REGAL-BELOIT CORPORATION
----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 18, 1995
To the Stockholders of Regal-Beloit Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of Regal-Beloit
Corporation, a Wisconsin Corporation (the "Company") will be held at the
Company Headquarters, 200 State Street, Beloit, Wisconsin 53511-9940, on
Tuesday, April 18, 1995 at 10:30 A.M. Central Daylight Time for the following
purposes:
1. To elect three Class B Directors for a term of three years.
2. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the Company for the year ending December 31, 1995.
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors does not have plans to bring any other business before
the meeting, and has not been advised that any other business will be brought
before the meeting.
The Board of Directors has fixed February 28, 1995, as the record date for the
determination of stockholders entitled to notice of, and to vote at, this
meeting.
To assure representation at the meeting, please indicate your voting directions,
date, sign and mail promptly, the enclosed proxy which is being solicited on
behalf of the Board of Directors. A return envelope which requires no postage
if mailed in the United States is enclosed for such purpose. Stockholders who
are present at the meeting may withdraw their proxies and vote in person if they
wish.
A copy of the 1994 Annual Report of the Company accompanies this notice and
attached Proxy Statement.
By Order of the Board of Directors
Gerald J. Berres
----------------------------------------
Gerald J. Berres, Secretary
REGAL-BELOIT CORPORATION
Beloit, Wisconsin
March 17, 1995
<PAGE>
REGAL-BELOIT CORPORATION
200 STATE STREET
BELOIT, WISCONSIN 53511-9940
-------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS, APRIL 18, 1995
* * * * * * * *
SOLICITATION AND VOTING
The enclosed proxy for the Annual Meeting of Stockholders to be held April 18,
1995, and any and all adjournments thereof, is solicited on behalf of the
Board of Directors of the Company. A proxy may be revoked at any time prior
to the voting thereof by notice in writing filed with the Secretary of the
Company or by withdrawal in person at the registration desk at the annual
meeting. Properly executed proxies will be voted as specified thereon, unless
revoked.
The Company will bear the expense of this solicitation of proxies. It is
expected that only the mails will be used for such solicitation, except
Directors, Officers or regular employees of the Company may solicit proxies
personally or by telephone or telegraph. The Company may pay brokers and other
custodians, nominees and fiduciaries their reasonable expenses for sending
proxy material to principals and obtaining their proxies.
This Proxy Statement, Notice of Meeting and accompanying proxy cards are first
being mailed to stockholders on or about March 17, 1995.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On January 31, 1995, the outstanding voting securities of Regal-Beloit
Corporation consisted of 20,454,952 shares of $0.01 par value Common Stock,
each share of which is entitled to one vote. Only stockholders of record
at the close of business on February 28, 1995, will be entitled to vote at the
meeting.
To the best of the Company's knowledge, no entity owned more than 5% of its
outstanding voting securities at the close of business on January 31, 1995,
except Prudential Insurance Company of America, 751 Broad Street, Newark, NJ
07102, who owned 2,047,070 shares (10.0%); and FMR Corp., 82 Devonshire
Street, Boston MA 02109-3614 who owned 1,245,300 shares (6.1%). On January
31, 1995, the Directors, nominees for Directors and Officers of the Company
as a group (13 persons) were beneficial owners of 1,734,695 shares of the
Company's Common Stock (including 413,494 shares subject to options exercisable
within 60 days) constituting approximately 8.5% of the outstanding shares of
Common Stock.
A majority of the shares entitled to vote, present in person or represented by
proxy, shall constitute a quorum at the annual meeting. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum.
If a quorum is present, Directors are elected by the affirmative vote of a
majority of the outstanding shares present in person or by proxy at the meeting
and entitled to vote on the election of Directors. "Majority" means that an
individual who receives more than half the votes cast is elected as Director.
A withheld vote has the effect of a vote against the nominee or nominees.
2
<PAGE>
ELECTION OF DIRECTORS
The current three year term of the Class B Directors expires at the forthcoming
annual meeting. Unless otherwise directed, proxies will be voted at the
annual meeting for the election of nominees, John M. Eldred, John A. McKay and
G. Frederick Kasten, Jr. as Class B Directors for a three year term until the
1998 annual stockholder meeting and until their successors are duly elected.
All except Mr. Kasten are currently serving as Directors. Management has no
reason to believe that any of the foregoing nominees is not available or
will not serve if elected, but if any of them should become so unavailable to
serve as a Director, full discretion is reserved to the persons named as
proxies to vote for such other persons as may be nominated.
The following sets forth certain information (furnished by them to the Company)
concerning each nominee and each Director whose term of office continues after
the annual meeting.
<TABLE>
<CAPTION>
Beneficial Ownership Of
Company Stock As Of
January 31, 1995
-----------------------
Percentage
Principal Occupation, Business Director Number Of Of Shares
Name and Age Experience and Other Directorships Since Shares (1) Outstanding
- --------------------------- ----------------------------------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Nominees For
Class B Directors
Term Expires in 1998:
JOHN M. ELDRED-64 President, The First National Bank 1965 39,508 *
(3) & Trust Co. of Beloit. Director,
First National Bank & Trust Company
of Beloit; Trustee, Beloit College,
Beloit Memorial Hospital.
JOHN A. McKAY-61 President & COO, Harnischfeger 1992 7,408 *
(3) Industries, Inc.; Chairman and CEO
of Beloit Corporation; Director,
Sandusky Foundry & Machining Co.,
First National & Bank Trust Co., of
Beloit; Trustee, University of
Maine.
G. FREDERICK KASTEN, JR.-56 President, CEO, Robert W. Baird & New 10,000 *
Co., Inc. Director of Robert W. Nominee
Baird & Co., Inc.; Columbia
Hospital Corporation; Milwaukee
World Festival, Inc.; Interstate
Forging Industries. Trustee of
Lawrence University.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership Of
Company Stock As Of
January 31, 1995
-----------------------
Percentage
Principal Occupation, Business Director Number Of Of Shares
Name and Age Experience and Other Directorships Since Shares (1) Outstanding
- --------------------------- ----------------------------------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Class C Directors
Term Expires in 1996:
J. REED COLEMAN-61 Chairman, Madison-Kipp Corporation; 1981 66,958 *
Director, Madison-Kipp Corporation,
Kemper Corporation, Kemper National
Insurance Co., Xeruca Corp., Lunar
Corporation and NIBCO, Inc.
ELBERT H. NEESE-71 Director, Neese Family Foundation; 1980 233,588 1.0
(2)(3) Former Chairman and President,
Beloit Corporation; Director, First
National Bank & Trust Company of
Beloit; Trustee, Beloit College;
General Partner, Neese Investment
Partnership.
FRANK E. BAUCHIERO-60 President, Industrial, Dana North 1993 6,870 *
America; past President, Warner
Electric Brake & Clutch; Director,
Walbro Corp., Rockford Products
Corporation and M & I Bank of
Beloit.
Class A Directors
Term Expires in
1997:
WILLIAM W. KEEFER-70 Past Chairman, Warner Electric 1985 48,532 *
Brake and Clutch Co.; Director,
Franklin Electric Co.; past
Chairman, Board of Trustees, Beloit
College.
JAMES L. PACKARD-52 Chairman, President and Chief 1980 433,870 2.0
(3) Executive Officer of the Company,
employed with the Company since
1979. President and Director since
1980. Chief Executive Officer
since 1984. Chairman since 1986.
Director, First National Bank &
Trust Co. of Beloit, Elco
Industries of Rockford, Illinois.
HENRY W. KNUEPPEL-46 Executive Vice President - 1987 193,599 1.0
Operations of the Company, employed
since 1979. Vice President - Power
Transmission Group 1982 - 1985.
Vice President - Operations 1985 -
1987. Director and Executive Vice
President - Operations since 1987.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership Of
Company Stock As Of
January 31, 1995
-----------------------
Percentage
Principal Occupation, Business Director Number Of Of Shares
Name and Age Experience and Other Directorships Since Shares (1) Outstanding
- --------------------------- ----------------------------------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Director In Office; Term
Expiring at Annual Meeting
and Not Continuing
Because of Retirement:
HENRY R. ODELL - 70 Consultant; Former Associate Pro- 1955 321,286 2.0
fessor, University of Virginia;
One of the original founders,
former Executive Vice President,
Treasurer, Regal-Beloit Corporation.
<FN>
* Represents less than 1% of the common stock.
(1) The amounts shown for all Directors except Messrs. Packard, Knueppel,
McKay and Bauchiero include 18,958 shares each for which they have vested but
unexercised non-qualified stock options. The amounts shown for Messrs. McKay
and Bauchiero include 7,208 shares and 4,870 shares, respectively, for which
they have vested but unexercised options. The amount shown for Mr. Eldred
includes 200 shares held in an Individual Retirement Account, 239 in 401K and
437 in a profit sharing ERISA account. The amounts shown for Messrs.
Packard and Knueppel include 139,500 shares and 94,750 shares, respectively,
for which they have vested but unexercised options; 274,636 shares and 91,180
shares, respectively, as to which the indicated persons share voting and
dispositive power with a spouse and 16,902 shares and 5,978 shares
respectively, held in trust under the Company's Employee Profit Sharing Plan
and Trust, the Company's Personal Savings Plan (401K) and an Individual
Retirement Account (IRA). The amounts shown for Messrs. Packard and Eldred
include 1,416 shares, and 6,206 shares respectively, held by their spouses,
as to which they disclaim beneficial ownership.
(2) Of the amount shown for Mr. Neese, 214,630 shares are held by a
charitable foundation of which he, his spouse and one other person share voting
powers and as to which he disclaims any beneficial interest.
(3) Director John M. Eldred is the President, and he and Directors Neese,
Packard and McKay are Directors of The First National Bank & Trust Company of
Beloit, Beloit, Wisconsin. During 1994, Regal-Beloit Corporation had business
transactions with The Beloit Corporation and The First National Bank & Trust
Company of Beloit. All transactions were in the ordinary course of business
and it is anticipated that like transactions will continue. As of December 31,
1994, the Company had outstanding letters of credit with the Bank in the
aggregate amount of $2,216,455. The Company has not drawn down on any of the
letters of credit.
5
<PAGE>
1994 Committees Of The Board
The standing committees of the Board of Directors are the Audit Committee, the
Compensation Committee and the Nominating Committee.
Audit Committee. The current Audit Committee members are Directors J. Reed
Coleman, Chairman; Henry R. Odell, William W. Keefer and Frank E. Bauchiero.
James L. Packard is an ex-officio member. The committee is appointed by and
receives its authority and assignments from and reports to the Board of
Directors. Its responsibilities include, but are not limited to,
recommendations of the appointment of the public accountants, review of the
scope and results of the public accountant's audit activities and the fees
proposed and charged therefore, and review of the Company's accounting controls
and policies, financial reporting practices and the internal audit control
procedures and related reports of the Company. The committee held two meetings
in 1994.
Compensation Committee. The current Compensation Committee consists of
Directors John A. McKay, Chairman, Elbert H. Neese and John M. Eldred. The
committee is appointed by and reports to the Board of Directors. Among its
duties are to recommend to the Board of Directors the annual compensation of
the directors and principal corporate officers and to review, formulate,
recommend and administer short and long range compensation programs for
Officers and Key Employees. The committee held two meetings during 1994.
Nominating Committee. Directors who serve on the Nominating Committee are
Elbert H. Neese, Chairman, John M. Eldred and Henry R. Odell. This committee
is responsible for recommending to the Board candidates to fill interim and
expiring Board and Officer vacancies. Nominees are selected on the basis of
outstanding professional and business achievements, character and their
ability to make useful contributions in the best interests of the Company. The
committee will consider nominees suggested by stockholders. It is suggested
that any such nominees be brought to the attention of the Secretary. The
committee held two meetings during 1994.
Other Information About The Board
The Board of Directors has the responsibility to elect the principal Officers,
establish corporate policies and to oversee the overall performance of the
Company. Members of the Board are kept informed by written reports and
financial data sent to them each month, as well as by oral and written
operating, planning and financial reports given to them by Company Officers
and others at Board and committee meetings.
Directors' Compensation. Each outside Director of the Company (currently
Messrs. Coleman, Bauchiero, Eldred, Keefer, McKay, Neese and Odell) receives
an annual fee of $14,000 plus $1,000 and expenses for each Board meeting
attended. The Audit, Compensation and Nominating Committee Chairmen each
receive an additional $1,000 annual fee. There are four regularly scheduled
Board of Directors meetings per year. Outside Directors serving on committees
of the Board of Directors receive an additional $1,000, plus expenses for each
committee meeting attended. In addition, the Company provides Directors with
certain health, life and travel insurance benefits.
6
<PAGE>
COMPENSATION
Report Of Compensation Committee On Annual Compensation
The Compensation Committee of the Board of Directors (the "Committee") as
described above is composed entirely of independent outside directors. The
Committee is responsible for setting and administering the policies which
govern both annual compensation and stock option programs. The following is an
overview of those compensation policies.
Overall Policy for Executive Officers' Compensation. The Compensation
Committee of the Board of Directors maintains executive salary and benefits at
a level that will permit the Company to attract and retain the highest quality
individual in its key executive positions, taking into consideration the
prevailing competitive job market, the current and projected size of the
Company, its ability to pay and the relationship of the resulting executive
compensation to other non-executive compensation in the Company.
Executive Officers' compensation overall consists of a cash salary, an annual
performance bonus and stock options.
General Measures Used to Determine Compensation for the Chief Executive
Officer. The cash salary compensation, bonus and stock option programs are
determined by annually comparing the Chief Executive Officer's position to
those of similar chief executive officers for companies of the same comparable
size and type as reported in one or more representative management compensation
studies, taking into consideration geographic location, inflation and the
responsibilities commensurate with the position.
An annual performance bonus program is used as an incentive to reward positive
results. The bonus is based exclusively on "Return On Average Shareholders
Equity". Payment is on a sliding scale dependent upon the Company's Average
R.O.E. The Compensation Committee, with Board approval, makes stock option
grants to the Chief Executive Officer under the 1987 and 1991 programs
previously approved by the shareholders.
Criteria Used in Determining the Four Highest Paid Executive Officers' other
than the Chief Executive Officer's Compensation. The criteria for determining
the cash salary, annual performance bonus and stock options for the other
Executive Officers is basically the same as outlined above for the Chief
Executive Officer except that the annual performance bonus payouts are factored
down depending on position responsibility. Option grants may also vary and
contain fewer restrictions.
Stock Option Philosophy. Stock options for Executive Officers, including the
Chief Executive Officer, have been historically granted on a periodic basis to
accomplish a diverse set of goals, namely, to advance the Company's growth and
success by attracting well-qualified Executives whose judgment the Company is
dependent upon for the successful conduct of its operations and to provide
such Executives with incentives to put forth maximum effort for the long-term
success of the Company's business and, in addition, to help supplement the
Executive's retirement benefits. The size and term are based on competitive
practice and position levels to insure retention and alignment of these
Executive Officers' long-range interests with those of the shareholders and
the opportunity for those Executive Officers to build a meaningful stake in the
Company.
The above overview of the Company's compensation policies has been presented
by the following named Directors comprising the Compensation Committee for the
fiscal year ending December 31, 1994.
John A. McKay, Chairman
Elbert H. Neese
John M. Eldred
7
<PAGE>
Compensation Committee Interlocks And Insider Participation
The Compensation Committee consisted of John A. McKay, Chairman, John M.
Eldred, Elbert H. Neese. Mr. Packard, the Company's Chief Executive Officer,
Mr. Eldred, Mr. McKay and Mr. Neese, who are Directors of the Company, served
on the Board of Directors of The First National Bank & Trust Company of
Beloit and participate in decisions by First National Bank & Trust Company of
Beloit's compensation committee regarding compensation of its executives.
During the past fiscal year, the Company had business transactions with the
Bank and The Beloit Corporation. All transactions were in the ordinary course
of business and it is anticipated that like transactions will continue. As of
December 31, 1994, the Company had outstanding letters of credit with the Bank
in the aggregate amount of $2,216,455. The Company has not drawn down on any
of the letters of credit.
The following tables and graphs provide information required by various proxy
rules promulgated by the Securities and Exchange Commission concerning the
named Executive Officers' compensation.
Comparison Of Five Year Cumulative Total Return
The following graph compares the hypothetical total shareholder return
(including reinvestment of dividends) on an investment in (1) the Company's
Common Stock (2) the Standard & Poor's Manufacturing Diversified Industrials
Index and (3) the AMEX Market Value Index for the period January 1, 1990
through December 31, 1994. In each case, the graph assumes the investment of
$100.00 on January 1, 1990. Regal-Beloit Corporation and AMEX data were
supplied by Media General Financial Services, and the S & P Manufacturing
Diversified Industrials data was supplied by S & P Compustat Services, Inc.
Five Year Cumulative Performance Graph
</TABLE>
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Regal-Beloit Corporation 100.00 87.22 89.03 145.00 183.26 193.71
AMEX Market Value Index 100.00 84.80 104.45 105.88 125.79 111.12
S & P Manufacturing Diversified 100.00 99.13 121.51 131.71 159.89 165.50
</TABLE>
8
<PAGE>
Summary Compensation Table
The Summary Compensation Table below shows the compensation for the past three
years of each of the Company's five most highly compensated Executive Officers,
including the Chief Executive Officer (the "Named Executive Officers").
<TABLE>
<CAPTION>
Annual Compensation (1) Long-Term Compensation
$ Awards $
Other $ Stock Long-Term $
$ $ Annual Restricted Options Incentive All Other
Name Principal Position Year Salary Bonus(1) Comp.(2) Stock (4) Payouts Comp.(3)
- ------------------ ------------------- ---- -------- -------- -------- ---------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Chairman, President 1994 316,347 216,000 (2) 0 0 0 16,850
James L. Packard Chief Executive 1993 295,105 120,960 (2) 0 0 0 9,770
Officer 1992 258,611 42,840 (2) 0 200,000 0 6,200
1994 199,393 107,712 (2) 0 0 0 10,500
Henry W. Knueppel Executive Vice 1993 189,129 61,588 (2) 0 0 0 7,374
President 1992 171,217 22,646 (2) 0 120,000 0 4,124
Vice President- 1994 150,377 68,160 (2) 0 0 0 7,976
Robert C. Burress Chief 1993 133,762 36,288 (2) 0 0 0 5,220
Financial Officer 1992 119,281 13,440 (2) 0 12,000 0 2,900
Vice 1994 75,693 25,600 (2) 0 0 0 3,744
Gerald J. Berres President-Secretary 1993 107,483 22,540 (2) 0 0 0 4,060
General Counsel 1992 101,738 8,422 (2) 0 6,000 0 2,300
1994 98,667 34,560 (2) 0 0 0 5,056
Dennis M. Conerton Vice President- 1993 94,389 19,780 (2) 0 0 0 3,563
Controller 1992 90,090 7,414 (2) 0 6,000 0 2,028
<FN>
(1) Includes amounts earned in fiscal year, whether or not deferred or payable.
(2) The Company also provides its Named Executive Officers certain additional
non-cash benefits that are not described in this Proxy Statement. Such
compensation is below the Securities and Exchange Commission's required
disclosure thresholds.
(3) Vested and non-vested contribution to the Company's Employee Profit Sharing
Plan and Trust.
(4) Stock option awards have been restated to reflect the 100% stock split of
August 1, 1994.
</TABLE>
Ownership Of Company Stock And Stock Equivalents By Named Executive Officers
To encourage growth in shareholders' value, the Company believes that the Named
Executive Officers who are in a position to make a substantial contribution to
the long-term success of the Company should have a significant stake in its on-
going success through stock ownership. This focuses attention on managing the
Company as an owner with an equity position in the business.
The interests of the Company's five top Named Executive Officers in the
Company's Common Stock, which is set forth in the following table, includes
stock owned and stock options granted or in which an interest was held as of
January 31, 1995.
9
<PAGE>
<TABLE>
<CAPTION>
Security Ownership of Management
Shares
Beneficially Percent Of
Name Office Owned(1) Class (5)
- -------------------------- --------------------------- ------------ ----------
<S> <C> <C> <C>
James L. Packard (2)(3)(4) Chairman, Chief Executive 433,870 2.0
Officer, President
Henry W. Knueppel (2)(3) Executive Vice President - 193,599 1.0
Operations
Robert C. Burress (2) Vice President - Chief 154,744 *
Financial Officer
Gerald J. Berres Vice President - Secretary 76,226 *
General Counsel
Dennis M. Conerton (3) Vice President - Controller 142,106 *
Total as a group 1,000,545 4.9
<FN>
(1) The amount shown for Messrs. Packard, Knueppel, Burress, Berres and
Conerton and all Executive Officers as a group include 139,500, 94,750,
36,000, 18,942, 17,434, and 306,626 shares, respectively, for which they
have vested but unexercised options, but which could be acquired within
60 days pursuant to outstanding option grants.
(2) The amount shown for Messrs. Packard, Knueppel and Burress includes
274,636, 91,180, and 94,840 shares, respectively, as to which the
indicated persons share voting and dispositive power with a spouse.
(3) The amount shown for Messrs. Packard, Knueppel and Conerton includes
16,902, 4,128, and 4,672 shares, respectively, as to shares held in trust
under the Company's Employee Profit Sharing Plan and Trust, the Company's
Personal Savings Plan (401K) and an Individual Retirement Account (IRA).
(4) The amount shown for Mr. Packard includes 1,416 shares held by his spouse
as to which he disclaims beneficial ownership.
(5) * Represents less than 1% of the common stock.
</TABLE>
10
<PAGE>
Option Exercise And 1994 Fiscal Year-End Option Values
The following table sets forth information concerning the exercise of stock
options during fiscal year 1994 by each of the Named Executive Officers and
the fiscal year-end value of unexercised options.
<TABLE>
<CAPTION>
Total Number Of Total Value Of
Number Of Unexercised Options Held Unexercised, In-The-Money
Shares At Fiscal Year-End Options Held at Fiscal Year-End
Acquired On Value -------------------------- ----------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable (1) Unexercisable (1)
- ------------------ ----------- -------- ----------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
James L. Packard 6,218 $128,402 139,500 140,000 $1,893,875 $1,907,500
Henry W. Knueppel 0 0 94,750 84,000 1,290,969 1,144,500
Robert C. Burress 0 0 36,000 0 490,500 0
Gerald J. Berres 2,000 36,500 18,942 0 258,085 0
Dennis M. Conerton 0 0 17,434 0 237,538 0
<FN>
(1) Total value of exercisable and unexercisable options are based on the fair
market value ($13 5/8 as of December 30, 1994) of the Company's stock.
</TABLE>
Option Grants in Fiscal 1994
The Company has in effect stock option plans pursuant to which options to
purchase Common Stock of the Company are granted to the Named Executive
Officers, Directors and other Key Employees of the Company and its
subsidiaries. No stock options were granted to any of the Named Executive
Officers in 1994. Stock options totaling 22,100 shares were granted to Key
Employees and 7,462 shares were granted to Directors in fiscal year 1994.
SUMMARY OF BENEFIT PLANS
The Company has certain plans which provide, or may provide, compensation and
benefits to Named Executive Officers of the Company, which are described
herein. These plans are principally the Company's Incentive Stock Plan,
Officers' Compensation Bonus Plan and the Target Supplemental Retirement Plan.
The Company also provides its Executive Officers certain group life, health,
medical and other benefits generally available to all salaried employees and
certain additional non-cash benefits that are not described in this Proxy
Statement because such compensation is below the Securities and Exchange
Commission's required disclosure thresholds.
Profit Sharing Plan
The Company makes an annual discretionary contribution to its tax-qualified
profit sharing plan which covers approximately 74% of the Company's hourly
and salaried employees. (Union employees whose collective bargaining
agreement does not provide for their inclusion in the plan and employees at
certain non-participating units are excluded from participation.) Eligible
employees become participants in the profit sharing plan on the first January 1
or July 1 after completing 1,000 hours of service in a 12-month period. The
Company's contribution to the profit sharing plan is allocated to participants
in accordance with a formula based upon participant compensation and years of
service with the Company. A participant must be employed on the last day of
the year and be credited with 1,000 hours of service during the year to be
eligible for an allocation. Company contributions vest at 20% per year
beginning after the completion of three years of service. Effective July 1,
1988, participants have the option to direct the investment of their accounts
in 10% increments between a fixed income fund, a bond fund, a balanced fund,
two equity funds and an employer stock fund. Distributions from the plan are
made generally upon termination of service for any reason in the form of a
single sum payment in cash and/or employer check.
11
<PAGE>
The Company also maintains a profit sharing award program in which it makes an
annual discretionary contribution to be allocated to employees in accordance
with a formula based upon compensation and years of employment with the
Company. The amount allocated is included in the cash compensation of each
employee and, effective for years commencing after 1987, may be deferred in
whole or in part through the Company's 401(K) plan. Amounts allocated to the
Company's Named Executive Officers for 1994 are included in the Summary
Compensation Table.
Target Supplemental Retirement Plan
The Target Supplemental Retirement Plan ("TSRP") limits participants to
selected employees who are designated by the Compensation Committee.
All individuals named in the Cash Compensation Table, except Gerald J. Berres,
participate in the TSRP. Under the TSRP, participants are entitled, upon
normal or approved early retirement, to receive amounts which, together with
social security, a hypothetical profit sharing plan balance annuitized over
fifteen (15) years, and the Target Supplemental Retirement Benefit equal the
lesser of two percent (2%) of final five (5) years average salary times years
of service with the Company up to a maximum of 30 years or 60% income
replacement. Consequently, unless reduced as described below, the estimated
annual Target Supplemental Retirement benefits to TSRP participants will
approximate those shown in the column of the following table which sets forth
estimated benefits for participants with various years of credited service.
These benefits will be reduced by the Social Security payment and the amortized
hypothetical Profit Sharing balance.
<TABLE>
<CAPTION>
Average Annual
Earnings For The Years Of Credited Service
Final Five Years -------------------------------------------------------
Of Service 10 15 20 25 30
- ---------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
100,000 20,000 30,000 40,000 50,000 60,000
200,000 40,000 60,000 80,000 100,000 120,000
300,000 60,000 90,000 120,000 150,000 180,000
400,000 80,000 120,000 160,000 200,000 240,000
500,000 100,000 150,000 200,000 250,000 300,000
</TABLE>
The TSRP participant needs a minimum of 15 years of continuous service and
have reached the age of 62 to qualify for early retirement benefit. The
Compensation Committee may grant a participant additional years of service
to qualify for benefits.
The TSRP is designed to provide a participant a retirement benefit that is
comparable in replacement income percentage to that provided lower paid
employees. The Plan does this by supplementing retirement income which is
lost to higher paid employees due to social security caps and limits on
income considered for the Company's Qualified Retirement Plans.
12
<PAGE>
Officers' Incentive Bonus Plan
The Company's Officers' Incentive Bonus Plan provides for the payment of a
bonus to the Named Executive Officers based exclusively on "Return On Average
Shareholders Equity". Payments are based on a sliding scale dependent upon
the Company's Average ROE. Bonuses are earned only after the Return on
Average Shareholders Equity equals or exceeds 10%. The Bonus benefits are
maximized upon reaching a Return On Average Shareholders Equity of 20%.
Benefits are further factored depending upon a job responsibility factor.
Amounts allocated to the Named Executive Officers for 1994 are included in the
Summary Compensation Table.
1982 Incentive Stock Option Plan
The Company's 1982 Incentive Stock Option Plan provides stock options for
Officers and Key Employees. The Plan is administered by the Compensation
Committee of the Board of Directors. Options to purchase shares of Common
Stock of the Company are granted on behalf of the Company by the Board
upon the recommendations of the committee. The committee recommends the
eligible persons to whom the options may be granted, the number of shares to
be optioned, the price at which shares may be optioned (which shall not be
less than the fair market value of the stock on the date of grant) and any
limitations such as to when each option shall be exercisable. Options to
purchase up to a total of 307,469 shares could have been granted under the
Plan which expired in 1992.
1987 Stock Option Plan
The Company also maintains a 1987 Stock Option Plan which provides for the
grant of stock options to Officers and Key Employees on terms substantially
similar to the 1982 Stock Incentive Option Plan (except for certain federal
income tax treatment). Options to purchase up to a total of 256,700 shares
(adjusted for the August 1994 two for one stock split) may be granted under
the Plan.
1991 Flexible Stock Incentive Plan
The Regal-Beloit Corporation 1991 Flexible Stock Incentive Plan
The Plan provides long term incentives to eligible Directors, Officers and Key
Employees of the Company. The Plan is administered by the Board of Directors
or a committee so constituted as to comply with Rule 16b-3 of the Securities
and Exchange Act of 1934. The committee selects the eligible participants,
determines the size, the time and terms of grants to be given, except grants
to Outside Directors are limited by the Plan. Grants may be made in the form
of Deferred Stock, Restricted Stock, Stock Options, Performance Shares, Stock
Appreciation Rights, or a combination thereof. The committee determines the
amount, the form of and combination to be received by the participant. The
maximum number of shares of Common Stock available for distribution under the
Plan is 1,000,000 shares (adjusted for the August 1994 two for one stock
split).
The Plan also provides that annually as of the date corresponding to the
Annual Stockholders' Meeting that the Committee grant a non-qualified stock
option to each Outside Director of the company. The number of shares of
Common Stock granted to each Outside Director shall equal the dollar value of
the Outside Director's current annual retainer fee; except the initial Grant
to a newly elected Outside Director which shall be granted on the date
corresponding to the Annual Stockholders' Meeting at which the Outside Director
is initially elected shall be equal in dollar value to three (3) times the
annual retainer fee payable to Outside Directors. The number of shares to be
granted shall be determined by dividing 100% of the fair market value of the
Company's Common Stock, on the date of Grant, which date shall always be the
date corresponding to the Annual Shareholders' Meeting, into the then current
annual retainer fee being paid to Outside Directors.
13
<PAGE>
The right to exercise any Grant given to Outside Directors shall vest
immediately upon Grant. Unexercised Grants to Outside Directors shall
terminate, the earlier of ten (10) years after the date of Grant or one (1)
year after the date of the death of the Outside Director. Any Director who is
terminated for cause and has not effectively exercised his options prior to
termination shall have such unexercised options lapse immediately upon
termination as an Outside Director. "Cause" is defined as a serious or willful
act of misconduct detrimental to the business of Regal-Beloit Corporation or
its subsidiaries or their reputation.
In all other respects, Grants to an Outside Director under the Plan shall be
controlled by the terms and conditions of the Plan and the rules, regulations,
agreements, guidelines, instruments and interpretations issued by the
Committee, except where inconsistent with the limitations set forth in
Section 4 of the Plan.
Term Life Insurance
The Company provided $250,000 of term life insurance for each of its Named
Executive Officers during 1994, except Gerald J. Berres.
Supplemental Disability
The Company also provided supplemental disability insurance for Named Executive
Officers and salaried employees during 1994. The Plan provides compensation to
a disabled Named Executive Officer at the rate of 100% of his normal salary for
the first 12 months of total disability and 60% thereafter. Other salaried
employees receive 100% of their normal salary for the first 6 months of total
disability and 60% thereafter. None of the Company's Executive Officers
received disability benefits during 1994.
Employment Contracts and Executive Termination Benefits Agreement
The Company has no employment contracts with any Named Executive Officers of
the Company. However, the Company has termination benefits agreements (the
"Agreements") with the five Named Executive Officers of the Company. The
benefits provided by the Agreements are triggered by the termination of the
individual who is a party to an Agreement within three years following a
change in control of the Company, if the individual's employment with the
Company is terminated not for cause or if the individual terminates his or her
employment with "good reason". If the individual's employment is terminated
for cause, or as a consequence of death or disability, the Agreement is not
triggered. The employment period is three years commencing with the change
in control. The Agreement provides that upon such termination, the termination
payment shall be a severance payment equal to the sum of the individual's
annual salary then in effect plus the amount of the individual's highest
annual bonus award during the previous three years, multiplied by the number
of years (or fractional portion of a year) remaining in the employment period,
but not less than one year's annual salary and bonus award. The individual
may elect to receive such payment in a lump sum or monthly installments. In
addition, the individual, at no cost, shall continue to participate in the
Company's medical and dental benefit plan for the remainder of the employment
period. The termination payments and benefits described above may be reduced
if necessary to comply with Internal Revenue Code limits concerning "golden
parachutes".
14
<PAGE>
Outside Directors
Non-qualified Stock Option Grant
On January 23, 1992, the Board of Directors granted to each non-employee
member of the Board of Directors a non-qualified stock option grant of 20,000
shares of Common Stock, at an option price of $7.50 per share which price was
equal to the closing price of a share of Regal-Beloit Corporation's Common
Stock on the date of grant as adjusted to reflect the August 1994 two for one
stock split. The options granted will terminate five (5) years from the date
of grant, or one year following the Director's death but in any event prior to
the expiration date of the option. The grant shall be exercisable as to one-
quarter of the shares granted on the date of grant and one-quarter on each
anniversary date thereafter. The limitation on exercisability shall be
removed immediately upon death, ceasing to be a member of the Board or a change
in control.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Officers and Directors, and persons who own more than ten percent (10%) of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the American Stock Exchange. Officers, Directors and greater than ten
percent (10%) shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by the Company,
or written representation from certain reporting persons that no Form 5's were
required for those persons, the Company believes that, since May 1, 1991 all
filing requirements applicable to its Officers, Directors, and greater than
ten percent (10%) beneficial owners were complied with.
SELECTION OF AUDITORS
The Board of Directors, in accordance with the recommendation of its Audit
Committee, has appointed Arthur Andersen LLP as the Company's independent
public accountants for the year ending December 31, 1995 and is submitting the
selection of auditors for approval by the stockholders at the forthcoming
annual meeting. Representatives of Arthur Andersen LLP will be present at
the annual meeting and will be available to respond to appropriate questions
and to make a statement if they desire to do so.
In addition to services performed in connection with their audit function
(which services included examination of the annual financial statements,
assistance and consultation in connection with filing the 10-K annual report
with the Securities and Exchange Commission and auditing the Company's Profit
Sharing Plan and Personal Savings Plan), Arthur Andersen LLP provided other
non-audit services during the year ended December 31, 1994.
The Audit Committee concluded that the performance of such services does not
impair the independence of Arthur Andersen LLP as Regal-Beloit Corporation's
auditors.
In the event the shareholders do not ratify the appointment of Arthur Andersen
LLP or if for any reason that firm shall cease to act as auditors for Regal-
Beloit Corporation, the Company will appoint other independent public
accountants as auditors.
15
<PAGE>
STOCKHOLDER PROPOSALS
Stockholder proposals must be received by the Company no later than November
15, 1995 in order to be considered for inclusion in next year's annual meeting
proxy statement.
The proponent of a proposal must be a record or beneficial owner of at least
one percent (1%) or $1,000 in market value of securities entitled to be voted
at the meeting and have held such securities for at least one year and shall
continue to own such securities through the date on which the meeting is held.
By Order of the Board of Directors
Gerald J. Berres
------------------------------------------------
Gerald J. Berres, Secretary
Beloit, Wisconsin
March 17, 1995
16
<PAGE>
APPENDIX
Exhibit I . . . . . . . . . . . . . Proxy Card
Exhibit II . . . . . . . . . . . . Five Year Performance Graph
<PAGE>
Exhibit I - Proxy Card
Please mark
X votes as in
this example.
This Proxy when executed will be voted in the manner directed herein. If no
direction is made, this Proxy will be voted FOR the election of Directors and
FOR Propopsal 2.
<TABLE>
<CAPTION>
|-------------------------------------------------------------------------------------------|
|The Board of Directors recommends a vote FOR the election of Directors and FOR Proposal 2. |
|-------------------------------------------------------------------------------------------|
| |
| FOR WITHHELD FOR AGAINST ABSTAIN |
| -------- -------- ------- ------- ------- |
|<S> >C> <C> <C> <C> <C> <C> | <C>
|1. Election of Direc- 2. Selection of Indepen- |
| tors (See reverse). dent Auditors. |
| -------- -------- ------- ------- ------- |
| For, except vote withheld from the following nominee(s): | 3. To act on other business that
| | properly comes before the
| -------------------------------------------------------- | meeting or any adjournments,
| | and matters incident to conduct
| | thereof.
|-------------------------------------------------------------------------------------------|
MARK HERE
FOR ADDRESS
CHANGE AND
NOTE AT LEFT
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Please sign exactly as name appears hereron. Joint owners should Signature: ________________________ Date: ________
each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. Signature : ________________________ Date: ________
</TABLE>
<PAGE>
REGAL-BELOIT CORPORATION
PROXY FOR ANNUAL MEETING ON APRIL 18, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J. L. Packard and G.J. Berres or either of them,
as Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of common
stock of Regal-Beloit Corporation heldon record by the undersigned on
February 28, 1995, at the Annual Meeting of Stockholders to be held on April
18, 1995, at 10:30 A.M. Central Daylight Time, at the Regal-Beloit Corporation's
Corporate Headquarters, 200 State Street, Beloit, Wisconsin 53511-9940, or any
adjournment thereof (the Meeting) and thereto vote all shares.
ELECTION OF ALL THREE (3) CLASS B DIRECTORS:
(or if any nominee is not available for election; such substitute as the Board
of Directors may designate).
Nominees:
John M. Eldred, John A. McKay, G. Frederick Kasten
SEE REVERSE SIDE. If you wish to vote in accordance with the Board of
Directors' recommendations, just sign on the reverse side. You need not mark
any boxes. Please mark, sign, date and return this card promptly using the
enclosed envelope.
SEE REVERSE
SIDE
