<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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(4) Date filed:
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<PAGE> 2
Brunswick Corporation
March 22, 1999
Dear Brunswick Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Brunswick
Shareholders to be held on Wednesday, April 21, 1999, at 2:00 p.m. at
Brunswick's corporate offices, 1 N. Field Ct., Lake Forest, Illinois.
Brunswick's 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 corporate offices, 1 N. Field Ct., Lake Forest, Illinois, on
Wednesday, April 21, 1999, at 2:00 p.m. for the following purposes:
(1) To elect directors,
(2) To approve an amendment to the 1991 Stock Plan increasing the
number of shares authorized for issuance under the Plan,
(3) To ratify the appointment of Arthur Andersen LLP as auditors,
and
(4) To consider such other business as may properly come before the
meeting.
Brunswick shareholders of record at the close of business on February 25,
1999, 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 22, 1999
<PAGE> 4
Brunswick Corporation Logo
PROXY STATEMENT
The Board of Directors of Brunswick Corporation is soliciting proxies from
its shareholders for the annual meeting of shareholders to be held on April 21,
1999. This proxy statement is first being mailed to shareholders on or about
March 22, 1999. Any shareholder submitting a proxy may revoke it at any time
before it is voted. If a shareholder is participating in Brunswick'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 Brunswick's 92,054,541 shares of Common Stock outstanding
as of the close of business on February 25, 1999, 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 non-votes"), those shares will be
counted for quorum purposes. The broker non-votes 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
Brunswick'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. Four directors are
to be elected at the meeting. The Board of Directors has nominated Peter Harf,
Peter N. Larson, Jay W. Lorsch and Bettye Martin Musham for election as
directors to serve for terms expiring at the 2002 annual meeting or until their
respective successors shall have been elected and qualified.
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
Brunswick, 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 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
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<PAGE> 5
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 2002 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 52
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 and the Board of Directors; director of Compaq Computer
Corporation, Coty Inc. and CIGNA Corporation; Chairman of the Listed Stock
Advisory Committee of the New York Stock Exchange; age 59
JAY W. LORSCH Director since 1983
Louis E. Kirstein Professor of Human Relations since 1978, Chairman of Doctoral
Programs since 1995, and Senior Associate Dean and Chairman of Executive
Education Programs, 1990-1995, Harvard University Graduate School of Business
Administration; age 66
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., Gear
Holdings, Inc. and Wallace Computer Co.; age 66
DIRECTORS CONTINUING IN OFFICE UNTIL 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; age
55
JEFFREY L. BLEUSTEIN Director since 1997
Chairman of the Board of Harley-Davidson, Inc., a motorcycle manufacturer, since
1998; President and Chief Executive Officer of Harley-Davidson, Inc., 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; age 59
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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 global advertising and communications
company, 1988-1989 (and of Ogilvy and Mather Worldwide, 1985-1989); director of
Compaq Computer Corporation and PennCorp Financial Group, Inc.; age 68
ROBERT L. RYAN Director since 1998
Senior Vice President and Chief Financial Officer of Medtronic, Inc., a medical
technology company, since 1993; director of Dain Rauscher Corporation and United
Healthcare Corporation; age 55
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 60
MANUEL A. FERNANDEZ Director since 1997
Chairman of Gartner Group, Inc., an information technology company, since 1995;
Chairman and Chief Executive Officer of Gartner Group, Inc., 1995-1998; and
President and Chief Executive Officer of Gartner Group, Inc., 1991-1997; age 52
REBECCA P. MARK Director since 1997
Vice Chairman of Enron Corp., a global integrated natural gas company, since
1998; Chairman and Chief Executive Officer of Azurix, an Enron Corp. global
water company, since 1998; Chairman and Chief Executive Officer of Enron
International, the emerging markets arm of Enron Corp., 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
44
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 62
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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
Resource and Compensation and Corporate Governance Committees are composed
solely of independent directors.
Members of the Executive Committee are Messrs. Larson (Chairman), Callahan,
Fernandez, Lorsch and Schipke.
Members of the Audit and Finance Committee are Messrs. Callahan (Chairman),
Bleustein, Roman and Ryan.
Members of the Human Resource and Compensation Committee are Messrs.
Schipke (Chairman), Archibald and Lorsch.
Members of the Corporate Governance Committee are Messrs. Fernandez
(Chairman) and Harf, Ms. Mark and Ms. Martin Musham.
The Audit and Finance Committee met five times during 1998. The Committee
recommends to the Board the annual selection of independent public accountants;
assesses the independence of the independent public accountants; and reviews the
scope and results of the audits conducted by the independent public accountants
and internal auditors. The Committee consults with the independent public
accountants, internal auditors and management regarding the adequacy of the
Company's accounting and financial controls and reviews the Company's accounting
and financial reporting practices. The Committee meets with the independent
public accountants and internal auditors without members of management present.
The Committee reports to the Board concerning the preceding matters.
The Human Resource and Compensation Committee met five times during 1998.
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 Brunswick.
The Corporate Governance Committee met five times during 1998. The
Corporate Governance Committee recommends to the Board of Directors nominees for
directors of Brunswick 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. 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
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<PAGE> 8
for submission to the Board of Directors. Shareholders wishing to recommend
nominees should send such recommendations to the Secretary of Brunswick.
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 Brunswick 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 Brunswick 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 eight times during 1998. All directors attended
75 percent or more of all board meetings and meetings of committees of which
they are members during 1998, except for Ms. Mark and Mr. Ryan.
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 Chairpersons 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 Brunswick, 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, and receipt of
this Common Stock is deferred until after retirement from the Board.
Non-employee directors at the time of the 1998 annual meeting of
shareholders of Brunswick received options to purchase 3,000 shares of Common
Stock each at a price of $32.5625 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
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elected after six months following the most recent annual meeting of
shareholders. The exercise price of these options is 100 percent 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. In addition, the options become exercisable upon a change in
control of Brunswick. The options may be exercised at any time after becoming
exercisable until the tenth anniversary of the date of the award.
Directors may purchase engines, boats, fitness equipment and billiards
tables from Brunswick at Brunswick's dealers' net cost. Each director also may
use one Brunswick boat for up to two years. In addition, directors may receive
up to $1,500 of Brunswick products annually. The value of the products is
included in the directors' taxable income, and Brunswick reimburses the
directors for any taxes due.
SHAREHOLDERS
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 1, 1999 Class
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Nolan D. Archibald 23,502(1) *
Jeffrey L. Bleustein 10,002(1) *
Michael J. Callahan 42,488(1) *
Manuel A. Fernandez 6,503(1) *
Peter Harf 35,817(1) *
Peter N. Larson 1,139,011(2) 1.2%
Jay W. Lorsch 34,099(1) *
Rebecca P. Mark 5,965(1) *
Bettye Martin Musham 23,844(1) *
Kenneth Roman 32,202(1) *
Robert L. Ryan 1,782(1) *
Roger W. Schipke 30,530(1) *
George W. Buckley 27,400(2) *
William J. Barrington 158,898(2) *
Peter B. Hamilton 177,515(2) *
Dudley E. Lyons 18,764(2) *
All directors and executive officers as a group 2,270,520(1)(2) 2.4%
</TABLE>
* Less than 1 percent
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(1) Includes the following shares of Common Stock issuable to the directors,
receipt of which has been deferred: Messrs. Archibald 4,503 shares,
Bleustein 3,503 shares, Callahan 15,848 shares, Fernandez 5,004 shares,
Harf 6,818 shares, Lorsch 18,846 shares, Roman 5,025 shares, Ryan 1,782
shares and Schipke 16,431 shares, Ms. Mark 4,465 shares, Ms. Martin Musham
7,582 shares and all directors as a group 89,812 shares. Also includes the
following shares of Common Stock issuable pursuant to currently exercisable
stock options: 4,000 shares for each of Messrs. Archibald, Harf and Roman;
9,600 shares for each of Messrs. Callahan, Lorsch and Schipke and Ms.
Martin Musham; and 1,500 shares for each of Messrs. Bleustein and Fernandez
and Ms. Mark.
(2) Includes 420,249 shares for Mr. Larson, receipt of which has been deferred
and of which 50,000 shares were restricted, and includes the following
shares of restricted stock: Mr. Barrington 5,000 shares, and all directors
and executive officers as a group 66,700 shares. Also includes the
following shares of Common Stock issuable pursuant to currently exercisable
stock options: Messrs. Larson 716,255 shares, Buckley 15,000 shares,
Barrington 117,400 shares, Hamilton 133,000 shares, Lyons 12,000 shares and
all directors and executive officers as a group 1,402,535 shares.
The only shareholder known to Brunswick to own beneficially more than 5
percent of the outstanding Common Stock of Brunswick is:
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Name and Address of Owned as of of
Beneficial Owner December 31, 1998 Class
----------------------------------------------------------------------------------------------
<S> <C> <C>
Harris Associates, Inc. 7,760,600(1) 8.4%
Two North LaSalle Street
Chicago, IL 60602
</TABLE>
(1) Harris Associates LP is also considered the beneficial owner of all of
these shares. Harris Associates Investment Trust, series designated The
Oakmark Fund, owns 7,280,000 of these shares and has shared voting power
and shared dispositive power for such shares. Harris Associates, Inc. and
Harris Associates LP have shared voting power for all of these shares, sole
dispositive power for 479,800 of these shares and shared dispositive power
for 7,280,800 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
and is responsible for overseeing all compensation plans in which the Chairman
and Chief Executive Officer and the Senior Executives of Brunswick participate.
For 1998, "Senior Executives" include all Group Presidents and all Senior
Corporate Executives in Brunswick.
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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 system 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 employees and to
encourage an ownership commitment through Stock Ownership Guidelines facilitated
by our incentive compensation programs. 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 Brunswick'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 manufactured consumer products and related services.
During 1998, Brunswick's executive compensation plans included competitive
base salaries plus incentives for short-term, mid-term and long-term
performance. Our mix of base and incentive pay plans has been designed to place
a substantial amount of compensation at risk, more than the average corporation
in our compensation survey. The size of the individual awards in the plans
increases 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 Brunswick. In its administration of the plans the Committee
has in the past, and may in the future, use judgment and discretion.
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; it was completed most recently in September 1998. 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.
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<PAGE> 12
THE BRUNSWICK PERFORMANCE PLAN is an annual bonus plan that in 1998
provided opportunities for bonuses to be earned by Senior Executives and other
management employees of Brunswick. 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 1998, 40 percent of the
bonus for Group executives was based on their operating margin percentage, 40
percent was based on working capital turnover targets and the remaining 20
percent was based on clearly established organizational development objectives
central to the continued strength of their business. For corporate executives,
80 percent of the bonus was based on the earnings per share goal and 20 percent
on specific organizational development objectives. Awards under this Plan for
Senior Executives can reach up to 125 percent of their base salaries in effect
at the beginning of the Plan year. Bonuses earned by Senior Executives under the
Plan for 1998 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 percent in Brunswick
stock and 50 percent in cash if they 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 Brunswick's strategic plans by
defining the contribution necessary from each business unit to achieve
Brunswick's overall plan. The performance period for the Strategic Incentive
Plan beginning January 1, 1997, was two years. The goals for the 1997 to 1998
performance period were specified financial targets; 50 percent for division
contribution and 50 percent for operating margin percentage for the business
units and earnings per share for corporate participants. Bonuses for Senior
Executives under the Plan were based upon a combination of business unit
performance and overall Brunswick performance. For this cycle, Senior Executives
may earn up to 100 percent of base salary or up to 75 percent of base salary in
effect at the beginning of the performance period depending upon their position.
From 75 percent to 100 percent of the maximum awards were denominated in stock
units at the beginning of the performance period using the January 2, 1997,
closing price of Brunswick's Common Stock. The payout value of these units was
based upon the closing stock price on December 31, 1998. 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
payments may be deferred.
THE 1991 STOCK PLAN, Brunswick's long-term incentive plan, provides the
opportunity to grant stock options. Brunswick believes 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 Brunswick that Senior
Executives who own significant amounts of Brunswick 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.
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<PAGE> 13
Brunswick has a formal policy regarding Stock Ownership Guidelines. Under
the Guidelines as approved by the Committee, Senior Executives of Brunswick are
expected to own specific minimum amounts of Brunswick stock, calculated as a
multiple of their base salaries, and ranging from five times annual salary for
the Chairman and Chief Executive Officer to one to three 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 1998, the Committee approved the annual award of options. The
exercise price was set at 100 percent of the fair market value on the date of
grant. The awards were approximately the same numbers of options granted in July
1997. These values were up to 100 percent of the base salary of the Senior
Executives. Options will 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 previous option grant was taken into
consideration when determining the amount and number of the 1998 option grants.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In April 1998, a three-year contract extension of Mr. Larson's Employment
Agreement was completed. As part of this agreement, Mr. Larson was awarded
50,000 stock units, which will be deferred until his termination of employment
at which time he will be paid in shares of Brunswick stock, and he will be
awarded 50,000 additional stock units in 1999, 2000 and 2001, which will also be
deferred until his termination of employment. 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
reviews Mr. Larson's performance, with the interim review focusing primarily on
non-financial factors that are believed to be essential for his successful
leadership of Brunswick. On October 21, 1998, the Board increased Mr. Larson's
base salary to $900,000 effective December 1, 1998. His base salary had been
unchanged since April 1995.
Mr. Larson participates in an annual bonus plan that provides for a maximum
of 200 percent of his annual salary based upon the achievement of specific
financial and leadership goals established by the Board. Mr. Larson's goals for
1998 included achievement of specified earnings per share and net sales targets.
After considering the extent of Mr. Larson's accomplishments of his assigned
goals, the Committee recommended, and the Board of Directors approved, a bonus
of $672,800 for 1998, 42.05 percent of his maximum award, 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 percent of base salary per year in each cycle depending on
the achievement of performance goals which have been approved by the Board. One
hundred percent of the award is denominated in stock units at the beginning of
the performance period using the closing price of Brunswick's Common Stock on
the first day of the performance period. The payout value of
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<PAGE> 14
these units was based upon the closing stock price on December 31, 1998. Mr.
Larson's goals for this cycle related to acquisition strategy, talent
enhancement and strengthening of the relationship with the investment community.
In recognition of the extent of Mr. Larson's achievement of these strategic
goals, the Committee recommended and the Board approved an award to Mr. Larson
of $1,110,483, 66.25 percent of his maximum award, which he has deferred.
In July 1998, at the time the other Senior Executives were awarded options,
Mr. Larson was awarded options to purchase 150,000 shares of Brunswick'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
Brunswick has reviewed its executive compensation plans in response to the
Omnibus Budget Reconciliation Act of 1993 (the "Act"), which established a $1
million 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 Brunswick 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 Brunswick, under the terms of an 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
J. W. Lorsch
11
<PAGE> 15
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
BRUNSWICK, S&P 500 INDEX AND PEER GROUP
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
BRUNSWICK 100.0 107.4 139.7 142.6 183.4 152.5
S&P 500 INDEX 100.0 101.3 139.4 171.6 228.7 294.4
PEER GROUP 100.0 122.9 120.0 125.3 133.8 122.4
</TABLE>
The basis of comparison is a $100 investment at December 31, 1993 in each of
Brunswick, the S&P 500 Index and 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.)
weighted by the beginning of the year market value of each company. All
dividends are reinvested.
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 compensated 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(3) sation(4) Award(5) Options(#) Payouts sation(6)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter N. Larson/Chairman 1998 $808,493 $2,397,800 $221,379 $ 0 150,000 $1,110,483 $229,287
and Chief Executive Officer 1997 800,000 843,200 63,036 0 200,000 1,949,742 229,716
1996 800,000 1,387,063 115,197 790,400 162,255 0 3,223
- --------------------------------------------------------------------------------------------------------------------------
George W. Buckley/Senior 1998 $403,397 $ 628,800 $ 14,959 $ 0 35,000 $ 356,190 $ 33,706
Vice President and President- 1997 186,301 185,600 133,114 0 50,000 100,000 471,875
Mercury Marine Group(1)
- --------------------------------------------------------------------------------------------------------------------------
William J. Barrington/Vice 1998 $387,973 $ 431,200 $ 17,628 $ 0 30,000 $ 342,833 $ 76,925
President and President- Sea 1997 385,000 331,639 0 0 30,000 665,769 74,569
Ray Group 1996 362,055 360,000 0 0 88,000 210,600 71,970
- --------------------------------------------------------------------------------------------------------------------------
Peter B. Hamilton/Executive 1998 $403,397 $ 391,200 $ 15,861 $ 0 30,000 $ 209,534 $ 81,448
Vice President, Chief 1997 400,000 374,080 479 0 30,000 587,531 84,224
Financial Officer and 1996 354,110 350,000 11,085 0 90,000 0 43,410
Chairman- Indoor Recreation
- --------------------------------------------------------------------------------------------------------------------------
Dudley E. Lyons/Senior Vice 1998 $353,397 $ 263,600 $ 0 $ 0 25,000 $ 135,946 $ 34,786
President-Strategic Business 1997 140,959 170,000 26,946 0 40,000 100,000 159,375
Development and Chairman-
US Marine(2)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Buckley joined Brunswick as Vice President and President -- Mercury
Marine Group in August 1997.
(2) Mr. Lyons joined Brunswick as Vice President -- Strategic Business
Development in August 1997.
(3) The annual bonus amount for Mr. Larson includes $1,725,000 representing the
value of 50,000 Common Stock units awarded on April 1, 1998. Receipt of the
Common Stock represented by these units has been deferred until his
termination of employment.
(4) Includes $79,746 for Mr. Larson in 1996 and $26,940 for Mr. Buckley in 1997
for use of Brunswick's aircraft for authorized non-corporate purposes, and
for Mr. Buckley in 1997 amounts reimbursed for payment of taxes and $35,898
for relocation allowances which were in addition to amounts generally paid.
(5) The amount shown in this column is the value of the restricted shares as of
the date of grant. As of December 31, 1998, Mr. Barrington held 9,000
restricted shares with a value of $222,750. Mr. Larson was awarded 29,411
shares in February 1997 based on Brunswick'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.
(6) All Other Compensation for 1998 for the named officers is comprised of the
following: (i) Company contributions to the Brunswick Retirement Savings
Plan for Messrs. Larson $2,200, Buckley $2,200, Barrington $1,694, Hamilton
$2,200 and Lyons $2,200; (ii) Company
13
<PAGE> 17
contributions to the Brunswick Employee Stock Ownership Plan for Messrs.
Larson $334, Buckley $393, Barrington $373, Hamilton $334 and Lyons $334;
(iii) Company contributions for the Sea Ray Employees' Stock Ownership and
Profit Sharing Plan and Supplemental Profit Sharing Plan for Mr. Barrington
of $58,715 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 $226,753,
Buckley $31,113, Barrington $16,143, Hamilton $78,914 and Lyons $32,252.
OPTION GRANTS IN 1998
<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 1998(4) Price Date 0% 5% 10%
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Peter N. Larson(2)............. 150,000 11.81% $19.9375 07/28/08 0 $1,880,788 $4,766,286
George W. Buckley(3)........... 35,000 2.75% $19.9375 07/28/08 0 $438,851 $1,112,133
William J. Barrington(3)....... 30,000 2.36% $19.9375 07/28/08 0 $376,158 $953,257
Peter B. Hamilton(3)........... 30,000 2.36% $19.9375 07/28/08 0 $376,158 $953,257
Dudley E. Lyons(3)............. 25,000 1.97% $19.9375 07/28/08 0 $313,465 $794,381
All Optionees(5)............... 1,270,550 100% $20.0975 Various 0 $16,058,773 $40,696,020
All Shareholders(6)............ N/A N/A N/A N/A 0 $1,163,510,936 $2,948,565,152
Optionee's Gain as % of All
Shareholders' Gains.......... N/A N/A N/A N/A 0 1.38% 1.38%
</TABLE>
(1) Non-qualified stock options awarded during 1998 were granted at 100 percent
of the closing market value on the date of grant with a 10-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) Thirty percent of the options vest on the earliest of (i) the first
anniversary of the grant date, (ii) when Brunswick's stock price attains
$35.00 per share or (iii) when annual net earnings exceed $2.70 per share;
30 percent vest on the earliest of (i) the second anniversary of the grant
date, (ii) when Brunswick's stock price attains $40.00 per share or (iii)
when annual net earnings of Brunswick exceed $3.00 per share; and 40
percent vest on the earliest of (i) the third anniversary of the grant
date, (ii) when Brunswick's stock price attains $45.00 per share or (iii)
when annual net earnings of Brunswick exceed $3.30 per share. Options vest
earlier if there is a change in control of Brunswick.
(3) Thirty percent of the options vest when Brunswick's stock price attains
$35.00 per share or when annual net earnings of Brunswick exceed $2.70 per
share; 30 percent vest when Brunswick's stock price attains $40.00 per
share or when annual net earnings of Brunswick exceed $3.00 per share; and
40 percent vest when Brunswick's stock price attains $45.00
14
<PAGE> 18
per share or when annual net earnings of Brunswick 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 Brunswick.
(4) Based on 1,270,550 options granted to 464 employees during 1998.
(5) No gain to the optionees is possible without an increase in stock price,
which will benefit all stockholders commensurately. No appreciation in the
stock price results in no payout for the optionee.
(6) The potential realizable values for all shareholders were calculated using
the weighted average exercise price of option shares awarded during 1998
and the total outstanding shares of Common Stock on December 31, 1998. At 5
percent and 10 percent annual appreciation the value of the Common Stock
would be approximately $32.74 per share and $52.13 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 12/31/98 Options Held at 12/31/98(1)
Acquired on --------------------------- ------------------------------
Executive Exercise Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Peter N. Larson 0 687,353 324,902 $2,716,360 $991,115
George W. Buckley 0 15,000 70,000 $ 0 $168,438
William J. Barrington 0 98,200 86,200 $ 479,700 $272,775
Peter B. Hamilton 0 113,000 87,000 $ 338,000 $273,875
Dudley E. Lyons 0 12,000 53,000 $ 0 $120,313
</TABLE>
(1) Represents the difference between the option exercise price and the fair
market value of Brunswick's Common Stock on December 31, 1998.
LONG-TERM INCENTIVE PLAN -- AWARDS DURING 1998
<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(#) Target(#) Maximum(#)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Peter N. Larson 53,333 01/02/98 - 12/31/99 13,334 40,000 53,333
George W. Buckley 16,668 01/02/98 - 12/31/99 6,667 13,334 16,668
William J.
Barrington 16,043 01/02/98 - 12/31/99 6,417 12,834 16,043
Peter B. Hamilton 16,668 01/02/98 - 12/31/99 6,667 13,334 16,668
Dudley E. Lyons C 12,989 01/02/98 - 12/31/99 5,196 10,391 12,989
D $20,508 $ 8,203 $16,406 $20,508
</TABLE>
(1) These are awards under Brunswick's Strategic Incentive Plan. The value and
the number of stock units were determined as a percentage of the executive
officer's salary on
15
<PAGE> 19
January 2, 1998, based on the price of Brunswick's Common Stock at that
time. The number of the 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 aggregate division contribution
and earnings per share for the other executive officers. Mr. Lyons also
received a cash award under the plan which is contingent on achieving the
same targets. 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 the payout.
PENSION PLANS
The following table shows the maximum retirement income which may be
payable as a straight life annuity pursuant to Brunswick'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
1,000,000 330,000 440,000 550,000 660,000
1,600,000 528,000 704,000 880,000 1,056,000
2,200,000 726,000 968,000 1,210,000 1,452,000
</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 1998 earnings used to
calculate Mr. Larson's benefits under the salaried pension plans are $1,643,220,
which include his 1998 salary and the bonus paid in 1998 for 1997 performance.
The 1998 award of 50,000 stock units valued at $1,725,000 is not included in
calculating his pension.
The years of service of the officers named in the summary compensation
table are: Messrs. Larson 19 years, Buckley 1 year, Hamilton 15 years and Lyons
1 year. Mr. Barrington does not participate in any salaried pension plan. Mr.
Larson's 19 years include 15 years when he was employed by Johnson & Johnson
since his employment agreement provides that Brunswick will pay him a pension as
if he had been employed by Brunswick for these 15 years, reduced by the pension
he receives from Johnson & Johnson and reduced by his Social Security benefit.
Brunswick has agreed to award Mr. Buckley 5 additional years of service after he
has been employed by Brunswick for 3 years. Mr. Hamilton's 15 years include 12.5
years when he was employed by Cummins Engine Company, Inc., since Brunswick has
agreed to provide Mr. Hamilton with a pension from Brunswick as if he had been
employed by Brunswick for these 12.5 years, reduced by the pension he receives
from Cummins Engine Company, Inc.
16
<PAGE> 20
If there is a change in control of Brunswick on or before March 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
Brunswick, 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 Brunswick, the participant's pension
would not be reduced as a result of early retirement. A change in control of
Brunswick is the same as the definition in Mr. Larson's employment agreement,
which is described on page 19, except that prior to the occurrence of a
transaction the Brunswick Board of Directors may decide that the transaction
does not constitute a change in control for purposes of the pension plan.
EMPLOYMENT AGREEMENTS
Brunswick has an employment agreement with Mr. Larson which provides for
his employment through April 1, 2002, at an annual salary of $900,000 per year
commencing December 1, 1998. The agreement will be extended for successive
additional one-year terms unless Brunswick 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 percent of salary based on
the accomplishment of specified goals, which will be paid one-half in cash and
one-half in Common Stock of Brunswick. Mr. Larson may elect to have the entire
bonus paid in cash if he has satisfied Brunswick's stock ownership guidelines.
The agreement provides that he will participate in Brunswick's Strategic
Incentive Plan and that his maximum award under the Strategic Incentive Plan
will be 100 percent of his base salary for each year of the two-year performance
period. Awards under this plan are denominated in stock units based on the
market value of Brunswick'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 Brunswick'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. In 1996, Mr. Larson was granted an option to
purchase 90,000 shares of Brunswick Common Stock, which was in addition to the
normal annual award provided under the agreement and in lieu of the award for
2002. The agreement also provides that with some exceptions Mr. Larson shall
participate in all benefit plans offered to Brunswick'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, or for three
years if following a change of control of Brunswick (as defined below). 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 Brunswick.
17
<PAGE> 21
The agreement provides that Mr. Larson was awarded 50,000 Common Stock
units on April 1, 1998, and that Mr. Larson is to be awarded 50,000 Common Stock
units on the first business day of 1999, 2000 and 2001, which will vest on
December 31 of each such year. Mr. Larson has deferred receipt of the Common
Stock represented by these units until he terminates employment.
Mr. Larson has agreed to defer receipt of cash or Common Stock compensation
under his agreement to the extent the current payment of the cash or Common
Stock would result in the payment not being deductible by Brunswick 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 percent per annum for amounts which are
deferred by reason of the $1 million deduction limitation) or, if greater, at
Brunswick'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.
The agreement provides that Mr. Larson will receive a pension from
Brunswick as if he had been employed by Brunswick 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 Brunswick's supplemental pension plan in a
lump sum.
If, other than following a change in control of Brunswick, Mr. Larson's
employment is terminated before completion of the term of his agreement for any
reason other than death, incapacity or cause, or 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, or breach by Brunswick 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 awards for the two
year period following termination based on performance to date extrapolated
through the termination date. Stock options granted to Mr. Larson prior to
January 1, 1998, become exercisable on termination of employment to the extent
they were not already exercisable. If Mr. Larson's employment continues through
April 1, 1999, stock options granted to Mr. Larson prior to January 1, 1999,
shall become exercisable on termination of employment. If his employment
continues through April 1, 2002, all additional stock options shall become
exercisable on termination of employment. In addition, on termination of Mr.
Larson's employment non-performance restrictions on stock options shall lapse,
performance restrictions on
18
<PAGE> 22
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 Brunswick 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.
If Mr. Larson resigns during the 60 days following a change in control of
Brunswick, or if during the term of the agreement Mr. Larson's employment is
terminated following a change in control for any reason other than for death,
incapacity or cause, or if during the term of the agreement following a change
in control Mr. Larson resigns following a significant change in the nature or
scope of his duties, a reduction in compensation, a reasonable determination by
Mr. Larson that, as a result of change in the circumstances regarding his
duties, he is unable to exercise his authorities or duties, then Mr. Larson
shall receive a lump sum payment equal to (i) his salary for three years and
(ii) a bonus of 200 percent of salary for each of the three years. He will also
receive incentive compensation, split dollar life insurance and other employee
benefits for the three years, except that he shall not receive these benefits
for periods after his 65th birthday. In addition, Brunswick 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 Brunswick's supplemental pension plan, and these
benefits shall be adjusted to add three years to his age and years of service
(or, if less than three years, the period from Mr. Larson's termination until
his 65th birthday) at his annual salary at the time of termination with an
annual bonus of 200 percent of his salary. He shall be fully vested in all stock
options and restricted stock awards, and stock options may be exercised until
the earlier of (i) their expiration or (ii) five years following his
termination. If Mr. Larson is required to pay any excise tax on payments from
Brunswick by reason of Section 4999 of the Internal Revenue Code of 1986,
Brunswick will reimburse him for such excise tax plus any other taxes owed as a
result of such reimbursement.
The definition of a change in control includes (i) the ownership of 30
percent or more of the outstanding voting stock of Brunswick by any person other
than an employee benefit plan of Brunswick, (ii) a tender offer which has not
been negotiated and approved by the Board of Directors of Brunswick for stock of
Brunswick if (a) the offeror owns or has accepted for payment 25 percent or more
of the outstanding voting stock of Brunswick or (b) the offer remains open three
days before its stated termination date and if the offeror could own 50 percent
or more of the outstanding voting stock of Brunswick as a result of the offer,
(iii) the failure of the Board of Directors' nominees to constitute a majority
of the Board of Directors of Brunswick following a contested election of
directors, (iv) a merger of Brunswick with another corporation unless
Brunswick's stockholders receive 75 percent of the voting stock outstanding
after the merger and except for a merger effected to implement a
recapitalization of Brunswick in which no person acquires more than 25 percent
of the Brunswick voting stock or (v) a complete liquidation or dissolution of
Brunswick or sale of substantially all of Brunswick's assets.
19
<PAGE> 23
Brunswick has an employment agreement with Mr. Lyons which provides for his
employment through August 4, 2000, at an annual salary of not less than $390,000
per year commencing December 1, 1998. The agreement provides for an annual bonus
of up to 100 percent of salary, which may be paid in cash and/or Brunswick
Common Stock.
The agreement provides that he will participate in Brunswick's Strategic
Incentive Plan and that his maximum award under the Strategic Incentive Plan
will be 100 percent of his annual salary at the beginning of the performance
period. Under this plan all of the awards are denominated in stock units based
on the market value of Brunswick Common Stock at the beginning of the
performance period. Under the plan Mr. Lyons 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 Brunswick's stock ownership guidelines.
The agreement provides that Mr. Lyons shall receive stock options having a
value based on the Black-Scholes valuation method of up to 50 percent of his
salary and that he will receive life insurance under Brunswick's split dollar
life insurance plan equal to 3.5 times his annual salary. The agreement also
provides that Mr. Lyons shall participate in all benefit plans offered to
Brunswick'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 Brunswick.
If Mr. Lyons' employment is terminated before completion of the term of his
agreement for any reason other than death, incapacity or cause, or if Mr. Lyons
resigns following a significant change in the nature or scope of his duties, a
reduction in his compensation, a reasonable determination by Mr. Lyons 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 Brunswick of the agreement, the
agreement provides that he shall receive a lump sum payment equal to (i) to 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 Brunswick
by Mr. Lyons during the term of the agreement and for one year thereafter and
requires confidentiality on the part of Mr. Lyons during and after the term of
the agreement.
Brunswick also has agreements with Messrs. Hamilton, Buckley, Barrington
and Lyons that provide that after a change in control of Brunswick 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, incentive compensation, employee benefits
and perquisites equivalent to those provided by Brunswick to executives with
comparable duties, but at least as great as those to which the executive was
entitled immediately prior to the
20
<PAGE> 24
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.
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 for any reason
during the 30 days after the first anniversary of the change in control, the
executive would be paid a lump sum payment equal to (i) his salary for three
years at the rate in effect as of the date of termination, and (ii) a bonus of
100 percent of salary for each of the three years. The executive will be
entitled to receive a lump sum payment for supplemental pension plan benefits,
stock options and other employee benefits for the three years. The executive
shall continue to participate in Brunswick's split dollar life insurance plan
until the executive's policy is released to the executive in accordance with the
plan's provisions and shall be fully vested in all stock options and restricted
stock awards. The executive will be able to exercise all stock options until the
earlier of (i) their expiration or (ii) two years following termination of
employment. 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 Brunswick'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 with his salary and bonus specified above. The
agreements prohibit competition with Brunswick 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
Brunswick by reason of Section 4999 of the Internal Revenue Code of 1986,
Brunswick will reimburse the executive for such excise tax plus any other taxes
owed as a result of such reimbursement. Payments to Mr. Lyons will be reduced by
the amount of any payment to him under his employment agreement described above
in the event of termination of employment.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
J. Roger Patterson, former Vice President-Marine Asset Management, filed
one late Form 4 to report a purchase of shares of Common Stock. Mr. Barrington
reported an award of Common Stock and the withholding of Common Stock for taxes
for the award late on Form 5.
21
<PAGE> 25
PROPOSAL TO APPROVE AN AMENDMENT TO THE 1991 STOCK PLAN
INCREASING THE NUMBER OF SHARES AUTHORIZED
FOR ISSUANCE UNDER THE PLAN
GENERAL
Shareholders approved Brunswick's 1991 Stock Plan (the "Plan") at the 1991
annual meeting of shareholders and approved amendments to the Plan at the 1996
annual meeting of shareholders. On February 9, 1999, the Board of Directors
approved an amendment to the Plan to increase the number of shares which may be
issued under the Plan by 5,000,000 shares, subject to shareholder approval. The
Board also amended the Plan to provide that henceforth no more than 2,000,000
shares of restricted stock may be issued under the Plan, that the exercise price
of outstanding options may not be adjusted other than for changes in
capitalization and similar changes, that the option price may not be less than
100 percent of the fair market value of the Common Stock as of the date of the
award, and that shares withheld for taxes will become available for additional
awards under the Plan.
The amended Plan provides for the issuance of a maximum of 16,200,000
shares of Common Stock of Brunswick from the Plan's inception in 1991 (subject
to adjustment as described below). The shares may be authorized but unissued
shares or treasury shares. Before the amendment on February 9, 1999, the Plan
provided for the issuance of 11,200,000 shares of Common Stock, of which
7,228,271 shares are subject to outstanding awards, 1,464,054 shares are
available for future grants and 2,507,675 shares have been issued for exercised
options and other awards. If the amended Plan is approved by shareholders,
6,464,054 shares will be available for future awards. No participant may receive
awards of stock options and stock appreciation rights with respect to more than
300,000 shares of Common Stock in any calendar year, and future awards of
restricted stock under the Plan may not exceed 2,000,000 shares.
Shares related to awards that expire unexercised or are forfeited,
terminated, surrendered, cancelled, withheld for taxes or settled in cash in
lieu of stock or in such manner that all or some of the shares covered by an
award are not issued to a participant shall immediately become available for
additional awards under the Plan.
The closing price of the Common Stock on March 15, 1999, as reported on the
New York Stock Exchange Composite Tape was $20 per share. In October 1997,
Brunswick adopted a systematic program to repurchase up to 5,000,000 shares for
its stock plans to mitigate the dilution resulting from these plans, and to date
Brunswick has repurchased 1,542,000 shares of Common Stock under this program.
In addition, in October 1998 Brunswick announced a program to repurchase up to
7,000,000 shares of Common Stock. Brunswick repurchased the 7,000,000 shares
during the last three months of 1998.
The Plan provides for the grant of incentive stock options, nonqualified
stock options, stock appreciation rights, restricted stock, and other
stock-based awards to management employees of Brunswick and its subsidiaries.
The purpose of the Plan is to promote the long-term financial
22
<PAGE> 26
interests and growth of Brunswick by (i) attracting and retaining management
personnel, (ii) motivating management personnel by means of growth-related
incentives, (iii) providing incentive compensation opportunities that are
competitive with those of other major corporations and (iv) further aligning the
interests of participants with those of the shareholders of Brunswick.
A copy of the Plan as proposed to be amended is set forth as Exhibit A to
this Proxy Statement. The following descriptions are qualified in their entirety
by reference to the full text of the amended Plan set forth as Exhibit A.
ELIGIBILITY AND PARTICIPATION
Participants in the Plan are selected by the Human Resource and
Compensation Committee of the Board of Directors (the "Committee") which
administers the Plan. The Plan contemplates that awards will be granted to
management employees and that participants will be such employees of Brunswick
and its subsidiaries, including officers of Brunswick, as from time to time are
designated by the Committee. Approximately 500 employees are eligible to receive
awards under the Plan. Directors of Brunswick are not eligible to participate
unless they are also employees.
ADMINISTRATION
Under the Plan and subject to the limitations thereunder, the Committee is
authorized: (i) to select participants in the Plan, (ii) to make awards in such
forms and amounts as it shall determine, (iii) to impose such limitations,
restrictions and conditions upon such awards as it shall deem appropriate, (iv)
to interpret the Plan and to adopt, amend and rescind administrative guidelines
and other rules and regulations relating to the Plan, (v) to correct any defect
or omission or to reconcile any inconsistency in the Plan or in any award
granted thereunder and (vi) to make all other determinations and to take all
other actions necessary or advisable for the implementation and administration
of the Plan.
AMENDMENT AND TERMINATION
The Board of Directors or the Committee may suspend or terminate the Plan
or any portion thereof at any time and may amend it from time to time in such
respects as the Board of Directors or the Committee may deem advisable,
provided, however, that no such amendment shall be made without shareholder
approval to the extent such approval is required by law, agreement or the rules
of any exchange upon which the Common Stock is listed. No such amendment,
suspension or termination shall impair the rights of participants under
outstanding awards without the consent of the participants affected thereby.
The Committee may amend or modify any award in any manner to the extent
that the Committee would have had the authority under the Plan to initially
grant such award, except that the Committee may not adjust the exercise price of
options other than for changes in
23
<PAGE> 27
capitalization and similar changes. No such amendment or modification shall
impair the rights of any participant under any award without the consent of such
participant.
CHANGES IN CAPITALIZATION AND SIMILAR CHANGES
In the event that each of the outstanding shares of Common Stock shall be
changed into or exchanged for a different number or kind of shares of stock or
securities of Brunswick or of another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, stock dividend, stock split,
combination of shares, or otherwise), then there shall be substituted for each
share of Common Stock then offered or available for offer under the Plan the
number and kind of shares of stock into which such outstanding shares of the
Common Stock of Brunswick shall be so changed or for which such shares shall be
so exchanged. The Committee may make any necessary equitable adjustments. In the
event of a spin-off, extraordinary dividend, or other distribution or similar
transaction, the Committee may adjust equitably the exercise price of any
outstanding options or the terms of any outstanding stock appreciation rights.
AWARDS
Under the Plan, an employee to whom an option is granted will have the
right to purchase the number of shares of Common Stock covered by the option,
subject to the terms and provisions of the Plan. The option price to be paid by
a participant is determined by the Committee and cannot be less than 100 percent
of the fair market value of the Common Stock on the date on which the option is
granted. The Committee may require options, other than incentive stock options,
to be purchased by participants for a purchase price determined by the
Committee.
Under the Plan, the exercise price of an option is payable in cash, by the
surrender of shares of Common Stock at the fair market value on the date on
which the option is exercised, or by any combination of cash and such shares.
Any option granted under the Plan will be exercisable for specified periods
determined by the Committee.
Under the Plan, in addition to stock options, participants may be awarded
stock appreciation rights and restricted stock, performance shares and other
forms of awards that the Committee in its discretion may determine are
consistent with the objectives and limitations of the Plan. Such awards may be
payable in Common Stock, cash or both, and shall be subject to such restrictions
and conditions as the Committee shall determine.
The amount and type of awards to be granted in the future to the named
officers, to all executive officers as a group and to all other employees are
not currently determinable.
FEDERAL INCOME TAX CONSIDERATIONS
The discussion which follows is a summary, based on current law, of some
significant federal income tax considerations relating to stock options awarded
under the Plan. A participant who is
24
<PAGE> 28
granted a stock option will not be subject to federal income tax at the time of
grant, and Brunswick will not be entitled to a tax deduction by reason of such
grant. Generally, upon exercise of a non-qualified option by an employee, the
difference between the option price and the fair market value of the Common
Stock will be considered ordinary income at the time of exercise. Upon exercise
of an incentive stock option (as defined in the Internal Revenue Code), although
no taxable income will be recognized by the participant and Brunswick is not
entitled to a tax deduction by reason of such exercise, the excess of the fair
market value on the date of exercise over the exercise price is treated by the
participant as an item of tax preference for alternative minimum tax purposes.
If shares purchased pursuant to the exercise of an incentive stock option are
sold within two years from the date of grant or within one year after the
transfer of such shares to the participant, then the difference, with certain
adjustments, between the fair market value of the shares at the date of exercise
and the option price will be considered ordinary income. Generally, Brunswick is
entitled to an income tax deduction for any compensation income taxed to the
participant.
Brunswick may withhold amounts from participants to satisfy withholding tax
requirements. Participants may have Common Stock withheld from awards, may
tender Common Stock back to Brunswick or may deliver previously acquired Common
Stock to satisfy withholding tax requirements.
VOTE REQUIRED TO AMEND THE 1991 STOCK PLAN
The affirmative vote of the majority of shares present in person or
represented by proxy and entitled to vote on the proposal is required to approve
the amendment of the 1991 Stock Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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 Brunswick and its subsidiaries for the year 1999. The Board of
Directors recommends the appointment of Arthur Andersen LLP as auditors for
Brunswick and its subsidiaries be ratified. If 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 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.
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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 that may be considered at the meeting.
The entire expense of proxy solicitation will be borne by Brunswick. In
addition to solicitation by mail, telephone, facsimile, telegraph and personal
contact by its officers and employees, Brunswick 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
Brunswick. For its services, Georgeson & Co. will be paid a fee of approximately
$9,900.
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 2000 annual meeting must be received by Brunswick at its offices
at 1 N. Field Ct., Lake Forest, Illinois 60045-4811, Attention: Secretary, no
later than November 23, 1999, and must otherwise meet the requirements of those
rules. The date after which a shareholder proposal submitted outside the
processes of Rule 14a-8 under the Securities Exchange Act of 1934 is considered
untimely for the 2000 annual meeting is February 6, 2000, calculated as provided
in Rule 14a-4(c)(1) under the Securities Exchange Act of 1934.
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 22, 1999
26
<PAGE> 30
EXHIBIT A
BRUNSWICK CORPORATION
1991 STOCK PLAN
(AS PROPOSED TO BE AMENDED)
1. Purpose. The purpose of the Brunswick Corporation 1991 Stock Plan (the
"Plan") is to promote the long term financial interests and growth of Brunswick
Corporation (the "Company") by (a) attracting and retaining management
personnel, (b) motivating management personnel by means of growth-related
incentives, (c) providing incentive compensation opportunities that are
competitive with those of other major corporations, and (d) furthering the
identity of interests of participants with those of the stockholders of the
Company.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" means any entity in which the Company has a direct or
indirect equity interest which is so designated by the Committee.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Committee" means the Human Resource and Compensation Committee of the
Board of Directors of the Company.
"Common Stock" means the Common Stock, par value $.75 per share, of the
Company or such other securities as may be substituted therefor pursuant to
paragraph 5(c).
The "fair market value" of the Common Stock shall be determined in
accordance with procedures established by the Committee.
"Participant" means any management employee of the Company or an
Affiliate selected by the Committee.
"Rule 16b-3" means such rule adopted under the Securities Exchange Act
of 1934, as amended, or any successor rule.
3. Limitation on Aggregate Shares. The number of shares of Common Stock
with respect to which awards may be granted under the Plan and which may be
issued upon the exercise or payment thereof shall not exceed, in the aggregate,
16,200,000 shares (of which no more than 2,000,000 shares may be awards of
restricted stock granted after February 9, 1999), except for adjustments
provided for in paragraph 5(c) of the Plan and provided, however, that shares
related to awards that expire unexercised or are forfeited, surrendered,
terminated, cancelled, withheld for taxes, or settled in cash in lieu of stock
or in such manner that all or some of the shares covered by an award are not
issued to a participant shall immediately become available for additional awards
under the Plan. Such 16,200,000 shares of Common Stock may be either
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<PAGE> 31
authorized and unissued shares, treasury shares, or a combination thereof, as
the Committee shall determine.
4. Awards. The Committee may grant to participants, in accordance with
this paragraph 4 and the other provisions of the Plan, stock options, stock
appreciation rights ("SARs"), restricted stock and other awards. The maximum
number of shares of Common Stock as to which a participant may receive stock
options and stock appreciation rights under the Plan in 1996 or in any
subsequent calendar year is 300,000 subject to the provisions of Section 5(c)
hereof.
(a) Options.
(i) Options granted under the Plan may be incentive stock options
("ISOs") within the meaning of Section 422 of the Code or any
successor provision, or in such other form, consistent with
the Plan, as the Committee may determine.
(ii) The option price per share of Common Stock shall be fixed by
the Committee at not less than 100% of the fair market value
of a share of Common Stock on the date of grant, provided that
in no event shall the option price be less than the par value.
(iii) The Committee may require options other than ISOs to be
purchased by participants for a purchase price determined by
the Committee.
(iv) Options shall be exercisable at such time or times as the
Committee shall determine at or subsequent to grant.
(v) Options shall be exercised in whole or in part by written
notice to the Company (to the attention of the Corporate
Secretary) and payment in full of the option price. Payment
of the option price may be made, at the discretion of the
optionee, and to the extent permitted by the Committee, (A)
in cash (including check, bank draft, or money order), (B) in
Common Stock (valued at the fair market value thereof on the
date of exercise), (C) by a combination of cash and Common
Stock or (D) with any other consideration (including payment
in accordance with a cashless exercise program under which,
if so instructed by the participant, shares of Common Stock
may be issued directly to the participant's broker or dealer
upon receipt of the option price in cash from the broker or
dealer).
(b) SARs.
(i) An SAR shall entitle its holder to receive from the Company,
at the time of exercise of such right, an amount equal to the
excess of the fair market value (at the date of exercise) of a
share of Common Stock over a specified price fixed by the
Committee multiplied by the number of shares as to which the
holder is exercising the SAR. SARs may be in tandem with any
previously or contemporaneously granted option or independent
of any option. The specified price of a tandem SAR shall be
the option price of the related option.
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The amount payable may be paid by the Company in Common Stock
(valued at its fair market value on the date of exercise),
cash or a combination thereof, as the Committee may
determine, which determination shall be made after
considering any preference expressed by the holder.
(ii) An SAR shall be exercised by written notice to the Company (to
the attention of the Corporate Secretary) at any time prior to
its stated expiration. To the extent a tandem SAR is
exercised, the related option will be cancelled and, to the
extent the related option is exercised, the tandem SAR will be
cancelled.
(c) Restricted Stock.
(i) The Committee may award to any participant shares of Common
Stock, subject to this paragraph 4(c) and such other terms and
conditions as the Committee may prescribe (such shares being
called "restricted stock"). Each certificate for restricted
stock shall be registered in the name of the participant and
deposited, together with a stock power endorsed in blank, with
the Company.
(ii) There shall be established for each restricted stock award a
restriction period (the "restriction period") of such length
as shall be determined by the Committee. Shares of restricted
stock may not be sold, assigned, transferred, pledged or
otherwise encumbered, except as hereinafter provided, during
the restriction period. Except for the restrictions on
transfer and such other restrictions as the Committee may
impose, the participant shall have all the rights of a holder
of Common Stock as to such restricted stock. At the expiration
of the restriction period, the Company shall redeliver to the
participant (or the participant's legal representative) the
certificates deposited pursuant to this paragraph.
(iii) Except as provided by the Committee at the time of grant or
otherwise, upon termination of employment for any reason
during the restriction period all shares still subject to
restriction shall be forfeited by the participant.
(d) Other Awards. Other awards, including, without limitation,
performance shares and other forms of awards measured in whole or in
part by the value of shares, the performance of the participant or
the performance of the Company, may be granted under the Plan. Such
awards may be payable in Common Stock, cash or both, and shall be
subject to such restrictions and conditions, as the Committee shall
determine. At the time of such an award, the Committee shall, if
applicable, determine a performance period and performance goals to
be achieved during the performance period, subject to such later
revisions as the Committee shall deem appropriate to reflect
significant unforeseen events. Following the conclusion of each
performance period, the Committee shall determine the extent to
which performance goals have been attained or the degree of
achievement between
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maximum and minimum levels during the performance period in order to
evaluate the level of payment to be made, if any.
5. Miscellaneous Provisions.
(a) Administration. The Plan shall be administered by the Committee.
Subject to the limitations of the Plan, the Committee shall have the
sole and complete authority: (i) to select participants in the Plan,
(ii) to make awards in such forms and amounts as it shall determine,
(iii) to impose such limitations, restrictions and conditions upon
such awards as it shall deem appropriate, (iv) to interpret the Plan
and to adopt, amend and rescind administrative guidelines and other
rules and regulations relating to the Plan, (v) to correct any
defect or omission or to reconcile any inconsistency in the Plan or
in any award granted hereunder and (vi) to make all other
determinations and to take all other actions necessary or advisable
for the implementation and administration of the Plan. The
Committee's determinations on matters within its authority shall be
conclusive and binding upon the Company and all other persons. All
expenses associated with the Plan shall be borne by the Company,
subject to such allocation to its Affiliates and operating units as
it deems appropriate. The Committee may, to the extent that such
action will not prevent the Plan from complying with Rule 16b-3,
delegate any of its authority hereunder to such persons as it deems
appropriate.
(b) Transferability. An award under the Plan may be transferred only (i)
by will or the laws of descent and distribution, (ii) in accordance
with guidelines established by the Committee, or (iii) pursuant to a
qualified domestic relations order as defined by the Code or Title I
of the Employee Retirement Income Security Act, or the rules
thereunder (but only if permitting such transfer will not affect the
status of the award under the Code). Any purported transfer contrary
to this provision will nullify the award.
(c) Changes in Capitalization and Similar Changes. In the event that
each of the outstanding shares of Common Stock shall be changed into
or exchanged for a different number or kind of shares of stock or
securities of the Company or of another corporation (whether by
reason of merger, consolidation, recapitalization, reclassification,
stock dividend, stock split, combination of shares, or otherwise),
then there shall be substituted for each share of Common Stock then
offered or available for offer under the Plan the number and kind of
shares of stock into which such outstanding shares of the Common
Stock of the Company shall be so changed or for which such shares
shall be so exchanged. The Committee in its sole discretion shall
make any equitable adjustments as may be necessary. No fraction of a
share of Common Stock shall be delivered if an adjustment in the
number of shares is necessary. In the event of a spin-off,
extraordinary dividend or other distribution or similar transaction,
the Committee may adjust equitably the exercise price of any
outstanding options or the terms of any outstanding SARs.
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(d) Tax Withholding. The Committee shall have the power to withhold, or
require a participant to remit to the Company, an amount sufficient
to satisfy any withholding or other tax due with respect to any
amount payable and/or shares issuable under the Plan, and the
Committee may defer such payment or issuance unless indemnified to
its satisfaction. A participant may elect to have shares of Common
Stock otherwise issuable under an award withheld, tender back to the
Company shares of Common Stock received pursuant to an award or
deliver to the Company previously acquired shares of Common Stock
having a fair market value sufficient to satisfy all or part of the
Company's withholding tax obligations for the participant associated
with the transaction. Such election must be made by a participant
prior to the date on which the tax obligation arises.
(e) Listing and Legal Compliance. The Committee may suspend the exercise
or payment of any award so long as it determines that securities
exchange listing or registration or qualification under any
securities laws is required in connection therewith and has not been
completed on terms acceptable to the Committee.
(f) Rights to Participants. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any
participant's employment at any time, nor confer upon any
participant any right to continue in the employ of the Company for
any period of time or to continue his or her present or any other
rate of compensation. No employee shall have a right to be selected
as a participant or, having been so selected, to be selected again
as a participant.
(g) Amendment, Suspension and Termination of Plan. The Board of
Directors or the Committee may suspend or terminate the Plan or any
portion thereof at any time and may amend it from time to time in
such respects as the Board of Directors or the Committee may deem
advisable; provided, however, that no such amendment shall be made
without stockholder approval to the extent such approval is required
by law, agreement or the rules of any exchange upon which the Common
Stock is listed. No such amendment, suspension or termination shall
impair the rights of participants affected thereby or make any
change that would disqualify the Plan, or any other plan of the
Company intended to be so qualified, from the exemption provided by
Rule 16b-3.
The Committee may amend or modify any award in any manner to the extent
that the Committee would have had the authority under the Plan to initially
grant such award, except that the Committee may not adjust the exercise
price of any options other than as provided in Section 5(c) hereof. No such
amendment or modification shall impair the rights of any participant under
any award without the consent of such participant.
6. Change in Control. "Change in Control" of the Company means the
occurrence of any of the following events:
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<PAGE> 35
(a) any Person other than a trustee or other fiduciary of securities
held under an employee benefit plan of the Company or any of its
subsidiaries, is or becomes a Beneficial Owner, directly or
indirectly, of stock of the Company representing 30% or more of the
total voting power of the Company's then outstanding stock and
securities, excluding any Person who becomes such a Beneficial Owner
in connection with a transaction described in Clause (A) of
paragraph (d), below;
(b) a tender offer (for which a filing has been made with the Securities
and Exchange Commission ("SEC") which purports to comply with the
requirements of Section 14(d) of the Securities Exchange Act of 1934
and the corresponding SEC rules) is made for the stock of the
Company, which has not been negotiated and approved by the Board of
Directors of the Company, then the first to occur of
(i) any time during the offer when the Person making the offer owns
or has accepted for payment stock of the Company with 25% or
more of the total voting power of the Company's stock, or
(ii) three business days before the offer is to terminate unless the
offer is withdrawn first if the Person making the offer could
own, by the terms of the offer plus any shares owned by this
Person, stock with 50% or more of the total voting power of the
Company's stock when the offer terminates;
(c) individuals who, as of September 1, 1998, constitute the Board of
Directors (the "Incumbent Board") of the Company, cease for any
reason to constitute a majority thereof; provided, however, that any
individual becoming a director whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at
least 75% of the directors then comprising the Incumbent Board shall
be considered as though such individual was a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board of Directors of the Company;
(d) there is consummated a merger or consolidation of the Company (or
any direct or indirect subsidiary of the Company) with any other
corporation, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent
thereof) at least 75% of the combined voting power of the stock and
securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation,
or (B) a merger or consolidation effected to implement a
recapitalization of the Company ( or similar transaction) in which
no Person is or becomes
A-6
<PAGE> 36
the Beneficial Owner, directly or indirectly, of stock and
securities of the Company representing more than 25% of the combined
voting power of the Company's then outstanding stock and securities;
or
(e) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets other than a sale or
disposition by the Company of all or substantially all of the assets
to an entity at least 75% of the combined voting power of the stock
and securities of which is owned by Persons in substantially the
same proportions as their ownership of the Company's voting stock
immediately prior to such sale.
"Person" shall mean any person (as defined in Section 3(a)(9) of the
Securities Exchange Act (the "Exchange Act"), as such term is
modified in Section 13(d) and 14(d) of the Exchange Act), other than
(1) any employee plan established by the Company, (2) the Company or
any of its affiliates (as defined in Rule 12b-2 promulgated under
the Exchange Act), (3) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (4) a corporation
owned, directly or indirectly, by stockholders of the Company in
substantially the same proportions as their ownership of the
Company. "Beneficial Owner" shall mean beneficial owner as defined
in Rule 13d-3 under the Exchange Act.
The Committee may provide in any award that in the event of a Change in
Control, the participant may (a) exercise any outstanding Options or SARs which
would not then be exercisable by the participant absent the Change in Control;
(b) require the Company to release all restrictions on shares of restricted
stock awarded to the participant; and (c) require the Company to pay the
participant the fair value (prorated to the date of the Change in Control) of
any other awards under the Plan then held by the participant.
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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 that
the undersigned may be entitled to vote at the Annual Meeting of
Shareholders to be held on April 21, 1999, or any adjournment
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS [ ] FOR the following nominees: P. Harf, [ ] WITHHOLD AUTHORITY to vote for
P. N. Larson, J. W. Lorsch and B. all nominees or their alternates
Martin Musham (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.)
---------------------------------------------------------------------
<TABLE>
<S> <C>
2. Approval of Amendment to 1991 Stock Plan FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Ratification of Arthur Andersen LLP as auditors FOR [ ] AGAINST [ ] ABSTAIN [ ]
</TABLE>
4. 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, 2 AND 3.
PLEASE MARK, SIGN ON REVERSE SIDE, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Continued from other side)
Dated
- -------------------------------------------------------, 1999
<TABLE>
<S> <C>
--------------------------------- ---------------------------------
(Signature of Shareholder) (Signature of Shareholder)
</TABLE>
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> 38
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 21, 1999, 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, 2 AND
3. IF YOU DO NOT RETURN THIS FORM BY APRIL 19, 1999, 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> 39
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 Nominee(s) Written Below 3. Ratification of Arthur For Against Abstain
Nominees: P. Harf, P.N. Larson, / / / / / / Andersen LLP as / / / / / /
J.W. Lorsch and B. Martin Musham. ------------------------ Auditors.
2. Approval of Amendment to 1991 For Against Abstain 4. In their discretion on such other business
Stock Plan. / / / / / / as may properly come before the meeting.
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Signature
Dated:__________________________,1999
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, 2 AND 3 IS RECOMMENDED BY THE BOARD OF DIRECTORS.
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v FOLD AND DETACH HERE v
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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