SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-12
EMERSON ELECTRIC CO.
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(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):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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/ / 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:
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(4) Date Filed:
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NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
[logo]
EMERSON
St. Louis, Missouri
December 16, 2002
TO THE STOCKHOLDERS OF
EMERSON ELECTRIC CO.:
The Annual Meeting of the Stockholders of Emerson Electric Co. will be
held at the office of the Company, 8000 West Florissant Avenue, St. Louis,
Missouri on Tuesday, February 4, 2003, commencing at 10:00 a.m., at which
meeting only holders of the common stock of record at the close of business
on November 26, 2002, will be entitled to vote, for the following purposes:
1. To elect five Directors;
2. To vote upon the stockholder proposal described in the accompanying
proxy statement, if properly presented at the meeting; and
3. To transact such other and further business, if any, as lawfully may
be brought before the meeting.
EMERSON ELECTRIC CO.
By /s/ Charles F. Knight
Chairman of the Board
/s/ W. W. Withers
Secretary
EVEN THOUGH YOU MAY PLAN TO ATTEND THE MEETING IN PERSON, PLEASE VOTE
BY TELEPHONE OR THE INTERNET, OR EXECUTE THE ENCLOSED PROXY CARD AND MAIL
IT PROMPTLY. A RETURN ENVELOPE (WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES) IS ENCLOSED FOR YOUR CONVENIENCE. TELEPHONE AND INTERNET
VOTING INFORMATION IS PROVIDED ON YOUR PROXY CARD. SHOULD YOU ATTEND THE
MEETING IN PERSON, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
IMPORTANT
PLEASE NOTE THAT A TICKET IS REQUIRED FOR ADMISSION TO THE MEETING. IF
YOU PLAN TO ATTEND IN PERSON AND ARE A STOCKHOLDER OF RECORD, PLEASE CHECK
THE BOX ON YOUR PROXY CARD AND BRING THE TEAR-OFF ADMISSION TICKET WITH YOU
TO THE MEETING. IF YOUR SHARES ARE HELD BY SOMEONE ELSE (SUCH AS A BROKER)
PLEASE BRING WITH YOU A LETTER FROM THAT FIRM OR AN ACCOUNT STATEMENT
SHOWING YOU WERE A BENEFICIAL HOLDER ON NOVEMBER 26, 2002.
EMERSON ELECTRIC CO.
8000 WEST FLORISSANT AVENUE, ST. LOUIS, MISSOURI 63136
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 4, 2003
This proxy statement is furnished to the stockholders of Emerson
Electric Co. in connection with the solicitation of proxies for use at the
Annual Meeting of Stockholders to be held February 4, 2003, and at all
adjournments thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting of Stockholders. This proxy statement and the enclosed
form of proxy are first being mailed to stockholders on or about December
16, 2002.
If you have a disability which requires accommodation at the meeting,
please call 314-553-2197; requests must be received by January 14, 2003.
REGISTERED SHAREHOLDERS CAN SIMPLIFY THEIR VOTING AND SAVE THE COMPANY
EXPENSE BY CALLING 1-800-435-6710 AND VOTING BY TELEPHONE, OR VOTING BY
INTERNET AT http://www.proxyvoting.com. Telephone and Internet voting
information is provided on your proxy card. A Control Number, located on
the proxy card, is designed to verify your identity and allow you to vote
your shares and confirm that your voting instructions have been properly
recorded.
If your shares are held in the name of a bank or broker, follow the
voting instructions on the form you receive from that firm. The
availability of telephone or Internet voting will depend on that firm's
voting processes.
IF YOU VOTE BY TELEPHONE OR INTERNET, IT IS NOT NECESSARY TO RETURN
YOUR PROXY CARD.
If you do not choose to vote by telephone or Internet, please return
your proxy card, properly signed, and the shares represented will be voted
in accordance with your directions. You can specify your choices by marking
the appropriate boxes on the proxy card. If your proxy card is signed and
returned without specifying choices, the shares will be voted FOR Proposal
1 and AGAINST Proposal 2 and otherwise in the discretion of the proxies.
The Company knows of no reason why any of the nominees for Director named
herein would be unable to serve. In the event, however, that any nominee
named should, prior to the election, become unable to serve as a Director,
your proxy (unless designated to the contrary) will be voted for such other
person or persons as the Board of Directors of the Company may recommend.
You may revoke your proxy at any time before it is voted (in the case
of proxy cards) by giving notice to the Secretary of the Company or by
executing a later-dated proxy. To revoke a proxy or change your vote by
telephone or Internet, you must do so by telephone or Internet (following
the directions on your proxy card) by twelve midnight Eastern time on
February 3, 2003.
The close of business on November 26, 2002, has been fixed as the
record date for the determination of stockholders entitled to vote at the
Annual Meeting of Stockholders. As of the record date, there were
outstanding and entitled to be voted at such meeting 420,848,500
shares of common stock. The holders of the common stock will be
entitled to one vote for each share of common stock held of record on the
record date.
A copy of the Company's Annual Report to Stockholders for the fiscal
year ended September 30, 2002 accompanies this proxy statement.
This proxy is solicited by the Board of Directors of the Company. The
solicitation will be by mail and the expense thereof will be paid by the
Company. The Company has retained Georgeson & Company, Inc. to assist in
the solicitation of proxies at an estimated cost of $13,000 plus expenses.
In addition, solicitation of proxies may be made by telephone or telegram
by Directors, officers or regular employees of the Company.
2
I. ELECTION OF DIRECTORS
NOMINEES AND CONTINUING DIRECTORS
The Board of Directors is divided into three classes, with the terms of
office of each class ending in successive years. Five Directors of the
Company are to be elected for terms ending at the Annual Meeting in 2006,
or until their respective successors have been elected and have qualified.
Certain information with respect to the nominees for election as Directors
proposed by the Company, as well as the other Directors whose terms of
office as Directors will continue after the Annual Meeting, is set forth
below.
SHARES OF
EMERSON
SERVED AS COMMON STOCK
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY
OR POSITION, OTHER DIRECTORSHIPS SINCE OWNED(1)(2)(3)
-------------------------------- --------- --------------
NOMINEES FOR TERMS ENDING IN 2006
A. A. Busch III, 65......................................... 1985 29,234(4)
Chairman of the Board and President of Anheuser-Busch
Companies, Inc., brewery, container manufacturer and
theme park operator
He is also a Director of SBC Communications Inc.
A. F. Golden, 56............................................ 2000 3,878
Partner of Davis Polk & Wardwell, lawyers
G. A. Lodge, 70............................................. 1974 12,034
President of InnoCal Management, Inc., a venture capital
management company
V. R. Loucks, Jr., 68....................................... 1979(5) 8,034
Retired Chairman and Chief Executive Officer of Baxter
International Inc., Chairman of The Aethena Group LLC
(private equity fund)
He is also a Director of Affymetrix, Inc., Anheuser-Busch
Companies, Inc., GeneSoft, Inc. and Edwards Life
Sciences Corporation
J. B. Menzer, 51............................................ 2002(5) 1,000
Executive Vice President of Wal-Mart Stores, Inc. and
President and Chief Executive Officer of Wal-Mart
International
He is also a Director of Wal-Mart de Mexico
TO CONTINUE IN OFFICE UNTIL 2005
D. N. Farr, 47.............................................. 2000 413,726(4)
Chief Executive Officer of Emerson
He is also a Director of Delphi Corp.
D. C. Farrell, 69........................................... 1989 18,034
Retired Chairman and Chief Executive Officer of The May
Department Stores Company
W. J. Galvin, 56............................................ 2000 333,208(4)
Executive Vice President and Chief Financial Officer of
Emerson
He is also a Director of Factory Mutual Insurance Company
R. B. Horton, 63............................................ 1987 7,396
Chairman of Chubb plc, electronic security systems and
monitoring and fire protection systems and services
He is also a Director of PartnerRe Ltd. and Premier
Farnell plc
3
SHARES OF
EMERSON
SERVED AS COMMON STOCK
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY
OR POSITION, OTHER DIRECTORSHIPS SINCE OWNED(1)(2)(3)
-------------------------------- --------- --------------
C. A. Peters, 47............................................ 2000 205,148
Senior Executive Vice President of Emerson
J. W. Prueher, 59........................................... 2001 1,284
Retired Admiral, U.S. Navy, and Retired U.S. Ambassador to
the People's Republic of China
He is also a Director of Merrill Lynch & Company, Inc.,
The New York Life Insurance Company, and Integrated
Defense Technologies, Inc.
TO CONTINUE IN OFFICE UNTIL 2004
J. G. Berges, 55............................................ 1997 532,072(4)
President of Emerson
He is also a Director of PPG Industries, Inc. and MKS
Instruments, Inc.
C. Fernandez G., 35......................................... 2001 2,284
Vice Chairman and Chief Executive Officer of Grupo Modelo,
S. A. de C. V., brewer
He is also a Director of Anheuser-Busch Companies, Inc.,
Grupo Televisa, S.A., and Grupo Elektra S.A.
C. F. Knight, 66............................................ 1972 1,626,597
Chairman of the Board of Emerson
He is also a Director of Anheuser-Busch Companies, Inc.,
BP p.l.c., International Business Machines Corporation,
Morgan Stanley Dean Witter & Co. and SBC Communications
Inc.
R. L. Ridgway, 67........................................... 1995 6,744
Former Assistant Secretary of State for Europe and Canada
She is also a Director of The Boeing Company, Manpower,
Inc., New Perspective Fund, Inc., Sara Lee Corporation
and 3M Company
W. M. Van Cleve, 73......................................... 1984 31,234(4)
Senior Counsel of Bryan Cave LLP, lawyers
E. E. Whitacre, Jr., 61..................................... 1990 8,434
Chairman and Chief Executive Officer of SBC Communications
Inc., a communications holding company
He is also a Director of Anheuser-Busch Companies, Inc.,
Burlington Northern Santa Fe Corporation and The May
Department Stores Company
All Directors and Executive Officers as a Group
(21 persons).............................................. 3,665,618(6)(7)
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(1) Beneficial ownership of Emerson common stock is stated as of September
15, 2002, except J. B. Menzer, which is stated as of October 17, 2002.
Under rules of the Securities and Exchange Commission, persons who have
power to vote or dispose of securities, either alone or jointly with
others, are deemed to be the beneficial owners of such securities.
Accordingly, except as indicated for Mr. Berges and Mr. Galvin in Note
4 below, shares owned separately by spouses are not included. Each
person reflected in the table has both sole voting power and sole
investment power with respect to the shares included in the table,
except as described in the footnotes below and except as follows: (i)
with respect to the following shares, the person named has no
investment power: Mr. Knight-240,672; Mr. Farr-160,000; Mr.
Berges-140,000; Mr. Galvin-68,000; Mr. Peters-42,000; Mr. Golden-1,878;
Mr. Fernandez-1,084; Mr. Preuher-1,084; Mr. Withers-32,000; each other
non-employee Director-5,634 (except
4
Mr. Menzer); and all Directors and executive officers as a group-778,464
shares; and (ii) with respect to the following shares the person named
has no voting power: Mr. Knight-8,799; Mr. Farr-2,267; Mr. Berges-4,182;
Mr. Galvin-6,176; and Mr. Peters-2,308.
(2) Includes the following shares which such persons have or will have
within 60 days after September 15, 2002 the right to acquire upon the
exercise of employee stock options: Mr. Knight-229,333; Mr.
Farr-207,657; Mr. Berges-227,820; Mr. Galvin-123,745; Mr.
Peters-87,784; and Mr. Withers-70,894.
(3) No person reflected in the table owns more than .5% of the outstanding
shares of Emerson common stock.
(4) Includes 668 shares held by the children of Mr. Farr; 38,291 shares
held by the spouse and/or children of Mr. Berges; and 34,309 shares
held by or in trust for the spouse and/or children of Mr. Galvin.
Includes 75,139 shares, and options exercisable with respect to 57,258
shares, held by the Galvin Family Partnership. Includes 300 shares held
by Mr. Busch as co-trustee of a trust, as to which Mr. Busch shares
voting and investment power and disclaims beneficial ownership.
Includes 9,200 shares held by Mr. Van Cleve as co-trustee of three
trusts and a charitable foundation, as to which Mr. Van Cleve shares
voting and investment power and disclaims beneficial ownership.
(5) Mr. Loucks previously served as a Director from April 1974 to December
1975. The Board of Directors appointed Mr. Menzer as a Director on
October 1, 2002.
(6) Includes 977,911 shares of common stock which executive officers have,
or will have within 60 days after September 15, 2002 the right to
acquire upon exercise of employee stock options. Shares owned as a
group represents .87% of the outstanding common stock of the Company.
The shares issuable upon exercise of options were deemed to be
outstanding for purposes of calculating the percentage of outstanding
shares. The total includes 23,804 shares held in employee accounts
under the Company's 401(k) savings plans, as to which employees have
investment power only.
(7) The total includes shares owned by L. L. Browning, Jr. and R. B. Loynd,
Directors who are retiring at the meeting, who owned 197,793 shares and
14,034 shares, respectively. The total also includes shares owned by
W. W. Withers, the only executive officer of the Company named in the
Summary Compensation Table not otherwise shown individually in this
table, who beneficially owned 145,811 shares.
L. L. Browning, Jr. and R. B. Loynd, whose terms of office as Directors
expire at the 2003 Annual Meeting, are retiring from the Board at the
meeting and not standing for re-election.
Each of the nominees and continuing Directors has had the same position
or other executive positions with the same employer during the past five
years, except as follows:
* Mr. Farrell retired as Chairman and Chief Executive Officer of The
May Department Stores Company in April 1998.
* Mr. Loucks relinquished the position of Chief Executive Officer of
Baxter International Inc. at the end of 1998 and retired as Chairman
at the end of 1999.
* Sir Robert Horton retired as Chairman of Railtrack PLC in July 1999.
He was named Deputy Chairman of Chubb plc in September 2002 and
Chairman in December 2002 (both are non-executive positions).
* Admiral Prueher served as Ambassador to the People's Republic of
China from November 1999 to May 2002. Prior thereto he served as a
lecturer and Senior Advisor to the Stanford-Harvard Preventive
Defense Program and a Senior Fellow at the Center for Naval Analysis.
Admiral Prueher completed 35 years of service in the United States
Navy in May 1999, and was Commander-in-Chief of the U. S. Pacific
Command from 1996 until his retirement.
CERTAIN BUSINESS RELATIONSHIPS AND TRANSACTIONS
G. A. Lodge is employed by InnoCal Management, Inc. ("InnoCal I"), which
manages a private venture capital fund, InnoCal L.P. The Company has
committed to invest $10 million in InnoCal II, L.P., a separate $100
million private venture capital fund which is managed by InnoCal Management
II, LLC ("InnoCal II"). InnoCal I occasionally furnishes management
services to InnoCal II, for which InnoCal II reimburses InnoCal I; the
amount of
5
such reimbursements in the Company's 2002 fiscal year attributable to Mr.
Lodge's services to InnoCal II was $175,000. Mr. Lodge also has an interest
in the investment gains of InnoCal II, L.P. of 3.5%.
Mr. Van Cleve is a Senior Counsel and former Chairman of the law firm
of Bryan Cave LLP, which firm the Company retained in fiscal 2002 and
expects to retain in fiscal 2003.
Mr. Golden is a partner of the law firm of Davis Polk & Wardwell, which
firm the Company retained in fiscal 2002 and expects to retain in fiscal
2003.
BOARD OF DIRECTORS AND COMMITTEES
The members of the Board of Directors are elected to various
committees. The standing committees of the Board (and the respective
chairmen) are: Executive Committee (Knight), Audit Committee (Busch),
Compensation and Human Resources Committee (Loucks), Finance Committee
(Horton), Pension Committee (Lodge) and Public Policy Committee (Whitacre).
The Compensation and Human Resources Committee acts as a nominating
committee and reviews new Director nominees. There were eight meetings of
the Board of Directors during fiscal 2002. All of the Directors attended at
least 75% of the meetings of the Board and committees on which they served
except G. A. Lodge, who attended 71% of such meetings due to a
hospitalization.
The functions of the Compensation and Human Resources Committee are to
review and approve the salaries of all officers of the Company; review and
approve all salaries above a specified level to be paid to non-officer
employees and salaries of all division presidents; grant awards under and
administer the Company's stock option and incentive shares plans; review
and approve all additional compensation plans, agreements and contracts;
determine if necessary when service by officers and Directors with another
entity is eligible for indemnification under the Company's Bylaws; monitor
the senior management and Director succession plans and review new Director
nominees; and authorize Company contributions to benefit plans, and adopt
and terminate benefit plans not the prerogative of management. The
Committee met five times in fiscal 2002. The members of the Committee are
V. R. Loucks, Jr., Chairman, D. C. Farrell, E. E. Whitacre, Jr., and R. B.
Loynd.
See the "Report of the Compensation and Human Resources Committee of
the Board of Directors on Executive Compensation" at page 11 below.
The functions and membership of the Audit Committee are described under
"Report of the Audit Committee" below.
DIRECTOR COMPENSATION
Directors who are employees of the Company do not receive any
compensation for service as Directors. Each non-employee Director is
currently paid an annual retainer of $45,000 plus an award of restricted
shares of Company common stock with a market value on the date of the award
of $75,000 and fees of $1,500 plus expenses for attendance at each Board
meeting. Such restricted stock does not vest and cannot be sold until the
Director's retirement or earlier death or resignation. Each committee
chairman is currently paid an annual retainer of $5,000, except the chair
of the Audit Committee who is paid an annual retainer of $10,000, and each
committee member is paid $1,250 plus expenses for attendance at each
committee meeting.
Directors may elect to defer all or a part of such cash compensation;
such deferred amounts are credited with interest quarterly at the prime
rate charged by Bank of America, N.A. Directors in the alternative may
elect to have deferred fees converted into units equivalent to shares of
Emerson common stock, and their accounts are credited with additional units
representing dividend equivalents. All deferred fees are payable only in
cash.
The Company has a Continuing Compensation Plan for Non-Management
Directors which was amended effective June 4, 2002 to exclude any
non-employee Director who assumes office after that date. Under this plan,
a non-employee Director who assumed office prior to that date, and who
serves as a Director for at least five years will, after the later of
termination of service as a Director or age 72, receive for life a
percentage of the annual cash retainer for Directors in effect at the time
of termination of service. Such percentage is 50% for five years' service
and increases by 10% for each additional year of service to 100% for ten
years' or more service. In the event that service as a Director terminates
because of death, the benefit will be paid to the surviving spouse for five
years.
6
C. F. Knight, Chairman of the Board, is an employee of the Company.
Under the terms of his employment agreement, after his retirement as an
officer and employee of the Company Mr. Knight will be available at
management's request to consult with the Company up to 30 days per year,
for a period of not less than 15 years and will be compensated with a daily
consulting fee based on his daily salary rate at the time of his
retirement. He will also continue to have access to Company facilities and
services, including the Company's aircraft, car, driver, financial planning
and club memberships if he meets certain conditions including not competing
with the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's Directors and executive officers are required, pursuant
to Section 16(a) of the Securities Exchange Act of 1934, to file statements
of beneficial ownership and changes in beneficial ownership of common stock
of the Company with the Securities and Exchange Commission and the New York
Stock Exchange and to furnish copies of such statements to the Company.
Based solely on a review of the copies of such statements furnished to
the Company and written representations that no other such statements were
required, the Company believes that during fiscal year 2002 its Directors
and executive officers complied with all such requirements.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company's financial reporting process
on behalf of the Board of Directors. The Committee is composed of seven
independent Directors, met four times in fiscal 2002, and operates under a
written charter adopted by the Board of Directors. Management has the
primary responsibility for the financial statements and the reporting
process, including the Company's systems of internal controls. In
fulfilling its oversight responsibilities, the Committee reviewed the
audited financial statements in the Annual Report on Form 10-K with
management, including a discussion of the quality and the acceptability of
the Company's financial reporting and controls.
The Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with accounting principles generally accepted in the
United States of America, their judgments as to the quality and the
acceptability of the Company's financial reporting and such other matters
as are required to be discussed with the Committee under auditing standards
generally accepted in the United States of America. In addition, the
Committee has discussed with the independent auditors the auditors'
independence from management and the Company, including the impact of
non-audit-related services provided to the Company and the matters in the
auditors' written disclosures required by Standard No. 1 of the
Independence Standards Board.
The Committee also discussed with the Company's internal and
independent auditors the overall scope and plans for their respective
audits. The Committee meets periodically with the internal and independent
auditors, with and without management present, to discuss the results of
their examinations, their evaluations of the Company's internal controls,
and the overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report on Form 10-K for the fiscal
year ended September 30, 2002 for filing with the Securities and Exchange
Commission. The Committee also evaluated and recommended to the Board the
reappointment of the Company's independent auditors for fiscal 2003.
Audit Committee
A. A. Busch III, Chairman
C. Fernandez G.
A. F. Golden
R. B. Loynd
J. B. Menzer
R. L. Ridgway
W. M. Van Cleve
7
FEES PAID TO KPMG LLP
The following fees were paid to KPMG LLP, the Company's independent
auditors, for services rendered in fiscal 2002 ($ in Millions):
Audit Fees.................................................. $ 8.5
Financial Information Systems Design and Implementation
Fees...................................................... 0
All Other Fees.............................................. 9.3
-----
Total KPMG LLP Fees..................................... $17.8
=====
Audit Fees primarily represents amounts expected to be paid for the
audit of the Company's annual financial statements, reviews of SEC Forms
10-Q and 10-K and statutory audit requirements at certain non-U.S.
locations.
All Other Fees include amounts paid for non-financial statement audit
services, such as tax services, financial due diligence assistance and
audits of benefit plans.
EXECUTIVE COMPENSATION
The following information relates to compensation received or earned by
the Company's Chief Executive Officer and each of the other four most
highly compensated executive officers of the Company for the last fiscal
year of the Company and the compensation received or earned by them for the
two prior fiscal years (except C. A. Peters, who became an executive
officer during 2001).
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION(1)
-----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUT
------------------------------------------------------------------------------------------------
SECURITIES LONG-
OTHER UNDERLYING TERM ALL
ANNUAL RESTRICTED OPTIONS/ INCENTIVE OTHER
NAME AND FISCAL COMPENSA- STOCK SARS PLAN COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) TION($)(2) AWARD(S)($)(3) (#) PAYOUTS($)(4) SATION($)(5)
------------------ ------ --------- -------- ---------- -------------- ---------- ------------- ------------
D. N. Farr 2002 925,000 500,000 40,135 929,600 125,000 1,867,335 36,915
Chief Executive Officer(6) 2001 700,000 540,000 18,692 6,681,250 100,000 0 32,757
2000 450,000 600,000 -- 0 85,000 0 20,314
J. B. Berges 2002 812,500 500,000 -- 0 100,000 2,347,485 34,382
President 2001 700,000 540,000 -- 6,013,125 100,000 0 33,236
2000 450,000 600,000 -- 0 100,000 0 25,575
W. J. Galvin 2002 518,750 400,000 -- 0 85,000 2,082,735 24,184
Executive Vice President and 2001 425,000 430,000 -- 1,870,750 0 0 22,932
Chief Financial Officer 2000 400,000 475,000 -- 0 85,000 0 21,250
W. W. Withers 2002 405,000 330,000 -- 0 50,000 1,153,145 19,719
Senior Vice President, 2001 345,000 350,000 -- 801,750 0 0 19,488
Secretary and General Counsel 2000 325,000 380,000 -- 0 50,000 0 18,982
C. A. Peters 2002 387,500 315,000 -- 0 50,000 1,087,275 18,182
Senior Executive Vice 2001 350,000 320,000 -- 2,806,125 30,000 0 18,096
President
--------
(1) The Company's stock option plans, incentive shares plans and
supplemental executive retirement and savings investment plans
generally provide for acceleration of vesting in the event of a change
in control of the Company.
(2) Consistent with applicable regulations, certain non-cash compensation
need not be reported.
8
(3) The number of shares of restricted stock held by the named executive
officers at the end of fiscal 2002, and the aggregate value of such
shares, are as follows: D. N. Farr, 160,000 shares having a value of
$7,030,400; J. G. Berges, 140,000 shares having a value of $6,151,600;
W. J. Galvin, 68,000 shares having a value of $2,987,920; W. W. Withers,
32,000 shares having a value of $1,405,080; and C. A. Peters, 42,000
shares having a value of $1,845,480. The Company pays dividends on
restricted stock. All restricted stock awards have a restriction period
and are earned over a period of three to ten years and vest at the end
of such period; the shares are payable only if the executive is employed
with the Company and in good standing at the end of the restriction
period. The amounts shown in the table represent the dollar value based
on the stock price per share at award date and do not reflect any
payment to the individual.
(4) Long-term performance awards paid in fiscal 2002 were based on
achievement of performance objectives over a five-year period. The
awards were made in fiscal 1997 and were disclosed as to the then-named
executive officers in the Company's proxy statement for the 1998 Annual
Meeting.
(5) Includes for fiscal 2002: (a) the value of the benefit to the named
individuals of the remainder of premiums paid by the Company on behalf
of the named individuals pursuant to the Company's "split dollar"
insurance program in the following amounts: D. N. Farr-$240; J. G.
Berges-$569; W. J. Galvin-$465; W. W. Withers-$844; and C. A.
Peters-$494; (b) contributions by the Company on behalf of the named
individuals to the Company's matched savings plan in the following
amounts: D. N. Farr-$36,675; J. G. Berges-$33,813; W. J.
Galvin-$23,719; W. W. Withers-$18,875; and C. A. Peters-$17,688.
(6) Mr. Farr was also the Company's Chief Operating Officer until November
1, 2001.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(1)
---------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS/SARS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 0% ($) 5% ($) 10% ($)
---- ------------ ------------ ----------- ---------- ------ ------ -------
D. N. Farr............... 125,000 5.92 52.83 01/16/2012 0 4,153,063 10,524,677
J. G. Berges............. 100,000 4.73 52.83 01/16/2012 0 3,332,450 8,419,741
W. J. Galvin............. 85,000 4.02 52.83 01/16/2012 0 2,824,083 7,156,780
W. W. Withers............ 50,000 2.37 52.83 01/16/2012 0 1,661,225 4,209,871
C. A. Peters............. 50,000 2.37 52.83 01/16/2012 0 1,661,225 4,209,871
All Optionees(3)(4)...... 2,112,250 100 52.85 various 0 70 million 178 million
All Stockholders......... n/a n/a n/a n/a 0 12 billion 30 billion
Optionees Gain as % of
All Stockholders' Gain. n/a n/a n/a n/a 0 Less than Less than
1% 1%
-------
(1) Options were granted at 100% of the market price on the date of grant.
Options generally become exercisable one-third after one year from the
date of grant, an additional one-third after two years from the date of
grant, and are exercisable in full after three years from the date of
grant. Options granted in January 2002 became exercisable one-third
after nine months from the date of grant, an additional one-third
becomes exercisable 21 months after the date of grant, and are
exercisable in full 33 months after the date of grant.
(2) The dollar amounts under these columns are the result of calculations
at 0% and at the 5% and 10% rates set by the Securities and Exchange
Commission and therefore are not intended to forecast possible future
appreciation, if any, of the Company's stock price. Potential
realizable value for all stockholders is based on 421 million shares
outstanding at October 1, 2002 and a per share price of $44.16.
(3) Based on total number of options awarded in fiscal year 2002.
9
(4) No gain to the optionees is possible without an increase in stock
price, which will benefit all stockholders commensurately. A zero
percent stock price appreciation will result in zero dollars for the
optionee.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END($)(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------ ----------- ------------- ----------- -------------
D. N. Farr................ 0 0 104,328 236,668 162,419 53,251
J. G. Berges.............. 0 0 127,824 216,668 248,386 53,251
W. J. Galvin.............. 0 0 67,081 130,001 26,624 53,251
W. W. Withers............. 0 0 37,563 76,667 15,975 31,950
C. A. Peters.............. 0 0 51,120 85,000 142,131 15,975
-------
(1) The values represent the difference between the exercise price of the
options and the market price of the Company's common stock at fiscal
year-end.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE
PAYOUTS UNDER
NON-STOCK
PERFORMANCE OR PRICE-BASED PLANS
NUMBER OF OTHER PERIOD
PERFORMANCE UNTIL MATURATION TARGET/MAXIMUM
NAME UNITS OR PAYOUT (# OF SHARES)
---- ----------- ---------------- -----------------
D. N. Farr...................................... n/a n/a n/a
J. G. Berges.................................... n/a n/a n/a
W. J. Galvin.................................... n/a n/a n/a
W. W. Withers................................... n/a n/a n/a
C. A. Peters.................................... n/a n/a n/a
PENSION PLAN TABLE
The following table shows the annual benefits payable upon retirement
at age 65 for various compensation and years of service combinations under
the Emerson Electric Co. Retirement Plan and a related supplemental
executive retirement plan.
ANNUAL RETIREMENT BENEFIT AT AGE 65 AFTER
----------------------------------------------------------------------
10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
AVERAGE ANNUAL OF OF OF OF OF
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE
-------------- -------- -------- -------- -------- --------
$ 600,000............................. $ 88,028 $132,042 $176,056 $220,070 $ 308,097
800,000............................. 118,028 177,042 236,056 295,070 413,097
1,000,000............................. 148,028 222,042 296,056 370,070 518,097
1,200,000............................. 178,028 267,042 356,056 445,070 623,097
1,400,000............................. 208,028 312,042 416,056 520,070 728,097
1,600,000............................. 238,028 357,042 476,056 595,070 833,097
1,800,000............................. 268,028 402,042 536,056 670,070 938,097
2,000,000............................. 298,028 447,042 596,056 745,070 1,043,097
10
Retirement benefits under the plans are computed on the basis of an
annuity with five years certain, unless the participant elects another
method of payment. The benefit amounts in the Pension Plan Table above have
already been adjusted for Social Security (or any other benefits). The
dollar amounts in the salary and bonus columns of the Summary Compensation
Table above are substantially the same as the compensation covered by the
plans, but deferred bonuses may cause such amounts to vary from the amounts
shown in the Summary Compensation Table.
The credited years of service covered by the plans for each of the
persons named in the Summary Compensation Table above are as follows: D. N.
Farr, 22; J. G. Berges, 27; W. J. Galvin, 30; W. W. Withers, 13; and C. A.
Peters, 23. Payment of the specified retirement benefits is contingent upon
continuation of the plans in their present form until the employee retires.
The benefits of certain employees may be reduced under the Emerson
Electric Co. Retirement Plan to meet the limits of the Internal Revenue
Code. An employee who is subject to a reduction of benefits under the
Internal Revenue Code may be selected to participate in the supplemental
executive retirement plan. Participation in the supplemental plan is by
award, subject to the sole approval by the Compensation and Human Resources
Committee. D. N. Farr, J. G. Berges, and W. J. Galvin have been selected to
participate in the supplemental plan. The estimated annual retirement
benefits payable upon retirement at age 65 to D. N. Farr, J. G. Berges,
W. J. Galvin, W. W. Withers, and C. A. Peters are 60%, 57%, 59%, 6%, and 23%,
respectively, of the dollar amounts shown in the salary and bonus columns
of the Summary Compensation Table for fiscal year 2002.
REPORT OF THE COMPENSATION AND HUMAN RESOURCES COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation and Human Resources Committee of the Board of
Directors (the "Committee"), composed of four non-employee Directors,
establishes and administers the executive compensation program for the
Company's top executives. The program supports the Company's commitment to
enhancing stockholder value. It is designed to attract and retain
high-quality executives, to encourage them to make career commitments to
the Company, and to accomplish the Company's short- and long-term
objectives. The executive compensation package has uniquely served the
Company's stockholders since 1977 by rewarding and motivating executives
for the accomplishment of the Company's objectives. The executive
compensation program is a focused, well-defined management tool that
reinforces the Company's culture and commitment to stockholders.
The Committee has historically viewed compensation as a total package
that includes base salary and variable short- and long-term
(performance-based) compensation. The total program is structured to
deliver a significant percentage of pay through at-risk pay programs which
reward executives if the performance of the Company warrants. Basic
principles underlying the pay programs are the following:
* Maximize stockholder value.
* Retain, reward and motivate key executives.
* Compensate for performance rather than create a sense of entitlement.
* Reward team results.
* Build executive stock ownership.
COMPONENTS OF EXECUTIVE COMPENSATION
To determine the competitive level of total compensation (including
total annual cash and long-term incentives), the Committee sets the total
pay target in a competitive compensation range as benchmarked against
published survey data and data derived through special studies of
comparable industries, including those shown in the peer group performance
graph.
TOTAL ANNUAL CASH COMPENSATION: Cash compensation consists of base
salary and annual cash incentives (bonuses), with the sum of the two
referred to as "Total Cash Compensation." Currently, approximately 1,200
key executives participate in the Total Cash Compensation program. A Total
Cash Compensation target, including base salary and incentive, is
established for each executive officer position using benchmark survey
comparisons. Annual increases, if any, are based on individual merit and
Company affordability. The annual incentive opportunity
11
represents from 25% to 70% of Total Cash Compensation. Payment of the annual
cash incentive portion is based on the financial performance of the Company
versus pre-established targets. The Committee annually establishes and
approves short-term financial targets which are important to the Company and
its stockholders. Typical targets include sales, earnings per share, pre-tax
earnings and net profits, return on equity, and asset management. To a
lesser degree, individual performance and potential can be a factor. The
relative importance of each target is determined each year by the Committee,
and may vary depending upon the Company's financial objectives for that
year.
LONG-TERM COMPENSATION INCENTIVES: Long-term incentive awards,
consisting of performance shares, stock options and restricted stock, are a
substantial portion of the total compensation packages of certain key
senior executives and are specifically focused on the Company's longer-term
objectives. Long-term programs are paid in stock. The Company's continuing
philosophy is that executives are expected to hold the stock earned under
the programs. The value of current executive stock holdings is significant,
in absolute terms and in relation to base pay, though the Company does not
establish specific ownership targets. Long-term plan participation and size
of awards are determined by the individual's potential to make significant
contributions to the Company's financial results, level of management
responsibility and individual performance and potential.
PERFORMANCE SHARES: The performance shares program reinforces the
Company's long-term objectives and rewards executives for achieving those
objectives. The Company has had continuing performance shares programs
since 1977. Participation in this program is limited, and only executives
who can most directly influence the Company's long-term financial success
are included. Awards are denominated in share units with no dividend
payments during the performance period. The Committee approves the
performance measures and evaluates the performance of the Company against
those measures. Historically, the Company's plans have targeted earnings
per share growth objectives and other financial measures deemed appropriate
to accomplish the Company's performance targets. The final payout (paid in
stock and/or cash) can range from 0% to 100% of the target award, depending
-----------
upon the level of achievement of the established financial targets.
STOCK OPTIONS: The stock option program provides the long-term focus
for a larger group of key employees. Currently, approximately 2,500 key
employees are eligible to be considered for participation in the stock
option program. Awards are intended to be made approximately every three
years and are generally vested one-third each year. Options are granted at
100% of the fair market value of the Company's common stock on the date of
grant and expire ten years from the date of grant.
RESTRICTED STOCK: The restricted stock program was designed primarily
to retain key executives and potential top management of the Company while
building stock ownership, long-term equity and linking pay directly with
stockholder return. Participation has been highly selective and limited to
a very small group of executives. The Committee views this program as an
important management succession planning and retention tool. The
restriction period for most awards is ten years.
The Company's incentive compensation programs are designed to reward
executives for achievement of the Company's performance objectives. The
plans, as approved by stockholders, are designed to comply with Internal
Revenue Code Section 162(m) to ensure tax deductibility. The Committee
considers it important to retain the flexibility to design compensation
programs that are in the best interest of the Company and the stockholders.
CEO COMPENSATION
The Committee reviewed Mr. Farr's 2002 performance in his second year
as Chief Executive Officer. They recognized that Mr. Farr continued to
provide extraordinary leadership in a difficult year. Because of Mr. Farr's
vision and leadership throughout the year, Emerson is in the midst of a
profound transformation which should drive improved performance in the many
markets it serves. This focus on restructuring has delivered substantial
benefits in a challenging environment. Operating cash flow increased over
6% and free cash flow over 20% for the year, providing a solid foundation
for the Company. Further, key technology and growth investments in the
businesses have been maintained allowing Emerson to gain share and
strengthen the Company's position versus competitors. Mr. Farr maintained a
conservative approach to managing costs and strengthening the balance sheet
to position Emerson for the future and to deliver solid financial
performance.
12
In recognition of Mr. Farr's strong leadership in fiscal year 2002, the
Committee determined that he should be awarded a bonus for the year
consistent with the financial performance of the Company. Therefore, this
bonus was set at a reduced level.
The Committee awarded Mr. Farr a fiscal year 2002 bonus of $500,000,
down 7% from fiscal year 2001 and 17% from fiscal year 2000. He received a
base salary of $925,000 and was awarded long-term compensation consisting
of 20,000 shares of restricted stock and 125,000 stock options.
The payout of performance units for the fiscal year 1997 - 2001 period
under the Incentive Shares Plan, which is the primary long-term incentive
plan for key executives, was made in fiscal year 2002. A broad group of key
executive officers around the world participate in this shareholder-
approved plan, including Mr. Farr and other executive officers listed in the
Summary Compensation Table. The performance payout made after the end of the
five-year period is reported in the Summary Compensation Table.
Compensation and Human Resources Committee
V. R. Loucks, Jr., Chairman
D. C. Farrell
E. E. Whitacre, Jr.
R. B. Loynd
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The functions and members of the Compensation and Human Resources
Committee are set forth above under "Board of Directors and Committees."
None of the Committee members has served as an officer or employee of the
Company or a subsidiary of the Company except R. B. Loynd, who served as a
Director of the Company during the last fiscal year, was an officer of a
division of the Company from 1955 to 1969, serving last as President of the
Builder Products Division.
E. E. Whitacre, Jr., Chairman and Chief Executive Officer of SBC
Communications Inc., served as a Director and member of the Compensation
and Human Resources Committee of the Company; and C. F. Knight, Chairman of
the Board of the Company, served as a Director of SBC Communications Inc.
during the last fiscal year.
13
PERFORMANCE GRAPH
The following graph compares cumulative total returns (assuming
reinvestment of dividends) on the Company's common stock against the
Standard & Poor's Composite 500 Stock Index (S&P 500) and the Dow Jones
Electrical Components and Equipment Index (DJEE) for the five-year period
ended September 30, 2002 and the Compound Annual Growth Rate (CAGR).
[GRAPH]
-----------------------------------------------------
1997 1998 1999 2000 2001 2002 CAGR
---- ---- ---- ---- ---- ---- ----
EMERSON $100 $110 $114 $124 $ 89 $ 86 -3.0%
S&P 500 100 109 139 158 116 92 -1.6
DJEE 100 85 127 149 58 37 -18.0
-----------------------------------------------------
14
II. STOCKHOLDERS' PROPOSAL ON SEXUAL ORIENTATION
Six stockholders have informed the Company that they intend to present
jointly the following proposal at the meeting:
Sexual Orientation Policy
WHEREAS: our Company has pledged its commitment to principles of
non-discrimination, but has not in its company-wide, written equal
employment opportunity policy explicitly barred discrimination based on
sexual orientation;
WHEREAS: employment discrimination and the denial of equal benefits on
the basis of sexual orientation diminishes employee morale and
productivity;
WHEREAS: a National Gay and Lesbian Task Force study revealed that
between 16% and 44% of gay men and lesbians in twenty cities nationwide
have experienced some form of workplace harassment or discrimination
related to their sexual orientation;
WHEREAS: San Francisco, Atlanta and New York have adopted and other
jurisdictions are considering adopting legislation restricting business
with companies which do not guarantee equal treatment for lesbian and gay
employees;
WHEREAS: our Company has operations in and makes sales to public
institutions in states and cities, which prohibit discrimination on the
basis of sexual orientation;
WHEREAS: our Company has an interest in preventing discrimination and
resolving complaints internally to avoid costly litigation or damage to our
reputation as an equal opportunity employer;
WHEREAS: hundreds of major corporations have adopted sexual orientation
non-discrimination policies including General Electric, General Motors,
Ford, Chrysler, Boeing, and Coca-Cola, leaving our Company behind;
WHEREAS: national polls have consistently found more than
three-quarters of Americans support equal rights in the workplace for gay
men, lesbians and bisexuals;
RESOLVED: The Shareholders request the Board of Directors to amend
Emerson's company-wide written equal employment opportunity policy to bar
discrimination on the basis of sexual orientation.
SUPPORTING STATEMENT: Sexual orientation discrimination is a morally
wrong and self-defeating business practice. By adopting and implementing a
clear and equitable policy, our Company will ensure a respectful and
supportive atmosphere for all employees and enhance its competitive edge by
joining the growing ranks of major companies guaranteeing equal opportunity
for all employees.
The Company will provide to stockholders the names and addresses of the
proponents and the number of shares of Emerson common stock held by them
promptly upon receiving an oral or written request therefor.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
-------
Identical proposals were submitted at the Company's annual meetings in
2001 and 2002. In 2001, the number of shares voting AGAINST the proposal
was more than 87% and in 2002 the number of shares voting AGAINST the
proposal was more than 89%.
The Board believes the current policies and practices achieve the
objectives of this proposal and that implementation of this proposal is
unnecessary. In fact, after meetings between the proponents and the Company
and in a letter dated August 10, 2001 from the proponents to each Company
Director, the proponents acknowledged that the Company takes affirmative
action to prevent discrimination based on sexual orientation by stating in
the letter, "[We] were happy to learn, for example, that Emerson includes
sexual orientation in its company-wide diversity training program. This
represents an important commitment to equality." This supports the Board
position that the action recommended by the proponent is unnecessary.
However, the proponents continued in their letter that ". . .we believe
that a legitimate commitment to nondiscrimination must begin with a formal
written statement. . ."
The Company continues to believe that its written equal employment
opportunity policy should only enumerate the types of discrimination that
are prohibited by U.S. law in order to highlight that these particular
types of
15
discrimination are illegal under federal law. This does not mean that the
Company does not share the proponents' interest in preventing
discrimination based on sexual orientation. The Company fully shares the
proponents' interests and does take affirmative action to prevent such
discrimination. The Board believes that adding additional special
categories to the Company's written policy which are not prohibited by
federal law is unnecessary and adding numerous additional special
categories to the Company's written policy dilutes the Company's overall
policy that discrimination in any form is prohibited.
The Company has an all-inclusive global policy so that there can be no
doubt among employees, supervisors or contractors worldwide that any form
of discrimination is prohibited. The Company maintains one consistent
global policy, which makes management's expectations clear. The Company's
communication, training and monitoring programs are continuously upgraded
to prevent discrimination of all kinds. For example, each of the Company's
human resources managers receives extensive training on acceptable
employment policies and practices, including the Company's policy that
employment actions be based only on merit. Each human resources manager is
specifically informed that the Company prohibits discrimination for any
reason. In addition, the Company's prohibition against discrimination is
discussed during the periodic conferences conducted for its human resources
staff.
Finally, the Company has received no indication from its employees that
discrimination on the basis of sexual orientation occurs at the Company,
nor has the Company received notice from any of its customers or suppliers
that the Company's employment policies or practices jeopardize its
relationships with those customers and suppliers.
FOR THESE REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
-------
THIS PROPOSAL.
III. VOTING
Shares may be represented by proxy at the meeting by completing and
returning the proxy card or voting by telephone or by Internet. The
affirmative vote of a majority of the shares entitled to vote which are
present in person or represented by proxy at the 2003 Annual Meeting is
required to elect Directors, to approve the stockholder proposal and to act
on any other matters properly brought before the meeting. Shares
represented by proxies which are marked or voted "withhold authority" with
respect to the election of any one or more nominees for election as
Directors, proxies which are marked or voted "abstain" on the stockholder
proposal, and proxies which are marked or voted to deny discretionary
authority on other matters will be counted for the purpose of determining
the number of shares represented by proxy at the meeting. Such proxies will
thus have the same effect as if the shares represented thereby were voted
against such nominee or nominees, against the stockholder proposal, and
against such other matters, respectively. If a broker indicates on the
proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will not be considered as present
and entitled to vote with respect to that matter.
The Company knows of no other matters to come before the meeting. If
any other matters properly come before the meeting, the proxies solicited
hereby will be voted on such matters in the discretion of the persons
voting such proxies, except proxies which are marked to deny discretionary
authority.
IV. INDEPENDENT AUDITORS
KPMG LLP was the auditor for the fiscal year ended September 30, 2002,
and the Board of Directors, upon recommendation of the Audit Committee, has
selected it as auditor for the year ending September 30, 2003. A
representative of KPMG LLP will be present at the meeting with the
opportunity to make a statement and/or respond to appropriate questions
from stockholders.
V. STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2004 Annual
Meeting scheduled to be held on February 3, 2004, must be received by the
Company by August 15, 2003 for inclusion in the Company's proxy statement
and proxy relating to that meeting. Upon receipt of any such proposal, the
Company will determine whether or not to include such proposal in the proxy
statement and proxy in accordance with regulations governing the
solicitation of proxies.
16
In order for a stockholder to nominate a candidate for Director, under
the Company's Bylaws timely notice of the nomination must be received by
the Company in advance of the meeting. Ordinarily, such notice must be
received not less than 90 nor more than 120 days before the meeting, i.e.,
between October 6 and November 5, 2003 for the 2004 Annual Meeting (but if
the Company gives less than 100 days' (1) notice of the meeting or (2)
prior public disclosure of the date of the meeting, then such notice must
be received within 10 days after notice of the meeting is mailed or other
public disclosure of the meeting is made). The stockholder filing the
notice of nomination must describe various matters regarding the nominee,
including, but not limited to, such information as name, address,
occupation and shares held.
In order for a stockholder to bring other business before a stockholder
meeting, timely notice must be received by the Company within the time
limits described above. Such notice must include a description of the
proposed business, the reasons therefor, and other specified matters. These
requirements are separate from the requirements a stockholder must meet to
have a proposal included in the Company's proxy statement. The foregoing
time limits also apply in determining whether notice is timely for purposes
of rules adopted by the Securities and Exchange Commission relating to the
exercise of discretionary voting authority.
In each case the notice must be given to the Secretary of the Company,
whose address is 8000 West Florissant Avenue, P.O. Box 4100, St. Louis,
Missouri 63136. Any stockholder desiring a copy of the Company's Bylaws
will be furnished one without charge upon written request to the Secretary.
A copy of the amended Bylaws is filed as an exhibit to the Company's Annual
Report on Form 10-K for the 2001 fiscal year and is available at the
Securities and Exchange Commission Internet site (http://www.sec.gov).
17
[LOGO]
EMERSON
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby appoint C. F. KNIGHT, W. W. WITHERS,
and H. M. SMITH, or any of them, with full powers of substitution, the true
and lawful attorneys in fact, agents and proxies of the undersigned to
represent the undersigned at the Annual Meeting of the Stockholders of
EMERSON ELECTRIC CO., to be held on February 4, 2003, commencing at 10:00
A.M., St. Louis Time, at the headquarters of the Company at 8000 West
Florissant Avenue, St. Louis, Missouri, and at any and all adjournments of
said meeting, and to vote all the shares of Common Stock of the Company
standing on the books of the Company in the name of the undersigned as
specified and in their discretion on such other business as may properly
come before the meeting.
(Continued, and to be signed, on the other side)
-------------------------------------------------------------------------------
FOLD AND DETACH HERE
[LOGO]
EMERSON
ADMISSION TICKET
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, February 4, 2003
10:00 A.M.
Emerson Electric Co. Headquarters
8000 W. Florissant Avenue
St. Louis, MO 63136
==============================
PLEASE PRESENT THIS TICKET
NON-TRANSFERABLE AT THE REGISTRATION DESK
UPON ARRIVAL
==============================
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION Please mark
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AND your vote as
AGAINST PROPOSAL 2. indicated in
this example /X/
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING:
---
1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed to the right
/ / / /
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name on the list below.)
01 A. A. Busch III 02 A. F. Golden 03 G. A. Lodge
04 V. R. Loucks, Jr. 05 J. B. Menzer
I PLAN TO ATTEND THE ANNUAL MEETING / /
MANAGEMENT RECOMMENDS A VOTE AGAINST THE FOLLOWING:
-------
2. STOCKHOLDERS' PROPOSAL ON SEXUAL ORIENTATION FOR AGAINST ABSTAIN
/ / / / / /
The undersigned hereby acknowledges receipt of Notice of said Annual Meeting
and accompanying Proxy Statement, each dated December 16, 2002.
Please disregard if you have previously provided your consent decision. / /
By checking the box to the right, I consent to future delivery of annual
reports, proxy statements, prospectuses and other materials and shareholder
communications electronically via the Internet at a webpage which will be
disclosed to me. I understand that the Company may no longer distribute
printed materials to me from any future shareholder meeting until such
consent is revoked. I understand that I may revoke my consent at any time by
contacting the Company's transfer agent, Mellon Investor Services LLC,
Ridgefield Park, NJ and that costs normally associated with electronic
delivery, such as usage and telephone charges as well as any costs I may
incur in printing documents, will be my responsibility.
SIGNATURE SIGNATURE DATE
------------------------ --------------------- ---------
(IF STOCK IS OWNED IN JOINT NAMES ALL OWNERS MUST SIGN)
----------------------------------------------------------------------------
FOLD AND DETACH HERE
-------------------------------------------------
YOU CAN VOTE IN ONE OF THREE WAYS:
-------------------------------------------------
1. Call toll-free 1-800-435-6710 on a touch tone
telephone 24 hours a day - 7 days a week.
There is NO CHARGE to you for this call.
OR
--
2. Vote by Internet at our Internet Address: http://www.eproxy.com/emr
OR
--
3. Mark, sign and date your proxy card and
return promptly in the enclosed envelope.
----------------------------------------------------------------------------
IF YOU WISH TO VOTE BY TELEPHONE OR INTERNET, PLEASE FOLLOW THESE
DIRECTIONS:
READ THE ACCOMPANYING PROXY STATEMENT.
HAVE YOUR PROXY CARD IN HAND.
You will be asked to enter your 11-digit Control Number, which is
located in the box in the lower right hand corner of this form.
YOU DO NOT NEED TO RETURN A PROXY CARD IF YOU ARE VOTING BY
TELEPHONE OR INTERNET.
----------------------------------------------------------------------------
THANK YOU FOR VOTING
PLEASE ADMIT: CONTROL NUMBER
Page 14 of the printed proxy statement contains a Stock Performance
Graph. The information contained within the graph is presented in a tabular
format immediately following the graph.