<PAGE> 1
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-11(c) or Rule 14a-12
</TABLE>
ASTEC INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(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:
(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 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[ASTEC LOGO]
ASTEC INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1999
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Astec Industries, Inc., a
Tennessee corporation, will be held at the Company's executive offices, 4101
Jerome Avenue, Chattanooga, Tennessee, on April 22, 1999, at 10:00 a.m.,
Chattanooga time, for the following purposes:
1. To elect three directors in Class I to serve until the annual
meeting of shareholders in 2002, or in the case of each director until his
successor is duly elected and qualified.
2. 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 8, 1999
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
Company's offices from March 15, 1999 through the Annual Meeting.
By Order of the Board of Directors
RICHARD W. BETHEA, JR.
Secretary
Dated: March 22, 1999
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.
<PAGE> 3
ASTEC INDUSTRIES, INC.
4101 Jerome Avenue
Chattanooga, Tennessee 37407
(423) 867-4210
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1999
The enclosed proxy appointment is solicited by and on behalf of the
Board of Directors of Astec Industries, Inc. for use at its Annual Meeting of
Shareholders to be held on April 22, 1999, 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 22, 1999. The Company's Annual Report to Shareholders for the
fiscal year ended December 31, 1998, 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 8, 1999 (the "Record Date") will be entitled to notice of, and
to vote at, the Annual Meeting. As of the Record Date there were 19,014,380
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.
1. 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 I expire with this Annual Meeting. The directors of Class II
and Class III will continue in office until the 2000 and 2001 annual meetings of
shareholders, respectively. At the present time there are three 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 three directors 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 three Class I nominees 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 I director will be elected to hold office until the 2002 annual meeting of
shareholders and thereafter until his successor has been elected and qualified.
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 PLURALITY 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 EACH OF THE NOMINEES. WITHHOLDING AUTHORITY TO VOTE WITH
RESPECT TO ANY ONE OR MORE NOMINEES WILL CONSTITUTE A VOTE AGAINST SUCH
NOMINEE(S).
-2-
<PAGE> 4
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 positions 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 8, 1999, and the
percentage of the 19,014,380 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.
NOMINEES FOR DIRECTOR
CLASS I
FOR THREE-YEAR TERM EXPIRING ANNUAL MEETING 2002
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, SHARES OF COMMON STOCK
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)
---------------- ---------------------------- ----------------------
<S> <C> <C>
William D. Gehl Mr. Gehl is Chairman of the Board, President, and Chief 0
(52) Executive Officer of Gehl Company, a manufacturer of
-- agricultural and industrial construction equipment.
Prior to joining Gehl Company in 1992 as President and
Chief Executive Office, Mr. Gehl served as Executive
Vice President and Chief Operating Officer of The
Ziegler Companies, Inc., a financial services holding
company.
Ronald W. Dunmire Mr. Dunmire served as President and Chief Executive 2,000
(61) Officer of Cedarapids, Inc., a manufacturer of rock
(1996) crushing and road building equipment and a subsidiary of
Raytheon Company, from 1983 until 1993. Mr. Dunmire is
currently retired.
Robert Dressler Mr. Dressler has served as a Managing Director since 2,000
(73) December, 1996 and previously served as a Senior Vice
(1997) President in the Corporate Finance Department of Raymond
James and Associates, Inc. since 1987. Mr. Dressler
also serves as director of Crown Andersen, Inc.
</TABLE>
-3-
<PAGE> 5
MEMBERS OF BOARD OF DIRECTORS
CONTINUING IN OFFICE
CLASS II
TERM EXPIRING ANNUAL MEETING 2000
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, SHARES OF COMMON STOCK
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)
------------------- -------------------------------- ------------------------
<S> <C> <C>
Daniel K. Frierson Mr. Frierson has been the Chief Executive Officer of 3,000
(57) The Dixie Group, Inc., a public company in the
(1994) 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 boards of Printpack, Inc. and SunTrust Bank
of Chattanooga, N.A., which was formerly American
National Bank.
E. D. Sloan, Jr. Mr. Sloan is Chairman of the Board of Nolas Trading 202,000(2)
(69) Company, Inc., which until 1987 was named Sloan 1.06%
(1978) Construction Co., Inc.
George C. Dillon Mr. Dillon has served as a director of the Company 4,048(3)
(76) since 1986. While currently retired, Mr. Dillon
(1986) formerly served as a director of the Phelps Dodge
Corporation, Newhall Land & Farming Company, and
Butler Manufacturing Co.
Robert G. Stafford Mr. Stafford was appointed Group Vice President - 1,665(4)
(60) Aggregate in December 1998 and served as President
(1988) of Telsmith, Inc., a subsidiary of the Company from
April 1991 to December 1998.
</TABLE>
-4-
<PAGE> 6
CLASS III
TERM EXPIRING ANNUAL MEETING 2001
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, SHARES OF COMMON STOCK
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)
---------------- ----------------------------- ------------------------
<S> <C> <C>
J. Don Brock Dr. Brock has been President of the Company since its 2,536,621(5)
(60) incorporation in 1972 and assumed the additional 13.23%
(1972) position of Chairman of the Board in 1975. He earned
his Ph.D. degree in mechanical engineering from the
Georgia Institute of Technology. Dr. Brock also serves
as a director on the board of The Dixie Group, Inc., a
public company in the textile manufacturing business.
Albert E. Guth Mr. Guth has served as the President of Astec Financial 81,174(6)
(59) Services, Inc., a subsidiary of the Company since June
(1972) 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.
W. Norman Smith Mr. Smith was appointed Group Vice President - Asphalt 364,442(7)
(59) in December 1998 and has served as the President of 1.91%
(1982) 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.
William B. Sansom Mr. Sansom has served as the Chairman and Chief 2,000
(57) Executive Officer of H.T. Hackney Co., a diversified
(1995) 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.
</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 8, 1999. All share amounts reflect a two-for-one
stock split of the Common Stock effective January 18, 1999.
-5-
<PAGE> 7
(2) Includes 200,000 shares held of record by Mr. Sloan's Individual
Retirement Account.
(3) Includes 4,000 shares held in Mr. Dillon's Individual Retirement
Account.
(4) Includes 1,665 shares held in the Company's Supplemental Executive
Retirement Plan.
(5) Does not include 293,508 shares held by Edna F. Brock, Dr. Brock's
mother, over which shares he has no voting or dispositive power. Does
include 160,000 shares subject to options under the Company's 1992
Stock Option Plan and 2,501 shares held in the Company's Supplemental
Executive Retirement Plan.
(6) Includes 50,000 shares subject to options under the Company's 1992
Stock Option Plan and 1,174 shares held in the Company's Supplemental
Executive Retirement Plan.
(7) Includes 112,000 shares subject to options under the Company's 1992
Stock Option Plan and 1,302 shares held in the Company's Supplemental
Executive Retirement Plan.
OTHER INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
Meetings. During 1998, the Board of Directors held six meetings, and
the Board's Committees held the meetings described below. 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. During 1998, the Company's Board of Directors had an
Executive Committee, an Audit Committee, a Compensation Committee, a Nominating
Committee and a Technical 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. During 1998, the members of the Executive Committee were Dr. Brock
(Chairman) and Messrs. Smith, Frierson and Guth. The Executive Committee met
three times during 1998. The current members of the Executive Committee are Dr.
Brock (Chairman) and Messrs. Smith, Frierson and Guth.
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. In 1998, the members of the Audit Committee were Messrs.
Dillon (Chairman), Sansom and Dunmire. During 1998, the Audit Committee held
three meetings. The current members of the Audit Committee are Messrs. Dillon
(Chairman), Sansom and Dunmire.
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 the Company's stock option plans. In 1998, the
members of the Compensation Committee were Messrs. Frierson (Chairman), Sloan,
and Dunmire, and Jones (whose term as director expires with this Annual Meeting
and is not being considered for re-election), and during 1998, the Compensation
Committee held two meetings. The current members of the Compensation Committee
are Messrs. Frierson (Chairman), Jones, Sloan, and Dunmire.
Nominating Committee. The Nominating Committee is authorized to
recommend candidates for election. During 1998, the members of the Nominating
Committee were Messrs. Sansom (Chairman), Frierson and Dressler. The Nominating
Committee met once in 1998. The current members of the nominating committee are
Messrs. Sansom (Chairman), Frierson and Dressler.
Technical Committee. The Technical Committee met two times in 1998 to
review the Company's product lines and to consider new areas of technical
design. In 1998, the members of the Technical Committee were
-6-
<PAGE> 8
Dr. Brock (Chairman) and Messrs. Stafford, Smith, Dressler and Dunmire. The
current members of the Technical Committee are Dr. Brock (Chairman), and Messrs.
Smith, Stafford, Dunmire and Dressler.
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 8, 1999:
<TABLE>
<CAPTION>
Title of Class Shares Beneficially Owned(1) Percent of Class
-------------- ---------------------------- ----------------
<S> <C> <C>
Common Stock, $.20 Par Value 3,296,950 16.77%
</TABLE>
- -------------------
(1) The foregoing table includes 645,000 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. The
share amount reflects a two-for-one stock split of the Common Stock effective
January 18, 1999.
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>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER DATE BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
- ------------------- ------------- --------------------- ----------------
<S> <C> <C> <C>
J. Don Brock March 8, 1999 2,536,621(2) 13.23%
Astec Industries, Inc.
4101 Jerome Avenue
Chattanooga, Tennessee 37407
Dimensional Fund Advisors, Inc. March 8, 1999 1,012,800(3) 5.33%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Lynne W. Brock March 8, 1999 1,725,828 9.08%
6454 Howard Adair Road
Chattanooga, Tennessee 37416
</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. All share amounts reflect a two-for-one stock split of the
Common Stock effective January 18, 1999.
(2) Includes 160,000 shares subject to options under the 1992 Stock Option Plan
and 2,501 shares held in the Company's Supplemental Executive Retirement 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
-7-
<PAGE> 9
Dr. Brock. Does not include 293,508 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.
Dimensional Fund Advisors, Inc. is an investment advisor with voting and
dispositive power over 612,800 shares and sole voting but no dispositive power
over 400,000 shares. Dimensional Fund Advisors, Inc. disclaims beneficial
ownership of all 1,012,800 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, 1996, 1997 and 1998 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 $100,000
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------------- ----------------------
Name and Securities Underlying All Other
Principal Position Year Salary ($) Bonus ($) Options (# of shares) Compensation($)(1)
- -------------------------------------- ------------ ----------- -------------- ----------------------- ------------------
<S> <C> <C> <C> <C> <C>
J. Don Brock 1998 $300,000 $160,000 60,000 $50,659
Chairman of the Board 1997 247,000 125,000 -- 65,466
and President 1996 240,000 50,000 80,000 75,171
Robert G. Stafford 1998 $165,000 $ 82,500 60,000 $32,494
Group Vice President - Aggregate 1997 159,000 74,240 -- 26,971
1996 147,885 54,760 50,000 21,392
W. Norman Smith 1998 $165,000 $ 82,500 60,000 $30,833
Group Vice President - Asphalt 1997 159,000 79,500 -- 22,022
and President of Astec, Inc. 1996 154,000 30,800 30,000 27,083
Richard W. Bethea, Jr. 1998 $190,000 $ 75,000 36,000 $30,593
Vice President and 1997 165,000 60,000 10,000 --
General Counsel 1996 -- -- -- --
Albert E. Guth 1998 $148,000 $ 74,000 10,000 $25,869
President of Astec Financial 1997 144,000 30,000 -- 19,927
Services, Inc. 1996 140,000 20,000 10,000 18,038
</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 1998 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; and (c) insurance premiums on health insurance policies and
term life insurance policies for the benefit of each of the Named Executive
Officers. Company contributions under the 401(k) Plan for the 1998 fiscal year
were as follows: $3,200 to Dr. Brock; $3,200 to Mr. Stafford; $3,200 to Mr.
Smith; $2,850 to Mr. Bethea; and $3,200 to Mr. Guth. For the 1998 fiscal year,
Company contributions under the Supplemental Executive Retirement Plan were:
$41,483 to Dr. Brock; $23,480 to Mr. Stafford; $23,477 to Mr. Smith; $24,535 to
Mr. Bethea; and $16,814 to Mr. Guth. The amount of insurance premium paid for
the benefit of each of the Named Executive Officers for the 1998 fiscal year
was: $5,976 for Dr. Brock; $5,814 for Mr. Stafford; $4,156 for Mr. Smith; $3,208
for Mr. Bethea; and $5,855 for Mr. Guth.
-8-
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides details regarding stock options granted
to the Named Executive Officers in 1998. In addition, the hypothetical gains or
"option spreads" that would exist for the respective options are reflected.
These gains are based on assumed rates of annual compound price appreciation of
5% and 10% from the date the options were granted over the full option term.
All amounts reflect a two-for-one stock split of the Common Stock effective
January 18, 1999.
INDIVIDUAL OPTION GRANTS
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Securities % if Total Options Price Appreciation for
Underlying Granted to Exercise Option Term ($)
Options Employees in or Base ---------------
Name Granted (#)1 Fiscal Year (%) Price ($/Sh)(2) Expiration Date 5% 10%
---- ------------ --------------- --------------- --------------- -- ---
<S> <C> <C> <C> <C> <C> <C>
J. Don Brock 60,000 9.04% $19.113 6/25/03 $183,744 $ 532,177
Robert G. Stafford 60,000 9.04% $17.375 6/25/08 $655,623 $1,661,477
W. Norman Smith 60,000 9.04% $17.375 6/25/08 $655,623 $1,661,477
Richard W. Bethea, Jr. 36,000 5.42% $17.375 6/25/08 $393,374 $ 996,886
Albert E. Guth 10,000 1.51% $17.375 6/25/08 $109,270 $ 276,913
</TABLE>
- -------------------
(1) All of the options were granted under the 1998 Long-Term Incentive Plan and
are not 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 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 Compensation 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
Compensation 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 Compensation Committee may declare all options
granted under the Plan immediately exercisable. All amounts reflect a
two-for-one stock split of the Common Stock effective January 18, 1999.
(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.
-9-
<PAGE> 11
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 1998, 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, 1998. 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. All amounts reflect a two-for-one
stock split of the Common Stock effective January 18, 1999.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares at Fiscal Year-End (#) at Fiscal Year-End ($)
Acquired on Value ------------------------------- -----------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---------- ------------ ------------ ----------- ------------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
J. Don Brock 120,000 $1,095,240 200,000 60,000 $4,415,720 $522,000
Robert G. Stafford - - 240,000 60,000 $5,793,820 $626,280
W. Norman Smith 20,000 $ 289,860 112,000 60,000 $2,543,788 $626,280
Richard W. Bethea, Jr. - - 20,000 36,000 $465,000 $375,768
Albert E. Guth - - 50,000 10,000 $1,076,260 $104,380
</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. During 1998, the Company's policy regarding
the compensation of directors was to pay directors who were not full-time
employees of the Company a fee of $8,000 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. During 1999, Outside
Directors will be paid according to the Non-Employee Directors Stock Incentive
Plan. Directors can choose to have their annual fee of $10,000 paid in either
common stock, deferred stock or stock options. All meeting fees will be paid in
cash.
Compensation Committee Interlocks and Insider Participation. In 1998,
the members of the Company's Compensation Committee were Messrs. Frierson
(Chairman), Dunmire, Jones and Sloan, none of which served as an officer or
employee of the Company during the 1998 fiscal year. The current members of the
Compensation Committee are Messrs. Frierson (Chairman), Sloan, and Dunmire.
There are no "interlocks," as defined by the SEC, with respect to any member of
the Compensation Committee.
-10-
<PAGE> 12
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 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, 1993,
and reinvestment of all dividends).
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR ASTEC INDUSTRIES, INC.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
YEAR-END CUMULATIVE RETURNS
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
ASTEC INDUSTRIES, INC. 100.0 82.9 64.2 61.8 108.9 361.8
NASDAQ STOCK MARKET 100.0 97.8 138.3 170.0 208.3 293.5
PEER INDEX 100.0 64.8 54.7 64.2 60.1 38.9
LEGEND
Symbol Index Description
------ -----------------
_____________ Astec Industries, Inc.
__ __ __ __ _ Nasdaq Stock Market (US companies)
- - - - - - - Peer Index (Standard Industrial Classification Code Group 3590-3599)
</TABLE>
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 10
companies in the Standard Industrial Classification Code Group 3590-3599
(manufacturers of
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<PAGE> 13
industrial and commercial machinery and 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 3590-3599, 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,
contributions to the Supplemental Executive Retirement Plan, 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. In 1999, based on the proposed
Executive Officer Annual Bonus Equity Election Plan, the Company's Executive
Officers will have the option to receive up to 100% of their bonus in Common
Stock or stock options. 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
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<PAGE> 14
capital employed, growth, and safety. In 1998, the growth goal was replaced by
an income before income tax goal. 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 is
applied to ten percent of earnings by subsidiary after consideration of income
taxes. The performance rating earned may vary from 5% to 100% of the 10%.
Stock Options
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 1998 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 1998 was $300,000, a level believed to be competitive
with that of other similarly situated companies in the construction equipment
industry.
Dr. Brock's bonus for fiscal 1998 was $160,000. This bonus was based on
the subjective determination of the Compensation Committee in recognition of Dr.
Brock's contribution to the Company in 1998. The Compensation Committee believes
Dr. Brock has continued to manage the Company well in a challenging business
climate.
COMPENSATION COMMITTEE
Daniel K. Frierson, Chairman
E. D. Sloan, Jr.
Ronald W. Dunmire
G. W. Jones
SECTION 16(A) FILING REQUIREMENTS
Based solely on a review of the copies of the Forms 3, 4 and 5 received
by it, the Company believes that during 1998 all filing requirements applicable
to its officers, directors, and greater than ten-percent beneficial owners were
satisfied, except that Albert E. Guth failed to timely file a Form 4 with
respect to the purchase of 20,000 shares of Common Stock in August 1998.
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<PAGE> 15
AUDITORS
Ernst & Young LLP served as the Company's auditors for the year ended
December 31, 1998, and that firm of independent accountants is serving as
auditors for the Company for the current calendar year. Representatives of Ernst
& Young LLP 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 LLP 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 costs of soliciting proxy appointments will be paid 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 2000 Annual Meeting of Shareholders of the Company must be
received by the Company at its principal executive offices on or before November
22, 1999 in order to be included in the Company's Proxy Statement and Form of
Proxy Appointment relating to the 2000 Annual Meeting of Shareholders.
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<PAGE> 16
[FORM OF PROXY APPOINTMENT-FRONT]
ASTEC INDUSTRIES, INC.
PROXY APPOINTMENT SOLICITED BY AND ON BEHALF OF
THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 22, 1999
The undersigned hereby appoints J. Don Brock and Richard W. Bethea, Jr.,
and each of them, with individual power of substitution, proxies to vote all
shares of the Common Stock of Astec Industries, Inc. (the "Company") that the
undersigned may be entitled to vote at the Annual Meeting of Shareholders of the
Company to be held in Chattanooga, Tennessee on April 22, 1999, and at any
adjournment thereof, as follows:
For participants in the Company's 401(k) Retirement Plan, as amended and
restated on March 1, 1987 ("Plan"), this card also provides voting instructions
to the Trustee under the Plan for the undersigned's allowable portion, if any,
of the total number of shares of Common Stock of the Company held by such Plan
as indicated on the reverse side hereof. These voting instructions are solicited
and will be carried out in accordance with the applicable provisions of the
Plan.
1. [ ] Authority Granted (except as indicated to the contrary below)
[ ] Authority Withheld
to vote for the election as directors of
the Company in Class I of the three
nominees set forth below to serve until
the 2002 Annual Meeting of Shareholders,
or in the case of each nominee until his
successor is duly elected and qualified,
as set forth in the accompanying Proxy
Statement:
William D. Gehl, Ronald W. Dunmire, Robert Dressler
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE(S), LIST NAME(S) BELOW.)
--------------------------------------------------
- --------------------------------------------------------------------------------
2. [ ] Authority Granted
[ ] Authority Withheld
to vote in accordance with their best
judgment upon such other matters as may
properly come before the meeting or any
adjournments thereof.
[ ] Abstain from Voting
(Continued and to be signed and dated on other side)
<PAGE> 17
[FORM OF PROXY APPOINTMENT-BACK]
THIS PROXY APPOINTMENT, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
APPOINTMENT WILL BE VOTED AFFIRMATIVELY ON PROPOSAL 1.
IMPORTANT: Please date this proxy appointment card and sign exactly as your name
or names appear(s) hereon. If the stock is held jointly, signatures should
include both names. Executors, administrators, trustees, guardians, and others
signing in a representative capacity should give full title. In order to ensure
that your shares will be represented at the Annual Meeting of Shareholders,
please vote, sign, date, and return this 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.
(SEAL)
----------------------------------------------------
Signature of Shareholder
DATED: , 1999
-----------------------------------------
(SEAL)
----------------------------------------------------
Signature of Shareholder
DATED: , 1999
-----------------------------------------
