<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
BUTLER MANUFACTURING COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
BUTLER MANUFACTURING COMPANY
BMA Tower - Penn Valley Park
(P.O. Box 419917)
Kansas City, Missouri 64l4l-0917
March 10, 1999
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
To the Stockholders:
The annual meeting of stockholders of Butler Manufacturing Company will be
held at Atkins Auditorium, Nelson-Atkins Museum of Art, 4525 Oak Street, Kansas
City, Missouri, on Tuesday, April 20, l999, beginning at 9:30 a.m., local time
for the following purposes:
l. To elect four directors each for a three year term expiring in 2002;
2. To transact such other business as may properly come before the
meeting.
Holders of Common Stock of record on the books of the Company at the close
of business on February 22, 1999, will be entitled to vote at the meeting or any
adjournment thereof. A list of stockholders of the Company as of the close of
business on February 22, 1999, will be available for inspection during business
hours from April 5, 1999 through the close of business on April 19, 1999 at the
Company's offices at BMA Tower, Kansas City, Missouri and will also be available
at the meeting.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, SIGN, DATE AND MAIL PROMPTLY IN THE
ENCLOSED ENVELOPE THE ACCOMPANYING PROXY SO THAT, IF YOU ARE UNABLE TO ATTEND
THE MEETING, YOUR SHARES MAY NEVERTHELESS BE VOTED.
By Order of the Board of Directors,
/s/ Robert H. West
ROBERT H. WEST
Chairman of the Board
/s/ Richard O. Ballentine
RICHARD O. BALLENTINE
Vice President, General Counsel and Secretary
...........................................................
PLEASE JOIN US!
Stockholders are invited to gather in Rozelle Court for
coffee, juice and pastries before the meeting. Company
directors, executives and other associates will be present
from 9:00 a.m.
...........................................................
<PAGE> 3
PROXY STATEMENT
This Proxy Statement is being furnished in connection with the solicitation
of proxies for use at the Company's 1999 annual meeting of stockholders on April
20, 1999, as set forth in the preceding Notice. It is expected that this Proxy
Statement and enclosed form of Proxy will be mailed to stockholders commencing
March 10, 1999. A returned Proxy will not be exercised if you attend the meeting
and choose to cast a ballot, or if you should otherwise give written notice of
revocation at any time before it is exercised.
Holders of common stock of record at the close of business on February 22,
1999, are entitled to vote at the meeting. As of February 22, 1999, there were
7,198,774 shares of common stock outstanding, each share being entitled to one
vote. As of February 22, no shares of Class A or Class 1 Preferred Stock were
issued.
Stockholders representing a majority of the common stock outstanding and
entitled to vote must be present or represented by proxy in order to constitute
a quorum to conduct business at the meeting. The only matter to be submitted to
the Stockholders at the meeting is the election of four directors. If any other
matters are properly brought before the meeting, the enclosed proxy permits the
stockholder to give discretionary authority to the persons named in the proxy to
vote the shares in their best judgment.
YOU ARE SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS TO SIGN, DATE AND
RETURN THE PROXY CARD IN THE ACCOMPANYING ENVELOPE, which is postage-paid if
mailed in the United States.
Abstentions and broker non-votes will be counted as present for purposes of
determining the existence of a quorum at the Annual Meeting. Abstentions will be
treated as shares present and entitled to vote for purposes of any matter
requiring the affirmative vote of a majority or other proportion of the shares
present and entitled to vote. With respect to any matter brought before the
Annual Meeting requiring the affirmative vote of a majority or other proportion
of the outstanding shares, an abstention or non-vote will have the same effect
as a vote against the matter being voted upon.
You may revoke your proxy at any time before it is actually voted at the
Annual Meeting by (i) delivering written notice of revocation to the Secretary
of the Company, (ii) submitting a subsequently dated proxy, or (iii) attending
the meeting and withdrawing the proxy. Each unrevoked proxy card properly
executed and received prior to the close of the voting will be voted as
indicated. Where specific instructions are not indicated, the proxy will be
voted FOR the election of all directors as nominated.
<PAGE> 4
ELECTION OF CLASS A DIRECTORS
NOMINEES.
The primary purpose for this year's annual meeting is the election of four
Class A Directors, each for terms of three years expiring at the Annual Meeting
of Stockholders for 2002. The terms of the other two classes of directors do not
expire until 2000 (Class B) and 2001 (Class C). Persons elected as directors
continue to hold office until their terms expire or until their successors are
elected and are qualified.
Each nominee has consented to be named and to serve if elected. All
nominees are current directors. If for any reason any should not be available or
able to serve, the proxies will exercise discretionary authority to vote for
substitutes proposed by the Board of Directors of the Company.
VOTING.
By checking the appropriate box on your proxy card you may (i) vote for all
of the director nominees as a group; (ii) withhold authority to vote for all
director nominees as a group; or (iii) vote for all director nominees as a group
except those nominees you identify in the line provided for that choice. The
four nominees for director who receive the highest number of votes cast will be
elected as directors.
CLASS A NOMINEES
(TERMS WILL EXPIRE 2002)
GARY M. CHRISTENSEN
President and Chief Executive Officer, Pella Corporation; Member
of the Board Organization and Compensation and Benefits
Committees.
Christensen, 55, has been a Director since 1999. He has been
President and Chief Executive Officer of Pella Corporation since
1996. Pella Corporation manufactures wood windows and doors. He
joined Pella in 1990 as Senior Vice President, Sales and
Marketing and was named President and Chief Operating Officer in
1994. From 1980 to 1990 he was a marketing executive for General
Electric and from 1971 to 1980 was with Trane Corporation. He is
a director of Brenton Banks, Inc., the Policy Advisory Board,
Harvard Joint Center for Housing Studies, and is Vice Chairman of
the Iowa Business Council.
2
<PAGE> 5
C. L. WILLIAM HAW
President and Chief Executive Officer of National Farms, Inc.
Member of the Audit, Board Organization and Executive Committees.
Haw, age 60, has been a Director since 1983. He has been
employed as the President and Chief Executive Officer of National
Farms, Inc., a diversified agricultural production company, since
1974. He is also an advisory director of Commerce Bank of Kansas
City, N.A.
JOHN J. HOLLAND
President and Chief Executive Officer; Member of the Executive
Committee.
Holland, age 48, became a Director in January, 1999. He
joined Butler in 1980, became Vice President-Controller in 1986,
Vice President-Finance in 1990, Executive Vice President in 1998
and President and Chief Executive Officer in 1999. Mr. Holland is
a director of Commerce Fund, a mutual fund; an advisory director
of Allendale Insurance Company; and a director of Saint Luke's
Hospital. He is a former chairman of Heart of America Family
Services.
DONALD H. PRATT
Vice Chairman; Member of the Executive Committee.
Pratt, age 61, has been a Director since 1979. He joined
Butler in 1965, became Executive Vice President in 1980,
President in 1986 and Vice Chairman in 1999. Mr. Pratt is also a
director of American Century Mutual Funds; a director of Atlas
Copco North America Inc. and is a trustee of the Midwest Research
Institute.
3
<PAGE> 6
CLASS B DIRECTORS
(TERMS EXPIRE 2000)
ROBERT J. REINTJES, SR.
President and Chief Executive Officer, Geo. P. Reintjes Co.,
Inc.; Chairman of the Audit Committee and Member of the
Compensation and Benefits and Executive Committees.
Reintjes, age 67, has been President and Chief Executive
Officer of Geo. P. Reintjes Co., Inc. of Kansas City, Missouri
for over 20 years. Geo. P. Reintjes Co., Inc. is a specialty
contracting firm which installs refractories and weld overlay in
basic industries. He is also a director of Midwest Grain
Products, Inc. and an advisory director of Commerce Bank of
Kansas City, N.A. and is a trustee of the Francis Families
Foundation, Midwest Research Institute, and Benedictine College.
He is a member of the Kansas City Crime Commission.
JUDITH A. ROGALA
President, Aramark Uniform Services, Aramark Corporation; Member
of the Audit and Compensation and Benefits Committees.
Rogala, age 57, has been a director since 1989. She has been
President, Aramark Uniform Services which rents and sells
industrial uniforms and image apparel, since 1997. From 1994 to
1997, she was Executive Vice President, Business Services
Division, Office Depot Inc., a distributor of office supplies.
From 1992 to 1994, she was the CEO and President of EQ-The
Environmental Quality Company. She is also a director of Red Roof
Inns, Inc. and a member of the Board of Advisors, DSC Logistics,
Inc. She is a member of the Economic Club of Chicago, the
Committee of 200 and of the Alumni Board, University of New
Mexico.
GARY L. TAPELLA
President and Chief Executive Officer, Rheem Manufacturing
Company; Member of the Audit and Board Organization Committees.
Tapella, age 55, has been a director since January, 1998. He
has been President and Chief Executive Officer of Rheem
Manufacturing Company since 1991. He has been with Rheem since
1968 serving in various domestic and international operations.
Rheem is a manufacturer of residential and commercial central air
conditioners, gas and electric furnaces and water heaters. He is
a director and past Chairman of the Gas Appliance Manufacturers
Association (GAMA), a director and First Vice Chairman of the Air
Conditioning and Refrigeration Institutes' (ARI) International
Committee and a member of the Electrical Manufacturers
Association.
4
<PAGE> 7
CLASS C DIRECTORS
(TERMS EXPIRE 2001)
ALAN M. HALLENE
Retired. Former President, Montgomery Elevator International;
Member of the Audit and Board Organization Committees.
Hallene, age 70, has been a Director since 1979. He served as a
director of Montgomery Elevator Company from 1960 to 1994 and
President, Montgomery Elevator International from 1989 to his
retirement in November, 1994. Mr. Hallene is also a director of
Pella Corporation, John D. and Catherine T. MacArthur Foundation,
and University of Illinois Foundation. He is a trustee of the
Butterworth Memorial Trust.
ROBERT J. NOVELLO
Chairman, Copeland Corporation; Chairman of the Compensation and
Benefits Committee and member of the Board Organization
Committee.
Novello, age 61, has been a Director since 1996. He has been
Chairman of Copeland Corporation, a subsidiary of Emerson
Electric Company, since 1987 and until 1998 was also Chief
Executive Officer of Copeland and Executive Vice President,
Emerson Electric Company. Copeland manufactures compressors for
air conditioning systems and for commercial refrigeration
equipment. Mr. Novello is also a director of Watsco, Inc. He is a
director of the Air Conditioning and Refrigeration Institute,
Northeastern University National Council and the Babson College
Graduate Advisory Board.
ROBERT H. WEST
Chairman of the Board; Chairman of the Executive Committee.
West, age 60, has been a Director since 1975. He joined
Butler in 1968, became President in 1978 and Chairman of the
Board and Chief Executive Officer in 1986. He relinquished his
CEO position in January, 1999. Mr. West is a director of Commerce
Bancshares, Inc., Burlington Northern Santa Fe Corporation,
Kansas City Power & Light Company, and Saint Luke's-Shawnee
Mission Health System. He is a trustee of the University of
Missouri at Kansas City.
5
<PAGE> 8
CERTAIN INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
The Board has four standing committees: (1) the Audit Committee, (2) the
Executive Committee, (3) the Board Organization Committee, and (4) the
Compensation and Benefits Committee. All committees consist of non-employee
directors except the Executive Committee. The primary functions of the
committees are described below.
During 1998, the Board met 5 times and the various committees met as
follows: Compensation and Benefits - 3 times; Audit - 2 times; Board
Organization - 3 times. The Executive Committee did not meet. All directors
attended 86% or more of such meetings.
Non-employee directors are paid a retainer of $20,000 per annum (all in
Butler common stock) and $1,500 for attendance at each board and committee
meeting and for attendance in connection with special assignments. Attendance by
means of conference telephone is compensated at the rate of $1,000 per meeting.
Travel allowances are provided where appropriate. The Company provides $50,000
of accidental death and of term life insurance for each non-employee director
while the director serves as such and thereafter for those who have served for
more than ten years. Directors who are employees of the Company receive no
director compensation.
The Audit Committee recommends to the Board an independent accountant to
audit the books and records of the Company and its subsidiaries for the year. It
also reviews, to the extent it deems appropriate, litigation and pending claims,
the scope, plan and findings of the independent accountant's annual audit and
internal audits, recommendations of the auditor, the adequacy of internal
accounting controls and audit procedures, the Company's audited financial
statements, non-audit services performed by the independent auditor, and fees
paid to the independent auditor for audit and non-audit services. The Audit
Committee also monitors compliance with the Company's policies concerning
business conduct.
The Executive Committee acts for the Board of Directors upon matters
requiring action before the next Board meeting.
The Board Organization Committee recommends to the Board qualifications for
new director nominees, candidates for nomination, the structure of Board
committees, the review of director performance and policies concerning
compensation and length of service. The Committee considers written
recommendations from stockholders concerning these subjects and suggests that
they be addressed to the Secretary of the Company. Recommendations for director
nominees should provide pertinent information concerning the candidate's
background and experience.
A description of the Compensation and Benefits Committee's responsibilities
is set out under "COMPENSATION AND BENEFITS COMMITTEE.".
NOMINATING PROCEDURES
The Company's Bylaws establish a procedure for the nomination of candidates
for election to the Board of Directors. Nominations may be made at an annual
meeting of stockholders pursuant to the Corporation's notice of meeting, by or
at the direction of the Board of Directors, or by any stockholder of the
Corporation who was a stockholder of record at the time of giving of notice, who
is entitled to vote at the meeting and who complied with the notice procedures
set forth. Notice of proposed
6
<PAGE> 9
stockholder nominations for election of directors must also be given to the
Secretary not less than 90 days nor more than 120 days before the anniversary
date of the last annual meeting for annual meetings and not less than ten days
after notice to stockholders for any special meeting for the election of
Directors. The notice must contain certain information about each proposed
nominee, including his/her age, business and residence addresses and principal
occupation, the number of shares of capital stock of the Company beneficially
owned by the nominee and such other information as would be required to be
included in a proxy statement. Provision is also made for substitution of
nominees should a designated nominee be unable or unwilling to stand for
election at the meeting. If the Chairman of the meeting of stockholders
determines that a nomination was not made in accordance with these procedures,
the nomination shall be void. The advance notice requirement permits the Board
to inform stockholders in a timely manner about the qualifications of the
proposed nominees.
BENEFICIAL OWNERSHIP TABLE
The following table sets forth information regarding beneficial ownership
of Butler common stock by all present directors and the executive officers who
are listed in the Summary Compensation Table. The table reports ownership as of
February 22, 1999. No director or executive officer beneficially owns as much as
one percent of all outstanding Butler common stock. The table also sets forth
the number of shares beneficially owned and the percentage of ownership of
Butler common stock by all directors and executive officers as a group and by
each person who was known by the Company to own beneficially as much as five
percent of the total outstanding shares of Butler common stock as of February
22, 1999.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL COMMON STOCK
STOCKHOLDER OWNERSHIP OWNED
----------- --------- -----
<S> <C> <C>
Richard O. Ballentine (a)....................................... 9,191
Harold G. Bernthal ............................................. 10,993
Gary M. Christensen ............................................ 0
Alan M. Hallene ................................................ 5,443
C. L. William Haw .............................................. 7,843
John J. Holland (b)............................................. 23,038
Richard S. Jarman (c)........................................... 56,818
Robert J. Novello............................................... 1,599
Donald H. Pratt (d)............................................. 22,581
Robert J. Reintjes, Sr.......................................... 3,883
Judith A. Rogala................................................ 3,193
Gary L. Tapella................................................. 770
Robert H. West (e) ............................................. 73,247
All Directors and Executive Officers as a Group of 28 (f)...... 441,154 5.97%
Trustee of Butler Manufacturing Company
Individual Retirement Asset Account (IRAA) (g)................. 835,450 11.31%
FMR Corp. and Edward C. Johnson 3d(h)........................... 664,150 9.23%
</TABLE>
7
<PAGE> 10
For purposes of the table a person is deemed to be a beneficial owner of
shares if the person has or shares the power to vote or dispose of them, or if
the person has the right to acquire such power within sixty days through the
exercise of a stock option or otherwise ("stock acquisition rights").
Unless otherwise indicated in the footnotes below, each person had sole
voting and investment power over the shares listed under "Amount and Nature of
Beneficial Ownership" above. Percentage of ownership is calculated on the basis
of 7,198,774 shares outstanding at February 22, 1999, plus the number of shares
subject to stock acquisition rights for those persons and groups holding such
rights. The stockholders disclaim beneficial ownership in the shares described
in the footnotes as being "held by" or "held for the benefit of" other persons.
(a) Includes 1,837 shares subject to exercisable outstanding stock options,
1,307 shares in Mr. Ballentine's IRAA account, 27 shares in his BEST
401(k) account and 90 shares held by a member of Mr. Ballentine's family.
Mr. Ballentine shares voting and investment power with respect to the 90
shares.
(b) Includes 15,500 shares subject to exercisable outstanding stock options,
3,471 shares in Mr. Holland's IRAA account and 444 shares in his BEST
401(k) account.
(c) Includes 37,500 shares subject to exercisable outstanding stock options,
4,964 shares in Mr. Jarman's IRAA account and 17 shares in his BEST 401(k)
account.
(d) Includes 7,175 shares in Mr. Pratt's IRAA account and 416 shares in his
BEST 401(k) account.
(e) Includes 8,613 shares in Mr. West's IRAA account, 27 shares in his BEST
401(k) account, and 6,502 shares held by a member of Mr. West's family.
Mr. West shares voting and investment power with respect to the 6,502
shares.
(f) Includes 186,600 shares subject to exercisable outstanding stock options,
49,693 shares in officers' IRAA accounts and 1,183 shares in officers'
BEST 401(k) accounts.
(g) The shares are held for the benefit of Plan participants. The amount and
percent do not include shares mentioned in the preceding footnotes which
are allocated to the accounts of officers. Under the Plan, the trustee
passes on to participants voting and permitted reinvestment decisions as
to allocated shares.
(h) FMR Corp. is the owner of Fidelity Management Trust Company (a Bank that
reports beneficial ownership of the Company's Common Stock for
institutional accounts) and Fidelity Management Research Company, an
investment advisor to several investment companies which also reports
beneficial ownership of the Company's common stock. FMR Corp. reports that
it is controlled by the family of Edward C. Johnson 3d. The reporting
persons and related entities report sole power to vote 664,150 of the
shares and sole power to dispose of 411,600 of the shares. The address of
FMR Corp. is 82 Devonshire Street, Boston, Mass. 02109.
8
<PAGE> 11
COMPENSATION AND BENEFITS COMMITTEE
The Compensation and Benefits Committee ("Committee") is composed of five
independent outside directors. It is the Committee's responsibility to assure
that the Company's policies regarding executive compensation are followed, to
recommend changes to the policies, to recommend to the Board the compensation of
the Chairman of the Board, Vice Chairman, President and Chief Executive Officer
and of any other officers who are directors, to review compensation plans for
other executive officers and management personnel as recommended by the Chief
Executive Officer, and to administer the Company's stock incentive plans. The
Committee also reviews proposals concerning the adoption of or material changes
to Company pension plans, the financial condition of each plan and the
investment performance of each investment advisor. It recommends to the Board
the amount of the Company's annual contribution to the Individual Retirement
Asset Account plan and to the Company's 401(k) Plan. The Committee also
recommends to the Board the appointment of plan trustees and approves the
appointment of investment advisors and actuaries.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Novello, Bernthal, Christensen, Reintjes and Ms. Rogala serve as
members of the Committee. No Committee member is an officer or former officer of
the Company. No Committee or board member has been or is an executive of another
company on whose board a Butler executive sits.
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
ON EXECUTIVE COMPENSATION
Following is the Compensation and Benefits Committee's Report on the
Company's compensation policies and practices with respect to compensation for
executive officers.
COMPENSATION POLICIES APPLICABLE TO BUTLER'S EXECUTIVE OFFICERS. It is the
Company's policy that executive officers receive total compensation that is
appropriate in light of business unit and corporate performance, and the
executive's performance in achieving both annual and strategic goals and that is
competitive with compensation levels of companies of comparable type and size.
Each factor is considered in arriving at total compensation with business unit
performance given greater weight for business unit executives and corporate
performance for corporate executives.
Because of the cyclical nature of the Company's business, the Committee's
policy is to conservatively manage fixed compensation and emphasize variable,
results-oriented compensation, to achieve a competitive total compensation
package for executives. The Committee considers total remuneration data on an
annual basis to ensure that the Company is appropriately aligned with the market
for executive talent. Companies with whom the Committee compares compensation
are companies in the same or related industry as the Company and durable goods
manufacturing companies of comparable size as surveyed and reported by
independent consulting organizations. While the Committee does not attempt to
set executive compensation at any particular competitive level, survey data
indicates that the Company's executive compensation is usually below the
midpoint of the compensation paid by such comparable companies.
The key elements of executive compensation are base salary, annual bonus,
stock options and restricted stock bonus awards.
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<PAGE> 12
Base salaries for executives are set subjectively within salary ranges
which are established for each position based on the surveys mentioned above.
Factors typically considered by the Committee in setting base salaries are the
CEO's recommendation, individual performance, leadership, tenure and length of
time since the last salary adjustment.
The Company's executive officers are eligible for an annual incentive cash
bonus. Bonus amounts are discretionary and are based on corporate affordability
and on achievement of personal objectives and of business unit and corporate
pretax operating earnings objectives. At the beginning of each year, threshold
and target levels of pretax operating earnings for the year are established for
the Company and each business unit. Normally, no bonus is awarded unless the
threshold level of pretax earnings is met. If the threshold level is met, the
Committee will consider bonuses ranging from 5 to 75% of annual base pay
depending on how close actual pretax operating earnings are to the established
targets. The Committee may also consider individual non-financial performance in
determining final amounts of any discretionary bonus awards.
Long-term incentives are provided exclusively through the grant of stock
options and restricted stock bonus awards. Throughout its ninety-eight year
history, the Company has had a strong tradition of employee stock ownership at
all organizational levels. The belief has been that employee stock ownership
encourages close identity of interests among shareholders, executives and
operating personnel. Stock options and restricted stock bonus awards are granted
at current market price so that executive rewards accrue only as shareholder
value increases. The Company believes that as a long-term incentive the
Company's stock price provides an appropriate yardstick by which to measure and
reward executive performance.
Stock options and the opportunity to participate in the restricted stock
bonus award program are normally granted once a year to a group of senior
executives whose positions of responsibility afford them the opportunity to
significantly affect the future growth and profitability of the Company. The
number of individual options awarded is discretionary. Among factors considered
are the executive's job responsibilities, the Company's strategic priorities,
the number of shares currently owned by the executive, and the number of options
previously granted to the executive.
In setting executive compensation, the Committee takes into account a
number of other factors including pension benefits, supplemental retirement
benefits, insurance and other benefits, that are described in this Proxy
Statement.
COMMITTEE'S BASES FOR THE CEO'S COMPENSATION FOR 1998, INCLUDING THE FACTORS AND
CRITERIA UPON WHICH THE CEO'S COMPENSATION WAS BASED. With respect to the salary
paid to Mr. West for 1998, the Committee took into consideration, in addition to
the factors mentioned above, the following: the annual salaries of chief
executive officers of the comparable companies described above; the Company's
level of profitability in 1997; and Mr. West's leadership in setting and
effecting the long term strategic growth of the Company.
In 1998, the Company exceeded its threshold pretax operating earnings goal
but did not achieve its target goal. Based on these results, Mr. West was
awarded a bonus of $66,100.
This report is made over the name of each member of the Committee, namely
Robert J. Novello (Chairman), Harold G. Bernthal, Gary M. Christensen, Robert J.
Reintjes, Sr., and Judith A. Rogala. Mr. Christensen became a member of the
Committee after Mr. West's 1998 bonus was set.
10
<PAGE> 13
'
SUMMARY COMPENSATION TABLE
The table below shows all plan and non-plan compensation awarded to, earned
by, or paid to the Company's Chief Executive Officer and its four most highly
compensated executive officers other than the CEO, for services rendered to the
Company and its subsidiaries during the periods indicated.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
LONG-TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION
-------------------------------- ---------------------- ------------
AWARDS
-------
RESTRICTED STOCK
NAME AND STOCK (1) OPTIONS
PRINCIPAL POSITION YEAR SALARY BONUS OTHER ($) (# SHARES) ($) (2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert H. West 1998 $ 388,750 $ 66,100 $ 2,999 None 0 $298,790
Chairman of the 1997 $ 374,000 $ 219,400 $ 5,870 None 0 $294,860
Board and Chief 1996 $ 359,000 $ 270,000 $ 2,600 None 0 $294,235
Executive Officer*
Donald H. Pratt 1998 $ 304,000 $ 51,700 $ 935 None 0 $204,290
President* 1997 $ 292,000 $ 137,100 $ 1,725 None 0 $200,711
1996 $ 280,000 $ 154,600 $ 1,300 None 0 $200,235
Richard. O. Ballentine 1998 $ 173,425 $ 38,200 $ 915 None 0 $ 23,090
Vice President, 1997 $ 166,425 $ 65,100 $ 750 None 0 $ 20,860
General Counsel, 1996 $ 160,000 $ 80,000 $ 1,050 None 0 $ 20,235
and Secretary
John J. Holland 1998 $ 225,000 $ 49,600 $ 920 None 4,000 $ 47,990
Executive Vice 1997 $ 174,350 $ 80,000 $ 800 $ 5,000 4,000 $ 46,854
President* 1996 $ 166,000 $ 83,500 $ 1,050 $ 15,750 0 $ 46,235
Richard S. Jarman 1998 $ 224,250 $ 100,000 $ 1,510 None 0 $228,068
President, Bldgs. 1997 $ 215,000 $ 123,100 $ 1,825 None 0 $225,841
Division* 1996 $ 201,000 $ 101,000 $ 2,850 None 0 $225,428
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
*On January 19, 1999, Mr. West relinquished the title of CEO; Mr. Pratt was
elected Vice Chairman; Mr. Holland was elected President and CEO; and Mr. Jarman
was elected Executive Vice President.
(1) For 1997 and 1996, restricted stock of the value indicated was awarded
to Mr. Holland upon his election to receive a portion of his annual
bonus in Butler common stock as described under "Restricted Stock
Bonus Program." The restricted stock vests on the third anniversary of
the date of the award. Dividends are payable on the restricted stock.
At December 31, 1998, Mr. Holland held 579 shares of restricted stock
with a value of $12,955.
(2) To offset its obligations under the Company's Supplemental Retirement
Benefit Plan for executives whose retirement benefit cannot be fully
funded through the Company's Base Retirement Plan for Salaried
Employees, the Company has agreed to pay the premiums for policies of
split dollar life insurance on the lives of such executives. Included
in this column is the value of premiums paid in 1998 for Mr. West of
$294,900, for Mr. Pratt of $200,400, for Mr. Ballentine of $19,200,
for Mr. Holland of $44,100 and for Mr. Jarman of $224,400.
11
<PAGE> 14
- Includes $800 for the Company's 1998 contribution to the Individual
Retirement Asset Account (IRAA) and forfeitures allocated for each
named executive officer's account.
- Includes $210 for insurance premiums paid by the Company in 1998 with
respect to term life insurance for each named executive officer.
- Includes the Company's 30% matching contribution for 1998 to the
named executive officer's account in the Butler Employees' Savings
Trust (a 401(k) plan). $2,880 was allocated to Mr. West's account,
$2,880 to Mr. Pratt's, $2,880 to Mr. Ballentine's, $2,880 to Mr.
Holland's and $2,658 to Mr. Jarman's.
<TABLE>
<CAPTION>
OPTION GRANTS DURING 1998
- -------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF
NAME SECURITIES TOTAL GRANT DATE
UNDERLYING OPTIONS OPTIONS GRANTED EXERCISE PRESENT
GRANTED (#) (1) TO EMPLOYEES PRICE ($/SH) (2) VALUE ($) (3)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John J. Holland 4,000 3.9% $32.1875 $41,844
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For 1998, all options awarded to the named executive officer by the
Compensation and Benefits Committee were long-term incentive awards granted
on January 20, 1998. The option vested twelve months after the date of
grant. Vesting is accelerated upon death, permanent disability, or a change
of control of the Company. The option will expire five years from the date
of grant or earlier if employment terminates.
(2) The exercise price per share is the fair market value of the common stock
on the date of grant which is the closing price of Butler's common stock on
the New York Stock Exchange on the date of grant.
(3) We calculated this value by using the Black-Scholes stock option pricing
model.
The model, as we applied it, uses the grant date of January 20, 1998 and
the fair market value on that date of $32.1875 per share as discussed
above. The model also assumes (a) a risk-free rate of return of 4.6% (which
was the yield on a U.S. Treasury Strip zero coupon bond with a maturity
that approximates the term of the option), (b) a stock price volatility of
36% (calculated using month-end closing prices of Butler common stock on
the New York Stock Exchange for the period beginning with January 1, 1994
and ending as of the end of the month preceding the grant date, (c) a
constant dividend yield of 1.9% based on the quarterly cash dividend rate
of 15 cents per share on the Butler common stock, and (d) an exercise date,
on average of five years after grant.
We did not adjust the model for non-transferability, risk of forfeiture, or
vesting restrictions. The actual value (if any) an executive officer
receives from a stock option will depend upon the amount by which the
market price of Butler common stock exceeds the exercise price of the
option on the date of exercise. There can be no assurance that the amount
stated as "Grant Date Present Value" will actually be realized.
12
<PAGE> 15
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets out the number of exercised and unexercised
options and the value of all such in-the-money options held by the named
executive officers at December 31, 1998. The Company has no Stock Appreciation
Rights (SARs) outstanding.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
SHARES 1998 STOCK NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTION EXERCISES OPTIONS IN-THE-MONEY OPTIONS
ON EXERCISE ---------------- AT DECEMBER 31, 1998 AT DECEMBER 31, 1998 (1)
------------- VALUE -------------------- ------------------------
NAME (#) REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. H. West 0 0 0 0 0 0
--------------------------------------------------------------------------------------------------------------
D. H. Pratt 0 0 0 0 0 0
--------------------------------------------------------------------------------------------------------------
R. Ballentine 2,000 $ 26,535 1,837 0 $ 22,421 0
--------------------------------------------------------------------------------------------------------------
J. J. Holland 2,500 $ 65,044 11,500 4,000 $ 84,038 0
--------------------------------------------------------------------------------------------------------------
R. S. Jarman 0 0 37,500 0 $420,188 0
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Reflects the amount by which the fair market value of Butler stock
exceeded (in the case of exercised options) or exceeds (in the case
of unexercised options) the option price. At December 31, 1998, the
Company's stock price was $22.375.
PENSION PLAN TABLE
The following table shows estimated annual benefits payable upon retirement
at age 65 to salaried employees in the specified compensation and years of
service classifications. Average compensation generally means income reported on
Federal Income Tax withholding statements each year, including salary, bonus,
and other annual compensation but excluding relocation expenses, and
contributions the Company makes to provide benefits under other employee benefit
plans.
The average compensation is the employee's average compensation for the
five consecutive calendar years in which compensation is the highest during the
participant's entire completed calendar years of continuous employment. Benefits
are calculated on the assumption that the benefits will be payable over the
participant's lifetime and that no survivor benefits (which would reduce the
benefit shown) are to be paid. The benefits shown in the table are subject to a
deduction for the monthly income value of IRAA benefits and of the cash value or
death benefits of split dollar life insurance, if any. Average compensation and
years of credited service for the individuals named in the compensation table at
December 31, 1998 were: Mr. Ballentine, $223,924 and 29 years; Mr. Jarman,
$284,893 and 24 years; Mr. Pratt, $402,456 and 34 years; Mr.
Holland, $244,837 and 19 years; and Mr. West, $548,157 and 30 years.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION FOR YEARS OF CREDITED SERVICE
------------------------------------------------------
AVERAGE COMPENSATION 10 20 30 40
-------------------- -- -- -- --
<S> <C> <C> <C> <C>
$200,000 $31,500 $ 63,000 $ 94,400 $126,700
250,000 39,700 79,500 119,200 159,700
300,000 48,000 96,000 143,900 192,700
350,000 56,200 112,500 168,700 225,700
400,000 64,500 129,000 193,400 258,700
450,000 72,700 145,500 218,200 291,700
500,000 81,000 162,000 242,900 324,700
550,000 89,200 178,500 267,700 357,700
600,000 97,400 194,800 292,100 390,300
</TABLE>
13
<PAGE> 16
DEFERRED COMPENSATION PLAN
The Company has an executive deferred compensation plan that allows
approximately 60 executives to defer up to 25% of their annual salary and up to
100% of any incentive pay. The amount deferred is credited with interest at the
end of each calendar year. Participants must defer their compensation until a
specified date, their retirement, termination of employment or a change in
control of the Company (as defined) and may elect to take the balance of their
deferred cash account at the end of the deferral period in a lump sum or in
monthly payments. They must begin taking payments from their account no later
than age 70. Messrs. West, Ballentine, and Jarman participated in this Plan in
1998.
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
The Company has Change of Control Employment Agreements with six executive
officers, including Messrs Ballentine, Holland, Pratt and West. The Agreements
provide that upon a change of control (as defined in the Agreements), the
executive shall be entitled to receive until the third anniversary of the change
in control a base salary, annual cash bonuses and other fringe benefits at the
highest levels provided to the executive during certain periods immediately
preceding the change in control. Upon a termination of the executive other than
for cause, or upon the executive's resignation for good reason (as defined) or
resignation during a thirty (30) day period following the first anniversary of
the change of control, the executive is entitled to receive a lump sum cash
payment consisting of (a) the executive's base salary through the date of
termination, (b) a proportionate bonus based upon the executive's annual bonus
for the last three fiscal years, (c) three times the sum of the base salary plus
bonus the executive is entitled to under the Agreement, (d) other accrued
obligations, and (e) the difference between the actuarial equivalent of the
retirement benefit the executive would receive if he remained employed for the
Employment Period and the actuarial equivalent of the executive's actual
retirement benefit. In addition, for the remainder of the Employment Period, the
executive is entitled to continued employee welfare benefits, including life and
family health insurance. If any payment to the executive, whether pursuant to
the Agreement or otherwise would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code, then the executive shall be entitled to
receive an additional payment equal to the excise tax and other taxes with
respect thereto. The Agreements continue for a three year term with provision
for automatic renewal. Benefits are provided subsequent to the expiration of the
Agreement if a change of control occurs during the initial or any renewal term.
RESTRICTED STOCK BONUS PROGRAM
The Company has a Restricted Stock Bonus Program that allows approximately
15 senior executives, including Messrs. Ballentine, Holland, Jarman and Pratt,
to elect to receive up to 50% of their annual bonus in the Company's common
stock ("Bonus Stock"). If the eligible executive makes such an election, the
Company will match the Bonus Stock at a 50% rate ("Match Stock"). The Match
Stock is restricted and not transferable for 3 years. If the Executive's
employment is terminated prior to the end of 3 years (other than due to
retirement, disability, or a change of control of the Company), or if the
Executive transfers his or her Bonus Stock during the 3-year period, the Match
Stock will be forfeited. The principal purpose of the Program is to increase
share ownership among senior executives and encourage close identity of
interests among them and shareholders.
14
<PAGE> 17
PERFORMANCE GRAPH
The following line graph compares, for five years, beginning December 31,
1993, the yearly percentage change in the Company's cumulative total shareholder
return with the New York Stock Exchange (NYSE) stock market index and the Media
General "General Building Materials Group" index. The graph assumes $100
invested at December 31, 1993 and reinvestment of dividends.
The Company's stock is traded on the NYSE. The Media General General
Building Materials Group index is an industry index published by Media General
Financial Services which includes the Company. (Media General has discontinued
its "Other Building Materials Group Index" formerly used in the Performance
Graph.) This index, like its predecessor, is only generally related to the
Company's markets. Three of the Company's direct competitors, American Buildings
Company, NCI Building Systems, Inc., and Robertson-Ceco Corporation are
included. Conversely, the Media General index includes firms such as Armstrong
World Industries, Inc., Owens Corning Fiberglas Corporation, USG Corporation,
and The Sherwin-Williams Company, whose products do not compete with the
Company's.
[LINE GRAPH]
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Butler Manufacturing 100.00 123.33 221.05 231.15 186.94 132.50
------------------------------------------------------------------------------------------------
Media General 100.00 95.27 120.42 144.68 158.80 181.31
------------------------------------------------------------------------------------------------
NYSE 100.00 98.06 127.15 153.16 201.50 239.77
------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 18
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Marc S. Hafer, President of the Lester Building Systems Division timely
filed a Form 5 with the Securities and Exchange Commission for 1998 which
inadvertently failed to include 70 shares of Company stock he acquired in a
401(k) plan in August, 1998. A corrected Form 5 was filed on February 25, 1999.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of Arthur Andersen LLP, independent certified public
accountants, which audited the books, records and accounts of the Company for
1998, will be present at the stockholders meeting. They will have the
opportunity to make a statement and will be available to respond to appropriate
questions.
The selection of the independent certified public accountants to audit the
books, records and accounts of the Company for 1999 will be made by the
Directors at its April, 1999 meeting based upon the recommendation of the Audit
Committee. Members of the Committee are Robert J. Reintjes, Sr. (Chairman), Alan
M. Hallene, C. L. William Haw, Judith A. Rogala and Gary L. Tapella.
PROXY SOLICITATIONS
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokers, banks or other persons for reasonable expenses in
sending proxy material to beneficial owners. Proxies may be solicited through
the mail and through telephonic or telegraphic communications to, or by meetings
with, stockholders or their representatives by present and former directors,
officers and other employees of the Company who will receive no additional
compensation therefor.
DATES FOR THE SUBMISSION OF CERTAIN MATTERS
Stockholders who intend to present proposals for inclusion in the Company's
proxy statement for the next annual meeting of stockholders on April 18, 2000,
must forward them to the Company at BMA Tower, Penn Valley Park, 700 Karnes
Boulevard, (P.O. Box 419917), Kansas City, Missouri 64141-0917, Attention:
Secretary, so that they are received not earlier than December 22, 1999 or later
than January 21, 2000. In addition, proxies solicited by management may confer
discretionary authority to vote on matters which are not included in the proxy
statement but which are raised at the annual meeting by stockholders, unless the
Company receives written notice of the matter by January 21, 2000, at the above
address.
By the Order of the Board of Directors
/s/ Richard O. Ballentine
Richard O. Ballentine, Secretary
March 10, 1999
16
<PAGE> 19
------------------------------------
BUTLER
MANUFACTURING
COMPANY
--------------------------
NOTICE
OF
ANNUAL MEETING
OF
STOCKHOLDERS
AND
PROXY STATEMENT
--------------------------
TIME AND PLACE
Tuesday, April 20, 1999
9:30 a.m.
Atkins Auditorium
Nelson-Atkins Museum of Art
4525 Oak Street
Kansas City, Missouri
------------------------------------
<PAGE> 20
[BUTLER LOGO]
BUTLER MANUFACTURING COMPANY PROXY
P.O. BOX 419917, KANSAS CITY, MISSOURI 64141-0917
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Donald H. Pratt, C. L. William Haw and Robert H. West,
or any of them, each with full power to appoint his substitute, proxies to vote,
in the manner specified below, all of the shares of common stock of Butler
Manufacturing Company, held by the undersigned at the Annual Meeting of
Stockholders to be held on April 20, 1999 or at any adjournment thereof.
1. Election of four Class A Directors - Nominees: GARY M. CHRISTENSEN; C. L.
WILLIAM HAW; JOHN J.
HOLLAND; DONALD H. PRATT
[ ] FOR all Nominees. [ ] AUTHORITY WITHHELD from all Nominees.
[ ] FOR all nominees, except vote withheld for the following Nominee(s):
---------------------------------------------------------
2. In your discretion, you are authorized to vote upon such other business as
may properly come before the meeting.
The Board of Directors recommends a vote FOR the Director Nominees.
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD
(See reverse side for matters to be voted on)
The undersigned has received the Company's Annual Report for 1998 and its Proxy
Statement. This Proxy is revocable and it shall not be voted if the undersigned
is present and voting in person. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THE SHARES WILL BE VOTED "FOR" ALL NOMINEES.
--------------------------------------
Stockholder's Signature
--------------------------------------
Stockholder's Signature
Dated
---------------------------------
(Please sign exactly as your name(s)
appear. All joint owners must sign;
executors, trustees, custodians, etc.
should indicate the capacity in which
they are signing.) PLEASE RETURN THE
PROXY PROMPTLY IN THE ACCOMPANYING
ENVELOPE.
<PAGE> 21
[BUTLER LOGO]
INSTRUCTION CARD
INSTRUCTIONS TO: UMB Bank, N.A., Trustee of the Butler Manufacturing Company
Individual Retirement Asset Account (IRAA) and Fidelity
Management Trust Company, Trustee of the Butler Employee
Savings Trust (BEST), Galesburg Hourly Employee Savings Trust
(GHEST), and Birmingham Hourly Employee Savings Trust (BHEST)
for voting at the Annual Meeting of Stockholders of Butler
Manufacturing Company on April 20, 1999.
Please vote the shares held by you for my IRAA stock account and/or Butler
Common Stock Fund as specified below.
1. Election of four Class A Directors - Nominees: GARY M. CHRISTENSEN; C. L.
WILLIAM HAW; JOHN J.
HOLLAND; DONALD H. PRATT
[ ] FOR all Nominees. [ ] AUTHORITY WITHHELD from all Nominees.
[ ] FOR all nominees, except vote withheld for the following Nominee(s):
---------------------------------------------------------
2. In your discretion, you are authorized to vote upon such other business as
may properly come before the meeting.
The Board of Directors recommends a vote FOR the Director Nominees.
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD
(See reverse side for matters to be voted on)
The undersigned has received the Company's Annual Report for 1998 and its Proxy
Statement. IF THE INSTRUCTION CARD IS NOT RETURNED OR IF NO DIRECTION IS GIVEN
WHEN THE DULY EXECUTED INSTRUCTION CARD IS RETURNED, THE SHARES CREDITED IN THE
IRAA STOCK ACCOUNT AND/OR THE BEST, GHEST OR BHEST BUTLER COMMON STOCK FUND WILL
BE VOTED ON EACH BALLOT ITEM IN THE SAME PROPORTION AS THE TRUSTEE HAS BEEN
INSTRUCTED TO VOTE BY PARTICIPANTS GIVING VALID INSTRUCTIONS.
---------------------------------------------
Participant's Signature
---------------------------------------------
Date
(Please complete, date and sign exactly as
your name appears. RETURN CARD PROMPTLY
IN ACCOMPANYING ENVELOPE.)
