SCHEDULE 14A
SCHEDULE 14 INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Name of Registrant as Specified in Its Charter:
Paul Mueller Company
Name of Person(s) Filing Proxy Statement:
Sheet Metal Workers International Association
Payment of Filing Fee (check the appropriate box)
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[X ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
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Revised Preliminary Proxy Statement
For Release to Shareholders 3/20/00
Sheet Metal Workers International Association
1750 New York Avenue NW
Washington, D.C. 20006
Tel. (800) 457-7694
Fax: (202) 662-0891
ANNUAL MEETING OF SHAREHOLDERS
PAUL MUELLER COMPANY
May 1, 2000 10:00am
1600 West Phelps Street
Springfield MO 65802
VOTE FOR AN INDEPENDENT CANDIDATE FOR THE BOARD OF DIRECTORS -
VOTE FOR THE PROPOSAL TO END THE POISON PILL
To Fellow Paul Mueller Company shareholders:
I. ELECT AN INDEPENDENT CANDIDATE TO THE BOARD OF DIRECTORS
Our Local and its members own stock in the Company and also
have interests going beyond stock ownership, as the Local
represents about 380 Company employees in employment
matters.<FN1>
We located for shareholders an excellent independent
candidate for director, Joseph N.
Bacino. Until his recent retirement, Mr. Bacino was the Chairman
and CEO of Young Sales Corporation (a company engaged in metal
and composite materials fabrication, insulation, and roofing; now
known as Young Group Ltd.) He also operated its metals group,
including St. Louis Blow Pipe. He helped arrange for this
business to be sold by its family shareholders to employees just
before his retirement.
He knows firsthand about the metal fabricating
business and how to smoothly transition a family business to new
leadership. He knows how to address employee morale issues. He
has experience with various different unions, but he has given us
no indication as to what actions he would take as a director with
respect to union issues. We simply believe he will bring greater
independence to the Board which will benefit both employees and
shareholders.
_________________
<FN1>This includes interests in the outcome of NLRB proceedings
against Company management. See "Information on participants in
this solicitation" below.
<PAGE>
Up for reelection this year are two insiders, CEO Daniel
Manna and Chairman Paul Mueller (age 85).Originally Mr. Mueller's
grandson, David Moore (age 28), was also up for reelection.
However, after we announced this campaign, the board moved Mr.
Moore to a vacancy not up for reeleection until 2001, and then
eliminated his original seat, thereby shrinking
the Board from eight seats to seven and increasing the percentage
of votes required to elect Mr. Bacino.
A. EXPERIENCE OF JOSEPH N. (NICK) BACINO
For more than six years before his retirement in October
1998, he was Chairman and Chief Executive Officer of Young Sales
Corp. (now known as Young Group Ltd.), St. Louis MO. Under his
leadership the Company grew to about $60 million in annual sales.
It has operated 3 groups (Metals, Roofing, and Insulation), and
also has had an industrial products division fabricating
products out of polymer composites.
For more than 10 years until his retirement, Mr. Bacino
served as one of two chief operating executives of Young's Metals
Group, known as St. Louis Blow Pipe. This group fabricates metals
for a variety of different industrial uses, such as power plants,
chemical plants, dust collection equipment and blow pipe
equipment.
Mr. Bacino also served as director of Young Insulation
Group, which distributed insulation products throughout the
Midwest and South. Young Roofing as of 1998 was reported by
Engineering News Record to be one of the 20 largest roofing
contractors in the nation. Mr. Bacino (age 69) began his
employment with Young in 1957 after graduating college with a
degree in business management.
B. COMPANY PERFORMANCE
1. COURTS UPHOLD CUSTOMER LAWSUIT AGAINST MUELLER FOR USING
DEFECTIVE MATERIALS
In 1999, the Company paid its customer
Alcon Labs $1,875,000 due to Alcon's lawsuit over the rusting of
tanks supplied by the Company in the early 1990's. This payment
occurred after the Company's attorneys spent many hours (and
presumably many shareholder dollars), unsuccessfully appealing
the jury verdict and judgment for approximately $1.7 million.
In rejecting the Company's appeal, the Texas Court of
Appeals relied heavily on the fact that "the evidence at trial
showed that the rust and corrosion problems were caused by
Mueller's use of defective stainless steel, and Mueller does not
challenge that evidence on appeal." Paul Mueller Company v. Alcon
Laboratories, 993 S.W.2d 851, 857 (Tex. App. May 1999).
<PAGE>
2. STOCK PRICES:
GRAPH: Company vs. S&P 500.
3. LATEST FINANCIALS:
For 9 months ending 9/30/99: Earnings per share: $0.41,
down from $3.00 in same period of 1998. Net income: $483,000,
down from $3.5 million in same period of 1998.
4. CONCLUSION
We believe Mr. Bacino has the time, desire and knowledge to
improve the Company's performance. Mr. Manna does not need to be
a voting member of the board for him to remain as
CEO: no doubt the board would invite him to all board meetings,
but he simply would no longer have a vote if voted out. Mr.
Manna's performance does not, in our view, warrant his
continuation as a director. We recommend a vote FOR Mr. Bacino on
the enclosed proxy card.
III. FURTHER INFORMATION ON THE ELECTION OF DIRECTORS
Each board seat carries a 3-year term. There are now 7
directors: the three insiders named above, Mueller executive Don
Golik (his 3-year term expires 2001), and 3 directors apparently
not employed by the Company nor in the Mueller family (terms
expire 2002). We tried to eliminate the need for a proxy contest
here by asking the board to support Mr. Bacino's election
to the previous vacancy (its term up in 2001), but received no
response. The Company has a system of cumulative voting in the
election of directors. This means each share of stock has as
many votes as there are vacancies, and you can distribute these
votes among as many candidates as you wish. We are considered a
legal challenge to the Board's decision reducing the number of
seats from 8 to 7 and relieving David Moore from an election
challenge this year. If a court were to rule there should be
three seats up for election, Mr. Bacino could win a seat with the
cumulated votes of 33% of the stock voted, plus one share; if the
board's decision stands, he will need 50% plus one. There can be
no guarantee that all Company nominees will be willing to serve
with Mr. Bacino; however, they have given no indication they
would decline to do so.
IV. PLEASE VOTE FOR OUR PROPOSAL TO END THE POISON PILL
We previously notified you that we will present a proposal
to require the Board get shareholder approval before continuing
the Company's poison pill.
The Board established a poison pill here in 1991 without a
vote of shareholders. This pill provides that if someone attempts
to buy more than 20% of the stock without Board approval,
then all other shareholders get the right to buy an additional
share at a designated price for each share they already own--thus
diluting the acquirer's stock.
We believe the practical effect of this plan is to force
someone interested in buying more than 20% to get permission from
the Board. We believe this plan represents Board interference in
your ability to decide when (and to whom) to sell your stock.
Shareholder proposals against poison pills received an
average vote of 54.9% in favor in 1997, 57.4% in 1998, and 61.6%
in 1999, according to the Investor Responsibility Research
Center. (Vote as a percentage of shares voted for and against,
abstentions excluded.)
The poison pill at Paul Mueller is worse than many others
because it contains a "dead hand" provision -- the only directors
who can approve a merger without triggering the pill are members
of the Board "prior to the date of this Agreement" (1/29/91), or
subsequent directors approved by the prior directors.
This type of poison pill, unlike most poison pills, not only
allows the current Board to thwart a merger favored by most or
all shareholders, but also denies shareholders the right to
replace this board with new directors empowered to redeem the
poison pill to permit such merger to go forward.
Supporters of pills argue they protect shareholders by
allowing a board to resist offers which are not high enough to
reflect a stock's true value (a board can push the buyer to
offer more). However, we think shareholders are capable of
deciding on their own whether an offer is adequate.
Could Board members use their veto power to keep themselves
(or friends in management) from losing their positions? Pill
supporters note that rejecting an offer simply for
self-entrenchment would breach directors' fiduciary duties.
However, we believe fear of a change in control may have an
unconscious effect on how a board responds to an offer. Also, if
the pill was used in breach of fiduciary duty, to prove as much
in court is difficult, expensive, and time-consuming for
shareholders and the Company. We believe the temptation offered
by a pill should be eliminated.
Don't be misled by management's claim of support from a
November 1997 Georgeson & Company "study": Georgeson is a proxy
soliciting firm which usually works for management.
Management also suggests the pill is designed to prevent
"coercion" or unequal treatment of shareholders: however, the
pill does not just attack offers made to some shareholders rather
than all. The pill also attacks offers made equally to all
shareholders.
The full text of our proposal is Appendix A to this proxy
statement. The current pill at Paul Mueller Company, scheduled to
expire January 29, 2001, is labeled by management the
"shareholder rights agreement." Further details of this Agreement
are in Appendix B to this statement.
Join us in pressing for the pill to not be renewed without
shareholder approval: please vote FOR our proposal on the
enclosed proxy card.
<PAGE>
V. VOTING PROCEDURES
PLEASE VOTE USING THE ENCLOSED PROXY CARD: it allows Mr.
Bacino and SMWIA General Counsel to present your voting
instructions at the shareholders meeting. Management will also
send you a proxy card later, but that will not contain a box
allowing you to vote for Mr. Bacino. Ignore such
management card if you support Mr. Bacino : if you instead
send it in, it cancels out your previous vote on our card. You
can revoke any proxy vote prior to the tally at the shareholders
meeting by signing and submitting a new proxy card, by sending
written notice of revocation to the proxy holder, or by appearing
at the meeting and voting in person.
We will keep the information on your card confidential until
we must turn it in to the inspector of election at the meeting.
We will not use the information on your card for any purpose
except this vote.
Passage of the proposal will require a favorable vote by a
majority of outstanding stock -- thus it is important that
everyone vote. We intend to solicit at least a majority of the
voting power of the outstanding stock. The record date for
eligibility to vote is March 10, 2000. We seek no
discretionary voting authority for the meeting. The Company's
proxy statement indicates the board election and the
proposal are the only matters likely to come up for a vote at
this meeting. The Company's bylaws require any shareholder
wishing to bring matters before the meeting to have given notice
at least 90 days before the meeting. However, if somehow a new
matter were to come up, we would not vote your stock on such
matter.
If you sign and date the enclosed card but do not
instruct us how to vote, your stock will be voted FOR Mr. Bacino
and the proposal. We incorporate by reference all other
information concerning the board of directors and voting
procedures contained in management's 1999 proxy statement at
pages 2-5.
VI. INFORMATION ON PARTICIPANTS IN THIS SOLICITATION:
The participants in this solicitation are Sheet Metal
Workers International Association (SMWIA), its local affiliate
(Local 208) and Mr. Bacino. Local 208 owns 90 shares of Company
common stock and represents approximately 380 Mueller employees
for collective bargaining purposes, some of whom advise us they
also own Company stock in undetermined amounts. Mr. Bacino
beneficially owns 30 shares of common stock. His business address
is 458 Steeplechase Lane, St. Louis MO 63131. SMWIA's business
address is above. Local 208 is at 314 W. Pershing St.,
Springfield MO 65806-2112.
Mr. Bacino has made us no promises or assurances as to labor
matters. He has received nothing of value from us except help
with this proxy solicitation, which includes SMWIA's agreement to
indemnify him. He has had no litigation or transactions with the
Company. Some non-management employees of Mr. Bacino's former
company were represented by local affiliates of SMWIA (not Local
208), while other employees were represented by various other
unions. No participant has any arrangements, contracts or
understanding with anyone concerning transactions in the
Company's stock, future employment by the Company or its
affiliates, or any future transactions to which Company or any of
its affiliates may be a party. The only transactions with Company
stock in which the participants have engaged in the last 2 years
have been their purchases of their stock on the open market with
their own money (Bacino, 2/3/00; Local 208, 7/27/99). SMWIA will
bear all solicitation costs (anticipated at $5000) and will not
seek reimbursement from the Company. SMWIA will solicit proxies
by mail, phone, e-mail, fax and in person using its regular
staff, who shall not receive any additional compensation, but
SMWIA may also hire an outside solicitor. SMWIA will reimburse
banks, brokers, and other custodians, nominees or fiduciaries for
reasonable expenses incurred in forwarding proxy material to
beneficial owners.
While we do not seek your support as to labor matters, if
you consider such matters relevant to your vote, consider the
following: Administrative Law Judges (ALJ's) of the National
Labor Relations Board (NLRB) have issued four decisions
finding Company management violated federal labor laws with
respect to Local 208 and the workforce. Management has
appealed various aspects of these decisions to the full Board in
Washington D.C., where they are pending. These decisions came
after trial on complaints issued by the NLRB General Counsel. The
first ALJ found the 1995 strike by Local 208 was caused by
management's unfair labor practices: that is, its violations of
the law by taking unilateral actions regarding the workforce "as
though the Union did not exist" (including transferring work from
its unionized plant to its non-union one and offering new hires a
wage higher than long-term employees and higher than offered in
negotiations), and making threats and discriminating against
union supporters.
At SMWIA's urging, most strikers made an unconditional offer
to return to work in May 1996, but management refused to
reinstate most at that time (it did so subsequently). It is
established labor law that an employer must reinstate unfair
labor practice strikers who make an unconditional offer to return
to work. The ALJ thus held the Company liable for back pay and
benefits to 89 strikers. The ALJ ordered the Company to make
employees whole for unilateral changes in medical care, pensions
and wages. SMWIA estimates the liability currently at over
$1,000,000, with interest accruing at the short-term federal
funds rate plus 3%.
After the first ALJ decision, management committed
additional violations of federal labor laws. A second ALJ found
management failed to give the union any opportunity to bargain
over changing work schedules, failed to respond to any grievances
filed by the union and discriminatorily disciplined a union
supporter. In January 2000, an ALJ ruled that management had
unlawfully retaliated against the Local's President by demoting
him. There is no collective bargaining agreement between
Local 208 and the Company; the Company implemented portions of
its final offer in 1995; there are still about 20 employees who
have not sought to return to work. Most strikers are back at
work per the Union's recommendation, and the Union has not
engaged in any boycott activities for at least 2 years.
VII. SHAREHOLDER PROPOSALS FOR 2001:
Shareholders wishing to submit proposals for inclusion
in management's proxy materials for the year 2001 must do so by
November 27,2000.
PLEASE RETURN THE ENCLOSED PROXY CARD TODAY.
For more information, contact the SMWIA Research & Education
Department at (800) 457-7694.
VOTE FOR JOSEPH N. BACINO IN THE BOARD ELECTION
VOTE FOR THE PROPOSAL TO END THE POISON PILL
<PAGE>
APPENDIX A.
FURTHER INFORMATION ABOUT THE COMPANY'S CURRENT POISON PILL:
A copy of the poison pill is available by contacting
the Company's headquarters at (417) 831-3000. In January
1991, the Board adopted the poison pill by declaring a
dividend of one common stock purchase right for each
outstanding share of common stock. Each Right entitles the
registered holder to purchase from the Company one share of
Common stock (or in some circumstances, other securities,
cash or other assets), at a price of $125 per common share,
subject to adjustment. The Rights are not exercisable until
the Distribution Date, defined as 10 days following an
announcement that a person or group of affiliated or
associated persons has acquired 20% or more of the
Company's stock, or that they intend to make a tender
offer or exchange offer for 20% or more of the stock.
The Board in its discretion may redeem the Rights
prior to any acquisition of 20% or more at a price of
one (1) cent per Right. The Rights may also be
redeemed in the following exceptional situation: if a
bidder is interested in acquiring all the shares of the
company for cash only, and such bidder does not own
more than 1% of the Company's stock (and has not owned
more than 1% in the prior year and never disclosed any
intent to influence or acquire the Company), and has
written financing commitments and an investment
banker's opinion that the price he offers is fair, then
the Board must put the bidder's proposal up for a
shareholder vote in 60-90 days. If a majority of
outstanding stock votes in favor of the proposal, then
the Rights will be redeemed if the bidder pays in full
within 60 days. We incorporate by reference the
Company's Summary of Rights to Purchase Common Shares
(provided all shareholders of record and filed with the
SEC on Form 8-A on 2/1/91).
<PAGE>
APPENDIX B.
TEXT OF THE SHAREHOLDER PROPOSAL TO END THE POISON PILL:
RESOLVED, the shareholders of Paul Mueller Company
hereby amend its Bylaws and Articles to add the
following additional section to each:
Poison Pills (Shareholder Rights Plans)
A. The Corporation shall not adopt or maintain a
shareholder rights plan, rights agreement or any other
form of "poison pill" which is designed to or has the
effect of making acquisition of large holdings of the
Corporation's shares of stock more difficult or
expensive (such as the 1991 "Rights Agreement"), unless
such plan is first approved by a majority shareholder
vote.
B. The affirmative vote of a majority of shares voted
shall suffice to approve such a plan.
C. The Corporation shall redeem any such rights now
in effect.
D. Notwithstanding any other bylaw provision, the
Board may not amend any of the above provisions without
shareholder ratification.
IT IS FURTHER RESOLVED, that the above provisions
are intended to be severable: if any application or
provision is beyond the legal power of shareholders,
then it shall be severed from the rest. If shareholders
have no authority under Missouri law to impose such
restriction in either bylaws or articles, then this
resolution shall be deemed a recommendation that the
Board not adopt a poison pill without prior shareholder
approval.
<PAGE>
PROXY CARD
solicited by SMWIA
for Annual Shareholders Meeting of
Paul Mueller Company, May 1, 2000
The undersigned hereby designates Joseph N. Bacino and Patrick
Riley, with full power of substitution, as the proxy of the
undersigned for the sole purpose of voting all stock of
the undersigned in the manner marked below at the Company's
annual meeting (or any continuance):
1. ELECTION OF DIRECTORS:
CUMULATE VOTES FOR JOSEPH N. BACINO: [ ]
WITHHOLD AUTHORITY AS TO MR. BACINO: [ ]
2. PROPOSAL TO END THE COMPANY'S POISON PILL:
FOR THIS PROPOSAL: [ ]
AGAINST THIS PROPOSAL: [ ]
ABSTAIN: [ ]
[We recommend a vote FOR Mr. Bacino and FOR the proposal to end
the pill. This proxy card grants no discretionary voting
authority: if matters come before the meeting other than the
above, the stock of the undersigned will not be voted on such
matters.] .
Dated: ________
SIGNATURE:_______________________________________
PRINT SHAREHOLDER NAME:____________________________________
Optional information to help us keep you informed (the proxy
statement explains how we will
keep this card confidential):
Telephone ___________ Fax_________________
E-mail: _________________________________________
Mail to us in the enclosed envelope or fax to (202) 662-0895.
