ASTEC INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 24, 1997
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of Astec Industries, Inc., a Tennessee corporation (the
"Company"), will be held at the Company's executive offices, 4101 Jerome
Avenue, Chattanooga, Tennessee, on April 24, 1997, at 10:00 A.M.,
Chattanooga time, for the following purposes:
1. To elect four directors in Class II to serve until the annual
meeting of shareholders in 2000, or in the case of each
director until his successor is duly elected and qualified.
2. To elect one director in class I to serve until the annual
meeting of shareholders in 1999, or until his successor is duly
elected and qualified. This director will fill the unexpired
term of Mr. Jerry Gilbert who resigned as a member of the
Board of Directors in 1996.
3. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 10,
1997 are entitled to notice of, and to vote at, the Annual Meeting. The
transfer books will not be closed. A complete list of shareholders entitled to
vote at the Annual Meeting will be available for inspection by shareholders at
the offices of the Company from March 17, 1997 through the Annual
Meeting.
By Order of the Board of Directors
/s/ Richard W. Bethea, Jr.
RICHARD W. BETHEA, JR.
Secretary
Dated: March 24, 1997
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
MEETING IN PERSON, PLEASE VOTE, SIGN, DATE, AND
RETURN THE ENCLOSED PROXY APPOINTMENT CARD
PROMPTLY IN THE ENCLOSED BUSINESS REPLY ENVELOPE.
IF YOU DO ATTEND THE MEETING, YOU MAY, IF YOU WISH,
WITHDRAW YOUR PROXY APPOINTMENT AND VOTE IN
PERSON.
ASTEC INDUSTRIES, INC.
4101 Jerome Avenue
Chattanooga, Tennessee 37407
(423) 867-4210
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 1997
The enclosed proxy appointment is solicited by and on behalf of the
Board of Directors of Astec Industries, Inc. (the "Company") for use at its
Annual Meeting of Shareholders (the "Annual Meeting") to be held on April
24, 1997, and at any adjournments thereof. The appointment of proxy is
revocable at any time prior to its exercise at the Annual Meeting by (i)
written notice to the Secretary of the Company, (ii) properly submitting to the
Company a duly executed proxy appointment bearing a later date, or
(iii) attending the Annual Meeting and voting in person.
This Proxy Statement is being mailed by the Company to its
shareholders on or about March 21, 1997. The Company's Annual Report to
Shareholders for the fiscal year ended December 31, 1996, including financial
statements, is being sent to the shareholders with this Proxy Statement.
Only holders of record of the Company's Common Stock as of the
close of business on March 10, 1997 (the "Record Date") will be entitled to
notice of, and to vote at, the Annual Meeting. As of the Record Date there
were 10,044,199 shares of Common Stock outstanding and entitled to be
voted at the Annual Meeting. A shareholder is entitled to one vote for each
share of Common Stock held.
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes,
with the term of office of each class ending in successive years. The terms of
directors of Class II expire with this Annual Meeting. The directors of
Class III and Class I will continue in office until the 1998 and 1999 annual
meetings of shareholders, respectively. At the present time there are two
directors in Class I, four directors in Class II, and four directors in Class
III. The shareholders are being asked to vote for the election of the four
directors in Class II and one director in Class I.
If the enclosed proxy appointment card is properly executed and
returned, the persons appointed as proxies will vote the shares represented by
the proxy appointment in favor of the election to the Board of Directors of
each of the four Class II nominees and the Class I nominee whose names
appear below, unless either authority to vote for any or all of the nominees is
withheld or such appointment has previously been revoked. It is anticipated
that management shareholders of the Company will grant authority to vote
for the election of all the nominees. Each Class II director will be elected
to hold office until the 2000 annual meeting of shareholders and thereafter
until his successor has been elected and qualified. The Class I director will
be elected to hold office until the 1999 annual meeting of shareholders and
thereafter until his successor has been elected and qualified. The Class I
director will fill the unexpired term of Mr. Jerry Gilbert who resigned as a
member of the Board of Directors in 1996. In the event that any nominee is
unable to serve (which is not anticipated), the persons appointed as proxies
will cast votes for the remaining nominees and for such other persons as they
may select.
The Board of Directors recommends that shareholders check
"Authority Granted" to vote for the election of all of the nominees. The
affirmative vote of the holders of a majority of the shares of Common
Stock represented and entitled to vote at the Annual Meeting at which a
quorum is present is required for the election of the nominees.
Withholding authority to vote with respect to any one or more nominees
will constitute a vote against such nominee(s).
Certain Information Concerning Nominees and Directors
The following table sets forth the names of the nominees and of the
directors continuing in office, their ages, the year in which they were first
elected directors, their position(s) with the Company, their principal
occupations and employers for at least the last five years, any other
directorships held by them in companies that are subject to the reporting
requirements of the Securities Exchange Act of 1934 or any company
registered as an investment company under the Investment Company Act of
1940, the number of shares of the Company's Common Stock beneficially
owned by them on March 10, 1997, and the percentage of the 10,044,199
total shares of Common Stock outstanding on such date that such beneficial
ownership represents. For information concerning membership on
Committees of the Board of Directors, see "Other Information About the
Board and its Committees" below.
<TABLE>
NOMINEES FOR DIRECTOR
Class II
For Three-Year Term Expiring Annual Meeting 2000
<CAPTION>
Positions with the Company, Shares of Common Stock
<CAPTION>
<S> <C> <C>
Name, Age, and Principal Occupations During Beneficially Owned and
Year First At Least Past Five Years, Percent of Common
Elected Director and Other Directorships Stock Outstanding 1
Daniel K. Frierson
(55)
(1994) Mr. Frierson has been the Chief
Executive Officer of Dixie Yarns,
Incorporated, a public company
in the textile manufacturing
business, since 1979 and has
served as Chairman of the Board
of such company since 1987.
Mr. Frierson also serves as a
director on the board of SunTrust
Bank of Chattanooga, N.A.,
which was formerly American
National Bank. 1,500
E. D. Sloan, Jr.
(67)
(1978) Mr. Sloan is Chairman of the
Board of Nolas Trading Company,
Inc., a privately owned
investment concern, and served
from 1984 through 1987 as the
Chairman of the Board of Sloan
Construction Co., Inc. 251,000 2
2.50%
George C. Dillon
(74)
(1986) Mr. Dillon has served as a
director of the Company
since 1986. While currently
retired, Mr. Dillon formerly
served as a director of the
Phelps Dodge Corporation,
Newhall Land & Farming Company,
and Butler Manufacturing Co. 3,100 3
Robert G. Stafford
(58)
(1988) Mr. Stafford has served as
President of Telsmith, Inc.,
a subsidiary of the Company,
since April 1991 and as a
director of the Company since 1988. 125,514 4
1.23%
Class I
For Two-Year Term Expiring Annual Meeting 1999
Robert Dressler
(71)
(Nominated in 1997) Mr. Dressler has served as a
Managing Director since December,
1996 and previously served as a
Senior Vice President in the
Corporate Finance Department of
Raymond James and Associates, Inc.
since 1987. Mr. Dressler also
serves as a director of
Crown Andersen, Inc. -
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
Class III
Term Expiring Annual Meeting 1998
J. Don Brock
(58)
(1972) Dr. Brock has been President
of the Company since its
incorporation in 1972 and
assumed the additional position
of Chairman of the Board in
1975. He earned his Ph.D.
degree in mechanical engineering
from the Georgia Institute of
Technology. 1,341,000 5
13.14%
Albert E. Guth
(57)
(1972) Mr. Guth has served as the
President of Astec Financial
Services, Inc., a subsidiary of
the Company since June 1996.
Previously he served as
Chief Financial Officer of
the Company since 1987,
Senior Vice President of the
Company since 1984
and Secretary of the Company
since 1972. 50,000 6
W. Norman Smith
(57)
(1982) Mr. Smith has served as the
President of Astec, Inc., a
subsidiary of the Company,
since its formation in January
1995. Previously, he served
as the President of Heatec,
Inc., a subsidiary of the
Company, since 1977. 195,970 7
1.94%
William B. Sansom
(55)
(1995) Mr. Sansom has served as the
Chairman and Chief Executive
Officer of H.T. Hackney Co., a
diversified wholesale grocery,
gas and oil, and furniture
manufacturing company, since 1983.
Formerly, Mr. Sansom served as the
Tennessee Commissioner of
Transportation from 1979 to
1981, and as Tennessee
Commissioner of Finance
and Administration from 1981
to 1983. Mr. Sansom also serves
as a director on the boards of
Martin Marietta Materials and
First Tennessee National Corporation. 1,000
MEMBERS OF BOARD OF DIRECTORS
CONTINUING IN OFFICE
Class I
Term Expiring Annual Meeting 1999
G. W. Jones
(70)
(1993) Mr. Jones has served as a director
of the Company since 1993. While
currently retired, Mr. Jones served
as President of APAC, Inc.,
a subsidiary of Ashland Oil, Inc.,
and as Senior Vice President of
Ashland Oil, Inc., from 1969 to 1992. 2,000
Ronald W. Dunmire
(59)
Mr. Dunmire served as President and
Chief Executive Officer of Cedarapids,
Inc., a manufacturer of rock
crushing and road building equipment
and a subsidiary of Raytheon Company,
from 1983 until 1993.
Mr. Dunmire is currently retired. 1,000
</TABLE>
1 The amounts of the Company's Common Stock beneficially owned are
reported on the basis of regulations of the Securities and Exchange
Commission governing the determination of beneficial ownership of
securities. The beneficial owner has both voting and dispositive power over
the shares of Common Stock, unless otherwise indicated. As indicated,
certain of the shares included are beneficially owned by the holders by virtue
of their ownership of options to purchase Common Stock under the 1986
Stock Option Plan or the 1992 Stock Option Plan and such shares issuable
upon currently exercisable options have been taken into account in
determining the percent of Common Stock owned. Unless indicated in the
table, the number of shares included in the table as beneficially owned by a
director or nominee does not exceed one percent of the Common Stock of
the Company outstanding on March 10, 1997.
2 Includes 100,000 shares held of record by Nolas Trading Company, Inc., a
corporation of which Mr. Sloan owns all of the issued and outstanding shares
of common stock, and 150,000 shares held of record by Mr. Sloan's
individual retirement account.
3 Includes 2,000 shares held of record by Mr. Dillon's individual retirement
account.
4 Includes 30,000 shares subject to options under the Company's 1986 Stock
Option Plan, 90,000 shares subject to options under the Company's 1992
Stock Option Plan, and 1,764 shares held in the Company's 401(k) Plan.
5 Does not include 148,584 shares held beneficially by Edna F. Brock, Dr.
Brock's mother, over which shares he has no voting or dispositive power.
Does include 40,000 shares subject to options under the Company's 1986
Stock Option Plan and 120,000 shares subject to options under the
Company's 1992 Stock Option Plan.
6 Includes 25,000 shares subject to options under the Company's 1992 Stock
Option Plan.
7 Includes 10,000 shares subject to options under the Company's 1986 Stock
Option Plan, 56,000 shares subject to options under the Company's 1992
Stock Option Plan, and 6,400 shares owned by Mr. Smith's children.
Other Information about the Board and its Committees
Meetings. During 1996, the Board of Directors held seven meetings,
and the Board's Committees held the meetings described below. Except for
Messrs. Sloan and Frierson, each incumbent director attended at least 75% of
the aggregate of: (1) the total number of meetings of the Board of Directors
held during the period for which he has been a director; and (2) the total
number of meetings held by all committees of the Board on which he served
during the periods that he served.
Committees. The Company's Board of Directors has an Executive
Committee, an Audit Committee, a Compensation Committee, and a
Technical Committee. The Company does not have a nominating committee.
The full Board of Directors performs the function which would be performed
by a nominating committee. Certain information regarding the Board's
Committees is set forth below.
Executive Committee. The Executive Committee is authorized to act on
behalf of the Board of Directors on matters that may arise between regular
meetings of the Board upon which the Board of Directors would be
authorized to act. The current members of the Executive Committee are
Dr. Brock (Chairman) and Messrs. Smith and Guth. The Executive
Committee met once during 1996.
Audit Committee. The Audit Committee annually reviews and
recommends to the Board the firm to be engaged as independent auditors for
the next fiscal year, reviews with the independent auditors the plan and
results of the auditing engagement, reviews the scope and results of the
Company's procedures for internal auditing, and inquires as to the adequacy
of the Company's internal accounting controls. The current members of the
Audit Committee are Messrs. Dillon (Chairman), Sloan, Jones, Frierson, Sansom
and Dunmire. During 1996, the Audit Committee held four meetings.
Compensation Committee. The Compensation Committee is authorized
to consider and recommend to the full Board the executive compensation
policies of the Company and to administer both of the Company's stock
option plans. The current members of the Compensation Committee are
Messrs. Sloan (Chairman), Dillon, Dunmire, Jones, Frierson and Sansom, and
during 1996, the Compensation Committee held one meeting.
Technical Committee. The Technical Committee met once in 1996 to
review the Company's product lines and to consider new areas of technical
design. The current members of the Technical Committee are Dr. Brock
(Chairman) and Messrs. Stafford, Smith and Dunmire.
Transactions With Management
On March 18, 1996, Dr. J. Don Brock, Chairman of the Board and
President of the Company loaned $1,178,000 to the Company to supplement
its working capital revolving credit facility. The Company executed a
demand note payable to Dr. Brock in connection with this loan bearing
interest at a rate equal to that paid to The First National Bank of Chicago
under the Company's unsecured revolving line of credit. At the time Dr.
Brock loaned these funds to the Company, the Company's outstanding
balance under its $22,000,000 revolving credit facility was $9,605,000. The
Company was able to use the proceeds of the loan from Dr. Brock to reduce
the amount outstanding under the credit facility. As of December 31, 1996,
interest of $73,135 had been accrued with respect to this loan. The principal
and all accrued interest was repaid to Dr. Brock on January 6, 1997.
Common Stock Ownership of Management
Based on available information, the Company believes that its directors
and executive officers as a group beneficially owned the following number of
shares of Common Stock as of March 10, 1997:
Title of Class Shares Beneficially Owned 1 Percent of Class
Common Stock,
$.20 Par Value 2,109,799 20.04%
1 The foregoing table includes 482,000 shares which the directors and
executive officers have the right to acquire pursuant to currently exercisable
options under the Company's stock option plans. Such shares issuable upon
exercise of all currently exercisable options are assumed to be outstanding for
purposes of determining the percent of shares owned by the group.
Common Stock Ownership of Certain Beneficial Owners
The following table sets forth information as of the dates indicated with
respect to the only persons who are known by the Company to be the
beneficial owners of more than 5% of the outstanding shares of the
Company's Common Stock.
<TABLE>
<S>
Name and Address of Amount and Nature of
Beneficial Owner Date Beneficial Ownership Percent of Class 1
<CAPTION>
J. Don Brock
Astec Industries, Inc.
4101 Jerome Avenue
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chattanooga, Tennessee 37407 March 10, 1997 1,341,000 2 13.14%
Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, Wisconsin 53202 March 10, 1997 1,755,200 3 17.47%
Overseas Lending Corporation
c/o Enpro International N.V.
345 Avenue of the Americas
New York, New York 10105 March 10, 1997 554,000 5.52%
Lynne W. Brock
6723 Hickory Manor Circle
Chattanooga, Tennessee 37421 March 10, 1997 999,000 9.95%
</TABLE>
1 The amounts of the Company's Common Stock beneficially owned are
reported on the basis of regulations of the Securities and Exchange
Commission governing the determination of beneficial ownership of
securities. The beneficial owner has both voting and dispositive power over
the shares of Common Stock, unless otherwise indicated.
2 Includes 40,000 shares subject to options under the 1986 Stock Option
Plan and 120,000 shares subject to options under the 1992 Stock Option
Plan. The shares of Common Stock issuable upon exercise of such options
held by Dr. Brock are assumed to be outstanding for purposes of determining
percent of shares owned by Dr. Brock. Does not include 148,584 shares held
beneficially by Edna F. Brock, Dr. Brock's mother, over which shares he has
no voting or dispositive power.
3 Based on information previously provided by such investor to the
Company, Heartland Advisors, Inc. is an investment advisor with voting and
dispositive power over 1,479,700 shares and sole dispositive but no voting
power over 275,500 shares.
Executive Compensation
The following table presents certain summary information
concerning compensation paid or accrued by the Company for services
rendered in all capacities during the fiscal years ended December 31, 1994,
1995 and 1996 for (i) the President of the Company, and (ii) each of the four
other most highly compensated executive officers of the Company
(determined as of the end of the last fiscal year) whose total annual salary
and bonus exceeded $100,000 (collectively, the "Named Executive Officers").
Summary Compensation Table
<TABLE>
Annual Long/Term
Compensation Compensation
Name and Securities Underlying All Other
<S> <C> <C> <C> <S> <C> <S> <C> <S> <C> <S> <C>
Principal Position Year Salary ($) Bonus ($) Options (# of shares) Compensation ($)1
J. Don Brock 1996 $240,000 $50,000 80,000 $75,171
Chairman of the Board 1995 232,000 50,000 20,000 78,832
and President 1994 225,000 120,000 20,000 15,109
Robert G. Stafford 1996 154,000 77,000 50,000 23,331
President of Telsmith,
Inc. 1995 147,885 54,760 5,000 21,392
1994 141,865 30,530 15,000 3,421
Albert E. Guth 1996 140,000 20,000 10,000 18,038
President of Astec
Financial Services, Inc. 1995 135,000 25,000 5,000 21,770
1994 130,000 45,000 10,000 4,170
W. Norman Smith 1996 154,000 30,800 30,000 27,083
President of Astec, Inc. 1995 140,000 70,000 10,000 22,511
1994 115,877 48,160 8,000 7,671
James G. May 1996 100,000 50,000 23,000 17,451
President of Heatec, Inc.1995 90,000 45,000 5,000 12,538
1994 78,800 12,839 - 2,213
</TABLE>
1 The compensation reported under All Other Compensation represents (a)
contributions to the Company's 401(k) Plan on behalf of the Named
Executive Officers to match 1996 pre-tax elective contributions (included
under salary and bonus) made by each Named Executive Officer to such plan;
(b) contributions to the Company's Supplemental Executive Retirement Plan
on behalf of the Named Executive Officers; (c) insurance premiums on term
life insurance policies for the benefit of each of the Named Executive
Officers; and (d) a payment to Dr. Brock for all accrued but unused vacation
time through December 31, 1996. Company contributions under the 401(k)
Plan for the 1996 fiscal year were as follows: $4,750 to Dr. Brock; $3,000 to
Mr. Stafford; $3,300 to Mr. Guth; $4,750 to Mr. Smith; and $2,900 to Mr.
May. For the 1996 fiscal year, Company contributions under the
Supplemental Executive Retirement Plan were: $30,904 to Dr. Brock;
$19,888 to Mr. Stafford; $13,968 to Mr. Guth; $21,472 to Mr. Smith; and
$13,968 to Mr. May. The amount of insurance premium paid for the benefit
of each of the Named Executive Officers for the 1996 fiscal year was:
$29,517 for Dr. Brock; $623 for Mr. Stafford; $770 for Mr. Guth; $861 for
Mr. Smith; and $583 for Mr. May. The Named Executive Officers have no
interest in the cash surrender value of the term life insurance policies. The
Company paid Dr. Brock $47,139 for all accrued but unused vacation time
through December 31, 1996, $10,000 of which was for unused vacation time
accrued during 1996.
Option Grants in Last Fiscal Year
The following table provides details regarding stock options granted
to the Named Executive Officers in 1996. In addition, the hypothetical gains
or "option spreads" that would exist for the respective options are reflected.
These gains are based on assumed rates of annual compound price
appreciation of 5% and 10% from the date the options were granted over the
full option term.
Individual Option Grants
<TABLE>
Potential Realizable
Name Securities % of Total Value at Assumed Annual
Underlying Options Granted Exercise Rates of Stock Price
Options to Employees in or Base Expiration Appreciation for
Granted (#)1 Fiscal Year (%) Price ($/Sh) 2 Date Option Term ($)
5% 10%
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
J. Don Brock 3 20,000 8.0% 11.83 4/15/06 $ 65,367 $144,446
60,000 24.0% 10.45 12/11/06 173,228 382,789
Robert G. Stafford 10,000 4.0% 10.75 4/15/06 67,604 171,326
40,000 16.0% 9.50 12/11/06 238,978 605,621
Albert E. Guth 5,000 2.0% 10.75 4/15/06 33,802 85,663
5,000 2.0% 9.50 12/11/06 29,871 75,702
W. Norman Smith 10,000 4.0% 10.75 4/15/06 67,604 171,326
20,000 8.0% 9.50 12/11/06 119,489 302,810
James G. May 8,000 3.2% 10.75 4/15/06 54,084 137,061
15,000 6.0% 9.50 12/11/06 89,616 227,107
</TABLE>
1 All of the options were granted under the Astec Industries, Inc. 1992 Stock
Option Plan (the "Plan") and are currently exercisable. If the Company is a
party to any reorganization under which the Company will not remain in
existence or substantially all of its Common Stock will be purchased by a
single purchaser or group of purchasers acting together, the Compensation
Committee of the Board of Directors (the "Committee") may, in its
discretion, (i) declare all options outstanding under the Plan exercisable
immediately and terminate any options not so exercised within a time period
specified by the Committee; (ii) adjust the outstanding options as appropriate
so that they apply to the securities of the corporation resulting from such
reorganization; or (iii) take some combination of (i) and (ii). If the
Committee believes an event is likely to lead to a change in control of stock
ownership of the Company, whether or not any such change in control
actually occurs, the Committee may declare all options granted under the Plan
immediately exercisable.
2 The exercise price may be paid by delivery of already-owned shares and tax
withholding obligations related to exercise may be paid by offset of the
underlying shares, subject to certain conditions.
3 As a ten percent or greater stockholder of the Company, as required by the
Plan, the incentive stock options to Dr. Brock were granted for a five-year
term with an exercise price equal to 110% of the market value of the
Common Stock on the date of grant.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table shows stock option exercises by the Named
Executive Officers during 1996, including the aggregate value of gains on the
date of exercise. In addition, this table includes the number of shares
underlying both exercisable and non-exercisable stock options as of
December 31, 1996. Also reported are the values for "in-the-money" options
which represent the positive spread between the exercise price of any such
existing stock options and the year-end price of the Company's Common Stock.
<TABLE>
Number of Securities
Underlying Value of Unexercised
Shares Unexercised Options In-the-money Options
Acquired on Value at Fiscal Year-End (#) at Fiscal Year-End ($)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
J. Don Brock - - 160,000 - $325,000 -
Robert G. Stafford - - 127,000 - 402,525 -
Albert E. Guth - - 25,000 - - -
W. Norman Smith - - 66,000 - 131,250 -
James G. May - - 28,000 - - -
</TABLE>
Pension Plan. The Company formerly operated a defined benefit plan
for the Barber-Greene shop, Barber-Greene office and Telsmith office
employees. In December 1995, all assets in this plan were finally distributed
to Transamerica, Inc. for the establishment of annuities for the benefit of its
participants. At the time of this distribution, Mr. Stafford had nine and one-
third years of credit under the plan and has an estimated annual benefit
payable upon retirement of $8,385.
Compensation of Directors. The Company's current policy regarding the
compensation of directors is to pay directors who are not full-time employees
of the Company a fee of $6,000 per year for services as a director, plus
$1,000 for each Board meeting attended. Further, directors are paid $500
per Committee meeting attended or $300 if the Committee meeting occurs on
the day of a Board meeting. The Company also reimburses the directors for
travel and other out-of-pocket expenses incurred in connection with their
duties as directors. Directors who are full-time employees of the Company
receive no additional compensation for services as directors.
Compensation Committee Interlocks and Insider Participation. The
current members of the Company's Compensation Committee are Messrs.
Sloan (Chairman), Dillon, Dunmire, Jones, Frierson and Sansom, none of
which served as an officer or employee of the Company during the 1996 fiscal
year. There are no "interlocks," as defined by the Securities and Exchange
Commission, with respect to any member of the Compensation Committee.
Five-Year Shareholder Return Comparison. The following line-graph
presentation compares cumulative, five-year shareholder returns of the
Company with the Nasdaq Stock Market (US Companies) and an industry
group composed of manufacturers of industrial and commercial machinery
and computer equipment over the same period (assuming the investment of
$100 in the Company's Common Stock , the Nasdaq Stock Market (US
Companies) and the industry group on December 31, 1990, and reinvestment
of all dividends).
Year-End Cumulative Returns
1991 1992 1993 1994 1995 1996
Astec Industries, Inc. 100.0 311.5 473.1 392.3 303.8 292.3
Nasdaq Stock Market 100.0 116.4 133.6 130.6 184.7 227.2
Peer Index 100.0 130.8 134.7 149.4 229.9 300.4
Legend
Symbol Index Description
Astec Industries, Inc.
Nasdaq Stock Market (US companies)
Peer Index (Standard Industrial Classification Code Group 35)
Total return calculations for the Nasdaq Stock Market (US Companies)
and the Peer Index were prepared by the Center for Research in Security
Prices, The University of Chicago. The Peer Index is composed of the
approximately 465 companies, including the Company, in the Standard
Industrial Classification ("SIC") Code Group 35 - industrial and commercial
machinery and computer equipment. Information with regard to SIC
classifications in general can be found in the Standard Industrial
Classification Manual published by the Executive Office of the President,
Office of Management and Budget. Specific information regarding the companies
comprising the Peer Index, SIC Code Group 35, will be provided to any
shareholder upon request to the Secretary of the Company.
Compensation Committee Report on Executive Compensation.
The Compensation Committee of the Board of Directors has furnished
the following report on executive compensation:
Overview and Philosophy
The Compensation Committee of the Board of Directors (the
"Compensation Committee") is composed entirely of outside directors and is
responsible for making recommendations to the Board with respect to the
Company's executive compensation policies. In addition, the Compensation
Committee, pursuant to authority delegated by the Board, recommends the
compensation to be paid to the Company's executive officers.
The objectives of the Company's executive compensation program are to:
- Approve compensation policies and guidelines that will attract and
retain qualified personnel and reward performance.
- Encourage the achievement of Company performance by utilizing a
performance rated bonus plan.
The executive compensation program provides an overall level of
compensation opportunity that is competitive within the construction
equipment manufacturing industry, as well as with a broader group of
companies of comparable size and complexity. Actual compensation levels
may be greater or less than average competitive levels in similar companies
based upon annual and long-term Company performance as well as individual
performance. The Compensation Committee will use its discretion to
recommend executive compensation where in its judgment external, internal
or an individual's circumstances so warrant.
Executive Officer Compensation Program
The Company's executive officer compensation program is comprised of
base salary, annual cash performance rating bonus plan compensation, long-
term incentive compensation in the form of stock options and various
benefits, including medical and 401(k) plans generally available to all
employees of the Company. The Company does not have a policy that
requires or encourages the Board of Directors to limit executive
compensation to that deductible under Section 162(m) of the Internal
Revenue Code. The Board of Directors will consider various alternatives for
preserving the deductibility of compensation payments and benefits to the
extent necessary and to the extent consistent with its other compensation
objectives.
Base Salary
Base salary for the Company's executive officers is determined by the
Compensation Committee based on the individual's education, experience and
performance. The Compensation Committee periodically reviews each
executive officer's compensation.
Annual Cash Incentive Compensation
The Performance Rating Management Bonus Plan is the Company's
annual incentive program for executive officers and key managers of the
Company's subsidiaries, and all non-union employees. The purpose of the
plan is to provide direct financial incentive in the form of an annual cash
bonus to those who achieve their business units' annual goals. Budgeted
goals for the Company and each business unit are set at the beginning of each
fiscal year. In 1988, the following measures of Company performance were
selected: return on capital employed, cash flow on capital employed, growth,
and safety. Each year the relative values of these measures are adjusted based
on the circumstances and goals defined. Individual performance may also be
taken into account in determining bonuses, but no bonus is paid unless the
above criteria have been achieved. A performance score which is weighted
two-thirds for the current year and one-third for the prior year is applied to
ten percent of earnings by division after consideration of income taxes. The
performance rating earned may vary from 5% to 100% of the 10%.
Stock Option
The stock option program is the Company's long-term incentive plan for
executive officers and key managers. The objectives of the program are to
relate executive and shareholder long-term interests by creating a strong and
direct link between executive pay and shareholder return, and to enable
executives to develop and maintain a long-term stock position in the
Company's Common Stock. The Company's stock option plans authorize the
Compensation Committee to award key personnel stock options and stock
appreciation rights. Awards are granted at the discretion of the
Compensation Committee based on Company performance, individual
performance and the employee's position with the Company.
Benefits
The Company provides medical and 401(k) benefits to the executive
officers that are generally available to Company employees. The amount of
prerequisites, as determined in accordance with the rules of the Securities and
Exchange Commission relating to executive compensation, did not exceed
10% of salary for fiscal 1996 and are very minimal.
Chief Executive Officer Compensation
Dr. Brock has served as President of the Company since he founded it in
1972. His base salary in 1996 was $240,000, a level believed to be
competitive with that of other similarly situated companies in the construction
equipment industry.
Dr. Brock's bonus in fiscal 1996 was $50,000. This bonus was based on
the subjective determination of the Compensation Committee in recognition
of Dr. Brock's contribution to the Company in 1996. On April 16, 1996, the
Compensation Committee granted Dr. Brock an option to acquire 20,000
shares of Company stock under the Company's 1992 Stock Option Plan. On
December 12, 1996, the Compensation Committee also granted Dr. Brock an
option to acquire 60,000 shares of Company stock under the Company's 1992
Stock Option Plan. The Compensation Committee believes Dr. Brock has
continued to manage the Company well in a challenging business climate.
COMPENSATION COMMITTEE
E. D. Sloan, Jr., Chairman
George C. Dillon
Ronald W. Dunmire
Daniel K. Frierson
G. W. Jones
William B. Sansom
Section 16(a) Filing Requirements
Based solely on a review of the copies of the Forms 3, 4 and 5 received
by it, or written representations from certain reporting persons that no Forms
5 were required to be filed, the Company believes that during 1996 all filing
requirements applicable to its officers, directors, and greater than ten-
percent beneficial owners were satisfied, except that Mr. Roger Sandberg failed
to file a Form 3 to report becoming an executive officer of the Company. This
deficiency was corrected on a Form 5 filed by Mr. Sandberg on March 3, 1997.
AUDITORS
Ernst & Young served as the Company's auditors for the year ended
December 31, 1996, and that firm of independent accountants is serving as
auditors for the Company for the current calendar year. Representatives of
Ernst & Young are expected to be present at the Annual Meeting and will
have an opportunity to make a statement if they so desire and will be available
to respond to appropriate questions.
The reports of Ernst & Young on the financial statements of the
Company for the three most recent fiscal years contained no adverse opinion
or disclaimer of opinion and were not qualified or modified as to audit scope
or accounting principles.
SOLICITATION OF PROXIES
The cost of soliciting proxy appointments will be borne by the Company.
In addition to solicitation by mail, officers of the Company may solicit proxy
appointments by personal interview, and by telephone and telegraph, and may
request brokers holding stock in their names, or the names of nominees, to
forward proxy soliciting material to the beneficial owners of such stock and
will reimburse such brokers for their reasonable expenses.
OTHER MATTERS
Management does not know of any other matters to be brought before
the meeting other than those referred to above. If any matters which are not
specifically set forth in the form of proxy appointment and this proxy
statement properly come before the meeting, the persons appointed as proxies
will vote thereon in accordance with their best judgment.
Whether or not you expect to be present at the meeting in person, please
vote, sign, date, and return promptly the enclosed proxy appointment card in
the enclosed envelope. No postage is necessary if the proxy appointment
card is mailed in the United States.
SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company intended to be presented for
consideration at the 1998 Annual Meeting of Shareholders of the Company
must be received by the Company at its principal executive offices on or
before November 25, 1997 in order to be included in the Company's Proxy
Statement and Form of Proxy Appointment relating to the 1998 Annual
Meeting of Shareholders.
