<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. __)
[X] Filed by the Registrant
[ ] Filed by a party other than the Registrant
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Section 240.14a-11(c) or Section
240.14a-12
PAUL MUELLER COMPANY
- --------------------------------------------------------------------
(name of registrant as specified in its charter)
- --------------------------------------------------------------------
(name of person(s) filing proxy statement,
if other than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction ap-
plies: _____________________________________________________
(2) Aggregate number of securities to which transaction applies:
____________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined): ________________________________________
(4) Proposed maximum aggregate value of transaction: ___________
(5) Total fee paid: _____________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Ex-
change Act Rule 0-11(a)(2) and identify the filing for which
the off-setting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount previously paid: ____________________________________
(2) Form, Schedule or Registration Statement number: ___________
(3) Filing party: ______________________________________________
(4) Date filed: ________________________________________________
<PAGE> 2
[ LETTERHEAD OF PAUL MUELLER COMPANY ]
March 27, 2000
Dear Shareholder,
Attached to this letter is the Notice of Annual Meeting of Share-
holders of Paul Mueller Company and Proxy Statement describing the
formal business to be transacted at the annual meeting.
Soon you may receive a separate proxy solicitation from the Sheet
Metal Workers International Association (the "International Union"),
on behalf of its local affiliate that represents a portion of our
Springfield plant employees. In this solicitation, the International
Union is seeking to have the Bylaws and Articles of Incorporation
of Paul Mueller Company (the "Company") amended to eliminate the
Company's Shareholder Rights Plan, which was designed to deter a
hostile attempt to take over the Company on unfair or nonnegotiated
terms. Additionally, the International Union is proposing its own
candidate, Joseph N. (Nick) Bacino, for election to the Company's
Board of Directors.
The International Union claims to be acting in the best interests
of shareholders. However, there are certain facts you may wish to
consider with regard to the International Union's solicitation.
At the time our last labor contract negotiations began in May 1994,
the International Union's management came to Springfield, advised
the Company that it had placed the Springfield Union Local 208 in
receivership, and took control of negotiations away from the locally
elected business agent. In July 1995, the International Union
called a strike and gave the Company's negotiating team the clear
impression in negotiations that the Union would not agree to a new
contract until the Company agreed to implement a "Union Security
Clause." Such a provision would force certain classes of employees
within the bargaining unit represented by the Union to pay Union
dues, or a service fee or its equivalent, as a condition of con-
tinued employment.
Currently, Company employees have the freedom of choice as to
whether to join the Union and pay Union dues or not to join the
Union. We strongly support this right of our employees and believe
our employees do as well, as demonstrated by the lack of support
the International Union has received from our workforce. It is
management's belief that this lack of support is evidenced by the
fact that only about half of the work-force represented by the Union
participated in the strike, and a great majority of those employees
that did participate returned to work after a very short period of
time. The International-led strike still continues, but with only
17 of the approximately 390 employees represented by the Union parti-
cipating.
The International Union, on behalf of its local affiliate that is
the owner of 90 shares of Company stock, purports to be acting in
the best interest of our shareholders. To the contrary, the Inter-
national Union's actions are viewed by management as a campaign to
achieve, through continued harassment, what the International Union
has failed to accomplish legitimately in contract negotiations.
Accordingly, management strongly urges you to vote FOR the two
nominees for election as directors proposed by the Company's Board
of Directors and to vote AGAINST the International Union's proposal
relating to the Shareholder Rights Plan by signing and returning
the Company's WHITE proxy card. DO NOT RETURN to the Union any
proxy card you may receive from them, even to vote against the
Union's proposal.
IF YOU HAVE ALREADY SIGNED AND RETURNED A PROXY CARD SENT TO YOU BY
THE UNION, you may revoke your previously signed proxy by simply
returning the enclosed WHITE proxy card, WITH A LATER DATE, to the
Company in the enclosed envelope.
Sincerely,
/S/ DANIEL C. MANNA
Daniel C. Manna
President and Chief Executive Officer
Enclosures
<PAGE> 3
PAUL MUELLER COMPANY
P.O. BOX 828 / SPRINGFIELD, MISSOURI, U.S.A. 65801
- --------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
(MAY 1, 2000)
- --------------------------------------------------------------------
Notice is hereby given that the annual meeting of shareholders of
Paul Mueller Company, a Missouri corporation, will be held at the
offices of the Company, 1600 West Phelps Street, Springfield,
Missouri 65802, on Monday, May 1, 2000, commencing at 10:00 a.m. on
that day, and thereafter as it may from time to time be adjourned,
to consider and act upon the following:
1. To elect two (2) Class III directors for a term of three (3)
years expiring at the annual meeting to be held in 2003 and until
their respective successors are duly elected and shall qualify.
2. To consider and vote upon a shareholder proposal regarding the
Company's Shareholder Rights Plan, which is opposed by the Board
of Directors, if it is properly presented at the meeting by its
proponent.
3. To transact such other business as may properly come before the
meeting or any postponement, adjournment or adjournments thereof.
The Board of Directors of the Company has fixed the close of business
on March 10, 2000, as the record date for the determination of share-
holders entitled to notice of and to vote at the annual meeting or
any postponement, adjournment or adjournments thereof.
Shareholders who are unable to attend the meeting but who wish their
shares to be voted may vote by proxy. A WHITE form of proxy, which
has been prepared by the Board of Directors of the Company, and
a return envelope are enclosed. Since it is very important that
your shares be represented at this year's annual meeting, you are
requested to sign, date and return the enclosed WHITE proxy in the
enclosed envelope as promptly as possible. Your proxy may be revoked
at any time before it is exercised and will not be used if you attend
the meeting and vote in person. If your shares are held of record
by a broker, bank, or other nominee ("Street Name"), you will need
to obtain from the record holder and bring to the meeting a proxy,
issued in your name, authorizing you to vote the shares.
By order of the Board of Directors.
DONALD E. GOLIK
Secretary
Springfield, Missouri
March 27, 2000
<PAGE> 4
PAUL MUELLER COMPANY
P.O. BOX 828 / SPRINGFIELD, MISSOURI, U.S.A. 65801
-------------------
PROXY STATEMENT
-------------------
GENERAL INFORMATION
SOLICITATION AND REVOCABILITY OF PROXIES. The enclosed proxy is
being solicited on behalf of the Board of Directors of Paul Mueller
Company (the Company) for use at the annual meeting of the share-
holders to be held on May 1, 2000, and at any postponement, adjourn-
ment or adjournments thereof. Any proxy given does not affect
the right to vote in person at the meeting and may be revoked at
any time before it is exercised by notifying Donald E. Golik,
Secretary, by mail, telegram, facsimile or appearing at the meeting
in person and requesting a ballot. This Proxy Statement and the
proxy were first mailed to shareholders on or about ______________.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER
NOMINEE, ONLY YOUR BANK, BROKER OR OTHER NOMINEE CAN VOTE YOUR
SHARES AND ONLY UPON YOUR SPECIFIC INSTRUCTIONS. PLEASE CONTACT
THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND INSTRUCT HIM OR HER
TO VOTE THE COMPANY'S WHITE PROXY CARD AS SOON AS POSSIBLE.
PROXY CONTEST. The Sheet Metal Workers International Association
(the "Union") on behalf of its local affiliate, Sheet Metal Workers
Local 208 (the "Local"), that owns 90 shares of the Common Stock of
the Company, filed preliminary proxy materials with the Securities
and Exchange Commission ("SEC") indicating that the Union intends
to present a proposal to amend the Bylaws and Articles of Incorpora-
tion of the Company to require shareholder approval for the Company
to adopt or maintain a shareholder rights plan (the "Proposed Amend-
ments"). The Union's proxy materials also indicate that the Union
intends to nominate a single candidate for the Board of Directors
of the Company. The Local represents about 390 of the Company's
approximately 850 employees.
Management and the Board of Directors view this Proxy Contest as a
campaign to achieve, through continued harassment, what the Union
has failed to accomplish legitimately in contract negotiations.
The Board of Directors is soliciting proxies FOR its two nominees for
election to the Board of Directors (listed below under the caption
"Election of Directors") and AGAINST the Union's Proposed Amendments.
A WHITE proxy card is enclosed for your use. THE BOARD OF DIRECTORS
URGES YOU TO COMPLETE, SIGN, DATE, AND RETURN THE WHITE PROXY CARD IN
THE ENCLOSED ENVELOPE.
If you have any questions or need further assistance in voting your
shares, please call Donald E. Golik, Secretary of the Company, toll
free at (800) 683-5537.
THE BOARD OF DIRECTORS URGES YOU NOT TO SIGN ANY PROXY CARD YOU MAY
RECEIVE FROM THE UNION. IF YOU HAVE ALREADY SIGNED AND RETURNED A
PROXY CARD SENT TO YOU BY THE UNION, YOU MAY REVOKE YOUR PREVIOUSLY
SIGNED PROXY BY SIMPLY RETURNING THE ENCLOSED WHITE PROXY CARD, WITH
1
<PAGE> 5
A LATER DATE, TO THE COMPANY IN THE ENCLOSED ENVELOPE. It will NOT
help your Board of Directors to return the Union proxy card voting
to "abstain." Do NOT return any proxy card sent to you by the
Union. If you send in the Union's proxy card, it cancels out any
previous proxy. The only way to support your Board of Directors'
nominees is to return the Company's WHITE proxy card voting "FOR"
the Company's two nominees and "AGAINST" the Union's Proposed Amend-
ment.
EXPENSE OF SOLICITATION. All expenses of solicitation will be borne
by the Company, including the preparation, assembly, printing, and
mailing of this Proxy Statement, the accompanying proxy, and any
additional information furnished to shareholders. In addition to
solicitations by mail, employees and directors of the Company may
solicit proxies in person or by telephone. The Company does not
expect to pay any compensation for the solicitation of proxies.
The Company will reimburse banks, brokers, and other custodians,
nominees or fiduciaries for reasonable expenses incurred in for-
warding proxy material to beneficial owners.
VOTING OF PROXIES. Any proxy given pursuant to this solicitation
and received in time for the meeting will be voted as specified in
such proxy. If the enclosed Company's WHITE proxy card is executed
and returned without instructions as to how it is to be voted, your
shares will be voted FOR the election as directors of the nominees
proposed by the Board of Directors listed below under the caption
"Election of Directors" and AGAINST the Union's Proposed Amendments;
provided, however, that if any other candidate for director is
proposed at the annual meeting by persons other than the Board
of Directors, the shares represented by the proxy may be voted
cumulatively for fewer than all of the nominees named herein or
distributed among the nominees, as the proxyholder may determine.
If any of the nominees should unexpectedly become unavailable for
election for any reason, the shares represented by the proxy will
be voted for such substituted nominee or nominees as the Board of
Directors may name. Each of the nominees hereinafter named has
indicated his willingness to serve if elected, and it is not anti-
cipated that any of them will become unavailable for election.
The proxy confers discretionary authority, with respect to the vot-
ing of the shares represented thereby, on any other business that
may properly come before the meeting, including, among other things,
consideration of a motion to adjourn the meeting to another time or
place. At the date this Proxy Statement went to press, the Board
of Directors is not aware that any such other business is to be
presented for action at the meeting and does not itself intend to
present any such other business; however, if any such other business
does come before the meeting, shares represented by proxies given
pursuant to this solicitation will be voted in accordance with the
recommendation of the Board of Directors or, in the absence of such
a recommendation, in accordance with the judgment of the proxyholder.
PERSONS ENTITLED TO VOTE. Only holders of Common Stock of the Com-
pany of record as of the close of business on March 10, 2000, are
entitled to vote at the meeting. At the close of business on that
date, 1,174,021 shares of Common Stock were outstanding. The pre-
sence, in person or by proxy, of the holders of a majority of the
outstanding shares of Comon Stock of the Company is necessary to
constitute a quorum at the meeting for both proposal (1) and propo-
sal (2). Holders of Common Stock are entitled to one vote per share
standing in their names on the record date. In the election of
directors, each shareholder will have cumulative voting rights,
which means he will have the right to cast as many votes as equals
the number of shares owned by him multiplied by the number of
directors to be elected, and this total number of votes may be
divided among one or more candidates for the office of director in
such manner as the shareholder may elect, if present to vote in
person, or as the proxyholders elect, if voting by proxy. In the
event the votes for one of the director nominees are withheld,
those votes will be cumulatively voted by the proxyholder for the
remaining director nominee. Withholding authority to vote for all
director nominees has the effect of abstaining from voting for any
director nominees. Shares cannot be voted at the meeting unless the
owner is present in person or represented by proxy. The directors
shall be elected by an affirmative vote of the plurality of shares
that are entitled to vote on the election of directors and that are
2
<PAGE> 6
represented at the meeting by shareholders who are present in person
or represented by a proxy, assuming a quorum is present. Accord-
ingly, the two nominees for Class III directors receiving the great-
est number of votes at the meeting will be elected as Class III
directors. With respect to the proposal to consider an amendment
to the Bylaws and Articles of Incorporation concerning adopting
or maintaining a Shareholder Rights Plan, the proposal must be
approved by an affirmative vote of a majority of the common shares
outstanding.
In determining the number of shares that have been affirmatively
voted for a particular matter, shares not represented at the meet-
ing, shares represented by shareholders that abstain from voting on
a matter, and shares held by brokers or other nominees for which no
voting instructions on the matter being voted upon have been given
by the beneficial owner and for which the nominee does not have
discretionary authority to vote are not considered to be votes
affirmatively cast. Any of the foregoing is equivalent to a vote
against the proposal other than the election of directors and will
have no effect on the election of directors. Abstentions will have
the effect of a vote against any of the proposals to which the ab-
stention applies.
When a broker or other nominee holding shares for a customer votes
on one proposal but does not vote on another proposal because the
broker or nominee does not have discretionary voting power with
respect to such proposal and has not received instructions from the
beneficial owner, it is referred to as a "broker nonvote." Properly
executed proxies marked "abstain" or proxies required to be treated
as "broker nonvotes" will be treated as present for purposes of
determining whether there is a quorum at the meeting.
3
<PAGE> 7
PRINCIPAL SHAREHOLDERS. As of the close of business on February 29,
2000, the principal beneficial owners of the Company's Common Stock
were as follows:
<TABLE>
<CAPTION>
Shares Percent
Beneficially of
Name and Address Owned<F1> Class
------------------------------ ------------ ------
<S> <C> <C>
Paul Mueller 106,557<F2> 9.08%
1600 West Phelps Street
Springfield, Missouri 65802
Moore Sons Investments, L.P. 58,879<F3><F4> 5.02%
1020 West 59th Street
Kansas City, Missouri 64113
Royce & Associates, Inc.
and Charles M. Royce 129,350<F5> 11.02%
1414 Avenue of the Americas
New York, New York 10019
Dimensional Fund Advisors Inc. 71,600<F6> 6.10%
1299 Ocean Avenue
Santa Monica, California 90401
<FN>
<F1> Unless otherwise noted, each shareholder has sole voting
power and investment power over the number of shares set
forth beside his name.
<F2> The 106,557 shares include 15,000 shares owned by the
Mueller Family Foundation, and Paul Mueller disclaims any
beneficial ownership in those shares.
<F3> In his capacity as a general partner of Moore Sons
Investments, L.P., David L. Moore may be deemed to be
beneficial owner of 58,879 shares of Common Stock owned
by said limited partnership. In his capacity as general
partner of Moore Sons Investments, L.P., David L. Moore
may be deemed to have shared power to vote or direct the
vote of 58,879 shares of Common Stock and may be deemed
to have shared power to dispose or direct the disposition
of 58,879 shares of Common Stock owned by said limited
partnership. David L. Moore disclaims beneficial owner-
ship of all such shares owned by said limited partnership.
As husband of Mary Kathleen Moore, David L. Moore may be
deemed to be beneficial owner of an additional 8,262
shares of Common Stock, which are owned by Mary Kathleen
Moore. David L. Moore disclaims beneficial ownership of
all such shares exclusively owned by Mary Kathleen Moore.
<F4> In her capacity as a general partner of Moore Sons Invest-
ments, L.P., Mary Kathleen Moore may be deemed to have
shared power to vote or direct the vote of 58,879 shares
of Common Stock and may be deemed to have the shared power
to dispose or direct the disposition of 58,879 shares of
Common Stock owned by said limited partnership. Mary
Kathleen Moore disclaims beneficial ownership of all such
shares owned by said limited partnership. Mary Kathleen
Moore is the direct owner of 8,262 shares of Common Stock
over which she has sole voting and dispositive power.
<F5> Royce & Associates, Inc., ("Royce") is the beneficial
owner of 129,350 shares of the Company's Common Stock
as of December 31, 1999 (the most recent date for which
information is available). Charles M. Royce may be
deemed to be a controlling person of Royce and, as such,
may be deemed to beneficially own the shares of Common
Stock of the Company beneficially owned by Royce. Mr.
Royce does not own any shares outside of Royce and
disclaims beneficial ownership of the shares held by
Royce.
<F6> Dimensional Fund Advisors Inc. ("Dimensional"), an
investment advisor registered under Section 203 of
the Investment Advisors Act of 1940, is deemed to have
beneficial ownership of 71,600 shares of the Company's
Common Stock as of December 31, 1999 (the most recent
date for which information is available). Dimensional
furnishes investment advice to four investment companies
registered under the Investment Company Act of 1940 and
serves as investment manager to certain other commingled
group trusts and separate accounts. (These investment
companies, trusts, and accounts are the "Funds.") In
its role as investment advisor and investment manager,
Dimensional possesses both voting and investment power
over the 71,600 shares of Common Stock of the Company
that are owned by the Funds, and Dimensional disclaims
beneficial ownership of those shares.
</FN>
</TABLE>
All of the information set forth in the above table and footnotes is
based solely on information furnished by the persons listed in the
table. The Company does not know of any other person (as that term
is defined by the Securities and Exchange Commission) who owns of
record or beneficially more than 5% of the Company's outstanding
shares.
NOTICE REQUIREMENTS AND SHAREHOLDER PROPOSALS. To permit the Com-
pany and its shareholders to deal with shareholder proposals in an
informed and orderly manner, the Bylaws of the Company establish an
advance notice procedure. No shareholder proposal, no shareholder
4
<PAGE> 8
nominations of persons for election to the Board of Directors, or
other business may be brought before the 2001 annual meeting of the
shareholders unless written notice of such proposal, nomination or
other business is received by the Secretary of the Company at the
address set forth on page 1 of this Proxy Statement not earlier than
January 1, 2001, nor later than January 31, 2001. Such notice must
contain certain specified information concerning any proposal to be
brought before the meeting or any nomination for a person to be
elected as a director at the meeting, as well as the shareholder
submitting the proposal. The proposals must also comply with all
applicable statutes, laws and regulations, and the Bylaws of the
Company. A copy of the applicable Bylaw provisions may be obtained,
without charge, upon written request to the Secretary of the Company
at the address set forth on page 1 of the Proxy Statement.
In addition, shareholder proposals intended to be included in the
Company's Proxy Statement for the annual meeting in 2001 must be
received by the Secretary of the Company, at the address set forth
on page 1 of this Proxy Statement, not later than November 27, 2000.
Such proposals must comply with certain rules and regulations promul-
gated by the Securities and Exchange Commission.
5
<PAGE> 9
ITEM 1 - ELECTION OF DIRECTORS
DIRECTORS. As of the 2000 annual meeting of the shareholders of
the Company (scheduled for May 1, 2000), the Board of Directors
will consist of seven members, divided into three classes, of whom
approximately one-third are elected each year at the annual meeting
of shareholders to serve for a term of three years and until their
successors are duly elected and shall qualify, or until such direc-
tor's death, resignation or removal. The Board of Directors has
operated with seven members, there being one vacancy, since January
20, 1997. Because the current Board of Directors believes that
seven members has been an appropriate number to efficiently and
effectively carry out its responsibilities to the Company, the Board
of Directors exercised its authority under the Articles of Incorpor-
ation of the Company to reduce the size of the Board of Directors
from eight to seven directors effective as of the 2000 annual meeting
of the shareholders (scheduled for May 1, 2000). Provisions in the
Articles of Incorporation of the Company require that the reduction
in the number of directors be implemented by decreasing the number
of directors in Class III from three to two directors, while leaving
the number of directors in Class II at three and in Class I at two.
As a result of these changes, two directors will be elected at this
year's annual meeting of the shareholders. David T. Moore, a current
Class III director whose term expires as of the 2000 annual meeting
of the shareholders, has been appointed by the Board of Directors
as a Class I director effective as of the 2000 annual meeting of the
shareholders to fill the vacancy in Class I for the remaining term
expiring as of the 2001 annual meeting of the shareholders of the
Company.
The Union's preliminary proxy materials indicate that it intends
to nominate one individual, Joseph N. (Nick) Bacino for election to
the Company's Board of Directors at the 2000 annual meeting. The
Union's preliminary proxy materials contain information regarding
its nominee. One of the Union's reasons for submitting a nominee
for election as a director is to provide for a more independent
Board of Directors. The Company's seven-member Board of Directors
consists of four outside directors who are not employed by the
Company, three of whom are fully independent and have no relation-
ship with the Company or any of its officers or directors. The
Company's management believes that these outside directors are very
qualified to assist the Company's management in the operations of
the Company.
Based on the small number of shares owned by the Union and prior
dealings with the Union, the Company believes that the Union's real
motive in nominating a candidate for election to the Company's Board
of Directors is to have an individual on the Board who will be favor-
able to the Union's position in its negotiations and other dealings
with the Company. Because Mr. Bacino would be only one of seven
directors, his sole vote would not be sufficient to set policy for
the Board; but he would be in a position to persuade the other direc-
tors, particularly the outside directors, to support his position.
The two nominees of the Board of Directors are Paul Mueller, the
Chairman of the Board and founder of the Company, and Daniel C.
Manna, the President and CEO. The Company's Board of Directors
believes that it is essential that these two individuals be elected
to the Board because of their high degree of involvement and famili-
arity with the Company's operations.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR
OF THE TWO NOMINEES PROPOSED BY THE BOARD OF DIRECTORS, DESCRIBED
BELOW, BY SO INDICATING ON THE COMPANY'S WHITE PROXY CARD AND NOT
VOTE IN FAVOR OF THE UNION'S NOMINEE. DO NOT SIGN AND RETURN ANY
PROXY CARD SENT TO YOU BY THE UNION, EVEN TO WITHHOLD AUTHORITY FOR
THE UNION'S NOMINEE FOR ELECTION TO THE BOARD OF DIRECTORS OR TO
VOTE "AGAINST" OR "ABSTAIN" FROM VOTING WITH RESPECT TO THE UNION'S
PROPOSED AMENDMENTS.
The following schedule sets forth the names of the two persons who
have been nominated by the Board of Directors for election as direc-
tors of the Company, the names of the remaining five directors whose
terms expire in subsequent years, and certain related information:
6
<PAGE> 10
<TABLE>
<CAPTION>
Shares of
Common Stock
of the Company
Beneficially
Owned on
Feb. 29, 2000
<F1>
-------------
Name and First No. Percent
Present Position Occupation During Became a of of
with Company Age Past Five Years Director Shares Class
- ---------------------- --- --------------------- -------- ------ -----
<F2>
NOMINEES FOR CLASS III DIRECTORS - TERM EXPIRING IN 2003
- --------------------------------
<S> <C> <C> <C> <C> <C>
Daniel C. Manna<F3> 53 President and CEO of 1977 20,798 2%
President and Director the Company
Paul Mueller<F3> 84 Chairman of the Board 1946 106,557<F4> 9%
Chairman of the Board of the Company
and Director
<CAPTION>
CONTINUING CLASS I DIRECTORS - TERM EXPIRING IN 2001
- ----------------------------
<S> <C> <C> <C> <C> <C>
Donald E. Golik 56 Position with the 1982 1,609 -
Senior Vice President Company
& Chief Financial
Officer, Secretary,
and Director
David T. Moore<F5> 28 Vice President - 1997 3,431<F6> -
Director Product Development--
Corporate Document
Systems, LLC
Previous positions held:
Director of Technical
Services--Access
Corporation, a
computer software
company;
Student--Kansas State
University, Depart-
ment of Physics;
<CAPTION>
CONTINUING CLASS II DIRECTORS - TERM EXPIRING IN 2002
- -----------------------------
<S> <C> <C> <C> <C> <C>
Gerald A. Cook 57 Chairman of the Board, 1999 - -
Director President and Trea-
surer--Loren Cook
Company, a manufac-
turer of air-moving
equipment
William B. Johnson<F3> 67 International Business 1993 1,150 -
Director Consultant
William R. Patterson 58 Member--Stonecreek 1997 1,000 -
Director Management, LLC
Previous positions held:
Executive Vice
President--Premium
Standard Farms, Inc.
Business Consultant
Partner--Arthur
Andersen, LLP, in
the Commercial
Audit Division
All officers and directors as a group (7 persons). 134,545 11%
<FN>
<F1> Unless otherwise noted, the nominees and each director have
sole voting power and investment power over the number of
shares set forth beside his name.
<F2> The percentage is less than 1%, except as otherwise indicated.
<F3> Member of Executive Committee.
<F4> The 106,557 shares include 15,000 shares owned by the Mueller
Family Foundation, and Paul Mueller disclaims any beneficial
ownership in those shares.
<F5> Mr. Moore is currently a Class III director whose term expires
as of this year's annual meeting of the shareholders of the
Company. Pursuant to the authority granted to it under the
Company's Articles of Incorporation, the Board of Directors
has appointed Mr. Moore a director to fill the vacancy in
Class I, effective as of this year's annual meeting of the
shareholders, for the remainder of the term expiring as of the
2001 annual meeting of the shareholders of the Company.
<F6> Does not include 58,879 shares owned by Moore Sons Investments,
L.P., of which David T. Moore owns a 49.5% limited partnership
interest.
</FN>
</TABLE>
7
<PAGE> 11
The Board of Directors of the Company does not have a permanent nomi-
nating committee.
The Board of Directors of the Company held four meetings during the
year ended December 31, 1999. No director attended less than 75% of
the meetings of the Board of Directors and Committee(s) on which he
served.
The Company pays each director who is not an employee of the Company
an annual fee of $6,000, plus a fee of $1,000 for each regular or
special meeting of the Board attended, $500 for each Board committee
meeting attended, and $1,000 per day for special assignments.
The Company has a Compensation and Benefits Committee, and the mem-
bers are William R. Patterson - Chairman, Gerald A. Cook, and William
B. Johnson. The Committee met twice in 1999. The function of the
Committee is to develop, review, and make recommendations to the
Board of Directors as to the compensation policies for officers
of the Company and to administer salary and incentive plans for
officers.
Mr. Patterson was acting Chief Financial Officer in a consulting
arrangement with Premium Standard Farms, Inc., during the time it
filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code
in July 1996 and emerged from bankruptcy in September 1996.
Mr. Patterson is a director of American Italian Pasta Company and
Collins Industries, Inc.
Mr. Moore is the grandson of Paul Mueller.
8
<PAGE> 12
ITEM 2 - SHAREHOLDER PROPOSAL
In its preliminary proxy materials, the Union indicates that it will
propose that the shareholders of the Company vote on two Proposed
Amendments, the text of which is set forth below. For the reasons
set forth below, the Board of Directors unanimously recommends a
vote AGAINST the Proposed Amendments. The text of the Proposed
Amendments is as follows:
RESOLVED, that the shareholders of Paul Mueller Company hereby
amend its Bylaws and Articles to add the following additional
section to each:
Poison Pills (Shareholders' Rights Plans)
A. The Corporation shall not adopt or maintain a share-
holders' 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 ap-
proval.
THE BOARD OF DIRECTORS OPPOSES THE PROPOSED AMENDMENTS AND RECOMMENDS
A VOTE AGAINST THE UNION'S PROPOSAL.
In adopting the Shareholders' Rights Plan (the "Plan") and declar-
ing a dividend distribution of Common Share Purchase Rights (the
"Rights"), the Board of Directors carefully considered the limited
purposes of the Plan and the Rights. The Plan and the Rights con-
tain provisions to protect the shareholders of the Company in the
event of an unsolicited attempt to acquire the Company that uses
coercive tactics that unfairly pressure shareholders, squeeze them
out of their investment without giving them any real choice, and
deprive them of the full value of their shares. The Plan and the
Rights were designed to enhance the Board of Directors' ability to
represent the interests of all the shareholders of the Company in
the event of an unfair offer and to negotiate a more favorable
transaction.
The Plan and the Rights were designed to discourage any attempt to
acquire the Company that is coercive and does not provide fair and
equal treatment of all of the Company's shareholders. The Plan is
not intended to prevent a takeover of the Company and will not do
so. The Plan and the Rights were put into place to enhance the
negotiating position of the Board of Directors and the shareholders
by creating an incentive for a potential acquirer to negotiate in
good faith with the Board of Directors. The Board of Directors
believes that keeping the Plan and the Rights in place allows the
Company to continue to improve its financial performance while, if
necessary, using the Plan and the Rights either to deter short-term
speculators or to negotiate a higher price if the Company receives
a fair acquisition proposal.
9
<PAGE> 13
The benefits of a Rights Agreement have been validated by a study
of Georgeson and Company, Inc., released in November 1997. The
study found that premiums paid to target companies with Rights
Agreements were on average 8% higher than premiums paid to purchase
target companies that did not have Rights Agreements. The presence
of a Rights Agreement did not increase the likelihood that a hostile
takeover bid would be defeated or that a friendly bid would be with-
drawn, and the takeover rate was similar for companies with and
without Rights Agreements. In light of these and similar consider-
ations in 1991, the Board of Directors adopted the Plan and issued
the Rights; and the Board of Directors continues to believe that
the presence of the Plan is important for the protection of the
Company's shareholders.
The Proposed Amendments would require the Company to terminate the
Plan and to redeem the Rights. The Proposed Amendments would also
take away the Board of Directors' ability to adopt a new Shareholder
Rights Plan without soliciting proxies and seeking the approval of
the Company's shareholders. The Board of Directors believes such a
lack of flexibility would greatly diminish the Board of Directors'
ability to negotiate the best price for the shareholders in the event
an unsolicited offer to purchase the Company should arise in the
future.
For all of these reasons, the Board of Directors unanimously recom-
mends that you vote AGAINST the Proposed Amendments.
10
<PAGE> 14
EXECUTIVE COMPENSATION
The following table summarizes, for the last three years, the com-
pensation of the Chief Executive Officer and the other most highly
compensated executive officer of the Company whose total annual
salary and bonus exceeded $100,000:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
----------------------
Awards
--------------
Securi-
Annual Other Re- ties
Name and Compensation Annual stricted Under- Other
Principal ---------------- Compen- Stock lying LTIP Compen-
Position Year Salary Bonus sation Awards Options Payouts sation
- --------------- ---- -------- ------- ------- ------- ----- ------ ------
<F1> <F2> <F3> <F4>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel C. Manna 1999 $245,000 $ - $ 900 $65,000 7,000 $ - $2,500
President 1998 230,000 23,500 1,200 - - - 2,880
& CEO 1997 220,000 - - - - - 2,375
Donald E. Golik 1999 $164,700 $ - $13,000 $32,500 3,500 $ - $2,500
Sr. Vice Presi- 1998 156,600 16,000 8,300 - - - 2,880
dent & CFO 1997 150,000 - 8,700 - - - 2,375
<FN>
<F1> Bonus amounts were earned and accrued during each year indi-
cated.
<F2> Other Annual Compensation consists of payments for unused
vacation and travel-incentive payments (available to all
employees) for using cost-effective airline fares on inter-
national flights.
<F3> Based on the closing price of the Company's stock on December
31, 1999, of $28.875, the aggregate number and value of all
shares of restricted stock holdings on such date were 2,000
shares and $57,750 for Mr. Manna and 1,000 shares and $28,875
for Mr. Golik. Dividends are paid on restricted stock held by
executive officers.
<F4> All Other Compensation includes Company contributions paid or
accrued during each year under the Profit Sharing and Retirement
Savings Plan [401(k) Plan].
</FN>
</TABLE>
OPTION GRANTS IN 1999. The following table provides information
relating to the option grants to the officers named in the Summary
Compensation Table during 1999. The exercise price of the options
was above the fair-market value of the Company's Common Stock on the
date the options were granted. The calculation of potential realiz-
able values is based on assumed annualized rates of stock apprecia-
tion of 5% and 10% over the full ten-year term of the options. All
options granted during 1999 vest five years after the date of grant.
<TABLE>
<CAPTION>
Potential Realiz-
Percent able Value at
of Total Assumed Annual
Options Rates of Stock
Securities Granted Exer- Price Appreciation
Underlying to cise Expira- for Option Term
Options Employee Price tion -------------------
Name Granted in 1999 per Share Date 5% 10%
- --------------- ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Daniel C. Manna 7,000 34 $ 36.00 5-12-09 $118,580 $338,100
Donald E. Golik 3,500 17 36.00 5-12-09 59,290 169,050
</TABLE>
NOTE: At December 31, 1999, the options were unexercisable and were
not in-the-money.
PENSION PLAN TABLE. Officers and directors who are employees of
the Company participate in the Paul Mueller Company Noncontract
Employees Retirement Plan (Plan).
The Plan is a defined benefit plan; and the compensation covered by
the Plan includes only base salary and compensation covered by the
Plan is limited to $170,000 annually by the Internal Revenue Code.
Daniel C. Manna and Donald E. Golik are also covered under the Paul
Mueller Company Supplemental Executive Retirement Plan (Supplemental
Plan) effective January 1, 1996, which provides for an additional
retirement benefit based on the provisions of the Plan for compensa-
tion in excess of the Internal Revenue Code limitation of $170,000.
11
<PAGE> 15
The combined annual retirement benefit under the Plan and Supple-
mental Plan is not subject to deductions for social security benefits
or other offset amounts. The maximum number of years of credited
service is 35 years. The retirement benefit is based on the years of
credited service and the final average monthly compensation based on
the 60 consecutive months of highest compensation during the most
recent 120 complete months of compensation. The monthly benefit is
calculated as follows: [$5.85 + (0.015 x final average monthly com-
pensation over $650)] x years of credited service.
The following table presents the combined annual retirement benefit
due under the Plans at age sixty-five (65) based on various amounts
of final average annual compensation and years of service:
<TABLE>
<CAPTION>
Final
Average Years of Service
Annual ----------------------------------------------------
Compensation 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$160,000 $ 35,300 $ 47,100 $ 58,800 $ 70,600 $ 82,400
180,000 39,800 53,100 66,300 79,600 92,900
200,000 44,300 59,100 73,800 88,600 103,400
220,000 48,800 65,100 81,300 97,600 113,900
240,000 53,300 71,100 88,800 106,600 124,400
260,000 57,800 77,100 96,300 115,600 134,900
</TABLE>
The following table indicates, for the current executive officers
named in the Summary Compensation Table, the compensation for 1999
covered by the Plans and the years of credited service:
<TABLE>
<CAPTION>
Compensation Years of
Covered Credited
Name by Plans Service
---------------- ------------ --------
<S> <C> <C>
Daniel C. Manna $245,000 23
Donald E. Golik 164,700 20
</TABLE>
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE. The Compensation
and Benefits Committee (Committee) is charged with the responsi-
bility of developing, reviewing, and recommending to the Board of
Directors of the Company policies relating to compensation and
remuneration of executive officers, with a view to ensuring that
such policies are fair and equitable in view of market conditions
and that they contribute to the success of the Company. The Com-
mittee also is charged with the responsibility of administering
the salary plan for executive officers, the Executive Short-Term
Incentive Plan, and the 1999 Long-Term Incentive Plan. The Commit-
tee is composed of three nonemployee directors of the Board who
have no interlocking relationships. Given the Company's current
level of executive compensation, the Committee has not yet adopted
a policy with respect to Section 162(m) of the Internal Revenue
Code pertaining to the deductability of compensation in excess of
$1,000,000.
The Committee believes that executive compensation should be aligned
with Company financial performance. With this in mind, the Com-
mittee has established a program to (1) attract and retain key
executives critical to the long-term success of the Company, (2)
reward executives for enhanced shareholder value, and (3) support
a performance-oriented environment that rewards performance consis-
tent with Company financial goals.
The compensation program for executive officers currently consists
of a base salary, an annual incentive award under the Executive
Short-Term Incentive Plan, annual awards of options and restricted
stock under the 1999 Long-Term Incentive Plan, and contributions
paid or accrued under the Profit Sharing and Retirement Savings
Plan [401(k) Plan].
12
<PAGE> 16
Salary ranges for executive officer positions, including the Chief
Executive Officer (CEO), are established periodically based on
competitive salary data developed by an independent compensation
consultant. The CEO's salary is established by considering salaries
of CEO's of comparably sized, capital-goods manufacturing companies.
The Committee believes the CEO's compensation and that of all
executive officers should be heavily influenced by the Company's
performance. Therefore, the Executive Short-Term Incentive Plan
provides the opportunity for a cash incentive that is a percentage
of base salary and is based on (a) profitability of the Company
and (b) an individual's level of performance. The Committee estab-
lishes a target level of profitability at the beginning of each
year against which actual profitability will be measured. Addition-
ally, the Committee may consider other factors in arriving at the
determination of corporate performance for incentive calculation
purposes. Such other factors may include market conditions;
extraordinary adjustments due to taxation, nonoperating income,
collective bargaining issues, or Acts of God; or other achievements
which position the Company for future growth or enhance the market
value of the corporation. Under the Plan, profitability must reach
at least 70% of the annual target; and the return on equity must
reach a specified level. The maximum bonus payable is 55% of base
salary.
The main factors upon which the Committee evaluates the CEO's perfor-
mance are: (1) the Company's actual profitability for the year, and
(2) those activities undertaken by the CEO which will position the
Company for future growth and enhance the market value of the Com-
pany. Significant items considered are additions to and expansion
of the product lines, progress in margin improvement, and the imple-
mentations of systems and procedures to improve efficiency, enhance
the Company's competitiveness, and position the Company for long-
term growth. Based on the profitability performance for 1999, the
CEO was not awarded a bonus for 1999 under the Executive Short-Term
Incentive Plan.
Under the 1999 Long-Term Incentive Plan, executive officers and
other key employees are eligible to receive grants of nonqualified
stock options and restricted stock. The Committee believes that
stock options and restricted stock are an essential element of
executive compensation because they focus management's attention
on shareholder interests and align long-term executive performance
with shareholder value. Through periodic grants of stock options
and restricted stock, executive officers and other key employees
are rewarded for performance and the increase in shareholder value.
Option grants are made at or above fair market value of the Com-
pany's Common Stock on the date of grant. During 1999, the CEO was
granted options for 7,000 shares of Common Stock and granted 2,000
shares of restricted stock.
The Company also has a 401(k) Plan in which executive officers and
substantially all other employees are eligible to participate. The
Plan provides for a match of each employee's contributions up to a
specified limit. The Plan also provides a profit-sharing feature
whereby an additional match is made by the Company if the Company's
net income reaches predetermined levels established annually by the
Board of Directors.
COMPENSATION AND BENEFITS COMMITTEE:
William R. Patterson, Chairman
Gerald A. Cook, Member
William B. Johnson, Member
13
<PAGE> 17
COMPANY PERFORMANCE. The following graph shows a five-year compari-
son of the cumulative total returns for the Company, the S&P 500
Index, and the Media General Financial Services, Inc. - Metals Fabri-
cation Index (MG-Metals Fabrication Index).
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
<CAPTION>
Paul MG-Metals
Mueller S&P Fabrication
Company 500 Index
------- ----------- -----------
<S> <C> <C> <C>
1994 100 100 100
1995 116 138 116
1996 135 169 154
1997 149 226 208
1998 164 290 175
1999 126 351 215
<FN>
<F1> Assumes $100 invested on December 31, 1994,
in each of Paul Mueller Company Common Stock,
the S&P 500 Index, and the Media General
Financial Services, Inc. - Metals Fabrica-
tion Index.
<F2> Total return includes reinvestment of dividends.
</FN>
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's Board of Directors annually selects the Company's inde-
pendent auditing firm. Arthur Andersen LLP has been the Company's
independent auditing firm since 1969. It is not expected that Arthur
Andersen LLP will have a representative present at the May 1, 2000,
meeting of shareholders.
The Company has an Audit Committee, and the members are William B.
Johnson - Chairman, Gerald A. Cook, and David T. Moore. The Audit
Committee met once in 1999. The functions of the Audit Committee
are to nominate the independent auditors of the Company for appoint-
ment by the Board of Directors, arrange for and review the results
of the Company's annual audit, ratify annual audit fees, and provide
for independent review of the adequacy of the Company's system of
internal controls.
The Company's Board of Directors has not adopted a written charter
for the Audit Committee, but will consider the adoption of such a
charter during the current year. The members of the Audit Committee
are independent, as independence is defined in Rule 4200(a)(15) of
the National Association of Securities Dealers' current listing
standards.
14
<PAGE> 18
P R O X Y MUELLER (Registered)
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF PAUL MUELLER COMPANY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 1, 2000
The undersigned hereby constitutes and appoints Donald E. Golik and
Ronald W. Gielow, and each of them, as proxies, with full power of
substitution, to vote all of the shares of the Common Stock which
the undersigned is entitled to vote at the annual meeting of the
shareholders of the Company to be held at the offices of the Company,
1600 West Phelps Street, Springfield, Missouri, on Monday, May 1,
2000, commencing at 10:00 a.m. on that day, and at any postponement,
adjournment or adjournments thereof, as fully and with the same
effect as the undersigned might or could do if personally present,
upon all matters set forth below.
- --------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITS NOMINEES.
---
(1) The election of two (2) Class III directors for a term of three
(3) years expiring at the annual meeting to be held in 2003:
Daniel C. Manna and Paul Mueller.
[ ] FOR all nominees listed, with the discretion to distribute
the votes among the nominees as the proxyholder may deter-
mine.
[ ] WITHHOLD AUTHORITY to vote for all nominees listed.
[ ] FOR all nominees EXCEPT WITHHOLD AUTHORITY to vote for the
following: ____________________
(If you set forth the name of one of the nominees on the
above line, unless you request otherwise, your votes will
then be cumulated and voted by the proxyholder for the
other nominee.)
- ---------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL (2).
-------
(2) To consider an amendment to the Bylaws and Articles of Incor-
poration stating that the Corporation shall not adopt or
maintain a Shareholder Rights Plan unless such Plan is first
approved by an affirmative vote of a majority of the common
shares outstanding.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- ---------------------------------------------------------------------
(continued, and to be signed, on the other side)
(PROXY - continued from other side)
- ---------------------------------------------------------------------
(3) The transaction, in their discretion, of such other business
as may properly come before the meeting or any postponement,
adjournment or adjournments thereof.
- ---------------------------------------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR ALL NOMINEES IN PROPOSAL (1), WITH THE
DISCRETION TO DISTRIBUTE VOTES AMONG THE NOMINEES AS THE PROXYHOLDER
MAY DETERMINE, AND AGAINST PROPOSAL (2).
Either of said proxies present and acting at said meeting or any
postponement, adjournment or adjournments thereof shall have and may
exercise all of the powers of all of said proxies. The undersigned
hereby ratifies and confirms all that said proxies, or either of them
or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof, and acknowledges receipt of the Notice of said
meeting and the Proxy Statement accompanying it.
Date _________________________, 2000
____________________________________
____________________________________
Please insert date of signing. Sign
exactly as name appears at left.
Where stock is issued in two or more
names, all should sign. If signing
as attorney, administrator, execu-
tor, trustee, guardian or corporate
officer, give full title as such.
