<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
BRUNSWICK CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
BRUNSWICK CORPORATION
- --------------------------------------------------------------------------------
(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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
Brunswick Corporation
March 24, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Brunswick
Shareholders to be held on Wednesday, April 22, 1998 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,
/s/ PETER N. 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 22, 1998 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,
1998 will be entitled to notice of and to vote at the meeting and any
adjournment thereof.
By order of the Board of Directors,
/s/ MARY D. ALLEN
MARY D. ALLEN
Secretary
Lake Forest, Illinois
March 24, 1998
<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 22, 1998 and at any adjournment thereof. This statement and form of
proxy were first mailed to shareholders on or about March 24, 1998. 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 99,504,103 shares of Common Stock outstanding
as of the close of business on February 24, 1998, 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, four
directors are to be elected. The Board of Directors has nominated Nolan D.
Archibald, Jeffrey L. Bleustein, and Kenneth Roman for election as directors to
serve for terms expiring at the 2001 Annual Meeting and until their respective
successors shall have been elected and qualified. The Board of Directors has
nominated Bettye Martin Musham for election as a director to serve for a term
expiring at the 1999 Annual Meeting and until her successor shall have been
elected and qualified. Jack F. Reichert and George D. Kennedy are retiring from
the Board at the 1998 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 represented by proxy at
the Annual Meeting and entitled to vote on the election of directors. In
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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 2001 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 54
JEFFREY L. BLEUSTEIN Director since 1997
President and Chief Executive of Harley-Davidson, Inc., a motorcycle
manufacturer, since 1997; President and Chief Operating Officer of the
Motorcycle Division of Harley-Davidson, Inc., 1993-1997; Executive Vice
President of Harley-Davidson, Inc., 1991-1997; director of Harley-Davidson,
Inc.; age 58
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 and marketing
group, 1988-1989 (and of Ogilvy and Mather Worldwide, 1985-1989); director of
Compaq Computer Corporation and PennCorp Financial Group, Inc.; age 67
NOMINEE FOR ELECTION FOR TERM EXPIRING AT THE 1999 ANNUAL MEETING
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 Footstar, Inc. and
Gear Holdings, Inc.; age 65
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 and Chairman and Chief Executive Officer
of its U.S.-based international cosmetics business, now called Coty Inc., since
1993; age 51
PETER N. LARSON Director since 1995
Chairman and Chief Executive Officer of Brunswick since 1995; Executive Officer,
Johnson & Johnson, a leading health care company, 1991-1995, where he served as
Chairman of the Worldwide Consumer and Personal Care Group and was a member of
the Executive Committee
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and the Board of Directors; director of Compaq Computer Corporation, Coty Inc.
and CIGNA Corporation; member of the Listed Stock Advisory Committee of the New
York Stock Exchange; age 58
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 65
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2000 ANNUAL MEETING
MICHAEL J. CALLAHAN Director since 1991
Executive Vice President and Chief Financial Officer of FMC Corporation, a
producer of chemicals and machinery for industry and agriculture, since 1994;
Executive Vice President and Chief Financial Officer of Whirlpool Corporation, a
manufacturer of major home appliances, 1992-1994; age 59
MANUEL A. FERNANDEZ Director since 1997
Chairman and Chief Executive Officer of Gartner Group, Inc., an information
technology company, since 1995 and President and Chief Executive Officer of
Gartner Group, Inc., 1991-1997; age 51
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 43
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 61
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COMMITTEES AND MEETINGS
The Board of Directors has Executive, Audit and Finance, Human Resource and
Compensation, and Corporate Governance Committees. The Audit and Finance, Human
Resources and Compensation and Corporate Governance Committees are composed
solely of independent directors.
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),
Bleustein, Reichert and Roman.
Members of the Human Resource and Compensation Committee are Messrs.
Schipke (Chairman), Archibald, Fernandez and Kennedy.
Members of the Corporate Governance Committee are Messrs. Lorsch
(Chairman), Harf and Ms. Mark and Ms. Martin Musham.
The Audit and Finance Committee met five times during 1997. The Audit and
Finance Committee oversees the Company's accounting procedures and financial
reporting practices. It reviews the activities of the internal and external
auditors, focusing on the Company's internal controls, and recommends to the
Board an external auditor and the terms of this engagement. The Committee
reviews transactions of a financial nature which it considers necessary to carry
out its primary responsibilities or which are referred to it by the Board, such
as legal liabilities, environmental matters, capital investments, financial
strategy and pension funding.
The Human Resource and Compensation Committee met seven times during 1997.
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 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 seven times during 1997. 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 administers
the 1997 Stock Plan for Non-Employee Directors. The Corporate Governance
Committee also recommends to the Board nominees to fill vacancies on the Board
of Directors as they occur and considers and makes recommendations to the Board
with regard to 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.
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<PAGE> 8
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.
The Board of Directors met nine times during 1997. All directors attended
75% or more of all board meetings and meetings of committees of which they are
members during 1997.
DIRECTOR COMPENSATION
Directors who are not employees and who are not committee chairpersons are
entitled to an annual fee of $50,000 and the Directors who are Chairmen of the
Audit and Finance, Human Resource and Compensation, and Corporate Governance
Committees each receive an annual fee of $57,500 per annum. One-half of such
annual fees are paid in Common Stock of the Company, and each director may elect
to have the remaining one-half of these fees paid in cash or Common Stock.
Receipt of this Common Stock may be deferred until after retirement from the
Board. New non-employee directors receive an award of Common Stock which has a
value of $25,000 at the time they are first elected to the Board.
Non-employee directors at the time of the 1997 Annual Meeting of
Shareholders of the Company received options to purchase 3,000 shares of Common
Stock each at a price of $27.625 per share. New non-employee directors receive
options to purchase 3,000 shares of Common Stock if they first are elected to
the Board of Directors within six months after the most recent annual meeting of
shareholders or options to purchase 1,500 shares of Common Stock if they first
are elected after six months following the most recent annual meeting of
shareholders. The exercise price of these options is 100% of the fair market
value of the Common Stock on the date of the award. Options for one-half of
these shares become fully exercisable one year after the date of the award, and
options for the other one-half become exercisable two years after the date of
the award. The options may be exercised at any time after becoming exercisable
until the tenth anniversary of the date of the award.
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Directors may purchase engines, boats, fitness equipment and billiard
tables from the Company at the Company's dealers' net cost. Each director also
may use one Company boat for up to two years. 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 makes the directors whole with
respect to any taxes due.
In the event of a change in control of the Company (as defined on page 18),
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 February 2, 1998, 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 February 2, 1998 Class
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nolan D. Archibald 5,820(1) *
Jeffrey L. Bleustein 1,272(1) *
Michael J. Callahan 23,537(1) *
Manuel A. Fernandez 2,471(1) *
Peter Harf 27,007(1) *
George D. Kennedy 32,227(1) *
Peter N. Larson 841,728(2) *
Jay W. Lorsch 29,804(1) *
Rebecca P. Mark 2,211(1) *
Bettye Martin Musham 20,120(1) *
Jack F. Reichert 476,172(1)(3) *
Kenneth Roman 18,406(1) *
Roger W. Schipke 25,165(1) *
Peter B. Hamilton 136,405(2) *
William J. Barrington 134,223(2) *
Frederick J. Florjancic, Jr. 144,520(2) *
Jim W. Dawson 121,283(2) *
All directors and executive officers as a group 2,366,152(1)(2)(3) 2.4%
</TABLE>
* Less than 1%
(1) Includes the following shares of stock issued to the directors, receipt of
which has been deferred: Messrs. Archibald 3,320 shares, Bleustein 1,272
shares, Callahan 12,996 shares, Fernandez 2,471 shares, Harf 4,507 shares,
Kennedy 17,338 shares, Lorsch 16,187 shares, Reichert 2,460 shares, Roman
2,758 shares, and Schipke 13,565 shares, Ms. Mark 2,211 shares, Ms. Martin
Musham 7,399 shares, and 86,484 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
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Messrs. Callahan, Kennedy, Lorsch and Schipke and Ms. Martin Musham; 128,950
shares for Mr. Reichert; and 176,950 shares for all directors as a group.
(2) Includes 262,404 shares for Mr. Larson, receipt of which has been deferred
and of which 60,213 shares were restricted, and includes the following
shares of restricted stock: Messrs. Barrington 9,000 shares, Florjancic
12,500 shares, Dawson 9,700 shares and all executive officers as a group
100,613 shares. Also includes the following shares of common stock issuable
pursuant to currently exercisable stock options: Messrs. Larson 577,353
shares, Hamilton 93,000 shares, Barrington 94,200 shares, Florjancic 90,400
shares, Dawson 89,240 shares, and all executive officers as a group
1,168,933 shares.
(3) Includes 32,600 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 1997 Class
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Pioneering Management Corporation 6,871,900(1) 6.91%
60 State Street
Boston, MA 02109
Common Stock Lazard Freres & Co. 5,127,325(2) 5.15%
30 Rockefeller Plaza
New York, New York 10020
</TABLE>
- --------------------------------------------------------------------------------
(1) Pioneering Management Corporation has sole voting power and sole dispositive
power for all of these shares.
(2) Lazard Freres & Co. has sole voting power for 3,991,125 of these shares and
sole dispositive power for all of these shares.
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 and the Senior Executives of the Company
participate. For 1997, "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 that has been followed in
developing these plans. At the root of our compensation systems is a belief that
the corporation with the best employee talent will be the market leader. The
purposes of the plans are to attract and retain outstanding key
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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 substantial amount of
compensation at risk. Brunswick recognizes past performance and expected future
contributions through a combination of competitive base salaries, the annual
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 tactical and strategic initiatives.
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, some of
the companies included in our industry peer group on page 12 are not included in
the list of comparable companies for the determination of salary ranges for the
Senior Executives. Our competition for executive talent includes a broad array
of corporations providing consumer product manufacturing and services.
During 1997, Brunswick's executive compensation plans included competitive
base salaries plus incentives for short, mid-term and long-term performance. The
size of the individual awards in the plans increased based upon the level of
responsibility of the Senior Executive. In this way, a greater opportunity for
incentive compensation is provided for those executives 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 retention 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 internal and external comparisons provides the best overall
measure for salary administration. Our consultant's study will be updated every
other year. Executives whose salaries are above the market data at the 75th
percentile for their comparative positions will be scheduled for salary reviews
every two years; all other executives' salaries will be reviewed annually.
THE BRUNSWICK PERFORMANCE PLAN is an annual bonus plan which in 1997
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 1997, 60% of the bonus for
Group executives was based on their pre-tax earnings goals, 20% was based on
working capital targets and the remaining 20% was based on clearly established
organizational development objectives central to the continued strength of their
business. For Corporate executives 80% of the bonus was based on our earnings
per share goal and 20% on specific organizational development objectives. Awards
under this Plan for Senior Executives can range
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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 1997 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
cash or 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
Brunswick's overall plan. For the three-year performance period concluding in
1997, 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. 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
1995-97 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 by the Groups, 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 bonuses were paid all in cash for this cycle.
The performance period for the Strategic Incentive Plan beginning January
1, 1996, was 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 were based upon a combination of 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 awards were 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
was made in common stock for those Senior Executives who had not reached the
Stock Ownership Guidelines. Any stock payments may be deferred.
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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 position, the individual will be expected to reach the targeted
amount required under the policy within five years.
In July 1997, the Committee approved the annual grant award of options. The
exercise price was set at 100% of the fair market value on the date of grant.
The awards were approximately 80% of the number of options granted in July 1996,
yet the total value of options granted in 1997 was 100% of the value of the 1996
awards as calculated using the Black-Scholes pricing model. These values were up
to 100% of the base salary of the Senior Executives. 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 size of the two
previous option grants were taken into consideration when determining the amount
and number of the 1997 option grants.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In February 1997, a one-year contract extension of Mr. Larson's Employment
Agreement was completed. It provided for a special award of 100,000 options,
granted at the then fair market value and vesting over the contract period; in
addition, his salary was frozen for the entire Agreement term. His performance
will continue to be reviewed annually by the Board, taking into account such
financial and non-financial factors as the Board determines to be pertinent.
Also, 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 specific
financial and leadership 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 $843,200 for 1997, a portion 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
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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
achievement of specific strategic goals, the Committee recommended and the Board
approved an award to Mr. Larson of $1,599,742, 77.1% of his maximum award, which
he has deferred.
The Strategic Incentive Plan cycle of 1995-97 provided for discretionary
awards for executives who contributed to Brunswick's achievements for a
substantial period of the cycle but who were not employed when the cycle began.
The Committee recommended and the Board approved a discretionary award to Mr.
Larson of $350,000 for his contributions during 33 of the 36 months of the
cycle, which he has deferred.
In July 1997, at the time the other Senior Executives were awarded options,
Mr. Larson was awarded options to purchase 100,000 shares of the Company's
Common Stock at its then current market value with the vesting provisions
similar to those options awarded all other senior executives.
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. Mr. Larson and all other senior executives will defer receipt of
compensation, to the extent it is not deductible by the Company, under the terms
of a new automatic deferral plan established for this purpose.
Submitted by Members of the Human Resource and Compensation Committee of
the Board of Directors.
R.W. Schipke, Chairman
N.D. Archibald
M.A. Fernandez
G.D. Kennedy
11
<PAGE> 15
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
BRUNSWICK, S&P 500 INDEX, PEER GROUP AND FORMER PEER GROUP
<TABLE>
<CAPTION>
Measurement Period S&P 500 Former Peer
(Fiscal Year Covered) Brunswick Peer Group Index Group
<S> <C> <C> <C> <C>
1992 100.00 100.00 100.00 100.00
1993 113.60 120.70 110.10 145.50
1994 122.00 157.40 111.50 124.80
1995 158.70 162.10 153.40 173.40
1996 162.00 163.60 188.90 203.10
1997 208.40 173.30 251.80 172.90
</TABLE>
The basis of comparison is a $100 investment at December 31, 1992 in each of
Brunswick, the S&P 500 Index, a peer group of six recreation manufacturing
companies (Coleman Company, Inc., Cybex International, Inc., Huffy Corporation,
Johnson Worldwide Associates, Inc., K2, Inc., and Polaris Industries, Inc.) and
a former peer group of two recreation manufacturing companies (Johnson Worldwide
Associates, Inc. and K2, Inc.) weighted by the beginning of the year market
value of each company. All dividends are reinvested. Last year the former peer
group also included Outboard Marine Corporation ("OMC"), but OMC is no longer a
public company. The four additional companies were added to the revised peer
group to replace OMC and to add recreation companies which compete with
Brunswick's new camping, cooler, bicycle and exercise equipment businesses.
12
<PAGE> 16
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(2) Award(3) Option(#) Payouts(4) sation(5)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter N. Larson/Chairman 1997 $800,000 $ 843,200 $ 63,036 0 200,000 $1,949,742 $ 229,716
and Chief Executive Officer 1996 800,000 1,387,063 115,197 790,400 162,255 0 3,223
1995 600,000 983,721 116,505 720,000 500,000 0 3,000,215
- ------------------------------------------------------------------------------------------------------------------------------
Peter B. Hamilton/Sr. Vice 1997 $400,000 $ 374,080 $ 479 0 30,000 $ 587,531 $ 84,224
President and Chief Financial 1996 354,110 350,000 11,085 0 90,000 0 43,410
Officer(1) 1995 29,726 0 250 0 50,000 0 465,000
- ------------------------------------------------------------------------------------------------------------------------------
William J. Barrington/President, 1997 $385,000 $ 331,639 0 0 30,000 $ 665,769 $ 74,569
Sea Ray Group 1996 362,055 360,000 0 0 88,000 210,600 71,970
1995 334,849 192,000 $ 2,678 94,375 10,000 213,750 67,296
- ------------------------------------------------------------------------------------------------------------------------------
Frederick J. Florjancic, Jr./ 1997 $360,000 $ 341,208 $246,474 0 25,000 $ 593,792 $ 24,049
Corporate Vice President and 1996 348,384 288,320 0 0 75,400 172,462 21,768
President, Brunswick Indoor 1995 340,000 35,402 250 113,250 12,000 188,100 22,547
Recreation Group
- ------------------------------------------------------------------------------------------------------------------------------
Jim W. Dawson/Corporate Vice 1997 $343,397 $ 203,184 0 0 30,000 $ 258,679 $ 40,597
President and President, 1996 303,288 160,000 0 0 80,000 141,000 41,187
Brunswick Outdoor 1995 262,301 131,300 $ 278 98,150 10,400 156,750 42,123
Recreation Group
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Hamilton joined the Company as Senior Vice President and Chief Financial
Officer in December 1995.
(2) Includes for Mr. Larson $79,746 and $80,715 for his use of the Company's
aircraft for authorized non-corporate purposes in 1996 and 1995,
respectively, and for Mr. Florjancic amounts reimbursed for payment of taxes
and $75,146 for relocation allowances which were in addition to amounts
generally paid in 1997.
(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, 1997 for the named officers are as follows:
Messrs. Larson 60,213 shares, $1,825,207; Barrington 11,250 shares,
$341,016; Florjancic 14,625 shares, $443,320; and Dawson 11,950 shares,
$362,234. 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
became 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) The Long-Term Incentive Payouts for 1997 include payouts for two performance
periods as a result of the restructuring of the performance cycles.
(5) All Other Compensation for 1997 for the named officers is comprised of the
following: (i) Company contributions to the Brunswick Retirement Savings
Plan for Messrs. Larson $2,090; Hamilton $2,090; Barrington $1,694;
Florjancic $2,090; and Dawson $2,090; (ii) Company contributions to the
Brunswick Employee Stock Ownership Plan for Messrs. Larson $334; Hamilton
$334; Barrington $393; Florjancic $334; and Dawson $216; (iii) Company
contributions for the Sea Ray Employees' Stock Ownership and Profit Sharing
13
<PAGE> 17
Plan and Supplemental Profit Sharing Plan for Mr. Barrington of $56,120, and
(iv) the value of split dollar life insurance premiums paid by the Company
on behalf of the named executive officers. This value represents the cost of
term life insurance provided during the year as well as the present value of
the potential cash surrender value attributable to this year's premium
payment. This present value is determined by assuming an interest free loan
to the named executives until the Company is reimbursed for its portion of
the premiums. These amounts are: Messrs. Larson $227,292; Hamilton $81,800;
Barrington $16,362; Florjancic $21,625; and Dawson $38,291.
OPTION GRANTS IN 1997
<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 1997(4) Price Date 0% 5% 10%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Peter N. Larson(2)............ 100,000 5.83% $25.5000 02/03/07 0 $1,603,681 $4,064,043
100,000 5.83% $32.1875 07/29/07 0 $2,024,255 $5,129,859
Peter B. Hamilton(3).......... 30,000 1.75% $32.1875 07/29/07 0 $607,276 $1,538,958
William J. Barrington(3)...... 30,000 1.75% $32.1875 07/29/07 0 $607,276 $1,538,958
Frederick J. Florjancic,
Jr.(3)...................... 25,000 1.46% $32.1875 07/29/07 0 $506,064 $1,282,465
Jim W. Dawson(3).............. 30,000 1.75% $32.1875 07/29/97 0 $607,276 $1,538,958
All Optionees(5).............. 1,717,198 100% $31.3690 Various 0 $33,876,531 $85,849,781
All Shareholders(6)........... N/A N/A N/A N/A 0 $1,962,529,347 $4,973,434,685
Optionee's Gain as % of All
Shareholders' Gain.......... N/A N/A N/A N/A 0 1.73% 1.73%
</TABLE>
(1) Non-qualified stock options awarded during 1997 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) Options awarded on February 3, 1997 vest in increments of 30%, 30% and 40%
on the first three anniversaries of the grant date. Vesting provisions for
options awarded July 29, 1997 are as follows: 30% of the options vested
when the Company's stock price attained $35.00; 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 $40.00 per share or, (iii) when annual net
earnings of the Company exceed $3.00 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 $45.00 per share or, (iii) when annual net
earnings of the Company exceed $3.30 per share. Options vest earlier if
there is a change in control of the Company.
(3) 30% of the options vested when the Company's stock price attained $35.00
per share; 30% of the options vest when the Company's stock price attains
$40.00 per share or when annual net earnings of the Company exceed $3.00
per share; and 40% vest when the Company's stock
14
<PAGE> 18
price attains $45.00 per share or when annual net earnings of the Company
exceed $3.30 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 1,717,198 options granted to 457 employees during 1997.
(5) No gain to the optionees is possible without an increase in stock price,
which will benefit all stockholders commensurately. A zero percent stock
price appreciation will result in zero dollars for the optionee.
(6) The potential realizable values for all shareholders were calculated using
the weighted average exercise price of option shares awarded during 1997
and the total outstanding shares of Common Stock on December 31, 1997. At
5% and 10% annual appreciation the value of the Common Stock would be
approximately $51.10 per share and $81.36 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 12/31/97 Options Held at 12/31/97(1)
Acquired on ------------------------------ ------------------------------
Executive Exercise Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Peter N. Larson 0 577,353 284,902 $5,368,511 $1,782,133
Peter B. Hamilton 0 93,000 77,000 $ 747,750 $ 498,500
William J. Barrington 0 94,200 60,200 $ 930,125 $ 369,950
Frederick J. Florjancic,
Jr. 0 90,400 52,460 $ 908,921 $ 324,135
Jim W. Dawson 0 89,240 57,160 $ 888,745 $ 349,580
</TABLE>
(1) Represents the difference between the option exercise price and the fair
market value of the Company's Common Stock on December 31, 1997.
LONG-TERM INCENTIVE PLAN -- AWARDS DURING 1997
<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 67,725 1/2/97 - 12/31/98 33,863 67,725
Peter B. Hamilton 16,932 1/2/97 - 12/31/98 8,466 16,932
William J. Barrington 16,297 1/2/97 - 12/31/98 8,148 16,297
Frederick J. Florjancic,
Jr. 15,238 1/2/97 - 12/31/98 7,619 15,238
Jim W. Dawson 14,392 1/2/97 - 12/31/98 7,196 14,392
</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, 1997 based on the price of the Company's
Common Stock at that time. The number of the
15
<PAGE> 19
stock units to which each officer becomes entitled will depend upon the
achievement of specified strategic goals for Mr. Larson and specified
financial targets for earnings before interest and taxes, operating margin
percentage and net earnings per share for the other named officers. 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 end of the performance
period.
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 18 years, Hamilton 14 years, Florjancic 12 years and
Dawson 30 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
16
<PAGE> 20
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.
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 two-year 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 $1 million 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% per annum for amounts which are deferred by
reason of the $1 million 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
17
<PAGE> 21
the rate in effect as of the date of termination and (ii) annual bonus and
strategic incentive 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.
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.
18
<PAGE> 22
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 as long as he is a director or a
consultant to the Company.
The Company also has agreements with Messrs. Hamilton, Barrington,
Florjancic and Dawson 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.
19
<PAGE> 23
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 1998. 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
20
<PAGE> 24
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 1999 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 24, 1998 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,
/s/ MARY D. ALLEN
MARY D. ALLEN
Secretary
Lake Forest, Illinois
March 24, 1998
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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.
Allen, 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 22, 1998 or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
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1. ELECTION OF DIRECTORS [ ] FOR the following nominees: N.D. [ ] WITHHOLD AUTHORITY to vote for
Archibald, J.L. Bleustein, B. Martin all nominees or their alternates
Musham and K. Roman (except as marked
to the contrary) or for alternate(s)
designated by the Board of Directors
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(Instruction: To withhold authority to vote for any individual nominee, write
the name of such nominee(s) in the space provided below.)
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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 SHAREHOLDER. 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.
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(Continued from other side)
Dated , 1998
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(Signature of Shareholder) (Signature of Shareholder)
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.
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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.
Allen, 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 22, 1998 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 20, 1998, 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.
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BRUNSWICK CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
[ ]
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For All
1. Election of Directors - For Withheld Except Vote Withheld for the Nominee(s) Written Below
Nominees: N.D. Archibald, J.L. Bleustein, / / / / / / ________________________________________________________
B. Martin Musham and K. Roman.
2. Ratification of Auditors. For Against Abstain 3. In their discretion on such other business as
/ / / / / / may properly come before the meeting.
Dated: ___________________________, 1998
__________________________________________.
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.
A vote FOR items 1 and 2 is recommended by the Board of Directors
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[FOLD AND DETACH HERE]
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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