UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 Section 240.14a-11 (e) or
Section 240.14a-12
FRANKLIN ELECTRIC CO., 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)
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[X] No fee required
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FRANKLIN ELECTRIC CO., INC.
400 East Spring Street
Bluffton, Indiana 46714
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held
April 28, 2006 at 9:00 A.M., Eastern Time
To the Shareholders of
Franklin Electric Co., Inc.
THE ANNUAL MEETING OF SHAREHOLDERS OF FRANKLIN ELECTRIC CO., INC. (THE
"COMPANY"), AN INDIANA CORPORATION, WILL BE HELD AT THE PRINCIPAL OFFICE OF
THE COMPANY, 400 EAST SPRING STREET, BLUFFTON, INDIANA, ON FRIDAY, APRIL 28,
2006, AT 9:00 A.M., EASTERN TIME. THE PURPOSES OF THE MEETING ARE TO:
1. Elect three directors for terms expiring at the 2009 Annual Meeting of
Shareholders;
2. Ratify the appointment of Deloitte & Touche LLP as the Company's
independent registered public accounting firm for the 2006 fiscal year;
and
3. Transact any other business that may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on February 24, 2006
will be entitled to notice of and to vote at the Annual Meeting.
You are urged to vote your proxy regardless of whether you plan to attend
the Annual Meeting. If you do attend, you may nevertheless vote in person
which will revoke any previously executed proxy.
By order of the Board of Directors.
/s/ Thomas J. Strupp
--------------------
Vice President, Chief Financial
Officer and Secretary
Bluffton, Indiana
March 20, 2006
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FRANKLIN ELECTRIC CO., INC.
400 East Spring Street
Bluffton, Indiana 46714
______________________________
PROXY STATEMENT
______________________________
Annual Meeting of Shareholders
To be Held on April 28, 2006
GENERAL INFORMATION
This Proxy Statement and the enclosed proxy are furnished to shareholders
in connection with the solicitation of proxies by the Board of Directors of
Franklin Electric Co., Inc. (the "Company"), 400 East Spring Street,
Bluffton, Indiana, for use at the Annual Meeting of Shareholders to be held on
April 28, 2006 or any adjournment or postponement thereof. This Proxy
Statement, together with the Company's Annual Report to shareholders,
including financial statements contained therein, is being mailed to
shareholders, beginning on or about March 20, 2006.
The expenses of solicitation, including the cost of printing and mailing,
will be paid by the Company. Officers and employees of the Company, without
additional compensation, may solicit proxies personally, by telephone or by
facsimile. Arrangements will also be made with brokerage firms and other
custodians, nominees and fiduciaries to forward proxy solicitation materials
to the beneficial owners of shares held of record by such persons, and the
Company will reimburse such entities for reasonable out-of-pocket expenses
incurred by them in connection therewith.
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VOTING INSTRUCTIONS
Shareholders may attend the Annual Meeting and vote their shares in
person. Shareholders also may choose to submit their proxies by any of the
following methods:
VOTING BY MAIL: Complete the enclosed proxy, date and sign it, and return it
in the envelope provided.
VOTING BY TELEPHONE: Call the toll-free telephone number provided on the
proxy. Telephone voting will be available through April 27, 2006, 24 hours a
day. Detailed instructions will be provided during the call. The procedures
are designed to authenticate votes cast by using the last 4 digits of a
shareholder's social security/taxpayer I.D. number. Shareholders that vote by
telephone should not return the proxy card.
VOTING BY INTERNET: Sign on to the website address identified on the proxy.
Internet voting will be available through April 27, 2006, 24 hours a day.
Detailed instructions will be provided on the website. The procedures are
designed to authenticate votes cast by using the last 4 digits of a
shareholder's social security/taxpayer I.D. number. Shareholders that vote by
Internet should not return the proxy card.
SHAREHOLDERS WHO ARE PARTICIPANTS IN THE COMPANY'S EMPLOYEE STOCK
OWNERSHIP PLAN AND/OR DIRECTED INVESTMENT SALARY PLAN WILL RECEIVE A VOTING
INSTRUCTION CARD THAT COVERS THE SHARES CREDITED TO THEIR PLAN ACCOUNTS. SUCH
SHAREHOLDERS MAY NOT VOTE BY TELEPHONE OR INTERNET.
If the enclosed proxy is properly voted, the shares represented thereby
will be voted in the manner specified in the proxy. If a shareholder does not
specify the manner in which the proxy shall be voted, the shares represented
thereby will be voted:
* FOR the election of the nominees for director as set forth in this Proxy
Statement;
* FOR the ratification of the appointment of Deloitte & Touche LLP as the
Company's independent registered public accounting firm for the 2006
fiscal year; and
* In accordance with the recommendations of management with respect to
other matters that may properly come before the Annual Meeting.
A shareholder who has executed a proxy has the power to revoke it at any
time before it is voted by (i) delivering written notice of such revocation to
Mr. Thomas J. Strupp, Vice President, Chief Financial Officer and Secretary,
400 East Spring Street, Bluffton, Indiana 46714, (ii) executing and delivering
a subsequently dated proxy by mail, or voting by telephone or through the
Internet at a later date, or (iii) by attending the Annual Meeting and voting
in person.
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SHAREHOLDERS ENTITLED TO VOTE AND SHARES OUTSTANDING
The Board of Directors of the Company fixed the close of business on
February 24, 2006 as the record date (the "Record Date") for determining
shareholders entitled to notice of and to vote at the Annual Meeting. As of
the Record Date, there were 45,000,000 shares of common stock, $.10 par value
(the "Common Stock"), authorized, of which 22,601,412 shares were outstanding.
Each share of Common Stock is entitled to one vote on each matter submitted to
a vote of the shareholders of the Company. Votes cast by proxy or in person
at the Annual Meeting will be tabulated by the inspectors of election
appointed for the Annual Meeting and will be counted as present for purposes
of determining whether a quorum is present. A majority of the outstanding
shares of Common Stock, present in person or represented by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting.
Abstentions and broker non-votes will be counted for purposes of determining
the presence or absence of a quorum but will not be counted as votes cast on
any matter submitted to shareholders. As a result, abstentions and broker
non-votes will not have any effect on the voting results with respect to any
of the matters scheduled to be submitted to shareholders at the Annual
Meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
The following table shows the persons known by the Company to be the
beneficial owners of more than five percent of the Company's Common Stock as
of February 24, 2006, unless otherwise noted. The nature of beneficial
ownership is sole voting and investment power, unless otherwise noted.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
Select Equity Group, Inc., jointly 3,348,924 (1) 14.82
with George S. Loening
(and related entities),
380 Lafayette Street, 6th Floor
New York, NY 10003
Patricia Schaefer 2,000,084 8.85
5400 Deer Run Court
Muncie, IN 47304
Diane D. Humphrey 1,843,073 8.15
2279 East 250 North Road
Bluffton, IN 46714
Wells Fargo Bank Minnesota, N.A. 1,787,494 (2) 7.91
Midwest Plaza, West Tower
Suite 700
801 Nicolette Mall
Minneapolis, MN 55479-0065
T. Rowe Price Associates, Inc. 1,585,500 (3) 7.02
100 E. Pratt Street
Baltimore, MD 21202
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(1) According to a Schedule 13G jointly filed with the SEC on February 14,
2006, Select Equity Group, Inc., Select Offshore Advisors, LLC and
George S. Loening have sole investment and voting power with respect to
3,348,924 shares, and no shared voting or investment power.
(2) Wells Fargo Bank holds these shares as Trustee under the Company's
Employee Stock Ownership Plan (the "ESOP"), Directed Investment Salary
Plan (the "401(k) Plan"), and defined benefit pension plans. Share
information is from February 24, 2006 Trust records provided by Wells
Fargo Bank. The shares held in the ESOP and 401(k) Plan will be voted
pursuant to the direction of the participants to the extent these shares
are allocated to participants' accounts. Unallocated shares and
allocated shares for which no direction is received from participants
will be voted by the Trustee in accordance with the direction of the
Employee Benefits Committee of the Company. The Employee Benefits
Committee is appointed by the Company's Board of Directors to oversee
the Company's employee benefit plans. In the absence of any direction
from the Employee Benefits Committee, such shares will be voted by the
Trustee in the same proportion that the allocated shares were voted,
unless inconsistent with the Trustee's fiduciary obligations. The
Trustee has no investment power over allocated shares and has shared
investment power over unallocated shares. The shares held in the defined
benefit pension plans will be voted pursuant to the direction of the
Employee Benefits Committee of the Company, which also has investment
power over these shares.
(3) According to a Schedule 13G filed with the SEC on February 14, 2006, T.
Rowe Price Associates, Inc. has sole investment power with respect to
1,585,500 shares, sole voting power with respect to 669,500 shares and
no shared voting or investment power. These securities are owned by
various individual and institutional investors which T. Rowe Price
Associates, Inc. serves as investment advisor with power to direct
investments and/or sole power to vote the securities. For purposes of
the reporting requirements of the Securities Exchange Act of 1934, T.
Rowe Price Associates, Inc. is deemed to be a beneficial owner of such
securities; however, T. Rowe Price Associates, Inc. expressly disclaims
that it is, in fact, the beneficial owner of such securities.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of Common Stock
beneficially owned by directors, nominees, each of the executive officers
named in the "Summary Compensation Table" below, and all executive officers
and directors as a group, as of February 24, 2006. The nature of beneficial
ownership is sole voting and investment power, unless otherwise noted.
NAME OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
R. Scott Trumbull 250,912(1)(2)(3) 1.10
Gregg C. Sengstack 245,270(1)(2) 1.08
Peter-Christian Maske 99,291(1)(2) *
Howard B. Witt 94,685(1) *
Robert J. Stone 76,399(1)(2) *
Jerome D. Brady 71,072(1)(3) *
Daniel J. Crose 40,912(1)(2) *
Thomas L. Young 5,249 *
David A. Roberts 5,116(1)(3) *
Diana S. Ferguson 4,916(1)(3) *
David M. Wathen 2,249(3) *
All directors and 1,122,130(1)(2)(3) 4.83
executive officers as
a group
* Less than 1 percent of class
(1) Includes shares issuable pursuant to stock options exercisable within 60
days after February 24, 2006 as follows: Mr. Trumbull, 160,370; Mr.
Sengstack, 127,050; Mr. Maske, 19,450; Mr. Witt, 80,000; Mr. Stone,
54,243; Mr. Brady, 68,000; Mr. Crose, 38,243; Mr. Roberts, 2,667; Ms.
Ferguson, 2,667; and all directors and executive officers as a group,
643,262.
(2) Includes shares held by the ESOP Trustee as to which the individuals do
not have investment power as follows: Mr. Trumbull, 561; Mr. Sengstack,
6,704; Mr. Maske, 1,921; Mr. Stone, 4,568; Mr. Crose, 986; and all
directors and executive officers as a group, 37,576.
(3) Does not include 1,815 stock units credited to Mr. Trumbull, 5,088 stock
units credited to Mr. Brady, 1,086 stock units credited to Mr. Roberts,
2,071 stock units credited to Ms. Ferguson and 984 stock units credited
to Mr. Wathen, pursuant to the terms of the Nonemployee Directors'
Deferred Compensation Plan described under "Information About the Board
and its Committees".
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, officers and greater than 10 percent shareholders of the
Company's Common Stock to file with the SEC initial reports of ownership and
reports of changes in ownership of Common Stock of the Company and to furnish
the Company with copies of all Section 16(a) reports they file. Based solely
on a review of the copies of these reports furnished to the Company and
written representations that no other reports were required to be filed, the
Company believes that its directors, officers and greater than 10 percent
shareholders complied with all applicable Section 16(a) filing requirements
applicable to them during 2005, with the following exceptions: Mr. Roberts
filed a late Form 4 to report a purchase of shares; Messrs. Wathen and Young
each filed a late Form 3 to report their initial appointment to the Company's
Board of Directors and a late Form 4 to report an award of Company shares.
ELECTION OF DIRECTORS
The Company's By-laws provide that the Board of Directors shall consist
of three to eleven directors, with the exact number set by the Board of
Directors by resolution. The Board of Directors currently consists of seven
directors, divided into three classes of two or three directors each. Each
year, the directors of one of the three classes are elected to serve terms of
three years and until their successors have been elected and qualified. Three
directors will be elected at the Annual Meeting this year. Directors are
elected by the affirmative vote of a plurality of the shares voted (i.e., the
three nominees who receive the most votes will be elected).
Jerome D. Brady, David M. Wathen and Diana S. Ferguson have been
nominated to serve as directors of the Company for terms expiring in 2009.
Messrs. Brady and Wathen and Ms. Ferguson are currently directors of the
Company. The nominees have indicated their willingness to serve as a director
if elected. If, however, any nominee is unwilling or unable to serve as a
director, shares represented by the proxies will be voted for the election of
another nominee proposed by the Board of Directors or the Board may reduce the
number of directors to be elected at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF EACH NOMINEE.
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INFORMATION CONCERNING NOMINEES AND CONTINUING DIRECTORS
The ages, principal occupations during the past five years and certain
other affiliations of the director nominees and the continuing directors, and
the years in which they first became directors of the Company, are set forth
below:
NOMINEES FOR TERMS EXPIRING IN 2006
DIRECTOR
NAME AND POSITION AGE PRINCIPAL OCCUPATION SINCE
Jerome D. Brady, 62 Retired in 2000. Formerly 1998
Director of the Company President and Chief Executive
Officer of C&K Components,
a manufacturer of electro-
mechanical switches. Director,
Circor International, Inc.
David M. Wathen, 53 President and Chief Executive 2005
Director of the Company Officer, Balfour Beatty, Inc.
(U.S. Operations), an engineering,
construction and building
management services company,
from 2002 to present; prior thereto,
Principal Member, QUESTOR, a
venture capital firm.
Diana S. Ferguson, 42 Senior Vice President, Strategy 2004
Director of the Company and Corporate Development, Sara Lee
Corporation, a manufacturer of
consumer products, from 2005 to
present; prior thereto, Senior Vice
President, Corporate Development and
Treasurer, Sara Lee Corporation,
from 2001 to 2005. Director,
Peoples Energy Corporation.
8
CONTINUING DIRECTORS
--------------------
DIRECTORS WHOSE TERMS EXPIRE IN 2007
DIRECTOR
NAME AND POSITION AGE PRINCIPAL OCCUPATION SINCE
Thomas L Young, 61 President, Titus Holdings Ltd., 2005
Director of the Company a private investment company;
formerly Executive Vice President
and Chief Financial Officer,
Owens-Illinois, Inc., a manufacturer
of glass and plastic packaging, from
2003 until retirement in 2005; prior
thereto, Co-Chief Executive Officer
(from January 2004 to April 2004)
and Executive Vice President,
Administration and General Counsel,
Owens-Illinois, Inc., from 1998
to 2004. Director, Manor Care,
Inc., and Owens-Illinois, Inc.
R. Scott Trumbull, 57 Chairman of the Board 1998
Chairman of the Board and Chief Executive Officer
and Chief Executive of the Company since 2003. Formerly
Officer of the Company Executive Vice President and
Chief Financial Officer,
Owens-Illinois, a manufacturer of
glass and plastic packaging, from
2001 to 2002; prior thereto, Executive
Vice President - International
Operations and Corporate Development,
Owens-Illinois, Inc., from 1998 to 2001.
Director, Health Care REIT
and Schneider National, Inc.
DIRECTORS WHOSE TERMS EXPIRE IN 2008
DIRECTOR
NAME AND POSITION AGE PRINCIPAL OCCUPATION SINCE
Howard B. Witt, 65 Retired in 2005. Formerly 1994
Director of the Company Chairman of the Board, President
and Chief Executive Officer,
Littelfuse, Inc., a manufacturer
of electronic, electrical and
automotive fuses, from 1990 to 2004.
Director, Littelfuse, Inc. and
Artisan Funds, Inc.
David A. Roberts 58 President and Chief Executive 2003
Director of the Company Officer, Graco, Inc., a
manufacturer of fluid-handling
equipment and systems since June
2001; formerly, Group Vice President,
The Marmon Group, Inc. a
diversified manufacturer, from 1995
to 2001. Director, Graco, Inc.
9
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
Nonemployee directors are paid an annual retainer of $35,000 plus a fee
of $1,500 for each Board and Board committee meeting attended. The Audit
Committee chairman receives an additional fee of $6,000 and the Personnel and
Compensation and the Corporate Governance Committee chairmen receive an
additional fee of $3,500. Directors who are employees of the Company receive
no additional compensation for serving on the Board or Board committees.
Nonemployee directors participate in the Franklin Electric Co., Inc.
Stock Plan (the "Stock Plan"). In 2005, the Personnel and Compensation
Committee granted awards, of 2,249 shares of the Company's common stock to
each nonemployee director. The shares which vested immediately upon grant had
a market value of $80,000 on the April 29, 2005 date of grant.
Nonemployee directors may participate in the Nonemployee Directors'
Deferred Compensation Plan (the "Deferred Compensation Plan"). Under the
Deferred Compensation Plan, each nonemployee director may elect to receive his
or her annual director's fee in Company shares or in cash. If Company shares
are elected, nonemployee directors may also elect to defer issuance of the
shares until service on the Board terminates, in which case the director's fee
is converted into stock units. Additional credits are made to a participant's
stock unit account in dollar amounts equal to the cash dividends that the
participant would have received had he or she been the owner on each record
date of a number of shares of common stock equal to the number of stock units
in his or her stock unit account on such date. Ms. Ferguson, Mr. Schneider
(who retired in October 2005) and Mr. Wathen elected to receive their fiscal
2005 director's fees in Company shares and to defer issuance of the shares.
Accordingly, on April 29, 2005, Ms. Ferguson, Mr. Schneider and Mr. Wathen
were credited with 984 stock units.
Under terms of the Deferred Compensation Plan, upon his retirement, Mr.
Schneider elected to receive the balance of his stock unit account in common
stock of the Company as of January 31, 2006. Accordingly, Mr. Schneider
received 4,923 shares of the Company's Common Stock.
The Company has a Consulting Directors' Plan for nonemployee directors
who retire from Board service at age 70 or older. Under the Consulting
Directors' Plan, a retiring director shall be eligible to enter into a
consulting agreement with the Company under the terms of which the consulting
director agrees to be available for consultation from time to time and is
entitled to receive an annual fee for such services equal to the director's
fee in effect at retirement. The consulting director can receive this fee up
to the same number of years that were served as director. The Company froze
the Consulting Directors' Plan in 2003; accordingly, eligibility for future
participation in the Consulting Directors' Plan is limited to the Company's
nonemployee directors first elected for service before 2003.
DIRECTOR INDEPENDENCE
The Board of Directors of the Company has determined that each of the
current directors, except for R. Scott Trumbull, Chairman of the Board and
Chief Executive Officer of the Company, is an "independent director" in
compliance with the independence standards set forth in the Company's
Corporate Governance Guidelines and under the applicable rules adopted by The
Nasdaq Stock Market ("Nasdaq").
10
MEETINGS
The Board held five (5) regularly scheduled meetings during 2005. Each
director, except Mr. Schneider, attended at least 75 percent of the aggregate
meetings of the Board and Board committees of which he or she was a member
during the period that each served as a director. All directors, except Mr.
Schneider, who were members of the Board at that time attended the 2005 Annual
Meeting of Shareholders.
COMMITTEES
The committees of the Board are: the Audit Committee, the Personnel and
Compensation Committee and the Corporate Governance Committee.
AUDIT COMMITTEE. The current members of the Audit Committee are Jerome
D. Brady (Chairman), Diana S. Ferguson, and Thomas L Young. The Board of
Directors has determined that each member of the Audit Committee is an
"independent director" in compliance with the independence standards set forth
in the Company's Corporate Governance Guidelines and under the applicable
Nasdaq rules. The Board of Directors has adopted an Audit Committee charter, a
copy of which is available on the Company's website at www.fele.com under
"Corporate Governance," that sets forth the duties and responsibilities of the
Audit Committee. Under its charter, the Audit Committee assists the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial information which will be provided to shareholders and others, the
system of internal control which management has established, the Company's
process for monitoring compliance with laws and regulations, and the audit
process. It is the general responsibility of the Audit Committee to advise and
make recommendations to the Board of Directors in all matters regarding the
Company's accounting methods and internal control procedures. The Audit
Committee held four (4) meetings in 2005.
PERSONNEL AND COMPENSATION COMMITTEE. The current members of the
Personnel and Compensation Committee (the "Compensation Committee") are Howard
B. Witt (Chairman), David A. Roberts and David M. Wathen. The Board of
Directors has determined that each member of the Compensation Committee is an
"independent director" in compliance with the independence standards set forth
in the Company's Corporate Governance Guidelines and under applicable Nasdaq
rules. The Board of Directors has adopted a Compensation Committee charter, a
copy of which is available on the Company's website at www.fele.com under
"Corporate Governance," that sets forth the duties and responsibilities of the
Compensation Committee. Under its charter, the Compensation Committee
determines and approves the annual salary, bonus and other benefits of the
chief executive officer and the other executive officers of the Company;
reviews and submits to the Board of Directors recommendations concerning stock
plans; periodically reviews the Company's policies in the area of management
benefits; and oversees the Company's management development and organization
structure. The Compensation Committee held three (3) meetings in 2005.
CORPORATE GOVERNANCE COMMITTEE. The Board of Directors voted to
establish the Corporate Governance Committee (the "Governance Committee") at
its December 2005 Board meeting. The current members of the Governance
Committee are Thomas L. Young (Chairman), David A. Roberts, David M. Wathen
and Diana S. Ferguson. The Board of Directors has determined that each member
of the Governance Committee is an "independent director" in compliance with
the independence standards set forth in the Company's Corporate Governance
Guidelines and under applicable Nasdaq rules. The Board of Directors has
adopted a Governance Committee charter, a copy of which is available on the
Company's website at www.fele.com under "Corporate Governance," that sets
11
forth the duties and responsibilities of the Governance Committee. Under its
charter, the Governance Committee reviews the size of the Company's Board of
Directors and committee structure and recommends appointments to the Board and
the Board Committees; reviews and recommends to the Board of Directors the
compensation of nonemployee directors including grants of awards to
nonemployee directors under the Company's equity based and incentive
compensation plans; and develops such corporate governance guidelines deemed
necessary for the Company. The Governance Committee will begin holding
meetings in 2006.
The Governance Committee is also responsible for identifying and
recommending to the Board candidates for director. The Governance Committee
seeks to identify as candidates for director persons from various backgrounds
and with a variety of life experiences who have a reputation for and a record
of integrity and good business judgment. The Governance Committee also
considers whether a person has experience in a highly responsible position in
a profession or industry relevant to the conduct of the Company's business.
The Governance Committee takes into account the current composition of the
Board and the extent to which a person's particular expertise, experience and
ability and willingness to make an appropriate time commitment will complement
the expertise and experience of other directors. Candidates for director
should also be free of conflicts of interest or relationships that may
interfere with the performance of their duties. Based on its evaluation and
consideration, the Governance Committee submits its recommendation for
director candidates to the full Board of Directors, which is then responsible
for selecting the candidates to be elected by the shareholders.
The Governance Committee will consider as candidates for director persons
recommended or nominated by shareholders. Shareholders may recommend
candidates for directors by writing to the Secretary of the Company at the
address listed below under "Other Corporate Governance Matters." Nominations
of directors may be made by any shareholder entitled to vote in the election
of directors, provided that written notice of intent to make a nomination is
given to the Secretary of the Company not later than ninety (90) days prior to
the anniversary date of the immediately preceding annual meeting of
shareholders. The notice must set forth: (i) information regarding the
proposed nominee as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the SEC, and (ii) the consent of such
nominee to serve as a director of the Corporation if so elected.
OTHER CORPORATE GOVERNANCE MATTERS
The Board of Directors has adopted Corporate Governance Guidelines, a
copy of which is available on the Company's website at www.fele.com under
"Corporate Governance," that provide, among other things, that the Company's
independent directors will meet in executive session, outside the presence of
the non-independent directors and management, at least twice a year. In 2005,
the independent directors met in executive session five (5) times.
Shareholders may contact the Board of Directors, any Board committee, any
independent director or any other director by writing to the Secretary of the
Company as follows:
Franklin Electric Co., Inc.
Attention: [Board of Directors]
[Board Committee] [Board Member]
c/o Corporate Secretary
Franklin Electric Co., Inc.
400 E. Spring Street
Bluffton, IN 46714
The independent directors of the Board have approved a process for
collecting, organizing and responding to written shareholder communications
addressed to the Board, Board committees or individual directors. Copies of
the Company's corporate governance documents, including the Board Committee
charters and the Corporate Governance Guidelines are available upon written
request to the Secretary of the Company at the address listed above.
12
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors, which is composed solely
of independent directors, is responsible, under guidelines established in the
Audit Committee Charter (a copy of which is available on the Company's website
at www.fele.com under "Corporate Governance"), for overseeing the accounting
and financial reporting processes of the Company and the audits of the
financial statements by reviewing (i) the quality and integrity of the
consolidated financial statements prepared by management; (ii) the performance
of the internal audit function; and (iii) the qualifications, independence and
performance of the Company's independent registered public accounting firm.
In accordance with SEC rules the Audit Committee of the Company states
that:
* The Audit Committee has reviewed and discussed with management the
Company's audited financial statements for the fiscal year ended December
31, 2005.
* The Audit Committee has reviewed and discussed with Deloitte & Touche LLP,
the Company's independent registered public accounting firm, the matters
required to be discussed by the Statement on Auditing Standards No. 61
(Codification of Statements on Auditing Standards, AU Section 380), as
modified or supplemented ("Communication with Audit Committees").
* The Audit Committee has received the written disclosures and the letter
from Deloitte & Touche LLP required by Independence Standards Board
Standard No. 1, as modified or supplemented ("Independence Discussions with
Audit Committees"), and has discussed with Deloitte & Touche LLP the
independent registered public accounting firm's independence.
Based upon the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2005 for filing with the SEC.
This report is submitted on behalf of the members of the Audit Committee:
Jerome D. Brady (Chairman)
Diana S. Ferguson
Thomas L. Young
13
PERSONNEL AND COMPENSATION COMMITTEE REPORT
It is the philosophy of the Personnel and Compensation Committee (the
"Committee") to maintain a compensation program to attract and retain
executive officers who can successfully build the Company's long-term
shareholder value. The Committee has retained a compensation consulting firm
to provide information on compensation packages of companies of similar size
and in similar industries to aid in the design of its package for the
Company's executive officers. The Committee encourages superior performance
through the use of annual performance targets for the purpose of determining
cash bonuses as well as stock incentive vehicles designed to closely align the
executive's reward to that of the shareholders.
For the executive officers, including the named executive officers in the
Summary Compensation Table, the current compensation package includes a base
salary, an annual incentive cash bonus and grants of stock options and/or
awards of restricted stock. The Committee believes the combined value of base
salary plus incentive cash bonus is competitive with the salary and bonus
provided to similarly situated executives as reflected in published market
surveys. The Committee believes that a significant portion of executive
officer compensation, including the Chief Executive Officer, should be
dependent upon corporate performance.
Base Salary ranges are established using salary and trend data for
companies of similar size and in similar industries, using a variety of
independent third-party executive compensation surveys. The target for base
salary ranges is the median of this marketplace. Executive positions are
individually benchmarked against these survey sources annually and multiple
surveys are used to establish a competitive salary range for each position.
The actual base salary of each executive officer relative to the target
established above is determined by the executive's performance, which is
evaluated annually by the Chief Executive Officer and reviewed and approved by
the Committee. Other factors that may influence the level of individual
executive base pay include current position in salary range, internal pay
relationships, and retention considerations.
The executive officers of the Company are eligible to participate in the
Executive Officer Annual Incentive Cash Bonus Program. Under the plan the
Committee approves an annual incentive cash bonus calculation for the
executive officers taking into account certain financial performance targets
and the individual's strategic task accomplishments. The Company's financial
performance targets in 2005 were pre-tax return on net assets, earnings per
share and individual business unit financial results. The maximum bonus
possible as a percent of base salary was established at above median market
levels (75% of salary for executive officers other than the Chief Executive
Officer and 100% for the Chief Executive Officer). In 2005, the Company
exceeded the return on net asset and earnings per share goals, and each
executive met their business unit and individual goals at a level such that,
combined with the corporate performance defined above, maximum payouts were
made to all executive officers.
In 2005, the Committee made grants of stock options and restricted stock
to certain executive officers, including the Chief Executive Officer, under
the Company's shareholder-approved stock plans. The purpose of these plans is
to encourage stock ownership, offer long-term performance incentive and to
more closely align the executive's compensation with the return received by
the Company's shareholders. Using information on incentive compensation
programs provided by an outside consultant, the Committee reviews annually the
14
financial incentives to officers and determines the number of stock option
grants and/or restricted stock awards given to each executive officer using
competitive data for companies of similar size and in similar industries, as
reflected in independent third party long term incentive surveys. In 2005,
the Committee made stock option grants, ranging from 4,500 shares to 30,200
shares, to the 10 executive officers of the Company, including the named
executive officers in the Summary Compensation Table, and awarded restricted
stock, of 5,000 shares and 10,000 shares respectfully, to 2 executive
officers, including 1 named executive officer in the Summary Compensation
Table.
Section 162(m) of the Internal Revenue Code limits the deductibility for
federal income tax purposes of executive compensation paid to the Chief
Executive Officer and the four other most highly compensated officers of a
public company to $1,000,000 per year, but contains an exception for certain
performance-based compensation. Base salary does not by its nature qualify as
performance-based compensation under Section 162(m) and the Company's annual
incentive cash bonus payments and restricted stock awards do not qualify as
performance-based compensation under Section 162(m). The Company's grants of
stock options under its stock plans qualify as performance-based compensation
under Section 162(m). The Company in 2005 did not pay any executive officer
salary, bonus and restricted stock compensation in excess of the Section
162(m) limit.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
On an annual basis, the Committee is responsible for reviewing the
individual performance of the Chief Executive Officer, and determining
appropriate adjustments in base pay and award opportunities under the
Executive Officer Annual Incentive Cash Bonus Program.
In 2005, Mr. Trumbull served as Chairman and Chief Executive Officer of
the Company. The Committee, after reviewing salary survey data of companies
of similar size and in similar industries, as published in independent third
party executive compensation surveys, established Mr. Trumbull's base salary
at $504,700 per year. Mr. Trumbull's earned base salary in 2005 was $501,035.
Mr. Trumbull earned the maximum bonus award available of $501,035 which is
equal to 100% of base pay earned in 2005. The 2005 bonus award was based upon
the achievement of specified levels of return on net assets and earnings per
share targets of the Company. Return on net assets for 2005 of 38.9% exceeded
the target which led to the maximum payout attributable to return on net
assets, which was 70% of the total payout. Earnings per share for 2005 of
$1.98 exceeded the target which led to the maximum payout attributable to
earnings per share, which was 30% of the total payout.
Review of the 2005 performance of the Chief Executive Officer was
conducted by the Committee. Based on this review and using salary survey data
for manufacturing companies of comparable sales volume and financial
performance, the Committee increased Mr. Trumbull's based salary from $504,700
to $555,000, effective February 1, 2006. For 2006 Mr. Trumbull will
participate in the Executive Officer Annual Incentive Cash Bonus Program, with
a maximum payout of 100% of base pay earned, based on achievement relative to
performance targets specified by the Committee.
Howard B. Witt (Chairman)
David A. Roberts
David M. Wathen
15
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for the years
2003 through 2005 for the Company's Chief Executive Officer and the Company's
other four most highly compensated executive officers who served as executive
officers of the Company during 2005.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
BONUS SECURITIES
(PERFORMANCE RESTRICTED UNDERLYING
NAME AND BASED STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY INCENTIVE) AWARD(S)($) (# OF SHARES) COMPENSATION
------------------ ---- ------ --------- ---------- ----------- ------------
R. Scott Trumbull, 2005 $501,035 $501,035 $ - 30,200 $ 7,175
Chairman of the 2004 486,260 486,260 - 60,800 7,175
Board and CEO 2003 475,000 475,000 - 400,000 7,000
Peter-Christian Maske,2005 $325,603 $184,691 $ - 9,000 $ -
Senior Vice 2004 315,536 184,690 - 16,000 -
President, 2003 251,508 145,700 - - 86,791
President-Europa
Gregg C. Sengstack, 2005 $259,989 $194,992 $ - 9,000 $ 7,175
Senior Vice 2004 246,255 184,691 - 16,000 7,175
President, 2003 235,000 145,700 - - 7,000
International &
Fueling Systems
Robert J. Stone 2005 $193,755 $145,316 $390,500 5,450 $ 7,175
Vice President, 2004 172,505 129,380 - 7,200 20,925
Sales, Marketing & 2003 161,254 75,330 - - 7,000
Technology
Daniel J. Crose 2005 $192,109 $144,081 $ - 5,450 $ 7,175
Vice President 2004 172,505 129,380 - 7,200 7,175
North American 2003 164,171 120,000 - - 7,000
Submersible
Operations
A restricted stock grant, subject to performance-based conditions, was
made to Mr. Stone on March 3, 2005. The value as of December 31, 2005
is $395,400.
All Other Compensation for 2005 reflects Company matching contributions
to employee benefit plans of $7,175 for each executive officer except Mr.
Maske. In 2004, Mr. Stone received one month base salary of $13,750 as
relocation allowance. In 2003, Mr. Maske received two months base salary
of $39,167 plus additional relocation costs (including tax gross-up) of
$40,624.
16
OPTION GRANTS IN 2005 FISCAL YEAR
Potential
Percent Realizable Value
Number of of Total at Assumed Annual
Securities Options Exercise Rates of Stock Price
Underlying Granted to or Appreciation for
Options Employees Base Option Term
Granted(1) in Fiscal Price Expiration -----------
Name (#) Year ($/Sh) Date 5% ($) 10%($)
---- -------- ------ ----- ------- ------ ------
R. Scott Trumbull 30,200 17% $40.93 2/10/15 $ 777,368 $1,970,003
Peter-Christian
Maske 9,000 5% $40.93 2/10/15 231,666 587,087
Gregg C. Sengstack 9,000 5% $40.93 2/10/15 231,666 587,087
Robert J. Stone 5,450 3% $40.93 2/10/15 140,287 355,514
Daniel J. Crose 5,450 3% $40.93 2/10/15 140,287 355,514
(1) Options were granted on February 10, 2005 and vest at a rate of 25% per
year beginning on February 10, 2006. Upon a change in control of the
Company, all options become immediately vested.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired Fiscal Fiscal
on Value Year-End (#) Year-End($)
Exercise Realized(1) Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable(2)
---- ------ ------ ----------- -----------
R.Scott Trumbull 129,500 $2,454,447 60,660/318,840 $ 850,652/$4,194,858
Peter-Christian
Maske 253,200 $6,116,594 14,000/ 23,800 $ 327,810/$ 122,752
Gregg C. Sengstack - - 121,600/ 33,400 $2,726,269/$ 325,221
Robert J. Stone 70,000 $1,828,783 51,440/ 11,210 $1,169,560/$ 56,238
Daniel J. Crose - - 35,440/ 27,210 $ 614,460/$ 321,388
(1) Based on the excess of the fair market value of the Common Stock on the
date of exercise over the option exercise price.
(2) Based on the excess of the fair market value of the Common Stock of
$39.54 on December 30, 2005 over the option exercise price.
17
PENSION PLANS
The Company has three pension plans in which executive officers
participate: the Franklin Electric Co., Inc. Basic Retirement Plan, the
Franklin Electric Co., Inc. Cash Balance Plan, and the Franklin Electric Co.,
Inc. Pension Restoration Plan (collectively referred to herein as the "Pension
Plans").
The below table illustrates the approximate combined annual pension
benefit payable upon retirement at age 65 under the Pension Plans, after
integration with social security for Mr. Trumbull and Mr. Sengstack. In the
table, Annual Compensation is based on the highest thirty-six consecutive
months' compensation which includes salary and bonus. Years of service for
Mr. Trumbull and Mr. Sengstack, named executive officers, are 8 years and 17
years respectively.
Mr. Maske, a named executive officer, has 4 years of service under
pension plans of the Company and 26 years of service under pension plans of
one of the Company's foreign subsidiaries. His combined annual pension amount,
including social security (both U.S. and foreign) does not exceed the benefits
listed in the table below.
Combined Annual Pension Amount, Including Social Security
Annual
Compen- Years of Service
sation 10 15 20 25 30 35
---------------------------------------------------------------------------
$ 150,000 $ 52,500 $ 60,000 $ 70,000 $ 81,700 $ 93,400 $105,100
200,000 70,000 80,000 90,000 100,000 114,400 129,600
250,000 87,500 100,000 112,500 125,000 135,400 154,100
300,000 105,000 120,000 135,000 150,000 156,400 178,600
350,000 122,500 140,000 157,500 175,000 177,400 203,100
400,000 140,000 160,000 180,000 200,000 200,000 227,600
450,000 157,500 180,000 202,500 225,000 225,000 252,100
500,000 175,000 200,000 225,000 250,000 250,000 276,600
550,000 192,500 220,000 247,500 275,000 275,000 301,100
600,000 210,000 240,000 270,000 300,000 300,000 325,600
650,000 227,500 260,000 292,500 325,000 325,000 350,100
700,000 245,000 280,000 315,000 350,000 350,000 374,600
750,000 262,500 300,000 337,500 375,000 375,000 399,100
800,000 280,000 320,000 360,000 400,000 400,000 423,600
850,000 297,500 340,000 382,500 425,000 425,000 448,100
900,000 315,000 360,000 405,000 450,000 450,000 472,600
950,000 332,500 380,000 427,500 475,000 475,000 497,100
1,000,000 350,000 400,000 450,000 500,000 500,000 521,600
1,050,000 367,500 420,000 472,500 525,000 525,000 546,100
Mr. Crose and Mr. Stone, the other named executive officers, have 4 years
and 13 years, respectively, of service with the Company. The approximate
combined annual pension benefit payable upon retirement at age 65 under the
Pension Plans including Social Security for Mr. Crose and Mr. Stone would be
$50,000 and $230,000 respectively.
18
AGREEMENTS
The Company has employment agreements with R. Scott Trumbull, Chairman of
the Board and Chief Executive Officer, Gregg C. Sengstack, Senior Vice
President, International and Fueling Systems, and Peter-Christian Maske,
Senior Vice President, President-Europa.
The agreements with Messrs. Trumbull and Sengstack are three-year
agreements which automatically extend for an additional year unless either
party provides 90 days advance written notice of an election not to extend the
then current term. Under Mr. Trumbull's agreement, the Company, depending on
the reason for termination of employment, may be required to pay Mr. Trumbull
his annual compensation, including bonus, for the period from termination to
the earlier of (i)the date on which Mr. Trumbull reaches his normal retirement
age, or (ii)whichever is applicable, (a)thirty-six months if termination is
prior to January 1, 2006, or (b)eighteen months if termination is after
January 1, 2006, and all stock options held by Mr. Trumbull may become
immediately exercisable. Under Mr. Sengstack's agreement, the Company,
depending on the reason for termination of employment, may be required to pay
Mr. Sengstack his annual compensation, including bonus, for a period of
eighteen months after termination, and all stock options held by Mr. Sengstack
may become immediately exercisable. If termination is effected within two
years after a Change in Control of the Company (as defined in the agreements),
the Company may be required to pay Messrs. Trumbull and Sengstack their
respective annual compensation for up to three years, from the date of
termination or change in control, whichever is earlier, and to continue to
provide them with certain benefits under the Company's benefit plans in which
they were a participant at the time of their termination of employment. Under
his agreement, Mr. Trumbull is deemed to have five years of full-time service
with the Company as of January 1, 2003 for purposes of vesting provisions and
benefit accruals under certain employee benefit plans of the Company.
The employment agreement with Mr. Maske continues until attainment of age
65, subject to earlier termination by either party upon six months prior
written notice. In case the contract is terminated, the Company is required to
pay the compensation provided under the contract for the six months of the
termination notice. If termination is effected in connection with a change in
control of the Company, the Company will be required to pay Mr. Maske his
annual compensation for up to two years from the date of termination or change
in control, whichever is earlier and to continue to provide him with certain
benefits under the Company's benefit plans in which he was a participant at
the time of his termination of employment.
Messrs. Trumbull, Sengstack, Stone and Crose have signed a
confidentiality and non-compete agreement with the Company. Under this
agreement these persons agree to maintain all confidential information of the
Company and for a period of eighteen months after each officer ceases to be
employed with the Company each officer has agreed not to, directly or
indirectly, participate in the design, development, manufacture or
distribution of electrical submersible motors or related products in
competition with the Company.
19
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
(including reinvestment of dividends) on an investment in (1) the Company's
Common Stock, (2) the Standard & Poor's 500 Stock Index, and (3) the Russell
2000 Stock Index for the period December 31, 2000 through December 31, 2005.
In each case, the graph assumes the investment of $100 on December 31, 2000.
$300
257
242
$200
183 149
143 142
121 120
103 103
$100 98
88 88
82
69
$ 0
2000 2001 2002 2003 2004 2005
YEAR
FRANKLIN ELECTRIC
S & P 500
RUSSELL 2000
20
SECURITIES AUTHORIZED FOR ISSUANCE UNDER
EQUITY COMPENSATION PLANS
The following table sets forth information about the Company's equity
compensation plans as of December 31, 2005.
(C)
Number of Securities
(A) (B) Remaining Available
Number of Securities Weighted-Average for Future Issuance
to be Issued Upon Exercise Price Under Equity
Exercise of of Outstanding Compensation Plans
Outstanding Options, Options, (Excluding Securities
Plan Category Warrants & Rights Warrants & Rights Reflected in Column A)
------------- ----------------- ----------------- ---------------------
Equity Compensation
Plans Approved by
Security Holders(1) 1,813,500 $23.60 1,263,508
Equity Compensation
Plans Not Approved
by Security Holders(2) 15,967 n/a 84,033
(1) This Plan category includes the following plans: Franklin Electric Co.,
Inc. Stock Option Plan (0 shares remain available for issuance) and the
Franklin Electric Co., Stock Plan (1,263,508 shares remain available for
issuance).
(2) This Plan category includes the Nonemployee Directors' Deferred
Compensation Plan, adopted in 2000 and described above under the caption
"Information About the Board and its Committees". The information
included in column A represents shares underlying stock units, payable
on a one-for-one basis, credited to the directors' respective stock unit
accounts as of December 31, 2005. Nonemployee directors may elect to
receive the distribution of stock units in cash or in shares of the
Company's Common Stock.
21
RATIFICATION OF THE APPOINTMENT
OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed the firm of Deloitte & Touche LLP as
the Company's independent registered public accounting firm for the 2006
fiscal year. Although shareholder ratification is not legally required, the
Board of Directors believes it advisable to submit its decision to the
shareholders. If the shareholders fail to ratify Deloitte & Touche LLP as the
Company's independent registered public accounting firm, the Audit Committee
will reassess its appointment. Deloitte & Touche LLP has acted as independent
auditors for the Company since 1988.
Representatives of Deloitte & Touche LLP are expected to be present at
the Annual Meeting with the opportunity to make a statement if they desire to
do so, and to be available to respond to questions relating to their
examinations of the Company's financial statements.
The affirmative vote of the holders of a majority of the votes cast at
the Annual Meeting is required to approve the ratification of the appointment
of Deloitte & Touche LLP as the Company's independent registered public
accounting firm.
AUDIT FEES
The aggregate fees for professional services rendered by Deloitte &
Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective
affiliates (collectively, "Deloitte") for the audit of the Company's annual
financial statements and the reviews of the financial statements included in
the Corporation's Quarterly Reports on Form 10-Q were $547,000 and $473,000,
respectively, for the fiscal years ended December 31, 2005 and January 1,
2005.
AUDIT-RELATED FEES
The fees for audits of the Company's employee benefit plans rendered by
Deloitte were $40,000 and $32,000, respectively, for the fiscal years ended
December 31, 2005 and January 1, 2005.
TAX FEES
The fees for tax services rendered by Deloitte were $77,182 and $80,927
respectively, for the fiscal years ended December 31, 2005 and January 1,
2005.
AUDIT COMMITTEE PRE-APPROVAL POLICY
The Audit Committee has adopted a Pre-Approval Policy for Audit, Audit-
Related and Non-Audit Services. The Audit Committee has delegated to the
Audit Committee Chairman the authority to pre-approve services not prohibited
by law up to a maximum of $10,000 individually or $50,000 in the aggregate,
provided that the Audit Committee Chairman shall report any decisions to pre-
approve services to the full Audit Committee at its next meeting. For the
fiscal year ended December 31, 2005 the Company did not pay any fees for
services pursuant to the exceptions to the pre-approval requirements set forth
in 17 CFR 210.2-01(c)(7)(i)(c).
22
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
STOCKHOLDER PROPOSALS
October 30, 2006 is the date by which proposals of shareholders intended
to be presented at the next annual meeting must be received by the Company to
be considered for the inclusion in the Company's proxy statement for the 2006
Annual Meeting. Also, other proposals intended to be presented at the next
Annual Meeting but not included in the Company's proxy statement must be
received by the Company no later than January 26, 2007 to be considered for
presentation at that meeting.
OTHER BUSINESS
Management has no knowledge of any other matters to be presented for
action by the shareholders at the 2006 Annual Meeting. The enclosed proxy
gives discretionary authority to the persons designated as proxies therein to
vote on any additional matters that should properly and lawfully be presented.
By order of the Board of Directors
Dated: March 20, 2006
/s/ Thomas J. Strupp
--------------------
Vice President, Chief Financial
Officer and Secretary
APPENDIX 1
FRANKLIN ELECTRIC PROXY
Franklin Electric Co., Inc.
400 East Spring Street
Bluffton, IN 46714
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints R. Scott Trumbull and Thomas J. Strupp as
Proxies, and each of them, with full power of substitution, with all power the
undersigned would possess if personally present, and to vote all shares of
common stock of Franklin Electric Co., Inc. held of record by the undersigned
on February 24, 2006, which the undersigned would be entitled to vote at the
Annual Meeting of Shareholders to be held on April 28, 2006 or any adjournment
or postponement thereof.
1. ELECTION OF DIRECTORS. Proposal to elect Jerome D. Brady, Diana S.
Ferguson and David M. Wathen as directors to serve until the 2009 Annual
Meeting of Shareholders.
[ ]FOR all nominees [ ]WITHHOLD AUTHORITY to vote for all nominees
(INSTRUCTIONS: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list below.)
Jerome D. Brady Diana S. Ferguson David M. Wathen
2. APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
Proposal to ratify the appointment of Deloitte & Touche LLP as the Company's
Independent Registered Public Accounting Firm for the 2006 fiscal year.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting, or any adjournment or
postponements thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy
will be voted FOR proposals 1 and 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED________________________________, 2006
___________________________________________
Signature
___________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.