<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
Bell & Howell 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):
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(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
BELL & HOWELL COMPANY
5215 OLD ORCHARD ROAD
SKOKIE, ILLINOIS 60077
APRIL 9, 1999
DEAR SHAREHOLDER,
YOU ARE INVITED TO ATTEND THE 1999 ANNUAL MEETING OF SHAREHOLDERS TO
BE HELD ON WEDNESDAY, MAY 12, 1999, IN SKOKIE, ILLINOIS.
AS IN PREVIOUS YEARS, IF YOU CANNOT ATTEND THE MEETING IN PERSON, YOU
WILL BE ABLE TO HEAR THE MEETING LIVE OVER THE INTERNET. PLEASE LOOK AT THE
INSTRUCTIONS FOR CONNECTING TO THE BELL & HOWELL WEB SITE ENCLOSED SEPARATELY
WITH THIS PROXY STATEMENT.
THE ANNUAL MEETING WILL BEGIN WITH VOTING FOR DIRECTORS AND ON OTHER
BUSINESS MATTERS PROPERLY BROUGHT BEFORE THE MEETING, AND WILL BE FOLLOWED BY MY
SUMMARY OF THE COMPANY'S 1998 PERFORMANCE AND QUESTIONS AND ANSWERS.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU CAN BE SURE YOUR SHARES ARE
REPRESENTED AT THE MEETING BY PROMPTLY COMPLETING, SIGNING, DATING AND RETURNING
YOUR PROXY FORM IN THE ENCLOSED ENVELOPE OR, AS WE HAVE ALSO PROVIDED, BY VOTING
VIA THE INTERNET OR BY TELEPHONE.
CORDIALLY,
JAMES P. ROEMER
CHAIRMAN OF THE BOARD
<PAGE>
- --------------------------------------------------------------------------------
BELL & HOWELL COMPANY
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
Bell & Howell Company's 1999 Annual Meeting of Shareholders will be held at 5215
Old Orchard Road, Skokie Illinois, on Wednesday, May 12, 1999, at 8:00 a.m.,
CDT. The shareholders will act on the matters listed below:
(1) Election of ten Directors for the ensuing year and
(2) Transaction of such other business as may properly come before the
meeting.
This Proxy Statement is furnished in connection with the solicitation of proxies
by Bell & Howell Company on behalf of the Board of Directors for the 1999 Annual
Meeting of Shareholders.
Only Shareholders of record at the close of business on March 19, 1999, will be
entitled to vote at the meeting and any adjournments.
Bell & Howell's audited financial statements and other financial information for
Fiscal 1998 are included in the Company's Form 10-K mailed to you along with
this Proxy Statement.
You can ensure that your shares are voted at the meeting by promptly completing,
signing, dating and returning the enclosed proxy form in the envelope provided.
You can also vote your shares on the Internet or by telephone. (SEE THE PROXY
FORM FOR SPECIFIC INSTRUCTIONS.)
Your right to attend the meeting and vote will
not be affected by your sending in a signed proxy or voting your proxy over the
Internet or by telephone. You may revoke your proxy at any time before it is
exercised by voting in person at the Annual Meeting, by submitting another proxy
bearing a later date or by notifying the Inspector of Election in writing of
your election to revoke it.
If you plan to attend the meeting, please complete and return the advance
registration form on the back page of this Proxy Statement. An admission card
will be waiting for you at the meeting.
TODD BUCHARDT
General Counsel and Secretary April 9, 1999
2
<PAGE>
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
Bell & Howell Company has ten Directors on its Board of Directors and at the
1999 Annual Meeting of Shareholders ten persons will be elected to hold office
until the 2000 Annual Meeting or until their successors have been elected and
have qualified.
The Board's nominees, Messrs. James P. Roemer (Chairman), David Bonderman, David
G. Brown, J. Taylor Crandall, Daniel L. Doctoroff, Nils A. Johansson, William E.
Oberndorf, Gary L. Roubos, John H. Scully and William J. White, listed on this
and the next page with brief biographies, are all current Bell & Howell
Directors. The Board knows of no reason why any nominee may be unable to serve
as a Director. If any nominee is unable to serve, however, the shares
represented by all valid proxies will be voted for the election of such other
person as the Board may recommend.
The names, ages and year each Director was first elected a Director, and the
recent business experience and certain other information relating to each
Director are set forth below:
JAMES P. ROEMER, 51, has served as Chairman of the Board since January 1998 and
has been a Director of the Company since February 1995. In February 1997 he was
elected President and Chief Executive Officer of the Company. From February 1995
to February 1997 he served as President and Chief Operating Officer of the
Company. Prior to that, he served as President and Chief Executive Officer of
Bell & Howell Information and Learning from January 1994 to June 1995. Mr.
Roemer joined Bell & Howell as a Vice President and Bell & Howell Publishing
Services (PSC) as President and Chief Operating Officer in October 1991 and was
promoted to President and Chief Executive Officer of PSC in September 1993.
Prior to joining Bell & Howell, Mr. Roemer was President of the Michie Group,
Mead Data Central from December 1989 to October 1991. From January 1982 to
December 1989 he was Vice President and General Manager of Lexis, an on-line
information service. From April 1981 to December 1982 he served as acting
President of Mead Data Central.
DAVID BONDERMAN, 56, has been a Director of the Company since December 1987. He
has been the Managing General Partner of TPG Partners L.P. (a private investment
company) since December 1993. He is also a Director of Beringer Wine Estates,
Inc., Continental Airlines, Inc., Denbury Resources, Inc., Oxford Health Plans,
Inc, Ryanair Ltd., Realty Information Group and Washington Mutual Inc.
DAVID G. BROWN, 42, has been a Director of the Company since January 1994. He
has been a principal in Arbor Investors LLC (a private investment company) since
August 1995 and has been Chief Financial Officer of Keystone, Inc. since
September 1998 and a Vice President of Keystone, Inc. since August 1993. He is a
director of AER Energy Resources, Inc.
J. TAYLOR CRANDALL, 45, has been a Director of the Company since November 1990.
He has been President and Chief Executive Officer of Keystone, Inc. since
September 1998 and was Vice President and Chief Financial Officer of Keystone,
Inc. from October 1986 to August 1998. He was President, Director and sole
stockholder of Acadia MGP, Inc. (managing general partner of Acadia Investment
Partners, L.P., the sole general partner of Acadia Partners, L.P. (an investment
partnership) from January 1992 to September 1995. He is a Director of Integrated
Orthopedics, Inc., Physicians Reliance Network, Quaker State Corporation,
Signature Resorts, Inc., Specialty Foods, Inc. and Washington Mutual Inc.
3
<PAGE>
DANIEL L. DOCTOROFF, 40, has been a Director of the Company since June 1990. He
has served as Managing Director of Oak Hill Partners, Inc. (successor to
Rosecliff, Inc., the investment advisor to Acadia Partners, L.P.) since August
1987 and Managing Partner of Oak Hill Capital Management, Inc since November
1998. Since October 1992, he also has been a Vice President of Keystone, Inc.
and since February 1994 has been Managing Partner of Insurance Partners
Advisors, L.P. He is also a Director of Williams Scotsman, Inc., MeriStar
Hospitality, Inc. and MeriStar Hotels & Resorts, Inc.
NILS A. JOHANSSON, 50, has been a Director of the Company since April 1990.
Since January 1994, he has held the office of Executive Vice President and Chief
Financial Officer of the Company. Mr. Johansson served as Senior Vice President,
Finance and Chief Financial Officer of the Company from May 1989 to January
1994. From February 1981 to May 1989 he held various executive positions with
Bell & Howell, including Corporate Treasurer and positions in financial planning
and analysis, as well as business development.
WILLIAM E. OBERNDORF, 45, has been a Director of the Company July 1988. He has
served as Managing Director of SPO Partners & Co. (a private investment company)
since March 1991. He is also a Director of Plum Creek Timber Company, L.P.
GARY L. ROUBOS, 62, has been a Director of the Company since February 1994. He
has been Chairman of the Board of Dover Corporation (a diversified equipment
manufacturer) since August 1989 and was President from May 1977 to May 1993. He
is also a Director of Omnicom Group, Inc.
JOHN H. SCULLY, 54, has been a Director of the Company since July 1988. He has
served as Managing Director of SPO Partners & Co. since March 1991. He is also a
Director of Plum Creek Timber Company, L.P.
WILLIAM J. WHITE, 60, has served as a Director of the Company since February
1990, was Chairman of the Board from February 1990 to January 1998, served as
Chief Executive Officer of the Company from February 1990 to February 1997 and
was also President of the Company from February 1990 to February 1995. He is
also a Director of Ivex Packaging Corporation, Readers Digest Association, Inc.
and TJ International, Inc.
- - BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held four meetings during 1998. The average attendance by
Directors at these meetings was 90%, and all nominees attended at least 50% of
the Board and Committee meetings they were scheduled to attend.
The Board of Directors has two operating committees: a COMPENSATION COMMITTEE
and an AUDIT COMMITTEE.
MESSRS. OBERNDORF (CHAIRMAN), BONDERMAN, CRANDALL, DOCTOROFF AND ROUBOS are
members of the Compensation Committee. This Committee's primary responsibilities
are: (1) to monitor the Company's management resources, structure, succession
planning, (2) development and selection process and the performance of key
executives; and (2) to review and approve executive compensation. This Committee
also administers the Bell & Howell 1995 Stock Option Plan, the Management
Incentive Bonus Plan and the Long Term Incentive Plan. This Committee met twice
during 1998.
4
<PAGE>
MESSRS. ROUBOS (CHAIRMAN), OBERNDORF AND SCULLY are members of the Audit
Committee. This Committee's primary responsibilities are: (1) to approve the
selection of independent auditors; (2) to review the scope and results of the
independent audit; (3) to review the evaluation of the Company's systems of
internal accounting controls and (4) to appraise the Company's financial
reporting (including its Proxy Statement and 10-K) and the accounting standards
and principles followed. The Audit Committee met twice during 1998.
All of the Directors, except for Messrs. Johansson and Roemer (who receive no
additional compensation as Directors), receive their sole compensation through
participation in the 1995 Non-Employee Directors' Stock Option Compensation
Plan. The Plan provides for annual non-qualified stock option grants to each
Director who is not also an employee of Bell & Howell or any of its affiliates.
The options expire ten years after the date they are granted, except in the
event of a Director's retirement, total disability, death or other termination
of service.
Each annual grant, made as of the last day of trading of the Company's Common
Stock in the second fiscal quarter (June 30 in 1998), permits a non-employee
Director to purchase shares of the Company's Common Stock at an exercise price
not less than the fair value of the Common Stock on the date the option is
granted. The number of shares which may be purchased is equal to the total
annual compensation otherwise payable to a Director divided by the fair market
value of an option on one share of Common Stock. For these purposes, the value
of an option is determined using the Black-Scholes option-pricing model.
For 1998, the annual compensation was set at $20,000 per annum. Based on that
amount, each non-employee Director received an option grant of 1,550 shares of
the Company's Common Stock at an exercise price of $25.8125 per share, with the
exception of Mr. White who was a non-employee Director for a portion of the year
and received an option grant of 900 shares.
All Directors are reimbursed travel expenses for attendance at Board meetings.
- - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists beneficial owners of more than five percent of the
Company's Common Stock as of December 31, 1998.
<TABLE>
<CAPTION>
- ------------------------------------ ---------------- -------
Name and Address of Beneficial Owner Number of Shares Percent
- ------------------------------------ ---------------- -------
<S> <C> <C>
Keystone, Inc. 4,363,000 18.7%
3100 Texas Commerce Tower
201 Main Street
Fort Worth, Texas 76102
- ------------------------------------ ---------------- -------
Lazard Freres & Co. LLC
30 Rockefeller Plaza 1,794,674 7.7%
New York, NY 10020
- ------------------------------------ ---------------- -------
Fir Tree Partners
1211 Avenue of the Americas 1,218,000 5.2%
24th Floor
New York, NY 10036
- ------------------------------------ ---------------- -------
</TABLE>
5
<PAGE>
- --------------------------------------------------------------------------------
- - REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
- - COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The philosophy of the Compensation Committee is:
- to align executive compensation with shareholder interests
- to ensure that compensation is at a level that enables the Company to
attract and retain high quality talent and
- to provide significant rewards for achievement of business objectives
and growth in shareholder value
The Company's compensation program for executive officers currently consists of
the following key elements: base salary, annual bonuses, long term incentive
bonuses and stock option grants. Each element of the program has a somewhat
different purpose. Salary and annual bonuses are made to compensate ongoing
performance and achievement of business objectives through the year based upon
established targets and goals, while long term incentive bonuses and stock
option grants are designed to provide strong incentives for creation of
long-term shareholder value and continued retention by the Company of executive
officers and other key employees.
In determining the overall level and form of executive compensation to be paid
or awarded in 1998, including the Chief Executive Officer, the Company
considered, among other things: continued increases in the Company's sales and
productivity in a period of rapid change and intensified competition and the
compensation practices and performances of other major corporations which are
most likely to compete with the Company for the services of its executive
officers.
Federal tax law establishes certain requirements in order for compensation
exceeding $1 million earned by certain executives to be deductible. The
Compensation Committee believes that the Management Incentive Bonus constitutes
qualified performance-based compensation and, therefore, will be exempt from the
$1,000,000 limitation on deductible compensation.
- - BASES FOR CHIEF EXECUTIVE OFFICER COMPENSATION
For 1998, Mr. Roemer received total cash payments of $1,071,639 in salary and
bonuses and stock options (as shown in the Summary Compensation Table on page
8).
Of the 385,000 shares of Bell & Howell common stock granted to him in the May
1995 stock options, 96,250 are currently exercisable. As of May 1, 1999, a total
of 192,500 will be exercisable. The remaining 50% will become exercisable on May
1, 2000. As shown in the Summary Compensation Table, Mr. Roemer was also granted
stock options in February 1998 for 250,000 shares which vest on February 27,
2001. In addition, he was granted stock options for 100,000 shares in February
1999 which vest on February 26, 2002. With respect to all option grants to Mr.
Roemer, if he were to leave the Company for reasons other than disability or
death before any of the respective vesting dates, he would forfeit his right to
all unvested shares.
In determining Mr. Roemer's 1999 compensation, the Committee has focused on his
ability to enhance the long-term value of the Company. During his tenure with
Bell & Howell, he has been
6
<PAGE>
a leader in the revitalization of the Company and its transformation into a
provider of technological solutions within a number of market segments. Mr.
Roemer's total compensation is based on both Bell & Howell's recent performance
and his contributions to the overall long-term strategy and financial strength
of the Company.
*****
The foregoing report on executive compensation is provided by the following
outside directors, who comprised the Compensation Committee during 1998:
<TABLE>
<S> <C>
William E. Oberndorf (Chairman) Daniel L. Doctoroff
David Bonderman Gary L. Roubos
J. Taylor Crandall
</TABLE>
- - INFORMATION RELATING TO DIRECTORS AND EXECUTIVE OFFICERS
The following table includes all Bell & Howell stock holdings, as of March 1,
1999, of the Company's Directors, the five most highly compensated executive
officers and the directors and executive officers as a group.
<TABLE>
<CAPTION>
- --------------------------------- ---------------- -------
DIRECTORS AND EXECUTIVE OFFICERS: NUMBER OF SHARES PERCENT
- --------------------------------- ---------------- -------
<S> <C> <C>
DAVID BONDERMAN(1)(2) 732,610 3.0%
- --------------------------------- ---------------- -------
WILLIAM J. WHITE(3)(4)(5) 706,774 2.9%
- --------------------------------- ---------------- -------
WILLIAM E. OBERNDORF(2)(6) 533,815 2.2%
- --------------------------------- ---------------- -------
NILS A. JOHANSSON(5) 315,312 1.3%
- --------------------------------- ---------------- -------
JAMES P. ROEMER(5) 217,805 *
- --------------------------------- ---------------- -------
J. TAYLOR CRANDALL(2) 118,441 *
- --------------------------------- ---------------- -------
JOHN H. SCULLY (2) 78,037 *
- --------------------------------- ---------------- -------
MICHAEL A. DERING(5) 28,800 *
- --------------------------------- ---------------- -------
DANIEL L. DOCTOROFF(2) 15,983 *
- --------------------------------- ---------------- -------
JOSEPH P. REYNOLDS 21,000 *
- --------------------------------- ---------------- -------
WAYNE E. MICKIEWICZ 20,000 *
- --------------------------------- ---------------- -------
GARY L. ROUBOS(2) 6,929 *
- --------------------------------- ---------------- -------
DAVID G. BROWN(2) 5,225 *
- --------------------------------- ---------------- -------
ALL DIRECTORS AND EXECUTIVE OFFICERS 2,942,706 12.2%
AS A GROUP (17 PERSONS)
- --------------------------------- ---------------- -------
</TABLE>
(1) Includes 72,488 shares owned by Group Management, Inc. and 64,483 shares
owned by Bonderman Family Limited Partnership.
(2) Includes 5,225 option shares granted under the Non-Employee Directors Stock
Option Plan which are vested and fully exercisable.
(3) Includes 144,859 shares held in a trust of which Mr. White's spouse is the
beneficial owner.
(4) Includes 900 option shares granted under the Non-Employee Directors Stock
Option Plan which are vested and fully exercisable.
(5) Includes 460,000 option shares, 67,500 option shares, 96,250 and 8,800
options shares for Messrs. White, Johansson, Roemer and Dering,
respectively, granted under the 1995 Stock Option Plan, which are vested
and exercisable.
(6) Includes 20,000 shares owned by Oberndorf Family Partners over which Mr.
Oberndorf exercises sole voting power.
* less than 1%.
7
<PAGE>
- --------------------------------------------------------------------------------
- - SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by the Company or a
subsidiary of the Company to each of its five most highly compensated executive
officers for fiscal 1998, 1997 and 1996:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
--------------------------------------
AWARDS PAYOUTS
------------------------ ---------
ANNUAL COMPENSATION SECURITIES
NAME AND FISCAL -------------------- UNDERLYING RESTRICTED LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(2) STOCK PAYOUTS(3) COMPENSATION
- ------------------ ---- ------ -------- ---------- ----- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James P. Roemer, 1998 $599,518 $472,121 250,000 -- -- 66,523(4)
Chairman of the Board 1997 567,298 71,153 -- $316,875 -- 101,288(4)
President and 1996 510,572 233,331 -- -- $ 54,384 94,984(4)
Chief Executive Officer
Nils A. Johansson 1998 433,275 272,964 -- -- -- 33,941(5)
Executive Vice President 1997 433,082 54,135 -- -- -- 44,336(5)
and Chief Financial Officer 1996 396,162 181,046 -- -- 79,380 27,069(5)
Michael A. Dering, 1998 301,916 180,000 50,000 -- -- 306,658(6)
President of Bell & Howell 1997 265,056 164,617 12,000 259,875 -- 11,599(6)
Mail and Messaging 1996(7) 105,770 75,000 10,000 -- -- 87,728(6)
Technologies
Joseph R. Reynolds 1998(8) 185,095 148,500 15,000 272,344 -- 192,677(9)
President of Bell & Howell
Information and Learning
Wayne Mickiewicz 1998(8) 134,616 150,000 15,000 253,125 -- 271,942(10)
President of Bell & Howell
Publishing Services
</TABLE>
(1) Consists of amounts awarded under the Company's Management Incentive Bonus
Plan (the "MIB") to Messrs. Roemer, Johansson, Dering, Reynolds and
Mickiewicz. The MIB provides a financial incentive for key management
employees to focus their efforts on, and achieve, annual financial targets.
Payments under the MIB for fiscal 1998 were made in March 1999.
(2) Amounts reflected in this column are for grants of stock options under the
Company's 1995 Stock Option Plan. No Stock Appreciation Rights (SAR's) have
been used by the Company.
(3) For fiscal 1996 consisted of amounts earned under the Company's Long Term
Incentive Plan: 1993-1996 (the "LTIP"). The LTIP provided long-term cash
incentives to key management employees by rewarding them for achieving
financial targets for the period commencing fiscal 1993 through fiscal
1996. Prorated payments under the LTIP were made in cash in February 1997.
(4) For fiscal 1998, 1997, and 1996 includes $4,800, $4,775 and $3,000,
respectively, in contributions to the Bell & Howell Profit Sharing
Retirement Plan ("PSRP"); $15,320, $20,933 and $12,38l, respectively, in
contributions to the Bell & Howell Replacement Benefit Plan ("RBP");
$6,574, $6,207 and $3,384, respectively, for imputed life insurance, and
$39,829, $69,373 and $76,219, respectively, for relocation and related
expenses.
(5) For fiscal 1998, 1997, and 1996 consists of $9,600, $9,600, and $6,000
respectively, in contributions to the PSRP; $19,645, $32,010, and $18,489
respectively, in contributions to the RBP, and $4,696, $ 2,726, and $2,580,
respectively, in imputed life insurance.
(6) For fiscal 1998, 1997 and 1996 includes $2,081, $2,263 and $694,
respectively, in imputed life insurance; for fiscal 1998 and 1997 includes
$4,800 and $4,775, respectively, in contribution to the PSRP and $8,200 and
$4,561, respectively, in contributions to the RBP; and for fiscal 1998 and
1996 includes $291,577 and $87,034, respectively, for relocation and
related expenses.
(7) Reflects compensation from July 1996, when the employment of Mr. Dering by
the Company began, through December 1996.
(8) Reflects compensation from April 1998 and July 1998, respectively, when the
employment of Messrs. Reynolds and Mickiewicz by the Company began, through
December 1998.
(9) For fiscal 1998 includes $2,393 in imputed life insurance, $4,800 for the
PSRP, $4,314 for the RBP, $31,170 for relocation and related expenses and a
$150,000 signing bonus.
(10) For fiscal 1998 includes $1,365 in imputed life insurance, $4,039 for the
PSRP $116,538 for relocation and related expenses and a $150,000 signing
bonus.
8
<PAGE>
- --------------------------------------------------------------------------------
- - STOCK OPTIONS
The 1995 Stock Option Plan, amended by approval of the shareholders in May 1998
(together, the "Option Plan"), reserves a total of 3,660,000 shares of Common
Stock for issuance. The intent of the Option Plan is to increase shareholder
value and maintain an entrepreneurial spirit within the Company by providing
significant capital accumulation opportunities to the Company's key employees.
Under the terms of the Option Plan, selected officers and key employees may
receive incentive stock options in such amounts as may be established by the
Compensation Committee at the time of grant. The exercise price of each option
will also be determined by the Compensation Committee at the time of grant, but
the price will not be less than the fair market value of the Common Stock on the
date of grant.
Under the Option Plan, the Company granted options in May 1995 to Messrs. Roemer
and Johansson in the amounts shown on the table which follows on page 10,
exercisable commencing in May 1998 for portions of the shares granted as and
when the price of the stock increased.
Options to Messrs. Roemer, Dering, Reynolds and Mickiewicz in the amounts shown
on the table which follows, as well as to other officers and key employees, were
granted by the Company in fiscal 1998 to those persons selected by the
Compensation Committee based on the value of their contribution to the Company.
Except for the grant to Mr. Roemer, each of these options expires ten years from
the date of grant, vests in 20% increments on the anniversary of the grant for
each of the first five years, and becomes exercisable for the portion vested
immediately after vesting. Mr. Roemer's option grant of 250,000 shares vests in
February 2001and must be exercised prior to February 27, 2004. The Company had
outstanding grants of 2,094,071 shares to officers and key employees as of end
of fiscal 1998.
The table on page 10 also shows the potential realizable value from stock
options granted in 1995, 1996, 1997 and 1998. These hypothetical gains are based
entirely on assumed annual growth rates of five, ten and twenty per cent in the
value of the Company's Common Stock price over the lives of the stock options
granted. The options granted in May 1995 to Mr. Roemer, for example, would
produce the pre-tax gain of $7,308,360 shown in the table if the Company's
Common Stock price rises by 20% per annum over the six year life of the options.
Based on the number of shares outstanding at the end of 1998, such an increase
in the Company's Common Stock price would produce a corresponding aggregate
pre-tax gain of almost $651,000,000 for the Company's shareholders. In other
words, Mr. Roemer's potential gain from stock options granted in 1995 would
equal about one and one-tenth percent (i.e., 1.1%) of the potential gain to all
shareholders resulting from the assumed future stock price increases.
There are federal income tax consequences to the Company and the participant
which arise with respect to awards under the Plan.
A participant who is granted an incentive stock option does not recognize any
taxable income at the time of the grant and the Company is not entitled to any
deduction at the time of grant. The Company will be entitled to a deduction for
federal income tax purposes for the ordinary income recognized by the
participant if a participant sells the shares acquired through an option
exercise within one year after the date of exercise or if that sale occurs
within two years from the date of the option grant. Under all other
circumstances, any gain or loss realized on a sale of the option shares will be
treated as a long-term capital gain or loss to the participant, but the Company
will not be entitled to any deduction for federal income tax purposes.
A participant who is granted a non-qualified stock option will not have taxable
income at the time of grant, but will have taxable income at the time of
exercise equal to the difference between the exercise price and the market value
of the Company's Common Stock on the date of exercise. The Company is entitled
to a tax deduction for the same amount.
Option grants totaling approximately 797,000 shares were exercisable at the end
of fiscal 1998.
9
<PAGE>
- --------------------------------------------------------------------------------
- - STOCK OPTIONS GRANTED FROM 1995 TO 1998
<TABLE>
<CAPTION>
Number of Percent
Securities of Total Exercise Latest Potential Realizable Value at Assumed
Underlying Annual or Base Possible Annual Rates of Stock Price
Year of Options Options Price Expiration Price Appreciation for Option Term(1)
Name Grant Granted (#) Granted ($/Sh) Date 5% 10% 20%
- ----------- ----------- ----------- --------- -------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James P. Roemer 1998 250,000 45.8% 26.875 Feb 2004 $ 4,225,386 $10,707,957 $34,881,979
1995 38,500 15.50 May 2001 202,952 460,429 1,185,136
1995 38,500 18.50 May 2001 87,452 344,929 1,069,636
1995 77,000 22.25 May 2001 -- 401,108 1,850,522
1995 77,000 26.75 May 2001 -- 54,608 1,504,022
1995 77,000 32.00 May 2001 -- -- 1,099,772
1995 77,000 38.50 May 2001 -- -- 599,272
-------
385,000 29.7
Nils A. Johansson 1995 27,000 15.50 May 2001 142,330 322,898 831,134
1995 27,000 18.50 May 2001 61,330 241,898 750,134
1995 54,000 22.25 May 2001 -- 281,297 1,297,769
1995 54,000 26.75 May 2001 -- 38,297 1,054,769
1995 54,000 32.00 May 2001 -- -- 771,269
1995 54,000 38.50 May 2001 -- -- 420,269
-------
270,000 20.8
Michael A. Dering 1998 50,000 9.2 26.875 May 2008 845,077 2,141,591 6,976,396
1997 12,000 3.9 21.125 Mar 2007 159,425 404,014 1,316,105
1996 10,000 4.4 29.375 July 2006 184,738 468,162 1,525,073
Joseph P. Reynolds 1998 15,000 2.8 26.25 Apr 2008 247,627 627,536 2,044,246
Wayne Mickiewicz 1998 15,000 2.8 25.3125 June 2008 238,783 605,124 1,971,237
</TABLE>
(1) The table sets forth the potential realizable values of such options, upon
their latest possible expiration date, at arbitrarily assumed annualized
rates of stock price appreciation of five, ten and twenty percent over the
term of the options. Because actual gains will depend upon, among other
things, the actual dates of exercise of the options and the future
performance of the Common Stock in the market, the amounts reflected in
this table may not reflect the values actually realized. No gain to the
named executive officers is possible without an increase in stock price
which will benefit all shareholders proportionately.
- - AGGREGATED STOCK OPTION EXERCISES IN 1998 AND YEAR END STOCK OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised
Options at Value of Unexercised
Year-End (1) In-the-Money Options at
Shares Acquired Value Exercisable/ Year-End ($)(2)
Name On Exercise Realized Unexercisable Exercisable/ Unexercisable
- ---- ----------- -------- ------------- --------------------------
<S> <C> <C> <C> <C>
James P. Roemer None N/A 96,250/538,750(3)(4) $1,902,189/$4,932,715
Nils A. Johansson None N/A 67,500/202,500 (3) 1,334,003/1,541,606
Michael A. Dering None N/A 6,400/65,600 (5) 73,803/757,733
Joseph P. Reynolds None N/A None/15,000 (5) None/173,445
Wayne Mickiewicz None N/A None/15,000 (5) None/187,508
</TABLE>
(1) All information provided is with respect to stock options. No SARs have
been issued by the Company.
(2) The amounts have been determined by multiplying the aggregate number of
options by the difference between $37.813, the closing price of the Common
Stock on December 31, 1998 (the last trading day of fiscal 1998), and the
exercise price of the options.
(3) 288,750 of these options to Mr. Roemer and all of these options to Mr.
Johansson are exercisable as follows: up to 50% commencing May 1999 and up
to 100% commencing May 2000. (4)250,000 of these options are fully
exercisable commencing in February 2001.
(5) These options are exercisable in 20% cumulative increments, the first
increment beginning one year after the date of grant.
10
<PAGE>
- --------------------------------------------------------------------------------
- - SUPPLEMENTAL RETIREMENT PLAN
The Bell & Howell Supplemental Retirement Plan ("SRP") provides certain officers
and employees with additional pension benefits upon retirement to supplement
social security and the benefits provided under the Bell & Howell Profit Sharing
Retirement Plan ("PSRP") and the Bell & Howell Replacement Benefit Plan ("RBP").
The SRP provides for lifetime monthly pension payments which generally equals
(i) a percentage of the participant's average monthly compensation during the
highest paid four years of the participant's last six years of employment (the
actual percentage is determined by length of service, but cannot exceed 50%)
LESS (ii) the sum of the monthly amounts which are attributable to the Company's
contribution payable under the PSRP and RBP and as primary social security
benefits. If a participant is involuntarily terminated other than "for cause"
and has been a plan participant for at least five years or he voluntarily
terminates his employment and has been an employee for at least ten years and a
plan participant for at least five years, he will be entitled to deferred SRP
payments calculated as if his termination date were his retirement date. The
estimated credited years of service at the end of fiscal 1998 for each of the
individuals listed in the Supplemental Retirement Plan Table below are seven,
seventeen, and two years for Messrs. Roemer, Johansson and Dering, respectively,
and none for Messrs. Reynolds or Mickiewicz who began their employment with the
Company in 1998. The Company estimates that the annual SRP benefits which have
accrued through the end of fiscal 1998 and would be payable upon retirement at
age 60 to Messrs. Roemer, Johansson and Dering would be $93,049, $167,442 and
$3,409, respectively.
The Company estimates that the following annual benefits would be payable upon
retirement at or after age 60 (participants may elect to receive reduced
benefits at age 55) to persons in the following specified participation levels,
compensation and year-of-service classifications (these calculations take into
account amounts which are estimated to be received under the Company's PSRP and
RBP and as social security benefits):
SUPPLEMENTAL RETIREMENT PLAN TABLE
<TABLE>
<CAPTION>
PARTICIPATION YEARS OF SERVICE
LEVEL I ----------------------------
REMUNERATION 15 20 OR MORE
- ------------ -- ----------
<S> <C> <C>
$250,000 $93,750 $125,000
425,000 159,375 212,500
600,000 225,000 300,000
775,000 290,625 387,500
950,000 356,250 475,000
</TABLE>
<TABLE>
<CAPTION>
PARTICIPATION YEARS OF SERVICE
LEVEL II ------------------------------------------------
REMUNERATION 15 20 25 30 OR MORE
- ------------ ------- ------- ------- ----------
<S> <C> <C> <C> <C>
$125,000 $34,375 $43,750 $53,125 $62,500
150,000 41,250 52,500 63,750 75,000
175,000 48,125 61,250 74,375 87,500
200,000 55,000 70,000 85,000 100,000
225,000 61,875 78,750 95,625 112,500
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
- - RELATED PARTY TRANSACTIONS
The Company has made loans (the balance of which totaled approximately
$2,523,000 at the end of fiscal 1998) to certain key employees in connection
with their purchases of the Company's Common Stock. Pursuant to the terms of
such loans, the shares acquired are pledged as security. The following
individuals had loans in excess of $60,000 outstanding at the end of fiscal 1998
(all rounded to the nearest $,000): M. A. Dering ($226), N. A. Johansson ($267),
B. Longe ($209), D.A. Mater ($120), W. Mickiewicz ($209), B. Moeller ($175), J.
P. Reynolds ($225), and M.T. Rubly ($406). N. A. Johansson and M. T. Rubly
repaid their loans in full in March 1999. Each loan is evidenced by an
installment note maturing five years from the date of the note and bearing
interest at the Company's marginal rate of borrowing (approximately 6% in fiscal
1998). Interest and principal may be deferred until the maturity date.
- - CERTAIN TRANSACTIONS
During 1998, Bell & Howell Company and its subsidiaries did not have any
purchase, sale, lease, finance, insurance or other transactions with companies
or organizations with which Bell & Howell's Directors are associated.
- - 1998 LONG TERM INCENTIVE PLAN
Bell & Howell Company and Subsidiaries 1998 Long-Term Incentive Plan (the "1998
LTIP") was established to provide a continuing long-term cash incentive to key
management employees by rewarding them for achieving financial targets for
overlapping three year periods (with the first plan cycle for the two year
period from fiscal 1998 through fiscal 1999 (the "1998/99 Plan Cycle"). The
1998/99 Plan Cycle currently covers 10 officers and 43 employees and provides
payments based on the participant's participation level -- either 20% or 30% of
the employee's base rate of pay -- and the performance level achieved from the
identified financial targets over the 1998/99 Plan Cycle. Payments for the
1998/99 Plan Cycle will be made after completion of the cycle, but no later than
March 31, 2000. The 1999/2001 Plan Cycle currently covers currently covers 10
officers and 44 employees and provides payments based on the participant's
participation level and the performance level achieved from the identified
financial targets over the 1999/2001 Plan Cycle. No accrued amounts will vest
pursuant to the 1998 LTIP since participants are eligible for payments only if
they are employed by the Company on the last day of a plan cycle, except for
death, disability or retirement.
12
<PAGE>
- - PERFORMANCE GRAPH: FISCAL 1998
COMPARISON OF FORTY FOUR MONTH CUMULATIVE TOTAL RETURN AMONG BELL & HOWELL,
COMPOSITE GROUP AND S&P 500.
The following graph compares the cumulative total return of the Company's Common
Stock as compared with the S&P 500 Stock Index and a weighted composite of the
S&P Publishing Index and S&P Office Equipment & Supplies Index, weighted each
year based on the Company's EBITDA ratio.
[GRAPH]
The graph assumes a $100 investment made on May 2, 1995, the first trading date
of the Company's Common Stock, and the reinvestment of all dividends, as
follows:
<TABLE>
<CAPTION>
Dollar Value of $100 Investment at
May 2, 1995 January 2, 1999
----------- ---------------
<S> <C> <C>
Bell & Howell $100.00 $243.95
Composite Group 100.00 238.80
S&P 500 100.00 206.16
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
2. OTHER MATTERS
- - SHAREHOLDER PROPOSALS FOR 2000
Under the rules of the Securities and Exchange Commission, shareholder proposals
submitted for next year's Proxy Statement must be received by Bell & Howell no
later than the close of business on December 15, 1999, to be considered.
Proposals should be addressed to Todd Buchardt, General Counsel and Secretary,
Bell & Howell Company, 5215 Old Orchard Road, Skokie, Illinois 60077-1076.
- - VOTING SECURITIES
Shareholders of record at the close of business on March 19, 1999, will be
eligible to vote at the meeting. The voting securities of Bell & Howell consist
of its $.001 par value common stock, of which 23,242,542 shares were outstanding
on March 19, 1999. Each share outstanding on the record date will be entitled to
one vote.
Individual votes of shareholders are kept private, except as appropriate to meet
legal requirements. Access to proxies and other individual share owner voting
records is limited to the Independent Inspectors of Election (Boston EquiServe,
L.P.) and certain employees of Bell & Howell and its agents who must acknowledge
in writing their responsibility to comply with this policy of confidentiality.
- - VOTE REQUIRED FOR APPROVAL
The nominees for director receiving a plurality of the votes cast at the meeting
in person or by proxy shall be elected. All other matters which may presented at
the meeting require the favorable vote of a majority of shares voted at the
meeting for approval. Abstentions and broker non-votes will not be treated as
votes cast and, therefore, will have no effect on the outcome of the matters to
be voted on at the meeting.
- - MANNER FOR VOTING PROXIES
The shares represented by all valid proxies received will be voted in the manner
specified on the proxies. Where specific choices are not indicated, the shares
represented by all valid proxies received will be voted "FOR" the nominees for
director named earlier in this Proxy Statement.
Although the Board knows of no matter other than the election of directors which
may be presented to the meeting, should any other matter need to be acted upon
at the meeting, the persons named on the proxy card will vote in accordance with
their judgment.
14
<PAGE>
- --------------------------------------------------------------------------------
- - VOTING ON THE INTERNET OR VIA TELEPHONE
Again this year, registered holders (that is, those stockholders who hold stock
in their own names and whose shares are not held by a broker in a "street name"
on their behalf or whose shares are not held under the Bell & Howell Associate
Stock Purchase Plan) will be able to vote their proxies over the Internet or by
telephone. SPECIFIC INSTRUCTIONS FOR VOTING ON THE INTERNET OR BY TELEPHONE ARE
INCLUDED ON THE PROXY CARD.
- - SOLICITATION OF PROXIES
Proxies may be solicited on behalf of the Board of Directors by mail, telephone,
telegraph or in person, and solicitation costs will be paid by Bell & Howell.
Copies of proxy material and of the Form 10-K for 1998 will be supplied to
brokers, dealers, banks and voting trustees, or their nominees, for the purpose
of soliciting proxies from beneficial owners, and Bell & Howell will reimburse
such record holders for their reasonable expenses.
- - ACCOUNTING INFORMATION
The Company's independent auditor for fiscal 1999 is and for fiscal
1998 was KPMG LLP, which will be available to respond to appropriate questions
at the Annual Meeting of Shareholders.
15
<PAGE>
YOUR PROXY CARD IS ATTACHED BELOW
PLEASE READ AND FOLLOW THE INSTRUCTIONS
CAREFULLY AND DETACH AND RETURN YOUR
COMPLETED PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
DETACH HERE
PROXY
BELL & HOWELL COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS MAY 12, 1999
The undersigned hereby constitutes and appoints David G. Brown and Gary L.
Roubos, and each of them jointly and severally, proxies, with full power
of substitution to vote all shares of Common Stock which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of Bell & Howell
Company (the "Company") to be held on May 12, 1999, at 5215 Old Orchard Road,
Skokie, Illinois.
The undersigned acknowledges the receipt of Notice of the aforesaid
Annual Meeting and Proxy Statement, each dated April 9, 1999, grants,
authority to any of said proxies, or their substitutes, to act in the absence
of others, with all the powers which the undersigned would possess if
personally present at such meeting, and hereby ratifies and confirms all that
said proxies, or their substitutes, may lawfully do in the undersigned's
name, place and stead. The undersigned instructs said proxies, or either of
them, to vote as set forth on the reverse side.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE>
BELL & HOWELL
COMPANY
c/o Equiserve
P.O. Box 8040
Boston, MA 02266-8040
VOTE BY TELEPHONE
- -----------------
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE (1-877-779-8683)
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT
AND PROXY CARD.
2. CALL THE TOLL-FREE NUMBER
1-877-PRX-VOTE(1-877-779-8683). FOR
SHAREHOLDERS RESIDING OUTSIDE THE UNITED
STATES CALL COLLECT ON A TOUCH-TONE PHONE
3. ENTER YOUR 14-DIGIT CONTROL NUMBER LOCATED
ON YOUR PROXY CARD ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS.
YOUR VOTE IS IMPORTANT!
CALL 1-877-PRX-VOTE(1-877-779-8683) ANYTIME!
VOTE BY INTERNET
- ----------------
It's fast, convenient, and your vote is immediately
confirmed and posted.
FOLLOW THESE THREE EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT
AND PROXY CARD.
2. GO TO THE WEBSITE.
HTTP://WWW.BELLHOWELL.COM
3. CLICK ON THE "ANNUAL MEETING" ICON AND FOLLOW
THE INSTRUCTIONS ON YOUR SCREEN.
YOUR VOTE IS IMPORTANT!
GO TO HTTP://WWW.BELLHOWELL.COM ANYTIME!
DO NOT RETURN YOUR PROXY CARD IF YOUR ARE VOTING BY TELEPHONE OR INTERNET
DETACH HERE
- --------------------------------------------------------------------------------
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.
ALL PROXIES SIGNED AND RETURNED WILL BE VOTED OR NOT VOTED IN ACCORDANCE WITH
YOUR INSTRUCTIONS, BUT THOSE WITH NO CHOICE SPECIFIED WILL BE VOTED "FOR" EACH
OF THE NOMINEES FOR DIRECTOR NAMED BELOW.
1. Election of Directors
NOMINEES: (01) David Bonderman, (02) David G. Brown, (03), J. Taylor Crandall,
(04) Daniel L. Doctoroff, (05) Nils A. Johansson, (06) William E. Oberndorf,
(07) James P. Roemer, (08) Gary L. Roubos, (09) John H. Scully and (10) William
J. White.
FOR ALL NOMINEES / / / /WITHHELD FROM ALL NOMINEES
/ /
---------------------------------------
For all nominees except as noted above.
2. On all other matters which may properly come before the meeting or any
adjournment thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
NO POSTAGE REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED
ENVELOPE AND MAILED IN THE UNITED STATES.
Please sign exactly as name appears hereon. Joint owners should each
sign. Persons signing in a representative or fiduciary capacity should
add their titles.
PLEASE SIGN BELOW, DATE AND RETURN PROMPTLY.
Signature:______________________________________Date:_________
Signature:______________________________________Date:_________
<PAGE>
1999 ANNUAL MEETING OF SHAREHOLDERS
8:00 A.M. CDT
MAY 12, 1999
5215 OLD ORCHARD ROAD
SKOKIE, ILLINOIS
CUT OFF AT DOTTED LINE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
ADVANCE REGISTRATION FORM
Send your completed and signed proxy form in the enclosed envelope.
Include this Advance Registration Form in the envelope if you plan
to attend the Annual Meeting.
Attendance at the Annual Meeting is limited to Bell & Howell
shareholders or their named representative. We reserve the right to
limit the number of representatives who may attend the Annual Meeting.
(PLEASE PRINT)
Shareholder's Name
------------------------------------------------------
Address
------------------------------------------------------------------
------------------------------------------------------------------
(Admission card will be returned c/o the Shareholder's address)
