BAIRNCO CORPORATION
300 Primera Blvd, Suite 432
Lake Mary, Florida 32746
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 21, 2000
To Shareholders:
The Annual Meeting of Shareholders of Bairnco Corporation (the "Company",
or "Bairnco") will be held on Friday, April 21, 2000, at Bairnco's corporate
offices, 300 Primera Blvd., Suite 432, Lake Mary, 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 approve Bairnco's 2000 Stock Incentive Plan.
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 6, 2000 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
Larry D. Smith
Secretary
Lake Mary, Florida
March 14, 2000
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
300 Primera Blvd., Suite 432
Lake Mary, Florida 32746
--------------------
PROXY STATEMENT
Annual Meeting of Shareholders
To Be Held April 21, 2000
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INTRODUCTION
The Annual Meeting of Shareholders of Bairnco Corporation will be held on
Friday, April 21, 2000, at Bairnco's corporate headquarters, 300 Primera Blvd.,
Suite 432, Lake Mary, 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 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
ratification of auditors, and in favor of the approval of Bairnco's 2000 Stock
Incentive Plan. 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 6, 2000, are
entitled to notice of, and to vote at, the Annual Meeting. At the close of
business on such date there were 7,789,584 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, 2000. Bairnco's Annual Report to shareholders
accompanies this Proxy Statement.
<PAGE>
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 2000 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 1999
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.
Names and Ages of Nominees Data Pertaining to Nominees
- -------------------------- ---------------------------
Luke E. Fichthorn III (58) ....... 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 (61) ............ 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 (64) ........... 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 (58) ........ Beginning January 1, 2000, Mr. Yelverton
became CEO of LiveInsurance.com, a national
online insurance brokerage agency. From July
1997 until January 2000, Mr. Yelverton was
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.
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<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
During 1999, Bairnco's Board of Directors met seven times for regular
meetings and had three 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 1999.
During 1999, Bairnco's outside directors received the following
compensation: Charles T. Foley - $26,500 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 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 current thirty year U.S. Government bond yield.
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<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
Bairnco has standing Audit, Compensation and Nominating Committees of the
Board of Directors. The Compensation Committee met eight times during 1999 and
the Audit Committee met twice during 1999. 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 1999 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 $150,000. 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.
4
<PAGE>
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of December 31, 1999,
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 Percentage of
of Beneficial Issued
Ownership of and Outstanding
Name and Address of Beneficial Owner Common Stock Common Stock
- ------------------------------------ ------------ ------------
Marvin Schwartz.................... 922,800 11.84%
605 Third Avenue
New York, NY 10158
FMR Corp. ......................... 900,900 11.55%
82 Devonshire Street
Boston, MA 02109
Dimensional Fund Advisors Inc. .... 629,700 8.08%
1299 Ocean Avenue
Santa Monica, CA 90401
Neuberger & Berman, LLC............ 447,400 5.74%
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.
5
<PAGE>
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, 1999.
Percentage of
Amount and Nature Issued
of Beneficial and Outstanding
Ownership of Common Stock on
Name of Individual or Group Common Stock December 31, 1998
- --------------------------- ------------ -----------------
Luke E. Fichthorn III................ 404,631(1) 5.19%
Charles T. Foley..................... 298,949(2) 3.83%
James W. Lambert..................... 3,250(3) (9)
Richard A. Shantz.................... 302,099(4) 3.87%
Larry D. Smith....................... 130(5) (9)
J. Robert Wilkinson.................. 70,417(6) (9)
William F. Yelverton................. 35,899(7) (9)
All executive officers and directors 1,115,375(8) 14.32%
as a group (7 persons)
- ----------
(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 33,350 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 11,999 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 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 9,999 vested unexercised stock options granted under
the 1990 Bairnco Stock Option Plan.
(5) Mr. Smith indirectly owns 130 shares through ownership in trust under the
Bairnco Corporation 401(K) Savings 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 7,851 shares through ownership in trust under the
Bairnco Corporation 401(K) Savings Plan.
(7) Includes shares that would be issued upon the exercise of 10,999 vested
unexercised stock options granted under the 1990 Bairnco Stock Option
Plan.
(8) 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 352,163 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.
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<PAGE>
COMPENSATION OF MANAGEMENT
General
The following table sets forth information regarding the compensation paid,
distributed or accrued for services rendered during 1997, 1998, and 1999 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
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........... 1999 $385,167 $292,500 -0- -0-
Chairman of the Board and 1998 374,167 157,500 -0- -0-
Chief Executive Officer 1997 362,500 240,000 -0- -0-
J. Robert Wilkinson (1) ........ 1999 186,292 89,213 -0- -0-
Chief Financial Officer Emeritus 1998 182,458 32,300 -0- -0-
1997 177,167 74,400 -0- -0-
James W. Lambert (2) ........... 1999 113,333 75,348 17,500 -0-
Vice President Finance 1998 107,667 30,900 -0- 3,260
1997 41,788 39,706 2,500 27,152
Larry D. Smith (3) ............. 1999 102,885 92,664 20,000 28,107
Vice President Administration 1998 -0- -0- -0- -0-
1997 -0- -0- -0- -0-
</TABLE>
- ----------
(1) Mr. Wilkinson has announced his retirement as Vice President Finance
effective April 1, 2000, and will serve as Chief Financial Officer
Emeritus until that time.
(2) Mr. Lambert was appointed as Corporate Controller in August 1997 and was
promoted to Vice President Finance effective December 31, 1999, replacing
Mr. Wilkinson. Amounts shown under All Other Compensation for Mr. Lambert
relate to relocation allowances and reimbursement of relocation expenses.
(3) Mr. Smith was appointed VP Administration and Corporate Secretary in April
1999. Amounts shown under All Other Compensation for Mr. Smith relate to
relocation allowances and reimbursement of relocation expenses.
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<PAGE>
Stock Options
The following tables set forth information for each Named Executive with
regard to stock option grants and exercises during 1999 and the value of stock
options held as of December 31, 1999. 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% to 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.
OPTIONS GRANTED IN FISCAL 1999
<TABLE>
<CAPTION>
Potential Realizable
Number of Value at Assumed Annual
Securities % of Total Options Rates of Stock
Underlying Granted to Appreciation
Options Employees in for Option Term
Name Granted Fiscal 1999 Exercise Price Expiration Date 5% 10%
- ---- ------- ----------- -------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Larry D. Smith........... 20,000 20.7% $6.375 05/21/2010 $107,475 $294,567
James W. Lambert......... 3,000 3.1% $7.375 08/18/2010 $18,650 $51,116
14,500 15.0% $6.875 12/09/2010 $84,031 $230,311
</TABLE>
AGGREGATED OPTION EXERCISES IN 1999
AND 1999 YEAR END OPTION VALUE
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired Value Options at Year-End (#) Year-End ($) (1)
on Exercise Realized ----------------------------- ----------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Luke E. Fichthorn III... -0- -0- 266,666 83,334 $16,000 $5,000
J. Robert Wilkinson..... -0- -0- 50,000 -0- $50,000 $-0-
James W. Lambert........ -0- -0- 1,250 18,750 $-0- $-0-
Larry D. Smith.......... -0- -0- -0- 20,000 $-0- $-0-
</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, 1999 and
the option grant price.
8
<PAGE>
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 1999 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:
Years of Service at Retirement
Average Compensation -----------------------------------------------------
at Retirement 5 10 15 20 25 or More
------------- ------- ------- ------- ------- ----------
$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
In accordance with IRS regulation, the maximum allowable compensation
permitted in computing a benefit is $160,000 for 1999. 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, 1999, and the remuneration received during 1999 covered
by the Retirement Plan, were, respectively, as follows: Mr. Fichthorn, 10 years
and $160,000; Mr. Wilkinson, 13 years and $160,000; Mr. Lambert, 3 years and
$144,233; and Mr. Smith, 1 year and $119,394.
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 $42,609 payable upon
normal retirement date, based upon 25 projected years of credited service, and
1999 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 $389,000 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
9
<PAGE>
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 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 (24
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 1999: 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.
10
<PAGE>
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 16 because the Company competes for
talent with a broader group of employers than just those in its industry.)
During 1999, 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 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 $1.08 per share, generating a total
bonus pool of $1,170,000 of which $684,918 was paid out.
Distribution of MIC awards to eligible employees is dependent upon the
Compensation Committee's review of management'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, 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.
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 1998. On May 1, 1999 he received a salary increase of 3.0%
resulting in a current salary for Mr. Fichthorn of $389,000. In accordance with
his contract, Mr. Fichthorn also earned a bonus for 1999 in the amount of
$292,500 which represents 25% of the pool generated by the formula described
above.
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162 (m) Disclosure
Based on current levels of compensation, no executive officer is expected
to receive compensation for 2000 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
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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 PRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
[GRAPHIC OMITTED]
Bairnco S&P 500 Composite Russell 2000
------- ------- --------- ------------
1994.............. 100 100 100 100
1995.............. 146 138 133 128
1996.............. 174 169 168 150
1997.............. 266 226 206 183
1998.............. 195 290 230 178
1999.............. 168 351 289 216
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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 2000 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.
PROPOSAL 3. 2000 STOCK INCENTIVE PLAN
The Board of Directors is submitting the Bairnco 2000 Stock Incentive Plan
(the "Stock Incentive Plan") to the shareholders for their approval. Bairnco
believes that over the years its stock plans have made a significant
contribution to the success of Bairnco by helping attract and retain skilled
management personnel.
The following summary is qualified in its entirety by reference to the
full text of the Stock Incentive Plan which is set forth as Exhibit A to this
Proxy Statement.
General Information Regarding the Stock Incentive Plan
The stock incentive plan has two components which, if approved, will
provide (i) for automatic grants ("Automatic Grants") of stock options to
non-employee directors ("Outside Directors") in the number of shares and at the
times described below and (ii) the Compensation Committee (the "Committee") with
discretionary authority to grant stock options to officers and other key
executive and management employees of Bairnco and its subsidiaries (the
"Discretionary Portion"). All Outside Directors would receive automatic grants.
The Committee would select the grantees under the Discretionary Portion of the
Stock Incentive Plan from approximately 100 employees, including one officer and
director and three officers who are also employees. The number of such grantees
could vary from year to year. It is not possible to state in advance the exact
number or identity of such grantees or the amounts of the grants.
The maximum number of shares of Bairnco Common Stock that may be issued
under the 2000 Stock Incentive Plan would be 750,000. The shares to be issued
under the Stock Incentive Plan may be unissued shares or treasury shares. If
there is a stock split, stock dividend, recapitalization, or other relevant
change affecting the Bairnco Common Stock, the Board of Directors will make any
appropriate adjustments in the number of shares that could be issued in the
future and in the number of shares and price under all outstanding grants made
before the event. If shares under a grant are not issued, those shares would
again be available for inclusion in future grants. If any award under the Stock
Incentive Plan is exercised using shares of previously owned Bairnco Common
Stock only the net number of shares issued will be counted against the shares
authorized for issuance.
The Committee must be composed of two or more persons appointed by the
Board of Directors of Bairnco who are not eligible to receive grants under the
Discretionary Portion of the Stock Incentive Plan (but who may receive Automatic
Grants). The Committee will have the authority to administer the Discretionary
Portion of the Stock Incentive Plan. Pursuant to that authority, the Committee
may establish rules and regulations for the operation of the Discretionary
Portion, select employees to receive grants thereunder and determine the number
of shares subject to such grants. The Committee may grant awards under the
Discretionary Portion in exchange for prior awards under the Discretionary
Portion or under the 1990 Incentive Plan, and the shares subject to any
exchanged award or option will become available for future grants under the
Stock Incentive Plan.
Grants to Employees Under the Stock Incentive Plan
Stock Options
The Committee could grant employees (but not Outside Directors)
nonqualified options and options qualifying as incentive stock options under the
Internal Revenue Code of 1986, as amended (the "Code"). The option price of an
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incentive stock option would be the fair market value of a share of Bairnco
Common Stock on the date of grant. The option price for a non-qualified stock
option would be the fair market value of a share on the date grant (or, if
determined by the Committee, the book value per share). To exercise an option,
an employee would pay the option price in cash or, if permitted by the
Committee, by delivering shares of Bairnco Common Stock already owned by the
employee that have a fair market value equal to the option price. The Stock
Incentive Plan would authorize the Committee to permit "pyramiding", which
involves the exercise of an option in successive stages using as the payment at
each stage shares which have been acquired under the option in preceding stages.
The term of each option will be fixed by the Committee but may not exceed
10 years from the date the option becomes exercisable (or, in the case of an
incentive stock option, ten years from the date of grant). The Committee will
determine the time or times at which each option granted to an employee may be
exercised. Such options may be made exercisable in installments, and the
exercisability of such options may be accelerated by the Committee.
Termination of Employment
Unless otherwise determined by the Committee, in the event of termination
of employment by reason of retirement, long-term disability or death, any option
may thereafter be exercised in full for a period of three years (or such shorter
period as the Committee shall determine at grant), 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, unless otherwise determined
by the committee, any options will be cancelled. The committee may permit an
employee whose employment terminates for any such reason up to three years to
exercise an option.
Change of Control Provisions
The Stock Incentive Plan provides that, except as described below, in the
event of a "change of control" (as described in the Stock Incentive Plan), all
options granted to employees will become immediately exercisable.
Notwithstanding the foregoing, if the Committee determines that an employee will
receive a new award (or have his/her prior award honored) in a manner which
preserves its value and eliminates the risk that the value of the award will be
forfeited due to involuntary termination, no acceleration of exercisability or
vesting would occur as a result of the change of control, provided that the
Committee may waive this condition at the time of the grant of any award.
Grants to Outside Directors Under the Stock Incentive Plan
Each person who becomes an Outside Director during the term of the Stock
Incentive Plan an option for 5,000 shares of Bairnco Common Stock on the date he
or she becomes a member of the Board. Additionally, during the term of the Stock
Incentive Plan, each Outside Director will receive an option grant of 1,000
shares at each annual meeting of shareholders occurring during his or her
service as a member of the Board of Directors.
Each option granted to an Outside Director will have an option price per
share equal to the fair market value of a share of Bairnco Common Stock on the
date the option is granted under the terms of the Stock Incentive Plan. Each
option will become exercisable in three approximately equal annual installments,
provided that (i) all such options will become exercisable upon the occurrence
of a change of control or (ii) will become fully exercisable upon the Outside
Director's death or retirement from the Board at or after age 65. Each option
shall remain exercisable for 10 years after the date on which it becomes
exercisable and shall be exercisable for up to three years (or, if shorter, over
its remaining term) following termination from membership on the Board, but only
to the extent exercisable on the date of such termination (including by reason
of any acceleration occurring at the date of such termination).
Federal Income Tax Consequences
The grant of an incentive stock option or a non-qualified stock option
would not result in income for the grantee or in a deduction for Bairnco.
The exercise of a non-qualified stock option generally would result in
ordinary income for the grantee and a deduction for Bairnco measured by the
difference between the fair market value of the shares received at the time of
exercise and the option price. However, if the grantee is an officer or director
subject to the short swing trading provisions of Section 16(b) of the Securities
Exchange Act of 1934 (a "16(b) person"), the income for that grantee and the
deduction for Bairnco would be measured by the difference between the option
price and the fair market value for the shares six months following exercise,
unless the grantee elects, in accordance with Internal Revenue Service
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regulations, to recognize the income at the time of exercise. Income tax
withholding would be required at the time income is recognized.
Exercise of an incentive stock option would not result in ordinary income
for an employee if the employee (i) does not dispose of the shares within two
years after the date of grant or one year after the transfer of shares upon
exercise, and (ii) is an employee of Bairnco or a subsidiary of Bairnco from the
date of grant until three months before the exercise date. If these requirements
are met, the employee's basis in the shares upon later disposition would be the
option price and any gain realized upon disposition of such shares would be
taxed to the employee as long term capital gain, and Bairnco 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 market value of the shares purchased determined at the time of
exercise over the option price as a result of the exercise. Outside Directors
may not receive incentive stock options.
If the employee disposes of the incentive stock option shares prior to the
expiration of the holding periods described above, the employee would recognize
ordinary income and Bairnco would be entitled to a deduction equal to the lesser
of the fair market value of the 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 would be treated as long term or short term capital gain,
depending on whether the shares are held for the requisite holding period.
Other Information
The Board may terminate or suspend the Stock Incentive Plan at any time
but such termination or suspension will not affect any stock options then
outstanding. Unless terminated by action of the Board, the Stock Incentive Plan
will continue in effect indefinitely. The Board may also amend the Stock
Incentive Plan as it deems advisable. The Board presently intends to submit all
material amendments to the Stock Incentive Plan to the Shareholders for their
approval to the extent required by applicable law, exchange rules or Rule 16b-3
as promulgated under the Securities Exchange Act of 1934, as amended. Subject to
the terms of the Stock Incentive Plan, the Committee may amend the term of any
award or option theretofore retroactively or prospectively, but no such
amendment shall adversely affect any such award or option without the holder's
consent.
The Board of Directors unanimously recommends a vote FOR approval of
Bairnco's 2000 Stock Incentive Plan.
PROPOSALS BY HOLDERS OF COMMON STOCK
Any proposal that a shareholder of Bairnco desires to have included in the
Proxy Statement relating to the 2001 Annual Meeting of Shareholders must be
received by Bairnco at its executive offices no later than December 1, 2000. The
executive offices of Bairnco currently are located at 300 Primera Blvd., Suite
432, Lake Mary, Florida 32746.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on Bairnco's review of filings with the Securities and Exchange
Commission and written representations from its directors and executive
officers, the following director failed to file during 1999 a report covering a
single transaction on a timely basis as required by Section 16(a) of the
Securities Exchange Act of 1934:
William Yelverton filed a late Form 4 reporting a single stock option
grant under the 1990 Bairnco Stock Incentive Plan.
The Company is not aware of any beneficial holder of 10% of the Company's
common stock which has not complied with filing requirements.
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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
Larry D. Smith
Secretary
Lake Mary, Florida
March 11, 2000
PLEASE DATE, SIGN AND IMMEDIATELY RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ADDRESSED ENVELOPE.
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EXHIBIT A
BAIRNCO CORPORATION
2000 STOCK INCENTIVE PLAN
Section 1. Purpose
1.1. The purpose of the "BAIRNCO CORPORATION 2000 STOCK INCENTIVE PLAN"
(the "Plan") is to foster and promote the long-term financial success of the
Company and materially increase shareholder value by (a) motivating superior
performance by means of performance-related incentives, (b) encouraging and
providing for the acquisition of an ownership interest in the Company by
Employees and Outside Directors, and (c) enabling the Company to attract and
retain the services of an outstanding management team upon whose judgment,
interest, and special effort the successful conduct of its operations is largely
dependent.
Section 2. Definitions
2.1. Definitions. Whenever used herein, the following terms shall have the
respective meanings set forth below:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Board" means the Board of Directors of the Company.
(c) "Book Value" on any date shall mean the book value per share of
Stock as reflected on the most recent consolidated pro forma balance
sheet of the Company; provided, however, that the Committee may, in
its discretion, adjust the book value per share to reflect events or
other circumstances not reflected on such most recent balance sheet.
(d) "Change in Control" means the first to occur of the following
events:
(i) The acquisition by any person, entity or "group", within the
meaning of Section 13(d)(3) or 14(d)(2) of the Act, other than
the Company, its Subsidiaries or any employee benefit plan of
the Company or its Subsidiaries, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act)
of 20% or more of either the then outstanding shares of Stock
or the combined voting power of the Company's then outstanding
voting securities entitled to vote generally in the election
of directors; or
(ii) When individuals who, as of the beginning of any 24-month
period (or such other period as the Committee shall determine
at the time of grant), constitute the Board at the beginning
of such period (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the beginning of such
period whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the
Directors of the Company, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Act) shall be,
for purposes of the Plan, considered as though such person
were a member of the Incumbent Board; or
(iii) The approval by the stockholders of the Company of the (A) a
reorganization, merger or consolidation, in each case, with
respect to which persons who were shareholders of the Company
immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or
consolidated company, (B) a liquidation or dissolution of the
Company or (C) the sale of all or substantially all of the
assets of the Company.
(e) "Change in Control Price" means the highest price per share of Stock
offered in conjunction with any transaction resulting in a Change in
Control (as determined in good faith by the Committee if any part of
the offered price is payable other than in cash) or, in the case of
a Change in Control occurring solely by reason
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of a change in the composition of the Board, the highest Fair Market
Value of the Stock on any of the 30 trading days immediately
preceding the date on which a Change in Control occurs.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the Compensation Committee of the Board (or such
other committee of the Board which shall have jurisdiction over the
compensation of officers), which shall consist of two or more
members. If at any time, no Committee shall be in office, the Board
shall perform the functions of the Committee, provided that a
majority of the members of the Board are disinterested persons (as
described above).
(h) "Company" means BAIRNCO Corporation, a Delaware corporation, and any
successor thereto.
(i) "Constructive Termination" means a termination by a Participant
following a material reduction in the Participant's compensation, a
material reduction in the Participant's responsibilities or the
relocation of the Participant's principal place of employment to
another location, in each case without the Participant's written
consent.
(j) "Disability" means total disability as determined in accordance with
the terms of the Company's long-term disability plan, as in effect
from time to time.
(k) "Employee" means any officer or other key employee of the Company or
any of its Subsidiaries.
(l) "Fair Market Value" means the closing price of a share of Stock on
any date in which the Stock is traded on an established securities
market as reported on such recognized quotation system on which the
trading prices of the Stock are quoted on such date. In the event
that there are no Stock transactions reported on such system on such
date, Fair Market Value shall mean the closing price of a share of
Stock on the immediately preceding date on which Stock transactions
were so reported. If on any date the Stock is not traded on an
established securities market, Fair Market Value shall mean the fair
market value of a share of Stock as determined by the Committee in
its absolute discretion.
(m) "Involuntary Termination" means a termination by the New Employer
for any reason.
(n) "New Employer" means the Participant's employer, or the parent or
subsidiary of such employer, immediately following a Change in
Control.
(o) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of the Plan, an Option may be
either (i) an "Incentive Stock Option" (ISO) within the meaning of
Section 422 of the Code or (ii) a "Nonqualified Stock Option" (NSO),
except that ISOs may not be granted to Outside Directors.
(p) "Outside Director" means a member of the Board who is not a common
law employee of the Company or any its Subsidiaries.
(q) "Participant" means any Employee or Outside Director designated by
the Committee to participate in the Plan.
(r) "Retirement" means termination of employment in accordance with the
retirement provisions of any retirement plan maintained by the
Company or any of its subsidiaries; provided that, in the case of an
Outside Director, Retirement shall mean retirement from service as a
member of the Board of Directors after achieving age 65.
(t) "Stock" means the common stock of the Company, par value $.05 per
share.
(u) "Subsidiary" means any corporation in which a majority of its
outstanding voting securities is owned, directly or indirectly, by
the Company.
2.2. Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.
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Section 3. Eligibility and Participation
Participants in the Plan shall be those Employees and/or Outside Directors
selected by the Committee to participate in the Plan.
Section 4. Powers of the Committee
4.1. Power to Grant. The Committee shall determine the Participants to
whom Options shall be granted, the type or types of Options to be granted and
the terms and conditions of any and all such Options. The Committee may
establish different terms and conditions for different types of Options, for
different Participants receiving the same type of Option and for the same
Participant for each Option such Participant may receive, whether or not granted
at different times.
4.2. Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to prescribe, amend, and rescind rules and regulations relating to
the Plan under its jurisdiction, to provide for conditions and assurances deemed
necessary or advisable to protect the interests of the Company, and to make all
other determinations necessary or advisable for the administration and
interpretation of the Plan in order to carry out its provisions and purposes.
Determinations, interpretations, or other actions made or taken by the Committee
pursuant to the provisions of the Plan shall be final, binding, and conclusive
for all purposes and upon all persons.
Section 5. Stock Subject to Plan
5.1. Number. Subject to the provisions of Section 5.3, the number of
shares of Stock subject to Options under the Plan may not exceed 750,000 shares.
With respect to any shares issued with respect to any Option exercised by
surrendering previously owned Stock, only the net number of shares of Stock
issued shall be counted against the number of shares authorized for issuance
hereunder. Without limiting the foregoing, the Committee may grant Options under
the Plan which are conditioned on the cancellation or termination of Options
granted under the Plan or a prior incentive plan, including Options which are
payable solely in cash. The shares to be delivered under the Plan may consist,
in whole or in part, of treasury Stock or authorized but unissued Stock, not
reserved for any other purpose.
5.2. Canceled, Terminated, or Forfeited Options. Any shares of Stock
subject to an Option which for any reason is canceled, terminated or otherwise
settled without the issuance of any Stock (including in exchange for a cash
payment or other economic benefit) shall again be available for Options under
the Plan.
5.3. Adjustment in Capitalization. In the event of any Stock dividend or
Stock split, recapitalization (including, without limitation, the payment of an
extraordinary cash dividend), merger, consolidation, combination, spin-off,
distribution of assets to stockholders, exchange of shares, or other similar
corporate change, the aggregate number of shares of Stock available for Options
under Section 5.1 or subject to outstanding Options and the respective prices,
limitations, and/or performance criteria applicable to outstanding Options may
be appropriately adjusted by the Committee, whose determination shall be
conclusive; provided, however, that any fractional shares resulting from any
such adjustment shall be disregarded.
Section 6. Stock Options
6.1. Grant of Options. Options may be granted to Participants or Outside
Directors at such time or times as shall be determined by the Committee. The
Committee shall have complete discretion in determining the number of Options,
if any, to be granted to a Participant; provided that, unless the Committee
otherwise determines, each Outside Director shall receive an Option in respect
of 5,000 shares of Stock when first elected to the Board of Directors and shall
annually receive an Option grant in respect of 1,000 shares of Stock at each
annual meeting of shareholders occurring during his or her service as a member
of the Board of Directors. Each Option shall be evidenced by an Option agreement
that shall specify the type of Option granted, the exercise price, the duration
of the Option, the number of shares of Stock to which the Option pertains, and
such other terms not inconsistent with the Plan as the Committee shall
determine.
6.2. Option Price. The Committee may grant NSOs pursuant to the Plan at an
exercise price greater than or equal to either (i) the Fair Market Value or (ii)
the Book Value of the Stock on the date the Option is granted. All
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ISOs granted pursuant to the Plan shall have an exercise price at least equal to
the Fair Market Value of a share of Stock on the date the Option is granted.
6.3. Exercise of Options. Options awarded under the Plan shall be
exercisable at such times and shall be subject to such restrictions and
conditions, including the performance of a minimum period of service or the
satisfaction of performance goals, as the Committee may impose, either at or
after the time of grant of such Options; provided that no Option shall be
exercisable for more than 10 years after the date on which it becomes
exercisable (or, in the case of an Option which is an ISO, 10 years after the
date of grant). Notwithstanding anything in the Plan to the contrary, to the
extent required by the Code, the aggregate Fair Market Value (determined as of
the date the Option is granted) of the shares of Stock with respect to which
ISOs are exercisable for the first time by any Participant during any calendar
year (under all plans of the Company and its subsidiaries) shall not exceed
$100,000 or such other amount as may subsequently be specified under the Code;
provided that any Options granted having a value in excess of such amount shall
be deemed to be NSOs.
6.4. Payment. The Committee shall establish procedures governing the
exercise of Options, which shall require that written notice of exercise be
given and that the Option price be paid in full in cash or cash equivalents,
including by personal check, at the time of exercise. The Committee may, in its
discretion, permit a Participant to make payment in Stock already owned by him,
valued at its Fair Market Value on the date of exercise, as full or partial
payment of the exercise price. As soon as practicable after receipt of a written
exercise notice and full payment of the exercise price, the Company shall
deliver to the Participant a certificate or certificates representing the
acquired shares of Stock.
6.5. Settlement Rights. The Company may, at the direction of the
Committee, elect upon receipt of an exercise notice with respect to an Option,
pay the Participant an amount per share in cash equal to the difference between
the Fair Market Value of the Stock and the exercise price under the Option in
lieu of issuing the shares of Stock to the Participant.
Section 7. Termination of Employment
7.1. Termination of Employment Due to Retirement. Unless otherwise
determined by the Committee at the time of grant, in the event a Participant's
employment terminates by reason of Retirement, any Option granted to such
Participant which are then outstanding may be exercised at any time prior to the
expiration of the term of the Option or within three (3) years (or such shorter
period as the Committee shall determine at the time of grant) following the
Participant's termination of services for the Company or any Subsidiary,
whichever period is shorter.
7.2. Termination of Employment Due to Death or Disability. Unless
otherwise determined by the Committee at the time of grant, in the event a
Participant's employment is terminated by reason of death or Disability, any
Options granted to such Participant which are then outstanding may be exercised
by the Participant or the Participant's legal representative at any time prior
to the expiration date of the term of the Option or within three (3) years (or
such shorter period as the Committee shall determine at the time of grant)
following the Participant's termination of services for the Company or any
Subsidiary, whichever period is shorter.
7.3. Termination of Employment for Any Other Reason. Unless otherwise
determined by the Committee at or after the time of grant, in the event the
employment of the Participant shall terminate for any reason other than one
described in Section 7.1 or 7.2, any Options granted to such Participant which
are then outstanding shall be canceled. Notwithstanding the foregoing, in no
event shall the Committee permit any Participant the right to exercise an Option
more than three (3) years after the termination of the Participant's services
for the Company or any Subsidiary.
Section 8. Change in Control
8.1. Accelerated Vesting and Payment. Unless the Committee shall otherwise
determine in the manner set forth in Section 8.2 below, in the event of a Change
in Control, each Option shall be canceled in exchange for a payment in cash of
an amount equal to the excess of the Change in Control Price over the exercise
price for such Option.
8.2. Alternative Options. Notwithstanding Section 8.1, no cancellation,
acceleration of exercisability or vesting or cash settlement or other payment
shall occur with respect to any Option or any class of Options if the Committee
reasonably determines in good faith prior to the occurrence of a Change in
Control that such Option or Options shall be honored or assumed, or new rights
substituted therefor (such honored, assumed or substituted award hereinafter
called an "Alternative Award"), by the New Employer, provided that any such
Alternative Award must:
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(i) be based on stock which is traded on an established securities
market, or which will be so traded within 30 days of the Change in
Control;
(ii) provide such Participant (or each Participant in a class of
Participants) with rights and entitlements substantially equivalent
to or better than the rights, terms and conditions applicable under
such Option, including, but not limited to, an identical or better
exercise and vesting schedule and identical or better timing and
methods of payment;
(iii) have substantially equivalent economic value to such Option
(determined at the time of the Change in Control);
(iv) have terms and conditions which provide that in the event that the
Participant suffers an Involuntary Termination or Constructive
Termination:
(A) any conditions on a Participant's rights under, or any
restrictions on transfer or exercisability applicable to, each
such Alternative Award shall be waived or shall lapse, as the
case may be; or
(B) each Participant shall have the right to surrender such
Alternative Award within 30 days following such termination in
exchange for a payment in cash equal to the excess of the fair
market value of the stock subject to the Alternative Award
over the price, if any, that a Participant would be required
to pay to exercise such Alternative Award.
Notwithstanding this Section 8.2, the Committee may, at the time of grant,
determine that this Section 8.2 shall not be applicable with respect to a
particular Option and that Section 8.1 shall apply to such Option without regard
to Section 8.2.
Section 9. Amendment, Modification, and
Termination of Plan
The Board at any time may terminate or suspend the Plan, and from time to
time may amend or modify the Plan. No amendment, modification, or termination of
the Plan shall in any manner adversely affect any Option theretofore granted
under the Plan, without the consent of the Participant.
Section 10. Miscellaneous Provisions
10.1. Nontransferability of Options. No Options granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. All rights with
respect to Options granted to a Participant under the Plan shall be exercisable
during his lifetime only by such Participant.
10.2. Beneficiary Designation. Each Participant under the Plan may from
time to time name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
or by whom any right under the Plan is to be exercised in case of his death.
Each designation will revoke all prior designations by the same Participant,
shall be in a form prescribed by the Committee, and will be effective only when
filed by the Participant in writing with the Committee during his lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to or exercised by the Participant's surviving
spouse, if any, or otherwise to or by his estate.
10.3. No Guarantee of Employment or Participation. Nothing in the Plan
shall interfere with or limit in any way the right of the Company or any
subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
subsidiary or affiliate. No Employee shall have a right to be selected as a
Participant, or, having been so selected, to receive any future Options.
10.4. Tax Withholding. The Company shall have the power to withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
Federal, state, and local withholding tax requirements on any Option under the
Plan, and the Company may defer payment of cash or issuance of Stock until such
requirements are satisfied. The Committee may, in its discretion, permit a
Participant to elect, subject to such conditions as the Committee shall impose,
(i) to have shares of Stock otherwise issuable under the Plan withheld by the
Company or (ii) to deliver to the
A-5
<PAGE>
Company previously acquired shares of Stock having a Fair Market Value
sufficient to satisfy all or part of the Participant's estimated total Federal,
state, and local tax obligation associated with the transaction.
10.5. Indemnification. Each person who is or shall have been a member of
the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be made a party or in
which he may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of any
judgment in any such action, suit, or proceeding against him, provided he shall
give the Company an opportunity, at its own expense, to handle and defend the
same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive and shall be
independent of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or By-laws, by contract,
as a matter of law, or otherwise.
10.6. No Limitation on Compensation. Nothing in the Plan shall be
construed to limit the right of the Company to establish other plans or to pay
compensation to its employees, in cash or property, in a manner which is not
expressly authorized under the Plan.
10.7. Requirements of Law. The granting of Options and the issuance of
shares of Stock shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
10.8. Term of Plan. The Plan shall be effective upon its adoption by the
Board, subject to approval by the Company's stockholders at their next annual
meeting. The Plan shall continue in effect, unless sooner terminated pursuant to
Section 9, until the tenth anniversary of the date on which it is adopted by the
Board.
10.9. Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware.
A-6
PROXY
BAIRNCO CORPORATION
ANNUAL MEETING OF SHAREHOLDERS, April 21, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BAIRNCO CORPORATION
The undersigned hereby appoints LUKE E. FICHTHORN III, LARRY D. SMITH, 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, 300 Primera Blvd., Suite
432, Lake Mary, Florida, on Friday, April 21, 2000, 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 listed 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.)
- --------------------------------------------------------------------------------
2. RATIFICATION OF MANAGEMENT'S SELECTION OF AUDITORS
|_| FOR |_| AGAINST |_| ABSTAIN
3. APPROVAL OF BAIRNCO'S 2000 STOCK INCENTIVE PLAN
|_| 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
