[CRANE LOGO(R)]
CRANE CO. 100 FIRST STAMFORD PLACE, STAMFORD, CONNECTICUT 06902
March 7, 2003
DEAR CRANE SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of the Shareholders
of Crane Co., to be held at 10:00 a.m. Eastern Daylight Time on Monday, April
28, 2003 in the Elm Meeting Room of The Westin Stamford Hotel, One First
Stamford Place, Stamford, Connecticut.
The Notice of Meeting and Proxy Statement on the following pages describe
the matters to be presented at the meeting. Management will report on current
operations and there will be an opportunity for discussion of the Company and
its activities. Our 2002 Annual Report accompanies this Proxy Statement.
It is important that your shares be represented at the meeting regardless
of the size of your holdings. If you are unable to attend in person, we urge
you to participate by voting your shares by proxy. You may do so by filling out
and returning the enclosed proxy card, or by using the Internet address or the
toll-free telephone number on the proxy card.
Sincerely,
/s/ R.S. EVANS
R.S. EVANS
Chairman of the Board
CRANE CO.
100 FIRST STAMFORD PLACE
STAMFORD, CONNECTICUT 06902
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 2003
---------------------
March 7, 2003
To The Shareholders of Crane Co.:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of the Shareholders of
Crane Co. will be held in the Elm Meeting Room of The Westin Stamford Hotel,
One First Stamford Place, Stamford, Connecticut on Monday, April 28, 2003 at
10:00 a.m., Eastern Daylight Time, for the following purposes:
1. To elect four directors to serve for three year terms until the Annual
Meeting of Shareholders in 2006.
2. To consider and act upon a proposal to approve the selection of Deloitte
& Touche LLP as independent auditors for the Company for 2003.
3. To consider and act upon a proposal submitted by certain shareholders
concerning adoption of the MacBride Principles in reference to the
Company's operations in Northern Ireland.
4. To transact such other business as may properly come before the meeting
in connection with the foregoing or otherwise.
The Board of Directors has fixed the close of business on February 28,
2003 as the record date for the purpose of determining shareholders entitled to
notice of and to vote at said meeting or any adjournment thereof. A complete
list of such shareholders will be open to the examination of any shareholder
during regular business hours for a period of ten days prior to the meeting at
the offices of the Company at 100 First Stamford Place, Stamford, Connecticut.
In order to assure a quorum, it is important that shareholders who do not
expect to attend the meeting in person fill in, sign, date and return the
enclosed proxy in the accompanying envelope, or use the Internet address or the
toll-free telephone number set forth on the enclosed proxy card.
By Order of the Board of Directors,
AUGUSTUS I. DUPONT
Secretary
IF YOU EXPECT TO ATTEND THE MEETING IN PERSON, WE REQUEST THAT YOU WRITE
FOR YOUR CARD OF ADMISSION TO THE SECRETARY, CRANE CO., 100 FIRST STAMFORD
PLACE, STAMFORD, CONNECTICUT 06902.
CRANE CO.
100 FIRST STAMFORD PLACE
STAMFORD, CONNECTICUT 06902
----------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 2003
The enclosed proxy is solicited by the Board of Directors of Crane Co.
(the "Company") for use at the Annual Meeting of Shareholders to be held in the
Elm Meeting Room of The Westin Stamford Hotel, One First Stamford Place,
Stamford, Connecticut, on Monday, April 28, 2003, at 10:00 a.m., Eastern
Daylight Time, or at any adjournment thereof. The enclosed proxy, when properly
executed and received by the Secretary prior to the meeting, and not revoked,
will be voted in accordance with the directions thereon. If no directions are
indicated, the proxy will be voted for each nominee named herein for election
as a director, for the proposal to approve the selection of Deloitte & Touche
LLP as independent auditors for the Company for 2003 and against the
shareholder proposal concerning the MacBride Principles. If any other matter
should be presented at the Annual Meeting upon which a vote may properly be
taken, the shares represented by the proxy will be voted with respect thereto
in accordance with the discretion of the person or persons holding such proxy.
Proxies may be revoked by shareholders at any time prior to the voting of the
proxy by written notice to the Company, by submitting a new proxy or by
personal ballot at the meeting.
Shareholders of record may vote their proxy by using the toll-free number
listed on the proxy card as an alternative to using the written form of proxy.
The telephone voting procedure is designed to authenticate votes cast by use of
a Personal Identification Number. Alternatively, shareholders of record may
vote their proxy via the Internet at the website www.eproxyvote.com/cr. Both
procedures allow shareholders to appoint a proxy to vote their shares and to
confirm that their instructions have been properly recorded. The Company has
been advised by counsel that these procedures are consistent with the
requirements of applicable law. Specific instructions to be followed by any
shareholder of record interested in voting by telephone or via the Internet are
set forth on the enclosed proxy card.
The date on which this proxy statement and enclosed form of proxy are
first being sent to the Company's shareholders is on or about March 7, 2003.
OUTSTANDING SHARES AND REQUIRED VOTES. As of the close of business on
February 28, 2003, the record date for determining shareholders entitled to
vote at the Annual Meeting, the Company had issued and outstanding 59,452,362
shares of Common Stock, par value $1.00 per share ("Common Stock"). Each share
of Common Stock is entitled to one vote at the meeting. Directors will be
elected by a plurality vote of the holders of shares of Common Stock present in
person or represented by proxy and entitled to vote at the meeting. The
approval of auditors and the shareholder proposal concerning the MacBride
Principles each requires the affirmative vote of the holders of a majority of
the shares of Common Stock present in person or represented by proxy and
entitled to vote at the meeting. Abstentions may be specified as to all
proposals to be brought before the meeting other than the election of
directors. Under the rules of the New York Stock Exchange, Inc. (the "NYSE"),
brokers holding shares for customers have authority to vote on certain matters
even if they have not received instructions from the beneficial owners, but do
not have such authority as to certain other matters (so-called "broker
non-votes"). The NYSE has advised the Company that member firms of the NYSE may
vote without specific instructions from beneficial owners as to all matters
presented in this Proxy Statement other than the shareholder proposal
concerning the MacBride Principles. With regard to the election of directors,
votes may be cast in favor or withheld, and the four persons receiving the
highest number of favorable votes will be elected as directors of the Company.
As to the approval of auditors and the shareholder proposal, if a shareholder
abstains from voting certain shares it will have the effect of a negative vote.
1
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of ten members divided into
three classes. At the Annual Meeting four directors are to be elected to hold
office for three year terms until the Annual Meeting in 2006 and until their
successors are elected and qualified. The enclosed proxy will be voted for
election of the four directors of such class named in the following table,
whose election has been proposed by the Nominating and Governance Committee and
recommended by the Board of Directors. If any nominee shall, prior to the
meeting, become unavailable for election as a director, the persons named in
the accompanying form of proxy will vote for such nominee, if any, as may be
recommended by the Board of Directors, or the Board of Directors may reduce the
number of directors to eliminate the vacancy.
Under the Company's By-Laws, shareholders intending to nominate any person
for election as a director of the Company must notify the Secretary of the
Company in writing not more than 120 days nor less than 90 days prior to the
anniversary date of the immediately preceding annual meeting, unless the date
of the current annual meeting is more than 30 days before or after such
anniversary date. The notice must set forth (a) as to each person nominated,
(i) the name, age, business address and residence address of such person, (ii)
the principal occupation of such person, (iii) the number of shares of Common
Stock beneficially owned by such person and (iv) any other information required
to be disclosed in solicitations for proxies for elections of directors under
the federal securities laws, and (b) as to the shareholder giving such notice,
(i) the name and record address of such shareholder and (ii) the number of
shares of Common Stock beneficially owned by such shareholder. The notice must
be accompanied by the executed consent of the nominee to serve as a director if
so elected.
The age, position with the Company, period of service as a director of the
Company, business experience during the past five years, directorships in other
companies and shareholdings in the Company as of February 28, 2003 for each of
the nominees for election and for each of those directors whose term will
continue are set forth below.
COMMON SHARES
BENEFICIALLY
OWNED(1)
--------------
NOMINEES TO BE ELECTED FOR TERMS TO EXPIRE IN 2006
R. S. EVANS ................................................................. 1,553,793
Age 58; Director since 1979. Chairman of the Board of the Company.
Chairman and Chief Executive Officer of the Company from 1984 to 2001.
Other directorships: Fansteel, Inc., HBD Industries, Inc., Huttig Building
Products, Inc.
ERIC C. FAST ................................................................ 1,044,507
Age 53; Director since 1999. President and Chief Executive Officer of the
Company since April 2001. President and Chief Operating Officer of the
Company from September 1999 to April 2001. Co-Head of Global
Investment Banking of Salomon Smith Barney (investment banking firm)
from 1997 to 1998, Co-Head of Global Investment Banking, Salomon
Brothers, Inc. (investment banking firm) from 1995 to 1997 and a
Managing Director of that firm from 1988 to 1998. Other directorships:
Convergys Corporation.
2
COMMON SHARES
BENEFICIALLY
OWNED(1)
--------------
DORSEY R. GARDNER ......................................................... 35,052
Age 60; Director from 1982 to 1986 and since 1989. President, Kelso
Management Company, Inc., Boston, MA (investment management).
General Partner, Hollybank Investments, L. P., and Thistle Investments,
L. P., Miami, FL (private investment funds). Other directorships: Huttig
Building Products, Inc.
DWIGHT C. MINTON .......................................................... 69,157
Age 68; Director since 1983. Chairman Emeritus of the Board of Church &
Dwight Co., Inc., Princeton, NJ (manufacturer of consumer and specialty
products). Other directorships: Church & Dwight Co., Inc.
DIRECTORS WHOSE TERMS EXPIRE IN 2005
E. THAYER BIGELOW, JR. .................................................... 53,243
Age 61; Director since 1984. Managing Director, Bigelow Media, New York,
NY (investment in media and entertainment companies) since September
2000) and Senior Advisor, AOL Time Warner Inc., New York, NY (a media
and entertainment company) since October 1998. Chief Executive Officer,
Court TV, New York, NY, an affiliate of Time Warner Entertainment LP
(cable television program services) March 1997 to October 1998. Other
directorships: Huttig Building Products, Inc., Lord Abbett & Co. Mutual
Funds (42 funds).
CHARLES J. QUEENAN, JR. ................................................... 21,135
Age 72; Director since 1986. Senior Counsel since 1995 and prior thereto,
Partner, Kirkpatrick & Lockhart LLP, Pittsburgh, PA (attorneys at law).
Other directorships: Allegheny Technologies Incorporated, Teledyne
Technologies Incorporated, Water Pik Technologies, Inc.
JEAN GAULIN ............................................................... 20,010
Age 60; Director from 1995 to 1999 and since 2001. Retired Chairman,
President and Chief Executive Officer of Ultramar Diamond Shamrock
Corporation, San Antonio, TX (petroleum refining and marketing).
Chairman, President and Chief Executive Officer, Ultramar Diamond
Shamrock Corporation, January 2000 to December 2001; Vice Chairman,
President and Chief Executive Officer, Ultramar Diamond Shamrock
Corporation, 1999; Vice Chairman, President and Chief Operating Officer,
Ultramar Diamond Shamrock Corporation, December 1996 to December
1998. Other directorships: Abitibi Consolidated, Inc., National Bank of
Canada.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2004
RICHARD S. FORTE .......................................................... 35,044
Age 58; Director since 1983. Chairman, Forte Cashmere Company, South
Natick, MA (importer and manufacturer) since January 2002. President,
Dawson Forte Cashmere Company (importer) from 1997 to 2001. Other
directorships: Huttig Building Products, Inc.
3
COMMON SHARES
BENEFICIALLY
OWNED(1)
--------------
WILLIAM E. LIPNER ............................................................ 8,950
Age 55; Director since 1999. Chairman and Chief Executive Officer, NFO
WorldGroup, Inc., Greenwich, CT (marketing information/ research services
worldwide). Other directorships: Change Technology Partners, Inc., NFO
WorldGroup, Inc.
JAMES L. L. TULLIS ........................................................... 11,020
Age 55; Director since 1998. Chief Executive Officer, Tullis-Dickerson & Co.,
Inc., Greenwich, CT (venture capital investments in the health care
industry) since 1986.
----------
(1) As determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934. No director except Mr. R. S. Evans and Mr. E. C. Fast
beneficially owns more than 1% of the outstanding shares of Common Stock.
See Beneficial Ownership of Common Stock by Directors and Management,
page 5.
The Board of Directors met nine times during 2002. Each director attended
over 75% of the Board and Committee meetings held in the period during which he
was a director and Committee member.
The Board of Directors has an Executive Committee, Audit Committee,
Nominating and Governance Committee and Management Organization and
Compensation Committee. The Executive Committee, which meets when a quorum of
the full Board of Directors cannot be readily obtained, met twice in 2002. The
Audit Committee, which consists of directors who meet the independence and
experience requirements of the New York Stock Exchange, met nine times in 2002
(including four meetings by conference telephone to review quarterly financial
information) with the Company's management, internal auditors and independent
auditors to review matters relating to the quality of financial reporting and
internal accounting controls and the nature, extent and results of their
audits, and otherwise maintained communications between the auditors of the
Company and the Board of Directors. (See the Committee's report on page 18.)
The duties of the Nominating and Governance Committee include developing
criteria for selection of and identifying potential candidates for service as
directors of the Company, as well as policies regarding tenure of service and
retirement for members of the Board of Directors. During 2002 the Nominating
and Governance Committee's duties were expanded to include responsibility and
oversight of corporate governance matters. (See Corporate Governance Update on
page 7.) The Nominating and Governance Committee met five times in 2002. The
duties of the Management Organization and Compensation Committee include
coordinating the annual evaluation of the Chief Executive Officer, recommending
to the Board of Directors all actions regarding compensation of the Chief
Executive Officer, review of the compensation of other officers and business
unit presidents, review of director compensation, administration of the EVA
Incentive Compensation Plan and Stock Incentive Plan, review and approval of
significant changes or additions to the compensation policies and practices of
the Company and review of management development and succession planning
policies. The Management Organization and Compensation Committee met seven
times in 2002. (See the Committee's report on page 11.)
The memberships of committees during 2002 were as follows: Executive
Committee: E.T. Bigelow, Jr., R.S. Evans, E. C. Fast and D.C. Minton; Audit
Committee: R.S. Forte, D.R. Gardner, J. Gaulin and C.J. Queenan, Jr.
(Chairman); Nominating and Governance Committee: E. T. Bigelow, Jr., J. Gaulin
(Chairman), D. C. Minton and C. J. Queenan, Jr.; Management Organization and
Compensation Committee: E.T. Bigelow, Jr. (Chairman), D.R. Gardner, D.C. Minton
and J.L.L. Tullis.
4
COMPENSATION OF DIRECTORS. The Company's standard retainer payable to each
non-employee director is $35,000 per annum. Pursuant to the Non-Employee
Director Stock Compensation Plan, non-employee directors receive, in lieu of
cash, shares of Common Stock of the Company (rounded to the nearest ten shares)
with a market value equal to 50% of the standard annual retainer. All directors
who are not full-time employees of the Company, of which there are eight,
participate in the plan. The shares are issued each year after the Company's
annual meeting, are forfeitable if the director ceases to remain a director
until the Company's next annual meeting, except in the case of death,
disability or change in control, and may not be sold for a period of five years
or such earlier date as the director leaves the Board. In April 2002 each
non-employee director received 530 restricted shares of Common Stock pursuant
to the plan.
In addition, under the Non-Employee Director Stock Compensation Plan an
option to purchase 2,000 shares of Common Stock is granted to each non-employee
director immediately following each annual meeting of shareholders. Each such
option has an exercise price equal to the fair market value at the date of
grant, has a term of 10 years and vests 50% after one year, 75% after two years
and 100% after three years from the date of grant. On April 22, 2002 each
non-employee director other than Mr. Queenan received an option to purchase
2,000 shares at an exercise price of $28.38 per share. Mr. Queenan elected to
continue to participate in the Crane Co. Retirement Plan for Non-Employee
Directors (see description below), and therefore does not receive any stock
option grants under the Non-Employee Director Stock Compensation Plan.
Directors also receive $1,000 for each Board meeting attended.
Non-employee members of the Executive Committee receive an annual retainer of
$2,000. Members of other committees receive $1,000 for each committee meeting
attended, and committee chairman receive an annual retainer of $3,000. The
Board of Directors approved a special fee of $10,000 to Mr. Bigelow in 2002 in
recognition of the significant time and effort spent on the modification of the
EVA Incentive Compensation Plan.
The Crane Co. Retirement Plan for Non-Employee Directors provides for a
benefit upon retirement at or after age 65 equal to the participant's annual
retainer in effect at the time service terminates, payable for a period of time
equal to the number of years the participant has served on the Board and not as
an employee. After two years of service, participants are 50% vested in
benefits payable, and after each full year of service thereafter, participants
are vested in an additional 10%. In the event of death, disability or change in
control, participants are automatically 100% vested and, in the case of a
change in control, a minimum of seven years of retirement benefits is payable.
Additionally, a participant leaving the Board after a change in control would
be entitled to receive, in lieu of installment payments, a lump sum cash
payment such that the participant will retain, after all applicable taxes, the
actuarial equivalent of the benefits payable under the plan. A former director
may receive his benefits prior to age 65 on an actuarially reduced basis. The
plan is unfunded and benefits thereunder are payable from the Company's general
assets, either in the form of a joint and survivor annuity or, if the director
so elects upon reaching age 55, in the form of a survivor annuity should the
director die while in service. The Retirement Plan for Non-Employee Directors
was terminated as to active directors when the Non-Employee Director Stock
Compensation Plan was approved by shareholders in April 2000, but Mr. Queenan
elected to continue his participation in the Retirement Plan in lieu of any
option grants under the Stock Compensation Plan. Former Crane Co. directors
will continue to receive their retirement benefits under the Retirement Plan.
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY DIRECTORS AND MANAGEMENT
To focus management attention on growth in shareholder value, the Company
believes that officers and key employees should have a significant equity stake
in the Company. It therefore encourages its officers and key employees to
increase their ownership of and to hold Common Stock through the Stock
Incentive Plan and the Savings and Investment Plan. Directors also receive 50%
of their annual retainer in restricted stock issued under the Non-Employee
Director Stock Compensation Plan. The beneficial ownership of Common Stock by
the non-employee directors as a
5
group (see pages 2-4 for individual holdings), the executive officers named in
the Summary Compensation Table (other than Mr. M.L. Raithel who retired on
December 31, 2002), all other executive officers as a group and all directors
and executive officers of the Company as a group as of February 28, 2003 is as
follows:
SHARES IN
SHARES UNDER STOCK OPTIONS COMPANY TOTAL SHARES % OF SHARES
SHARES RESTRICTED EXERCISABLE SAVINGS PLAN BENEFICIALLY OUTSTANDING AS
OWNED STOCK PLANS (1) WITHIN 60 DAYS (401(K)) OWNED OF 2/28/03 (2)
--------- ----------------- ---------------- -------------- -------------- ---------------
Non-Employee Directors
and Nominees as a
Group (9 persons) .......... 624,505 104,240 1,068,463 10,196 1,807,404 2.91%
E. C. Fast .................. 111,710 131,746 800,280 771 1,044,507 1.68%
A. I. duPont ................ 7,869 51,072 289,234 1,412 349,587 0.56%
B. L. Ellis ................. 4,490 51,121 104,334 1,666 161,611 0.26%
T. M. Noonan ................ 2,982 32,962 125,551 2,096 163,591 0.26%
Other Executive Officers
(4 persons) ................ 72,994 43,186 268,956 25,007 410,143 0.66%
------- ------- --------- ------ ---------
Total -- Directors and
Executive Officers as a
Group (17 persons) ......... 824,550 414,327 2,656,818 41,148 3,936,843 6.34%
======= ======= ========= ====== =========
----------
(1) Subject to forfeiture if established performance and/or service
conditions are not met.
(2) As determined in accordance with Rule 13d-3 under Securities Exchange Act
of 1934. Does not include 7,778,416 shares of Common Stock owned by The
Crane Fund (see Principal Shareholders of the Company, below); nor
510,471 shares of Common Stock owned by the Crane Fund for Widows and
Children; nor an aggregate of 683,715 shares of Common Stock held in
trusts for the pension plans of the Company and certain subsidiaries
which shares may be voted and disposed of in the discretion of the
trustees unless the sponsor of a particular plan directs otherwise. Mr.
duPont and two other executive officers are trustees for The Crane Fund
and the Crane Fund for Widows and Children. None of the directors or
trustees has any beneficial interest in, and all disclaim beneficial
ownership of, the shares held by the trusts. In addition, as of February
28, 2003, 4,461 other employees of the Company held 1,793,854 shares of
Common Stock in the Crane Co. Savings and Investment Plan, 443 shares of
Common Stock in the Crane Co. Union Employees Savings and Investment
Plan, and 313,552 shares of Common Stock in the ELDEC Corporation and
Interpoint Corporation Deferred Income Plan, resulting in a total of
6,044,692 shares of Common Stock beneficially owned by directors,
officers and employees, or 9.7% of the outstanding shares as of February
28, 2003.
PRINCIPAL SHAREHOLDERS OF THE COMPANY
The following table sets forth the ownership by each person who owned of
record or was known by the Company to own beneficially more than 5% of its
Common Stock on February 28, 2003.
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
---------------------- ------------------------- ------------------ -----------
Common Stock ......... The Crane Fund (1) 7,778,416(1) 13.08%
100 First Stamford Place
Stamford, CT 06902
Common Stock ......... Gabelli Funds, LLC(2) 4,786,774(2) 8.05%
One Corporate Center
Rye, NY 10580-1435
----------
(1) The Crane Fund is a charitable trust managed by trustees appointed by the
Board of Directors of the Company. The incumbent trustees are: G.A.
Dickoff, A.I. duPont and E. M. Kopczick, all of whom are executive
officers of the Company. Pursuant to the trust instrument, the shares
held by the trust shall be voted by the trustees as directed by the Board
of Directors, the distribution of the income of the trust for its
charitable purposes is subject to the control of the Board of Directors
and the shares may be sold by the trustees only upon the direction of the
Board of Directors. None of the directors or the trustees has any direct
beneficial interest in, and all disclaim beneficial ownership of, shares
held by The Crane Fund.
6
(2) As reported in a Schedule 13F filed December 2, 2002. According to a
previously filed Schedule 13D, such shares are owned by certain
investment companies, broker/dealers and private investment partnerships
which Mario J. Gabelli or Marc J. Gabelli directly or indirectly controls
or for which one of them acts as chief investment officer, with the
direct or indirect power to vote or direct the vote or to dispose or
direct the disposition of all such shares.
CORPORATE GOVERNANCE UPDATE
The Company has always been committed to good corporate governance. In
furtherance of this commitment, during 2002 the Board of Directors expanded the
duties of the Nominating Committee by increasing the Committee's duties
specifically to include responsibility and oversight of corporate governance
matters. As a reflection of this change, the Nominating Committee was renamed
the Nominating and Governance Committee.
In light of this expanded mandate, the Nominating and Governance
Committee, with the assistance of legal counsel, engaged in an in-depth study
to examine the Company's corporate governance policies and procedures, with the
goal of strengthening the Company's commitment to good governance practices.
While the Committee recognized that rules were still being established under
the Sarbanes-Oxley Act of 2002 and that the New York Stock Exchange had not yet
adopted rules to enhance its governance standards, the Committee felt it was
important to take action at this time as a means of expressing the Company's
commitment in this area.
At the conclusion of this study, the Board of Directors adopted a set of
Corporate Governance Guidelines, which incorporate many of the Company's
pre-existing policies and practices as well as enhancements derived from the
Committee's current review. In addition, the Board of Directors amended the
charters of the Nominating and Governance Committee and the Management
Organization and Compensation Committee (formerly the Organization and
Compensation Committee) to reflect the enhanced responsibilities of each of
these Committees. A copy of the Corporate Governance Guidelines is set forth in
the Annual Report which accompanies this proxy statement.
In addition, complete texts of the charters for the Nominating and
Governance Committee, the Management Organization and Compensation Committee
and the Audit Committee, as well as copies of the Corporate Governance
Guidelines, have been posted on the Company's website at www.craneco.com.
7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation for each of the last three
completed fiscal years paid to the Company's Chief Executive Officer, and each
of the four most highly paid executive officers other than the Chief Executive
Officer who were serving as executive officers at December 31, 2002.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------------- --------------------------------------------------
OTHER RESTRICTED SECURITIES ALL(4)
ANNUAL STOCK UNDERLYING LTIP (3) OTHER
COMPENSATION AWARD(2) OPTIONS/ PAYOUTS COMPENSATION
NAME YEAR SALARY($) BONUS(1)($) ($) ($) SARS(#) ($) ($)
-------------------- ------ ----------- ------------- -------------- ------------ ------------ ---------- -------------
E. C. Fast 2002 800,000 493,082 39,869 130,204 300,000 -- 7,432
President and 2001 587,500 387,078 35,355 1,752,010 300,000 -- 7,185
Chief Executive 2000 450,000 261,856 19,026 -- 100,000 -- 6,975
Officer (5)
M. L. Raithel 2002 298,700 143,192 19,187 414,841 40,000 181,159 2,131
Vice President 2001 290,000 282,424 29,974 105,250 40,000 -- 2,668
Finance and Chief 2000 228,662 235,552 18,309 266,400 35,000 -- 815
Financial Officer
A. I. duPont 2002 262,600 125,887 16,926 146,605 40,000 339,695 6,524
Vice President, 2001 255,000 202,885 23,914 105,250 40,000 -- 6,200
General Counsel 2000 240,000 172,229 29,319 179,093 40,000 -- 5,820
and Secretary
B. L. Ellis 2002 214,500 102,828 16,147 97,845 40,000 -- 5,768
Vice President, 2001 195,000 169,918 14,756 263,125 20,000 -- 5,489
Chief Information 2000 178,500 125,578 10,539 197,190 20,000 -- 5,547
Officer
T. M. Noonan 2002 190,600 89,857 8,153 98,170 20,000 90,580 5,294
Vice President, 2001 185,000 201,361 8,603 131,563 15,000 -- 5,677
Taxes 2000 179,007 170,072 7,176 132,200 20,000 -- 5,655
----------
(1) Represents the amounts paid to the named executives under the Company's
EVA Incentive Compensation Plan for Executive Officers (see Part B of the
Report on Executive Compensation by the Management Organization &
Compensation Committee on page 11). After giving effect to such payments,
the account balances under such Plan for the named executives were as
follows: E. C. Fast $0; M. L. Raithel $231,242; A. I. duPont $147,216; B.
L. Ellis $100,384; and T. M. Noonan $179,914. Mr. Raithel's account
balance was paid to him in full in connection with his retirement as
Chief Financial Officer on December 31, 2002. The account balances for
the remaining executives were paid in shares of restricted stock of an
equivalent value, which vest one-third on the first, second and third
anniversaries of the date of grant (January 27, 2003).
(2) Amounts shown are the fair market value at date of grant of shares of
restricted stock awarded to the named executive officers with vesting
conditions other than Company performance. These include shares of
restricted stock to provide retirement benefits that would have been
earned by them under the Company's qualified pension plan but for the
application of certain limits imposed by the Internal Revenue Code (see
Part C of the Report on Executive Compensation by the Management
Organization and Compensation Committee on page 12). Such shares will
vest after 10 years of service or upon age 65, or earlier retirement
under the terms of the pension plan. In addition, the amounts shown
include the fair value of shares of time-based restricted stock at date
of grant. Such shares will vest in accordance with various schedules over
a period of five years from the date of grant if the executive continues
in the employ of the Company or upon his earlier death or permanent
disability or upon a change-in-control of the Company. Dividends are paid
on all restricted stock at the same rate as other shares of Common Stock
and are reported in the column "Other Annual Compensation" of the Summary
Compensation Table.
8
(3) Shares of restricted stock issued under the Company's restricted stock
plans that are subject to performance-based conditions on vesting are
classified as long-term incentive awards reportable in the column "LTIP
Payouts" of the Summary Compensation Table upon vesting. The amounts
shown represent the fair market value of an award of restricted stock
granted in 1997 that became 50% vested on April 21, 2002. The remaining
50% of such award was forfeited due to failure of performance conditions.
There were no shares of performance-based restricted stock outstanding at
December 31, 2002.
(4) Amounts included in the Company's matching contribution for eligible
employees for the purchase of Common Stock in the Company's Saving &
Investment Plan (401k) and premiums for life insurance.
(5) The amounts shown for Mr. Fast in 2001 and 2002 include shares of
restricted stock and stock options granted pursuant to an employment
agreement executed in January 2001 which provides for accelerated vesting
if Mr. Fast's employment is terminated by the Company other than for
cause. See Other Agreements and Information on page 16.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options to the
named executive officers of the Company during the fiscal year ended December
31, 2002.
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION GRANT DATE
GRANTED (2) FISCAL YEAR $/SHARE (3) DATE PRESENT VALUE ($)(4)
-------------- -------------- ------------- ------------ ---------------------
E. C. Fast (1) ......... 300,000 25.61% 23.23 1/22/2011 1,922,100
M. L. Raithel .......... 40,000 3.41% 23.23 1/22/2011 256,280
A. I. duPont ........... 40,000 3.41% 23.23 1/22/2011 256,280
B. L. Ellis ............ 40,000 3.41% 23.23 1/22/2011 256,280
T. M. Noonan ........... 20,000 1.71% 23.23 1/22/2011 128,140
----------
(1) The options granted to Mr. Fast were granted pursuant to the employment
agreement executed in January 2001 when Mr. Fast agreed to serve as
President and Chief Executive Officer of the Company upon the retirement
of R. S. Evans in April 2001.
(2) No SARs were granted.
(3) The exercise price of options granted under the Company's stock option
plans were and may not be less than 100% of the fair market value of the
shares on the date of grant. Options granted become exercisable 50% one
year, 75% two years and 100% three years after grant and expire, unless
exercised, 10 years after grant. If employment terminates, the optionee
generally may exercise the option only to the extent it could have been
exercised on the date his employment terminated and must be exercised
within three months thereof. In the event employment terminates by reason
of retirement, permanent disability, death or change in control, options
become fully exercisable. The exercise price may be paid by delivery of
shares owned for more than six months and income tax obligations related
to exercise may be satisfied by surrender of shares received upon
exercise, subject to certain conditions.
(4) The amounts shown were calculated using a Black-Scholes option pricing
model which derives a value of $6.42 per share for each option granted.
The estimated values assume a risk-free rate of return of 4.67% based
upon the 10-year Treasury (adjusted for constant maturities) from the
Federal Reserve Statistical Release H.15(519), stock price volatility of
27.97%, a dividend yield of 1.72% and an option duration of 5.23 years.
The actual value, if any, that an executive may realize will depend upon
the excess of the stock price over the exercise price on the date the
option is exercised, and so the value realized by an executive may be
more or less than the value estimated by the Black-Scholes model.
9
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SHARES AT FISCAL YEAR-END(#)(1) AT FISCAL YEAR-END($)(2)
ACQUIRED ON VALUE ------------------------------- ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------- ------------- ------------ ------------- --------------- ------------- --------------
E. C. Fast ............ 0 0 550,280 475,000 54,918 1,500
M. L. Raithel ......... 0 0 218,377 68,750 286,032 525
A. I. duPont .......... 0 0 249,234 70,000 110,118 600
B. L. Ellis ........... 0 0 74,334 55,000 900 300
T. M. Noonan .......... 0 0 106,801 32,500 36,781 225
----------
(1) No SARs were held at December 31, 2002.
(2) Computed based upon the difference between aggregate fair market value at
December 31, 2002, the last trading day for the year, and aggregate
exercise price.
PERFORMANCE GRAPH
The following performance graph compares the total return to shareholders
of an investment of $100 in each of Crane Co. Common Stock, the S&P 500 Index
and the S&P Industrial Machinery Index, in which the Company is included as one
of nine companies, from December 31, 1997 to December 31, 2002. "Total Return"
means the increase in value of an investment in a security over a given period
assuming reinvestment in that security of all dividends received thereon during
the period.
[GRAPHIC OMITTED]
Crane Co. S&P 500 S&P Industrial Machinery
1997 100.00 100.00 100.00
1998 105.61 128.58 115.90
1999 74.00 155.63 142.48
2000 107.67 141.43 169.61
2001 98.54 124.62 167.06
2002 77.91 97.07 165.62
1998 5.61% 28.58% 15.90%
1999 -29.93% 21.04% 22.93%
2000 45.50% -9.13% 19.04%
2001 -8.48% -11.89% -1.50%
2002 -20.94% -22.10% -0.865%
Peer companies in the S&P Industrial Manufacturing Index are: Danaher
Corporation, Dover Corporation, Eaton Corporation, ITT Industries, Illinois
Tool Works, Ingersoll-Rand Co., Pall Corp. and Parker-Hannifin Corporation.
10
REPORT ON EXECUTIVE COMPENSATION
BY THE MANAGEMENT ORGANIZATION AND COMPENSATION
COMMITTEE OF THE COMPANY
In 2002 the Management Organization and Compensation Committee of the
Board of Directors of the Company (the "Committee") maintained its previously
established three-pronged approach to executive officer and key employee
compensation: competitive base salaries; short and medium-term cash incentive
compensation linked to measurable increases in shareholder value; and long-term
incentive compensation utilizing stock options the value of which is keyed to
increases in shareholder returns (through increases in the price of the
Company's Common Stock) and awards of restricted Common Stock for retention
purposes. The Committee has established targets for ownership of Company Common
Stock to encourage executive officers and key employees to hold a significant
portion of their net worth in the Company's Common Stock so that the future
price of the Company's Common Stock will constitute a key element in their
financial planning and ultimately in their net worth. In addition, the
Committee continued a program using shares of restricted stock to offset
significant limitations in pension benefits imposed upon certain executive
officers and key employees by federal tax policies while concurrently
preserving the incentive linkage between improved share performance and the
recipient's ultimate return.
A. BASE SALARIES. In 2002 the base salaries of the Company's executive
officers and other key managers were reviewed and adjusted where appropriate to
reflect promotions and other changes in duties as well as competitive market
conditions. The Committee believes the Company's base salaries are sufficiently
competitive to attract and retain qualified executive officers and key
managers. Base salaries of executive officers other than the Chief Executive
Officer were increased 3.0% in 2002 except for one executive officer who
received a competitive market increase of 10% and one newly-hired executive
officer who did not receive an increase in 2002.
B. SHORT AND MEDIUM-TERM INCENTIVE COMPENSATION--FOCUSED ON ECONOMIC VALUE
ADDED. The Company's annual incentive compensation program utilizes the
principles of economic value added ("EVA"). EVA is defined as the difference
between the return on total capital invested in the business (net operating
profit after tax, or NOPAT, divided by total capital employed) and the cost of
capital, multiplied by total capital employed. During 2002 the Committee
undertook a review of the Company's EVA Incentive Compensation Plan ("Plan") as
it applied to the Company's executive officers. The purpose of the review was
to address concerns that (i) measurement of EVA under the Plan lacked the
transparency to participants needed for an effective motivating compensation
program, (ii) EVA as determined under the Plan was not fully aligned with
results as reported to shareholders and (iii) projected EVA awards indicated
inadequate pay for performance over the forecast period 2002-2004. The review
encompassed consideration of alternative EVA plan structures that would
mitigate these concerns, as well as analysis of competitive salary and bonus
pay to executive officers at a peer group of comparable industrial companies.
After a series of meetings, the Committee voted to recommend, and the Board of
Directors approved, the following changes to the Plan as applied to executive
officers and other key executives in the corporate office: (i) EVA awards would
be calculated using total capital employed and NOPAT based on amounts as
reported in the Company's published financial statements, except that
provisions relating to the Company's asbestos liabilities would be excluded;
(ii) the component costs of debt and equity would be fixed by the Committee at
the beginning of each year, with the blended cost of capital to vary with the
actual capital structure of the Company throughout the year (for 2002, the cost
of debt was 7.5% and the cost of equity was 11.5%); (iii) the payout structure
would be based on target bonuses (expressed as a percentage of annual salary
for each participant) so that each year the annual EVA award is paid out up to
the target bonus, plus one-third of the bank balance from prior years, after
crediting any excess from the current year EVA award, with the remaining bank
balance carried for future years; and (iv) for the transition year 2002 with
respect to the corporate EVA pool, the target bonuses would be reduced to
reflect the decline in 2002 operating profit from operating profit in 2001, and
any remaining bank balances from the former EVA plan would be paid out in
shares of restricted stock vesting one-third per year for three years.
11
The Committee believes that, compared to such common performance measures
as return on capital, return on equity, growth in earnings per share and growth
in cash flow, EVA has the highest correlation with the creation of value for
shareholders over the long term. The program does not involve the meeting of
pre-established goals, as such. Rather, the EVA during the year, in aggregate
as well as the increase or decrease compared to the prior year, is the sole
basis for any incentive compensation award, thereby motivating executives to
focus on continuous value improvement. Awards are generally uncapped to provide
maximum incentive to create value and, because awards may be positive or
negative, executives can incur penalties when value is reduced.
The key elements of the EVA formula are the cost of capital, the return on
capital, the amount of capital employed in the Company, the net operating
profit of the Company after tax and the prior year's EVA. Thus, the EVA formula
requires the executive to focus on improvement in the Company's balance sheet
as well as the income statement. Awards are calculated on the basis of year end
results, and award formulas utilize both a percentage of the change in EVA from
the prior year, whether positive or negative, and a percentage of the positive
EVA, if any, in the current year. EVA awards are calculated for the Company as
a whole for the corporate executives.
If the EVA award for a particular year is positive, it is paid out to the
participating executive up to the predetermined target (percentage of salary),
and any excess is credited to the executive's "bank account." If the EVA award
is negative, an executive may still receive a cash payment from his or her bank
account up to the target bonus, before the negative EVA award is applied to the
bank account. If the executive's bank account is a positive number, one-third
of the account balance is also paid to the executive in cash, and the remainder
of the account balance represents that individual's "equity" in the account for
future years. If the account balance is negative, the executive will receive no
incentive compensation payment the following year unless the EVA award is
positive. Each year, the Company adds interest to a positive balance at six
percent. The account is subject to forfeiture in the event an executive leaves
the Company by reason of termination or resignation, but is paid in full if the
executive dies, becomes disabled or retires at age 65 (or earlier at the
discretion of the Committee) or upon a change-in-control of the Company. The
bank account concept with the three year payout at risk gives the incentive
compensation program a longer term perspective and provides participants with
ownership incentives as the account balances build or decline. Although the
program is formula driven, the Committee retains discretion to review and
adjust its impact on individuals for reasonableness and to preserve its
incentivizing objectives, provided that the EVA award percentages of the
individuals named in the Summary Compensation Table are capped by the Committee
at the beginning of the year.
C. LONG-TERM INCENTIVE COMPENSATION--FOCUSED ON SHAREHOLDER RETURN. The
Company has used its stock option plan and restricted stock plan (now combined
in the 2001 Stock Incentive Plan) as the foundation for a long-term stock-based
incentive compensation program focused on shareholder return. The Committee
believes that executive officers approach their responsibilities more and more
like owners of the Company as their holdings of and potential to own Company
Common Stock increase. This philosophy starts with the Board of Directors,
whose non-employee members receive 50% of their annual retainer in Company
Common Stock. As of February 28, 2003, 6.3% of the Company's Common Stock is
beneficially owned by directors and executive officers. (See Beneficial
Ownership of Common Stock by Directors and Management, page 6.) The Committee
has established targets for ownership of Company Common Stock by executive
officers and key employees (expressed as a multiple of their base salary,
ranging from a multiple of one for salaries up to $125,000 to a multiple of
five for salaries above $500,000).
(i) Stock Options. The Stock Incentive Plan is administered by the
Committee, which is authorized to grant options to key employees of the Company
or any majority-owned subsidiary of the Company. Options granted become
exercisable 50% one year after the grant date, 75% two years after the grant
date and 100% three years after the grant date and the option price must not be
less than 100% of the average fair market value on the date of grant. Options
expire, unless exercised, 10 years after grant. Because the Company's Stock
Incentive Plan requires that options be granted at no less than fair market
value, a gain can only result if the Company's share price increases from
12
the date of grant. This incentive program is, therefore, directly tied to
increases in shareholder value. In 2002, the Committee granted 1,171,500 stock
options to the officers and key employees of the Company.
(ii) Restricted Stock. Under the Stock Incentive Plan, the Committee may
also award restricted shares of the Company's Common Stock to selected officers
and key employees. The Committee has the authority to select participants and
to determine the amount and timing of awards, restriction periods, market value
thresholds and any terms and conditions applicable to grants. From 1990 to
1997, the Committee generally established performance goals for the lapse of
restrictions on stock awarded involving the achievement over 21/2 and 5 year
intervals of returns for the Company's shareholders (Common Stock price
appreciation plus dividends) equal to or better than certain performance
benchmarks, e.g. 125% of the shareholder return of the S&P 500, 150% of such
return or 17.5% compounded annually. Each such award has also required that the
price of the Company's Common Stock must be higher than the price on the date
of grant, or the restrictions will not lapse. If the conditions are not met,
such restricted stock awards are forfeited after five years, subject to the
discretion of the Committee to adjust the terms of such awards. The last of
such awards, granted in 1997, vested 50% in 2002 and an aggregate of 84,434
shares were delivered to participating executives free of restrictions.
Beginning in 1998, the Committee determined to award restricted stock only with
time-vesting criteria to selected employees for long-term retention purposes. A
total of 63,000 shares of restricted stock were awarded to officers and other
key employees of the Company on this basis in 2002, which generally vest as to
25 percent of the award on the second, third, fourth and fifth anniversaries of
the date of grant, or upon the participant's earlier death, permanent
disability, normal retirement at age 65 or upon a change-in-control of the
Company. In addition, a total of 35,636 shares of restricted stock, vesting
one-third each year for three years, were granted on January 27, 2003 in
respect of residual bank account balances in connection with the modification
of the EVA Plan described above.
Since 1995, the Committee has administered a program using grants of
restricted stock to make up the shortfall in executive officer and key employee
pension benefits imposed by certain federal tax policies which limit the amount
of compensation that can be considered for determining benefits under
tax-qualified plans. Under this program, the Committee will grant to certain
executive officers and key employees who have been impacted by such tax
limitations amounts of restricted stock to make up that portion of the
Company's retirement benefit at normal retirement (age 65), lost by reason of
the tax limitations. The Committee is of the view that the grants provide the
potential to offset the tax limitations on the executive's future pension
benefits, but require the recipient to look to future increases in shareholder
value through stock appreciation if that objective is to be actually achieved.
A total of 46,809 shares of restricted stock were granted under this program in
2002.
D. COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER. E. C. Fast has an
employment agreement, entered into in 2001 when he succeeded R. S. Evans as
Chief Executive Officer. The employment agreement with Mr. Fast, the principal
terms of which are set forth below under the caption "Other Agreements and
Information," is in keeping with the Committee's view that Chief Executive
Officer compensation should include a competitive base salary while emphasizing
incentives closely linked to shareholder return, such as the Company's EVA Plan
and significant grants of stock options, with a substantial award of time-based
restricted stock for retention purposes. After considering competitive salary
data for comparable industrial companies, the Committee recommended that Mr.
Fast's annual salary be increased from $650,000 to $800,000, and the Board of
Directors approved this increase. Mr. Fast's 2002 incentive compensation award
of a negative $672,082 under the EVA Incentive Compensation Plan was calculated
on the basis of a pre-established percentage of the aggregate EVA for the
Company; he received a payment of $493,082 for 2002, after giving effect to the
modification and transition provisions for the EVA Plan described above. In
addition, in 2002 the Committee granted to Mr. Fast options to purchase 300,000
shares of Common Stock (pursuant to the terms of his employment agreement) at
an exercise price of $23.23 per share, and 5,605 shares of retirement-based
restricted stock under the program described above.
13
E. OMNIBUS BUDGET REVENUE RECONCILIATION ACT OF 1993. In 1993, Congress
adopted the Omnibus Budget Revenue Reconciliation Act of 1993, certain
provisions of which (Section 162(m) of the Internal Revenue Code) for tax years
beginning after December 31, 1993 limit to $1 million per employee the
deductibility of compensation paid to the executive officers required to be
listed in the Company's proxy statement unless the compensation meets certain
specific requirements. The EVA Incentive Compensation Plan is intended to
constitute a performance-based plan meeting the criteria for continued
deductibility set out in the applicable regulations. In addition, the Company
believes that all stock options and performance-based restricted stock granted
to date under the Company's stock incentive plans will meet the requirements of
Section 162(m) for deductibility. The shares of time-based restricted stock
granted to offset the impact of the tax limitations on pension benefits, as
well as the other time-based restricted stock awarded in 2002 as described in
paragraph C above, would not satisfy the performance-based criteria of Section
162(m), and accordingly compensation expense in respect of income recognized by
the executive officer upon lapse of the restrictions would not be deductible to
the extent that such income, together with all other compensation in such year
that did not satisfy the criteria of Section 162(m), exceeded $1 million. As a
matter of policy, the Committee intends to develop and administer compensation
programs which will maintain deductibility under Section 162(m) for all
executive compensation, except in the limited circumstance when the materiality
of the deduction is in the judgment of the Committee significantly outweighed
by the incentive value of the compensation.
Submitted by:
The Management Organization and Compensation
Committee of the Board of Directors of Crane Co.
E.T. Bigelow, Jr.
D.R. Gardner
D.C. Minton
J.L.L. Tullis
14
RETIREMENT BENEFITS
All officers of the Company, including the individuals identified in the
Summary Compensation Table, are participants in the Company's pension plan for
non-bargaining employees. Directors who are not employees do not participate in
the plan. Eligibility for retirement benefits is subject to certain vesting
requirements, which include completion of five years of service where
employment is terminated prior to normal or other retirement or death, as
determined by applicable law and the plan. Benefit accruals continue for years
of service after age 65.
The annual pension benefits payable under the pension plan are equal to
12/3% per year of service of the participant's average annual compensation
during the five highest compensated consecutive years of the 10 years of
service immediately preceding retirement less 12/3% per year of service of the
participant's Social Security benefit, up to a maximum deduction of 50% of the
Social Security benefit. Compensation for purposes of the pension plan is
defined as total W-2 compensation plus employee contributions made under salary
reduction plans less (i) the imputed income value of group life insurance and
auto allowance, (ii) income derived from participation in the Company's
restricted stock plans and (iii) on or after January 1, 1993, income derived
from the Company's stock option plans and a former stock appreciation rights
plan. In general, such covered compensation for any year would be equivalent to
the sum of the salary set forth in the Summary Compensation Table for such
years plus the bonus shown in the Table for the immediately preceding year.
The table below sets forth the estimated annual benefit payable on
retirement at normal retirement age (age 65) under the Company's pension plan.
Benefits are based on accruals through December 31, 2002 for specified salary
and years of service classifications, and assume benefits to be paid in the
form of a single life annuity. The amounts have not been reduced by the Social
Security offset referred to above.
PENSION PLAN TABLE
AVERAGE YEARS OF SERVICE
ANNUAL -------------------------------------------------------------------
COMPENSATION* 10 20 25 30 35
------------------ ---------- ---------- ---------- ---------- ---------------
$150,000 ......... $25,005 $50,010 $62,513 $75,015 $ 87,518
$175,000 ......... 29,173 58,345 72,931 87,518 102,104
$200,000 ......... 33,340 66,680 83,350 100,020 116,690
$225,000 ......... 37,508 75,015 93,769 112,523 131,276
$235,000 ......... 39,175 78,349 97,936 117,524 137,111
$250,000 ......... 41,675 83,350 104,188 125,025 145,863**
----------
* Between January 1, 1989 and December 31, 1993, for the purpose of
determining benefit accruals and benefit limitations under the pension
plan for all plan years beginning in 1989, a participant's compensation
is deemed to be limited to $200,000 indexed for inflation ($235,840 for
1993) ("Limitation"). As a result of the Limitation, the covered
compensation under the Company's pension plan for Mr. Raithel (who
retired December 31, 2002 with 32 years of service credit) was limited to
$200,584 in 1993. Messrs. duPont and Noonan were not employed by the
Company in 1993; they joined the Company in 1996 and each now has seven
years of service credit under the Company's pension plan. Mr. Ellis
joined the Company in 1997 and has five years of service credit under the
company's pension plan. Mr. Fast joined the Company in 1999 and has three
years of service credit under the Company's pension plan. Commencing
January 1, 1994, the compensation limit was further reduced to $150,000
indexed for inflation in future years ("OBRA '93 Limitation"). As a
result of the OBRA '93 Limitation, the covered compensation under the
Company's pension plan for the foregoing individuals for the years 1994
through 1996 was limited to $150,000, was increased to $160,000 for 1997,
1998 and 1999, and was increased to $170,000 for 2000 and 2001 and
$200,000 for 2002.
** The actual retirement benefit at normal retirement date payable pursuant
to Section 235(a) of the Tax Equity and Fiscal Responsibility Act of 1982
(and subsequent to 1986 at the age at which unreduced Social Security
benefits may commence pursuant to the Tax Reform Act of 1986) may not
exceed the lesser of $160,000 or 100% of the officer's average
compensation during his highest three consecutive calendar years of
earnings (the "Tax Act Limitation"). The Tax Act Limitation may be
adjusted annually for changes in the cost of living. The dollar limit is
subject to further reduction to the extent that a participant has fewer
than 10 years of service with the Company or 10 years of participation in
the defined benefit plan.
15
OTHER AGREEMENTS AND INFORMATION
The Company has entered into indemnification agreements with E. C. Fast,
each other director of the Company, Messrs. duPont, Ellis and Noonan and the
four other executive officers of the Company, the form of which was approved by
the shareholders of the Company at the 1987 Annual Meeting. The Indemnification
Agreements require the Company to indemnify the officers or directors to the
full extent permitted by law against any and all expenses (including advances
thereof), judgments, fines, penalties and amounts paid in settlement incurred
in connection with any claim against such person arising out of the fact that
he was a director, officer, employee, trustee, agent or fiduciary of the
Company or was serving as such for another entity at the request of the
Company, and to maintain directors and officers liability insurance coverage or
to the full extent permitted by law to indemnify such person for the lack
thereof.
Each of the individuals named in the Summary Compensation Table (and
certain other executive officers) has an agreement which, in the event of a
change in control of the Company, provides for the continuation of the
employee's then current base salary, bonus plan and benefits for the three year
period following the change in control. Upon termination within three years
after a change in control, by the Company without cause or by the employee with
"Good Reason" (as defined in the agreement), the employee is immediately
entitled to a proportionate amount of the greater of the last year's bonus or
the average bonus paid in the three prior years, three times the sum of his or
her annual salary and the greater of the last year's bonus or the average of
the last three years' bonuses, and all accrued deferred compensation and
vacation pay, and employee benefits, medical coverage and other benefits also
continue for three years after termination. "Good Reason" under the agreements
includes, among other things, any action by the Company which results in a
diminution in the position, authority, duties or responsibilities of the
employee. The agreements also provide that the employee may terminate his or
her employment for any reason during the 30 day period immediately following
the first year after the change of control, which shall be deemed "Good Reason"
under the agreement. If it is determined that any economic benefit or payment
or distribution by the Company to the individual, pursuant to the agreement or
otherwise (including, but not limited to, any economic benefit received by the
employee by reason of the acceleration of rights under the various options and
restricted stock plans of the Company) ("Payment"), is subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code, the agreements
provide that the Company shall make additional cash payments to the employee
such that after payment of all taxes including any excise tax imposed on such
payments, the employee will retain an amount equal to the excise tax on all the
Payments. The agreements are for a three-year period, but are automatically
renewed annually for a three-year period unless the Company gives notice that
the period shall not be extended.
On January 22, 2001 the Company entered into an Employment Agreement with
Mr. Fast pursuant to which Mr. Fast agreed to serve as President and Chief
Executive Officer of the Company commencing upon the retirement of Mr. Evans as
Chief Executive Officer of the Company on the date of the 2001 Annual Meeting,
April 23, 2001. The Employment Agreement is for a term of two years, renewable
each year for one additional year unless either party gives written notice to
the other, and provides for the following compensation: (i) an annual salary of
no less than $650,000; (ii) participation in the EVA Incentive Compensation
Plan; (iii) the grant on the date of the Crane Co. Board meeting in April 2001
of non-qualified stock options to purchase 200,000 shares of Common Stock, and
the grant on the date of the Crane Co. Board meeting in January 2002 of
non-qualified stock options to purchase 300,000 shares of Common Stock, in each
case with an exercise price equal to the fair market value of a share of Common
Stock on the date of grant, with a term of 10 years and vesting 50% after one
year, 75% after two years and 100% after three years from the date of grant;
and (iv) the grant on the date of the Crane Co. Board Meeting in April 2001 of
65,000 restricted shares of Common Stock vesting 25% on each of the second,
third, fourth and fifth anniversaries of the date of grant. The Employment
Agreement also contains certain covenants of Mr. Fast concerning
confidentiality, non-competition and non-solicitation of employees after
termination of employment. If the Company terminates Mr. Fast's employment
other than for cause, Mr. Fast would be entitled to receive a lump sum cash
payment equal to two times his annual
16
base salary plus the higher of his current EVA bank account or two times his
highest EVA bonus payment in the preceding five years, all stock options would
become fully vested and exercisable and all restricted stock would become fully
vested and nonforfeitable.
Also on January 22, 2001 the Board of Directors approved certain
arrangements for the benefit of Mr. Evans upon his resignation as Chief
Executive Officer of the Company. Under these arrangements, which became
effective on the date of the 2001 Annual Meeting, Mr. Evans continues to serve
as non-executive Chairman of the Board and devotes approximately 50 days per
year to the business of the Company, and he receives the following
compensation: (i) an annual salary of no less than $400,000; (ii) payment of
his current EVA bank account balance (distributed in January 2002), with the
right to participate in the EVA Incentive Compensation Plan for the period from
January 1, 2001 until the date of his retirement; (iii) full vesting of all
outstanding stock options held by Mr. Evans; (iv) all retirement-based
restricted stock would become fully vested and nonforefeitable; and (v) the
grant of non-qualified stock options to purchase 250,000 shares of Common Stock
at an exercise price equal to the fair market value of a share of Common Stock
at an exercise price equal to the fair market value of a share of Common Stock
on the date of grant with a term of 10 years and vesting 50% after one year 75%
after two years and 100% after three years from the date of grant. In addition,
the Company provides Mr. Evans with an office at the Company's headquarters and
the use of the Company's airplane for business and personal use subject to the
approval of the Company's Chief Executive Officer. Mr. Evans reimburses the
Company for any personal use of the aircraft at rates published under IRS
regulations. The foregoing arrangements are set forth in an agreement with a
term of three years, renewable each year for an additional year, and if the
Company terminated Mr. Evan's employment other than for cause, or if Mr. Evans
terminated his employment for Good Reason (as defined in the Agreement) or for
any reason after a change-in-control, Mr. Evans would be entitled to receive a
lump sum cash payment equal to the full amount of his base salary through the
end of the term of the agreement.
In connection with M. L. Raithel's retirement as Vice President-Finance
and Chief Financial Officer of the Company on December 31, 2002 at age 55 after
32 years of service to the Company, the Management Organization and
Compensation Committee approved the following: (i) full payment in cash of Mr.
Raithel's bank account under the EVA Incentive Compensation Plan, which was
$231,242 after giving effect to the negative EVA award for 2002 and the bonus
for 2002 set forth in the Summary Compensation Table on page 8; and (ii) full
vesting of 36,796 shares of retirement-based restricted stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
For the fiscal year ended December 31, 2002 each director and executive
officer of the Company timely filed all required reports under Section 16(a) of
the Securities Exchange Act of 1934.
OTHER TRANSACTIONS AND RELATIONSHIPS
The law firm of Kirkpatrick & Lockhart LLP, of which Mr. Queenan is senior
counsel, furnished legal services to the Company in 2002.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Management Organization and Compensation Committee is or
has ever been an employee of the Company and no executive officer of the
Company has served as a director or member of a compensation committee of
another company of which any member of the Committee is an executive officer.
17
PRINCIPAL ACCOUNTING FIRM FEES
Set forth below is a summary of the fees paid for the year ended December
31, 2002 to the Company's principal accounting firm, Deloitte & Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates:
Audit fees .............................................. $1,428,958(1)
Fees relating to financial information systems design and
implementation ......................................... $ 0
All other fees .......................................... $2,331,364(2)
----------
(1) Includes statutory audit fees related to the Company's wholly owned
foreign subsidiaries.
(2) Includes fees for audit related services (consisting principally of
audits of employee benefit plans, due diligence assistance pertaining to
acquisitions and consultation on accounting standards) of $170,000, tax
consulting and other tax related services of $1,803,976 and other
non-audit services of $357,388.
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of Directors,
the Audit Committee (the "Committee") assists the Board of Directors in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and financial reporting practices of the Company. All of
the members of the Committee qualify as "independent" under the provisions of
Section 301 of the Sarbanes-Oxley Act of 2002, the rules of the Securities and
Exchange Commission thereunder and the listing standards of the New York Stock
Exchange.
In discharging its oversight responsibility as to the audit process, the
Committee obtained from the independent auditors a formal written statement
confirming the absence of any relationships between the auditors and the
Company that might bear on the auditors' independence consistent with
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees." The Committee discussed with the auditors any activities
that may impact their objectivity and independence, including fees for
non-audit services, and satisfied itself as to the auditors' independence. The
Committee received a report on the quality control procedures of the
independent auditors as well as the most recent peer review conducted under
guidelines of the American Institute of Certified Public Accountants. The
Committee also discussed with management, the internal auditors and the
independent auditors the quality and adequacy of the Company's internal
controls and the internal audit function's organization, responsibilities,
budget and staffing. The Committee reviewed with the independent auditors and
the internal auditors their audit plan and audit scope.
The Committee discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, both with and without members of
management present, discussed and reviewed the independent auditors'
examination of the financial statements. The Committee also discussed the
results of the internal audit examinations.
The Committee reviewed the audited financial statements of the Company as
of and for the year ended December 31, 2002, with management and the
independent auditors. Management is responsible for the preparation,
presentation and integrity of the Company's financial statements, the Company's
internal controls and financial reporting process and the procedures designed
to assure compliance with accounting standards and applicable laws and
regulations. The Company's independent auditors are responsible for performing
an independent audit of the Company's financial statements and expressing an
opinion as to their conformity with generally accepted accounting principles.
Based on the above-mentioned review and discussions with the independent
auditors, the Committee recommended to the Board of Directors that the
Company's audited financial statements be included in its Annual Report on Form
10-K for the year ended December 31, 2002, for filing with the Securities and
Exchange Commission.
18
The members of the Committee are not professionally engaged in the
practice of auditing or accounting and are not, and do not represent themselves
to be, performing the functions of auditors or accountants. Members of the
Committee may rely without independent verification on the information provided
to them and on the representations made by management and the independent
auditors. Accordingly the Committee's oversight does not provide an independent
basis to determine that management has maintained appropriate accounting and
financial reporting principles or appropriate internal control and procedures
designed to assure compliance with accounting standards and applicable laws and
regulations. Furthermore, the Committee's considerations and discussions
referred to above do not assure that the audit of the Company's financial
statements has been carried out in accordance with generally accepted auditing
standards, that the financial statements are presented in accordance with
generally accepted accounting principles or that the Company's auditors are in
fact "independent".
The Committee approved a policy regarding services by the Company's
independent auditors, effective January 1, 2003. Under this policy, the
independent auditors are prohibited from performing certain services in
accordance with Section 202 of the Sarbanes-Oxley Act of 2002. With respect to
non-prohibited services to be provided by the independent auditors, the policy
requires that a budget for such services be prepared by management and approved
by the Committee at the beginning of each fiscal year, and any expenditure
outside of the budget or within the approved budget but in excess of $100,000
must also be approved by the Committee in advance. Pursuant to this policy, the
Committee reviewed and approved the budget for the audit and other services to
be provided by Deloitte & Touche LLP in 2003. The Committee also recommended
the reappointment, subject to shareholder approval, of Deloitte & Touche LLP to
serve as independent auditors and the Board of Directors concurred in such
recommendation.
Submitted by:
The Audit Committee of the
Board of Directors of Crane Co.
R.S. Forte
D.R. Gardner
J. Gaulin
C.J. Queenan, Jr.
APPROVAL OF THE SELECTION OF AUDITORS
The Board of Directors proposes and recommends that the shareholders
approve the selection of the firm of Deloitte & Touche LLP as independent
auditors for the Company for 2003. Deloitte & Touche LLP have been the
independent auditors for the Company since 1979. Unless otherwise directed by
the shareholders, proxies will be voted for approval of the selection of
Deloitte & Touche LLP to audit the books and accounts of the Company for the
current year. In accordance with the Company's practice, a member of Deloitte &
Touche LLP will attend the Annual Meeting and will have an opportunity to make
a statement if he desires to do so and to respond to appropriate questions
which may be asked by shareholders.
19
SHAREHOLDER PROPOSAL REGARDING IMPLEMENTATION OF THE
MACBRIDE PRINCIPLES
The following proposal was submitted to the Company by New York City
Comptroller William C. Thompson, Jr. on behalf of the New York City Employees'
Retirement System and the New York City Teachers' Retirement System, which held
92,626 and 64,225 shares of the Company's common stock as of October 31, 2002,
respectively. Mr. Thompson's address is 1 Centre Street, New York, New York
10007-2341.
"WHEREAS, Crane Company has a subsidiary in Northern Ireland;
WHEREAS, the securing of a lasting peace in Northern Ireland encourages us
to promote means for establishing justice and equality;
WHEREAS, employment discrimination in Northern Ireland has been cited by
the International Commission of Jurists as one of the major causes of sectarian
strife;
WHEREAS, Dr. Sean MacBride, founder of Amnesty International and Nobel
Peace laureate, has proposed several equal opportunity employment principles to
serve as guidelines for corporations in Northern Ireland. These include:
1. Increasing the representation of individuals from underrepresented
religious groups in the workforce, including managerial, supervisory,
administrative, clerical and technical jobs.
2. Adequate security for the protection of minority employees both at the
workplace and while traveling to and from work.
3. The banning of provocative religious or political emblems from the
workplace.
4. All job openings should be publicly advertised and special recruitment
efforts should be made to attract applicants from underrepresented
religious groups.
5. Layoff, recall, and termination procedures should not, in practice,
favor particular religious groupings.
6. The abolition of job reservations, apprenticeship restrictions, and
differential employment criteria, which discriminate on the basis of
religion or ethnic origin.
7. The development of training programs that will prepare substantial
numbers of current minority employees for skilled jobs, including the
expansion of existing programs and the creation of new programs to
train, upgrade, and improve the skills of minority employees.
8. The establishment of procedures to assess, identify and actively
recruit minority employees with potential for further advancement.
9. The appointment of a senior management staff member to oversee the
company's affirmative action efforts and the setting up of timetables
to carry out affirmative action principles.
RESOLVED: Shareholders request the Board of Directors to:
1. Make all possible lawful efforts to implement and/or increase activity
on each of the nine MacBride Principles."
SUPPORTING STATEMENT OF NEW YORK CITY COMPTROLLER
We believe that our company benefits by hiring from the widest available
talent pool. An employee's ability to do the job should be the primary
consideration in hiring and promotion decisions.
Implementation of the MacBride Principles by Crane Company will
demonstrate its concern for human rights and equality of opportunity in its
international operations.
Please vote your proxy FOR these concerns.
20
OPPOSITION STATEMENT OF THE BOARD OF DIRECTORS OF THE COMPANY
The Board of Directors believes that the Company benefits by hiring from
the widest available talent pool and that an employee's ability to do the job
should be the primary consideration in hiring and promotion decisions, which is
why the Company has a long-standing policy of providing equal opportunity
employment without regard to race, color, religion, sex, national origin,
citizenship status, age, disability or marital status. The Company has one
subsidiary located in Northern Ireland, Crane Stockham Valve Limited ("CSVL"),
and CSVL is subject to the same policy.
CSVL is subject to the Northern Ireland Fair Employment Act 1989, as
amended and updated by the Fair Employment and Treatment (Northern Ireland)
Order 1998 (the "Fair Employment Act"), and the Code of Practice for the
Promotion of Equality of Opportunity promulgated under the Fair Employment Act.
The Fair Employment Act makes religious discrimination and preferential
treatment in employment illegal, and requires CSVL to monitor its work force,
submit annual returns and regularly review its employment procedures. The Fair
Employment Act allows the Equality Commission for Northern Ireland (formerly
the Fair Employment Commission) to oversee such regular reviews and provides
for the imposition of penalties against employers who are found to have
discriminated on the grounds of religious or political beliefs.
As an employer with more than 10 employees in Northern Ireland, CSVL is
registered under the Fair Employment Act, and thus works with the Equality
Commission to further ensure that its employment procedures are not
discriminatory. In addition, CSVL entered into a voluntary agreement with the
Commission in October 1996 pursuant to which CSVL undertook a program of
affirmative action regarding communication of equal opportunity policies and
procedures, continuing to provide a working environment without intimidation or
harassment, annual auditing of its employment practices and procedures and
outreach measures to encourage applications from the Roman Catholic community.
In effect, the Company's policies and applicable laws endorse the same
belief in equality of opportunity that is embodied in the MacBride Principles.
However, the Board of Directors does not believe that it is advisable for the
Company to endorse or subscribe to the MacBride Principles as set forth in the
proposed resolution. By adopting the MacBride Principles, CSVL would become
unnecessarily accountable to two sets of similar but not identical fair
employment guidelines, which would unnecessarily burden CSVL and its management
in the conduct of CSVL's business. In addition, the Board of Directors is
concerned that implementation of a duplicate set of principles could lead to
confusion, conflicts and, potentially, unfairness in the workplace. For the
foregoing reasons, the Board of Directors believes that adoption of the
MacBride Principles is not in the best interests of the Company or its
shareholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote AGAINST the
Shareholder Proposal Regarding Implementation of the MacBride Principles.
21
MISCELLANEOUS
Solicitation of Proxies. The Company will bear all of the costs of the
solicitation of proxies for use at the Annual Meeting. In addition to the use
of the mails, proxies may be solicited by personal interview, telephone and fax
by directors, officers and employees of the Company, who will undertake such
activities without additional compensation. To aid in the solicitation of
proxies, the Company has retained Georgeson Shareholder which will receive a
fee for its services of $5,500 plus out-of-pocket expenses. Banks, brokerage
houses and other institutions, nominees and fiduciaries will be requested to
forward the proxy materials to the beneficial owners of the Common Stock held
of record by such persons and entities and will be reimbursed for their
reasonable expenses in forwarding such material.
Incorporation by Reference. The Report on Executive Compensation on pages
11-14, the Audit Committee Report on page 18 and the Performance Graph on page
10 of this Proxy Statement shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934
except to the extent that the Company specifically incorporates either of said
reports or said graph by reference and neither of the reports nor the graph
shall otherwise be deemed filed under such Acts.
Next Annual Meeting; Shareholder Proposals. The By-Laws provide that the
Annual Meeting of Shareholders of the Company will be held on the second Monday
in May in each year unless otherwise determined by the Board of Directors.
Appropriate proposals of security holders intended to be presented at the 2004
Annual Meeting must be received by the Company for inclusion in the Company's
proxy statement and form of proxy relating to that meeting on or before
November 7, 2003. In addition, under the Company's By-Laws, if security holders
intend to nominate directors or present proposals at the 2004 Annual Meeting
other than through inclusion of such proposals in the Company's proxy materials
for that meeting, then the Company must receive notice of such nominations or
proposals no earlier than December 31, 2003 and no later than January 30, 2004.
If the Company does not receive notice by that date, then such proposals may
not be presented at the 2004 Annual Meeting.
Shareholders who do not expect to attend in person are urged to sign, date
and return the enclosed proxy in the envelope provided, or to use the Internet
address or the toll-free telephone number on the enclosed proxy card. In order
to avoid unnecessary expense, we ask your cooperation in voting your proxy
promptly, no matter how large or how small your holdings may be.
By Order of the Board of Directors,
AUGUSTUS I. DUPONT
Secretary
March 7, 2003
22
CRANE CO.
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8048
EDISON, NJ 08818-8048
[CRANE LOGO(R)]
VOTER CONTROL NUMBER
[ ]
YOUR VOTE IS IMPORTANT. PLEASE VOTE IMMEDIATELY.
VOTE-BY-INTERNET [ICON OMITTED]
1. LOG ON TO THE INTERNET AND GO TO http://www.eproxyvote.com/cr.
2. ENTER YOUR VOTER CONTROL NUMBER LISTED ABOVE AND FOLLOW THE EASY STEPS
OUTLINED ON THE SECURED WEBSITE.
OR
VOTE-BY-TELEPHONE [ICON OMITTED]
1. CALL TOLL-FREE 1-877-PRX-VOTE (1-877-779-8683)
2. ENTER YOUR VOTER CONTROL NUMBER LISTED ABOVE AND FOLLOW THE EASY RECORDED
INSTRUCTIONS.
IF YOU VOTE OVER THE INTERNET OR BY TELEPHONE, PLEASE DO NOT MAIL YOUR CARD.
[309 - CRANE CO.] [FILE NAME: ZCRN11.ELX]
[LOGO - ZCRANE] [VERSION - (3)] [2/27/03] [ORIG. 02/12/03]
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
ZCRN11
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF DIRECTORS, FOR
PROPOSAL 2 AND AGAINST PROPOSAL 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES,
FOR PROPOSAL 2 AND AGAINST PROPOSAL 3.
1. Election of Directors.
NOMINEES: (01) R.S. Evans, (02) E.C. Fast,
(03) D.R. Gardner, (04) D.C. Minton
FOR WITHHELD
[ ] [ ]
[ ]
--------------------------------------
For all nominees except as noted above
Signature: Date:
---------------------------------------- --------------------
FOR AGAINST ABSTAIN
2. Approval of Deloitte & Touche LLP as [ ] [ ] [ ]
independent auditors for the Company
for 2003.
3. Shareholder proposal regarding [ ] [ ] [ ]
MacBride Principles.
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, administrator, trustee or guardian, please give full
title as such.
Signature: Date:
---------------------------------------- --------------------
[CRANE LOGO(R)]
INVESTOR INFORMATION
Visit our web site at www.craneco.com where you will fund detailed information
about the Company, its component businesses and its stock performance. All of
this information, including annual reports, SEC filings, earnings, news and
dividend releases, can be bookmarked, printed or downloaded from this site.
You can automatically receive e-mail notification of Crane Co. news, the
Company's SEC filings, and Crane's daily closing stock price by clicking "Email
Alert Signup" at www.craneco.com. Once your name has been added to our
distribution list, the Company will automatically e-mail you news and
information as it is released.
You may also listen to all earnings releases, dividend releases, corporate news
and other important announcements 24 hours a day, seven days a week, on demand
by dialing our Crane Co. Shareholder Direct Information Line toll-free at
1-888-CRANE-CR (1-888-272-6327).
ELECTRONIC DELIVERY OF ANNUAL REPORT AND PROXY MATERIALS
Most shareholders can elect to view future proxy statements and annual reports
over the Internet instead of receiving paper copies in the mail. If you are a
registered shareholder and wish to consent to electronic delivery of future
annual reports and proxy statements, you may register your authorization at
www.econsent.com/cr. You will be required to provide your social security
number, e-mail address and the account number. You can locate your account
number on your stock certificate, dividend check or plan statement.
[309 - CRANE CO.] [FILE NAME: ZCRN12.ELX]
[LOGO - ZCRANE] [VERSION - (5)] [02/28/03] [ORIG. 02/12/03]
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
ZCRN12
PROXY
CRANE CO.
ANNUAL MEETING OF SHAREHOLDERS ON APRIL 28, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby appoint and constitute R.S. Evans, E.C. Fast and
A.I. duPont, and each of them, true and lawful agents and proxies of the
undersigned, with full power of substitution, and hereby authorizes each of them
to vote, as directed on the reverse side of this card, or, if not so directed,
in accordance with the Board of Directors' recommendations, all shares of Crane
Co. held of record by the undersigned at the close of business on February 28,
2003 at the Annual Meeting of Shareholders of Crane Co. to be held in the Elm
Meeting Room of the Westin Stamford Hotel, One First Stamford Place, Stamford,
Connecticut on Monday April 28, 2003 at 10:00 a.m., Eastern Daylight Time, or at
any adjournment thereof with all the powers the undersigned would possess if
then and there personally present, and to vote, in their discretion, upon such
other matters as may come before said meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES (SEE
REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD OR USE THE TOLL-FREE TELEPHONE
NUMBER OR INTERNET WEB SITE ON THE REVERSE SIDE.
PROXY