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NOTICE OF
YEAR 2000
ANNUAL MEETING
AND
PROXY STATEMENT
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BELL & HOWELL COMPANY
5215 OLD ORCHARD ROAD
SKOKIE, ILLINOIS 60077
April 14, 2000
Dear Shareholder,
You are invited to attend the Year 2000 Annual Meeting of Shareholders to be
held at 8:00 a.m. on Wednesday, May 17, 2000, in Skokie, Illinois.
As in previous years, if you cannot attend the meeting in person you will be
able to listen to the meeting live over the Internet. Please see the
instructions for connecting to the Bell & Howell website enclosed separately
with this Proxy Statement.
The Annual Meeting will begin with voting for directors and continue with
other business matters properly brought before the meeting, and will be followed
by my summary of the Company's 1999 performance and a question and answer
period.
Whether or not you plan to attend, you can be sure your shares are
represented at the meeting by promptly completing, signing, and dating the
enclosed proxy form, and returning it to us in the enclosed envelope. Or, as an
alternative method, you may cast your vote via the Internet or by telephone.
Cordially,
[SIGNATURE]
James P. Roemer,
CHAIRMAN OF THE BOARD
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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TIME......................................... 8:00 a.m. CT on Wednesday, May 17, 2000
PLACE........................................ Bell & Howell Company
5215 Old Orchard Road, 12(th) Floor
Skokie, IL 60077
ITEMS OF BUSINESS............................ (1) To elect nine members of the Board for
the ensuing year; AND
(2) To transact such other business as may
properly come before the meeting
RECORD DATE.................................. You can vote if you are a shareholder of
record on March 22, 2000
FINANCIAL INFORMATION........................ Our Form 10-K for the 1999 fiscal year and
other financial information are being mailed
to you along with this Proxy Statement
PROXY VOTING................................. It is important that your shares be
represented and voted at the meeting. Please
vote your shares in one of these ways:
(1) Mark, sign, date and promptly return the
enclosed proxy card in the envelope
provided;
(2) Vote via the Internet at the website
noted on your proxy card; or
(3) Use the toll-free telephone number shown
on the proxy card
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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.
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<S> <C>
[SIGNATURE]
April 14, 2000 Todd W. Buchardt,
SECRETARY
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TABLE OF CONTENTS
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QUESTIONS AND ANSWERS ABOUT VOTING.......................... 4
ELECTION OF DIRECTORS....................................... 5
A. Information About the Board, Committees, and
Compensation
B. Information About the Nominees for Director
EXECUTIVE COMPENSATION...................................... 8
A. Compensation Committee Report on Executive Compensation
B. Bases for Chief Executive Officer Compensation
COMPENSATION AND STOCK OWNERSHIP INFORMATION................ 9
A. Summary Compensation Table
B. Security Ownership of Certain Beneficial Owners
C. Ownership Information of Directors and Executive
Officers
D. Section 16(a) Beneficial Ownership Reporting Compliance
E. Stock Options Granted in 1999
F. Aggregated Stock Option Exercises in 1999 and Year End
Stock Option Values
SUPPLEMENTAL RETIREMENT PLAN................................ 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION............................................. 15
RELATED PARTY TRANSACTIONS.................................. 15
EMPLOYMENT CONTRACTS--CHANGE IN CONTROL AGREEMENTS.......... 15
PERFORMANCE GRAPH FOR FISCAL YEAR 1999...................... 16
SHAREHOLDER PROPOSALS FOR 2001.............................. 16
VOTING...................................................... 17
A. Voting Securities
B. Vote Required for Approval
C. Manner for Voting Proxies
D. Voting on the Internet
SOLICITATION OF PROXIES..................................... 17
ACCOUNTING INFORMATION...................................... 17
ADVANCE REGISTRATION FORM................................... BACK COVER
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QUESTIONS AND ANSWERS
Q: WHO CAN VOTE?
A: You can vote, if you were a shareholder at the close of business on the
record date of March 22, 2000.
Q: WHAT AM I VOTING ON?
A: You are voting on:
- The election of nine nominees as directors for terms that expire in 2001.
The Board of Directors' nominees are: David Bonderman, David Brown, Daniel
L. Doctoroff, Nils A. Johansson, William E. Oberndorf, James P. Roemer,
Gary L. Roubos, John H. Scully, and William J. White; AND
- Other business as may properly come before the meeting.
Q: HOW WILL THE PROXIES VOTE ON ANY OTHER BUSINESS BROUGHT UP AT THE MEETING?
A: By submitting your proxy card, you authorize the proxies to use their
judgment to determine how to vote on any other matter brought before the
annual meeting. The Company does not know of any other business to be
considered at the annual meeting. The proxies' authority to vote according
to their judgment applies only to shares you own as the shareholder of
record.
Q: HOW DO I CAST MY VOTE?
A: You may vote your share in one of these ways:
- Mark, sign, date, and promptly return the proxy card in the envelope
provided;
- Vote via the Internet at the website noted on your proxy card; OR
- Use the toll-free telephone number shown on the proxy card.
Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
A: The Board recommends you vote "FOR" the election of each nominee.
Q: CAN I REVOKE MY PROXY CARD?
A: You can revoke your proxy card by:
- Submitting a new proxy card;
- Giving written notice before the meeting to the Secretary of the Company,
stating that you are revoking your proxy card; OR
- Attending the meeting and voting your shares in person.
Unless you decide to vote your shares in person, you should revoke your
prior proxy card in the same way you initially submitted it--that is, by
Internet, telephone, or mail.
Q: WHO WILL COUNT THE VOTES?
A: Boston Equiserve.
Q: WHAT SHARES ARE INCLUDED ON MY PROXY CARD?
A: Your proxy card represents all shares registered to your account with the
same social security number and address.
Q: HOW MANY VOTES CAN I CAST?
A: On all matters you are entitled to one vote per share.
Q: WHAT IS A "QUORUM?"
A: A quorum is the number of shares that must be present to have the annual
meeting. The quorum requirement for the annual meeting is one-third of the
outstanding shares as of the record date, present in person or represented
by proxy. If you submit a valid proxy card or attend the annual meeting,
your shares will be counted to determine whether there is a quorum.
Q: HOW MANY VOTES WILL IT TAKE TO ELECT THE DIRECTOR NOMINEES?
A: The Directors are elected by a plurality of the votes cast by the shares
present in person or by proxy at the Annual Meeting and entitled to vote.
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INFORMATION ABOUT THE BOARD, COMMITTEES, AND COMPENSATION
The Board of Directors presently consists of ten members; however, J. Taylor
Crandall has decided not to stand for reelection to the Board. We express
sincere appreciation for his efforts and contributions during his nearly ten
years as a director.
The Board held six meetings during 1999. The average attendance by Directors
at these meetings was greater than 80%, and all nominees attended at least 90%
of the Committee meetings they were scheduled to attend. The Board has both an
Audit Committee and Compensation Committee.
AUDIT COMMITTEE. The Audit Committee's primary responsibilities are to
approve the selection of independent auditors; to review the scope and results
of the independent audit; to review the evaluation of the Company's systems of
internal accounting controls; and 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 two times during 1999. Messrs.
Roubos (CHAIRMAN), Oberndorf, and Scully are members of the Audit Committee.
COMPENSATION COMMITTEE. The Compensation Committee's responsibilities are
to monitor the Company's management resources, structure, succession planning,
development and selection process and the performance of key executives; and 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 two times during 1999. Messrs.
Oberndorf (CHAIRMAN), Bonderman, Crandall, Doctoroff, and Roubos are members of
the Compensation Committee.
COMPENSATION OF DIRECTORS. All of the Directors, except for
Messrs. Johansson and Roemer (who receive no additional compensation as
Directors), receive their compensation through both cash payments for individual
meeting attendance throughout the year and participation in the 1995
Non-Employee Directors' Stock Option Compensation Plan.
Compensation currently consists of an annual retainer fee of $25,000 in
stock options and a fee of $2,000 in cash for each Board meeting attended. A fee
of $1,000 in cash is also paid to each Director for their attendance at a
Committee meeting, and an additional $2,500 in cash is paid to those Directors
who serve as a Committee Chairman. The Board is also reimbursed travel expenses
for attendance at these meetings.
Under the 1995 Non-Employee Directors' Stock Option Compensation Plan, the
Board receives an annual stock option grant made as of the last day of trading
of the Company's Common Stock in the second fiscal quarter (July 2, 1999). The
stock options grant permits a non-employee Director to purchase shares of the
Company's Common Stock at an exercise price not less than the market value of
the Common Stock on the date the option is granted. The number of shares that
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 by using the
Black-Scholes option-pricing model. Based on that amount, in 1999 each
non-employee Director received an option grant of 1,070 shares of the Company's
Common Stock at an exercise price of $37.25 per share.
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INFORMATION ABOUT THE NOMINEES FOR DIRECTOR
The names of the persons who have been nominated by the Board for election
as Directors at the Annual Meeting are set forth below. There are no other
nominees. Nominations for Director are made by written notice to the Secretary
of the Company, generally at least 14 days prior to the shareholders' meeting at
which Directors are to be elected. All nominees have consented to serve as
Directors if elected.
If any nominee becomes unable to serve as a Director, the proxies will be
voted by the proxy holders for a substitute person nominated by the Board, and
authority to do so is included in the proxy. The term of office of each nominee
who is elected extends until the annual shareholders' meeting in 2001 and until
his successor is elected and qualified.
JAMES P. ROEMER, 52, has been 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 Company from
January 1994 to June 1995. Mr. Roemer joined Bell & Howell as Vice President and
Bell & Howell Publishing Services Company as President and Chief Operating
Officer in October 1991 and was promoted to President and Chief Executive
Officer of Bell & Howell Publishing Services Company 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. Mr. Roemer presently serves as a member of the Board of Directors
of bigchalk.com, inc.
DAVID BONDERMAN, 57, has been a Director of the Company since
December 1987. He has been the Managing General Partner of Texas Pacific Group
(a private investment company) since December 1992. He is also a Director of
Beringer Wine Estates, Inc., Continental Airlines, Inc., Denbury
Resources, Inc., Oxford Health Plans, Inc., Ryanair Ltd., Co-Star Realty
Information Group, Inc. and Washington Mutual Inc.
DAVID G. BROWN, 43, has been a Director of the Company since January 1994.
He has been the Managing Partner of Oak Hill Venture Partners since August 1999
and a Principal in Arbor Investors LLC since August 1995, Chief Financial
Officer of Keystone, Inc. from September 1998 to February 2000, and a Vice
President of Keystone, Inc. since August 1993. Prior to joining Keystone,
Mr. Brown was a Vice President in the Corporate Finance Department of Salomon
Brothers Inc. from August 1985 to July 1993. He is a Director of 2Bridge, AER
Energy Resources, FEP Holdings, Lattice Communications, Lightning Finance,
MarketTools, MobileForce Technologies, Owners.com, Sitara Networks, and WOW
Networks.
DANIEL L. DOCTOROFF, 41, has been a Director of the Company since
June 1990. He has served as Managing Director of Oak Hill Partners, Inc. since
August 1987 and has been a Managing Partner of Oak Hill Capital Management since
November 1998. Since October 1992, he also has been a Vice President of
Keystone, Inc. and since February 1994 he has been Managing Partner of Insurance
Partners Advisory, L.P. He is also a Director of Williams Scotsman, Inc.,
MeriStar Hospitality, Inc. and MeriStar Hotels and Resorts, Inc.
NILS A. JOHANSSON, 51, 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 January 1992 to
January 1994. From May 1989 to December 1991, he was Vice President, Finance,
Treasurer and Chief Financial Officer of the Company. From February 1981 to
May 1989 he
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held various executive positions with Bell & Howell, including Corporate
Treasurer, and positions in financial planning, analysis and control, as well as
business development. Mr. Johansson also serves as a member of the Board of
Directors of bigchalk.com, inc.
WILLIAM E. OBERNDORF, 46, 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, Inc. and
bigchalk.com, inc.
GARY L. ROUBOS, 63, has been a Director of the Company since February 1994.
He was Chairman of the Board of Dover Corporation from August 1989 to May 1998
and was President from May 1977 to May 1993. He is also a Director of Dover
Corporation and Omnicom Group, Inc.
JOHN H. SCULLY, 55, 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, Inc.
WILLIAM J. WHITE, 61, has been a Director of the Company since
February 1990 and was Chairman of the Board from February 1990 to January 1998.
He served as Chief Executive Officer of the Company from February 1990 to
February 1997 and was President of the Company from February 1990 to
February 1995. Since January 1998 he has been a Professor of Industrial
Engineering and Management Science at Northwestern University. He is also a
Director of Ivex Packaging Corporation and Readers Digest Association, Inc.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The philosophy of the Compensation Committee is to align executive
compensation with shareholder interests; 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 of executive officers and other
key employees by the Company.
In determining the overall level and form of executive compensation to be
paid or awarded in 1999 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 $1,000,000 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 1999, Mr. Roemer received total cash payments of $1,094,893 in salary
and bonuses (excluding Long Term Incentive Plan), as shown in the Summary
Compensation Table on page 9.
Of the 385,000 shares of Bell & Howell common stock granted to him in the
May 1995 stock options, 192,500 are currently exercisable. The remaining
192,500, or 50%, will become exercisable in May 2000. As shown in the Summary
Compensation Table, Mr. Roemer was also granted stock options in February 1998
for 250,000 shares (which vest in February 2001) and 100,000 shares in
February 1999 (which vest in February 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. As a director of bigchalk.com, inc., Mr. Roemer was
granted an option to purchase shares of bigchalk.com, inc. Mr. Roemer exercised
these option shares and purchased 20,833 shares of bigchalk.com, inc.
In determining Mr. Roemer's 2000 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 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
members of the Compensation Committee during 1999:
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William E. Oberndorf (CHAIRMAN) Daniel L. Doctoroff David Bonderman
J. Taylor Crandall Gary L. Roubos
</TABLE>
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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 1999, 1998 and 1997:
<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(4) COMPENSATION
- ------------------ -------- -------- -------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James P. Roemer....................... 1999 $629,430 $465,463 100,000 $133,200 $356,561(5)
Chairman of the Board 20,833(3) --
President and 1998 599,518 472,121 -- -- -- 66,523(5)
Chief Executive Officer 1997 567,298 71,153 250,000 $316,875 -- 101,288(5)
Howard S. Cohen ......................
Executive Vice
President(5)
Nils A. Johansson..................... 1999 448,276 234,000 20,000 -- 139,860 47,168(7)
Executive Vice President 18,333(3)
and 1998 433,275 272,964 -- -- -- 33,941(7)
Chief Financial Officer 1997 433,082 54,135 -- -- -- 44,336(7)
Joseph P. Reynolds.................... 1999 288,273 104,298 15,000 -- -- 103,258(9)
President of Bell & 18,333(3) --
Howell 1998(8) 185,095 148,500 15,000 272,344 -- 192,677(9)
Information & Learning Company
Wayne E. Mickiewicz................... 1999 258,073 131,617 15,000 -- -- 10,682(10)
President of Bell & 1998(8) 134,616 150,000 15,000 253,215 -- 271,942(10)
Howell
Publishing Services Company
Brian J. Longe........................ 1999 293,732 107,650 18,000 -- 66,600 12,690(12)
President of Bell & 1998 262,668 107,533 27,000 -- -- 6,493(12)
Howell 1997(11) 115,062 14,110 6,000 -- -- 2,333(12)
Imaging Company
</TABLE>
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(1) Consists of amounts awarded under the Company's Management Incentive Bonus
Plan (the "MIB") to Messrs. Roemer, Johansson, Longe, 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 1999 were made in March 2000.
(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) Consists of options to purchase shares of common stock of bigchalk.com,
inc., a 46%-owned subsidiary of the Company. See "Related Party
Transactions."
(4) For fiscal 1999 consisted of amounts earned under the Company's Long Term
Incentive Plan: 1998-1999 (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 1998 through fiscal
1999. Payments under the LTIP were made in cash in March 2000.
(5) For fiscal 1999, 1998 and 1997 includes $4,800, $4,800 and $4,775,
respectively, in contributions to the Bell & Howell Profit Sharing
Retirement Plan ("PSRP"); $30,099, $15,320 and $20,933, respectively, in
contributions to the Bell & Howell Replacement Benefit Plan ("RBP");
$4,966, $6,574 and $6,207, respectively, for imputed life insurance; and
$316,696, $39,829 and $69,373, respectively, for relocation and related
expenses.
(6) Mr. Cohen joined the Company in January 2000. The terms of his employment
are discussed in the section entitled, "EMPLOYMENT CONTRACTS, CHANGE OF
CONTROL ARRANGEMENTS."
(7) For fiscal 1999, 1998 and 1997 includes $9,600, $9,600 and $9,600,
respectively, in contributions to the PSRP; $34,074, $19,645 and $32,010,
respectively, in contributions to the RBP; and $3,494, $4,696 and $2,726,
respectively, in imputed life insurance.
(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.
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(9) For fiscal 1999 and 1998 includes $4,800 and $4,800, respectively, in
contributions to the PSRP; $8,346 and $4,314, respectively, in
contributions to the RBP; $4,819 and $2,393, respectively, in imputed life
insurance; $85,293 and $31,170, respectively, for relocation and related
expenses; and for fiscal 1998 includes a $150,000 signing bonus.
(10) For fiscal 1999 and 1998 includes $4,800 and $4,039, respectively, in
contributions to the PSRP; and $2,061 and $1,365, respectively, in imputed
life insurance; for fiscal 1999 includes $3,821 in contributions to the
RBP; for fiscal 1998 includes $116,538 for relocation and related
expenses; and for fiscal 1998 includes a $150,000 signing bonus.
(11) Reflects compensation from October 1997, when the employment of Mr. Longe
by the Company began, through December, 1997.
(12) For fiscal 1999, 1998 and 1997 includes $4,800, $4,800 and $2,333 in
contributions to the PSRP; and for fiscal 1999 and 1998 includes $4,890
and $1,693, respectively, in contributions to the RBP; and for fiscal 1999
includes $3,000 in imputed life insurance.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists information concerning the only beneficial owners
known by the Company to own more than five percent of the Company's Common Stock
as of December 31, 1999.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT
- ------------------------------------ ---------------- --------
<S> <C> <C>
Keystone, Inc. ....................................... 4,362,999 18.5%
3100 Texas Commerce Tower
201 Main Street
Fort Worth, Texas 76102
Lazard Freres & Co. LLC .............................. 1,794,674 7.6%
30 Rockefeller Plaza
New York, NY 10020
Fir Tree Partners .................................... 1,218,000 5.2%
1211 Avenue of the Americas
24th Floor
New York, NY 10036
Legg Mason, Inc. ..................................... 1,275,700 5.4%
100 Light Street
Baltimore, MD 21202
John H. Scully(1)(2).................................. 1,290,290 5.5%
William E. Oberndorf(1)(3)............................ 1,444,880 6.1%
</TABLE>
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(1) Messrs. Oberndorf and Scully, through the relationships with Main Street
Partners, L.P. and San Francisco Partners, L.P., may be deemed to share
investment and voting control with respect to 997,700 shares.
(2) Includes 286,295 shares that Mr. Scully may be deemed to beneficially own as
president of Phoebe Snow Foundation, a private foundation, as beneficiary of
a retirement account, as general partner of Netcong Newton, an investment
partnership; and through his ownership of options to purchase 6,295 shares
that are currently exercisable.
(3) Includes 440,885 shares that Mr. Oberndorf may be deemed to beneficially own
through his control of family trusts and through his ownership of options to
purchase 6,295 shares that are currently exercisable.
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OWNERSHIP INFORMATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table includes all Bell & Howell stock holdings, as of
March 1, 2000 of the Company's Directors, the executive officers listed in the
"Summary Compensation" table above, and the directors and executive officers as
a group.
<TABLE>
<CAPTION>
DIRECTORS AND EXECUTIVE OFFICERS: NUMBER OF SHARES PERCENT
- --------------------------------- ---------------- --------
<S> <C> <C>
William E. Oberndorf(5)..................................... 1,524,980 6.2
John H. Scully(5)........................................... 1,370,390 5.6
David Bonderman(1)(2)....................................... 733,680 3.0
William J. White(3)(4)...................................... 423,139 1.7
Nils A. Johansson(4)........................................ 347,412 1.4
J. Taylor Crandall(2)....................................... 117,961 *
James P. Roemer(4).......................................... 151,083 *
Howard S. Cohen............................................. 30,000 *
Joseph P. Reynolds(4)....................................... 24,900 *
Wayne E. Mickiewicz(4)...................................... 23,000 *
Brian Longe(4).............................................. 22,800 *
Gary L. Roubos(2)........................................... 7,999 *
Daniel L. Doctoroff(2)...................................... 6,295 *
David G. Brown(2)........................................... 6,295 *
All directors and executive officers as a Group (19
Persons).................................................. 4,910,464
</TABLE>
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(1) Includes 72,488 shares owned by Group Management, Inc. and 64,483 shares
owned by Bonderman Family Limited Partnership.
(2) Includes 6,295 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, and 1,070 option shares granted under the Non-Employee
Directors Stock Option Plan which are vested and fully exercisable.
(4) Includes 277,970; 139,000; 38,500; 6,000; 3,000 and 14,800 option shares
for Messrs. White, Johansson, Roemer, Reynolds, Mickiewicz and Longe,
respectively, granted under the 1995 Stock Option Plan, which are vested
and fully exercisable.
(5) Footnotes for Messrs. Oberndorf and Scully on page 10.
* less than 1%.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers, the chief accounting officer and 10% shareholders
("Insiders") to file with the Securities & Exchange Commission (SEC) and the New
York Stock Exchange reports disclosing their ownership and any changes in
ownership of Company securities, and to send copies of these filings to the
Company. To our knowledge, based upon review of such reports we have received
and based upon written representations that no other reports were required,
during the year ended January 1, 2000, the Company is unaware of any instances
of noncompliance or late compliance with 16(a) filing requirements applicable to
them, except due to an administrative error, the failure to file the granting of
options pursuant to the Non-Employee Directors Stock Option Plan, by Messrs.
Bonderman, Brown, Crandall, Doctoroff, Oberndorf, Roubos, Scully, and White.
11
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STOCK OPTIONS GRANTED IN 1999
<TABLE>
<CAPTION>
NUMBER OF PERCENT POTENTIAL REALIZABLE VALUE AT ASSUMED
SECURITIES OF TOTAL EXERCISE LATEST ANNUAL RATES OF STOCK PRICE
YEAR UNDERLYING ANNUAL OR BASE POSSIBLE PRICE APPRECIATION FOR OPTION TERM(1)
OF OPTIONS OPTIONS PRICE EXPIRATION -------------------------------------
NAME GRANT GRANTED (#) GRANTED ($/SH) DATE 5% 10% 20%
- ---- -------- ----------- ---------- -------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James P. Roemer........ 1999 100,000 21.0% 33.1250 Feb 2009 $2,083,213 $5,279,272 $17,197,627
20,833(3) n/a(2) 6.00 Dec 2009 n/a(2) n/a(2) n/a(2)
Nils A. Johansson...... 1999 20,000 4.2 33.1250 Feb 2009 416,643 1,055,854 3,439,525
18,333(3) n/a(2) 6.00 Dec 2009 n/a(2) n/a(2) n/a(2)
Joseph P. Reynolds..... 1999 15,000 3.2 33.1250 Feb 2009 312,482 791,891 2,579,644
18,333(3) n/a(2) 6.00 Dec 2009 n/a(2) n/a(2) n/a(2)
Wayne Mickiewicz....... 1999 15,000 3.2 33.1250 Feb 2009 312,482 791,891 2,579,644
Brian J. Longe......... 1999 10,000 29.0625 Oct 2009 182,773 463,181 1,508,848
1999 8,000 33.1250 Feb 2009 166,657 422,342 1,375,810
18,000 3.8
</TABLE>
- --------------------------
(1) The table sets forth the potential realizable values of such options, upon
their latest possible expiration date, at arbitrarily assumed annualized
rates of stock price appreciation of five, ten and twenty percent over the
term of the options. Because actual gains will depend upon, among other
things, the actual dates of exercise of the options and the future
performance of the Common Stock in the market, the amounts reflected in
this table may not reflect the values actually realized. No gain to the
named executive officers is possible without an increase in stock price,
which will benefit all shareholders proportionately.
(2) This information is not applicable to this item because bigchalk.com, inc.
is not a publicly traded company.
(3) Consists of options to purchase shares of common stock of bigchalk.com,
inc., a 46% owned subsidiary of the Company. See "Related Party
Transactions."
12
<PAGE>
AGGREGATED STOCK OPTION EXERCISES IN 1999 & YEAR END STOCK OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED YEAR-END(1) YEAR-END ($)(3)
NAME ON EXERCISE VALUE REALIZED EXERCISABLE/ UNEXERCISABLE EXERCISABLE/ UNEXERCISABLE
- ---- --------------- -------------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
James P. Roemer........ 154,000 $2,306,626 192,500/542,500 $2,071,781/$1,429,281
20,833(2)
Nils A. Johansson...... None N/A 135,000/155,000(4) $ 1,452,938/136,688
18,333(2)
Joseph P. Reynolds..... None N/A 3,000/27,000(5) $ 16,688/66,750
18,333(2)
Wayne Mickiewicz....... None N/A 3,000/27,000(5) $ 19,500/78,500
Brian J. Longe......... None N/A 7,800/43,200(5) $ 41,063/165,125
</TABLE>
- --------------------------
(1) All information provided is with respect to stock options. No SARs have been
issued by the Company.
(2) Represents options to purchase shares of common stock of bigchalk.com, inc.,
a 46% owned subsidiary of the Company.
(3) The amounts have been determined by multiplying the aggregate number of
options by the difference between $31.8125, the closing price of the Common
Stock on December 31, 1999 (the last trading day of fiscal 1999), and the
exercise price of the options.
(4) 135,000 of these options are fully exercisable commencing in May 2000;
20,000 of these options are exercisable in 20% cumulative increments, the
first increment beginning one year after the date of grant.
(5) These options are exercisable in 20% cumulative increments, the first
increment beginning one year after the date of grant.
13
<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; and (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 1999 for each
of the individuals listed in the Supplemental Retirement Plan Table below are 8,
18, and 2 years for Messrs. Roemer, Johansson and Longe, respectively, and one
for Messrs. Reynolds or Mickiewicz. The Company estimates that the annual SRP
benefits which have accrued through the end of fiscal 1999 and would be payable
upon retirement at age 60 to Messrs. Roemer, Johansson and would be 133,000 and;
197,000 respectively. Messrs. Longe, Reynolds and Mickiewicz have $-0- accrued.
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 beginning 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>
YEARS OF SERVICE
PARTICIPATION ---------------------
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>
YEARS OF SERVICE
PARTICIPATION -------------------------------------------
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>
14
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Obendorf, Bonderman, Crandall, Doctoroff and Roubos are the members
of the Compensation Committee. No member of the Compensation Committee is an
officer of the Company. No member of the Compensation Committee served as a
director or member of the Compensation Committee of another entity, one of whose
executive officers serviced as a director or member of the Compensation
Committee of the Company.
RELATED PARTY TRANSACTIONS
The Company has made loans (the balance of which totaled approximately
$1,544,000 at the end of fiscal 1999) 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 1999 (all rounded to the nearest $,000): M. A. Dering ($239), J.
P. Reynolds ($238), W. E. Mickiewicz ($222), B. Longe ($199), T. W. Buchardt
($161), R. Rook ($136), D. A. Mater ($126). Mr. Dering repaid his loan in full
in February 2000. 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 1999). Interest and principal may
be deferred until the maturity date. J.P. Reynolds had an additional loan of
$141,000 evidenced by an installment note payable in five annual installments
years from the date of the note and bearing interest at the Company's marginal
rate of borrowing.
In January 2000, the Company's subsidiary (bigchalk.com) raised venture
capital financing of $55,000,000 which reduced the Company's ownership interest
to approximately 45%. Currently, the Company's ownership interest is
approximately 46%. One of the venture capital firms providing such financing was
Core Learning Group, LLC, who contributed $20,000,000 in exchange for
approximately 13% of bigchalk.com. Messrs. Oberndorf and Scully, directors of
the Company, own a majority interest in Core Learning Group, LLC.
EMPLOYMENT CONTRACTS--CHANGE IN CONTROL AGREEMENTS
In January 2000, the Company and Mr. Cohen entered into a two-year
Employment Agreement. The principal terms of the employment agreement include:
- Annual salary of $425,000;
- Annual bonus based upon Mr. Cohen meeting or exceeding certain management
incentive bonus criteria;
- Provision of certain medical and other employee benefits;
- Prohibition against competing against the Company during employment and
for one year after termination of employment; AND
- Mr. Cohen may acquire 30,000 shares of the Company at its then-current
market value. The Company agreed to provide Mr. Cohen a loan equal to 90%
of the purchase price. The loan accrues interest at the Internal Revenue
Code Applicable Federal Rate.
- A grant of 200,000 option shares pursuant to the Company's 1995 Stock
Option Plan;
- Severance Benefits upon termination. If a change of control (as defined in
the employment agreement) occurs, any invested and outstanding options
shall vest and become fully exercisable.
15
<PAGE>
PERFORMANCE GRAPH: FISCAL 1999
COMPARISON OF 56-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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BELL & HOWELL S&P 500 COMPOSITE GROUP
<S> <C> <C> <C>
May 2, 1995 100.00 100.00 100.00
December 30, 1995 180.65 119.63 121.85
December 28, 1996 146.77 146.99 128.47
January 3, 1998 168.95 189.38 174.05
January 2, 1999 243.95 238.75 206.16
January 1, 2000 205.24 285.37 228.08
</TABLE>
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 1, 2000
----------- ---------------
<S> <C> <C>
Bell & Howell........................... $100.00 $205.24
Composite Group......................... $100.00 $228.08
S&P 500................................. $100.00 $285.37
</TABLE>
SHAREHOLDER PROPOSALS FOR 2001
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, 2000, to be
considered. Proposals should be addressed to Todd W. Buchardt, General Counsel
and Secretary at Bell & Howell Company, 5215 Old Orchard Road, Skokie, Illinois
60077-1076. For a shareholder to bring other business before the Annual Meeting,
but not have it included in the proxy statement, timely notice must be submitted
in writing, delivered or mailed by first-class mail, postage prepaid, to the
Secretary of the Company not less than 45 days prior to the month and day of
mailing of the prior year's proxy statement. The notice must identify the
proposing
16
<PAGE>
shareholder and his/her address and contain a description of the proposed
business and such other information as would be required to determine the
appropriateness of including the proposal in the proxy statement.
VOTING SECURITIES
Shareholders of record at the close of business on March 22, 2000, will be
eligible to vote at the meeting. The voting securities of Bell & Howell consist
of its common stock, of which 23,724,855 were outstanding on March 22, 2000.
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 (Bank
Boston, c/o 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.
VOTING ON THE INTERNET OR VIA TELEPHONE
Again this year, registered holders (i.e., 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 1999 will be
supplied to brokers, dealers, banks, and voting trustees, or their nominees, for
the purpose of soliciting proxies from beneficial owners Bell & Howell will
reimburse such record holders for their reasonable expenses.
ACCOUNTING INFORMATION
The Company's independent auditor for both 1999 and 2000 fiscal years is
KPMG LLP. A representative from KPMG will be available to respond to any
appropriate questions at the Annual Meeting of Shareholders.
17
<PAGE>
YEAR 2000 ANNUAL MEETING OF SHAREHOLDERS
8:00 A.M. CT
MAY 17, 2000
5215 OLD ORCHARD ROAD
SKOKIE, ILLINOIS
CUT 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 of Shareholders on May 17, 2000.
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)
<TABLE>
<S> <C>
Shareholder
Name:
------------------------------------------------------------
Address:
------------------------------------------------------------
------------------------------------------------------------
</TABLE>
(Admission card will be available at the Annual Meeting)
<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
[1397 - BELL & HOWELL COMPANY] [FILE NAME: BLH19B.ELX]
[VERSION - 2] [03/21/00] [orig. 03/20/00]
DETACH HERE
PROXY
BELL & HOWELL COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS MAY 17, 2000
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 17, 2000, 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 14, 2000, 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 9398
BOSTON, MA 02205-9398
- ----------------- -----------------
VOTE BY TELEPHONE VOTE BY INTERNET
- ----------------- -----------------
It's fast, convenient, and immediate! It's fast, convenient, and your
Call Toll-Free on a Touch-Tone Phone vote is immediately confirmed and
1-877-PRX-VOTE (1-877-779-8683). posted.
- ------------------------------------- -----------------------------------
FOLLOW THESE FOUR EASY STEPS: FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY 1. READ THE ACCOMPANYING PROXY
STATEMENT AND PROXY CARD. STATEMENT AND PROXY CARD.
2. CALL THE TOLL-FREE NUMBER 2. GO TO THE WEBSITE
1-877-PRX-VOTE (1-877-779-8683). HTTP://WWW.BELLHOWELL.COM
3. ENTER YOUR 14-DIGIT VOTER CONTROL 3. ENTER YOUR 14-DIGIT VOTER CONTROL
NUMBER LOCATED ON YOUR PROXY CARD NUMBER LOCATED ON YOUR PROXY CARD
ABOVE YOUR NAME. ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS. 4. FOLLOW THE INSTRUCTIONS PROVIDED.
- ------------------------------------- ------------------------------------
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to HTTP://WWW.BELLHOWELL.COM
anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
[1397 - BELL & HOWELL COMPANY] [FILE NAME: BLH19A.ELX]
[VERSION - 3] [04/13/00] [orig. 03/20/00]
DETACH HERE
PLEASE MARK
/X/ 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) Daniel L.
Doctoroff, (04) Nils A. Johansson, (05) William E. Oberndorf, (06) James P.
Roemer, (07) Gary L. Roubos, (08) John H. Scully and (09) William J. White.
FOR WITHHELD
ALL / / / / FROM ALL
NOMINEES NOMINEES
2. On all other matters which may
/ / _____________________________________ properly come before the
For all nominees except as noted above 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:______
