SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
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>
BAIRNCO CORPORATION
2251 LUCIEN WAY, SUITE 300
MAITLAND, FLORIDA 32751
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 22, 1999
To Shareholders:
The Annual Meeting of Shareholders of Bairnco Corporation (the "Company",
or "Bairnco") will be held on Thursday April 22, 1999, at Bairnco's corporate
offices, 2251 Lucien Way, Suite 300, Maitland, Florida at 9:00 A.M., local time,
for the following purposes:
1. To elect the Board of Directors of Bairnco.
2. To ratify management's selection of Bairnco's auditors.
3. To transact such other business as may properly come before the
meeting and any adjournment thereof.
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Only shareholders of record at the close of business on March 8, 1999 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
James W. Lambert
Assistant Secretary
Maitland, Florida
March 17, 1999
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>
BAIRNCO CORPORATION
2251 Lucien Way, Suite 300
Maitland, Florida 32751
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PROXY STATEMENT
Annual Meeting of Shareholders
To Be Held April 22, 1999
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INTRODUCTION
The Annual Meeting of Shareholders of Bairnco Corporation will be held on
Thursday, April 22, 1999, at Bairnco's corporate headquarters, 2251 Lucien Way,
Suite 300, Maitland, Florida at 9:00 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 Assistant 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, 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.
Only shareholders of record at the close of business on March 8, 1999, are
entitled to notice of, and to vote at, the Annual Meeting. At the close of
business on such date there were 8,209,659 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 17, 1999. 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 1999 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 1998
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.
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Names and Ages of Nominees Data Pertaining to Nominees
- -------------------------- ---------------------------
Luke E. Fichthorn III (57) .......... 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-five 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 (60) ............... For the past 27 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 (63) .............. 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 (57) ........... Since July 1997, Mr. Yelverton has been
an independent consultant. From
September 1995 through June 1997, Mr.
Yelverton was Executive Vice President
of Prudential Insurance Company of
America. From September 1989 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.
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 1998, Bairnco's Board of Directors met seven times for regular
meetings and had four telephonic meetings. Each director attended more than 75%
of the total number of meetings of the Board of Directors and the committees of
the Board on which he served.
Each non-employee director received an annual retainer of $16,000 per year
payable quarterly and a fee of $1,500 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 and attended in
person are limited to $1,500. No fees are paid for meetings conducted via
telephone. It is also the company's policy to grant annually to each
non-employee director an option to purchase 1,000 shares of Bairnco stock. The
exercise price of the option is set at the fair market value of the common stock
at the date of grant. One third of the options vest in each of the succeeding
three years at the anniversary date of the grant. The options remain exercisable
for ten years from the date of vesting.
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 such
payments were made during 1998.
During 1998, Bairnco's outside directors received the following
compensation: Charles T. Foley -- $23,500 Richard A. Shantz -- $26,500, William
F. Yelverton -- $26,500. Each director was also granted an option to purchase
1,000 shares of Bairnco stock as described above.
It is the present policy of Bairnco that outside directors, upon retirement
from the Board of Directors, shall receive annually for the number of years
equal to the number of years he or she has served on the Board of Directors of
Bairnco
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as a non-employee director, 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 six times during 1998 and the
Audit Committee met twice during 1998. 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 1998, 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, 1998,
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:
Amount and Nature
of Beneficial Percentage of Issued
Ownership of and Outstanding
Name and Address of Beneficial Owner Common Stock Common Stock
- ------------------------------------ ------------ ------------
Marvin Schwartz 922,800 11.14%
605 Third Avenue
New York, NY 10158
FMR Corp. 900,900 10.88%
82 Devonshire Street
Boston, MA 02109
Dimensional Fund Advisors Inc. 587,500 7.09%
1299 Ocean Avenue
Santa Monica, CA 90401
Neuberger & Berman, LLC 500,800 6.05%
605 Third Avenue
New York, NY 10158
The Company has retained the services of Neuberger & Berman, LLC to serve as
investment manager with respect to a portion of the assets in the Bairnco
Corporation Retirement Plan. Neuberger & Berman, LLC is a registered investment
advisor under the Investment Advisors Act of 1940 and serves as investment
advisor to numerous individuals and retirement plans. Fees payable under this
arrangement are customary for these services.
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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, 1998.
Percentage of Issued
Amount and Nature of and Outstanding
Beneficial Ownership of Common Stock on
Name of Individual or Group Common Stock December 31, 1998
- --------------------------- ----------------------- -----------------
Luke E. Fichthorn III 392,531(1) 4.74%
Charles T. Foley 288,449(2) 3.48%
James W. Lambert 2,625(3) (8)
Richard A. Shantz 341,099(4) 4.12%
J. Robert Wilkinson 70,194(5) (8)
William F. Yelverton 34,899(6) (8)
All executive officers and
directors as a group (6 persons) 1,129,797(7) 13.64%
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(1) Includes 2,000 shares owned by Mrs. Fichthorn and 1,500 shares owned by two
trusts of which Mr. Fichthorn is a co-trustee. Mr. Fichthorn disclaims
beneficial ownership of these shares. 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 38,350 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 10,999 vested unexercised stock options granted under the 1990 Bairnco
Stock Option Plan.
(3) Includes shares that would be issued upon the exercise of 625 vested
unexercised stock options granted under the 1990 Bairnco Stock Option Plan.
(4) Includes 25,700 shares owned by Mrs. Shantz as to which Mr. Shantz
disclaims beneficial ownership. Also, includes shares that would be issued
upon the exercise of 8,999 vested unexercised stock options granted under
the 1990 Bairnco Stock Option Plan.
(5) Includes 400 shares owned by each 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 7,628 shares through ownership in trust under the
Bairnco Corporation 401(K) Savings Plan.
(6) Includes shares that would be issued upon the exercise of 9,999 vested
unexercised stock options granted under the 1990 Bairnco Stock Option Plan.
(7) Includes a total of 29,900 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 347,288 vested unexercised stock options granted under the 1990
Bairnco Stock Option Plan.
(8) The percentage of shares owned by such executive officer or director does
not exceed 1% of the issued and outstanding Bairnco Common Stock.
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COMPENSATION OF MANAGEMENT
General
The following table sets forth information regarding the compensation paid,
distributed or accrued for services rendered during 1996, 1997, and 1998 to the
Chairman of the Board and each of the two other most highly compensated
executive officers of Bairnco (collectively the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------- Awards All Other
Name and Principal Position Year Salary Bonus Options Compensation
- ------------------------- ----- --------- ---------- ---------- -----------
($) ($)
<S> <C> <C> <C> <C> <C>
Luke E. Fichthorn III 1998 $374,167 $157,500 -0- -0-
Chairman of the Board 1997 362,500 240,000 -0- -0-
1996 349,167 206,250 -0- -0-
J. Robert Wilkinson 1998 182,458 32,300 -0- -0-
Vice President, Finance 1997 177,167 74,400 -0- -0-
1996 171,150 75,300 -0- -0-
James W. Lambert (1) 1998 107,667 30,900 -0- 3,260
Corporate Controller 1997 41,788 39,706 2,500 27,152
1996 -0- -0- -0- -0-
</TABLE>
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1) Mr. Lambert was appointed as Corporate Controller in August 1997. Amounts
shown under All Other Compensation for Mr. Lambert relate to relocation
allowances and reimbursement of relocation expenses.
Stock Options
The following table sets forth information for each Named Executive with
regard to stock option exercises during 1998 and the value of stock options held
as of December 31, 1998. No stock options were granted to Named Executives
during 1998 under the Company's 1990 Stock Incentive Plan.
AGGREGATED OPTION EXERCISES IN 1998
AND 1998 YEAR END OPTION VALUE
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired on Value Options at Year-End (#) Year-End ($) (1)
Exercise Realized ------------------------- -------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------- -------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Luke E. Fichthorn III -0- -0- 266,666 83,334 $315,999 $98,751
J. Robert Wilkinson -0- -0- 50,000 -0- $106,250 $-0-
James W. Lambert -0- -0- 625 1,875 $-0- $-0-
</TABLE>
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(1) Value is determined by multiplying the number of unexercised in-the-money
options by the difference between the stock price on December 31, 1998 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
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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 1998 remuneration covered by the
Bairnco Plan for each participant therefore includes management incentive
compensation (up to such 50% ceiling) paid during 1999 in respect of 1998
awards.
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 $3,863 $7,727 $11,590 $15,453 $19,317
75,000 6,301 12,602 18,903 25,203 31,504
100,000 8,738 17,477 26,215 34,953 43,692
150,000 13,613 27,227 40,840 54,453 68,067
160,000 or more 14,588 29,177 43,765 58,353 72,942
</TABLE>
In accordance with IRS regulation, the maximum allowable compensation
permitted in computing a benefit is $160,000 for 1998. 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, 1998, and the remuneration received during 1998 covered
by the Retirement Plan, were, respectively, as follows: Mr. Fichthorn, 9 years
and $160,000; Mr.
Wilkinson, 12 years and $160,000; and Mr. Lambert, 2 years and $138,567.
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 $42,582 payable upon
normal retirement date, based upon 25 projected years of credited service, and
1998 covered remuneration of $160,000.
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 $377,500 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
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1995. The remaining 83,334 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 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 (23
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
1998: 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 COMMITEE 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 15 because the Company competes for talent with
a broader group of employers than just those in its industry.) During 1998, the
Company utilized information from several nationwide salary surveys as a basis
to make upward adjustments in salary ranges
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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 depends upon company performance as measured by 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
Bairnco and its consolidated subsidiaries as reported to shareholders in excess
of $.30 per share, including the management incentive compensation annual pool
as a cost in arriving at pre-tax income. Over the past fiscal year, net income
excluding non-operating items was equal to $.72 per share, generating a total
bonus pool of $630,000.
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. No grants were issued to the Named Executive
Officers during the fiscal year ending December 31, 1998.
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 improving operating
performance. 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 1997. On May 1, 1998 he received a salary increase of 2.7%
resulting in a current salary for Mr. Fichthorn of $377,500. The Committee
determined to award Mr. Fichthorn a bonus of $157,500 which represents 25% of
the pool generated by the formula described above.
162 (m) Disclosure
Based on current levels of compensation, no executive officer is expected
to receive compensation for 1999 services which would be non deductible under
Section 162 (m) of the Internal Revenue Code. Accordingly, the Compensation
Committee has not considered any revisions to its policies and programs in
response to this provision of law.
Respectfully submitted,
The Compensation Committee
Richard A. Shantz
Charles T. Foley
William F. Yelverton
8
<PAGE>
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, the Russell 2000 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, 1993, 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.
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
- --------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------
Bairnco 100 112 163 195 298 219
- --------------------------------------------------------------------------------
S&P 500 100 101 139 171 229 294
- --------------------------------------------------------------------------------
Composite 100 99 132 166 204 228
- --------------------------------------------------------------------------------
Russell 2000 100 98 126 147 180 175
- --------------------------------------------------------------------------------
9
<PAGE>
PROPOSAL 2. 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 1999 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 2000 Annual Meeting of Shareholders must be
received by Bairnco at its executive offices no later than December 1, 1999. The
executive offices of Bairnco currently are located at 2251 Lucien Way, Suite
300, Maitland, Florida 32751.
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon a review of filings with the Securities and Exchange Commission
and written representations from its directors and executive officers that no
other reports were required, the Company believes that all of the Company's
directors and executive officers complied with the filing requirements of
Section 16(a) of the Securities Exchange Act of 1934 during the fiscal year
ended December 31, 1998. The Company is not aware that any beneficial holder of
10% of the Company's common stock has not complied with filing requirements.
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.
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
James W. Lambert
Assistant Secretary
Maitland, Florida
March 17, 1999
PLEASE DATE, SIGN AND IMMEDIATELY RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ADDRESSED ENVELOPE.
10
<PAGE>
PROXY
BAIRNCO CORPORATION
ANNUAL MEETING OF SHAREHOLDERS, April 22, 1999
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BAIRNCO CORPORATION
The undersigned hereby appoints LUKE E. FICHTHORN III, J. ROBERT WILKINSON,
and JAMES W. LAMBERT, 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 Bairnco's corporate offices, 2251 Lucien Way, Suite
300, Maitland, Florida, on Thursday, April 22, 1999, at 9:00 A.M., local time,
and at any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
1. ELECTION OF DIRECTORS
|_| FOR all nominees listed below (except as marked to the contrary below)
|_| WITHHOLD AUTHORITY to vote for all nominees listed below
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.)
________________________________________________________________________________
<PAGE>
2. RATIFICATION OF MANAGEMENT'S SELECTION OF AUDITORS
|_| FOR |_| AGAINST |_| ABSTAIN
3. 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 and 2.
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
