<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</TABLE>
LANCER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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<PAGE> 2
LANCER CORPORATION LETTERHEAD
6655 Lancer Blvd.
San Antonio, Texas 78219
April 18, 2000
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Meeting") of Lancer Corporation (the "Company") to be held at the Company's
Corporate Headquarters at 6655 Lancer Blvd., San Antonio, Texas on Thursday, May
18, 2000 at 9:30 a.m., local time.
The attached Notice of Annual Meeting and Proxy Statement fully describes the
formal business to be transacted at the Meeting, which includes electing eight
directors of the Company, and transacting such other matters as may properly
come before the Meeting or any adjournments thereof.
Directors and officers of the Company, as well as a representative of the
Company's independent auditors, will be present at the annual meeting to respond
to any questions that you may have.
The Company's Board of Directors believes that a favorable vote on the matter to
be considered at the Meeting is in the best interest of the Company and its
shareholders and unanimously recommends a vote "FOR" such matter. Accordingly,
we urge you to review the accompanying material carefully, and to sign, date and
return the enclosed Proxy promptly. If you attend the Meeting, you may vote in
person even if you have previously mailed a Proxy.
Sincerely,
/s/ GEORGE F. SCHROEDER
George F. Schroeder
President and Chief Executive Officer
<PAGE> 3
LANCER CORPORATION
6655 Lancer Blvd.
San Antonio, Texas 78219
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 18, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Meeting")
of Lancer Corporation (the "Company" or "Lancer") will be held at the Company's
Corporate Headquarters at 6655 Lancer Blvd., San Antonio, Texas on Thursday, May
18, 2000 at 9:30 a.m., local time. A form of Proxy and a Proxy Statement for the
Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of a Board of Directors consisting of eight directors for the
ensuing year; and
2. Such other matters as may properly come before the Meeting or any
adjournments thereof.
The close of business on April 3, 2000 has been fixed by the Board of Directors
as the record date for determining shareholders entitled to notice of and to
vote at the Meeting or any adjournments thereof. For a period of at least 10
days prior to the Meeting, a complete list of shareholders entitled to vote at
the Meeting shall be open to the examination of any shareholder during ordinary
business hours at the Company's Corporate Headquarters, 6655 Lancer Blvd., San
Antonio, Texas 78219.
Information concerning the matters to be acted upon at the Meeting is set forth
in the accompanying Proxy Statement.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING IN PERSON ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, YOU MAY VOTE
IN PERSON EVEN IF YOU HAVE PREVIOUSLY MAILED A PROXY.
By Order of the Board of Directors
/s/ GEORGE F. SCHROEDER
George F. Schroeder
President and Chief Executive Officer
San Antonio, Texas
April 18, 2000
<PAGE> 4
LANCER CORPORATION
6655 Lancer Blvd.
San Antonio, Texas 78219
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 2000
THE PROXY
This Proxy Statement is being furnished to shareholders of Lancer Corporation
(the "Company" or "Lancer") in connection with the solicitation of Proxies (the
"Proxies") for use at the Annual Meeting of Shareholders (the "Meeting") to be
held at the Company's Corporate Headquarters at 6655 Lancer Blvd., San Antonio,
Texas on Thursday, May 18, 2000, at 9:30 a.m., local time, or at such other time
and place to which the Meeting may be adjourned. The enclosed Proxy is solicited
by the Board of Directors of the Company. Where a shareholder has appropriately
specified how a Proxy is to be voted, it will be voted accordingly.
The Proxy may be revoked at any time by providing written notice of such
revocation to Lancer Corporation, P.O. Box 11214, New York, NY 10203-0214. This
notice must be received prior to 5:00 p.m., local time on May 4, 2000. If notice
of revocation is not actually received by such date, a shareholder may
nevertheless revoke a Proxy by attending the Meeting and voting in person.
The address of the principal executive offices of the Company is 6655 Lancer
Blvd., San Antonio, Texas 78219. This Proxy Statement and enclosed Proxy are
first being mailed to shareholders on or about April 18, 2000.
RECORD DATE AND VOTING SECURITIES
The record date for determining the shareholders entitled to vote at the Meeting
is the close of business on April 3, 2000 (the "Record Date"), at which time the
Company had issued and outstanding 9,124,857 shares of Common Stock, par value
$.01 per share (the "Common Stock"), which class of stock constitutes the only
outstanding securities of the Company entitled to vote at the Meeting.
QUORUM AND VOTING
The presence at the Meeting, in person or by Proxy, of the holders of a majority
of the outstanding shares of Common Stock is necessary to constitute a quorum.
Each share of Common Stock is entitled to one vote with respect to each matter
to be voted on at the Meeting. The approval of all proposals requires the
affirmative vote of a majority of the outstanding shares of Common Stock present
in person or by Proxy at the Meeting. Neither the Company's Articles of
Incorporation nor Bylaws provide for cumulative voting.
Abstentions and broker non-votes will be included in determining the presence of
a quorum at the meeting. Because matters to be voted upon at the meeting must be
approved by a vote of the holders of a majority of the shares of the Company
present at the meeting in person or by proxy, any abstention (including broker
non-votes) on any matter will have the effect of and be counted as a "no" vote.
ACTIONS TO BE TAKEN AT THE MEETING
All shares represented by valid Proxies, unless the shareholder otherwise
specifies, will be voted FOR (i) the election of the eight persons named under
"Election of Directors" of the Company; and (ii) at the discretion of the proxy
holders, any other matter that may properly come before the Meeting or any
adjournment thereof. The Board of Directors of the Company unanimously
recommends a vote "FOR" the proposal described in this Proxy.
1
<PAGE> 5
PROPOSAL I - ELECTION OF DIRECTORS
There are eight directors to be elected. It is intended that the names of the
persons indicated in the following table will be placed in nomination and that
the persons named in the Proxy will vote for their election unless otherwise
instructed. Each of the nominees has indicated his or her willingness to serve
as a member of the Board of Directors, if elected. In case any nominee shall
become unavailable for election to the Board of Directors for any reason not
presently known or contemplated, the proxy holders will have discretionary
authority in that instance to vote the Proxy for a substitute. To be elected, a
nominee must receive the affirmative vote of the holders of a majority of the
shares of Common Stock present, in person or by Proxy, at the Meeting. Each
nominee elected will serve as director for the ensuing year and until his or her
successor shall have been duly qualified and elected.
The nominees are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- ---------
<S> <C> <C>
Alfred A. Schroeder (1) (5) 63 Chairman of the Board
George F. Schroeder (1) (4) 60 President, Chief Executive Officer
and Director
Walter J. Biegler (2) (5) 58 Director
Jean M. Braley (3) 70 Director
Charles K. Clymer (3) (4) 64 Director
Olivia F. Kirtley (2) (4) 49 Director
Michael E. Smith (3) (5) 59 Director
E.T. (Toby) Summers III (2) (4) (5) 52 Director
</TABLE>
(1) Alfred A. Schroeder and George F. Schroeder are brothers. No other nominee
is related by blood, marriage or adoption to another nominee or to any
executive officer of the Company or its subsidiaries.
(2) Member of the Audit Committee
(3) Member of the Compensation and Stock Option Committees
(4) Member of the Strategic Planning Committee
(5) Member of the Executive Committee
Mr. Alfred A. Schroeder is a co-founder of the Company and has served as
Chairman of the Board of Directors of the Company since its inception in 1967.
His primary responsibilities include conceptual engineering design, new product
development and corporate planning. He is the brother of George F. Schroeder,
and is also a partner in Lancer Properties. See "Compensation and Certain
Transactions."
Mr. George F. Schroeder is a co-founder of the Company and has served as its
President, Chief Executive Officer and director since 1967. His primary
responsibilities include strategic planning, marketing, overall production
management and corporate administration. He is the brother of Alfred A.
Schroeder, and is also a partner in Lancer Properties. See "Compensation and
Certain Transactions."
Mr. Walter J. Biegler has served as a director of the Company since 1985. Mr.
Biegler is a private investor. From 1991 until 1998, he was Chief Financial
Officer of Periodical Management Group, Inc., a San Antonio, Texas distributor
of periodicals, books and specialty items in the United States, Mexico and the
Virgin Islands. Prior to November 1991, he served as the Chief Financial Officer
and Senior Vice President-Finance of La Quinta Motor Inns, Inc. of San Antonio,
Texas, a national hotel chain.
Ms. Jean M. Braley has served as a director of the Company since 1976. She
served as Secretary of the Company from 1982 to 1985. Ms. Braley has been a
private investor since 1985. She is also a partner in Lancer Properties. See
"Compensation and Certain Transactions."
2
<PAGE> 6
Mr. Charles K. Clymer has served as a director of the Company since 1996. Mr.
Clymer retired from The Coca-Cola Company in 1993 after 31 years of service.
Managerial positions held with Coca-Cola included Manager of Chile, Director and
Senior Vice President of Coca-Cola (Japan) Company Limited, and Vice President
of On Premise Market Development and Customer Service for the Latin America
Group.
Ms. Olivia F. Kirtley has served as a director of the Company since 1999. She is
immediate Past Chair of the American Institute of Certified Public Accountants
(AICPA), the national professional organization for over 350,000 CPAs in
business and industry, public practice, government and education. She is
currently Vice President of Vermont American Corporation, a leading global
manufacturer and marketer of power tool accessories, headquartered in
Louisville, Kentucky. Ms. Kirtley has been with Vermont American over 20 years
and also held the positions of Chief Financial Officer, Treasurer and Director
of Tax. Ms. Kirtley has served on the Board of Directors of Res Care, Inc. since
1998.
Mr. Michael E. Smith has served as a director of the Company since 1985. Mr.
Smith is presently a principal shareholder and Executive Vice President of
Gosling & Sachse, an insurance brokerage firm. He has been employed by the same
firm since 1968. Mr. Smith has been the Company's insurance broker since 1981.
See "Compensation and Certain Transactions."
Mr. E.T. (Toby) Summers III has been a director of the Company since 1999. Mr.
Summers is a private investor and principal in The Harvest Group, a private
equity investment firm. Mr. Summers served in a variety of leadership positions
with Coca-Cola Bottling Company of the Southwest from 1973 through 1998. Most
recently he held the position of President and Chief Operating Officer from 1988
through 1998 until the company's merger with Coca-Cola Enterprises. Mr. Summers
also served as Chairman of the Board of Directors of Western Container
Corporation, a manufacturer of plastic bottles for the beverage industry, and as
a member of the Board of Governors of the National Coca-Cola Bottlers
Association from 1989-1998.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board of
Directors. The Board meets on a periodic basis to review significant
developments affecting the Company and to act on matters requiring Board
approval. The Board of Directors met five times during the 1999 fiscal year.
During such period, each member of the Board participated in at least 75% of all
Board and applicable Committee meetings.
During 1999, the Board of Directors maintained Audit, Compensation and Stock
Option Committees to devote attention to specific subjects and to assist it in
the discharge of its responsibilities. Walter J. Biegler, Charles K. Clymer and
Michael E. Smith were members of the Audit, Compensation and Stock Option
Committees. Additionally, E.T. Summers III was a member of the Audit Committee.
The Audit Committee reviews the engagement of auditors, including the fee,
scope, and timing of the audit. The committee also reviews policies, procedures,
the effectiveness of internal controls, and the financial reporting process. The
Compensation Committee is responsible for officer compensation, and the Stock
Option Committee is responsible for administering the Company's stock option
plans. The Compensation Committee met once, and the Stock Option Committee met
four times during the 1999 fiscal year. The Audit committee met three times
during the 1999 fiscal year.
At a meeting of the Board of Directors in February 2000, the Board changed its
committee structure. Walter J. Biegler, Olivia F. Kirtley and E.T. Summers III
are members of the Audit Committee. The Audit Committee reviews the engagement
of auditors, including the fee, scope, and timing of the audit. The committee
also reviews policies, procedures, the effectiveness of internal controls, and
the financial reporting process. Jean M. Braley, Charles K. Clymer and Michael
E. Smith are members of the Compensation and Stock Option Committees. The
Compensation Committee is responsible for officer compensation, and the Stock
Option Committee is responsible for administering the Company's stock option
plans. Charles K. Clymer, Olivia F. Kirtley, George F. Schroeder and E.T.
Summers III are members of the Strategic Planning Committee. The Strategic
Planning Committee makes recommendations to the full Board regarding policies
concerning the Company's operations and finances, and the marketing and sale of
the Company's products. Walter J. Biegler, Michael E. Smith, Alfred A. Schroeder
and E.T. Summers III are members of the Executive Committee. The Executive
Committee will have authority to act on behalf of the Board between regular
Board meetings, except where full board action is required by applicable laws or
the Company's bylaws.
3
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 24, 2000, regarding the
beneficial ownership of common stock of Lancer by each person known by Lancer to
own 5% or more of the outstanding shares of each class of Lancer's Common Stock,
each director of Lancer, each executive officer of the Company named in the
Summary Compensation Table set forth in this proxy, and the directors and
executive officers of Lancer as a group. The persons named in the table have
sole voting and investment power with respect to all shares of Common Stock
owned by them, unless otherwise noted.
<TABLE>
<CAPTION>
Number of Shares
Name of Beneficial Owner of Common Stock Percent of
and Number of Persons in Group Beneficially Owned Class
<S> <C> <C>
Alfred A. Schroeder (1)(2) 1,223,235 12.7
George F. Schroeder (1)(3) 1,363,631 14.2
Walter J. Biegler 7,750 *
Jean M. Braley (1)(4) 470,177 4.9
Charles K. Clymer 6,521 *
Olivia F. Kirtley (5) 238,500 2.5
Michael E. Smith 7,650 *
E.T. Summers III 10,000 *
Dimensional Fund Advisors, Inc. (6) 516,249 5.4
Greenbriar Partners, Ltd. (7) 549,225 5.7
All directors and executive officers
as a group (nine persons) (8) 3,115,007 34.6
</TABLE>
*Less than 1%
(1) The mailing address for Mr. Alfred A. Schroeder, Mr. George F. Schroeder
and Ms. Jean M. Braley is 6655 Lancer Blvd., San Antonio, Texas 78219.
(2) Includes 111,375 shares purchasable pursuant to options which are
exercisable within the next 60 days.
(3) Includes 447,525 shares held by trusts for the children of Mr. George F.
Schroeder, of which Mr. George F. Schroeder is the trustee, and includes
111,375 shares purchasable pursuant to options which are exercisable within
the next 60 days.
(4) Includes 265,318 shares held by the Estate of William V. Braley for which
Ms. Braley serves as sole independent executrix.
(5) Includes 159,000 shares jointly owned with Ms. Kirtley's husband and 74,700
shares owned by Ms. Kirtley's husband. Also includes 4,000 shares owned by
Ms. Kirtley's children, in which Ms. Kirtley has disclaimed any beneficial
ownership.
(6) Dimensional Fund Advisors, Inc. is an investment advisor whose mailing
address is 1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401.
(7) Greenbriar Partners, Ltd. is an investment firm whose mailing address is
1901 N. Akard, Dallas, Texas 75201. Includes 13,500 shares held by Rowe
Family Partnership, Ltd.
(8) Includes 226,350 shares purchasable pursuant to options which are
exercisable within the next 60 days.
4
<PAGE> 8
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers of the Company:
<TABLE>
<CAPTION>
Name Age Position with the Company
- ---- --- -------------------------
<S> <C> <C>
Alfred A. Schroeder 62 Chairman of the Board
George F. Schroeder 59 President and CEO
Mark L. Freitas 39 Corporate Controller
</TABLE>
Mr. Alfred A. Schroeder is a co-founder of the Company and has served as
Chairman of the Board of Directors of the Company since its inception in 1967.
His primary responsibilities include conceptual engineering design, new product
development and corporate planning. He is the brother of George F. Schroeder,
and is also a partner in Lancer Properties. See "Compensation and Certain
Transactions."
Mr. George F. Schroeder is a co-founder of the Company and has served as
President, Chief Executive Officer and director since 1967. His primary
responsibilities include strategic planning, marketing, overall production
management and corporate administration. He is the brother of Alfred A.
Schroeder, and is also a partner in Lancer Properties. See "Compensation and
Certain Transactions."
Mr. Mark L. Freitas joined Lancer in 1998 and serves as Corporate Controller.
Before joining Lancer, Mr. Freitas worked for three years with Bausch & Lomb,
Inc., as a Senior Corporate Auditor and Cost Manager, and ten years in public
accounting with various firms.
COMPENSATION AND CERTAIN TRANSACTIONS
REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK OPTION COMMITTEE ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors consists of three
non-employee directors of the Company. It is authorized to review and consider
the Company's compensation standards and practices. The Compensation Committee
considers suggestions from management and makes recommendations to the Board of
Directors concerning the cash compensation to be paid to executive and other
officers of the Company and its subsidiaries.
The Stock Option Committee of the Board of Directors was formed in 1985 at the
time of the adoption of the Company's first Incentive Stock Option plan. It
consists of three non-employee directors. The Committee administers such plans
and awards long-term compensation in the form of stock options to executive
officers and other eligible employees under such plans.
The Company's executive compensation program is designed to attract and retain
talented managers and to motivate such managers to increase profitability and
shareholder value over time. Executive officers' compensation consists of base
salary and benefits and may include incentives in the form of annual cash
bonuses and stock options.
In determining base salaries for executive and other officers, the Compensation
Committee considers recommendations from the President and CEO of the Company.
Annual cash bonuses are typically tied to a performance target approved by the
Compensation Committee. Bonuses may also be awarded at the Compensation
Committee's discretion for special individual contributions to the success of
the Company. The Compensation Committee determines the CEO's compensation based
on the same criteria that it uses for other executive officers. Since the
Company did not achieve desired results for the year, executive officers were
generally not awarded performance bonuses. In 1999, the Chairman and the
President/CEO received non-performance based bonuses of $39,831 and $61,780,
respectively.
Based upon available data, the Compensation Committee believes the base salaries
and cash bonuses of its executive officers were set at or below the levels of
comparable companies as measured by market capitalization.
5
<PAGE> 9
All employees, including executive officers and non-employee directors are
eligible to receive grants of stock options from the Company. Options granted
generally have an exercise price equal to the market value of the Common Stock
on the date of grant, generally become exercisable in equal annual installments
over four years after the date of grant, and are contingent upon the optionee's
continued employment with the Company. The number of options granted to an
individual varies according to his or her individual contribution to the success
of the Company. The Stock Option Committee intends to make future grants as
necessary to focus managers on increasing profitability and shareholder value.
Recent amendments to the federal income tax laws impose limitations on the
deductibility of compensation in excess of $1 million paid to executive officers
in certain circumstances. Certain performance-based compensation, however, is
specifically exempt from such limitations. Since the vesting of options under
the Company's 1992 Non-Statutory Stock Option Plan (the "1992 Plan") is not
subject to the attainment of performance objectives, it is possible that awards
to Named Officers under this plan, when taken in conjunction with their annual
compensation, could become subject to the limitations of Section 162(m) of the
Internal Revenue Code. Awards made under the 1992 Plan to two of the Named
Officers will expire if not exercised by January 12, 2002. Therefore, it is
likely that these options will be exercised by January 12, 2002. When added to
other compensation likely to be paid to such officers in 2002, compensation
related to these awards is likely to be partially non-deductible to the Company
under Section 162(m). The committee believes the compensation of its executive
officers cannot always be based upon fixed formulas, and that the prudent use of
discretion in determining compensation is in the best interest of the Company
and its shareholders. In some cases, the Committee, in the exercise of such
discretion, may approve executive compensation that is not fully deductible.
However, the Company does not expect the limitations on deductibility to have a
material impact on its financial condition.
COMPENSATION AND STOCK OPTION COMMITTEES
Jean M. Braley
Charles K. Clymer
Michael E. Smith
COMPENSATION OF DIRECTORS
Directors who are also employees of the Company receive no compensation for
serving as a director. Directors who are not employees of the Company receive a
fee of $3,000 per quarter.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Michael E. Smith is a member of the Company's Compensation and Stock Option
Committees. Mr. Smith is a principal shareholder and Executive Vice President of
the insurance brokerage firm of Gosling & Sachse. The Company paid approximately
$390,000, $373,000 and $279,000 in premiums in 1999, 1998 and 1997,
respectively, for various insurance policies placed by or through Gosling &
Sachse.
6
<PAGE> 10
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid or to be paid by the
Company to the Chairman of the Board and the Chief Executive Officer for
services rendered in all capacities for the years ended December 31, 1999, 1998
and 1997.
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------- ------------
Other Securities
Annual Underlying All Other
Year Salary Bonus Compensation(1) Options Compensation (2)
Name/Title ($) ($) ($) (#) ($)
- ------------------------------ -------- --- ---------- --- --------- ---------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Alfred A. Schroeder 1999 199,992 39,831 7,810 - 57,764
Chairman of the 1998 199,992 36,512 5,209 - 57,199
Board 1997 199,992 38,214 4,945 - 52,432
George F. Schroeder 1999 199,992 61,780 7,937 - 29,889
President & CEO 1998 199,992 - 5,324 - 29,324
1997 199,992 - 4,945 - 28,080
Michael W. Andoloro (3) 1999 199,992 - - - -
Chief Operating Officer
David E. Green (3) 1999 122,315 - - - -
Chief Financial Officer
</TABLE>
(1) These amounts reflect Company contributions to its profit sharing plan and
401K plan for the benefit of the Named Officers for the years indicated.
(2) These amounts include insurance premiums paid for the benefit of the Named
Officers and certain other taxable fringe benefits.
(3) Mr. Andaloro left the Company in July 1999. Mr. Green left the Company in
October 1999.
7
<PAGE> 11
OPTIONS GRANTS DURING THE 1999 FISCAL YEAR
The following table discloses, for David E. Green, information on Common Stock
options of the Company ("Options") granted during the 1999 fiscal year. There
are no other named executive officers who received options during 1999.
Individual Grants Option Value
- ------------------------------------------------ -----------------------------
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
for Option Term
-----------------------------
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price Expiration 5% 10%
Name/Title Granted(1) in Fiscal Yr ($/Sh) Date (2) (2)
- ---------- ---------- ------------ -------- ---------- --- ---
<S> <C> <C> <C> <C> <C> <C>
David E. Green 20,000 35.1% $8.69 3/23/2004 $48,004 $106,076
Chief Financial Officer
</TABLE>
(1) The recipient of the option grant listed in the table above is no longer
employed by the Company. If he were employed by the Company as of the date
of this Proxy Statement, he would be 40% vested in the grants. The options
would be exercisable to the extent vested. The options would not be
transferable, other than by will or the laws of decent and distribution or
pursuant to a qualified domestic relations order.
(2) The information in these columns illustrates the value that might be
realized upon exercise of the options granted during fiscal year 1999
assuming the specified compound rates of appreciation of the Company's
Common Stock over the term of the options. The potential realizable value
columns of the foregoing table do not take into account certain provisions
of the options providing for termination of the option following
termination of employment or nontransferability.
8
<PAGE> 12
OPTIONS EXERCISED DURING THE 1999 FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table discloses, for the Chairman of the Board, the Chief
Executive Officer, and the Named Executive Officers, information concerning
options exercised during the fiscal year ended December 31, 1999, and the number
and value of the options held at the end of fiscal year 1999 based upon the
closing price of $4.63 per share of Common Stock on December 31, 1999. Amounts
are adjusted for the three-for-two stock dividends paid in July 1997, July 1996
and July 1995.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-the Money
Shares Options at FY-End Options at FY-End
Acquired Value Exercisable/ Exercisable/
Name/Title on Exercise Realized Unexercisable Unexercisable
- ---------- ------------- --------- ---------------------- -----------------------------------
<S> <C> <C> <C> <C>
Alfred A. Schroeder 0 0 111,375/ $371,324/
Chairman of the 0 $ 0
Board
George F. Schroeder 0 0 111,375/ $371,324/
President & CEO 0 $ 0
</TABLE>
9
<PAGE> 13
COMPANY PERFORMANCE
The following graph shows a comparison of cumulative total returns for the
Company, the Standard & Poors SmallCap 600 Index, and the Standard & Poors
Specialized Manufacturing ("SPSM") Index for the five-year period ended December
31, 1999.
The total cumulative return on investment (change in the year end stock price
plus reinvested dividends) for each year for the Company, the Standard & Poors
SmallCap 600 Index, and the SPSM Index is based on the stock price or composite
index on December 31 of each year presented. The comparison assumes that $100
was invested in the Company's Common Stock and in each of the other two indices.
[GRAPH]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
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<S> <C> <C> <C> <C> <C> <C>
Lancer Corporation $ 100.00 $ 114.29 $ 249.50 $ 211.24 $ 202.06 $ 84.96
Standard & Poors SmallCap 600 $ 100.00 $ 129.96 $ 157.67 $ 198.01 $ 195.42 $ 219.66
S & P Specialized Manufacturing $ 100.00 $ 145.79 $ 150.08 $ 193.43 $ 167.88 $ 219.61
</TABLE>
PROFIT SHARING PLAN
In 1991 the Company amended the non-contributory profit sharing plan it
originally adopted in 1985 to comply with changes in the law. The amount of
annual contributions made by the Company is at the discretion of the Board of
Directors but may not exceed an amount equal to fifteen percent of the
compensation paid or accrued during the year to all participating employees.
Substantially all United States employees are eligible to participate. The
Company's consolidated statements of income for the years ended December 31,
1999, 1998 and 1997 include provisions of $0.4 million, $0.6 million and $0.6
million, respectively, attributable to the plan.
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CERTAIN TRANSACTIONS
Michael E. Smith, a principal shareholder and Executive Vice President of the
insurance brokerage firm Gosling & Sachse, has been the Company's insurance
broker since 1981. The Company paid approximately $390,000, $373,000 and
$279,000 in premiums for various insurance policies placed by or through
Bailey-Gosling Associates, Inc. in 1999, 1998 and 1997, respectively, for which
Mr. Smith's services were used in connection therewith.
Lancer Properties is a Texas general partnership that owns the land and building
at 235 West Turbo in San Antonio, Texas where a portion of the Company's
production operations are located. The Company leases the premises on a
month-to-month basis for $6,600 per month. The Company also leases adjoining
operating facilities at 257R West Turbo, from Lancer Properties on a
month-to-month basis for $800 per month. The Company pays all maintenance
expenses, property taxes, assessments and insurance premiums on these
facilities. Alfred A. Schroeder, George F. Schroeder and Jean M. Braley, all of
whom were directors of the Company during 1999, own 13.33%, 13.33% and 15%,
respectively, of Lancer Properties. The Estate of William V. Braley, for which
Mrs. Braley serves as sole independent executrix, also holds a 15% interest in
the partnership.
As of December 31, 1999, Alfred A. Schroeder and George F. Schroeder were
indebted to the Company for approximately $746,000 for cash advances received
from the company prior to and during 1999. This indebtedness is evidenced by
promissory notes payable to the Company. $273,000 of this debt is payable in
four equal annual installments, plus accrued interest at the rate of 5.37% per
annum, with the first such installment due June 1, 2000. The balance of the
indebtedness accrues interest at a rate of 5.59% per annum, and is payable upon
demand.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP ("KPMG") has acted as the Company's independent auditors to make an
examination of the accounts of the Company for the fiscal year 1999. It is
expected that a representative of KPMG will be present at the Meeting with an
opportunity to make a statement if such representative so desires, and will be
able to respond to appropriate questions by shareholders. The appointment of
independent public accountants for the 2000 fiscal year will be made by the
Board of Directors of the Company based upon a recommendation of the Audit
Committee.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
the Company's Common Stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the American Stock
Exchange. Based solely on reports and other information submitted by executive
officers and directors, the Company believes that during the year ended December
31, 1999 each of its executive officers, directors and persons who own more than
ten percent of the Company's Common Stock filed all reports required by Section
16(a), except for one late filing by George F. Schroeder, President and Chief
Executive Officer, pursuant to the purchase of 10,000 shares of the Company's
common stock.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder action
at subsequent annual meetings of the Company. For such proposals to be
considered for inclusion in the Proxy Statement and Proxy relating to the 2001
Annual Meeting of Shareholders, such proposals must be received by the Company
no later than December 19, 2000. Such proposals should be directed to Lancer
Corporation, 6655 Lancer Blvd., San Antonio, Texas 78219, Attn: Chief Financial
Officer. For any proposal that is not submitted for inclusion in next year's
Proxy Statement, but is instead sought to be presented directly at the 2001
annual meeting of shareholders, management will be able to vote proxies in its
discretion if the Company (i) receives notice of the proposal before the close
of business on March 4, 2001, and advises shareholders in the Company's Proxy
Statement about the nature of the matter and how management intends to vote on
such matter or (ii) does not receive notice of the proposal prior to the close
of business on March 4, 2001.
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OTHER BUSINESS
The Board of Directors knows of no matter other than those described herein that
will be presented for consideration at the Meeting. However, should any other
matters properly come before the Meeting or any adjournment thereof, it is the
intention of the persons named in the accompanying Proxy to vote in accordance
with their best judgment in the interest of the Company.
MISCELLANEOUS
The expenses of preparing, printing and mailing this notice of meeting and proxy
material and all other expenses of soliciting proxies will be borne by the
Company. Georgeson & Company Inc., New York, New York, will distribute proxy
soliciting material to brokers, banks, and institutional holders and will
request such parties to forward soliciting material to the beneficial owners of
the Common Stock held of record by such persons. The Company will pay Georgeson
& Company Inc. an estimated fee of $2,000 for its services and will reimburse
Georgeson & Company Inc. for payments made to brokers and other nominees for
their expenses in forwarding soliciting material.
The Company's Annual Report to Shareholders for the fiscal year ended December
31, 1999 accompanies this Proxy statement. The Annual Report is not deemed to be
part of this Proxy Statement.
By order of the Board of Directors
/s/ GEORGE F. SCHROEDER
George F. Schroeder
President and Chief Executive Officer
San Antonio, Texas
April 18, 2000
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LANCER CORPORATION
2000 ANNUAL MEETING OF SHAREHOLDERS - MAY 18, 2000
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned shareholder of LANCER CORPORATION, a Texas corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement, each dated April 18, 2000 and hereby appoints George F.
Schroeder and Alfred A. Schroeder or either of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 2000 Annual Meeting
of Shareholders of Lancer Corporation to be held May 18, 2000 at 9:30 a.m.,
local time, at the Company's facility at 6655 Lancer Blvd., San Antonio, Texas,
and at any adjournment or adjournments thereof, and to vote all shares of Common
Stock which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth on the reverse side hereof and in
their discretion, upon such other matter or matters which may properly come
before the meeting or any adjournment or adjournments thereof.
This Proxy will be voted as directed or, if no contrary direction is
indicated, will be voted FOR the election of all listed directors, and as said
proxies deem advisable on such other matters as may come before the meeting.
(Continued, and to be signed and dated, on the reverse side.)
LANCER CORPORATION
PO BOX 11214
NEW YORK, NY 10203-0214
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1. ELECTION OF DIRECTORS FOR all nominees / / WITHHOLD AUTHORITY to vote / / EXCEPTIONS / /
listed below for all nominees listed below
Nominees: Alfred A. Schroeder, George F. Schroeder, Walter J. Biegler, Jean
M. Braley, Charles K. Clymer, Olivia F. Kirtley, Michael E. Smith, E.T.
(Toby) Summers III
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the Exceptions box and strike a line through that nominee's name.)
Address Change and/or
Comments Mark Here / /
(This Proxy should be marked, dated and
signed by the shareholder(s) exactly as
his or her name appears hereon, and
returned promptly in the enclosed
envelope. Persons signing in a fiduciary
capacity should so indicate, if shares
are held by joint tenants both should
sign.)
Dated , 2000
---------------------------------------
----------------------------------------
Signature
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Signature
Votes MUST be indicated (x) in
Black or Blue ink. / /
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope
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