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SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 sec.240.14a-11(c) or sec.240.14a-12
WESTINGHOUSE AIR BRAKE COMPANY
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------
(5) Total fee paid:
------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------
(3) Filing Party:
--------------------------------------------------
(4) Date Filed:
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[ X ] No fee required
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WESTINGHOUSE AIR BRAKE COMPANY
1001 AIR BRAKE AVENUE
WILMERDING, PENNSYLVANIA 15148
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS--MAY 19, 1999
To The Stockholders:
The Annual Meeting of Stockholders of Westinghouse Air Brake Company (the
"Company") will be held at the Sheraton Hotel at Station Square, Pittsburgh,
Pennsylvania on Wednesday, May 19, 1999 at 2:00 p.m. (local time) for the
purpose of considering and acting upon the following:
(1) The election of three persons to serve as directors;
(2) The ratification of the appointment of Arthur Andersen LLP as
independent public accountants to audit the financial statements of the
Company and its subsidiaries for the 1999 fiscal year; and
(3) Such other business as may properly come before the Annual Meeting or
any adjournment thereof.
The close of business on March 22, 1999 has been fixed by the Board of
Directors as the record date for the determination of stockholders entitled to
receive notice of and to vote at the Annual Meeting, or any adjournments
thereof, and only stockholders of record on such date are entitled to receive
notice of and to vote at said Annual Meeting.
If you hold the Company's Common Stock directly, you will find enclosed a
proxy card which must be completed and returned in order to vote all Common
Stock which you hold. If you hold Common Stock through the Westinghouse Air
Brake Company Employee Stock Ownership Plan and Trust (the "ESOP"), you will
find enclosed a proxy card which must be completed and returned in order to vote
all Common Stock held on your behalf by the ESOP. The Company's 1998 Annual
Report to Stockholders and the Annual Report on Form 10-K for the year ended
December 31, 1998 are also enclosed.
By Order of the Board of Directors,
Robert J. Brooks
Chief Financial Officer
and Secretary
Wilmerding, Pennsylvania
March 31, 1999
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES
MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A
QUORUM MAY BE ASSURED AT THE ANNUAL MEETING. YOU ARE CORDIALLY INVITED TO ATTEND
THE ANNUAL MEETING IN PERSON. THE GIVING OF YOUR PROXY DOES NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE ANNUAL MEETING.
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MARCH 31, 1999
WESTINGHOUSE AIR BRAKE COMPANY
1001 AIR BRAKE AVENUE
WILMERDING, PENNSYLVANIA 15148
PROXY STATEMENT
1999 ANNUAL MEETING OF STOCKHOLDERS
May 19, 1999
GENERAL
This Proxy Statement is furnished to stockholders in connection with the
solicitation by the Board of Directors of Westinghouse Air Brake Company (the
"Company") of proxies in the accompanying form for use at the 1999 Annual
Meeting of Stockholders of the Company (the "Annual Meeting") to be held at the
Sheraton Hotel at Station Square, Pittsburgh, Pennsylvania on Wednesday, May 19,
1999 at 2:00 p.m. (local time) and at any adjournment thereof. If a proxy in the
accompanying form is duly executed and returned to the Company, the shares
represented will be voted at the Annual Meeting and, where a choice is
specified, will be voted in accordance with the specification made. Any
stockholder who gives a proxy has the power to revoke it at any time before it
is exercised by notice to the Secretary. A later-dated proxy will revoke an
earlier proxy, and stockholders who attend the Annual Meeting may, if they wish,
vote in person even though they have submitted a proxy, in which event the proxy
will be deemed to have been revoked.
The persons appointed in the proxy to vote at the Annual Meeting may vote
or act in accordance with their judgment on any matters properly presented for
action at the Annual Meeting.
As of the close of business on March 22, 1999, the Company had issued and
outstanding 33,928,747 shares of Common Stock, par value $.01 per share ("Common
Stock"). Each stockholder is entitled to one vote for each share of Common Stock
held by such stockholder. This proxy statement and the proxy in the accompanying
form are being mailed on or about March 31, 1999 to stockholders of record as of
the close of business on March 22, 1999.
The 1998 Annual Report to Stockholders and the Annual Report on Form 10-K
for the fiscal year ended December 31, 1998, which includes consolidated
financial statements, are enclosed with this Proxy Statement.
VOTING
Stockholders of record as of the close of business on March 22, 1999 (the
"Record Date") have the right to receive notice of and to vote at the Annual
Meeting. A majority of the shares entitled to vote, present in person or by
proxy, shall constitute a quorum. For the election of directors, a plurality of
all shares entitled to vote, whether present in person or by proxy, shall be
sufficient to elect a director. In all other matters other than the election of
directors, the affirmative vote of the majority of shares present in person or
by proxy shall be sufficient to approve such other matters which come before the
meeting unless more than a majority of the votes cast is required by statute or
by the Company's By-Laws.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Under the proxy rules of the Securities and Exchange Commission (the
"Commission"), a person who directly or indirectly has or shares voting power or
investment power with respect to a security is considered a beneficial owner of
the security. Voting power includes the power to vote or direct the voting of
shares, and investment power includes the power to dispose of or direct the
disposition of shares. Shares as to which voting power or investment power may
be acquired within 60 days are also considered as beneficially owned under the
proxy rules.
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MANAGEMENT
The directors, the chief executive officer, four other most highly
compensated executive officers as of December 31, 1998, and all directors and
executive officers of the Company as a group beneficially owned as of the Record
Date the number of shares of Common Stock set forth in the table below. The
information on beneficial ownership in the table and related footnotes is based
upon data furnished to the Company by, or on behalf of, the persons referred to
in the table. Unless otherwise indicated in the footnotes to the table, each
person named has sole voting power and sole dispositive power with respect to
the shares included in the table. Shares which are described as being held in
the Voting Trust (see note 2 under "Other Beneficial Owners", on page 3) have
the voting and dispositive powers described in note 2 to "Other Beneficial
Owners", on page 3.
SHARES OF PERCENT
NAME COMMON STOCK OF CLASS
- ---- ------------ --------
William E. Kassling 3,551,424(1) 10.48
James P. Kelley 2,545,548(2)(3) 7.51
Kim G. Davis 2,406,000(3)(4) 7.10
Emilio A. Fernandez 665,072(5) 1.96
John M. Meister 455,216(6) 1.34
Robert J. Brooks 381,589(7) 1.13
Gregory T.H. Davies 59,192(3) *
James C. Huntington, Jr. 18,000(3) *
James V. Napier 12,500(3)(8) *
All directors and executive officers as a
group (13 persons) 10,405,106(9) 30.70
- ---------------
* Less than 1%
(1) Includes 52,105 shares beneficially owned by William E. Kassling, of which
6,500 shares are deposited in the Voting Trust. Also includes 1,443,336
shares beneficially owned by Davideco, a Pennsylvania business trust, which
are all deposited in the Voting Trust. Also includes 500 shares beneficially
owned by Mr. Kassling's son, beneficial ownership of which shares is
disclaimed, and 3,498,819 shares held of record by the Voting Trust, of
which Mr. Kassling, Robert J. Brooks and Kevin P. Conner, an executive
officer of the Company, are trustees, beneficial ownership of which shares
is disclaimed. See note 2 to "Other Beneficial Owners" below.
(2) Includes 105,548 shares beneficially owned by James P. Kelley. Also includes
40,000 shares beneficially owned by Vestar Capital Partners, Inc., of which
Mr. Kelley is a Managing Director, beneficial ownership of which shares is
disclaimed. Also includes 2,400,000 shares beneficially owned by Vestar
Equity Partners, L.P., beneficial ownership of which shares is disclaimed.
Vestar Associates, L.P. is the sole general partner of Vestar Equity
Partners, L.P., and Vestar Associates Corporation is the sole general
partner of Vestar Associates, L.P. Mr. Kelley is Managing Director of Vestar
Associates Corporation.
(3) Includes options that are exercisable within 60 days of the Record Date.
(4) Includes 2,400,000 shares beneficially owned by Charlesbank Capital
Partners, LLC, formerly known as Harvard Private Capital Holdings, Inc., of
which Kim G. Davis is a Managing Director, beneficial ownership of which
shares is disclaimed.
(5) Includes 395,476 shares beneficially owned by Emilio A. Fernandez. Also
includes 257,175 shares beneficially owned by Mr. Fernandez's wife and
12,421 shares beneficially owned by his son, beneficial ownership of which
shares is disclaimed.
(6) Includes 255,216 shares beneficially owned by John M. Meister, of which
250,000 shares are deposited in the Voting Trust. Also includes 200,000
shares held in trust for Mr. Meister's children, beneficial ownership of
which shares is disclaimed. Mr. Meister is trustee of such trust.
(7) Includes 21,589 shares beneficially owned by Robert J. Brooks, of which
9,300 shares are deposited in the Voting Trust. Also includes 360,000 shares
beneficially owned by Suebro, Inc., a Delaware holding company, which are
all deposited in the Voting Trust. Does not include 3,498,819 shares held of
record by the Voting Trust. Such shares are included in the reported
holdings of William E. Kassling.
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(8) Includes 7,000 shares beneficially owned by James V. Napier and 500 shares
held in Mr. Napier's Keogh account.
(9) Includes notes 1-8.
OTHER BENEFICIAL OWNERS
The following table sets forth information with respect to each stockholder
known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock as of December 31, 1998. The information on beneficial
ownership in the table and related footnotes is based upon data furnished to the
Company by, or on behalf of, the persons referred to in the table. Unless
otherwise indicated in the footnotes to the table, each stockholder named has
sole voting power and sole dispositive power with respect to the shares included
in the table.
SHARES OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK OF CLASS
------------------------------------ ------------ --------
U.S. Trust Company, N.A., 9,297,409(1) 27.43
as trustee for Westinghouse Air Brake Company Employee
Stock Ownership Plan and Trust
515 S. Flower Street
Suite 2700
Los Angeles, CA 90071
RAC Voting Trust 3,498,819(2) 10.40
c/o Westinghouse Air Brake Company
1001 Air Brake Avenue
Wilmerding, PA 15148
Charlesbank Capital Partners, LLC 2,400,000 7.08
600 Atlantic Avenue, 26th Floor
Boston, MA 02210
Vestar Equity Partners, L.P. 2,400,000 7.08
c/o Vestar Capital Partners, Inc.
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, Colorado 80202
Shapiro Capital Management Company, Inc. 2,139,500 6.31
3060 Peachtree Road, N.W.
Atlanta, GA 30305
First Manhattan Co. 1,753,950 5.17
437 Madison Avenue
New York, NY 10022
- ---------------
(1) Under the terms of the Westinghouse Air Brake Company Employee Stock
Ownership Plan and Trust, U.S. Trust Company, N.A., as sole trustee for the
ESOP (the "ESOP Trustee"), is required to vote the shares held by the ESOP
in accordance with the instructions from the ESOP participants for all
shares allocated to such participants' accounts. Shares not allocated to the
account of any employee are voted by the ESOP Trustee in the same proportion
as the votes for which participant instructions are given. Allocated shares
for which the ESOP Trustee does not receive instructions are voted in the
manner directed by the ESOP Committee, an administrative committee comprised
of persons appointed by the Board of Directors of the Company (currently
Messrs. Kassling, Brooks and Kevin P. Conner). As of December 31, 1998,
771,189 shares were allocated (including accrued amounts) to participants'
accounts, and 8,564,811 shares were not allocated.
(2) Pursuant to the Second Amended Westinghouse Air Brake Company Voting
Trust/Disposition Agreement dated as of December 13, 1995 (the "Amended
Voting Trust Agreement"), certain employees of the Company have delivered
their shares of Common Stock of the Company to the trustees of the Voting
Trust.
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The current trustees are Messrs. Kassling, Brooks and Conner. The trustees
of the Voting Trust have sole voting power with respect to all shares
reported as beneficially owned by the Voting Trust. The Amended Voting Trust
Agreement expires January 1, 2000 and can be terminated by an affirmative
vote of two-thirds of the shares held by the Voting Trust or by the
unanimous vote of the trustees.
PROXY PROPOSAL NO. 1
ELECTION OF DIRECTORS
On February 17, 1999, the Board of Directors unanimously adopted a
resolution to increase the size of the Board of Directors from seven to eight
members. The members of the Nominating Committee, Robert J. Brooks, William E.
Kassling and James P. Kelley, nominated Mr. Gregory T. H. Davies to fill the
newly created vacancy on the Board of Directors, and the Board of Directors
unanimously approved Mr. Davies' election to the Board of Directors for a term
to expire at the annual meeting of stockholders in 2000 and until his successor
is elected and qualified.
NOMINEES
Three directors will be elected at the Annual Meeting to serve until the
annual meeting of stockholders in 2002 and until their successors are elected
and qualified or until their earlier resignation or removal. The Nominating
Committee of the Board of Directors has exclusive authority to nominate persons
to be elected to the Board. The Nominating Committee has nominated, and the
Board has approved the nominations of, Emilio A. Fernandez, William E. Kassling
and James V. Napier. The Board recommends a vote for their election. Each of the
nominees has consented to be named as a nominee and to serve if elected.
Unless authority to so vote is withheld, it is intended that the proxies
solicited by the Board of Directors will be voted FOR the election of the three
nominees. In the event that at the date of the Annual Meeting any of the
nominees should for any reason not be available for election, the proxies
solicited by the Board will be voted for the election of the other nominees and
such substitute nominee as shall be designated by the Board.
Information with respect to the three nominees, and the continuing
directors is set forth in the table below. Each of Messrs. Fernandez, Kassling
and Napier is presently a member of the Board of Directors. The nominees and
continuing directors have held the positions shown for more than five years
unless otherwise indicated.
Nominees for a term expiring in 2002:
DIRECTOR
NOMINEE SINCE PRINCIPAL OCCUPATION; OTHER DIRECTORSHIPS; AGE
- ------------------------- -------- ----------------------------------------------------------
Emilio A. Fernandez 1995 Vice Chairman of the Company since February 1998;
Executive Vice President of the Company from January 1995
to February 1998; President of Pulse Electronics, Inc.
since prior to 1994 to January 1995; Director of Pulse
Medical Instruments, Inc.; Age 54
William E. Kassling 1990 Chairman and Chief Executive Officer of the Company;
Director of Aearo Corporation; Commercial Intertech, Inc.;
and Scientific Atlanta, Inc.; Age 55
James V. Napier 1995 Chairman of Scientific Atlanta, Inc. since July 1994;
Chairman and interim Chief Executive Officer of Scientific
Atlanta, Inc. from November 1993 to July 1994; Director of
Engelhard Corporation, Vulcan Materials Company, McKesson
HBOC, Scientific Atlanta, Inc., Personnel Group of
America, Inc. and Intelligent Systems, Inc.; Age 62
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DIRECTOR
DIRECTOR SINCE PRINCIPAL OCCUPATION; OTHER DIRECTORSHIPS; AGE
- ------------------------- -------- ----------------------------------------------------------
Continuing Directors with a term expiring in 2000:
Robert J. Brooks 1990 Chief Financial Officer of the Company since prior to
1994; Director of Crucible Materials Corporation; Age 54
Gregory T. H. Davies 1999 President and Chief Operating Officer of the Company from
March 1998; Vice President and Group Executive of Danaher
Corporation from prior to 1994 to March 1998; Age 52
Kim G. Davis 1997 Managing Director of Charles Bank Capital Partners, LLC,
formerly known as Harvard Private Capital Group, Inc.,
since 1998; Private Investor from 1994 to 1998; General
Partner of Kohlberg & Co. from prior to 1994; Age 45
Continuing Directors with a term expiring in 2001:
James C. Huntington, Jr. 1995 Independent businessman since prior to 1994; Formerly
Senior Vice President of American Standard, Inc. prior to
1994; Age 71
James P. Kelley 1990 Managing Director of Vestar Capital Partners, Inc.
(private equity investment firm) since prior to 1994;
Director of Reid Plastics, Inc. and Celestial Seasonings,
Inc.; Age 44
VOTE REQUIRED
Only affirmative votes are counted in the election of directors. The three
nominees for election as directors at the Annual Meeting who receive the highest
number of votes cast for the election of directors by the holders of the
Company's Common Stock present in person or voting by proxy, a quorum being
present, will be elected as directors.
COMMITTEES OF BOARD OF DIRECTORS
In addition to the Nominating Committee, the principal committees of the
Board of Directors are the Audit Committee and the Compensation Committee.
The members of the Audit Committee are Kim G. Davis, James C. Huntington,
Jr., James P. Kelley and James V. Napier. The Audit Committee may (i) make
recommendations to the Board regarding the engagement of the Company's
independent accountants, (ii) review the plan, scope and results of the annual
audit, the independent accountants' letter of comments and management's response
thereto and the scope of any non-audit services which may be performed by the
independent accountants, (iii) manage the Company's policies and procedures with
respect to internal accounting and financial controls and (iv) review any
changes in accounting policy. The Audit Committee may also review any possible
violations of the Company's business ethics and conflicts of interest policies.
The members of the Compensation Committee are Messrs. Davis, Huntington,
Kelley and Napier. The Compensation Committee may establish compensation levels
for officers of the Company, review management organization and development,
review significant employee benefit programs and establish and administer
executive compensation programs and the Company's 1995 Stock Incentive Plan.
The Board of Directors met seven times during 1998. The Nominating
Committee met one time during 1998; the Audit Committee met two times during
1998; and the Compensation Committee met two times during 1998. All of the
directors attended at least 75% of the aggregate of all meetings of the Board of
Directors and the Committees on which they served during 1998.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
William E. Kassling, the Chairman and Chief Executive Officer of the
Company, served on the Board of Directors of Scientific Atlanta, Inc. James V.
Napier, a director of the Company, is the Chairman of Scientific Atlanta, Inc.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive a retainer or
fees for attending meetings of the Board of Directors or meetings of Committees
of the Board. Directors who are not employees of the Company each receive a
$10,000 annual retainer, $1,000 for each meeting they attend, $750 ($1,000 for
the Committee chairperson) for each Committee meeting they attend that is not
held on the same day as a Board meeting and $500 for each Board or Committee
meeting in which they participate by conference telephone. Directors are also
reimbursed for travel expenses to and from Board and Committee meetings.
In addition, non-employee directors participate in the 1995 Non-Employee
Directors' Fee and Stock Option Plan (the "Directors' Plan") whereby each
receives annually 1,000 shares of Common Stock of the Company and a nonstatutory
option to purchase 5,000 additional shares upon initial election to the Board
and thereafter upon any subsequent re-election. The exercise price per share of
Common Stock of each option granted is 100% of the fair market value per share
of the Common Stock on the date of grant, except that for any stock option
granted on or prior to October 31, 1998, the exercise price will be the higher
of fair market value or $14 per share. The term of each option commences on the
date of grant and, unless earlier terminated in accordance with the Directors'
Plan, expires ten years after such date. If a recipient is removed from the
Board for cause, such recipient's options terminate on the earlier to occur of
the expiration date of the options or 90 days following the date of such
removal.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers and persons who own more
than ten percent of a registered class of the Company's equity securities to
file with the Commission reports of ownership and reports of changes in
ownership of the Common Stock and other equity securities of the Company. These
persons are required to furnish the Company with copies of all Section 16(a)
reports they file.
The Company believes that all filing requirements applicable to its
directors and executive officers were complied with in 1998, other than one late
transaction report by an executive officer. In making this representation, the
Company has relied solely on the representations of its directors and executive
officers and copies of the reports that they have filed with the Commission and
provided to the Company.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation paid
for services rendered in all capacities to the Company for the last three fiscal
years to those persons who were, as of December 31, 1998, the Chief Executive
Officer of the Company and the other four most highly compensated executive
officers of the Company.
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SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- -------------------------
SECURITIES
NAME AND RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS STOCK AWARDS OPTIONS COMPENSATION(1)
------------------ ---- ------ ----- ------------ ---------- ---------------
William E. Kassling 1998 $406,922 $371,000 -- 106,880 $56,795
Chief Executive Officer 1997 387,872 259,700 -- -- 55,091
1996 350,000 114,000 -- 146,250 41,924
Gregory T.H. Davies(2) 1998 $278,054 $250,000 $372,188 185,500 $23,819
President and 1997 -- -- -- -- --
Chief Operating Officer 1996 -- -- -- -- --
Emilio A. Fernandez 1998 $160,384 $215,710 -- -- $12,651
Vice Chairman 1997 211,482 208,592 -- -- 23,021
1996 195,348 147,000 -- 99,206 10,000
John M. Meister 1998 $214,166 $126,810 -- 53,440 $32,656
Executive Vice President; 1997 179,199 125,187 -- -- 28,468
Transit Products Group 1996 159,509 72,000 -- 73,125 23,906
Robert J. Brooks 1998 $177,952 $163,244 -- 53,440 $28,603
Chief Financial Officer 1997 173,467 114,271 -- -- 28,626
1996 154,004 50,000 -- 73,125 23,540
- ---------------
(1) Includes split dollar life insurance premiums paid by the Company on behalf
of the following executives: Mr. Kassling, ($12,355); Mr. Meister ($8,800)
and Mr. Brooks ($9,027). Also includes the fair market value, at the time of
the award, of shares awarded pursuant to the 1997 Executive Retirement Plan
to the following executives: Mr. Kassling ($44,440); Mr. Davies ($13,396);
Mr. Meister ($23,856) and Mr. Brooks ($19,576). Also includes amounts
contributed by the Company to the ESOP for the account of the following
executives: Mr. Fernandez ($12,651) and Mr. Davies ($10,423).
(2) Mr. Davies began working for the Company on February 26, 1998. On an
annualized basis for 1998, Mr. Davies' salary was $300,000. Mr. Davies was
awarded 15,000 shares of restricted Common Stock on February 26, 1998, the
value of such award was $372,188 on the date of the grant, and the value of
such award was $366,563 as of December 31, 1998. The shares will vest over a
three year period as follows: 6,000 shares on February 26, 1999; 7,000
shares on February 26, 2000 and 2,000 shares on February 26, 2001.
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OPTION GRANTS IN 1998
The following table sets forth as to the individuals named in the Summary
Compensation Table information with respect to the stock options granted during
1998 under the 1995 Stock Incentive Plan.
OPTIONS GRANTED IN 1998
% OF TOTAL
OPTIONS
NO. OF SHARES GRANTED TO
SUBJECT TO EMPLOYEES EXERCISE GRANT DATE
NAME OPTIONS GRANTED IN 1998 PRICE/SHARE EXPIRATION DATE PRESENT VALUE(3)
---- --------------- ---------- ----------- --------------- ----------------
William E. Kassling 106,880(1) 13.14 $20.00 10/09/08 $965,351
Chief Executive Officer
Gregory T.H. Davies 75,000(2) 9.22 $24.81 02/26/08 $734,903
President and 110,500(1)(2) 13.58 $20.00 10/09/08 $954,959
Chief Operating Officer
Emilio A. Fernandez 0 0 0 -- 0
Vice Chairman
John M. Meister 53,440(1) 6.57 $20.00 10/09/08 $482,675
Executive Vice President;
Transit Products Group
Robert J. Brooks 53,440(1) 6.57 $20.00 10/09/08 $482,675
Chief Financial Officer
- ---------------
(1) The option grants were made on October 9, 1998 pursuant to the 1995 Stock
Incentive Plan. The options become fully exercisable on October 9, 2008 but
are subject to early exercisablity based on the attainment of certain
performance targets.
(2) The option grant was made on February 26, 1998 pursuant to the 1995 Stock
Incentive Plan. The options vest in four equal annual installments beginning
on the date of grant.
(3) Based on the Black-Scholes option pricing model adopted for use in valuing
executive stock options. The actual value, if any, an executive may realize
will depend on the excess of the stock price at the time of exercise over
the exercise price on the date the option is exercised. There is no
assurance the value realized by an executive will be at or near the value
estimated by the Black-Scholes model. The estimated values under that model
were calculated based on the following assumptions:
(a) Grant Price: $24.81 for options granted on February 26, 1998
$20.00 for options granted on October 9, 1998
(b) Exercise Date: On the date of expiration
(c) Risk-Free Interest Rate: 4.56%
(d) Volatility: 29.10%
The following table sets forth as to the persons named in the Summary
Compensation Table information with respect to (i) the stock options exercised
during 1998, (ii) the net value realized upon such exercises, (iii) the number
of shares covered by unexercised stock options held at December 31, 1998 and
(iv) the value of such unexercised options at December 31, 1998.
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AGGREGATED OPTION EXERCISES IN 1998 AND DECEMBER 31, 1998 OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE DECEMBER 31, 1998 DECEMBER 31, 1998(1)
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
William E. Kassling 0 $0 0/253,130 $0/1,867,239
Chief Executive Officer
Gregory T.H. Davies 0 $0 47,000/138,500 $ 0/432,025
President and Chief Operating
Officer
Emilio A. Fernandez 0 $0 0/99,206 $ 0/983,131
Vice Chairman
John M. Meister 0 $0 0/126,565 $ 0/933,619
Executive Vice President;
Transit Products Group
Robert J. Brooks 0 $0 0/126,565 $ 0/933,619
Chief Financial Officer
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(1) Options to Messrs. Kassling, Fernandez, Meister and Brooks were granted in
1996 and 1998. The exercise price of the options granted in 1996 are $14.00
per share and the exercise price of the options granted in 1998 are $20.00
per share. As of December 31, 1998, the fair market value of the Company's
Common Stock was $23.91 per share. Consequently, these options are
"in-the-money" for purposes of the chart. Options were granted to Mr. Davies
in February and October 1998, and the exercise prices are $20.00 per share
and $24.81 per share, respectively. Accordingly, the 75,000 options granted
to Mr. Davies in February 1998 are not "in-the-money" for purposes of the
chart.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement in whole or in part, the following report and the
Stock Performance Graph on page 11 shall not be incorporated by reference into
any such filings.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee is comprised entirely of non-employee members of
the Board of Directors. The Compensation Committee's principal responsibility is
to review, recommend and approve changes to the Company's compensation policies
and programs. The Compensation Committee is also responsible for reviewing and
approving all compensation actions for the Chief Executive Officer and the other
executive officers.
The Company's compensation plan has three components: base salaries and
bonuses, benefit plans and long-term incentives.
Base Salaries and Bonuses. The base salaries and bonuses of the executive
officers are established each year by the Board of Directors upon the
Committee's recommendations. Base salaries are determined at the commencement of
each fiscal year, and bonuses are awarded after the Company's financial results
for the fiscal year have become available.
Executive officers' (including the five executive officers named herein)
base salaries depend primarily upon their offices and responsibilities and are
reviewed annually. William E. Kassling is the only executive officer who has an
employment agreement with the Company. That agreement entitles Mr. Kassling to a
base salary and an incentive bonus of up to 100% of his base salary based upon
the Company's achievement of certain targeted consolidated net income levels.
Mr. Kassling is also eligible for additional incentive bonuses attributable to
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superior performance at the discretion of the Board of Directors. The
Compensation Committee reviews and approves Mr. Kassling's salary annually.
The Committee reevaluated its philosophy this year with respect to bonuses
to be paid to executives in 1999. Bonuses to be paid in 1999 will be determined
based on two factors established by each executive and his supervisor or the
Board of Directors. The first factor measures whether the Company and related
divisions have attained certain financial results for the fiscal year in
question. The second factor measures whether an executive has attained certain
goals agreed to by the executive and his supervisor and the Board of Directors.
There are guidelines as to the payment of bonuses if the criteria are met,
although the Committee may exercise its discretion with respect to such
guidelines. The Committee believes that the new plan will encourage the Company
and its executives to establish more ambitious goals and increase teamwork,
productivity and profitability.
Under the 1997 Executive Retirement Plan, the Company may award stock
bonuses to certain eligible employees including certain executives who do not
participate in the ESOP. The stock bonuses granted under the 1997 Executive
Retirement Plan are issued from the Company's treasury shares. The amount
awarded monthly is based on the "Covered Compensation" of each eligible
employee, as such term is defined in the ESOP. The Compensation Committee
believes it is appropriate to allow executives to participate in benefits
similar to those provided to other employees under the ESOP. Of the executive
officers named herein, Messrs. Kassling, Davies, Meister and Brooks participated
in 1997 Executive Retirement Plan during 1998 and were awarded shares with a
fair market value, at the time of the award, of $44,440, $13,396, $23,856 and
$19,576, respectively. Messrs. Davies and Fernandez are the only executive
officers named herein who were eligible to participate in the ESOP during 1998.
The Company contributed shares of Common Stock to the ESOP for the accounts of
Messrs. Fernandez and Davies with a fair market value, at the time of the
allocation, of $12,651 and $10,423, respectively.
Under the 1998 Employee Stock Purchase Plan, employees of the Company may
purchase shares of the Company's Common Stock. Under the terms of the Plan,
employees of the Company are eligible to periodically purchase shares of the
Company's Common Stock at a purchase price equal to 85% of the fair market value
of the stock, and to finance such purchases through periodic payroll deductions.
The Committee believes that the Plan promotes the continued success of the
Company by encouraging its employees to have increased awareness of and
commitment to the Company's corporate-wide goals and objectives. Messrs.
Kassling, Davies and Brooks are the only executive officers named herein who
elected to participate in the plan during 1998, purchasing shares of common
stock with an aggregate fair market value, at the time of purchase of $21,250,
$20,104 and $7,086, respectively.
Long-Term Incentives. Under the 1995 Stock Incentive Plan, the Compensation
Committee may grant long term incentives to employees by granting stock options
and making restricted share awards. The Committee views stock options and
restricted share awards as beneficial incentives to hire and retain executives
and to provide executives with greater incentive to increase their efforts to
make the Company and its subsidiaries more successful. The Committee believes
stock options and restricted share awards are particularly useful long-term
incentives because such options and awards connect the interests of employees to
those of the Company's stockholders through common ownership of the Company's
Common Stock. The decision to grant stock options and make restricted share
awards is based upon an individual's job level.
Other. The executive officers may participate in the Company's Section
401(k) Plan. The Company provides certain perquisites and other personal
benefits to certain of its employees, including its executive officers, which in
the aggregate are not significant.
Respectfully submitted,
/s/ Kim G. Davis
/s/ James C. Huntington, Jr.
/s/ James P. Kelley
/s/ James V. Napier
10
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STOCKHOLDER RETURN PERFORMANCE GRAPH
The following line graph compares the cumulative total stockholder return
among the Company's Common Stock, the Standard & Poor's 500 Stock Index (the
"S&P Stock Index") and a peer group of manufacturing companies selected by the
Company. The Company believes that the business and operations of the peer group
members closely resemble those of the Company. The graph assumes a $100
investment as of June 16, 1995 (the date the Company's shares were publicly
listed on the New York Stock Exchange) in the Company's Common Stock, the S&P
Stock Index and the peer group and assumes the reinvestment of dividends.
Returns for the month of June 1995 have been prorated.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P 500 STOCK INDEX AND PEER GROUP INDEX
WESTINGHOUSE AIR BRAKE
COMPANY ('WABCO') S&P 500 PEER GROUP
---------------------- ------- ----------
'6/16/95' 100.00 100.00 100.00
'1995' 75.97 117.10 78.36
'1996' 90.59 143.99 87.34
'1997' 184.30 192.03 147.43
'1998' 176.06 246.91 156.05
The peer group includes publicly traded manufacturing companies engaged in
lines of business similar to the Company. The peer group consists of the
following companies: ABC Rail Products Corp., Atchison Casting Corp., The
Greenbrier Companies, Harmon Industries, Ltd., Johnstown America Corp.,
MotivePower Industries (formerly MK Rail Corp.), Railworks Corp., and Varlen
Corporation. Railworks Corp., which recently became publicly traded, replaced
Portec Inc., which was acquired by a privately held company in 1998 and is no
longer publicly traded.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PULSE NOTES
In payment for the acquisition of substantially all of the assets and
related liabilities of Pulse Electronics, Inc. and Pulse Embedded Computer
Systems, Inc. (collectively, "Old Pulse") in January 1995 (the "Pulse
Acquisition"), the Company issued a subordinated promissory note in the amount
of $17 million in favor of certain former shareholders of Old Pulse including
Emilio A. Fernandez, a director and executive officer of the Company, and
members of his immediate family (the "Pulse Note"). The Pulse Note matures on
January 31, 2004. Interest thereon is payable semiannually. Interest will accrue
until January 31, 2001 at the per annum rate of 9.5%, and from February 1, 2001
until January 31, 2004 at the prime rate charged by Chase on December 31, 2000
plus 1% (with a maximum adjustment rate of 2%).
11
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PULSE LEASE
In connection with the Pulse Acquisition, the Company assumed a lease
agreement between Old Pulse and Jollo Associates Limited Partnership ("Jollo")
covering a 37,000 square foot building. Jollo is a Maryland limited partnership
in which Mr. Fernandez, his wife and certain other former shareholders of Old
Pulse are the sole partners. The lease expires December 31, 2002. Total rent
paid under the lease in 1998 was $390,000.
EMPLOYMENT AGREEMENT
The Company and Mr. Kassling have entered into an employment agreement
pursuant to which Mr. Kassling received a base salary of $406,922 in 1998. Mr.
Kassling is also entitled to an incentive bonus payment and certain other
perquisites and benefits.
STOCKHOLDERS AND VOTING TRUST AGREEMENTS
As of December 31, 1998, ownership of the Company's Common Stock was held
in the following approximate percentages: by management and the ESOP (58%),
Vestar Equity Partners, L.P. ("Vestar") (7%), Charlesbank Capital Partners, LLC
("Charlesbank") (7%), American Industrial Partners Capital ("AIP") (3%), and all
others including public shareholders (25%). A Stockholders Agreement exists
among certain members of management, Vestar, Charlesbank, AIP and the Company
that provides for, among other things, the composition of the Board of Directors
as long as certain minimum stock percentages are maintained.
The Company has also entered into a Registration Rights Agreement with
Charlesbank, AIP, the Voting Trust, Vestar and certain individual shareholders
(collectively, the "Holders"). This agreement provides that each of Charlesbank,
the Voting Trust and Vestar may make demands at various times for registration
of their respective shares so as to permit the sale of the shares in the public
market. All Holders also have incidental or "piggyback" rights to request
registration of their respective shares if the Company is registering shares for
sale for the Company's account.
Those shareholders comprised of the active original management owners are
parties to the Amended Voting Trust Agreement. The Voting Trust provides for,
among other matters, the stock to be voted as one block and restrictions on the
sale or transfer of such stock. The Amended Voting Trust Agreement expires on
January 1, 2000 and can be terminated by an affirmative vote of two-thirds of
the shares held by the trust. In connection with the Voting Trust, the Company
has entered into an Indemnification Agreement with the trustees, which is
covered by the Company's directors and officers liability insurance.
The shares held by the ESOP (established January 31, 1995) are subject to
the terms of the related ESOP loan and pledge agreement and Employee Stock
Ownership Trust Agreement and Plan.
The Company believes that each of the transactions above contains terms no
less favorable to the Company than could be obtained from unaffiliated third
parties on an arms' length basis.
PROXY PROPOSAL NO. 2
RATIFICATION OF APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
On February 18, 1999, the Board of Directors appointed Arthur Andersen LLP
as independent public accountants to audit the books and records of the Company
and its subsidiaries for the year ending December 31, 1999. Arthur Andersen LLP
served as the Company's independent public accountants for the year ended
December 31, 1998. Although the appointment of independent public accountants is
not required to be approved by stockholders, the Board of Directors believes
that stockholders should participate in such selection through ratification. If
the stockholders fail to ratify Arthur Andersen LLP as the independent public
accountants, the Board of Directors will reconsider its selection.
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Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and, while they are not expected to make a statement, they will
have the opportunity to do so if they desire. They will also be available to
respond to appropriate questions.
VOTE REQUIRED
Adoption of the proposal requires the approval of a majority of the votes
cast. Abstentions from voting by a stockholder present in person or represented
by proxy and entitled to vote and broker non-votes are not votes cast "for" or
"against" the proposal and are therefore not counted in determining whether the
required vote for ratification has been obtained.
IT IS INTENDED THAT THE PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
VOTED FOR RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP.
OTHER MATTERS
No business other than that set forth above is expected to come before the
Annual Meeting or any adjournment thereof. Should other business properly come
before the Annual Meeting or any adjournment thereof, the proxy holders will
vote upon the same according to their discretion and best judgment.
EXPENSES OF SOLICITATION
The cost of solicitation of proxies for the Annual Meeting will be paid by
the Company. In addition to the solicitation of proxies by mail, the officers
and regular employees of the Company may solicit proxies in person or by
telephone or telegraph. ChaseMellon Shareholder Services, L.L.C. will forward
proxy soliciting material and the Company's 1998 Annual Report to Stockholders
to the beneficial owners of the shares of the Company's Common Stock held of
record by them at an approximate cost of $13,000. In addition, other nominees,
custodians or fiduciaries will forward proxy soliciting material and the
Company's 1998 Annual Report to Stockholders to the beneficial owners of the
shares of the Company's Common Stock held of record by them, and the Company
will reimburse these record holders for their reasonable out-of-pocket expenses
incurred in doing so.
STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING TO BE HELD IN 2000
The Board of Directors does not know of any other business that may be
presented for consideration at the Annual Meeting. If any other business should
properly come before the Annual Meeting, it is the intention of those named in
the Proxies solicited hereby to vote the shares represented by such Proxies in
accordance with their judgement on such matters.
A proposal submitted by a stockholder for the regular annual meeting of
stockholders to be held in 2000 must be received by the Secretary, Westinghouse
Air Brake Company, 1001 Air Brake Avenue, Wilmerding, Pennsylvania 15148 on or
prior to December 3, 1999 in order to be eligible for inclusion in the Company's
Proxy Statement for that annual meeting. In connection with the 2000 Annual
Meeting of Stockholders, if the Company does not receive notice of a matter or
proposal to be considered (whether or not the proponent thereof intends to
include such matter or proposal in the proxy statement of the Company) on or
before February 2, 2000 then the persons appointed by the Board of Directors to
act as the proxies for such annual meeting will be allowed to use their
discretionary voting authority with respect to any such matter or proposal at
such annual meeting, if such matter or proposal is raised at such annual
meeting.
By Order of the Board of Directors,
Robert J. Brooks
Chief Financial Officer
and Secretary
13
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WESTINGHOUSE AIR BRAKE COMPANY
- --------------------------------------------------------------------------------
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
SHERATON AT STATION SQUARE, PITTSBURGH, PENNSYLVANIA
WEDNESDAY, MAY 19, 1999 - 2:00 P.M.(LOCAL TIME)
The undersigned stockholder of WESTINGHOUSE AIR BRAKE COMPANY (the
"Company") does hereby appoint WILLIAM E. KASSLING and ROBERT J. BROOKS, and
each of them acting individually, with full power of substitution, as proxies
of the undersigned to vote at the Annual Meeting of Stockholders of the
Company, to be held May 19, 1999 (the "Annual Meeting"), and at all
adjournments thereof, all the shares of Common Stock of the Company which the
undersigned may be entitled to vote, on the matters set out on the reverse side
of this proxy card and described in the Proxy Statement and, in their
discretion, on any other business which may properly come before the Annual
Meeting.
The undersigned stockholder hereby revokes all previous proxies for the
Annual Meeting and acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, both dated March 31, 1999, and of the Annual
Report to Stockholders for 1998.
You are urged to return promptly this proxy card in the enclosed envelope
whether or not you expect to attend the Annual Meeting in person so that your
shares may be voted in accordance with your wishes and in order that the
presence of a quorum may be assured at the Annual Meeting.
The shares represented by this proxy card will be voted as directed by the
stockholder. If this proxy card is executed but no direction is given, such
shares will be voted "FOR" items 1 and 2.
(Continued and to be signed on the reverse side.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
17
- --------------------------------------------------------------------------------
WESTINGHOUSE AIR BRAKE COMPANY
VOTING INSTRUCTIONS FOR THE ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE ESOP TRUSTEE
SHERATON AT STATION SQUARE, PITTSBURGH, PENNSYLVANIA
WEDNESDAY, MAY 19, 1999 - 2:00 P.M. (LOCAL TIME)
The undersigned participant in the WESTINGHOUSE AIR BRAKE COMPANY EMPLOYEE
STOCK OWNERSHIP PLAN (the "ESOP") does hereby instruct the ESOP Trustee to vote
at the Annual Meeting of Stockholders of Westinghouse Air Brake Company (the
"Company"), to be held May 19, 1999 (the "Annual Meeting"), and at all
adjournments thereof, all the shares of Common Stock of the Company which the
undersigned may be entitled to provide instructions, on the matters set out on
the reverse side of this card and described in the Proxy Statement and, in its
discretion, on any other business which may properly come before the Annual
Meeting.
The Undersigned participant hereby acknowledges receipt of the Notice of
Annual Meeting of Stockholders and Proxy Statement both dated March 31, 1999,
and of the Annual Report to Stockholders for 1998.
The shares represented by this card will be voted as directed by the
participant. If this card is executed but no direction is given or if such
direction is not received by the ESOP Trustee on or before May 17, 1999, such
shares will be voted in accordance with the Westinghouse Air Brake Company
Employee Stock Ownership Plan and Trust.
(Continued and to be signed on the reverse side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
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- ------------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Items 1 and 2. Please mark [X]
Your votes as
indicated in
this example
ITEM (1) - Election of the following three Directors for a term
expiring in 2002 Emilio A. Fernandez, William E. Kassling
and James V. Napier
A vote FOR includes discretionary authority
to vote for a substituted nominee if any of
the nominees listed becomes unable to serve
FOR all Nominees WITHHOLD AUTHORITY or for good cause will not serve.
(except as shown to Vote for All
to the right) Nominees (To withhold authority to vote for one or more
such nominees, write such nominees' name(s) on
[ ] [ ] the line below.)
______________________________________________
ITEM (2) - The ratification of the appointment of
Arthur Anderson LLP as independent
public accountants of the Company for
the 1999 fiscal year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
--- Please date and sign exactly as your name appears
| hereon and return in the enclosed envelope. If
| acting as attorney, executor, administrator,
| guardian or trustee, please so indicate with
your full title when signing. If a corporation,
please sign in full corporate name, by duly
authorized officer. If shares are held jointly,
each stockholder named should sign.
Signature(s)_________________________________________ Signature(s)_________________________________________ Date___________________
NOTE: Please sign exactly as name appears on hereon. Joint owners shall each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
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NOTICE TO PARTICIPANTS
IN THE
WESTINGHOUSE AIR BRAKE COMPANY
RAC VOTING TRUST
Dear Voting Trust Participant:
Enclosed with this notice is Westinghouse Air Brake Company's Proxy
Statement and its 1998 Annual Report to Stockholders. These materials refer to
the Annual Meeting of Stockholders which will be held on May 19, 1999. The
Annual Meeting is being called for the purpose of (i) electing three nominees
for the Board of Directors and (ii) ratifying the appointment of Arthur Andersen
LLP as independent public accountants for the 1999 fiscal year, as well as
considering any other matters that may properly come before the Meeting.
As a Voting Trust Participant and stockholder you are cordially invited to
attend the Annual Meeting, and I hope that you will make an effort to do so. As
you know, by the terms of the Second Amended WABCO Voting Trust/Disposition
Agreement dated as of December 13, 1995 by which we deposited our shares in the
Voting Trust, we agreed that the Trustees of the Voting Trust will be
responsible for voting the shares we have delivered to the Trust. Accordingly, a
proxy card has not been included with the enclosed materials.
Thank you for your continued cooperation and for your faith in the success
of our joint efforts.
Sincerely,
William E. Kassling
Chairman and Chief Executive Officer
20
U.S. TRUST COMPANY, N.A.
NOTICE TO PARTICIPANTS
IN THE
WESTINGHOUSE AIR BRAKE COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
Dear ESOP Participant:
Enclosed with this notice is a Proxy Statement with respect to the Annual
Meeting of Stockholders of Westinghouse Air Brake Company (the "Company") to be
held on May 19, 1999 (the "Annual Meeting"), along with the Company's 1998
Annual Report to Stockholders. The Annual Meeting will be for the purpose of (i)
electing three nominees for the Board of Directors and (ii) ratifying the
appointment of Arthur Andersen LLP as independent public accountants for the
1999 fiscal year. The Proxy Statement has been prepared by the Board of
Directors of the Company in connection with the business to be transacted at the
Annual Meeting. THE ITEMS TO BE PRESENTED AT THE ANNUAL MEETING ARE IMPORTANT
AND ARE DESCRIBED IN THE PROXY MATERIALS BEING ENCLOSED WITH THIS NOTICE.
DIRECTIONS TO THE TRUSTEE
Only U.S. Trust Company, N.A., as trustee (the "Trustee") of the
Westinghouse Air Brake Company Employee Stock Ownership Plan (the "ESOP"), can
vote the shares of the Company's stock (the "Shares") held by the ESOP. However,
under the terms of the Westinghouse Air Brake Company Employee Stock Ownership
Plan and Trust, you, as a participant in the ESOP, are entitled to instruct the
Trustee how to vote.
Enclosed with this notice is a confidential voting instruction card which
is provided to you for the purpose of instructing the Trustee how to vote the
Shares concerning the above matters, which are described in the enclosed Proxy
Statement. Your interest in these matters is important. Please take the time to
complete the voting instruction card and return it to the Trustee. You may
instruct the Trustee to vote for, against, or to abstain from approval of such
matters. If you do not provide instructions to the Trustee, your Shares will be
voted in accordance with the Westinghouse Air Brake Company Employee Stock
Ownership Plan and Trust.
The Trustee will vote all shares of the ESOP in accordance with the
instructions set forth on the voting instruction cards which are received by the
Trustee on or before May 17, 1999, unless the Trustee determines such
instructions are contrary to the requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
CONFIDENTIALITY
How you vote will not be revealed, directly or indirectly, to any officer,
any other employee or any director of the Company or to anyone else, except as
otherwise required by law. You should, therefore, instruct the Trustee to vote
the Shares in the manner you think best.
VOTING DEADLINE
Because of the time required to tabulate voting instructions from
participants before the Annual Meeting, the Trustee must establish a cut-off
date for receiving your instruction card. The cut-off date established by the
Trustee is 5:00 P.M. Eastern Time on May 17, 1999. The Trustee cannot insure
that instruction cards received after the cut-off date will be tabulated.
Therefore, it is important that you act promptly and return your instruction
card on or before May 17, 1999, in the envelope provided for your convenience.
If the Trustee does not receive timely instructions from you with respect to
your Shares, the Trustee will vote such Shares in the manner directed by the
ESOP Committee, which is currently comprised of William E. Kassling, Robert J.
Brooks, and Kevin P. Conner.
If you also hold shares of Common Stock of the Company directly and not
through the ESOP, you will receive, under separate cover, proxy solicitation
materials including a proxy card. That card should be used to vote the shares
you hold directly and CANNOT be used to direct the voting of shares held by the
ESOP.
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FURTHER INFORMATION
If you have questions regarding this information provided to you, you may
contact the Trustee at (800) 535-3093 between 11:30 A.M. and 7:00 P.M. Eastern
Time, Monday through Friday.
Your ability to instruct the Trustee how to vote your Shares is an
important part of your rights as an ESOP participant. Please consider the
enclosed material carefully and then furnish your voting instructions promptly.
Dated March 31, 1999
U.S. Trust Company, N.A.,
as Trustee of
WESTINGHOUSE AIR BRAKE COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
