<PAGE>
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
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BHA Group Holdings, 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
----------------------------------------------------------------------
<PAGE>
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>
BHA GROUP HOLDINGS, INC.
----------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------------
TUESDAY, FEBRUARY 22, 2000
To the Stockholders of
BHA GROUP HOLDINGS, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of BHA Group
Holdings, Inc. (the 'Company') will be held at the office of the Company, Second
(2nd) Floor, BHA Group Holdings, Inc. Corporate Headquarters, 8800 East 63rd
Street, Kansas City, Missouri 64133, on Tuesday, February 22, 2000, at 10:30
a.m., Kansas City time, for the following purposes:
1. To elect directors for the ensuing year;
2. To ratify the selection of KPMG LLP as independent auditors of the
Company for the fiscal year ending September 30, 2000; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on January 4, 2000 has been designated as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting of Stockholders or any adjournments thereof.
MANAGEMENT REQUESTS ALL STOCKHOLDERS TO SIGN AND DATE THE ENCLOSED FORM OF
PROXY AND RETURN IT IN THE POSTAGE PAID, SELF-ADDRESSED ENVELOPE PROVIDED FOR
YOUR CONVENIENCE. PLEASE DO THIS WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING OF STOCKHOLDERS. SHOULD YOU ATTEND, YOU MAY, IF YOU WISH, WITHDRAW YOUR
PROXY AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors
Stanley D. Biggs
Secretary
Kansas City, Missouri
January 14, 2000
<PAGE>
BHA GROUP HOLDINGS, INC.
----------------------------------
PROXY STATEMENT
----------------------------------
DATED JANUARY 14, 2000
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, FEBRUARY 22, 2000
This Proxy Statement is furnished by the Board of Directors (the 'Board')
of BHA Group Holdings, Inc. (the 'Company') in connection with the solicitation
of proxies to be voted at the Annual Meeting of Stockholders of the Company
which will be held at the principal executive offices of the Company, Second
(2nd) Floor, BHA Group Holdings, Inc. Corporate Headquarters, 8800 East 63rd
Street, Kansas City, Missouri 64133, on Tuesday, February 22, 2000 at 10:30
a.m., Kansas City time, and all adjournments thereof (the 'Annual Meeting'). The
close of business on January 4, 2000 has been designated as the record date (the
'Record Date') for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting.
Any proxy delivered pursuant to this solicitation may be revoked, at the
option of the person executing the proxy, at any time before it is exercised,
either by delivering a signed revocation to the Secretary of the Company at any
time prior to the Annual Meeting, or, at the Annual Meeting, by delivering a
signed revocation to the Chairman of the meeting at any time prior to the
commencement of the voting thereon. A duly executed proxy conferring different
authority than an earlier proxy of the same stockholder will constitute a
revocation of such earlier proxy.
UNLESS OTHERWISE SPECIFIED IN THE PROXY (AND EXCEPT FOR 'BROKER NON-VOTES'
DESCRIBED BELOW), STOCK REPRESENTED BY PROXIES WILL BE VOTED (i) FOR THE
ELECTION OF THE BOARD'S NOMINEES FOR DIRECTORS; (ii) FOR THE RATIFICATION OF THE
SELECTION OF KPMG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR
ENDING SEPTEMBER 30, 2000 ('FISCAL 2000'); AND (iii) IN THE DISCRETION OF THE
PROXY HOLDERS WITH RESPECT TO SUCH MATTERS AS MAY COME BEFORE THE ANNUAL
MEETING.
The cost of soliciting proxies will be borne by the Company. In addition to
the use of the mails, proxies may be solicited personally or by telephone by
some of the regular employees of the Company. The Company does not expect to pay
any compensation for the solicitation of proxies, but may reimburse brokers and
other persons holding stock in their names, or in the names of nominees, for
their expense incurred in sending proxy materials to their principals and
obtaining their proxies. On or about January 14, 2000, this Proxy Statement and
the accompanying form of proxy are to be mailed to each stockholder of record as
of the Record Date.
As of December 31, 1999, the Company had outstanding 6,545,790 shares of
the Company's $.01 par value common stock (the 'Common Stock'), the Company's
only class of voting securities outstanding. Each share of Common Stock
outstanding entitles the holder thereof to one vote. The majority of all the
outstanding shares of Common Stock constitutes a quorum at the Annual Meeting.
Shares of Common Stock represented by proxies that reflect abstentions and
'broker non-votes' (i.e. Common Stock represented at the Annual Meeting by
proxies held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have the discretionary voting power on a particular
matter) will be counted as a vote represented and voted at the Annual Meeting
for purposes of determining the number of votes required to approve a proposal.
Shares of Common Stock represented by proxies that withhold authority to vote
for a nominee for election as a director and broker non-votes will not be
counted as a vote represented and voted at the Annual Meeting for purposes of
determining the number of votes required to elect such nominee.
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
NOMINEES FOR ELECTION OF DIRECTORS
Seven directors are to be elected at the Annual Meeting, each to hold
office until the next annual meeting of stockholders and until his successor is
duly elected and qualified. In voting for directors, for each share of Common
Stock held of record, such stockholder is entitled to cast one vote either in
favor of or against each candidate, or to abstain from voting on any or all
candidates. It is intended that shares represented by the enclosed form of proxy
will be voted in favor of the election of all of the nominees named below as
directors, all of whom are now directors of the Company, unless otherwise
specified in such proxy. If any of the nominees should become unavailable for
election, the shares represented by such proxies will be voted for such
substitute nominees as may be nominated by the Board. The election of directors
requires the affirmative vote of the holders of a plurality of the shares
present or represented and entitled to vote at the Annual Meeting.
The following information is given with respect to the nominees:
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION SINCE
---- -------------------- -----
<S> <C> <C>
Lamson Rheinfrank, Jr. ... Chairman of the Board of the Company(1) 1986
James E. Lund............. Chief Executive Officer and President of the 1986
Company(2)
James J. Thome............ Chief Operating Officer and Executive Vice 1990
President of the Company(3)
Don H. Alexander.......... President and Chief Executive Officer of 1986
Alexander & Associates, Inc.(4)
Robert D. Freeland........ Chairman of the Board of Havens Steel Company(5) 1988
Thomas A. McDonnell....... President and Chief Executive Officer of DST 1993
Systems, Inc.(6)
Richard C. Green, Jr. .... Chairman and Chief Executive Officer of UtiliCorp 1995
United, Inc.(7)
</TABLE>
- ------------
(1) Mr. Rheinfrank, age 59, has been Chairman of the Board of the Company since
its inception in July 1986. He was the Chief Executive Officer and Chairman
of the Board of Directors of Standard Havens, Inc. ('Standard Havens') from
1967 until May 1989 when Standard Havens, which had been an affiliate of the
Company, was acquired by a subsidiary of Raytheon Company. Mr. Rheinfrank
also serves as the non-executive Chairman of the Board of Celotex
Corporation, a Director of Commerce Bank of Kansas City and an advisory
director of Havens Steel Company and U.S. Engineering Co.
(2) Mr. Lund, age 50, has been a Director of the Company since its inception in
July 1986. He has been President and Chief Executive Officer of the Company
since April 1993 and prior thereto, served as Executive Vice President. Mr.
Lund joined Standard Havens in 1979 as Marketing Manager of the Baghouse
Accessories Division, and served as Manager of Sales and Marketing from 1980
to 1985, at which time he assumed the position of Vice President and General
Manager of the Baghouse Accessories Division of Standard Havens.
(3) Mr. Thome, age 44, has been Chief Operating Officer of the Company since May
1997 and Executive Vice President of the Company since April 1993. He has
been a Director of the Company since February 1990. He joined the Company in
1986 as National Sales Manager and became Vice President of the Company in
November 1988. Prior to his employment with the Company, Mr. Thome served in
various positions with Standard Havens from 1979 to 1986.
(4) Mr. Alexander, age 61, has been a Director of the Company since its
inception in July 1986. Mr. Alexander is President and Chief Executive
Officer of Alexander & Associates, Inc., a private investment group;
Chairman of EMCO Specialty Products, Inc, a manufacturing company of hat and
(footnotes continued on next page)
2
<PAGE>
(footnotes continued from previous page)
coat racks; Chairman of Huebert Fiberboard Company of Booneville, MO, a
manufacturing company of fiberboard; Chairman of Tulsa Power LLC, a
Tulsa-based manufacturer of machinery for the wire and cable industry; and a
Director of the Bank of Blue Valley, a commercial banking company in
Overland Park, Kansas. Prior to 1988 he was President of Perkins Industries,
Inc. of Lenexa, Kansas, a manufacturer of adhesives and resins.
(5) Mr. Freeland, age 62, has been a Director of the Company since November
1988. He is Chairman of the Board of Havens Steel Company of Kansas City,
Missouri, a global steel construction company. From 1983 to 1993, he was
President and Chief Executive Officer and has been a Director of Havens
Steel Company since 1971. Mr. Freeland is a past President and Board Member
of the Central Fabricators Association of Chicago, Illinois, and is the
immediate past Chairman and current Board Member of the American Institute
of Steel Construction of Chicago, Illinois.
(6) Mr. McDonnell, age 54, has been a Director of the Company since December
1993. Mr. McDonnell is the President and Chief Executive Officer and a
Director of DST Systems, Inc. ('DST'), a company providing information
processing and computer software services primarily to mutual funds and
financial service organizations. He has been employed by DST in various
capacities since 1973. He is a Director of Informix Software, Inc., Euronet
Services, Inc., and Computer Sciences Corporation.
(7) Mr. Green, age 45, has been a Director of the Company since November 1995.
Mr. Green is Chairman of the Board of Directors and Chief Executive Officer
of UtiliCorp United, Inc. ('UtiliCorp United'), a global energy company. His
association with UtiliCorp United began in 1976 with assignments in a
variety of operating and staff positions involving plant supervision, legal,
finance and treasury functions. He was appointed Chief Executive Officer of
UtiliCorp United in 1985 and Chairman of the Board of Directors of UtiliCorp
United in 1989. He is a Trustee of the Urban Institute in Washington, DC; a
member of the boards of directors of the Midwest Research Institute.
COMMITTEES AND MEETINGS OF THE BOARD
During the Company's fiscal year ended September 30, 1999 ('Fiscal 1999'),
the Board held four regular meetings. The Board has an Audit Committee and a
Compensation Committee, but does not have a Nominating Committee.
The Audit Committee consists of Messrs. Alexander, Freeland, McDonnell and
Green. During Fiscal 1999, the Audit Committee met once. The Audit Committee
reviews and reports to the Board with respect to various auditing and accounting
matters, including the nomination of the Company's independent public
accountants, the scope of audit procedures, general accounting policy matters,
the Company's internal audit function, and the performance of the Company's
independent public accountants.
During Fiscal 1999, the Compensation Committee, comprised of Messrs.
Alexander, Freeland, McDonnell and Green, met four times. The Compensation
Committee is responsible for the review and approval of the annual corporate
compensation guidelines, management bonuses, executive officer compensation, and
the potential levels of contribution to or awards under the Company's Employee
Stock Option Plan ('ESOP'), 401(k) plan and Incentive Stock Option Plan (the
'Plan') for the ensuing year.
During Fiscal 1999, all of the directors attended at least 75% of the
meetings of the Board and committees of which they are members.
DIRECTORS' COMPENSATION
Currently, each director who is not employed by the Company receives an
annual retainer of $14,000 plus $1,000 for each meeting of the Board or any
committee he attends, which, upon election,
3
<PAGE>
can be paid in the form of Common Stock. All eligible directors elected to
receive Common Stock for all compensation earned in Fiscal 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, all officers, directors and beneficial owners
of more than 10% of Common Stock of the Company filed timely reports under
Section 16(a) of the Securities Exchange Act of 1934, as amended (the 'Exchange
Act') during Fiscal 1999.
COMPANY OFFICERS AND SENIOR OFFICERS OF SUBSIDIARY CORPORATIONS
Messrs. Rheinfrank, Lund and Thome are officers of the Company who are
listed above as nominees for director. The only officers of the Company and
senior officers of the Company's subsidiaries other than these individuals are
H. Torsten Andersch, James C. Shay, Robert B. O'Conor, and Stanley D. Biggs.
Mr. Andersch, age 42, is a Vice President having joined the Company's
wholly-owned subsidiary, BHA Group GmbH as Sales Manager in September 1990. He
became Assistant General Manager in December 1990 and was promoted to General
Manager of BHA Group GmbH in September 1992. Prior to September 1990, he was
employed as Sales Manager at Eastman Christensen GmbH.
Mr. Shay, age 36, has been Senior Vice President and Chief Financial
Officer since August 1999. He had been Treasurer and Chief Financial Officer
since March 1994 and was the Corporate Secretary from May 1997 to August 1999.
He joined the Company as Controller in June 1992. From 1986 to 1992, he was
employed at KPMG LLP as an Audit Manager and in various other positions.
Mr. O'Conor, age 42, has been the Senior Vice President of Sales of the
Company's principal operating subsidiary since July 1999. In October 1996, he
was promoted to Vice President of Sales. He held numerous positions in Sales and
Product Management prior to being promoted to General Sales Manager in December
1990. He joined the Company in August 1983 as a Sales Representative. Prior to
August 1983, he was employed in sales and engineering positions for
Owens-Corning Fiberglass Corporation.
Mr. Biggs, age 41, joined the Company in August 1999 as Vice President,
Treasurer and Corporate Secretary. From 1988 until August 1999, he was employed
by The Rival Company as Vice President, Treasurer and Corporate Secretary and
various other positions.
4
<PAGE>
EXECUTIVE COMPENSATION
I. SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------- ----------------------------------------
AWARDS PAYOUTS
--------------------------- -----------
SECURITIES
OTHER UNDER-
ANNUAL RESTRICTED LYING ALL OTHER
ANNUAL COMPEN- STOCK OPTIONS/ LTIP COMPEN-
NAME AND PRINCIPAL FISCAL SALARY BONUS(1) SATION(2) AWARD(S)(3) SARS PAYOUTS(4) SATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James E. Lund, 1999 241,800 -- -- -- -- -- 8,700(5)
Chief Executive Officer 1998 241,800 -- -- -- 42,300 -- 11,996(6)
and President 1997 221,800 84,500 -- -- -- 71,000 14,120(7)
Lamson Rheinfrank, Jr., 1999 178,500 -- -- -- -- -- 7,120(5)
Chairman 1998 178,500 -- -- -- 42,300 -- 10,416(6)
1997 178,500 42,250 -- -- -- 35,500 12,540(7)
James J. Thome, 1999 241,800 -- -- -- -- -- 4,710(5)
Executive Vice President 1998 241,800 -- -- -- 42,300 -- 8,006(6)
and Chief Operating 1997 210,150 78,163 -- -- -- 65,675 9,493(7)
Officer
James C. Shay, 1999 146,700 -- -- -- -- -- 3,420(5)
Senior Vice President 1998 120,000 -- -- -- 47,300 -- 6,716(6)
and Chief Financial 1997 97,500 33,800 -- -- -- 24,850 8,840(7)
Officer
(8)
Robert B. O'Conor, 1999 163,855 -- -- -- 20,000 -- 4,170(5)
Senior Vice President 1998 145,534 9,900 -- -- -- -- 7,466(6)
of Sales 1997 114,485 12,675 -- -- -- -- 9,590(7)
</TABLE>
(1) Annual bonus payments were based on the Company's financial performance for
each fiscal year (see 'Compensation Committee Report on Executive
Compensation -- Annual Cash Incentives').
(2) No amounts for executive earnings and other personal benefits are shown
because the aggregate dollar amount per executive is less than either
$50,000 or 10% of annual salary and bonus.
(3) The total number of shares and their Fair Market Value ('FMV'), calculated
by multiplying the closing market price of unrestricted Common Stock on a
specific date by the number of shares of restricted stock. The related
vesting time table is represented in the following table:
<TABLE>
<CAPTION>
Number of
Shares on Vested Stock Awards -- Time Table
Award -------------------------------------
Date and FMV ($) FMV ($)
held as on on Oct. Oct. Oct. Oct. Oct.
of Sept. Award Sept. 30, 18, 18, 18, 18, 18,
Name of Participant 30, 1999 Date 1999 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
James E. Lund 11,459 $131,779 $111,015 2,292 2,292 2,291 2,292 2,292
Lamson Rheinfrank, Jr. 1,825 $ 20,988 $ 17,681 365 365 365 365 365
James J. Thome 8,696 $100,004 $ 84,247 1,739 1,739 1,740 1,739 1,739
James C. Shay 669 $ 7,694 $ 6,481 134 134 133 134 134
Robert B. O'Conor 958 $ 11,017 $ 9,281 192 192 192 191 191
</TABLE>
As holders of restricted stock, the executives have, with respect to the
restricted stock, all of the rights of a stockholder of the Company,
including the right to vote the restricted stock and receive dividends and
distributions thereon.
(footnotes continued on next page)
5
<PAGE>
(footnotes continued from previous page)
(4) Represents payments of bonus awards made pursuant to the Company's Incentive
Compensation Plan (see 'Compensation Committee Report on Executive
Compensation -- Stock Compensation -- Incentive Compensation Plan').
(5) Amounts of All Other Compensation for Fiscal 1999 include the following:
(i) Contributions by the Company under the ESOP: each executive $2,400;
(ii) Contributions by the Company under the 401(k) plan: each executive
$600; and,
(iii) Premiums on life insurance for executives paid by the Company: Mr.
Lund, $5,700; Mr. Rheinfrank, $4,120; Mr. Thome, $1,710; Mr. Shay,
$420; Mr. O'Conor, $1,170.
(6) Amounts of All Other Compensation for Fiscal 1998 include the following:
(i) Contributions by the Company under the ESOP: each executive $5,696;
(ii) Contributions by the Company under the 401(k) plan: each executive
$600; and,
(iii) Premiums on life insurance for executives paid by the Company: Mr.
Lund, $5,700; Mr. Rheinfrank, $4,120; Mr. Thome, $1,710; Mr. Shay,
$420; Mr. O'Conor, $1,170.
(7) Amounts of All Other Compensation for Fiscal 1997 include the following:
(i) Contributions by the Company under the ESOP: each executive $7,820;
(ii) Contributions by the Company under the 401(k) plan: each executive,
$600; and,
(iii) Premiums on life insurance for executives paid by the Company: Mr.
Lund, $5,700; Mr. Rheinfrank, $4,120; Mr. Thome, $1,073; Mr. Shay,
$420; Mr. O'Conor, $1,170.
(8) Base salary for Mr. O'Conor also includes monthly incentives tied to sales
results.
II. OPTION/SAR GRANTS TABLE
The following table sets forth information with respect to the named
executives concerning the grant of stock options during Fiscal 1999.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rate of Stock
Price Appreciation for
Individual Grant Award Option
- --------------------------------------------------------------------------- -----------------------------------------------
% of Total
Number of Options
Securities Granted to
Underlying Employees Exercise or
Options in Fiscal Base Price Expiration
Name Granted Year ($/Sh) Date 5% 10%
- ---- ------- ---- ------ ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Robert B. O'Conor 20,000 7.8% $13.06 11/10/08 164,267 416,286
</TABLE>
- ------------
The options represented above were granted during fiscal 1999 and vest in four
annual increments of 25%. The options may not be exercisable until the price of
the Common Stock reaches $25.00 per share. Regardless of the price of the Common
Stock, the options will be 100% vested after seven years.
6
<PAGE>
III. AGGREGATED OPTION EXERCISES IN FISCAL 1999
AND FISCAL YEAR-END ('FY-END') OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE
SHARES MONEY
ACQUIRED VALUE NUMBER OF SECURITIES UNDERLYING OPTIONS AT
ON EXERCISE REALIZED UNEXERCISED OPTIONS AT FY-END FY-END
NAME (#)(1) ($)(1) (#) ($)(3)
-------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Exercisable Unexercisable(2) Exercisable
------ ------- ------
<S> <C> <C> <C> <C> <C>
James E. Lund -- -- 19,965 150,111 --
Lamson Rheinfrank, Jr. 33,940 77,527 5,989 42,300 --
James J. Thome -- -- 19,965 135,470 --
James C. Shay -- -- 16,016 67,542 27,855
Robert B. O'Conor 7,250 26,443 2,292 45,233 --
<S> <C>
NAME
(a)
Unexercisable(2)
-------
James E. Lund 274,918
Lamson Rheinfrank, Jr. --
James J. Thome 237,584
James C. Shay 2,323
Robert B. O'Conor 2,776
</TABLE>
- ------------
(1) All of the options granted under the Incentive Stock Plan expire ten years
from the date of award. The above table shows that during the current fiscal
year, executive officers exercised certain stock options. The majority of
the options exercised during fiscal 1999 were awarded during 1989 and as
such, had reached the end of their ten year term. Consistent with the
Compensation Committee's strategy emphasizing long-term stock ownership
(refer to the 'Compensation Committee Report on Executive Compensation'),
the executive officers that exercised stock options shown above retained the
maximum number of shares possible.
(2) Includes options that have not met vesting requirements and minimum fair
market value requirements.
(3) Based on a fair market value as of September 30, 1999 of $9.688 per share.
Values are stated on a pre-tax basis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 1999, the Compensation Committee was comprised of Messrs.
Alexander, Freeland, McDonnell and Green. No such member of the Compensation
Committee was at any time an officer or employee of the Company or any of its
subsidiaries.
EXECUTIVE EMPLOYMENT CONTRACTS
The Company has employment agreements with each of the officers which serve
on its Executive Committee (each, an 'Agreement' and collectively, the
'Agreements'). The initial terms of the Agreements expired on September 30, 1997
at which point they became subject to one year automatic extensions on each
October 1, unless either party gives notice within 30 days of such October 1 of
his or its election to have such automatic extensions cease. All of the
Agreements have been automatically extended.
Each Agreement prohibits the executive from competing with the Company for
the three year period after the termination of such employment with the Company.
Each Agreement further provides that if the Company terminates the Agreement
without cause, the executive covered by such Agreement is entitled to the base
salary he would have received through the then current expiration of such
Agreement and the pro rata portion of the annual bonus that would have been
earned in the year of termination. Finally, each Agreement provides for such
continuing payments in the event that the executive terminates his Agreement for
good reason.
7
<PAGE>
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Board believes that increasing the value of the Company to its
stockholders is the Board's most important objective and should be the key
measure of management performance. The Board also believes that executive
compensation should be objectively determined. For this reason, the Compensation
Committee, which is made up of directors who are not employees of the Company,
is responsible for determining the compensation packages of the Company's
executives.
The Compensation Committee's role in determining the compensation of the
executives of the Company is to assure that the Company's compensation strategy
is aligned with the Board's overall objective and that executive compensation is
structured to provide fair, reasonable and competitive base salary levels and
the opportunity for the executives to earn incentive compensation reflecting
both the Company's and the individual's performance. Moving into fiscal 2000,
the Committee is implementing a number of modifications which will be focused on
the attainment of three year goals and a substantially increased and sustainable
level of earnings in future periods.
The executive compensation program is designed to accomplish the Board's
objectives. The program is based upon the principles that: executive performance
should be judged and compensated primarily on the basis of the Company's
earnings and the strength of the Company's financial position; long-term
appreciation in stockholder value are the most appropriate measure of the
Company's financial performance; and the most effective approach to promoting
the financial success of the Company is to align the stockholders' and the
executives' interests. This alignment is best accomplished through a
compensation strategy emphasizing long-term stock ownership. As a result, the
program is designed to increase the proportion of long-term compensation tied to
increases in the Company's earnings, financial position and appreciation in
stockholder value. The annual cash compensation for executive officers is
primarily in the form of base salary, which is being maintained at levels
consistent with competitive market compensation practices, and annual cash
incentives based on quantitative objectives tied to the Company's financial
performance. Annual cash compensation is supplemented with long-term incentive
compensation, primarily in the form of stock incentives, intended to link
executive compensation to changes in stockholders' value.
The Compensation Committee intends that the application of these principles
will result in total executive compensation and capital accumulation potential
above competitive levels for superior stockholder returns and below competitive
levels for average or lesser returns.
There are three components to the Company's executive compensation
packages: base salary, annual cash incentives and stock compensation. Each of
these components is discussed in detail below.
BASE SALARY
Base salaries are established under the Agreements for each officer that
serves on the Executive Committee. Factors considered in establishing salaries
include the responsibilities of the position, compensation of executives in
companies of similar size or in the same industry and external market
conditions.
SHORT-TERM ANNUAL CASH INCENTIVES
Annual cash incentive awards are based entirely on quantitative objectives
tied to the Company's financial performance. The annual cash incentive component
of compensation enables the Company to adjust payouts to executives based on the
Company's performance with only modest adjustments to base salaries. For fiscal
1997 through 1999, executives were able to earn bonuses based upon the Company's
performance as measured against pre-determined financial objectives for the
fiscal year. Performance was measured by comparing Company net earnings to
targeted levels as established in the Company's business plan and approved by
the Compensation Committee for the fiscal year. The ratio of net earnings to
targeted levels was multiplied by each individual's bonus maximum to determine
the annual bonus payout for each period. The amounts of each individual's
maximum bonus received Compensation Committee approval and were determined
considering the impact on overhead as a percentage of sales, the responsibility
of each position and the compensation level required to provide a
8
<PAGE>
competitive employee compensation package. During Fiscal 1999 and 1998, the
Company's executive officers did not earn an annual cash incentive award as the
Company did not meet the pre-determined financial objectives for the fiscal
year. In order to achieve the Committee's objective of substantially higher and
more sustainable level of earnings, the financial targets for fiscal 2000, 2001,
and 2002 have been incorporated into an annual cash incentive bonus program for
those future periods. This bonus program provides for varying levels of annual
cash payouts to the executives if future earnings per share targets are met.
LONG-TERM INCENTIVES
The Committee believes that long-term changes in stockholder value are an
important measure of the Company's performance. The Committee uses stock
incentives, which consist primarily of restricted stock and stock options, to
align the interests of the Company's stockholders and executives. During fiscal
1997, shares of restricted stock were awarded to the executives for the
achievement of the long-term financial goals for the Company which were in place
at that time (see summary of payments under column (h) of the Executive
Compensation Table). For fiscal 1999 and 1998, no awards of restricted stock
were made as the long-term financial targets for the Company were not achieved.
The Committee also uses the award of stock options as a longer-term
incentive for executives. In order to help ensure that the strategy emphasizing
long-term stock ownership is implemented, the Compensation Committee has
expressed its intent that future awards of stock incentives to the executives
are dependent upon such executives retaining ownership of a substantial portion
of the shares of the Company's Common Stock acquired through the stock incentive
awards. The Compensation Committee has advised the executive officers that they
should retain a majority (less shares forfeited or used to pay the option
exercise price or taxes) of all restricted stock and stock acquired through the
exercise of options previously awarded. Since 1994, the executives of the
Company have exercised certain stock options and have retained the maximum
number of shares possible after using a portion of the shares to pay the option
exercise price and income taxes.
The Compensation Committee believes that while the Company should provide
an opportunity for its executives to acquire significant equity in the Company,
realization of the benefits of this opportunity should generally occur only
after the stockholders have benefited from an increase in the value of their
investment. For this reason, the Compensation Committee adopted the policy that
recipients of stock options would be generally permitted to exercise options,
regardless of exercise price, only if future earnings or share price performance
targets are met.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Lund received total compensation amounting to $250,500 in Fiscal 1999.
His Fiscal 1999 compensation related to base salary remained consistent with
that of Fiscal 1998. He did not earn any bonuses in Fiscal 1999, as the
Company's net earnings did not meet any of the long or short term performance
criteria under the incentive plans in place for that period. The Compensation
Committee considers Mr. Lund's compensation to be in line with industry and
market size standards and to be consistent with Company performance objectives.
This report was presented to and approved by the Board.
Thomas A. McDonnell
Don H. Alexander
Robert D. Freeland
Richard C. Green, Jr.
9
<PAGE>
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPHS FOR
BHA GROUP HOLDINGS, INC.
The following graph reflects a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of an
initial $100 investment on September 30, 1994 in the Company's Common Stock, the
Standard & Poor's 500 Stock Index and the First Analysis Environmental Index.
The comparisons in this table are required by the Securities and Exchange
Commission. The stock price performance shown on the graph is not intended to
forecast or be indicative of future price performance.
[PERFORMANCE GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Company/Index 9/94 9/95 9/96 9/97 9/98 9/99
BHA Group Holdings, Inc. 100 104.82 124.93 164.62 124.18 103.59
S&P 500 Comp. Ltd. 100 129.74 156.12 219.27 239.11 305.59
First Analysis 100 111.4 123.55 154.59 129.12 138.39
</TABLE>
10
<PAGE>
COMPARISON OF LONG-TERM CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPHS FOR
BHA GROUP HOLDINGS, INC.
The following graph reflects a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of an
initial $100 investment on November 30, 1986 (which corresponds to the month in
which the Company's stock first traded) in the Company's Common Stock, the
Standard & Poor's 500 Stock Index and the First Analysis Environmental Index.
The stock price performance shown on the graph is not intended to forecast or be
indicative of future price performance.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Company/Index 11/86 9/87 9/88 9/89 9/90 9/91 9/92
BHA Group Holdings, Inc. 100 207.41 266.71 625.06 558.41 475.04 508.41
S&P 500 Comp. Ltd. 100 133.07 116.61 155.09 140.76 184.63 205.03
First Analysis 100 145.94 128.83 180.3 157.09 183.84 166.41
<C> <C> <C> <C> <C> <C> <C>
Company/Index 9/93 9/94 9/95 9/96 9/97 9/98 9/99
BHA Group Holdings, Inc. 468.88 440.38 461.59 550.14 724.93 546.87 456.18
S&P 500 Comp. Ltd. 231.69 240.23 311.68 375.06 526.76 574.41 734.12
First Analysis 158.28 159.47 177.65 197.01 246.51 205.89 219.46
</TABLE>
11
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1999, the Company had outstanding and entitled to vote
6,545,790 shares of Common Stock. As of December 31, 1999, the trustee of the
ESOP was the registered holder of 769,028 shares of Common Stock, 717,856 of
which have vested in participant accounts. Participants in the ESOP are entitled
to vote both the vested and unvested shares which are in their account.
The following table sets forth, as of December 31, 1999, certain
information with respect to (a) each person known by the Company to own
beneficially five percent or more of the outstanding Common Stock, (b) each of
the directors and nominees for director of the Company, (c) each of the
executive officers named in the Summary Compensation Table, and (d) all
directors, executive and senior officers of the Company and its subsidiaries as
a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) COMMON STOCK
------------------- -------------------------- ------------
<S> <C> <C>
Royce & Associates, Inc. 844,036% 12.9
1414 Avenue of the Americas, 9th Floor
New York, New York 10019-2578
T. Rowe Price Associates ....................... 657,749 10.1%
100 East Pratt Street, 7th Floor
Baltimore, Maryland 21202-1090
Merrill Lynch Asset Management ................. 638,277 9.8%
800 Scudder Mill Road
Plainsboro, NJ 08536-1606
Lamson Rheinfrank, Jr. ......................... 504,901(2) 7.7%
BHA Group Holdings, Inc.
8800 East 63rd Street
Kansas City, Missouri 64133
Goldman Sachs and Company ...................... 350,061 5.4%
1 New York Plaza, 41st Floor
New York, NY 10004
Dimensional FD Advisors, Inc. .................. 335,207 5.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401-1005
Robert D. Freeland ............................. 108,082(3) 1.7%
Havens Steel Company
7219 East 17th Street
Kansas City, Missouri 64126
James E. Lund .................................. 104,776(4) 1.6%
BHA Group Holdings, Inc.
8800 East 63rd Street
Kansas City, Missouri 64133
James J. Thome ................................. 80,802(5) 1.2%
BHA Group Holdings, Inc.
8800 East 63rd Street
Kansas City, Missouri 64133
James C. Shay .................................. 24,718(6) *
BHA Group Holdings, Inc.
8800 East 63rd Street
Kansas City, Missouri 64133
Robert B. O'Conor .............................. 15,599(7) *
BHA Group, Inc.
8800 East 63rd Street
Kansas City, MO 64133
Don H. Alexander ............................... 27,968(8) *
Alexander & Associates, Inc.
408 Miami
Kansas City, KS 66105
</TABLE>
(table continued on next page)
12
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) COMMON STOCK
------------------- -------------------------- ------------
<S> <C> <C>
Thomas A. McDonnell ............................ 18,085(9) *
DST Systems, Inc.
333 W. 11th Street, 5th Floor
Kansas City, Missouri 64105
Richard C. Green, Jr. .......................... 12,233(10) *
UtiliCorp United, Inc.
MSC 2-283
20 West 9th Street
Kansas City, Missouri 64105
All directors, named executives and senior
officers as a group (9 people)................ 897,164 13.7%
</TABLE>
- ------------
* Less than 1%
(1) All information is as of December 31, 1999 and was determined in accordance
with Rule 13d-3 under the Exchange Act, based upon information furnished by
the persons listed or contained in filings made by them with the Securities
and Exchange Commission. Unless otherwise indicated, beneficial ownership
disclosed consists of sole voting and dispositive power.
(2) Consists of 29,731 shares of Common Stock held of record by Mr. Rheinfrank,
195,404 shares of Common Stock held by irrevocable family trusts of which
Mr. Rheinfrank is the co-trustee, 7,000 shares of Common Stock held by his
daughters (as to which shares he disclaims any beneficial interest), 32,490
shares of Common Stock owned by Mr. Rheinfrank's wife (as to which shares
he disclaims any beneficial interest), 21,200 shares of Common Stock in the
Rheinfrank Foundation, 187,550 shares of Common Stock in the Rheinfrank
Family Limited Partnership, options to purchase 5,989 shares of Common
Stock under the Plan which are exercisable within 60 days of December 31,
1999, 1,825 shares of restricted stock, 5,840 shares of Common Stock held
of record by the trustee of the ESOP for Mr. Rheinfrank who is entitled to
vote such shares by virtue of the allocation under the ESOP, and 17,872
shares held in account under the BHA Group Holdings, Inc. 401(K) Plan.
(3) Consists of 12,461 shares of Common Stock held of record by Mr. Freeland,
and 95,621 shares of Common Stock held of record by Havens Steel Company,
with whom Mr. Freeland shares investment power through his position as
Chairman of the Board of that Company, but as to which Mr. Freeland
disclaims any beneficial interest.
(4) Consists of 50,044 shares of Common Stock held of record by Mr. Lund, 8,052
shares of Common Stock owned by Mr. Lund's wife (as to which shares he
disclaims any beneficial interest), options to purchase 19,965 shares of
Common Stock under the Plan which are exercisable within 60 days of
December 31, 1999, 11,459 shares of restricted stock, and 15,256 shares of
Common Stock held of record by the trustee of the ESOP for Mr. Lund who is
entitled to vote such shares by virtue of the allocation under the ESOP.
(5) Consists of 38,918 shares of Common Stock held of record by Mr. Thome,
options to purchase 19,965 shares of Common Stock under the Plan which are
exercisable within 60 days of December 31, 1999, 8,696 shares of restricted
stock, 13,216 shares of Common Stock held of record by the trustee of the
ESOP for Mr. Thome who is entitled to vote such shares by virtue of the
allocation under the ESOP, and 7 shares held in account under the BHA Group
Holdings, Inc. 401(K) Plan.
(6) Consists of 4,042 shares of Common Stock held of record by Mr. Shay,
options to purchase 16,016 shares of Common Stock under the Plan which are
exercisable within 60 days of December 31, 1999, 669 shares of restricted
stock, 2,267 shares of Common Stock held of record by the trustee of the
ESOP for Mr. Shay who is entitled to vote such shares by virtue of the
allocation under the ESOP, and 1,724 shares held in account under the BHA
Group Holdings, Inc. 401(K) Plan.
(7) Consists of 5,063 shares of Common Stock held of record by Mr. O'Conor,
options to purchase 2,292 shares of Common Stock under the Plan which are
exercisable within 60 days of December 31, 1999, 958 shares of restricted
stock, 5,982 shares of Common Stock held of record by the trustee
(footnotes continued on next page)
13
<PAGE>
(footnotes continued from previous page)
of the ESOP for Mr. O'Conor who is entitled to vote such shares by virtue
of the allocation under the ESOP, and 1,304 shares held in account under
the BHA Group Holdings, Inc. 401(K) Plan.
(8) Consists of 27,968 shares of Common Stock held of record by Mr. Alexander.
(9) Consists of 18,085 shares of Common Stock held of record by Mr. McDonnell
and options to purchase 7,486 shares under the Plan which are exercisable
within 60 days of December 31, 1999.
(10) Consists of 12,233 shares of Common Stock held of record by Mr. Green.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
(PROPOSAL NO. 2)
KPMG LLP is the accounting firm which examined and reported on the
Company's financial statements for Fiscal 1999. KPMG LLP has been selected by
the Board to serve as the Company's accounting firm for Fiscal 2000.
Representatives of KPMG LLP are expected to attend the Annual Meeting. The
representatives of KPMG LLP will have the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
The Board is seeking stockholder approval of its selection of KPMG LLP.
Stockholder approval requires the affirmative vote of the holders of a majority
of the shares present or represented and entitled to vote at the Annual Meeting.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION OF KPMG LLP
AND IT IS INTENDED THAT SHARES REPRESENTED BY THE ENCLOSED FORM OF PROXY WILL BE
VOTED IN FAVOR OF THE RATIFICATION OF THE SELECTION OF KPMG LLP UNLESS OTHERWISE
SPECIFIED IN SUCH PROXY. If stockholders do not ratify the appointment of KPMG
LLP as the auditors of the Company for Fiscal 2000 at the Annual Meeting, the
Board, on recommendation of its Audit Committee, may reconsider the selection.
TIME FOR SUBMISSION OF PROPOSAL OF STOCKHOLDERS
Any stockholder who intends to present a proposal to be included in the
Company's proxy statement for action at the Company's Annual Meeting of
Stockholders scheduled to be held on February 20, 2001, must comply with and
meet the requirements of Regulation 14a-8 of the Exchange Act. That regulation
requires, among other things, that a proposal to be included in the Company's
proxy statement for its annual meeting in 2001, must be received by the Company
at its principal executive office, 8800 East 63rd Street, Kansas City, Missouri
64133, by September 17, 2000. In addition, if a stockholder presents a matter
for action at the Company's next annual meeting without providing the Company
with notice of such matter by November 30, 2000, stock represented at such
meeting by proxies solicited by the Board of Directors may be voted in the
discretion of such proxy holders against the matter proposed by such
stockholder.
GENERAL AND OTHER MATTERS
Management knows of no matter other than the matters described above which
will be presented to the Annual Meeting. However, if any other matters properly
come before the meeting, or any of its adjournments, the person or persons
voting the proxies will vote them in accordance with his or their best judgment
on such matters. You are urged to sign and return your proxy to make certain
your shares will be voted at the Annual Meeting.
By Order of the Board of Directors
STANLEY D. BIGGS
Secretary
Kansas City, Missouri
January 14, 2000
14
<PAGE>
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<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROXY Appendix I
BHA GROUP HOLDINGS, INC.
8800 East 63rd Street, Kansas City, Missouri 64133
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - February 22, 2000
The undersigned hereby appoints James E. Lund and Stanley D. Biggs, or
either of them, as Proxy or Proxies of the undersigned with full power of
substitution to attend and to represent the undersigned at the Annual Meeting of
Stockholders of BHA Group Holdings, Inc. (the "Company") to be held on February
22, 2000, and at any adjournments thereof, and to vote thereat the number of
shares of stock of the Company the undersigned would be entitled to vote if
personally present, in accordance with the instructions set forth on this proxy
card. Any proxy heretofore given by the undersigned with respect to such stock
is hereby revoked.
Dated: _____________________________, ___________
Month/Day Year
------------------------------------------------------------------
------------------------------------------------------------------
Please sign exactly as name appears above. For joint accounts, each
joint owner must sign. Please give full title if signing in a
representative capacity.
[ ] PLEASE CHECK IF YOU PLAN TO ATTEND THE MEETING
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS
NOMINEES: Don H. Alexander, Robert D. Freeland, Richard C. Green, Jr., James E. Lund, Thomas A. McDonnell, Lamson
Rheinfrank, Jr., and James J. Thome.
[ ] FOR ALL nominees listed above.
[ ] FOR ALL nominees listed above EXCEPT:
------------------------------------------------------------------------------
(Instruction: To withhold authority to vote on any individual nominee, write the name above.)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
2. RATIFICATION OF KPMG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE
FISCAL YEAR ENDING SEPTEMBER 30, 2000.
[ ] FOR the ratification of KPMG LLP.
[ ] AGAINST the ratification of KPMG LLP.
[ ] ABSTAIN
3. ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. If no
specification is made, this proxy will be voted FOR Proposals 1 and 2
listed above.
</TABLE>
