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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14 a-11(c) or 240.14a-12
BRENCO, INCORPORATED
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------
Jacob M. Feichtner
Executive Vice President,
Secretary and Treasurer
Brenco, Incorporated
(Name of Person(s) Filing Proxy Statement)
- --------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
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14a-6(j)(2).
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Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and O-11.
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[ ] Check box if any part of the fee is offset as provided
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BRENCO, INCORPORATED
Petersburg, Virginia
Notice of Annual Meeting of Shareholders
To be held April 21, 1994
To Shareholders of Brenco, Incorporated:
You are hereby notified that the annual meeting of shareholders of
Brenco, Incorporated, a Virginia corporation, will be held at the Crestar
Center, 919 East Main Street, Richmond, Virginia, on Thursday, April 21,
1994, at 3:30 p.m. for the following purposes:
1. To elect a Board of Directors for the ensuing year;
2. To ratify the appointment of McGladrey & Pullen as
auditors for 1994; and
3. To approve an amendment to the 1987 Restricted Stock Plan as
more fully described in the accompanying proxy statement;
4. To transact such other business as may properly come before
the meeting.
Only shareholders of record at the close of business on February 25,
1994, are entitled to notice of and to vote at the meeting.
A proxy statement and proxy are enclosed herewith.
If you are unable to attend the meeting in person, you are urged to
sign, date and return the enclosed proxy promptly in the enclosed addressed
envelope which requires no postage if mailed within the United States. If
you attend the meeting in person, you may withdraw your proxy and vote your
shares.
By Order of the Board of Directors
Jacob M. Feichtner
Executive Vice President
Secretary and Treasurer
Petersburg, Virginia
March 11, 1994
BRENCO, INCORPORATED
P. O. Box 389
Petersburg, Virginia 23804
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation
of proxies for use at the Annual Meeting (the "Annual Meeting") of
shareholders of Brenco, Incorporated (the "Company") to be held on
Thursday, April 21, 1994, and at any adjournments thereof. The
accompanying proxy is solicited by the Board of Directors of the Company
and is revocable by the shareholder giving it at any time before it is
voted. The principal executive offices of the Company are located at
Petersburg Industrial Park, Petersburg, Virginia 23804. The approximate
mailing date of the proxy statement is March 11, 1994.
OUTSTANDING SHARES AND VOTING RIGHTS
Only shareholders of record at the close of business on February 25,
1994, are entitled to receive notice of and to vote at the Annual Meeting.
As of February 25, 1994, the number of shares and class of stock that was
outstanding and will be entitled to vote at the meeting was 10,037,572
shares of Common Stock, par value $1.00 per share ("Common Stock"). Each
share of Common Stock is entitled to one vote on all matters. There are no
cumulative voting rights. If a quorum is present, the seven nominees
receiving the greatest number of votes cast by the holders of Common Stock
will be elected directors and, as a result, votes withheld and non-votes
will have no effect.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 25, 1994, the number
and percentage of shares of Common Stock held by each person who, to the
knowledge of the Company, is the beneficial owner of 5% or more of the
outstanding shares of Common Stock, each of the Company's directors and
executive officers named in the Summary Compensation Table, and all of the
Company's executive officers and directors as a group.
<TABLE>
<CAPTION>
Amount
Name and Address of Beneficially Percent of
Beneficial Owner Owned Class
<S> <C> <C>
Fidelity Management & Research Co. 1,290,200 12.85%
Boston, Massachusetts
Estate of Mildred F. Whitfield 860,000 (1) 8.57
Principal Mutual Life Insurance Co. 818,000 (2) 8.15
Des Moines, Iowa
David L. Babson & Company, Inc. 821,700 8.19
Cambridge, Massachusetts
Anne Whitfield Kenny 788,932 (3) 7.86
Richmond, Virginia
Dimensional Fund Advisors Inc. 565,900 5.64
Santa Monica, California
1
Amount
Name and Address of Beneficially Percent of
Beneficial Owner Owned Class
<S> <C> <C>
Howard J. Bush 28,563 (7) *
Midlothian, Virginia
Jacob M. Feichtner 38,402 (7) *
Richmond, Virginia
Steven M. Johnson 1,600 (4) *
Richmond, Virginia
John C. Kenny 7,500 (5) *
Richmond, Virginia
Robert V. Lawrence 23,403 (7) *
Colonial Heights, Virginia
J. Craig Rice 106,607 (7) 1.06%
Midlothian, Virginia
James M. Wells III 200 *
Richmond, Virginia
Needham B. Whitfield 551,937 (6)(7) 5.50
Midlothian, Virginia
Frederic W. Yocum, Jr. 2,000 *
Iowa City, Iowa
All executive officers 1,549,144 (7) 15.43
and directors as a group
(9 persons) including
those named above
*Less than 1%
<FN>
(1) Anne Whitfield Kenny and Needham B. Whitfield are also deemed to beneficially own the shares shown for the estate of
Mildred F. Whitfield. See notes (3) and (6) below.
(2) These shares are also deemed to be beneficially owned, as a result of shared voting (and dispositive) power, by
Invista Capital Management, Inc., an indirect wholly-owned subsidiary of Principal Mutual Life Insurance Company.
(3) Mrs. Kenny is the wife of John C. Kenny, a director, and the sister of Needham B. Whitfield, a director and officer.
Shares shown for Mrs. Kenny include (a) 447,800 shares owned directly by Mrs. Kenny; (b) 230,832 shares held in a trust of
which Mrs. Kenny is a co-trustee with NationsBank of Virginia, N.A. and an income beneficiary; (c) 97,800 shares held for the
benefit of Mrs. Kenny's two children in trusts established pursuant to the will of Mildred F. Whitfield, of which Mrs. Kenny
is co-trustee; (d) 12,000 shares held by a charitable foundation of which Mrs. Kenny is an officer; and (e) 500 shares held as
custodian.
2
With respect to all these shares owned by or held for the benefit of others, Mrs. Kenny disclaims beneficial ownership.
Shares shown for Mrs. Kenny do not include the 860,000 shares shown for the estate of Mildred F. Whitfield, which shares Mrs.
Kenny and Needham B. Whitfield are also deemed to beneficially own as co-executors of the estate of Mildred F. Whitfield.
(4) The amount shown includes 700 shares held by Mr. Johnson's wife, as to which shares Mr. Johnson disclaims beneficial
ownership.
(5) Mr. Kenny is the husband of Anne Whitfield Kenny, and brother-in-law of Needham B. Whitfield, a director and
officer. Shares shown for Mr. Kenny exclude those owned by his wife as set forth above in the table, as to all of which
shares he disclaims beneficial ownership.
(6) Mr. Whitfield is the brother of Anne Whitfield Kenny, and the brother-in-law of John C. Kenny, a director. The
amounts shown include 89,830 shares owned directly by Mr. Whitfield, as well as 17,465 shares of stock awarded pursuant to the
Restricted Stock Plan as to which Mr. Whitfield has voting and dividend rights, but which are not fully vested. Shares shown
for Mr. Whitfield also include; (a) 211,596 shares held for the benefit of his children in trusts of which Mr. Whitfield is a
co-trustee with NationsBank of Virginia, N.A. and an income beneficiary; (b) 25,000 shares owned by his wife; (c) 66,082
shares held in trusts for the benefit of his two minor children, of which Mr. Whitfield is a co-trustee with his wife; (d)
30,164 shares held in trust for his two grown children, of which Mr. Whitfield is a co-trustee with his children; (e) 97,800
shares held for the benefit of two children of Mr. Whitfield in trusts established pursuant to the will of Mildred F.
Whitfield, of which Mr. Whitfield is co-trustee; (f) 12,000 shares held by a charitable foundation of which Mr. Whitfield is
an officer; and (g) 2,000 shares held in custodianship for the two minor children of a former partner of Mr. Whitfield, for
which Mr. Whitfield acts as custodian. With respect to all these shares owned by or held for the benefit of others, Mr.
Whitfield disclaims beneficial ownership. Shares shown for Mr. Whitfield do not include the 860,000 shares shown for the
estate of Mildred F. Whitfield, which shares Mr. Whitfield and Mrs. Kenny are also deemed to beneficially own as co-executors
of the estate of Mildred F. Whitfield.
(7) The beneficial ownership shown for the named executive officers and for all executive officers and directors as a
group includes currently exercisable options awarded under the Company's Stock Option Plan and/or shares of restricted stock
awarded under the Company's Restricted Stock Plan, as now fully described under "Executive Compensation".
</TABLE>
ELECTION OF DIRECTORS
Unless otherwise instructed, shares of Common Stock represented by
proxies will be voted for the election of the nominees listed below, all of
whom are members of the present Board of Directors. Directors elected at
the Annual Meeting will hold office until the next Annual Meeting of
shareholders or until their respective successors are duly elected and
qualified.
In the event that any nominee becomes unavailable for election for any
reason, an event which management does not anticipate, shares of Common
Stock represented by proxies will be voted for any substitute nominee
designated by the Board of Directors.
The following table sets forth with respect to each nominee for
director, his age, principal occupation during the past five years, other
positions he holds with the Company, if any, other directorships of public
companies he holds, if any, and the year in which he first became a
director of the Company.
3
<TABLE>
<CAPTION>
Principal Occupation During
Name and Position the Last Five Years and Director
with the Company Age Other Directorships Since
<S> <C> <C> <C>
Jacob M. Feichtner 56 Executive Vice President, Sec- 1985
Executive Vice President retary and Treasurer of the
and Director Company.
Steven M. Johnson 43 Vice President - Corporate Development 1990
Director and Secretary of Tredegar
Industries, Inc., a diversified
manufacturing company headquartered
in Richmond, Virginia. Previously also
General Counsel, Tredegar Industries,
from 1989-1992.
John C. Kenny (1) 71 Counsel in the law firm of 1966
Director Christian, Barton, Epps, Brent
and Chappell, Richmond,
Virginia.
J. Craig Rice 46 President and Chief Operating 1985
President, Chief Officer of the Company.
Operating Officer
and Director
James M. Wells III (2) 47 President and Director of Crestar 1990
Director Financial Corporation and Crestar
Bank, a banking and financial
services institution headquartered
in Richmond, Virginia.
Needham B. Whitfield (3) 57 Chief Executive Officer of the 1973
Chief Executive Officer Company. Principal in the firm of
and Chairman of the Harper & Whitfield, P.C., Certified
Board of Directors Public Accountants, until August 1989.
Frederic W. Yocum, Jr. 51 President, Chief Executive Officer 1990
Director and Chief Operating Officer of Iowa
Interstate Railroad. President,
Pittsburgh and Lake Erie Acquisition
Corporation, affiliated with Railroad
Development Corporation headquartered
in Pittsburgh, Pennsylvania April, 1990 -
August, 1991. Vice President of CSX-
Transportation, until April 1990.
<FN>
(1) The firm of Christian, Barton, Epps, Brent and Chappell was retained by the Company to perform legal services during
the past year and is expected to perform legal services for the Company during the current year. Mr. Kenny's family
relationship to certain principal shareholders and directors is explained under "Security Ownership of Certain Beneficial
Owners and Management".
4
(2) The Company maintains a customary banking relationship with Crestar Bank, including a revolving credit facility.
(3) Mr. Whitfield's family relationship to certain principal shareholders and directors is explained under "Security
Ownership of Certain Beneficial Owners and Management".
</TABLE>
COMMITTEES AND MEETINGS
The Board of Directors held 12 meetings during the year ended December
31, 1993. During the year, each director attended at least 75 percent of
the aggregate number of meetings of the Board of Directors and respective
Committees thereof on which he served, held during the period in which he
served as such. The Company's outside directors receive a monthly fee of
$500 and a $500 meeting attendance fee for Board, Audit and Compensation
Committee meetings plus traveling expenses.
There is no Nominating Committee. Nominations are made by the entire
Board at a regular meeting of the Board, and although the Board currently
does not have a formal procedure for considering nominations made by
shareholders, it will accept suggestions.
The Audit Committee of the Board currently consists of Messrs. Johnson
and Yocum. The Committee met with the Company's independent auditors twice
during the year at which times the audit of the Company's financial
statements was discussed.
The Compensation Committee of the Board currently consists of Messrs.
Johnson, Whitfield and Yocum. The Committee met four times during the
year. The Compensation Committee establishes the cash compensation (salary
and cash bonuses) of the officers of the Company and such key employees of
the Company as may be recommended by the Chief Executive Officer; reviews
management recommendations on stock incentive awards to officers and
employees of the Company; exercises the full authority of the Board under
employee benefit and other similar plans of the Company (other than stock
incentive plans); and reviews management succession planning. Outside
director committee members review and evaluate the performance of the Chief
Executive Officer and establish his compensation, other than stock option
and restricted stock awards which are established and approved for all
officers and key employees by non-employee members of the Board of
Directors.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table lists all compensation paid or accrued by the
Company for services in all capacities to the Company's chief executive
officer and the Company's most highly compensated executive officers other
than the chief executive officer whose total annual salary and bonus for
the year ended December 31, 1993 exceeded $100,000. Figures are given for
compensation paid or accrued by the Company during the three years ended
December 31, 1993.
5
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
Securities All
Restricted Underlying Other
Name and Stock Options/ Compen-
Principal Position Year Salary($) Bonus($) Awards($)(1) SARs(#) sation(2)
<S> <C> <C> <C> <C> <C> <C>
Needham B. Whitfield FY93 $140,016 $39,400 $38,094 10,800 $ 9,300
Chief Executive Offi- FY92 135,000 15,000 40,250 18,000 7,900
cer, Chairman of the FY91 115,008 15,000 0 0 5,750
Board of Directors
and director of the
Company, and director
and officer of one or
more Subsidiaries.
J. Craig Rice FY93 180,000 59,100 39,750 10,800 12,500
President, Chief FY92 160,008 20,000 45,000 18,000 11,267
Operating Officer and FY91 147,000 27,000 29,250 45,000 9,983
director of the Com-
pany, and director and
officer of one or
more Subsidiaries.
Jacob M. Feichtner FY93 121,608 31,520 11,594 4,800 7,430
Executive Vice Presi- FY92 117,000 10,000 16,875 8,000 7,333
dent, Secretary and FY91 113,400 17,500 14,625 8,500 6,987
Treasurer and director
of the Company, and
director and officer
of one or more Subsid-
iaries.
Howard J. Bush FY93 115,008 29,550 9,938 4,800 6,667
Vice President Plan- FY92 105,000 8,000 13,125 8,000 6,033
ning, Marketing and FY91 99,750 9,000 7,313 7,500 5,448
Distribution.
Robert V. Lawrence FY93 93,000 21,670 6,625 4,800 5,237
Vice President FY92 89,016 5,500 7,500 6,000 5,007
Engineering. FY91 86,835 7,000 4,875 6,000 4,842
<FN>
(1) At December 31, 1993, the number of shares and year end value of the aggregate restricted stock holdings (i.e., still
subject to a period of restriction) for the persons named in the Summary Compensation Table were: 11,500 shares with an
aggregate fair market value of $140,875 for Needham B. Whitfield; 17,500 shares with an aggregate fair market value of
$214,375 for J. Craig Rice; 6,750 shares with an aggregate fair market value of $82,688 for
6
Jacob M. Feichtner; 4,584 shares with an aggregate fair market value of $56,154 for Howard J. Bush; and 2,934 shares with an
aggregate fair market value of $35,942 for Robert V. Lawrence. During the year ended December 31, 1993, the following number
of shares of Restricted Stock, the value of which is reported in the above table, were awarded under the Restricted Stock
Plan, for the persons named in the Summary Compensation Table: 5,750 shares for Needham B. Whitfield; 6,000 shares for J.
Craig Rice; 1,750 shares for Jacob M. Feichtner; 1,500 shares for Howard J. Bush; and 1,000 shares for Robert V. Lawrence.
The periods of restriction for all Restricted Stock awards, including the above, made to date under the Plan are (a) 2 years
for 1/3 of the total shares covered by the award, (b) 3 years for the next 1/3 of such shares and (c) 4 years for the
remaining 1/3 of such shares. The recipient has the right to vote such shares and to receive dividends on them during the
period of restriction.
(2) The amounts reported as "All Other Compensation" in this column reflect (a) the amount of Brenco's contributions to
its Supplemental Pension Plan on behalf of the named executives and (b) the amount of dividends paid on the restricted stock
awards as follows:
(a) The amounts of Brenco's contributions to its Supplemental Pension Plan on behalf of the named executive officers for
1993, 1992 and 1991 are: Mr. Whitfield - $7,000, $6,750 and $5,750; Mr. Rice - $9,000, $8,000 and $7,350; Mr. Feichtner -
$6,080, $5,850 and $5,670; Mr. Bush - $5,750, $5,250 and $4,988; and Mr. Lawrence - $4,650, $4,450 and $4,342.
(b) The amount of dividends paid on the restricted stock awards to the named executive officers for 1993, 1992 and 1991
are: Mr. Whitfield - $2,300, $1,150 and 0; Mr. Rice - $3,500, $3,267 and $2,633; Mr. Feichtner - $1,350, $1,483 and $1,317;
Mr. Bush - $917, $783 and $460; and Mr. Lawrence - $587, $557 and $500.
</TABLE>
The following table reflects grants of stock options made during the
year ended December 31, 1993 to each of the named executive officers.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Potential
Realizable
Value at
Individual Grants (1) Assumed Annual
Rates of
Stock Price
Number of Percent of Appreciation
Securities Total Options/ Per Option
Underlying SARs Granted Exercise Term
Options/SARs to Employees or Base Expiration
Name Granted(#) in Fiscal Year Price($/Sh) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Needham B. Whitfield 10,800 12.12% $10 3/4 10/21/98 $32,076 $70,880
J. Craig Rice 10,800 12.12 10 3/4 10/21/98 32,076 70,880
Jacob M. Feichtner 4,800 5.39 10 3/4 10/21/98 14,256 31,502
Howard J. Bush 4,800 5.39 10 3/4 10/21/98 14,256 31,502
Robert V. Lawrence 4,800 5.39 10 3/4 10/21/98 14,256 31,502
<FN>
(1) All grants were made under the Company's 1988 Stock Option Plan as amended by the shareholders on April 15, 1993 and
vest incrementally over three years from the grant date.
7
</TABLE>
The following table sets forth information regarding the exercise of
stock options during the year ended December 31, 1993, by each of the named
executive officers.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
Number of Value of
Unexercised Unexercised
Options/SARs at Options/SARs at
Fiscal Year-End(#) Fiscal Year-End($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable Unexercisable
<S> <C> <C> <C> <C> <C>
Needham B. Whitfield 0 0 4,500/24,300 $ 29,813/$105,637
J. Craig Rice 25,000 $111,875 53,250/35,550 343,406/176,419
Jacob M. Feichtner 19,000 73,625 18,375/12,925 122,984/ 61,028
Howard J. Bush 5,625 22,500 19,500/12,675 90,359/ 59,372
Robert V. Lawrence 16,250 62,594 5,750/10,800 40,734/ 44,466
</TABLE>
The following table shows the estimated retirement benefit payable
under the Company's defined benefit Retirement Plan to employees in the
listed remuneration and years of service classifications, with the
assumptions of 1993 retirement and straight life payments.
<TABLE>
<CAPTION>
Pension Plan Table *
Years of Service
Amount of Annual Retirement Benefit
Remuneration(1) 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$100,000 $20,250 $ 27,000 $ 33,750 $ 40,500 $ 47,250
125,000 25,875 34,500 43,125 51,750 60,375
150,000 31,500 42,000 52,500 63,000 73,500
175,000 37,125 49,500 61,875 74,250 86,625
200,000 42,750 57,000 71,250 85,500 99,750
225,000 48,375 64,500 80,625 96,750 112,875
250,000 54,000 72,000 90,000 108,000 126,000
300,000 65,250 87,000 108,750 130,500 152,250
400,000 87,750 117,000 146,250 175,500 204,750
<FN>
* All benefits computed without regard to the compensation limitations of Internal Revenue Code 401(a)(17) or the benefit
limitation of Code Section 415.
(1) "Remuneration" is the average of the five-year salary plus 75% of the year-end cash incentive awards as such amounts
are shown under the respective salary and bonus columns in the Summary Compensation Table. The Retirement Plan limits the
annual pension payable to the maximum limitation specified in Section 415 of the Internal Revenue Code which was $115,641 in
1993.
8
</TABLE>
For periods prior to 1989, benefits generally accrued at the rate of
1.5% of remuneration for each year of service and were reduced by social
security. For the periods after 1988, benefits generally accrue at a rate
of 1% of remuneration for each year of service plus .5% of remuneration in
excess of social security remuneration for each year of service (up to a
maximum of 35 years). The Pension Plan Table shows the estimated
retirement benefit payable to employees in the remuneration and years of
service classification under the post-1988 benefit formula.
Following are credited years of service for the executive officers
named in the Summary Compensation Table on page 6 as of December 31, 1993:
Needham B. Whitfield - 8; J. Craig Rice - 20; Jacob M. Feichtner - 13;
Howard J. Bush - 4; and Robert V. Lawrence - 30.
Compensation of Directors
The Company's outside directors receive a monthly fee of $500 and a
$500 meeting attendance fee for Board, Compensation and Audit Committee
meetings plus traveling expenses. The Company's outside directors, and the
amount each received in monthly and meeting attendance fees for the year
ended December 31, 1993, were: Steven M. Johnson, $15,000; John C. Kenny,
$11,500; James M. Wells, III, $12,000; and Frederic W. Yocum, Jr., $18,500,
which includes $4,000 paid to Mr. Yocum in connection with certain special
assignments for the Board. Directors who are also employees of the Company
receive no additional compensation for serving as directors.
Employment Agreements
On July 26, 1983 the Board of Directors authorized agreements with
certain key employees of the Company, including Messrs. Rice, Feichtner and
Lawrence, to provide such employees with severance pay equal to one year's
salary in the event their employment is terminated or their duties are
materially altered as a result of a change in control of the Company. For
purposes of this arrangement, "change in control" means a change in the
composition of a majority of the Board of Directors of the Company as a
result of a successful tender or exchange offer for the Company's Common
Stock, the transfer of ownership of 28% or more of the Company's voting
stock to any person or group of associated or affiliated persons acting
together, the merger or consolidation of the Company with another concern,
or the sale of all or substantially all of the Company's assets.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors is comprised of
Steven M. Johnson, Needham B. Whitfield and Frederic W. Yocum, Jr.
Needham B. Whitfield, as Chief Executive Officer of the Company, is the
only member of the committee who is an employee of the Company. None of
the Company's executive officers has served on the Board of Directors of
any company of which a Compensation Committee member is an employee.
9
Compensation Committee Report on Executive Compensation
Officer and Key Employee Compensation. Since assuming control in
1985, the present management of the Company has increased the Company's
sales four-fold and restored the Company to profitability. Sales have
grown every year, reaching a new record in 1993; income from operations in
1993 was the best in over thirteen years. In order to continue this
success, the Compensation Committee believes it essential to provide a
compensation program that both ensures the continued motivation and
retention of the management team and rewards managers as the shareholders
benefit.
The Company's compensation program for officers and key employees
consists of three major elements: base salary, a discretionary annual cash
incentive award, and periodic grants of stock options and restricted stock.
By providing a significant portion of executive compensation in an annual
bonus that varies with earnings and in stock option and restricted stock
awards that vary in value with the market value of the Company's common
stock, the Committee believes it has closely aligned management's
compensation over time with the shareholders' interests.
Establishing Competitive Pay Levels and Practices. The Compensation
Committee employs a firm of compensation consultants who provide data,
comparables, and objective and independent guidance on compensation
practices for officers and key employees of companies of similar size and
nature. The last formal study was completed by the compensation
consultants in the fall of 1993. The Committee believes it appropriate to
align Company compensation practices with the 50th percentile of the
consultants' survey population, with the exception that the compensation of
the Company's two senior executive officers should be lower in salary and
cash incentives and more heavily weighted in longer term stock awards.
Base Salary. Salaries paid to officers and key employees (other than
the Chief Executive Officer) are established annually by the Committee in
conjunction with a review of the Chief Executive Officer's performance
assessment of each executive's contributions, experience, and other
attributes.
Annual Cash Incentive. Each year, the Chief Executive Officer
recommends to the Committee cash incentive targets for each of the other
officers and key employees. The amount of the cash incentive award for
each individual is dependent upon the Company's achieving its target for
income from operations for the year, and will vary with that measure, with
the exception that no cash incentive awards will be made if pre-established
threshold of operating income is not met, and in no event may the actual
award exceed two times the original target. Once the targeted amount for
the individual has been established, the Chief Executive Officer will set
specific incentive goals for each officer and key employee, and at year
end, based upon the Chief Executive's Officer's evaluation of the
individual's performance, the Committee may determine to withhold some
portion of the individual's available award.
Stock Incentives. The Committee has determined that stock option and
restricted stock awards are the best mechanisms to reward officers and key
employees for long-term performance, in a manner that is directly linked to
the interests of the shareholders. The individual receives his vested
interest in the awards over a number of years, and the value of the awards
varies directly with the market value of the Company's shares.
10
Awards of stock options and restricted stock are suggested by the
Chief Executive Officer and considered by the Compensation Committee as
part of the annual compensation plan for each officer and key employee.
Based on these considerations, the Compensation Committee makes its
recommendations to the non-employee members of the Board of Directors, who
establish and approve all stock option and restricted stock grants.
Historically, options have typically been granted with a five-year period
of exercise and a three-year vesting schedule; restricted stock awards
typically vest over a four-year time frame. In determining the size of
each grant or award, the Committee does not take into consideration the
current option or restricted stock holdings of the recipient.
Officers named in the Summary Compensation Table received stock option
and restricted stock awards during 1993 as set forth therein.
Chief Executive Officer Compensation. The compensation of Mr.
Whitfield, the Chief Executive Officer, is determined by the outside
director members of the Compensation Committee in a manner consistent with
the determination of compensation for other officers of the Company. Mr.
Whitfield's salary is based on competitive pay levels of Chief Executive
Officers of similar sized companies as determined by the compensation
consultants, with the exception that Mr. Whitfield's compensation is based
in part upon the assumption that he will devote 75% of his working time to
the affairs of the Company. In 1993, he devoted substantially all of his
working time to the Company. His salary in 1993 was $140,000, which was an
increase of 3.7% over the previous year, in keeping with inflation. As the
result of the survey of pay comparables conducted by the consultants in the
fall of 1993, Mr. Whitfield's salary was adjusted upwards to $170,000 for
1994, which is lower than the median for such pay comparables.
Mr. Whitfield's cash incentive award for 1993 was $39,400, which was
slightly less than double his original target for the year, as the result
of the Company exceeding its target for operating income by a similar
percentage.
In 1993, Mr. Whitfield received stock options representing 10,800
shares of the Company's common stock and a restricted stock award for 5,750
shares of such stock, as part of his total compensation plan, following the
guidelines outlined above for all officers and key employees. Details of
these awards to Mr. Whitfield are provided under the caption Summary
Compensation Table.
Submitted by,
Steven M. Johnson
Frederic W. Yocum, Jr.
Needham B. Whitfield
11
Performance Graph
To assist shareholders in assessing corporate performance, the
following graph provides a five year comparison of cumulative total returns
(on a dividends reinvested basis) for the Company's common stock with the
S&P 500, a broad market index, and the Timken Company, a peer issuer, a
domestic manufacturer of roller bearings with its stock traded on the New
York Stock Exchange.
There is no published index available which compares the Company to
its competition.
Performance Graph
(HARD COPY TO BE SENT TO SEC UNDER COVER OF FORM SE)
Proposal to Approve Amendment to 1987 Restricted Stock Plan
General. In 1987, the shareholders approved the Company's 1987
Restricted Stock Plan (the "Plan"). The Plan as initially adopted and
approved by shareholders provided that 100,000 shares of the Company's
authorized, but unissued Common Stock were made available for restricted
stock awards to key personnel of the Company and its subsidiaries under the
Plan. The Plan is administered by non-employee members of the Board of
Directors who are empowered to grant eligible employees Common Stock
subject to a period of restriction specified in each grant during which the
shares may not be transferred. The applicable period of restriction is
established on a case by case basis, depending on the performance goals to
be achieved, provided that in no case may the period of restriction be less
than two years or more than five years. The recipient has the right to
vote such shares and to receive dividends on them, and if the recipient
remains an employee of the Company at the time of expiration of the period
of restriction, the restrictions will be removed and the shares will become
freely transferable. At January 28, 1994, awards covering a total of
82,010 shares of the Company's Common Stock had been awarded, leaving
17,990 shares available for further awards under the Plan.
For the year ended December 31, 1993, the following restricted stock
awards were made under the Plan: Mr. Whitfield - 5,750 shares; Mr. Rice -
6,000 shares; Mr. Feichtner - 1,750 shares; Mr. Bush - 1,500 shares; Mr.
Lawrence - 1,000 shares; and all current executive officers as a group -
16,000 shares. Future awards are within the discretion of the Plan
administrators.
12
Proposed Amendment. On January 28, 1994, the Board of Directors
approved an amendment to the plan and recommended that the amendment be
submitted to shareholders for their approval. The amendment would increase
the number of shares of Common Stock available for issuance under the Plan
by an additional 100,000, subject to future adjustments as provided in the
Plan. In view of the small number of shares remaining available for grant
under the Plan, the Board believes this amendment is necessary in order to
make shares available for further awards under the Plan so that the Company
and its subsidiaries will continue to be able to provide an effective means
of attracting and retaining key employees.
If a quorum is present, the affirmative vote of a majority of shares
present in person or by proxy and entitled to vote is required for approval
of the proposed amendment, and as a result, in tabulating votes,
abstentions have the effect of a vote against the amendment while non-votes
have no effect on the vote.
Ratification of Auditors
The Board of Directors has selected McGladrey & Pullen to audit the
financial statements of the Company and its Subsidiaries for the year
ending December 31, 1994. McGladrey & Pullen has been serving as auditor
of the financial statements of the Company since 1952. The Board of
Directors recommends that the shareholders ratify its appointment of
McGladrey & Pullen. The affirmative vote of a majority of the votes cast
is required for ratification of the appointment of auditors.
It is anticipated that representatives of McGladrey & Pullen will be
present at the meeting to respond to appropriate questions and will have an
opportunity, if they desire, to make a statement.
OTHER MATTERS
Annual Report to Shareholders
The 1993 Annual Report of the Company, which includes audited
financial statements for the year ended December 31, 1993, has been mailed
to shareholders of record.
10-K Report
A copy of the Company's 10-K Annual Report for 1993 to the Securities
and Exchange Commission will be available free of charge at the end of
March, 1994. You may obtain a copy by written request to:
Secretary
BRENCO, INCORPORATED
One Park West Circle
Suite 204
Midlothian, Virginia 23113
Shareholders' Proposals
Shareholders who intend to present proposals at the Company's Annual
Meeting of shareholders to be held on April 20, 1995, must submit their
proposals to the Secretary of the Company on or before November 18, 1994.
13
The Company's Bylaws prescribe the procedures a shareholder must
follow to make nominations for director candidates. Notice of shareholder
nominations must be submitted in writing to the Secretary of the Company
at the Company's principal place of business at least 90 days prior to the
anniversary date of the previous year's annual meeting (or not later than
10 days after the record date in the case of a special meeting). The
notice must contain all information specified in Article II, Section 12 of
the Bylaws. Any shareholder desiring a copy of the Company's Bylaws will
be furnished one without charge upon written request to the Secretary.
General
The cost of soliciting proxies will be borne by the Company. In
addition to the use of mails, proxies may be solicited by personal
interview, telephone and telegraph, and by directors, officers and regular
employees of the Company, without special compensation therefor. The
Company expects to reimburse banks, brokers and other persons for their
reasonable out-of-pocket expenses in handling proxy material for beneficial
owners of the Company's Common Stock.
Unless contrary instructions are indicated on the proxy, all shares of
Common Stock represented by valid proxies received pursuant to this
solicitation (and not revoked before they were voted) will be voted for the
election of the nominees for directors named herein, for approval of the
proposed amendment to the Restricted Stock Plan and for the ratification of
the selection of McGladrey & Pullen as independent auditors for the year
ending December 31, 1994. If a shareholder specifies a different choice on
the proxy, his or her shares of Common Stock will be voted in accordance
with the specification so made.
The Board of Directors knows of no business other than that set forth
above to be transacted at the meeting, but if other matters requiring a
vote of the shareholders arise, the persons designated as proxies will vote
the shares of Common Stock represented by the proxies in accordance with
their judgment on such matters.
By Order of the Board of Directors
Jacob M. Feichtner
Executive Vice President
Secretary and Treasurer
Petersburg, Virginia
March 11, 1994
14
TEXT OF PROXY CARD
FRONT SIDE
PROXY
BRENCO, INCORPORATED
P.O. BOX 389
PETERSBURG, VIRGINIA 23804
The undersigned hereby appoints John C. Kenny, Steven M. Johnson and
Jacob M. Feichtner, jointly and severally, as Proxies, each with full power
to act alone and with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the
shares of Common Stock of Brenco, Incorporated held of record by the
undersigned on February 25, 1994 at the Annual Meeting of Shareholders to
be held on April 21, 1994 or any adjournment thereof.
Please sign reverse side and return promptly.
BACK SIDE
X Please mark your votes as in this example.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. If no direction
is made, this proxy will be voted for Proposals 1, 2 and 3.
FOR WITHHELD
1. ELECTION OF DIRECTORS:
Nominees: J. Feichtner, S. Johnson, J. Kenny, J. Rice, J. Wells,
N. Whitfield, F. Yocum
To withhold authority to vote for any individual nominee, write that
nominee's name on the line provided below:
2. Ratify the appointment of McGladrey & FOR AGAINST ABSTAIN
Pullen as auditors for 1994.
3. To approve an amendment to the 1987
Restricted Stock Plan as more fully
described in the accompanying proxy
statement.
4. In their discretion, the Proxies are authorized to vote upon other
business
as may properly come before the meeting.
15
BACK SIDE
Signature(s) Date
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
STATEMENT OF DIFFERENCES BETWEEN ELECTRONIC SUBMISSION OF PROXY AND ACTUAL
CARD
DISTRIBUTED TO SHAREHOLDERS:
DIFFERENCES
PAGES 15 AND 16 OF THE DOCUMENT ARE THE COMPLETE TEXT OF THE WORDING OF THE
PROXY CARD. HOWEVER, THE SIZE OF THE TYPE AND THE CARD ARE NOT
REPRESENTATIVE OF THE ACTUAL CARD SENT TO SHAREHOLDERS.
DESCRIPTION
THE ACTUAL PROXY CARD SENT TO SHAREHOLDERS IS A 3 INCH BY 8 1/2 INCH WHITE
CARD WITH PRINTING ON BOTH SIDES AS INDICATED. BOXES ARE PROVIDED FOR
INDICATING DECISIONS RATHER THAN LINES AS SHOWN.
16
