensation changes, the Committee considers the Company's overall
performance in meeting both short-term and long-term objectives, and
considers achievement of operating objectives in areas such as sales,
earnings, entered orders and economic profit, as well as progress toward
long-term strategic objectives.
- Stockholder Return: The Program has been designed to establish a direct
link between the interests of the Company's executives and its
Stockholders. This is accomplished by allocating a substantial portion of
senior management compensation to stock-based programs tied directly to
Stockholder return.
- Individual Performance: In addition to the above factors, the Committee
considers the executive's individual performance and contributions to the
Company's results in determining appropriate compensation levels.
THE EXECUTIVE COMPENSATION PROGRAM
To achieve the above objectives, the Program consists of three basic
elements:
- Base Salary: The base salary of each executive is reviewed annually and
set by the Committee at the beginning of each fiscal year. Salary changes
reflect overall Company performance, pay competitiveness and the
individual's performance. The targeted percentage of cash compensation
represented by base salary varies based on the level of the position,
with a target of approximately 60% for the Chief Executive Officer and
approximately 70% for the other executive officers.
- Annual Incentive Cash Compensation: A substantial portion of each
executive's annual cash compensation is tied to Company performance
through the Company's Performance Compensation Plan, an annual incentive
cash compensation program. The Committee determines the annual
Performance Compensation payment for each executive after the end of each
fiscal year on the basis of a combination of objective targets and
subjective evaluations of Company performance, considering market
conditions and industry circumstances, in key areas such as earnings per
share, sales, profitability, entered orders and economic profit. The
demonstrated individual performance of the
6
executive as measured against strategic management objectives is also
considered in the determination of the Performance Compensation payment.
The types and relative importance of specific financial and other
business objectives vary among the Company's executives depending upon
their position and the particular function(s) for which they are
responsible.
- Long-Term Incentive Compensation: To align the interest of the Company's
management directly with those of Stockholders, a substantial portion of
senior executives' total compensation is provided by stock-based,
long-term compensation plans. To place emphasis on Stockholder return,
the Company has implemented stock option, performance share and
restricted stock programs. Awards and payments to executive officers
under these programs are included in the accompanying tables. The
Company's stock option plans provide for the award of incentive stock
options, non-qualified stock options, and stock appreciation rights
("SARs"). No SARs have been awarded to date. All options granted to date,
when first issued, have been awarded at an exercise price equal to the
fair market value of the stock on the date of the award. Accordingly, the
executive is rewarded only if the market price of the Company's stock
appreciates. Since options vest over time, the Company periodically
grants new options to provide continuing incentives for future
performance. The size of previous grants and the number of options held
are considered by the Committee, but are not entirely determinative of
future grants. Like base pay, the grants are set with regard to
competitive considerations, and each executive's actual grant is based
upon individual performance and the executive's potential for future
contributions. The Company's existing performance share plan provides for
the earning of shares if the Company achieves specified performance
objectives which were established at the time of the award, and vesting
is contingent on continued employment for a specified period. Awards not
earned by stock performance will nevertheless vest at the end of the
specified period. All performance share awards made to date have directly
encouraged Stockholder value creation by providing for earning of shares
if the Company achieves specific stock price targets. The restricted
stock program, in which vesting of awards is contingent on continued
employment for a specified period, also provides for Stockholder value
creation as this component of the compensation system is designed to
retain senior executives and motivate them to improve market value of the
stock over a number of years.
FISCAL YEAR 2001 EXECUTIVE OFFICER COMPENSATION
Fiscal year 2001 base salaries for the executive officers, which are shown
in the Summary Compensation Table on page 10, were set at the beginning of
fiscal year 2001. The salaries were set based on a subjective evaluation of
fiscal year 2000 performance and salary levels compared to similar companies,
consistent with the methodology described below.
In determining fiscal year 2001 Performance Compensation Plan payments for
the executive officers, the Committee considered the competitiveness of cash
compensation levels compared to similar companies. The Committee utilized
information in an executive compensation report from a nationally recognized,
independent compensation consulting firm. The report compared the Company's
compensation practices to publicly traded filtration/fluid flow companies
selected on the basis of their similarity to the Company. The report indicated
that at the start of fiscal year 2001 target total cash compensation of the
Company's Chief Executive Officer, including both base salary and the annual
incentive compensation, was at the median level for chief executive officers of
the comparison companies and target total cash compensation of the Company's
other executive officers was below the median level for comparable senior
officers of the comparison companies. Total compensation of the Company's Chief
Executive Officer and other executive officers, including base salary, annual
incentive cash compensation and long-term incentive compensation, was below the
median total compensation for the comparable senior officers of the comparison
companies. The Committee also considered the Company's operating performance and
progress made on strategic initiatives. The overall strong operating performance
of the Company in fiscal 2001 resulted from growth in, and focus on, the
Company's expanded commercial business.
The Company disclosed its fiscal 2001 and fiscal 2000 financial results on
a "reported" and on an "operational" basis. The "reported" amounts are prepared
in accordance with Generally Accepted Accounting Principles (GAAP) and are
presented in the Company's Consolidated Statements of Operations. The fiscal
7
2001 "operational" amounts exclude the favorable impact of a non-recurring
income tax adjustment of $12.7 million, or $0.99 per share. The fiscal 2000
"operational" amounts exclude the positive impact to net earnings from property
sales in Riverhead, NY and Calabasas, CA of $2.7 million pretax, or $0.22 per
share. "Operational" results represent net earnings and earnings per share on an
ongoing operating basis. The Company believes presenting the financial results
on an "operational" basis provides a more meaningful basis for evaluating and
comparing the fiscal 2001 financial performance with the prior year.
In fiscal 2001, the Company recorded sales of $344.9 million, an increase
of $44.7 million, or 14.9%, over fiscal 2000 sales of $300.2 million. Fiscal
2001 net earnings from operations were $17.4 million, or $1.36 per share,
compared with fiscal 2000 net earnings from operations of $14.1 million, or
$1.11 per share. Net earnings from operations increased approximately 23.4% year
over year. Reported earnings were $30.1 million, or $2.35 per share, compared
with $16.8 million, or $1.33 per share, for fiscal 2001 and fiscal 2000,
respectively.
After the close of the fiscal year, based on the evaluation of the above
factors, the Committee approved a performance compensation plan payment for
fiscal 2001 of $426,870 for the Chief Executive Officer. The fiscal 2001 total
cash compensation levels established for the Company's other executive officers
are detailed in the Summary Compensation Table on page 10.
The Committee believes that stock ownership by key executives provides a
valuable and important incentive for their continued best efforts and diligence,
and provides for the continuing alignment of their interests with those of the
Stockholders. To facilitate these objectives, in fiscal 2001 the Committee
awarded the executive officers (other than the Chief Executive Officer), as a
group, options totaling 26,000 shares under the 1999 Stock Option Plan. The
Chief Executive Officer did not receive a stock option award in fiscal 2001. In
fiscal 2001, the Committee awarded the Chief Executive Officer 40,000 shares of
restricted stock which vest at the end of approximately three years of continued
service. This approach is designed to focus the executive on the creation of
shareholder value over the long term since the full benefit of the compensation
package cannot be realized unless stock appreciation occurs over a number of
years.
In fiscal 2001, the Chief Executive Officer and the other executive
officers were awarded performance shares pursuant to the 2001 Stock Incentive
Plan. These performance shares become earned based on the achievement of
specified stock price target levels over a period of up to five years, but the
award increments do not vest unless the recipient has continued employment
service through March 31 of the year following the end of the fiscal year in
which earned. Awards not earned by stock performance will nevertheless vest at
the end of the five year period.
As a result of the achievement in fiscal 2001 of the share price targets
established with the performance share awards made under the 2001 Stock
Incentive Plan, the Chief Executive Officer and other executive officers earned
33% of their awards. These awards will vest upon continued service through March
2002. In accordance with the 2001 Stock Incentive Plan, additional awards were
made to the executive officers (other than the Chief Executive Officer) to
restore their awards to their original levels, increase the award levels to
recognize changes in responsibility and establish higher share price targets for
the earning of such awards. The foregoing awards are shown in the table on page
12 titled "Long-Term Incentive Plans -- Awards in Last Fiscal Year".
As a result of the achievement during fiscal year 2000 of share price
targets established within the 1997 Performance Share Plan, the Chief Executive
Officer and the other executive officers earned the final portions of their
awards under the 1997 Performance Share Plan, and payment of such earned awards
was made in fiscal 2001. The Chief Executive Officer received a settlement of
36,667 shares, and the other executive officers, as a group, received a
settlement of 25,667 shares.
The Company has employment agreements with the Chief Executive Officer and
the other executive officers as described on page 15. The Chief Executive
Officer and the other executive officers are covered by a Severance Plan which
is described on page 14.
Section 162(m) of the Internal Revenue Code denies a federal income tax
deduction for compensation in excess of $1 million paid to any of the Company's
highest paid executive officers unless the compensation
8
qualifies for a performance-based exception. The 1999 Stock Option Plan is
designed to permit awards that satisfy the performance-based exception of
section 162(m). To date, no other specific action, including any action with
respect to the 2001 Stock Incentive Plan, has been taken with respect to section
162(m) because the Company's compensation levels have not been expected to
exceed the $1 million limit by a material amount. The Committee intends to
review the potential effect of section 162(m) periodically and may in the future
take other appropriate actions to qualify, to the extent reasonable, executive
officer compensation for deductibility under section 162(m).
SUMMARY
The Committee believes the Company's compensation program has been designed
and managed by the Committee to directly link the compensation of the Company's
executives to Company performance, individual performance and Stockholder
return. The level of total direct compensation paid to the Company's Chief
Executive Officer over the last three year period is slightly below the median
competitive level for similar companies in the filtration/fluid flow comparison
group. The total direct compensation for the Company's other executive officers
falls within the first quartile as determined by the comparison group, however
it is commensurate with their executive officer tenure. The Committee will
continue to address these compensation levels over time, consistent with Company
and individual performance, and will continue to emphasize performance and
stock-based compensation that links management and Stockholder interests.
The Human Resources and
Ethics Committee
D.C. Trauscht, Chairman
L.W. Solley
J.D. Woods
9
SUMMARY COMPENSATION TABLE
The following table contains certain information concerning compensation
paid for each of the last three fiscal years to the Company's Chief Executive
Officer and its other three executive officers serving at September 30, 2001,
for all services rendered in all capacities to the Company and its subsidiaries.
LONG TERM-COMPENSATION
--------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ------------------------ -----------
------------------------------------------- ($) (#) ($)
($) RESTRICTED SECURITIES ($) ALL OTHER
NAME AND FISCAL ($) ($) OTHER ANNUAL STOCK UNDERLYING LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS(1) SATION(2)
------------------ ------ ------ ----- ------------ ---------- ---------- ---------- ---------
D.J. Moore................... 2001 $460,000 $426,870 $82,621(3) $688,800(4) 0 $478,840 $493
Chairman and 2000 440,000 421,173 28,706 0 0 662,298 437
Chief Executive Officer 1999 425,000 246,500 18,927 0 54,000 0 390
V.L. Richey, Jr.............. 2001 145,000 90,545 43,598(3) 0 9,000 149,648 0
President and Chief 2000 120,000 74,418 34,939(5) 0 15,000 159,546 0
Operating Officer 1999 110,000 44,200 1,847 0 18,000 0 0
C.J. Kretschmer.............. 2001 160,000 96,670 37,696(3) 0 9,000 149,648 0
Exec. Vice President and 2000 140,000 86,700 12,609 0 15,000 168,595 0
Chief Financial Officer
A.S. Barclay................. 2001 125,000 69,750 49,339(3) 0 8,000 127,202 0
Vice President, Secretary and 2000 105,000 65,475 46,234(5) 0 15,000 135,469 0
General Counsel
-------------------------
(1) Amounts earned in fiscal year 2001 were earned in respect of performance
units awarded pursuant to the 2001 Stock Incentive Plan; however, no payout
related to the amounts earned in fiscal year 2001 will vest and be
distributed unless the recipient continues in the employment of the Company
through March 31, 2002. Amounts earned in fiscal year 2000 were earned
pursuant to the 1997 Performance Share Plan and were paid out on April 2,
2001. Valuation is based on the closing market prices of the stock on the
dates the award increments were earned. Dividends, if any, will not be paid
prior to the vesting and distribution of the stock.
(2) Represents the dollar value of the benefit of premiums paid for split-dollar
life insurance policies.
(3) Includes interest payments on loans for purchases of Common Shares under the
Executive Stock Purchase Plan of $27,000 for D.J. Moore and $18,000 each for
V.L. Richey, Jr., C. J. Kretschmer and A.S. Barclay.
(4) Represents fair market value of $17.22 per share at the time of award for
the 40,000 shares awarded. The value of these shares at September 30, 2001
was $986,000 based on fair market value of $24.65 per share. As of that
date, Mr. Moore held no other restricted stock. These shares will vest and
be distributed if Mr. Moore continues in the employment of the Company
through the vesting date, October 31, 2003, upon his earlier termination on
account of death or disability, or upon his termination by the Company other
than for cause.
(5) Includes interest payment of $16,500 on loan for purchase of Common Shares
under the Executive Stock Purchase Plan.
The Company's stock option, restricted stock award and performance share
award agreements and Supplemental Executive Retirement Plan applicable to
certain of the named executive officers generally provide for acceleration of
vesting and, in certain cases, payout of awards and retirement benefits under
such agreements and Plan in the event of a change in control of the Company, as
defined in such agreements and Plan, respectively.
10
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------
(#) % OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO ($)
UNDERLYING EMPLOYEES ($/SHARE) GRANT DATE
OPTIONS IN FISCAL EXERCISE EXPIRATION PRESENT
NAME GRANTED(1) YEAR PRICE DATE VALUE(2)
---- ---------- ---------- --------- ---------- ----------
V.L. Richey, Jr........................... 9,000 5.14 $17.2188 10/16/10 $69,573
C.J. Kretschmer........................... 9,000 5.14 17.2188 10/16/10 69,573
A.S. Barclay.............................. 8,000 4.56 17.2188 10/16/10 61,844
-------------------------
(1) All stock option grants are non-transferable, have a term of ten years from
the date of grant, and have an exercise price equal to 100% of the fair
market value on the date of grant. All options are exercisable as follows:
one-third of the options granted may be exercised on or after one year after
the date of grant, one-third on or after two years after the date of grant,
and one-third on or after three years after the date of grant. In the event
of a change in control of the Company, 100% of the options granted may be
immediately exercised.
(2) Estimated present values based on the Black-Scholes option pricing model, a
mathematical formula used to value options traded on stock exchanges. The
following assumptions were used in applying the model to calculate the
values: expected future stock price annual volatility rate of 37.47%;
risk-free rate of return of 4.590% for the option term; annual dividend
yield of 0%; and a ten-year option term. No adjustments have been made for
non-transferability or risk of forfeiture. The actual value of the options
will depend on the market price of the shares on the date the options are
exercised, and may vary significantly from the theoretical values estimated
by the Black-Scholes model.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides certain information concerning stock option
exercises during fiscal year 2001 by each of the named executive officers and
the value of their unexercised options at September 30, 2001.
(#) ($)
SECURITIES VALUE OF
UNDERLYING UNEXERCISED,
UNEXERCISED IN-THE-MONEY
(#) OPTIONS AT OPTIONS AT
SHARES ($) 9/30/01 9/30/01(2)
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED(1) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- ------------- -------------
D.J. Moore........................ 32,820 $578,728 37,116 / 36,000 $545,218 / $499,273
V.L. Richey, Jr................... 0 0 26,225 / 31,000 326,575 / 363,555
C.J. Kretschmer................... 0 0 29,648 / 27,000 485,613 / 308,080
A.S. Barclay...................... 0 0 14,251 / 22,667 216,486 / 254,425
-------------------------
(1) Based on the difference between the average of the high and low market
prices on the date of exercise and the option price.
(2) Based on the difference between the average of the high and low market
prices on September 30, 2001 and the option price.
11
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The following table sets forth certain information regarding awards made to
the named executive officers during fiscal year 2001 under the Company's 2001
Stock Incentive Plan.
NUMBER OF
SHARES, UNITS OR PERFORMANCE OR
OTHER RIGHTS OTHER PERIOD UNTIL
NAME (1) MATURATION OR PAYOUT
---- ---------------- --------------------
D.J. Moore.................................................. 64,000 10/00-9/05
V.L. Richey, Jr............................................. 22,667 10/00-9/05
8,000 10/01-9/06
C.J. Kretschmer............................................. 22,667 10/00-9/05
8,000 10/01-9/06
A.S. Barclay................................................ 19,000 10/00-9/05
6,666 10/01-9/06
-------------------------
(1) Represents performance units awarded pursuant to the Plan. An equivalent
number of shares will be earned in increments subject to the achievement of
specified corresponding stock price target levels during the performance
periods. Each target level is based on the average stock price over a period
of thirty consecutive trading days. For the award increments to vest and be
distributed, the recipient must continue in the employment of the Company
through March 31 following the end of the fiscal year during which the award
increment is earned. Awards not earned by stock performance will
nevertheless vest and be distributed at the end of the performance periods,
September 30, 2005 or September 30, 2006, provided the recipient continues
in the employment of the Company. All awards made to date provide for
acceleration of vesting of awards in the event of a change in control of the
Company, as defined in the Plan. During fiscal year 2001, 21,333, 6,667,
6,667 and 5,667 shares were earned by D.J. Moore, V.L. Richey, Jr., C.J.
Kretschmer and A.S. Barclay, respectively.
RETIREMENT PLAN
At the time of the 1990 spin-off of the Company by Emerson Electric Co.
("Emerson"), the Company established a Retirement Plan (the "Retirement Plan")
in which the Company's executive officers as well as other covered employees
participate. Prior to the 1990 spin-off, the executive officers participated in
one of the pension plans of Emerson or its subsidiaries. The Retirement Plan is
substantially identical to the Emerson Retirement Plan at the time of the 1990
spin-off (the "Emerson Retirement Plan"). Under the Retirement Plan, a
participant will be credited with his service under the Emerson Retirement Plan,
but his benefit accrued under the Retirement Plan will be offset by his benefit
accrued under the Emerson Retirement Plan as of September 30, 1990. Benefits
under the Retirement Plan may be reduced under certain maximum provisions of the
Internal Revenue Code. In 1993, the Company adopted a Supplemental Executive
Retirement Plan (the "SERP") which provides that where any such reductions
occur, the Company will pay a retirement supplement (as an operating expense) to
certain executives, including certain executive officers. The SERP will maintain
total retirement benefits at the formula level of the Retirement Plan.
12
PENSION PLAN TABLE
ANNUAL RETIREMENT BENEFIT AT AGE 65 AFTER
--------------------------------------------------------------------
AVERAGE 10 15 20 25 30 35
ANNUAL YEARS OF YEARS OF YEARS OF YEARS OF YEARS OF YEARS OF
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE
------------ -------- -------- -------- -------- -------- --------
$ 150,000 ...................... $ 20,639 $ 30,959 $ 41,279 $ 51,599 $ 61,918 $ 72,238
250,000 ...................... 35,639 53,459 71,279 89,099 106,918 124,738
350,000 ...................... 50,639 75,959 101,279 126,599 151,918 177,238
450,000 ...................... 65,639 98,459 131,279 164,099 196,918 229,738
550,000 ...................... 80,639 120,959 161,279 201,599 241,918 282,238
650,000 ...................... 95,639 143,459 191,279 239,099 286,918 334,738
750,000 ...................... 110,639 165,959 221,279 276,599 331,918 387,238
850,000 ...................... 125,639 188,459 251,279 314,099 376,918 439,738
950,000 ...................... 140,639 210,959 281,279 351,599 421,918 492,238
1,050,000 ...................... 155,639 233,459 311,279 389,099 466,918 544,738
1,150,000 ...................... 170,639 255,959 341,279 426,599 511,918 597,238
These plans provide for fixed retirement benefits based on the
participant's credited years of service, five-year average compensation (the
highest average annual cash compensation during any five consecutive years), and
applicable Social Security covered compensation. The dollar amounts listed for
salary and bonus in the Summary Compensation Table are substantially the same as
the compensation covered by these plans. The foregoing table shows the combined
annual benefits that will be payable from these plans on the basis of a single
life annuity with five years certain.
Under current law, the benefit amounts will not be subject to any reduction
for Social Security or other offset amounts. The credited years of service
covered by these plans for each of the persons named in the Summary Compensation
Table were as follows as of October 1, 2001: Mr. Moore, 17.5; Mr. Richey, 16,
Mr. Kretschmer, 24; and Ms. Barclay, 13. Payment of the specified retirement
benefits is contingent upon continuation of the plans in their present form
until the employee retires.
13
PERFORMANCE GRAPH
The following graph presents a comparison of the cumulative total
shareholder return on the Common Shares as measured against the Standard &
Poor's 500 Stock Index (the "Index") and a peer group (the "2001 Peer Group").
The Company is not a component of the Index or the 2001 Peer Group. The
measurement period begins on September 30, 1996 and measures at each September
30 thereafter. These figures assume that all dividends paid over the measurement
period were reinvested, and the starting value of each index and the investments
in the Common Shares were $100 at the close of trading on September 30, 1996.
[PERFORMANCE GRAPH]
9/96 9/97 9/98 9/99 9/00 9/01
ESCO Technologies
Inc................... 100.00 188.00 109.33 118.67 185.33 265.60
S&P 500................. 100.00 140.45 153.15 195.74 221.74 162.71
2001 Peer Group......... 100.00 105.13 75.76 95.76 96.61 107.15
The 2001 Peer Group is comprised of Calgon Carbon Corporation, Clacor Inc.,
Cuno Inc., Donaldson, Inc., Ionics Inc., Lydall Inc., Millipore Corp., Osmonics
Inc. and Pall Corporation. The companies composing the 2001 Peer Group are the
same companies which composed the "2000 Peer Group" used in the proxy statement
for the 2001 Annual Meeting of Stockholders.
SEVERANCE PLAN
The Company has established a Severance Plan (the "Plan") covering the
executive officers. Under the Plan, following an occurrence of a Change of
Control (as defined), each executive officer will be entitled to be employed by
the Company for a three-year period with respect to Mr. Moore, and for a
two-year period with respect to Messrs. V.L. Richey, Jr. and C.J. Kretschmer and
Ms. A.S. Barclay, during which: (i) he or she will be paid a minimum base salary
equal to his or her base salary prior to the Change of Control, and a minimum
annual bonus based on the average of his or her bonuses during the last five
preceding fiscal years, disregarding the highest and lowest such years, and (ii)
he or she will continue to receive the employee benefits to which he or she was
entitled prior to the Change of Control. During this employment period, if the
executive officer's employment is terminated by the Company other than for cause
or disability, or the executive officer terminates his or her employment
following certain actions by the Company, he or she will be
14
entitled to receive, among other things: (i) three times, in the case of Mr.
Moore, and two times in the case of Messrs. Richey and Kretschmer and Ms.
Barclay, his or her minimum annual base salary and minimum annual bonus, (ii) in
the case of Messrs. Moore, Richey and Kretschmer the lump sum value of a
supplemental retirement benefit equal to the difference between (a) his benefits
under the Retirement Plan and SERP by the addition of three years in the case of
Mr. Moore, and two years in the case of Messrs. Richey and Kretschmer of
credited service and (b) the amounts actually payable under such plans, and
(iii) the continuation of his or her employee benefits for three years in the
case of Mr. Moore, and two years in the case of Messrs. Richey and Kretschmer
and Ms. Barclay. The Company may amend the Plan, but no amendment adverse to the
rights of the executive officers will be effective unless notice thereof has
been given by the Company to the affected executive officers at least one year
prior to the occurrence of a Change of Control.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements effective on or about
November 1, 1999 with Messrs. Moore, Richey and Kretschmer and Ms. Barclay, the
current executive officers. The employment agreements have terms of four years
for Mr. Moore and were amended to extend until November 2, 2004 for the other
current executive officers. The agreements provide for a base salary of not less
than their fiscal year 1999 base salary, as increased in accordance with the
Company's compensation policy, and an annual bonus in accordance with the
Performance Compensation Plan. These executives are also entitled to participate
in any stock options, restricted stock awards, performance shares and other
compensation as the Company's Human Resources and Ethics Committee shall
determine. They are also entitled to participate in all employee benefit
programs of the Company applicable to senior executives, and the Company will
continue to provide certain perquisites.
The Company has the right to terminate the employment of the current
executive officers at any time upon thirty days notice for cause or without
cause, and these executives have the right to resign at any time upon thirty
days notice. If an executive's employment is terminated by the Company other
than for cause, or if an executive terminates his employment following certain
actions by the Company, the executive will be entitled to receive certain
benefits. In the case of Mr. Moore, he will receive: (i) for three years, the
continuation of his then-current base salary and bonus (bonus calculated using
the average annual percentage of base salary under the Performance Compensation
Plan for the past five consecutive fiscal years, excluding the highest and
lowest percentage), (ii) the lump sum value of a supplemental retirement benefit
equal to the difference between (a) his benefits under the Retirement Plan and
SERP by the addition of three years of credited service and age and (b) the
amounts actually payable under such plans, (iii) immediate vesting of
outstanding stock options and restricted stock awards, and immediate vesting and
payout of awards outstanding under the performance share plan, and (iv)
continuation of certain employee benefits and perquisites for the period of base
salary continuation. In the case of the other current executive officers, they
will receive: (i) for one year, the continuation of his or her then-current base
salary and bonus (bonus calculated by using no less than the annual percentage
of base salary under the Performance Compensation Plan for the last fiscal
year), (ii) immediate vesting of outstanding stock options and immediate vesting
and payout of shares earned under the performance share plan, and (iii)
continuation of certain employee benefits and perquisites for the period of base
salary continuation. If an executive's employment is terminated in connection
with a Change of Control, or in the case of Mr. Moore, if he terminates his
employment based on a Change of Control, the executive will not receive the
foregoing benefits, and will receive instead the benefits payable under the
Company's Severance Plan.
All of the aforementioned agreements prohibit the executives from
disclosing confidential information or trade secrets concerning the Company, and
for a specific period from soliciting employees of the Company and from
soliciting customers or distributors of the Company.
15
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
number of Common Shares beneficially owned by the directors and executive
officers of the Company as of November 1, 2001. Except as otherwise noted, each
person has sole voting and investment power as to his or her shares.
NUMBER OF
COMMON SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1)(2)
------------------------ -------------------------
W.S. Antle III.......................................... 7,796(3)
A.S. Barclay............................................ 44,266
C.J. Kretschmer......................................... 77,467
J.M. McConnell.......................................... 6,377
D.J. Moore.............................................. 348,993(4)
V.L. Richey, Jr......................................... 66,471
L.W. Solley............................................. 3,000
J.M. Stolze............................................. 2,800
D.C. Trauscht........................................... 11,675
J.D. Woods.............................................. 2,083
All directors and executive officers as a group (10
persons).............................................. 570,928
-------------------------
(1) The percentage of total outstanding Common Shares beneficially owned by any
individual does not exceed 1%, except in the case of Mr. Moore who
beneficially owns 2.8%. The percentage beneficially owned by all directors
and executive officers as a group is 4.6%.
(2) Includes the following Common Shares covered by employee stock options which
the individual has the right to acquire within 60 days after November 1,
2001: Mr. Moore 55,116; Mr. Richey 40,225; Mr. Kretschmer 41,648; Ms.
Barclay 24,250; and all directors and executive officers as a group,
161,239.
(3) Includes 540 stock equivalents credited to Mr. Antle's deferred compensation
account under the Compensation Plan for Non-Employee Directors.
(4) Includes 40,000 Common Shares which are non-transferable and subject to
certain vesting requirements.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to each
person known by the Company to beneficially own more than five percent of the
outstanding Common Shares:
NUMBER OF PERCENT
NAME AND ADDRESS OF COMMON SHARES OF OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY OWNED COMMON SHARES
------------------- ------------------ --------------
Dimensional Fund Advisors Inc............................... 1,066,600(1) 8.6%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Franklin Resources, Inc..................................... 633,700(2) 5.1%
and certain other parties
777 Mariners Island Boulevard
San Mateo, CA 94404
-------------------------
(1) Based on information provided by Dimensional Fund Advisors Inc.
("Dimensional"), an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940 which furnishes investment advice to four
investment companies registered under the Investment Company Act of 1940,
and serves as investment manager to certain other investment vehicles,
including commingled group trusts. (These investment companies and
investment vehicles are the "Portfolios"). In its role as investment advisor
and investment manager, Dimensional possessed both investment and voting
power over the 1,066,600 shares
16
as of 9/30/01. The Portfolios own all such shares, and Dimensional disclaims
beneficial ownership of all such shares.
(2) Based on information contained in Schedule 13G (Amendment No. 5) under the
Securities Exchange Act of 1934, dated January 26, 2001, filed by Franklin
Resources, Inc. ("FRI") and certain other parties, indicating beneficial
ownership by investment companies or other managed accounts whose investment
advisers are direct and indirect subsidiaries of FRI. Charles B. Johnson and
Rupert H. Johnson, Jr. each owns in excess of 10% of the outstanding common
stock of FRI, and may each be deemed to be the beneficial owners of the
633,700 shares. Franklin Advisory Services, LLC ("FAS") is the investment
advisor for such shares. FAS has sole voting power and sole investment power
as to the 633,700 shares. Each of the foregoing persons and entities
disclaims any economic interest in or beneficial ownership of the 633,700
shares. The address of FAS is One Parker Plaza, Sixteenth Floor, Fort Lee,
NJ 07024.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own beneficially more than ten
percent of any class of equity security of the Company to file with the
Securities and Exchange Commission initial reports of such ownership and reports
of changes in such ownership. Officers, directors and such beneficial owners are
required by Securities and Exchange Commission regulation to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
based solely on review of the copies of such reports furnished to the Company
and written representations that no other reports were required, during the
fiscal year ended September 30, 2001, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with, except that D.J. Moore was late in filing one Form 4,
involving two transactions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION OF THE
THREE NOMINEES FOR DIRECTORS.
II. VOTING
The affirmative vote of the holders of a majority of the shares entitled to
vote which are present in person or represented by proxy at the 2002 Annual
Meeting is required to elect directors and to act on any other matters properly
brought before the meeting. Shares represented by proxies which are marked
"withhold authority" with respect to the election of any one or more nominees
for election as directors and proxies which are marked to deny discretionary
authority on other matters will be counted for the purpose of determining the
number of shares represented by proxy at the meeting. Such proxies will thus
have the same effect as if the shares represented thereby were voted against
such nominee or nominees and against such other matters, respectively. Shares
not voted on one or more but less than all such matters on proxies returned by
brokers will be treated as not represented at the meeting as to such matter or
matters.
The Company knows of no other matters to come before the meeting. If any
other matters properly come before the meeting, the proxies solicited hereby
will be voted on such matters in accordance with the judgment of the persons
voting such proxies.
III. INDEPENDENT AUDITORS
KPMG LLP was the Company's auditors for the fiscal year ended September 30,
2001, and the Audit and Finance Committee has selected it as auditors for the
fiscal year ending September 30, 2002. A representative of KPMG LLP is expected
to be present at the meeting with the opportunity to make a statement and/or
respond to appropriate questions from Stockholders.
IV. STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the 2003 Annual
Meeting must be received by the Company by August 9, 2002 for inclusion in the
Company's proxy statement and form of proxy relating to that
17
meeting. Upon receipt of any such proposal, the Company will determine whether
or not to include such proposal in the proxy statement and form of proxy in
accordance with regulations governing the solicitation of proxies.
In order for a Stockholder to nominate a candidate for director, under the
Company's Articles of Incorporation, timely notice of the nomination must be
given to the Company in advance of the meeting. Ordinarily, such notice must be
given not less than 60 nor more than 90 days before the meeting (but if the
Company gives less than 50 days notice or prior public disclosure of the date of
the meeting, then the Stockholder must give such notice within ten days after
notice of the meeting is mailed or other public disclosure of the meeting is
made, whichever occurs first). The Stockholder filing the notice of nomination
must describe various matters regarding the nominee, including such information
as name, address, occupation and shares held.
In order for a Stockholder to bring other business before a Stockholder
meeting, timely notice must be given to the Company within the time limits
described above. Such notice must include a description of the proposed
business, the reasons therefor and other specified matters. The Board may reject
any such proposals that are not made in accordance with these procedures or that
are not a proper subject for Stockholder action in accordance with the
provisions of applicable law. These requirements are separate from and in
addition to the requirements a Stockholder must meet to have a proposal included
in the Company's proxy statement. The foregoing time limits also apply in
determining whether notice is timely for purposes of rules adopted by the
Securities and Exchange Commission relating to the exercise of discretionary
voting authority.
In each case, the notice must be given to the Secretary of the Company,
whose address is 8888 Ladue Road, Suite 200, St. Louis, Missouri 63124-2056. Any
Stockholder desiring a copy of the Company's Articles of Incorporation or Bylaws
will be furnished one without charge upon written request to the Secretary.
18
[ESCO TECHNOLOGIES LOGO]
[X] PLEASE MARK VOTES REVOCABLE PROXY FOR WITH- FOR ALL
AS IN THIS EXAMPLE ESCO TECHNOLOGIES INC. HOLD EXCEPT
1. ELECTION OF DIRECTORS of all [ ] [ ] [ ]
nominees listed (except as marked
to the contrary below):
[ESCO TECHNOLOGIES LOGO] W.S. ANTLE III, L.W. SOLLEY, J.D. WOODS
The undersigned, as holder of record of the Common INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
Stock of ESCO TECHNOLOGIES INC.(the "Company"), does hereby NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN
appoint D.J. Moore, C.J. Kretschmer and A.S. Barclay, or any THE SPACE PROVIDED BELOW.
of them, the true and lawful attorneys in fact, agents and
proxies of the undersigned to represent the undersigned at
the Annual Meeting of Stockholders of the Company, to be ----------------------------------------------------------------
held on February 5, 2002, commencing at 10:00 A.M., St. Louis
time, at the Hilton St. Louis Frontenac Hotel, 1335
S. Lindbergh Blvd., St. Louis County, Missouri 63131 and at MANAGEMENT RECOMMENDS A VOTE FOR THE ABOVE PROPOSAL.
any and all adjournments of such meeting, and to vote all
the shares of Common Stock of the Company standing on the
register of the Company's stock transfer agent in the name THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
of the undersigned as follows, and in their discretion on
such other business as may properly come before the meeting:
The undersigned hereby acknowledges receipt of the Notice
of the Annual Meeting and accompanying Proxy Statement dated
December 11, 2001.
The proxies will vote your Common Stock in the manner
directed herein by the undersigned Stockholder.
Please be sure to date and sign Date IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
this Proxy in the box below. PROPOSAL 1.
Please sign exactly as your name appears on this form.
When signing as an attorney, executor, administrator, trustee
or guardian, please give full title as such. If signing on
behalf of a corporation, please sign in full corporate name by
Stockholder sign above Co-holder (if any) sign above President or other authorized officer. If signing on behalf of a
partnership, please sign in partnership name by authorized
person.
--------------------------------------------------------------------------------
DETACH ABOVE FORM,SIGN,DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
ESCO TECHNOLOGIES INC.
PLEASE ACT PROMPTLY
SIGN,DATE & MAIL YOUR PROXY FORM TODAY
December 11, 2001
Dear Stockholder:
The Annual Meeting of Stockholders of ESCO Technologies Inc. will be held
at the Hilton St. Louis Frontenac Hotel, 1335 S. Lindbergh Blvd., St. Louis
County, Missouri 63131 at 10:00 A.M. on Tuesday, February 5, 2002.
It is important that your shares are represented at this meeting. Whether
or not you plan to attend the meeting, please review the enclosed proxy
materials, complete the attached proxy form above, and return it promptly in the
envelope provided.
Thank you.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
---------------------------
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