<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 [ ]
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
BRUNSWICK CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
[COMPANY NAME]
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
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:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
Brunswick Corporation
March 20, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Brunswick
Shareholders to be held on Wednesday, April 23, 1997 at 3:00 P.M. at Brunswick's
World Headquarters, 1 N. Field Ct., Lake Forest, Illinois. Brunswick's World
Headquarters is on Route 60, just east of the Tri-State Tollway.
The formal Notice of Annual Meeting and Proxy Statement accompanying this
letter describe the business to be acted on at the meeting.
It is important that your shares be represented at the meeting.
Therefore, I urge that you MARK, SIGN, DATE and RETURN PROMPTLY the
enclosed PROXY in the envelope furnished for that purpose. If you are present at
the meeting, you may, if you wish, revoke your proxy and vote in person. I am
looking forward to seeing you at the meeting.
Sincerely,
Peter Larson
PETER N. LARSON
Chairman
<PAGE> 3
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders of Brunswick Corporation will be held at
Brunswick's World Headquarters, 1 N. Field Ct., Lake Forest, Illinois, on
Wednesday, April 23, 1997 at 3:00 P.M. for the following purposes:
(1) To elect Directors,
(2) To ratify the appointment of Arthur Andersen LLP as auditors,
and
(3) To consider such other business as may properly come before the
meeting.
Brunswick shareholders of record at the close of business on February 24,
1997 will be entitled to notice of and to vote at the meeting and any
adjournment thereof.
By order of the Board of Directors,
Peter Hamilton
PETER B. HAMILTON
Secretary
Lake Forest, Illinois
March 20, 1997
<PAGE> 4
Brunswick Corporation
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Brunswick Corporation (the
"Company") which will be voted at the Annual Meeting of Shareholders to be held
on April 23, 1997 and at any adjournment thereof. This statement and form of
proxy were first mailed to shareholders on or about March 20, 1997. Any
shareholder submitting a proxy may revoke it at any time before it is voted. If
a shareholder is participating in the Company's Dividend Reinvestment Plan or
Employee Stock Investment Plan, any proxy given by such shareholder will also
govern the voting of all shares held for the shareholder's account under those
plans, unless contrary instructions are received.
Only holders of the Company's 98,881,047 shares of Common Stock outstanding
as of the close of business on February 24, 1997, the record date, will be
entitled to vote at the meeting. Each share of Common Stock is entitled to one
vote. The representation in person or by proxy of a majority of the outstanding
shares of Common Stock is necessary to provide a quorum at the Annual Meeting.
Abstentions are counted as present in determining whether the quorum requirement
is satisfied, but they have no other effect on voting for election of directors.
Abstentions are the same as a vote against on other matters. In instances where
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned a proxy ("broker nonvotes"), those shares will be
counted for quorum purposes. The broker nonvotes will not be included in the
vote totals for a proposal and therefore will have no effect on the vote for the
proposal.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides that the Board of
Directors shall be divided into three classes, each consisting, as nearly as may
be possible, of one-third of the total number of directors. At the meeting, five
directors are to be elected. The Board of Directors has nominated Michael J.
Callahan, Manuel A. Fernandez, Rebecca P. Mark and Roger W. Schipke for election
as directors to serve for terms expiring at the 2000 Annual Meeting, and until
their respective successors shall have been elected and qualified. The Board of
Directors has nominated George D. Kennedy for election as a director to serve
for a term expiring at the 1998 Annual Meeting, and until his successor shall
have been elected and qualified since he is retiring from the Board in 1998.
John P. Diesel and Bernd K. Koken are retiring from the Board at the 1997 Annual
Meeting.
It is intended that votes will be cast, pursuant to authority granted by
the enclosed proxy, for the election of the nominees named below as directors of
the Company, except as otherwise specified in the proxy. Directors shall be
elected by a plurality of the votes present in person or
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represented by proxy at the Annual Meeting and entitled to vote on the election
of directors. In the event any one or more of such nominees shall be unable to
serve, votes will be cast, pursuant to authority granted by the enclosed proxy,
for such person or persons as may be designated by the Board of Directors.
Biographical information follows for each person nominated and each person whose
term of office will continue after the Annual Meeting.
NOMINEES FOR ELECTION FOR TERMS EXPIRING AT THE 2000 ANNUAL MEETING
MICHAEL J. CALLAHAN Director since 1991
Executive Vice President and Chief Financial Officer of FMC Corporation, a
producer of chemicals, defense systems, machinery and equipment, since 1994;
Executive Vice President and Chief Financial Officer of Whirlpool Corporation, a
manufacturer of major home appliances, 1992-1994; age 58
MANUEL A. FERNANDEZ Director since 1997
Chairman, President and Chief Executive Officer of the Gartner Group, Inc., a
leading independent provider of research and analysis on computer hardware,
software, communications and related information technologies, since 1995 and
President and Chief Executive Officer of Gartner Group, Inc., 1991-1995; age 50
REBECCA P. MARK Director since 1997
Chairman and Chief Executive Officer of Enron International, the emerging
markets arm of Enron Corp., a leading integrated natural gas company, since
1996; Chairman and Chief Executive Officer of Enron Development Corp., an Enron
subsidiary which pursues new international markets, 1991-1996; director of
Thermatrix, Inc., age 42
ROGER W. SCHIPKE Director since 1993
Private Investor; Chairman of the Board and Chief Executive Officer of The
Sunbeam Corporation, a consumer products firm, 1993-1996; Chairman of the Board
and Chief Executive Officer of The Ryland Group, a company engaged in mortgage
banking and home building, 1990-1993; director of Legg-Mason, Inc., Oakwood
Homes Corporation and The Rouse Company; age 60
NOMINEE FOR ELECTION FOR TERM EXPIRING AT THE 1998 ANNUAL MEETING
GEORGE D. KENNEDY Director since 1979
Retired; Chairman of the Board of Mallinckrodt Group Inc. ("Mallinckrodt"), a
producer of medical products, specialty chemicals, products for animal health
and nutrition, and animal feed supplements, 1986-1994; Chairman of the Board and
Chief Executive Officer of Mallinckrodt, 1986-1991; director of American
National Can Co., Illinois Tool Works, Inc., Kemper National Insurance Co.,
Scotsman Industries, Inc. and Stone Container Corp.; age 70
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DIRECTORS CONTINUING IN OFFICE UNTIL THE 1999 ANNUAL MEETING
PETER HARF Director since 1996
Chairman and Chief Executive Officer of Joh. A. Benckiser GmbH, an international
consumer products company, since 1988; director of Kimberly-Clark Corporation;
age 50
PETER N. LARSON Director since 1995
Chairman and Chief Executive Officer of Brunswick since 1995; Chairman of the
Worldwide Consumer and Personal Care Group, Johnson & Johnson, a leading health
care company, 1994-1995; Company Group Chairman, Johnson & Johnson, 1991-1994;
director of Compaq Computer Corporation; Chairman of the Advertising Education
Foundation; member of the Listed Stock Advisory Committee of the New York Stock
Exchange; age 57
JAY W. LORSCH Director since 1983
Louis E. Kirstein Professor of Human Relations since 1978, Chairman of Doctoral
Programs since 1995, Senior Associate Dean and Chairman of Executive Education
Programs, 1990-1995, Harvard University Graduate School of Business
Administration; age 64
KENNETH ROMAN Director since 1995
Independent Consultant since 1991; Executive Vice President, American Express
Company, a major financial services company, 1989-1991; Chairman and Chief
Executive Officer of The Ogilvy Group, a leading advertising agency, 1988-1989
(and of Ogilvy and Mather Worldwide, 1985-1989); director of Compaq Computer
Corporation, IBJ Schroder Bank and Trust Company, and PennCorp Financial Group,
Inc.; age 66
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1998 ANNUAL MEETING
NOLAN D. ARCHIBALD Director since 1995
Chairman of the Board, President and Chief Executive Officer of The Black &
Decker Corporation, a consumer and commercial products company, since 1986;
director of ITT Corporation; age 53
BETTYE MARTIN MUSHAM Director since 1993
President and Chief Executive Officer of Gear Holdings, Inc., a design,
marketing and communications firm, since 1977; director of Consolidated
Communications, Inc., Footstar, Inc. and Gear Holdings, Inc.; age 64
JACK F. REICHERT Director since 1977
Retired; Chairman of the Board and Chief Executive Officer of Brunswick,
1983-1995; President of Brunswick, 1977-1993 and 1994-1995; director of Viad
Corp; age 66
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COMMITTEES AND MEETINGS
The Board of Directors met nine times during 1996. The Board of Directors
has Executive, Audit and Finance, Human Resource and Compensation, and Corporate
Governance Committees. None of the members of these committees are affiliated
with the Company except for Mr. Larson, who is Chairman of the Executive
Committee.
Members of the Executive Committee are Messrs. Larson (Chairman), Callahan,
Kennedy, Lorsch and Schipke.
Members of the Audit and Finance Committee are Messrs. Callahan (Chairman),
Kennedy and Reichert and Ms. Martin Musham.
Members of the Human Resource and Compensation Committee are Messrs.
Schipke (Chairman), Archibald, Diesel and Koken.
Members of the Corporate Governance Committee are Messrs. Lorsch
(Chairman), Harf and Roman.
The Audit and Finance Committee met five times during 1996. The Audit and
Finance Committee is responsible for assuring that the Company's accounting
procedures and financial records are valid and accurate and that its financial
statements are presented fairly and in conformity with generally accepted
accounting principles. To carry out these responsibilities, it reviews the
activities of the internal and external auditors, focusing on the adequacy of
the Company's internal controls. The Committee is responsible for recommending
to the Board an external auditor and the terms of this engagement. The Committee
reviews transactions of a financial nature which it considers necessary in
carrying out its primary responsibilities or which are referred to it by the
Board, such as legal liabilities, environmental issues, capital investments,
financial strategy, and the selection of financial advisors. It also reviews the
Company's pension plans, assuring adequate funding, and the effective
performance of these funds.
The Human Resource and Compensation Committee met ten times during 1996.
The Human Resource and Compensation Committee administers the Brunswick
Performance Plan, Strategic Incentive Plan, 1991 Stock Plan, 1994 Stock Option
Plan for Non-Employee Directors, 1995 Stock Plan for Non-Employee Directors and
Supplemental Pension Plan. The Human Resource and Compensation Committee, from
time to time, also recommends to the Board of Directors compensation of the
Chairman and Chief Executive Officer and other officers of the Company.
The Corporate Governance Committee met six times during 1996. The Corporate
Governance Committee recommends to the Board of Directors nominees for directors
of the Company to be elected by the shareholders, evaluates the performance of
the Board of Directors and its members and recommends compensation for members
of the Board of Directors and its committees except the Corporate Governance
Committee. The Corporate Governance Committee also recommends to the Board of
Directors nominees to fill vacancies on the Board of Directors as they occur and
considers and makes recommendations to the Board with regard to
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<PAGE> 8
increases and decreases in the size of the Board. The Corporate Governance
Committee will consider nominees recommended by shareholders for submission to
the Board of Directors. Shareholders wishing to recommend nominees should send
such recommendations to the Secretary of the Company.
The By-laws provide that nominations for the election of directors may be
made by the Board of Directors or a committee appointed by the Board of
Directors. In addition, the By-laws provide a procedure for shareholder
nominations. Shareholders intending to nominate director candidates for election
must deliver written notice thereof to the Secretary of the Company not later
than (i) with respect to an election to be held at an annual meeting of
shareholders, 90 days prior to the anniversary date of the immediately preceding
annual meeting of shareholders, and (ii) with respect to an election to be held
at a special meeting of shareholders, the close of business on the tenth day
following the date on which notice of such meeting is first given to
shareholders. The notice of nomination shall set forth certain information
concerning such shareholder and the shareholder's nominee(s), including their
names and addresses, a representation that the shareholder is entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice, a description of all
arrangements or understandings between the shareholder and each nominee, such
other information as would be required to be included in a proxy statement
soliciting proxies for the election of the nominees of such shareholder and the
consent of each nominee to serve as a director of the Company if so elected. The
chairman of the shareholders' meeting may refuse to acknowledge the nomination
of any person not made in compliance with the foregoing procedure.
DIRECTOR COMPENSATION
Directors who are not officers are entitled to an annual fee of $25,000 and
the Chairmen of the Audit and Finance, Human Resource and Compensation, and
Corporate Governance Committees each receive an additional $5,000 per annum.
Such annual fees and committee chair fees are paid in Common Stock of the
Company, receipt of which may be deferred until after retirement from the Board.
Non-employee directors are also paid $1,500 for each Board and Committee
meeting, and the directors may elect to be paid in Common Stock for such meeting
fees and to defer receipt of such Common Stock until after retirement. New
non-employee directors receive an award of Common Stock which has a value equal
to the annual fee at the time they are first elected to the Board. Non-employee
directors who were elected prior to July 25, 1995 have had the present value of
their benefits under the former non-employee directors pension plan converted
into Common Stock, which they will receive when they retire. If directors retire
from the board before satisfying specified age and service requirements, the
amount of Common Stock will be reduced.
Pursuant to the 1994 Stock Option Plan for Non-Employee Directors,
non-employee directors at the time of each Annual Meeting of Shareholders of the
Company receive options to purchase a number of shares of Common Stock such that
the options will have a value of $25,000
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using the Black-Scholes pricing model with specified assumptions. The exercise
price of the options is 100% of the fair market value of the Common Stock on the
date of the award. The options become fully exercisable six months after the
date of the award and may be exercised at any time thereafter until the tenth
anniversary of the date of the award.
Directors may purchase engines, boats, and billiard tables from the Company
at the Company's dealers' net cost. Each director is also offered the
opportunity to use one of the Company's boats for up to two years without
charge. The director is responsible for insurance on the boat, and the imputed
value of the use of the boat is included in the director's taxable income.
Directors may receive up to $1,500 of the Company's other products annually. The
value of the products is included in the directors' taxable income, and the
Company reimburses the directors for the taxes on this income plus any taxes
owed as a result of the reimbursement.
In the event of a change in control of the Company (as defined on page 19),
the Company will be obligated to continue to provide to retired directors
insurance and benefit programs equivalent to those provided at the time of the
change in control of the Company.
SHAREHOLDERS
As of March 17, 1997, each director, each executive officer listed in the
summary compensation table, and all directors and executive officers as a group
owned the number of shares of Brunswick Common Stock set forth in the following
table:
<TABLE>
<CAPTION>
Number of Shares Percent
Name of Individual Beneficially Owned of
or Persons in Group as of March 17, 1997 Class
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nolan D. Archibald 4,963(1) *
Michael J. Callahan 21,500(1) *
John P. Diesel 25,124(1) *
Manuel A. Fernandez 1,049(1) *
Peter Harf 25,279(1) *
George D. Kennedy 30,223(1) *
Bernd K. Koken 25,722(1) *
Peter N. Larson 408,502(2) *
Jay W. Lorsch 27,840(1) *
Rebecca P. Mark 870(1) *
Bettye Martin Musham 19,186(1) *
Jack F. Reichert 622,406(1)(3) *
Kenneth Roman 16,960(1) *
Roger W. Schipke 23,063(1) *
David D. Jones 92,025(2) *
William J. Barrington 75,833(2) *
Peter B. Hamilton 43,272 *
Frederick J. Florjancic, Jr. 92,495(2) *
All directors and executive officers as a group 1,816,100(1)(2)(3) 1.8%
</TABLE>
* Less than 1%
(1) Includes the following shares of stock issued for the directors under the
1995 Stock Plan for Non-Employee Directors, receipt of which has been
deferred: Messrs. Archibald 2,463 shares, Callahan 10,959 shares, Diesel
14,310 shares, Fernandez 1,049 shares, Harf 2,779
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shares, Kennedy 15,443 shares, Koken 13,685 shares, Lorsch 14,315 shares,
Reichert 1,617 shares, Roman 1,330 shares, and Schipke 11,463 shares, Ms.
Mark 870 shares, Ms. Martin Musham 7,445 shares, and 97,728 shares for all
directors as a group. Also includes the following shares of common stock
issuable pursuant to currently exercisable stock options: 2,500 shares for
each of Messrs. Archibald, Harf and Roman; 8,100 shares for each of Messrs.
Callahan, Diesel, Kennedy, Koken, Lorsch and Schipke and Ms. Martin Musham;
128,950 shares for Mr. Reichert; and 193,150 shares for all directors as a
group.
(2) Includes the following shares of restricted stock: Messrs. Larson 60,213
shares, Jones 14,500 shares, Barrington 11,250 shares, Florjancic 14,625
shares, and all executive officers as a group 140,187 shares. Also includes
the following shares of common stock issuable pursuant to currently
exercisable stock options: Messrs. Larson 150,000 shares, Jones 38,300
shares, Barrington 32,400 shares, and Florjancic 37,700 shares, and all
executive officers as a group 373,900 shares.
(3) Includes 70,600 shares held by the Jack F. Reichert Foundation for which Mr.
Reichert has shared dispositive power and shared voting power.
The only shareholders known to the Company to own beneficially more than 5%
of the outstanding voting securities of the Company are:
<TABLE>
<CAPTION>
Shares
Beneficially
Owned as of Percent
Name and Address of December 31, of
Title of Class Beneficial Owner 1996 Class
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Sanford C. Bernstein & Co., Inc. 9,251,651(1) 9.4%
One State Street Plaza
New York, NY 10004
Common Stock Mellon Bank Corporation 5,395,125(2) 5.5%
One Mellon Bank Center
Pittsburgh, PA 15258
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Sanford C. Bernstein & Co., Inc. has sole voting power for 4,959,219 of
these shares, shared voting power for 1,109,885 of these shares and sole
dispositive power for all of these shares.
(2) Mellon Bank Corporation and its subsidiaries have sole voting power for
2,622,000 of these shares, shared voting power for 2,550,125 of these
shares, sole dispositive power for 2,707,000 of these shares and shared
dispositive power for 139,000 of these shares. These shares include
2,461,125 shares held by Mellon Bank, N.A. as Trustee of the Brunswick
Employee Stock Ownership Plan, which have not been allocated to
participants' accounts.
REPORT OF THE HUMAN RESOURCE AND COMPENSATION COMMITTEE
The Human Resource and Compensation Committee of the Board of Directors
(the "Committee") is comprised entirely of independent, non-employee Directors
who are responsible for administering all compensation plans in which the
Chairman and Chief Executive Officer
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and the Senior Executives of the Company participate. For 1996, "Senior
Executives" include all Group Presidents and all Senior Corporate Executives in
the Company.
EXECUTIVE COMPENSATION PLANS
We welcome the opportunity to share with our shareholders the details of
our executive compensation plans and the philosophy which has been followed in
developing these plans. We believe that the Corporation with the best employee
talent will be the market leader. The purpose of the plans is to attract and
retain outstanding key employees and to encourage an ownership commitment
through Stock Ownership Guidelines facilitated by our incentive compensation
programs. Our mix of base and incentive pay plans has been designed to place a
significant amount of compensation at risk. Brunswick recognizes past
performance and expected future contributions through a combination of
competitive base salaries, the Brunswick Performance Plan, the Strategic
Incentive Plan and the 1991 Stock Plan. These plans motivate our executives by
providing incentives for the successful implementation of the Company's
strategic programs.
Our independent consultant provides extensive information regarding the
compensation practices of comparable companies with revenues similar to
Brunswick and/or the competitors of our business units for the purpose of
reviewing and establishing salary levels. Because of their smaller size, the
companies included in the peer group index on page 13 are not included in the
list of comparable companies for the determination of salary ranges for the
Senior Corporate Executives. For 1996 comparisons, the total compensation
package of each Senior Executive was developed by including an annual award of
stock options as well as opportunities for annual and two-year incentives
payable in cash and stock.
During 1996, the executive compensation plans included competitive base
salaries plus incentives for short, mid-term and long-term performance.
Participation in the plans varied based upon the levels of responsibility of the
Senior Executive and management employees of the Company and its business units.
In this way, a greater opportunity for incentive compensation is provided for
those employees whose responsibilities are deemed to have the largest impact on
the long-term success of the Company. In its administration of the plans the
Committee has in the past and may in the future use judgment and discretion, as
described below:
ANNUAL BASE SALARIES including the Chief Executive's have been targeted at
levels generally in the third quartile of the marketplace for similar positions
for defensive and retentive reasons. For salary administration, "salary band
ranges" have been developed to establish internal equity for like positions,
while also supporting a broad cross-organizational career development process.
Survey data provided by our independent consultant provides an external
assessment of the market pricing for our positions. We believe that this
combination of the internal and external comparison provides the best overall
measure for salary administration. The consultant's study will be updated every
other year. Executives whose salaries are above the market data at the 75th
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percentile for their comparative positions will be scheduled for salary reviews
every two years; all other executives' salaries will continue to be reviewed
annually.
THE BRUNSWICK PERFORMANCE PLAN is an annual bonus plan which in 1996
provided opportunities for bonuses to be earned by Senior Executives and other
management employees of the Company. Under the Plan, bonus pools were generated
based upon the achievement of specified annual financial targets and written
objectives which were reviewed by the Committee. For 1996, 40% of the bonus was
based on pre-tax earnings goals, 40% was based on cash flow targets and the
remaining 20% was based on clearly established organizational development
objectives central to the continued strength of the business. Awards under this
Plan for Senior Executives can range from zero to 100% of their base salaries in
effect at the beginning of the Plan year. Bonuses earned by Senior Executives
under the Plan for 1996 were reviewed and approved by the Committee based upon
an assessment of performance against assigned goals. In addition, for certain of
the Senior Executives, the bonus earned was paid up to 50% in Brunswick stock
and 50% in cash if he or she had not met the Stock Ownership Guidelines as
described below. If the guidelines have been met, the payment form is at the
election of the Senior Executive. Any stock payment may be deferred at the
Senior Executive's election.
The purpose of the STRATEGIC INCENTIVE PLAN is to provide a mid-term
incentive for the successful implementation of the Company's strategic plans by
defining the contribution necessary from each business unit to achieve its plan.
For the three-year performance period concluding in 1996, the Strategic
Incentive Plan had been a long-term bonus plan providing for cash bonuses to
Senior Executives of up to 75% of their base salary at the beginning of the
performance period. Participation included all Senior Executives and various key
management employees who may have a significant impact on the achievement of the
Company's strategic goals. Specific written goals to be completed during the
three-year performance period of the Plan were submitted to the Committee. These
included, among others, goals related to sales volume, profitability levels,
opportunities for growth, global expansion, employee development, improvements
in quality and customer satisfaction, market share gains, the generation of cash
and cost reduction measures. The goals were specific to each operating unit and
in some cases to a specific market, such as international, serviced by the
operating unit. Amounts earned under the Plan have been based upon the
percentage of the assigned strategic goals which were achieved multiplied by the
maximum bonus which could have been paid to each participant as determined at
the beginning of the performance period. Bonuses for Group Presidents for the
1994-96 performance period were determined by measuring the level of achievement
of goals assigned to their individual business units. Senior Corporate
Executives earned bonuses based upon the weighted percentage of the total of all
assigned goals achieved multiplied by their maximum potential bonus as
determined at the beginning of the performance period. Actual bonuses paid under
this Plan to all Senior Executives were approved by the Committee.
The performance period for the Plan beginning January 1, 1996 is two years.
The goals for the 1996-1997 performance period are specified financial targets
for pre-tax earnings and cash flow results. Bonuses for Senior Executives under
the Plan will be based upon a combination of
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business unit performance and overall Company performance. Senior Executives may
earn from zero to 100% of base salary or zero to 75% of base salary in effect at
the beginning of the performance period depending upon their position. From 75%
to 100% of the maximum award will be denominated in stock units at the beginning
of the performance period using the January 2, 1996 closing price of the
Company's Common Stock. Similar to the annual bonus plan, a portion of the final
payout will be made in common stock for those Senior Executives who have not
reached the Stock Ownership Guidelines. Any stock payments may be deferred.
The 1991 STOCK PLAN, the Company's long-term incentive plan, provides the
opportunity to grant stock options. The Company feels strongly that stock and
stock options are an integral part of a Senior Executive's total annual
compensation package. It has long been the belief of the Company that Senior
Executives who own significant amounts of Company stock are more inclined to
focus on its long-term growth, make decisions which are in the best interests of
all shareholders and contribute to higher levels of shareholder value.
The Company has a formal policy regarding Stock Ownership Guidelines. Under
the Guidelines, as approved by the Committee, Senior Executives of the Company
are expected to own specific minimum amounts of Company stock depending upon
their position, calculated as a multiple of their base salaries, and ranging
from 5 times annual salary for the Chairman and Chief Executive to 2-3 times
base salary for Senior Executives. In the case of a new hire or promotion to a
Senior Executive level, the individual will be expected to reach the targeted
amount required under the policy within five years.
In January, 1996, Senior Executives were awarded grants of non-qualified
stock options to purchase stock with values up to 100% of their base salary as
determined using a Black-Scholes pricing model. The exercise price was set at
100% of the fair market value of the Company's stock at the time of grant.
Options will fully vest three years from the date of grant; however, vesting may
be accelerated based upon the achievement of specific thresholds for earnings
per share or stock price. In addition, in July, 1996, the Committee approved a
change in the timing of the award of options from the beginning of the year to
July of each year. In order to make this transition, an additional award of
stock options was granted in July. The exercise price was set at 100% of the
fair market value on the date of grant. The July awards were approximately 50%
to 75% of the value of the January, 1996 awards using the Black-Scholes pricing
model. Options will fully vest in three years; however, vesting may be
accelerated based upon the achievement of specific thresholds for earnings per
share or stock price. The next planned grant of options will be in July, 1997.
The size of previous option grants are taken into consideration when determining
the amount of option grants.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Under the terms of the employment agreement entered into between Brunswick
and Mr. Larson, the annual base salary for Mr. Larson has been set at $800,000.
His performance is to be reviewed annually by the Board, taking into account
such financial and non-financial factors as
10
<PAGE> 14
the Board determines to be pertinent. Approximately six months through each
annual performance cycle, the Board shall review Mr. Larson's performance, with
the interim review focusing primarily on non-financial factors which are
believed to be essential for his successful leadership of the Company.
Mr. Larson participates in an annual bonus plan which provides for a
maximum of 200% of his annual salary based upon the achievement of goals
established by the Board. After considering Mr. Larson's accomplishments of his
assigned goals, the Committee recommended, and the Board of Directors approved,
a bonus of $1,353,600 for 1996, receipt of which was deferred by Mr. Larson.
Mr. Larson participates in the Strategic Incentive Plan under which he may
earn a maximum of 100% of base salary per year in each cycle depending on the
achievement of performance goals which have been approved by the Board (for the
1996-1997 cycle his maximum is 200%). One hundred percent of the award is
denominated in stock units at the beginning of the performance period using the
closing price of the Company's Common Stock on the first day of the performance
period. In recognition of Mr. Larson's forfeiture of benefits to Long Term
Compensation earned prior to joining Brunswick and his performance in 1996
toward achievement of the long term goals of the Company, the Committee
recommended and the Board approved an award to Mr. Larson of 29,411 shares of
restricted Common Stock.
In January 1996, Mr. Larson was awarded 72,255 non-qualified stock options
under the terms of his employment agreement. The option price was the then fair
market value of the Company's stock. Such options are to vest 30%, 30% and 40%
respectively on each of the next three anniversaries of the grant date or
earlier if specified earnings or stock price goals are achieved. In July 1996,
at the time the other Senior Executives were awarded options to transition to
the annual July awarding of options, Mr. Larson was awarded options to purchase
90,000 shares of the Company's Common Stock at its then current market value
with the vesting provisions similar to those options awarded in January. This
award will satisfy the requirements of his employment agreement.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
The Company has reviewed its executive compensation plans in response to
the Omnibus Budget Reconciliation Act of 1993 (the "Act"), which established a
million dollar tax deduction limitation in August, 1993 for the taxable years
beginning on or after January 1, 1994. The limitation applies to compensation in
excess of $1 million paid to any executive who is employed by the Company on
December 31 and named in the summary compensation table, with certain exceptions
including an exception for compensation based upon objective performance
measurements which are administered by a committee of outside directors and
approved by shareholders. Mr. Larson has agreed to defer receipt of compensation
to the extent it is not deductible by the Company because it exceeds the one
million dollar deduction limitation.
11
<PAGE> 15
After a detailed review of the provisions of the Act as they pertain to the
Plans currently in effect in the Company, the Committee has determined the
following:
(i) The Company does not currently intend to qualify the Brunswick
Performance Plan for an exception to the deduction limitation of such
compensation resulting from payments made under the Plan. The Chairman
and Chief Executive Officer does not participate in this Plan; and
(ii) The Company does not intend to submit the Strategic Incentive Plan to
shareholders for approval in order to qualify the payments as
performance-based compensation. For 1996, bonus payments under the
Plan were earned by the accomplishment of strategic goals, the
assessment of which were partly judgmental rather than being solely
formula driven.
The Company and the Committee will continue to monitor the impact of these
Plans with respect to the deduction limitation.
Submitted by Members of the Human Resource and Compensation Committee of
the Board of Directors.
R.W. Schipke, Chairman
N.D. Archibald
J. P. Diesel
B.K. Koken
12
<PAGE> 16
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG BRUNSWICK, S&P 500 INDEX AND PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD BRUNSWICK PEER GROUP S&P 500
(FISCAL YEAR COVERED) INDEX
<S> <C> <C> <C>
1991 100.0 100.0 100.0
1992 120.5 110.1 107.6
1993 136.9 135.8 118.5
1994 147.0 120.8 120.0
1995 191.3 151.7 165.1
1996 195.3 175.4 203.3
</TABLE>
Basis of comparison is a $100 investment at December 31, 1991 in each of
Brunswick, the S&P 500 Index and a peer group of three recreation manufacturing
companies [Outboard Marine Corporation, K2, Inc. (formerly Anthony Industries,
Inc.) and Johnson Worldwide Associates, Inc.] weighted by the beginning of the
year market value of each company. All dividends are reinvested.
13
<PAGE> 17
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation of the Chief Executive
Officer and each of the four other most highly paid executive officers for each
of the last three years.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation -----------------------------------
-------------------------------- Awards Payouts
Other ----------------------- ---------
Annual Restricted Securities Long-Term All Other
Compen- Stock Underlying Incentive Compen-
Name/Position Year Salary Bonus sation Award(3) Options(#) Payouts sation(4)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter N. Larson/Chairman 1996 $800,000 $1,387,063 $115,197(5) $790,400 162,255 $ 0 $ 3,223
and Chief Executive Officer(1) 1995 600,000 983,721 116,505 720,000 500,000 0 3,000,215
- ---------------------------------------------------------------------------------------------------------------------------
David D. Jones/Corporate Vice 1996 $450,000 $ 301,680 $ 0 $ 0 100,000 $201,000 $ 40,742
President and President, 1995 402,877 233,600 1,809 132,125 14,000 207,800 41,287
Mercury Marine Division 1994 338,384 250,000 1,195 90,625 10,000 200,000 21,445
- ---------------------------------------------------------------------------------------------------------------------------
William J. 1996 $362,055 $ 360,000 $ 0 $ 0 88,000 $210,600 $ 71,970
Barrington/President, Sea Ray 1995 334,849 192,000 2,678 94,375 10,000 213,750 67,296
Division 1994 313,699 180,000 901 72,500 8,000 185,000 32,182
- ---------------------------------------------------------------------------------------------------------------------------
Peter B. Hamilton/Sr. Vice 1996 $354,110 $ 350,000 $ 11,085 $ 0 90,000 $ 0 $ 43,410
President, Chief Financial 1995 29,726 0 250 0 50,000 0 465,000
Officer and Secretary(2)
- ---------------------------------------------------------------------------------------------------------------------------
Frederick J. Florjancic, Jr./ 1996 $348,384 $ 288,320 $ 0 $ 0 75,400 $172,462 $ 21,768
Corporate Vice President and 1995 340,000 35,402 250 113,250 12,000 188,100 22,547
President, Brunswick Indoor 1994 316,301 160,000 1,392 117,812 13,000 183,000 11,986
Recreation Group
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Larson has been Chairman and Chief Executive since 1995.
(2) Mr. Hamilton joined the Company as Senior Vice President and Chief Financial
Officer in December 1995.
(3) The amounts shown in this column are the value of the restricted shares as
of the date of grant. The total number and value of restricted stock
holdings as of December 31, 1996 for the named officers are as follows:
Messrs. Larson 30,802 shares, $739,248; Jones 17,000 shares, $408,000;
Barrington 13,500 shares, $324,000 and Florjancic 16,750 shares, $402,000.
Mr. Larson was awarded 30,802 shares in February, 1996 based on the
Company's financial performance for 1995, and these shares become fully
vested on April 1, 1998. Mr. Larson was awarded 29,411 shares in February,
1997 based on the Company's financial performance for 1996, and these shares
become fully vested on February 15, 1998. Receipt of Mr. Larson's shares is
deferred until his retirement. Dividends are paid quarterly on all shares of
restricted stock.
(4) All Other Compensation for 1996 for the named officers is comprised of the
following: (i) Company contributions to the Brunswick Retirement Savings
Plan for Messrs. Larson $2,850; Jones $2,850; Barrington $1,980; Hamilton
$2,850 and Florjancic $2,850; (ii) Company contributions to the Brunswick
Employee Stock Ownership Plan for Messrs. Larson $373; Jones $373;
Barrington $432; Hamilton $373 and Florjancic $334; (iii) Company
contributions for the Sea Ray Employees' Stock Ownership and Profit Sharing
Plan and Supplemental Profit Sharing Plan for Mr. Barrington of $52,808 and
(iv) the term life portion of the premiums plus the present value of the
remaining premiums paid for the benefit of the named executives, measuring
such value by assuming an interest free loan to the named executives until
the Company is reimbursed for such remaining premiums: Messrs. Jones
$37,519; Barrington $16,750; Hamilton $40,187 and Florjancic $18,584.
(5) Includes $79,746 for use of the Company's aircraft for authorized
non-corporate purposes.
14
<PAGE> 18
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
Individual Grants(1)
------------------------------------------------ Potential Realizable
Number of % of Total Value at Assumed Annual
Securities Options Rates of Stock Price
Underlying Granted to Appreciation for Option Term
Options Employees Exercise Expiration -------------------------------------
Executive Granted in 1996(4) Price Date 0% 5% 10%
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Peter N. Larson(2)............. 72,255 2.37% $23.375 01/02/06 0 $1,062,178 $2,691,768
90,000 2.95% $18.375 07/30/06 0 $1,040,034 $2,635,652
David D. Jones(3).............. 60,000 1.96% $23.375 01/02/06 0 $882,025 $2,235,224
40,000 1.31% $18.375 07/30/06 0 $462,238 $1,171,401
William J. Barrington(3)....... 48,000 1.57% $23.375 01/02/06 0 $705,620 $1,788,179
40,000 1.31% $18.375 07/30/06 0 $462,238 $1,171,401
Peter B. Hamilton(3)........... 50,000 1.64% $23.375 01/02/06 0 $735,021 $1,862,687
40,000 1.31% $18.375 07/30/06 0 $462,238 $1,171,401
Frederick J. Florjancic,
Jr.(3)....................... 45,400 1.49% $23.375 01/02/06 0 $667,399 $1,691,319
30,000 .98% $18.375 07/30/06 0 $346,678 $878,551
All Shareholders(5)............ N/A N/A N/A N/A 0 $1,325,066,197 $3,357,977,903
</TABLE>
(1) Non-qualified stock options awarded during 1996 were granted at 100% of the
closing fair market value on the date of grant with a ten year option term.
When exercising options, an option holder may deliver previously acquired
shares of Common Stock or may request that shares be withheld to satisfy
the required withholding taxes.
(2) 30% of the options vest on the earliest of (i) the first anniversary of the
grant date, (ii) when the Company's stock price attains $30.00 per share
or, (iii) when annual net earnings of the Company exceed $2.35 per share;
30% of the options vest on the earliest of (i) the second anniversary of
the grant date, (ii) when the Company's stock price attains $35.00 per
share or, (iii) when annual net earnings of the Company exceed $2.70 per
share; and 40% vest on the earliest of (i) the third anniversary of the
grant date, (ii) when the Company's stock price attains $40.00 per share
or, (iii) when annual net earnings of the Company exceed $3.05 per share.
Options vest earlier if there is a change in control of the Company.
(3) 30% of the options vest when the Company's stock price attains $30.00 per
share or when annual net earnings of the Company exceed $2.35 per share;
30% of the options vest when the Company's stock price attains $35.00 per
share or when annual net earnings of the Company exceed $2.70 per share;
and 40% vest when the Company's stock price attains $40.00 per share or
when annual net earnings of the Company exceed $3.05 per share. Any options
not vested prior to the third anniversary of the grant date become
exercisable on that date. Options vest earlier if there is a change in
control of the Company.
(4) Based on 3,054,345 options granted to 395 employees during 1996.
(5) The potential realizable values for all shareholders were calculated using
the weighted average exercise price of option shares awarded during 1996
and the total outstanding shares of Common Stock on December 31, 1996. At
5% and 10% annual appreciation the value of the
15
<PAGE> 19
Common Stock would be approximately $34.86 per share and $55.50 per share,
respectively, at the end of the 10-year period.
OPTION EXERCISES AND YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
Number of Securities Value of
Number of Underlying the Unexercised Unexercised, In-the-Money
Shares Options at 12/31/96 Options Held at 12/31/96(1)
Acquired on ------------------------------ ------------------------------
Executive Exercise Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Peter N. Larson 0 150,000 512,255 $581,250 $1,907,659
David D. Jones 0 30,100 113,800 $230,763 $ 336,225
William J. Barrington 0 26,200 98,200 $205,125 $ 309,675
Peter B. Hamilton 0 0 140,000 $ 0 $ 362,500
Frederick J. Florjancic,
Jr. 0 28,900 89,000 $218,088 $ 270,725
</TABLE>
(1) Represents the difference between the option exercise price and the fair
market value of the Company's Common Stock on December 31, 1996.
LONG-TERM INCENTIVE PLAN -- AWARDS DURING 1996
<TABLE>
<CAPTION>
Number of Shares, Performance or Other Estimated Future Payouts Under
Units or Period Until Non-Stock Price-Based Plans
Executive Other Rights(#)(1) Maturation or Payout Threshold(#) Maximum(#)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peter N. Larson 68,449 1/2/96 - 12/31/97 34,225 68,449
David D. Jones 19,251 1/2/96 - 12/31/97 9,626 19,251
William J. Barrington 15,401 1/2/96 - 12/31/97 7,701 15,401
Peter B. Hamilton 14,973 1/2/96 - 12/31/97 7,487 14,973
Frederick J. Florjancic,
Jr. 14,545 1/2/96 - 12/31/97 7,273 14,545
</TABLE>
(1) These are awards under the Company's Strategic Incentive Plan. The value and
the number of stock units were determined as a percentage of the executive
officer's salary on January 2, 1996 based on the price of the Company's
Common Stock at that time. The number of the stock units to which each
officer becomes entitled to will depend upon the achievement of specified
financial targets for pre-tax earnings and cash flow results. Each executive
officer may elect to have stock units paid in Common Stock or in cash based
on the price of the Common Stock at the time of payout.
16
<PAGE> 20
PENSION PLANS
The following table shows the maximum retirement income which may be
payable as a straight life annuity pursuant to the Company's salaried pension
plans at age 65 under various assumed conditions prior to reduction for Social
Security benefits.
<TABLE>
<CAPTION>
Average of the
Three Highest Retirement Income for
Consecutive Years' Years of Participating Service
Earnings as a --------------------------------------------------------------------
Participant 15 20 25 30
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 600,000 $198,000 $ 264,000 $ 330,000 $ 396,000
800,000 264,000 352,000 440,000 528,000
2,200,000 726,000 968,000 1,210,000 1,452,000
2,600,000 858,000 1,144,000 1,430,000 1,716,000
</TABLE>
The salaried pension plans are non-contributory plans providing for
benefits following retirement under a formula based upon years of participation
in the plans up to 30 years, the average of the three highest consecutive years'
earnings (salaries, annual bonuses and commissions but excluding bonuses earned
under the Strategic Incentive Plan), and age.
The years of service of the officers named in the summary compensation
table are: Messrs. Larson 17 years, Jones 15 years, Hamilton 13 years and
Florjancic 11 years. Mr. Barrington does not participate in any salaried pension
plan.
If there is a change in control of the Company on or before April 1, 2001
and if there is a termination, merger or transfer of assets of the salaried
pension plans during the five years following the change in control of the
Company, benefits would be increased so that there would be no excess net
assets. Also, in the event of the involuntary termination of employment (other
than for cause) of a participant in the salaried pension plans during the five
years following such change in control of the Company, the participant's pension
would not be reduced as a result of early retirement.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Mr. Larson which provides for
his employment through April 1, 1999 at an annual salary of $800,000 per year.
The agreement will be extended for successive additional one-year terms unless
the Company or Mr. Larson elects not to extend the term at least six months
before the new term otherwise would begin. The agreement provides for an annual
bonus of up to 200% of salary based on the accomplishment of specified goals,
which will be paid one-half in cash and one-half in Common Stock of the Company.
Mr. Larson may elect to have the entire bonus paid in cash if he has satisfied
the Company's stock ownership guidelines. Pursuant to the agreement Mr. Larson
received options to purchase 100,000 shares of Common Stock at $25.50 per share
for ten years and an award of 29,411 shares of Common Stock based on his 1996
performance, which will become fully vested
17
<PAGE> 21
on February 15, 1998, or earlier in the event of death, disability or change in
control of the Company.
The agreement provides that he will participate in the Company's Strategic
Incentive Plan beginning with the 1996-1997 performance period and that his
maximum award under the Strategic Incentive Plan will be 100% of his salary for
the performance period. Awards under this plan are denominated in stock units
based on the market value of the Company's Common Stock at the beginning of the
performance period. Under the plan Mr. Larson may elect to receive stock or the
cash value of the stock units at the time the award is paid, depending in part
on whether he has satisfied the Company's stock ownership guidelines.
Mr. Larson is also entitled under the agreement to an annual award of
options to purchase Common Stock which are to have a value of $750,000 using the
Black-Scholes pricing model. The agreement also provides that with some
exceptions Mr. Larson shall participate in all benefit plans offered to the
Company's Senior Executives during the term of the agreement and for two years
following termination of the agreement for any reason other than death,
incapacity or cause. In addition, the agreement provides that he shall be
entitled for six years following the termination of the agreement to coverage
under any directors and officers liability insurance policy, indemnification
by-law and indemnification agreement then maintained or offered by the Company.
Mr. Larson has agreed to defer receipt of cash or Common Stock compensation
under his agreement to the extent it is not deductible by the Company because it
exceeds the one million dollar deduction limitation in Section 162(m) of the
Internal Revenue Code. He also may elect to defer receipt of additional cash or
Common Stock compensation under his agreement. Cash amounts deferred either will
be invested or will accrue interest at the prime rate in effect at the First
National Bank of Chicago (plus 5% for amounts which are deferred by reason of
the one million dollar deduction limitation) or, if greater, at the Company's
short term borrowing rate. Dividends on Common Stock which is deferred will be
reinvested in additional shares of Common Stock unless Mr. Larson elects to
receive the dividends on a current basis. Life insurance of three and one-half
times Mr. Larson's base salary is to be maintained for him during the term of
the agreement and for two years following termination of the agreement for any
reason other than death, incapacity or cause. Mr. Larson may elect to reduce the
amount of life insurance provided to him and to receive the premiums which
otherwise would have been paid for the insurance.
If Mr. Larson's employment is terminated before completion of the term of
his agreement for any reason other than death, incapacity or cause, or if Mr.
Larson resigns following a significant change in the nature or scope of his
duties, a reduction in his compensation, a reasonable determination by Mr.
Larson that as a result of a change in the circumstances regarding his duties,
he is unable to exercise his authorities or duties, a change in control of the
Company (as defined below), or breach by the Company of the agreement, the
agreement provides that he shall receive a lump sum payment equal to (i) his
salary for two years following termination at the rate in effect as of the date
of termination and (ii) annual bonus and strategic incentive
18
<PAGE> 22
awards for the two year period following termination based on performance to
date extrapolated through the termination date and that non-performance
restrictions on stock options shall lapse, performance restrictions on options
shall lapse to the extent authorized by the Board of Directors, and options
which are then exercisable or become exercisable because of the lapse of
restrictions shall remain exercisable until the earlier of (i) their expiration
or (ii) five years following termination of employment. The agreement prohibits
competition with the Company by Mr. Larson during the term of the agreement and
for two years thereafter and requires confidentiality on the part of Mr. Larson
during and after the term of the agreement.
The agreement provides that Mr. Larson will receive a pension from the
Company as if he had been employed by the Company for an additional 15 years,
reduced by the pension he receives from Johnson & Johnson, his former employer,
and reduced by the amount of his Social Security benefit. Mr. Larson may elect
to be paid his pension benefits under the Company's supplemental pension plan in
a lump sum.
Upon Mr. Larson's request after a change in control of the Company, the
Company is required under the agreement to pay Mr. Larson any amount then held
for him in a deferred compensation account, and to pay a lump sum pension
payment equal to the present value of benefits accrued under the Company's
supplemental pension plan. The definition of a change in control includes (i)
the ownership of 30% or more of the outstanding voting stock of the Company by
any person other than an employee benefit plan of the Company, (ii) a tender
offer which has not been negotiated and approved by the Board of Directors of
the Company for stock of the Company if (a) the offeror owns or has accepted for
payment 25% or more of the outstanding voting stock of the Company or (b) the
offer remains open three days before its stated termination date and if the
offeror could own 50% or more of the outstanding voting stock of the Company as
a result of the offer, or (iii) the failure of the Board of Directors' nominees
to constitute a majority of the Board of Directors of the Company following a
contested election of directors.
The Company has an employment agreement with Mr. Hamilton which provides
for his employment through December 31, 1998 at an annual salary of not less
than $350,000 per year. The agreement provides for an annual bonus of up to 100%
of salary, which may be paid in cash and/or Common Stock of the Company.
Pursuant to the agreement Mr. Hamilton received options to purchase 50,000
shares of Common Stock at $23.375 per share for ten years, an award of 20,000
shares of Common Stock, and a cash payment of $40,000.
The agreement provides that he will participate in the Company's Strategic
Incentive Plan beginning with the 1996-1997 performance period and that his
maximum award under the Strategic Incentive Plan will be 100% of his annual
salary at the beginning of the performance period. Awards under this plan are
denominated in stock units based on the market value of the Company's Common
Stock at the beginning of the performance period. Under the plan Mr. Hamilton
may elect to receive stock or the cash value of the stock units at the time the
award is paid, depending in part on whether he has satisfied the Company's stock
ownership guidelines.
19
<PAGE> 23
The agreement also provides that Mr. Hamilton shall participate in all
benefit plans offered to the Company's Senior Executives during the term of the
agreement and for one year following termination of the agreement for any reason
other than death, incapacity or cause. In addition, the agreement provides that
he shall be entitled for six years following the termination of the agreement to
coverage under any directors and officers liability insurance policy,
indemnification by-law and indemnification agreement then maintained or offered
by the Company.
If Mr. Hamilton's employment is terminated before completion of the term of
his agreement for any reason other than death, incapacity or cause, or if Mr.
Hamilton resigns following a significant change in the nature or scope of his
duties, a reduction in his compensation, a reasonable determination by Mr.
Hamilton that as a result of a change in the circumstances regarding his duties,
he is unable to exercise his authorities or duties, or breach by the Company of
the agreement, the agreement provides that he shall receive a lump sum payment
equal to (i) his salary for one year following termination at the rate in effect
as of the date of termination and (ii) annual bonus and strategic incentive
awards for the one year period following termination based on performance to
date extrapolated through the termination date. The agreement prohibits
competition with the Company by Mr. Hamilton during the term of the agreement
and for one year thereafter and requires confidentiality on the part of Mr.
Hamilton during and after the term of the agreement.
The agreement provides that Mr. Hamilton will receive a pension from the
Company as if he had been employed by the Company for an additional 12.5 years,
reduced by the pension he receives from Cummins Engine Company, Inc., his former
employer.
Mr. Reichert retired as Chairman of the Board on October 1, 1995. The
Company has agreed to provide him until October 1, 2010 with life insurance of
three and one-half times his former base salary (less the face value of any
policy released to him under the Split Dollar Life Insurance Plan). This
obligation is being satisfied through the Split Dollar Life Insurance Plan. The
Company also has agreed to provide Mr. Reichert with office space and
secretarial service until October 1, 2000.
The Company also has employment agreements with Messrs. Jones, Barrington,
Hamilton and Florjancic and certain other officers which provide that after a
change in control of the Company each executive will be employed for three years
(but not beyond the executive's 65th birthday) during which the executive will
be entitled to a salary not less than the executive's annual salary immediately
prior to the change in control, with the opportunity for regular increases, and
incentive compensation, employee benefits and perquisites equivalent to those
provided by the Company to executives with comparable duties, but at least as
great as those to which the executive was entitled immediately prior to the
change in control. The definition of a change in control in these agreements is
the same as the definition in Mr. Larson's agreement described above. Within 60
days after a change in control, the Company is required to pay the executive a
lump sum pension payment equal to the present value of benefits accrued under
the Company's supplemental pension plan as of the end of the prior year.
20
<PAGE> 24
If employment is terminated under any of these agreements before completion
of the term of employment for any reason other than death, incapacity or cause,
or if an executive resigns following a significant change in the nature or scope
of the executive's duties, a reduction in total compensation, a reasonable
determination by the executive that as a result of a change in the circumstances
affecting the executive's position the executive is unable to exercise the
authorities and duties attached to the executive's position, or breach by the
Company of the agreement, the executive would be paid a lump sum payment equal
to (i) his or her salary for three years at the rate in effect as of the date of
termination, (ii) a bonus of 50% of salary for each of the three years, and
(iii) an additional bonus under the Brunswick Strategic Incentive Plan equal to
50% of salary for each of the three years. If the executive attains age 65
during such three-year period, all of the foregoing payments will be reduced
proportionally. If the lump sum payments are paid, the executive shall be
treated as though he or she had continued to participate in the Company's
incentive compensation and employee benefit plans for the three years, and the
executive will receive a lump sum payment equal to the then present value of the
additional pension benefit accrued for the three years. The agreements prohibit
competition with the Company by the executive for one year after termination of
employment and require confidentiality on the part of the executive during and
after the term of the agreements. The agreements also provide that if any
executive is required to pay any excise tax on payments from the Company by
reason of Section 4999 of the Internal Revenue Code of 1986, the Company will
reimburse the executive for such excise tax plus any other taxes owed as a
result of such reimbursement.
The agreements provide that each executive may resign during the six months
following a change in control of the Company and elect to receive a lump sum
payment equal to (i) his or her salary for two years at the rate in effect as of
the date of termination, (ii) a bonus of 50% of salary for the two years, and
(iii) an additional bonus under the Brunswick Strategic Incentive Plan equal to
50% of salary for the two years. Also, the executive would be treated as though
he or she had continued to participate in the Company's incentive compensation
and employee benefit plans for the two years, and the executive will receive a
lump sum payment equal to the then present value of the additional pension
benefit that would have accrued for the two years. If the executive attains age
65 during such two-year period, all of the foregoing payments will be reduced
proportionally. Payments to Mr. Hamilton will be reduced by the amount of any
payments to him under his employment agreement described above in the event of
termination of employment.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of its Audit and Finance Committee, the Board of
Directors has appointed Arthur Andersen LLP, independent public accountants,
auditors for the Company and its subsidiaries for the year 1997. The Board of
Directors recommends to the shareholders that the appointment of Arthur Andersen
LLP as auditors for the Company and its subsidiaries be ratified. If the
shareholders do not ratify the appointment, the selection of auditors will be
reconsidered by the Audit and Finance Committee and the Board of Directors.
Representatives of Arthur Andersen LLP will be present at the Annual Meeting of
Shareholders with the
21
<PAGE> 25
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
OTHER MATTERS
If any matters other than those referred to in the Notice of Annual Meeting
should properly come before the Meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the proxies held by them in
accordance with their best judgment. Management does not know of any business
other than that referred to in the Notice which may be considered at the
Meeting.
The entire expense of proxy solicitation will be borne by the Company. In
addition to solicitation by mail, telephone, facsimile, telegraph and personal
contact by its officers and employees, the Company has retained the firm of
Georgeson & Co. to assist in the solicitation of proxies. Reasonable
out-of-pocket expenses of forwarding the proxy material will be paid by the
Company. For its services, Georgeson & Co. will be paid a fee of approximately
$8,000.
SHAREHOLDER PROPOSALS
Under the rules of the Securities and Exchange Commission proposals of
shareholders to be considered for inclusion in the proxy statement and form of
proxy for the 1998 Annual Meeting must be received by the Company at its offices
at 1 N. Field Ct., Lake Forest, Illinois 60045-4811, Attention: Secretary, no
later than November 20, 1997 and must otherwise meet the requirements of those
rules.
In order to assure the presence of the necessary quorum and to vote on the
matters to come before the Annual Meeting, please indicate your choices on the
enclosed proxy, and date, sign and return it promptly in the envelope provided.
By order of the Board of Directors,
Peter Hamilton
PETER B. HAMILTON
Secretary
Lake Forest, Illinois
March 20, 1997
22
<PAGE> 26
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BRUNSWICK
CORPORATION
BRUNSWICK LOGO
The undersigned hereby appoints P. N. Larson, P. B. Hamilton and M. D.
Schmitz, and each of them, as proxies with power of substitution, and
hereby authorizes them to represent and to vote, as designated below,
all the shares of common stock of Brunswick Corporation which the
undersigned may be entitled to vote at the Annual Meeting of
Shareholders to be held on April 23, 1997 or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
<TABLE>
<CAPTION>
<S> <C> <C>
1. ELECTION OF DIRECTORS [ ] FOR the following nominees: M. J. [ ] WITHHOLD AUTHORITY to vote for
Callahan, M. A. Fernandez, G. D. Kennedy, all nominees or their alternates
R. P. Mark and R. W. Schipke (except
as marked to the contrary) or for
alternate(s) designated by the Board
of Directors
</TABLE>
(Instruction: To withhold authority to vote for any individual nominee,
write the name of such nominee(s) in the space provided below.)
---------------------------------------------------------------------
2. Ratification of Auditors FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion on such other business as may properly come
before the meeting.
THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
PLEASE MARK, SIGN ON REVERSE SIDE, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Continued from other side)
Dated , 1997
--------------------------------------
--------------------------------- ----------------------------------
(Signature of Stockholder) (Signature of Stockholder)
Please sign as your name or names appear above,
date and mail this proxy promptly in the
enclosed return envelope. If your stock is
held in joint tenancy, both joint tenants must
sign. Executors, administrators, trustees,
etc. should give full title as such. If
executed by a corporation, a duly authorized
officer should sign.
<PAGE> 27
PROXY PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
BRUNSWICK CORPORATION
The undersigned hereby appoints P.N. Larson, P.B. Hamilton, and M.D.
Schmitz, and each of them, as proxies, with power of substitution, and hereby
authorizes them to represent and to vote, in accordance with the instructions on
the reverse side, all the shares of common stock of Brunswick Corporation which
the undersigned may be entitled to vote at the Annual Meeting of Shareholders to
be held on April 23, 1997 or any adjournment thereof.
BY SIGNING AND RETURNING THIS FORM, YOU WILL BE INSTRUCTING MELLON BANK
N.A., THE TRUSTEE FOR THE BRUNSWICK EMPLOYEE STOCK OWNERSHIP PLAN, BRUNSWICK
RETIREMENT SAVINGS PLANS AND SEA RAY EMPLOYEES' STOCK OWNERSHIP AND PROFIT
SHARING PLAN, TO VOTE THE SHARES ALLOCATED TO YOUR ACCOUNT IN THESE PLANS. THE
TRUSTEE WILL VOTE YOUR SHARES AS YOU DIRECT. IF YOU SIGN AND RETURN THIS FORM
WITHOUT MAKING ANY DIRECTION, YOUR SHARES WILL BE VOTED FOR PROPOSALS 1 AND 2.
IF YOU DO NOT RETURN THIS FORM BY APRIL 21, 1997, THE TRUSTEE WILL VOTE YOUR
SHARES (EXCEPT FOR SHARES ACQUIRED WITH TAX CREDIT CONTRIBUTIONS) IN THE SAME
PROPORTION AS IT VOTES SHARES FOR WHICH IT RECEIVES INSTRUCTIONS.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
<PAGE> 28
BRUNSWICK CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
<TABLE>
<S><C>
1. Election of Directors-- For All
Nominees: M.J. Callahan, M.A. Fernandez, For Withheld Except Vote Withheld for the Nominee(s) Written Below
G.D. Kennedy, R.P. Mark and R.W. Schipke. / / / / / /
_______________________________________________________
2. Ratification of Auditors. For Against Abstain
/ / / / / / 3. In their discretion on such other business as
may properly come before the meeting.
A VOTE FOR ITEMS 1 AND 2 IS RECOMMENDED BY THE BOARD OF DIRECTORS.
Dated: _________________________________, 1997
______________________________________________
Signature
NOTE: Please sign exactly as name appears on
this proxy, date and mail this proxy promptly in
the enclosed return envelope so that it is
received prior to the meeting. These
confidential voting instructions will be seen
only by authorized personnel of the Trustee and
its tabulator.
</TABLE>
