<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
BAIRNCO CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
BAIRNCO CORPORATION
2251 LUCIEN WAY, SUITE 300
MAITLAND, FLORIDA 32751
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 18, 1997
To Shareholders:
The Annual Meeting of Shareholders of Bairnco Corporation ("Bairnco") will
be held on Friday April 18, 1997, at the Sheraton Orlando North, 600 N. Lake
Destiny Road, Maitland, Florida at 10:00 a.m., local time, for the following
purposes:
1. To elect the Board of Directors of Bairnco.
2. To amend the Bairnco Corporation 1990 Stock Incentive Plan.
3. To ratify management's selection of Bairnco's auditors.
4. To transact such other business as may properly come before the
meeting and any adjournment thereof.
---------------------
Only shareholders of record at the close of business on March 4, 1997 will
be entitled to notice of and to vote at the meeting.
If you do not expect to attend the meeting in person, please date and sign
the enclosed proxy and return it promptly by mail in the envelope provided.
By Order of the Board of Directors
Linda M. Metcalf
Secretary
Maitland, Florida
March 21, 1997
THE BOARD OF DIRECTORS SOLICITS THE EXECUTION AND IMMEDIATE RETURN OF THE
ACCOMPANYING PROXY. PLEASE DATE, SIGN AND RETURN THE PROXY IN THE ENCLOSED
ADDRESSED ENVELOPE.
<PAGE> 3
BAIRNCO CORPORATION
2251 LUCIEN WAY, SUITE 300
MAITLAND, FLORIDA 32751
---------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 18, 1997
---------------------
INTRODUCTION
The Annual Meeting of Shareholders of Bairnco Corporation ("Bairnco") will
be held on Friday, April 18, 1997, at the Sheraton Orlando North, 600 North Lake
Destiny Road, Maitland, Florida at 10:00 a.m., local time, for the purposes set
forth in the accompanying notice. This Proxy Statement is furnished in
connection with the solicitation by Bairnco's Board of Directors of proxies to
be voted at such meeting and at any and all adjournments thereof. Proxies
properly executed, duly returned and not revoked will be voted at the Annual
Meeting (including adjournments) in accordance with the specifications therein.
If a proxy in the accompanying form is executed and returned, it
nevertheless may be revoked at any time prior to the exercise thereof by
executing and returning a proxy bearing a later date, by giving notice of
revocation to the Secretary of Bairnco, or by attending the Annual Meeting and
voting in person. On the matters coming before the meeting as to which a choice
has been specified by a shareholder by means of the ballot on the proxy, the
shares will be voted accordingly. If no choice is so specified, the shares will
be voted for the nominees listed in this Proxy Statement, in favor of the
amendment to the Bairnco Corporation 1990 Stock Incentive Plan, and in favor of
the ratification of auditors. Abstentions (including broker non-votes) will be
counted for quorum purposes, but will have no affect on the outcome of the
voting, except on the amendment to the Stock Incentive Plan, where abstentions
will have the effect of a vote against the proposal.
Only shareholders of record at the close of business on March 4, 1997, are
entitled to notice of, and to vote at, the Annual Meeting. At the close of
business on such date there were 9,388,334 shares of common stock of Bairnco
("Bairnco Common Stock") outstanding. Each such share will be entitled to one
vote on each matter submitted to shareholders.
The Proxy Statement and accompanying form of proxy are first being sent to
shareholders on or about March 21, 1997. Bairnco's Annual Report to shareholders
accompanies this Proxy Statement.
PROPOSAL 1. ELECTION OF DIRECTORS
DIRECTORS AND NOMINEES FOR ELECTION AS DIRECTORS
The persons designated as proxies in the accompanying form of proxy have
been selected by the Board of Directors of Bairnco and have indicated that they
intend to vote all proxies received by them for the election of each of the
following nominees for the office of director of Bairnco, unless instructed
otherwise. The terms of all incumbent directors expire at the 1998 Annual
Meeting of Shareholders, or at such later time as their successors have been
duly elected and qualified. Nominees elected at the Annual Meeting will serve
until the Annual Meeting of Shareholders next succeeding their election or until
their successors have been duly elected and qualified. All such nominees are
currently directors of Bairnco, and all were elected by shareholders at the 1996
Annual Meeting of Shareholders.
If for any reason any of the following nominees is not a candidate when the
election occurs, proxies will be voted for the election of a substitute nominee
designated by the Board of Directors. The Board of Directors has no reason to
believe that any substitute nominees will be required.
<PAGE> 4
<TABLE>
<CAPTION>
NAMES AND AGES OF NOMINEES DATA PERTAINING TO NOMINEES
- -------------------------- ---------------------------
<S> <C>
Luke E. Fichthorn III (55)... Since May 23, 1990, Mr. Fichthorn has served as the
Chairman and on December 18, 1991, Mr. Fichthorn became
Chief Executive Officer of Bairnco. For over twenty-one
years, Mr. Fichthorn has been a private investment banker
and partner of Twain Associates, a private investment
banking and consulting firm. Mr. Fichthorn became a
director of Bairnco in January, 1981. Mr. Fichthorn is also
a director of Florida Rock Industries, Inc. and FRP
Properties, Inc.
Charles T. Foley (58)........ For the past 25 years, Mr. Foley has been President, Chief
Investment Officer and a director of Estabrook Capital
Management, Inc., an investment advisory firm providing
asset management services for individuals and institutions.
Mr. Foley is Chairman of the Audit Committee and a member
of the Nominating and Compensation Committees. Mr. Foley
has been a director of Bairnco since May, 1990.
Richard A. Shantz (61)....... Mr. Shantz was President of Bairnco from August, 1990,
until his retirement on January 2, 1992. He has served as a
director of Bairnco since August, 1990. Mr. Shantz is
Chairman of the Compensation Committee and a member of the
Audit and Nominating Committees.
William F. Yelverton (55).... Since January 1996, Mr. Yelverton has been CEO of the
Individual Insurance Group of Prudential Life Insurance
Company. From September 1995 through December 1995, he
served as President of Prudential Insurance and Financial
Services. From September 1988 until September 1995 he was
Chairman and CEO of New York Life Worldwide Holding, Inc.,
an insurance holding company. Mr. Yelverton was elected as
a director in August, 1991. Mr. Yelverton is Chairman of
the Nominating Committee and is a member of the Audit and
Compensation Committees.
</TABLE>
Assuming that a quorum is present, nominees receiving a plurality of the
votes cast at the Annual Meeting will be elected to the Board of Directors of
Bairnco. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITS NOMINEES FOR ELECTION
TO THE BOARD OF DIRECTORS.
MEETINGS OF THE BOARD OF DIRECTORS
During 1996, Bairnco's Board of Directors met ten times for regular
meetings and two times for special meetings. No member of the Board attended
fewer than 90% of the aggregate of (1) the total number of meetings of the Board
of Directors, and (2) the total number of meetings held by all committees of the
Board on which he served. Each non-employee director received an annual retainer
of $12,000 per year payable quarterly and a fee of $1,000 for each regular or
special meeting attended in person. Under this policy, attendance fees for all
regular meetings, special meetings and committee meetings held on a single day
are limited to $1,000. At the December, 1996 Board of Directors meeting, the
Board approved a resolution changing the Board meeting schedule from ten to six
meetings per year, increasing the annual retainer to $16,000 per year and
increasing the fee to $1,500 for attending in person each regular or special
meeting. Under the revised policy, attendance fees for all regular meetings,
special meetings and committee meetings held on a single day, will be limited to
$1,500. Mr. Shantz received fees of $3,500 for serving on a Special Committee of
the Board that met during 1996.
In addition, each director and former director of Bairnco, who is not at
the time an employee of Bairnco or any of its subsidiaries, is entitled to
$1,500 per day when called upon by Bairnco to perform extraordinary services
(not incidental to attendance at directors' meetings) on its behalf. No payments
were made during 1996.
2
<PAGE> 5
During 1996, Bairnco's outside directors received the following
compensation: Charles T. Foley -- $21,000, Richard A. Shantz -- $23,500, William
F. Yelverton -- $21,000.
It is the present policy of Bairnco that outside directors upon retirement
from the Board of Directors shall receive for the number of years equal to the
number of years he or she has served on the Board of Directors of Bairnco,
annually an amount equal to the non-employee director annual retainer in effect
at the time of his or her retirement. Such amount shall be payable in quarterly
installments. If the retired non-employee director should die prior to receiving
payments equal to the number of years served on the Board, the director's estate
will have the choice of either continuing to receive the remaining payments on a
quarterly basis, or receiving in a lump sum, the net present value of the
remaining payments discounted at the then thirty year U.S. Government bond
yield.
COMMITTEES OF THE BOARD OF DIRECTORS
Bairnco has standing Audit, Compensation and Nominating Committees of the
Board of Directors. The Compensation Committee met seven times during 1996 and
the Audit Committee met two times during 1996. The non-employee directors who
are members of the Audit, Compensation and Nominating Committees of Bairnco were
entitled to receive a fee for each meeting attended in person on a day during
which the Board of Directors did not meet. During 1996, the Audit, and
Compensation Committees met only on days on which the Board of Directors met
and, accordingly, no additional fees were paid with respect to such meetings.
The Audit Committee reviews and recommends to the Board of Directors the
engagement of the independent auditors of Bairnco and its subsidiaries, and
reviews with the auditors their work, fees and the accounting policies and
practices of Bairnco and its subsidiaries.
The Compensation Committee reviews and recommends to the Board of Directors
the base salaries proposed to be paid to officers of Bairnco, Presidents of its
subsidiaries, Presidents of divisions of its subsidiaries, and other employees
whose base salaries exceed $100,000. The Compensation Committee also reviews and
approves management incentive compensation and reviews and administers the stock
option plan.
The Nominating Committee reviews and recommends to the Board of Directors
the appropriate size and composition of the Board of Directors. The Nominating
Committee will not consider recommendations from shareholders; the Committee
believes it has sufficient resources and contacts to fulfill its obligations.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information as of December 31, 1996,
regarding the beneficial ownership of Bairnco Common Stock by the only persons
known to Bairnco to be the beneficial owners of more than 5% of Bairnco's issued
and outstanding Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE PERCENTAGE OF
OF BENEFICIAL ISSUED AND
OWNERSHIP OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK
- ------------------------------------ ----------------- -------------
<S> <C> <C>
Marvin Schwartz....................................... 922,800 9.80%
605 Third Avenue
New York, N.Y. 10158
Cornelia Bailey....................................... 610,000 6.48%
14 Bassett Creek Trail North
Hobe Sound, FL 33455
Dimensional Fund Advisors Inc.(1)..................... 571,000 6.06%
1299 Ocean Avenue
Santa Monica, CA 90401
</TABLE>
3
<PAGE> 6
- ---------------
(1) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 571,000 shares of
Bairnco Corporation stock as of December 31, 1996 all of which shares are
held in portfolios of DFA Investment Dimensions Group Inc., a registered
open-end investment company, or in series of the DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares.
The following table presents information regarding beneficial ownership of
Bairnco Common Stock by each member of the Board of Directors, each nominee for
election as a director, each of the executive officers of Bairnco named in the
summary compensation table below and by all directors and executive officers of
Bairnco as a group, as of December 31, 1996.
<TABLE>
<CAPTION>
PERCENTAGE OF
ISSUED AND AMOUNT AND NATURE
OUTSTANDING OF BENEFICIAL
COMMON STOCK ON OWNERSHIP OF
NAME OF INDIVIDUAL OR GROUP DECEMBER 31, 1996 COMMON STOCK
--------------------------- ----------------- -----------------
<S> <C> <C>
Luke E. Fichthorn III...................................... 402,731(1) 4.28%
Charles T. Foley........................................... 388,299(2) 4.12%
Elmer G. Pruim III......................................... 2,900(3) (9)
Richard A. Shantz.......................................... 366,999(4) 3.90%
Barry M. Steinhart......................................... 33,715(5) (9)
J. Robert Wilkinson........................................ 69,844(6) (9)
William F. Yelverton....................................... 32,899(7) (9)
All executive officers and directors as a group (7
persons)................................................. 1,297,387(8) 13.78%
</TABLE>
- ---------------
(1) Includes 2,000 shares owned by Mrs. Fichthorn, an aggregate of 18,700 shares
owned by his children and 1,500 shares owned by two trusts of which Mr.
Fichthorn is a co-trustee. Mr. Fichthorn disclaims beneficial ownership of
all shares referenced thus far in this Note (1). Also includes shares that
would be issued upon exercise of 266,666 vested unexercised stock options
granted under the 1990 Bairnco Stock Option Plan.
(2) Includes 37,600 shares owned by Estabrook Capital Management, Inc.
("Estabrook") which represents less than 1% of the issued and outstanding
shares. Mr. Foley is President, Chief Investment Officer and a director of
Estabrook. Estabrook has represented to Bairnco that it has created a
"Chinese wall" that prevents Mr. Foley from participating in any investment
or voting decisions with respect to such shares. Accordingly, Mr. Foley
disclaims beneficial ownership of the shares of Bairnco Common Stock held
by Estabrook. Also includes shares that would be issued upon the exercise
of 8,999 vested unexercised stock options granted under the 1990 Bairnco
Stock Option Plan.
(3) Includes shares that would be issued upon the exercise of 1,250 vested
unexercised stock options granted under the 1990 Bairnco Stock Option Plan.
(4) Includes 35,700 shares owned by Mrs. Shantz as to which Mr. Shantz disclaims
beneficial ownership. Also, includes shares that would be issued upon the
exercise of 6,999 vested unexercised stock options granted under the 1990
Bairnco Stock Option Plan.
(5) Includes 100 shares owned by each of his two children (under the Uniform
Gift to Minors Act). Also includes shares that would be issued upon
exercise of 30,000 vested unexercised stock options granted under the 1990
Bairnco Stock Option Plan.
(6) Includes 400 shares owned by each of his three children (under the Uniform
Gifts to Minors Act) with Mrs. Wilkinson as custodian with respect to which
Mr. Wilkinson disclaims beneficial ownership. Also includes shares that
would be issued upon exercise of 50,000 vested unexercised stock options
granted under the 1990 Bairnco Stock Option Plan. Mr. Wilkinson also
indirectly owns 7,278 shares through ownership in trust under the Bairnco
Corporation 401(K) Savings Plan.
(7) Includes shares that would be issued upon the exercise of 7,999 vested
unexercised stock options granted under the 1990 Bairnco Stock Option Plan.
4
<PAGE> 7
(8) Includes a total of 59,300 shares owned by the wives, children or in trusts
or custodial accounts for relatives of executive officers or directors but
as to which each executive officer or director, respectively, disclaims
beneficial ownership. Also includes shares that would be issued upon the
exercise of 371,247 vested unexercised stock options granted under the 1990
Bairnco Stock Option Plan.
(9) The percentage of shares owned by such executive officer or director does
not exceed 1% of the issued and outstanding Bairnco Common Stock.
Based on Bairnco's review of Securities and Exchange Commission Forms 3, 4,
and 5 submitted to Bairnco and written representation from directors and
executive officers, no director, executive officer or beneficial holder of 10%
of Bairnco common stock, failed to file a report on a timely basis, during 1996,
as required by Section 16(a) of the Securities Exchange Act of 1934.
COMPENSATION OF MANAGEMENT
GENERAL
The following table sets forth information regarding the compensation paid,
distributed or accrued by Bairnco and its subsidiaries for services rendered
during 1994, 1995, and 1996 to the Chairman of the Board and each of the three
other most highly compensated executive officers of Bairnco (collectively the
"Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------- -------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
--------------------------- ---- -------- -------- -------------
($) ($)
<S> <C> <C> <C> <C>
Luke E. Fichthorn III............................... 1996 $349,167 $206,250
Chairman of the Board 1995 $339,167 $162,200
1994 $330,000 $146,300
J. Robert Wilkinson................................. 1996 $171,983 $ 81,469
V. P. Finance 1995 $167,300 $ 65,000
1994 $165,950 $ 55,600
Elmer G. Pruim III(1)............................... 1996 $ 93,333 $ 32,500 10,000
1995 $ 82,083 $ 64,000
1994 $ 33,333 $ 12,500 2,500
Barry M. Steinhart(2)............................... 1996 $100,000 $ 23,958
1995 $100,000 $ 36,500
1994 $ 98,500 $ 27,400
</TABLE>
- ---------------
(1) Mr. Pruim severed as Controller of the Corporation until October, 1996. At
that time he was appointed President of Arlon's Adhesives and Films
Division
(2) Mr. Steinhart resigned as an Executive Officer of the Corporation in
October, 1996. He remains employed with the Corporation in a managerial
position.
5
<PAGE> 8
1996 OPTION GRANTS TABLE
The following table sets forth information regarding stock option grants
issued to each Named Executive during fiscal year 1996 under the Company's 1990
Stock Incentive Plan. Under Securities and Exchange Commission regulations,
companies are required to project an estimate of appreciation of the underlying
shares of stock during the option term. The Company has chosen the 5%-10%
formula approved by the SEC. However, the ultimate value will depend on the
market value of the Company's stock at a future date, which may or may not
correspond to the projections below.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
# OF SECURITIES % OF TOTAL STOCK APPRECIATION
UNDERLYING OPTIONS GRANTED FOR OPTION TERM
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION ---------------------
NAME GRANTED IN FISCAL YEAR PRICE DATE 5% 10%
- ---- --------------- --------------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Elmer G. Pruim III........... 2,500 3.33% $7.000 1/25/2006 $11,006 $27,890
Elmer G. Pruim III........... 10,000 13.33% $6.125 10/18/2006 $28,290 $73,213
</TABLE>
The following table sets forth information for each Named Executive with
regard to the aggregate stock options held as of December 31, 1996.
FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FY-END(#) AT FY-END($)(1)
-------------- ----------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ---- -------------- ----------------
<S> <C> <C>
Luke E. Fichthorn III..................................... 266,666/83,333 $182,666/$57,083
J. Robert Wilkinson....................................... 50,000/0 $81,250/$0
Barry M. Steinhart........................................ 30,000/0 $48,750/$0
Elmer G. Pruim III........................................ 1,250/11,250 $2,031/$18,281
</TABLE>
- ---------------
(1) Value is determined by multiplying the number of unexercised in-the-money
options by the difference between the stock price on December 31, 1996 and
the option grant price.
BAIRNCO RETIREMENT PLAN
Bairnco maintains the Bairnco Corporation Retirement Plan (the "Bairnco
Plan"), a non-contributory defined benefit pension plan, in which all salaried
employees and certain hourly employees of Bairnco, and its U.S. subsidiaries,
KASCO Corporation and Arlon, Inc., participate.
Remuneration covered by the Bairnco Plan in a particular year includes that
year's base salary, overtime pay, commissions, stock purchase plan payments,
other incentive compensation and amounts that are deferred under a 401(k) plan
that is at any time maintained by Bairnco, but excludes, among other items,
compensation received in that year under the Management Incentive Compensation
Plan in excess of 50% of the participant's basic pay rate as of the December 31
preceding the date of payment. The 1996 remuneration covered by the Bairnco Plan
for each participant therefore includes management incentive compensation (up to
such 50% ceiling) paid during 1997 in respect of 1996 awards.
6
<PAGE> 9
The following table presents information regarding estimated annual
benefits payable in the form of a straight life annuity upon retirement to
persons in specified remuneration and years of service classifications:
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE AT RETIREMENT
COMPENSATION ------------------------------------------------------
AT RETIREMENT 5 10 15 20 25 OR MORE
------------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C>
$ 50,000.............................. $ 3,979 $ 7,958 $11,936 $15,915 $19,894
75,000.............................. 6,416 12,833 19,249 25,665 32,081
100,000.............................. 8,854 17,708 26,561 35,415 44,269
150,000 or more...................... 13,729 27,458 41,186 54,915 68,644
</TABLE>
In accordance with IRS regulation, the maximum allowable compensation
permitted in computing a benefit is $150,000 for 1996. However, employees will
receive the greater of the benefit outlined above or the accrued benefit as of
December 31, 1993 which was based on compensation in excess of $150,000 plus a
benefit based on service after December 31, 1993 and final average compensation
based on the $150,000 limit.
For each of the following, the credited years of service under the Bairnco
Plan as of December 31, 1996, and the remuneration received during 1996 covered
by the Retirement Plan, were, respectively, as follows: Mr. Fichthorn, 7 years
and $150,000; Mr. Wilkinson, 10 years and $150,000; Mr. Steinhart, 14 years and
$123,958; and Mr. Pruim, 2 years and $125,833.
In addition, Bairnco sponsors a non-qualified retirement plan such that
retirement benefits as determined under the Bairnco Plan are supplemented to
provide an aggregate pension benefit based on adjusted dates of hire and
remuneration. Pursuant to his employment agreement, a non-qualified retirement
plan provides Mr. Fichthorn an estimated annual benefit of $43,307 payable upon
normal retirement date, based upon 25 projected years of credited service, and
1996 covered remuneration of $150,000.
EXECUTIVE CONTRACTS
Employment Agreement with Mr. Fichthorn
On May 23, 1990, Bairnco entered into an agreement with Mr. Fichthorn,
Chairman of Bairnco, under which Mr. Fichthorn became an employee. The initial
term of the agreement was for four years, but the agreement generally
automatically renews so that at no time will the term of the agreement be less
than four years. Under the agreement, Mr. Fichthorn presently receives a base
salary of $352,500 and is entitled to participate in the Bairnco Headquarters
management incentive compensation plan, where he is entitled to receive 25% of
an annual pool that is generated at the rate of $15,000 for each $.01 per share
of net income of Bairnco and its consolidated subsidiaries as reported to
shareholders in excess of $.30 per share after reflecting the management
incentive compensation annual pool as a cost in arriving at pre-tax income.
In accordance with the agreement, Mr. Fichthorn received on the date when
he became an employee of Bairnco stock options for 350,000 shares of Bairnco
Common Stock at an exercise price equal to the book value of a share of stock
determined on the last day of the month in which he became an employee ($5.94
per share). One hundred thousand of the option shares became exercisable on the
first anniversary of the date of grant; of the remaining 250,000 shares, 83,333
shares became exercisable on January 28, 1993 for earnings of $.70 per share for
the calendar year 1992. An additional 83,333 shares became exercisable on
January 26, 1996 for earnings at $.75 per share for the calendar year 1995. The
remaining 83,334 shares will become exercisable on the tenth anniversary of the
date of grant, if Mr. Fichthorn is an employee on such date.
All options will remain exercisable for ten years from the first date they
become exercisable. Except in the case of a voluntary termination or a
termination for cause, as defined in the agreement, exercisable options will
generally remain exercisable for three years following termination. The
exercisability of all of the options granted to Mr. Fichthorn generally will
accelerate in the event of a change of control. Each option share is to be
accompanied by a limited stock appreciation right that will become exercisable
for six months following a change of control. Upon exercise of such right, Mr.
Fichthorn will receive the excess of the fair market value per share (or, if
greater, $10 per share) over the exercise price per share for the underlying
option. In the event that the payments received by Mr. Fichthorn with respect to
his options and under any other provision of the
7
<PAGE> 10
agreement by reason of a change of control are subject to the excise tax on
excess parachute payments, Bairnco will pay Mr. Fichthorn such amounts as are
necessary to place him in the same position as he would have been in if no
excise tax had been payable.
Mr. Fichthorn will also receive a special retirement supplement that is
intended to provide him a retirement benefit comparable to what he would have
received under the Bairnco Plan (described above) if his combined past service
as a director of Bairnco's former subsidiary, Keene Corporation, and Bairnco (21
years) were treated as years of service under that plan. The supplemental, non
qualified benefit (as described above) is fully vested.
The Agreement provides that if Mr. Fichthorn dies while an employee, his
surviving spouse or estate will receive a death benefit equal to three times the
sum of (i) his base salary, and (ii) the highest bonus paid to him during the
prior three years or the current year. If Mr. Fichthorn's employment terminates
due to disability, he will receive 75% of his base salary for two years and 55%
of such salary thereafter until the disability ends or his supplemental
retirement benefits commence.
If Bairnco terminates Mr. Fichthorn's employment without cause or breaches
the agreement in a material fashion leading Mr. Fichthorn to terminate his
employment, Bairnco will pay Mr. Fichthorn a lump sum benefit equal to the sum
of (i) four times his then base salary, and (ii) the highest bonus paid or
payable to him during the prior three years or the current year. Regardless of
the reason for his termination, Bairnco will also provide Mr. Fichthorn and his
spouse with medical, health and hospitalization benefits following his
termination until he attains age 65 (or, in the event of his death, until his
spouse attains age 65).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The Compensation Committee consisted of the following members during all of
1996: Messrs. Charles Foley, Richard Shantz and William Yelverton. All the
members of the Committee are outside directors. Prior to his retirement on
January 2, 1992, Mr. Shantz was President of the Corporation. He was elected to
the Compensation Committee on February 20, 1992.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Company's executive compensation program is based on two objectives:
(i) providing market-competitive compensation opportunities, and (ii) creating a
strong link between the interests of the shareholders, the Company's financial
performance, and the total compensation of the Company's executive officers.
The components of the Company's executive compensation program include:
annual base cash compensation, management incentive compensation (MIC), and
longer term incentives consisting of stock options.
Base salaries are targeted at the median of competitive data for industrial
companies. (These companies differ from those shown as the Company's peer group
in the Performance Graph on page 10 because the Company competes for talent with
a broader group of employers than just those in its industry.) During 1996, the
Company utilized information from several nationwide salary surveys as a basis
to make upward adjustments in salary ranges to maintain competitiveness.
Individual variability is based on performance and experience. Adjustments are
normally considered annually, based upon general movement in external salary
levels, individual performance and potential, and/or changes in the positions,
duties and responsibilities in accordance with a formal Compensation Policy.
INCENTIVE COMPENSATION
Incentive compensation is a function of company performance namely, net
income per share, and is administered through Bairnco's Management Incentive
Compensation (MIC) Program. The annual pool for the MIC Program for executives
is generated at the rate of $15,000 for each $.01 per share of net income of
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<PAGE> 11
Bairnco and its consolidated subsidiaries as reported to shareholders in excess
of $.30 per share, after reflecting the management incentive compensation annual
pool as a cost in arriving at pre-tax income. Over the past fiscal year, net
income was equal to $.85 per share, generating a total bonus pool of $825,000.
Distribution of MIC awards to eligible employees is dependent upon the
Compensation Committee's objective evaluation of the individual employee's
achievement, as measured against predetermined specific objectives for each
employee, and distributions are made on an annual basis.
STOCK OPTION PLAN
The 1990 Bairnco Stock Incentive Plan (the "Option Plan") was approved by
shareholders at the 1990 Annual Meeting of Shareholders. Under the terms of the
Option Plan, the Committee has complete discretion in determining the
participation and number of options, (up to an annual maximum of 250,000 Common
Shares) if any, to be granted to a Participant. The Committee has established
and follows guidelines with respect to the granting of options under the Option
Plan to employees upon their hire or promotion to important managerial or
supervising classifications. Grants were issued to the following named executive
officer during the fiscal year ending December 31, 1996: Elmer Pruim.
COMPENSATION EARNED BY THE CHIEF EXECUTIVE OFFICER
In considering the Chairman's base salary, the Committee reviewed Bairnco's
general financial performance and the progress in turning around problem
operations. The Committee also reviewed the Chairman's base salary against
recent salary surveys. This information showed Mr. Fichthorn's salary to be in
the average range for industrial companies the size of Bairnco. The Committee
also considered the time period elapsed from Mr. Fichthorn's date of last
increase in May 1995. On May 1, 1996 he received a salary increase of 3.0%
resulting in a current salary for Mr. Fichthorn of $352,500.
162 (M) DISCLOSURE
Based on current levels of compensation, no executive officer is expected
to receive compensation for 1997 services which would be non deductible under
Section 162 (m) of the Internal Revenue Code. Accordingly, except as described
in Proposal 2 herein, the Compensation Committee has not considered any
revisions to its policies and programs in response to this new provision of law.
Respectfully submitted,
The Compensation Committee
Richard A. Shantz
Charles T. Foley
William F. Yelverton
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<PAGE> 12
PERFORMANCE GRAPH
Presented in the graph below is a comparison of the five year cumulative
returns among Bairnco Common Stock, the S&P 500 Index and a Dow Jones composite
peer group index. The cumulative returns shown in the graph assume an initial
investment of $100 as of December 31, 1991, and reinvestment of all cash and
cash equivalent dividends declared as of the ex-date of the dividend.
Due to the diversity of Bairnco's operations, no single, published,
industry or line-of-business index was determined to be relevant for comparative
purposes to the total return on an investment in Bairnco Common Stock over the
last five years. Accordingly, a composite peer group index was developed using
three industry group indices published by Dow Jones. The indices used, each of
which was weighted equally in deriving the composite index, were the Dow Jones
Electrical Components and Equipment Index, the Dow Jones
Industrial -- Diversified Index and the Dow Jones Diversified Technology Index.
PERFORMANCE GRAPH
FIVE YEAR CUMULATIVE RETURN COMPARISON
AMONG BAIRNCO, S&P 500 AND COMPOSITE
<TABLE>
<CAPTION>
MEASUREMENT PERIOD BAIRNCO S&P 500 COMPOSITE
(FISCAL YEAR COVERED)
<S> <C> <C> <C>
1991 100 100 100
1992 94 108 109
1993 56 118 126
1994 63 120 125
1995 92 165 166
1996 110 203 209
</TABLE>
On December 31, 1993, a restructuring plan was adopted by Bairnco pursuant
to which the businesses comprising the Specialty Construction Products segment
and certain other non-core businesses were to be divested. Losses from these
discontinued operations in 1993, net of related tax benefits, amounted to
($23,395,000) or ($2.23) per share and included a substantial write-down of the
net assets of these operations to their expected net realizable value as of
December 31, 1993. Restructuring costs were also incurred at KASCO Corporation
in conjunction with programs underway to focus this unit on those lines of
business that have the greatest growth and profit potential and to rationalize
its North American production facilities. In the fourth quarter of 1993, Bairnco
also recorded a $3.0 million pre-tax provision for anticipated litigation
expenses. (See Note 2 to the Consolidated Financial Statements on page 19 of
Bairnco's 1996 Annual Report).
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<PAGE> 13
PROPOSAL 2. AMENDMENT TO THE
BAIRNCO CORPORATION 1990 STOCK INCENTIVE PLAN
On March 14, 1997, the Board of Directors unanimously approved, subject to
approval by the Corporation's shareholders, an amendment to the Corporation's
1990 Stock Incentive Plan (the "1990 Plan") to limit the maximum number of the
Corporation's Common Shares that may be awarded as stock options to any single
participant in any twelve month period to 250,000 Common Shares. The Board took
this action to meet the requirements of a change in Section 162(m) of the
Internal Revenue Code of 1986 as amended (the "Code") that affects the 1990 Plan
beginning in 1997. This amendment will assure that any additional stock options
granted under the 1990 Plan will continue to be tax deductible to the
Corporation under the Code.
Under Section 162(m) of the Code, no deduction is allowed in any taxable
year of the Corporation for compensation in excess of $1 million paid to each of
its chief executive officer and four most highly paid other executive officers.
An exception to this rule applies to certain performance based compensation as
to which the shareholders have approved (i) the performance criteria and (ii)
the maximum amount payable to any given individual in a specified period. Since
stock options are inherently performance based, they provide value to employees
only if the stock price appreciates, the Corporation's shareholders need only
approve a maximum number of stock options which may be granted to any individual
within a twelve month period under the 1990 Plan in order for the exception to
Section 162(m) to be applicable.
To be approved, the proposed amendment requires the affirmative vote of the
holders of a majority of the Common Shares present in person or represented by
proxy at the Annual Meeting and entitled to vote thereon. Abstentions from
voting on this proposal (including broker non-votes) will have the effect of
votes against this proposal. If not otherwise specified, properly executed
proxies will be voted in favor of the proposal. If shareholders do not approve
the amendment to the 1990 Plan, no option grants will be made to the
Corporation's executive officers under the 1990 Plan following the 1997 Annual
Meeting of Shareholders.
On March 4, 1997, the record date, the closing price of the Corporation's
Common Shares on the New York Stock Exchange was $7.25.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT TO THE 1990 PLAN.
The following is a summary of the material terms of the 1990 Plan, as
amended by the proposed amendment.
General Information Regarding the 1990 Plan
The 1990 Plan is administered by the Committee, which is authorized to
grant stock options and limited stock appreciation rights ("LSARs") to officers
and other key executive and management employees of the Corporation and its
subsidiaries. In addition, options are granted to each outside director of the
Corporation. While the number of grantees will vary from year to year, in 1996,
39 individuals including 7 officers and directors, received awards under the
1990 Plan.
The maximum number of the Corporation's Common Shares that may be issued
under the 1990 Plan is 2,500,000 plus the number of Common Shares received by
the Corporation after May 23, 1990 in payment of the exercise price under any
Option. If Common Shares under a grant are not issued, those Common Shares will
again be available for inclusion in future grants. Additionally, there is
available for issuance under the 1990 Plan any Common Shares subject to options
under the 1990 Plan which are canceled, terminated or otherwise settled without
the issuance of the Corporation's Common Shares or a direct payment in cash.
Payment of cash in lieu or Common Shares in respect of a Limited Stock
Appreciation Right is considered an issuance of Common Shares under the 1990
Plan. Common Shares issued pursuant to the 1990 Plan may either be treasury
shares or newly issued shares. If there is a stock spilt, stock dividend,
recapitalization, or other relevant change affecting the Corporation's Common
Shares, appropriate adjustments would be made in the number of Common Shares
that could be issued in the future and in the number of Common Shares and price
under all outstanding grants made before the event.
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<PAGE> 14
Grants Under the 1990 Plan
Stock Options. The Committee may grant nonqualified stock options ("NSOs")
and options qualifying as incentive stock options ("ISOs") under the Code. The
option price of any option must be at least equal to the fair market value of a
Common Share on the date of grant. The term of each option is fixed by the
Committee but may not exceed (i) ten years from the date upon which an NSO
become exercisable or (ii) ten years from the date upon which an ISO is granted.
The Committee determines the time or times at which each option may be
exercised. Options may be made exercisable in installments, and the
exercisability of options may be accelerated by the Committee. Subject to the
per person limit described above, the Committee has the discretion to determine
the number of Common Shares to be awarded to each participant.
Limited Stock Appreciation Rights. The Committee may grant LSARs which
become exercisable for a period of 90 days following a Change of Control. LSARs
entitle the grantee to receive an amount equal to the excess of the then fair
market value of the Common Shares with respect to which the LSAR is being
exercised over the price fixed by the Committee at the time the LSAR was
granted. Payment is made in cash, in Common Shares, or a combination of the two
as the Committee determines. If an LSAR is exercised, the right under any
related option would terminate. If any related stock option is exercised, any
LSAR related to the Common Shares purchased would terminate. The Committee will
determine the time or times at which an LSAR may be exercised.
Termination of Employment. In the event of termination of employment by
reason of retirement, long term disability or death, any option or LSAR may
thereafter be exercised in full for a period of up to 3 years, subject in each
case to the stated term of the option. In the event of termination of employment
for any reason other than retirement, disability or death, any options and LSARs
which are not then exercisable will be canceled and any exercisable options will
remain exercisable for up to 3 years following such termination.
Change of Control Provisions. The 1990 Plan provides that the Committee
may provide participants with certain additional rights and benefits in the
event of a "Change in Control" (as defined in the 1990 Plan), including, without
limitation, allowing all LSARs to become immediately exercisable for a period of
90 days. These provisions will not apply, however, if the acquirer agrees to
substitute new awards that preserve the value of the existing awards (including,
without limitation, by accelerating vesting for a participant who is
involuntarily or constructively terminated due to a Change of Control).
Federal Income Tax Consequences
Stock Options. The grant of an ISO or an NSO would not result in income
for the grantee or in a deduction for the Corporation.
The exercise of an NSO generally would result in ordinary income for the
grantee and a deduction for the Corporation measured by the difference between
the fair market value of the Common Shares received at the time of exercise and
the option price.
The exercise of an ISO would not result in ordinary income for the grantee
if the grantee (i) does not dispose of the Common Shares within two years after
the date of grant or one year after the transfer of Common Shares upon exercise,
and (ii) is an employee of the Corporation or a subsidiary of the Corporation
from the date of grant until three months before the exercise date. If these
requirements are met, the grantee's basis in the Common Shares upon later
disposition would be the option price. Any gain would be taxed to the grantee as
a long term capital gain, and the Corporation would not be entitled to a
deduction. The excess of the market value on the exercise date over the option
price is considered as income for purposes of the alternative minimum tax;
therefore, a grantee is potentially subject to the minimum tax on the excess of
the market value of the Common Shares purchased over option price as a result of
exercise.
If the grantee disposes of the ISO Common Shares prior to the expiration of
either of the holding periods described above, the grantee would recognize
ordinary income, and the Corporation would be entitled to a deduction, equal to
the lesser of the fair market value of the Common Shares on the exercise date
minus the option price or the amount realized on disposition minus the option
price. Any gain in excess of this amount
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<PAGE> 15
would be treated as long term or short term capital gain, depending on whether
the Common Shares are held for the requisite holding period.
LSARs. The grant of an LSAR would not result in income for the grantee or
in a deduction for the Corporation. Upon the exercise of an LSAR, the grantee
would recognize ordinary income and the Corporation would be entitled to a
deduction measured by the fair market value of the Common Shares plus any cash
received.
Other Information
The Board may terminate or suspend the 1990 Plan at any time but such
termination or suspension shall not affect any stock options or LSARs then
outstanding under the 1990 Plan. Unless terminated by action of the Board, the
1990 Plan will continue in effect until June 1, 2000, but awards granted prior
to such date shall continue in effect until they expire in accordance with their
terms. The Board may also amend the 1990 Plan as it deems advisable, but subject
to any shareholder approval required of any such amendment under applicable law.
The Committee may amend the terms of any award or option theretofore granted,
retroactively or prospectively, but no such amendment shall adversely affect any
such award or option without the holder's consent.
PROPOSAL 3. RATIFICATION OF AUDITORS
The Board of Directors has voted unanimously to retain the firm of Arthur
Andersen LLP, independent certified public accountants, as auditors for Bairnco
and its subsidiaries for the 1997 fiscal year. The Board of Directors is
submitting its selection of Arthur Andersen LLP to shareholders for
ratification. Representatives of Arthur Andersen LLP are expected to be present
at the Annual Meeting and to be available to respond to appropriate questions.
These representatives will have the opportunity to make a statement at the
Annual Meeting if they desire to do so. Ratification of management's selection
of auditors will require the affirmative vote of the holders of a majority of
the shares of Bairnco Common Stock present at the Annual Meeting (assuming that
a quorum is present). THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF MANAGEMENT'S SELECTION OF AUDITORS.
PROPOSALS BY HOLDERS OF COMMON STOCK
Any proposal that a shareholder of Bairnco desires to have included in the
Proxy Statement relating to the 1998 Annual Meeting of Shareholders must be
received by Bairnco at its executive offices no later than December 1, 1997. The
executive offices of Bairnco currently are located at 2251 Lucien Way, Suite
300, Maitland, Florida 32751.
EXPENSES AND OTHER MATTERS
Bairnco will pay the costs of preparing, assembling and mailing this Proxy
Statement and the material enclosed herewith. Bairnco has requested brokers,
nominees, fiduciaries and other custodians who hold shares of Bairnco Common
Stock in their names to solicit proxies from their clients who own such shares,
and Bairnco has agreed to reimburse them for their expenses in so doing.
In addition to the use of the mails, certain officers, directors and
regular employees of Bairnco, at no additional compensation, may request the
return of proxies by personal interview or by telephone or telegraph.
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<PAGE> 16
Management does not intend to present any further items of business to the
Annual Meeting, and knows of no such items that will or may be presented by
others. If, however, any other matter properly comes before the meeting, the
persons named in the enclosed proxy form will vote thereon in such manner as
they may in their discretion determine.
By Order of the Board of Directors
Linda M. Metcalf
Secretary
Maitland, Florida
March 21, 1997
PLEASE DATE, SIGN AND IMMEDIATELY RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ADDRESSED ENVELOPE.
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<PAGE> 17
APPENDIX
PROXY
BAIRNCO CORPORATION
ANNUAL MEETING OF SHAREHOLDERS, APRIL 18, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BAIRNCO CORPORATION
The undersigned hereby appoints LUKE E. FICHTHORN III, J. ROBERT WILKINSON,
and LINDA M. METCALF, and each of them, the proxies of the undersigned, with
power of substitution in each, to vote all stock of BAIRNCO CORPORATION that the
undersigned is entitled to vote at the Annual Meeting of Shareholders of such
Corporation to be held at Sheraton Orlando North, 600 North Lake Destiny Road,
Maitland, Florida, on Friday, April 18, 1997, at 10:00 A.M., local time, and at
any adjournment thereof. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
FOLLOWING PROPOSALS:
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as listed to the contrary below) all nominees listed below
</TABLE>
NOMINEES: Luke E. Fichthorn III, Charles T. Foley, Richard A. Shantz,
William F. Yelverton
(INSTRUCTIONS: to withhold your vote from any individual nominee or nominees,
check the FOR box above and write each such nominee's name on
the space provided below.)
- --------------------------------------------------------------------------------
2. AMENDMENT TO THE BAIRNCO CORPORATION 1990 STOCK INCENTIVE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. RATIFICATION OF MANAGEMENT'S SELECTION OF AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. TO VOTE, IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING
If no contrary instructions are indicated on this Proxy, this Proxy will be
voted FOR Proposals 1, 2, and 3.
Dated:
------------------------
------------------------------
Signature
------------------------------
Signature
Please sign exactly as name
appears at left. Joint owners
should each sign. When signing
as attorney, executor,
administrator, trustee or
guardian, give your full title
as such.
PLEASE SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
