<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
Filed by a party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
BMC INDUSTRIES, INC.
(Name of Registrant as Specified In Its Charter)
-------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
--
<PAGE>
BMC
INDUSTRIES, INC.
ONE MERIDIAN CROSSINGS, SUITE 850
MINNEAPOLIS, MINNESOTA 55423
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1999
------------------------
TO THE STOCKHOLDERS OF BMC INDUSTRIES, INC.:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of BMC
Industries, Inc. will be held at the Radisson Hotel South, 7800 Normandale
Boulevard, Bloomington, Minnesota on Wednesday, May 12, 1999 at 10:00 a.m.,
Central Daylight Time, for the following purposes:
1. To elect four directors for a term of two years; and
2. To transact such other business as properly may come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on March 24, 1999 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the meeting or any adjournment thereof.
By Order of the Board of Directors
/s/ Jon A. Dobson
Jon A. Dobson
GENERAL COUNSEL AND SECRETARY
March 31, 1999
YOUR VOTE IS VERY IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING AND REGARDLESS OF THE NUMBER
OF SHARES YOU OWN, PLEASE SIGN AND RETURN YOUR PROXY CARD AS SOON AS POSSIBLE.
YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS USAGE. A PRE-ADDRESSED
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE IN RETURNING THE SIGNED
PROXY CARD.
<PAGE>
BMC
INDUSTRIES, INC.
ONE MERIDIAN CROSSINGS, SUITE 850
MINNEAPOLIS, MINNESOTA 55423
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
------------------------
INFORMATION CONCERNING THE SOLICITATION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of BMC Industries, Inc. (the "Company," "BMC,"
"we" or "our") for use at the 1999 Annual Meeting of Stockholders to be held at
the Radisson Hotel South, 7800 Normandale Boulevard, Bloomington, Minnesota on
Wednesday, May 12, 1999, at 10:00 a.m., Central Daylight Time, and at any
adjournment thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. Our annual report to stockholders for
the year ended December 31, 1998 has been mailed to stockholders but is not to
be considered a part of the proxy soliciting materials.
You are entitled to vote at the meeting if you were a stockholder of record
at the close of business on March 24, 1999. PLEASE SIGN, DATE AND RETURN THE
PROXY CARD IN THE ACCOMPANYING PRE-ADDRESSED ENVELOPE. Signing and returning
your proxy card will not prevent you from voting in person at the meeting. You
may revoke your proxy at any time before it is used at the meeting 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. On
March 24, 1999, there were 27,226,380 shares of common stock outstanding.
The cost of soliciting proxies will be borne by the Company. Officers,
directors and regular employees of the Company may, without additional
compensation, solicit proxies by mail, personal conversation, telephone or
otherwise. We will reimburse brokerage firms and others for expenses incurred in
forwarding solicitation material to the beneficial owners of BMC common stock.
We anticipate that this proxy statement, a proxy card and our annual report to
stockholders for the year ended December 31, 1998 will be mailed to stockholders
on or about March 31, 1999.
VOTING OF SHARES
Each stockholder has the right to cumulate votes for the election of
directors by giving written notice of intent to cumulate votes to any officer
before the meeting, or to the presiding officer at the meeting (before the
election of directors). If any stockholder gives notice to cumulate, then each
stockholder may cast a number of votes equal to the number of his or her shares
multiplied by the number of directors to be elected. The stockholder may cast
all those votes for one nominee or may distribute them among the nominees. On
all other matters, stockholders are entitled to one vote per share.
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 is required for a quorum for the transaction of business. 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 for or
against, abstentions or broker non-votes on a matter.
The election of a nominee for director requires the affirmative vote of a
majority of the shares of common stock present and entitled to vote in person or
by proxy at the meeting (or, if votes are cumulated, the affirmative vote of
more than one-fifth of all votes cast). 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.
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<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINATION
Our Second Restated Articles of Incorporation provide that the Board will
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. Each class of directors serves a two year term, with the term
of one class expiring each year in rotation. The Board currently consists of
seven (7) directors, with the terms of four present members of the Board
expiring as of the meeting. The terms of the remaining three members of the
Board will expire next year.
The Board has determined that there will be seven (7) directors for the
ensuing year. The Board has nominated John W. Castro, Joe E. Davis, H. Ted Davis
and James M. Ramich to serve as directors for terms of two years, expiring at
the annual meeting of stockholders in 2001.
The Board recommends a vote FOR the election of the nominees. 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 that
nominee 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.
INFORMATION ABOUT DIRECTORS AND NOMINEES
The following table gives certain information concerning 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 2001:
John W. Castro................ President and Chief Executive Officer of Merrill Corporation
(diversified document services) 50 1994
Dr. H. Ted Davis.............. Dean, Institute of Technology, University of Minnesota 61 1998
Joe E. Davis.................. Former President and Chief Executive Officer of National Health
Enterprises, Inc.; former Chairman of the Board, Linear
Corporation 64 1982
James M. Ramich............... Former Executive Vice President, Corning Communications of
Corning Incorporated 53 1998
DIRECTORS NOT STANDING FOR ELECTION AT THE MEETING WHOSE TERMS EXPIRE IN 2000:
Lyle D. Altman................ Former Chairman of the Board of Network Systems Corporation (data
communications equipment) 68 1983
Paul B. Burke................. Chairman of the Board, President and Chief Executive Officer of
BMC Industries, Inc. 43 1991
Harry A. Hammerly............. Former Executive Vice President and Director of 3M Company 65 1995
</TABLE>
2
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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.
Dr. Davis has served as Dean of the Institute of Technology at the
University of Minnesota since 1995. He has served as the Regents' Professor,
Department of Chemical Engineering and Materials Service, at the University of
Minnesota since 1997. Dr. Davis also served as Head of the Department of
Chemical Engineering at the University of Minnesota from 1980 to 1995.
Mr. Ramich retired from Corning Incorporated in April 1998 after 25 years of
service, most recently as Executive Vice President, Corning Communications. He
also served in a number of other senior management and operating positions at
Corning, including President, Corning Japan, Executive Vice President,
Information Display Group and Vice President of Corporate Development.
In March 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 1993 to March 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 of the Company since May 1991, and he has
served as its President and Chief Executive Officer since July 1991. Mr. Burke
has also served as Chairman of the Board since May 1995. 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.
Mr. Hammerly retired from 3M Company in July 1995. He served in various
positions with 3M from June 1955 to July 1995, most recently as Executive Vice
President, International Operations.
The following Board members also serve as directors of the designated public
companies: Mr. Burke, Donaldson Company, Inc.; Mr. Castro, Merrill Corporation;
Mr. Davis, American Variable Insurance Series and Wilshire Technologies, Inc.;
and Mr. Hammerly, Apogee Enterprises, Inc., Brown and Sharp Manufacturing
Company and Milacron, Inc.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
COMMITTEES. During 1998, the Board of Directors met seven (7) times. The
Board maintains four standing committees: an Audit Committee, a Compensation
Committee, a Finance Committee and a Corporate Governance Committee. In 1998,
all of our directors attended 75% or more of the meetings of the Board and the
committees on which they served. The Audit Committee oversees our internal audit
department and the provision of outside audit services. It met two (2) times in
1998. The Compensation Committee reviews and approves compensation for all
elected executive officers; reviews, approves and modifies all general
compensation matters; and sets the terms of, and grants awards under, our 1994
Stock Incentive Plan and any other incentive plans. The Compensation Committee
met four (4) times during 1998. The Finance Committee approves dividends payable
to stockholders and reviews our Company's long-range financing plan. The Finance
Committee met six (6) times during 1998. The Corporate Governance 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
Corporate Governance Committee also reviews Board and corporate governance
policies. The Corporate Governance Committee did not meet during 1998. The
Corporate Governance Committee will consider nominees recommended by a
stockholder if the stockholder submits the recommendation in writing to the
chairperson of the Corporate Governance Committee. Our 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 Corporate
Governance Committee. Under the bylaws, any such nomination made by a
stockholder must
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<PAGE>
be made by written notice to the corporate 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 Audit, Compensation, Finance and Corporate Governance Committees are
presently comprised of the following incumbent directors:
<TABLE>
<CAPTION>
CORPORATE GOVERNANCE
AUDIT COMMITTEE COMPENSATION COMMITTEE FINANCE COMMITTEE COMMITTEE
- -------------------------- ------------------------------ ---------------------- -------------------------
<S> <C> <C> <C>
Lyle D. Altman, Chair Harry A. Hammerly, Chair Joe E. Davis, Chair John W. Castro, Chair
Joe E. Davis James M. Ramich Lyle D. Altman Harry A. Hammerly
H. Ted Davis John W. Castro James M. Ramich H. Ted Davis
</TABLE>
DIRECTORS' FEES. Since he is an employee, Mr. Burke is not paid a
director's fee. Non-employee directors are paid an annual cash retainer of
$15,000. Non-employee directors also receive a fee of $1,000 for each Board
meeting attended and $1,000, $1,200 in the case of the committee Chair, for each
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 corporate secretary in conjunction with the
human resources department. Each non-employee director may elect to participate
and defer his or her director's fees. 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 can elect to
have compensation credited to a phantom investment options account ("Investment
Account") or an "Interest Income" account ("Interest Account"). Compensation
credited to the Investment Account is converted into share equivalents of up to
three mutual funds ("Phantom Investments") chosen from a variety of equity and
bond fund options. The value of Phantom Investments credited to the Investment
Account, and, consequently the value of a participating director's account,
increases or decreases depending on the market performance of the underlying
mutual funds chosen as Phantom Investments. 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 our 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, $65,950 was deferred under
the Deferred Plan by one current director who is not an executive officer.
NON-EMPLOYEE DIRECTOR STOCK OPTIONS. On December 10, 1993, the Board
adopted the 1994 Stock Incentive Plan (the "1994 Plan"), which subsequently was
approved by stockholders at the annual meeting of stockholders in 1994. The 1994
Plan provides for automatic non-qualified option grants to non-employee
directors. Effective as of January 1, 1997, the Board amended the 1994 Plan to
provide for an automatic, one-time grant to directors filling new directorships
or vacancies of a non-qualified option to purchase 10,000 shares of common
stock, at an exercise price equal to the fair market value of our common stock
on the date of their election or appointment. Prior to January 1, 1997, new
directors received a non-qualified option to purchase 20,000 shares of common
stock on the date of their first election or appointment to the Board. 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 4,000 shares of common stock at the fair market
value of our common stock on the date of grant. Each option becomes exercisable
in full three years after the date of grant and terminates five years after the
date of grant. If a non-employee director ceases to serve as a director for any
reason other than death, disability or mandatory retirement, all options held by
the director will continue to vest
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<PAGE>
and expire in accordance with the original terms of the grants. All options
become immediately exercisable in the event of a director's death, disability or
mandatory retirement.
NON-EMPLOYEE DIRECTOR STOCK OWNERSHIP GUIDELINES. The Board adopted minimum
stock ownership guidelines in 1998 for non-employee directors. The minimum level
of ownership is five times the annual retainer. Non-employee directors have a
period of five years to acquire sufficient shares to meet the minimum levels.
Shares may be held in various forms of beneficial ownership, including jointly
with a spouse, through a trust or in a retirement account. Unexercised stock
options, however, do not count toward fulfillment of the guidelines. Until a
non-employee director meets the minimum ownership guidelines, he or she receives
50% of the annual cash retainer in BMC common stock.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information, as of March 24, 1999, unless
otherwise indicated, pertaining to persons who, to the best of our knowledge,
owned beneficially more than five percent (5%) of our outstanding common stock.
This table also provides information with respect to shares of common stock
beneficially held by the directors and executive officers named in the Summary
Compensation Table 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>
Becker Capital Management, Inc........................................ 1,370,600(2) 5.0%
1211 SW Fifth Avenue, Suite 2185
Portland, OR 97204
Lyle D. Altman........................................................ 44,000(3) *
Paul B. Burke......................................................... 1,081,204(4) 3.9
John W. Castro........................................................ 46,000(5) *
H. Ted Davis.......................................................... 2,701 *
Joe E. Davis.......................................................... 123,200(3) *
William A. Guernsey................................................... 80,291(6) *
Harry A. Hammerly..................................................... 38,588(7) *
Jeffrey J. Hattara.................................................... 9,200(8) *
James M. Ramich....................................................... 971 *
Jeffrey L. Wright..................................................... 15,758(9) *
All directors and executive officers as a group (12 persons).......... 1,453,554(10) 5.2
</TABLE>
- ------------------------
* less than 1%.
(1) Unless otherwise noted, all shares are held by individuals or entities
possessing sole voting and investment power. Unless otherwise noted, share
amounts and percentages are as of March 24, 1999. Shares subject to options
that are exercisable on or prior to May 24, 1999 are treated as outstanding
for purposes of determining the percent beneficially owned by an individual
or by members of the group, as the case may be.
(2) As set forth in a Schedule 13G filed with the Securities and Exchange
Commission on February 10, 1999, Becker Capital Management, Inc. ("Becker"),
a registered investment adviser, is deemed to
5
<PAGE>
have beneficial ownership as of December 31, 1998 of 1,370,600 shares.
Becker reports that it has sole voting power and sole dispositive power with
respect to all 1,370,600 shares.
(3) Includes 12,000 shares that the director has the right to acquire within 60
days upon the exercise of options.
(4) Includes 624,600 shares that Mr. Burke has the right to acquire within 60
days upon the exercise of options; 9,468 shares held as nontransferable
restricted shares awarded under the 1994 Plan, which are subject to
forfeiture under certain circumstances; 400 shares held indirectly as
custodian for his minor son; and 11,353 shares allocable to him as of
December 31, 1998 in connection with his participation in the Savings and
Profit Sharing Plan.
(5) Includes 8,000 shares that Mr. Castro has the right to acquire within 60
days upon the exercise of options and 10,000 shares held by his wife, of
which Mr. Castro disclaims beneficial ownership.
(6) Includes 64,000 shares that Mr. Guernsey has the right to acquire within 60
days upon the exercise of options and 1,411 shares allocable to Mr. Guernsey
as of December 31, 1998 in connection with his participation in the Savings
and Profit Sharing Plan.
(7) Included 24,000 shares that Mr. Hammerly has the right to acquire within 60
days upon the exercise of options.
(8) Includes 8,000 shares that Mr. Hattara has the right to acquire within 60
days upon the exercise of options.
(9) As of January 31, 1999. Includes 12,700 shares that Mr. Wright had the right
to acquire within 60 days upon the exercise of options and 258 shares
allocable to him as of December 31, 1998 in connection with his
participation in the Savings and Profit Sharing Plan.
(10) Includes 400 shares held indirectly by Mr. Burke's minor son, 773,700
shares deemed beneficially owned by members of the group by virtue of a
right to acquire them within 60 days upon the exercise of options, 10,384
shares held as non-transferable restricted shares awarded under the 1994
Plan to two executive officers and 13,295 shares allocable as of December
31, 1998 to four executive officers in connection with their participation
in the Savings and Profit Sharing Plan.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THE COMMITTEE. The Compensation Committee of our Board of Directors (the
"Committee") is comprised entirely of non-employee directors and administers our
executive compensation program. See "Information About the Board and its
Committees" for a more complete description of the functions of the Committee.
COMPENSATION PHILOSOPHY. Our executive compensation policy is intended to
support the achievement of our desired economic performance by:
- Providing compensation that will attract and retain superior talent and
reward performance; and
- Aligning executive officers' interests with our 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, 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, with an
emphasis on incentive compensation over base salary. The Committee, in reviewing
compensation matters, consults with the Director of Compensation and Benefits
and, as appropriate, independent compensation consultants. The Committee makes
use of a variety of independently available compensation surveys, each of which
provides compensation data for well over 100
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<PAGE>
companies, including many of the companies in the Standard & Poor's ("S&P") 500
and S&P Manufacturing (Diversified Industries) indices used in our stock
performance graph. 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 profit and revenue levels
comparable to those of BMC. Actual individual compensation levels for officers
may be greater or less than median competitive levels, based upon annual and
long-term BMC performance as well as individual performance. The Committee, at
its discretion, sets executive compensation at levels which it judges are
justified by external, internal or other circumstances.
ELEMENTS OF EXECUTIVE OFFICER COMPENSATION POLICY. The executive officer
compensation policy is comprised of base salary, annual cash bonus incentive
opportunities and long-term incentives in the form of stock options and/or
restricted stock awards.
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
and profitability. In determining individual salaries, in addition to the
comparison with similar companies, the Committee takes into consideration
individual experience and performance, as well as competitive and comparable
data related to the executive officer's specific areas of expertise.
ANNUAL CASH BONUS INCENTIVES. Under the management incentive bonus plan
(the "Bonus Plan"), executive officers and key employees, designated by the
Chief Executive Officer, may receive cash bonus awards after the close of the
fiscal year if we achieve financial performance goals set by the Board for that
year. Target bonus rates of a percentage of base salary are established for each
executive officer based 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. In 1998, we did not
achieve our established financial performance goals. Accordingly, executive
officers were not eligible to receive a bonus under the Bonus Plan for 1998.
LONG-TERM INCENTIVES. On December 10, 1993, the Board of Directors approved
the 1994 Plan which subsequently was approved by stockholders at the 1994 Annual
Meeting of Stockholders. The 1994 Plan provides for grants to eligible employees
of stock options, restricted stock awards, performance units, stock bonuses and
stock appreciation rights. To the extent not otherwise fixed by the terms of the
1994 Plan, the Committee has the discretion to select participants, the type of
award and the terms and conditions for each award. 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 BMC.
The Committee does not rely on any single formula in determining the size of
grants or selecting recipients. The Committee considers published survey data,
the potential and performance of the recipient, grants made in prior years and
remaining outstanding options held by the recipient.
STOCK OPTION REPRICING. In addition to stock option grants consistent with
the compensation policy discussed above, in August 1998, the Committee
determined that additional incentives were necessary to address concerns
regarding the retention of key employees due to the fact that many of these
employees held stock options with option prices significantly higher than the
current fair market value of BMC common stock. In response, the Committee
approved a program (the "Exchange Program") under which key employees were
offered the opportunity to exchange unexercised stock options granted on
December 23, 1997, priced at $16.3125 per share, on a one-for-one basis for new
stock options with an exercise price of $7.0313 per share. In addition, the
Exchange Program allowed new hires subsequent to December 23, 1997 to exchange
higher priced options for new stock options at the exercise price of $7.0313 per
share. All stock options issued under the Exchange Program will expire on their
original expiration date. Mr. Burke, the Chief Executive Officer, was ineligible
for participation in the Exchange Program.
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<PAGE>
Executive officers, excluding the Chief Executive Officer, who elected to
participate in the Exchange Program are shown in the table entitled "10-Year
Option/SAR Repricings" on page 13. Employees exchanged 251,500 stock options.
POLICY ON DEDUCTIBILITY OF COMPENSATION. Section 162(m) of the Internal
Revenue Code limits our tax deduction to $1 million per person for annual
compensation paid to executive officers, unless certain requirements are met.
One requirement is that the Committee consist entirely of outside directors. The
Committee meets this requirement. Another requirement is that compensation in
excess of $1 million must be based upon the attainment of performance goals
approved by stockholders. Awards under the 1994 Plan meet these requirements and
are eligible for exceptions to the deduction limitation. Although no executive
officer's annual compensation, excluding qualified performance-based
compensation, has exceeded $1 million to date, the Committee may pay total
annual compensation to an executive officer that exceeds $1 million in order to
attract, retain and reward the executive, as necessary to maximize the return to
stockholders.
CHIEF EXECUTIVE OFFICER COMPENSATION. Base salary, stock option awards,
incentive compensation awards and other compensation paid to Mr. Burke are
consistent with the design of the overall program described above. Amounts paid
and granted under these plans are disclosed in the Summary Compensation Table on
page 11. 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 75% of his base salary with a
maximum of 112.5%. Benefits and perquisites are not emphasized and are set at
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 our performance under his
leadership. Our 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.
Mr. Burke's 1998 base salary was $400,000. Because we did not meet our
financial goals for 1998 as defined by the Bonus Plan, Mr. Burke did not receive
a bonus for 1998. To aid in the retention of Mr. Burke, the Committee granted
him a stock option for the purchase of 100,000 shares of common stock in
February 1998. The Committee determined the size of this grant based in part on
information provided by independent sources, including a survey performed by an
outside compensation consultant. This option becomes exercisable in five equal
annual installments, the first installment of which became exercisable in
February 1999.
Members of the Compensation Committee:
Harry A. Hammerly, Chairman
John W. Castro
James M. Ramich
8
<PAGE>
COMPARATIVE STOCK PERFORMANCE
This graph compares the cumulative total stockholder return on our common
stock, assuming reinvestment of dividends, for the last five fiscal years to the
total cumulative return on the S&P 500 Composite Stock Index and the S&P
Manufacturing (Diversified Industries) Index over the same period. The graph
assumes $100 invested at the per share closing price of common stock on the New
York Stock Exchange on December 31, 1993 in BMC and each of the indices.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON 12/31/93)
DOLLARS
BMC INDUSTRIES, INC. S&P MANUF'G-DIVERSIFIED S&P 500
<S> <C> <C> <C>
12/31/93 100.00 100.00 100.00
12/30/94 148.33 103.43 101.32
12/29/95 441.67 145.65 139.34
12/31/96 599.47 194.23 171.30
12/31/97 311.17 267.49 228.44
12/31/98 120.42 328.15 293.72
Source: Carl Thompson
Associates www.ctaonline.com
(800) 959-9677. Data from
Bloomberg Financial
Markets.
</TABLE>
9
<PAGE>
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows compensation information for the chief executive
officer, one former executive officer and its two other most highly compensated
executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------
AWARDS
ANNUAL COMPENSATION(1) --------------
--------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(3) OPTIONS(4) COMPENSATION(5)
- ------------------------------- --------- ---------- --------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Paul B. Burke.................. 1998 $ 400,000 $ 0 $ 161,692 100,000 $ 27,948
Chairman of the Board, 1997 350,000 0 126,603 200,000 24,288
President and CEO 1996 350,000 262,500 131,629 80,916
Jeffrey J. Hattara............. 1998 161,538 0 19,363 50,000 0
Vice President, Finance and 1997 -- -- -- -- --
Administration and CFO(6) 1996 -- -- -- -- --
William A. Guernsey............ 1998 205,000 0 41,796 0 13,323
Senior Vice President, 1997 203,892 0 34,399 10,000 10,013
Corporate Development(7) 1996 -- -- -- -- --
Jeffrey L. Wright.............. 1998 130,000 0 16,613 20,000 7,698
Former Treasurer(8) 1997 99,231 0 15,604 18,500 5,481
1996 90,462 33,931 12,849 15,000 0
</TABLE>
- ------------------------
(1) Annual compensation is included in the appropriate category in the year
earned. Mr. Guernsey was not an executive officer during 1996 and Mr.
Hattara was not employed by BMC during 1996 and 1997, and, accordingly, no
information is given with respect to their compensation for those years.
(2) Bonuses are included in the year earned. Under our management incentive
bonus plan, bonuses earned during any given fiscal year are paid to
participants in March of the following year. No bonuses were paid for 1998
and 1997 since we did not meet our performance objectives.
(3) Includes the value of all perquisites and personal benefits provided to the
named executive officers, including the use of leased automobiles,
reimbursement of club membership dues, tax preparation services and physical
examinations. For purposes of this table, we have determined the value of
perquisites and benefits at their incremental cost, not on the taxable
benefit derived by the executive officer. We permit stock option
participants, including executive officers, to exercise stock options
through interest-free loans, up to a maximum amount. See "Certain
Transactions" below. The value of such interest-free loans was determined by
calculating the interest imputed on such loans for the applicable year at
the applicable federal rate provided by the Internal Revenue 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, $39,176, $35,258 and $45,036 for fiscal 1998,
1997 and 1996, respectively; imputed interest on interest free loans,
$101,180, $80,275 and $75,825 for fiscal 1998, 1997 and 1996,
respectively.
(b) Mr. Hattara: Leased auto, $15,811 for fiscal 1998.
(c) Mr. Guernsey: Leased auto, $12,875 and $12,829 for fiscal 1998 and 1997,
respectively; imputed interest on interest free loans, $17,627 and
$12,188 for fiscal 1998 and 1997, respectively.
10
<PAGE>
(d) Mr. Wright: Leased auto, $10,852, $11,597 and $12,800 for fiscal 1998,
1997 and 1996, respectively.
(4) Includes the replacement of 40,000 and 15,000 options that were previously
granted to Messrs. Hattara and Wright, respectively, and canceled pursuant
to the Exchange Program. Mr. Burke was ineligible for the Exchange Program.
(5) Includes the following contributions made and to be made to the Savings and
Profit Sharing Plan and nonqualified benefit equalization plan on behalf of
the named executive officers for services performed in fiscal 1998:
(a) Mr. Burke: Savings and Profit Sharing Plan, $10,048; benefit
equalization plan, $17,900.
(b) Mr. Guernsey: Savings and Profit Sharing Plan, $10,048; benefit
equalization plan, $3,275.
(c) Mr. Wright: Savings and Profit Sharing Plan, $7,698.
(6) Mr. Hattara became Vice President, Finance and Administration and Chief
Financial Officer in January 1998.
(7) Mr. Guernsey served as President, Mask Operations from July 1992 to November
1997 when he was named Senior Vice President, Corporate Development.
(8) Mr. Wright became Treasurer in May 1998. Prior to that date, he served as
Corporate Controller. Mr. Wright resigned from all positions with BMC in
January 1999.
STOCK OPTION GRANTS AND EXERCISES
The following table shows the options granted to the executive officers
named in the Summary Compensation Table during 1998. Individual grants are
listed separately for each officer. In addition, this table shows the estimated
present value of each grant as of the date of grant.
OPTION GRANTS IN 1998(1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
NUMBER OF % OF TOTAL GRANT DATE
SECURITIES OPTIONS VALUE(2)
UNDERLYING GRANTED TO EXERCISE OR -------------
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED 1998 ($/SH) DATE PRESENT VALUE
- ---------------------------------------------- ------------ ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Paul B. Burke................................. 100,000 15.4% $ 19.6565 2/20/08 $ 974,000
Jeffrey J. Hattara............................ 40,000(3) 6.2% 7.0313 1/28/08 139,600
10,000 1.5% 7.0313 8/07/08 34,900
William A. Guernsey........................... 0 -- -- -- --
Jeffrey L. Wright............................. 15,000(3) 2.3% 7.0313 12/24/07 52,350
5,000 0.8% 7.0313 8/07/08 17,450
</TABLE>
- ------------------------
(1) All options were granted under the 1994 Plan. Options typically vest in five
equal annual installments commencing on the first anniversary date of the
grant. All options were granted at an exercise price equal to the fair
market value based on the average of the high and low sales price of our
common stock on the date of grant.
(2) The present value determination was made using the Black-Scholes option
pricing model. The assumptions used in the model are dependent on the date
of option grant. The assumptions used include expected stock price
volatility of .55, risk-free rate of return of 5.50%, weighted average
expected life of five years, dividend yield of .96% and contractual time to
exercise of ten years. Actual gains, if any, on stock option exercises are
dependent upon our future performance and the
11
<PAGE>
performance of our common stock, overall market conditions, and the
executive's continued employment through the vesting dates of the option
grant.
(3) Grants of stock options pursuant to the Exchange Program in exchange for the
cancellation of outstanding stock options.
The following table provides information about stock option exercises during
1998 by the executive officers named in the Summary Compensation Table and stock
options held by each of them at year-end.
AGGREGATED OPTION EXERCISES IN 1998 AND OPTION VALUES AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED ON OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS AT
EXERCISE VALUE 1998 DECEMBER 31, 1998
NAME (1) REALIZED(2) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(3)
- ------------------------------- ----------- --------------- --------------------------- --------------------------
<S> <C> <C> <C> <C>
Paul B. Burke.................. 215,000 $ 0 564,600/340,000 $ 2,028,585/$111,248
Jeffrey J. Hattara............. 0 0 0/50,000 0/0
William A. Guernsey............ 0 0 62,000/44,000 33,374/16,687
Jeffrey L. Wright.............. 0 0 9,700/28,800 0/0
</TABLE>
- ------------------------
(1) Under the 1994 Plan, the exercise price of options 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,
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 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 the date of exercise, minus the
exercise price. Mr. Burke did not realize any value on his option exercise
because the market price did not exceed the exercise price.
(3) Based on the closing price of our common stock on the New York Stock
Exchange-Composite Transactions at December 31, 1998 ($6.25), minus the
exercise price.
STOCK OPTION EXCHANGE PROGRAM
The following table provides information concerning the Exchange Program,
including (i) the name and position of each executive officer who participated
in the Exchange Program, including executive officers not listed in the Summary
Compensation Table, (ii) the date of the exchange, (iii) the number of
securities underlying exchanged options, (iv) the per share market price of the
underlying security at the time of the exchange, (v) the original exercise price
of the canceled option at the time of exchange, (vi) the per share exercise
price of the option received in exchange for the existing option and (vii) the
original option term remaining at the date of exchange.
12
<PAGE>
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES EXERCISE ORIGINAL OPTION
UNDERLYING MARKET PRICE OF PRICE TERM REMAINING
OPTIONS STOCK AT TIME AT TIME OF NEW AT DATE OF
REPRICED OR OF REPRICING OR REPRICING OR EXERCISE REPRICING
NAME DATE AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
- ------------------------------- --------- ------------- --------------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Jon A. Dobson.................. 8/07/98 10,000 $ 7.0313 $ 16.3125 $ 7.0313 9 Years, 5
General Counsel and Secretary Months
Jeffrey J. Hattara............. 8/07/98 40,000 7.0313 15.9700 7.0313 9 Years, 6
Vice President, Finance and Months
Administration and CFO
Steven E. Opdahl............... 8/07/98 15,000 7.0313 16.625 7.0313 9 Years, 9
Corporate Controller Months
Jeffrey L. Wright.............. 8/07/98 15,000 7.0313 16.3125 7.0313 9 Years, 5
Former Treasurer(1) Months
</TABLE>
- ------------------------------
(1) All options received by Mr. Wright pursuant to the Exchange Program were
forfeited upon termination of employment.
OFFICER AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
We currently have change of control agreements (the "Change of Control
Agreements") with Messrs. Burke, Guernsey and Hattara. Under the Change of
Control Agreements, termination of an individual executive officer's employment
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
our assets; 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 our voting stock; or, a change in
composition of the 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 Change of Control Agreements to Mr. Burke 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. Severance benefits payable under the
Change of Control Agreements to Messrs. Guernsey and Hattara consist of a lump
sum payment equal to one year's base salary. Any monthly payments under the
Change of Control Agreements 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 the severance payment amount less the amount required to avoid any excise
tax. Under the Change of Control Agreements, each executive officer remains
employed 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 our failure to continue to provide benefit
plans equivalent to those we offered 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 BMC 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 BMC. Death or
attainment of age 65 prior to the end of the 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" means the following: (a) the
sale or other transfer of substantially all of our assets; (b) liquidation or
dissolution;
13
<PAGE>
(c) a merger or consolidation if (i) less than 50% of the voting stock of the
surviving company is held by persons who were stockholders of BMC 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 BMC
immediately prior to the merger or consolidation without the prior approval of
our continuity directors (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 our voting stock, or 20% or
more of our voting stock without the prior approval of the continuity directors;
(e) the continuity directors ceasing to constitute a majority of the Board; or
(f) any change of control that is required to be reported on Form 8-K.
Under the 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 common stock 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 our public release of
certain financial reports and (iii) all restrictions on any outstanding
restricted stock awards will immediately lapse.
To the extent not already vested, all benefits under the Savings and Profit
Sharing Plan (the "Savings Plan") become fully vested in the event of any
"change in control." For purposes of the Savings Plan, a change in control means
the following: (a) the sale or other transfer of substantially all of our
assets; (b) liquidation or dissolution; (c) a person becomes the beneficial
owner of 50 percent or more of the voting power of our outstanding securities;
(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.
EMPLOYMENT AGREEMENTS
In February 1999, we entered into a two-year employment agreement with Mr.
Burke, effective January 1, 1999, pursuant to which he continues to serve as
President, Chief Executive Officer and Chairman of the Board. The agreement
provides for an annual base cash salary of $400,000, subject to increase at the
Board's sole discretion, a restricted stock award with a fair market value of
$50,000 and grant of non-qualified stock options to purchase 300,000 shares of
our common stock. The agreement also provides for an annual bonus under the
Bonus Plan, subject to the terms of the Bonus Plan, determined by using a deemed
base salary of $425,000, which allocates $25,000 of the restricted stock award
to Mr. Burke's base salary for purposes of calculating his bonus in each year of
the two-year agreement. The agreement automatically renews for successive
one-year periods, unless terminated by BMC or Mr. Burke on not less than sixty
(60) days written notice before the end of the initial term or any successive
one-year renewal period. If we issue a notice of non-renewal to Mr. Burke, he
will receive payment of one year's base salary following expiration of the
initial or renewal term.
We entered into an employment agreement with Mr. Hattara, effective January
26, 1998. Under the terms of this agreement, we agreed to employ Mr. Hattara for
a period of at least two years. If we terminate his employment without "cause"
during the term of this agreement, he will be entitled to receive severance
payments equal to his then current base salary for a period of twelve (12)
months from the date of termination, payable in twelve monthly installments. Mr.
Hattara's agreement generally defines "cause" to include acts of personal
dishonesty, repeated failure to perform his duties, or illegal conduct that is
materially injurious to BMC.
14
<PAGE>
CERTAIN TRANSACTIONS
In 1993, we adopted the BMC Loan Program pursuant to which employees can
borrow money to exercise stock options and, until recently, to pay any related
income taxes due. In February 1999, the Compensation Committee amended the plan
to eliminate loans for tax payments associated with the exercise of stock
options. We hold the shares obtained upon exercise of the underlying stock
options 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 and to minimize the need to sell shares in the open market to pay the
exercise price of options. Approval of the loans are subject to the sole and
absolute discretion of the Compensation Committee.
The total amount that any employee may borrow under the BMC Loan Program is
determined by the Compensation Committee but may not exceed: (i) for the first
loan request, 100% of the exercise price of the option, and (ii) for any
subsequent loan, the lesser of (a) 100% of the exercise price of the option 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 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, no loan may be made which would cause the aggregate amount
outstanding under all loans to an employee to exceed 100% of the market value of
all stock pledged as collateral by that employee under the BMC Loan Program. If
the market value of all shares held as collateral falls below an employee's loan
balance, the employee must make arrangements to repay that portion of the loan,
or pledge additional shares, equal to the difference between the market value
and the loan balance.
The loans made to employees under the BMC Loan Program are made on an
interest-free basis. Upon termination of the employee's employment, the loan
must be repaid within 45 days or a longer period if approved by the Compensation
Committee. Upon the death or long-term disability of the employee, the
Compensation Committee may extend the term of the repayment of the loan up to
six months. Notwithstanding the terms of the BMC Loan Program, the Compensation
Committee may demand repayment of the loans 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 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 stock pledged for a loan, net of
applicable estimated taxes and other withholdings on such dividends, are also
applied to the loan.
As of March 24, 1999, Messrs. Burke and Guernsey had loans outstanding under
the BMC Loan Program of $2,702,070 and $77,755, respectively. The largest loan
amount outstanding for Messrs. Burke and Guernsey during 1998 was $2,705,546 and
$431,581, respectively.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors and executive officers, and persons who beneficially own more than 10%
of our common stock, to file initial reports of ownership and reports of changes
in ownership of our common stock and other equity securities with the Securities
and Exchange Commission (the "SEC"). Directors, executive officers and greater
than 10% stockholders are required by SEC regulations to furnish BMC with copies
of all Section 16(a) reports they file. To our knowledge, based solely on review
of the copies of reports furnished to BMC with respect to the period ended
December 31, 1998, all directors, executive officers and greater than 10%
stockholders were in compliance with all Section 16(a) filing requirements,
except for Dr. Davis and Mr. Ramich, whose initial reports on Form 3, and Mr.
Altman, whose Form 4 for transactions in April 1998, were sent
15
<PAGE>
electronically to the SEC during the filing period, but received one day late.
Dr. Davis also failed to include one transaction on his Form 4 filed for
transactions in July 1998, which filing was subsequently amended to include the
transaction.
INDEPENDENT AUDITORS
During 1998, in addition to auditing our financial statements, Ernst & Young
LLP performed services in connection with preparation of our tax returns and
related tax planning, audits of employee benefit plans and provision of general
accounting advice.
Ernst & Young LLP, or its predecessor, has been our independent auditors
since 1980 and has been selected by the Board to continue as such for the
current fiscal year. We have requested and expect 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.
2000 STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented in the proxy materials
relating to the proposed 2000 Annual Meeting of Stockholders must be received by
BMC on or before January 13, 2000. If notice of any other stockholder proposal
intended to be presented at the 2000 Annual Meeting of Stockholders but not
intended to be included in the Company's proxy materials for that meeting is not
received by BMC on or before January 13, 2000, the proxy solicited by the Board
of Directors for use in connection with that meeting may confer authority on the
proxies named therein to vote in their discretion on the proposal without any
discussion in the proxy materials for that meeting of either the proposal or how
the proxies intend to exercise their voting discretion.
OTHER BUSINESS
We know 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.
WE WILL FURNISH, WITHOUT CHARGE, A COPY OF OUR ANNUAL REPORT ON FORM 10-K,
EXCLUSIVE OF EXHIBITS, FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 TO EACH
PERSON WHO IS A STOCKHOLDER OF THE COMPANY AS OF MARCH 24, 1999, 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.,
ONE MERIDIAN CROSSINGS, SUITE 850, MINNEAPOLIS, MN 55423.
Dated: March 31, 1999
BMC Industries, Inc.
One Meridian Crossings, Suite 850
Minneapolis, Minnesota 55423
16
<PAGE>
- PLEASE DETACH HERE -
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
1. Election of directors: 01 John W. Castro 02 Dr. H. Ted Davis
03 Joe E. Davis 04 James M. Ramich
/ / Vote FOR / / Vote WITHHELD
all nominees from all nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE ------------------------
FOR ANY INDICATED NOMINEE, WRITE THE NUMBER(S)
OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) ------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR THE PROPOSAL.
- ------
Address Change? Mark Box / /
Indicate changes below: Date:
-----------------------------
------------------------------------
------------------------------------
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full name
or corporation and title authorized
officer signing the proxy.
<PAGE>
BMC INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, MAY 12, 1999
10:00 A.M.
RADISSON HOTEL SOUTH
7800 NORMANDALE BOULEVARD
BLOOMINGTON, MINNESOTA
BMC INDUSTRIES, INC.
ONE MERIDIAN CROSSINGS, SUITE 850, MINNEAPOLIS, MINNESOTA 55423 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON WEDNESDAY, MAY 12, 1999.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify below.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEM 1.
By signing the proxy, you revoke all prior proxies and appoint Jeffrey J.
Hattara and Steven E. Opdahl, and each of them, with full power of
substitution, to vote your shares on the matter shown on the reverse side
and any other matter which may come before the Annual Meeting and all
adjournments.
If any stockholder gives notice to cumulate votes in accordance with the
procedure described in the proxy statement, the proxy holders will vote your
shares cumulatively for all four nominees to the Board of Directors
(other than any nominee as to which you withhold authority).
See reverse for voting instructions.
