<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the registrant /X/
Filed by party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BMC INDUSTRIES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1 Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2 Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3 Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4 Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
*Set forth the amount on which the filing fee is calculated and state how
it was determined.
/X/ 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:
$125
------------------------------------------------------------------------
2 Form, Schedule or Registration Statement No.:
Schedule 14A Preliminary Proxy Statement
------------------------------------------------------------------------
3 Filing Party:
BMC Industries, Inc.
------------------------------------------------------------------------
4 Date Filed:
March 14, 1995
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<PAGE>
BMC
INDUSTRIES, INC.
TWO APPLETREE SQUARE
MINNEAPOLIS, MINNESOTA 55425
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 4, 1995
------------------------
TO THE STOCKHOLDERS OF BMC INDUSTRIES, INC.:
The Annual Meeting of Stockholders of BMC Industries, Inc. will be held at
the Atrium Center, 3105 East 80th Street, Bloomington, Minnesota on Thursday,
May 4, 1995 at 10:00 a.m. local time, for the following purposes:
1. To elect three directors for a term of two years;
2. To act on the proposal to amend Article V of the Second Restated
Articles of Incorporation of the Company to increase the number of
authorized shares of voting common stock from twenty-four million five
hundred thousand (24,500,000) shares to forty-nine million five hundred
thousand (49,500,000) shares;
3. To act on the proposal to amend Article V of the Second Restated
Articles of Incorporation of the Company to permit the Board of Directors
to amend the Company's Second Restated Articles of Incorporation to
change the number of authorized shares of capital stock in connection
with any division or combination of the Company's shares; and
4. To transact such other business as properly may be brought before the
meeting or any adjournment thereof.
The close of business of March 10, 1995 has been fixed as the record date
for the determination of stockholders who are entitled to vote at the meeting.
By order of the Board of Directors
[SIGNATURE]
Michael P. Hawks
SECRETARY
March 27, 1995
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING, NO ADMISSION TICKET OR
OTHER CREDENTIALS WILL BE NECESSARY. IF YOU DO NOT PLAN TO ATTEND THE MEETING,
PLEASE BE SURE YOU ARE REPRESENTED AT THE MEETING BY MARKING, SIGNING, DATING,
AND MAILING YOUR PROXY IN THE REPLY ENVELOPE PROVIDED.
<PAGE>
BMC
INDUSTRIES, INC.
TWO APPLETREE SQUARE
MINNEAPOLIS, MINNESOTA 55425
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
------------------------
INTRODUCTION
This proxy statement, which is first being mailed to stockholders on March
27, 1995, is furnished in connection with the solicitation by the Board of
Directors of BMC Industries, Inc. (the "Company") of proxies to be voted at the
Annual Meeting of Stockholders to be held on May 4, 1995, at the place and for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders, and at any adjournment thereof (the "Meeting"). The Company's 1994
Annual Report to Stockholders has been mailed to the stockholders but is not to
be considered a part of the proxy soliciting materials.
The accompanying proxy is enclosed for your use. You are solicited on behalf
of the Board of Directors of the Company (the "Board") to MARK, SIGN, DATE AND
RETURN THE PROXY IN THE ACCOMPANYING SELF-ADDRESSED ENVELOPE. The proxy is
revocable at any time before it is used at the Meeting. A proxy may be revoked
by filing a revoking instrument or a duly executed proxy bearing a later date
with the Secretary of the Company or by attending the Meeting and voting in
person. The shares represented by proxies received by the Board will be voted at
the Meeting.
The cost of soliciting proxies will be borne by the Company. Officers,
directors and regular employees of the Company may, but without compensation
other than their regular compensation, solicit proxies by mail, personal
conversation, telephone or otherwise. The Company may reimburse brokerage firms
and others for expenses incurred in forwarding solicitation material to the
beneficial owners of the Company's common stock ("Common Stock").
VOTING OF SHARES
Only holders of Common Stock of record at the close of business on March 10,
1995 (the "Record Date") will be entitled to vote at the Meeting. On March 10,
1995, the Company had 13,399,942 outstanding shares of Common Stock, each such
share entitling the holder thereof to one vote on each matter to be voted on at
the Meeting. Holders of shares of Common Stock are not entitled to cumulative
voting rights.
The presence at the Meeting, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock entitled to vote at the
Meeting (6,699,972 shares as of March 10, 1995) is required for a quorum for the
transaction of business. In general, shares of Common Stock represented by a
properly signed and returned proxy card will be counted as shares present and
entitled to vote at the Meeting for purposes of determining a quorum, without
regard to whether the card reflects votes against director nominees or
abstentions (or is left blank) or reflects a "broker non-vote" on a matter
(i.e., a card returned by a broker on behalf of its beneficial owner customer
that is not voted on a particular matter because voting instructions have not
been received and the broker has no discretionary authority to vote).
The election of a nominee for director and any other proposals described in
this Proxy Statement, other than the proposed amendments to the Second Restated
Articles of Incorporation (the "Articles"), require the affirmative vote of a
majority of the shares of Common Stock present and entitled to vote in person or
by proxy on that matter (and at least a majority of the minimum number of votes
necessary for a quorum to transact business at the Meeting). The affirmative
vote of the holders of at least a majority of the outstanding Common Stock
entitled to vote is required to amend Article V of the Company's Articles to
increase the number of authorized shares of voting Common Stock of the Company
and to amend Article V of the Company's Articles to allow the Board to amend the
Articles
<PAGE>
without stockholder approval to change the number of authorized shares of
capital stock in connection with any division or combination of the Company's
shares. Shares represented by a proxy card voted as abstaining on any of the
proposals will be treated as shares present and entitled to vote that were not
cast in favor of a particular matter, and thus will be counted as votes against
that matter. Shares represented by a proxy card that includes broker non-votes
on a matter will be treated as shares not entitled to vote on that matter, and
thus will not be counted in determining whether that matter has been approved.
ELECTION OF DIRECTORS
PROPOSAL 1
NOMINATION
The Company's Articles provide that the Board shall consist of not less than
three nor more than 17 members, as determined from time to time by the Board of
Directors, divided into two classes of as nearly equal size as possible. The
term of each class of directors is two years, and the term of one class expires
each year in rotation. The terms of four present members of the Board will
expire at the Meeting. The terms of the remaining three members of the Board
will not expire this year, but rather will expire as indicated below.
During 1994, the Board welcomed one new member to the Board of Directors.
The Board elected John W. Castro as a director effective August 4, 1994, with a
term expiring at the Meeting. The Board has determined that there will be six
(6) directors of the Company for the ensuing year. The Board has nominated John
W. Castro, Joe E. Davis and Dr. Richard A. Swalin to serve as directors of the
Company for terms of two years, expiring at the 1997 Annual Meeting of
Stockholders, or until their successors are elected and qualify.
The Board recommends a vote FOR the election of Messrs. Castro, Davis and
Swalin. Election requires the affirmative vote of a majority of the shares of
Common Stock represented in person or by proxy at the Meeting (and at least a
majority of the minimum number of votes necessary for a quorum to transact
business at the Meeting). In the absence of other instructions, the proxies will
be voted for the election of the nominees. If the Board should learn prior to
the Meeting that any of the nominees will be unable to serve by reason of death,
incapacity or other unexpected occurrence, the proxies that otherwise would have
been voted for them will be voted for such substitute nominee as may be selected
by the Board. Alternatively, the proxies, at the Board's discretion, may be
voted for such fewer number of nominees as results from such death, incapacity
or other unexpected occurrence. The Board has no reason to believe that any of
the nominees will be unable to serve.
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INFORMATION ABOUT DIRECTORS AND NOMINEES
The following table gives certain information concerning the Company's
directors, including this year's nominees.
<TABLE>
<CAPTION>
NAMES OF DIRECTORS DIRECTOR
AND NOMINEES PRINCIPAL OCCUPATION AGE SINCE
-------------------------- ---------------------------------------------------------------------- --- -----------
<S> <C> <C> <C>
NOMINEES FOR A TWO-YEAR TERM EXPIRING IN 1997:
John W. Castro President and Chief Executive Officer of Merrill Corporation 46 1994
(financial printing)
Joe E. Davis Private Investor; formerly President and Chief Executive Officer of 60 1982
National Health Enterprises, Inc.; formerly Chairman of the Board,
Linear Corporation
Dr. Richard A. Swalin Professor of Materials Science & Technology Management, University of 66 1993
Arizona; Retired Vice President of Research and Development,
Allied-Signal Corp.
DIRECTORS NOT STANDING FOR ELECTION THIS YEAR WHOSE TERMS EXPIRE IN 1996:
Lyle D. Altman Former Chairman of the Board of Network Systems Corporation (data 64 1983
communications equipment)
Paul B. Burke President and Chief Executive Officer of BMC Industries, Inc. 39 1991
S. Walter Richey President and Chief Executive Officer of Space Center Company (real 59 1982
estate; financial services; logistical services)
</TABLE>
Except as indicated below, there has been no change in the principal
occupations or employment during the past five years for the directors or
nominees for election as directors.
On March 7, 1995, Mr. Altman resigned as Chairman of the Board of Network
Systems Corporation ("NSC") in connection with Storage Technology Corporation's
acquisition of NSC. From September 1, 1993 to March 7, 1995, Mr. Altman served
as interim Chief Executive Officer of NSC. Mr. Altman previously served as
President and Chief Executive Officer of NSC until October, 1991, and as its
Chief Executive Officer until April, 1992.
Mr. Burke has been President and Chief Operating Officer of the Company
since May, 1991, and he has served as its President and Chief Executive Officer
since July, 1991. Mr. Burke has also been appointed Chairman of the Board
effective as of the next scheduled board meeting, which will be held following
the Meeting. Mr. Burke joined the Company as Associate General Counsel in June,
1983 and became Vice President, Secretary and General Counsel in August, 1985.
In November, 1987 he was appointed Vice President, Ft. Lauderdale Operations of
the Company's Vision-Ease Lens Division, and in May, 1989 he was appointed
President of Vision-Ease Lens.
Since 1984, Dr. Swalin has served in various positions with the University
of Arizona. Dr. Swalin was a member of the Company's Board of Directors from
1973-1977 and from 1983-1991.
The following Board members also serve as directors of the designated public
companies or affiliates of public companies: Mr. Castro, Merrill Corporation;
Mr. Davis, Freymiller Trucking, Inc., Wilshire Technologies, and American
Variable Insurance Series; Mr. Richey, First Bank Systems, Inc., Donaldson
Company, Inc. and The Bekins Company; and Dr. Swalin, Medtronic, Inc.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
COMMITTEES. The business and affairs of the Company are managed by the
Board, which met six (6) times in 1994. The Board maintains several standing
committees, including Audit, Compensation, Finance and Nominating Committees.
The Audit Committee oversees the Company's Internal Audit Department and the
provision of outside audit services. It met two (2) times in 1994. The
Compensation Committee recommends the compensation of the Chief Executive
Officer; reviews and approves
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<PAGE>
compensation for all elected executive officers; reviews, approves and modifies
all general compensation matters; and, sets the terms of, and grants awards
under the Company's 1994 Stock Incentive Plan and any other incentive plans. The
Compensation Committee met two (2) times during 1994. The Finance Committee
approves the Company's dividends payable to stockholders and reviews the
Company's long-range financing plan. The Finance Committee met two (2) times
during 1994. The Nominating Committee is authorized to identify, evaluate and
nominate persons for election to the Board and to make recommendations to the
Board with respect to such persons. The Nominating Committee will consider
nominees recommended by stockholders if submitted in writing to the Committee
Chair. The Company's Restated Bylaws also permit any stockholder entitled to
vote for the election of directors to make nominations directly, without first
recommending the nominee to the Nominating Committee. Under the Restated Bylaws,
any such nomination made by a stockholder must be made by written notice to the
Company's Secretary not less than 120 days prior to the Annual Meeting of
Stockholders or special meeting called for the election of directors (as the
case may be). The motion must include each nominee's name, age, business address
and residence address, principal occupation, and beneficial share ownership,
together with the class of directors to which the nominee is being nominated and
such other information as would be required in a proxy solicitation concerning
the nominee under the Securities and Exchange Commission's proxy rules. The
Nominating Committee met one (1) time in 1994.
The Audit, Compensation, Finance and Nominating Committees are presently
comprised of the following incumbent directors of the Company:
<TABLE>
<CAPTION>
AUDIT COMPENSATION FINANCE NOMINATING
COMMITTEE COMMITTEE COMMITTEE COMMITTEE
----------------------------- ------------------------ -------------------------- ---------------------------
<S> <C> <C> <C>
S. Walter Richey (Chair) Joe E. Davis (Chair) Joe E. Davis (Chair) Lyle D. Altman (Chair)
John W. Castro Lyle D. Altman S. Walter Richey John W. Castro
Dr. Richard A. Swalin Norman C. Mears Dr. Richard A. Swalin Norman C. Mears
</TABLE>
DIRECTORS' FEES. Mr. Burke is not paid a director's fee. The other
directors are paid an annual retainer of $12,000, $800 per Board meeting
attended and $800 ($850 in the case of the committee Chair) per committee
meeting attended.
DIRECTORS' DEFERRED COMPENSATION PLAN. On December 7, 1984, the Board of
Directors adopted the Directors' Deferred Compensation Plan (the "Deferred
Plan"), which is administered by the Secretary of the Company in conjunction
with the Human Resources Department. Each non-employee member of the Board of
Directors may elect to participate and defer his or her receipt of the fees
described above. The amount of each participating director's compensation
deferred under the Deferred Plan is credited to a separate bookkeeping account
in the director's name. Participants may elect to have compensation credited to
the "BMC Stock Performance" account ("Stock Account") or the "Interest Income"
account ("Interest Account"). Compensation credited to the Stock Account is
converted into share equivalents of Common Stock ("Phantom Stock") and each
participant is entitled to additional Stock Account credits for dividends (if
any) paid with respect to corresponding shares of BMC common stock during the
year. The value of Phantom Stock credited to the Stock Account, and,
consequently, the value of a participating director's account, increases or
decreases depending on the market performance of the Common Stock. Compensation
credited to the Interest Account earns interest computed on the beginning
balance each quarter at an annual rate equal to the effective cost of borrowing
under the Company's revolving credit agreements in effect during the quarter.
Amounts credited to participating directors' accounts are payable in cash in a
lump sum or in two to ten annual installments, at the option of the participant,
upon termination from the Board of Directors. During the past three years,
$48,395 was deferred under the Deferred Plan by all current directors, including
Mr. Mears, who are not executive officers, as a group (6 persons).
NON-EMPLOYEE DIRECTOR STOCK OPTIONS. On December 10, 1993, the Board
adopted the 1994 Stock Incentive Plan (the "1994 Plan") and the Stockholders
approved the 1994 Plan on May 5, 1994. The 1994 Plan provides for automatic
non-qualified option grants to the Company's non-employee directors. In
accordance with the terms of the 1994 Plan, new non-employee directors of the
Company who are first elected or appointed to the Board of Directors to fill new
directorships or vacancies will be automatically granted on a one-time basis on
the date of their election or appointment, non-qualified
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options to purchase 10,000 shares of Common Stock, at an exercise price equal to
the fair market value of the Common Stock on the date of grant. The 1994 Plan
further provides that on the date of each subsequent Annual Meeting of
Stockholders, each non-employee director will automatically be granted
additional options to purchase 2,000 shares.
OTHER. Under the Company's director retirement policy, a director is not
permitted to stand for re-election to a new term on the Company's Board of
Directors once he or she has reached age 68. Mr. Norman C. Mears, a member of
the Company's Board of Directors since 1954, and whose term expires at the
Meeting, is ineligible to stand for re-election. The Company wishes to extend to
Mr. Mears its sincere gratitude for his many years of service.
In 1994, all of the incumbent directors attended 75% or more of the
aggregate meetings of the Board and all such committees on which they served.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Set forth in the following table is information, as of December 31, 1994
(unless otherwise indicated), pertaining to persons who, to the best of the
Company's knowledge, owned beneficially more than five percent (5%) of the
outstanding Common Stock of the Company. Also set forth below is information
with respect to shares of the Common Stock beneficially held by the Company's
directors and the Company's executive officers named in the "Summary
Compensation Table", which appears below under the heading "Executive
Compensation", and for all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(1)
--------------------------------
PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT OF CLASS
---------------------------------------------------- ---------------- --------------
<S> <C> <C>
FMR Corporation 1,218,100(2) 9.09%
82 Devonshire Street
Boston, MA 02109-3614
Neuberger & Berman 688,700(3) 5.14%
605 Third Avenue
New York, NY 10158-3698
Investment Advisers, Inc. 674,700(4) 5.04%
3700 First Bank Place
P.O. Box 357
Minneapolis, MN 55440-0357
Lyle D. Altman 12,000(5) * (6)
Paul B. Burke 320,757(7) 2.36% (6)
John W. Castro 4,000 * (6)
Joe E. Davis 66,000(5) * (6)
Michael P. Hawks 47,730(8) * (6)
Merle D. Kerr 162,139(9) 1.21% (6)
Norman C. Mears 112,234(10) * (6)
Terry R. Nygaard 17,975(11) * (6)
S. Walter Richey 12,000(5) * (6)
Richard A. Swalin 2,000 * (6)
All Directors and current Executive Officers as a 756,835(12) 5.55% (6)
group (10 persons)
<FN>
------------------------
* = less than 1%.
(1) Unless otherwise noted, all of the shares shown are held by individuals or
entities possessing sole voting and investment power with respect to such
shares. Unless otherwise noted, share amounts
</TABLE>
5
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<TABLE>
<S> <C>
and percentages are as of December 31, 1994. Shares not outstanding but
deemed beneficially
owned by an individual or by members of the group (as the case may be) by
virtue of a right to acquire them within 60 days upon the exercise of
options are treated as outstanding for purposes of determining the percent
beneficially owned by the individual or the group.
(2) As set forth in a Schedule 13G, dated February 13, 1995, filed with the
Securities and Exchange Commission and reflecting such entity's beneficial
ownership as of December 31, 1994, 1,186,600 shares are beneficially owned
by Fidelity Management & Research Company ("Fidelity"), a wholly owned
subsidiary of FMR Corp. ("FMR"), an investment adviser registered under the
Investment Advisers Act of 1940 and adviser to several investment companies
registered under the Investment Company Act of 1940 (the "Funds"). Edward
C. Johnson 3d, FMR and the Funds each have sole power to dispose of the
1,186,600 shares owned by the Funds. The power to vote and direct the
voting of the shares owned by the Funds is held by the Funds, through
guidelines established by the Funds' Boards of Trustees. Edward C. Johnson
3d, the Chairman of FMR, and Abigail P. Johnson each own 24.9% of the
outstanding voting common stock of FMR. Various Johnson family members,
through their ownership of voting common stock and the execution of a
family stockholders' voting agreement, form a controlling group with
respect to FMR. Fidelity International Limited, a Bermudian joint stock
company and an investment adviser to various investment companies ("FIL")
is the beneficial owner of 31,500 shares of the Company. A partnership
controlled by Edward C. Johnson 3d and members of his family own
appropriately 47.22% of the voting power of FIL.
(3) As set forth in a Schedule 13G filed with the Securities and Exchange
Commission on February 10, 1995, Neuberger & Berman ("Neuberger"), a
registered investment adviser, is deemed to have beneficial ownership of
688,700 shares. As reported in the Schedule 13G, Neuberger possesses sole
voting power with respect to 253,500 of such shares, shared voting power
with respect to 250,000 of such shares and shared dispositive power with
respect to all such shares. Excludes 2,200 shares owned by certain partners
of Neuberger, of which Neuberger disclaims beneficial ownership.
(4) As set forth in a Schedule 13G, dated February 13, 1995, filed with the
Securities and Exchange Commission and reflecting such entity's beneficial
ownership as of December 31, 1994, Investment Advisers, Inc. ("IAI") has
advised the Company that it held all such shares by various custodian banks
for various clients of IAI, and possessed sole voting, investment and
disposition power with respect to 557,200 of such shares.
(5) Includes 2,000 shares that the director has the right to acquire within 60
days upon the exercise of options.
(6) As of March 10, 1995.
(7) Includes 169,800 shares that Mr. Burke has the right to acquire within 60
days upon the exercise of options; 200 shares held indirectly as custodian
for Mr. Burke's minor son; and, 6,967 shares allocable to Mr. Burke as of
December 31, 1994 in connection with his participation in the Company's
401(k) savings plan.
(8) Includes 15,000 shares that Mr. Hawks has the right to acquire within 60
days upon the exercise of options and 5,995 shares allocable to Mr. Hawks
as of December 31, 1994 in connection with his participation in the
Company's 401(k) savings plan. Does not include 5 shares held by Mr. Hawks'
father, as to which he disclaims any beneficial interest.
(9) Includes 52,500 shares that Mr. Kerr has the right to acquire within 60
days upon the exercise of options and 7,639 shares allocable to Mr. Kerr as
of December 31, 1994 in connection with his participation in the Company's
401(k) savings plan.
(10) Includes 2,000 shares that Mr. Mears has the right to acquire within 60
days upon the exercise of options. Includes 24,526 shares owned
beneficially by Mr. Mears' wife, as to which he may be deemed to share
voting and investment power, but as to which he disclaims any beneficial
</TABLE>
6
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<TABLE>
<S> <C>
interest. Includes 84,000 shares held by a trust of which Mr. Mears is the
beneficiary and co-trustee, as to which he shares voting and investment
power with First Trust National Association, Inc.
(11) Includes 5,475 shares allocable to Mr. Nygaard as of December 31, 1994 in
connection with his participation in the Company's 401(k) savings plan.
(12) Includes 24,526 shares owned beneficially by the wife of a director, as to
which he may be deemed to share voting and investment power, but as to
which shares he disclaims any beneficial interest. Includes 200 shares held
indirectly by an officer as custodian for a minor child. Includes 84,000
shares as to which voting and investment power are shared. Includes 245,300
shares not outstanding but deemed beneficially owned by members of the
group by virtue of a right to acquire them within 60 days upon the exercise
of options. Includes 26,076 shares allocable as of December 31, 1994 to
current executive officers (4 persons) in connection with their
participation in the Company's 401(k) savings plan. Does not include 5
shares held by an officer's father, as to which such officer disclaims any
beneficial interest.
</TABLE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THE COMMITTEE. The Compensation Committee of the Company's Board of
Directors (the "Committee") is comprised entirely of outside directors. The
Committee is responsible for:
- Annually reviewing and recommending to the Board of Directors the salary
and annual management incentive compensation of the Company's Chief
Executive Officer;
- Reviewing, approving or modifying the recommendations of the Chief
Executive Officer regarding annual salaries and annual management
incentive compensation for the Company's other executive officers;
- Annually reviewing, approving or modifying performance standards against
which management incentive plan awards will be made for executive
officers;
- Reviewing, approving or modifying incentive awards proposed at year end
for executive officers;
- Reviewing, approving or modifying stock option awards for executive
officers and other key employees eligible to receive awards;
- Reviewing, approving or modifying supplemental benefit or compensation
plans which apply exclusively to senior management, including executive
officers;
- Reviewing and recommending to the Board of Directors changes to current
executive officer benefit plans or the adoption of new executive
compensation programs requiring stockholder approval; and
- Reviewing and acting as appropriate on any other issues relating to
executive compensation and brought to the Committee by the Chief Executive
Officer for its consideration.
COMPENSATION PHILOSOPHY. The Company's executive compensation policy is
intended to support the achievement of the Company's desired economic
performance by:
- Providing compensation that will attract and retain superior talent and
reward performance; and
- Aligning executive officers' interests with the Company's success by
linking both annual incentive compensation and long-term incentive
compensation with the Company's success in achieving performance goals.
The executive compensation policy adopted by the Company, as approved by the
Committee, provides for an overall level of potential compensation that is at a
median level of competitiveness with manufacturing companies of comparable size.
The Committee, in reviewing compensation matters, consults with the Company's
Director of Compensation and Benefits and, as appropriate, independent
7
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compensation consultants. The Committee makes use of a variety of independently
available compensation surveys, each of which provide compensation data for well
over 100 companies, including many of the companies in the S&P 500-Registered
Trademark- and S&P-Registered Trademark- Manufacturing (Diversified Industries)
indices used in the Company's performance graph. See "Executive Compensation --
Comparative Stock Performance". The compensation surveys used by the Committee
report compensation data for like-sized manufacturing companies and provide
statistical analyses that predict median compensation rates at revenue levels
comparable to the Company. Actual individual compensation levels for officers of
the Company may be greater or less than median competitive levels, based upon
annual and long-term Company performance as well as individual performance. The
Compensation Committee, at its discretion, sets executive compensation at levels
which it judges are justified by external, internal, or other circumstances.
COMPLIANCE WITH FEDERAL TAX LEGISLATION. The Omnibus Reconciliation Act of
1993 added Section 162(m) to the Internal Revenue Code of 1986, as amended (the
"Code"), which generally precludes the Company and other public companies from
taking a tax deduction for compensation over $1 million which is not
"performance-based" and is paid, or otherwise taxable, to executives named in
the Summary Compensation Table and employed by the Company at the end of the
applicable tax year. No named executive is likely to earn over $1 million in
1995. The Company does not have a policy at this time regarding qualifying
compensation paid to its executive officers for deductibility under Section
162(m), but continues to monitor the situation.
ELEMENTS OF EXECUTIVE OFFICER COMPENSATION POLICY. The Company's executive
officer compensation policy is comprised of base salary, annual cash management
incentive compensation, long-term incentive compensation in the form of stock
options and/or restricted stock awards, and various other benefits, including
both medical, retirement and other benefit plans generally available to
employees of the Company and also certain perquisites available only to
executive officers (as described more fully below).
BASE SALARY. Base salary levels for the Company's executive officers,
including the Chief Executive Officer, are generally set at or below median
levels of competitiveness compared to manufacturing companies of similar size.
In determining individual salaries, in addition to the comparison with similar
companies, the Committee also takes into consideration individual experience and
performance, as well as competitive and comparable data related to the executive
officer's specific areas of expertise. As a matter of philosophy, the Company
does not emphasize base salaries in an executive's total compensation package.
ANNUAL INCENTIVE COMPENSATION. Under the Company's management incentive
bonus plan (the "Bonus Plan"), executive officers and key employees of the
Company, designated by the Chief Executive Officer, may receive cash bonus
awards after the close of the fiscal year if the Company achieves financial
performance goals set by the Board for that year. An earnings target is
established at the beginning of each year by the Board. A threshold level of 95
percent of the earnings target must be achieved before any bonus can be paid to
executive officers. Target bonus rates of between 25 percent and 50 percent of
base salary are established for each executive officer, depending upon the
individual's level of responsibility and the median level of incentive
compensation opportunity offered by like-sized manufacturing companies as
reported in salary surveys. If the earnings threshold is achieved, a participant
receives an award varying from 50 percent to 150 percent of his or her target
bonus rate, depending upon the actual earnings performance compared to the
earnings target. No bonuses are paid unless the predetermined earnings threshold
is achieved, and maximum bonuses are paid only in the event that actual
performance equals or exceeds 115% of the earnings target for the year. For
1994, the Company achieved performance beyond 115% of the earnings target.
Accordingly, executive officers were eligible to receive the maximum bonus under
the Bonus Plan for 1994.
On December 10, 1993, the Company's Board of Directors approved the
Company's 1994 Stock Incentive Plan (the "1994 Plan"), which subsequently was
approved by the Company's stockholders at the 1994 Annual Meeting of
Stockholders. The 1994 Plan provides for grants to eligible employees of the
Company of stock options, restricted stock awards, performance units, stock
bonuses and stock appreciation rights. The Committee has the discretion to
select participants, the type of award and the terms and conditions for each
award, to the extent not otherwise fixed by the terms of the 1994 Plan.
8
<PAGE>
Awards under the 1994 Plan are intended to align management and stockholder
long-term interests by creating a direct link between executive compensation and
stockholder return, and to enable executives to develop and maintain an equity
position in the Company.
The Committee does not rely on any single formula in determining the size of
grants or selecting recipients, but considers relevant median level competitive
data, the potential and performance of the recipient, grants made in prior years
and options which remain outstanding. During 1994, the Company did not grant any
awards under the 1994 Plan to the named executive officers.
OTHER BENEFITS. The Company provides medical and retirement benefits to
executive officers that are generally available to Company employees, including
participation in medical and dental benefit plans, a qualified 401(k) employee
savings plan and a qualified defined contribution profit-sharing plan. In
addition, the Company offers executive officers and other key management
employees a nonqualified benefit equalization plan which is designed to restore
benefits that would otherwise be lost due to limits imposed by IRS code Sections
401(a)(17), 401(k)(3), 401(m), 402(g) and 415. The Company also offers executive
officers certain executive perquisites which may be deemed to be a personal
benefit or constitute compensation to such executive officers, including (for
example) the use of leased automobiles, reimbursement for club membership dues,
tax preparation services, annual physical examinations and supplemental health
insurance. The Company provides an interest rate supplement to executive
officers who obtain commercial loans to pay the cost of exercising stock options
or of acquiring shares of the Company's stock in the open market. In addition,
the Company offers interest-free loans to employees to facilitate the exercise
of stock options. See "Certain Transactions."
CHIEF EXECUTIVE OFFICER COMPENSATION. Base salary, incentive compensation
awards, and other compensation paid to Mr. Burke, as well as stock option awards
made to Mr. Burke during his tenure as an executive officer, are consistent with
the design of the overall program described above, and are shown in the tables
below. The potential value of Mr. Burke's compensation package is designed to
"pay for results" by placing a high degree of pay at risk and by providing
significant emphasis on stockholder value through the granting of stock options.
Annual incentive compensation is targeted at 50% of his base salary with a
maximum of 75%. Benefits and perquisites are not emphasized and are set at or
below median levels of competitiveness. Mr. Burke's base salary and his stock
option awards are determined after a review of competitive compensation compiled
by independent consultants and after taking into account the Company's
performance under his leadership. The Company's performance is measured against
financial goals for earnings, earnings per share and cash flow. Other
measurements used to evaluate Mr. Burke are stock price performance and
soundness of strategic operating plans. Because the Company significantly
exceeded its financial goals for 1994 as defined by the Company's Bonus Plan,
Mr. Burke received a bonus equal to 75% of his 1994 base salary.
Members of the Compensation Committee
Joe E. Davis, Chairman
Lyle D. Altman
Norman C. Mears
9
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on the
Company's Common Stock for the last five fiscal years to the total cumulative
return on the S&P500-Registered Trademark- Index and the
S&P-Registered Trademark- Manufacturing (Diversified Industries) Index over the
same period, assuming a $100 investment in Common Stock and each such index on
December 31, 1989 and reinvestment of all dividends (if any).
CUMULATIVE TOTAL RETURN
BASED ON INVESTMENT OF $100 BEGINNING DECEMBER 31, 1989
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BMC S&P 500 S&P MFG
<S> <C> <C> <C>
Dec-89 100 100 100
102 97 107
138 103 115
75 89 92
Dec-90 52 97 99
74 111 116
102 111 122
103 117 120
Dec-91 100 126 122
139 123 127
92 126 120
111 130 126
Dec-92 144 136 132
131 142 138
162 143 143
200 146 150
Dec-93 277 150 160
280 144 161
356 145 159
368 152 167
Dec-94 411 152 166
</TABLE>
10
<PAGE>
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table describes the cash and non-cash compensation for each of
the last three fiscal years of the Company's Chief Executive Officer and its
three other executive officers whose annual salary and bonus exceed $100,000.
The Company has only four executive officers, including its Chief Executive
Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
AWARDS
ANNUAL COMPENSATION(1) -------------
------------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS(2) COMPENSATION(3) OPTIONS(4) COMPENSATION(5)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
--------------------------------- ------------ ----------- ----------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Paul B. Burke, 1994 $ 250,000 $ 187,500 $ 78,055 0 $ 67,046
President and CEO 1993 $ 220,000 $ 165,000 $ 48,250 200,000 $ 58,757
1992 $ 213,181 $ 139,314 $ 61,140 310,000 $ 23,409
Merle D. Kerr, 1994 $ 155,000 $ 81,133 $ 46,253 0 $ 38,164
Vice President Finance 1993 $ 143,000 $ 75,075 $ 34,075 20,000 $ 35,113
and Chief Financial Officer 1992 $ 140,116 $ 64,096 $ 25,141 110,000 $ 17,164
Michael P. Hawks, 1994 $ 100,000 $ 37,438 $ 24,000 0 $ 22,399
Treasurer and Secretary 1993 $ 95,700 $ 35,888 $ 18,267 10,000 $ 21,241
1992 $ 94,027 $ 30,723 $ 18,516 16,000 $ 12,690
Terry R. Nygaard, 1994 $ 91,269 $ 34,226 $ 22,073 0 $ 19,845
Corporate Controller 1993 $ 85,231 $ 27,808 $ 10,715 20,000 $ 17,857
1992(6) -- -- -- -- --
<FN>
------------------------
(1) Annual compensation (including compensation deferred at the election of the
named executive officer pursuant to qualified benefit plans) is included in
the appropriate category in the year earned.
(2) Bonuses are included in the year earned. Under the Company's Bonus Plan,
bonuses earned during any given fiscal year are paid to participants by
April of the following year.
(3) Includes the value of all perquisites and personal benefits provided by the
Company to the named individuals, including the use of leased automobiles,
reimbursement of club membership dues, tax preparation services, annual
physical examinations, supplemental health insurance and an interest rate
supplement related to the exercise of stock options or acquiring shares in
the open market. For the purposes of this table, the above mentioned
perquisites and benefits were valued at their incremental cost to the
Company, not on the taxable benefit derived by the named individuals. In
addition, the Company permits executive officers to exercise stock options
and pay any related income taxes due through interest-free loans from the
Company. See "Certain Transactions" below. The value of such interest-free
loans was determined by calculating the interest on such loans for the
applicable year at the applicable federal rate provided by the Code.
Specific perquisites or personal benefits exceeding 25% of the total
reported for each of the named individuals were as follows:
(a) Mr. Burke: Leased auto, $31,581, $20,887 and $19,088 for fiscal 1994,
1993 and 1992, respectively; imputed interest on interest free loans,
$32,805 for fiscal 1994; club memberships, $22,355 for 1992 (includes
$12,046 available to and deferred by Mr. Burke in prior years which
was paid to him or on his behalf during 1992). Total other annual
compensation paid to or on behalf of Mr. Burke during fiscal 1992 also
included $10,292 related to his relocation upon promotion to President
in 1991.
(b) Mr. Kerr: Leased auto, $13,305, $12,022 and $12,224 for fiscal 1994,
1993 and 1992, respectively; imputed interest on interest free loans,
$17,973 for fiscal 1994; club memberships $7,259 for fiscal 1992.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
(c) Mr. Hawks: Leased auto, $12,544, $11,730 and $8,771 for fiscal 1994,
1993 and 1992, respectively.
(d) Mr. Nygaard: Leased auto, $12,089 and $7,364 for fiscal 1994 and 1993,
respectively.
(4) The number of shares have been adjusted for a two-for-one stock split in
1994.
(5) Includes contributions made and to be made by the Company to the Company's
qualified 401(k) savings plan, qualified profit sharing plan and
nonqualified benefit equalization plan on behalf of the named individuals
for services performed in fiscal 1994, as follows:
(a) Mr. Burke: Savings plan, $3,000; profit sharing plan, $18,000; benefit
equalization plan, $46,046.
(b) Mr. Kerr: Savings plan, $3,000; profit sharing plan, $18,000; benefit
equalization plan, $17,164.
(c) Mr. Hawks: Savings plan, $7,601; profit sharing plan, $14,246; benefit
equalization plan, $552.
(d) Mr. Nygaard: Savings plan, $7,145; profit sharing plan, $12,700;
benefit equalization plan, $0.
(6) Mr. Nygaard became Corporate Controller on May 6, 1993.
</TABLE>
OPTION EXERCISES
The following table summarizes options exercised by the executive officers
named in the "Summary Compensation Table" above during fiscal 1994 and the
potential realizable value of the options held by those individuals at year-end
1994. The Company did not grant any options to any of the executive officers
during fiscal 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
EXERCISE REALIZED OPTIONS AT YEAR-END(#) AT YEAR-END($)
NAME (#)(1) ($)(2) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(3)
--------------------------------- ------------- --------- ----------------------- --------------------------
<S> <C> <C> <C> <C>
Paul B. Burke, 2,100 $ 23,756 169,800/380,000 $1,951,868/$3,256,564
President and CEO
Merle D. Kerr, 0 0 52,500/75,000 $612,500/$755,625
Vice President Finance and Chief
Financial Officer
Michael P. Hawks, 4,375 $ 72,188 15,000/18,000 $181,750/$147,812
Treasurer and Secretary
Terry R. Nygaard, 1,250 $ 15,781 0/17,500 $0/$128,906
Corporate Controller
<FN>
------------------------
(1) The exercise price may be paid in cash or, at the Compensation Committee's
discretion, in shares of Common Stock valued at fair market value on the
date of exercise, or pursuant to a cashless exercise procedure under which
the executive provides irrevocable instructions to a brokerage firm to sell
the purchased shares and to remit to the Company, out of the sale proceeds,
an amount equal to the exercise price plus all applicable withholding
taxes. The exercise price may also be paid with an interest free loan from
the Company pursuant to the BMC Stock Option Exercise Loan Program (the
"BMC Loan Program"). See "Certain Transactions" for a more detailed
description of the BMC Loan Program.
(2) Market value of underlying securities on date of exercise, minus the
exercise price.
(3) Based on the closing price on the New York Stock Exchange -- Composite
Transactions of the Company's Common Stock at December 31, 1994 ($15 5/8),
minus the exercise price.
</TABLE>
12
<PAGE>
OFFICER AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
Each of Messrs. Burke, Kerr and Hawks have entered into change of control
agreements (the "Agreements") with the Company in the form described immediately
below.
Under the Agreements, termination of an individual executive officer's
employment with the Company in connection with any change of control triggers
severance benefits. A "change of control" includes the sale, lease or other
transfer of substantially all of the assets of the Company; a stockholder
approved dissolution or liquidation; a change of control reportable to the
Securities and Exchange Commission on Form 8-K; acquisition by any person of 50%
or more of the Company's voting stock; or, a change in composition of the
Company's Board of Directors, such that current directors cease to constitute a
majority (but only if the nominations of the newly elected members were not
approved by the current directors). Severance benefits payable under the
Agreements consist of three years' base salary, payable in the form of a lump
sum payment of one year's base salary and a payout of the remainder over 24
months. The 24 monthly payments are reduced to the extent of any base salary
received as a result of subsequent employment, but the terminated executive
officer has no duty to seek subsequent employment. In the event the standard
severance benefits constitute an excess parachute payment under the rules of the
Internal Revenue Service, severance benefits will be reduced to an amount equal
to three years' base salary less the amount required to avoid excise tax
treatment. Under the Agreements, each executive officer remains employed by the
Company for a six month period following any change of control. During that
period, he or she may resign for "good reason" and receive contractual severance
benefits. "Good reason" includes adverse changes in compensation and/or duties,
forced relocation to a new locale, or the Company's failure to continue to
provide benefit plans equivalent to those offered by the Company prior to the
change of control. At the end of the six month period, the executive has a 30
day period in which to decide whether to remain employed by the successor;
during that period, the executive may elect to terminate employment, with or
without good reason, and receive contractual severance benefits. Any termination
by the successor during the above periods without good cause, or by the Company
prior to a change in control at the insistence of an acquiror, also triggers
severance benefits. "Good cause" includes (i) willful and continued failure to
perform duties or (ii) conviction of a felony or gross misdemeanor materially
injurious to the Company. Death or attainment of age 65 prior to the end of the
24 month period during which monthly payments are made ends all further
obligations of the Company.
To the extent not already exercisable, options also become immediately
exercisable under the 1994 Plan in the event of any "change in control." For
purposes of the 1994 Plan, a "change in control" of the Company means the
following (a) the sale or other transfer of substantially all of the assets of
the Company; (b) the liquidation or dissolution of the Company; (c) a merger or
consolidation involving the Company if (i) less than 50% of the voting stock of
the surviving company is held by persons who were stockholders of the Company
immediately before the merger or consolidation, or (ii) less than 80% of the
voting stock of the surviving company is held by persons who were stockholders
of the Company immediately prior to the merger or consolidation without the
prior approval of the continuity directors of the Company (directors as of
December 10, 1993 and additional directors nominated or elected by a majority of
the "continuity directors"); (d) ownership by any person or group of 50% or more
of the Company's voting stock, or 20% or more of the Company's voting stock
without the prior approval of the continuity directors; (e) the continuity
directors ceasing to constitute a majority of the Board, and (f) any change of
control that is required to be reported under Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Under the Company's 1984 Omnibus Stock Program, which terminated pursuant to
its terms on January 10, 1994, if any person makes a successful tender or
exchange offer for the common stock of the Company that the Board opposes or
does not affirmatively recommend, then (i) all incentive stock options, and
non-qualified options with respect to which no stock appreciation rights have
been granted, will become immediately exercisable, (ii) all non-qualified
options with respect to which stock appreciation rights have been granted and
which have been outstanding for at least six months, will become immediately
exercisable, provided that exercise may only take place during certain periods
following the public release of certain financial reports by the Company, and
(iii) all restrictions on any outstanding restricted stock awards will
immediately lapse.
13
<PAGE>
To the extent not already vested, all benefits under the Company's Profit
Sharing Plan 1994 Revision (the "Profit Sharing Plan") and Savings Plan 1994
Revision (the "Savings Plan") become fully vested in the event of any "change in
control." For purposes of the Profit Sharing Plan and Savings Plan, a change in
control of the Company means the following: (a) the sale or other transfer of
substantially all of the assets of the Company; (b) the liquidation or
dissolution of the Company; (c) a person becomes the beneficial owner of 50
percent or more of the voting power of the outstanding securities of the
Company; (d) individuals who constitute "incumbent directors" (directors as of
January 1, 1994 and additional directors nominated or elected by a majority of
the "incumbent directors") cease to constitute at least a majority of the board;
or (e) any change in control that is required to be reported under Section 13 or
15(d) of the Securities Exchange Act of 1934.
14
<PAGE>
PROPOSAL TO AMEND THE
COMPANY'S SECOND RESTATED ARTICLES OF INCORPORATION TO
INCREASE AUTHORIZED COMMON SHARES
PROPOSAL 2
INTRODUCTION
At present, the Company's Articles authorize the issuance of twenty-five
million (25,000,000) shares of capital stock consisting of five hundred thousand
(500,000) undesignated shares and twenty-four million five hundred thousand
(24,500,000) shares of voting Common Stock. As of December 31, 1994, because of
a two-for-one stock split occuring in 1994, thirteen million three hundred
ninety-one thousand nine hundred forty-two (13,391,942) shares of Common Stock
were issued and outstanding and two million two hundred eleven thousand nine
hundred eighty-eight (2,211,988) shares were reserved for issuance, though not
issued, under the Company's stock plans. Accordingly, on December 31, 1994,
there were only eight million eight hundred ninety-six thousand seventy
(8,896,070) shares of voting Common Stock available for issuance or sale by the
Company, other than those issuable as described above.
AMENDMENT
On December 14, 1994, the Board approved, subject to stockholder approval,
an increase in the number of shares of authorized capital stock from twenty-five
million (25,000,000) shares to fifty million (50,000,000) shares consisting of
five hundred thousand (500,000) undesignated shares and forty-nine million five
hundred thousand (49,500,000) shares of voting Common Stock. If this amendment
is approved by the Company's stockholders, thirty-three million eight hundred
ninety-six thousand seventy (33,896,070) shares of voting Common Stock will be
authorized and available for issuance or sale by the Company immediately after
the Meeting, other than those issuable as described above.
PURPOSE AND EFFECT OF PROPOSED AMENDMENT
In August 1994, the Board declared a two-for-one stock split, but did not
have the authority to increase the authorized shares correspondingly. As a
result, the Board is asking the stockholders to approve two proposals. In the
first proposal (Proposal 2), the Board is asking the stockholders to approve an
increase in the number of authorized shares of voting Common Stock. In the
second proposal (Proposal 3), the Board is asking the stockholders to approve an
amendment to the Articles that would allow the Board, in conjunction with a
future stock split, to increase the number of authorized shares of voting Common
Stock without stockholder approval. If these two Proposals are approved, the
Board will have added flexibility in declaring stock splits and other divisions
or combinations of the Company's capital stock.
The Board believes that it is necessary and desirable to increase the number
of shares of Common Stock that the Company is authorized to issue to give the
Board additional flexibility to raise equity capital, adopt additional employee
benefit plans, make acquisitions through the use of stock, and to enable the
Board to reserve additional shares for issuance under any warrants which may be
issued in the future. The Board has no immediate plans, understandings,
agreements or commitments to issue additional Common Stock for any of these
purposes, except as permitted or required by the Company's stock plans. The
Board believes that the proposed increase in the authorized shares would make it
unnecessary to hold a special stockholders' meeting in the future for the
purpose of authorizing an increase in the authorized Common Stock should the
Company decide to use its shares for one or more of such previously mentioned
purposes. No additional action or authorization by the Company's stockholders
would be necessary prior to the issuance of such additional shares, unless
required by applicable law or regulation or the rules of the New York Stock
Exchange.
Under the Company's Articles, the Company's stockholders do not have
preemptive rights with respect to the Common Stock. Thus, should the Board elect
to issue additional shares of Common Stock, existing stockholders would not have
any preferential rights to purchase such shares. In addition, if the Board
elects to issue additional shares of Common Stock, such issuance could have a
dilutive effect on the shareholdings of current stockholders.
15
<PAGE>
The proposed amendment to increase the authorized number of shares of Common
Stock could, under certain circumstances, have an anti-takeover effect. As
previously stated, however, the only intended purpose of the proposed amendment
is to increase the number of available shares of Common Stock in order to give
the Board more flexibility in conducting normal business operations, and the
proposal is not being presented as, nor is it part of, a plan to adopt a series
of anti-takeover measures.
PROPOSED RESOLUTION
A resolution in substantially the following form will be submitted to the
stockholders at the Meeting:
RESOLVED, that the first paragraph of Article V of the Company's Second
Restated Articles of Incorporation is amended in its entirety to provide as
follows:
The aggregate number of shares that this Corporation has authority to issue
is fifty million (50,000,000) shares which shall consist of five hundred
thousand (500,000) undesignated shares and forty-nine million five hundred
thousand (49,500,000) shares of voting common stock. Only the authorization
of the Board of Directors is necessary for this Corporation to issue shares
and other securities and rights to purchase shares and other securities. All
49,500,000 shares of voting common stock shall have equal rights and
preferences. The Board of Directors is authorized to establish, from the
undesignated shares, one or more classes and series of shares, to designate
each such class and series, and to fix the rights and preferences of each
such class and series. All stockholders are denied preemptive rights, unless
the Board of Directors shall grant preemptive rights to the holders of some
or all of the undesignated shares with respect to some or all of the
undesignated shares. This Corporation may issue shares of voting common
stock to the holders of shares of any class or series of the undesignated
shares and it may issue shares of any class or series of the undesignated
shares to the holders of shares of voting common stock.
RESOLVED FURTHER, that appropriate officers, or each acting singly, be, and
they hereby are, authorized, empowered and directed in the name of and on
behalf of the Company to do all such other acts and to negotiate, execute,
deliver and perform all such other documents, instruments and certificates
as may be necessary or appropriate, as determined by the Company's legal
counsel, to carry out the transactions contemplated by the foregoing
resolutions, including, without limitation, the filing of appropriate
Articles of Amendment with the Secretary of State of the State of Minnesota.
RECOMMENDATION OF THE BOARD
The Board recommends a vote FOR approval of such increase in the authorized
common shares. The affirmative vote of the holders of a majority of shares of
Common Stock is necessary for approval. Unless a contrary choice is specified,
proxies solicited by the Board will be voted FOR approval of such increase in
the authorized common shares.
16
<PAGE>
PROPOSAL TO AMEND ARTICLE V OF THE
COMPANY'S SECOND RESTATED ARTICLES OF INCORPORATION
PROPOSAL 3
INTRODUCTION
Until recently, Minnesota law required all amendments to the articles of
incorporation of a Minnesota corporation to be approved by its stockholders.
However, as a result of a change to Subdivision 3 of Section 302A.402 of the
Minnesota Statutes, the board of directors of a company, in conjunction with a
stock split, can amend the company's articles of incorporation without
stockholder approval if the articles of incorporation do not prohibit such
action.
AMENDMENT AND PROPOSED RESOLUTION
On December 14, 1994, the Board approved, subject to stockholder approval,
an amendment to Article V of the Articles that would permit the Board to approve
an increase or decrease in the number of authorized shares of capital stock of
the Company in connection with any division or combination of shares to the
extent such increase or decrease will not result in the percentage of authorized
shares that remains unissued after the division or combination exceeding the
percentage of authorized shares that were unissued before the division or
combination. In order to allow the Board to take such action in the future and
to amend the Articles without being required to obtain stockholder approval, a
resolution in substantially the following form will be submitted to the
stockholders at the Meeting:
RESOLVED, that the second paragraph of Article V of the Company's Second
Restated Articles of Incorporation is amended in its entirety to provide as
follows:
The vote required for any amendment to, or repeal of, all or any portion of
this Article V shall be the affirmative vote of the holders of at least
two-thirds of the voting power of the outstanding shares; provided, however,
that if the then current or a pre-existing Board of Directors of this
Corporation shall by resolution adopted at a meeting of the Board of
Directors have approved the amendment or repeal proposal and have determined
to recommend it for approval by the holders of shares entitled to vote on
the matter, then the vote required shall be the affirmative vote of the
holders of at least a majority of the voting power of the outstanding
shares; provided, further, that notwithstanding the foregoing, the Board of
Directors may amend this Article V to increase or decrease the number of
authorized shares in connection with any division or combination of shares
to the extent such increase or decrease will not result in the percentage of
authorized shares that remains unissued after the division or combination
exceeding the percentage of authorized shares that were unissued before the
division or combination.
RESOLVED FURTHER, that the appropriate officers, or each acting singly, be,
and they hereby are, authorized, empowered and directed in the name of and
on behalf of the Company to do all such other acts and to negotiate,
execute, deliver and perform all such other documents, instruments and
certificates as may be necessary or appropriate, as determined by the
Company's legal counsel, to carry out the transactions contemplated by the
foregoing resolutions, including, without limitation, the filing of
appropriate Articles of Amendment with the Secretary of State of the State
of Minnesota.
RECOMMENDATION OF THE BOARD
The Board recommends a vote FOR approval of such amendment to the Articles.
The affirmative vote of the holders of a majority of shares of Common Stock is
necessary for approval. Unless a contrary choice is specified, proxies solicited
by the Board will be voted FOR approval of such amendment to the Articles.
17
<PAGE>
CERTAIN TRANSACTIONS
Effective April 22, 1993, as amended on December 14, 1994, the Company
adopted the BMC Loan Program pursuant to which employees can borrow money from
the Company, generally on an interest-free basis, to exercise the Company's
stock options and to pay any related income taxes due. The shares obtained upon
exercise of the underlying stock options are held as collateral for the loan.
The purpose of the BMC Loan Program is to facilitate the exercise of stock
options, to encourage share ownership by employees, to minimize tax consequences
to key employees, and to minimize the need to sell shares in the open market to
pay income taxes due upon the exercise of options. Approval of the loans are
subject to the sole and absolute discretion of the Committee.
The total amount that any employee may borrow under the program is
determined by the Committee but may not exceed the following: (i) for the first
loan request, 100% of the exercise price of the option, plus 100% of the state
and federal income taxes actually paid within 15 months of such exercise on any
income recognized by reason of such exercise and (ii) for any subsequent loan,
the lesser of (a) 100% of the exercise price of the option, plus 100% of the
state and federal income taxes actually paid within 15 months of such exercise
on any income recognized by reason of such exercise or (b) the amount that, when
added to the principal amount of all outstanding loans under the BMC Loan
Program, will not exceed 60% of the market value of all the of the Company's
stock pledged as collateral by the employee immediately following the loan or
(c) eight times the employee's then current base salary. Notwithstanding the
foregoing criteria, the loans under the program may not exceed 100% of the
market value of all of the Company's stock pledged as collateral under the BMC
Loan Program at the time of such loan.
The loans made to employees under the BMC Loan Program are made on an
interest-free basis with respect to all amounts advanced to pay the option
exercise price. The loans are also interest-free with respect to the amounts
advanced to pay income taxes, but only to the extent that the aggregate
principal amount attributable to tax payments are not greater than two times the
employee's base annual compensation plus target bonus (the "Interest Free Loan
Amount"). The applicable interest rate for the amounts in excess of the Interest
Free Loan Amount is the rate applicable under any short-term borrowings by the
Company or, if the Company has no such borrowings, the interest rate payable to
the Company under its short-term money market investments. Upon termination of
the employee's employment, the loan must be repaid within 45 days or such longer
period as the Committee may determine. Upon the death or long term disability of
the employee, the Committee may extend the term of the repayment of the loan up
to six months. Notwithstanding the above, the Committee may demand repayment of
the notes at any time.
Each individual borrowing arrangement is evidenced by a written demand
promissory note executed by the employee at the time of borrowing. The note
provides that thirty percent (30%) of the employee's bonus compensation received
under the Bonus Plan (net of applicable estimated taxes and other withholdings)
will be applied to repay the principal under the note. In addition, a portion of
the proceeds from any sale of the Company's stock pledged under the BMC Loan
Program must be applied to the repayment of amounts outstanding under the BMC
Loan Program. All dividends received by an employee for BMC stock pledged for a
loan, net of applicable estimated taxes and other withholdings on such
dividends, are also applied to the loan.
The amount outstanding under the BMC Loan Program for Messrs. Burke, Kerr
and Hawks as of March 10, 1995 was $621,789, $334,164 and $148,035,
respectively. The largest loan amount outstanding for Messrs. Burke, Kerr and
Hawks during 1994 was $650,470, $358,712 and $82,361, respectively. The largest
loan amount outstanding for Messrs. Burke and Kerr during 1993 was $646,732 and
$360,667, respectively.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who beneficially own
more than 10% of the Company's Common Stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Directors, executive officers and greater than 10% stockholders are required by
SEC
18
<PAGE>
regulations to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company during the period ended December 31, 1994, all
Section 16(a) filing requirements applicable to its directors, executive
officers and greater than 10% stockholders were complied with, except that: John
W. Castro failed to timely file a Form 3, which was subsequently filed within 20
days.
INDEPENDENT AUDITORS
During 1994, in addition to auditing the Company's financial statements,
Ernst & Young, LLP performed services in connection with preparation of the
Company's tax returns and related tax planning, audits of employee benefit plans
of the Company and its operating units and provision of general accounting
advice.
Ernst & Young, LLP, or its predecessor, has been the Company's independent
auditors since 1980 and has been selected by the Board to continue as such for
the current fiscal year. The Company has requested and expects a representative
of Ernst & Young, LLP to be present at the Meeting, to make a statement if he or
she so desires and to respond to appropriate questions.
1996 STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented in the proxy materials
relating to the 1996 Annual Meeting of Stockholders must be received by the
Company on or before November 28, 1995.
OTHER BUSINESS
The Company knows of no business which will be presented for consideration
at the Meeting other than that described in this proxy statement. As to other
business, if any, that may properly come before the Meeting, it is intended that
proxies solicited by the Board will be voted in accordance with the judgment of
the person or persons voting the proxies.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K (EXCLUSIVE OF EXHIBITS) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 TO
EACH PERSON WHO IS A STOCKHOLDER OF THE COMPANY AS OF MARCH 10, 1995, UPON
RECEIPT FROM ANY SUCH PERSON OF A WRITTEN REQUEST FOR SUCH AN ANNUAL REPORT.
SUCH REQUESTS SHOULD BE SENT TO: INVESTOR RELATIONS DEPARTMENT, BMC INDUSTRIES,
INC., TWO APPLETREE SQUARE, MINNEAPOLIS, MN 55425.
Dated: March 27, 1995
BMC Industries, Inc.
Two Appletree Square
Minneapolis, Minnesota 55425
19
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.
The undersigned hereby appoint(s) Merle D. Kerr
and Michael P. Hawks, and each of them, as
Proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to
represent and to vote, as designated below, all
[LOGO] the shares of common stock of BMC Industries,
Inc. held of record by the undersigned on March
Two Appletree Square Proxy 10, 1995, at the Annual Meeting of Stockholders
Minneapolis, Minnesota to be held on May 4, 1995, or any adjournment
55425 thereof.
----------------------------
1. ELECTION OF DIRECTORS FOR all nominees listed AGAINST all nominees
below / / listed below / /
(except as marked to the
contrary below)
(INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE(S), STRIKE A LINE THROUGH
HIS NAME ON THE LIST)
John W. Castro Joe E. Davis Dr. Richard A. Swalin
2. To act on the proposal to amend Article V of the Second Restated Articles of
Incorporation of the Company to increase the number of authorized shares of
voting common stock from 24,500,000 shares to 49,500,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
3. To act on the proposal to amend Article V of the Second Restated Articles of
Incorporation of the Company to permit the Board of Directors to amend the
Company's Second Restated Articles of Incorporation to change the number of
authorized shares of capital stock in connection with any division or
combination of the Company's shares.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
The Board of Directors Recommends a Vote FOR Proposals 1, 2 and 3 Above.
(PLEASE SIGN ON REVERSE SIDE.)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 2 AND 3 AND FOR ALL NOMINEES NAMED IN PROPOSAL 1 ABOVE.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
--------------------------------------------------------------------------------
Dated: ______________, 1995.
____________________________
Print name(s) of
stockholder(s)
____________________________
Signature
____________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE
UNITED STATES.