<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:
[ ] 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 Rule 14a-11(c) or Rule 14a-12
Briggs & 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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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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 Marriott Chateau Elan Conference Center,
Braselton, Georgia 30517, on Wednesday, October 20, 1999, 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
2002;
(b) To consider and vote upon a proposal to amend and restate the Briggs &
Stratton Corporation Stock Incentive Plan (a copy of the restated Plan,
as so amended, is attached as Exhibit A to the accompanying Proxy
Statement); and
(c) 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 7, 1999
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 Marriott Chateau Elan Conference Center is located in Braselton,
Georgia, 30 minutes north of Atlanta and 55 minutes from Atlanta Hartsfield
International Airport, off I-85 North, Exit 48.
<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 20, 1999 and any adjournments thereof. Only
shareholders of record at the close of business on August 26, 1999 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 23,123,389 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.
Assuming a quorum exists, the affirmative vote of the majority of the votes
represented at the meeting is required for approval of the proposed amendment
and restatement of the Briggs & Stratton Corporation Stock Incentive Plan,
provided that the total of the votes cast represents over 50% of the shares
entitled to vote. An abstention will count toward the quorum requirement and,
though not a vote cast, will have the effect of a vote against the proposed
amendment. A broker non-vote shall count toward the quorum requirement but shall
have no effect on the voting for the proposed amendment. 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 7, 1999.
(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
2002 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
attainment of age 70. Mr. Robert H. Eldridge, who has served as a director since
1988, will not stand for reelection, pursuant to the Board retirement policy for
employee directors. Management appreciates Mr. Eldridge's 33 years of service to
Briggs & Stratton Corporation. Jay H. Baker, recently retired President of
Kohl's Department Stores, has been nominated by the Board to fill the vacancy
created by the retirement of Mr. Eldridge. 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.
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<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 for options granted prior to fiscal 2000,
expire at the end of five years, and for grants thereafter expire at the end of
seven 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 1999, each nonemployee director received a grant of 3,000 LSOs, based
on the Company Performance Factor for fiscal 1999.
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 2002):
- ------------------------------------------------------------
<S> <C> <C>
[PHOTO] MICHAEL E. BATTEN, 59 (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.
[PHOTO] JAY H. BAKER, 65 Nominee
Retired. President of Kohl's Department Stores, an operator of
family oriented, specialty department stores (1986-1999).
Director of Kohl's Corporation.
[PHOTO] PETER A. GEORGESCU, 60 (1)(3) 1986
Chairman and Chief Executive Officer of Young & Rubicam Inc.,
an international communications firm. Chairman since 1995 and
Chief Executive Officer since 1994. Director of Young & Rubicam
Inc. and International Flavors & Fragrances Inc.
</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 2001):
- ------------------------------------
<S> <C> <C>
[PHOTO] EUNICE M. FILTER, 58(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. President and Chief Executive
Officer of Xerox Credit Corporation. Director of Baker Hughes,
Inc., Xerox Credit Corporation and Xerox Canada, Inc.
[PHOTO] CLARENCE B. ROGERS, JR., 69(1)(2)(3) 1991
Retired. Chairman of Equifax Inc., a provider of information based
administrative services (1992-1999) and Chief Executive Officer
(1989-1995). Director of Morgan Stanley Dean Witter & Co.; Equifax
Inc.; Oxford Industries, Inc.; Sears, Roebuck & Co. and ChoicePoint,
Inc.
[PHOTO] FREDERICK P. STRATTON, JR., 60(3)(4) 1976
Chairman and Chief Executive Officer of the Corporation since
1986. Director of Bank One Corporation; Midwest Express Holdings,
Inc.; Weyco Group Inc.; Wisconsin Electric Power Company and
Wisconsin Energy Corporation.
Incumbent Directors (Class of 2000):
- ------------------------------------
[PHOTO] ROBERT J. O'TOOLE, 58(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.,
Factory Mutual Insurance Co. and A.O. Smith Corporation.
[PHOTO] JOHN S. SHIELY, 47(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,
Marshall & Ilsley Corporation and Quad/Graphics, Inc.
[PHOTO] CHARLES I. STORY, 45(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. Directors of INROADS, Inc. and ChoicePoint, Inc. Advisory
Director of First American National Bank.
</TABLE>
Footnotes (1), (2),(3) and (4) are on Page 4.
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 1999.
(2) Member of Nominating, Compensation and Governance Committee, a committee
composed of all 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 held five meetings during
fiscal 1999.
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 2000 Annual Meeting, received by
the Secretary no later than July 22, 2000.
(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 1999.
(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 1999.
The Board of Directors held four meetings in fiscal 1999. All of the
Directors attended 90% or more 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 CLASS
BENEFICIAL OWNER BENEFICIAL OWNERSHIP
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Barclays Global Investors. N.A. 1,669,672 (a) 7.2%
45 Fremont Street
San Francisco, California 94105
Pioneering Management Corp. 1,638,700 (b) 7.1%
60 State Street
Boston, Massachusetts 02109
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Barclays Global Investors. N.A. reports that as of June 30, 1999 it had
sole voting power for 1,566,101 shares, shared voting power for 103,505 shares
and shared dispositive power for all 1,669,672 shares.
(b) Pioneering Management Corp. reports that as of August 9, 1999 it had
sole voting power and sole dispositive power with respect to all 1,638,700
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>
Jay H. Baker 0 * 0 0 0
Michael E. Batten 900 * 900 0 0
Robert H. Eldridge 207,254 (a) (b) * 28,146 174,200 4,908
Eunice M. Filter 1,000 * 1,000 0 0
Richard J. Fotsch 39,017 (a) * 24,980 10,900 3,137
Peter A. Georgescu 2,300 m * 0 2,300 0
Michael D. Hamilton 31,656 (a) * 27,959 0 3,697
Robert J. O'Toole 1,000 * 1,000 0 0
Clarence B. Rogers, Jr. 2,000 * 2,000 0 0
John S. Shiely 378,255 (a) (c) 1.6 85,628 290,000 2,627
Charles I. Story 1,000 * 600 400 0
Frederick P. Stratton, Jr. 776,953 (a) (b) (c) 3.4 171,330 599,152 6,471
All directors, nominees and
executive officers as a group
(21 persons including the
above named) 1,120,215 (a) 4.8 468,386 612,796 39,033
</TABLE>
*Less than 1%.
(a) Includes shares issuable pursuant to stock options exercisable within 60
days for Messrs. Eldridge, Fotsch, Hamilton, Shiely, Stratton, and all
directors, nominees and executive officers as a group of: 12,301; 24,980;
6,350; 60,628; 131,330 and 333,035; 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 290,000 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
2,797 phantom stock units through his deferral of director fees under the
Deferred Compensation Plan for Directors and Mr. Stratton has acquired 6,977
phantom stock units through compensation deferrals under the 1995 and 1999
Deferred Compensation Agreements.
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, 1994 in
each of Briggs & Stratton common stock, the Standard & Poor's (S&P) 500 Index
and the S&P Machinery Index.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
6/94 6/95 6/96 6/97 6/98 6/99
<S> <C> <C> <C> <C> <C> <C>
- - Briggs & Stratton Corporation................. 100 114 139 173 133 210
- - S&P 500....................................... 100 130 159 214 279 342
- - S&P Machinery (diversified)................... 100 134 145 210 210 215
- - Total return calculation is based on compounded monthly returns with
reinvested dividends.
</TABLE>
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
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<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 1999 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 2.0% in fiscal 1999.
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, except Mr. Fotsch, the Committee determined that the
Individual Performance Factor would be the same as the Company Performance
Factor. Mr. Fotsch's Accrued Bonus is calculated as described above with his
Individual Performance Factor based on EVA Performance of the Engine Group.
Individual target incentive awards under the Plan ranged from 20% to 90% of base
compensation for fiscal 1999. For the same year, Mr. Stratton's individual
target incentive award was 90%. His fiscal 1999 bonus reflects a payout of 140%
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. For Plan years through 1999, Expected Improvement was
$4 million, except that it was not added to the current Plan Year Target EVA to
the extent it made such Target EVA exceed $25 million. For fiscal 1999 the
Target EVA was $21 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.
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<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 1999. 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 was
awarded in the form of LSOs, which were either Incentive Stock Options or
Non-Qualified Stock Options under the Stock Option part of the Incentive Plan.
All LSOs granted to date have a term of 5 years and become exercisable at the
end of 3 years.
On August 4, 1999, after publication of financial results for fiscal 1999,
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 1999. 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 1999 have
a premium exercise price and a term of five years, the current Black-Scholes
value of these options is only 21.7% 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 1999.
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%.
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<PAGE> 12
The following example illustrates the calculation of the stock option grant
for a Senior Executive who is entitled to $50,000 in Total Bonus Payout under
the EVA Plan. The number of options earned is calculated by dividing the Total
Bonus Payout by 10% of the FMV of Corporation stock. Assume the FMV of
Corporation stock on the date of grant is $60.21875.
Example: NUMBER OF OPTIONS GRANTED
10% of the FMV is $6.021875.
Options Granted is 8,303 ($50,000 divided by 6.021875)
EXERCISE PRICE = (.9 X FMV) X ESTIMATED ANNUAL GROWTH RATE(5)*
6.58% is the Estimated Annual Growth Rate (5.58 plus 1%) (See
description above)
The exercise price is $74.53 (.9 x $60.21875 x 1.0658(5)*
* Raising it to the 5th power takes it to a 5-year compound growth
rate.
Thus, the fair market value of the Corporation shares must exceed $74.53
between 3 and 5 years from the date of LSO grant to give the LSO options value
to the Senior Executives, based on this example.
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.
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 2000. 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.
Mr. Stratton entered into a similar agreement for fiscal 1999, pursuant to
which he 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. For fiscal 1999, the amount deferred converted into 3,806 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.
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
------ --------
ANNUUAL 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 1999 $535,488 $673,992 115,180 $19,607 $7,419
Chairman and 1998 525,000 288,225 88,890 29,264 7,432
Chief Executive Officer 1997 499,200 247,603 58,480 43,678 7,356
J.S. Shiely 1999 375,000 314,663 53,290 6,255 5,170
President and 1998 367,560 134,527 40,280 9,336 5,184
Chief Operating Officer 1997 356,856 132,750 29,450 13,935 5,273
M.D. Hamilton 1999 263,782 196,735 16,860 6,325 6,297
Executive Vice President - 1998 281,352 85,812 26,670 9,440 7,252
Sales & Service 1997 274,488 85,091 19,910 14,090 6,764
R.H. Eldridge 1999 249,024 174,130 29,800 5,308 7,754
Executive Vice President 1998 241,824 73,756 22,870 7,923 8,154
and Secretary-Treasurer 1997 235,920 73,135 17,060 11,825 7,588
R.J. Fotsch 1999 236,324 108,168 18,120 944 5,234
Senior Vice President 1998 219,984 37,727 10,960 1,409 5,411
and General Manager 1997 179,904 45,021 9,460 2,102 5,048
</TABLE>
(1) Includes amounts earned in fiscal year, whether or not deferred.
(2) No SARs are outstanding. Option awards reported for fiscal 1999 were granted
August 4, 1999 based on executive performance for fiscal 1999.
(3) Figures reflect portion of the bonus bank balances paid with respect to each
fiscal year.
(4) All other compensation for fiscal 1999 for Messrs. Stratton, Shiely,
Hamilton, Eldridge and Fotsch, respectively, includes: (i) matching
contributions to the Corporation's Savings and Investment Plan for each
named executive officer of $4,331, $4,297, $3,845, $4,400 and $4,623 and
(ii) the cost of Survivor Annuity Plan coverage for each named executive
officer of $3,088, $873, $2,452, $3,354 and $611.
11
<PAGE> 14
STOCK OPTIONS
The Stock Incentive Plan approved by shareholders provides for the granting
of stock options with respect to Common Stock. The following tables set forth
further information relating to stock options:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS FOR LAST FISCAL YEAR*
GRANT DATE
INDIVIDUAL GRANTS VALUE
- --------------------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR BASE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR ($ / SH) DATE VALUE ($) **
- --------- ------------ ------------ ---------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
F.P. Stratton......... 115,180 24.5% $ 74.53 8/4/04 $1,501,385
J.S. Shiely........... 53,290 11.3 74.53 8/4/04 694,822
M.D. Hamilton......... 16,860 3.6 74.53 8/4/04 219,829
R.H. Eldridge......... 29,800 6.3 74.53 8/4/04 388,548
R.J. Fotsch........... 18,120 3.8 74.53 8/4/04 236,258
</TABLE>
* Option awards reported for fiscal 1999 were granted August 4, 1999 based on
executive performance for fiscal 1999. 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 4, 2002. No SARs
were granted.
** Black-Scholes values are based on the following assumptions:
Stock price at date of grant: $60.21875
Option term: 5 years
Risk-free interest rate: .0599
Volatility: .301
Dividend yield: .025
Risk-free interest rate is the five year U.S. government bond yield on the
date of grant.
Volatility and yield assumptions are based on monthly price
and dividend data for the 36 months ending 6/30/99.
It should not be concluded that the Corporation supports the validity of the
Black-Scholes method or that the values shown in the table as generated by
the model represent the amounts an executive might earn upon exercise of the
options.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES*
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES ACQUIRED VALUE AT FISCAL YEAR END(#) AT FISCAL YEAR END($)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
F.P. Stratton......... 180,550 2,326,786 163,200 282,180 2,354,850 1,541,257
J.S. Shiely........... 82,035 844,806 54,118 129,530 1,211,995 680,791
M.D. Hamilton......... 114,347 1,173,676 0 69,790 0 465,830
R.H. Eldridge......... 115,553 1,430,947 6,971 75,060 216,872 398,606
R.J. Fotsch........... 20,873 412,954 22,900 40,620 376,583 187,520
</TABLE>
* No SARs are outstanding. Options at fiscal year end include options granted
August 4, 1999 based on executive performance for fiscal 1999.
LONG-TERM INCENTIVE COMPENSATION
As described in more detail in the Nominating, Compensation and Governance
Committee Report on Executive Compensation, the EVA Plan requires that accrued
bonuses payable to Senior Executives in excess of 125% of their target bonus be
banked. This occurred in fiscal 1999. The amount in the bonus bank is at risk in
the sense that in any year the accrued bonus is negative, the negative bonus
amount is subtracted from the outstanding bonus bank balance. This occurred in
fiscal 1996. The amounts of banked contingent incentive compensation awarded to
the named executive officers for fiscal 1999 are as follows:
12
<PAGE> 15
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
PRICE-BASED PLANS
--------------------------------------------------------------
NAME AMOUNTS BANKED ($) MINIMUM ($) MAXIMUM ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
F.P. Stratton............. $145,305 0 $145,305
J.S. Shiely............... 67,837 0 67,837
M.D. Hamilton............. 42,414 0 42,414
R.H. Eldridge............. 37,540 0 37,540
R.J. Fotsch............... 9,699 0 9,699
</TABLE>
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 1999).
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. Hamilton'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 26 years of service of
$250,000 per year. Mr. Eldridge'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 100% survivor annuity, shall entitle him to a benefit after 33 years
of service of $200,000 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*
1,600,000 334,000 668,000 1,002,000 1,120,000*
</TABLE>
* Figures reduced to reflect the maximum limitation of 70% of compensation.
13
<PAGE> 16
The previous 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-26; Mr. Shiely-13; Mr.
Hamilton-23; Mr. Eldridge-33 and Mr. Fotsch-22.
EMPLOYMENT AGREEMENTS
All executive officers of the Corporation, except Mr. Eldridge and Mr.
Hamilton, and including the other three named executive officers, are parties to
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. Hamilton's employment agreement provides for retirement benefits
described on page 13 and continues in effect through December 31, 2002, unless
terminated earlier by the Corporation as the result of death, disability or
gross negligence by Mr. Hamilton. In exchange for enhanced retirement benefits,
Mr. Hamilton has agreed to forego $2,510 per month effective December 1, 1998
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. Mr. Eldridge's agreement
provides for the retirement benefits described on page 13 and continues in
effect through October 31, 1999.
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 16 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.
(b) PROPOSAL TO AMEND STOCK INCENTIVE PLAN
GENERAL
The Corporation's Stock Incentive Plan was originally approved by the
shareholders in October 1990. The Incentive Plan initially reserved 400,000
shares of the Corporation's Common Stock for distribution pursuant to awards,
subject to adjustment to reflect stock splits, mergers, reorganizations and
other changes in capital structure. In October 1993 the shareholders approved an
amendment of the Stock Incentive Plan to add
14
<PAGE> 17
1,250,000 shares of the Corporation's Common Stock, $.01 par value, to
accommodate the Leveraged Stock Option ("LSO") Program. The number of shares
reserved was adjusted for a two-for-one stock split in November 1994 and for the
spin-off of the Corporation's automotive lock business in February 1995. The
adjusted total authorized shares reserved for issuance under the Stock Incentive
Plan is 3,361,935 shares of Common Stock. Currently, only 461,930 shares remain
ungranted and only 1,440,921 options are outstanding.
On August 3, 1999, the Board, following recommendation of the Nominating,
Compensation and Governance Committee (the "Committee"), approved amendment and
restatement of the Stock Incentive Plan, subject to shareholder approval, to add
2,000,000 shares of the Corporation's Common Stock, $.01 par value, primarily to
accommodate the LSO Program for employees and the Director's Leverage Stock
Option ("Director LSO") Plan. Of the 2,000,000 additional shares being reserved
by current amendment to the Plan and the 461,930 shares that remain ungranted
under the Plan prior to amendment, only 200,000 shares in aggregate will be
available for issuance as Stock Appreciation Rights, Restricted Stock, Deferred
Stock or Stock Purchase Rights. All Stock Options granted under the Plan will be
premium priced Leveraged Stock Options.
The Incentive Plan also includes certain other changes. In an effort to
comply with Section 162(m) of the Code and to assure that bonuses paid to
executives are deductible to the maximum extent possible, the Incentive Plan has
been amended to provide that cash bonuses may be paid to executive officers.
Cash bonus awards shall be paid solely on account of the attainment of one or
more preestablished, objective performance goals. These performance goals may be
based upon EVA improvement, stock price, market share, sales, earnings per
share, return on equity, or cost. The maximum bonus payable to any individual
for any year shall not exceed $1,000,000. If the changes to the Incentive Plan
are not approved, no cash bonuses will be paid under the Incentive Plan.
The Incentive Plan has also been amended to provide that the Board may pay
all, or such portion as it shall from time to time determine, of the retainer
and fees payable to the members of the Board in shares of the Corporation's
Common Stock. The number of shares to be issued to directors, in lieu of the
cash compensation to which they would otherwise be entitled, shall be determined
by the Board. The Board may permit directors to defer the issuance of stock in
accordance with such rules as it may determine.
DESCRIPTION OF THE LSO PROGRAM
LSOs granted under the Incentive Plan may be Incentive Stock Options
("ISO") as defined under and subject to Section 422 of the Internal Revenue Code
("Code") or Non-Qualified Stock Options ("NQSOs").
The LSOs will be exercisable no earlier than 3 nor more than 7 years from
date of grant. Generally, LSOs will expire upon the optionee's termination of
employment for cause, 1 year following termination of employment due to death, 3
years following termination due to retirement or disability, or 3 months after
termination of employment for any other reason; provided that in no event will
the option continue longer than its maximum term of seven years. To the extent
options are ISOs, they will retain such status, in general, only if exercised
within 3 months following termination of employment.
The exercise price of LSOs will not be less than 100% of fair market value
on date of grant, and will be based on a formula. (See the example set forth
under "Stock Incentive Plan" in the Committee Report above.) The closing price
of a share of Briggs & Stratton Corporation Common Stock on the New York Stock
Exchange on August 26, 1999 was $61.625. The option price is payable in cash or
by use of Common Stock already owned by the optionee. In addition, the
Committee, in its sole discretion, may elect to cash out all or any portion of
LSOs by paying a per share amount equal to the excess of the fair market value
at exercise over the Option Exercise Price. Such payment may be in cash or
Common Stock. LSOs are not transferrable except by will or the laws of descent
or distribution.
15
<PAGE> 18
After the close of each fiscal year, the Committee will determine the
amount of Total Bonus Payout for each Senior Executive under the EVA Plan, and
an equivalent to such dollar amount will be invested in leveraged stock options
on behalf of each executive. The number of LSOs will be the dollar amount of the
LSO grant divided by 10% of the FMV of the Corporation's stock at date of grant.
See the example under "Stock Incentive Plan" above. Although more LSOs will be
granted under the LSO Program than straight options under a similar plan, it is
expected that, due to the formula increase in exercise price built into the LSO
Program, more options will lapse if the value of the stock does not increase by
more than the formula increment in the exercise price. To the extent stock
options terminate or lapse without being exercised, the shares subject thereto
shall again be available for distribution in connection with further awards
under the LSO Program.
Approximately 25 persons, including all officers named in the "Summary
Compensation Table" are expected to participate in the LSO Program under the
Stock Incentive Plan. The Plan is administered by the Committee, and may be
modified or terminated by the Board at any time.
DESCRIPTION OF THE DIRECTOR'S LSO PLAN
Nonemployee directors, of which there are currently 6, participate in a
Director LSO 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 EVA Plan. The Plan is entirely formula driven and is
described more fully in the director compensation description provided
previously under Election of Directors. All options 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.
RESTRICTED STOCK AND DEFERRED STOCK AWARDS
The Committee may make small Restricted Stock awards on occasion to certain
key employees. In the past two years, the Committee recommended and the Board
approved Restricted Stock awards totaling 9,000 shares. The number of shares
reserved under the Stock Incentive Plan that will be issued for this purpose in
the form of Restricted Stock is expected to be small.
The Stock Incentive Plan provides that the Committee may elect to cash out
all or part of the portion of any Stock Option to be exercised by paying the
optionee an amount, in cash or Stock, equal to the excess of the Fair Market
Value of the Stock over the option price (the "Spread Value") on the effective
date of such cash out. The Committee may require that all or part of the shares
to be issued with respect to the Spread Value portion of an exercised Stock
Option take the form of Deferred or Restricted Stock, which shall be valued on
the date of exercise on the basis of the Fair Market Value of such Deferred or
Restricted Stock. To date, the Committee has not issued Deferred or Restricted
Stock for this purpose, but it may elect to do so on occasion in the future. It
is not expected that any significant number of shares reserved under the Stock
Incentive Plan will be used for this purpose.
OTHER PLAN PROVISIONS CURRENTLY IN EFFECT
Upon the occurrence of a "change in control" of the Corporation, as defined
in the Incentive Plan, any outstanding stock options which are not then
exercisable will become fully exercisable and vested. Upon a change in control,
optionees may elect to surrender all or any part of their stock options and
receive a per share amount in cash equal to the excess of the "change in control
price" over the exercise price of the stock option. The "change in control
price" will be the highest price per share paid in any transaction reported on
the New York Stock Exchange Composite index, or paid or offered to be paid in
any bona fide transaction relating to a potential or actual change in control of
the Corporation at any time during the 60-day period immediately preceding the
change in control as determined by the Committee. If an optionee's employment is
terminated at or following a change in control (other than by death, disability,
or retirement), the exercise periods of an optionee's stock options will be
extended to the earlier of six months and one day from the date of employment
termination or the options' respective expiration dates.
16
<PAGE> 19
In the event of any merger, stock split, consolidation, recapitalization,
stock dividend, reorganization or other change in corporate structure affecting
the Common Stock, the Board of Directors may, in its sole discretion, make such
substitutions or adjustments in the aggregate number of shares reserved for
issuance under the Incentive Plan, in the number and option price of shares
subject to outstanding options (and related stock appreciation rights), in the
number and purchase price of shares subject to outstanding stock purchase
rights, and in the number of shares subject to other awards granted under the
Incentive Plan.
The complete text of the Incentive Plan is attached as Exhibit A to this
Proxy Statement.
FEDERAL INCOME TAX ASPECTS
The following is a brief summary of the Corporation's understanding of the
principal anticipated Federal income tax consequences of awards made under the
LSO Program of the Incentive Plan based upon the applicable provisions of the
Code in effect on the date hereof. This summary is not intended to be
exhaustive, and does not describe state or local tax consequences.
1. Incentive Stock Options. An optionee will not realize taxable income at
the time an ISO is granted or exercised. If Common Stock is issued to an
optionee pursuant to the exercise of an ISO, and if no disqualifying disposition
of the shares is made by the optionee within two years of the date of grant or
within one year after exercise of the option, then (a) any gain upon the
subsequent sale of the shares will be taxed to the optionee as a long-term
capital gain, and any loss sustained will be a long-term loss, and (b) no
deduction will be allowed to the Corporation for Federal income tax purposes.
The spread between the ISO price and the fair market value of the shares at the
time of exercise is an adjustment item for purposes of the alternative minimum
tax.
If an optionee disposes of shares acquired upon the exercise of an ISO
before the expiration of the holding periods described above, then generally (a)
the optionee will be taxed as if he had received compensation income in the year
of disposition in an amount equal to the excess, if any, of the fair market
value of the shares on the exercise date (or, if less, the amount realized on
the disposition of the shares) over the option price paid for such shares, and
(b) the Corporation will generally be entitled to a corresponding deduction in
that year. Any further gain or loss realized by the participant will be taxed as
short-term or long-term capital gain or loss, as the case may be, and will not
result in any deduction by the Corporation.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following the termination of the optionee's
employment, the option will generally be treated for tax purposes as a
non-qualified stock option.
All stock acquired pursuant to the exercise of an ISO is subject to the
holding period rules and disqualifying disposition rules described above,
regardless of whether such stock is paid for with cash or previously acquired
shares. Furthermore, the exercise of an ISO with previously acquired stock will
be deemed to be an exchange to which Section 1036 of the Code applies. The
optionee's basis in the number of shares of ISO stock that equals the number of
previously acquired shares used to exercise the ISO shall equal the basis of the
previously acquired shares used to exercise the ISO, increased by the amount of
compensation recognized in the transaction, if any. The optionee's basis in any
remaining shares of ISO stock shall be zero.
If "statutory option stock" (stock acquired through the exercise of a
qualified stock option, an ISO, an option granted under an employee stock
purchase plan or a restricted stock option) is transferred to acquire shares
offered under an ISO, and if the applicable holding periods for such statutory
option stock have not been met before such transfer, the transfer will result in
ordinary income with respect to the stock disposed of, but will not affect the
tax treatment, as described above, for the stock received.
To the extent that the fair market value of Common Stock (determined as of
the date of grant) subject to ISOs exercisable for the first time by an optionee
during any calendar year exceeds $100,000, those options will not be considered
ISOs.
17
<PAGE> 20
2. Non-Qualified Stock Options. An optionee will not realize taxable income
at the time an NQSO is granted, but taxable income will be realized, and the
Corporation will generally be entitled to a deduction, at the time of exercise
of the NQSO. The amount of income (and the Corporation's deduction) will be
equal to the difference between the NQSO exercise price and the fair market
value of the shares on the date of exercise. The income realized will be taxed
at ordinary income tax rates for federal income tax purposes. On subsequent
disposition of the shares acquired upon exercise of an NQSO, capital gain or
loss as determined under the normal capital asset holding period rules will be
realized in the amount of the difference between the proceeds of sale and the
fair market value of the shares on the date of exercise. Where the NQSO exercise
price is paid in "delivered stock," the exercise is treated as a tax-free
exchange of the shares of delivered stock (without recognizing any taxable gain
with respect thereto) for a like number of new shares. The optionee's basis in
the number of new shares that equals the number of shares used to exercise the
NQSO will equal the basis of the shares used to exercise the NQSO, and the
optionee's holding period for the new shares will include the optionee's holding
period in the shares used to exercise the NQSO. The optionee's basis in any
remaining shares will equal the amount of compensation income recognized upon
exercise of the NQSO and the optionee's holding period for such shares will
begin on the date the optionee acquires them. This mode of payment does not
affect the ordinary income tax liability incurred upon exercise of the NQSO
described above.
3. Withholding. Under the Incentive Plan, a participant must pay the
Corporation, no later than the date on which an amount first becomes includable
in the participant's gross income for federal income tax purposes with respect
to an award, any taxes required to be withheld with respect to such amount. Such
withholding obligation may be settled with already owned shares, including
shares that constitute part of the award giving rise to the withholding
obligation, unless otherwise determined by the Corporation. The amount of income
recognized is not reduced by the delivery of already owned shares or the
retention by the Corporation of shares issuable under an award to satisfy
withholding obligations; the transaction is taxed as if the shares were sold for
the amount of the withholding tax.
NEW PLAN BENEFITS
The number of awards to be made pursuant to the Stock Incentive Plan as
amended and restated is subject to the discretion of the Committee and therefore
cannot be determined with certainty at this time. However, the Corporation
anticipates that the Committee will continue its annual grant programs in a
manner consistent with past practice. If so, LSOs will continue to be granted to
officers and key employees of the Corporation under the Leveraged Stock Option
Program and to directors of the Corporation pursuant to the Director's Leveraged
Stock Option Plan. The number of LSOs granted to each of the named executive
officers and nonemployee directors of the Corporation in fiscal 1999 are
described previously under Election of Directors and Executive Compensation -
Stock Options. In total, 391,720 LSOs were granted to executive officers and
79,300 LSOs were granted to non-executive officer key employees during fiscal
1999.
SHAREHOLDER COST
The shareholder cost of stock based incentive plans has traditionally been
measured by potential voting power dilution, i.e., shares reserved divided by
fully diluted shares outstanding. Shareholders have increasingly focused more on
the expected economic cost of stock based incentive plans, i.e., the value of
stock and options reserved divided by the market value of shares outstanding.
This approach, unlike the traditional approach, recognizes that stock grants are
more expensive than conventional stock options and that conventional stock
options are more expensive that premium stock options. The Board believes that
expected economic cost is the most appropriate measure of shareholder cost.
The Corporation engaged an outside consultant to calculate the economic
cost and the voting power dilution resulting from the recommended 2,000,000
increase in the shares approved under the Incentive Plan. Only 461,930 shares
remain ungranted and 1,440,921 options are outstanding of the shares previously
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reserved for the Incentive Plan. Therefore, the calculations are based on the
potential voting power dilution and economic cost related to these shares plus
the 2,000,000 new shares, or a total of 3,902,851 shares. The voting power
dilution is calculated to be under 15% on a fully diluted basis. Because the
LSOs have a premium exercise price and terms of 5 or 7 years, the economic cost
as a percent of the market value of the Corporation's shares outstanding is very
low and significantly less than for traditional grants. The Board believes that
this is a reasonable cost for the shareholders to incur to obtain the benefits
of a very powerful incentive for management to increase shareholder value.
CONCLUSION AND RECOMMENDATION
The Board of Directors believes that it is in the best interests of the
Corporation and its shareholders to approve amendment of the Incentive Plan, and
accordingly recommends a vote FOR approval of the Briggs & Stratton Corporation
Amended and Restated Stock Incentive Plan. A copy of the full text of the Briggs
& Stratton Corporation Amended and Restated Stock Incentive Plan is attached as
Exhibit A to this Proxy Statement.
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 27, 1999 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.
SHAREHOLDER PROPOSALS
Proposals which shareholders intend to present at the 2000 Annual Meeting
of Shareholders must be received at the Corporate Offices Building in Wauwatosa,
Wisconsin no later than July 22, 2000, 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 10, 2000 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 7, 1999
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EXHIBIT A
THE BRIGGS & STRATTON CORPORATION
AMENDED AND RESTATED
STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Plan is to enable key employees and directors of the
Company, its subsidiaries and affiliates to participate in the Company's future
by offering them proprietary interests in the Company. The Plan also provides a
means through which the Company can attract and retain key employees and
directors of merit.
For purposes of the Plan, the following terms are defined as set forth
below:
(a) "Board" means the Board of Directors of the Company.
(b) "Cash Bonus Award" means an award pursuant to Section 10.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
(d) "Commission" means the Securities and Exchange Commission or any
successor agency.
(e) "Committee" means the Committee referred to in Section 2.
(f) "Company" means Briggs & Stratton Corporation, a corporation organized
under the laws of the State of Wisconsin, or any successor corporation.
(g) "Deferred Stock" means an award made pursuant to Section 8.
(h) "Directors' Fees in Stock" means an award of stock made to a director
pursuant to Section 11.
(i) "Disability" means permanent and total disability as determined under
procedures established by the Committee for purposes of the Plan.
(j) "Early Retirement" means retirement, with the consent for purposes of
the Company or such other officer as may be designated by the
Committee, from active employment with the Company, a subsidiary or
affiliate pursuant to the early retirement provisions of the applicable
pension plan of such employer.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
(l) "Fair Market Value" means, except as provided in Sections 5(k) and
6(b)(ii), the mean, as of any given date, between the highest and
lowest reported sales prices of the Stock on the New York Stock
Exchange or, if no such sale of Stock occurs on the New York Stock
Exchange on such date, the fair market value of the Stock as determined
by the Committee in good faith.
(m) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section
422 of the Code.
(n) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(o) "Normal Retirement" means retirement from active employment or service
with the Company, a subsidiary or affiliate at or after age 65 with
respect to employees and in accordance with the Board service policy
with respect to Directors.
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(p) "Plan" means The Briggs & Stratton Corporation Amended and Restated
Stock Incentive Plan, as set forth herein and as hereinafter amended
from time to time.
(q) "Restricted Stock" means an award under Section 7.
(r) "Retirement" means Normal or Early Retirement.
(s) "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission under
Section 16(b) of the Exchange Act, as amended from time to time.
(t) "Stock" means the Common Stock, $0.01 par value, of the Company.
(u) "Stock Appreciation Right" means a right granted under Section 6.
(v) "Stock Option" or "Option" means an option granted under Section 5.
(w) "Stock Purchase Right" means a purchase right granted under Section 9.
In addition, the terms "Change in Control" and "Change in Control Price"
have the meanings set forth in Sections 17(b) and (c), respectively.
SECTION 2. ADMINISTRATION.
For awards that may be granted to eligible employees, the Plan shall be
administered by the Nominating, Compensation and Governance Committee of the
Board or such other committee of the Board, which shall be constituted to permit
the Plan to comply with Rule 16b-3 and Section 162(m) of the Code, who shall be
appointed by the Board and who shall serve at the pleasure of the Board. If at
any time no Committee shall be in office, the functions of the Committee
specified in the Plan shall be exercised by the Board. For awards that may be
granted to directors, the Plan shall be administered by the entire Board. The
term "Committee" shall refer to the Nominating, Compensation and Governance
Committee of the Board or such other committee appointed by the Board with
respect to the awards granted to eligible employees and the entire Board with
respect to awards that may be granted to directors.
The Committee shall have plenary authority to grant to eligible employees,
pursuant to the terms of the Plan, Stock Options, Stock Appreciation Rights,
Restricted Stock, Deferred Stock, Stock Purchase Rights and Cash Bonus Awards.
The Committee shall have plenary authority to grant to directors, pursuant to
the terms of the Plan, Non-Qualified Stock Options and Directors' Fees in Stock.
In particular, the Committee shall have the authority, subject to the terms
of the Plan:
(a) to select the officers and other key employees to whom Stock Options,
Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock
Purchase Rights and Cash Bonus Awards may from time to time be granted;
(b) to select the directors to whom Non-Qualified Stock Options and
Directors' Fees in Stock may from time to time be granted;
(c) to determine whether and to what extent awards are to be granted
hereunder;
(d) to determine the number of shares to be covered by each award granted
hereunder;
(e) to determine the terms and conditions of any award granted hereunder
(including, but not limited to, the share price, any restriction or
limitation and any vesting acceleration or forfeiture waiver regarding
any Stock Option or other award and the shares of Stock relating
thereto, based on such factors as the Committee shall determine);
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(f) to adjust the performance goals and measurements applicable to
performance-based awards pursuant to the terms of the Plan;
(g) to determine under what circumstances a Stock Option may be settled in
cash, Deferred Stock or Restricted Stock under Section 5(k);
(h) to determine to what extent and under what circumstances Stock and
other amounts payable with respect to an award shall be deferred; and
(i) to determine the terms and conditions of Stock Purchase Rights, the
Stock purchased by exercising such Rights and any loans to be made by
the Company with respect thereto. The Committee shall have the
authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to
time, deem advisable, to interpret the terms and provisions of the Plan
and any award issued under the Plan (and any agreement relating
thereto) and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the members thereof may authorize any one or more of their number or
any officer of the Company to execute and deliver documents on behalf of the
Committee.
Any determination made by the Committee pursuant to the provisions of the
Plan with respect to any award shall be made in its sole discretion at the time
of the grant of the award or, unless in contravention of any express term of the
Plan, at any time thereafter. All decisions made by the Committee pursuant to
the provisions of the Plan shall be final and binding on all persons, including
the Company and Plan participants.
SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for distribution
under the Plan shall be 5,361,935 shares. Such shares may consist, in whole or
in part, of authorized and unissued shares or treasury shares. Of the 2,000,000
additional shares being reserved by current amendment to the Plan and the
461,930 shares that remain ungranted under the Plan prior to amendment, only
200,000 shares in aggregate will be available for issuance as Stock Appreciation
Rights, Restricted Stock, Deferred Stock or Stock Purchase Rights. All Stock
Options granted under the Plan will be premium priced Leveraged Stock Options.
Subject to Section 6(b)(iv), if any shares of Stock that have been optioned
cease to be subject to a Stock Option, if any shares of Stock that are subject
to any Restricted or Deferred Stock award or Stock Purchase Right are forfeited
or if any Stock Option or other award otherwise terminates without a payment
being made to the participant in the form of Stock, such shares shall again be
available for distribution in connection with awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split or other change in corporate
structure affecting the Stock, such substitution or adjustments shall be made in
the aggregate number of shares reserved for issuance under the Plan, in the
number and option price of shares subject to outstanding Stock Options, in the
number and purchase price of shares subject to outstanding Stock Purchase Rights
and in the number of shares subject to other outstanding awards granted under
the Plan as may be determined to be appropriate by the Board, in its sole
discretion; provided, however, that the number of shares subject to any award
shall always be a whole number. Such adjusted option price shall also be used to
determine the amount payable by the Company upon the exercise of any Stock
Appreciation Right associated with any Stock Option.
SECTION 4. ELIGIBILITY.
Officers and other key employees of the Company, its subsidiaries and
affiliates who are responsible for or contribute to the management, growth and
profitability of the business of the Company, its subsidiaries or affiliates are
eligible to be granted Stock Options, Stock Appreciation Rights, Restricted
Stock, Deferred
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Stock, Stock Purchase Rights and Cash Bonus Awards. However, no employee shall
be eligible to receive awards covering more than 150,000 shares of Stock in any
calendar year. Directors of the Company are eligible to be granted Non-Qualified
Stock Options and Directors' Fees in Stock.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone or in addition to other awards granted
under the Plan and may be of two types: Incentive Stock Options and
Non-Qualified Stock Options. Any Stock Option granted under the Plan shall be in
such form as the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights). Incentive Stock Options
may be granted only to employees of the Company and its subsidiaries (within the
meaning of Section 425(f) of the Code). To the extent that any Stock Option does
not qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option.
Stock Options shall be evidenced by option agreements, the terms and
provisions of which may differ. An option agreement shall indicate on its face
whether it is an agreement for Incentive Stock Options or Non-Qualified Stock
Options. The grant of a Stock Option shall occur on the date the Committee by
resolution selects an individual as a participant in any grant of Stock Options,
determines the number of Stock Options to be granted to such individual and
specifies the terms and provisions of the option agreement. The Company shall
notify a participant of any grant of Stock Options, and a written option
agreement or agreements shall be duly executed and delivered by the Company.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered nor
shall any discretion or authority granted under the Plan be exercised so as to
disqualify the Plan under Section 422 of the Code or, without the consent of the
optionee affected, to disqualify any Incentive Stock Option under such Section
422.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions as the
Committee shall deem desirable:
(a) Option Price. The option price per share of Stock purchasable under a
Stock Option shall be equal to the Fair Market Value of the Stock at
time of grant or such higher price as shall be determined by the
Committee at grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than
10 years after the date the Option is granted, and no Non-Qualified
Stock Option shall be exercisable more than 10 years and one day after
the date the Option is granted.
(c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined
by the Committee. If the Committee provides that any Stock Option is
exercisable only in installments, the Committee may at any time waive
such installment exercise provisions, in whole or in part, based on
such factors as the Committee may determine.
(d) Method of Exercise. Subject to the provisions of this Section 5, Stock
Options may be exercised, in whole or in part, at any time during the
option period by giving written notice of exercise to the Company
specifying the number of shares to be purchased.
Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the
Company may accept. As determined by the Committee, payment in full or
in part may also be made in the form of unrestricted Stock already
owned by the optionee or, in the case of the exercise of a
Non-Qualified Stock Option, Restricted Stock or Deferred Stock subject
to an award hereunder (based, in each case, on the Fair Market Value of
the Stock on the date the Stock Option is exercised); provided,
however, that, in the case of an Incentive Stock Option, the right
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to make a payment in the form of already owned shares may be authorized
only at the time the Stock Option is granted.
If payment of the option exercise price of a Non-Qualified Stock Option
is made in whole or in part in the form of Restricted Stock or Deferred
Stock, such Restricted Stock or Deferred Stock (and any replacement
shares relating thereto) shall remain (or be) restricted or deferred,
as the case may be, in accordance with the original terms of the
Restricted Stock award or Deferred Stock award in question, and any
additional Stock received upon the exercise shall be subject to the
same forfeiture restrictions or deferral limitations, unless otherwise
determined by the Committee.
No shares of Stock shall be issued until full payment therefor has been
made. Subject to any forfeiture restrictions or deferral limitations
that may apply if a Stock Option is exercised using Restricted Stock or
Deferred Stock, an optionee shall have all of the rights of a
stockholder of the Company, including the right to vote the shares and
the right to receive dividends, with respect to shares subject to the
Stock Option when the optionee has given written notice of exercise,
has paid in full for such shares and, if requested, has given the
representation described in Section 15(a).
(e) Non-transferability of Options. No Stock Option shall be transferable
by the optionee other than by will or by the laws of descent and
distribution, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee or by the guardian or legal
representative of the optionee, it being understood that the terms
"holder" and "optionee" include the guardian and legal representative
of the optionee named in the option agreement and any person to whom an
option is transferred by will or the laws of descent and distribution.
(f) Termination by Death. Subject to Section 5(j), if an optionee's
employment or service terminates by reason of death, any Stock Option
held by such optionee may thereafter be exercised, to the extent then
exercisable or on such accelerated basis as the Committee may
determine, for a period of one year (or such other period as the
Committee may specify) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is
the shorter.
(g) Termination by Reason of Disability. Subject to Section 5(j), if an
optionee's employment or service terminates by reason of Disability,
any Stock Option held by such optionee may thereafter be exercised by
the optionee, to the extent it was exercisable at the time of
termination or on such accelerated basis as the Committee may
determine, for a period of three years (or such shorter period as the
Committee may specify at grant) from the date of such termination or
until the expiration of the stated term of such Stock Option, whichever
period is the shorter; provided, however, that, if the optionee dies
within such three-year period (or such shorter period), any unexercised
Stock Option held by such optionee shall, notwithstanding the
expiration of such three-year (or such shorter) period, continue to be
exercisable to the extent to which it was exercisable at the time of
death for a period of 12 months from the date of such death or until
the expiration of the stated term of such Stock Option, whichever
period is the shorter. In the event of termination by reason of
Disability, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option will thereafter be treated as a
Non-Qualified Stock Option.
(h) Termination by Reason of Retirement. Subject to Section 5(j), if an
optionee's employment or service terminates by reason of Retirement,
any Stock Option held by such optionee may thereafter be exercised by
the optionee, to the extent it was exercisable at the time of such
Retirement or on such accelerated basis as the Committee may determine,
for a period of three years (or such shorter period as the Committee
may specify at grant) from the date of such termination or until the
expiration of the stated term of such Stock Option, whichever period is
the shorter; provided, however, that, if the optionee dies within such
three-year (or such shorter) period any unexercised Stock Option held
by such optionee shall, notwithstanding the expiration of such
three-year (or such shorter) period, continue to be exercisable to the
extent to which it was exercisable at the time of death for a period of
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12 months from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter. In
the event of termination by reason of Retirement, if an Incentive Stock
Option is exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a Non-Qualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Committee, if an
optionee's employment or service terminates for any reason other than
death, Disability or Retirement, the Stock Option shall thereupon
terminate, except that such Stock Option, to the extent then
exercisable, may be exercised for the lesser of three months or the
balance of such Stock Option's term if the optionee is involuntarily
terminated by the Company, a subsidiary or affiliate without cause.
Notwithstanding the foregoing, if an optionee's employment or service
terminates at or after a Change in Control (as defined in Section
12(b)), other than by reason of death, Disability or Retirement, any
Stock Option held by such optionee shall be exercisable for the lesser
of (x) six months and one day, and (y) the balance of such Stock
Option's term pursuant to Section 5(b).
(j) Incentive Stock Option Limitations. To the extent required for
"incentive stock option" status under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the
Stock with respect to which Incentive Stock Options granted after 1986
are exercisable for the first time by the optionee during any calendar
year under the Plan and any other stock option plan of any subsidiary
or parent corporation (within the meaning of Section 425 of the Code)
after 1986 shall not exceed $100,000.
The Committee is authorized to provide at grant that, to the extent
permitted under Section 422 of the Code, if a participant's employment
with the Company and its subsidiaries is terminated by reason of death,
Disability or Retirement and the portion of any Incentive Stock Option
that is otherwise exercisable during the post-termination period
specified under Sections 5(f), (g) or (h), applied without regard to
this Section 5(j), is greater than the portion of such option that is
exercisable as an "incentive stock option" during such post-termination
period under Section 422, such post-termination period shall
automatically be extended (but not beyond the original option term) to
the extent necessary to permit the optionee to exercise such Incentive
Stock Option (either as an Incentive Stock Option or, if exercised
after the expiration periods that apply for the purposes of Section
422, as a Non-Qualified Stock Option).
(k) Cashing Out of Option: Settlement of Spread Value in Deferred or
Restricted Stock. On receipt of written notice to exercise, the
Committee may elect to cash out all or part of the portion of any Stock
Option to be exercised by paying the optionee an amount, in cash or
Stock, equal to the excess of the Fair Market Value of the Stock over
the option price (the "Spread Value") on the effective date of such
cash out.
Cash outs relating to options held by optionees who are actually or
potentially subject to Section 16(b) of the Exchange Act shall comply
with the "window period" provisions of Rule 16b-3, to the extent
applicable, and, in the case of cash outs of Non-Qualified Stock
Options held by such optionees, the Committee may determine Fair Market
Value under the pricing rule set forth in Section 6(b)(ii)(B).
In addition, if the option agreement so provides at grant or is amended
after grant and prior to exercise to so provide (with the optionee's
consent), the Committee may require that all or part of the shares to
be issued with respect to the Spread Value payable in the event of a
cash out of an unexercised Stock Option or the Spread Value portion of
an exercised Stock Option take the form of Deferred or Restricted
Stock, which shall be valued on the date of exercise on the basis of
the Fair Market Value of such Deferred or Restricted Stock, determined
without regard to the deferral limitations or forfeiture restrictions
involved. Notwithstanding any other provision of this Plan, upon a
Change in Control (as defined in Section 12(b)) other than a Change in
Control specified in clause (i) of Section 12(b) arising as a result of
beneficial ownership (as defined therein) by the Participant of
Outstanding Company
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Common Stock or Outstanding Company Voting Securities (as such terms
are defined below), in the case of Stock Options other than Stock
Options held by an officer or director of the Company (within the
meaning of Section 16 of the Exchange Act) which were granted less than
six months prior to the Change in Control, during the 60-day period
from and after a Change in Control (the "Exercise Period"), unless the
Committee shall determine otherwise at the time of grant, an optionee
shall have the right, in lieu of the payment of the exercise price of
the shares of Stock being purchased under the Stock Option and by
giving notice to the Company, to elect (within the Exercise Period) to
surrender all or part of the Stock Option to the Company and to receive
cash, within 30 days of such notice, in an amount equal to the amount
by which the "Change in Control Price" (as defined in Section 12(c))
per share of Stock on the date of such election shall exceed the
exercise price per share of Stock under the Stock Option multiplied by
the number of shares of Stock granted under the Stock Option as to
which the right granted under this Section 5(k) shall have been
exercised.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the
Plan. In the case of a Non-Qualified Stock Option, such rights may be
granted either at or after the time of grant of such Stock Option. In
the case of an Incentive Stock Option, such rights may be granted only
at the time of grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof, granted with
respect to a given Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock
Option, except that, unless otherwise determined by the Committee at
the time of grant, a Stock Appreciation Right granted with respect to
less than the full number of shares covered by a related Stock Option
shall not be reduced until the number of shares covered by an exercise
or termination of the related Stock Option exceeds the number of shares
not covered by the Stock Appreciation Right.
A Stock Appreciation Right may be exercised by an optionee in
accordance with Section 6(b) by surrendering the applicable portion of
the related Stock Option in accordance with procedures established by
the Committee. Upon such exercise and surrender, the optionee shall be
entitled to receive an amount determined in the manner prescribed in
Section 6(b). Stock Options which have been so surrendered shall no
longer be exercisable to the extent the related Stock Appreciation
Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions as shall be determined by the Committee,
including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time
or times and to the extent that the Stock Options to which they
relate are exercisable in accordance with the provisions of
Section 5 and this Section 6; provided, however, that a Stock
Appreciation Right shall not be exercisable during the first six
months of its term by an optionee who is actually or potentially
subject to Section 16(b) of the Exchange Act, except that this
limitation shall not apply in the event of death or Disability of
the optionee prior to the expiration of the six-month period.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee
shall be entitled to receive an amount in cash, shares of Stock
or both equal in value to the excess of the Fair Market Value of
one share of Stock over the option price per share specified in
the related Stock Option multiplied by the number of shares in
respect of which the Stock Appreciation Right shall have been
exercised, with the Committee having the right to determine the
form of payment.
In the case of Stock Appreciation Rights relating to Stock
Options held by optionees who are actually or potentially subject
to Section 16(b) of the Exchange Act, the Committee:
(a) may require that such Stock Appreciation Rights be exercised
only in accordance with the applicable "window period"
provisions of Rule 16b-3; and
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(b) in the case of Stock Appreciation Rights relating to
Non-Qualified Stock Options, may provide that the amount to
be paid upon exercise of such Stock Appreciation Rights
during a Rule 16b-3 "window period" shall be based on the
highest mean sales price of the Stock on the New York Stock
Exchange on any day during such "window period".
(iii) Stock Appreciation Rights shall be transferable only when and to
the extent that the underlying Stock Option would be transferable
under Section 5(e).
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option
or part thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised for the purpose of the
limitation set forth in Section 3 on the number of shares of
Stock to be issued under the Plan, but only to the extent of the
number of shares issued under the Stock Appreciation Right at the
time of exercise based on the value of the Stock Appreciation
Right at such time.
SECTION 7. RESTRICTED STOCK.
(a) Administration. Shares of Restricted Stock may be issued either alone
or in addition to other awards granted under the Plan. The Committee
shall determine the officers and key employees to whom and the time or
times at which grants of Restricted Stock will be made, the number of
shares to be awarded, the time or times within which such awards may be
subject to forfeiture and any other terms and conditions of the awards,
in addition to those contained in Section 7(c).
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors or
criteria as the Committee shall determine. The provisions of Restricted
Stock awards need not be the same with respect to each recipient.
(b) Awards and Certificates. Each participant receiving a Restricted Stock
award shall be issued a certificate in respect of such shares of
Restricted Stock. Such certificate shall be registered in the name of
such participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such award,
substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of The Briggs & Stratton Corporation Stock Incentive Plan
and a Restricted Stock Agreement. Copies of such Plan and Agreement are
on file at the offices of Briggs & Stratton Corporation, 12301 West
Wirth Street, Wauwatosa, Wisconsin 53222."
The Committee may require that the certificates evidencing such shares
be held in custody by the Company until the restrictions thereon shall
have lapsed and that, as a condition of any Restricted Stock award, the
participant shall have delivered a stock power, endorsed in blank,
relating to the Stock covered by such award.
(c) Terms and Conditions. Shares of Restricted Stock shall be subject to
the following terms and conditions:
(i) Subject to the provisions of the Plan and the Restricted Stock
Agreement referred to in Section 7(c)(vi), during a period set by
the Committee, commencing with the date of such award (the
"Restriction Period"), the participant shall not be permitted to
sell, assign, transfer, pledge or otherwise encumber shares of
Restricted Stock. Within these limits, the Committee may provide
for the lapse of such restrictions in installments and may
accelerate or waive such restrictions, in whole or in part, based
on service, performance and such other factors or criteria as the
Committee may determine.
(ii) Except as provided in this paragraph (ii) and Section 7(c)(i),
the participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a stockholder of the
Company,
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including the right to vote the shares and the right to receive
any cash dividends. Unless otherwise determined by the Committee,
cash dividends shall be automatically deferred and reinvested in
additional Restricted Stock and dividends payable in Stock shall
be paid in the form of Restricted Stock.
(iii) Except to the extent otherwise provided in the applicable
Restricted Stock Agreement and Sections 7(c)(i) and (iv), upon
termination of a participant's employment for any reason during
the Restriction Period, all shares still subject to restriction
shall be forfeited by the participant.
(iv) In the event of hardship or other special circumstances of a
participant whose employment is involuntarily terminated (other
than for cause), the Committee may waive in whole or in part any
or all remaining restrictions with respect to such participant's
shares of Restricted Stock.
(v) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction
Period, unlegended certificates for such shares shall be
delivered to the participant.
(vi) Each award shall be confirmed by, and be subject to the terms of,
a Restricted Stock Agreement.
SECTION 8. DEFERRED STOCK.
(a) Administration. Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall
determine the officers and key employees to whom and the time or times
at which Deferred Stock shall be awarded, the number of shares of
Deferred Stock to be awarded to any participant, the duration of the
period (the "Deferral Period") during which, and the conditions under
which, receipt of the Stock will be deferred and any other terms and
conditions of the award, in addition to those contained in Section
8(b). The Committee may condition the grant of Deferred Stock upon the
attainment of specified performance goals or such other factors or
criteria as the Committee shall determine. The provisions of Deferred
Stock awards need not be the same with respect to each recipient.
(b) Terms and Conditions. Deferred Stock awards shall be subject to the
following terms and conditions:
(i) Subject to the provisions of the Plan and the Deferred Stock
Agreement referred to in Section 8(b)(vii), Deferred Stock awards
may not be sold, assigned, transferred, pledged or otherwise
encumbered during the Deferral Period. At the expiration of the
Deferral Period (or Elective Deferral Period as defined in
Section 8(b)(vi), where applicable), share certificates shall be
delivered to the participant for the shares covered by the
Deferred Stock award.
(ii) Unless otherwise determined by the Committee, amounts equal to
any dividends declared during the Deferral Period with respect to
the number of shares covered by a Deferred Stock award will be
awarded, automatically deferred and deemed to be reinvested in
additional Deferred Stock.
(iii) Except to the extent otherwise provided in the applicable
Deferred Stock Agreement and Sections 8(b)(iv) and (v), upon
termination of a participant's employment for any reason during
the Deferral Period, the rights to the shares still covered by
the Deferred Stock award shall be forfeited.
(iv) Based on service, performance and such other factors or criteria
as the Committee may determine, the Committee may provide for the
lapse of deferral limitations in installments and may accelerate
the vesting of all or any part of any Deferred Stock award and
waive the deferral limitations for all or any part of such award.
(v) In the event of hardship or other special circumstances of a
participant whose employment is involuntarily terminated (other
than for cause), the Committee may waive in whole or in part any
or all remaining deferral limitations with respect to any or all
of such participant's Deferred Stock.
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(vi) A participant may elect to further defer receipt of the Deferred
Stock payable under an award (or an installment of an award) for
a specified period or until a specified event (the "Elective
Deferral Period"), subject in each case to the Committee's
approval and to such terms as are determined by the Committee.
Subject to any exceptions adopted by the Committee, such election
must generally be made at least 12 months prior to completion of
the Deferral Period for the award (or for such installment of an
award).
(vii) Each award shall be confirmed by, and be subject to the terms of,
a Deferred Stock Agreement.
SECTION 9. STOCK PURCHASE RIGHTS.
(a) Awards and Administration. The Committee may grant Stock Purchase
Rights which shall enable the recipients to purchase Stock:
(i) at its Fair Market Value on the date of grant;
(ii) at 50% of such Fair Market Value on such date; or
(iii) at an amount equal to the par value of such Stock on such date.
The Committee may impose such terms and conditions as it shall
determine on such Stock Purchase Rights or the exercise thereof and may
also provide for deferral limitations or forfeiture restrictions with
respect to the Stock purchased.
Each Stock Purchase Right award shall be confirmed by, and be subject
to the terms of, a Stock Purchase Rights Agreement. The terms of such
awards need not be the same with respect to each participant.
(b) Stock Exercisability. Stock Purchase Rights shall be exercisable for
such period after grant as is determined by the Committee, not to
exceed 30 days. However, the Committee may provide that Stock Purchase
Rights granted to persons who are actually or potentially subject to
Section 16(b) of the Exchange Act shall not become exercisable until
six months and one day after the grant date and shall then be
exercisable for 10 trading days at the purchase price specified by the
Committee in accordance with Section 9(a).
(c) Loans. If the Committee so determines, the Company shall make or
arrange for a loan to an employee with respect to the exercise of Stock
Purchase Rights. The Committee shall have full authority to decide
whether such a loan should be made and to determine the amount, term
and other provisions of any such loan, including the interest rate to
be charged, whether the loan is to be with or without recourse against
the borrower, the security, if any, therefor, the terms on which the
loan is to be repaid and the conditions, if any, under which it may be
forgiven. However, no loan hereunder shall have a term (including
extensions) exceeding 10 years in duration or be in an amount exceeding
90% of the total purchase price paid by the borrower.
SECTION 10. CASH BONUS AWARDS.
(a) Administration. The Committee may establish cash bonus awards for
executive officers either alone or in addition to other awards granted
under the Plan. The Committee shall determine the time or times at
which bonus awards shall be granted, and the conditions upon which such
awards will be paid.
(b) Terms and Conditions.
(i) A cash bonus award shall be paid solely on account of the
attainment of one or more preestablished, objective performance
goals. Performance goals shall be based on one or more
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business criteria that apply to the individual, a business unit,
or the corporation as a whole. It is intended that any
performance goal will be in a form which relates the bonus to an
increase in the value of the Company to its shareholders.
Economic Value Added ("EVA(R)") improvement is the financial
performance measure most closely correlated with increases in
shareholder value. In general, EVA is the excess of net operating
profit after taxes, less a capital charge which is intended to
represent the return expected by the providers of the Company's
capital. Performance goals may also include stock price, market
share, sales, earnings per share, return on equity, or costs. In
addition, performance goals for any individual who is not a
"covered employee", as that term is defined in Section 162(m) of
the Code, may be based upon such other factors as the Committee
may determine.
(ii) Performance goals shall be established in writing by the
Committee not later than 90 days after the commencement of the
period of service to which the performance goal relates. The
preestablished performance goal must state, in terms of an
objective formula or standard, the method for computing the
amount of compensation payable to any employee if the goal is
attained. It is intended that the bonus formula will be based
upon a percentage of an individual's salary or base pay. However,
in no event, shall the maximum bonus payable to any individual
for any year exceed $1,000,000.
(iii) Following the close of the performance period, the Committee
shall determine whether the performance goal was achieved, in
whole or in part, and determine the amount payable to each
individual.
EVA(R) is a registered trademark of Stern Stewart & Co.
SECTION 11. DIRECTORS' FEES IN STOCK
The Board (acting as the Committee under the Plan) may pay all, or such
portion as it shall from time to time determine, of the retainer and fees
payable to the members of the Board in shares of Stock. The number of shares to
be issued to directors, in lieu of the cash compensation to which they would
otherwise be entitled, shall be determined by the Board. The Board may permit
directors to defer the issuance of Stock hereunder in accordance with such rules
as the Board may determine.
SECTION 12. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control (as defined in Section
12(b)):
(i) Any Stock Appreciation Rights and Stock Options outstanding as of
the date such Change in Control is determined to have occurred
and not then exercisable and vested shall become fully
exercisable and vested to the full extent of the original grant;
provided, however, that, in the case of the holder of Stock
Appreciation Rights who is actually subject to Section 16(b) of
the Exchange Act, such Stock Appreciation Rights shall have been
outstanding for at least six months at the date such Change in
Control is determined to have occurred.
(ii) The restrictions and deferral limitations applicable to any
Restricted Stock, Deferred Stock and Stock Purchase Rights shall
lapse, and such Restricted Stock, Deferred Stock and Stock
Purchase Rights shall become free of all restrictions and fully
vested to the full extent of the original grant.
(b) Definition of Change in Control. For purposes of the Plan, a "Change in
Control" shall mean the happening of any of the following events:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person")
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<PAGE> 33
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (i)
the then outstanding shares of Stock of the Company (the
"outstanding Company Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
the following acquisitions shall not constitute a Change in
Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (iv) any
acquisition by any corporation pursuant to a transaction
described in clauses (i), (ii) and (iii) of paragraph (3) of this
subsection (b) of this Section 12; or
(ii) Individuals who, as of December 1,1989, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to December 1,1989 whose election,
or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a reorganization,
merger or consolidation (a "Business Combination"), in each case,
unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result
of such transaction owns the Company through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities
of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for
such Business Combination; or
(iv) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of
the Company, other than to a corporation, with respect to which
following such sale or other disposition, (A) more than 60% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally
in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
as the case
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<PAGE> 34
may be, (B) less than 20% of, respectively, the then outstanding
shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
any Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation), except to the extent
that such Person owned 20% or more of the Outstanding Company
Common Stock or Outstanding Company Voting Securities prior to
the sale or disposition and (C) at least a majority of the
members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing
for such sale or other disposition of assets of the Company or
were elected, appointed or nominated by the Board.
(c) Change in Control Price. For purposes of the Plan, "Change in Control
Price" means the highest price per share paid in any transaction
reported on the New York Stock Exchange Composite Index or paid or
offered in any bona fide transaction related to a potential or actual
change in control of the Company at any time during the preceding 60
day period as determined by the Committee, except that, in the case of
Incentive Stock Options and Stock Appreciation Rights relating to
Incentive Stock Options, such price shall be based only on transactions
reported for the date on which the Committee decides to cash out such
options.
SECTION 13. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan but no amendment,
alteration or discontinuation shall be made which would impair the rights of an
optionee under a Stock Option or a recipient of a Stock Appreciation Right,
Restricted Stock Award, Deferred Stock Award, Stock Purchase Right and Cash
Bonus Award theretofore granted without the optionee's or recipient's consent,
or without the approval of the Company's stockholders, if shareholder approval
of the change would be required to comply with Rule 16b-3 or the Code.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights of any holder without the holder's consent.
Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules, as
well as other developments.
SECTION 14. UNFUNDED STATUS OF PLAN.
It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Stock or make payments; provided, however, that, unless the Committee
otherwise determines, the existence of such trusts or other arrangements is
consistent with the "unfunded" status of the Plan.
SECTION 15. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares pursuant to a
Stock Option or a Stock Purchase Right to represent to and agree with
the Company in writing that the optionee or participant is acquiring
the shares without a view to the distribution thereof. The certificates
for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock or other securities delivered under
the Plan shall be subject to such stock transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations and other
requirements of the Commission, any stock exchange upon which the Stock is then
listed and any applicable Federal or state securities law, and the Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
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<PAGE> 35
(b) Nothing contained in this Plan shall prevent the Company, a subsidiary
or affiliate from adopting other or additional compensation
arrangements for its employees.
(c) The adoption of the Plan shall not confer upon any employee any right
to continued employment nor shall it interfere in any way with the
right of the Company, a subsidiary or affiliate to terminate the
employment of any employee at any time.
(d) No later than the date as of which an amount first becomes includible
in the gross income of the participant for Federal income tax purposes
with respect to any award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Company regarding
the payment of, any Federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount. Unless
otherwise determined by the Company, withholding obligations may be
settled with Stock, including Stock that is part of the award that
gives rise to the withholding requirement. The obligations of the
Company under the Plan shall be conditional on such payment or
arrangements, and the Company, its subsidiaries and affiliates shall,
to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the participant.
(e) At the time of grant, the Committee may provide in connection with any
grant made under this Plan that the shares of Stock received as a
result of such grant shall be subject to a right of first refusal
pursuant to which the participant shall be required to offer to the
Company any shares that the participant wishes to sell at the then Fair
Market Value of the Stock, subject to such other terms and conditions
as the Committee may specify at the time of grant.
(f) The reinvestment of dividends in additional Deferred or Restricted
Stock at the time of any dividend payment shall only be permissible if
sufficient shares of Stock are available under Section 3 for such
reinvestment (taking into account then outstanding Stock Options, Stock
Purchase Rights and other Plan awards).
(g) The Committee shall establish such procedures as it deems appropriate
for a participant to designate a beneficiary to whom any amounts
payable in the event of the participant's death are to be paid.
(h) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of
Wisconsin.
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|PROXY|
-------
[BRIGGS & STRATTON LOGO]
BRIGGS & STRATTON CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - OCTOBER 20, 1999
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 in Braselton, Georgia
on October 20, 1999 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
PROPOSALS (a) AND (b) AND IN THEIR DISCRETION ON OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
(Continued and to be Signed on Reverse Side)
<PAGE> 37
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
AND PROPOSAL (b).
(a) Election of Directors: Nominees - Jay H. Baker; Michael E. Batten; Peter A.
Georgescu
[ ] 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) Proposal to amend and restate the Briggs & Stratton Corporation Stock
Incentive Plan.
[ ] For [ ] Against [ ] Abstain
(c) 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 , 1999
----------------------
-------------------------------
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.
