<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary proxy statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to 14a-11(c) or Rule 14a-12
</TABLE>
Briggs and Stratton Corporation
- --------------------------------------------------------------------------------
(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):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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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(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> 2
BRIGGS & STRATTON CORPORATION
[BRIGGS & STRATTON LOGO]
12301 WEST WIRTH STREET
WAUWATOSA, WISCONSIN 53222
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE is hereby given that the Annual Meeting of Shareholders of BRIGGS &
STRATTON CORPORATION, a Wisconsin corporation (hereinafter called the
Corporation), will be held at the Doral Arrowwood Conference Center, Anderson
Hill Road, Rye Brook, New York 10573, on Wednesday, October 21, 1998, at 9:00
a.m. Eastern Daylight Time, for the following purposes:
(a) To elect three directors to serve for three-year terms expiring
in 2001; and
(b) To take action with respect to any other matters that may be
brought before the meeting and that might be considered by the
shareholders of a Wisconsin corporation at their annual meeting.
By order of the Board of Directors
Wauwatosa, Wisconsin
September 8, 1998
ROBERT H. ELDRIDGE, Secretary
YOUR VOTE IS IMPORTANT TO INSURE THAT A MAJORITY OF THE STOCK IS
REPRESENTED. PLEASE SIGN AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
ENVELOPE.
The Doral Arrowwood Conference Center is located in Rye Brook, New York,
about 25 miles north of Midtown Manhattan, New York and 5 miles from the
Westchester County (White Plains) Airport.
<PAGE> 3
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the
Board of Directors of Briggs & Stratton Corporation of proxies, in the
accompanying form, to be used at the Annual Meeting of Shareholders of the
Corporation to be held on October 21, 1998 and any adjournments thereof. Only
shareholders of record at the close of business on August 27, 1998 will be
entitled to notice of and to vote at the meeting. The shares represented by
each valid proxy received in time will be voted at the meeting and, if a choice
is specified on the proxy, such shares will be voted in accordance with that
specification. Shareholders may revoke proxies at any time to the extent they
have not been exercised. The cost of solicitation of proxies will be borne by
the Corporation. Solicitation will be made primarily by use of the mails;
however, some solicitation may be made by regular employees of the Corporation,
without additional compensation therefor, by telephone, by facsimile, or in
person. In addition, the Corporation has retained Georgeson & Company, Inc. to
assist in its proxy solicitation efforts, at a fee to the Corporation
anticipated not to exceed $9,500 plus reasonable out-of-pocket expenses. On the
record date, the Corporation had outstanding 23,623,591 shares of $.01 par
value common stock entitled to one vote per share.
A majority of the votes entitled to be cast with respect to each matter
submitted to the shareholders, represented either in person or by proxy, shall
constitute a quorum with respect to such matter. If a quorum exists, the
affirmative vote of a majority of the votes represented at the meeting will be
required for the election of directors. A vote withheld from the election of
directors shall count toward the quorum requirement and shall have the effect
of a vote against the director nominee or nominees. The Inspectors of Election
appointed by the Board of Directors shall count the votes and ballots.
The Corporation's principal executive offices are located at 12301 West
Wirth Street, Wauwatosa, Wisconsin 53222. It is expected that this Proxy
Statement and the form of proxy will be mailed to shareholders on or about
September 8, 1998.
(a) ELECTION OF DIRECTORS
The Board of Directors of Briggs & Stratton is divided into three classes,
with the term of office of each class ending in successive years. Three
directors are to be elected to serve for a term of three years each expiring in
2001 and six directors will continue to serve for the terms designated in the
following schedule. All directors are elected subject to the Bylaw restriction
that no director shall serve beyond the Annual Meeting of Shareholders
following their attainment of age 70. It is intended that proxies received in
response to this solicitation will be voted for the election of the nominees
named below or, in the event of a contingency not presently foreseen, for the
election of other persons who may be nominated as substitutes.
1
<PAGE> 4
Each nonemployee director of the Corporation receives an annual retainer
fee of $20,000, a fee of $1,500 for each Board meeting attended and $1,000 for
each Committee meeting attended in conjunction with a Board meeting, a fee of
$1,500 for each Committee meeting not held in conjunction with a Board meeting,
and a fee of $250 for participating in any written consent resolution.
Nonemployee directors may elect to defer receipt of all or a portion of their
directors' fees until any date but no later than the year in which the director
attains the age of 71 years. Participants may elect to have deferred amounts
either: (a) credited with interest quarterly at 80% of the prevailing prime
rate or (b) converted into common share units, based on the deferral date
closing price of the Corporation's common stock, and credited with an amount
equivalent to any dividend paid on the Corporation's common stock, which shall
be converted into additional common share units. All distributions shall be
paid in cash. Nonemployee directors are also provided with $150,000 of coverage
under the Corporation's Business Travel Accident Plan while on corporate
business.
Nonemployee directors participate in a Director's Leveraged Stock Option
Plan. In general, the Plan is structured such that each nonemployee director may
receive a grant of nonqualified stock options ("LSOs"), the number of such LSOs
to be determined by reference to the Company Performance Factor achieved under
the Economic Value Added Incentive Compensation Plan ("EVA(R) Plan"). When
Company performance reaches target under the EVA Plan, each nonemployee director
will be awarded 2,000 options. Company performance exceeding target will result
in additional shares granted on a sliding scale. Performance less than target
may result in no option grants. The LSOs are premium priced with the exercise
price equal to the exercise price for LSOs granted under the LSO Program for
Senior Executives of the Corporation. These LSOs become exercisable after they
have been held for three years, and they expire at the end of five years. The
Director's LSO Plan is structured so that a fair return must be provided to the
Corporation's shareholders before the options become valuable. In August 1998,
each nonemployee director received a grant of 1,000 LSOs, based on the Company
Performance Factor for fiscal 1998.
EVA(R) is a registered trademark of Stern Stewart & Co.
<TABLE>
<CAPTION>
YEAR FIRST
BECAME A
NAME, AGE, PRINCIPAL OCCUPATION FOR PAST FIVE YEARS AND DIRECTORSHIPS DIRECTOR
- ---------------------------------------------------------------------- ----------
NOMINEES FOR ELECTION AT THE ANNUAL MEETING (CLASS OF 2001):
<S> <C>
EUNICE M. FILTER, 57 (1)(3) 1997
Vice President, Treasurer and Secretary of Xerox Corporation,
a manufacturer of office equipment. Vice President and Secretary
since 1984 and Treasurer since 1990. Director of Baker Hughes,
Inc., Xerox Credit Corporation and Xerox Canada, Inc.
CLARENCE B. ROGERS, JR., 68 (1)(2)(3) 1991
Chairman of Equifax Inc., a provider of information based
administrative services, since 1992. Chief Executive Officer
(1989-1995) and President (1989-1992). Director of Morgan
Stanley Dean Witter & Co.; Equifax Inc.; Oxford Industries,
Inc.; Sears, Roebuck & Co. and ChoicePoint, Inc.
FREDERICK P. STRATTON, JR., 59 (3) (4) 1976
Chairman and Chief Executive Officer of the Corporation since
1986. Also President (1992-1994). Director of Banc One Corporation;
Midwest Express Holdings, Inc.; Weyco Group Inc.; Wisconsin Electric
Power Company and Wisconsin Energy Corporation.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
YEAR FIRST
BECAME A
NAME, AGE, PRINCIPAL OCCUPATION FOR PAST FIVE YEARS AND DIRECTORSHIPS DIRECTOR
- --------------------------------------------------------------------- ----------
INCUMBENT DIRECTORS (CLASS OF 2000):
<S> <C>
ROBERT J. O'TOOLE, 57 (1) (2) 1997
Chairman of the Board, President and Chief Executive Officer,
A.O. Smith Corporation, a diversified manufacturer whose major
products include electric motors and water heaters. Chairman
since 1992, Chief Executive Officer since 1989 and President
since 1986. Director of Firstar Corporation, Firstar Bank
Milwaukee, N.A., Protection Mutual Insurance Co. and
A.O. Smith Corporation.
JOHN S. SHIELY, 46 (4) 1994
President and Chief Operating Officer of the Corporation since 1994.
Executive Vice President - Administration (1991-1994). Director of
Consolidated Papers, Inc., M&I Marshall & Ilsley Bank and Quad/Graphics,
Inc.
CHARLES I. STORY, 44 (1) (3) 1994
President and Chief Executive Officer, INROADS, Inc., a national non-
profit training and development organization which prepares talented
minorities for careers in business and engineering, since 1993. Director
of INROADS, Inc. and ChoicePoint, Inc. Advisory Director of First American
National Bank.
INCUMBENT DIRECTORS (CLASS OF 1999):
MICHAEL E. BATTEN, 58 (1) (2) (4) 1984
Chairman and Chief Executive Officer of Twin Disc, Incorporated,
manufacturer of power transmission equipment. Chairman since 1989 and
Chief Executive Officer since 1983. Director of Firstar Corporation,
Simpson Industries, Inc., Twin Disc, Incorporated and Universal Foods
Corporation.
ROBERT H. ELDRIDGE, 59 1988
Executive Vice President and Chief Financial Officer, Secretary-Treasurer
of the Corporation since April 1995. Secretary-Treasurer (1984-1995).
Director of M&I Northern Bank.
PETER A. GEORGESCU, 59 (1) (3) 1986
Chairman and Chief Executive Officer of Young & Rubicam Inc., an
international communications firm; Chairman since January 1995 and Chief
Executive Officer since January 1994. President (1990-1994). Director of
Young & Rubicam Inc.
Footnotes (1), (2), (3) and (4) are on page 4.
</TABLE>
3
<PAGE> 6
(1) Member of Audit Committee, of which Mr. Batten is Chairman. The Audit
Committee, composed of all outside directors, makes recommendations to the
Board of Directors regarding the engagement of independent public
accountants to audit the books and accounts of the Corporation and reviews
with such accountants the audited financial statements and their report
thereon. The Audit Committee also reviews and approves all non-audit
services performed by the independent public accountants, reviews such
accountants' recommendations on accounting policies and internal controls,
reviews internal accounting and auditing procedures, and monitors internal
programs to insure compliance with law and to avoid conflicts of interest.
The Audit Committee held three meetings during fiscal 1998.
(2) Member of Nominating, Compensation and Governance Committee, a committee
composed of outside directors, of which Mr. Rogers is Chairman. The
Nominating, Compensation and Governance Committee: (a) proposes to the
Board of Directors a slate of nominees for election by the shareholders at
the Annual Meeting of Shareholders and prospective director candidates in
the event of the resignation, death or retirement of directors or change
in Board composition requirements; (b) reviews candidates recommended by
shareholders for election to the Board of Directors; (c) develops plans
regarding the size and composition of both the Board of Directors and
Committees; (d) considers executive compensation, benefits and succession
planning issues and makes appropriate recommendations to the Board of
Directors; (e) administers The Briggs & Stratton Corporation Stock
Incentive Plan and the Economic Value Added Incentive Compensation Plan;
and (f) prepares on an annual basis a report on executive compensation.
The Nominating, Compensation and Governance Committee, formerly known as
the Nominating and Salaried Personnel Committee, held four meetings during
fiscal 1998.
The Committee will consider candidates for the Board of Directors
recommended by a shareholder who submits such recommendation in writing to
the Secretary of the Corporation at its principal office in Wauwatosa,
Wisconsin, stating the shareholder's name and address, the name and
address of the candidate, and the qualifications of and other detailed
background information regarding the candidate. All letters suggesting
candidates must be received by the Secretary of the Corporation on or
before May 1 of the year of the Annual Meeting of Shareholders in which
the candidate's nomination would be acted upon.
Any direct nominations by shareholders for the Board of Directors must be
made in accordance with the information and timely notice requirements of
the Corporation's Bylaws, a copy of which may be obtained from the
Secretary of the Corporation. Among other things, such nominations must be
in writing and, for consideration at the 1999 Annual Meeting, received by
the Secretary no later than July 23, 1999.
(3) Member of Planning Committee, of which Mr. Stratton is Chairman. This
Committee reviews with management the product and marketing plans for the
Corporation. There were three meetings held during fiscal 1998.
(4) Member of Executive Committee. The Executive Committee is authorized to
exercise the authority of the Board of Directors in the management of the
business and the affairs of the Corporation between meetings of the Board,
except as provided in the Bylaws. The Executive Committee held no meetings
during fiscal 1998.
The Board of Directors held four meetings in fiscal 1998. All of the
Directors attended over 75% of the meetings of the Board and Committees
upon which they serve.
4
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table presents the names of persons known to the Corporation
to be the beneficial owners of more than 5% of the outstanding shares of its
common stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------------------------------------------------------
<S> <C> <C>
Pioneering Management Corp. 1,940,000 (a) 8.2%
60 State Street
Boston, Massachusetts 02109
------------------------------------------------------------------
</TABLE>
(a) Pioneering Management Corp. reports that as of August 3, 1998 it had
sole voting power and sole dispositive power with respect to all 1,940,000
shares.
The above beneficial ownership information is based on information
furnished by the specified persons and is determined in accordance with Rule
13d-3, as required for purposes of this Proxy Statement. It is not necessarily
to be construed as an admission of beneficial ownership for other purposes.
5
<PAGE> 8
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of shares of common stock of the Corporation by each director,
nominee and named executive officer, and by all directors, nominees and
executive officers as a group, as of the record date.
<TABLE>
<CAPTION>
NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------
TOTAL NO. SOLE SHARED SOLE
OF SHARES PERCENT VOTING AND VOTING AND VOTING
BENEFICIALLY OF INVESTMENT INVESTMENT POWER
DIRECTORS AND EXECUTIVE OFFICERS OWNED CLASS POWER POWER ONLY
- -------------------------------- ------------- -------- -------- ---------- -------
<S> <C> <C> <C> <C> <C>
Michael E. Batten 900 * 900 0 0
Robert H. Eldridge 307,702 (a) (b) 1.2 128,751 174,200 4,751
Eunice M. Filter 500 * 500 0 0
Peter A. Georgescu 2,300 * 0 2,300 0
Michael D. Hamilton 132,405 (a) * 128,847 0 3,558
Robert J. O'Toole 0 * 0 0 0
Clarence B. Rogers, Jr. 2,000 * 2,000 0 0
John S. Shiely 448,654 (a) (c) 1.8 158,153 288,000 2,501
Charles I. Story 700 * 300 400 0
Frederick P. Stratton, Jr. 1,113,502 (a) (b) (c) 4.5 370,304 736,908 6,290
James A. Wier 130,297 (a) * 113,047 13,092 4,158
All directors, nominees and
executive officers as a group
(21 persons including the
above named) 2,090,582 (a) 8.4% 1,285,984 760,899 43,699
</TABLE>
* Less than 1%.
(a) Includes shares issuable pursuant to stock options exercisable within 60
days for Messrs. Eldridge, Hamilton, Shiely, Stratton, Wier, and all
directors, nominees and executive officers as a group of: 122,524;
114,347; 133,153; 343,304; 113,047 and 1,179,964; respectively.
(b) Includes 174,200 shares in the Briggs & Stratton Retirement Plan as to
which Mr. Stratton and Mr. Eldridge share beneficial ownership through
joint voting and investment power.
(c) Includes 288,000 shares in the Briggs & Stratton Corporation Foundation
as to which Mr. Stratton and Mr. Shiely share beneficial ownership through
joint voting and investment power.
The above beneficial ownership information is based on information
furnished by the specified persons and is determined in accordance with Rule
13d-3, as required for purposes of this Proxy Statement. It is not necessarily
to be construed as an admission of beneficial ownership for other purposes.
In addition to the common shares reported above, Mr. Rogers has acquired
2,025 phantom stock units through his deferral of director fees under the
Deferred Compensation Plan for Directors and Mr. Stratton has acquired 3,110
phantom stock units through compensation deferrals under the 1995 Deferred
Compensation Agreement.
6
<PAGE> 9
PERFORMANCE GRAPH
The chart below shows a comparison of the cumulative return over the last five
fiscal years had $100 been invested at the close of business on June 30, 1993
in each of Briggs & Stratton common stock, the Standard & Poor's (S&P) 500
Index and the S&P Machinery Index.
FIVE YEAR CUMULATIVE TOTAL RETURN COMPARISON*
BRIGGS & STRATTON VERSUS PUBLISHED INDICES (S&P 500 AND S&P MACHINERY)
[LINE GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
6/93 6/94 6/95 6/96 6/97 6/98
---- ---- ---- ---- ---- ----
[D] Briggs & Stratton Corporation 100 103 118 144 179 138
[S] S&P 500 100 101 128 161 217 282
[X] S&P Machinery (diversified) 100 109 138 158 228 228
</TABLE>
* Total return calculation is based on compounded monthly returns with
reinvested dividends.
NOMINATING, COMPENSATION AND GOVERNANCE COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Corporation's Nominating, Compensation and Governance Committee (the
"Committee"), which is comprised of three outside directors of the Corporation,
is responsible for considering and approving compensation arrangements for
senior management of the Corporation, including the Corporation's executive
officers and the chief executive officer. The objectives of the Committee in
establishing compensation arrangements for senior management continue to be as
follows: (i) to attract and retain key executives who are important to the
continued success of the Corporation and its operating divisions; and (ii) to
provide strong financial incentives, at reasonable cost to the shareholders,
for senior management to enhance the value of the shareholders' investment.
The primary components of the Corporation's executive compensation program
are (i) base salary, (ii) incentive compensation bonuses and (iii) incentive
stock options.
The Committee believes that:
- - The Corporation's incentive plans provide very strong incentives for
management to increase shareholder value;
- - The Corporation's pay levels are appropriately targeted to attract and
retain key executives; and
- - The Corporation's total compensation program is a cost-effective strategy
to increase shareholder value.
BASE SALARIES
The Committee reviews officers' base salaries annually. Salaries are based
on level of responsibility and individual performance. It is the Committee's
objective that base salary levels, in the aggregate, be at or
7
<PAGE> 10
modestly above competitive salary levels. The Committee defines a competitive
salary level as the average for similar responsibilities in similar companies.
In setting fiscal 1998 base salaries, the Committee reviewed compensation
survey data provided by its outside consultant, Hewitt Associates, for a
Comparator Group of companies (which is not the same group of companies
included in the S&P Machinery Index), in the general sales dollar size range
and broad industry sector of the Corporation. The Committee was satisfied that
the salary levels set would achieve the Committee's objective. As a result of
this process, Mr. Stratton received an increase in base salary of 5.2% in
fiscal 1998.
INCENTIVE BONUSES
The Corporation maintains an Economic Value Added ("EVA") Incentive
Compensation Plan (the "Plan", or "EVA Plan"), the purpose of which is to
provide incentive compensation to certain key employees, including all
executive officers, in a form which relates the financial reward to an increase
in the value of the Corporation to its shareholders. In general, EVA is the
excess of net operating profit after taxes, less a capital charge. The capital
charge is intended to represent the return expected by the providers of the
firm's capital, and is the weighted average cost of (i) equity capital based on
a 30-year Treasury Bond yield plus the product of the average equity risk
premium and the business risk index for the Corporation, and (ii) debt capital
equal to actual after-tax debt cost. EVA improvement is the financial
performance measure most closely correlated with increases in shareholder
value.
Under the EVA Plan, the Accrued Bonus for a participant for any fiscal year
is equal to the aggregate of 50% of the Company Performance calculation (Base
Salary X Target Incentive Award X Company Performance Factor) plus 50% of the
Individual Performance calculation (Base Salary X Target Incentive Award X
Individual Performance Factor). The intent of the Plan is to reward executives
based on their ability to continuously improve the amount of EVA earned on
behalf of shareholders. For all of the executives named in the Summary
Compensation Table, the Committee determined that the Individual Performance
Factor would be the same as the Company Performance Factor. Individual target
incentive awards under the Plan ranged from 20% to 90% of base compensation for
fiscal 1998. For the same year, Mr. Stratton's individual target incentive award
was 90%. His fiscal 1998 bonus reflects a payout of 61% of his target incentive
award.
The Company Performance Factor is determined by reference to the amount of
improvement or deterioration in EVA. If the annual EVA is in excess of the
Target EVA, the Company Performance calculation will produce an amount in
excess of the Target Incentive Award; if the annual EVA is less than the Target
EVA, the Company Performance calculation will produce an amount less than the
Target Incentive Award. There is no cap and no floor on the accrued bonus. The
Target EVA is the average of the Target EVA and Actual EVA for the prior Plan
year plus an Expected Improvement. Expected Improvement for each fiscal year is
$4 million. In the event the average of the Target EVA and the Actual EVA for
the prior year exceeds $25 million, the Expected Improvement factor will not be
added to the target. For fiscal 1998 the Target EVA was $22 million.
The Individual Performance Factor is determined by the executive to whom
the participant reports, subject to approval by the Committee, and is the
average (or weighted average) of one or more quantifiable or non-quantifiable
factors (called "Supporting Performance Factors"). Supporting Performance
Factors represent an achievement percentage continuum that ranges from 50% to
150% of the individual target award opportunity, and will be enumerated from .5
to 1.5 based on such continuum. However, if approved by the Committee,
Supporting Performance Factors which are the same as the Company Performance
Factor or are based on divisional EVA are uncapped.
8
<PAGE> 11
The EVA bonus plan provides the powerful incentive of an uncapped bonus
opportunity, but also uses a "Bonus Bank" feature to ensure that extraordinary
EVA improvements are sustained before extraordinary bonus awards are paid out.
The Bonus Bank feature applies to those participants determined by the
Committee to be Senior Executives under the Plan. All of the executive
officers, including those named in the Summary Compensation Table, were
designated Senior Executives for fiscal 1998. Each year, any accrued bonus in
excess of 125% of the target bonus award is added to the outstanding Bonus Bank
balance. The bonus paid is equal to the accrued bonus for the year, up to a
maximum of 125% of the target bonus, plus 33% of the new Bonus Bank balance. A
Bonus Bank account is considered "at risk" in the sense that in any year the
accrued bonus is negative, the negative bonus amount is subtracted from the
outstanding Bonus Bank balance. Thus, extraordinary EVA improvements must be
sustained for several years to ensure full payout of the accrued bonus. In the
event the outstanding Bonus Bank balance at the beginning of the year is
negative, the bonus paid is limited to the accrued bonus up to a maximum of 75%
of the target bonus. The executive is not expected to repay negative balances.
On termination of employment due to death, disability or retirement, the
Available Balance in the Bonus Bank will be paid to the terminating executive
or his designated beneficiary or estate. Executives who voluntarily leave to
accept employment elsewhere or who are terminated for cause will forfeit any
positive Available Balance.
STOCK INCENTIVE PLAN
In 1990, the shareholders approved the Corporation's Stock Incentive Plan
("Incentive Plan"). The Incentive Plan authorizes the Committee to grant to
officers and other key employees stock incentive awards in the form of one or
any combination of the following: stock options, stock appreciation rights,
deferred stock, restricted stock and stock purchase rights. In early 1993, the
Committee worked with a consultant engaged at that time to adopt a method of
granting options which more closely aligns financial reward to optionees to the
long-term performance of the Corporation.
The Committee determined that for a five year period, beginning in fiscal
1994, the sole form of options to be granted under the Incentive Plan would be
leveraged stock options (LSOs), and therefore an amendment to the Incentive
Plan increasing the number of shares available for LSO grants was submitted to
shareholders and approved at the October 1993 Annual Meeting. Effective
beginning in fiscal 1994, an amount equal to the annual Total Bonus Payout
under the EVA Plan for officers and key employees covered by the Incentive Plan
is awarded in the form of LSOs, which can be either Incentive Stock Options or
Non-Qualified Stock Options under the Stock Option part of the Incentive Plan.
All options granted have a term of 5 years and become exercisable at the end of
3 years.
On August 5, 1998, after publication of financial results for fiscal 1998,
the Committee granted LSOs to all Senior Executives, including all executive
officers, based on the amount of their Total Bonus Payout under the EVA Plan
for fiscal 1998. The calculation of the number of options granted to each
executive, and the method of determining their exercise price, is described
below. These Leveraged Stock Options provide a form of option grant that
simulates a stock purchase with 10:1 leverage. Because the leveraged options
granted in 1998 have a premium exercise price and a term of five years, the
current Black-Scholes value of these options is only 14.1% of the grant date
stock price. The number of leveraged options granted to Mr. Stratton was
determined in the manner described and was based on his incentive bonus for
fiscal 1998.
The number of LSOs granted to a Senior Executive is determined by dividing
the Total Bonus Payout by 10% of the fair market value (FMV) of the Corporation
stock on the date of grant. The exercise price of the option is the product of
90% of the FMV on the date of grant times the Estimated Annual Growth Rate
compounded over the five year term of the option. The Estimated Annual Growth
Rate equals the average daily closing 30-year U.S. Treasury Bond yield for
March in the year of grant plus 1%.
9
<PAGE> 12
The maximum number of LSOs to be granted each year is 600,000, and the maximum
number of LSOs that may be granted cumulatively under the LSO Program is
2,539,986. If the Total Bonus Payout under EVA produces more than 600,000 LSOs
in any year, LSOs granted to all Senior Executives for that year will be
reduced pro-rata based on proportionate Total Bonus Payouts under the EVA Plan.
The amount of such reduction shall be carried forward to subsequent years and
invested in LSOs to the extent the annual limitation is not exceeded in such
years. The LSO Program is intended to exist for a five-year period until 1999.
Internal Revenue Service regulations limit the deductibility by a corporation
of compensation paid to the Chief Executive Officer and the other executive
officers whose compensation is required to be reported in the Summary
Compensation Table to $1 million unless certain conditions are met. After
careful consideration of other alternatives for maintaining the deductibility
of compensation earned in excess of the $1 million cap by any of the covered
executives, the Committee recommended to the Board adoption of a resolution
requiring any corporate officer whose compensation might be expected to exceed
the cap to enter into a Deferred Compensation Agreement for fiscal 1999. Mr.
Stratton has entered into such an Agreement, under which he will defer any
amounts earned in excess of the cap to the fiscal year following the year in
which he leaves the employment of the Corporation. Pursuant to such agreement,
Mr. Stratton elected that amounts deferred be converted into phantom stock
units, based on the deferral date closing price of the Corporation's common
stock. Each year an amount equal to the dividends that would have been paid on
such units had they been actual shares of common stock is converted to
additional phantom stock units. Following termination, Mr. Stratton will be
entitled to receive either cash in an amount equal to the then-current market
value of the phantom stock units or a number of shares of Corporation common
stock equal to the number of units of phantom stock. Therefore, Mr. Stratton's
return on investment will be directly aligned with that of all other
shareholders in that the amount of his payout will be affected by dividends
paid and the increase or decrease in the price of Briggs & Stratton Corporation
stock between the deferral and his time of termination of employment.
Mr. Stratton entered into a similar agreement for fiscal 1998. However, his
compensation for that year did not exceed $1 million and, therefore, pursuant
to the terms of the Agreement, no compensation was deferred.
NOMINATING, COMPENSATION AND GOVERNANCE COMMITTEE:
Clarence B. Rogers, Jr., Chairman
Michael E. Batten
Robert J. O'Toole
10
<PAGE> 13
EXECUTIVE COMPENSATION
CASH COMPENSATION
The table which follows sets forth certain information for each of the last
three fiscal years concerning the compensation paid by the Corporation to the
Corporation's Chief Executive Officer and the four other most highly
compensated executive officers (collectively, the "named executive officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------
AWARDS PAYOUTS
--------- ---------
ANNUAL SECURITIES
COMPENSATION (1) UNDERLYING
NAME AND FISCAL ------------------------ OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS ($) SARs (#) (2) PAYOUTS ($)(3) COMPENSATION ($)(4)
- ------------------ ------- --------- ----------- ------------ -------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
F.P. Stratton 1998 $525,000 $288,225 88,890 $29,264 $7,432
Chairman and 1997 499,200 247,603 58,480 43,678 7,356
Chief Executive Officer 1996 499,200 0 19,630 65,191 7,147
J.S. Shiely 1998 367,560 134,527 40,280 9,336 5,184
President and 1997 356,856 132,750 29,450 13,935 5,273
Chief Operating Officer 1996 344,856 0 6,510 20,798 4,609
M.D. Hamilton 1998 281,352 85,812 26,670 9,440 7,252
Executive Vice President - 1997 274,488 85,091 19,910 14,090 6,764
Sales & Service 1996 274,488 0 6,350 21,030 6,502
J.A. Wier 1998 230,928 85,683 13,320 9,440 7,064
Executive Vice President - 1997 227,208 85,934 10,040 14,090 6,580
Operations 1996 245,333 0 3,170 21,029 5,575
R.H. Eldridge 1998 241,824 73,756 22,870 7,923 8,154
Executive Vice President 1997 235,920 73,135 17,060 11,825 7,588
and Chief Financial Officer, 1996 235,920 0 5,330 17,649 7,356
Secretary-Treasurer
</TABLE>
(1) Includes amounts earned in fiscal year, whether or not deferred.
(2) No SARs are outstanding. Option awards reported for fiscal 1998 were
granted August 5, 1998 based on executive performance for fiscal 1998.
(3) Figures reflect portion of the bonus bank balances paid with respect to
fiscal 1998.
(4) All other compensation for fiscal 1998 for Messrs. Stratton, Shiely,
Hamilton, Wier and Eldridge, respectively, includes: (i) matching
contributions to the Corporation's Savings and Investment Plan for each
named executive officer of $4,344, $4,311, $4,800, $4,800 and $4,800 and
(ii) the cost of Survivor Annuity Plan coverage for each named executive
officer of $3,088, $873, $2,452, $2,264 and $3,354.
11
<PAGE> 14
STOCK OPTIONS
The Stock Incentive Plan approved by shareholders provides for the
granting of stock options with respect to Common Stock. The following tables
set forth further information relating to stock options:
OPTION/SAR GRANTS FOR LAST FISCAL YEAR*
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
- -------------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARs
UNDERLYING GRANTED TO EXERCISE OR BASE GRANT DATE
OPTIONS/SARs EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR ($ / SH) DATE VALUE ($) **
- ---- ------------- ------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
F.P. Stratton 88,890 25.1% $44.98 8/5/03 $447,513
J.S. Shiely 40,280 11.4% 44.98 8/5/03 202,788
M.D. Hamilton 26,670 7.5% 44.98 8/5/03 134,269
J.A. Wier 13,320 3.8% 44.98 8/5/03 67,059
R.H. Eldridge 22,870 6.5% 44.98 8/5/03 115,138
</TABLE>
* Option awards reported for fiscal 1998 were granted August 5, 1998 based on
executive performance for fiscal 1998. The methodology used in determining
the number of grants awarded and other terms and conditions of the grants are
found in the Nominating, Compensation and Governance Committee Report on
Executive Compensation. Options become exercisable August 5, 2001. No SARs
were granted.
** Black-Scholes values are based on the following assumptions:
Stock price at date of grant: $35.7188
Option term: 5 years
Risk-free interest rate: .0535
Volatility: .223
Dividend yield: .025
Risk-free interest rate is the five year U.S. government bond yield on the
date of grant.
Volatility and yield assumptions are based on monthly price and dividend
data for the 36 months ending 6/30/98.
It should not be concluded that the Corporation supports the validity of
the Black-Scholes method or that the values shown in the table as generated
by the model represent the amounts an executive might earn upon exercise of
the options.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES*
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS/SARs OPTIONS/SARs
SHARES ACQUIRED VALUE AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
F.P. Stratton 4,488 123,695 250,149 329,710 211,172 0
J.S. Shiely 1,500 50,730 94,369 139,540 399,766 0
M.D. Hamilton 38,952 518,034 60,727 106,550 125,239 0
J.A. Wier 50,252 830,263 59,427 80,150 158,953 0
R.H. Eldridge 8,327 82,727 90,925 90,240 598,816 0
</TABLE>
* No SARs are outstanding. Options at fiscal year end include options
granted August 5, 1998 based on executive performance for fiscal 1998.
LONG-TERM INCENTIVE COMPENSATION
As described in more detail in the Nominating, Compensation and Governance
Committee Report on Executive Compensation, the EVA Plan requires that accrued
bonuses payable to Senior Executives in excess of 125% of their target bonus be
banked. This occurred in fiscal 1995. The amount in the bonus bank is at risk
in the sense that in any year the accrued bonus is negative, the negative bonus
amount is subtracted from the outstanding bonus bank balance. This occurred in
fiscal 1996. In fiscal 1998, the accrued bonus payable did not exceed 125% of
the target bonus for any of the named individuals, nor was it negative.
Therefore, there was no impact on the bonus bank.
12
<PAGE> 15
RETIREMENT PLAN
The Corporation maintains a defined benefit retirement plan (the
"Retirement Plan") covering all executive officers and substantially all other
Milwaukee employees. Under the Retirement Plan non-bargaining unit employees
receive an annual pension payable on a monthly basis at retirement equal to
1.6% of the employee's average of the highest five years' compensation of the
last ten calendar years of service prior to retirement multiplied by the number
of years of credited service, with an offset of 50% of Social Security
(prorated if years of credited service are less than 30). Compensation under
the Retirement Plan includes the compensation shown in the Summary Compensation
Table under the headings "Salary," "Bonus" and "LTIP Payouts," subject to a
maximum compensation set by law ($160,000 for fiscal 1998).
Executive officers participate in an unfunded program which supplements
benefits under the Retirement Plan. Under this program executive officers are
provided with additional increments of 0.50 of 1% of compensation per year of
credited service over that presently payable under the Retirement Plan to
non-bargaining unit employees. In no event can a pension paid under the above
described plans to a non-bargaining unit employee exceed 70% of the employee's
average monthly compensation.
Mr. Wier's employment agreement, described on page 14, provides for a
supplemental pension benefit which, when aggregated with the pension benefit
available under the Retirement Plan calculated in the form of a joint and 50%
survivor annuity, shall entitle him to a benefit after 25 years of service of
$250,000 per year.
A trust has been established for deposit of the aggregate present value of
the benefits described above for executive officers upon the occurrence of a
change in control of the Corporation, which trust would not be considered
funding the benefits for tax purposes.
The following table shows total estimated annual benefits from funded and
unfunded sources generally payable to executive officers upon normal retirement
at age 65 at specified compensation and years of service classifications
calculated on a single-life basis and adjusted for the projected Social
Security offset:
<TABLE>
<CAPTION>
ANNUAL PENSION PAYABLE FOR LIFE
AVERAGE ANNUAL COMPENSATION AFTER SPECIFIED YEARS OF CREDITED SERVICE
IN HIGHEST 5 OF LAST 10 --------------------------------------------------------------
CALENDAR YEARS OF SERVICE 10 YEARS 20 YEARS 30 YEARS 40 YEARS
- ----------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$200,000 $40,000 $80,000 $120,000 $140,000*
400,000 82,000 164,000 246,000 280,000*
600,000 124,000 248,000 372,000 420,000*
800,000 166,000 332,000 498,000 560,000*
1,000,000 208,000 416,000 624,000 700,000*
1,200,000 250,000 500,000 750,000 840,000*
1,400,000 292,000 584,000 876,000 980,000*
</TABLE>
* Figures reduced to reflect the maximum limitation of 70% of compensation.
The above table does not reflect limitations imposed by the Internal
Revenue Code of 1986, as amended (the "Code"), on pensions paid under federal
income tax qualified plans. However, an executive officer covered by the
Corporation's unfunded program will receive the full pension to which he would
be entitled in the absence of such limitations.
The years of credited service under the Retirement Plan for the individuals
named in the Summary Compensation Table are: Mr. Stratton-25; Mr. Shiely-12;
Mr. Hamilton-22; Mr. Wier-23 and Mr. Eldridge-32.
13
<PAGE> 16
EMPLOYMENT AGREEMENTS
All executive officers of the Corporation, except Mr. Wier, and including
the other four named executive officers, have signed a two-year employment
agreement, with a one-year automatic extension upon each anniversary date,
unless either party gives 30-days' notice that the agreement will not be
further extended. Under the agreement, the officer agrees to perform the duties
currently being performed in addition to other duties that may be assigned from
time to time. The Corporation agrees to pay the officer a salary of not less
than that of the previous year and to provide fringe benefits that are provided
to all other salaried employees of the Corporation in comparable positions. In
the event of a termination to which these employment agreements apply, the
foregoing payments are continued for the remainder of the term of the contract.
Mr. Wier's employment agreement provides for retirement benefits described on
page 13 and continues in effect through June 30, 2000, unless terminated
earlier by the Corporation as the result of death, disability or gross
negligence by Mr. Wier. In exchange for enhanced retirement benefits, Mr. Wier
has agreed to forego $4,167 per month effective December 1, 1995 from the base
salary level that would otherwise have been set by the Nominating, Compensation
and Governance Committee for his position and half of any option grants to
which he would otherwise be entitled.
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
The Board of Directors has authorized the Chairman of the Board to offer
to all executive officers and to certain other key employees change in control
employment agreements which ensure the employee's continued employment
following a "change in control" on a basis equivalent to the employee's
employment immediately prior to such change in terms of position, duties,
compensation and benefits, as well as specified payments upon termination
following a change in control. The Corporation currently has such agreements
with 17 executive officers and key employees of the Corporation, including all
of the executive officers named in the Summary Compensation Table. Such
agreements become effective only upon a defined change in control of the
Corporation, or if the employee's employment is terminated upon or in
anticipation of such a change in control, and automatically supersede any
existing employment agreement. Under the agreements, if during the employment
term (three years from the change in control) the employee is terminated other
than for "cause" or if the employee voluntarily terminates his employment for
good reason or during a 30-day window period one year after a change in
control, the employee is entitled to specified severance benefits, including a
lump sum payment of three times the sum of the employee's annual salary and
bonus and a "gross-up" payment which will, in general, effectively reimburse
the employee for any amounts paid under Federal excise taxes.
AUDITORS
The Board of Directors of the Corporation has selected the public
accounting firm of Arthur Andersen LLP as its independent auditors for the
current year. A representative of Arthur Andersen LLP will be present at the
Annual Meeting and will have the opportunity to make a statement if he desires
to do so and will be available to respond to appropriate questions.
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K
The Corporation is required to file an annual report, called Form 10-K,
with the Securities and Exchange Commission. A copy of Form 10-K for the fiscal
year ended June 28, 1998 accompanies this Proxy Statement. Requests for
additional copies should be directed to Carole Ford, Shareholder Relations,
Briggs & Stratton Corporation, P.O. Box 702, Milwaukee, Wisconsin 53201.
14
<PAGE> 17
SHAREHOLDER PROPOSALS
Proposals which shareholders intend to present at the 1999 Annual Meeting
of Shareholders must be received at the Corporate Offices Building in
Wauwatosa, Wisconsin no later than July 23, 1999, in order to be presented at
the meeting (and must otherwise be in accordance with the requirements of the
Bylaws of the Corporation), and must be received by May 11, 1999 for inclusion
in the proxy material for that meeting.
OTHER MATTERS
The Directors of the Corporation know of no other matters to be brought
before the meeting. If any other matters properly come before the meeting,
including any adjournment or adjournments thereof, it is intended that proxies
received in response to this solicitation will be voted on such matters in the
discretion of the person or persons named in the accompanying proxy form.
BY ORDER OF THE BOARD OF DIRECTORS
BRIGGS & STRATTON CORPORATION
Robert H. Eldridge, Secretary
Wauwatosa, Wisconsin
September 8, 1998
15
<PAGE> 18
BRIGGS & STRATTON CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - OCTOBER 21, 1998 PROXY
------
[BRIGGS & STRATTON LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby constitute and appoint FREDERICK P. STRATTON,
JR. and ROBERT H. ELDRIDGE, and each of them, with several power of
substitution, attorneys and proxies, for and in the name, place and stead of
the undersigned, to vote all shares votable by the undersigned at the
shareholders' annual meeting of Briggs & Stratton Corporation to be held at Rye
Brook, New York on October 21, 1998 at 9:00 a.m. Eastern Daylight Time and at
any adjournments thereof, subject to the directions indicated on the reverse
side hereof, hereby revoking any proxy previously given.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED BY THE PROXIES NAMED HEREIN
FOR ALL NOMINEES LISTED AND IN THEIR DISCRETION ON OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
(Continued and to be Signed on Reverse Side)
<PAGE> 19
BRIGGS & STRATTON CORPORATION
P.O. Box 702, Milwaukee, WI 53201-0702
PROXY SOLICITATED ON BEHALF OF THE BOARD OF DIRECTORS
(SEE REVERSE SIDE)
[-] DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED [-]
BRIGGS & STRATTON CORPORATION ANNUAL MEETING
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF DIRECTORS
(a) Election of Directors: Nominees - Eunice M. Filter; Clarence B. Rogers,
Jr.; Frederick P. Stratton, Jr.
[ ] VOTE FOR all nominees listed above*
[ ] VOTE WITHHELD from all nominees listed above
* To withhold authority to vote for any nominee, write the nominee's name
on the space below.
---------------------------------------------------------------------------
(b) In their discretion on other matters as may properly come before the
meeting.
All as set forth in the Notice and Proxy Statement relating to the
meeting, the receipt of which is hereby acknowledged.
[ ] I PLAN TO ATTEND THE MEETING. Date-------------------------, 1998
SIGNATURE(S) IN BOX
Please sign exactly as your name
appears hereon, giving your full title
if signing as attorney or fiduciary. If
shares are held jointly, each joint
owner should sign. If a corporation,
please sign in full corporate name by
duly authorized officer. If a
partnership, please sign in partnership
name by authorized person.
