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
Brenco, Incorporated
(Name of Person(s) Filing Proxy Statement)
- -------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-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 O-11;1
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<PAGE>
4) Proposed maximum aggregate value of transaction:
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1 Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule O-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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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
BRENCO, INCORPORATED
Petersburg, Virginia
Notice of Annual Meeting of Shareholders
To be held April 20, 1995
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 20, 1995, 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, LLP as auditors
for 1995; and
3. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on February 24, 1995,
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
Petersburg, Virginia
March 10, 1995
<PAGE>
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 20, 1995, 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 One Park West Circle, Suite 204, Midlothian, Virginia 23113. The
approximate mailing date of the proxy statement is March 10, 1995.
OUTSTANDING SHARES AND VOTING RIGHTS
Only shareholders of record at the close of business on February 24, 1995,
are entitled to receive notice of and to vote at the Annual Meeting. As of
February 24, 1995, the number of shares and class of stock that was outstanding
and will be entitled to vote at the meeting was 10,108,116 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.
With regard to the election of directors, votes may be cast in favor or
withheld. If a quorum is present, the nominees receiving a plurality of the
votes cast at the Annual Meeting will be elected directors; therefore, votes
withheld will have no effect. Generally, in other matters governed by Virginia
corporate law, including the ratification of auditors, the affirmative vote of a
majority of the shares cast is required for passage. Thus, although abstentions
and broker non-votes (shares held by customers which may not be voted on certain
matters because the broker has not received specific instructions from the
customer) are counted for purposes of determining the presence or absence of a
quorum for the transaction of business, they are generally not counted for
purposes of determining whether a proposal has been approved and therefore have
no effect.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 24, 1995, 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. 1,306,600 (8) 12.93%
Boston, Massachusetts
Anne Whitfield Kenny 1,073,276 (1) 10.62
Richmond, Virginia
David L. Babson & Company, Inc. 737,800 (8) 7.30
Cambridge, Massachusetts
1
<PAGE>
<CAPTION>
Amount
Name and Address of Beneficially Percent of
Beneficial Owner Owned Class
<S> <C> <C>
The Prudential Insurance Company of America 717,300 (8) 7.10%
Newark, New Jersey
Principal Mutual Life Insurance Co. 629,700 (2)(8) 6.23
Des Moines, Iowa
Dimensional Fund Advisors Inc. 509,800 (8) 5.04
Santa Monica, California
Estate of Mildred F. Whitfield 260,000 (3) 2.57
Howard J. Bush 30,417 (7) *
Midlothian, Virginia
Jacob M. Feichtner 45,364 (7) *
Richmond, Virginia
Donald E. Fitzsimmons 6,744 (7) *
Richmond, Virginia
Steven M. Johnson 1,600 (4) *
Richmond, Virginia
John C. Kenny 7,500 (5) *
Richmond, Virginia
J. Craig Rice 138,729 (7) 1.37
Midlothian, Virginia
James M. Wells III 200 *
Richmond, Virginia
Needham B. Whitfield 850,809 (6)(7) 8.42
Midlothian, Virginia
Frederic W. Yocum, Jr. 2,000 *
Iowa City, Iowa
All executive officers 2,189,934 (7) 21.67
and directors as a group
(12 persons) including
those named above
*Less than 1%
<FN>
(1) 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) 647,800 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) 95,676 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) 98,468 shares held by a charitable foundation of which Mrs. Kenny is an officer; and (e) 500 shares held as
2
<PAGE>
custodian. 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 260,000 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.
(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) 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 (1) and (6).
(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 267,663 shares owned directly by Mr. Whitfield, as well as 20,104 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) 116,082 shares held in trusts for the
benefit of his two minor children, of which Mr. Whitfield is a co-trustee with his wife; (c) 30,164 shares held in trusts for
his two grown children, of which Mr. Whitfield is a co-trustee with his children; (d) 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; (e) 100,000 shares held by two charitable foundations of which Mr. Whitfield is an officer; and (f)
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 260,000 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 more fully described under "Executive Compensation".
(8) The beneficial ownership shown for each of the institutional stockholders is based upon the Schedule 13G filings
received by the Company for such stockholders showing their respective ownership as of December 31, 1994. The Schedule 13Gs
certify that the acquisition of the shares reported thereon was in the ordinary course of business and not in connection with
or as a participant in any transaction having the purpose or effect of changing or influencing the control of the Company.
</TABLE>
3
<PAGE>
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.
<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 57 Executive Vice President & 1985
Executive Vice President Secretary of the Company.
and Director
Steven M. Johnson 44 Vice President - Corporate 1990
Director Development of Tredegar Industries,
Inc., a diversified manufacturing
company headquartered in Richmond,
Virginia.
John C. Kenny (1) 72 Counsel in the law firm of 1966
Director Christian, Barton, Epps, Brent
and Chappell, Richmond,
Virginia.
J. Craig Rice 47 President and Chief Operating 1985
President, Chief Officer of the Company.
Operating Officer
and Director
James M. Wells III (2) 48 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) 58 Chief Executive Officer of the 1973
Chief Executive Officer Company.
and Chairman of the
Board of Directors
4
<PAGE>
Frederic W. Yocum, Jr. 52 President and Director, Chief 1990
Director Executive Officer 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".
(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,
1994 and took action by unanimous written consent on three occasions. 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.
5
<PAGE>
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 four most highly compensated executive officers other than the chief
executive officer whose total annual salary and bonus for the year ended
December 31, 1994 exceeded $100,000. Figures are given for compensation paid or
accrued by the Company during the three years ended December 31, 1994.
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long-Term Compensation
Securities All
Restricted Underlying Other
Name and Stock Options/ Compen-
Principal Position Year Salary($) Bonus($) Awards($)(1) SARs(#) sation(2)
<S> <C> <C> <C> <C> <C> <C>
Needham B. Whitfield FY94 $170,016 $72,200 $67,974 13,000 $11,413
Chief Executive Offi- FY93 140,016 39,400 38,094 10,800 9,300
cer, Chairman of the FY92 135,000 15,000 40,250 18,000 7,900
Board of Directors
and director of the
Company.
J. Craig Rice FY94 200,016 81,225 67,974 13,000 12,207
President, Chief FY93 180,000 59,100 39,750 10,800 12,500
Operating Officer and FY92 160,008 20,000 45,000 18,000 11,267
director of the Com-
pany.
Jacob M. Feichtner FY94 126,000 37,620 12,463 5,000 7,745
Executive Vice Presi- FY93 121,608 31,520 11,594 4,800 7,430
dent & Secretary FY92 117,000 10,000 16,875 8,000 7,333
and director of the
Company.
Howard J. Bush FY94 120,000 34,200 11,325 6,000 7,095
Vice President of FY93 115,008 29,550 9,938 4,800 6,667
Marketing and FY92 105,000 8,000 13,125 8,000 6,033
Sales.
Donald E. Fitzsimmons FY94 110,481 39,220 8,496 3,600 5,711
Vice President of FY93 -- -- -- -- --
Railroad Sales. FY92 -- -- -- -- --
<FN>
(1) At December 31, 1994, 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: 17,465 shares with an
aggregate fair market value of $207,397 for Needham B. Whitfield; 19,881 shares with an aggregate fair market value of
$236,087 for J. Craig Rice; 5,695 shares with an aggregate fair market value of $67,628 for
6
<PAGE>
Jacob M. Feichtner; 4,480 shares with an aggregate fair market value of $53,200 for Howard J. Bush; and 985 shares with an
aggregate fair market value of $11,697 for Donald E. Fitzsimmons. During the year ended December 31, 1994, 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: 7,881 shares for Needham B. Whitfield; 7,881 shares for
J. Craig Rice; 1,445 shares for Jacob M. Feichtner; 1,313 shares for Howard J. Bush; and 985 shares for Donald E. Fitzsimmons.
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 amount of Brenco's contributions to its Supplemental Pension Plan on behalf of the named executive officers for
1994, 1993 and 1992 are: Mr. Whitfield - $7,500, $7,000 and $6,750; Mr. Rice - $7,500, $9,000 and $8,000; Mr. Feichtner -
$6,300, $6,080 and $5,850; Mr. Bush - $6,000, $5,750 and $5,250; and Mr. Fitzsimmons - $5,524 for 1994.
(b) The amount of dividends paid on the restricted stock awards to the named executive officers for 1994, 1993 and 1992
are: Mr. Whitfield - $3,913, $2,300 and $1,150; Mr. Rice - $4,707, $3,500 and $3,267; Mr. Feichtner - $1,445, $1,350 and
$1,483; Mr. Bush - $1,095, $917 and $783; and Mr. Fitzsimmons - $187 for 1994.
</TABLE>
Stock Options
The following table reflects grants of stock options made during the year
ended December 31, 1994 to each of the named executive officers.
<TABLE>
<CAPTION> Potential
Option/SAR Grants in Last Fiscal Year Realizable
Value at
Individual Grants (1) Assumed Annual
Rates of
Stock Price
Number of Percent of Appreciation
Securities Total Options/ Per Option
Underlying SARs Granted Exercise Term
Options/SARs to Employees or Base Expiration
Name Granted(#) in Fiscal Year Price($/Sh) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Needham B. Whitfield 13,000 12.36% $11 5/8 10/28/04 $95,030 $240,890
J. Craig Rice 13,000 12.36 11 5/8 10/28/04 95,030 240,890
Jacob M. Feichtner 5,000 4.75 11 5/8 10/28/04 36,550 92,650
Howard J. Bush 6,000 5.70 11 5/8 10/28/04 43,860 111,180
Donald E. Fitzsimmons 3,600 3.42 11 5/8 10/28/04 26,316 66,708
<FN>
(1) All grants were made under the Company's 1988 Stock Option Plan as amended by the shareholders on April 15, 1993 and
vest in one year from the grant date.
</TABLE>
The following table sets forth information regarding the exercise of stock
options during the year ended December 31, 1994, by each of the named executive
officers.
7
<PAGE>
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<CAPTION>
Number of Value of
Unexercised Unexercised
Options/SARs at Options/SARs at
Fiscal Year-End(#) Fiscal Year-End($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Needham B. Whitfield 13,500 $ 63,563 2,700/25,600 $ 3,038/$40,488
J. Craig Rice 0 0 76,200/25,600 449,288/40,488
Jacob M. Feichtner 0 0 25,700/10,600 155,725/17,800
Howard J. Bush 10,000 28,750 16,575/11,600 97,678/18,050
Donald E. Fitzsimmons 3,750 23,516 600/ 6,025 675/ 6,831
</TABLE>
Retirement Benefits
The Company maintains a defined benefit Executive Retirement Incentive Plan
for select executives and a defined benefit Retirement Plan for all employees,
including executives.
The Company's Executive Retirement Incentive Plan (the "Executive Plan")
was adopted effective January 1, 1995 and provides a monthly retirement benefit
for life to executives selected for participation by the Compensation Committee
of the Company's Board of Directors equal to the excess of (i) 3% of the
executive's remuneration multiplied by his years of service (up to a maximum of
20 years), over (ii) the value of benefits payable to the executive by the
Company's Retirement Plan and the executive's Social Security benefit. The
executive officers named in the Summary Compensation Table are among the
executives who have been selected for participation in the Executive Plan. In
order to receive a benefit under the Executive Plan, the executive must have at
least five years of vesting service and must retire after attaining age 55 but
no later than the first day of the calendar quarter coinciding with or next
following his attaining age 62. The Executive Plan provides for benefit payment
options and spousal and beneficiary rights and payments in the event of the
executive's death. No benefits are payable under the Executive Plan to any
executive who terminates employment before attaining age 55 or who does not
retire during the available retirement window period. In addition, benefits in
the Executive Retirement Incentive Plan are forfeited if a retired executive
competes with the Company.
The following table shows the estimated retirement benefits payable under
both the Company's Executive Plan and its Retirement Plan, together with Social
Security benefits (that is the gross amount before offset by the Retirement Plan
benefit and the Social Security benefit), to executives in the listed
remuneration and years of service classifications, with the assumption of
straight life payments.
8
<PAGE>
<TABLE>
Pension Plan Table - Executive Plan and Retirement Plan *
<CAPTION>
Years of Service
Amount of Annual Retirement Benefit (before Social Security Offset)
Remuneration(1) 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$100,000 $ 45,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000
125,000 56,250 75,000 75,000 75,000 75,000
150,000 67,500 90,000 90,000 90,000 90,000
175,000 78,750 105,000 105,000 105,000 105,000
200,000 90,000 120,000 120,000 120,000 120,000
225,000 101,250 135,000 135,000 135,000 135,000
250,000 112,500 150,000 150,000 150,000 150,000
300,000 135,000 180,000 180,000 180,000 180,000
400,000 180,000 240,000 240,000 240,000 240,000
<FN>
* All benefits computed without regard to compensation limits of Internal Revenue Code Section 401(a)(17) or benefit
limitations of Code Section 415 which do not apply to the Executive Plan, but which do apply to the Retirement Plan.
(1) "Remuneration" for the Executive Plan is the average of five-year salary plus 100% of the year-end cash incentive
awards as such amounts are shown under the respective salary and bonus columns in the Summary Compensation Table.
</TABLE>
The Company's Retirement Plan covers substantially all employees of the
Company and currently provides a monthly retirement benefit for life equal to 1%
of remuneration for each year of service plus .5% of remuneration for each year
of service in excess of Social Security covered compensation for each year of
service (up to a maximum of 35 years). The Retirement Plan limits the annual
pension payable to the maximum limitation specified in Code Section 415 which
was $118,800 for 1994.
The following table shows the estimated retirement benefits payable solely
under the Company's Retirement Plan (which is the minimum retirement amount
payable from the Company, regardless of whether an executive is entitled to
benefits under the Company's Executive Plan) to executives in the listed
remuneration and years of service classifications, with the assumptions of 1994
retirement and straight life payments. The table is based on the current
benefit formula.
<TABLE>
Pension Plan Table - Retirement Plan Only **
<CAPTION>
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
<PAGE> 9
<FN>
** All benefits computed without regard to compensation limits of Code Section 401(a)(17) or benefit limitations of Code
Section 415 which do apply to the Retirement Plan.
(1) "Remuneration" for the Retirement Plan is the average of 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.
</TABLE>
Following are credited years of service for the Executive Plan and the
Retirement Plan for the executive officers named in the Summary Compensation
Table on page 6 as of December 31, 1994: Needham B. Whitfield - 9; J. Craig
Rice - 21; Jacob M. Feichtner - 14; Howard J. Bush - 5; and Donald E.
Fitzsimmons - 9.
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. Mr. Yocum was paid $4,500 in connection with certain
special assignments for the Board during 1994. 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.
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 five-fold
and restored the Company to profitability. Sales have grown every year,
reaching a new record in 1994; income from operations in 1994 was the best in
over fourteen 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.
10
<PAGE>
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 incentive payment
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 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 toward 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 the Chief Executive Officer's review 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 a pre-established threshold of operating income
is not met, and in no event may the actual award exceed two times the original
target. Once targeted amounts have 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 will determine to award part or all 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 ultimate value of the awards varies
directly with the market value of the Company's shares.
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.
The options granted October 28, 1994 were granted with a ten-year period of
exercise and are exercisable one year after date of grant. 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.
11
<PAGE>
Officers named in the Summary Compensation Table received stock option and
restricted stock awards during 1994 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 1994, he
devoted substantially all of his working time to the Company. As the result of
the survey of pay comparables conducted by the consultants in the fall of 1993,
Mr. Whitfield's salary was adjusted to $170,000 for 1994, which is lower than
the median for such pay comparables. For 1995 Mr. Whitfield's salary was
increased 4%, which was in line with salary increases for other officers of the
Company.
Mr. Whitfield's cash incentive award for 1994 was $72,200, which was
slightly less than double his original target for the year, as the result of the
Company's exceeding its target for operating income by a similar percentage.
In 1994, Mr. Whitfield received stock options representing 13,000 shares of
the Company's Common Stock and a restricted stock award for 7,881 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.
Section 162(m) Considerations. The Committee has not given significant
consideration to the deductibility of executive compensation under Section
162(m) of the Internal Revenue Code which was enacted in 1993. Under this
provision, beginning in 1994 a publicly held corporation is not permitted to
deduct compensation in excess of one million dollars per year paid to the chief
executive officer or any one of the other named executive officers except to the
extent the compensation was paid under compensation plans meeting certain tax
code requirements. The Committee has noted that the Company does not currently
face the loss of this deduction for compensation. The Committee nevertheless
has determined that, in reviewing the design of and administering the executive
compensation program, the Committee will continue in the future to seek to
preserve the Company's tax deductions for executive compensation unless this
goal conflicts with the primary objectives of the Company's compensation's
program.
Submitted by,
Steven M. Johnson
Frederic W. Yocum, Jr.
Needham B. Whitfield
12
<PAGE>
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.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG BRENCO, INCORPORATED, TIMKEN COMPANY AND S&P 500
<CAPTION>
Measurement Period BRENCO, TIMKEN
(Fiscal Year Covered) INCORPORATED COMPANY S&P 500
<S> <C> <C> <C>
*Measurement Pt-12/31/89 $100.00 $100.00 $100.00
FYE 12/31/90 68.42 76.87 96.45
FYE 12/31/91 82.94 87.34 125.24
FYE 12/31/92 81.55 98.46 134.51
FYE 12/31/93 156.98 126.00 148.03
FYE 12/31/94 152.39 133.09 149.94
<FN>
* Assumes $100 invested on 12/31/89 in Brenco, Timken and S&P 500
(HARD COPY TO BE SENT TO SEC UNDER COVER OF FORM SE)
</TABLE>
Compliance with Section 16 of the Securities Exchange Act of 1934
Based on a review of reports of beneficial ownership of the Company's
Common Stock and written representations furnished to the Company, the Company
believes that its officers and directors filed on a timely basis the reports
required to be filed under Section 16(a) of the Securities Exchange Act of 1934
during 1994, except for the filing of a Form 3 reporting the initial beneficial
ownership of Mr. Fitzsimmons which was inadvertently not filed until one month
after he became an officer of the Company.
13
<PAGE>
Ratification of Auditors
The Board of Directors has selected McGladrey & Pullen, LLP to audit the
financial statements of the Company and its Subsidiaries for the year ending
December 31, 1995. McGladrey & Pullen, LLP 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,
LLP. 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, LLP 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 1994 Annual Report of the Company, which includes audited financial
statements for the year ended December 31, 1994, has been mailed to shareholders
of record.
10-K Report
A copy of the Company's 10-K Annual Report for 1994 to the Securities and
Exchange Commission will be available free of charge at the end of March, 1995.
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 18, 1996, must submit their
proposals to the Secretary of the Company on or before November 10, 1995.
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.
14
<PAGE>
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 and for the ratification of the selection of
McGladrey & Pullen, LLP as independent auditors for the year ending December 31,
1995. 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
Petersburg, Virginia
March 10, 1995
15
<PAGE>
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 24, 1995 at
the Annual Meeting of Shareholders to be held on April 20, 1995 or any
adjournment thereof.
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 and 2.
1. ELECTION OF DIRECTORS: FOR WITHHELD
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 & Pullen, LLP as auditors for 1995.
FOR AGAINST ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon other business
as may properly come before the meeting.
(Please sign reverse side and return promptly.)
16
<PAGE>
BACK SIDE
(Continued from other side)
Date: _____________________, 1995
_________________________________
Signature
_________________________________
Signature
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 16 AND 17 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 1/2 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.
17
